[Title 32 CFR ]
[Code of Federal Regulations (annual edition) - July 1, 2002 Edition]
[From the U.S. Government Printing Office]



[[Page i]]

          

                    32


          Parts 1 to 190

                         Revised as of July 1, 2002

National Defense





          Containing a codification of documents of general 
          applicability and future effect
          As of July 1, 2002
          With Ancillaries
          Published by
          Office of the Federal Register
          National Archives and Records
          Administration

A Special Edition of the Federal Register



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                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2002



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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 32:
    Subtitle A--Department of Defense
          Chapter I-- Office of the Secretary of Defense             5
  Finding Aids:
      Table of CFR Titles and Chapters........................     713
      Alphabetical List of Agencies Appearing in the CFR......     731
      List of CFR Sections Affected...........................     741



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                     ----------------------------

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 32 CFR 2.1 refers to 
                       title 32, part 2, section 
                       1.

                     ----------------------------

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                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, July 1, 2002, consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
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instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

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Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 1986, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, or 1973-1985, published in seven separate volumes. For 
the period beginning January 1, 1986, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
Authorities and Agency Rules (Table I). A list of CFR titles, chapters, 
and parts and an alphabetical list of agencies publishing in the CFR are 
also included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-523-5227 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, Washington, DC 20408 or e-mail 
info@fedreg.nara.gov.

SALES

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ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, the LSA (List of 
CFR Sections Affected), The United States Government Manual, the Federal 
Register, Public Laws, Public Papers, Weekly Compilation of Presidential 
Documents and the Privacy Act Compilation are available in electronic 
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free). E-mail, gpoaccess@gpo.gov.

[[Page vii]]

    The Office of the Federal Register also offers a free service on the 
National Archives and Records Administration's (NARA) World Wide Web 
site for public law numbers, Federal Register finding aids, and related 
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site also contains links to GPO Access.

                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

July 1, 2002.



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                               THIS TITLE

    Title 32--National Defense is composed of six volumes. The parts in 
these volumes are arranged in the following order: parts 1-190, parts 
191-399, parts 400-629, parts 630-699, parts 700-799, and part 800 to 
End. The contents of these volumes represent all current regulations 
codified under this title of the CFR as of July 1, 2002.

    The current regulations issued by the Department of Defense appear 
in the volumes containing parts 1-189 and parts 190-399; those issued by 
the Department of the Army appear in the volumes containing parts 400-
629 and parts 630-699; those issued by the Department of the Navy appear 
in the volume containing parts 700-799, and those issued by the 
Department of the Air Force, Defense Logistics Agency, Selective Service 
System, National Counterintelligence Center, Central Intelligence 
Agency, Information Security Oversight Office, National Security 
Council, Office of Science and Technology Policy, Office for Micronesian 
Status Negotiations, and Office of the Vice President of the United 
States appear in the volume containing parts 800 to end.

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[[Page 1]]



                       TITLE 32--NATIONAL DEFENSE




                   (This book contains parts 1 to 190)

  --------------------------------------------------------------------
                                                                    Part

                    SUBTITLE A--Department of Defense

chapter i--Office of the Secretary of Defense...............           2

Cross References: For Department of Defense Federal Acquisition 
  Regulations, see 48 CFR chapter 2.

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                    Subtitle A--Department of Defense

[[Page 5]]



              CHAPTER I--OFFICE OF THE SECRETARY OF DEFENSE




                            (Parts 1 to 190)

  --------------------------------------------------------------------

                        SUBCHAPTER A--ACQUISITION
Part                                                                Page
1

[Reserved]

2               Pilot program policy........................          11
3               Transactions other than contracts, grants, 
                    or cooperative agreements for prototype 
                    projects................................          13
4-20

[Reserved]

            SUBCHAPTER B--DOD GRANT AND AGREEMENT REGULATIONS
21              DoD grants and agreements--General matters..          16
22              DoD grants and agreements--Award and 
                    administration..........................          23
25              Governmentwide debarment and suspension 
                    (nonprocurement) and governmentwide 
                    requirements for drug-free workplace 
                    (grants)................................          56
28              New restrictions on lobbying................          75
32              Administrative requirements for grants and 
                    agreements with institutions of higher 
                    education, hospitals, and other non-
                    profit organizations....................          87
33              Uniform administrative requirements for 
                    grants and cooperative agreements to 
                    State and local governments.............         116
34              Administrative requirements for grants and 
                    agreements with for-profit organizations         144
             SUBCHAPTER C--PERSONNEL, MILITARY AND CIVILIAN
43              Personal commercial solicitation on DoD 
                    installations...........................         164
44              Screening the Ready Reserve.................         171
45              Certificate of release or discharge from 
                    active duty (DD Form 214/5 Series)......         175
47              Active duty service for civilian or 
                    contractual groups......................         189

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48              Retired serviceman's family protection plan.         194
53              Wearing of the uniform......................         204
54              Allotments for child and spousal support....         204
56              Nondiscrimination on the basis of handicap 
                    in programs and activities assisted or 
                    conducted by the Department of Defense..         209
57              Provision of early intervention and special 
                    education services to eligible DoD 
                    dependents in overseas areas............         228
58              Human Immunodeficiency Virus (HIV-1)........         250
59              Voluntary military pay allotments...........         257
61              Medical malpractice claims against military 
                    and civilian personnel of the Armed 
                    Forces..................................         259
62b             Drunk and drugged driving by DoD personnel..         260
64              Management and mobilization of regular and 
                    reserve retired military members........         270
67              Educational requirements for appointment of 
                    reserve component officers to a grade 
                    above first lieutenant or lieutenant 
                    (junior grade)..........................         274
68              Provision of free public education for 
                    eligible children pursuant to section 6, 
                    Public Law 81-874.......................         276
69              School boards for Department of Defense 
                    domestic dependent elementary and 
                    secondary schools.......................         283
70              Discharge review board (DRB) procedures and 
                    standards...............................         287
71              Eligibility requirements for education of 
                    minor dependents in overseas areas......         321
73              Training simulators and devices.............         326
74              Appointment of doctors of osteopathy as 
                    medical officers........................         330
75              Conscientious objectors.....................         331
77              Program to encourage public and community 
                    service.................................         339
78              Voluntary State tax withholding from retired 
                    pay.....................................         349
80              Provision of early intervention services to 
                    eligible infants and toddlers with 
                    disabilities and their families, and 
                    special education children with 
                    disabilities within the section 6 school 
                    arrangements............................         352
81              Paternity claims and adoption proceedings 
                    involving members and former members of 
                    the Armed Forces........................         375
85              Health promotion............................         377
86              Criminal history background checks on 
                    individuals in child care services......         381
88              Transition assistance for military personnel         392

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93              Acceptance of service of process; release of 
                    official information in litigation; and 
                    testimony by NSA personnel as witnesses.         395
94              Naturalization of aliens serving in the 
                    Armed Forces of the United States and of 
                    alien spouses and/or alien adopted 
                    children of military and civilian 
                    personnel ordered overseas..............         400
96              Acquisition and use of criminal history 
                    record information by the military 
                    services................................         403
97              Release of official information in 
                    litigation and testimony by DoD 
                    personnel as witnesses..................         405
99              Procedures for States and localities to 
                    request indemnification.................         408
100             Unsatisfactory performance of ready reserve 
                    obligation..............................         410
101             Participation in Reserve training programs..         415
104             Civilian employment and reemployment rights 
                    of applicants for, and Service members 
                    and former Service members of the 
                    Uniformed Services......................         418
105             Employment and volunteer work of spouses of 
                    military personnel......................         428
107             Personal services authority for direct 
                    health care providers...................         430
110             Standardized rates of subsistence allowance 
                    and commutation instead of uniforms for 
                    members of the Senior Reserve Officers' 
                    Training Corps..........................         431
112             Indebtedness of military personnel..........         437
113             Indebtedness procedures of military 
                    personnel...............................         440
142             Copyrighted sound and video recordings......         456
143             DoD policy on organizations that seek to 
                    represent or organize members of the 
                    Armed Forces in negotiation or 
                    collective bargaining...................         457
144             Service by members of the Armed Forces on 
                    State and local juries..................         460
145             Cooperation with the Office of Special 
                    Counsel of the Merit Systems Protection 
                    Board...................................         462
146             Compliance of DoD members, employees, and 
                    family members outside the United States 
                    with court orders.......................         467
147             Adjudicative guidelines for determining 
                    eligibility for access to classified 
                    information.............................         469
148             National policy and implementation of 
                    reciprocity of facilities...............         482

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149             Policy on technical surveillance 
                    countermeasures.........................         485
        SUBCHAPTER D--REGULATIONS PERTAINING TO MILITARY JUSTICE
150             Courts of criminal appeals rules of practice 
                    and procedure...........................         487
151             Status of forces policies and information...         495
152             Review of the manual for courts-martial.....         501
153             Legal assistance matters....................         503
                         SUBCHAPTER E--SECURITY
154             Department of Defense personnel security 
                    program regulation......................         507
155             Defense industrial personnel security 
                    clearance program.......................         570
156             Department of Defense personnel security 
                    program (DoDPSP)........................         577
158             Guidelines for systematic declassification 
                    review of classified information in 
                    permanently valuable DoD records........         579
                    SUBCHAPTER F--DEFENSE CONTRACTING
160             Defense acquisition regulatory system.......         587
162             Productivity Enhancing Capital Investment 
                    (PECI)..................................         589
165             Recoupment of nonrecurring costs on sales of 
                    U.S. items..............................         593
168a            National defense science and engineering 
                    graduate fellowships....................         597
169             Commercial activities program...............         598
169a            Commercial activities program procedures....         602
172             Disposition of proceeds from DoD sales of 
                    surplus personal property...............         644
173             Competitive information certificate and 
                    profit reduction clause.................         650
                 SUBCHAPTER G--CLOSURES AND REALIGNMENT
174             Revitalizing base closure communities.......         654
175             Revitalizing base closure communities--Base 
                    closure community assistance............         655

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176             Revitalizing base closure communities and 
                    community assistance--Community 
                    redevelopment and homeless assistance...         670
                       SUBCHAPTER H--CIVIL DEFENSE
185             Military support to civil authorities (MSCA)         680
                       SUBCHAPTERS I-K [RESERVED]
                        SUBCHAPTER L--ENVIRONMENT
187             Environmental effects abroad of major 
                    Department of Defense actions...........         692
189             Mineral exploration and extraction on DoD 
                    lands...................................         701
190             Natural Resources Management Program........         703

[[Page 11]]



                        SUBCHAPTER A--ACQUISITION



                            PART 1 [RESERVED]



PART 2--PILOT PROGRAM POLICY--Table of Contents




Sec.
2.1 Purpose.
2.2 Statutory relief for participating programs.
2.3 Regulatory relief for participating programs.
2.4 Designation of participating programs.
2.5 Criteria for designation of participating programs.

    Authority: 10 U.S.C. 2340 note.

    Source: 62 FR 17549, Apr. 10, 1997, unless otherwise noted.



Sec. 2.1  Purpose.

    Section 809 of Public Law 101-510, ``National Defense Authorization 
Act for Fiscal Year 1991,'' as amended by section 811 of Public Law 102-
484, ``National Defense Authorization Act for Fiscal Year 1993'' and 
Public Law 103-160, ``National Defense Authorization Act for Fiscal Year 
1994,'' authorizes the Secretary of Defense to conduct the Defense 
Acquisition Pilot Program. In accordance with section 809 of Public Law 
101-510, the Secretary may designate defense acquisition programs for 
participation in the Defense Acquisition Pilot Program.
    (a) The purpose of the pilot programs is to determine the potential 
for increasing the efficiency and effectiveness of the acquisition 
process. Pilot programs shall be conducted in accordance with the 
standard commercial, industrial practices. As used in this policy, the 
term ``standard commercial, industrial practice'' refers to any 
acquisition management practice, process, or procedure that is used by 
commercial companies to produce and sell goods and services in the 
commercial marketplace. This definition purposely implies a broad range 
of potential activities to adopt commercial practices, including 
regulatory and statutory streamlining, to eliminate unique Government 
requirements and practices such as government-unique contracting 
policies and practices, government-unique specifications and standards, 
and reliance on cost determination rather than price analysis.
    (b) Standard commercial, industrial practices include, but are not 
limited to:
    (1) Innovative contracting policies and practices;
    (2) Performance and commercial specifications and standards;
    (3) Innovative budget policies;
    (4) Establishing fair and reasonable prices without cost data;
    (5) Maintenance of long-term relationships with quality suppliers;
    (6) Acquisition of commercial and non-developmental items (including 
components); and
    (7) Other best commercial practices.



Sec. 2.2  Statutory relief for participating programs.

    (a) Within the limitations prescribed, the applicability of any 
provision of law or any regulation prescribed to implement a statutory 
requirement may be waived for all programs participating in the Defense 
Acquisition Pilot Program, or separately for each participating program, 
if that waiver or limit is specifically authorized to be waived or 
limited in a law authorizing appropriations for a program designated by 
statute as a participant in the Defense Acquisition Pilot Program.
    (b) Only those laws that prescribe procedures for the procurement of 
supplies or services; a preference or requirement for acquisition from 
any source or class of sources; any requirement related to contractor 
performance; any cost allowability, cost accounting, or auditing 
requirements; or any requirement for the management of, testing to be 
performed under, evaluation of, or reporting on a defense acquisition 
program may be waived.
    (c) The requirements in section 809 of Public Law 101-510, as 
amended by section 811 of Public Law 102-484, the requirements in any 
law enacted on or after the enactment of Public Law 101-510 (except to 
the extent that a waiver or limitation is specifically authorized for 
such a defense acquisition program by statute), and any provision of law 
that ensures the financial integrity of

[[Page 12]]

the conduct of a Federal Government program or that relates to the 
authority of the Inspector General of the Department of Defense may not 
be considered for waiver.



Sec. 2.3  Regulatory relief for participating programs.

    (a) A program participating in the Defense Acquisition Pilot Program 
will not be subject to any regulation, policy, directive, or 
administrative rule or guideline relating to the acquisition activities 
of the Department of Defense other than the Federal Acquisition 
Regulation (FAR) \1\, the Defense FAR Supplement (DFARS) \2\, or those 
regulatory requirements added by the Under Secretary of Defense for 
Acquisition and Technology, the Head of the Component, or the DoD 
Component Acquisition Executive.
---------------------------------------------------------------------------

    \1\ Copies of this Department of Defense publication may be obtained 
from the Government Printing Office, Superintendent of Documents, 
Washington, DC 20402.
    \2\ See footnote 1 to Sec. 2.3(a).
---------------------------------------------------------------------------

    (b) Provisions of the FAR and/or DFARS that do not implement 
statutory requirements may be waived by the Under Secretary of Defense 
for Acquisition and Technology using appropriate administrative 
procedures. Provisions of the FAR and DFARS that implement statutory 
requirements may be waived or limited in accordance with the procedures 
for statutory relief previously mentioned.
    (c) Regulatory relief includes relief from use of government-unique 
specifications and standards. Since a major objective of the Defense 
Acquisition Pilot Program is to promote standard, commercial industrial 
practices, functional performance and commercial specifications and 
standards will be used to the maximum extent practical. Federal or 
military specifications and standards may be used only when no practical 
alternative exists that meet the user's needs. Defense acquisition 
officials (other than the Program Manager or Commodity Manager) may only 
require the use of military specifications and standards with advance 
approval from the Under Secretary of Defense for Acquisition and 
Technology, the Head of the DoD Component, or the DoD Component 
Acquisition Executive.



Sec. 2.4  Designation of participating programs.

    (a) Pilot programs may be nominated by a DoD Component Head or 
Component Acquisition Executive for participation in the Defense 
Acquisition Pilot Program. The Under Secretary of Defense for 
Acquisition and Technology shall determine which specific programs will 
participate in the pilot program and will transmit to the Congressional 
defense committees a written notification of each defense acquisition 
program proposed for participation in the pilot program. Programs 
proposed for participation must be specifically designated as 
participants in the Defense Acquisition Pilot Program in a law 
authorizing appropriations for such programs and provisions of law to be 
waived must be specifically authorized for waiver.
    (b) Once included in the Defense Acquisition Pilot Program, decision 
and approval authority for the participating program shall be delegated 
to the lowest level allowed in the acquisition regulations consistent 
with the total cost of the program (e.g., under DoD Directive 5000.1, 
\3\ an acquisition program that is a major defense acquisition program 
would be delegated to the appropriate Component Acquisition Executive as 
an acquisition category IC program)
---------------------------------------------------------------------------

    \3\ Copies may be obtained, at cost, from the National Technical 
Information Service, 5285 Port Royal Road, Springfield, VA 22161.
---------------------------------------------------------------------------

    (c) At the time of nomination approval, the Under Secretary of 
Defense for Acquisition and Technology will establish measures to judge 
the success of a specific program, and will also establish a means of 
reporting progress towards the measures.



Sec. 2.5  Criteria for designation of participating programs.

    (a) Candidate programs must have an approved requirement, full 
program funding assured prior to designation, and low risk. Nomination 
of a candidate program to participate in the Defense Acquisition Pilot 
Program should occur as early in the program's life-cycle as possible. 
Developmental programs will only be considered on an exception basis.

[[Page 13]]

    (b) Programs in which commercial or non-developmental items can 
satisfy the military requirement are preferred as candidate programs. A 
nominated program will address which standard commercial, industrial 
practices will be used in the pilot program and how those practices will 
be applied.
    (c) Nomination of candidate programs must be accompanied by a list 
of waivers being requested to Statutes, FAR, DFARS, DoD Directives \4\ 
and Instructions,\5\ and where applicable, DoD Component regulations. 
Waivers being requested must be accompanied by rationale and 
justification for the waiver. The justification must include:
---------------------------------------------------------------------------

    \4\ See footnote 3 to Sec. 2.4(b).
    \5\ See footnote 3 to Sec. 2.4(b).
---------------------------------------------------------------------------

    (1) The provision of law proposed to be waived or limited.
    (2) The effects of the provision of law on the acquisition, 
including specific examples.
    (3) The actions taken to ensure that the waiver or limitation will 
not reduce the efficiency, integrity, and effectiveness of the 
acquisition process used for the defense acquisition program; and
    (4) A discussion of the efficiencies or savings, if any, that will 
result from the waiver or limitation.
    (d) No nominated program shall be accepted until the Under Secretary 
of Defense has determined that the candidate program is properly 
planned.



PART 3--TRANSACTIONS OTHER THAN CONTRACTS, GRANTS, OR COOPERATIVE AGREEMENTS FOR PROTOTYPE PROJECTS--Table of Contents




Sec.
3.1 Purpose.
3.2 Applicability.
3.3 Definitions.
3.4 Policy.

    Authority: Section 801 of the National Defense Authorization Act for 
Fiscal Year 2000 (Pub. L. 106-65) and Section 804 of the Floyd D. Spence 
National Defense Authorization Act for Fiscal Year 2001 (Pub. L. 106-
398).

    Source: 66 FR 57383, Nov. 15, 2001, unless otherwise noted.



3.1  Purpose.

    This part implements section 801 of the National Defense 
Authorization Act for Fiscal Year 2000 (Pub. L. 106-65) and section 804 
of the Floyd D. Spence National Defense Authorization Act for Fiscal 
Year 2001 (Pub. L. 106-398). It establishes the requirement for the 
inclusion of a clause in transactions other than contracts, grants or 
cooperative agreements for prototype projects awarded under authority of 
10 U.S.C. 2371 that provides Comptroller General access to records when 
payments total an amount in excess of $5,000,000.



3.2  Applicability.

    This part applies to the Secretary of a Military Department, the 
Directors of the Defense Agencies, and any other official designated by 
the Secretary of Defense to enter into transactions other than 
contracts, grants or cooperative agreements for prototype projects that 
are directly relevant to weapons or weapon systems proposed to be 
acquired or developed by the Department of Defense, under authority of 
10 U.S.C. 2371. Such transactions are commonly referred to as ``other 
transaction'' agreements and are hereafter referred to as agreements.



3.3  Definitions.

    Contracting activity. An element of an agency head and delegated 
broad authority regarding acquisition functions. It includes elements 
designated by the director of a defense agency which has been delegated 
contracting authority through its agency charter.
    Head of the contracting activity. The official who has overall 
responsibility for managing the contracting activity.



3.4  Policy.

    (a) A clause must be included in solicitations and agreements for 
prototype projects awarded under authority of 10 U.S.C. 2371, that 
provide for total government payments in excess of $5,000,000 to allow 
Comptroller General access to records that directly pertain to such 
agreements.
    (b) The clause referenced in paragraph (a) of this section will not 
apply with respect to a party or entity, or

[[Page 14]]

subordinate element of a party or entity, that has not entered into any 
other contract, grant, cooperative agreement or ``other transaction'' 
agreement that provides for audit access by a government entity in the 
year prior to the date of the agreement. The clause must be included in 
all agreements described in paragraph (a) of this section in order to 
fully implement the law by covering those participating entities and 
their subordinate elements which have entered into prior agreements 
providing for Government audit access, and are therefore not exempt. The 
presence of the clause in an agreement will not operate to require 
Comptroller General access to records from any party or participating 
entity, or subordinate element of a party or participating entity, or 
subordinate element of a party or participating entity, which is 
otherwise exempt under the terms of the clause and the law.
    (c)(1) The right provided to the Comptroller General in a clause of 
an agreement under paragraph (a) of this part, is limited as provided by 
subparagraph (c)(2) of this part in the case of a party to the 
agreement, an entity that participates in the performance of the 
agreement, or a subordinate element of that party or entity, if the only 
cooperative agreements or ``other transactions'' that the party, entity, 
or subordinate element entered into with government entities in the year 
prior to the date of that agreement are cooperative agreements or 
transactions that were entered into under 10 U.S.C. 2371 or Section 845 
of the National Defense Authorization Act for Fiscal Year 1994 (Pub. L. 
103-160; 10 U.S.C. 2371 note).
    (c)(2) The only records of a party, other entity, or subordinate 
element referred to in subparagraph (c)(1) of this part that the 
Comptroller General may examine in the exercise of the right referred to 
in that subparagraph, are records of the same type as the records that 
the government has had the right to examine under the audit access 
clauses of the previous cooperative agreements or transactions referred 
to in such subparagraph that were entered into by that particular party, 
entity, or subordinate element.
    (d) The head of the contracting activity (HCA) that is carrying out 
the agreement may waive the applicability of the Comptroller General 
access requirement if the HCA determines it would not be in the public 
interest to apply the requirement to the agreement. The waiver will be 
effective with respect to the agreement only if the HCA transmits a 
notification of the waiver to the Committees on Armed Services of the 
Senate and the House of Representatives, the Comptroller General, and 
the Director, Defense Procurement before entering into the agreement. 
The notification must include the rationale for the determination.
    (e) The HCA must notify the Director, Defense Procurement of 
situations where there is evidence that the Comptroller General Access 
requirement caused companies to refuse to participate or otherwise 
restricted the Department's access to companies that typically do not do 
business with the Department.
    (f) In no case will the requirement to examine records under the 
clause referenced in paragraph (a) of this section apply to an agreement 
where more than three years have passed after final payment is made by 
the government under such an agreement.
    (g) The clause referenced in paragraph (a) of this section, must 
provide for the following:
    (1) The Comptroller General of the United States, in the discretion 
of the Comptroller General, shall have access to and the right to 
examine records of any party to the agreement or any entity that 
participates in the performance of this agreement that directly pertain 
to, and involve transactions relating to, the agreement.
    (2) Excepted from the Comptroller General access requirement is any 
party to this agreement or any entity that participates in the 
performance of the agreement, or any subordinate element of such party 
or entity, that, in the year prior to the date of the agreement, has not 
entered into any other contract, grant, cooperative agreement, or 
``other transaction'' agreement that provides for audit access to its 
records by a government entity.

[[Page 15]]

    (3)(A) The right provided to the Comptroller General is limited as 
provided in subparagraph (B) in the case of a party to the agreement, 
any entity that participates in the performance of the agreement, or a 
subordinate element of that party or entity if the only cooperative 
agreements or ``other transactions'' that the party, entity, or 
subordinate element entered into with government entities in the year 
prior to the date of that agreement are cooperative agreements or 
transactions that were entered into under 10 U.S.C. 2371 or Section 845 
of the National Defense Authorization Act for Fiscal Year 1994 (Pub. L. 
103-160; 10 U.S.C. 2371 note).
    (B) The only records of a party, other entity, or subordinate 
element referred to in subparagraph (A) that the Comptroller General may 
examine in the exercise of the right referred to in that subparagraph 
are records of the same type as the records that the government has had 
the right to examine under the audit access clauses of the previous 
agreements or transactions referred to in such subparagraph that were 
entered into by that particular party, entity, or subordinate element.
    (4) This clause shall not be construed to require any party or 
entity, or any subordinate element of such party or entity, that 
participates in the performance of the agreement, to create or maintain 
any record that is not otherwise maintained in the ordinary course of 
business or pursuant to a provision of law.
    (5) The Comptroller General shall have access to the records 
described in this clause until three years after the date the final 
payment is made by the United States under this agreement.
    (6) The recipient of the agreement shall flow down this provision to 
any entity that participates in the performance of the agreement.

                          PARTS 4-20 [RESERVED]

[[Page 16]]



            SUBCHAPTER B--DoD GRANT AND AGREEMENT REGULATIONS



PART 21--DoD GRANTS AND AGREEMENTS--GENERAL MATTERS--Table of Contents




        Subpart A--Defense Grant and Agreement Regulatory System

Sec.
21.100 Scope.
21.105 Authority, purpose, and issuance.
21.110 Applicability and relationship to acquisition regulations.
21.115 Compliance and implementation.
21.120 Publication and maintenance.
21.125 Deviations.
21.130 Definitions.

               Subpart B--Authorities and Responsibilities

21.200 Purpose.
21.205 DoD Components' authorities.
21.210 Vesting and delegation of authority.
21.215 Contracting activities.
21.220 Grants officers.

Subpart C--Information Reporting on Grants, Cooperative Agreements, and 
                    Other Nonprocurement Instruments

21.300 Purpose.
21.305 Defense Assistance Awards Data System.
21.310 Catalog of Federal Domestic Assistance.
21.315 Uniform grants and agreements numbering system.

    Authority: 5 U.S.C. 301 and 10 U.S.C. 113.

    Source: 63 FR 12160, Mar. 12, 1998, unless otherwise noted.



        Subpart A--Defense Grant and Agreement Regulatory System



Sec. 21.100  Scope.

    The purposes of this part, which is one portion of the DoD Grant and 
Agreement Regulations (DoDGARs), are to:
    (a) Provide general information about the DoDGARs.
    (b) Set forth general policies and procedures related to DoD 
Components' overall management of functions related to grants and 
cooperative agreements.



Sec. 21.105  Authority, purpose, and issuance.

    (a) DoD Directive 3210.6\1\ established the Defense Grant and 
Agreement Regulatory System (DGARS). The directive authorized 
publication of policies and procedures comprising the DGARS in the DoD 
Grant and Agreement Regulations (DoDGARs), in DoD instructions, and in 
other DoD publications, as appropriate. Thus, the DoDGARs are one 
element of the DGARS.
---------------------------------------------------------------------------

    \1\ Copies may be obtained, at cost, from the National Technical 
Information Service, 5285 Port Royal Road, Springfield, VA 22161. 
Authorized users may also obtain copies from the Defense Technical 
Information Center, 8725 John J. Kingman Rd., Suite 0944, Fort Belvoir, 
VA 22060-6218.
---------------------------------------------------------------------------

    (b) The purposes of the DoDGARs, in conjunction with other elements 
of the DGARS, are to provide uniform policies and procedures for grants 
and cooperative agreements awarded by DoD Components, in order to meet 
DoD needs for:
    (1) Efficient program execution, effective program oversight, and 
proper stewardship of Federal funds.
    (2) Compliance with relevant statutes; Executive orders; and 
applicable guidance, such as Office of Management and Budget (OMB) 
circulars.
    (3) Collection from DoD Components, retention, and dissemination of 
management and fiscal data related to grants and agreements.
    (c) The Director of Defense Research and Engineering, or his or her 
designee:
    (1) Develops and implements DGARS policies and procedures.
    (2) Issues and maintains the DoD Grant and Agreement Regulations and 
other DoD publications that comprise the DGARS.



Sec. 21.110  Applicability and relationship to acquisition regulations.

    (a) Applicability to grants and cooperative agreements. The DoD 
Grant and Agreement Regulations (DoDGARs) apply to all DoD grants and 
cooperative agreements.

[[Page 17]]

    (b) Applicability to other nonprocurement instruments. (1) In 
accordance with DoD Directive 3210.6, the DoDGARs may include rules that 
apply to other nonprocurement instruments, when specifically required in 
order to implement a statute, Executive order, or Governmentwide rule 
that applies to other nonprocurement instruments, as well as to grants 
and cooperative agreements. For example, the rule on nonprocurement 
debarment and suspension in 32 CFR part 25, subparts A through E, 
applies to all nonprocurement transactions, including grants, 
cooperative agreements, contracts of assistance, loans and loan 
guarantees (see definition of ``primary covered transaction'' at 32 CFR 
25.110(a)(1)(i)).
    (2) The following is a list of DoDGARs rules that apply not only to 
grants and cooperative agreements, but also to other types of 
nonprocurement instruments:
    (i) Requirements for reporting to the Defense Assistance Award Data 
System, in subpart C of this part.
    (ii) The rule on nonprocurement debarment and suspension in 32 CFR 
part 25, subparts A through E.
    (iii) Drug-free workplace requirements in 32 CFR part 25, subpart F.
    (iv) Restrictions on lobbying in 32 CFR part 28.
    (v) Administrative requirements for grants, cooperative agreements, 
and other financial assistance to:
    (A) Universities and other nonprofit organizations, in 32 CFR part 
32.
    (B) State and local governments, in 32 CFR part 33.
    (3) Grants officers should be aware that each rule that applies to 
other types of nonprocurement instruments (i.e., other than grants and 
cooperative agreements) states its applicability to such instruments. 
However, grants officers must exercise caution when determining the 
applicability of some Governmentwide rules that are included in the 
DoDGARs, because a term may be defined differently in a Governmentwide 
rule than it is defined elsewhere in the DoDGARs. For example, the 
Governmentwide implementation of the Drug-Free Workplace Act of 1988 (32 
CFR part 25, subpart F) states that it applies to grants, but defines 
``grants'' to include cooperative agreements and other forms of 
financial assistance.
    (c) Relationship to acquisition regulations. The Federal Acquisition 
Regulation (FAR) (48 CFR parts 1-53), the Defense Federal Acquisition 
Regulation Supplement (DFARS) (48 CFR parts 201-270), and DoD Component 
supplements to the FAR and DFARS apply to DoD Components' procurement 
contracts used to acquire goods and services for the direct benefit or 
use of the Federal Government. Policies and procedures in the FAR and 
DFARS do not apply to grants, cooperative agreements, or other 
nonprocurement transactions unless the DoDGARs specify that they apply.



Sec. 21.115  Compliance and implementation.

    The Head of each DoD Component that awards or administers grants and 
cooperative agreements, or his or her designee:
    (a) Is responsible for ensuring compliance with the DoDGARs within 
that DoD Component.
    (b) May authorize the issuance of regulations, procedures, or 
instructions that are necessary to implement DGARS policies and 
procedures within the DoD Component, or to supplement the DoDGARs to 
satisfy needs that are specific to the DoD Component, as long as such 
regulations, procedures, or instructions do not impose additional costs 
or administrative burdens on recipients or potential recipients. Heads 
of DoD Components or their designees shall establish policies and 
procedures in areas where uniform policies and procedures throughout the 
DoD Component are required, such as for:
    (1) Requesting class deviations from the DoDGARs (see Sec. 21.125) 
or exemptions from the provisions of 31 U.S.C. 6301 et seq., that govern 
the appropriate use of contracts, grants, and cooperative agreements 
(see 32 CFR 22.220).
    (2) Designating one or more Grant Appeal Authorities to resolve 
claims, disputes, and appeals (see 32 CFR 22.815).
    (3) Reporting data on assistance awards and programs, as required by 
31 U.S.C. chapter 61 (see subpart C of this part).

[[Page 18]]

    (4) Prescribing requirements for use and disposition of real 
property acquired under awards, if the DoD Component makes any awards to 
institutions of higher education or to other nonprofit organizations 
under which real property is acquired in whole or in part with Federal 
funds (see 32 CFR 32.32).



Sec. 21.120  Publication and maintenance.

    (a) The DoDGARs are published as chapter I, subchapter B, title 32 
of the Code of Federal Regulations (CFR) and in a separate loose-leaf 
edition. The loose-leaf edition is divided into parts, subparts, and 
sections, to parallel the CFR publication. Cross-references within the 
DoDGARs are stated as CFR citations (e.g., a reference to Sec. 21.115 in 
part 21 would be to 32 CFR 21.115).
    (b) Updates to the DoDGARs are published in the Federal Register. 
When finalized, updates also are published as Defense Grant and 
Agreement Circulars, with revised pages for the separate, loose-leaf 
edition.
    (c) Revisions to the DoDGARs are recommended to the Director of 
Defense Research and Engineering (DDR&E) by a standing working group. 
The DDR&E, Director of Defense Procurement, and each Military Department 
shall be represented on the working group. Other DoD Components that use 
grants or cooperative agreements may also nominate representatives. The 
working group meets when necessary.



Sec. 21.125  Deviations.

    (a) The Head of the DoD Component or his or her designee may 
authorize individual deviations from the DoDGARs, which are deviations 
that affect only one grant or cooperative agreement, if such deviations 
are not prohibited by statute, executive order or regulation.
    (b) Class deviations that affect more than one grant or cooperative 
agreement must be approved in advance by the Director, Defense Research 
and Engineering (DDR&E) or his or her designee. Note that OMB 
concurrence also is required for deviations from two parts of the 
DoDGARs, 32 CFR parts 32 and 33, in accordance with 32 CFR 32.4 and 
33.6, respectively.
    (c) Copies of justifications and agency approvals for individual 
deviations and written requests for class deviations shall be submitted 
to: Deputy Director, Defense Research and Engineering, ATTN: Research, 
3080 Defense Pentagon, Washington DC 20301-3080.
    (d) Copies of requests and approvals for individual and class 
deviations shall be maintained in award files.



Sec. 21.130  Definitions.

    Acquisition. The acquiring (by purchase, lease, or barter) of 
property or services for the direct benefit or use of the United States 
Government (see more detailed definition at 48 CFR 2.101). In accordance 
with 31 U.S.C. 6303, procurement contracts are the appropriate legal 
instruments for acquiring such property or services.
    Assistance. The transfer of a thing of value to a recipient to carry 
out a public purpose of support or stimulation authorized by a law of 
the United States (see 31 U.S.C. 6101(3)). Grants and cooperative 
agreements are examples of legal instruments used to provide assistance.
    Contract. See the definition for procurement contract in this 
section.
    Contracting activity. An activity to which the Head of a DoD 
Component has delegated broad authority regarding acquisition functions, 
pursuant to 48 CFR 1.601.
    Contracting officer. A person with the authority to enter into, 
administer, and/or terminate contracts and make related determinations 
and findings. A more detailed definition of the term appears at 48 CFR 
2.101.
    Cooperative agreement. A legal instrument which, consistent with 31 
U.S.C. 6305, is used to enter into the same kind of relationship as a 
grant (see definition ``grant''), except that substantial involvement is 
expected between the Department of Defense and the recipient when 
carrying out the activity contemplated by the cooperative agreement. The 
term does not include ``cooperative research and development 
agreements'' as defined in 15 U.S.C. 3710a.
    Deviation. The issuance or use of a policy or procedure that is 
inconsistent with the DoDGARs.

[[Page 19]]

    DoD Components. The Office of the Secretary of Defense, the Military 
Departments, the Defense Agencies, and DoD Field Activities.
    Grant. A legal instrument which, consistent with 31 U.S.C. 6304, is 
used to enter into a relationship:
    (1) 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 Department of Defense's direct benefit or 
use.
    (2) In which substantial involvement is not expected between the 
Department of Defense and the recipient when carrying out the activity 
contemplated by the grant.
    Grants officer. An official with the authority to enter into, 
administer, and/or terminate grants or cooperative agreements.
    Nonprocurement instrument. A legal instrument other than a 
procurement contract. Examples include instruments of financial 
assistance, such as grants or cooperative agreements, and those of 
technical assistance, which provide services in lieu of money.
    Procurement contract. A legal instrument which, consistent with 31 
U.S.C. 6303, reflects a relationship between the Federal Government and 
a State, a local government, or other recipient when the principal 
purpose of the instrument is to acquire property or services for the 
direct benefit or use of the Federal Government. See the more detailed 
definition for contract at 48 CFR 2.101.
    Recipient. An organization or other entity receiving a grant or 
cooperative agreement from a DoD Component.



               Subpart B--Authorities and Responsibilities



Sec. 21.200  Purpose.

    This subpart describes the sources and flow of authority to use 
grants and cooperative agreements, and assigns the broad 
responsibilities associated with DoD Components' use of such 
instruments.



Sec. 21.205  DoD Components' authorities.

    (a) In accordance with 31 U.S.C. 6301 et seq., DoD Components shall 
use grants and cooperative agreements as legal instruments reflecting 
assistance relationships between the United States Government and 
recipients.
    (b) Unlike the use of a procurement contract (for which Federal 
agencies have inherent, Constitutional authority), use of a grant or 
cooperative agreement to carry out a program requires authorizing 
legislation, the intent of which supports the use of an assistance 
instrument (e.g., the intent of the legislation authorizing a program 
supports a judgment that the principal purpose of the program is 
assistance, rather than acquisition). DoD Components may award grants 
and cooperative agreements under a number of statutory authorities that 
fall into three categories:
    (1) Authorities that statutes provide to the Secretary of Defense. 
These authorities generally are delegated by the Secretary of Defense to 
Heads of DoD Components, usually through DoD directives, instructions, 
or policy memoranda that are not part of the Defense Grant and Agreement 
Regulatory System. Examples of statutory authorities in this category 
are:
    (i) Authority under 10 U.S.C. 2391 to make grants or conclude 
cooperative agreements to assist State and local governments in planning 
and carrying out community adjustments and economic diversification 
required by changes in military installations or in DoD contracts or 
spending that may have a direct and significant adverse consequence on 
the affected community.
    (ii) Authority under 10 U.S.C. 2413 to enter into cooperative 
agreements with entities that furnish procurement technical assistance 
to businesses.
    (2) Authorities that statutes may provide directly to Heads of DoD 
Components. When a statute authorizes the head of a DoD Component to use 
a grant or cooperative agreement or to carry out a program with a 
principal purpose of assistance, use of that authority requires no 
delegation by the Secretary of Defense. For example, 10 U.S.C. 2358 
authorizes the Secretaries

[[Page 20]]

of the Military Departments, in addition to the Secretary of Defense, to 
perform research and development projects through grants and cooperative 
agreements. A Military Department's use of the authority of 10 U.S.C. 
2358 therefore requires no delegation by the Secretary of Defense.
    (3) Authorities that arise indirectly as the result of statute. For 
example, authority to use a grant or cooperative agreement may result 
from:
    (i) A federal statute authorizing a program that is consistent with 
an assistance relationship (i.e., the support or stimulation of a public 
purpose, rather than the acquisition of a good or service for the direct 
benefit of the Department of Defense). In accordance with 31 U.S.C. 
chapter 63, such a program would appropriately be carried out through 
the use of grants or cooperative agreements.
    (ii) Exemptions requested by the Department of Defense and granted 
by the Office of Management and Budget under 31 U.S.C. 6307, as 
described in 32 CFR 22.220.



Sec. 21.210  Vesting and delegation of authority.

    (a) The authority and responsibility for awarding grants and 
cooperative agreements is vested in the Head of each DoD Component that 
has such authority.
    (b) The Head of each such DoD Component, or his or her designee, may 
delegate to the heads of contracting activities (HCAs) within that 
Component, authority to award grants or cooperative agreements, to 
appoint grants officers (see Sec. 21.220(c)), and to broadly manage the 
DoD Component's functions related to grants and cooperative agreements. 
An HCA is the same official (or officials) designated as the head of the 
contracting activity for procurement contracts, as defined at 48 CFR 
2.101--the intent is that overall management responsibilities for a DoD 
Component's functions related to nonprocurement instruments be assigned 
only to officials that have similar responsibilities for procurement 
contracts.



Sec. 21.215  Contracting activities.

    When designated by the Head of the DoD Component or his or her 
designee (see 32 CFR 21.210(b)), the HCA is responsible for the grants 
and cooperative agreements made by or assigned to that activity. He or 
she shall supervise and establish internal policies and procedures for 
that activity's assistance awards.



Sec. 21.220  Grants officers.

    (a) Authority. Only grants officers are authorized to sign grants or 
cooperative agreements, or to administer or terminate such legal 
instruments on behalf of the Department of Defense. Grants officers may 
bind the Government only to the extent of the authority delegated to 
them.
    (b) Responsibilities. Grants officers should be allowed wide 
latitude to exercise judgment in performing their responsibilities. 
Grants officers are responsible for ensuring that:
    (1) Individual grants and cooperative agreements are used 
effectively in the execution of DoD programs, and are awarded and 
administered in accordance with applicable laws, Executive orders, 
regulations, and DoD policies.
    (2) Sufficient funds are available for obligation.
    (3) Recipients of grants and cooperative agreements receive 
impartial, fair, and equitable treatment.
    (c) Selection, appointment and termination of appointment of grants 
officers. Each DoD Component that awards grants or enters into 
cooperative agreements shall have a formal process (see Sec. 21.210(b)) 
to select and appoint grants officers and terminate their appointments. 
DoD Components are not required to maintain a selection process for 
grants officers separate from the selection process for contracting 
officers, and written statements of appointment or termination for 
grants officers may be integrated into the necessary documentation for 
contracting officers, as appropriate.
    (1) Selection. In selecting grants officers, appointing officials 
shall consider the complexity and dollar value of the grants and 
cooperative agreements to

[[Page 21]]

be assigned and judge whether candidates possess the necessary 
experience, training, education, business acumen, judgment, and 
knowledge of contracts and assistance instruments to function 
effectively as grants officers.
    (2) Appointment. Statements of appointment shall be in writing and 
shall clearly state the limits of grants officers' authority, other than 
limits contained in applicable laws or regulations. Information on the 
limits of a grants officer's authority shall be readily available to the 
public and agency personnel.
    (3) Termination. Written statements of termination are required, 
unless the written statement of appointment provides for automatic 
termination. No termination shall be retroactive.



Subpart C--Information Reporting on Grants, Cooperative Agreements, and 
                    Other Nonprocurement Instruments



Sec. 21.300  Purpose.

    This subpart prescribes policies and procedures for compiling and 
reporting data related to grants, cooperative agreements, and other 
nonprocurement instruments subject to information reporting requirements 
of 31 U.S.C. chapter 61.



Sec. 21.305  Defense Assistance Awards Data System.

    (a) Purposes of the system. Data from the Defense Assistance Awards 
Data System (DAADS) are used to provide:
    (1) DoD inputs to meet statutory requirements for Federal 
Governmentwide reporting of data related to obligations of funds by 
grant, cooperative agreement, or other nonprocurement instrument.
    (2) A basis for meeting Governmentwide requirements to report to the 
Federal Assistance Awards Data System maintained by the Department of 
Commerce and for preparing other recurring and special reports to the 
President, the Congress, the General Accounting Office, and the public.
    (3) Information to support policy formulation and implementation and 
to meet management oversight requirements related to the use of grants, 
cooperative agreements, and other nonprocurement instruments.
    (b) Responsibilities. (1) The Deputy Director, Defense Research and 
Engineering (DDDR&E), or his or her designee, shall issue the manual 
described in paragraph (b)(2)(ii) of this section.
    (2) The Director for Information Operations and Reports, Washington 
Headquarters Services (DIOR, WHS) shall, consistent with guidance issued 
by the DDDR&E:
    (i) Process DAADS information on a quarterly basis and prepare 
recurring and special reports using such information.
    (ii) Prepare, update, and disseminate ``Department of Defense 
Assistance Awards Data System,'' an instruction manual for reporting 
information to DAADS. The manual, which shall be issued by the office of 
the DDR&E, shall specify procedures, formats, and editing processes to 
be used by DoD Components, including magnetic tape layout and error 
correction schedules.
    (3) The following offices shall serve as central points for 
collecting DAADS information from contracting activities within the DoD 
Components:
    (i) For the Army: As directed by the U.S. Army Contracting Support 
Agency.
    (ii) For the Navy: As directed by the Office of Naval Research.
    (iii) For the Air Force: As directed by SAF/AQCP.
    (iv) For the Office of the Secretary of Defense, Defense Agencies, 
and DoD Field Activities: Each Defense Agency shall identify a central 
point for collecting and reporting DAADS information to the DIOR, WHS, 
at the address given in paragraph (c)(2) of this section. DIOR, WHS 
shall serve as the central point for offices and activities within the 
Office of the Secretary of Defense and for DoD Field Activities.
    (4) The office that serves, in accordance with paragraph (b)(3) of 
this section, as the central point for collecting DAADS information from 
contracting activities within each DoD Component shall:
    (i) Establish internal procedures to ensure reporting by contracting 
activities that use grants, cooperative agreements or other 
nonprocurement instruments subject to 31 U.S.C. chapter 61.

[[Page 22]]

    (ii) Collect information required by DD Form 2566, ``DoD Assistance 
Award Action Report,'' from those contracting activities, and report it 
to DIOR, WHS, in accordance with paragraph (d) of this section.
    (iii) Submit to the DDDR&E, at the address given in Sec. 21.125(c), 
any recommended changes to the DAADS or to the instruction manual 
described in paragraph (b)(2)(ii) of this section.
    (c) Reporting procedures. The data required by the DD Form 2566 
shall be:
    (1) Collected for each individual grant, cooperative agreement, or 
other nonprocurement action that is subject to 31 U.S.C. chapter 61 and 
involves the obligation or deobligation of Federal funds. Each action is 
reported as an obligation under a specific program listed in the Catalog 
of Federal Domestic Assistance (CFDA, see Sec. 21.310). The program to 
be shown is the one that provided the funds being obligated (i.e., if a 
grants officer in one DoD Component obligates appropriations of a second 
DoD Component's program, the grants officer would show the CFDA program 
of the second DoD Component on the DD Form 2566).
    (2) Reported on a quarterly basis to DIOR, WHS by the offices that 
are designated pursuant to paragraph (b)(3) of this section. For the 
first three quarters of the Federal fiscal year, the data are due by 
close-of-business (COB) on the 15th day after the end of the quarter 
(i.e., first-quarter data are due by COB on January 15th, second-quarter 
data by COB April 15th, and third-quarter data by COB July 15th). 
Fourth-quarter data are due by COB October 25th, the 25th day after the 
end of the quarter. If any due date falls on a weekend or holiday, the 
data are due on the next regular workday. The mailing address for DIOR, 
WHS is 1215 Jefferson Davis Highway, Suite 1204, Arlington, VA 22202-
4302.
    (3) Reported on a computer tape, floppy diskette or by other means 
permitted by the instruction manual described in paragraph (b)(2)(ii) of 
this section. The data shall be reported in the format specified in the 
instruction manual.
    (d) Report control symbol. DoD Components' reporting of DAADS data 
is used by DoD to satisfy Governmentwide requirements to report to the 
Federal Assistance Awards Data System, which is assigned Interagency 
Report Control Number 0252-DOC-QU.



Sec. 21.310  Catalog of Federal Domestic Assistance.

    (a) Purpose and scope of the reporting requirement. (1) Under the 
Federal Program Information Act (31 U.S.C. 6101 et seq.), as implemented 
through OMB Circular A-89,\2\ the Department of Defense is required to 
provide certain information about its domestic assistance programs to 
OMB and the General Services Administration (GSA). GSA makes this 
information available to the public by publishing it in the Catalog of 
Federal Domestic Assistance (CFDA) and maintaining the Federal 
Assistance Programs Retrieval System, a computerized data base of the 
information.
---------------------------------------------------------------------------

    \2\ Contact the Office of Management and Budget, EOP Publications, 
725 17th St. N.W., New Executive Office Building, Washington, D.C. 
20503.
---------------------------------------------------------------------------

    (2) The CFDA covers all domestic assistance programs and activities, 
regardless of the number of awards made under the program, the total 
dollar value of assistance provided, or the duration. In addition to 
programs using grants and cooperative agreements, covered programs 
include those providing assistance in other forms, such as payments in 
lieu of taxes or indirect assistance resulting from Federal operations.
    (b) Responsibilities. (1) Each DoD Component that provides domestic 
financial assistance shall:
    (i) Report to the Director for Information Operations and Reports, 
Washington Headquarters Services (DIOR, WHS) all new programs and 
changes as they occur, or as DIOR, WHS requests annual updates to 
existing CFDA information.
    (ii) Identify to the DIOR, WHS a point-of-contact who will be 
responsible for reporting such program information and for responding to 
inquiries related to it.
    (2) The DIOR, WHS shall act as the Department of Defense's single 
office for collecting, compiling and reporting

[[Page 23]]

such program information to OMB and GSA.



Sec. 21.315  Uniform grants and agreements numbering system.

    DoD Components shall assign identifying numbers to all 
nonprocurement instruments subject to this subpart, including grants and 
cooperative agreements. The numbering system parallels the procurement 
instrument identification (PII) numbering system specified in 48 CFR 
204.70 (in the ``Defense Federal Acquisition Regulation Supplement''), 
as follows:
    (a) The first six alphanumeric characters of the assigned number 
shall be identical to those specified by 48 CFR 204.7003(a)(1) to 
identify the DoD Component and contracting activity.
    (b) The seventh and eighth positions shall be the last two digits of 
the fiscal year in which the number is assigned to the grant, 
cooperative agreement, or other nonprocurement instrument.
    (c) The 9th position shall be a number: ``1'' for grants; ``2'' for 
cooperative agreements; and ``3'' for other nonprocurement instruments.
    (d) The 10th through 13th positions shall be the serial number of 
the instrument. DoD Components and contracting activities need not 
follow any specific pattern in assigning these numbers and may create 
multiple series of letters and numbers to meet internal needs for 
distinguishing between various sets of awards.



PART 22--DoD GRANTS AND AGREEMENTS--AWARD AND ADMINISTRATION--Table of Contents




                           Subpart A--General

Sec.
22.100 Purpose, relation to other parts, and organization.
22.105 Definitions.

             Subpart B--Selecting the Appropriate Instrument

22.200 Purpose.
22.205 Distinguishing assistance from procurement.
22.210 Authority for providing assistance.
22.215 Distinguishing grants and cooperative agreements.
22.220 Exemptions.

                         Subpart C--Competition

22.300 Purpose.
22.305 General policy and requirement for competition.
22.310 Statutes concerning certain research, development, and facilities 
          construction grants.
22.315 Merit-based, competitive procedures.
22.320 Special competitions.
22.325 Historically Black colleges and universities (HBCUs) and other 
          minority institutions (MIs).

    Subpart D--Recipient Qualification Matters--General Policies and 
                               Procedures

22.400 Purpose.
22.405 Policy.
22.410 Grants officers' responsibilities.
22.415 Standards.
22.420 Pre-award procedures.

                   Subpart E--National Policy Matters

22.505 Purpose.
22.510 Certifications, representations, and assurances.
22.515 Provisions of annual appropriations acts.
22.520 Military recruiting on campus.
22.525 Paperwork Reduction Act.
22.530 Metric system of measurement.

                            Subpart F--Award

22.600 Purpose.
22.605 Grants officers' responsibilities.
22.610 Award instruments.

                     Subpart G--Field Administration

22.700 Purpose.
22.705 Policy.
22.710 Assignment of grants administration offices.
22.715 Grants administration office functions.

                  Subpart H--Post-Award Administration

22.800 Purpose and relation to other parts.
22.805 Post-award requirements in other parts.
22.810 Payments.
22.815 Claims, disputes, and appeals.
22.820 Debt collection.
22.825 Closeout audits.

Appendix A to Part 22--Proposal Provision for Required Certifications.
Appendix B to Part 22--Suggested Award Provisions for National Policy 
          Requirements That Often Apply.
Appendix C to Part 22--Administrative Requirements and Issues To Be 
          Addressed in Award Terms and Conditions.

    Authority: 5 U.S.C. 301 and 10 U.S.C. 113.

[[Page 24]]


    Source: 63 FR 12164, Mar. 12, 1998, unless otherwise noted.



                           Subpart A--General



Sec. 22.100  Purpose, relation to other parts, and organization.

    (a) This part outlines grants officers' and DoD Components' 
responsibilities related to the award and administration of grants and 
cooperative agreements.
    (b) In doing so, it also supplements other parts of the DoD Grant 
and Agreement Regulations (DoDGARs) that are either Governmentwide rules 
or DoD implementation of Governmentwide guidance in Office of Management 
and Budget (OMB) Circulars. Those other parts of the DoDGARs, which are 
referenced as appropriate in this part, are:
    (1) Governmentwide rules on debarment, suspension and drug-free 
workplace requirements, in 32 CFR part 25.
    (2) The Governmentwide rule on lobbying restrictions, in 32 CFR part 
28.
    (3) Administrative requirements for grants and agreements awarded to 
specific types of recipients:
    (i) For State and local governmental organizations, in the 
Governmentwide rule at 32 CFR part 33.
    (ii) For institutions of higher education and other nonprofit 
organizations, at 32 CFR part 32.
    (iii) For for-profit organizations, at 32 CFR part 34.
    (c) The organization of this part parallels the award and 
administration process, from pre-award through post-award matters. It 
therefore is organized in the same manner as the parts of the DoDGARs 
(32 CFR parts 32, 33, and 34) that prescribe administrative requirements 
for specific types of recipients.



Sec. 22.105  Definitions.

    Other than the terms defined in this section, terms used in this 
part are defined in 32 CFR 21.130.
    Administrative offset. An action whereby money payable by the United 
States Government to, or held by the Government for, a recipient is 
withheld to satisfy a delinquent debt the recipient owes the Government.
    Advanced research. Advanced technology development that creates new 
technology or demonstrates the viability of applying existing technology 
to new products and processes in a general way. Advanced research is 
most closely analogous to precompetitive technology development in the 
commercial sector (i.e., early phases of research and development on 
which commercial competitors are willing to collaborate, because the 
work is not so coupled to specific products and processes that the 
results of the work must be proprietary). It does not include 
development of military systems and hardware where specific requirements 
have been defined. It is typically funded in Advanced Technology 
Development (Budget Activity 3 and Research Category 6.3A) programs 
within Research, Development, Test and Evaluation (RDT&E).
    Applied research. Efforts that attempt to determine and exploit the 
potential of scientific discoveries or improvements in technology such 
as new materials, devices, methods and processes. It typically is funded 
in Applied Research (Budget Activity 2 and Research Category 6.2) 
programs within Research, Development, Test and Evaluation (RDT&E). 
Applied research normally follows basic research but may not be fully 
distinguishable from the related basic research. The term does not 
include efforts whose principal aim is the design, development, or 
testing of specific products, systems or processes to be considered for 
sale or acquisition; these efforts are within the definition of 
``development.''
    Basic research. Efforts directed toward increasing knowledge and 
understanding in science and engineering, rather than the practical 
application of that knowledge and understanding. It typically is funded 
within Basic Research (Budget Activity 1 and Research Category 6.1) 
programs within Research, Development, Test and Evaluation (RDT&E). For 
the purposes of this part, basic research includes:
    (1) Research-related, science and engineering education, including 
graduate fellowships and research traineeships.
    (2) Research instrumentation and other activities designed to 
enhance

[[Page 25]]

the infrastructure for science and engineering research.
    Claim. A written demand or written assertion by one of the parties 
to a grant or cooperative agreement seeking as a matter of right, the 
payment of money in a sum certain, the adjustment or interpretation of 
award terms, or other relief arising under or relating to a grant or 
cooperative agreement. A routine request for payment that is not in 
dispute when submitted is not a claim. The submission may be converted 
to a claim by written notice to the grants officer if it is disputed 
either as to liability or amount, or is not acted upon in a reasonable 
time.
    Debt. Any amount of money or any property owed to a Federal Agency 
by any person, organization, or entity except another United States 
Federal Agency. Debts include any amounts due from insured or guaranteed 
loans, fees, leases, rents, royalties, services, sales of real or 
personal property, or overpayments, penalties, damages, interest, fines 
and forfeitures, and all other claims and similar sources. Amounts due a 
nonappropriated fund instrumentality are not debts owed the United 
States, for the purposes of this subchapter.
    Delinquent debt. A debt:
    (1) That the debtor fails to pay by the date specified in the 
initial written notice from the agency owed the debt, normally within 30 
calendar days, unless the debtor makes satisfactory payment arrangements 
with the agency by that date; and
    (2) With respect to which the debtor has elected not to exercise any 
available appeals or has exhausted all agency appeal processes.
    Development. The systematic use of scientific and technical 
knowledge in the design, development, testing, or evaluation of 
potential new products, processes, or services to meet specific 
performance requirements or objectives. It includes the functions of 
design engineering, prototyping, and engineering testing.
    Electronic commerce. The conduct of business through the use of 
automation and electronic media, in lieu of paper transactions, direct 
personal contact, telephone, or other means. For grants and cooperative 
agreements, electronic commerce can include the use of electronic data 
interchange, electronic mail, electronic bulletin board systems, and 
electronic funds transfer for: program announcements or solicitations; 
applications or proposals; award documents; recipients' requests for 
payment; payment authorizations; and payments.
    Electronic data interchange. The exchange of standardized 
information communicated electronically between business partners, 
typically between computers. It is DoD policy that DoD Component EDI 
applications conform to the American National Standards Institute 
(ANSI), Accredited Standards Committee (ASC) X-12 standard.\1\
---------------------------------------------------------------------------

    \1\ Available from Accredited Standards Committee, X-12 Secretariat, 
Data Interchange Standards Association, 1800 Diagonal Road, Suite 355, 
Alexandria, VA 22314-2852; Attention: Manager Maintenance and 
Publications.
---------------------------------------------------------------------------

    Electronic funds transfer. A system that provides the authority to 
debit or credit accounts in financial institutions by electronic means 
rather than source documents (e.g., paper checks). Processing typically 
occurs through the Federal Reserve System and/or the Automated Clearing 
House (ACH) computer network. It is DoD policy that DoD Component EFT 
transmissions conform to the American National Standards Institute 
(ANSI), Accredited Standards Committee (ASC) X-12 standard.
    Historically Black colleges and universities. Institutions of higher 
education determined by the Secretary of Education to meet the 
requirements of 34 CFR 608.2. Each DoD Component's contracting 
activities and grants officers may obtain a list of historically Black 
colleges and universities from that DoD Component's Small and 
Disadvantaged Business Utilization office.
    Institution of higher education. An educational institution that 
meets the criteria in section 1201(a) of the Higher Education Act of 
1965 (20 U.S.C. 1141(a)). Note, however, that institution of higher 
education has a different meaning in Sec. 22.520, as given at 
Sec. 22.520(b)(2).
    Minority institutions. Institutions of higher education that meet 
the criteria for minority institutions specified in 10

[[Page 26]]

U.S.C. 2323. Each DoD Component's contracting activities and grants 
officers may obtain copies of a current list of institutions that 
qualify as minority institutions under 10 U.S.C. 2323 from that DoD 
Component's Small and Disadvantaged Business Utilization office (the 
list of minority institutions changes periodically, based on Department 
of Education data on institutions' enrollments of minority students).
    Research. Basic, applied, and advanced research, as defined in this 
section.
    Subaward. An award of financial assistance in the form of money, or 
property in lieu of money, made under a DoD grant or cooperative 
agreement by a recipient to an eligible subrecipient. The term includes 
financial assistance for substantive program performance by the 
subrecipient of a portion of the program for which the DoD grant or 
cooperative agreement was made. It does not include the recipient's 
procurement of goods and services needed to carry out the program.



             Subpart B--Selecting the Appropriate Instrument



Sec. 22.200  Purpose.

    This subpart provides the bases for determining the appropriate type 
of instrument in a given situation.



Sec. 22.205  Distinguishing assistance from procurement.

    Before using a grant or cooperative agreement, the grants officer 
shall make a positive judgment that an assistance instrument, rather 
than a procurement contract, is the appropriate instrument, based on the 
following:
    (a) Purpose. (1) The grants officer must judge that the principal 
purpose of the activity to be carried out under the instrument is to 
stimulate or support a public purpose (i.e., to provide assistance), 
rather than acquisition (i.e., to acquire goods and services for the 
direct benefit of the United States Government). If the principal 
purpose is acquisition, then the grants officer shall judge that a 
procurement contract is the appropriate instrument, in accordance with 
31 U.S.C. chapter 63 (``Using Procurement Contracts and Grant and 
Cooperative Agreements''). Assistance instruments shall not be used in 
such situations, except:
    (i) When a statute specifically provides otherwise; or
    (ii) When an exemption is granted, in accordance with Sec. 22.220.
    (2) For research and development, the appropriate use of grants and 
cooperative agreements therefore is almost exclusively limited to the 
performance of selected basic, applied, and advanced research projects. 
Development projects nearly always shall be performed by contract or 
other acquisition transaction because their principal purpose is the 
acquisition of specific deliverable items (e.g., prototypes or other 
hardware) for the benefit of the Department of Defense.
    (b) Fee or profit. Payment of fee or profit is consistent with an 
activity whose principal purpose is the acquisition of goods and 
services for the direct benefit or use of the United States Government, 
rather than an activity whose principal purpose is assistance. 
Therefore, the grants officer shall use a procurement contract, rather 
than an assistance instrument, in all cases where:
    (1) Fee or profit is to be paid to the recipient of the instrument; 
or
    (2) The instrument is to be used to carry out a program where fee or 
profit is necessary to achieving program objectives.



Sec. 22.210  Authority for providing assistance.

    (a) Before a grant or cooperative agreement may be used, the grants 
officer must:
    (1) Identify the program statute, the statute that authorizes the 
DoD Component to carry out the activity the principal purpose of which 
is assistance (see 32 CFR 21.205(b)).
    (2) Review the program statute to determine if it contains 
requirements that affect the:
    (i) Solicitation, selection, and award processes. For example, 
program statutes may authorize assistance to be provided only to certain 
types of recipients; may require that recipients meet certain other 
criteria to be eligible to receive assistance; or require that a 
specific process shall be used to review recipients' proposals.

[[Page 27]]

    (ii) Terms and conditions of the award. For example, some program 
statutes require a specific level of cost sharing or matching.
    (b) The grants officer shall ensure that the award of DoD 
appropriations through a grant or cooperative agreement for a research 
project meets the standards of 10 U.S.C. 2358, DoD's broad authority to 
carry out research, even if the research project is authorized under a 
statutory authority other than 10 U.S.C. 2358. The standards of 10 
U.S.C. 2358 are that, in the opinion of the Head of the DoD Component or 
his or her designee, the projects must be:
    (1) Necessary to the responsibilities of the DoD Component.
    (2) Related to weapons systems and other military needs or of 
potential interest to the DoD Component.



Sec. 22.215  Distinguishing grants and cooperative agreements.

    (a) Once a grants officer judges, in accordance with Secs. 22.205 
and 22.210, that either a grant or cooperative agreement is the 
appropriate instrument, the grants officer shall distinguish between the 
two instruments as follows:
    (1) Grants shall be used when the grants officer judges that 
substantial involvement is not expected between the Department of 
Defense and the recipient when carrying out the activity contemplated in 
the agreement.
    (2) Cooperative agreements shall be used when the grants officer 
judges that substantial involvement is expected. The grants officer 
should document the nature of the substantial involvement that led to 
selection of a cooperative agreement. Under no circumstances are 
cooperative agreements to be used solely to obtain the stricter controls 
typical of a contract.
    (b) In judging whether substantial involvement is expected, grants 
officers should recognize that ``substantial involvement'' is a 
relative, rather than an absolute, concept, and that it is primarily 
based on programmatic factors, rather than requirements for grant or 
cooperative agreement award or administration. For example, substantial 
involvement may include collaboration, participation, or intervention in 
the program or activity to be performed under the award.



Sec. 22.220  Exemptions.

    Under 31 U.S.C. 6307, ``the Director of the Office of Management and 
Budget may exempt an agency transaction or program'' from the 
requirements of 31 U.S.C. chapter 63. Grants officers shall request such 
exemptions only in exceptional circumstances. Each request shall specify 
for which individual transaction or program the exemption is sought; the 
reasons for requesting an exemption; the anticipated consequences if the 
exemption is not granted; and the implications for other agency 
transactions and programs if the exemption is granted. The procedures 
for requesting exemptions shall be:
    (a) In cases where 31 U.S.C. chapter 63 would require use of a 
contract and an exemption from that requirement is desired:
    (1) The grants officer shall submit a request for exemption, through 
appropriate channels established by his or her DoD Component (see 32 CFR 
21.115(b)(1)), to the Director of Defense Procurement (DDP).
    (2) The DDP, after coordination with the Director of Defense 
Research and Engineering (DDR&E), shall transmit the request to OMB or 
notify the DoD Component that the request has been disapproved.
    (b) In other cases, the DoD Component shall submit a request for the 
exemption through appropriate channels to the DDR&E. The DDR&E shall 
transmit the request to OMB or notify the DoD Component that the request 
has been disapproved.
    (c) Where an exemption is granted, documentation of the approval 
shall be maintained in the award file.



                         Subpart C--Competition



Sec. 22.300  Purpose.

    This subpart establishes DoD policy and implements statutes related 
to the use of competitive procedures in the award of grants and 
cooperative agreements.

[[Page 28]]



Sec. 22.305  General policy and requirement for competition.

    (a) It is DoD policy to maximize use of competition in the award of 
grants and cooperative agreements. This also conforms with:
    (1) 31 U.S.C. 6301(3), which encourages the use of competition in 
awarding all grants and cooperative agreements.
    (2) 10 U.S.C. 2374(a), which sets out Congressional policy that any 
new grant for research, development, test, or evaluation be awarded 
through merit-based selection procedures.
    (b) Grants officers shall use merit-based, competitive procedures 
(as defined by Sec. 22.315) to award grants and cooperative agreements:
    (1) In every case where required by statute (e.g., 10 U.S.C. 2361, 
as implemented in Sec. 22.310, for certain grants to institutions of 
higher education).
    (2) To the maximum extent practicable in all cases where not 
required by statute.



Sec. 22.310  Statutes concerning certain research, development, and facilities construction grants.

    (a) Definitions specific to this section. For the purposes of 
implementing the requirements of 10 U.S.C. 2374 in this section, the 
following terms are defined:
    (1) Follow-on grant. A grant that provides for continuation of 
research and development performed by a recipient under a preceding 
grant. Note that follow-on grants are distinct from incremental funding 
actions during the period of execution of a multi-year award.
    (2) New grant. A grant that is not a follow-on grant.
    (b) Statutory requirement to use competitive procedures. (1) A 
grants officer shall not award a grant by other than merit-based, 
competitive procedures (as defined by Sec. 22.315) to an institution of 
higher education for the performance of research and development or for 
the construction of research or other facilities, unless:
    (i) In the case of a new grant for research and development, there 
is a statute meeting the criteria in paragraph (c)(1) of this section;
    (ii) In the case of a follow-on grant for research and development, 
or of a grant for the construction of research or other facilities, 
there is a statute meeting the criteria in paragraph (c)(2) of this 
section; and
    (iii) The Secretary of Defense submits to Congress a written notice 
of intent to make the grant. The grant may not be awarded until 180 
calendar days have elapsed after the date on which Congress received the 
notice of intent. Contracting activities must submit a draft notice of 
intent with supporting documentation through channels to the Deputy 
Director, Defense Research and Engineering.
    (2) Because subsequently enacted statutes may, by their terms, 
impose different requirements than set out in paragraph (b)(1) of this 
section, grants officers shall consult legal counsel on a case-by-case 
basis, when grants for the performance of research and development or 
for the construction of research or other facilities are to be awarded 
to institutions of higher education by other than merit-based 
competitive procedures.
    (c) Subsequent statutes. In accordance with 10 U.S.C. 2361 and 10 
U.S.C. 2374, a provision of law may not be construed as requiring the 
award of a grant through other than the merit-based, competitive 
procedures described in Sec. 22.315, unless:
    (1) Institutions of higher education--new grants for research and 
development. In the case of a new grant for research and development to 
an institution of higher education, such provision of law specifically:
    (i) Identifies the particular institution of higher education 
involved;
    (ii) States that such provision of law modifies or supersedes the 
provisions of 10 U.S.C. 2361 (a requirement that applies only if the 
statute authorizing or requiring award by other than competitive 
procedures was enacted after September 30, 1989); and
    (iii) States that the award to the institution of higher education 
involved is required by such provision of law to be made in 
contravention of the policy set forth in 10 U.S.C. 2374(a).
    (2) Institutions of higher education--follow-on grants for research 
and development and grants for the construction of any research or other 
facility. In the case of any such grant to an institution of

[[Page 29]]

higher education, such provision of law specifically:
    (i) Identifies the particular institution of higher education 
involved; and
    (ii) States that such provision of law modifies or supersedes the 
provisions of 10 U.S.C. 2361 (a requirement that applies only if the 
statute authorizing or requiring award by other than competitive 
procedures was enacted after September 30, 1989).
    (3) Other entities--new grants for research and development--(i) 
General. In the case of a new grant for research and development to an 
entity other than an institution of higher education, such provision of 
law specifically:
    (A) Identifies the particular entity involved;
    (B) States that the award to that entity is required by such 
provision of law to be made in contravention of the policy set forth in 
10 U.S.C. 2374(a).
    (ii) Exception. The requirement of paragraph (c)(3)(i) of this 
section does not apply to any grant that calls upon the National Academy 
of Sciences to:
    (A) Investigate, examine, or experiment upon any subject of science 
or art of significance to the Department of Defense or any Military 
Department; and
    (B) Report on such matters to the Congress or any agency of the 
Federal Government.



Sec. 22.315  Merit-based, competitive procedures.

    Competitive procedures are methods that encourage participation in 
DoD programs by a broad base of the most highly qualified performers. 
These procedures are characterized by competition among as many eligible 
proposers as possible, with a published or widely disseminated notice. 
Competitive procedures include, as a minimum:
    (a) Notice to prospective proposers. The notice may be a notice of 
funding availability or Broad Agency Announcement published in the 
Federal Register or Commerce Business Daily, respectively, or a notice 
that is made available broadly by electronic means. Alternatively, it 
may take the form of a specific notice that is distributed to eligible 
proposers (a specific notice must be distributed to at least two 
eligible proposers to be considered as part of a competitive procedure). 
Notices must include, as a minimum, the following information:
    (1) Programmatic area(s) of interest, in which proposals or 
applications are sought.
    (2) Eligibility criteria for potential recipients (see subpart D of 
this part).
    (3) Criteria that will be used to select the applications or 
proposals that will be funded, and the method for conducting the 
evaluation.
    (4) The type(s) of funding instruments (e.g., grants, cooperative 
agreements, other assistance instruments, or procurement contracts) that 
are anticipated to be awarded pursuant to the announcement.
    (5) Instructions for preparation and submission of a proposal or 
application, including the time by which it must be submitted.
    (b) At least two eligible, prospective proposers.
    (c) Impartial review of the merits of applications or proposals 
received in response to the notice, using the evaluation method and 
selection criteria described in the notice. For research and development 
awards, in order to be considered as part of a competitive procedure, 
the two principal selection criteria, unless statute provides otherwise, 
must be the:
    (1) Technical merits of the proposed research and development; and
    (2) Potential relationship of the proposed research and development 
to Department of Defense missions.



Sec. 22.320  Special competitions.

    Some programs may be competed for programmatic or policy reasons 
among specific classes of potential recipients. An example would be a 
program to enhance U.S. capabilities for academic research and research-
coupled graduate education in defense-critical, science and engineering 
disciplines, a program that would be competed specifically among 
institutions of higher education. All such special competitions shall be 
consistent with program representations in the President's budget 
submission to Congress and with subsequent Congressional authorizations 
and appropriations for the programs.

[[Page 30]]



Sec. 22.325  Historically Black colleges and universities (HBCUs) and other minority institutions (MIs).

    Increasing the ability of HBCUs and MIs to participate in federally 
funded, university programs is an objective of Executive Order 12876 (3 
CFR, 1993 Comp., p. 671) and 10 U.S.C. 2323. Grants officers shall 
include appropriate provisions in Broad Agency Announcements (BAAs) or 
other announcements for programs in which awards to institutions of 
higher education are anticipated, in order to promote participation of 
HBCUs and MIs in such programs. Also, whenever practicable, grants 
officers shall reserve appropriate programmatic areas for exclusive 
competition among HBCUs and MIs when preparing announcements for such 
programs.



    Subpart D--Recipient Qualification Matters--General Policies and 
                               Procedures



Sec. 22.400  Purpose.

    The purpose of this subpart is to specify policies and procedures 
for grants officers' determination of recipient qualifications prior to 
award.



Sec. 22.405  Policy.

    (a) General. Grants officers normally shall award grants or 
cooperative agreements only to qualified recipients that meet the 
standards in Sec. 22.415. This practice conforms with the Governmentwide 
policy, stated at 32 CFR 25.115(a), to do business only with responsible 
persons.
    (b) Exception. In exceptional circumstances, grants officers may 
make awards to recipients that do not fully meet the standards in 
Sec. 22.415 and include special award conditions that are appropriate to 
the particular situation, in accordance with 32 CFR 32.14, 33.12, or 
34.4.



Sec. 22.410  Grants officers' responsibilities.

    The grants officer is responsible for determining a recipient's 
qualification prior to award. The grants officer's signature on the 
award document shall signify his or her determination that either:
    (a) The potential recipient meets the standards in Sec. 22.415 and 
is qualified to receive the grant or cooperative agreement; or
    (b) An award is justified to a recipient that does not fully meet 
the standards, pursuant to Sec. 22.405(b). In such cases, grants 
officers shall document in the award file the rationale for making an 
award to a recipient that does not fully meet the standards.



Sec. 22.415  Standards.

    To be qualified, a potential recipient must:
    (a) Have the management capability and adequate financial and 
technical resources, given those that would be made available through 
the grant or cooperative agreement, to execute the program of activities 
envisioned under the grant or cooperative agreement.
    (b) Have a satisfactory record of executing such programs or 
activities (if a prior recipient of an award).
    (c) Have a satisfactory record of integrity and business ethics.
    (d) Be otherwise qualified and eligible to receive a grant or 
cooperative agreement under applicable laws and regulations (see 
Sec. 22.420(c)).



Sec. 22.420  Pre-award procedures.

    (a) The appropriate method to be used and amount of effort to be 
expended in deciding the qualification of a potential recipient will 
vary. In deciding on the method and level of effort, the grants officer 
should consider factors such as:
    (1) DoD's past experience with the recipient;
    (2) Whether the recipient has previously received cost-type 
contracts, grants, or cooperative agreements from the Federal 
Government; and
    (3) The amount of the prospective award and complexity of the 
project to be carried out under the award.
    (b) There is no DoD-wide requirement to obtain a pre-award credit 
report, audit, or any other specific piece of information. On a case-by-
case basis, the grants officer will decide whether there is a need to 
obtain any such information to assist in deciding whether the recipient 
meets the standards in Sec. 22.415 (a), (b), and (c).

[[Page 31]]

    (1) Should the grants officer in a particular case decide that a 
pre-award credit report, audit, or survey is needed, he or she should 
consult first with the appropriate grants administration office 
(identified in Sec. 22.710), and decide whether pre-existing surveys or 
audits of the recipient, such as those of the recipient's internal 
control systems under OMB Circular A-133 \2\ will satisfy the need (see 
Sec. 22.715(a)(1)).
---------------------------------------------------------------------------

    \2\ Contact the Office of Management and Budget, EOP Publications, 
725 17th St. NW, New Executive Office Building, Washington, DC 20503.
---------------------------------------------------------------------------

    (2) If, after consulting with the grants administration office, the 
grants officer decides to obtain a credit report, audit, or other 
information, and the report or other information discloses that a 
potential recipient is delinquent on a debt to an agency of the United 
States Government, then:
    (i) The grants officer shall take such information into account when 
determining whether the potential recipient is qualified with respect to 
the grant or cooperative agreement; and
    (ii) If the grants officer decides to make the award to the 
recipient, unless there are compelling reasons to do otherwise, the 
grants officer shall delay the award of the grant or cooperative 
agreement until payment is made or satisfactory arrangements are made to 
repay the debt.
    (c) In deciding whether a recipient is otherwise qualified and 
eligible in accordance with the standard in Sec. 22.415(d), the grants 
officer shall ensure that the potential recipient:
    (1) Is not identified on the Governmentwide ``List of Parties 
Excluded from Federal Procurement and Nonprocurement Programs'' as being 
debarred, suspended, or otherwise ineligible to receive the award. The 
grants officer shall check the list of such parties for:
    (i) Potential recipients of prime awards, as described at 32 CFR 
25.505(d);
    (ii) A recipient's principals (e.g., officers, directors, or other 
key employees, as defined at 32 CFR 25.105); and
    (iii) Potential recipients of subawards, where DoD Component 
approval of such principals or lower-tier recipients is required under 
the terms of the award (see 32 CFR 25.505(e)).
    (2) Has provided all certifications and assurances required by 
Federal statute, Executive order, or codified regulation, unless they 
are to be addressed in award terms and conditions at the time of award 
(see Sec. 22.510).
    (3) Meets any eligibility criteria that may be specified in the 
statute authorizing the specific program under which the award is being 
made (see Sec. 22.210(a)(2)).
    (d) Grants officers shall obtain each recipient's Taxpayer 
Identification Number (TIN, which may be the Social Security Number for 
an individual and Employer Identification Number for a business or non-
profit entity) and notify the recipient that the TIN is being obtained 
for purposes of collecting and reporting on any delinquent amounts that 
may arise out of the recipient's relationship with the Government. 
Obtaining the TIN and so notifying the recipient is a statutory 
requirement of 31 U.S.C. 7701, as amended by the Debt Collection 
Improvement Act of 1996 (section 31001(i)(1), Pub. L. 104-134).



                   Subpart E--National Policy Matters



Sec. 22.505  Purpose.

    The purpose of this subpart is to supplement other regulations that 
implement national policy requirements, to the extent that it is 
necessary to provide additional guidance to DoD grants officers. The 
other regulations that implement national policy requirements include:
    (a) The other parts of the DoDGARs (32 CFR parts 32, 33, and 34) 
that implement the Governmentwide guidance in OMB Circulars A-102 \3\ 
and A-110 \4\ on administrative requirements for grants and cooperative 
agreements. Those parts address some national policy matters that appear 
in the OMB Circulars.
---------------------------------------------------------------------------

    \3\ See footnote 2 to Sec. 22.420(b)(1).
    \4\ See footnote 2 to Sec. 22.420(b)(1).
---------------------------------------------------------------------------

    (b) DoD regulations other than the DoDGARs.
    (c) Other Federal agencies' regulations.

[[Page 32]]



Sec. 22.510  Certifications, representations, and assurances.

    (a) Certifications--(1) Policy. Certifications of compliance with 
national policy requirements are to be obtained from recipients only for 
those national policies where a statute, Executive order, or codified 
regulation specifically states that a certification is required. Other 
national policy requirements may be addressed by obtaining 
representations or assurances (see paragraph (b) of this section). 
Grants officers should utilize methods for obtaining certifications, in 
accordance with Executive Order 12866 (3 CFR, 1993 Comp., p. 638), that 
minimize administration and paperwork.
    (2) Procedures. (i) When necessary, grants officers may obtain 
individual, written certifications.
    (ii) Whenever possible, and to the extent consistent with statute 
and codified regulation, grants officers should identify the 
certifications that are required for the particular type of recipient 
and program, and consolidate them into a single certification provision 
that cites them by reference.
    (A) Appendix A to this part lists the common certifications and 
cites their applicability. Because some certifications (e.g., the 
certification on lobbying in Appendix A to this part) are required by 
law to be submitted at the time of proposal, rather than at the time of 
award, Appendix A to this part includes language that may be used for 
incorporating common certifications by reference into a proposal.
    (B) If a grants officer elects to have proposers incorporate 
certifications by reference into their proposals, he or she must do so 
in one of the two following ways. When required by statute or codified 
regulation, the solicitation must include the full text of the 
certifications that proposers are to provide by reference. In other 
cases, the grants officer may include language in the solicitation that 
informs the proposers where the full text may be found (e.g., in 
documents or computer network sites that are readily available to the 
public) and offers to provide it to proposers upon request.
    (C) Grants officers may incorporate certifications by reference in 
award documents when doing so is consistent with statute and codified 
regulation. Note that a statute requires submission of the lobbying 
certification in Appendix A to this part at the time of proposal, and 
that 32 CFR 25.510(a) requires submission of certifications regarding 
debarment and suspension at the time of proposal. The provision that a 
grants officer would use to incorporate certifications in award 
documents, when consistent with statute and codified regulation, would 
be similar to the provision in Appendix A to this part, except that it 
would be modified to state that the recipient is providing the required 
certifications by signing the award document or by accepting funds under 
the award.
    (b) Representations and assurances. Many national policies, either 
in statute or in regulation, require recipients of grants and 
cooperative agreements to make representations or provide assurances 
(rather than certifications) that they are in compliance with the 
policies. As discussed in Sec. 22.610(b), Appendix B to this part 
suggests award terms and conditions that may be used to address several 
of the more commonly applicable national policy requirements. These 
terms and conditions may be used to obtain required assurances and 
representations, if the grants officer wishes to do so at the time of 
award, rather than through the use of the standard application form (SF-
424 \5\) or other means at the time of proposal.
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    \5\ For copies of Standard Forms listed in this part, contact 
regional grants administration offices of the Office of Naval Research. 
Addresses for the offices are listed in the ``DoD Directory of Contract 
Administration Services Components,'' DLAH 4105.4, which can be obtained 
either from: Defense Logistics Agency, Publications Distribution 
Division (DASC-WDM), 8725 John J. Kingman Rd., Suite 0119, Fort Belvoir, 
VA 22060-6220; or from the Defense Contract Management Command home page 
at http://www.dcmc.dcrb.dla.mil.''
---------------------------------------------------------------------------



Sec. 22.515  Provisions of annual appropriations acts.

    An annual appropriations act can include general provisions stating 
national policy requirements that apply to the use of funds (e.g., 
obligation

[[Page 33]]

through a grant or cooperative agreement) appropriated by the act. 
Because these requirements are of limited duration (the period during 
which a given year's appropriations are available for obligation), and 
because they can vary from year to year and from one agency's 
appropriations act to another agency's, the grants officer must know the 
agency(ies) and fiscal year(s) of the appropriations being obligated by 
a given grant or cooperative agreement, and may need to consult legal 
counsel if he or she does not know the requirements applicable to those 
appropriations.



Sec. 22.520  Military recruiting on campus.

    (a) Purpose. The purpose of this section is to implement section 558 
of the National Defense Authorization Act for Fiscal Year 1995 (Pub. L. 
103-337), as it specifically affects grants and cooperative agreements 
(note that section 558 appears as a note to 10 U.S.C. 503). This section 
thereby supplements DoD's primary implementation of section 558, in 32 
CFR part 216, ``Military Recruiting and Reserve Officer Training Corps 
Program Access to Institutions of Higher Education.''
    (b) Definitions specific to this section. In this section:
    (1) Directory information has the following meaning, given in 
section 558(c) of Pub. L. 103-337. It means, with respect to a student, 
the student's name, address, telephone listing, date and place of birth, 
level of education, degrees received, and the most recent previous 
educational institution enrolled in by the student.
    (2) Institution of higher education has a different meaning in this 
section than it does in the rest of this part. The meaning of the term 
in other sections of this part is given at Sec. 22.105. In this section, 
``institution of higher education'' (IHE) has the following meaning, 
given at 32 CFR 216.3. The term means a domestic college, university, or 
subelement thereof providing postsecondary school courses of study, 
including foreign campuses of such domestic institutions. The term 
includes junior colleges, community colleges, and institutions providing 
courses leading to undergraduate and post-graduate degrees. The term 
does not include entities that operate exclusively outside the United 
States, its territories, and possessions. A subelement of an IHE is a 
discrete (although not necessarily autonomous) organizational entity 
that may establish policy or practices affecting military recruiting and 
related actions (e.g., an undergraduate school, law school, medical 
school, or other graduate school).
    (c) Statutory requirement. No funds available to the Department of 
Defense may be provided by grant to any institution of higher education 
that either has a policy of denying or that effectively prevents the 
Secretary of Defense from obtaining, for military recruiting purposes, 
entry to campuses or access to students on campuses or access to 
directory information pertaining to students.
    (d) Policy--(1) Applicability to subordinate elements of 
institutions of higher education. 32 CFR part 216, DoD's primary 
implementation of section 558, establishes procedures by which the 
Department of Defense identifies institutions of higher education that 
have a policy or practice described in paragraph (c) of this section. In 
cases where those procedures lead to a determination that specific 
subordinate elements of an institution of higher education have such a 
policy or practice, rather than the institution as a whole, 32 CFR part 
216 provides that the prohibition on use of DoD funds applies only to 
those subordinate elements.
    (2) Applicability to cooperative agreements. As a matter of DoD 
policy, the restrictions of section 558, as implemented by 32 CFR part 
216, apply to cooperative agreements, as well as grants.
    (3) Deviations. Grants officers may not deviate from any provision 
of this section without obtaining the prior approval of the Director of 
Defense Research and Engineering. Requests for deviations shall be 
submitted, through appropriate channels, to: Director for Research, 
ODDR&E(R), 3080 Defense Pentagon, Washington, DC 20301-3080.
    (e) Grants officers' responsibilities. A grants officer shall:
    (1) Not award any grant or cooperative agreement to an institution 
of higher education that has been identified pursuant to the procedures 
of 32

[[Page 34]]

CFR part 216. Such institutions are identified on the Governmentwide 
``List of Parties Excluded from Federal Procurement and Nonprocurement 
Programs,'' as being ineligible to receive awards of DoD funds (note 
that 32 CFR 25.505(d) requires the grants officer to check the list 
prior to determining that a recipient is qualified to receive an award).
    (2) [Reserved]
    (3) Not consent to any subaward of DoD funds to such an 
organization, under a grant or cooperative agreement to any recipient, 
if such subaward requires the grants officer's consent.
    (4) Include the clause in paragraph (f) of this section in each 
grant or cooperative agreement with an institution of higher education. 
Note that this requirement does not flow down (i.e., recipients are not 
required to include the clause in subawards).
    (5) If an institution of higher education refuses to accept the 
clause in paragraph (f) of this section:
    (i) Determine that the institution is not qualified with respect to 
the award. The grants officer may award to an alternative recipient.
    (ii) Transmit the name of the institution, through appropriate 
channels, to the Director for Accession Policy, Office of the Assistant 
Secretary of Defense for Force Management Policy, OASD(FMP), 4000 
Defense Pentagon, Washington, DC 20301-4000. This will allow OASD(FMP) 
to decide whether to initiate an evaluation of the institution under 32 
CFR part 216, to determine whether it is an institution that has a 
policy or practice described in paragraph (c) of this section.
    (f) Clause for award documents. The following clause is to be 
included in grants and cooperative agreements with institutions of 
higher education:

``As a condition for receipt of funds available to the Department of 
Defense (DoD) under this award, the recipient agrees that it is not an 
institution of higher education (as defined in 32 CFR part 216) that has 
a policy of denying, and that it is not an institution of higher 
education that effectively prevents, the Secretary of Defense from 
obtaining for military recruiting purposes: (A) Entry to campuses or 
access to students on campuses; or (B) access to directory information 
pertaining to students. If the recipient is determined, using the 
procedures in 32 CFR part 216, to be such an institution of higher 
education during the period of performance of this agreement, and 
therefore to be in breach of this clause, the Government will cease all 
payments of DoD funds under this agreement and all other DoD grants and 
cooperative agreements to the recipient, and it may suspend or terminate 
such grants and agreements unilaterally for material failure to comply 
with the terms and conditions of award.''



Sec. 22.525  Paperwork Reduction Act.

    Grants officers shall include appropriate award terms or conditions, 
if a recipient's activities under an award will be subject to the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3500, et seq.):
    (a) Generally, the Act only applies to Federal agencies--it requires 
agencies to obtain clearance from the Office of Management and Budget 
before collecting information using forms, schedules, questionnaires, or 
other methods calling either for answers to:
    (1) Identical questions from ten or more persons other than 
agencies, instrumentalities, or employees of the United States.
    (2) Questions from agencies, instrumentalities, or employees of the 
United States which are to be used for statistical compilations of 
general public interest.
    (b) The Act applies to similar collections of information by 
recipients of grants or cooperative agreements only when:
    (1) A recipient collects information at the specific request of the 
awarding Federal agency; or
    (2) The terms and conditions of the award require specific approval 
by the agency of the information collection or the collection 
procedures.



Sec. 22.530  Metric system of measurement.

    (a) Statutory requirement. The Metric Conversion Act of 1975, as 
amended by the Omnibus Trade and Competitiveness Act of 1988 (15 U.S.C. 
205) and implemented by Executive Order 12770 (3 CFR, 1991 Comp., p. 
343), states that:
    (1) The metric system is the preferred measurement system for U.S. 
trade and commerce.

[[Page 35]]

    (2) The metric system of measurement will be used, to the extent 
economically feasible, in federal agencies' procurements, grants, and 
other business-related activities.
    (3) Metric implementation shall not be required to the extent that 
such use is likely to cause significant inefficiencies or loss of 
markets to United States firms.
    (b) Responsibilities. DoD Components shall ensure that the metric 
system is used, to the maximum extent practicable, in measurement-
sensitive activities supported by programs that use grants and 
cooperative agreements, and in measurement-sensitive outputs of such 
programs.



                            Subpart F--Award



Sec. 22.600  Purpose.

    This subpart sets forth grants officers' responsibilities relating 
to the award document and other actions at the time of award.



Sec. 22.605  Grants officers' responsibilities.

    At the time of award, the grants officer is responsible for ensuring 
that:
    (a) The award instrument contains the appropriate terms and 
conditions, in accordance with Sec. 22.610.
    (b) Information about the award is provided to the office 
responsible for preparing reports for the Defense Assistance Award Data 
System (DAADS), to ensure timely and accurate reporting of data required 
by 31 U.S.C. 6101-6106 (see 32 CFR part 21, subpart C).
    (c)(1) In addition to the copy of the award document provided to the 
recipient, a copy is forwarded to the office designated to administer 
the grant or cooperative agreement, and another copy is forwarded to the 
finance and accounting office designated to make the payments to the 
recipient.
    (2) For any award subject to the electronic funds transfer (EFT) 
requirement described in Sec. 22.810(b)(2), the grants officer shall 
include a prominent notification of that fact on the first page of the 
copies forwarded to the recipient, the administrative grants officer, 
and the finance and accounting office. On the first page of the copy 
forwarded to the recipient, the grants officer also shall include a 
prominent notification that the recipient, to be paid, must submit a 
Payment Information Form (Standard Form SF-3881\6\) to the responsible 
DoD payment office, if that payment office does not currently have the 
information (e.g., bank name and account number) needed to pay the 
recipient by EFT.
---------------------------------------------------------------------------

    \6\ See footnote 5 to Sec. 22.510(b).
---------------------------------------------------------------------------



Sec. 22.610  Award instruments.

    (a) Each award document shall include terms and conditions that:
    (1) Address programmatic requirements (e.g., a statement of work or 
other appropriate terms or conditions that describe the specific goals 
and objectives of the project). The grants officer shall develop such 
terms and conditions in coordination with program officials.
    (2) Provide for the recipient's compliance with:
    (i) Pertinent Federal statutes or Executive orders that apply 
broadly to Federal or DoD assistance awards.
    (ii) Any program-specific requirements that are prescribed in the 
program statute (see Sec. 22.210(a)(2)), or appropriation-specific 
requirements that are stated in the pertinent Congressional 
appropriations (see Sec. 22.515).
    (iii) Pertinent portions of the DoDGARs or other Federal 
regulations, including those that implement the Federal statutes or 
Executive orders described in paragraphs (a)(2) (i) and (ii) of this 
section.
    (3) Specify the grants officer's instructions for post-award 
administration, for any matter where the post-award administration 
provisions in 32 CFR part 32, 33, or 34 give the grants officer options 
for handling the matter. For example, under 32 CFR 32.24(b), the grants 
officers must choose among possible methods for the recipient's 
disposition of program income. It is essential that the grants officer 
identify the option selected in each case, to provide clear instructions 
to the recipient and the grants officer responsible for post-award 
administration of the grant or cooperative agreement.
    (b) To assist grants officers:

[[Page 36]]

    (1) Appendix B to this part provides model clauses to implement 
certain Federal statutes, Executive orders, and regulations (see 
paragraph (a)(2)(i) of this section) that frequently apply to DoD grants 
and cooperative agreements. Grants officers may incorporate the model 
clauses into award terms and conditions, as appropriate. It should be 
noted that Appendix B to this part is an aid, and not an exhaustive list 
of all requirements that apply in all cases. Depending on the 
circumstances of a given award, other statutes, Executive orders, or 
codified regulations also may apply (e.g., Appendix B to this part does 
not list program-specific requirements described in paragraph (a)(2)(ii) 
of this section).
    (2) Appendix C to this part is a list of administrative requirements 
that apply to awards to different types of recipients. It also 
identifies post-award administration issues that the grants officer must 
address in the award terms and conditions.



                     Subpart G--Field Administration



Sec. 22.700  Purpose.

    This subpart prescribes policies and procedures for administering 
grants and cooperative agreements. It does so in conjunction with 32 CFR 
parts 32, 33, and 34, which prescribe administrative requirements for 
particular types of recipients.



Sec. 22.705  Policy.

    (a) DoD policy is to have each recipient deal with a single office, 
to the maximum extent practicable, for post-award administration of its 
grants and cooperative agreements. This reduces burdens on recipients 
that can result when multiple DoD offices separately administer grants 
and cooperative agreements they award to a given recipient. It also 
minimizes unnecessary duplication of field administration services.
    (b) To further reduce burdens on recipients, the office responsible 
for performing field administration services for grants and cooperative 
agreements to a particular recipient shall be, to the maximum extent 
practicable, the same office that is assigned responsibility for 
performing field administration services for contracts awarded to that 
recipient.
    (c) Contracting activities and grants officers therefore shall use 
cross-servicing arrangements whenever practicable and, to the maximum 
extent possible, delegate responsibility for post-award administration 
to the cognizant grants administration offices identified in 
Sec. 22.710.



Sec. 22.710  Assignment of grants administration offices.

    In accordance with the policy stated in Sec. 22.705(b), the DoD 
offices (referred to in this part as ``grants administration offices'') 
that are assigned responsibility for performing field administration 
services for grants and cooperative agreements are (see the ``DoD 
Directory of Contract Administration Services Components,'' DLAH 
4105.4,\7\ for specific addresses of administration offices):
---------------------------------------------------------------------------

    \7\ Copies may be obtained either from the Defense Logistics Agency, 
Publications Distribution Division (DASC-WDM), 8725 John J. Kingman Rd., 
Suite 0119, Fort Belvoir, VA 22060-6220, or from the Defense Contract 
Management Command home page at http://www.dcmc.dcrb.dla.mil.
---------------------------------------------------------------------------

    (a) Regional offices of the Office of Naval Research, for grants and 
cooperative agreements with:
    (1) Institutions of higher education and laboratories affiliated 
with such institutions, to the extent that such organizations are 
subject to the university cost principles in OMB Circular A-21.\8\
---------------------------------------------------------------------------

    \8\ See footnote 2 to Sec. 22.420(b)(1).
---------------------------------------------------------------------------

    (2) Nonprofit organizations that are subject to the cost principles 
in OMB Circular A-122,\9\ if their principal business with the 
Department of Defense is research and development.
---------------------------------------------------------------------------

    \9\ See footnote 2 to Sec. 22.420(b)(1).
---------------------------------------------------------------------------

    (b) Field offices of the Defense Contract Management Command, for 
grants and cooperative agreements with all other entities, including:
    (1) For-profit organizations.
    (2) Nonprofit organizations identified in Attachment C of OMB 
Circular A-122 that are subject to for-profit cost principles in 48 CFR 
part 31.
    (3) Nonprofit organizations subject to the cost principles in OMB 
Circular A-122, if their principal business with the

[[Page 37]]

Department of Defense is other than research and development.
    (4) State and local governments.



Sec. 22.715  Grants administration office functions.

    The primary responsibility of cognizant grants administration 
offices shall be to advise and assist grants officers and recipients 
prior to and after award, and to help ensure that recipients fulfill all 
requirements in law, regulation, and award terms and conditions. 
Specific functions include:
    (a) Conducting reviews and coordinating reviews, audits, and audit 
requests. This includes:
    (1) Advising grants officers on the extent to which audits by 
independent auditors (i.e., public accountants or Federal auditors) have 
provided the information needed to carry out their responsibilities. If 
a recipient has had an independent audit in accordance with OMB Circular 
A-133, and the audit report disclosed no material weaknesses in the 
recipient's financial management and other management and control 
systems, additional preaward or closeout audits usually will not be 
needed (see Secs. 22.420(b) and 22.825(b)).
    (2) Performing pre-award surveys, when requested by a grants 
officer, after providing advice described in paragraph (a)(1) of this 
section.
    (3) Reviewing recipients' systems and compliance with Federal 
requirements, in coordination with any reviews and compliance audits 
performed by independent auditors under OMB Circular A-133, or in 
accordance with the terms and conditions of the award. This includes:
    (i) Reviewing recipients' financial management, property management, 
and purchasing systems, to determine the adequacy of such systems.
    (ii) Determining that recipients have drug-free workplace programs, 
as required under 32 CFR part 25.
    (4) Notifying the Office of the Assistant Inspector General for 
Policy and Oversight (OAIG(P&O)), 400 Army-Navy Drive, Arlington, VA 
22202, if either of the following is not available within a reasonable 
period of time (e.g., six months) after the date on which a recipient of 
DoD grants and agreements was to have submitted its audit report under 
OMB Circular A-133 to the OAIG(P&O):
    (i) The recipient's audit report under OMB Circular A-133.
    (ii) The OAIG(P&O)'s desk review of the recipient's audit report, or 
a letter stating that the OAIG(P&O) has decided not to conduct a desk 
review.
    (b) Performing property administration services for Government-owned 
property, and for any property acquired by a recipient, with respect to 
which the recipient has further obligations to the Government.
    (c) Ensuring timely submission of required reports.
    (d) Executing administrative closeout procedures.
    (e) Establishing recipients' indirect cost rates, where the 
Department of Defense is the cognizant or oversight Federal agency with 
the responsibility for doing so.
    (f) Performing other administration functions (e.g., receiving 
recipients' payment requests and transmitting approved payment 
authorizations to payment offices) as delegated by applicable cross-
servicing agreements or letters of delegation.



                  Subpart H--Post-Award Administration



Sec. 22.800  Purpose and relation to other parts.

    This subpart sets forth grants officers' and DoD Components' 
responsibilities for post-award administration, by providing DoD-
specific requirements on payments; debt collection; claims, disputes and 
appeals; and closeout audits.



Sec. 22.805  Post-award requirements in other parts.

    Grants officers responsible for post-award administration of grants 
and cooperative agreements shall administer such awards in accordance 
with the following parts of the DoDGARs, as supplemented by this 
subpart:
    (a) Awards to domestic recipients. Standard administrative 
requirements for grants and cooperative agreements with domestic 
recipients are specified in other parts of the DoDGARs, as follows:

[[Page 38]]

    (1) For awards to domestic institutions of higher education and 
other nonprofit organizations, requirements are specified in 32 CFR part 
32, which is the DoD implementation of OMB Circular A-110.
    (2) For awards to State and local governments, requirements are 
specified in 32 CFR part 33, which is the DoD codification of the 
Governmentwide common rule to implement OMB Circular A-102.
    (3) For awards to domestic for-profit organizations, requirements 
are specified in 32 CFR part 34, which is modeled on the requirements in 
OMB Circular A-110.
    (b) Awards to foreign recipients. DoD Components shall use the 
administrative requirements specified in paragraph (a) of this section, 
to the maximum extent practicable, for grants and cooperative agreements 
to foreign recipients.



Sec. 22.810  Payments.

    (a) Purpose. This section prescribes policies and grants officers' 
post-award responsibilities, with respect to payments to recipients of 
grants and cooperative agreements.
    (b) Policy. (1) It is Governmentwide policy to minimize the time 
elapsing between any payment of funds to a recipient and the recipient's 
disbursement of the funds for program purposes (see 32 CFR 32.22(a) and 
33.21(b), and the implementation of the Cash Management Improvement Act 
at 31 CFR part 205).
    (2) It also is a Governmentwide requirement to use electronic funds 
transfer (EFT) in the payment of any grant for which an application or 
proposal was submitted or renewed on or after July 26, 1996, unless the 
recipient has obtained a waiver by submitting to the head of the 
pertinent Federal agency a certification that it has neither an account 
with a financial institution nor an authorized payment agent. This 
requirement is in 31 U.S.C. 3332, as amended by the Debt Collection 
Improvement Act of 1996 (section 31001(x)(1)(A), Pub. L. 104-134), and 
as implemented by Department of Treasury regulations at 31 CFR part 208. 
As a matter of DoD policy, this requirement applies to cooperative 
agreements, as well as grants. Within the Department of Defense, the 
Defense Finance and Accounting Service implements this EFT requirement, 
and grants officers have collateral responsibilities at the time of 
award, as described in Sec. 22.605(c), and in postaward administration, 
as described in Sec. 22.810(c)(3)(iv).
    (3) Expanding on these Governmentwide policies, DoD policy is for 
DoD Components to use electronic commerce, to the maximum extent 
practicable, in the portions of the payment process for grants and 
cooperative agreements for which grants officers are responsible. In 
cases where recipients submit each payment request to the grants 
officer, this includes using electronic methods to receive recipients' 
requests for payment and to transmit authorizations for payment to the 
DoD payment office. Using electronic methods will improve timeliness and 
accuracy of payments and reduce administrative burdens associated with 
paper-based payments.
    (c) Post-award responsibilities. In cases where the recipient 
submits each payment request to the grants officer, the administrative 
grants officer designated to handle payments for a grant or cooperative 
agreement is responsible for:
    (1) Handling the recipient's requests for payments in accordance 
with DoD implementation of Governmentwide guidance (see 32 CFR 32.22, 
33.21, or 34.12, as applicable).
    (2) Reviewing each payment request to ensure that:
    (i) The request complies with the award terms.
    (ii) Available funds are adequate to pay the request.
    (iii) The recipient will not have excess cash on hand, based on 
expenditure patterns.
    (3) Maintaining a close working relationship with the personnel in 
the finance and accounting office responsible for making the payments. A 
good working relationship is necessary, to ensure timely and accurate 
handling of financial transactions for grants and cooperative 
agreements. Administrative grants officers:
    (i) Should be generally familiar with policies and procedures for 
disbursing

[[Page 39]]

offices that are contained in Chapter 19 of Volume 10 of the DoD 
Financial Management Regulation (the FMR, DoD 7000.14-R\10\).
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    \10\ Copies may be obtained, at cost, from the National Technical 
Information Service, 5285 Port Royal Road, Springfield, VA 22161. 
Authorized users may also obtain copies from the Defense Technical 
Information Center, 8725 John J. Kingman Rd., Suite 0944, Fort Belvoir, 
VA 22060-6218.
---------------------------------------------------------------------------

    (ii) Shall forward authorizations to the designated payment office 
expeditiously, so that payments may be made in accordance with the 
timely payment guidelines in Chapter 19 of Volume 10 of the FMR. Unless 
alternative arrangements are made with the payment office, 
authorizations should be forwarded to the payment office at least 3 
working days before the end of the period specified in the FMR. The 
period specified in the FMR is:
    (A) No more than seven calendar days after receipt of the 
recipient's request by the administrative grants officer, whenever 
electronic commerce is used (i.e., EDI to request and authorize payments 
and electronic funds transfer (EFT) to make payments).
    (B) No more than thirty calendar days after receipt of the 
recipient's request by the administrative grants officer, when it is not 
possible to use electronic commerce and paper transactions are used.
    (C) No more than seven calendar days after each date specified, when 
payments are authorized in advance based on a predetermined payment 
schedule, provided that the payment schedule was received in the 
disbursing office at least 30 calendar days in advance of the date of 
the scheduled payment.
    (iii) Shall ensure that the recipients' Taxpayer Identification 
Number (TIN) is included with each payment authorization forwarded to 
the payment office. This is a statutory requirement of 31 U.S.C. 3325, 
as amended by the Debt Collection Improvement Act of 1996 (section 
31001(y), Pub. L. 104-134).
    (iv) For each award that is required to be paid by EFT (see 
Sec. 22.605(c) and (Sec. 22.810(b)(2)), shall prominently indicate that 
fact in the payment authorization.



Sec. 22.815  Claims, disputes, and appeals.

    (a) Award terms. Grants officers shall include in grants and 
cooperative agreements a term or condition that incorporates the 
procedures of this section for:
    (1) Processing recipient claims and disputes.
    (2) Deciding appeals of grants officers' decisions.
    (b) Submission of claims--(1) Recipient claims. If a recipient 
wishes to submit a claim arising out of or relating to a grant or 
cooperative agreement, the grants officer shall inform the recipient 
that the claim must:
    (i) Be submitted in writing to the grants officer for decision;
    (ii) Specify the nature and basis for the relief requested; and
    (iii) Include all data that supports the claim.
    (2) DoD Component claims. Claims by a DoD Component shall be the 
subject of a written decision by a grants officer.
    (c) Alternative Dispute Resolution (ADR)--(1) Policy. DoD policy is 
to try to resolve all issues concerning grants and cooperative 
agreements by mutual agreement at the grants officer's level. DoD 
Components therefore are encouraged to use ADR procedures to the maximum 
extent practicable. ADR procedures are any voluntary means (e.g., mini-
trials or mediation) used to resolve issues in controversy without 
resorting to formal administrative appeals (see paragraph (e) of this 
section) or to litigation.
    (2) Procedures. (i) The ADR procedures or techniques to be used may 
either be agreed upon by the Government and the recipient in advance 
(e.g., when agreeing on the terms and conditions of the grant or 
cooperative agreement), or may be agreed upon at the time the parties 
determine to use ADR procedures.
    (ii) If a grants officer and a recipient are not able to resolve an 
issue through unassisted negotiations, the grants officer shall 
encourage the recipient to enter into ADR procedures. ADR procedures may 
be used prior to submission of a recipient's claim or at any time prior 
to the Grant Appeal Authority's decision on a recipient's appeal (see 
paragraph (e)(3)(iii) of this section).

[[Page 40]]

    (d) Grants officer decisions. (1) Within 60 calendar days of receipt 
of a written claim, the grants officer shall either:
    (i) Prepare a written decision, which shall include the reasons for 
the decision; shall identify all relevant data on which the decision is 
based; shall identify the cognizant Grant Appeal Authority and give his 
or her mailing address; and shall be included in the award file; or
    (ii) Notify the recipient of a specific date when he or she will 
render a written decision, if more time is required to do so. The notice 
shall inform the recipient of the reason for delaying the decision 
(e.g., the complexity of the claim, a need for more time to complete ADR 
procedures, or a need for the recipient to provide additional 
information to support the claim).
    (2) The decision of the grants officer shall be final, unless the 
recipient decides to appeal. If a recipient decides to appeal a grants 
officer's decision, the grants officer shall encourage the recipient to 
enter into ADR procedures, as described in paragraph (c) of this 
section.
    (e) Formal administrative appeals--(1) Grant appeal authorities. 
Each DoD Component that awards grants or cooperative agreements shall 
establish one or more Grant Appeal Authorities to decide formal, 
administrative appeals in accordance with paragraph (e)(3) of this 
section. Each Grant Appeal Authority shall be either:
    (i) An individual at a grade level in the Senior Executive Service, 
if civilian, or at the rank of Flag or General Officer, if military; or
    (ii) A board chaired by such an individual.
    (2) Right of appeal. A recipient has the right to appeal a grants 
officer's decision to the Grant Appeal Authority (but note that ADR 
procedures, as described in paragraph (c) of this section, are the 
preferred means for resolving any appeal).
    (3) Appeal procedures--(i) Notice of appeal. A recipient may appeal 
a decision of the grants officer within 90 calendar days of receiving 
that decision, by filing a written notice of appeal to the Grant Appeal 
Authority and to the grants officer. If a recipient elects to use an ADR 
procedure, the recipient is permitted an additional 60 calendar days to 
file the written notice of appeal to the Grant Appeal Authority and 
grants officer.
    (ii) Appeal file. Within 30 calendar days of receiving the notice of 
appeal, the grants officer shall forward to the Grant Appeal Authority 
and the recipient the appeal file, which shall include copies of all 
documents relevant to the appeal. The recipient may supplement the file 
with additional documents it deems relevant. Either the grants officer 
or the recipient may supplement the file with a memorandum in support of 
its position. The Grant Appeal Authority may request additional 
information from either the grants officer or the recipient.
    (iii) Decision. The appeal shall be decided solely on the basis of 
the written record, unless the Grant Appeal Authority decides to conduct 
fact-finding procedures or an oral hearing on the appeal. Any fact-
finding or hearing shall be conducted using procedures that the Grant 
Appeal Authority deems appropriate.
    (f) Representation. A recipient may be represented by counsel or any 
other designated representative in any claim, appeal, or ADR proceeding 
brought pursuant to this section, as long as the representative is not 
otherwise prohibited by law or regulation from appearing before the DoD 
Component concerned.
    (g) Non-exclusivity of remedies. Nothing in this section is intended 
to limit a recipient's right to any remedy under the law.



Sec. 22.820  Debt collection.

    (a) Purpose. This section prescribes procedures for establishing 
debts owed by recipients of grants and cooperative agreements, and 
transferring them to payment offices for collection.
    (b) Resolution of indebtedness. The grants officer shall attempt to 
resolve by mutual agreement any claim of a recipient's indebtedness to 
the United States arising out of a grant or cooperative agreement (e.g., 
by a finding that a recipient was paid funds in excess of the amount to 
which the recipient was entitled under the terms and conditions of the 
award).

[[Page 41]]

    (c) Grants officer's decision. In the absence of such mutual 
agreement, any claim of a recipient's indebtedness shall be the subject 
of a grants officer decision, in accordance with Sec. 22.815(b)(2). The 
grants officer shall prepare and transmit to the recipient a written 
notice that:
    (1) Describes the debt, including the amount, the name and address 
of the official who determined the debt (e.g., the grants officer under 
Sec. 22.815(d)), and a copy of that determination.
    (2) Informs the recipient that:
    (i) Within 30 calendar days of the grants officer's decision, the 
recipient shall either pay the amount owed to the grants officer (at the 
address that was provided pursuant to paragraph (c)(1) of this section) 
or inform the grants officer of the recipient's intention to appeal the 
decision.
    (ii) If the recipient elects not to appeal, any amounts not paid 
within 30 calendar days of the grants officer's decision will be a 
delinquent debt.
    (iii) If the recipient elects to appeal the grants officer's 
decision the recipient has 90 calendar days, or 150 calendar days if ADR 
procedures are used, after receipt of the grants officer's decision to 
file the appeal, in accordance with Sec. 22.815(e)(3)(i).
    (iv) The debt will bear interest, and may include penalties and 
other administrative costs, in accordance with the debt collection 
provisions in Chapters 29, 31, and 32 of Volume 5 and Chapters 18 and 19 
of Volume 10 of the DoD Financial Management Regulation (DoD 7000.14-R). 
No interest will be charged if the recipient pays the amount owed within 
30 calendar days of the grants officer's decision. Interest will be 
charged for the entire period from the date the decision was mailed, if 
the recipient pays the amount owed after 30 calendar days.
    (d) Follow-up. Depending upon the response from the recipient, the 
grants officer shall proceed as follows:
    (1) If the recipient pays the amount owed within 30 calendar days to 
the grants officer, the grants officer shall forward the payment to the 
responsible payment office.
    (2) If within 30 calendar days the recipient elects to appeal the 
grants officer's decision, further action to collect the debt is 
deferred, pending the outcome of the appeal. If the final result of the 
appeal is a determination that the recipient owes a debt to the Federal 
Government, the grants officer shall send a demand letter to the 
recipient and transfer responsibility for further debt collection to a 
payment office, as described in paragraph (d)(3) of this section.
    (3) If within 30 calendar days the recipient has neither paid the 
amount due nor provided notice of intent to file an appeal of the grants 
officer's decision, the grants officer shall send a demand letter to the 
recipient, with a copy to the payment office that will be responsible 
for collecting the delinquent debt. The payment office will be 
responsible for any further debt collection activity, including issuance 
of additional demand letters (see Chapter 19 of volume 10 of the DoD 
Financial Management Regulation, DoD 7000.14-R). The grants officer's 
demand letter shall:
    (i) Describe the debt, including the amount, the name and address of 
the official that determined the debt (e.g., the grants officer under 
Sec. 22.815(d)), and a copy of that determination.
    (ii) Notify the recipient that the debt is a delinquent debt that 
bears interest from the date of the grants officer's decision, and that 
penalties and other administrative costs may be assessed.
    (iii) Identify the payment office that is responsible for the 
collection of the debt, and notify the recipient that it may submit a 
proposal to that payment office to defer collection, if immediate 
payment is not practicable.
    (e) Administrative offset. In carrying out the responsibility for 
collecting delinquent debts, a disbursing officer may need to consult 
grants officers, to determine whether administrative offset against 
payments to a recipient owing a delinquent debt would interfere with 
execution of projects being carried out under grants or cooperative 
agreements. Disbursing officers may also ask grants officers whether it 
is feasible to convert payment methods under grants or cooperative 
agreements from advance payments to reimbursements, to facilitate use of 
administrative offset. Grants officers therefore should be familiar with 
guidelines

[[Page 42]]

for disbursing officers, in Chapter 19 of Volume 10 of the Financial 
Management Regulation (DoD 7000.14-R), concerning withholding and 
administrative offset to recover delinquent debts.



Sec. 22.825  Closeout audits.

    (a) Purpose. This section establishes DoD policy for obtaining 
audits at closeout of individual grants and cooperative agreements. It 
thereby supplements the closeout procedures specified in:
    (1) 32 CFR 32.71 and 32.72, for awards to institutions of higher 
education and other nonprofit organizations.
    (2) 32 CFR 33.50 and 33.51, for awards to State and local 
governments.
    (3) 32 CFR 34.61 and 34.62, for awards to for-profit entities.
    (b) Policy. Grants officers shall use their judgment on a case-by-
case basis, in deciding whether to obtain an audit prior to closing out 
a grant or cooperative agreement (i.e., there is no specific DoD 
requirement to obtain an audit prior to doing so). Factors to be 
considered include:
    (1) The amount of the award.
    (2) DoD's past experience with the recipient, including the presence 
or lack of findings of material deficiencies in recent:
    (i) Audits of individual awards; or
    (ii) Systems-wide financial audits and audits of the compliance of 
the recipient's systems with Federal requirements, under OMB Circular A-
133, where that Circular is applicable. (See Sec. 22.715(a)(1)).

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         Appendix A to Part 22--Proposal Provision for Required 
                            Certifications
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         Appendix B to Part 22--Suggested Award Provisions for 
             National Policy Requirements That Often Apply
    [GRAPHIC] [TIFF OMITTED] TR12MR98.001
    

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         Appendix C to Part 22--Administrative Requirements and 
         Issues To Be Addressed in Award Terms and Conditions
    [GRAPHIC] [TIFF OMITTED] TR16MR00.024
    

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[GRAPHIC] [TIFF OMITTED] TR16MR00.027

[65 FR 14411, Mar. 16, 2000]

[[Page 56]]



PART 25--GOVERNMENTWIDE DEBARMENT AND SUSPENSION (NONPROCUREMENT) AND GOVERNMENTWIDE REQUIREMENTS FOR DRUG-FREE WORKPLACE (GRANTS)--Table of Contents




                           Subpart A--General

Sec.
25.100 Purpose.
25.105 Definitions.
25.110 Coverage.
25.115 Policy.

                       Subpart B--Effect of Action

25.200 Debarment or suspension.
25.205 Ineligible persons.
25.210 Voluntary exclusion.
25.215 Exception provision.
25.220 Continuation of covered transactions.
25.225 Failure to adhere to restrictions.

                          Subpart C--Debarment

25.300 General.
25.305 Causes for debarment.
25.310 Procedures.
25.311 Investigation and referral.
25.312 Notice of proposed debarment.
25.313 Opportunity to contest proposed debarment.
25.314 Debarring official's decision.
25.315 Settlement and voluntary exclusion.
25.320 Period of debarment.
25.325 Scope of debarment.

                          Subpart D--Suspension

25.400 General.
25.405 Causes for suspension.
25.410 Procedures.
25.411 Notice of suspension.
25.412 Opportunity to contest suspension.
25.413 Suspending official's decision.
25.415 Period of suspension.
25.420 Scope of suspension.

      Subpart E--Responsibilities of GSA, Agencies and Participants

25.500 GSA responsibilities.
25.505 Military Departments and Defense Agencies' responsibility.
25.510 Participants' responsibilities.

          Subpart F--Drug-Free Workplace Requirements (Grants)

25.600 Purpose.
25.605 Definitions.
25.610 Coverage.
25.615 Grounds for suspension of payments, suspension or termination of 
          grants, or suspension or debarment.
25.616 Determinations of grantee violations.
25.620 Effect of violation.
25.625 Exception provision.
25.630 Certification requirements and procedures.
25.635 Reporting of and employee sanctions for convictions of criminal 
          drug offenses.

Appendix A to Part 25--Certification Regarding Debarment, Suspension, 
          and Other Responsibility Matters--Primary Covered Transactions
Appendix B to Part 25--Certification Regarding Debarment, Suspension, 
          Ineligibility and Voluntary Exclusion--Lower Tier Covered 
          Transactions
Appendix C to Part 25--Certification Regarding Drug-Free Workplace 
          Requirements

    Authority: 41 U.S.C. 701 et seq.; sec. 2455, Pub. L. 103-355, 108 
Stat. 3327 (31 U.S.C. 6101 note); E.O. 12549, 3 CFR, 1986 Comp.; 189; 
E.O. 12689, 3 CFR, 1989 Comp., p. 235.

    Source: 53 FR 19190 and 19204, May 26, 1988, unless otherwise noted. 
Redesignated at 57 FR 6199, Feb. 21, 1992.

    Cross Reference: See also Office of Management and Budget notice 
published at 55 FR 21697, May 25, 1990, and 60 FR 33036, June 26, 1995.



                           Subpart A--General



Sec. 25.100  Purpose.

    (a) Executive Order (E.O.) 12549 provides that, to the extent 
permitted by law, Executive departments and agencies shall participate 
in a governmentwide system for nonprocurement debarment and suspension. 
A person who is debarred or suspended shall be excluded from Federal 
financial and nonfinancial assistance and benefits under Federal 
programs and activities. Debarment or suspension of a participant in a 
program by one agency shall have governmentwide effect.
    (b) These regulations implement section 3 of E.O. 12549 and the 
guidelines promulgated by the Office of Management and Budget under 
section 6 of the E.O. by:
    (1) Prescribing the programs and activities that are covered by the 
governmentwide system;
    (2) Prescribing the governmentwide criteria and governmentwide 
minimum due process procedures that each agency shall use;
    (3) Providing for the listing of debarred and suspended 
participants, participants declared ineligible (see

[[Page 57]]

definition of ``ineligible'' in Sec. 25.105), and participants who have 
voluntarily excluded themselves from participation in covered 
transactions;
    (4) Setting forth the consequences of a debarment, suspension, 
determination of ineligibility, or voluntary exclusion; and
    (5) Offering such other guidance as necessary for the effective 
implementation and administration of the governmentwide system.
    (c) These regulations also implement Executive Order 12689 (3 CFR, 
1989 Comp., p. 235) and 31 U.S.C. 6101 note (Public Law 103-355, sec. 
2455, 108 Stat. 3327) by--
    (1) Providing for the inclusion in the List of Parties Excluded from 
Federal Procurement and Nonprocurement Programs all persons proposed for 
debarment, debarred or suspended under the Federal Acquisition 
Regulation, 48 CFR Part 9, subpart 9.4; persons against which 
governmentwide exclusions have been entered under this part; and persons 
determined to be ineligible; and
    (2) Setting forth the consequences of a debarment, suspension, 
determination of ineligibility, or voluntary exclusion.
    (d) Although these regulations cover the listing of ineligible 
participants and the effect of such listing, they do not prescribe 
policies and procedures governing declarations of ineligibility.

[60 FR 33040, 33053, June 26, 1995]



Sec. 25.105  Definitions.

    The following definitions apply to this part:
    Adequate evidence. Information sufficient to support the reasonable 
belief that a particular act or omission has occurred.
    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 the power to control both. Indicia of 
control include, but are not limited to: interlocking management or 
ownership, identity of interests among family members, shared facilities 
and equipment, common use of employees, or a business entity organized 
following the suspension or debarment of a person which has the same or 
similar management, ownership, or principal employees as the suspended, 
debarred, ineligible, or voluntarily excluded person.
    Agency. Any executive department, military department or defense 
agency or other agency of the executive branch, excluding the 
independent regulatory agencies.
    (a) The meaning of agency in Subpart F of this part, Drug-Free 
Workplace Requirements, is given at Sec. 25.605(b)(6) and is different 
than the meaning given in this section for subparts A through E of this 
part. Agency in Subpart F of this part means the Department of Defense 
or a Military Department only, and does not include any Defense Agency.
    (b) [Reserved]
    Civil judgment. The disposition of a civil action by any court of 
competent jurisdiction, whether entered by verdict, decision, 
settlement, stipulation, or otherwise creating a civil liability for the 
wrongful acts complained of; or a final determination of liability under 
the Program Fraud Civil Remedies Act of 1988 (31 U.S.C. 3801-12).
    Conviction. A judgment or conviction of a criminal offense by any 
court of competent jurisdiction, whether entered upon a verdict or a 
plea, including a plea of nolo contendere.
    Debarment. An action taken by a debarring official in accordance 
with these regulations to exclude a person from participating in covered 
transactions. A person so excluded is ``debarred.''
    Debarring official. An official authorized to impose debarment. The 
debarring official is either:
    (a) The agency head, or
    (b) An official designated by the agency head.
    (c) DoD Components' debarring officials for nonprocurement 
transactions are the same officials identified in 48 CFR part 209, 
subpart 209.4, as debarring officials for procurement contracts.
    Indictment. Indictment for a criminal offense. An information or 
other filing by competent authority charging a criminal offense shall be 
given the same effect as an indictment.
    Ineligible. Excluded from participation in Federal nonprocurement 
programs pursuant to a determination of

[[Page 58]]

ineligibility under statutory, executive order, or regulatory authority, 
other than Executive Order 12549 and its agency implementing 
regulations; for exemple, excluded pursuant to the Davis-Bacon Act and 
its implementing regulations, the equal employment opportunity acts and 
executive orders, or the environmental protection acts and executive 
orders. A person is ineligible where the determination of ineligibility 
affects such person's eligibility to participate in more than one 
covered transaction.
    Legal proceedings. Any criminal proceeding or any civil judicial 
proceeding to which the Federal Government or a State or local 
government or quasi-governmental authority is a party. The term includes 
appeals from such proceedings.
    List of Parties Excluded from Federal Procurement and Nonprocurement 
Programs. A list compiled, maintained and distributed by the General 
Services Administration (GSA) containing the names and other information 
about persons who have been debarred, suspended, or voluntarily excluded 
under Executive Orders 12549 and 12689 and these regulations or 48 CFR 
part 9, subpart 9.4, persons who have been proposed for debarment under 
48 CFR part 9, subpart 9.4, and those persons who have been determined 
to be ineligible.
    Notice. A written communication served in person or sent by 
certified mail, return receipt requested, or its equivalent, to the last 
known address of a party, its identified counsel, its agent for service 
of process, or any partner, officer, director, owner, or joint venturer 
of the party. Notice, if undeliverable, shall be considered to have been 
received by the addressee five days after being properly sent to the 
last address known by the agency.
    Participant. Any person who submits a proposal for, enters into, or 
reasonably may be expected to enter into a covered transaction. This 
term also includes any person who acts on behalf of or is authorized to 
commit a participant in a covered transaction as an agent or 
representative of another participant.
    Person. Any individual, corporation, partnership, association, unit 
of government or legal entity, however organized, except: foreign 
governments or foreign governmental entities, public international 
organizations, foreign government owned (in whole or in part) or 
controlled entities, and entities consisting wholly or partially of 
foreign governments or foreign governmental entities.
    Preponderance of the evidence. Proof by information that, compared 
with that opposing it, leads to the conclusion that the fact at issue is 
more probably true than not.
    Principal. Officer, director, owner, partner, key employee, or other 
person within a participant with primary management or supervisory 
responsibilities; or a person who has a critical influence on or 
substantive control over a covered transaction, whether or not employed 
by the participant. Persons who have a critical influence on or 
substantive control over a covered transaction are:
    (a) Principal investigators.
    (b) Reserved.
    Proposal. A solicited or unsolicited bid, application, request, 
invitation to consider or similar communication by or on behalf of a 
person seeking to participate or to receive a benefit, directly or 
indirectly, in or under a covered transaction.
    Respondent. A person against whom a debarment or suspension action 
has been initiated.
    State. Any of the States of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, any territory or possession 
of the United States, or any agency of a State, exclusive of 
institutions of higher education, hospitals, and units of local 
government. A State instrumentality will be considered part of the State 
government if it has a written determination from a State government 
that such State considers that instrumentality to be an agency of the 
State government.
    Suspending official. An official authorized to impose suspension. 
The suspending official is either:
    (a) The agency head, or
    (b) An official designated by the agency head.
    (c) DoD Components' suspending officials for nonprocurement 
transactions are the same officials identified in 48

[[Page 59]]

CFR part 209, subpart 209.4, as suspending officials for procurement 
contracts.
    Suspension. An action taken by a suspending official in accordance 
with these regulations that immediately excludes a person from 
participating in covered transactions for a temporary period, pending 
completion of an investigation and such legal, debarment, or Program 
Fraud Civil Remedies Act proceedings as may ensue. A person so excluded 
is ``suspended.''
    Voluntary exclusion or voluntarily excluded. A status of 
nonparticipation or limited participation in covered transactions 
assumed by a person pursuant to the terms of a settlement.

[53 FR 19190 and 19204, May 26, 1988. Redesignated at 57 FR 6199, Feb. 
21, 1992, and amended at 60 FR 33041, 33053, June 26, 1995]



Sec. 25.110  Coverage.

    (a) These regulations apply to all persons who have participated, 
are currently participating or may reasonably be expected to participate 
in transactions under Federal nonprocurement programs. For purposes of 
these regulations such transactions will be referred to as ``covered 
transactions.''
    (1) Covered transaction. For purposes of these regulations, a 
covered transaction is a primary covered transaction or a lower tier 
covered transaction. Covered transactions at any tier need not involve 
the transfer of Federal funds.
    (i) Primary covered transaction. Except as noted in paragraph (a)(2) 
of this section, a primary covered transaction is any nonprocurement 
transaction between an agency and a person, regardless of type, 
including: grants, cooperative agreements, scholarships, fellowships, 
contracts of assistance, loans, loan guarantees, subsidies, insurance, 
payments for specified use, donation agreements and any other 
nonprocurement transactions between a Federal agency and a person. 
Primary covered transactions also include those transactions specially 
designated by the U.S. Department of Housing and Urban Development in 
such agency's regulations governing debarment and suspension.
    (ii) Lower tier covered transaction. A lower tier covered 
transaction is:
    (A) Any transaction between a participant and a person other than a 
procurement contract for goods or services, regardless of type, under a 
primary covered transaction.
    (B) Any procurement contract for goods or services between a 
participant and a person, regardless of type, expected to equal or 
exceed the Federal procurement small purchase threshold fixed at 10 
U.S.C. 2304(g) and 41 U.S.C. 253(g) (currently $25,000) under a primary 
covered transaction.
    (C) Any procurement contract for goods or services between a 
participant and a person under a covered transaction, regardless of 
amount, under which that person will have a critical influence on or 
substantive control over that covered transaction. Such persons are:
    (1) Principal investigators.
    (2) Providers of federally-required audit services.
    (2) Exceptions. The following transactions are not covered:
    (i) Statutory entitlements or mandatory awards (but not subtier 
awards thereunder which are not themselves mandatory), including 
deposited funds insured by the Federal Government;
    (ii) Direct awards to foreign governments or public international 
organizations, or transactions with foreign governments or foreign 
governmental entities, public international organizations, foreign 
government owned (in whole or in part) or controlled entities, entities 
consisting wholly or partially of foreign governments or foreign 
governmental entities;
    (iii) Benefits 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);
    (iv) Federal employment;
    (v) Transactions pursuant to national or agency-recognized 
emergencies or disasters;
    (vi) Incidental benefits derived from ordinary governmental 
operations; and
    (vii) Other transactions where the application of these regulations 
would be prohibited by law.
    (b) Relationship to other sections. This section describes the types 
of transactions to which a debarment or suspension under the regulations 
will

[[Page 60]]

apply. Subpart B, ``Effect of Action,'' Sec. 25.200, ``Debarment or 
suspension,'' sets forth the consequences of a debarment or suspension. 
Those consequences would obtain only with respect to participants and 
principals in the covered transactions and activities described in 
Sec. 25.110(a). Sections 25.325, ``Scope of debarment,'' and 25.420, 
``Scope of suspension,'' govern the extent to which a specific 
participant or organizational elements of a participant would be 
automatically included within a debarment or suspension action, and the 
conditions under which affiliates or persons associated with a 
participant may also be brought within the scope of the action.
    (c) Relationship to Federal procurement activities. In accordance 
with E.O. 12689 and section 2455 of Public Law 103-355, any debarment, 
suspension, proposed debarment or other governmentwide exclusion 
initiated under the Federal Acquisition Regulation (FAR) on or after 
August 25, 1995 shall be recognized by and effective for Executive 
Branch agencies and participants as an exclusion under this regulation. 
Similarly, any debarment, suspension or other governmentwide exclusion 
initiated under this regulation on or after August 25, 1995 shall be 
recognized by and effective for those agencies as a debarment or 
suspension under the FAR.

[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 
6199, Feb. 21, 1992; 60 FR 33041, 33053, June 26, 1995]



Sec. 25.115  Policy.

    (a) In order to protect the public interest, it is the policy of the 
Federal Government to conduct business only with responsible persons. 
Debarment and suspension are discretionary actions that, taken in 
accordance with Executive Order 12549 and these regulations, are 
appropriate means to implement this policy.
    (b) Debarment and suspension are serious actions which shall be used 
only in the public interest and for the Federal Government's protection 
and not for purposes of punishment. Agencies may impose debarment or 
suspension for the causes and in accordance with the procedures set 
forth in these regulations.
    (c) When more than one agency has an interest in the proposed 
debarment or suspension of a person, consideration shall be given to 
designating one agency as the lead agency for making the decision. 
Agencies are encouraged to establish methods and procedures for 
coordinating their debarment or suspension actions.



                       Subpart B--Effect of Action



Sec. 25.200  Debarment or suspension.

    (a) Primary covered transactions. Except to the extent prohibited by 
law, persons who are debarred or suspended shall be excluded from 
primary covered transactions as either participants or principals 
throughout the Executive Branch of the Federal Government for the period 
of their debarment, suspension, or the period they are proposed for 
debarment under 48 CFR part 9, subpart 9.4. Accordingly, no agency shall 
enter into primary covered transactions with such excluded persons 
during such period, except as permitted pursuant to Sec. 25.215.
    (b) Lower tier covered transactions. Except to the extent prohibited 
by law, persons who have been proposed for debarment under 48 CFR part 
9, subpart 9.4, debarred or suspended shall be excluded from 
participating as either participants or principals in all lower tier 
covered transactions (see Sec. 25.110(a)(1)(ii)) for the period of their 
exclusion.
    (c) Exceptions. Debarment or suspension does not affect a person's 
eligibility for--
    (1) Statutory entitlements or mandatory awards (but not subtier 
awards thereunder which are not themselves mandatory), including 
deposited funds insured by the Federal Government;
    (2) Direct awards to foreign governments or public international 
organizations, or transactions with foreign governments or foreign 
governmental entities, public international organizations, foreign 
government owned (in whole or in part) or controlled entities, and 
entities consisting wholly or partially of foreign governments or 
foreign governmental entities;
    (3) Benefits to an individual as a personal entitlement without 
regard to the individual's present responsibility

[[Page 61]]

(but benefits received in an individual's business capacity are not 
excepted);
    (4) Federal employment;
    (5) Transactions pursuant to national or agency-recognized 
emergencies or disasters;
    (6) Incidental benefits derived from ordinary governmental 
operations; and
    (7) Other transactions where the application of these regulations 
would be prohibited by law.

[60 FR 33041, 33053, June 26, 1995]



Sec. 25.205  Ineligible persons.

    Persons who are ineligible, as defined in Sec. 25.105(i), are 
excluded in accordance with the applicable statutory, executive order, 
or regulatory authority.

[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



Sec. 25.210  Voluntary exclusion.

    Persons who accept voluntary exclusions under Sec. 25.315 are 
excluded in accordance with the terms of their settlements. Military 
Departments and Defense Agencies shall, and participants may, contact 
the original action agency to ascertain the extent of the exclusion.

[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



Sec. 25.215  Exception provision.

    Military Departments & Defense Agencies may grant an exception 
permitting a debarred, suspended, or voluntarily excluded person, or a 
person proposed for debarment under 48 CFR part 9, subpart 9.4, to 
participate in a particular covered transaction upon a written 
determination by the agency head or an authorized designee stating the 
reason(s) for deviating from the Presidential policy established by 
Executive Order 12549 and Sec. 25.200. However, in accordance with the 
President's stated intention in the Executive Order, exceptions shall be 
granted only infrequently. Exceptions shall be reported in accordance 
with Sec. 25.505(a).

[60 FR 33041, 33053, June 26, 1995]



Sec. 25.220  Continuation of covered transactions.

    (a) Notwithstanding the debarment, suspension, proposed debarment 
under 48 CFR part 9, subpart 9.4, determination of ineligibility, or 
voluntary exclusion of any person by an agency, agencies and 
participants may continue covered transactions in existence at the time 
the person was debarred, suspended, proposed for debarment under 48 CFR 
part 9, subpart 9.4, declared ineligible, or voluntarily excluded. A 
decision as to the type of termination action, if any, to be taken 
should be made only after thorough review to ensure the propriety of the 
proposed action.
    (b) Agencies and participants shall not renew or extend covered 
transactions (other than no-cost time extensions) with any person who is 
debarred, suspended, proposed for debarment under 48 CFR part 9, subpart 
9.4, ineligible or voluntary excluded, except as provided in 
Sec. 25.215.

[60 FR 33041, 33053, June 26, 1995]



Sec. 25.225  Failure to adhere to restrictions.

    (a) Except as permitted under Sec. 25.215 or Sec. 25.220, a 
participant shall not knowingly do business under a covered transaction 
with a person who is--
    (1) Debarred or suspended;
    (2) Proposed for debarment under 48 CFR part 9, subpart 9.4; or
    (3) Ineligible for or voluntarily excluded from the covered 
transaction.
    (b) Violation of the restriction under paragraph (a) of this section 
may result in disallowance of costs, annulment or termination of award, 
issuance of a stop work order, debarment or suspension, or other 
remedies as appropriate.
    (c) A participant may rely upon the certification of a prospective 
participant in a lower tier covered transaction that it and its 
principals are not debarred, suspended, proposed for debarment under 48 
CFR part 9, subpart 9.4, ineligible, or voluntarily excluded from the 
covered transaction (See Appendix B of these regulations), unless it 
knows that the certification is erroneous. An agency has the burden of 
proof that a participant did knowingly

[[Page 62]]

do business with a person that filed an erroneous certification.

[60 FR 33041, 33053, June 26, 1995]



                          Subpart C--Debarment



Sec. 25.300  General.

    The debarring official may debar a person for any of the causes in 
Sec. 25.305, using procedures established in Secs. 25.310 through 
25.314. The existence of a cause for debarment, however, does not 
necessarily require that the person be debarred; the seriousness of the 
person's acts or omissions and any mitigating factors shall be 
considered in making any debarment decision.

[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



Sec. 25.305  Causes for debarment.

    Debarment may be imposed in accordance with the provisions of 
Secs. 25.300 through 25.314 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, 
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 the 
present responsibility of a person.
    (b) Violation of the terms of a public agreement or transaction so 
serious as to affect the integrity of an 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, the effective date of these regulations, or a 
procurement debarment by any Federal agency taken pursuant to 48 CFR 
subpart 9.4;
    (2) Knowingly doing business with a debarred, suspended, ineligible, 
or voluntarily excluded person, in connection with a covered 
transaction, except as permitted in Sec. 25.215 or Sec. 25.220;
    (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. 25.315 or of any settlement of a 
debarment or suspension action; or
    (5) Violation of any requirement of subpart F of this part, relating 
to providing a drug-free workplace, as set forth in Sec. 25.615 of this 
part.
    (d) Any other cause of so serious or compelling a nature that it 
affects the present responsibility of a person.

[53 FR 19190 and 19204, May 26, 1988, as amended at 54 FR 4950, 4960, 
Jan. 31, 1989. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 
1992]



Sec. 25.310  Procedures.

    Military Departments and Defense Agencies shall process debarment 
actions as informally as practicable, consistent with the principles of 
fundamental fairness, using the procedures in Secs. 25.311 through 
25.314.

[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]

[[Page 63]]



Sec. 25.311  Investigation and referral.

    Information concerning the existence of a cause for debarment from 
any source shall be promptly reported, investigated, and referred, when 
appropriate, to the debarring official for consideration. After 
consideration, the debarring official may issue a notice of proposed 
debarment.



Sec. 25.312  Notice of proposed debarment.

    A debarment proceeding shall be initiated by notice to the 
respondent advising:
    (a) That debarment is being considered;
    (b) Of the reasons for the proposed debarment in terms sufficient to 
put the respondent on notice of the conduct or transaction(s) upon which 
it is based;
    (c) Of the cause(s) relied upon under Sec. 25.305 for proposing 
debarment;
    (d) Of the provisions of Secs. 25.311 through 25.314, and any other 
Military Departments and Defense Agencies procedures, if applicable, 
governing debarment decisionmaking; and
    (e) Of the potential effect of a debarment.

[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



Sec. 25.313  Opportunity to contest proposed debarment.

    (a) Submission in opposition. Within 30 days after receipt of the 
notice of proposed debarment, the respondent may submit, in person, in 
writing, or through a representative, information and argument in 
opposition to the proposed debarment.
    (b) Additional proceedings as to disputed material facts. (1) In 
actions not based upon a conviction or civil judgment, if the debarring 
official finds that the respondent's submission in opposition raises a 
genuine dispute over facts material to the proposed debarment, 
respondent(s) shall be afforded an opportunity to appear with a 
representative, submit documentary evidence, present witnesses, and 
confront any witness the agency presents.
    (2) A transcribed record of any additional proceedings shall be made 
available at cost to the respondent, upon request, unless the respondent 
and the agency, by mutual agreement, waive the requirement for a 
transcript.



Sec. 25.314  Debarring official's decision.

    (a) No additional proceedings necessary. In actions based upon a 
conviction or civil judgment, or in which there is no genuine dispute 
over material facts, the debarring official shall make a decision on the 
basis of all the information in the administrative record, including any 
submission made by the respondent. The decision shall be made within 45 
days after receipt of any information and argument submitted by the 
respondent, unless the debarring official extends this period for good 
cause.
    (b) Additional proceedings necessary. (1) In actions in which 
additional proceedings are necessary to determine disputed material 
facts, written findings of fact shall be prepared. The debarring 
official shall base the decision on the facts as found, together with 
any information and argument submitted by the respondent and any other 
information in the administrative record.
    (2) The debarring official may refer disputed material facts to 
another official for findings of fact. The debarring official may reject 
any such findings, in whole or in part, only after specifically 
determining them to be arbitrary and capricious or clearly erroneous.
    (3) The debarring official's decision shall be made after the 
conclusion of the proceedings with respect to disputed facts.
    (c) (1) Standard of proof. In any debarment action, the cause for 
debarment must be established by a preponderance of the evidence. Where 
the proposed debarment is based upon a conviction or civil judgment, the 
standard shall be deemed to have been met.
    (2) Burden of proof. The burden of proof is on the agency proposing 
debarment.
    (d) Notice of debarring official's decision. (1) If the debarring 
official decides to impose debarment, the respondent shall be given 
prompt notice:
    (i) Referring to the notice of proposed debarment;
    (ii) Specifying the reasons for debarment;

[[Page 64]]

    (iii) Stating the period of debarment, including effective dates; 
and
    (iv) Advising that the debarment is effective for covered 
transactions throughout the executive branch of the Federal Government 
unless an agency head or an authorized designee makes the determination 
referred to in Sec. 25.215.
    (2) If the debarring official decides not to impose debarment, the 
respondent shall be given prompt notice of that decision. A decision not 
to impose debarment shall be without prejudice to a subsequent 
imposition of debarment by any other agency.

[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



Sec. 25.315  Settlement and voluntary exclusion.

    (a) When in the best interest of the Government, Military 
Departments and Defense Agencies may, at any time, settle a debarment or 
suspension action.
    (b) If a participant and the agency agree to a voluntary exclusion 
of the participant, such voluntary exclusion shall be entered on the 
Nonprocurement List (see subpart E).



Sec. 25.320  Period of debarment.

    (a) Debarment shall be for a period commensurate with the 
seriousness of the cause(s). If a suspension precedes a debarment, the 
suspension period shall be considered in determining the debarment 
period.
    (1) Debarment for causes other than those related to a violation of 
the requirements of subpart F of this part generally should not exceed 
three years. Where circumstances warrant, a longer period of debarment 
may be imposed.
    (2) In the case of a debarment for a violation of the requirements 
of subpart F of this part (see Sec. 25.305(c)(5)), the period of 
debarment shall not exceed five years.
    (b) The debarring official may extend an existing debarment for an 
additional period, if that official determines that an extension is 
necessary to protect the public interest. However, a debarment may not 
be extended solely on the basis of the facts and circumstances upon 
which the initial debarment action was based. If debarment for an 
additional period is determined to be necessary, the procedures of 
Secs. 25.311 through 25.314 shall be followed to extend the debarment.
    (c) The respondent may request the debarring official to reverse the 
debarment decision or to reduce the period or scope of debarment. Such a 
request shall be in writing and supported by documentation. The 
debarring official may grant such a request for reasons including, but 
not limited to:
    (1) Newly discovered material evidence;
    (2) Reversal of the conviction or civil judgment upon which the 
debarment was based;
    (3) Bona fide change in ownership or management;
    (4) Elimination of other causes for which the debarment was imposed; 
or
    (5) Other reasons the debarring official deems appropriate.

[53 FR 19190 and 19204, May 26, 1988, as amended at 54 FR 4950, 4960, 
Jan. 31, 1989. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 
1992]



Sec. 25.325  Scope of debarment.

    (a) Scope in general. (1) Debarment of a person under these 
regulations constitutes debarment of all its divisions and other 
organizational elements from all covered transactions, unless the 
debarment decision is limited by its terms to one or more specifically 
identified individuals, divisions or other organizational elements or to 
specific types of transactions.
    (2) The debarment action may include any affiliate of the 
participant that is specifically named and given notice of the proposed 
debarment and an opportunity to respond (see Secs. 25.311 through 
25.314).
    (b) Imputing conduct. For purposes of determining the scope of 
debarment, conduct may be imputed as follows:
    (1) Conduct imputed to participant. The fraudulent, criminal or 
other seriously improper conduct of any officer, director, shareholder, 
partner, employee, or other individual associated with a participant may 
be imputed to the participant when the conduct occurred in connection 
with the individual's performance of duties for or on behalf of the

[[Page 65]]

participant, or with the participant's knowledge, approval, or 
acquiescence. The participant's acceptance of the benefits derived from 
the conduct shall be evidence of such knowledge, approval, or 
acquiescence.
    (2) Conduct imputed to individuals associated with participant. The 
fraudulent, criminal, or other seriously improper conduct of a 
participant may be imputed to any officer, director, shareholder, 
partner, employee, or other individual associated with the participant 
who participated in, knew of, or had reason to know of the participant's 
conduct.
    (3) Conduct of one participant imputed to other participants in a 
joint venture. The fraudulent, criminal, or other seriously improper 
conduct of one participant in a joint venture, grant pursuant to a joint 
application, or similar arrangement may be imputed to other participants 
if the conduct occurred for or on behalf of the joint venture, grant 
pursuant to a joint application, or similar arrangement may be imputed 
to other participants if the conduct occurred for or on behalf of the 
joint venture, grant pursuant to a joint application, or similar 
arrangement or with the knowledge, approval, or acquiescence of these 
participants. Acceptance of the benefits derived from the conduct shall 
be evidence of such knowledge, approval, or acquiescence.

[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



                          Subpart D--Suspension



Sec. 25.400  General.

    (a) The suspending official may suspend a person for any of the 
causes in Sec. 25.405 using procedures established in Secs. 25.410 
through 25.413.
    (b) Suspension is a serious action to be imposed only when:
    (1) There exists adequate evidence of one or more of the causes set 
out in Sec. 25.405, and
    (2) Immediate action is necessary to protect the public interest.
    (c) In assessing the adequacy of the evidence, the agency should 
consider 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. This assessment 
should include an examination of basic documents such as grants, 
cooperative agreements, loan authorizations, and contracts.

[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



Sec. 25.405  Causes for suspension.

    (a) Suspension may be imposed in accordance with the provisions of 
Secs. 25.400 through 25.413 upon adequate evidence:
    (1) To suspect the commission of an offense listed in 
Sec. 25.305(a); or
    (2) That a cause for debarment under Sec. 25.305 may exist.
    (b) Indictment shall constitute adequate evidence for purposes of 
suspension actions.

[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



Sec. 25.410  Procedures.

    (a) Investigation and referral. Information concerning the existence 
of a cause for suspension from any source shall be promptly reported, 
investigated, and referred, when appropriate, to the suspending official 
for consideration. After consideration, the suspending official may 
issue a notice of suspension.
    (b) Decisionmaking process. Military Departments and Defense 
Agencies shall process suspension actions as informally as practicable, 
consistent with principles of fundamental fairness, using the procedures 
in Secs. 25.411 through 25.413.

[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



Sec. 25.411  Notice of suspension.

    When a respondent is suspended, notice shall immediately be given:
    (a) That suspension has been imposed;
    (b) That the suspension is based on an indictment, conviction, or 
other adequate evidence that the respondent has committed irregularities 
seriously reflecting on the propriety of further

[[Page 66]]

Federal Government dealings with the respondent;
    (c) Describing any such irregularities in terms sufficient to put 
the respondent on notice without disclosing the Federal Government's 
evidence;
    (d) Of the cause(s) relied upon under Sec. 25.405 for imposing 
suspension;
    (e) That the suspension is for a temporary period pending the 
completion of an investigation or ensuing legal, debarment, or Program 
Fraud Civil Remedies Act proceedings;
    (f) Of the provisions of Secs. 25.411 through 25.413 and any other 
Military Departments and Defense Agencies procedures, if applicable, 
governing suspension decisionmaking; and
    (g) Of the effect of the suspension.

[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



Sec. 25.412  Opportunity to contest suspension.

    (a) Submission in opposition. Within 30 days after receipt of the 
notice of suspension, the respondent may submit, in person, in writing, 
or through a representative, information and argument in opposition to 
the suspension.
    (b) Additional proceedings as to disputed material facts. (1) If the 
suspending official finds that the respondent's submission in opposition 
raises a genuine dispute over facts material to the suspension, 
respondent(s) shall be afforded an opportunity to appear with a 
representative, submit documentary evidence, present witnesses, and 
confront any witness the agency presents, unless:
    (i) The action is based on an indictment, conviction or civil 
judgment, or
    (ii) A determination is made, on the basis of Department of Justice 
advice, that the substantial interests of the Federal Government in 
pending or contemplated legal proceedings based on the same facts as the 
suspension would be prejudiced.
    (2) A transcribed record of any additional proceedings shall be 
prepared and made available at cost to the respondent, upon request, 
unless the respondent and the agency, by mutual agreement, waive the 
requirement for a transcript.



Sec. 25.413  Suspending official's decision.

    The suspending official may modify or terminate the suspension (for 
example, see Sec. 25.320(c) for reasons for reducing the period or scope 
of debarment) or may leave it in force. However, a decision to modify or 
terminate the suspension shall be without prejudice to the subsequent 
imposition of suspension by any other agency or debarment by any agency. 
The decision shall be rendered in accordance with the following 
provisions:
    (a) No additional proceedings necessary. In actions: based on an 
indictment, conviction, or civil judgment; in which there is no genuine 
dispute over material facts; or in which additional proceedings to 
determine disputed material facts have been denied on the basis of 
Department of Justice advice, the suspending official shall make a 
decision on the basis of all the information in the administrative 
record, including any submission made by the respondent. The decision 
shall be made within 45 days after receipt of any information and 
argument submitted by the respondent, unless the suspending official 
extends this period for good cause.
    (b) Additional proceedings necessary. (1) In actions in which 
additional proceedings are necessary to determine disputed material 
facts, written findings of fact shall be prepared. The suspending 
official shall base the decision on the facts as found, together with 
any information and argument submitted by the respondent and any other 
information in the administrative record.
    (2) The suspending official may refer matters involving disputed 
material facts to another official for findings of fact. The suspending 
official may reject any such findings, in whole or in part, only after 
specifically determining them to be arbitrary or capricious or clearly 
erroneous.
    (c) Notice of suspending official's decision. Prompt written notice 
of the suspending official's decision shall be sent to the respondent.

[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]

[[Page 67]]



Sec. 25.415  Period of suspension.

    (a) Suspension shall be for a temporary period pending the 
completion of an investigation or ensuing legal, debarment, or Program 
Fraud Civil Remedies Act proceedings, unless terminated sooner by the 
suspending official or as provided in paragraph (b) of this section.
    (b) If legal or administrative proceedings are not initiated within 
12 months after the date of the suspension notice, the suspension shall 
be terminated unless an Assistant Attorney General or United States 
Attorney requests its extension in writing, in which case it may be 
extended for an additional six months. In no event may a suspension 
extend beyond 18 months, unless such proceedings have been initiated 
within that period.
    (c) The suspending official shall notify the Department of Justice 
of an impending termination of a suspension, at least 30 days before the 
12-month period expires, to give that Department an opportunity to 
request an extension.



Sec. 25.420  Scope of suspension.

    The scope of a suspension is the same as the scope of a debarment 
(see Sec. 25.325), except that the procedures of Secs. 25.410 through 
25.413 shall be used in imposing a suspension.

[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



       Subpart E--Responsibilities of GSA, Agency and Participants



Sec. 25.500  GSA responsibilities.

    (a) In accordance with the OMB guidelines, GSA shall compile, 
maintain, and distribute a list of all persons who have been debarred, 
suspended, or voluntarily excluded by agencies under Executive Order 
12549 and these regulations, and those who have been determined to be 
ineligible.
    (b) At a minimum, this list shall indicate:
    (1) The names and addresses of all debarred, suspended, ineligible, 
and voluntarily excluded persons, in alphabetical order, with cross-
references when 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 each listing; and
    (6) The agency and name and telephone number of the agency point of 
contact for the action.



Sec. 25.505  Military Departments and Defense Agencies' responsibilities.

    (a) The agency shall provide GSA with current information concerning 
debarments, suspension, determinations of ineligibility, and voluntary 
exclusions it has taken. Until February 18, 1989, the agency shall also 
provide GSA and OMB with information concerning all transactions in 
which Military Departments and Defense Agencies has granted exceptions 
under Sec. 25.215 permitting participation by debarred, suspended, or 
voluntarily excluded persons.
    (b) Unless an alternative schedule is agreed to by GSA, the agency 
shall advise GSA of the information set forth in Sec. 25.500(b) and of 
the exceptions granted under Sec. 25.215 within five working days after 
taking such actions.
    (c) The agency shall direct inquiries concerning listed persons to 
the agency that took the action.
    (d) Agency officials shall check the Nonprocurement List before 
entering covered transactions to determine whether a participant in a 
primary transaction is debarred, suspended, ineligible, or voluntarily 
excluded (Tel. ).
    (e) Agency officials shall check the Nonprocurement List before 
approving principals or lower tier participants where agency approval of 
the principal or lower tier participant is required under the terms of 
the transaction, to determine whether such principals or participants 
are debarred, suspended, ineligible, or voluntarily excluded.

[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



Sec. 25.510  Participants' responsibilities.

    (a) Certification by participants in primary covered transactions. 
Each participant shall submit the certification in

[[Page 68]]

appendix A to this part for it and its principals at the time the 
participant submits its proposal in connection with a primary covered 
transaction, except that States need only complete such certification as 
to their principals. Participants may decide the method and frequency by 
which they determine the eligibility of their principals. In addition, 
each participant may, but is not required to, check the Nonprocurement 
List for its principals (Tel. ). Adverse information on the 
certification will not necessarily result in denial of participation. 
However, the certification, and any additional information pertaining to 
the certification submitted by the participant, shall be considered in 
the administration of covered transactions.
    (b) Certification by participants in lower tier covered 
transactions. (1) Each participant shall require participants in lower 
tier covered transactions to include the certification in appendix B to 
this part for it and its principals in any proposal submitted in 
connection with such lower tier covered transactions.
    (2) A participant may rely upon the certification of a prospective 
participant in a lower tier covered transaction that it and its 
principals are not debarred, suspended, ineligible, or voluntarily 
excluded from the covered transaction by any Federal agency, unless it 
knows that the certification is erroneous. Participants may decide the 
method and frequency by which they determine the eligiblity of their 
principals. In addition, a participant may, but is not required to, 
check the Nonprocurement List for its principals and for participants 
(Tel. ).
    (c) Changed circumstances regarding certification. A participant 
shall provide immediate written notice to Military Departments and 
Defense Agencies if at any time the participant learns that its 
certification was erroneous when submitted or has become erroneous by 
reason of changed circumstances. Participants in lower tier covered 
transactions shall provide the same updated notice to the participant to 
which it submitted its proposals.



          Subpart F--Drug-Free Workplace Requirements (Grants)

    Source: 55 FR 21688, 21697, May 25, 1990, unless otherwise noted. 
Redesignated at 57 FR 6199, Feb. 21, 1992.



Sec. 25.600  Purpose.

    (a) The purpose of this subpart is to carry out the Drug-Free 
Workplace Act of 1988 by requiring that--
    (1) A grantee, other than an individual, shall certify to the agency 
that it will provide a drug-free workplace;
    (2) A grantee who is an individual shall certify to the agency that, 
as a condition of the grant, he or she will not engage in the unlawful 
manufacture, distribution, dispensing, possession or use of a controlled 
substance in conducting any activity with the grant.
    (b) Requirements implementing the Drug-Free Workplace Act of 1988 
for contractors with the agency are found at 48 CFR subparts 9.4, 23.5, 
and 52.2.



Sec. 25.605  Definitions.

    (a) Except as amended in this section, the definitions of 
Sec. 25.105 apply to this subpart.
    (b) For purposes of this subpart--
    (1) 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;
    (2) 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;
    (3) Criminal drug statute means a Federal or non-Federal criminal 
statute involving the manufacture, distribution, dispensing, use, or 
possession of any controlled substance;
    (4) Drug-free workplace means a site for the performance of work 
done in connection with a specific grant at which employees of the 
grantee are prohibited from engaging in the unlawful manufacture, 
distribution, dispensing, possession, or use of a controlled substance;

[[Page 69]]

    (5) Employee means the employee of a grantee directly engaged in the 
performance of work under the grant, including:
    (i) All direct charge employees;
    (ii) All indirect charge employees, unless their impact or 
involvement is insignificant to the performance of the grant; and,
    (iii) Temporary personnel and consultants who are directly engaged 
in the performance of work under the grant and who are on the grantee's 
payroll.

This definition does not include workers not on the payroll of the 
grantee (e.g., volunteers, even if used to meet a matching requirement; 
consultants or independent contractors not on the payroll; or employees 
of subrecipients or subcontractors in covered workplaces);
    (6) 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;
    (7) Grant means an award of financial assistance, including a 
cooperative agreement, in the form of money, or property in lieu of 
money, by a Federal agency directly to a grantee. The term grant 
includes block grant and entitlement grant programs, whether or not 
exempted from coverage under the grants management government-wide 
common rule on uniform administrative requirements for grants and 
cooperative agreements. The term does not include technical assistance 
that provides services instead of money, or other assistance in the form 
of loans, loan guarantees, interest subsidies, insurance, or direct 
appropriations; or any veterans' benefits to individuals, i.e., any 
benefit to veterans, their families, or survivors by virtue of the 
service of a veteran in the Armed Forces of the United States;
    (8) Grantee means a person who applies for or receives a grant 
directly from a Federal agency (except another Federal agency);
    (9) Individual means a natural person;
    (10) State means any of the States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, any territory or 
possession of the United States, or any agency of a State, exclusive of 
institutions of higher education, hospitals, and units of local 
government. A State instrumentality will be considered part of the State 
government if it has a written determination from a State government 
that such State considers the instrumentality to be an agency of the 
State government.

[55 FR 21688 and 21697, May. 25, 1990. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



Sec. 25.610  Coverage.

    (a) This subpart applies to any grantee of the agency.
    (b) This subpart applies to any grant, except where application of 
this subpart would be inconsistent with the international obligations of 
the United States or the laws or regulations of a foreign government. A 
determination of such inconsistency may be made only by the agency head 
or his/her designee.
    (1) Heads of Defense Agencies, Heads of DoD Field Activities, and 
their designees are authorized to make such determinations on behalf of 
the Secretary of Defense.
    (2) [Reserved]
    (c) The provisions of subparts A, B, C, D and E of this part apply 
to matters covered by this subpart, except where specifically modified 
by this subpart. In the event of any conflict between provisions of this 
subpart and other provisions of this part, the provisions of this 
subpart are deemed to control with respect to the implementation of 
drug-free workplace requirements concerning grants.

[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 
6199, Feb. 21, 1992; 60 FR 33053, June 26, 1995]

[[Page 70]]



Sec. 25.615  Grounds for suspension of payments, suspension or termination of grants, or suspension or debarment.

    A grantee shall be deemed in violation of the requirements of this 
subpart if the agency head or his or her official designee determines, 
in writing, that--
    (a) The grantee has made a false certification under Sec. 25.630;
    (b) With respect to a grantee other than an individual--
    (1) The grantee has violated the certification by failing to carry 
out the requirements of paragraphs (A)(a)-(g) and/or (B) of the 
certification (Alternate I to Appendix C) or
    (2) Such a number of employees of the grantee have been convicted of 
violations of criminal drug statutes for violations occurring in the 
workplace as to indicate that the grantee has failed to make a good 
faith effort to provide a drug-free workplace.
    (c) With respect to a grantee who is an individual--
    (1) The grantee has violated the certification by failing to carry 
out its requirements (Alternate II to Appendix C); or
    (2) The grantee is convicted of a criminal drug offense resulting 
from a violation occurring during the conduct of any grant activity.

[55 FR 21688 and 21697, May 25, 1990. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



Sec. 25.616  Determinations of grantee violations.

    Heads of Defense Agencies, Heads of DoD Field Activities, and their 
designees are authorized to make determinations of grantee violations 
under Sec. 25.615.

[60 FR 33053, June 26, 1995]



Sec. 25.620  Effect of violation.

    (a) In the event of a violation of this subpart as provided in 
Sec. 25.615, and in accordance with applicable law, the grantee shall be 
subject to one or more of the following actions:
    (1) Suspension of payments under the grant;
    (2) Suspension or termination of the grant; and
    (3) Suspension or debarment of the grantee under the provisions of 
this part.
    (b) Upon issuance of any final decision under this part requiring 
debarment of a grantee, the debarred grantee shall be ineligible for 
award of any grant from any Federal agency for a period specified in the 
decision, not to exceed five years (see Sec. 25.320(a)(2) of this part).

[55 FR 21688 and 21697, May 25, 1990. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



Sec. 25.625  Exception provision.

    The agency head may waive with respect to a particular grant, in 
writing, a suspension of payments under a grant, suspension or 
termination of a grant, or suspension or debarment of a grantee 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.



Sec. 25.630  Certification requirements and procedures.

    (a)(1) As a prior condition of being awarded a grant, each grantee 
shall make the appropriate certification to the Federal agency providing 
the grant, as provided in Appendix C to this part.
    (2) Grantees are not required to make a certification in order to 
continue receiving funds under a grant awarded before March 18, 1989, or 
under a no-cost time extension of such a grant. However, the grantee 
shall make a one-time drug-free workplace certification for a non-
automatic continuation of such a grant made on or after March 18, 1989.
    (b) Except as provided in this section, all grantees shall make the 
required certification for each grant. For mandatory formula grants and 
entitlements that have no application process, grantees shall submit a 
one-time certification in order to continue receiving awards.
    (c) A grantee that is a State may elect to make one certification in 
each Federal fiscal year. States that previously submitted an annual 
certification are not required to make a certification for Fiscal Year 
1990 until

[[Page 71]]

June 30, 1990. Except as provided in paragraph (d) of this section, this 
certification shall cover all grants to all State agencies from any 
Federal agency. The State shall retain the original of this statewide 
certification in its Governor's office and, prior to grant award, shall 
ensure that a copy is submitted individually with respect to each grant, 
unless the Federal agency has designated a central location for 
submission.
    (d)(1) The Governor of a State may exclude certain State agencies 
from the statewide certification and authorize these agencies to submit 
their own certifications to Federal agencies. The statewide 
certification shall name any State agencies so excluded.
    (2) A State agency to which the statewide certification does not 
apply, or a State agency in a State that does not have a statewide 
certification, may elect to make one certification in each Federal 
fiscal year. State agencies that previously submitted a State agency 
certification are not required to make a certification for Fiscal Year 
1990 until June 30, 1990. The State agency shall retain the original of 
this State agency-wide certification in its central office and, prior to 
grant award, shall ensure that a copy is submitted individually with 
respect to each grant, unless the Federal agency designates a central 
location for submission.
    (3) When the work of a grant is done by more than one State agency, 
the certification of the State agency directly receiving the grant shall 
be deemed to certify compliance for all workplaces, including those 
located in other State agencies.
    (e)(1) For a grant of less than 30 days performance duration, 
grantees shall have this policy statement and program in place as soon 
as possible, but in any case by a date prior to the date on which 
performance is expected to be completed.
    (2) For a grant of 30 days or more performance duration, grantees 
shall have this policy statement and program in place within 30 days 
after award.
    (3) Where extraordinary circumstances warrant for a specific grant, 
the grant officer may determine a different date on which the policy 
statement and program shall be in place.



Sec. 25.635  Reporting of and employee sanctions for convictions of criminal drug offenses.

    (a) When a grantee other than an individual is notified that an 
employee has been convicted for a violation of a criminal drug statute 
occurring in the workplace, it shall take the following actions:
    (1) Within 10 calendar days of receiving notice of the conviction, 
the grantee shall provide written notice, including the convicted 
employee's position title, to every grant officer, or other designee on 
whose grant activity the convicted employee was working, unless a 
Federal agency has designated a central point for the receipt of such 
notifications. Notification shall include the identification number(s) 
for each of the Federal agency's affected grants.
    (2) Within 30 calendar days of receiving notice of the conviction, 
the grantee shall do the following with respect to the employee who was 
convicted.
    (i) Take appropriate personnel action against the employee, up to 
and including termination, consistent with requirements of the 
Rehabilitation Act of 1973, as amended; or
    (ii) Require the employee to participate satisfactorily in a drug 
abuse assistance or rehabilitation program approved for such purposes by 
a Federal, State, or local health, law enforcement, or other appropriate 
agency.
    (b) A grantee who is an individual who is convicted for a violation 
of a criminal drug statute occurring during the conduct of any grant 
activity shall report the conviction, in writing, within 10 calendar 
days, to his or her Federal agency grant officer, or other designee, 
unless the Federal agency has designated a central point for the receipt 
of such notices. Notification shall include the identification number(s) 
for each of the Federal agency's affected grants.

(Approved by the Office of Management and Budget under control number 
0991-0002)

[[Page 72]]

 Appendix A to Part 25--Certification Regarding Debarment, Suspension, 
     and Other Responsibility Matters--Primary Covered Transactions

                     Instructions for Certification

    1. By signing and submitting this proposal, the prospective primary 
participant is providing the certification set out below.
    2. The inability of a person to provide the certification required 
below will not necessarily result in denial of participation in this 
covered transaction. The prospective participant shall submit an 
explanation of why it cannot provide the certification set out below. 
The certification or explanation will be considered in connection with 
the department or agency's determination whether to enter into this 
transaction. However, failure of the prospective primary participant to 
furnish a certification or an explanation shall disqualify such person 
from participation in this transaction.
    3. The certification in this clause is a material representation of 
fact upon which reliance was placed when the department or agency 
determined to enter into this transaction. If it is later determined 
that the prospective primary participant knowingly rendered an erroneous 
certification, in addition to other remedies available to the Federal 
Government, the department or agency may terminate this transaction for 
cause or default.
    4. The prospective primary participant shall provide immediate 
written notice to the department or agency to which this proposal is 
submitted if at any time the prospective primary participant learns that 
its certification was erroneous when submitted or has become erroneous 
by reason of changed circumstances.
    5. The terms covered transaction, debarred, suspended, ineligible, 
lower tier covered transaction, participant, person, primary covered 
transaction, principal, proposal, and voluntarily excluded, as used in 
this clause, have the meanings set out in the Definitions and Coverage 
sections of the rules implementing Executive Order 12549. You may 
contact the department or agency to which this proposal is being 
submitted for assistance in obtaining a copy of those regulations.
    6. The prospective primary participant agrees by submitting this 
proposal that, should the proposed covered transaction be entered into, 
it shall not knowingly enter into any lower tier covered transaction 
with a person who is proposed for debarment under 48 CFR part 9, subpart 
9.4, debarred, suspended, declared ineligible, or voluntarily excluded 
from participation in this covered transaction, unless authorized by the 
department or agency entering into this transaction.
    7. The prospective primary participant further agrees by submitting 
this proposal that it will include the clause titled ``Certification 
Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion-
Lower Tier Covered Transaction,'' provided by the department or agency 
entering into this covered transaction, without modification, in all 
lower tier covered transactions and in all solicitations for lower tier 
covered transactions.
    8. A participant in a covered transaction may rely upon a 
certification of a prospective participant in a lower tier covered 
transaction that it is not proposed for debarment under 48 CFR part 9, 
subpart 9.4, debarred, suspended, ineligible, or voluntarily excluded 
from the covered transaction, unless it knows that the certification is 
erroneous. A participant may decide the method and frequency by which it 
determines the eligibility of its principals. Each participant may, but 
is not required to, check the List of Parties Excluded from Federal 
Procurement and Nonprocurement Programs.
    9. Nothing contained in the foregoing shall be construed to require 
establishment of a system of records in order to render in good faith 
the certification required by this clause. The knowledge and information 
of a participant is not required to exceed that which is normally 
possessed by a prudent person in the ordinary course of business 
dealings.
    10. Except for transactions authorized under paragraph 6 of these 
instructions, if a participant in a covered transaction knowingly enters 
into a lower tier covered transaction with a person who is proposed for 
debarment under 48 CFR part 9, subpart 9.4, suspended, debarred, 
ineligible, or voluntarily excluded from participation in this 
transaction, in addition to other remedies available to the Federal 
Government, the department or agency may terminate this transaction for 
cause or default.

Certification Regarding Debarment, Suspension, and Other Responsibility 
                  Matters--Primary Covered Transactions

    (1) The prospective primary participant certifies to the best of its 
knowledge and belief, that it and its principals:
    (a) Are not presently debarred, suspended, proposed for debarment, 
declared ineligible, or voluntarily excluded by any Federal department 
or agency;
    (b) Have not within a three-year period preceding this proposal been 
convicted of or had a civil judgment rendered against them for 
commission of fraud or a criminal offense in connection with obtaining, 
attempting to obtain, or performing a public (Federal, State or local) 
transaction or contract under a public transaction; violation of Federal 
or State antitrust statutes or commission of

[[Page 73]]

embezzlement, theft, forgery, bribery, falsification or destruction of 
records, making false statements, or receiving stolen property;
    (c) Are not presently indicted for or otherwise criminally or 
civilly charged by a governmental entity (Federal, State or local) with 
commission of any of the offenses enumerated in paragraph (1)(b) of this 
certification; and
    (d) Have not within a three-year period preceding this application/
proposal had one or more public transactions (Federal, State or local) 
terminated for cause or default.
    (2) Where the prospective primary participant is unable to certify 
to any of the statements in this certification, such prospective 
participant shall attach an explanation to this proposal.

[60 FR 33042, June 26, 1995]

 Appendix B to Part 25--Certification Regarding Debarment, Suspension, 
 Ineligibility and Voluntary Exclusion--Lower Tier Covered Transactions

                     Instructions for Certification

    1. By signing and submitting this proposal, the prospective lower 
tier participant is providing the certification set out below.
    2. The certification in this clause is a material representation of 
fact upon which reliance was placed when this transaction was entered 
into. If it is later determined that the prospective lower tier 
participant knowingly rendered an erroneous certification, in addition 
to other remedies available to the Federal Government the department or 
agency with which this transaction originated may pursue available 
remedies, including suspension and/or debarment.
    3. The prospective lower tier participant shall provide immediate 
written notice to the person to which this proposal is submitted if at 
any time the prospective lower tier participant learns that its 
certification was erroneous when submitted or had become erroneous by 
reason of changed circumstances.
    4. The terms covered transaction, debarred, suspended, ineligible, 
lower tier covered transaction, participant, person, primary covered 
transaction, principal, proposal, and voluntarily excluded, as used in 
this clause, have the meaning set out in the Definitions and Coverage 
sections of rules implementing Executive Order 12549. You may contact 
the person to which this proposal is submitted for assistance in 
obtaining a copy of those regulations.
    5. The prospective lower tier participant agrees by submitting this 
proposal that, should the proposed covered transaction be entered into, 
it shall not knowingly enter into any lower tier covered transaction 
with a person who is proposed for debarment under 48 CFR part 9, subpart 
9.4, debarred, suspended, declared ineligible, or voluntarily excluded 
from participation in this covered transaction, unless authorized by the 
department or agency with which this transaction originated.
    6. The prospective lower tier participant further agrees by 
submitting this proposal that it will include this clause titled 
``Certification Regarding Debarment, Suspension, Ineligibility and 
Voluntary Exclusion-Lower Tier Covered Transaction,'' without 
modification, in all lower tier covered transactions and in all 
solicitations for lower tier covered transactions.
    7. A participant in a covered transaction may rely upon a 
certification of a prospective participant in a lower tier covered 
transaction that it is not proposed for debarment under 48 CFR part 9, 
subpart 9.4, debarred, suspended, ineligible, or voluntarily excluded 
from covered transactions, unless it knows that the certification is 
erroneous. A participant may decide the method and frequency by which it 
determines the eligibility of its principals. Each participant may, but 
is not required to, check the List of Parties Excluded from Federal 
Procurement and Nonprocurement Programs.
    8. Nothing contained in the foregoing shall be construed to require 
establishment of a system of records in order to render in good faith 
the certification required by this clause. The knowledge and information 
of a participant is not required to exceed that which is normally 
possessed by a prudent person in the ordinary course of business 
dealings.
    9. Except for transactions authorized under paragraph 5 of these 
instructions, if a participant in a covered transaction knowingly enters 
into a lower tier covered transaction with a person who is proposed for 
debarment under 48 CFR part 9, subpart 9.4, suspended, debarred, 
ineligible, or voluntarily excluded from participation in this 
transaction, in addition to other remedies available to the Federal 
Government, the department or agency with which this transaction 
originated may pursue available remedies, including suspension and/or 
debarment.

    Certification Regarding Debarment, Suspension, Ineligibility an 
          Voluntary Exclusion--Lower Tier Covered Transactions

    (1) The prospective lower tier participant certifies, by submission 
of this proposal, that neither it nor its principals is presently 
debarred, suspended, proposed for debarment, declared ineligible, or 
voluntarily excluded from participation in this transaction by any 
Federal department or agency.
    (2) Where the prospective lower tier participant is unable to 
certify to any of the statements in this certification, such prospective

[[Page 74]]

participant shall attach an explanation to this proposal.

[60 FR 33042, June 26, 1995]

   Appendix C to Part 25--Certification Regarding Drug-Free Workplace 
                              Requirements

                     Instructions for Certification

    1. By signing and/or submitting this application or grant agreement, 
the grantee is providing the certification set out below.
    2. The certification set out below is a material representation of 
fact upon which reliance is placed when the agency awards the grant. If 
it is later determined that the grantee knowingly rendered a false 
certification, or otherwise violates the requirements of the Drug-Free 
Workplace Act, the agency, in addition to any other remedies available 
to the Federal Government, may take action authorized under the Drug-
Free Workplace Act.
    3. For grantees other than individuals, Alternate I applies.
    4. For grantees who are individuals, Alternate II applies.
    5. Workplaces under grants, for grantees other than individuals, 
need not be identified on the certification. If known, they may be 
identified in the grant application. If the grantee does not identify 
the workplaces at the time of application, or upon award, if there is no 
application, the grantee must keep the identity of the workplace(s) on 
file in its office and make the information available for Federal 
inspection. Failure to identify all known workplaces constitutes a 
violation of the grantee's drug-free workplace requirements.
    6. Workplace identifications must include the actual address of 
buildings (or parts of buildings) or other sites where work under the 
grant takes place. Categorical descriptions may be used (e.g., 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).
    7. If the workplace identified to the agency changes during the 
performance of the grant, the grantee shall inform the agency of the 
change(s), if it previously identified the workplaces in question (see 
paragraph five).
    8. Definitions of terms in the Nonprocurement Suspension and 
Debarment common rule and Drug-Free Workplace common rule apply to this 
certification. Grantees' attention is called, in particular, to the 
following definitions from these rules:
    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 (21 CFR 1308.11 through 1308.15);
    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;
    Criminal drug statute means a Federal or non-Federal criminal 
statute involving the manufacture, distribution, dispensing, use, or 
possession of any controlled substance;
    Employee means the employee of a grantee directly engaged in the 
performance of work under a grant, including: (i) All direct charge 
employees; (ii) All indirect charge employees unless their impact or 
involvement is insignificant to the performance of the grant; and, (iii) 
Temporary personnel and consultants who are directly engaged in the 
performance of work under the grant and who are on the grantee's 
payroll. This definition does not include workers not on the payroll of 
the grantee (e.g., volunteers, even if used to meet a matching 
requirement; consultants or independent contractors not on the grantee's 
payroll; or employees of subrecipients or subcontractors in covered 
workplaces).

        Certification Regarding Drug-Free Workplace Requirements

             Alternate I. (Grantees Other Than Individuals)

    A. The grantee certifies that it will or will continue to provide a 
drug-free workplace by:
    (a) Publishing a statement notifying employees that the unlawful 
manufacture, distribution, dispensing, possession, or use of a 
controlled substance is prohibited in the grantee's workplace and 
specifying the actions that will be taken against employees for 
violation of such prohibition;
    (b) Establishing an ongoing drug-free awareness program to inform 
employees about--
    (1) The dangers of drug abuse in the workplace;
    (2) The grantee's policy of maintaining a drug-free workplace;
    (3) Any available drug counseling, rehabilitation, and employee 
assistance programs; and
    (4) The penalties that may be imposed upon employees for drug abuse 
violations occurring in the workplace;
    (c) Making it a requirement that each employee to be engaged in the 
performance of the grant be given a copy of the statement required by 
paragraph (a);
    (d) Notifying the employee in the statement required by paragraph 
(a) that, as a condition of employment under the grant, the employee 
will--
    (1) Abide by the terms of the statement; and

[[Page 75]]

    (2) Notify the employer in writing of his or her conviction for a 
violation of a criminal drug statute occurring in the workplace no later 
than five calendar days after such conviction;
    (e) Notifying the agency in writing, within ten calendar days after 
receiving notice under paragraph (d)(2) from an employee or otherwise 
receiving actual notice of such conviction. Employers of convicted 
employees must provide notice, including position title, to every grant 
officer or other designee on whose grant activity the convicted employee 
was working, unless the Federal agency has designated a central point 
for the receipt of such notices. Notice shall include the identification 
number(s) of each affected grant;
    (f) Taking one of the following actions, within 30 calendar days of 
receiving notice under paragraph (d)(2), with respect to any employee 
who is so convicted--
    (1) Taking appropriate personnel action against such an employee, up 
to and including termination, consistent with the requirements of the 
Rehabilitation Act of 1973, as amended; or
    (2) Requiring such employee to participate satisfactorily in a drug 
abuse assistance or rehabilitation program approved for such purposes by 
a Federal, State, or local health, law enforcement, or other appropriate 
agency;
    (g) Making a good faith effort to continue to maintain a drug-free 
workplace through implementation of paragraphs (a), (b), (c), (d), (e) 
and (f).
    B. The grantee may insert in the space provided below the site(s) 
for the performance of work done in connection with the specific grant:

Place of Performance (Street address, city, county, State, zip code)
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

Check {time}  if there are workplaces on file that are not identified 
here.

              Alternate II. (Grantees Who Are Individuals)

    (a) The grantee certifies that, as a condition of the grant, he or 
she will not engage in the unlawful manufacture, distribution, 
dispensing, possession, or use of a controlled substance in conducting 
any activity with the grant;
    (b) If convicted of a criminal drug offense resulting from a 
violation occurring during the conduct of any grant activity, he or she 
will report the conviction, in writing, within 10 calendar days of the 
conviction, to every grant officer or other designee, unless the Federal 
agency designates a central point for the receipt of such notices. When 
notice is made to such a central point, it shall include the 
identification number(s) of each affected grant.

[55 FR 21690, 21697, May 25, 1990. Redesignated at 57 FR 6200, Feb. 21, 
1992]



PART 28--NEW RESTRICTIONS ON LOBBYING--Table of Contents




                           Subpart A--General

Sec.
28.100 Conditions on use of funds.
28.105 Definitions.
28.110 Certification and disclosure.

                 Subpart B--Activities by Own Employees

28.200 Agency and legislative liaison.
28.205 Professional and technical services.
28.210 Reporting.

            Subpart C--Activities by Other Than Own Employees

28.300 Professional and technical services.

                  Subpart D--Penalties and Enforcement

28.400 Penalties.
28.405 Penalty procedures.
28.410 Enforcement.

                          Subpart E--Exemptions

28.500 Secretary of Defense.

                        Subpart F--Agency Reports

28.600 Semi-annual compilation.
28.605 Inspector General report.

Appendix A to Part 28--Certification Regarding Lobbying
Appendix B to Part 28--Disclosure Form to Report Lobbying

    Authority: Section 319, Public Law 102-121 (31 U.S.C. 1352); 5 
U.S.C. section 301; 10 U.S.C. 113.

    Source: 55 FR 6737 and 6752, Feb. 26, 1990. Redesignated at 57 FR 
6199, Feb. 21, 1992.


    Cross reference: See also Office of Management and Budget notice 
published at 54 FR 52306, December 20, 1989.



                           Subpart A--General



Sec. 28.100  Conditions on use of funds.

    (a) No appropriated funds may be expended by the recipient of a 
Federal contract, grant, loan, or cooperative ageement to pay any person 
for influencing or attempting to influence an officer or employee of any 
agency, a

[[Page 76]]

Member of Congress, an officer or employee of Congress, or an employee 
of a Member of Congress in connection with any of the following covered 
Federal actions: the awarding of any Federal contract, the making of any 
Federal grant, the making of any Federal loan, the entering into of any 
cooperative agreement, and the extension, continuation, renewal, 
amendment, or modification of any Federal contract, grant, loan, or 
cooperative agreement.
    (b) Each person who requests or receives from an agency a Federal 
contract, grant, loan, or cooperative agreement shall file with that 
agency a certification, set forth in Appendix A, that the person has not 
made, and will not make, any payment prohibited by paragraph (a) of this 
section.
    (c) Each person who requests or receives from an agency a Federal 
contract, grant, loan, or a cooperative agreement shall file with that 
agency a disclosure form, set forth in Appendix B, if such person has 
made or has agreed to make any payment using nonappropriated funds (to 
include profits from any covered Federal action), which would be 
prohibited under paragraph (a) of this section if paid for with 
appropriated funds.
    (d) Each person who requests or receives from an agency a commitment 
providing for the United States to insure or guarantee a loan shall file 
with that agency a statement, set forth in appendix A, whether that 
person has made or has agreed to make any payment to influence or 
attempt to influence an officer or employee of any agency, a Member of 
Congress, an officer or employee of Congress, or an employee of a Member 
of Congress in connection with that loan insurance or guarantee.
    (e) Each person who requests or receives from an agency a commitment 
providing for the United States to insure or guarantee a loan shall file 
with that agency a disclosure form, set forth in Appendix B, if that 
person has made or has agreed to make any payment to influence or 
attempt to influence an officer or employee of any agency, a Member of 
Congress, an officer or employee of Congress, or an employee of a Member 
of Congress in connection with that loan insurance or guarantee.



Sec. 28.105  Definitions.

    For purposes of this part:
    (a) Agency, as defined in 5 U.S.C. 552(f), includes Federal 
executive departments and agencies as well as independent regulatory 
commissions and Government corporations, as defined in 31 U.S.C. 
9101(1).
    (b) Covered Federal action means any of the following Federal 
actions:
    (1) The awarding of any Federal contract;
    (2) The making of any Federal grant;
    (3) The making of any Federal loan;
    (4) The entering into of any cooperative agreement; and,
    (5) The extension, continuation, renewal, amendment, or modification 
of any Federal contract, grant, loan, or cooperative agreement.

Covered Federal action does not include receiving from an agency a 
commitment providing for the United States to insure or guarantee a 
loan. Loan guarantees and loan insurance are addressed independently 
within this part.
    (c) Federal contract means an acquisition contract awarded by an 
agency, including those subject to the Federal Acquisition Regulation 
(FAR), and any other acquisition contract for real or personal property 
or services not subject to the FAR.
    (d) Federal cooperative agreement means a cooperative agreement 
entered into by an agency.
    (e) Federal grant means an award of financial assistance in the form 
of money, or property in lieu of money, by the Federal Government or a 
direct appropriation made by law to any person. The term does not 
include technical assistance which provides services instead of money, 
or other assistance in the form of revenue sharing, loans, loan 
guarantees, loan insurance, interest subsidies, insurance, or direct 
United States cash assistance to an individual.
    (f) Federal loan means a loan made by an agency. The term does not 
include loan guarantee or loan insurance.
    (g) Indian tribe and tribal organization have the meaning provided 
in section 4 of the Indian Self-Determination and Education Assistance 
Act (25 U.S.C. 450B). Alaskan Natives are included

[[Page 77]]

under the definitions of Indian tribes in that Act.
    (h) Influencing or attempting to influence means making, with the 
intent to influence, any communication to or appearance before an 
officer or employee or any agency, a Member of Congress, an officer or 
employee of Congress, or an employee of a Member of Congress in 
connection with any covered Federal action.
    (i) Loan guarantee and loan insurance means an agency's guarantee or 
insurance of a loan made by a person.
    (j) Local government means a unit of government in a State and, if 
chartered, established, or otherwise recognized by a State for the 
performance of a governmental duty, including a local public authority, 
a special district, an intrastate district, a council of governments, a 
sponsor group representative organization, and any other instrumentality 
of a local government.
    (k) Officer or employee of an agency includes the following 
individuals who are employed by an agency:
    (1) An individual who is appointed to a position in the Government 
under title 5, U.S. Code, including a position under a temporary 
appointment;
    (2) A member of the uniformed services as defined in section 101(3), 
title 37, U.S. Code;
    (3) A special Government employee as defined in section 202, title 
18, U.S. Code; and,
    (4) An individual who is a member of a Federal advisory committee, 
as defined by the Federal Advisory Committee Act, title 5, U.S. Code 
appendix 2.
    (l) Person means an individual, corporation, company, association, 
authority, firm, partnership, society, State, and local government, 
regardless of whether such entity is operated for profit or not for 
profit. This term excludes an Indian tribe, tribal organization, or any 
other Indian organization with respect to expenditures specifically 
permitted by other Federal law.
    (m) Reasonable compensation means, with respect to a regularly 
employed officer or employee of any person, compensation that is 
consistent with the normal compensation for such officer or employee for 
work that is not furnished to, not funded by, or not furnished in 
cooperation with the Federal Government.
    (n) Reasonable payment means, with respect to perfessional and other 
technical services, a payment in an amount that is consistent with the 
amount normally paid for such services in the private sector.
    (o) Recipient includes all contractors, subcontractors at any tier, 
and subgrantees at any tier of the recipient of funds received in 
connection with a Federal contract, grant, loan, or cooperative 
agreement. The term excludes an Indian tribe, tribal organization, or 
any other Indian organization with respect to expenditures specifically 
permitted by other Federal law.
    (p) Regularly employed means, with respect to an officer or employee 
of a person requesting or receiving a Federal contract, grant, loan, or 
cooperative agreement or a commitment providing for the United States to 
insure or guarantee a loan, an officer or employee who is employed by 
such person for at least 130 working days within one year immediately 
preceding the date of the submission that initiates agency consideration 
of such person for receipt of such contract, grant, loan, cooperative 
agreement, loan insurance commitment, or loan guarantee commitment. An 
officer or employee who is employed by such person for less than 130 
working days within one year immediately preceding the date of the 
submission that initiates agency consideration of such person shall be 
considered to be regularly employed as soon as he or she is employed by 
such person for 130 working days.
    (q) State means a State of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, a territory or possession of 
the United States, an agency or instrumentality of a State, and a multi-
State, regional, or interstate entity having governmental duties and 
powers.



Sec. 28.110  Certification and disclosure.

    (a) Each person shall file a certification, and a disclosure form, 
if required, with each submission that initiates agency consideration of 
such person for:

[[Page 78]]

    (1) Award of a Federal contract, grant, or cooperative agreement 
exceeding $100,000; or
    (2) An award of a Federal loan or a commitment providing for the 
United States to insure or guarantee a loan exceeding $150,000.
    (b) Each person shall file a certification, and a disclosure form, 
if required, upon receipt by such person of:
    (1) A Federal contract, grant, or cooperative agreement exceeding 
$100,000; or
    (2) A Federal loan or a commitment providing for the United States 
to insure or guarantee a loan exceeding $150,000,

Unless such person previously filed a certification, and a disclosure 
form, if required, under paragraph (a) of this section.
    (c) Each person shall file a disclosure form at the end of each 
calendar quarter in which there occurs any event that requires 
disclosure or that materially affects the accuracy of the information 
contained in any disclosure form previously filed by such person under 
paragraphs (a) or (b) of this section. An event that materially affects 
the accuracy of the information reported includes:
    (1) A cumulative increase of $25,000 or more in the amount paid or 
expected to be paid for influencing or attempting to influence a covered 
Federal action; or
    (2) A change in the person(s) or individual(s) influencing or 
attempting to influence a covered Federal action; or,
    (3) A change in the officer(s), employee(s), or Member(s) contacted 
to influence or attempt to influence a covered Federal action.
    (d) Any person who requests or receives from a person referred to in 
paragraphs (a) or (b) of this section:
    (1) A subcontract exceeding $100,000 at any tier under a Federal 
contract;
    (2) A subgrant, contract, or subcontract exceeding $100,000 at any 
tier under a Federal grant;
    (3) A contract or subcontract exceeding $100,000 at any tier under a 
Federal loan exceeding $150,000; or,
    (4) A contract or subcontract exceeding $100,000 at any tier under a 
Federal cooperative agreement,


Shall file a certification, and a disclosure form, if required, to the 
next tier above.
    (e) All disclosure forms, but not certifications, shall be forwarded 
from tier to tier until received by the person referred to in paragraphs 
(a) or (b) of this section. That person shall forward all disclosure 
forms to the agency.
    (f) Any certification or disclosure form filed under paragraph (e) 
of this section shall be treated as a material representation of fact 
upon which all receiving tiers shall rely. All liability arising from an 
erroneous representation shall be borne solely by the tier filing that 
representation and shall not be shared by any tier to which the 
erroneous representation is forwarded. Submitting an erroneous 
certification or disclosure constitutes a failure to file the required 
certification or disclosure, respectively. If a person fails to file a 
required certification or disclosure, the United States may pursue all 
available remedies, including those authorized by section 1352, title 
31, U.S. Code.
    (g) For awards and commitments in process prior to December 23, 
1989, but not made before that date, certifications shall be required at 
award or commitment, covering activities occurring between December 23, 
1989, and the date of award or commitment. However, for awards and 
commitments in process prior to the December 23, 1989 effective date of 
these provisions, but not made before December 23, 1989, disclosure 
forms shall not be required at time of award or commitment but shall be 
filed within 30 days.
    (h) No reporting is required for an activity paid for with 
appropriated funds if that activity is allowable under either subpart B 
or C.



                 Subpart B--Activities by Own Employees



Sec. 28.200  Agency and legislative liaison.

    (a) The prohibition on the use of appropriated funds, in Sec. 28.100 
(a), does not apply in the case of a payment of reasonable compensation 
made to an officer or employee of a person requesting or receiving a 
Federal contract, grant, loan, or cooperative agreement

[[Page 79]]

if the payment is for agency and legislative liaison activities not 
directly related to a covered Federal action.
    (b) For purposes of paragraph (a) of this section, providing any 
information specifically requested by an agency or Congress is allowable 
at any time.
    (c) For purposes of paragraph (a) of this section, the following 
agency and legislative liaison activities are allowable at any time only 
where they are not related to a specific solicitation for any covered 
Federal action:
    (1) Discussing with an agency (including individual demonstrations) 
the qualities and characteristics of the person's products or services, 
conditions or terms of sale, and service capabilities; and,
    (2) Technical discussions and other activities regarding the 
application or adaptation of the person's products or services for an 
agency's use.
    (d) For purposes of paragraph (a) of this section, the following 
agencies and legislative liaison activities are allowable only where 
they are prior to formal solicitation of any covered Federal action:
    (1) Providing any information not specifically requested but 
necessary for an agency to make an informed decision about initiation of 
a covered Federal action;
    (2) Technical discussions regarding the preparation of an 
unsolicited proposal prior to its official submission; and,
    (3) Capability presentations by persons seeking awards from an 
agency pursuant to the provisions of the Small Business Act, as amended 
by Public Law 95-507 and other subsequent amendments.
    (e) Only those activities expressly authorized by this section are 
allowable under this section.

[55 FR 6737 and 6752, Feb. 26, 1990. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



Sec. 28.205  Professional and technical services.

    (a) The prohibition on the use of appropriated funds, in Sec. 28.100 
(a), does not apply in the case of a payment of reasonable compensation 
made to an officer or employee of a person requesting or receiving a 
Federal contract, grant, loan, or cooperative agreement or an extension, 
continuation, renewal, amendment, or modification of a Federal contract, 
grant, loan, or cooperative agreement if payment is for professional or 
technical services rendered directly in the preparation, submission, or 
negotiation of any bid, proposal, or application for that Federal 
contract, grant, loan, or cooperative agreement or for meeting 
requirements imposed by or pursuant to law as a condition for receiving 
that Federal contract, grant, loan, or cooperative agreement.
    (b) For purposes of paragraph (a) of this section, ``professional 
and technical services'' shall be limited to advice and analysis 
directly applying any professional or technical discipline. For example, 
drafting of a legal document accompanying a bid or proposal by a lawyer 
is allowable. Similarly, technical advice provided by an engineer on the 
performance or operational capability of a piece of equipment rendered 
directly in the negotiation of a contract is allowable. However, 
communications with the intent to influence made by a professional (such 
as a licensed lawyer) or a technical person (such as a licensed 
accountant) are not allowable under this section unless they provide 
advice and analysis directly applying their professional or technical 
expertise and unless the advice or analysis is rendered directly and 
solely in the preparation, submission or negotiation of a covered 
Federal action. Thus, for example, communications with the intent to 
influence made by a lawyer that do not provide legal advice or analysis 
directly and solely related to the legal aspects of his or her client's 
proposal, but generally advocate one proposal over another are not 
allowable under this section because the lawyer is not providing 
professional legal services. Similarly, communications with the intent 
to influence made by an engineer providing an engineering analysis prior 
to the preparation or submission of a bid or proposal are not allowable 
under this section since the engineer is providing technical services 
but not directly in the preparation, submission or negotiation of a 
covered Federal action.

[[Page 80]]

    (c) Requirements imposed by or pursuant to law as a condition for 
receiving a covered Federal award include those required by law or 
regulation, or reasonably expected to be required by law or regulation, 
and any other requirements in the actual award documents.
    (d) Only those services expressly authorized by this section are 
allowable under this section.

[55 FR 6737 and 6752, Feb. 26, 1990. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



Sec. 28.210  Reporting.

    No reporting is required with respect to payments of reasonable 
compensation made to regularly employed officers or employees of a 
person.



            Subpart C--Activities by Other Than Own Employees



Sec. 28.300  Professional and technical services.

    (a) The prohibition on the use of appropriated funds, in Sec. 28.100 
(a), does not apply in the case of any reasonable payment to a person, 
other than an officer or employee of a person requesting or receiving a 
covered Federal action, if the payment is for professional or technical 
services rendered directly in the preparation, submission, or 
negotiation of any bid, proposal, or application for that Federal 
contract, grant, loan, or cooperative agreement or for meeting 
requirements imposed by or pursuant to law as a condition for receiving 
that Federal contract, grant, loan, or cooperative agreement.
    (b) The reporting requirments in Sec. 28.110 (a) and (b) regarding 
filing a disclosure form by each person, if required, shall not apply 
with respect to professional or technical services rendered directly in 
the preparation, submission, or negotiation of any commitment providing 
for the United States to insure or guarantee a loan.
    (c) For purposes of paragraph (a) of this section, ``professional 
and technical services'' shall be limited to advice and analysis 
directly applying any professional or technical discipline. For example, 
drafting of a legal document accompanying a bid or proposal by a lawyer 
is allowable. Similarly, technical advice provided by an engineer on the 
performance or operational capability of a piece of equipment rendered 
directly in the negotiation of a contract is allowable. However, 
communications with the intent to influence made by a professional (such 
as a licensed lawyer) or a technical person (such as a licensed 
accountant) are not allowable under this section unless they provide 
advice and analysis directly applying their professional or technical 
expertise and unless the advice or analysis is rendered directly and 
solely in the preparation, submission or negotiation of a covered 
Federal action. Thus, for example, communications with the intent to 
influence made by a lawyer that do not provide legal advice or analysis 
directly and solely related to the legal aspects of his or her client's 
proposal, but generally advocate one proposal over another are not 
allowable under this section because the lawyer is not providing 
professional legal services. Similarly, communications with the intent 
to influence made by an engineer providing an engineering analysis prior 
to the preparation or submission of a bid or proposal are not allowable 
under this section since the engineer is providing technical services 
but not directly in the preparation, submission or negotiation of a 
covered Federal action.
    (d) Requirements imposed by or pursuant to law as a condition for 
receiving a covered Federal award include those required by law or 
regulation, or reasonably expected to be required by law or regulation, 
and any other requirements in the actual award documents.
    (e) Persons other than officers or employees of a person requesting 
or receiving a covered Federal action include consultants and trade 
associations.
    (f) Only those services expressly authorized by this section are 
allowable under this section.

[55 FR 6737 and 6752, Feb. 26, 1990. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]

[[Page 81]]



                  Subpart D--Penalties and Enforcement



Sec. 28.400  Penalties.

    (a) Any person who makes an expenditure prohibited herein shall be 
subject to a civil penalty of not less than $10,000 and not more than 
$100,000 for each such expenditure.
    (b) Any person who fails to file or amend the disclosure form (see 
Appendix B) to be filed or amended if required herein, shall be subject 
to a civil penalty of not less than $10,000 and not more than $100,000 
for each such failure.
    (c) A filing or amended filing on or after the date on which an 
administrative action for the imposition of a civil penalty is commenced 
does not prevent the imposition of such civil penalty for a failure 
occurring before that date. An administrative action is commenced with 
respect to a failure when an investigating official determines in 
writing to commence an investigation of an allegation of such failure.
    (d) In determining whether to impose a civil penalty, and the amount 
of any such penalty, by reason of a violation by any person, the agency 
shall consider the nature, circumstances, extent, and gravity of the 
violation, the effect on the ability of such person to continue in 
business, any prior violations by such person, the degree of culpability 
of such person, the ability of the person to pay the penalty, and such 
other matters as may be appropriate.
    (e) First offenders under paragraphs (a) or (b) of this section 
shall be subject to a civil penalty of $10,000, absent aggravating 
circumstances. Second and subsequent offenses by persons shall be 
subject to an appropriate civil penalty between $10,000 and $100,000, as 
determined by the agency head or his or her designee.
    (f) An imposition of a civil penalty under this section does not 
prevent the United States from seeking any other remedy that may apply 
to the same conduct that is the basis for the imposition of such civil 
penalty.



Sec. 28.405  Penalty procedures.

    Agencies shall impose and collect civil penalties pursuant to the 
provisions of the Program Fraud and Civil Remedies Act, 31 U.S.C. 
sections 3803 (except subsection (c)), 3804, 3805, 3806, 3807, 3808, and 
3812, insofar as these provisions are not inconsistent with the 
requirements herein.



Sec. 28.410  Enforcement.

    The head of each agency shall take such actions as are necessary to 
ensure that the provisions herein are vigorously implemented and 
enforced in that agency.



                          Subpart E--Exemptions



Sec. 28.500  Secretary of Defense.

    (a) Exemption authority. The Secretary of Defense may exempt, on a 
case-by-case basis, a covered Federal action from the prohibition 
whenever the Secretary determines, in writing, that such an exemption is 
in the national interest. The Secretary shall transmit a copy of each 
such written exemption to Congress immediately after making such a 
determination.
    (b) Policy. It is the policy of the Department of Defense that 
exemptions under paragraph (a) of this section shall be requested only 
rarely and in exceptional circumstances.
    (c) Procedures. Each DoD Component that awards or administers 
Federal grants, Federal cooperative agreements, or Federal loans subject 
to this part shall establish procedures whereby:
    (1) A grants officer wishing to request an exemption for a grant, 
cooperative agreement, or loan shall transmit such request through 
appropriate channels to: Director for Research, ODDR&E(R), 3080 Defense 
Pentagon, Washington, DC. 20301-3080.
    (2) Each such request shall explain why an exemption is in the 
national interest, a justification that must be transmitted to Congress 
for each exemption that is approved.

[63 FR 12188, Mar. 12, 1998]



                        Subpart F--Agency Reports



Sec. 28.600  Semi-annual compilation.

    (a) The head of each agency shall collect and compile the disclosure 
reports (see appendix B) and, on May 31 and November 30 of each year, 
submit to

[[Page 82]]

the Secretary of the Senate and the Clerk of the House of 
Representatives a report containing a compilation of the information 
contained in the disclosure reports received during the six-month period 
ending on March 31 or September 30, respectively, of that year.
    (b) The report, including the compilation, shall be available for 
public inspection 30 days after receipt of the report by the Secretary 
and the Clerk.
    (c) Information that involves intelligence matters shall be reported 
only to the Select Committee on Intelligence of the Senate, the 
Permanent Select Committee on Intelligence of the House of 
Representatives, and the Committees on Appropriations of the Senate and 
the House of Representatives in accordance with procedures agreed to by 
such committees. Such information shall not be available for public 
inspection.
    (d) Information that is classified under Executive Order 12356 or 
any successor order shall be reported only to the Committee on Foreign 
Relations of the Senate and the Committee on Foreign Affairs of the 
House of Representatives or the Committees on Armed Services of the 
Senate and the House of Representatives (whichever such committees have 
jurisdiction of matters involving such information) and to the 
Committees on Appropriations of the Senate and the House of 
Representatives in accordance with procedures agreed to by such 
committees. Such information shall not be available for public 
inspection.
    (e) The first semi-annual compilation shall be submitted on May 31, 
1990, and shall contain a compilation of the disclosure reports received 
from December 23, 1989 to March 31, 1990.
    (f) Major agencies, designated by the Office of Management and 
Budget (OMB), are required to provide machine-readable compilations to 
the Secretary of the Senate and the Clerk of the House of 
Representatives no later than with the compilations due on May 31, 1991. 
OMB shall provide detailed specifications in a memorandum to these 
agencies.
    (g) Non-major agencies are requested to provide machine-readable 
compilations to the Secretary of the Senate and the Clerk of the House 
of Representatives.
    (h) Agencies shall keep the originals of all disclosure reports in 
the official files of the agency.



Sec. 28.605  Inspector General report.

    (a) The Inspector General, or other official as specified in 
paragraph (b) of this section, of each agency shall prepare and submit 
to Congress each year, commencing with submission of the President's 
Budget in 1991, an evaluation of the compliance of that agency with, and 
the effectiveness of, the requirements herein. The evaluation may 
include any recommended changes that may be necessary to strengthen or 
improve the requirements.
    (b) In the case of an agency that does not have an Inspector 
General, the agency official comparable to an Inspector General shall 
prepare and submit the annual report, or, if there is no such comparable 
official, the head of the agency shall prepare and submit the annual 
report.
    (c) The annual report shall be submitted at the same time the agency 
submits its annual budget justifications to Congress.
    (d) The annual report shall include the following: All alleged 
violations relating to the agency's covered Federal actions during the 
year covered by the report, the actions taken by the head of the agency 
in the year covered by the report with respect to those alleged 
violations and alleged violations in previous years, and the amounts of 
civil penalties imposed by the agency in the year covered by the report.

         Appendix A to Part 28--Certification Regarding Lobbying

 Certification for Contracts, Grants, Loans, and Cooperative Agreements

    The undersigned certifies, to the best of his or her knowledge and 
belief, that:
    (1) No Federal appropriated funds have been paid or will be paid, by 
or on behalf of the undersigned, to any person for influencing or 
attempting to influence an officer or employee of an agency, a Member of 
Congress, an officer or employee of Congress, or an employee of a Member 
of Congress in connection with the awarding of any Federal contract, the 
making of any Federal grant, the making of any Federal loan, the 
entering into of any cooperative agreement, and the

[[Page 83]]

extension, continuation, renewal, amendment, or modification of any 
Federal contract, grant, loan, or cooperative agreement.
    (2) If any funds other than Federal appropriated funds have been 
paid or will be paid to any person for influencing or attempting to 
influence an officer or employee of any agency, a Member of Congress, an 
officer or employee of Congress, or an employee of a Member of Congress 
in connection with this Federal contract, grant, loan, or cooperative 
agreement, the undersigned shall complete and submit Standard Form-LLL, 
``Disclosure Form to Report Lobbying,'' in accordance with its 
instructions.
    (3) The undersigned shall require that the language of this 
certification be included in the award documents for all subawards at 
all tiers (including subcontracts, subgrants, and contracts under 
grants, loans, and cooperative agreements) and that all subrecipients 
shall certify and disclose accordingly.
    This certification is a material representation of fact upon which 
reliance was placed when this transaction was made or entered into. 
Submission of this certification is a prerequisite for making or 
entering into this transaction imposed by section 1352, title 31, U.S. 
Code. Any person who fails to file the required certification shall be 
subject to a civil penalty of not less than $10,000 and not more than 
$100,000 for each such failure.

            Statement for Loan Guarantees and Loan Insurance

    The undersigned states, to the best of his or her knowledge and 
belief, that:
    If any funds have been paid or will be paid to any person for 
influencing or attempting to influence an officer or employee of any 
agency, a Member of Congress, an officer or employee of Congress, or an 
employee of a Member of Congress in connection with this commitment 
providing for the United States to insure or guarantee a loan, the 
undersigned shall complete and submit Standard Form-LLL, ``Disclosure 
Form to Report Lobbying,'' in accordance with its instructions.
    Submission of this statement is a prerequisite for making or 
entering into this transaction imposed by section 1352, title 31, U.S. 
Code. Any person who fails to file the required statement shall be 
subject to a civil penalty of not less than $10,000 and not more than 
$100,000 for each such failure.

[[Page 84]]

        Appendix B to Part 28--Disclosure Form to Report Lobbying
      [GRAPHIC] [TIFF OMITTED] TC23OC91.000
      

[[Page 85]]


[GRAPHIC] [TIFF OMITTED] TC23OC91.001


[[Page 86]]


[GRAPHIC] [TIFF OMITTED] TC23OC91.002


[[Page 87]]





PART 32--ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, AND OTHER NON-PROFIT ORGANIZATIONS--Table of Contents




                           Subpart A--General

Sec.
32.1 Purpose.
32.2 Definitions
32.3 Effect on other issuances.
32.4 Deviations.
32.5 Subawards.

                    Subpart B--Pre-Award Requirements

32.10 Purpose.
32.11 Pre-award policies.
32.12 Forms for applying for Federal assistance.
32.13 Debarment and suspension.
32.14 Special award conditions.
32.15 Metric system of measurement.
32.16 Resource Conservation and Recovery Act (RCRA).
32.17 Certifications and representations.

                   Subpart C--Post-Award Requirements

                    Financial and Program Management

32.20 Purpose of financial and program management.
32.21 Standards for financial management systems.
32.22 Payment.
32.23 Cost sharing or matching.
32.24 Program income.
32.25 Revision of budget and program plans.
32.26 Non-Federal audits.
32.27 Allowable costs.
32.28 Period of availability of funds.

                           Property Standards

32.30 Purpose of property standards.
32.31 Insurance coverage.
32.32 Real property.
32.33 Federally-owned and exempt property.
32.34 Equipment.
32.35 Supplies.
32.36 Intangible property.
32.37 Property trust relationship.

                          Procurement Standards

32.40 Purpose of procurement standards.
32.41 Recipient responsibilities.
32.42 Codes of conduct.
32.43 Competition.
32.44 Procurement procedures.
32.45 Cost and price analysis.
32.46 Procurement records.
32.47 Contract administration.
32.48 Contract provisions.
32.49 Resource Conservation and Recovery Act.

                           Reports and Records

32.50 Purpose of reports and records.
32.51 Monitoring and reporting program performance.
32.52 Financial reporting.
32.53 Retention and access requirements for records.

                       Termination and Enforcement

32.60 Purpose of termination and enforcement.
32.61 Termination.
32.62 Enforcement.

                 Subpart D--After-the-Award Requirements

32.70 Purpose.
32.71 Closeout procedures.
32.72 Subsequent adjustments and continuing responsibilities.
32.73 Collection of amounts due.

Appendix A to Part 32--Contract Provisions

    Authority: 5 U.S.C. 301 and 10 U.S.C. 113.

    Source: 63 FR 12188, Mar. 12, 1998, unless otherwise noted.



                           Subpart A--General



Sec. 32.1  Purpose.

    (a) General. This part implements OMB Circular A-110 \1\ and 
establishes uniform administrative requirements for awards and subawards 
to institutions of higher education, hospitals, and other non-
governmental, non-profit organizations.
---------------------------------------------------------------------------

    \1\ For copies of the Circular, contact the Office of Management and 
Budget, EOP Publications, 725 17th St. NW, New Executive Office 
Building, Washington, DC 20503.
---------------------------------------------------------------------------

    (b) Relationship to other parts. This part is an integral part of 
the DoD Grant and Agreement Regulations (DoDGARs), which comprise this 
subchapter of the Code of Federal Regulations. This part includes 
references to other parts of the DoDGARs that implement Governmentwide 
guidance and provide uniform internal policies and procedures for DoD 
Components that make or administer awards. Although parts 21 and 22 of 
this subchapter do not impose any direct requirements on recipients, and 
recipients therefore are not required to be familiar with those parts, 
the information in those parts

[[Page 88]]

concerning internal policies and procedures should be helpful to 
recipients of DoD awards.
    (c) Prime awards. DoD Components shall apply the provisions of this 
part to awards to recipients that are institutions of higher education, 
hospitals, and other non-profit organizations. DoD Components shall not 
impose additional or inconsistent requirements, except as provided in 
Secs. 32.4 and 32.14, or unless specifically required by Federal statute 
or executive order.
    (d) Subawards. Any legal entity that receives an award from a DoD 
Component shall apply the provisions of this part to subawards with 
institutions of higher education, hospitals, and other non-profit 
organizations. Thus, a governmental or for-profit organization, whose 
prime award from a DoD Component is subject to 32 CFR part 33 or part 
34, respectively, applies this part to subawards with institutions of 
higher education, hospitals, or other non-profit organizations. It 
should be noted that subawards are for the performance of substantive 
work under awards, and are distinct from contracts for procuring goods 
and services. It should be further noted that non-profit organizations 
that implement Federal programs for the States are also subject to State 
requirements.



Sec. 32.2  Definitions.

    The following are definitions of terms used in this part. Grants 
officers are cautioned that terms may be defined differently in this 
part than they are in other parts of the DoD Grant and Agreement 
Regulations, because this part implements OMB Circular A-110 and uses 
definitions as stated in that Circular. In such cases, the definition 
given in this section applies to the term as it is used in this part, 
and the definition given in other parts applies to the term as it is 
used in those parts. For example, suspension is defined in this section 
to mean temporary withdrawal of Federal sponsorship under an award, but 
is defined at 32 CFR 25.105 to be an action taken to exclude a person 
from participating in a grant, cooperative agreement, or other covered 
transaction.
    Accrued expenditures. The charges incurred by the recipient during a 
given period requiring the provision of funds for:
    (1) Goods and other tangible property received;
    (2) Services performed by employees, contractors, subrecipients, and 
other payees; and
    (3) Other amounts becoming owed under programs for which no current 
services or performance is required.
    Accrued income. The sum of:
    (1) Earnings during a given period from:
    (i) Services performed by the recipient; and
    (ii) Goods and other tangible property delivered to purchasers.
    (2) Amounts becoming owed to the recipient for which no current 
services or performance is required by the recipient.
    Acquisition cost of equipment. The net invoice price of the 
equipment, including the cost of modifications, attachments, 
accessories, or auxiliary apparatus necessary to make the property 
usable for the purpose for which it was acquired. Other charges, such as 
the cost of installation, transportation, taxes, duty or protective in-
transit insurance, shall be included or excluded from the unit 
acquisition cost in accordance with the recipient's regular accounting 
practices.
    Advance. A payment made by Treasury check or other appropriate 
payment mechanism to a recipient upon its request either before outlays 
are made by the recipient or through the use of predetermined payment 
schedules.
    Award. Financial assistance that provides support or stimulation to 
accomplish a public purpose. Awards include grants and other agreements 
in the form of money or property in lieu of money, by the Federal 
Government to an eligible recipient. The term does not include: 
Technical assistance, which provides services instead of money; other 
assistance in the form of loans, loan guarantees, interest subsidies, or 
insurance; direct payments of any kind to individuals; and, contracts 
which are required to be entered into and administered under procurement 
laws and regulations.
    Cash contributions. The recipient's cash outlay, including the 
outlay of

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money contributed to the recipient by third parties.
    Closeout. The process by which the grants officer administering an 
award made by a DoD Component determines that all applicable 
administrative actions and all required work of the award have been 
completed by the recipient and DoD Component.
    Contract. A procurement contract under an award or subaward, and a 
procurement subcontract under a recipient's or subrecipient's contract.
    Cost sharing or matching. That portion of project or program costs 
not borne by the Federal Government.
    Date of completion. The date on which all work under an award is 
completed or the date on the award document, or any supplement or 
amendment thereto, on which Federal sponsorship ends.
    Disallowed costs. Those charges to an award that the grants officer 
administering an award made by a DoD Component determines to be 
unallowable, in accordance with the applicable Federal cost principles 
or other terms and conditions contained in the award.
    DoD Component. A Military Department, Defense Agency, DoD field 
activity, or organization within the Office of the Secretary of Defense 
that provides or administers an award to a recipient.
    Equipment. Tangible nonexpendable personal property including exempt 
property charged directly to the award having a useful life of more than 
one year and an acquisition cost of $5,000 or more per unit. However, 
consistent with recipient policy, lower limits may be established.
    Excess property. Property under the control of any DoD Component 
that, as determined by the head thereof, is no longer required for its 
needs or the discharge of its responsibilities.
    Exempt property. Tangible personal property acquired in whole or in 
part with Federal funds, where the DoD Component has statutory authority 
to vest title in the recipient without further obligation to the Federal 
Government. An example of exempt property authority is contained in the 
Federal Grant and Cooperative Agreement Act (31 U.S.C. 6306), for 
property acquired under an award to conduct basic or applied research by 
a non-profit institution of higher education or non-profit organization 
whose principal purpose is conducting scientific research.
    Federal funds authorized. The total amount of Federal funds 
obligated by a DoD Component for use by the recipient. This amount may 
include any authorized carryover of unobligated funds from prior funding 
periods when permitted by agency regulations or agency implementing 
instructions.
    Federal share (of real property, equipment, or supplies). That 
percentage of the property's acquisition costs and any improvement 
expenditures paid with Federal funds.
    Funding period. The period of time when Federal funding is available 
for obligation by the recipient.
    Intangible property and debt instruments. Property that includes, 
but is not limited to, trademarks, copyrights, patents and patent 
applications and such property as loans, notes and other debt 
instruments, lease agreements, stock and other instruments of property 
ownership, whether considered tangible or intangible.
    Obligations. The amounts of orders placed, contracts and grants 
awarded, services received and similar transactions during a given 
period that require payment by the recipient during the same or a future 
period.
    Outlays or expenditures. Charges made to the project or program. 
They may be reported on a cash or accrual basis. For reports prepared on 
a cash basis, outlays are the sum of cash disbursements for direct 
charges for goods and services, the amount of indirect expense charged, 
the value of third party in-kind contributions applied and the amount of 
cash advances and payments made to subrecipients. For reports prepared 
on an accrual basis, outlays are the sum of cash disbursements for 
direct charges for goods and services, the amount of indirect expense 
incurred, the value of in-kind contributions applied, and the net 
increase (or decrease) in the amounts owed by the recipient for goods 
and other property received, for services performed by employees, 
contractors, subrecipients and other payees and other amounts becoming 
owed under programs for which no current services or performance are 
required.

[[Page 90]]

    Personal property. Property of any kind except real property. It may 
be tangible, having physical existence, or intangible, having no 
physical existence, such as copyrights, patents, or securities.
    Prior approval. Written approval by an authorized official 
evidencing prior consent.
    Program income. Gross income earned by the recipient that is 
directly generated by a supported activity or earned as a result of the 
award (see exclusions in Sec. 32.24(e) and (h)). Program income 
includes, but is not limited to, income from fees for services 
performed, the use or rental of real or personal property acquired under 
federally-funded projects, the sale of commodities or items fabricated 
under an award, license fees and royalties on patents and copyrights, 
and interest on loans made with award funds. Interest earned on advances 
of Federal funds is not program income. Except as otherwise provided in 
program regulations or the terms and conditions of the award, program 
income does not include the receipt of principal on loans, rebates, 
credits, discounts, etc., or interest earned on any of them.
    Project costs. All allowable costs, as set forth in the applicable 
Federal cost principles, incurred by a recipient and the value of the 
contributions made by third parties in accomplishing the objectives of 
the award during the project period.
    Project period. The period established in the award document during 
which Federal sponsorship begins and ends.
    Property. Real property and personal property (equipment, supplies, 
intangible property and debt instruments), unless stated otherwise.
    Real property. Land, including land improvements, structures and 
appurtenances thereto, but excluding movable machinery and equipment.
    Recipient. An organization receiving financial assistance directly 
from DoD Components to carry out a project or program. The term includes 
public and private institutions of higher education, public and private 
hospitals, and other quasi-public and private non-profit organizations 
such as, but not limited to, community action agencies, research 
institutes, educational associations, and health centers. The term also 
includes consortia comprised of any combination of universities, other 
nonprofit organizations, governmental organizations, for-profit 
organizations, and other entities, to the extent that the consortia are 
legally incorporated as nonprofit organizations. The term does not 
include Government-owned contractor-operated facilities or research 
centers providing continued support for mission-oriented, large-scale 
programs that are Government-owned or controlled, or are designated as 
federally-funded research and development centers.
    Research and development. All research activities, both basic and 
applied, and all development activities that are supported at 
universities, colleges, and other non-profit institutions. Research is 
defined as a systematic study directed toward fuller scientific 
knowledge or understanding of the subject studied. Development is the 
systematic use of knowledge and understanding gained from research 
directed toward the production of useful materials, devices, systems, or 
methods, including design and development of prototypes and processes. 
The term research also includes activities involving the training of 
individuals in research techniques where such activities utilize the 
same facilities as other research and development activities and where 
such activities are not included in the instruction function.
    Small award. An award not exceeding the simplified acquisition 
threshold fixed at 41 U.S.C. 403(11) (currently $100,000).
    Subaward. An award of financial assistance in the form of money, or 
property in lieu of money, made under an award by a recipient to an 
eligible subrecipient or by a subrecipient to a lower tier subrecipient. 
The term includes financial assistance when provided by any legal 
agreement, even if the agreement is called a contract, but does not 
include procurement of goods and services nor does it include any form 
of assistance which is excluded from the definition of ``award'' in this 
section.
    Subrecipient. The legal entity to which a subaward is made and which 
is

[[Page 91]]

accountable to the recipient for the use of the funds provided.
    Supplies. All personal property excluding equipment, intangible 
property, and debt instruments as defined in this section, and 
inventions of a contractor conceived or first actually reduced to 
practice in the performance of work under a funding agreement (``subject 
inventions''), as defined in 37 CFR part 401, ``Rights to Inventions 
Made by Nonprofit Organizations and Small Business Firms Under 
Government Grants, Contracts, and Cooperative Agreements.''
    Suspension. An action by a DoD Component that temporarily withdraws 
Federal sponsorship under an award, pending corrective action by the 
recipient or pending a decision to terminate the award by the DoD 
Component. Suspension of an award is a separate action from suspension 
of a participant under 32 CFR part 25.
    Termination. The cancellation of an award, in whole or in part, at 
any time prior to the date of completion.
    Third party in-kind contributions. The value of non-cash 
contributions provided by non-Federal third parties. Third party in-kind 
contributions may be in the form of real property, equipment, supplies, 
and the value of goods and services directly benefiting and specifically 
identifiable to the project or program.
    Unliquidated obligations. The amount of obligations incurred by the 
recipient:
    (1) That have not been paid, if financial reports are prepared on a 
cash basis.
    (2) For which an outlay has not been recorded, if reports are 
prepared on an accrued expenditure basis.
    Unobligated balance. The portion of the funds authorized by a DoD 
Component that has not been obligated by the recipient and is determined 
by deducting the cumulative obligations from the cumulative funds 
authorized.
    Unrecovered indirect cost. The difference between the amount awarded 
and the amount which could have been awarded under the recipient's 
approved negotiated indirect cost rate.
    Working capital advance. A procedure whereby funds are advanced to 
the recipient to cover its estimated disbursement needs for a given 
initial period.



Sec. 32.3  Effect on other issuances.

    For awards subject to this part, all administrative requirements of 
codified program regulations, program manuals, handbooks and other 
nonregulatory materials which are inconsistent with the requirements of 
this part shall be superseded, except to the extent they are required by 
statute, or authorized in accordance with the deviations provision in 
Sec. 32.4.



Sec. 32.4  Deviations.

    (a) Individual deviations. Individual deviations affecting only one 
award may be approved by DoD Components in accordance with procedures 
stated in 32 CFR 21.125(a) and (c).
    (b) Small awards. DoD Components may apply less restrictive 
requirements than the provisions of this part when awarding small 
awards, except for those requirements which are statutory.
    (c) Other class deviations. (1) For classes of awards other than 
small awards, the Director of Defense Research and Engineering (DDR&E), 
or his or her designee, may grant exceptions from the requirements of 
this part:
    (i) With the written concurrence of the Office of the Management and 
Budget (OMB). The DDR&E, or his or her designee, shall provide written 
notification to OMB of the Department of Defense's intention to grant a 
class deviation; and
    (ii) When exceptions are not prohibited by statute.
    (2) DoD Components shall request approval for such deviations in 
accordance with 32 CFR 21.125(b) and (c). However, in the interest of 
maximum uniformity, exceptions from the requirements of this part shall 
be permitted only in unusual circumstances.



Sec. 32.5  Subawards.

    Unless sections of this part specifically exclude subrecipients from 
coverage, the provisions of this part shall be applied to subrecipients 
performing

[[Page 92]]

work under awards if such subrecipients are institutions of higher 
education, hospitals or other non-profit organizations. State and local 
government subrecipients are subject to the provisions of 32 CFR part 
33. Subrecipients that are for-profit organizations are subject to 32 
CFR part 34.



                    Subpart B--Pre-Award Requirements



Sec. 32.10  Purpose.

    Sections 32.11 through 32.17 prescribe application forms and 
instructions and other pre-award matters.



Sec. 32.11  Pre-award policies.

    (a) Use of grants, cooperative agreements, and contracts. (1) OMB 
Circular A-110 states that:
    (i) In each instance, the Federal awarding agency shall decide on 
the appropriate award instrument (i.e., grant, cooperative agreement, or 
contract).
    (ii) The Federal Grant and Cooperative Agreement Act (31 U.S.C. 
6301-6308) governs the use of grants, cooperative agreements, and 
contracts. Under that Act:
    (A) A grant or cooperative agreement shall be used only when the 
principal purpose of a transaction is to accomplish a public purpose of 
support or stimulation authorized by Federal statute.
    (B) Contracts shall be used when the principal purpose is 
acquisition of property or services for the direct benefit or use of the 
Federal Government.
    (C) The statutory criterion for choosing between grants and 
cooperative agreements is that for the latter, ``substantial involvement 
is expected between the executive agency and the State, local 
government, or other recipient when carrying out the activity 
contemplated in the agreement.''
    (2) In selecting the appropriate award instruments, DoD Components' 
grants officers shall comply with the DoD implementation of the Federal 
Grant and Cooperative Agreement Act at 32 CFR 21.205(a) and 32 CFR part 
22, subpart B.
    (b) Public notice and priority setting. As a matter of 
Governmentwide policy, Federal awarding agencies shall notify the public 
of intended funding priorities for programs that use discretionary 
awards, unless funding priorities are established by Federal statute. 
For DoD Components, compliance with competition policies and statutory 
requirements implemented in 32 CFR part 22, subpart C, shall constitute 
compliance with this Governmentwide policy.



Sec. 32.12  Forms for applying for Federal assistance.

    (a) DoD Components shall comply with the applicable report clearance 
requirements of 5 CFR part 1320, ``Controlling Paperwork Burdens on the 
Public,'' with regard to all forms used in place of or as a supplement 
to the Standard Form 424 2 (SF-424) series.
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    \2\ For copies of Standard Forms listed in this part, contact 
regional grants administration offices of the Office of Naval Research. 
Addresses for the offices are listed in the ``DoD Directory of Contract 
Administration Services Components,'' DLAH 4105.4, which can be obtained 
from: Defense Logistics Agency, Publications Distribution Division 
(DASC-WDM), 8725 John J. Kingman Rd., Suite 0119, Fort Belvoir, VA 
22060-6220.
---------------------------------------------------------------------------

    (b) Applicants shall use the SF-424 series or those forms and 
instructions prescribed by DoD Components.
    (c) For Federal programs covered by E.O. 12372 (3 CFR, 1982 Comp., 
p. 197), ``Intergovernmental Review of Federal Programs,'' the applicant 
shall complete the appropriate sections of the SF-424 (Application for 
Federal Assistance) indicating whether the application was subject to 
review by the State Single Point of Contact (SPOC). The name and address 
of the SPOC for a particular State can be obtained from the DoD 
Component or the Catalog of Federal Domestic Assistance. The SPOC shall 
advise the applicant whether the program for which application is made 
has been selected by that State for review.
    (d) DoD Components that do not use the SF-424 form should indicate 
whether the application is subject to review by the State under E.O. 
12372.



Sec. 32.13  Debarment and suspension.

    DoD Components and recipients shall comply with the nonprocurement 
debarment and suspension common rule at 32 CFR part 25. This common rule

[[Page 93]]

restricts subawards and contracts with certain parties that are 
debarred, suspended or otherwise excluded from or ineligible for 
participation in Federal assistance programs or activities.



Sec. 32.14  Special award conditions.

    (a) DoD Components may impose additional requirements as needed, 
over and above those provided in this part, if an applicant or 
recipient:
    (1) Has a history of poor performance;
    (2) Is not financially stable;
    (3) Has a management system that does not meet the standards 
prescribed in this part;
    (4) Has not conformed to the terms and conditions of a previous 
award; or
    (5) Is not otherwise responsible.
    (b) Before imposing additional requirements, DoD Components shall 
notify the applicant or recipient in writing as to:
    (1) The nature of the additional requirements;
    (2) The reason why the additional requirements are being imposed;
    (3) The nature of the corrective action needed;
    (4) The time allowed for completing the corrective actions; and
    (5) The method for requesting reconsideration of the additional 
requirements imposed.
    (c) Any special conditions shall be promptly removed once the 
conditions that prompted them have been corrected.
    (d) Grants officers:
    (1) Should coordinate the imposition and removal of special award 
conditions with the cognizant grants administration office identified in 
32 CFR 22.710.
    (2) Shall include in the award file the written notification to the 
recipient, described in paragraph (b) of this section, and the 
documentation required by 32 CFR 22.410(b).



Sec. 32.15  Metric system of measurement.

    The Metric Conversion Act, as amended by the Omnibus Trade and 
Competitiveness Act (15 U.S.C. 205) declares that the metric system is 
the preferred measurement system for U.S. trade and commerce, and for 
Federal agencies' procurements, grants, and other business-related 
activities. DoD grants officers shall comply with requirements 
concerning the use of the metric system at 32 CFR 22.530.



Sec. 32.16  Resource Conservation and Recovery Act (RCRA).

    Recipients' procurements shall comply with applicable requirements 
of the Resource Conservation and Recovery Act (RCRA), as described at 
Sec. 32.49.



Sec. 32.17  Certifications and representations.

    (a) OMB Circular A-110 authorizes and encourages each Federal 
agency, unless prohibited by statute or codified regulation, to allow 
recipients to submit certifications and representations required by 
statute, executive order, or regulation on an annual basis, if the 
recipients have ongoing and continuing relationships with the agency. 
The Circular further states that annual certifications and 
representations, when used, shall be signed by responsible officials 
with the authority to ensure recipients' compliance with the pertinent 
requirements.
    (b) DoD grants officers shall comply with the provisions concerning 
certifications and representations at 32 CFR 22.510. Those provisions 
ease burdens on recipients to the extent possible, given current 
statutory and regulatory impediments to obtaining all certifications on 
an annual basis. The provisions thereby also comply with the intent of 
OMB Circular A-110, to use less burdensome methods for obtaining 
certifications and representations, as such methods become feasible.



                   Subpart C--Post-Award Requirements

                    Financial and Program Management



Sec. 32.20  Purpose of financial and program management.

    Sections 32.21 through 32.28 prescribe standards for financial 
management systems, methods for making payments and rules for: 
satisfying cost sharing and matching requirements, accounting for 
program income, budget revision approvals, making audits, determining 
allowability of cost, and establishing fund availability.

[[Page 94]]



Sec. 32.21  Standards for financial management systems.

    (a) DoD Components shall require recipients to relate financial data 
to performance data and develop unit cost information whenever 
practical. For awards that support research, it should be noted that it 
is generally not appropriate to develop unit cost information.
    (b) Recipients' financial management systems shall provide for the 
following.
    (1) Accurate, current and complete disclosure of the financial 
results of each federally-sponsored project or program in accordance 
with the reporting requirements set forth in Sec. 32.52. If a DoD 
Component requires reporting on an accrual basis from a recipient that 
maintains its records on other than an accrual basis, the recipient 
shall not be required to establish an accrual accounting system. These 
recipients may develop such accrual data for its reports on the basis of 
an analysis of the documentation on hand.
    (2) Records that identify adequately the source and application of 
funds for federally-sponsored activities. These records shall contain 
information pertaining to Federal awards, authorizations, obligations, 
unobligated balances, assets, outlays, income and interest.
    (3) Effective control over and accountability for all funds, 
property and other assets. Recipients shall adequately safeguard all 
such assets and assure they are used solely for authorized purposes.
    (4) Comparison of outlays with budget amounts for each award. 
Whenever appropriate, financial information should be related to 
performance and unit cost data. As discussed in paragraph (a) of this 
section, unit cost data is generally not appropriate for awards that 
support research.
    (5) Written procedures to minimize the time elapsing between the 
transfer of funds to the recipient from the U.S. Treasury and the 
issuance or redemption of checks, warrants or payments by other means 
for program purposes by the recipient. To the extent that the provisions 
of the Cash Management Improvement Act (CMIA) (Pub. L. 101-453) govern, 
payment methods of State agencies, instrumentalities, and fiscal agents 
should be consistent with CMIA Treasury-State Agreements or the CMIA 
default procedures codified at 31 CFR part 205, ``Withdrawal of Cash 
from the Treasury for Advances under Federal Grant and Other Programs.''
    (6) Written procedures for determining the reasonableness, 
allocability and allowability of costs in accordance with the provisions 
of the applicable Federal cost principles (see Sec. 32.27) and the terms 
and conditions of the award.
    (7) Accounting records including cost accounting records that are 
supported by source documentation.
    (c) Where the Federal Government guarantees or insures the repayment 
of money borrowed by the recipient, the DoD Component, at its 
discretion, may require adequate bonding and insurance if the bonding 
and insurance requirements of the recipient are not deemed adequate to 
protect the interest of the Federal Government.
    (d) The DoD Component may require adequate fidelity bond coverage 
where the recipient lacks sufficient coverage to protect the Federal 
Government's interest.
    (e) Where bonds are required in the situations described above, the 
bonds shall be obtained from companies holding certificates of authority 
as acceptable sureties, as prescribed in 31 CFR part 223, ``Surety 
Companies Doing Business with the United States.''



Sec. 32.22  Payment.

    (a) Payment methods shall minimize the time elapsing between the 
transfer of funds from the United States Treasury and the issuance or 
redemption of checks, warrants, or payment by other means by the 
recipients. Payment methods of State agencies or instrumentalities shall 
be consistent with Treasury-State agreements under the Cash Management 
Improvement Act (CMIA) (31 U.S.C. 3335 and 6503) or default procedures 
in 31 CFR part 205.
    (b) Recipients are to be paid in advance, provided they maintain or 
demonstrate the willingness to maintain:
    (1) Written procedures that minimize the time elapsing between the 
transfer of funds and disbursement by the recipient; and

[[Page 95]]

    (2) Financial management systems that meet the standards for fund 
control and accountability as established in Sec. 32.21. Cash advances 
to a recipient organization shall be limited to the minimum amounts 
needed and be timed to be in accordance with the actual, immediate cash 
requirements of the recipient organization in carrying out the purpose 
of the approved program or project. The timing and amount of cash 
advances shall be as close as is administratively feasible to the actual 
disbursements by the recipient organization for direct program or 
project costs and the proportionate share of any allowable indirect 
costs.
    (c) Whenever possible, advances shall be consolidated to cover 
anticipated cash needs for all awards made by the DoD Component to the 
recipient.
    (1) Advance payment mechanisms include, but are not limited to, 
Treasury check and electronic funds transfer.
    (2) Advance payment mechanisms are subject to 31 CFR part 205.
    (3) Recipients shall be authorized to submit requests for advances 
and reimbursements at least monthly when electronic fund transfers are 
not used.
    (d) Requests for Treasury check advance payment shall be submitted 
on SF-270,\3\ ``Request for Advance or Reimbursement,'' or other forms 
as may be authorized by OMB. This form is not to be used when Treasury 
check advance payments are made to the recipient automatically through 
the use of a predetermined payment schedule or if inconsistent with DoD 
procedures for electronic funds transfer.
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    \3\ See footnote 2 to Sec. 32.12(a).
---------------------------------------------------------------------------

    (e) Reimbursement is the preferred method when the requirements in 
paragraph (b) of this section cannot be met. DoD Components may also use 
this method on any construction agreement, or if the major portion of 
the construction project is accomplished through private market 
financing or Federal loans, and the Federal assistance constitutes a 
minor portion of the project.
    (1) When the reimbursement method is used, the responsible DoD 
payment office generally makes payment within 30 calendar days after 
receipt of the billing by the office designated to receive the billing, 
unless the billing is improper (for further information about timeframes 
for payments, see 32 CFR 22.810(c)(3)(ii)).
    (2) Recipients shall be authorized to submit requests for 
reimbursement at least monthly when electronic funds transfers are not 
used.
    (f) If a recipient cannot meet the criteria for advance payments and 
the grants officer, in consultation with the program manager, has 
determined that reimbursement is not feasible because the recipient 
lacks sufficient working capital, the award may provide for cash on a 
working capital advance basis. Under this procedure, the award shall 
provide for advancing cash to the recipient to cover its estimated 
disbursement needs for an initial period generally geared to the 
awardee's disbursing cycle. Thereafter, the award shall provide for 
reimbursing the recipient for its actual cash disbursements. The working 
capital advance method of payment shall not be used for recipients 
unwilling or unable to provide timely advances to their subrecipient to 
meet the subrecipient's actual cash disbursements.
    (g) To the extent available, recipients shall disburse funds 
available from repayments to and interest earned on a revolving fund, 
program income, rebates, refunds, contract settlements, audit recoveries 
and interest earned on such funds before requesting additional cash 
payments.
    (h) Unless otherwise required by statute, grants officers shall not 
withhold payments for proper charges made by recipients at any time 
during the project period unless:
    (1) A recipient has failed to comply with the project objectives, 
the terms and conditions of the award, or Federal reporting 
requirements; or
    (2) The recipient or subrecipient is delinquent in a debt to the 
United States under OMB Circular A-129, ``Managing Federal Credit 
Programs'' (see definitions of ``debt'' and ``delinquent debt,'' at 32 
CFR 22.105). Under such conditions, the grants officer may, upon 
reasonable notice, inform the recipient that payments shall not be made 
for obligations incurred after a specified date until the conditions are 
corrected or the indebtedness to

[[Page 96]]

the Federal Government is liquidated (also see 32 CFR 22.420(b)(2) and 
22.820).
    (i) Standards governing the use of banks and other institutions as 
depositories of funds advanced under awards are as follows:
    (1) Except for situations described in paragraph (i)(2) of this 
section, DoD Components shall not require separate depository accounts 
for funds provided to a recipient or establish any eligibility 
requirements for depositories for funds provided to a recipient. 
However, recipients must be able to account for the receipt, obligation 
and expenditure of funds.
    (2) Advances of Federal funds shall be deposited and maintained in 
insured accounts whenever possible.
    (j) Consistent with the national goal of expanding the opportunities 
for women-owned and minority-owned business enterprises, recipients 
shall be encouraged to use women-owned and minority-owned banks (a bank 
which is owned at least 50 percent by women or minority group members).
    (k) Recipients shall maintain advances of Federal funds in interest 
bearing accounts, unless:
    (1) The recipient receives less than $120,000 in Federal awards per 
year;
    (2) The best reasonably available interest bearing account would not 
be expected to earn interest in excess of $250 per year on Federal cash 
balances; or
    (3) The depository would require an average or minimum balance so 
high that it would not be feasible within the expected Federal and non-
Federal cash resources.
    (l)(1) Interest earned on Federal advances deposited in interest 
bearing accounts shall be remitted annually to Department of Health and 
Human Services, Payment Management System, PO Box 6021, Rockville, MD 
20852.
    (2) In keeping with Electronic Funds Transfer rules (31 CFR part 
206), interest should be remitted to the HHS Payment Management System 
through an electronic medium such as the FEDWIR Deposit System. 
Electronic remittances should be in the format and should include any 
data that are specified by the grants officer as being necessary to 
facilitate direct deposit in HHS' account at the Department of the 
Treasury.
    (3) Recipients that do not have electronic remittance capability 
should use a check.
    (4) Interest amounts up to $250 per year may be retained by the 
recipient for administrative expense.
    (m) Except as noted elsewhere in this part, only the following forms 
shall be authorized for the recipients in requesting advances and 
reimbursements. DoD Components shall not require more than an original 
and two copies of these forms.
    (1) SF-270, Request for Advance or Reimbursement. Each DoD Component 
shall adopt the SF-270 as a standard form for all nonconstruction 
programs when electronic funds transfer or predetermined advance methods 
are not used. DoD Components, however, have the option of using this 
form for construction programs in lieu of the SF-271,\4\ ``Outlay Report 
and Request for Reimbursement for Construction Programs.''
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    \4\ See footnote 2 to Sec. 32.12(a).
---------------------------------------------------------------------------

    (2) SF-271, Outlay Report and Request for Reimbursement for 
Construction Programs. Each DoD Component shall adopt the SF-271 as the 
standard form to be used for requesting reimbursement for construction 
programs. However, a DoD Component may substitute the SF-270 when the 
DoD Component determines that it provides adequate information to meet 
Federal needs.



Sec. 32.23  Cost sharing or matching.

    (a) All contributions, including cash and third party in-kind, shall 
be accepted as part of the recipient's cost sharing or matching when 
such contributions meet all of the following criteria:
    (1) Are verifiable from the recipient's records.
    (2) Are not included as contributions for any other federally-
assisted project or program.
    (3) Are necessary and reasonable for proper and efficient 
accomplishment of project or program objectives.
    (4) Are allowable under the applicable cost principles.
    (5) Are not paid by the Federal Government under another award, 
except

[[Page 97]]

where authorized by Federal statute to be used for cost sharing or 
matching.
    (6) Are provided for in the approved budget when required by the DoD 
Component.
    (7) Conform to other provisions of this part, as applicable.
    (b) Unrecovered indirect costs (see definition in Sec. 32.2) may be 
included as part of cost sharing or matching.
    (c) Values for recipient contributions of services and property 
shall be established in accordance with the applicable cost principles. 
If a DoD Component authorizes recipients to donate buildings or land for 
construction/facilities acquisition projects or long-term use, the value 
of the donated property for cost sharing or matching shall be the lesser 
of:
    (1) The certified value of the remaining life of the property 
recorded in the recipient's accounting records at the time of donation; 
or
    (2) The current fair market value. However, when there is sufficient 
justification, the DoD Component may approve the use of the current fair 
market value of the donated property, even if it exceeds the certified 
value at the time of donation to the project. The DoD Component may 
accept the use of any reasonable basis for determining the fair market 
value of the property.
    (d) Volunteer services furnished by professional and technical 
personnel, consultants, and other skilled and unskilled labor may be 
counted as cost sharing or matching if the service is an integral and 
necessary part of an approved project or program. Rates for volunteer 
services shall be consistent with those paid for similar work in the 
recipient's organization. In those instances in which the required 
skills are not found in the recipient organization, rates shall be 
consistent with those paid for similar work in the labor market in which 
the recipient competes for the kind of services involved. In either 
case, paid fringe benefits that are reasonable, allowable, and allocable 
may be included in the valuation.
    (e) When an employer other than the recipient furnishes the services 
of an employee, these services shall be valued at the employee's regular 
rate of pay (plus an amount of fringe benefits that are reasonable, 
allowable, and allocable, but exclusive of overhead costs), provided 
these services are in the same skill for which the employee is normally 
paid.
    (f) Donated supplies may include such items as office supplies, 
laboratory supplies or workshop and classroom supplies. Value assessed 
to donated supplies included in the cost sharing or matching share shall 
be reasonable and shall not exceed the fair market value of the property 
at the time of the donation.
    (g) The method used for determining cost sharing or matching for 
donated equipment, buildings and land for which title passes to the 
recipient may differ according to the purpose of the award, if the 
purpose of the award is to:
    (1) Assist the recipient in the acquisition of equipment, buildings 
or land, the total value of the donated property may be claimed as cost 
sharing or matching; or
    (2) Support activities that require the use of equipment, buildings 
or land, normally only depreciation or use charges for equipment and 
buildings may be made. However, the full value of equipment or other 
capital assets and fair rental charges for land may be allowed, provided 
that the DoD Component has approved the charges.
    (h) The value of donated property shall be determined in accordance 
with the usual accounting policies of the recipient, with the following 
qualifications.
    (1) The value of donated land and buildings shall not exceed its 
fair market value at the time of donation to the recipient as 
established by an independent appraiser (e.g., certified real property 
appraiser or General Services Administration representative) and 
certified by a responsible official of the recipient.
    (2) The value of donated equipment shall not exceed the fair market 
value of equipment of the same age and condition at the time of 
donation.
    (3) The value of donated space shall not exceed the fair rental 
value of comparable space as established by an independent appraisal of 
comparable space and facilities in a privately-owned building in the 
same locality.

[[Page 98]]

    (4) The value of loaned equipment shall not exceed its fair rental 
value.
    (i) The following requirements pertain to the recipient's supporting 
records for in-kind contributions from third parties:
    (1) Volunteer services shall be documented and, to the extent 
feasible, supported by the same methods used by the recipient for its 
own employees.
    (2) The basis for determining the valuation for personal service and 
property shall be documented.



Sec. 32.24  Program income.

    (a) DoD Components shall apply the standards set forth in this 
section in requiring recipient organizations to account for program 
income related to projects financed in whole or in part with Federal 
funds.
    (b) Except as provided in paragraph (h) of this section, program 
income earned during the project period shall be retained by the 
recipient and, in accordance with the terms and conditions of the award, 
shall be used in one or more of the following ways:
    (1) Added to funds committed to the project by the DoD Component and 
recipient and used to further eligible project or program objectives.
    (2) Used to finance the non-Federal share of the project or program.
    (3) Deducted from the total project or program allowable cost in 
determining the net allowable costs on which the Federal share of costs 
is based.
    (c) When a program regulation or award authorizes the disposition of 
program income as described in paragraphs (b)(1) or (b)(2) of this 
section, program income in excess of any limits stipulated shall be used 
in accordance with paragraph (b)(3) of this section.
    (d) In the event that program regulations or the terms and 
conditions of the award do not specify how program income is to be used, 
paragraph (b)(3) of this section shall apply automatically to all 
projects or programs except research. For awards that support research, 
paragraph (b)(1) of this section shall apply automatically unless the 
terms and conditions specify another alternative or the recipient is 
subject to special award conditions, as indicated in Sec. 32.14.
    (e) Unless program regulations or the terms and conditions of the 
award provide otherwise, recipients shall have no obligation to the 
Federal Government regarding program income earned after the end of the 
project period.
    (f) If authorized by program regulations or the terms and conditions 
of the award, costs incident to the generation of program income may be 
deducted from gross income to determine program income, provided these 
costs have not been charged to the award.
    (g) Proceeds from the sale of property shall be handled in 
accordance with the requirements of the Property Standards (see 
Secs. 32.30 through 32.37).
    (h) Unless program regulations or the terms and condition of the 
award provide otherwise, recipients shall have no obligation to the 
Federal Government with respect to program income earned from license 
fees and royalties for copyrighted material, patents, patent 
applications, trademarks, and inventions produced under an award. Note 
that the Patent and Trademark Amendments (35 U.S.C. chapter 18) apply to 
inventions made under an experimental, developmental, or research award.



Sec. 32.25  Revision of budget and program plans.

    (a) The budget plan is the financial expression of the project or 
program as approved during the award process. It may include either the 
sum of the Federal and non-Federal shares, or only the Federal share, 
depending upon DoD Component requirements. It shall be related to 
performance for program evaluation purposes whenever appropriate.
    (b) Recipients are required to report deviations from budget and 
program plans, and request prior approvals for budget and program plan 
revisions, in accordance with this section.
    (c) For nonconstruction awards, recipients shall request prior 
approvals from the cognizant grants officer for one or more of the 
following program or budget related reasons.
    (1) Change in the scope or the objective of the project or program 
(even if there is no associated budget revision requiring prior written 
approval).

[[Page 99]]

    (2) Change in a key person specified in the application or award 
document.
    (3) The absence for more than three months, or a 25 percent 
reduction in time devoted to the project, by the approved project 
director or principal investigator.
    (4) The need for additional Federal funding.
    (5) The transfer of amounts budgeted for indirect costs to absorb 
increases in direct costs, or vice versa, if approval is required by the 
DoD Component. DoD Components should require this prior approval only in 
exceptional circumstances. The requirement in each such case must be 
stated in the award document.
    (6) The inclusion, unless waived by the DoD Component, of costs that 
require prior approval in accordance with OMB Circular A-21,\5\ ``Cost 
Principles for Institutions of Higher Education,'' OMB Circular A-
122,\6\ ``Cost Principles for Non-Profit Organizations,'' or Appendix E 
to 45 CFR part 74, ``Principles for Determining Costs Applicable to 
Research and Development under Grants and Contracts with Hospitals,'' or 
48 CFR part 31, ``Contract Cost Principles and Procedures,'' as 
applicable. However, it should be noted that many of the prior approvals 
in these cost principles are appropriately waived only after 
consultation with the cognizant federal agency responsible for 
negotiating the recipient's indirect costs.
---------------------------------------------------------------------------

    \5\ See footnote 1 to Sec. 32.1(a).
    \6\ See footnote 1 to Sec. 32.1(a).
---------------------------------------------------------------------------

    (7) The transfer of funds allotted for training allowances (direct 
payment to trainees) to other categories of expense.
    (8) Unless described in the application and funded in the approved 
awards, the subaward, transfer or contracting out of any work under an 
award. This provision does not apply to the purchase of supplies, 
material, equipment or general support services.
    (9) If required by the DoD Component, the transfer of funds among 
direct cost categories that is described in paragraph (e) of this 
section.
    (d) (1) Except for requirements listed in paragraphs (c)(1) and 
(c)(4) of this section, OMB Circular A-110 authorizes DoD Components, at 
their option, to waive cost-related and administrative prior written 
approvals required by this part and OMB Circulars A-21 and A-122 (but 
see cautionary note at end of paragraph (c)(5) of this section).
    (2) The two prior approvals listed in paragraphs (d)(2)(i) and (ii) 
of this section are automatically waived unless the award document 
states otherwise. DoD Components should override this automatic waiver 
and require the prior approvals, especially for research awards, only in 
exceptional circumstances. Absent an override in the award terms and 
conditions, recipients need not obtain prior approvals before:
    (i) Incurring pre-award costs 90 calendar days prior to award 
(incurring pre-award costs more than 90 calendar days prior to award 
would still require the prior approval of the DoD Component). All pre-
award costs are incurred at the recipient's risk (i.e., the DoD 
Component is under no obligation to reimburse such costs if for any 
reason the recipient does not receive an award or if the award is less 
than anticipated and inadequate to cover such costs).
    (ii) Carrying forward unobligated balances to subsequent funding 
periods.
    (3) Under certain conditions, a DoD Component may authorize a 
recipient to initiate, without prior approval, a one-time, no-cost 
extension (i.e., an extension in the expiration date of an award that 
does not require additional Federal funds) for a period of up to twelve 
months, as long as the no-cost extension does not involve a change in 
the approved objectives or scope of the project. The conditions for 
waiving this prior approval requirement are that the DoD Component must:
    (i) Judge that the recipient's subsequently initiating a one-time, 
no-cost extension would not cause the DoD Component to fail to comply 
with DoD funding policies (for further information on the location of 
DoD funding policies, grants officers may refer to Appendix C to 32 CFR 
part 22).
    (ii) Require a recipient that wishes to initiate a one-time, no-cost 
extension to so notify the office that made the award at least 10 
calendar days before the original expiration date of the award.

[[Page 100]]

    (e) The DoD Component may, at its option, restrict the transfer of 
funds among direct cost categories, functions and activities for awards 
in which the Federal share of the project exceeds $100,000 and the 
cumulative amount of such transfers exceeds or is expected to exceed 10 
percent of the total budget as last approved by the DoD Component. As a 
matter of DoD policy, requiring prior approvals for such transfers 
generally is not appropriate for grants to support research. No DoD 
Component shall permit a transfer that would cause any Federal 
appropriation or part thereof to be used for purposes other than those 
consistent with the original intent of the appropriation.
    (f) For construction awards, recipients shall request prior written 
approval promptly from grants officers for budget revisions whenever:
    (1) The revision results from changes in the scope or the objective 
of the project or program;
    (2) The need arises for additional Federal funds to complete the 
project; or
    (3) A revision is desired which involves specific costs for which 
prior written approval requirements may be imposed consistent with 
applicable OMB cost principles listed in Sec. 32.27.
    (g) When a DoD Component makes an award that provides support for 
both construction and nonconstruction work, the DoD Component may 
require the recipient to request prior approval from the grants officer 
before making any fund or budget transfers between the two types of work 
supported.
    (h) No other prior approval requirements for specific items may be 
imposed unless a deviation has been approved, in accordance with the 
deviation procedures in Sec. 32.4(c).
    (i) For both construction and nonconstruction awards, DoD Components 
shall require recipients to notify the grants officer in writing 
promptly whenever the amount of Federal authorized funds is expected to 
exceed the needs of the recipient for the project period by more than 
$5000 or five percent of the Federal award, whichever is greater. This 
notification shall not be required if an application for additional 
funding is submitted for a continuation award.
    (j) When requesting approval for budget revisions, recipients shall 
use the budget forms that were used in the application unless the grants 
officer indicates a letter of request suffices.
    (k) Within 30 calendar days from the date of receipt of the request 
for budget revisions, the grants officer shall review the request and 
notify the recipient whether the budget revisions have been approved. If 
the revision is still under consideration at the end of 30 calendar 
days, the grants officer shall inform the recipient in writing of the 
date when the recipient may expect the decision.



Sec. 32.26  Non-Federal audits.

    (a) Recipients and subrecipients that are institutions of higher 
education or other non-profit organizations (including hospitals) shall 
be subject to the audit requirements contained in the Single Audit Act 
Amendments of 1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-
133,\7\ ``Audits of States, Local Governments, and Non-Profit 
Organizations.''
---------------------------------------------------------------------------

    \7\ See footnote 1 to Sec. 32.1(a).
---------------------------------------------------------------------------

    (b) State and local governments that are subrecipients shall be 
subject to the audit requirements contained in the Single Audit Act 
Amendments of 1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-133, 
``Audits of States, Local Governments, and Non-Profit Organizations.''
    (c) Hospitals that are subrecipients and are not covered by the 
audit provisions of revised OMB Circular A-133 shall be subject to the 
audit requirements specified in award terms and conditions.
    (d) For-profit organizations that are subrecipients shall be subject 
to the audit requirements specified in 32 CFR 34.16.



Sec. 32.27  Allowable costs.

    (a) General. For each kind of recipient or subrecipient of a cost-
type assistance award, or each contractor receiving a. cost-type 
contract under an assistance award, there is a set of Federal principles 
for determining allowable costs. Allowability of costs shall be 
determined in accordance with the

[[Page 101]]

cost principles applicable to the entity incurring the costs.
    (b) Governmental organizations. Allowability of costs incurred by 
State, local or federally-recognized Indian tribal governments that may 
be subrecipients or contractors under awards subject to this part is 
determined in accordance with the provisions of OMB Circular A-87,\8\ 
``Cost Principles for State and Local Governments.''
---------------------------------------------------------------------------

    \8\ See footnote 1 to Sec. 32.1(a).
---------------------------------------------------------------------------

    (c) Non-profit organizations. The allowability of costs incurred by 
non-profit organizations that may be recipients or subrecipients of 
awards subject to this part, or contractors under such awards, is 
determined in accordance with the provisions of OMB Circular A-122, 
``Cost Principles for Non-Profit Organizations.''
    (d) Higher educational institutions. The allowability of costs 
incurred by institutions of higher education that may be recipients, 
subrecipients, or contractors is determined in accordance with the 
provisions of OMB Circular A-21, ``Cost Principles for Educational 
Institutions.''
    (e) Hospitals. The allowability of costs incurred by hospitals that 
are recipients, subrecipients, or contractors is determined in 
accordance with the provisions of Appendix E to 45 CFR part 74, 
``Principles for Determining Costs Applicable to Research and 
Development Under Grants and Contracts with Hospitals.''
    (f) For-profit organizations. The allowability of costs incurred by 
subrecipients or contractors that are either for-profit organizations or 
non-profit organizations listed in Attachment C to Circular A-122 is 
determined in accordance with the provisions of the Federal Acquisition 
Regulation (FAR) at 48 CFR part 31; however, the grants officer or the 
award terms and conditions may in rare cases authorize a determination 
of allowable costs that are in accordance with uniform cost accounting 
standards and comply with cost principles acceptable to the Department 
of Defense.



Sec. 32.28  Period of availability of funds.

    Where a funding period is specified, a recipient may charge to the 
award only allowable costs resulting from obligations incurred during 
the funding period and any pre-award costs (see Sec. 32.25(d)(2)(i)) 
authorized by the DoD Component.

                           Property Standards



Sec. 32.30  Purpose of property standards.

    Sections 32.31 through 32.37 set forth uniform standards governing 
management and disposition of property furnished by the Federal 
Government and property whose cost was charged to a project supported by 
a Federal award. DoD Components shall require recipients to observe 
these standards under awards and shall not impose additional 
requirements, unless specifically required by Federal statute. The 
recipient may use its own property management standards and procedures 
provided it observes the provisions of Secs. 32.31 through 32.37.



Sec. 32.31  Insurance coverage.

    Recipients shall, at a minimum, provide the equivalent insurance 
coverage for real property and equipment acquired with Federal funds as 
provided to property owned by the recipient. Federally-owned property 
need not be insured unless required by the terms and conditions of the 
award.



Sec. 32.32  Real property.

    Each DoD Component that makes awards under which real property is 
acquired in whole or in part with Federal funds shall prescribe 
requirements for recipients concerning the use and disposition of such 
property. Unless otherwise provided by statute, such requirements, at a 
minimum, shall contain the following:
    (a) Title to real property shall vest in the recipient subject to 
the condition that the recipient shall use the real property for the 
authorized purpose of the project as long as it is needed and shall not 
encumber the property without approval of the DoD Component.
    (b) The recipient shall obtain written approval by the grants 
officer for the use of real property in other federally sponsored 
projects when the recipient determines that the property is no longer 
needed for the purpose of the original project. Use in other projects

[[Page 102]]

shall be limited to those under federally sponsored projects (i.e., 
awards) or programs that have purposes consistent with those authorized 
for support by the DoD Component.
    (c) When the real property is no longer needed as provided in 
paragraphs (a) and (b) of this section, the recipient shall request 
disposition instructions from the DoD Component or its successor Federal 
agency. The responsible Federal agency shall observe one or more of the 
following disposition instructions:
    (1) The recipient may be permitted to retain title without further 
obligation to the Federal Government after it compensates the Federal 
Government for that percentage of the current fair market value of the 
property attributable to the Federal participation in the project.
    (2) The recipient may be directed to sell the property under 
guidelines provided by the DoD Component and pay the Federal Government 
for that percentage of the current fair market value of the property 
attributable to the Federal participation in the project (after 
deducting actual and reasonable selling and fix-up expenses, if any, 
from the sales proceeds). When the recipient is authorized or required 
to sell the property, proper sales procedures shall be established that 
provide for competition to the extent practicable and result in the 
highest possible return.
    (3) The recipient may be directed to transfer title to the property 
to the Federal Government or to an eligible third party provided that, 
in such cases, the recipient shall be entitled to compensation for its 
attributable percentage of the current fair market value of the 
property.



Sec. 32.33  Federally-owned and exempt property.

    (a) Federally-owned property. (1) Title to federally-owned property 
remains vested in the Federal Government. Recipients shall submit 
annually an inventory listing of federally-owned property in their 
custody to the DoD Component that made the award. Upon completion of the 
award or when the property is no longer needed, the recipient shall 
report the property to the DoD Component for further Federal agency 
utilization.
    (2) If the DoD Component that made the award has no further need for 
the property, it shall be declared excess and either:
    (i) Reported to the General Services Administration, in accordance 
with the Federal Property and Administrative Services Act of 1949 (40 
U.S.C. 483(b)(2)), as implemented by General Services Administration 
regulations at 41 CFR 101-47.202; or
    (ii) Disposed of by alternative methods pursuant to other specific 
statutory authority. For example, DoD Components are authorized by the 
Federal Technology Transfer Act (15 U.S.C. 3710(i)), to donate research 
equipment to educational and non-profit organizations for the conduct of 
technical and scientific education and research activities--donations 
under this Act shall be in accordance with the DoD implementation of 
E.O. 12999 (3 CFR, 1996 Comp., p. 180), ``Educational Technology: 
Ensuring Opportunity for All Children in the Next Century,'' as 
applicable. Appropriate instructions shall be issued to the recipient by 
the DoD Component.
    (b) Exempt property. (1) When statutory authority exists, a DoD 
Component may vest title to property acquired with Federal funds in the 
recipient without further obligation to the Federal Government and under 
conditions the DoD Component considers appropriate. For example, under 
31 U.S.C. 6306, DoD Components may so vest title to tangible personal 
property under a grant or cooperative agreement for basic or applied 
research in a nonprofit institution of higher education or a nonprofit 
organization whose primary purpose is conducting scientific research. 
Such property is ``exempt property.''
    (2) As a matter of policy, DoD Components shall make maximum use of 
the authority of 31 U.S.C. 6306 to vest title to exempt property in 
institutions of higher education, without further obligation to the 
Government, to enhance the university infrastructure for future 
performance of defense research and related, science and engineering 
education.

[[Page 103]]

    (3) DoD Components may establish conditions, in regulation or in 
award terms and conditions, for vesting title to exempt property. Should 
a DoD Component not establish conditions, title to exempt property upon 
acquisition shall vest in the recipient without further obligation to 
the Federal Government.



Sec. 32.34  Equipment.

    (a) Title to equipment acquired by a recipient with Federal funds 
shall vest in the recipient, subject to conditions of this section.
    (b) The recipient shall not use equipment acquired with Federal 
funds to provide services to non-Federal outside organizations for a fee 
that is less than private companies charge for equivalent services, 
unless specifically authorized by Federal statute, for as long as the 
Federal Government retains an interest in the equipment.
    (c) The recipient shall use the equipment in the project or program 
for which it was acquired as long as needed, whether or not the project 
or program continues to be supported by Federal funds and shall not 
encumber the property without approval of the DoD Component that made 
the award. When no longer needed for the original project or program, 
the recipient shall use the equipment in connection with its other 
federally-sponsored activities, in the following order of priority:
    (1) First, activities sponsored by the DoD Component that funded the 
original project.
    (2) Second, activities sponsored by other DoD Components.
    (3) Then, activities sponsored by other Federal agencies.
    (d) During the time that equipment is used on the project or program 
for which it was acquired, the recipient shall make it available for use 
on other projects or programs if such other use will not interfere with 
the work on the project or program for which the equipment was 
originally acquired. First preference for such other use shall be given 
to other projects or programs sponsored by the DoD Component that 
financed the equipment; second preference shall be given to projects or 
programs sponsored by other DoD Components; and third preference shall 
be given to projects or programs sponsored by other Federal agencies. If 
the property is owned by the Federal Government, use on other activities 
not sponsored by the Federal Government shall be permissible if 
authorized by the DoD Component that financed the property. User charges 
shall be treated as program income.
    (e) When acquiring replacement equipment, the recipient may use the 
equipment to be replaced as trade-in or sell the equipment and use the 
proceeds to offset the costs of the replacement equipment subject to the 
approval of the DoD Component that financed the equipment.
    (f) The recipient's property management standards for equipment 
acquired with Federal funds and federally-owned property shall include 
all of the following:
    (1) Records for equipment and federally-owned property shall be 
maintained accurately and shall include the following information:
    (i) A description of the equipment or federally-owned property.
    (ii) Manufacturer's serial number, model number, Federal stock 
number, national stock number, or other identification number.
    (iii) Source of the equipment or federally-owned property, including 
the award number.
    (iv) Whether title vests in the recipient or the Federal Government.
    (v) Acquisition date (or date received, if the property was 
furnished by the Federal Government) and cost.
    (vi) Information from which one can calculate the percentage of 
Federal participation in the cost of the equipment (not applicable to 
property furnished by the Federal Government).
    (vii) Location and condition of the equipment or federally-owned 
property and the date the information was reported.
    (viii) Unit acquisition cost.
    (ix) Ultimate disposition data, including date of disposal and sales 
price or the method used to determine current fair market value where a 
recipient compensates the DoD Component that made the award for its 
share.
    (2) Property owned by the Federal Government shall be identified to 
indicate Federal ownership.

[[Page 104]]

    (3) A physical inventory of equipment and federally-owned property 
shall be taken and the results reconciled with the equipment records at 
least once every two years. Any differences between quantities 
determined by the physical inspection and those shown in the accounting 
records shall be investigated to determine the causes of the difference. 
The recipient shall, in connection with the inventory, verify the 
existence, current utilization, and continued need for the equipment or 
federally-owned property.
    (4) A control system shall be in effect to insure adequate 
safeguards to prevent loss, damage, or theft of the equipment or 
federally-owned property. Any loss, damage, or theft of equipment or 
federally-owned property shall be investigated and fully documented; if 
the property was owned by the Federal Government, the recipient shall 
promptly notify the DoD Component.
    (5) Adequate maintenance procedures shall be implemented to keep the 
equipment or federally-owned property in good condition.
    (6) Where the recipient is authorized or required to sell the 
equipment, proper sales procedures shall be established which provide 
for competition to the extent practicable and result in the highest 
possible return.
    (g) When the recipient no longer needs the equipment, the equipment 
may be used for other activities in accordance with the following 
standards.
    (1) For equipment with a current per unit fair market value of 
$5,000 or more, the recipient may retain the equipment for other uses 
provided that compensation is made to the DoD Component that originally 
made the award or its successor. The amount of compensation shall be 
computed by applying the percentage of Federal participation in the cost 
of the original project or program to the current fair market value of 
the equipment.
    (2) If the recipient has no need for the equipment, the recipient 
shall request disposition instructions from the DoD Component. The DoD 
Component shall issue instructions to the recipient no later than 120 
calendar days after the recipient's request and the following procedures 
shall govern:
    (i) The grants officer, in consultation with the program manager, 
shall judge whether the age and nature of the equipment warrant a 
screening procedure to determine whether the equipment is useful to a 
DoD Component or other Federal agency. If a screening procedure is 
warranted:
    (A) The DoD Component shall determine whether the equipment can be 
used to meet DoD requirements.
    (B) If no DoD requirement exists, the availability of the equipment 
shall be reported to the General Services Administration by the DoD 
Component to determine whether a requirement for the equipment exists in 
other Federal agencies.
    (ii) If so instructed or if disposition instructions are not issued 
within 120 calendar days after the recipient's request, the recipient 
shall sell the equipment and reimburse the DoD Component that made the 
award an amount computed by applying to the sales proceeds the 
percentage of Federal participation in the cost of the original project 
or program. However, the recipient shall be permitted to deduct and 
retain from the Federal share $500 or ten percent of the proceeds, 
whichever is less, for the recipient's selling and handling expenses.
    (iii) If the recipient is instructed to ship the equipment 
elsewhere, the recipient shall be reimbursed by the Federal Government 
by an amount which is computed by applying the percentage of the 
recipient's participation in the cost of the original project or program 
to the current fair market value of the equipment, plus any reasonable 
shipping or interim storage costs incurred.
    (iv) If the recipient is instructed to otherwise dispose of the 
equipment, the recipient shall be reimbursed by the DoD Component that 
made the award for such costs incurred in its disposition.
    (h) The DoD Component may reserve the right to transfer the title to 
the Federal Government or to a third party named by the Federal 
Government when such third party is otherwise eligible under existing 
statutes. Such transfer shall be subject to the following standards.

[[Page 105]]

    (1) The equipment shall be appropriately identified in the award or 
otherwise made known to the recipient in writing. For exempt property, 
in accordance with Sec. 32.33(b)(3), note that this identification must 
occur by the time of award, or title to the property vests in the 
recipient without further obligation to the Government.
    (2) The DoD Component shall issue disposition instructions within 
120 calendar days after receipt of a final inventory. The final 
inventory shall list all equipment acquired with award funds and 
federally-owned property. If the DoD Component fails to issue 
disposition instructions for equipment within the 120 calendar day 
period, the recipient shall apply the standards of paragraph (g) of this 
section.
    (3) When the DoD Component exercises its right to take title, the 
equipment shall be subject to the provisions for federally-owned 
property.



Sec. 32.35  Supplies.

    (a) Title to supplies shall vest in the recipient upon acquisition. 
If there is a residual inventory of unused supplies exceeding $5,000 in 
total aggregate value upon termination or completion of the project or 
program and the supplies are not needed for any other federally-
sponsored project or program, the recipient shall retain the supplies 
for use on non-Federal sponsored activities or sell them, but shall, in 
either case, compensate the Federal Government for its share. The amount 
of compensation shall be computed in the same manner as for equipment.
    (b) The recipient shall not use supplies acquired with Federal funds 
to provide services to non-Federal outside organizations for a fee that 
is less than private companies charge for equivalent services, unless 
specifically authorized by Federal statute as long as the Federal 
Government retains an interest in the supplies.



Sec. 32.36  Intangible property.

    (a) The recipient may copyright any work that is subject to 
copyright and was developed, or for which ownership was purchased, under 
an award. DoD Components reserve a royalty-free, nonexclusive and 
irrevocable right to reproduce, publish, or otherwise use the work for 
Federal purposes, and to authorize others to do so.
    (b) Recipients are subject to applicable regulations governing 
patents and inventions, including Governmentwide regulations issued by 
the Department of Commerce at 37 CFR part 401, ``Rights to Inventions 
Made by Nonprofit Organizations and Small Business Firms Under 
Government Grants, Contracts and Cooperative Agreements.''
    (c) The Federal Government has the right to:
    (1) Obtain, reproduce, publish or otherwise use the data first 
produced under an award; and
    (2) Authorize others to receive, reproduce, publish, or otherwise 
use such data for Federal purposes.
    (d)(1) In addition, in response to a Freedom of Information Act 
(FOIA) request for research data relating to published research findings 
produced under an award that were used by the Federal Government in 
developing an agency action that has the force and effect of law, the 
DoD Component that made the award shall request, and the recipient shall 
provide, within a reasonable time, the research data so that they can be 
made available to the public through the procedures established under 
the FOIA. If the DoD Component that made the award obtains the research 
data solely in response to a FOIA request, the agency may charge the 
requester a reasonable fee equaling the full incremental cost of 
obtaining the research data. This fee should reflect costs incurred by 
the agency, the recipient, and applicable subrecipients. This fee is in 
addition to any fees the agency may assess under the FOIA (5 U.S.C. 
552(a)(4)(A)).
    (2) The following definitions apply for purposes of this paragraph 
(d):
    (i) Research data is defined as the recorded factual material 
commonly accepted in the scientific community as necessary to validate 
research findings, but not any of the following: preliminary analyses, 
drafts of scientific papers, plans for future research, peer reviews, or 
communications with colleagues. This ``recorded'' material excludes 
physical objects (e.g., laboratory samples). Research data also do not 
include:

[[Page 106]]

    (A) Trade secrets, commercial information, materials necessary to be 
held confidential by a researcher until they are published, or similar 
information which is protected under law; and
    (B) Personnel and medical information and similar information the 
disclosure of which would constitute a clearly unwarranted invasion of 
personal privacy, such as information that could be used to identify a 
particular person in a research study.
    (ii) Published is defined as either when:
    (A) Research findings are published in a peer-reviewed scientific or 
technical journal; or
    (B) A Federal agency publicly and officially cites the research 
findings in support of an agency action that has the force and effect of 
law.
    (iii) Used by the Federal Government in developing an agency action 
that has the force and effect of law is defined as when an agency 
publicly and officially cites the research findings in support of an 
agency action that has the force and effect of law.
    (e) Title to intangible property and debt instruments acquired under 
an award or subaward (rather than developed or produced under the award 
or subaward) vests upon acquisition in the recipient. The recipient 
shall use that property for the originally-authorized purpose, and the 
recipient shall not encumber the property without approval of the DoD 
Component that made the award. When no longer needed for the originally 
authorized purpose, disposition of the intangible property shall occur 
in accordance with the provisions of Sec. 32.34(g).

[63 FR 12188, Mar. 12, 1998, as amended at 65 FR 14407, 14416, Mar. 16, 
2000]



Sec. 32.37  Property trust relationship.

    Real property, equipment, intangible property and debt instruments 
that are acquired or improved with Federal funds shall be held in trust 
by the recipient as trustee for the beneficiaries of the project or 
program under which the property was acquired or improved. DoD 
Components may require recipients to record liens or other appropriate 
notices of record to indicate that personal or real property has been 
acquired or improved with Federal funds and that use and disposition 
conditions apply to the property.

                          Procurement Standards



Sec. 32.40  Purpose of procurement standards.

    Sections 32.41 through 32.48 set forth standards for use by 
recipients in establishing procedures for the procurement of supplies 
and other expendable property, equipment, real property and other 
services with Federal funds. These standards are furnished to ensure 
that such materials and services are obtained in an effective manner and 
in compliance with the provisions of applicable Federal statutes and 
executive orders.



Sec. 32.41  Recipient responsibilities.

    The standards contained in this section do not relieve the recipient 
of the contractual responsibilities arising under its contract(s). The 
recipient is the responsible authority, without recourse to the DoD 
Component that made the award, regarding the settlement and satisfaction 
of all contractual and administrative issues arising out of procurements 
entered into in support of an award or other agreement. This includes 
disputes, claims, protests of award, source evaluation or other matters 
of a contractual nature. Matters concerning violation of statute are to 
be referred to such Federal, State or local authority as may have proper 
jurisdiction.



Sec. 32.42  Codes of conduct.

    The recipient shall maintain written standards of conduct governing 
the performance of its employees engaged in the award and administration 
of contracts. No employee, officer, or agent shall participate in the 
selection, award, or administration of a contract supported by Federal 
funds if a real or apparent conflict of interest would be involved. Such 
a conflict would arise when the employee, officer, or agent, any member 
of his or her immediate family, his or her partner, or an organization 
which employs or is about to employ any of the parties indicated herein, 
has a financial or other interest in the firm selected for an award. The 
officers, employees, and agents of the

[[Page 107]]

recipient shall neither solicit nor accept gratuities, favors, or 
anything of monetary value from contractors, or parties to 
subagreements. However, recipients may set standards for situations in 
which the financial interest is not substantial or the gift is an 
unsolicited item of nominal value. The standards of conduct shall 
provide for disciplinary actions to be applied for violations of such 
standards by officers, employees, or agents of the recipient.



Sec. 32.43  Competition.

    All procurement transactions shall be conducted in a manner to 
provide, to the maximum extent practical, open and free competition. The 
recipient shall be alert to organizational conflicts of interest as well 
as noncompetitive practices among contractors that may restrict or 
eliminate competition or otherwise restrain trade. In order to ensure 
objective contractor performance and eliminate unfair competitive 
advantage, contractors that develop or draft specifications, 
requirements, statements of work, invitations for bids and/or requests 
for proposals shall be excluded from competing for such procurements. 
Awards shall be made to the bidder or offeror whose bid or offer is 
responsive to the solicitation and is most advantageous to the 
recipient, price, quality and other factors considered. Solicitations 
shall clearly set forth all requirements that the bidder or offeror 
shall fulfill in order for the bid or offer to be evaluated by the 
recipient. Any and all bids or offers may be rejected when it is in the 
recipient's interest to do so.



Sec. 32.44  Procurement procedures.

    (a) All recipients shall establish written procurement procedures. 
These procedures shall provide, at a minimum, that:
    (1) Recipients avoid purchasing unnecessary items;
    (2) Where appropriate, an analysis is made of lease and purchase 
alternatives to determine which would be the most economical and 
practical procurement; and
    (3) Solicitations for goods and services provide for all of the 
following:
    (i) A clear and accurate description of the technical requirements 
for the material, product or service to be procured. In competitive 
procurements, such a description shall not contain features which unduly 
restrict competition.
    (ii) Requirements which the bidder/offeror must fulfill and all 
other factors to be used in evaluating bids or proposals.
    (iii) A description, whenever practicable, of technical requirements 
in terms of functions to be performed or performance required, including 
the range of acceptable characteristics or minimum acceptable standards.
    (iv) The specific features of ``brand name or equal'' descriptions 
that bidders are required to meet when such items are included in the 
solicitation.
    (v) The acceptance, to the extent practicable and economically 
feasible, of products and services dimensioned in the metric system of 
measurement.
    (vi) Preference, to the extent practicable and economically 
feasible, for products and services that conserve natural resources and 
protect the environment and are energy efficient.
    (b) Positive efforts shall be made by recipients to utilize small 
businesses, minority-owned firms, and women's business enterprises, 
whenever possible. Recipients of Federal awards shall take all of the 
following steps to further this goal:
    (1) Ensure that small businesses, minority-owned firms, and women's 
business enterprises are used to the fullest extent practicable.
    (2) Make information on forthcoming opportunities available and 
arrange time frames for purchases and contracts to encourage and 
facilitate participation by small businesses, minority-owned firms, and 
women's business enterprises.
    (3) Consider in the contract process whether firms competing for 
larger contracts intend to subcontract with small businesses, minority-
owned firms, and women's business enterprises.
    (4) Encourage contracting with consortiums of small businesses, 
minority-owned firms and women's business enterprises when a contract is 
too large

[[Page 108]]

for one of these firms to handle individually.
    (5) Use the services and assistance, as appropriate, of such 
organizations as the Small Business Administration and the Department of 
Commerce's Minority Business Development Agency in the solicitation and 
utilization of small businesses, minority-owned firms and women's 
business enterprises.
    (c) The type of procuring instruments used (e.g., fixed price 
contracts, cost reimbursable contracts, purchase orders, and incentive 
contracts) shall be determined by the recipient but shall be appropriate 
for the particular procurement and for promoting the best interest of 
the program or project involved. The ``cost-plus-a-percentage-of-cost'' 
or ``percentage of construction cost'' methods of contracting shall not 
be used.
    (d) Contracts shall be made only with responsible contractors who 
possess the potential ability to perform successfully under the terms 
and conditions of the proposed procurement. Consideration shall be given 
to such matters as contractor integrity, record of past performance, 
financial and technical resources or accessibility to other necessary 
resources. In certain circumstances, contracts with certain parties are 
restricted by the DoD implementation, in 32 CFR part 25, of E.O.s 12549 
(3 CFR, 1986 Comp., p. 189) and 12689 (3 CFR, 1989 Comp., p. 235), 
``Debarment and Suspension.''
    (e) Recipients shall, on request, make available for the DoD 
Component's pre-award review, procurement documents such as request for 
proposals or invitations for bids, independent cost estimates, etc., 
when any of the following conditions apply:
    (1) A recipient's procurement procedures or operation fails to 
comply with the procurement standards in this part.
    (2) The procurement is expected to exceed the simplified acquisition 
threshold fixed at 41 U.S.C. 403 (11) (currently $100,000) and is to be 
awarded without competition or only one bid or offer is received in 
response to a solicitation.
    (3) The procurement, which is expected to exceed the simplified 
acquisition threshold, specifies a ``brand name'' product.
    (4) The proposed award over the simplified acquisition threshold is 
to be awarded to other than the apparent low bidder under a sealed bid 
procurement.
    (5) A proposed contract modification changes the scope of a contract 
or increases the contract amount by more than the amount of the 
simplified acquisition threshold.



Sec. 32.45  Cost and price analysis.

    Some form of cost or price analysis shall be made and documented in 
the procurement files in connection with every procurement action. Price 
analysis may be accomplished in various ways, including the comparison 
of price quotations submitted, market prices and similar indicia, 
together with discounts. Cost analysis is the review and evaluation of 
each element of cost to determine reasonableness, allocability and 
allowability.



Sec. 32.46  Procurement records.

    Procurement records and files for purchases in excess of the 
simplified acquisition threshold shall include the following at a 
minimum:
    (a) Basis for contractor selection;
    (b) Justification for lack of competition when competitive bids or 
offers are not obtained; and
    (c) Basis for award cost or price.



Sec. 32.47  Contract administration.

    A system for contract administration shall be maintained to ensure 
contractor conformance with the terms, conditions and specifications of 
the contract and to ensure adequate and timely follow up of all 
purchases. Recipients shall evaluate contractor performance and 
document, as appropriate, whether contractors have met the terms, 
conditions and specifications of the contract.



Sec. 32.48  Contract provisions.

    The recipient shall include, in addition to provisions to define a 
sound and complete agreement, the following provisions in all contracts. 
The following provisions shall also be applied to subcontracts:

[[Page 109]]

    (a) Contracts in excess of the simplified acquisition threshold 
shall contain contractual provisions or conditions that allow for 
administrative, contractual, or legal remedies in instances in which a 
contractor violates or breaches the contract terms, and provide for such 
remedial actions as may be appropriate.
    (b) All contracts in excess of the simplified acquisition threshold 
shall contain suitable provisions for termination by the recipient, 
including the manner by which termination shall be effected and the 
basis for settlement. In addition, such contracts shall describe 
conditions under which the contract may be terminated for default as 
well as conditions where the contract may be terminated because of 
circumstances beyond the control of the contractor.
    (c) Except as otherwise required by statute, an award that requires 
the contracting (or subcontracting) for construction or facility 
improvements shall provide for the recipient to follow its own 
requirements relating to bid guarantees, performance bonds, and payment 
bonds unless the construction contract or subcontract exceeds $100,000. 
For those contracts or subcontracts exceeding $100,000, the DoD 
Component may accept the bonding policy and requirements of the 
recipient, provided the grants officer has made a determination that the 
Federal Government's interest is adequately protected. If such a 
determination has not been made, the minimum requirements shall be as 
follows:
    (1) A bid guarantee from each bidder equivalent to five percent of 
the bid price. The ``bid guarantee'' shall consist of a firm commitment 
such as a bid bond, certified check, or other negotiable instrument 
accompanying a bid as assurance that the bidder shall, upon acceptance 
of his bid, execute such contractual documents as may be required within 
the time specified.
    (2) A performance bond on the part of the contractor for 100 percent 
of the contract price. A ``performance bond'' is one executed in 
connection with a contract to secure fulfillment of all the contractor's 
obligations under such contract.
    (3) A payment bond on the part of the contractor for 100 percent of 
the contract price. A ``payment bond'' is one executed in connection 
with a contract to assure payment as required by statute of all persons 
supplying labor and material in the execution of the work provided for 
in the contract.
    (4) Where bonds are required in the situations described in 
Secs. 32.40 through 32.49, the bonds shall be obtained from companies 
holding certificates of authority as acceptable sureties pursuant to 31 
CFR part 223, ``Surety Companies Doing Business with the United 
States.''
    (d) All negotiated contracts (except those for less than the 
simplified acquisition threshold) awarded by recipients shall include a 
provision to the effect that the recipient, the Department of Defense, 
the Comptroller General of the United States, or any of their duly 
authorized representatives, shall have access to any books, documents, 
papers and records of the contractor which are directly pertinent to a 
specific program for the purpose of making audits, examinations, 
excerpts and transcriptions.
    (e) All contracts, including those for amounts less than the 
simplified acquisition threshold, by recipients and their contractors 
shall contain the procurement provisions of Appendix A to this part, as 
applicable.



Sec. 32.49  Resource Conservation and Recovery Act.

    Under the Resource Conservation and Recovery Act (RCRA) (section 
6002, Pub. L. 94-580, 42 U.S.C. 6962), any State agency or agency of a 
political subdivision of a State which is using appropriated Federal 
funds must comply with section 6002. Section 6002 requires that 
preference be given in procurement programs to the purchase of specific 
products containing recycled materials identified in guidelines 
developed by the Environmental Protection Agency (EPA) (40 CFR parts 
247-254). Accordingly, State and local institutions of higher education, 
hospitals, and non-profit organizations that receive direct Federal 
awards or other Federal funds shall give preference in their procurement 
programs funded with Federal funds to the purchase of

[[Page 110]]

recycled products pursuant to the EPA guidelines.

                           Reports and Records



Sec. 32.50  Purpose of reports and records.

    Sections 32.51 through 32.53 set forth the procedures for monitoring 
and reporting on the recipient's financial and program performance and 
the necessary standard reporting forms. They also set forth record 
retention requirements.



Sec. 32.51  Monitoring and reporting program performance.

    (a) Recipients are responsible for managing and monitoring each 
project, program, subaward, function or activity supported by the award. 
Recipients shall monitor subawards to ensure subrecipients have met the 
audit requirements as delineated in Sec. 32.26.
    (b) The award terms and conditions shall prescribe the frequency 
with which the performance reports shall be submitted. Except as 
provided in paragraph (f) of this section, performance reports shall not 
be required more frequently than quarterly or less frequently than 
annually. Annual reports shall be due 90 calendar days after the award 
year; quarterly or semi-annual reports shall be due 30 calendar days 
after the reporting period. DoD Components may require annual reports 
before the anniversary dates of multiple year awards in lieu of these 
requirements. The final performance reports are due 90 calendar days 
after the expiration or termination of the award.
    (c) If inappropriate, a final technical or performance report shall 
not be required after completion of the project.
    (d) When required, performance reports shall generally contain, for 
each award, brief information on each of the following:
    (1) A comparison of actual accomplishments with the goals and 
objectives established for the period, the findings of the investigator, 
or both. Whenever appropriate and the output of programs or projects can 
be readily quantified, such quantitative data should be related to cost 
data for computation of unit costs. However, unit costs are generally 
inappropriate for research (see Sec. 32.21 (a) and (b)(4)).
    (2) Reasons why established goals were not met, if appropriate.
    (3) Other pertinent information including, when appropriate, 
analysis and explanation of cost overruns or high unit costs.
    (e) Recipients shall not be required to submit more than the 
original and two copies of performance reports.
    (f) Recipients shall immediately notify the grants officer of 
developments that have a significant impact on the award-supported 
activities. Also, notification shall be given in the case of problems, 
delays, or adverse conditions which materially impair the ability to 
meet the objectives of the award. This notification shall include a 
statement of the action taken or contemplated, and any assistance needed 
to resolve the situation.
    (g) DoD Components' representatives may make site visits, as needed.
    (h) DoD Components shall comply with applicable clearance 
requirements of 5 CFR part 1320 when requesting performance data from 
recipients.



Sec. 32.52  Financial reporting.

    (a) The following forms or such other forms as may be approved by 
OMB are authorized for obtaining financial information from recipients:
    (1) SF-269 \9\ or SF-269A,\10\ Financial Status Report. (i) DoD 
Components shall require recipients to use the SF-269 or SF-269A to 
report the status of funds for all nonconstruction projects or programs. 
A DoD Component may, however, have the option of not requiring the SF-
269 or SF-269A when the SF-270, Request for Advance or Reimbursement, or 
SF-272,\11\ Report of Federal Cash Transactions, is determined to 
provide adequate information to meet agency needs, except that a final 
SF-269 or SF-269A shall be required at the completion of the project 
when the SF-270 is used only for advances.
---------------------------------------------------------------------------

    \9\ See footnote 2 to Sec. 32.12(a).
    \10\ See footnote 2 to Sec. 32.12(a).
    \11\ See footnote 2 to Sec. 32.12(a).
---------------------------------------------------------------------------

    (ii) The DoD Component shall prescribe whether the report shall be 
on a cash or accrual basis. If the award requires accrual information 
and the recipient's accounting records are not normally kept on the 
accrual basis, the

[[Page 111]]

recipient shall not be required to convert its accounting system, but 
shall develop such accrual information through best estimates based on 
an analysis of the documentation on hand.
    (iii) The DoD Component shall determine the frequency of the 
Financial Status Report for each project or program, considering the 
size and complexity of the particular project or program. However, the 
report shall not be required more frequently than quarterly or less 
frequently than annually. A final report shall be required at the 
completion of the award.
    (iv) The DoD Component shall require recipients to submit the SF-269 
or SF-269A (an original and no more than two copies) no later than 30 
calendar days after the end of each specified reporting period for 
quarterly and semi-annual reports, and 90 calendar days for annual and 
final reports. Extensions of reporting due dates may be approved by the 
grants officer upon request of the recipient.
    (2) SF-272, Report of Federal Cash Transactions. (i) When funds are 
advanced to recipients the DoD Component shall require each recipient to 
submit the SF-272 and, when necessary, its continuation sheet, SF-
272a.\12\ The grants officer shall use this report to monitor cash 
advanced to recipients and to obtain disbursement information for each 
award to the recipients.
---------------------------------------------------------------------------

    \12\ See footnote 2 to Sec. 32.12(a).
---------------------------------------------------------------------------

    (ii) DoD Components may require forecasts of Federal cash 
requirements in the ``Remarks'' section of the report.
    (iii) When practical and deemed necessary, DoD Components may 
require recipients to report in the ``Remarks'' section the amount of 
cash advances received in excess of three working days. Recipients shall 
provide short narrative explanations of actions taken to reduce the 
excess balances.
    (iv) Recipients shall be required to submit not more than the 
original and two copies of the SF-272 15 calendar days following the end 
of each quarter. DoD Components may require a monthly report from those 
recipients receiving advances totaling $1 million or more per year.
    (v) DoD Components may waive the requirement for submission of the 
SF-272 for any one of the following reasons:
    (A) When monthly advances do not exceed $25,000 per recipient, 
provided that such advances are monitored through other forms contained 
in this section;
    (B) If, in the grants officer's opinion, the recipient's accounting 
controls are adequate to minimize excessive Federal advances; or
    (C) When electronic payment mechanisms or SF-270 forms provide 
adequate data.
    (b) When the DoD Component needs additional information or more 
frequent reports, the following shall be observed:
    (1) When additional information is needed to comply with legislative 
requirements, grants officers shall issue instructions to require 
recipients to submit such information under the ``Remarks'' section of 
the reports.
    (2) When a grants officer, after consultation with the Federal 
agency assigned cognizance for a recipient's audit and audit resolution, 
determines that the recipient's accounting system does not meet the 
standards in Sec. 32.21, additional pertinent information to further 
monitor awards may be obtained upon written notice to the recipient 
until such time as the system is brought up to standard. The grants 
officer, in obtaining this information, shall comply with applicable 
report clearance requirements of 5 CFR part 1320.
    (3) Grants officers are encouraged to shade out any line item on any 
report if not necessary.
    (4) DoD Components are encouraged to accept the identical 
information from the recipients in machine readable format or computer 
printouts or electronic outputs in lieu of prescribed formats.
    (5) DoD Components may provide computer or electronic outputs to 
recipients when it expedites or contributes to the accuracy of 
reporting.



Sec. 32.53  Retention and access requirements for records.

    (a) This section sets forth requirements for record retention and 
access

[[Page 112]]

to records for awards to recipients. DoD Components shall not impose any 
other record retention or access requirements upon recipients.
    (b) Financial records, supporting documents, statistical records, 
and all other records pertinent to an award shall be retained for a 
period of three years from the date of submission of the final 
expenditure report. The only exceptions are the following:
    (1) If any litigation, claim, or audit is started before the 
expiration of the 3-year period, the records shall be retained until all 
litigation, claims or audit findings involving the records have been 
resolved and final action taken.
    (2) Records for real property and equipment acquired with Federal 
funds shall be retained for 3 years after final disposition.
    (3) When records are transferred to or maintained by the DoD 
Component that made the award, the 3-year retention requirement is not 
applicable to the recipient.
    (4) Indirect cost rate proposals, cost allocations plans, and 
related records, for which retention requirements are specified in 
paragraph (g) of this section.
    (c) Copies of original records may be substituted for the original 
records if authorized by the grants officer.
    (d) The grants officer shall request that recipients transfer 
certain records to DoD Component custody when he or she determines that 
the records possess long term retention value. However, in order to 
avoid duplicate recordkeeping, a grants officer may make arrangements 
for recipients to retain any records that are continuously needed for 
joint use.
    (e) DoD Components, the Inspector General, Comptroller General of 
the United States, or any of their duly authorized representatives, have 
the right of timely and unrestricted access to any books, documents, 
papers, or other records of recipients that are pertinent to the awards, 
in order to make audits, examinations, excerpts, transcripts and copies 
of such documents. This right also includes timely and reasonable access 
to a recipient's personnel for the purpose of interview and discussion 
related to such documents. The rights of access in this paragraph are 
not limited to the required retention period, but shall last as long as 
records are retained.
    (f) Unless required by statute, no DoD Component shall place 
restrictions on recipients that limit public access to the records of 
recipients that are pertinent to an award, except when the DoD Component 
can demonstrate that such records shall be kept confidential and would 
have been exempted from disclosure pursuant to the Freedom of 
Information Act (5 U.S.C. 552) if the records had belonged to the DoD 
Component making the award.
    (g) Indirect cost rate proposals, cost allocations plans, etc. 
Paragraphs (g)(1) and (g)(2) of this section apply to the following 
types of documents, and their supporting records: indirect cost rate 
computations or proposals, cost allocation plans, and any similar 
accounting computations of the rate at which a particular group of costs 
is chargeable (such as computer usage chargeback rates or composite 
fringe benefit rates).
    (1) If submitted for negotiation. If the recipient submits an 
indirect-cost proposal, plan, or other computation to the Federal agency 
responsible for negotiating the recipient's indirect cost rate, as the 
basis for negotiation of the rate, or the subrecipient submits such a 
proposal, plan, or computation to the recipient, then the 3-year 
retention period for its supporting records starts on the date of such 
submission.
    (2) If not submitted for negotiation. If the recipient is not 
required to submit to the cognizant Federal agency or the subrecipient 
is not required to submit to the recipient the proposal, plan, or other 
computation for negotiation purposes, then the 3-year retention period 
for the proposal, plan, or other computation and its supporting records 
starts at the end of the fiscal year (or other accounting period) 
covered by the proposal, plan, or other computation.
    (h) If the information described in this section is maintained on a 
computer, recipients shall retain the computer data on a reliable medium 
for the time periods prescribed. Recipients may transfer computer data 
in machine readable form from one reliable

[[Page 113]]

computer medium to another. Recipients' computer data retention and 
transfer procedures shall maintain the integrity, reliability, and 
security of the original computer data. Recipients shall also maintain 
an audit trail describing the data transfer. For the record retention 
time periods prescribed in this section, recipients shall not destroy, 
discard, delete, or write over such computer data.

                       Termination and Enforcement



Sec. 32.60  Purpose of termination and enforcement.

    Sections 32.61 and 32.62 set forth uniform suspension, termination 
and enforcement procedures.



Sec. 32.61  Termination.

    (a) Awards may be terminated in whole or in part only as follows:
    (1) By the grants officer, if a recipient materially fails to comply 
with the terms and conditions of an award;
    (2) By the grants officer with the consent of the recipient, in 
which case the two parties shall agree upon the termination conditions, 
including the effective date and, in the case of partial termination, 
the portion to be terminated; or
    (3) By the recipient upon sending to the grants officer written 
notification setting forth the reasons for such termination, the 
effective date, and, in the case of partial termination, the portion to 
be terminated. The recipient must provide such notice at least 30 
calendar days prior to the effective date of the termination. However, 
if the grants officer determines in the case of partial termination that 
the reduced or modified portion of the award will not accomplish the 
purposes for which the award was made, he or she may terminate the award 
in its entirety.
    (b) If costs are allowed under an award, the responsibilities of the 
recipient referred to in Sec. 32.71, including those for property 
management as applicable, shall be considered in the termination of the 
award, and provision shall be made for continuing responsibilities of 
the recipient after termination, as appropriate.



Sec. 32.62  Enforcement.

    (a) Remedies for noncompliance. If a recipient materially fails to 
comply with the terms and conditions of an award, whether stated in a 
Federal statute, regulation, assurance, application, or notice of award, 
the grants officer may, in addition to imposing any of the special 
conditions outlined in Sec. 32.14, take one or more of the following 
actions, as appropriate in the circumstances:
    (1) Temporarily withhold cash payments pending correction of the 
deficiency by the recipient or more severe enforcement action by the 
grants officer and DoD Component.
    (2) Disallow (that is, deny both use of funds and any applicable 
matching credit for) all or part of the cost of the activity or action 
not in compliance.
    (3) Wholly or partly suspend or terminate the current award.
    (4) Withhold further awards for the project or program.
    (5) Take other remedies that may be legally available.
    (b) Hearings and appeals. In taking an enforcement action, the DoD 
Component shall provide the recipient an opportunity for hearing, 
appeal, or other administrative proceeding to which the recipient is 
entitled under any statute or regulation applicable to the action 
involved. Award terms or conditions will incorporate the procedures of 
32 CFR 22.815 for processing recipient claims and disputes and for 
deciding appeals of grants officers' decisions.
    (c) Effects of suspension and termination. Costs of a recipient 
resulting from obligations incurred by the recipient during a suspension 
or after termination of an award are not allowable unless the grants 
officer expressly authorizes them in the notice of suspension or 
termination or subsequently. Other recipient costs during suspension or 
after termination which are necessary and not reasonably avoidable are 
allowable if the costs:
    (1) Result from obligations which were properly incurred by the 
recipient before the effective date of suspension or termination, are 
not in anticipation of it, and in the case of a termination, are 
noncancellable; and

[[Page 114]]

    (2) Would be allowable if the award were not suspended or expired 
normally at the end of the funding period in which the termination takes 
effect.
    (d) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude a recipient from being subject to debarment 
and suspension under 32 CFR part 25.



                 Subpart D--After-the-Award Requirements



Sec. 32.70  Purpose.

    Sections 32.71 through 32.73 contain closeout procedures and other 
procedures for subsequent disallowances and adjustments.



Sec. 32.71  Closeout procedures.

    (a) Recipients shall submit, within 90 calendar days after the date 
of completion of the award, all financial, performance, and other 
reports required by the terms and conditions of the award. The grants 
officer may approve extensions when requested by the recipient.
    (b) Unless the grants officer authorizes an extension, a recipient 
shall liquidate all obligations incurred under the award not later than 
90 calendar days after the funding period or the date of completion as 
specified in the terms and conditions of the award or in agency 
implementing instructions.
    (c) The responsible grants officer and payment office shall expedite 
completion of steps needed to close out awards and make prompt, final 
payments to a recipient for allowable reimbursable costs under the award 
being closed out.
    (d) The recipient shall promptly refund any balances of unobligated 
cash that the DoD Component has advanced or paid and that is not 
authorized to be retained by the recipient for use in other projects. 
OMB Circular A-129\13\ governs unreturned amounts that become delinquent 
debts (see 32 CFR 22.820).
---------------------------------------------------------------------------

    \13\ See footnote 1 to Sec. 32.1(a).
---------------------------------------------------------------------------

    (e) When authorized by the terms and conditions of the award, the 
grants officer shall make a settlement for any upward or downward 
adjustments to the Federal share of costs after closeout reports are 
received.
    (f) The recipient shall account for any real and personal property 
acquired with Federal funds or received from the Federal Government in 
accordance with Secs. 32.31 through 32.37.
    (g) In the event a final audit has not been performed prior to the 
closeout of an award, the DoD Component shall retain the right to 
recover an appropriate amount after fully considering the 
recommendations on disallowed costs resulting from the final audit.



Sec. 32.72  Subsequent adjustments and continuing responsibilities.

    (a) The closeout of an award does not affect any of the following:
    (1) The right of the Department of Defense to disallow costs and 
recover funds on the basis of a later audit or other review.
    (2) The obligation of the recipient to return any funds due as a 
result of later refunds, corrections, or other transactions.
    (3) Audit requirements in Sec. 32.26.
    (4) Property management requirements in Secs. 32.31 through 32.37.
    (5) Records retention as required in Sec. 32.53.
    (b) After closeout of an award, a relationship created under an 
award may be modified or ended in whole or in part with the consent of 
the grants officer and the recipient, provided the responsibilities of 
the recipient referred to in Sec. 32.73(a), including those for property 
management as applicable, are considered and provisions made for 
continuing responsibilities of the recipient, as appropriate.



Sec. 32.73  Collection of amounts due.

    (a) Any funds paid to a recipient in excess of the amount to which 
the recipient is finally determined to be entitled under the terms and 
conditions of the award constitute a debt to the Federal Government.
    (b) OMB Circular A-110 informs each Federal agency that:
    (1) If a debt is not paid within a reasonable period after the 
demand for payment, the Federal agency may reduce the debt by:

[[Page 115]]

    (i) Making administrative offset against other requests for 
reimbursement.
    (ii) Withholding advance payments otherwise due to the recipient.
    (iii) Taking other action permitted by statute.
    (2) Except as otherwise provided by law, the Federal awarding agency 
shall charge interest on an overdue debt in accordance with 4 CFR 
Chapter II, ``Federal Claims Collection Standards.''
    (c) DoD grants officers shall follow the procedures in 32 CFR 22.820 
for issuing demands for payment and transferring debts to DoD payment 
offices for collection. Recipients will be informed about pertinent 
procedures and timeframes through the written notices of grants 
officers' decisions and demands for payment.

               Appendix A to Part 32--Contract Provisions

    All contracts awarded by a recipient, including those for amounts 
less than the simplified acquisition threshold, shall contain the 
following provisions as applicable:
    1. Equal Employment Opportunity--All contracts shall contain a 
provision requiring compliance with E.O. 11246 (3 CFR, 1964-1965 Comp., 
p. 339), ``Equal Employment Opportunity,'' as amended by E.O. 11375 (3 
CFR, 1966-1970 Comp., p. 684), ``Amending Executive Order 11246 Relating 
to Equal Employment Opportunity,'' and as supplemented by regulations at 
41 CFR ch. 60, ``Office of Federal Contract Compliance Programs, Equal 
Employment Opportunity, Department of Labor.''
    2. Copeland ``Anti-Kickback'' Act (18 U.S.C. 874 and 40 U.S.C. 
276c)--All contracts and subawards in excess of $2000 for construction 
or repair awarded by recipients and subrecipients shall include a 
provision for compliance with the Copeland ``Anti-Kickback'' Act (18 
U.S.C. 874), as supplemented by Department of Labor regulations (29 CFR 
part 3, ``Contractors and Subcontractors on Public Building or Public 
Work Financed in Whole or in Part by Loans or Grants from the United 
States''). The Act provides that each contractor or subrecipient shall 
be prohibited from inducing, by any means, any person employed in the 
construction, completion, or repair of public work, to give up any part 
of the compensation to which he is otherwise entitled. The recipient 
shall report all suspected or reported violations to the responsible DoD 
Component.
    3. Davis-Bacon Act, as amended (40 U.S.C. 276a to a-7)--This Act 
applies to procurements under awards only when the Federal program 
legislation specifically makes it apply (i.e., Davis-Bacon does not by 
itself apply to procurements under awards). In cases where another 
statute does make the Davis-Bacon Act apply, all construction contracts 
awarded by the recipients and subrecipients of more than $2,000 shall 
include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 
276a to a-7) and as supplemented by Department of Labor regulations (29 
CFR part 5, ``Labor Standards Provisions Applicable to Contracts 
Governing Federally Financed and Assisted Construction''). Under this 
Act, contractors shall be required to pay wages to laborers and 
mechanics at a rate not less than the minimum wages specified in a wage 
determination made by the Secretary of Labor. In addition, contractors 
shall be required to pay wages not less than once a week. The recipient 
shall place a copy of the current prevailing wage determination issued 
by the Department of Labor in each solicitation and the award of a 
contract shall be conditioned upon the acceptance of the wage 
determination. The recipient shall report all suspected or reported 
violations to the Federal awarding agency.
    4. Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333)-
-Where applicable, all contracts awarded by recipients in excess of 
$100,000 for construction or other purposes that involve the employment 
of mechanics or laborers shall include a provision for compliance with 
sections 102 and 107 of the Contract Work Hours and Safety Standards Act 
(40 U.S.C. 327-333), as supplemented by Department of Labor regulations 
(29 CFR part 5). Under section 102 of the Act, each contractor shall be 
required to compute the wages of every mechanic and laborer on the basis 
of a standard work week of 40 hours. Work in excess of the standard work 
week is permissible provided that the worker is compensated at a rate of 
not less than 1\1/2\ times the basic rate of pay for all hours worked in 
excess of 40 hours in the work week. Section 107 of the Act is 
applicable to construction work and provides that no laborer or mechanic 
shall be required to work in surroundings or under working conditions 
which are unsanitary, hazardous or dangerous. These requirements do not 
apply to the purchases of supplies or materials or articles ordinarily 
available on the open market, or contracts for transportation or 
transmission of intelligence.
    5. Rights to Inventions Made Under a Contract, Grant or Cooperative 
Agreement--Contracts, grants, or cooperative agreements for the 
performance of experimental, developmental, or research work shall 
provide for the rights of the Federal Government and the recipient in 
any resulting invention in accordance with 37 CFR part 401, ``Rights to 
Inventions Made by Nonprofit Organizations

[[Page 116]]

and Small Business Firms Under Government Grants, Contracts and 
Cooperative Agreements.''
    6. Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water 
Pollution Control Act (33 U.S.C. 1251 et seq.), as amended--Contracts 
and subawards of amounts in excess of $100,000 shall contain a provision 
that requires the recipient to agree to comply with all applicable 
standards, orders or regulations issued pursuant to the Clean Air Act 
(42 U.S.C. 7401 et seq.) and the Federal Water Pollution Control Act as 
amended (33 U.S.C. 1251 et seq.). Violations shall be reported to the 
responsible DoD Component and the Regional Office of the Environmental 
Protection Agency (EPA).
    7. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)--Contractors who 
apply or bid for an award of $100,000 or more shall file the required 
certification. Each tier certifies to the tier above that it will not 
and has not used Federal appropriated funds to pay any person or 
organization for influencing or attempting to influence an officer or 
employee of any agency, a member of Congress, officer or employee of 
Congress, or an employee of a member of Congress in connection with 
obtaining any Federal contract, grant or any other award covered by 31 
U.S.C. 1352. Each tier shall also disclose any lobbying with non-Federal 
funds that takes place in connection with obtaining any Federal award. 
Such disclosures are forwarded from tier to tier up to the recipient.
    8. Debarment and Suspension (E.O.s 12549 and 12689)--Contract awards 
that exceed the simplified acquisition threshold and certain other 
contract awards shall not be made to parties listed on the General 
Services Administration's Lists of Parties Excluded from Federal 
Procurement and Nonprocurement Programs in accordance with E.O.s 12549 
(3 CFR, 1986 Comp., p. 189) and 12689 (3 CFR, 1989 Comp., p. 235), 
``Debarment and Suspension.'' This list contains the names of parties 
debarred, suspended, or otherwise excluded by agencies, and contractors 
declared ineligible under statutory or regulatory authority other than 
E.O. 12549. Contractors with awards that exceed the simplified 
acquisition threshold shall provide the required certification regarding 
its exclusion status and that of its principals.



PART 33--UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE AGREEMENTS TO STATE AND LOCAL GOVERNMENTS--Table of Contents




                           Subpart A--General

Sec.
33.1 Purpose and scope of this part.
33.2 Scope of subpart.
33.3 Definitions.
33.4 Applicability.
33.5 Effect on other issuances.
33.6 Additions and exceptions.

                    Subpart B--Pre-Award Requirements

33.10 Forms for applying for grants.
33.11 State plans.
33.12 Special grant or subgrant conditions for ``high-risk'' grantees.

                   Subpart C--Post-Award Requirements

                        Financial Administration

33.20 Standards for financial management systems.
33.21 Payment.
33.22 Allowable costs.
33.23 Period of availability of funds.
33.24 Matching or cost sharing.
33.25 Program income.
33.26 Non-Federal audit.

                    Changes, Property, and Subawards

33.30 Changes.
33.31 Real property.
33.32 Equipment.
33.33 Supplies.
33.34 Copyrights.
33.35 Subawards to debarred and suspended parties.
33.36 Procurement.
33.37 Subgrants.

               Reports, Records Retention, and Enforcement

33.40 Monitoring and reporting program performance.
33.41 Financial reporting.
33.42 Retention and access requirements for records.
33.43 Enforcement.
33.44 Termination for convenience.

                 Subpart D--After-the-Grant Requirements

33.50 Closeout.
33.51 Later disallowances and adjustments.
33.52 Collections of amounts due.

Subpart E--Entitlements [Reserved]

    Authority: 5 U.S.C. 301; 10 U.S.C. 113.

    Source: 53 FR 8070, 8087, Mar. 11, 1988. Redesignated at 57 FR 6200, 
Feb. 21, 1992.



                           Subpart A--General



Sec. 33.1  Purpose and scope of this part.

    This part establishes uniform administrative rules for Federal 
grants and cooperative agreements and subawards

[[Page 117]]

to State, local and Indian tribal governments.



Sec. 33.2  Scope of subpart.

    This subpart contains general rules pertaining to this part and 
procedures for control of exceptions from this part.



Sec. 33.3  Definitions.

    As used in this part:
    Accrued expenditures mean the charges incurred by the grantee during 
a given period requiring the provision of funds for:
    (1) Goods and other tangible property received;
    (2) Services performed by employees, contractors, subgrantees, 
subcontractors, and other payees; and
    (3) Other amounts becoming owed under programs for which no current 
services or performance is required, such as annuities, insurance 
claims, and other benefit payments.
    Accrued income means the sum of:
    (1) Earnings during a given period from services performed by the 
grantee and goods and other tangible property delivered to purchasers, 
and
    (2) Amounts becoming owed to the grantee for which no current 
services or performance is required by the grantee.
    Acquisition cost of an item of purchased equipment means the net 
invoice unit price of the property including the cost of modifications, 
attachments, accessories, or auxiliary apparatus necessary to make the 
property usable for the purpose for which it was acquired. Other charges 
such as the cost of installation, transportation, taxes, duty or 
protective in-transit insurance, shall be included or excluded from the 
unit acquisition cost in accordance with the grantee's regular 
accounting practices.
    Administrative requirements mean those matters common to grants in 
general, such as financial management, kinds and frequency of reports, 
and retention of records. These are distinguished from ``programmatic'' 
requirements, which concern matters that can be treated only on a 
program-by-program or grant-by-grant basis, such as kinds of activities 
that can be supported by grants under a particular program.
    Awarding agency means:
    (1) With respect to a grant, the Federal agency, and
    (2) With respect to a subgrant, the party that awarded the subgrant.
    Cash contributions means the grantee's cash outlay, including the 
outlay of money contributed to the grantee or subgrantee by other public 
agencies and institutions, and private organizations and individuals. 
When authorized by Federal legislation, Federal funds received from 
other assistance agreements may be considered as grantee or subgrantee 
cash contributions.
    Contract means (except as used in the definitions for ``grant'' and 
``subgrant'' in this section and except where qualified by ``Federal'') 
a procurement contract under a grant or subgrant, and means a 
procurement subcontract under a contract.
    Cost sharing or matching means the value of the third party in-kind 
contributions and the portion of the costs of a federally assisted 
project or program not borne by the Federal Government.
    Cost-type contract means a contract or subcontract under a grant in 
which the contractor or subcontractor is paid on the basis of the costs 
it incurs, with or without a fee.
    Equipment means tangible, nonexpendable, personal property having a 
useful life of more than one year and an acquisition cost of $5,000 or 
more per unit. A grantee may use its own definition of equipment 
provided that such definition would at least include all equipment 
defined above.
    Expenditure report means:
    (1) For nonconstruction grants, the SF-269 ``Financial Status 
Report'' (or other equivalent report);
    (2) For construction grants, the SF-271 ``Outlay Report and Request 
for Reimbursement'' (or other equivalent report).
    Federally recognized Indian tribal government means the governing 
body or a governmental agency of any Indian tribe, band, nation, or 
other organized group or community (including any Native village as 
defined in section 3 of the Alaska Native Claims Settlement

[[Page 118]]

Act, 85 Stat. 688) certified by the Secretary of the Interior as 
eligible for the special programs and services provided by him through 
the Bureau of Indian Affairs.
    Government means a State or local government or a federally 
recognized Indian tribal government.
    Grant means an award of financial assistance, including cooperative 
agreements, in the form of money, or property in lieu of money, by the 
Federal Government to an eligible grantee. The term does not include 
technical assistance which provides services instead of money, or other 
assistance in the form of revenue sharing, loans, loan guarantees, 
interest subsidies, insurance, or direct appropriations. Also, the term 
does not include assistance, such as a fellowship or other lump sum 
award, which the grantee is not required to account for.
    Grantee means the government to which a grant is awarded and which 
is accountable for the use of the funds provided. The grantee is the 
entire legal entity even if only a particular component of the entity is 
designated in the grant award document.
    Local government means a county, municipality, city, town, township, 
local public authority (including any public and Indian housing agency 
under the United States Housing Act of 1937) school district, special 
district, intrastate district, council of governments (whether or not 
incorporated as a nonprofit corporation under State law), any other 
regional or interstate government entity, or any agency or 
instrumentality of a local government.
    Obligations means the amounts of orders placed, contracts and 
subgrants awarded, goods and services received, and similar transactions 
during a given period that will require payment by the grantee during 
the same or a future period.
    OMB means the United States Office of Management and Budget.
    Outlays (expenditures) mean charges made to the project or program. 
They may be reported on a cash or accrual basis. For reports prepared on 
a cash basis, outlays are the sum of actual cash disbursement for direct 
charges for goods and services, the amount of indirect expense incurred, 
the value of in-kind contributions applied, and the amount of cash 
advances and payments made to contractors and subgrantees. For reports 
prepared on an accrued expenditure basis, outlays are the sum of actual 
cash disbursements, the amount of indirect expense incurred, the value 
of inkind contributions applied, and the new increase (or decrease) in 
the amounts owed by the grantee for goods and other property received, 
for services performed by employees, contractors, subgrantees, 
subcontractors, and other payees, and other amounts becoming owed under 
programs for which no current services or performance are required, such 
as annuities, insurance claims, and other benefit payments.
    Percentage of completion method refers to a system under which 
payments are made for construction work according to the percentage of 
completion of the work, rather than to the grantee's cost incurred.
    Prior approval means documentation evidencing consent prior to 
incurring specific cost.
    Real property means land, including land improvements, structures 
and appurtenances thereto, excluding movable machinery and equipment.
    Share, when referring to the awarding agency's portion of real 
property, equipment or supplies, means the same percentage as the 
awarding agency's portion of the acquiring party's total costs under the 
grant to which the acquisition costs under the grant to which the 
acquisition cost of the property was charged. Only costs are to be 
counted--not the value of third-party in-kind contributions.
    State means any of the several States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, any territory or 
possession of the United States, or any agency or instrumentality of a 
State exclusive of local governments. The term does not include any 
public and Indian housing agency under United States Housing Act of 
1937.
    Subgrant means an award of financial assistance in the form of 
money, or property in lieu of money, made under a grant by a grantee to 
an eligible subgrantee. The term includes financial

[[Page 119]]

assistance when provided by contractual legal agreement, but does not 
include procurement purchases, nor does it include any form of 
assistance which is excluded from the definition of ``grant'' in this 
part.
    Subgrantee means the government or other legal entity to which a 
subgrant is awarded and which is accountable to the grantee for the use 
of the funds provided.
    Supplies means all tangible personal property other than 
``equipment'' as defined in this part.
    Suspension means depending on the context, either:
    (1) Temporary withdrawal of the authority to obligate grant funds 
pending corrective action by the grantee or subgrantee or a decision to 
terminate the grant, or
    (2) An action taken by a suspending official in accordance with 
agency regulations implementing E.O. 12549 to immediately exclude a 
person from participating in grant transactions for a period, pending 
completion of an investigation and such legal or debarment proceedings 
as may ensue.
    Termination means permanent withdrawal of the authority to obligate 
previously-awarded grant funds before that authority would otherwise 
expire. It also means the voluntary relinquishment of that authority by 
the grantee or subgrantee. ``Termination'' does not include:
    (1) Withdrawal of funds awarded on the basis of the grantee's 
underestimate of the unobligated balance in a prior period;
    (2) Withdrawal of the unobligated balance as of the expiration of a 
grant;
    (3) Refusal to extend a grant or award additional funds, to make a 
competing or noncompeting continuation, renewal, extension, or 
supplemental award; or
    (4) Voiding of a grant upon determination that the award was 
obtained fraudulently, or was otherwise illegal or invalid from 
inception.
    Terms of a grant or subgrant mean all requirements of the grant or 
subgrant, whether in statute, regulations, or the award document.
    Third party in-kind contributions mean property or services which 
benefit a federally assisted project or program and which are 
contributed by non-Federal third parties without charge to the grantee, 
or a cost-type contractor under the grant agreement.
    Unliquidated obligations for reports prepared on a cash basis mean 
the amount of obligations incurred by the grantee that has not been 
paid. For reports prepared on an accrued expenditure basis, they 
represent the amount of obligations incurred by the grantee for which an 
outlay has not been recorded.
    Unobligated balance means the portion of the funds authorized by the 
Federal agency that has not been obligated by the grantee and is 
determined by deducting the cumulative obligations from the cumulative 
funds authorized.



Sec. 33.4  Applicability.

    (a) General. Subparts A through D of this part apply to all grants 
and subgrants to governments, except where inconsistent with Federal 
statutes or with regulations authorized in accordance with the exception 
provision of Sec. 33.6, or:
    (1) Grants and subgrants to State and local institutions of higher 
education or State and local hospitals.
    (2) The block grants authorized by the Omnibus Budget Reconciliation 
Act of 1981 (Community Services; Preventive Health and Health Services; 
Alcohol, Drug Abuse, and Mental Health Services; Maternal and Child 
Health Services; Social Services; Low-Income Home Energy Assistance; 
States' Program of Community Development Block Grants for Small Cities; 
and Elementary and Secondary Education other than programs administered 
by the Secretary of Education under title V, subtitle D, chapter 2, 
section 583--the Secretary's discretionary grant program) and titles I-
III of the Job Training Partnership Act of 1982 and under the Public 
Health Services Act (section 1921), Alcohol and Drug Abuse Treatment and 
Rehabilitation Block Grant and part C of title V, Mental Health Service 
for the Homeless Block Grant).
    (3) Entitlement grants to carry out the following programs of the 
Social Security Act:

[[Page 120]]

    (i) Aid to Needy Families with Dependent Children (title IV-A of the 
Act, not including the Work Incentive Program (WIN) authorized by 
section 402(a)19(G); HHS grants for WIN are subject to this part);
    (ii) Child Support Enforcement and Establishment of Paternity (title 
IV-D of the Act);
    (iii) Foster Care and Adoption Assistance (title IV-E of the Act);
    (iv) Aid to the Aged, Blind, and Disabled (titles I, X, XIV, and 
XVI-AABD of the Act); and
    (v) Medical Assistance (Medicaid) (title XIX of the Act) not 
including the State Medicaid Fraud Control program authorized by section 
1903(a)(6)(B).
    (4) Entitlement grants under the following programs of The National 
School Lunch Act:
    (i) School Lunch (section 4 of the Act),
    (ii) Commodity Assistance (section 6 of the Act),
    (iii) Special Meal Assistance (section 11 of the Act),
    (iv) Summer Food Service for Children (section 13 of the Act), and
    (v) Child Care Food Program (section 17 of the Act).
    (5) Entitlement grants under the following programs of The Child 
Nutrition Act of 1966:
    (i) Special Milk (section 3 of the Act), and
    (ii) School Breakfast (section 4 of the Act).
    (6) Entitlement grants for State Administrative expenses under The 
Food Stamp Act of 1977 (section 16 of the Act).
    (7) A grant for an experimental, pilot, or demonstration project 
that is also supported by a grant listed in paragraph (a)(3) of this 
section;
    (8) Grant funds awarded under subsection 412(e) of the Immigration 
and Nationality Act (8 U.S.C. 1522(e)) 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;
    (9) Grants to local education agencies under 20 U.S.C. 236 through 
241-1(a), and 242 through 244 (portions of the Impact Aid program), 
except for 20 U.S.C. 238(d)(2)(c) and 240(f) (Entitlement Increase for 
Handicapped Children); and
    (10) Payments under the Veterans Administration's State Home Per 
Diem Program (38 U.S.C. 641(a)).
    (b) Entitlement programs. Entitlement programs enumerated above in 
Sec. 33.4(a) (3) through (8) are subject to subpart E.

[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



Sec. 33.5  Effect on other issuances.

    All other grants administration provisions of codified program 
regulations, program manuals, handbooks and other nonregulatory 
materials which are inconsistent with this part are superseded, except 
to the extent they are required by statute, or authorized in accordance 
with the exception provision in Sec. 33.6.

[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



Sec. 33.6  Additions and exceptions.

    (a) For classes of grants and grantees subject to this part, Federal 
agencies may not impose additional administrative requirements except in 
codified regulations published in the Federal Register.
    (b) Exceptions for classes of grants or grantees may be authorized 
only by OMB.
    (c) Exceptions on a case-by-case basis and for subgrantees may be 
authorized by the affected Federal agencies.



                    Subpart B--Pre-Award Requirements



Sec. 33.10  Forms for applying for grants.

    (a) Scope. (1) This section prescribes forms and instructions to be 
used by governmental organizations (except hospitals and institutions of 
higher education operated by a government) in applying for grants. This 
section is not applicable, however, to formula grant programs which do 
not require applicants to apply for funds on a project basis.
    (2) This section applies only to applications to Federal agencies 
for grants,

[[Page 121]]

and is not required to be applied by grantees in dealing with applicants 
for subgrants. However, grantees are encouraged to avoid more detailed 
or burdensome application requirements for subgrants.
    (b) Authorized forms and instructions for governmental 
organizations. (1) In applying for grants, applicants shall only use 
standard application forms or those prescribed by the granting agency 
with the approval of OMB under the Paperwork Reduction Act of 1980.
    (2) Applicants are not required to submit more than the original and 
two copies of preapplications or applications.
    (3) Applicants must follow all applicable instructions that bear OMB 
clearance numbers. Federal agencies may specify and describe the 
programs, functions, or activities that will be used to plan, budget, 
and evaluate the work under a grant. Other supplementary instructions 
may be issued only with the approval of OMB to the extent required under 
the Paperwork Reduction Act of 1980. For any standard form, except the 
SF-424 facesheet, Federal agencies may shade out or instruct the 
applicant to disregard any line item that is not needed.
    (4) When a grantee applies for additional funding (such as a 
continuation or supplemental award) or amends a previously submitted 
application, only the affected pages need be submitted. Previously 
submitted pages with information that is still current need not be 
resubmitted.



Sec. 33.11  State plans.

    (a) Scope. The statutes for some programs require States to submit 
plans before receiving grants. Under regulations implementing Executive 
Order 12372, ``Intergovernmental Review of Federal Programs,'' States 
are allowed to simplify, consolidate and substitute plans. This section 
contains additional provisions for plans that are subject to regulations 
implementing the Executive order.
    (b) Requirements. A State need meet only Federal administrative or 
programmatic requirements for a plan that are in statutes or codified 
regulations.
    (c) Assurances. In each plan the State will include an assurance 
that the State shall comply with all applicable Federal statutes and 
regulations in effect with respect to the periods for which it receives 
grant funding. For this assurance and other assurances required in the 
plan, the State may:
    (1) Cite by number the statutory or regulatory provisions requiring 
the assurances and affirm that it gives the assurances required by those 
provisions,
    (2) Repeat the assurance language in the statutes or regulations, or
    (3) Develop its own language to the extent permitted by law.
    (d) Amendments. A State will amend a plan whenever necessary to 
reflect: (1) New or revised Federal statutes or regulations or (2) a 
material change in any State law, organization, policy, or State agency 
operation. The State will obtain approval for the amendment and its 
effective date but need submit for approval only the amended portions of 
the plan.



Sec. 33.12  Special grant or subgrant conditions for ``high-risk'' grantees.

    (a) A grantee or subgrantee may be considered ``high risk'' if an 
awarding agency determines that a grantee or subgrantee:
    (1) Has a history of unsatisfactory performance, or
    (2) Is not financially stable, or
    (3) Has a management system which does not meet the management 
standards set forth in this part, or
    (4) Has not conformed to terms and conditions of previous awards, or
    (5) Is otherwise not responsible; and if the awarding agency 
determines that an award will be made, special conditions and/or 
restrictions shall correspond to the high risk condition and shall be 
included in the award.
    (b) Special conditions or restrictions may include:
    (1) Payment on a reimbursement basis;
    (2) Withholding authority to proceed to the next phase until receipt 
of evidence of acceptable performance within a given funding period;
    (3) Requiring additional, more detailed financial reports;
    (4) Additional project monitoring;

[[Page 122]]

    (5) Requiring the grantee or subgrantee to obtain technical or 
management assistance; or
    (6) Establishing additional prior approvals.
    (c) If an awarding agency decides to impose such conditions, the 
awarding official will notify the grantee or subgrantee as early as 
possible, in writing, of:
    (1) The nature of the special conditions/restrictions;
    (2) The reason(s) for imposing them;
    (3) The corrective actions which must be taken before they will be 
removed and the time allowed for completing the corrective actions and
    (4) The method of requesting reconsideration of the conditions/
restrictions imposed.



                   Subpart C--Post-Award Requirements

                        Financial Administration



Sec. 33.20  Standards for financial management systems.

    (a) A State must expand and account for grant funds in accordance 
with State laws and procedures for expending and accounting for its own 
funds. Fiscal control and accounting procedures of the State, as well as 
its subgrantees and cost-type contractors, must be sufficient to--
    (1) Permit preparation of reports required by this part and the 
statutes authorizing the grant, and
    (2) Permit the tracing of funds to a level of expenditures adequate 
to establish that such funds have not been used in violation of the 
restrictions and prohibitions of applicable statutes.
    (b) The financial management systems of other grantees and 
subgrantees must meet the following standards:
    (1) Financial reporting. Accurate, current, and complete disclosure 
of the financial results of financially assisted activities must be made 
in accordance with the financial reporting requirements of the grant or 
subgrant.
    (2) Accounting records. Grantees and subgrantees must maintain 
records which adequately identify the source and application of funds 
provided for financially-assisted activities. These records must contain 
information pertaining to grant or subgrant awards and authorizations, 
obligations, unobligated balances, assets, liabilities, outlays or 
expenditures, and income.
    (3) Internal control. Effective control and accountability must be 
maintained for all grant and subgrant cash, real and personal property, 
and other assets. Grantees and subgrantees must adequately safeguard all 
such property and must assure that it is used solely for authorized 
purposes.
    (4) Budget control. Actual expenditures or outlays must be compared 
with budgeted amounts for each grant or subgrant. Financial information 
must be related to performance or productivity data, including the 
development of unit cost information whenever appropriate or 
specifically required in the grant or subgrant agreement. If unit cost 
data are required, estimates based on available documentation will be 
accepted whenever possible.
    (5) Allowable cost. Applicable OMB cost principles, agency program 
regulations, and the terms of grant and subgrant agreements will be 
followed in determining the reasonableness, allowability, and 
allocability of costs.
    (6) Source documentation. Accounting records must be supported by 
such source documentation as cancelled checks, paid bills, payrolls, 
time and attendance records, contract and subgrant award documents, etc.
    (7) Cash management. Procedures for minimizing the time elapsing 
between the transfer of funds from the U.S. Treasury and disbursement by 
grantees and subgrantees must be followed whenever advance payment 
procedures are used. Grantees must establish reasonable procedures to 
ensure the receipt of reports on subgrantees' cash balances and cash 
disbursements in sufficient time to enable them to prepare complete and 
accurate cash transactions reports to the awarding agency. When advances 
are made by letter-of-credit or electronic transfer of funds methods, 
the grantee must make drawdowns as close as possible to the time of 
making disbursements. Grantees must monitor cash drawdowns by their 
subgrantees to assure that they conform substantially to the same

[[Page 123]]

standards of timing and amount as apply to advances to the grantees.
    (c) An awarding agency may review the adequacy of the financial 
management system of any applicant for financial assistance as part of a 
preaward review or at any time subsequent to award.



Sec. 33.21  Payment.

    (a) Scope. This section prescribes the basic standard and the 
methods under which a Federal agency will make payments to grantees, and 
grantees will make payments to subgrantees and contractors.
    (b) Basic standard. Methods and procedures for payment shall 
minimize the time elapsing between the transfer of funds and 
disbursement by the grantee or subgrantee, in accordance with Treasury 
regulations at 31 CFR part 205.
    (c) Advances. Grantees and subgrantees shall be paid in advance, 
provided they maintain or demonstrate the willingness and ability to 
maintain procedures to minimize the time elapsing between the transfer 
of the funds and their disbursement by the grantee or subgrantee.
    (d) Reimbursement. Reimbursement shall be the preferred method when 
the requirements in paragraph (c) of this section are not met. Grantees 
and subgrantees may also be paid by reimbursement for any construction 
grant. Except as otherwise specified in regulation, Federal agencies 
shall not use the percentage of completion method to pay construction 
grants. The grantee or subgrantee may use that method to pay its 
construction contractor, and if it does, the awarding agency's payments 
to the grantee or subgrantee will be based on the grantee's or 
subgrantee's actual rate of disbursement.
    (e) Working capital advances. If a grantee cannot meet the criteria 
for advance payments described in paragraph (c) of this section, and the 
Federal agency has determined that reimbursement is not feasible because 
the grantee lacks sufficient working capital, the awarding agency may 
provide cash or a working capital advance basis. Under this procedure 
the awarding agency shall advance cash to the grantee to cover its 
estimated disbursement needs for an initial period generally geared to 
the grantee's disbursing cycle. Thereafter, the awarding agency shall 
reimburse the grantee for its actual cash disbursements. The working 
capital advance method of payment shall not be used by grantees or 
subgrantees if the reason for using such method is the unwillingness or 
inability of the grantee to provide timely advances to the subgrantee to 
meet the subgrantee's actual cash disbursements.
    (f) Effect of program income, refunds, and audit recoveries on 
payment. (1) Grantees and subgrantees shall disburse repayments to and 
interest earned on a revolving fund before requesting additional cash 
payments for the same activity.
    (2) Except as provided in paragraph (f)(1) of this section, grantees 
and subgrantees shall disburse program income, rebates, refunds, 
contract settlements, audit recoveries and interest earned on such funds 
before requesting additional cash payments.
    (g) Withholding payments. (1) Unless otherwise required by Federal 
statute, awarding agencies shall not withhold payments for proper 
charges incurred by grantees or subgrantees unless--
    (i) The grantee or subgrantee has failed to comply with grant award 
conditions or
    (ii) The grantee or subgrantee is indebted to the United States.
    (2) Cash withheld for failure to comply with grant award condition, 
but without suspension of the grant, shall be released to the grantee 
upon subsequent compliance. When a grant is suspended, payment 
adjustments will be made in accordance with Sec. 33.43(c).
    (3) A Federal agency shall not make payment to grantees for amounts 
that are withheld by grantees or subgrantees from payment to contractors 
to assure satisfactory completion of work. Payments shall be made by the 
Federal agency when the grantees or subgrantees actually disburse the 
withheld funds to the contractors or to escrow accounts established to 
assure satisfactory completion of work.
    (h) Cash depositories. (1) Consistent with the national goal of 
expanding the opportunities for minority business enterprises, grantees 
and subgrantees are

[[Page 124]]

encouraged to use minority banks (a bank which is owned at least 50 
percent by minority group members). A list of minority owned banks can 
be obtained from the Minority Business Development Agency, Department of 
Commerce, Washington, DC 20230.
    (2) A grantee or subgrantee shall maintain a separate bank account 
only when required by Federal-State agreement.
    (i) Interest earned on advances. Except for interest earned on 
advances of funds exempt under the Intergovernmental Cooperation Act (31 
U.S.C. 6501 et seq.) and the Indian Self-Determination Act (23 U.S.C. 
450), grantees and subgrantees shall promptly, but at least quarterly, 
remit interest earned on advances to the Federal agency. The grantee or 
subgrantee may keep interest amounts up to $100 per year for 
administrative expenses.

[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



Sec. 33.22  Allowable costs.

    (a) Limitation on use of funds. Grant funds may be used only for:
    (1) The allowable costs of the grantees, subgrantees and cost-type 
contractors, including allowable costs in the form of payments to fixed-
price contractors; and
    (2) Reasonable fees or profit to cost-type contractors but not any 
fee or profit (or other increment above allowable costs) to the grantee 
or subgrantee.
    (b) Applicable cost principles. For each kind of organization, there 
is a set of Federal principles for determining allowable costs. 
Allowable costs will be determined in accordance with the cost 
principles applicable to the organization incurring the costs. The 
following chart lists the kinds of organizations and the applicable cost 
principles.

------------------------------------------------------------------------
           For the costs of a--                Use the principles in--
------------------------------------------------------------------------
State, local or Indian tribal government..  OMB Circular A-87.
Private nonprofit organization other than   OMB Circular A-122.
 an (1) institution of higher education,
 (2) hospital, or (3) organization named
 in OMB Circular A-122 as not subject to
 that circular.
Educational institutions..................  OMB Circular A-21.
For-profit organization other than a        48 CFR part 31. Contract
 hospital and an organization named in OBM   Cost Principles and
 Circular A-122 as not subject to that       Procedures, or uniform cost
 circular.                                   accounting standards that
                                             comply with cost principles
                                             acceptable to the Federal
                                             agency.
------------------------------------------------------------------------



Sec. 33.23  Period of availability of funds.

    (a) General. Where a funding period is specified, a grantee may 
charge to the award only costs resulting from obligations of the funding 
period unless carryover of unobligated balances is permitted, in which 
case the carryover balances may be charged for costs resulting from 
obligations of the subsequent funding period.
    (b) Liquidation of obligations. A grantee must liquidate all 
obligations incurred under the award not later than 90 days after the 
end of the funding period (or as specified in a program regulation) to 
coincide with the submission of the annual Financial Status Report (SF-
269). The Federal agency may extend this deadline at the request of the 
grantee.



Sec. 33.24  Matching or cost sharing.

    (a) Basic rule: Costs and contributions acceptable. With the 
qualifications and exceptions listed in paragraph (b) of this section, a 
matching or cost sharing requirement may be satisfied by either or both 
of the following:
    (1) Allowable costs incurred by the grantee, subgrantee or a cost-
type contractor under the assistance agreement. This includes allowable 
costs borne by non-Federal grants or by others cash donations from non-
Federal third parties.
    (2) The value of third party in-kind contributions applicable to the 
period to which the cost sharing or matching requirements applies.
    (b) Qualifications and exceptions--(1) Costs borne by other Federal 
grant agreements. Except as provided by Federal statute, a cost sharing 
or matching requirement may not be met by costs borne by another Federal 
grant. This prohibition does not apply to income earned by a grantee or 
subgrantee from a contract awarded under another Federal grant.

[[Page 125]]

    (2) General revenue sharing. For the purpose of this section, 
general revenue sharing funds distributed under 31 U.S.C. 6702 are not 
considered Federal grant funds.
    (3) Cost or contributions counted towards other Federal costs-
sharing requirements. Neither costs nor the values of third party in-
kind contributions may count towards satisfying a cost sharing or 
matching requirement of a grant agreement if they have been or will be 
counted towards satisfying a cost sharing or matching requirement of 
another Federal grant agreement, a Federal procurement contract, or any 
other award of Federal funds.
    (4) Costs financed by program income. Costs financed by program 
income, as defined in Sec. 33.25, shall not count towards satisfying a 
cost sharing or matching requirement unless they are expressly permitted 
in the terms of the assistance agreement. (This use of general program 
income is described in Sec. 33.25(g).)
    (5) Services or property financed by income earned by contractors. 
Contractors under a grant may earn income from the activities carried 
out under the contract in addition to the amounts earned from the party 
awarding the contract. No costs of services or property supported by 
this income may count toward satisfying a cost sharing or matching 
requirement unless other provisions of the grant agreement expressly 
permit this kind of income to be used to meet the requirement.
    (6) Records. Costs and third party in-kind contributions counting 
towards satisfying a cost sharing or matching requirement must be 
verifiable from the records of grantees and subgrantee or cost-type 
contractors. These records must show how the value placed on third party 
in-kind contributions was derived. To the extent feasible, volunteer 
services will be supported by the same methods that the organization 
uses to support the allocability of regular personnel costs.
    (7) Special standards for third party in-kind contributions. (i) 
Third party in-kind contributions count towards satisfying a cost 
sharing or matching requirement only where, if the party receiving the 
contributions were to pay for them, the payments would be allowable 
costs.
    (ii) Some third party in-kind contributions are goods and services 
that, if the grantee, subgrantee, or contractor receiving the 
contribution had to pay for them, the payments would have been an 
indirect costs. Costs sharing or matching credit for such contributions 
shall be given only if the grantee, subgrantee, or contractor has 
established, along with its regular indirect cost rate, a special rate 
for allocating to individual projects or programs the value of the 
contributions.
    (iii) A third party in-kind contribution to a fixed-price contract 
may count towards satisfying a cost sharing or matching requirement only 
if it results in:
    (A) An increase in the services or property provided under the 
contract (without additional cost to the grantee or subgrantee) or
    (B) A cost savings to the grantee or subgrantee.
    (iv) The values placed on third party in-kind contributions for cost 
sharing or matching purposes will conform to the rules in the succeeding 
sections of this part. If a third party in-kind contribution is a type 
not treated in those sections, the value placed upon it shall be fair 
and reasonable.
    (c) Valuation of donated services--(1) Volunteer services. Unpaid 
services provided to a grantee or subgrantee by individuals will be 
valued at rates consistent with those ordinarily paid for similar work 
in the grantee's or subgrantee's organization. If the grantee or 
subgrantee does not have employees performing similar work, the rates 
will be consistent with those ordinarily paid by other employers for 
similar work in the same labor market. In either case, a reasonable 
amount for fringe benefits may be included in the valuation.
    (2) Employees of other organizations. When an employer other than a 
grantee, subgrantee, or cost-type contractor furnishes free of charge 
the services of an employee in the employee's normal line of work, the 
services will be valued at the employee's regular rate of pay exclusive 
of the employee's fringe benefits and overhead costs. If the services

[[Page 126]]

are in a different line of work, paragraph (c)(1) of this section 
applies.
    (d) Valuation of third party donated supplies and loaned equipment 
or space. (1) If a third party donates supplies, the contribution will 
be valued at the market value of the supplies at the time of donation.
    (2) If a third party donates the use of equipment or space in a 
building but retains title, the contribution will be valued at the fair 
rental rate of the equipment or space.
    (e) Valuation of third party donated equipment, buildings, and land. 
If a third party donates equipment, buildings, or land, and title passes 
to a grantee or subgrantee, the treatment of the donated property will 
depend upon the purpose of the grant or subgrant, as follows:
    (1) Awards for capital expenditures. If the purpose of the grant or 
subgrant is to assist the grantee or subgrantee in the acquisition of 
property, the market value of that property at the time of donation may 
be counted as cost sharing or matching,
    (2) Other awards. If assisting in the acquisition of property is not 
the purpose of the grant or subgrant, paragraphs (e)(2) (i) and (ii) of 
this section apply:
    (i) If approval is obtained from the awarding agency, the market 
value at the time of donation of the donated equipment or buildings and 
the fair rental rate of the donated land may be counted as cost sharing 
or matching. In the case of a subgrant, the terms of the grant agreement 
may require that the approval be obtained from the Federal agency as 
well as the grantee. In all cases, the approval may be given only if a 
purchase of the equipment or rental of the land would be approved as an 
allowable direct cost. If any part of the donated property was acquired 
with Federal funds, only the non-Federal share of the property may be 
counted as cost-sharing or matching.
    (ii) If approval is not obtained under paragraph (e)(2)(i) of this 
section, no amount may be counted for donated land, and only 
depreciation or use allowances may be counted for donated equipment and 
buildings. The depreciation or use allowances for this property are not 
treated as third party in-kind contributions. Instead, they are treated 
as costs incurred by the grantee or subgrantee. They are computed and 
allocated (usually as indirect costs) in accordance with the cost 
principles specified in Sec. 33.22, in the same way as depreciation or 
use allowances for purchased equipment and buildings. The amount of 
depreciation or use allowances for donated equipment and buildings is 
based on the property's market value at the time it was donated.
    (f) Valuation of grantee or subgrantee donated real property for 
construction/acquisition. If a grantee or subgrantee donates real 
property for a construction or facilities acquisition project, the 
current market value of that property may be counted as cost sharing or 
matching. If any part of the donated property was acquired with Federal 
funds, only the non-Federal share of the property may be counted as cost 
sharing or matching.
    (g) Appraisal of real property. In some cases under paragraphs (d), 
(e) and (f) of this section, it will be necessary to establish the 
market value of land or a building or the fair rental rate of land or of 
space in a building. In these cases, the Federal agency may require the 
market value or fair rental value be set by an independent appraiser, 
and that the value or rate be certified by the grantee. This requirement 
will also be imposed by the grantee on subgrantees.

[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



Sec. 33.25  Program income.

    (a) General. Grantees are encouraged to earn income to defray 
program costs. Program income includes income from fees for services 
performed, from the use or rental of real or personal property acquired 
with grant funds, from the sale of commodities or items fabricated under 
a grant agreement, and from payments of principal and interest on loans 
made with grant funds. Except as otherwise provided in regulations of 
the Federal agency, program income does not include interest on grant 
funds, rebates, credits, discounts, refunds, etc. and interest earned on 
any of them.

[[Page 127]]

    (b) Definition of program income. Program income means gross income 
received by the grantee or subgrantee directly generated by a grant 
supported activity, or earned only as a result of the grant agreement 
during the grant period. ``During the grant period'' is the time between 
the effective date of the award and the ending date of the award 
reflected in the final financial report.
    (c) Cost of generating program income. If authorized by Federal 
regulations or the grant agreement, costs incident to the generation of 
program income may be deducted from gross income to determine program 
income.
    (d) Governmental revenues. Taxes, special assessments, levies, 
fines, and other such revenues raised by a grantee or subgrantee are not 
program income unless the revenues are specifically identified in the 
grant agreement or Federal agency regulations as program income.
    (e) Royalties. Income from royalties and license fees for 
copyrighted material, patents, and inventions developed by a grantee or 
subgrantee is program income only if the revenues are specifically 
identified in the grant agreement or Federal agency regulations as 
program income. (See Sec. 33.34.)
    (f) Property. Proceeds from the sale of real property or equipment 
will be handled in accordance with the requirements of Secs. 33.31 and 
33.32.
    (g) Use of program income. Program income shall be deducted from 
outlays which may be both Federal and non-Federal as described below, 
unless the Federal agency regulations or the grant agreement specify 
another alternative (or a combination of the alternatives). In 
specifying alternatives, the Federal agency may distinguish between 
income earned by the grantee and income earned by subgrantees and 
between the sources, kinds, or amounts of income. When Federal agencies 
authorize the alternatives in paragraphs (g) (2) and (3) of this 
section, program income in excess of any limits stipulated shall also be 
deducted from outlays.
    (1) Deduction. Ordinarily program income shall be deducted from 
total allowable costs to determine the net allowable costs. Program 
income shall be used for current costs unless the Federal agency 
authorizes otherwise. Program income which the grantee did not 
anticipate at the time of the award shall be used to reduce the Federal 
agency and grantee contributions rather than to increase the funds 
committed to the project.
    (2) Addition. When authorized, program income may be added to the 
funds committed to the grant agreement by the Federal agency and the 
grantee. The program income shall be used for the purposes and under the 
conditions of the grant agreement.
    (3) Cost sharing or matching. When authorized, program income may be 
used to meet the cost sharing or matching requirement of the grant 
agreement. The amount of the Federal grant award remains the same.
    (h) Income after the award period. There are no Federal requirements 
governing the disposition of program income earned after the end of the 
award period (i.e., until the ending date of the final financial report, 
see paragraph (a) of this section), unless the terms of the agreement or 
the Federal agency regulations provide otherwise.

[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



Sec. 33.26  Non-Federal audit.

    (a) Basic rule. Grantees and subgrantees are responsible for 
obtaining audits in accordance with the Single Audit Act Amendments of 
1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-133, ``Audits of 
States, Local Governments, and Non-Profit Organizations.'' The audits 
shall be made by an independent auditor in accordance with generally 
accepted government auditing standards covering financial audits.
    (b) Subgrantees. State or local governments, as those terms are 
defined for purposes of the Single Audit Act Amendments of 1996, that 
provide Federal awards to a subgrantee, which expends $300,000 or more 
(or other amount as specified by OMB) in Federal awards in a fiscal 
year, shall:
    (1) Determine whether State or local subgrantees have met the audit 
requirements of the Act and whether subgrantees covered by OMB Circular 
A-

[[Page 128]]

110, ``Uniform Administrative Requirements for Grants and Agreements 
with Institutions of Higher Education, Hospitals, and Other Non-Profit 
Organizations,'' have met the audit requirements of the Act. Commercial 
contractors (private for-profit and private and governmental 
organizations) providing goods and services to State and local 
governments are not required to have a single audit performed. State and 
local governments should use their own procedures to ensure that the 
contractor has complied with laws and regulations affecting the 
expenditure of Federal funds;
    (2) Determine whether the subgrantee spent Federal assistance funds 
provided in accordance with applicable laws and regulations. This may be 
accomplished by reviewing an audit of the subgrantee made in accordance 
with the Act, Circular A-110, or through other means (e.g., program 
reviews) if the subgrantee has not had such an audit;
    (3) Ensure that appropriate corrective action is taken within six 
months after receipt of the audit report in instance of noncompliance 
with Federal laws and regulations;
    (4) Consider whether subgrantee audits necessitate adjustment of the 
grantee's own records; and
    (5) Require each subgrantee to permit independent auditors to have 
access to the records and financial statements.
    (c) Auditor selection. In arranging for audit services, Sec. 33.36 
shall be followed.

[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992; 62 FR 45939, 45943, Aug. 29, 1997]

                    Changes, Property, and Subawards



Sec. 33.30  Changes.

    (a) General. Grantees and subgrantees are permitted to rebudget 
within the approved direct cost budget to meet unanticipated 
requirements and may make limited program changes to the approved 
project. However, unless waived by the awarding agency, certain types of 
post-award changes in budgets and projects shall require the prior 
written approval of the awarding agency.
    (b) Relation to cost principles. The applicable cost principles (see 
Sec. 33.22) contain requirements for prior approval of certain types of 
costs. Except where waived, those requirements apply to all grants and 
subgrants even if paragraphs (c) through (f) of this section do not.
    (c) Budget changes--(1) Nonconstruction projects. Except as stated 
in other regulations or an award document, grantees or subgrantees shall 
obtain the prior approval of the awarding agency whenever any of the 
following changes is anticipated under a nonconstruction award:
    (i) Any revision which would result in the need for additional 
funding.
    (ii) Unless waived by the awarding agency, cumulative transfers 
among direct cost categories, or, if applicable, among separately 
budgeted programs, projects, functions, or activities which exceed or 
are expected to exceed ten percent of the current total approved budget, 
whenever the awarding agency's share exceeds $100,000.
    (iii) Transfer of funds allotted for training allowances (i.e., from 
direct payments to trainees to other expense categories).
    (2) Construction projects. Grantees and subgrantees shall obtain 
prior written approval for any budget revision which would result in the 
need for additional funds.
    (3) Combined construction and nonconstruction projects. When a grant 
or subgrant provides funding for both construction and nonconstruction 
activities, the grantee or subgrantee must obtain prior written approval 
from the awarding agency before making any fund or budget transfer from 
nonconstruction to construction or vice versa.
    (d) Programmatic changes. Grantees or subgrantees must obtain the 
prior approval of the awarding agency whenever any of the following 
actions is anticipated:
    (1) Any revision of the scope or objectives of the project 
(regardless of whether there is an associated budget revision requiring 
prior approval).
    (2) Need to extend the period of availability of funds.
    (3) Changes in key persons in cases where specified in an 
application or a grant award. In research projects, a

[[Page 129]]

change in the project director or principal investigator shall always 
require approval unless waived by the awarding agency.
    (4) Under nonconstruction projects, contracting out, subgranting (if 
authorized by law) or otherwise obtaining the services of a third party 
to perform activities which are central to the purposes of the award. 
This approval requirement is in addition to the approval requirements of 
Sec. 33.36 but does not apply to the procurement of equipment, supplies, 
and general support services.
    (e) Additional prior approval requirements. The awarding agency may 
not require prior approval for any budget revision which is not 
described in paragraph (c) of this section.
    (f) Requesting prior approval. (1) A request for prior approval of 
any budget revision will be in the same budget formal the grantee used 
in its application and shall be accompanied by a narrative justification 
for the proposed revision.
    (2) A request for a prior approval under the applicable Federal cost 
principles (see Sec. 33.22) may be made by letter.
    (3) A request by a subgrantee for prior approval will be addressed 
in writing to the grantee. The grantee will promptly review such request 
and shall approve or disapprove the request in writing. A grantee will 
not approve any budget or project revision which is inconsistent with 
the purpose or terms and conditions of the Federal grant to the grantee. 
If the revision, requested by the subgrantee would result in a change to 
the grantee's approved project which requires Federal prior approval, 
the grantee will obtain the Federal agency's approval before approving 
the subgrantee's request.

[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 
6199 and 6200, Feb. 21, 1992]



Sec. 33.31  Real property.

    (a) Title. Subject to the obligations and conditions set forth in 
this section, title to real property acquired under a grant or subgrant 
will vest upon acquisition in the grantee or subgrantee respectively.
    (b) Use. Except as otherwise provided by Federal statutes, real 
property will be used for the originally authorized purposes as long as 
needed for that purposes, and the grantee or subgrantee shall not 
dispose of or encumber its title or other interests.
    (c) Disposition. When real property is no longer needed for the 
originally authorized purpose, the grantee or subgrantee will request 
disposition instructions from the awarding agency. The instructions will 
provide for one of the following alternatives:
    (1) Retention of title. Retain title after compensating the awarding 
agency. The amount paid to the awarding agency will be computed by 
applying the awarding agency's percentage of participation in the cost 
of the original purchase to the fair market value of the property. 
However, in those situations where a grantee or subgrantee is disposing 
of real property acquired with grant funds and acquiring replacement 
real property under the same program, the net proceeds from the 
disposition may be used as an offset to the cost of the replacement 
property.
    (2) Sale of property. Sell the property and compensate the awarding 
agency. The amount due to the awarding agency will be calculated by 
applying the awarding agency's percentage of participation in the cost 
of the original purchase to the proceeds of the sale after deduction of 
any actual and reasonable selling and fixing-up expenses. If the grant 
is still active, the net proceeds from sale may be offset against the 
original cost of the property. When a grantee or subgrantee is directed 
to sell property, sales procedures shall be followed that provide for 
competition to the extent practicable and result in the highest possible 
return.
    (3) Transfer of title. Transfer title to the awarding agency or to a 
third-party designated/approved by the awarding agency. The grantee or 
subgrantee shall be paid an amount calculated by applying the grantee or 
subgrantee's percentage of participation in the purchase of the real 
property to the current fair market value of the property.

[[Page 130]]



Sec. 33.32  Equipment.

    (a) Title. Subject to the obligations and conditions set forth in 
this section, title to equipment acquired under a grant or subgrant will 
vest upon acquisition in the grantee or subgrantee respectively.
    (b) States. A State will use, manage, and dispose of equipment 
acquired under a grant by the State in accordance with State laws and 
procedures. Other grantees and subgrantees will follow paragraphs (c) 
through (e) of this section.
    (c) Use. (1) Equipment shall be used by the grantee or subgrantee in 
the program or project for which it was acquired as long as needed, 
whether or not the project or program continues to be supported by 
Federal funds. When no longer needed for the original program or 
project, the equipment may be used in other activities currently or 
previously supported by a Federal agency.
    (2) The grantee or subgrantee shall also make equipment available 
for use on other projects or programs currently or previously supported 
by the Federal Government, providing such use will not interfere with 
the work on the projects or program for which it was originally 
acquired. First preference for other use shall be given to other 
programs or projects supported by the awarding agency. User fees should 
be considered if appropriate.
    (3) Notwithstanding the encouragement in Sec. 33.25(a) to earn 
program income, the grantee or subgrantee must not use equipment 
acquired with grant funds to provide services for a fee to compete 
unfairly with private companies that provide equivalent services, unless 
specifically permitted or contemplated by Federal statute.
    (4) When acquiring replacement equipment, the grantee or subgrantee 
may use the equipment to be replaced as a trade-in or sell the property 
and use the proceeds to offset the cost of the replacement property, 
subject to the approval of the awarding agency.
    (d) Management requirements. Procedures for managing equipment 
(including replacement equipment), whether acquired in whole or in part 
with grant funds, until disposition takes place will, as a minimum, meet 
the following requirements:
    (1) Property records must be maintained that include a description 
of the property, a serial number or other identification number, the 
source of property, who holds title, the acquisition date, and cost of 
the property, percentage of Federal participation in the cost of the 
property, the location, use and condition of the property, and any 
ultimate disposition data including the date of disposal and sale price 
of the property.
    (2) A physical inventory of the property must be taken and the 
results reconciled with the property records at least once every two 
years.
    (3) A control system must be developed to ensure adequate safeguards 
to prevent loss, damage, or theft of the property. Any loss, damage, or 
theft shall be investigated.
    (4) Adequate maintenance procedures must be developed to keep the 
property in good condition.
    (5) If the grantee or subgrantee is authorized or required to sell 
the property, proper sales procedures must be established to ensure the 
highest possible return.
    (e) Disposition. When original or replacement equipment acquired 
under a grant or subgrant is no longer needed for the original project 
or program or for other activities currently or previously supported by 
a Federal agency, disposition of the equipment will be made as follows:
    (1) Items of equipment with a current per-unit fair market value of 
less than $5,000 may be retained, sold or otherwise disposed of with no 
further obligation to the awarding agency.
    (2) Items of equipment with a current per unit fair market value in 
excess of $5,000 may be retained or sold and the awarding agency shall 
have a right to an amount calculated by multiplying the current market 
value or proceeds from sale by the awarding agency's share of the 
equipment.
    (3) In cases where a grantee or subgrantee fails to take appropriate 
disposition actions, the awarding agency may direct the grantee or 
subgrantee to take excess and disposition actions.

[[Page 131]]

    (f) Federal equipment. In the event a grantee or subgrantee is 
provided federally-owned equipment:
    (1) Title will remain vested in the Federal Government.
    (2) Grantees or subgrantees will manage the equipment in accordance 
with Federal agency rules and procedures, and submit an annual inventory 
listing.
    (3) When the equipment is no longer needed, the grantee or 
subgrantee will request disposition instructions from the Federal 
agency.
    (g) Right to transfer title. The Federal awarding agency may reserve 
the right to transfer title to the Federal Government or a third part 
named by the awarding agency when such a third party is otherwise 
eligible under existing statutes. Such transfers shall be subject to the 
following standards:
    (1) The property shall be identified in the grant or otherwise made 
known to the grantee in writing.
    (2) The Federal awarding agency shall issue disposition instruction 
within 120 calendar days after the end of the Federal support of the 
project for which it was acquired. If the Federal awarding agency fails 
to issue disposition instructions within the 120 calendar-day period the 
grantee shall follow Sec. 33.32(e).
    (3) When title to equipment is transferred, the grantee shall be 
paid an amount calculated by applying the percentage of participation in 
the purchase to the current fair market value of the property.

[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 
6199 and 6201, Feb. 21, 1992]



Sec. 33.33  Supplies.

    (a) Title. Title to supplies acquired under a grant or subgrant will 
vest, upon acquisition, in the grantee or subgrantee respectively.
    (b) Disposition. If there is a residual inventory of unused supplies 
exceeding $5,000 in total aggregate fair market value upon termination 
or completion of the award, and if the supplies are not needed for any 
other federally sponsored programs or projects, the grantee or 
subgrantee shall compensate the awarding agency for its share.



Sec. 33.34  Copyrights.

    The Federal awarding agency reserves a royalty-free, nonexclusive, 
and irrevocable license to reproduce, publish or otherwise use, and to 
authorize others to use, for Federal Government purposes:
    (a) The copyright in any work developed under a grant, subgrant, or 
contract under a grant or subgrant; and
    (b) Any rights of copyright to which a grantee, subgrantee or a 
contractor purchases ownership with grant support.



Sec. 33.35  Subawards to debarred and suspended parties.

    Grantees and subgrantees must not make any award or permit any award 
(subgrant or contract) at any tier to any party which is debarred or 
suspended or is otherwise excluded from or ineligible for participation 
in Federal assistance programs under Executive Order 12549, ``Debarment 
and Suspension.''



Sec. 33.36  Procurement.

    (a) States. When procuring property and services under a grant, a 
State will follow the same policies and procedures it uses for 
procurements from its non-Federal funds. The State will ensure that 
every purchase order or other contract includes any clauses required by 
Federal statutes and executive orders and their implementing 
regulations. Other grantees and subgrantees will follow paragraphs (b) 
through (i) in this section.
    (b) Procurement standards. (1) Grantees and subgrantees will use 
their own procurement procedures which reflect applicable State and 
local laws and regulations, provided that the procurements conform to 
applicable Federal law and the standards identified in this section.
    (2) Grantees and subgrantees will maintain a contract administration 
system which ensures that contractors perform in accordance with the 
terms, conditions, and specifications of their contracts or purchase 
orders.
    (3) Grantees and subgrantees will maintain a written code of 
standards of conduct governing the performance of their employees 
engaged in the award and administration of contracts. No

[[Page 132]]

employee, officer or agent of the grantee or subgrantee shall 
participate in selection, or in the award or administration of a 
contract supported by Federal funds if a conflict of interest, real or 
apparent, would be involved. Such a conflict would arise when:
    (i) The employee, officer or agent,
    (ii) Any member of his immediate family,
    (iii) His or her partner, or
    (iv) An organization which employs, or is about to employ, any of 
the above, has a financial or other interest in the firm selected for 
award. The grantee's or subgrantee's officers, employees or agents will 
neither solicit nor accept gratuities, favors or anything of monetary 
value from contractors, potential contractors, or parties to 
subagreements. Grantee and subgrantees may set minimum rules where the 
financial interest is not substantial or the gift is an unsolicited item 
of nominal intrinsic value. To the extent permitted by State or local 
law or regulations, such standards or conduct will provide for 
penalties, sanctions, or other disciplinary actions for violations of 
such standards by the grantee's and subgrantee's officers, employees, or 
agents, or by contractors or their agents. The awarding agency may in 
regulation provide additional prohibitions relative to real, apparent, 
or potential conflicts of interest.
    (4) Grantee and subgrantee procedures will provide for a review of 
proposed procurements to avoid purchase of unnecessary or duplicative 
items. Consideration should be given to consolidating or breaking out 
procurements to obtain a more economical purchase. Where appropriate, an 
analysis will be made of lease versus purchase alternatives, and any 
other appropriate analysis to determine the most economical approach.
    (5) To foster greater economy and efficiency, grantees and 
subgrantees are encouraged to enter into State and local 
intergovernmental agreements for procurement or use of common goods and 
services.
    (6) Grantees and subgrantees are encouraged to use Federal excess 
and surplus property in lieu of purchasing new equipment and property 
whenever such use is feasible and reduces project costs.
    (7) Grantees and subgrantees are encouraged to use value engineering 
clauses in contracts for construction projects of sufficient size to 
offer reasonable opportunities for cost reductions. Value engineering is 
a systematic and creative anaylsis of each contract item or task to 
ensure that its essential function is provided at the overall lower 
cost.
    (8) Grantees and subgrantees will make awards only to responsible 
contractors possessing the ability to perform successfully under the 
terms and conditions of a proposed procurement. Consideration will be 
given to such matters as contractor integrity, compliance with public 
policy, record of past performance, and financial and technical 
resources.
    (9) Grantees and subgrantees will maintain records sufficient to 
detail the significant history of a procurement. These records will 
include, but are not necessarily limited to the following: rationale for 
the method of procurement, selection of contract type, contractor 
selection or rejection, and the basis for the contract price.
    (10) Grantees and subgrantees will use time and material type 
contracts only--
    (i) After a determination that no other contract is suitable, and
    (ii) If the contract includes a ceiling price that the contractor 
exceeds at its own risk.
    (11) Grantees and subgrantees alone will be responsible, in 
accordance with good administrative practice and sound business 
judgment, for the settlement of all contractual and administrative 
issues arising out of procurements. These issues include, but are not 
limited to source evaluation, protests, disputes, and claims. These 
standards do not relieve the grantee or subgrantee of any contractual 
responsibilities under its contracts. Federal agencies will not 
substitute their judgment for that of the grantee or subgrantee unless 
the matter is primarily a Federal concern. Violations of law will be 
referred to the local, State, or Federal authority having proper 
jurisdiction.
    (12) Grantees and subgrantees will have protest procedures to handle 
and

[[Page 133]]

resolve disputes relating to their procurements and shall in all 
instances disclose information regarding the protest to the awarding 
agency. A protestor must exhaust all administrative remedies with the 
grantee and subgrantee before pursuing a protest with the Federal 
agency. Reviews of protests by the Federal agency will be limited to:
    (i) Violations of Federal law or regulations and the standards of 
this section (violations of State or local law will be under the 
jurisdiction of State or local authorities) and
    (ii) Violations of the grantee's or subgrantee's protest procedures 
for failure to review a complaint or protest. Protests received by the 
Federal agency other than those specified above will be referred to the 
grantee or subgrantee.
    (c) Competition. (1) All procurement transactions will be conducted 
in a manner providing full and open competition consistent with the 
standards of Sec. 33.36. Some of the situations considered to be 
restrictive of competition include but are not limited to:
    (i) Placing unreasonable requirements on firms in order for them to 
qualify to do business,
    (ii) Requiring unnecessary experience and excessive bonding,
    (iii) Noncompetitive pricing practices between firms or between 
affiliated companies,
    (iv) Noncompetitive awards to consultants that are on retainer 
contracts,
    (v) Organizational conflicts of interest,
    (vi) Specifying only a ``brand name'' product instead of allowing 
``an equal'' product to be offered and describing the performance of 
other relevant requirements of the procurement, and
    (vii) Any arbitrary action in the procurement process.
    (2) Grantees and subgrantees will conduct procurements in a manner 
that prohibits the use of statutorily or administratively imposed in-
State or local geographical preferences in the evaluation of bids or 
proposals, except in those cases where applicable Federal statutes 
expressly mandate or encourage geographic preference. Nothing in this 
section preempts State licensing laws. When contracting for 
architectural and engineering (A/E) services, geographic location may be 
a selection criteria provided its application leaves an appropriate 
number of qualified firms, given the nature and size of the project, to 
compete for the contract.
    (3) Grantees will have written selection procedures for procurement 
transactions. These procedures will ensure that all solicitations:
    (i) Incorporate a clear and accurate description of the technical 
requirements for the material, product, or service to be procured. Such 
description shall not, in competitive procurements, contain features 
which unduly restrict competition. The description may include a 
statement of the qualitative nature of the material, product or service 
to be procured, and when necessary, shall set forth those minimum 
essential characteristics and standards to which it must conform if it 
is to satisfy its intended use. Detailed product specifications should 
be avoided if at all possible. When it is impractical or uneconomical to 
make a clear and accurate description of the technical requirements, a 
``brand name or equal'' description may be used as a means to define the 
performance or other salient requirements of a procurement. The specific 
features of the named brand which must be met by offerors shall be 
clearly stated; and
    (ii) Identify all requirements which the offerors must fulfill and 
all other factors to be used in evaluating bids or proposals.
    (4) Grantees and subgrantees will ensure that all prequalified lists 
of persons, firms, or products which are used in acquiring goods and 
services are current and include enough qualified sources to ensure 
maximum open and free competition. Also, grantees and subgrantees will 
not preclude potential bidders from qualifying during the solicitation 
period.
    (d) Methods of procurement to be followed--(1) Procurement by small 
purchase procedures. Small purchase procedures are those relatively 
simple and informal procurement methods for securing services, supplies, 
or other property that do not cost more than the simplified acquisition 
threshold fixed at 41 U.S.C. 403(11) (currently set at $100,000). If 
small purchase procedures are used,

[[Page 134]]

price or rate quotations shall be obtained from an adequate number of 
qualified sources.
    (2) Procurement by sealed bids (formal advertising). Bids are 
publicly solicited and a firm-fixed-price contract (lump sum or unit 
price) is awarded to the responsible bidder whose bid, conforming with 
all the material terms and conditions of the invitation for bids, is the 
lowest in price. The sealed bid method is the preferred method for 
procuring construction, if the conditions in Sec. 33.36(d)(2)(i) apply.
    (i) In order 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 are willing and able to compete 
effectively and 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 on the 
basis of price.
    (ii) If sealed bids are used, the following requirements apply:
    (A) The invitation for bids will be publicly advertised and bids 
shall be solicited from an adequate number of known suppliers, providing 
them sufficient time prior to the date set for opening the bids;
    (B) The invitation for bids, which will include any specifications 
and pertinent attachments, shall define the items or services in order 
for the bidder to properly respond;
    (C) All bids will be publicly opened at the time and place 
prescribed in the invitation for bids;
    (D) A firm fixed-price contract award will be made in writing to the 
lowest responsive and responsible bidder. Where specified in bidding 
documents, factors such as discounts, transportation cost, and life 
cycle costs shall be considered in determining which bid is lowest. 
Payment discounts will only be used to determine the low bid when prior 
experience indicates that such discounts are usually taken advantage of; 
and
    (E) Any or all bids may be rejected if there is a sound documented 
reason.
    (3) Procurement by competitive proposals. The technique of 
competitive proposals is normally conducted with more than one source 
submitting an offer, and either a fixed-price or cost-reimbursement type 
contract is awarded. It is generally used when conditions are not 
appropriate for the use of sealed bids. If this method is used, the 
following requirements apply:
    (i) Requests for proposals will be publicized and identify all 
evaluation factors and their relative importance. Any response to 
publicized requests for proposals shall be honored to the maximum extent 
practical;
    (ii) Proposals will be solicited from an adequate number of 
qualified sources;
    (iii) Grantees and subgrantees will have a method for conducting 
technical evaluations of the proposals received and for selecting 
awardees;
    (iv) Awards will be made to the responsible firm whose proposal is 
most advantageous to the program, with price and other factors 
considered; and
    (v) Grantees and subgrantees may use competitive proposal procedures 
for qualifications-based procurement of architectural/engineering (A/E) 
professional services whereby competitors' qualifications are evaluated 
and the most qualified competitor is selected, subject to negotiation of 
fair and reasonable compensation. The method, where price is not used as 
a selection factor, can only be used in procurement of A/E professional 
services. It cannot be used to purchase other types of services though 
A/E firms are a potential source to perform the proposed effort.
    (4) Procurement by noncompetitive proposals is procurement through 
solicitation of a proposal from only one source, or after solicitation 
of a number of sources, competition is determined inadequate.
    (i) Procurement by noncompetitive proposals may be used only when 
the award of a contract is infeasible under small purchase procedures, 
sealed bids or competitive proposals and one of the following 
circumstances applies:
    (A) The item is available only from a single source;
    (B) The public exigency or emergency for the requirement will not 
permit a delay resulting from competitive solicitation;

[[Page 135]]

    (C) The awarding agency authorizes noncompetitive proposals; or
    (D) After solicitation of a number of sources, competition is 
determined inadequate.
    (ii) Cost analysis, i.e., verifying the proposed cost data, the 
projections of the data, and the evaluation of the specific elements of 
costs and profits, is required.
    (iii) Grantees and subgrantees may be required to submit the 
proposed procurement to the awarding agency for pre-award review in 
accordance with paragraph (g) of this section.
    (e) Contracting with small and minority firms, women's business 
enterprise and labor surplus area firms. (1) The grantee and subgrantee 
will take all necessary affirmative steps to assure that minority firms, 
women's business enterprises, and labor surplus area firms are used when 
possible.
    (2) Affirmative steps shall include:
    (i) Placing qualified small and minority businesses and women's 
business enterprises on solicitation lists;
    (ii) Assuring that small and minority businesses, and women's 
business enterprises are solicited whenever they are potential sources;
    (iii) Dividing total requirements, when economically feasible, into 
smaller tasks or quantities to permit maximum participation by small and 
minority business, and women's business enterprises;
    (iv) Establishing delivery schedules, where the requirement permits, 
which encourage participation by small and minority business, and 
women's business enterprises;
    (v) Using the services and assistance of the Small Business 
Administration, and the Minority Business Development Agency of the 
Department of Commerce; and
    (vi) Requiring the prime contractor, if subcontracts are to be let, 
to take the affirmative steps listed in paragraphs (e)(2) (i) through 
(v) of this section.
    (f) Contract cost and price. (1) Grantees and subgrantees must 
perform a cost or price analysis in connection with every procurement 
action including contract modifications. The method and degree of 
analysis is dependent on the facts surrounding the particular 
procurement situation, but as a starting point, grantees must make 
independent estimates before receiving bids or proposals. A cost 
analysis must be performed when the offeror is required to submit the 
elements of his estimated cost, e.g., under professional, consulting, 
and architectural engineering services contracts. A cost analysis will 
be necessary when adequate price competition is lacking, and for sole 
source procurements, including contract modifications or change orders, 
unless price resonableness can be established on the basis of a catalog 
or market price of a commercial product sold in substantial quantities 
to the general public or based on prices set by law or regulation. A 
price analysis will be used in all other instances to determine the 
reasonableness of the proposed contract price.
    (2) Grantees and subgrantees will negotiate profit as a separate 
element of the price for each contract in which there is no price 
competition and in all cases where cost analysis is performed. To 
establish a fair and reasonable profit, consideration will be given to 
the complexity of the work to be performed, the risk borne by the 
contractor, the contractor's investment, the amount of subcontracting, 
the quality of its record of past performance, and industry profit rates 
in the surrounding geographical area for similar work.
    (3) Costs or prices based on estimated costs for contracts under 
grants will be allowable only to the extent that costs incurred or cost 
estimates included in negotiated prices are consistent with Federal cost 
principles (see Sec. 33.22). Grantees may reference their own cost 
principles that comply with the applicable Federal cost principles.
    (4) The cost plus a percentage of cost and percentage of 
construction cost methods of contracting shall not be used.
    (g) Awarding agency review. (1) Grantees and subgrantees must make 
available, upon request of the awarding agency, technical specifications 
on proposed procurements where the awarding agency believes such review 
is needed to ensure that the item and/or

[[Page 136]]

service specified is the one being proposed for purchase. This review 
generally will take place prior to the time the specification is 
incorporated into a solicitation document. However, if the grantee or 
subgrantee desires to have the review accomplished after a solicitation 
has been developed, the awarding agency may still review the 
specifications, with such review usually limited to the technical 
aspects of the proposed purchase.
    (2) Grantees and subgrantees must on request make available for 
awarding agency pre-award review procurement documents, such as requests 
for proposals or invitations for bids, independent cost estimates, etc. 
when:
    (i) A grantee's or subgrantee's procurement procedures or operation 
fails to comply with the procurement standards in this section; or
    (ii) The procurement is expected to exceed the simplified 
acquisition threshold and is to be awarded without competition or only 
one bid or offer is received in response to a solicitation; or
    (iii) The procurement, which is expected to exceed the simplified 
acquisition threshold, specifies a ``brand name'' product; or
    (iv) The proposed award is more than the simplified acquisition 
threshold and is to be awarded to other than the apparent low bidder 
under a sealed bid procurement; or
    (v) A proposed contract modification changes the scope of a contract 
or increases the contract amount by more than the simplified acquisition 
threshold.
    (3) A grantee or subgrantee will be exempt from the pre-award review 
in paragraph (g)(2) of this section if the awarding agency determines 
that its procurement systems comply with the standards of this section.
    (i) A grantee or subgrantee may request that its procurement system 
be reviewed by the awarding agency to determine whether its system meets 
these standards in order for its system to be certified. Generally, 
these reviews shall occur where there is a continuous high-dollar 
funding, and third-party contracts are awarded on a regular basis.
    (ii) A grantee or subgrantee may self-certify its procurement 
system. Such self-certification shall not limit the awarding agency's 
right to survey the system. Under a self-certification procedure, 
awarding agencies may wish to rely on written assurances from the 
grantee or subgrantee that it is complying with these standards. A 
grantee or subgrantee will cite specific procedures, regulations, 
standards, etc., as being in compliance with these requirements and have 
its system available for review.
    (h) Bonding requirements. For construction or facility improvement 
contracts or subcontracts exceeding the simplified acquisition 
threshold, the awarding agency may accept the bonding policy and 
requirements of the grantee or subgrantee provided the awarding agency 
has made a determination that the awarding agency's interest is 
adequately protected. If such a determination has not been made, the 
minimum requirements shall be as follows:
    (1) A bid guarantee from each bidder equivalent to five percent of 
the bid price. The ``bid guarantee'' shall consist of a firm commitment 
such as a bid bond, certified check, or other negotiable instrument 
accompanying a bid as assurance that the bidder will, upon acceptance of 
his bid, execute such contractual documents as may be required within 
the time specified.
    (2) A performance bond on the part of the contractor for 100 percent 
of the contract price. A ``performance bond'' is one executed in 
connection with a contract to secure fulfillment of all the contractor's 
obligations under such contract.
    (3) A payment bond on the part of the contractor for 100 percent of 
the contract price. A ``payment bond'' is one executed in connection 
with a contract to assure payment as required by law of all persons 
supplying labor and material in the execution of the work provided for 
in the contract.
    (i) Contract provisions. A grantee's and subgrantee's contracts must 
contain provisions in paragraph (i) of this section. Federal agencies 
are permitted to require changes, remedies, changed conditions, access 
and records retention, suspension of work, and other

[[Page 137]]

clauses approved by the Office of Federal Procurement Policy.
    (1) Administrative, contractual, or legal remedies in instances 
where contractors violate or breach contract terms, and provide for such 
sanctions and penalties as may be appropriate. (Contracts more than the 
simplified acquisition threshold)
    (2) Termination for cause and for convenience by the grantee or 
subgrantee including the manner by which it will be effected and the 
basis for settlement. (All contracts in excess of $10,000)
    (3) Compliance with Executive Order 11246 of September 24, 1965, 
entitled ``Equal Employment Opportunity,'' as amended by Executive Order 
11375 of October 13, 1967, and as supplemented in Department of Labor 
regulations (41 CFR chapter 60). (All construction contracts awarded in 
excess of $10,000 by grantees and their contractors or subgrantees)
    (4) Compliance with the Copeland ``Anti-Kickback'' Act (18 U.S.C. 
874) as supplemented in Department of Labor regulations (29 CFR Part 3). 
(All contracts and subgrants for construction or repair)
    (5) Compliance with the Davis-Bacon Act (40 U.S.C. 276a to 276a-7) 
as supplemented by Department of Labor regulations (29 CFR Part 5). 
(Construction contracts in excess of $2000 awarded by grantees and 
subgrantees when required by Federal grant program legislation)
    (6) Compliance with Sections 103 and 107 of the Contract Work Hours 
and Safety Standards Act (40 U.S.C. 327-330) as supplemented by 
Department of Labor regulations (29 CFR Part 5). (Construction contracts 
awarded by grantees and subgrantees in excess of $2000, and in excess of 
$2500 for other contracts which involve the employment of mechanics or 
laborers)
    (7) Notice of awarding agency requirements and regulations 
pertaining to reporting.
    (8) Notice of awarding agency requirements and regulations 
pertaining to patent rights with respect to any discovery or invention 
which arises or is developed in the course of or under such contract.
    (9) Awarding agency requirements and regulations pertaining to 
copyrights and rights in data.
    (10) Access by the grantee, the subgrantee, the Federal grantor 
agency, the Comptroller General of the United States, or any of their 
duly authorized representatives to any books, documents, papers, and 
records of the contractor which are directly pertinent to that specific 
contract for the purpose of making audit, examination, excerpts, and 
transcriptions.
    (11) Retention of all required records for three years after 
grantees or subgrantees make final payments and all other pending 
matters are closed.
    (12) Compliance with all applicable standards, orders, or 
requirements issued under section 306 of the Clean Air Act (42 U.S.C. 
1857(h)), section 508 of the Clean Water Act (33 U.S.C. 1368), Executive 
Order 11738, and Environmental Protection Agency regulations (40 CFR 
part 15). (Contracts, subcontracts, and subgrants of amounts in excess 
of $100,000)
    (13) Mandatory standards and policies relating to energy efficiency 
which are contained in the state energy conservation plan issued in 
compliance with the Energy Policy and Conservation Act (Pub. L. 94-163, 
89 Stat. 871).

[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 
6199 and 6201, Feb. 21, 1992; 60 FR 19639, Apr. 19, 1995]



Sec. 33.37  Subgrants.

    (a) States. States shall follow State law and procedures when 
awarding and administering subgrants (whether on a cost reimbursement or 
fixed amount basis) of financial assistance to local and Indian tribal 
governments. States shall:
    (1) Ensure that every subgrant includes any clauses required by 
Federal statute and executive orders and their implementing regulations;
    (2) Ensure that subgrantees are aware of requirements imposed upon 
them by Federal statute and regulation;
    (3) Ensure that a provision for compliance with Sec. 33.42 is placed 
in every cost reimbursement subgrant; and
    (4) Conform any advances of grant funds to subgrantees substantially 
to the same standards of timing and

[[Page 138]]

amount that apply to cash advances by Federal agencies.
    (b) All other grantees. All other grantees shall follow the 
provisions of this part which are applicable to awarding agencies when 
awarding and administering subgrants (whether on a cost reimbursement or 
fixed amount basis) of financial assistance to local and Indian tribal 
governments. Grantees shall:
    (1) Ensure that every subgrant includes a provision for compliance 
with this part;
    (2) Ensure that every subgrant includes any clauses required by 
Federal statute and executive orders and their implementing regulations; 
and
    (3) Ensure that subgrantees are aware of requirements imposed upon 
them by Federal statutes and regulations.
    (c) Exceptions. By their own terms, certain provisions of this part 
do not apply to the award and administration of subgrants:
    (1) Section 33.10;
    (2) Section 33.11;
    (3) The letter-of-credit procedures specified in Treasury 
Regulations at 31 CFR part 205, cited in Sec. 33.21; and
    (4) Section 33.50.

[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 
6199 and 6201, Feb. 21, 1992]

              Reports, Records, Retention, and Enforcement



Sec. 33.40  Monitoring and reporting program performance.

    (a) Monitoring by grantees. Grantees are responsible for managing 
the day-to-day operations of grant and subgrant supported activities. 
Grantees must monitor grant and subgrant supported activities to assure 
compliance with applicable Federal requirements and that performance 
goals are being achieved. Grantee monitoring must cover each program, 
function or activity.
    (b) Nonconstruction performance reports. The Federal agency may, if 
it decides that performance information available from subsequent 
applications contains sufficient information to meet its programmatic 
needs, require the grantee to submit a performance report only upon 
expiration or termination of grant support. Unless waived by the Federal 
agency this report will be due on the same date as the final Financial 
Status Report.
    (1) Grantees shall submit annual performance reports unless the 
awarding agency requires quarterly or semi-annual reports. However, 
performance reports will not be required more frequently than quarterly. 
Annual reports shall be due 90 days after the grant year, quarterly or 
semi-annual reports shall be due 30 days after the reporting period. The 
final performance report will be due 90 days after the expiration or 
termination of grant support. If a justified request is submitted by a 
grantee, the Federal agency may extend the due date for any performance 
report. Additionally, requirements for unnecessary performance reports 
may be waived by the Federal agency.
    (2) Performance reports will contain, for each grant, brief 
information on the following:
    (i) A comparison of actual accomplishments to the objectives 
established for the period. Where the output of the project can be 
quantified, a computation of the cost per unit of output may be required 
if that information will be useful.
    (ii) The reasons for slippage if established objectives were not 
met.
    (iii) Additional pertinent information including, when appropriate, 
analysis and explanation of cost overruns or high unit costs.
    (3) Grantees will not be required to submit more than the original 
and two copies of performance reports.
    (4) Grantees will adhere to the standards in this section in 
prescribing performance reporting requirements for subgrantees.
    (c) Construction performance reports. For the most part, on-site 
technical inspections and certified percentage-of-completion data are 
relied on heavily by Federal agencies to monitor progress under 
construction grants and subgrants. The Federal agency will require 
additional formal performance reports only when considered necessary, 
and never more frequently than quarterly.

[[Page 139]]

    (d) Significant developments. Events may occur between the scheduled 
performance reporting dates which have significant impact upon the grant 
or subgrant supported activity. In such cases, the grantee must inform 
the Federal agency as soon as the following types of conditions become 
known:
    (1) Problems, delays, or adverse conditions which will materially 
impair the ability to meet the objective of the award. This disclosure 
must include a statement of the action taken, or contemplated, and any 
assistance needed to resolve the situation.
    (2) Favorable developments which enable meeting time schedules and 
objectives sooner or at less cost than anticipated or producing more 
beneficial results than originally planned.
    (e) Federal agencies may make site visits as warranted by program 
needs.
    (f) Waivers, extensions. (1) Federal agencies may waive any 
performance report required by this part if not needed.
    (2) The grantee may waive any performance report from a subgrantee 
when not needed. The grantee may extend the due date for any performance 
report from a subgrantee if the grantee will still be able to meet its 
performance reporting obligations to the Federal agency.



Sec. 33.41  Financial reporting.

    (a) General. (1) Except as provided in paragraphs (a) (2) and (5) of 
this section, grantees will use only the forms specified in paragraphs 
(a) through (e) of this section, and such supplementary or other forms 
as may from time to time be authorized by OMB, for:
    (i) Submitting financial reports to Federal agencies, or
    (ii) Requesting advances or reimbursements when letters of credit 
are not used.
    (2) Grantees need not apply the forms prescribed in this section in 
dealing with their subgrantees. However, grantees shall not impose more 
burdensome requirements on subgrantees.
    (3) Grantees shall follow all applicable standard and supplemental 
Federal agency instructions approved by OMB to the extend required under 
the Paperwork Reduction Act of 1980 for use in connection with forms 
specified in paragraphs (b) through (e) of this section. Federal 
agencies may issue substantive supplementary instructions only with the 
approval of OMB. Federal agencies may shade out or instruct the grantee 
to disregard any line item that the Federal agency finds unnecessary for 
its decisionmaking purposes.
    (4) Grantees will not be required to submit more than the original 
and two copies of forms required under this part.
    (5) Federal agencies may provide computer outputs to grantees to 
expedite or contribute to the accuracy of reporting. Federal agencies 
may accept the required information from grantees in machine usable 
format or computer printouts instead of prescribed forms.
    (6) Federal agencies may waive any report required by this section 
if not needed.
    (7) Federal agencies may extend the due date of any financial report 
upon receiving a justified request from a grantee.
    (b) Financial Status Report--(1) Form. Grantees will use Standard 
Form 269 or 269A, Financial Status Report, to report the status of funds 
for all nonconstruction grants and for construction grants when required 
in accordance with Sec. 33.41(e)(2)(iii).
    (2) Accounting basis. Each grantee will report program outlays and 
program income on a cash or accrual basis as prescribed by the awarding 
agency. If the Federal agency requires accrual information and the 
grantee's accounting records are not normally kept on the accural basis, 
the grantee shall not be required to convert its accounting system but 
shall develop such accrual information through and analysis of the 
documentation on hand.
    (3) Frequency. The Federal agency may prescribe the frequency of the 
report for each project or program. However, the report will not be 
required more frequently than quarterly. If the Federal agency does not 
specify the frequency of the report, it will be submitted annually. A 
final report will be required upon expiration or termination of grant 
support.
    (4) Due date. When reports are required on a quarterly or semiannual 
basis, they will be due 30 days after the

[[Page 140]]

reporting period. When required on an annual basis, they will be due 90 
days after the grant year. Final reports will be due 90 days after the 
expiration or termination of grant support.
    (c) Federal Cash Transactions Report--(1) Form. (i) For grants paid 
by letter or credit, Treasury check advances or electronic transfer of 
funds, the grantee will submit the Standard Form 272, Federal Cash 
Transactions Report, and when necessary, its continuation sheet, 
Standard Form 272a, unless the terms of the award exempt the grantee 
from this requirement.
    (ii) These reports will be used by the Federal agency to monitor 
cash advanced to grantees and to obtain disbursement or outlay 
information for each grant from grantees. The format of the report may 
be adapted as appropriate when reporting is to be accomplished with the 
assistance of automatic data processing equipment provided that the 
information to be submitted is not changed in substance.
    (2) Forecasts of Federal cash requirements. Forecasts of Federal 
cash requirements may be required in the ``Remarks'' section of the 
report.
    (3) Cash in hands of subgrantees. When considered necessary and 
feasible by the Federal agency, grantees may be required to report the 
amount of cash advances in excess of three days' needs in the hands of 
their subgrantees or contractors and to provide short narrative 
explanations of actions taken by the grantee to reduce the excess 
balances.
    (4) Frequency and due date. Grantees must submit the report no later 
than 15 working days following the end of each quarter. However, where 
an advance either by letter of credit or electronic transfer of funds is 
authorized at an annualized rate of one million dollars or more, the 
Federal agency may require the report to be submitted within 15 working 
days following the end of each month.
    (d) Request for advance or reimbursement--(1) Advance payments. 
Requests for Treasury check advance payments will be submitted on 
Standard Form 270, Request for Advance or Reimbursement. (This form will 
not be used for drawdowns under a letter of credit, electronic funds 
transfer or when Treasury check advance payments are made to the grantee 
automatically on a predetermined basis.)
    (2) Reimbursements. Requests for reimbursement under nonconstruction 
grants will also be submitted on Standard Form 270. (For reimbursement 
requests under construction grants, see paragraph (e)(1) of this 
section.)
    (3) The frequency for submitting payment requests is treated in 
Sec. 33.41(b)(3).
    (e) Outlay report and request for reimbursement for construction 
programs--(1) Grants that support construction activities paid by 
reimbursement method. (i) Requests for reimbursement under construction 
grants will be submitted on Standard Form 271, Outlay Report and Request 
for Reimbursement for Construction Programs. Federal agencies may, 
however, prescribe the Request for Advance or Reimbursement form, 
specified in Sec. 33.41(d), instead of this form.
    (ii) The frequency for submitting reimbursement requests is treated 
in Sec. 33.41(b)(3).
    (2) Grants that support construction activities paid by letter of 
credit, electronic funds transfer or Treasury check advance. (i) When a 
construction grant is paid by letter of credit, electronic funds 
transfer or Treasury check advances, the grantee will report its outlays 
to the Federal agency using Standard Form 271, Outlay Report and Request 
for Reimbursement for Construction Programs. The Federal agency will 
provide any necessary special instruction. However, frequency and due 
date shall be governed by Sec. 33.41(b) (3) and (4).
    (ii) When a construction grant is paid by Treasury check advances 
based on periodic requests from the grantee, the advances will be 
requested on the form specified in Sec. 33.41(d).
    (iii) The Federal agency may substitute the Financial Status Report 
specified in Sec. 33.41(b) for the Outlay Report and Request for 
Reimbursement for Construction Programs.

[[Page 141]]

    (3) Accounting basis. The accounting basis for the Outlay Report and 
Request for Reimbursement for Construction Programs shall be governed by 
Sec. 33.41(b)(2).

[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 
6199 and 6201, Feb. 21, 1992]



Sec. 33.42  Retention and access requirements for records.

    (a) Applicability. (1) This section applies to all financial and 
programmatic records, supporting documents, statistical records, and 
other records of grantees or subgrantees which are:
    (i) Required to be maintained by the terms of this part, program 
regulations or the grant agreement, or
    (ii) Otherwise reasonably considered as pertinent to program 
regulations or the grant agreement.
    (2) This section does not apply to records maintained by contractors 
or subcontractors. For a requirement to place a provision concerning 
records in certain kinds of contracts, see Sec. 33.36(i)(10).
    (b) Length of retention period. (1) Except as otherwise provided, 
records must be retained for three years from the starting date 
specified in paragraph (c) of this section.
    (2) If any litigation, claim, negotiation, audit or other action 
involving the records has been started before the expiration of the 3-
year period, the records must be retained until completion of the action 
and resolution of all issues which arise from it, or until the end of 
the regular 3-year period, whichever is later.
    (3) To avoid duplicate recordkeeping, awarding agencies may make 
special arrangements with grantees and subgrantees to retain any records 
which are continuously needed for joint use. The awarding agency will 
request transfer of records to its custody when it determines that the 
records possess long-term retention value. When the records are 
transferred to or maintained by the Federal agency, the 3-year retention 
requirement is not applicable to the grantee or subgrantee.
    (c) Starting date of retention period--(1) General. When grant 
support is continued or renewed at annual or other intervals, the 
retention period for the records of each funding period starts on the 
day the grantee or subgrantee submits to the awarding agency its single 
or last expenditure report for that period. However, if grant support is 
continued or renewed quarterly, the retention period for each year's 
records starts on the day the grantee submits its expenditure report for 
the last quarter of the Federal fiscal year. In all other cases, the 
retention period starts on the day the grantee submits its final 
expenditure report. If an expenditure report has been waived, the 
retention period starts on the day the report would have been due.
    (2) Real property and equipment records. The retention period for 
real property and equipment records starts from the date of the 
disposition or replacement or transfer at the direction of the awarding 
agency.
    (3) Records for income transactions after grant or subgrant support. 
In some cases grantees must report income after the period of grant 
support. Where there is such a requirement, the retention period for the 
records pertaining to the earning of the income starts from the end of 
the grantee's fiscal year in which the income is earned.
    (4) Indirect cost rate proposals, cost allocations plans, etc. This 
paragraph applies to the following types of documents, and their 
supporting records: indirect cost rate computations or proposals, cost 
allocation plans, and any similar accounting computations of the rate at 
which a particular group of costs is chargeable (such as computer usage 
chargeback rates or composite fringe benefit rates).
    (i) If submitted for negotiation. If the proposal, plan, or other 
computation is required to be submitted to the Federal Government (or to 
the grantee) to form the basis for negotiation of the rate, then the 3-
year retention period for its supporting records starts from the date of 
such submission.
    (ii) If not submitted for negotiation. If the proposal, plan, or 
other computation is not required to be submitted to the Federal 
Government (or to the grantee) for negotiation purposes, then the 3-year 
retention period for the proposal plan, or computation and its 
supporting records starts from end of the fiscal year (or other 
accounting period)

[[Page 142]]

covered by the proposal, plan, or other computation.
    (d) Substitution of microfilm. Copies made by microfilming, 
photocopying, or similar methods may be substituted for the original 
records.
    (e) Access to records--(1) Records of grantees and subgrantees. The 
awarding agency and the Comptroller General of the United States, or any 
of their authorized representatives, shall have the right of access to 
any pertinent books, documents, papers, or other records of grantees and 
subgrantees which are pertinent to the grant, in order to make audits, 
examinations, excerpts, and transcripts.
    (2) Expiration of right of access. The rights of access in this 
section must not be limited to the required retention period but shall 
last as long as the records are retained.
    (f) Restrictions on public access. The Federal Freedom of 
Information Act (5 U.S.C. 552) does not apply to records Unless required 
by Federal, State, or local law, grantees and subgrantees are not 
required to permit public access to their records.

[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 
6199 and 6201, Feb. 21, 1992]



Sec. 33.43  Enforcement.

    (a) Remedies for noncompliance. If a grantee or subgrantee 
materially fails to comply with any term of an award, whether stated in 
a Federal statute or regulation, an assurance, in a State plan or 
application, a notice of award, or elsewhere, the awarding agency may 
take one or more of the following actions, as appropriate in the 
circumstances:
    (1) Temporarily withhold cash payments pending correction of the 
deficiency by the grantee or subgrantee or more severe enforcement 
action by the awarding agency,
    (2) Disallow (that is, deny both use of funds and matching credit 
for) all or part of the cost of the activity or action not in 
compliance,
    (3) Wholly or partly suspend or terminate the current award for the 
grantee's or subgrantee's program,
    (4) Withhold further awards for the program, or
    (5) Take other remedies that may be legally available.
    (b) Hearings, appeals. In taking an enforcement action, the awarding 
agency will provide the grantee or subgrantee an opportunity for such 
hearing, appeal, or other administrative proceeding to which the grantee 
or subgrantee is entitled under any statute or regulation applicable to 
the action involved.
    (c) Effects of suspension and termination. Costs of grantee or 
subgrantee resulting from obligations incurred by the grantee or 
subgrantee during a suspension or after termination of an award are not 
allowable unless the awarding agency expressly authorizes them in the 
notice of suspension or termination or subsequently. Other grantee or 
subgrantee costs during suspension or after termination which are 
necessary and not reasonably avoidable are allowable if:
    (1) The costs result from obligations which were properly incurred 
by the grantee or subgrantee before the effective date of suspension or 
termination, are not in anticipation of it, and, in the case of a 
termination, are noncancellable, and,
    (2) The costs would be allowable if the award were not suspended or 
expired normally at the end of the funding period in which the 
termination takes effect.
    (d) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude grantee or subgrantee from being subject to 
``Debarment and Suspension'' under E.O. 12549 (see Sec. 33.35).

[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 
6199 and 6201, Feb. 21, 1992]



Sec. 33.44  Termination for convenience.

    Except as provided in Sec. 33.43 awards may be terminated in whole 
or in part only as follows:
    (a) By the awarding agency with the consent of the grantee or 
subgrantee in which case the two parties shall agree upon the 
termination conditions, including the effective date and in the case of 
partial termination, the portion to be terminated, or

[[Page 143]]

    (b) By the grantee or subgrantee upon written notification to the 
awarding agency, setting forth the reasons for such termination, the 
effective date, and in the case of partial termination, the portion to 
be terminated. However, if, in the case of a partial termination, the 
awarding agency determines that the remaining portion of the award will 
not accomplish the purposes for which the award was made, the awarding 
agency may terminate the award in its entirety under either Sec. 33.43 
or paragraph (a) of this section.

[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 
6199 and 6201, Feb. 21, 1992]



                 Subpart D--After-The-Grant Requirements



Sec. 33.50  Closeout.

    (a) General. The Federal agency will close out the award when it 
determines that all applicable administrative actions and all required 
work of the grant has been completed.
    (b) Reports. Within 90 days after the expiration or termination of 
the grant, the grantee must submit all financial, performance, and other 
reports required as a condition of the grant. Upon request by the 
grantee, Federal agencies may extend this timeframe. These may include 
but are not limited to:
    (1) Final performance or progress report.
    (2) Financial Status Report (SF 269) or Outlay Report and Request 
for Reimbursement for Construction Programs (SF-271) (as applicable).
    (3) Final request for payment (SF-270) (if applicable).
    (4) Invention disclosure (if applicable).
    (5) Federally-owned property report:

In accordance with Sec. 33.32(f), a grantee must submit an inventory of 
all federally owned property (as distinct from property acquired with 
grant funds) for which it is accountable and request disposition 
instructions from the Federal agency of property no longer needed.
    (c) Cost adjustment. The Federal agency will, within 90 days after 
receipt of reports in paragraph (b) of this section, make upward or 
downward adjustments to the allowable costs.
    (d) Cash adjustments. (1) The Federal agency will make prompt 
payment to the grantee for allowable reimbursable costs.
    (2) The grantee must immediately refund to the Federal agency any 
balance of unobligated (unencumbered) cash advanced that is not 
authorized to be retained for use on other grants.

[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 
6199 and 6201, Feb. 21, 1992]



Sec. 33.51  Later disallowances and adjustments.

    The closeout of a grant does not affect:
    (a) The Federal agency's right to disallow costs and recover funds 
on the basis of a later audit or other review;
    (b) The grantee's obligation to return any funds due as a result of 
later refunds, corrections, or other transactions;
    (c) Records retention as required in Sec. 33.42;
    (d) Property management requirements in Secs. 33.31 and 33.32; and
    (e) Audit requirements in Sec. 33.26.

[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 
6199 and 6201, Feb. 21, 1992]



Sec. 33.52  Collection of amounts due.

    (a) Any funds paid to a grantee in excess of the amount to which the 
grantee is finally determined to be entitled under the terms of the 
award constitute a debt to the Federal Government. If not paid within a 
reasonable period after demand, the Federal agency may reduce the debt 
by:
    (1) Making an adminstrative offset against other requests for 
reimbursements,
    (2) Withholding advance payments otherwise due to the grantee, or
    (3) Other action permitted by law.
    (b) Except where otherwise provided by statutes or regulations, the 
Federal agency will charge interest on an overdue debt in accordance 
with the Federal Claims Collection Standards (4 CFR Ch. II). The date 
from which interest is computed is not extended by litigation or the 
filing of any form of appeal.

Subpart E--Entitlement [Reserved]

[[Page 144]]



PART 34--ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND AGREEMENTS WITH FOR-PROFIT ORGANIZATIONS--Table of Contents




                           Subpart A--General

Sec.
34.1 Purpose.
34.2 Definitions.
34.3 Deviations.
34.4 Special award conditions.

                   Subpart B--Post-Award Requirements

                    Financial and Program Management

34.10 Purpose of financial and program management.
34.11 Standards for financial management systems.
34.12 Payment.
34.13 Cost sharing or matching.
34.14 Program income.
34.15 Revision of budget and program plans.
34.16 Audits.
34.17 Allowable costs.
34.18 Fee and profit.

                           Property Standards

34.20 Purpose of property standards.
34.21 Real property and equipment.
34.22 Federally owned property.
34.23 Property management system.
34.24 Supplies.
34.25 Intellectual property developed or produced under awards.

                          Procurement Standards

34.30 Purpose of procurement standards.
34.31 Requirements.

                           Reports and Records

34.40 Purpose of reports and records.
34.41 Monitoring and reporting program and financial performance.
34.42 Retention and access requirements for records.

                       Termination and Enforcement

34.50 Purpose of termination and enforcement.
34.51 Termination.
34.52 Enforcement.
34.53 Disputes and appeals.

                 Subpart C--After-the-Award Requirements

34.60 Purpose.
34.61 Closeout procedures.
34.62 Subsequent adjustments and continuing responsibilities.
34.63 Collection of amounts due.

Appendix A to Part 34--Contract Provisions

    Authority: 5 U.S.C. 301 and 10 U.S.C. 113.

    Source: 63 FR 12204, Mar. 12, 1998, unless otherwise noted.



                           Subpart A--General



Sec. 34.1  Purpose.

    (a) This part prescribes administrative requirements for awards to 
for-profit organizations.
    (b) Applicability to prime awards and subawards is as follows:
    (1) Prime awards. DoD Components shall apply the provisions of this 
part to awards to for-profit organizations. DoD Components shall not 
impose requirements that are in addition to, or inconsistent with, the 
requirements provided in this part, except:
    (i) In accordance with the deviation procedures or special award 
conditions in Sec. 34.3 or Sec. 34.4, respectively; or
    (ii) As required by Federal statute, Executive order, or Federal 
regulation implementing a statute or Executive order.
    (2) Subawards. (i) Any legal entity (including any State, local 
government, university or other nonprofit organization, as well as any 
for-profit entity) that receives an award from a DoD Component shall 
apply the provisions of this part to subawards with for-profit 
organizations. It should be noted that subawards (see definition in 
Sec. 34.2) are financial assistance for substantive programmatic 
performance and do not include recipients' procurement of goods and 
services.
    (ii) For-profit organizations that receive prime awards covered by 
this part shall apply to each subaward the administrative requirements 
that are applicable to the particular type of subrecipient (e.g., 32 CFR 
part 33 specifies requirements for subrecipients that are States or 
local governments, and 32 CFR part 32 contains requirements for 
universities or other nonprofit organizations).



Sec. 34.2  Definitions.

    The following are definitions of terms as used in this part. Grants 
officers are cautioned that terms may be defined differently in this 
part than they are in other parts of the DoD Grant and Agreement 
Regulations (DoDGARs).

[[Page 145]]

    Advance. A payment made by Treasury check or other appropriate 
payment mechanism to a recipient upon its request either before outlays 
are made by the recipient or through the use of predetermined payment 
schedules.
    Award. A grant or cooperative agreement.
    Cash contributions. The recipient's cash outlay, including the 
outlay of money contributed to the recipient by third parties.
    Closeout. The process by which the grants officer administering an 
award made by a DoD Component determines that all applicable 
administrative actions and all required work of the award have been 
completed by the recipient and DoD Component.
    Contract. Either:
    (1) A procurement contract made by a recipient under a DoD 
Component's award or by a subrecipient under a subaward; or
    (2) A procurement subcontract under a contract awarded by a 
recipient or subrecipient.
    Cost sharing or matching. That portion of project or program costs 
not borne by the Federal Government.
    Disallowed costs. Those charges to an award that the grants officer 
administering an award made by a DoD Component determines to be 
unallowable, in accordance with the applicable Federal cost principles 
or other terms and conditions contained in the award.
    DoD Component. A Military Department, Defense Agency, DoD Field 
Activity, or organization within the Office of the Secretary of Defense 
that provides or administers an award to a recipient.
    Equipment. Tangible nonexpendable personal property charged directly 
to the award having a useful life of more than one year and an 
acquisition cost of $5,000 or more per unit. That definition applies for 
the purposes of the Federal administrative requirements in this part. 
However, the recipient's policy may be to use a lower dollar value for 
defining ``equipment,'' and nothing in this part should be construed as 
requiring the recipient to establish a higher limit for purposes other 
than the administrative requirements in this part.
    Excess property. Property under the control of any DoD Component 
that, as determined by the head thereof, is no longer required for its 
needs or the discharge of its responsibilities.
    Expenditures. See the definition for outlays in this section.
    Federally owned property. Property in the possession of, or directly 
acquired by, the Government and subsequently made available to the 
recipient.
    Funding period. The period of time when Federal funding is available 
for obligation by the recipient.
    Intellectual property. Intangible personal property such as patents 
and patent applications, trademarks, copyrights, technical data, and 
software rights.
    Obligations. The amounts of orders placed, contracts and grants 
awarded, services received and similar transactions during a given 
period that require payment by the recipient during the same or a future 
period.
    Outlays or expenditures. Charges made to the project or program. 
They may be reported on a cash or accrual basis. For reports prepared on 
a cash basis, outlays are the sum of cash disbursements for direct 
charges for goods and services, the amount of indirect expense charged, 
the value of third party in-kind contributions applied and the amount of 
cash advances and payments made to subrecipients. For reports prepared 
on an accrual basis, outlays are the sum of cash disbursements for 
direct charges for goods and services, the amount of indirect expense 
incurred, the value of in-kind contributions applied, and the net 
increase (or decrease) in the amounts owed by the recipient for goods 
and other property received, for services performed by employees, 
contractors, subrecipients and other payees and other amounts becoming 
owed under programs for which no current services or performance are 
required.
    Personal property. Property of any kind except real property. It may 
be:
    (1) Tangible, having physical existence (i.e., equipment and 
supplies); or
    (2) Intangible, having no physical existence, such as patents, 
copyrights, data and software.

[[Page 146]]

    Prior approval. Written or electronic approval by an authorized 
official evidencing prior consent.
    Program income. Gross income earned by the recipient that is 
directly generated by a supported activity or earned as a result of the 
award. Program income includes, but is not limited to, income from fees 
for services performed, the use or rental of real or personal property 
acquired under federally-funded projects, the sale of commodities or 
items fabricated under an award, license fees and royalties on patents 
and copyrights, and interest on loans made with award funds. Interest 
earned on advances of Federal funds is not program income. Except as 
otherwise provided in program regulations or the terms and conditions of 
the award, program income does not include the receipt of principal on 
loans, rebates, credits, discounts, etc., or interest earned on any of 
them.
    Project costs. All allowable costs, as set forth in the applicable 
Federal cost principles, incurred by a recipient and the value of the 
contributions made by third parties in accomplishing the objectives of 
the award during the project period.
    Project period. The period established in the award document during 
which Federal sponsorship begins and ends.
    Property. Real property and personal property (equipment, supplies, 
and intellectual property), unless stated otherwise.
    Real property. Land, including land improvements, structures and 
appurtenances thereto, but excludes movable machinery and equipment.
    Recipient. A for-profit organization receiving an award directly 
from a DoD Component to carry out a project or program.
    Research. Basic, applied, and advanced research activities. Basic 
research is defined as efforts directed toward increasing knowledge or 
understanding in science and engineering. Applied research is defined as 
efforts that attempt to determine and exploit the potential of 
scientific discoveries or improvements in technology, such as new 
materials, devices, methods, and processes. ``Advanced research,'' 
advanced technology development that creates new technology or 
demonstrates the viability of applying existing technology to new 
products and processes in a general way, is most closely analogous to 
precommercialization or precompetitive technology development in the 
commercial sector (it does not include development of military systems 
and hardware where specific requirements have been defined).
    Small award. An award not exceeding the simplified acquisition 
threshold fixed at 41 U.S.C. 403(11) (currently $100,000).
    Small business concern. A concern, including its affiliates, that is 
independently owned and operated, not dominant in the field of operation 
in which it has applied for an award, and qualified as a small business 
under the criteria and size standards in 13 CFR part 121. For more 
details, grants officers should see 48 CFR part 19 in the ``Federal 
Acquisition Regulation.''
    Subaward. Financial assistance in the form of money, or property in 
lieu of money, provided under an award by a recipient to an eligible 
subrecipient or by a subrecipient to a lower tier subrecipient. The term 
includes financial assistance when provided by any legal agreement, even 
if the agreement is called a contract, but the term includes neither 
procurement of goods and services nor any form of assistance which is 
excluded from the definition of ``award'' in this section.
    Subrecipient. The legal entity to which a subaward is made and which 
is accountable to the recipient for the use of the funds provided.
    Supplies. Tangible expendable personal property that is charged 
directly to the award and that has a useful life of less than one year 
or an acquisition cost of less than $5000 per unit.
    Suspension. An action by a DoD Component that temporarily withdraws 
Federal sponsorship under an award, pending corrective action by the 
recipient or pending a decision to terminate the award by the DoD 
Component. Suspension of an award is a separate action from suspension 
of a recipient under 32 CFR part 25.
    Termination. The cancellation of an award, in whole or in part, 
under an agreement at any time prior to either:

[[Page 147]]

    (1) The date on which all work under an award is completed; or
    (2) The date on which Federal sponsorship ends, as given on the 
award document or any supplement or amendment thereto.
    Third party in-kind contributions. The value of non-cash 
contributions provided by non-Federal third parties. Third party in-kind 
contributions may be in the form of real property, equipment, supplies 
and other expendable property, and the value of goods and services 
directly benefiting and specifically identifiable to the project or 
program.
    Unobligated balance. The portion of the funds authorized by a DoD 
Component that has not been obligated by the recipient and is determined 
by deducting the cumulative obligations from the cumulative funds 
authorized.



Sec. 34.3  Deviations.

    (a) Individual deviations. Individual deviations affecting only one 
award may be approved by DoD Components in accordance with procedures 
stated in 32 CFR 21.125(a).
    (b) Small awards. DoD Components may apply less restrictive 
requirements than the provisions of this part when awarding small 
awards, except for those requirements which are statutory.
    (c) Other class deviations. For classes of awards other than small 
awards, the Director, Defense Research and Engineering, or his or her 
designee, may grant exceptions from the requirements of this part when 
exceptions are not prohibited by statute. DoD Components shall request 
approval for such deviations in accordance with 32 CFR 21.125 (b) and 
(c).



Sec. 34.4  Special award conditions.

    (a) Grants officers may impose additional requirements as needed, 
over and above those provided in this part, if an applicant or 
recipient:
    (1) Has a history of poor performance;
    (2) Is not financially stable;
    (3) Has a management system that does not meet the standards 
prescribed in this part;
    (4) Has not conformed to the terms and conditions of a previous 
award; or
    (5) Is not otherwise responsible.
    (b) Before imposing additional requirements, DoD Components shall 
notify the applicant or recipient in writing as to:
    (1) The nature of the additional requirements;
    (2) The reason why the additional requirements are being imposed;
    (3) The nature of the corrective action needed;
    (4) The time allowed for completing the corrective actions; and
    (5) The method for requesting reconsideration of the additional 
requirements imposed.
    (c) Any special conditions shall be promptly removed once the 
conditions that prompted them have been corrected.
    (d) Grants officers:
    (1) Should coordinate the imposition and removal of special award 
conditions with the cognizant grants administration office identified in 
32 CFR 22.710.
    (2) Shall include in the award file the written notification to the 
recipient, described in paragraph (b) of this section, and the 
documentation required by 32 CFR 22.410(b).



                   Subpart B--Post-award Requirements

                    Financial and Program Management



Sec. 34.10  Purpose of financial and program management.

    Sections 34.11 through 34.17 prescribe standards for financial 
management systems; methods for making payments; and rules for cost 
sharing and matching, program income, revisions to budgets and program 
plans, audits, allowable costs, and fee and profit.



Sec. 34.11  Standards for financial management systems.

    (a) Recipients shall be allowed and encouraged to use existing 
financial management systems established for doing business in the 
commercial marketplace, to the extent that the systems comply with 
Generally Accepted Accounting Principles (GAAP) and the minimum 
standards in this section. As a minimum, a recipient's financial 
management system shall provide:

[[Page 148]]

    (1) Effective control of all funds. Control systems must be adequate 
to ensure that costs charged to Federal funds and those counted as the 
recipient's cost share or match are consistent with requirements for 
cost reasonableness, allowability, and allocability in the applicable 
cost principles (see Sec. 34.17) and in the terms and conditions of the 
award.
    (2) Accurate, current and complete records that document for each 
project funded wholly or in part with Federal funds the source and 
application of the Federal funds and the recipient's required cost share 
or match. These records shall:
    (i) Contain information about receipts, authorizations, assets, 
expenditures, program income, and interest.
    (ii) Be adequate to make comparisons of outlays with budgeted 
amounts for each award (as required for programmatic and financial 
reporting under Sec. 34.41. Where appropriate, financial information 
should be related to performance and unit cost data. Note that unit cost 
data are generally not appropriate for awards that support research.
    (3) To the extent that advance payments are authorized under 
Sec. 34.12, procedures that minimize the time elapsing between the 
transfer of funds to the recipient from the Government and the 
recipient's disbursement of the funds for program purposes.
    (4) The recipient shall have a system to support charges to Federal 
awards for salaries and wages, whether treated as direct or indirect 
costs. Where employees work on multiple activities or cost objectives, a 
distribution of their salaries and wages will be supported by personnel 
activity reports which must:
    (i) Reflect an after the fact distribution of the actual activity of 
each employee.
    (ii) Account for the total activity for which each employee is 
compensated.
    (iii) Be prepared at least monthly, and coincide with one or more 
pay periods.
    (b) Where the Federal Government guarantees or insures the repayment 
of money borrowed by the recipient, the DoD Component, at its 
discretion, may require adequate bonding and insurance if the bonding 
and insurance requirements of the recipient are not deemed adequate to 
protect the interest of the Federal Government.
    (c) The DoD Component may require adequate fidelity bond coverage 
where the recipient lacks sufficient coverage to protect the Federal 
Government's interest.
    (d) Where bonds are required in the situations described above, the 
bonds shall be obtained from companies holding certificates of authority 
as acceptable sureties, as prescribed in 31 CFR part 223, ``Surety 
Companies Doing Business with the United States.''



Sec. 34.12  Payment.

    (a) Methods available. Payment methods for awards with for-profit 
organizations are:
    (1) Reimbursement. Under this method, the recipient requests 
reimbursement for costs incurred during a time period. In cases where 
the recipient submits each request for payment to the grants officer, 
the DoD payment office reimburses the recipient by electronic funds 
transfer or check after approval of the request by the grants officer 
designated to do so.
    (2) Advance payments. Under this method, a DoD Component makes a 
payment to a recipient based upon projections of the recipient's cash 
needs. The payment generally is made upon the recipient's request, 
although predetermined payment schedules may be used when the timing of 
the recipient's needs to disburse funds can be predicted in advance with 
sufficient accuracy to ensure compliance with paragraph (b)(2)(iii) of 
this section.
    (b) Selecting a method. (1) The preferred payment method is the 
reimbursement method, as described in paragraph (a)(1) of this section
    (2) Advance payments, as described in paragraph (a)(2) of this 
section, may be used in exceptional circumstances, subject to the 
following conditions:
    (i) The grants officer, in consultation with the program official, 
must judge that advance payments are necessary or will materially 
contribute to the probability of success of the project contemplated 
under the award (e.g., as startup funds for a project performed

[[Page 149]]

by a newly formed company). The rationale for the judgment shall be 
documented in the award file.
    (ii) Cash advances shall be limited to the minimum amounts needed to 
carry out the program.
    (iii) Recipients and the DoD Component shall maintain procedures to 
ensure that the timing of cash advances is as close as is 
administratively feasible to the recipients' disbursements of the funds 
for program purposes, including direct program or project costs and the 
proportionate share of any allowable indirect costs.
    (iv) Recipients shall maintain advance payments of Federal funds in 
interest-bearing accounts, and remit annually the interest earned to the 
administrative grants officer responsible for post-award administration 
(the grants officer shall forward the payment to the responsible payment 
office, for return to the Department of Treasury's miscellaneous 
receipts account), unless one of the following applies:
    (A) The recipient receives less than $120,000 in Federal awards per 
year.
    (B) The best reasonably available interest bearing account would not 
be expected to earn interest in excess of $250 per year on Federal cash 
balances.
    (C) The depository would require an average or minimum balance so 
high that it would not be feasible within the expected Federal and non-
Federal cash resources.
    (c) Frequency of payments. For either reimbursements or advance 
payments, recipients shall be authorized to submit requests for payment 
at least monthly.
    (d) Forms for requesting payment. DoD Components may authorize 
recipients to use the SF-270,1 ``Request for Advance or 
Reimbursement;'' the SF-271,2 ``Outlay Report and Request for 
Reimbursement for Construction Programs;'' or prescribe other forms or 
formats as necessary.
---------------------------------------------------------------------------

    \1\ For copies of Standard Forms listed in this part, contact 
regional grants administration offices of the Office of Naval Research. 
Addresses for the offices are listed in the ``DoD Directory of Contract 
Administration Services Components,'' DLAH 4105.4, which can be obtained 
from either: Defense Logistics Agency, Publications Distribution 
Division (DASC-WDM), 8725 John J. Kingman Rd., Suite 0119, Fort Belvoir, 
VA 22060-6220; or the Defense Contract Management Command home page at 
http://www.dcmc.dcrb.dla.mil.
    \2\ See footnote 1 to this paragraph (d).
---------------------------------------------------------------------------

    (e) Timeliness of payments. Payments normally will be made within 30 
calendar days of the receipt of a recipient's request for reimbursement 
or advance by the office designated to receive the request (for further 
information about timeframes for payments, see 32 CFR 22.810(c)(3)(ii)).
    (f) Precedence of other available funds. Recipients shall disburse 
funds available from program income, rebates, refunds, contract 
settlements, audit recoveries, and interest earned on such funds before 
requesting additional cash payments.
    (g) Withholding of payments. Unless otherwise required by statute, 
grants officers shall not withhold payments for proper charges made by 
recipients during the project period for reasons other than the 
following:
    (1) A recipient has failed to comply with project objectives, the 
terms and conditions of the award, or Federal reporting requirements, in 
which case the grants officer may suspend payments in accordance with 
Sec. 34.52.
    (2) The recipient is delinquent on a debt to the United States (see 
definitions of ``debt'' and ``delinquent debt'' in 32 CFR 22.105). In 
that case, the grants officer may, upon reasonable notice, withhold 
payments for obligations incurred after a specified date, until the debt 
is resolved.



Sec. 34.13  Cost sharing or matching.

    (a) Acceptable contributions. All contributions, including cash 
contributions and third party in-kind contributions, shall be accepted 
as part of the recipient's cost sharing or matching when such 
contributions meet all of the following criteria:
    (1) They are verifiable from the recipient's records.
    (2) They are not included as contributions for any other federally-
assisted project or program.
    (3) They are necessary and reasonable for proper and efficient 
accomplishment of project or program objectives.

[[Page 150]]

    (4) They are allowable under Sec. 34.17.
    (5) They are not paid by the Federal Government under another award, 
except:
    (i) Costs that are authorized by Federal statute to be used for cost 
sharing or matching; or
    (ii) Independent research and development (IR&D) costs. In 
accordance with the for-profit cost principle in 48 CFR 31.205-18(e), 
use of IR&D as cost sharing is permitted, whether or not the Government 
decides at a later date to reimburse any of the IR&D as allowable 
indirect costs. In such cases, the IR&D must meet all of the criteria in 
paragraphs (a) (1) through (4) and (a) (6) through (8) of this section.
    (6) They are provided for in the approved budget, when approval of 
the budget is required by the DoD Component.
    (7) If they are real property or equipment, whether purchased with 
recipient's funds or donated by third parties, they must have the grants 
officer's prior approval if the contributions' value is to exceed 
depreciation or use charges during the project period (paragraphs (b)(1) 
and (b)(4)(ii) of this section discuss the limited circumstances under 
which a grants officer may approve higher values). If a DoD Component 
requires approval of a recipient's budget (see paragraph (a)(6) of this 
section), the grants officer's approval of the budget satisfies this 
prior approval requirement, for real property or equipment items listed 
in the budget.
    (8) They conform to other provisions of this part, as applicable.
    (b) Valuing and documenting contributions--(1) Valuing recipient's 
property or services of recipient's employees. Values shall be 
established in accordance with the applicable cost principles in 
Sec. 34.17, which means that amounts chargeable to the project are 
determined on the basis of costs incurred. For real property or 
equipment used on the project, the cost principles authorize 
depreciation or use charges. The full value of the item may be applied 
when the item will be consumed in the performance of the award or fully 
depreciated by the end of the award. In cases where the full value of a 
donated capital asset is to be applied as cost sharing or matching, that 
full value shall be the lesser of the following:
    (i) The certified value of the remaining life of the property 
recorded in the recipient's accounting records at the time of donation; 
or
    (ii) The current fair market value. However, when there is 
sufficient justification, the grants officer may approve the use of the 
current fair market value of the donated property, even if it exceeds 
the certified value at the time of donation to the project. The grants 
officer may accept the use of any reasonable basis for determining the 
fair market value of the property.
    (2) Valuing services of others' employees. When an employer other 
than the recipient furnishes the services of an employee, those services 
shall be valued at the employee's regular rate of pay plus an amount of 
fringe benefits and overhead (at an overhead rate appropriate for the 
location where the services are performed) provided these services are 
in the same skill for which the employee is normally paid.
    (3) Valuing volunteer services. Volunteer services furnished by 
professional and technical personnel, consultants, and other skilled and 
unskilled labor may be counted as cost sharing or matching if the 
service is an integral and necessary part of an approved project or 
program. Rates for volunteer services shall be consistent with those 
paid for similar work in the recipient's organization. In those 
instances in which the required skills are not found in the recipient 
organization, rates shall be consistent with those paid for similar work 
in the labor market in which the recipient competes for the kind of 
services involved. In either case, paid fringe benefits that are 
reasonable, allowable, and allocable may be included in the valuation.
    (4) Valuing property donated by third parties. (i) Donated supplies 
may include such items as office supplies or laboratory supplies. Value 
assessed to donated supplies included in the cost sharing or matching 
share shall be reasonable and shall not exceed the fair market value of 
the property at the time of the donation.
    (ii) Normally only depreciation or use charges for equipment and 
buildings may be applied. However, the fair

[[Page 151]]

rental charges for land and the full value of equipment or other capital 
assets may be allowed, when they will be consumed in the performance of 
the award or fully depreciated by the end of the award, provided that 
the grants officer has approved the charges. When use charges are 
applied, values shall be determined in accordance with the usual 
accounting policies of the recipient, with the following qualifications:
    (A) The value of donated space shall not exceed the fair rental 
value of comparable space as established by an independent appraisal of 
comparable space and facilities in a privately-owned building in the 
same locality.
    (B) The value of loaned equipment shall not exceed its fair rental 
value.
    (5) Documentation. The following requirements pertain to the 
recipient's supporting records for in-kind contributions from third 
parties:
    (i) Volunteer services shall be documented and, to the extent 
feasible, supported by the same methods used by the recipient for its 
own employees.
    (ii) The basis for determining the valuation for personal services 
and property shall be documented.



Sec. 34.14  Program income.

    (a) DoD Components shall apply the standards in this section to the 
disposition of program income from projects financed in whole or in part 
with Federal funds.
    (b) Recipients shall have no obligation to the Government, unless 
the terms and conditions of the award provide otherwise, for program 
income earned:
    (1) From license fees and royalties for copyrighted material, 
patents, patent applications, trademarks, and inventions produced under 
an award. Note, however, that the Patent and Trademark Amendments (35 
U.S.C. Chapter 18), as implemented in Sec. 34.25, apply to inventions 
made under a research award.
    (2) After the end of the project period. If a grants officer 
anticipates that an award is likely to generate program income after the 
end of the project period, the grants officer should indicate in the 
award document whether the recipient will have any obligation to the 
Federal Government with respect to such income.
    (c) If authorized by the terms and conditions of the award, costs 
incident to the generation of program income may be deducted from gross 
income to determine program income, provided these costs have not been 
charged to the award.
    (d) Other than any program income excluded pursuant to paragraphs 
(b) and (c) of this section, program income earned during the project 
period shall be retained by the recipient and used in one or more of the 
following ways, as specified in program regulations or the terms and 
conditions of the award:
    (1) Added to funds committed to the project by the DoD Component and 
recipient and used to further eligible project or program objectives.
    (2) Used to finance the non-Federal share of the project or program.
    (3) Deducted from the total project or program allowable cost in 
determining the net allowable costs on which the Federal share of costs 
is based.
    (e) If the terms and conditions of an award authorize the 
disposition of program income as described in paragraph (d)(1) or (d)(2) 
of this section, and stipulate a limit on the amounts that may be used 
in those ways, program income in excess of the stipulated limits shall 
be used in accordance with paragraph (d)(3) of this section.
    (f) In the event that the terms and conditions of the award do not 
specify how program income is to be used, paragraph (d)(3) of this 
section shall apply automatically to all projects or programs except 
research. For awards that support research, paragraph (d)(1) of this 
section shall apply automatically unless the terms and conditions 
specify another alternative or the recipient is subject to special award 
conditions, as indicated in Sec. 34.4.
    (g) Proceeds from the sale of property that is acquired, rather than 
fabricated, under an award are not program income and shall be handled 
in accordance with the requirements of the Property Standards (see 
Secs. 34.20 through 34.25).

[[Page 152]]



Sec. 34.15  Revision of budget and program plans.

    (a) The budget plan is the financial expression of the project or 
program as approved during the award process. It may include either the 
sum of the Federal and non-Federal shares, or only the Federal share, 
depending upon DoD Component requirements. It shall be related to 
performance for program evaluation purposes whenever appropriate.
    (b) Recipients are required to report deviations from budget and 
program plans, and request prior approvals for budget and program plan 
revisions, in accordance with this section.
    (c) Recipients shall immediately request, in writing, prior approval 
from the cognizant grants officer when there is reason to believe that 
within the next seven calendar days a programmatic or budgetary revision 
will be necessary for certain reasons, as follows:
    (1) The recipient always must obtain the grants officer's prior 
approval when a revision is necessary for either of the following two 
reasons (i.e., these two requirements for prior approval may never be 
waived):
    (i) A change in the scope or the objective of the project or program 
(even if there is no associated budget revision requiring prior written 
approval).
    (ii) A need for additional Federal funding.
    (2) The recipient must obtain the grants officer's prior approval 
when a revision is necessary for any of the following six reasons, 
unless the requirement for prior approval is waived in the terms and 
conditions of the award (i.e., if the award document is silent, these 
prior approvals are required):
    (i) A change in a key person specified in the application or award 
document.
    (ii) The absence for more than three months, or a 25 percent 
reduction in time devoted to the project, by the approved project 
director or principal investigator.
    (iii) The inclusion of any additional costs that require prior 
approval in accordance with applicable cost principles for Federal funds 
and recipients' cost share or match, in Sec. 34.17 and Sec. 34.13, 
respectively.
    (iv) The inclusion of pre-award costs. All such costs are incurred 
at the recipient's risk (i.e., the DoD Component is under no obligation 
to reimburse such costs if for any reason the recipient does not receive 
an award, or if the award is less than anticipated and inadequate to 
cover such costs).
    (v) A ``no-cost'' extension of the project period that does not 
require additional Federal funds and does not change the approved 
objectives or scope of the project.
    (vi) Any subaward, transfer or contracting out of substantive 
program performance under an award, unless described in the application 
and funded in the approved awards. This provision does not apply to the 
purchase of supplies, material, or general support services, except that 
procurement of equipment or other capital items of property always is 
subject to the grants officer's prior approval under Sec. 34.21(a), if 
it is to be purchased with Federal funds, or Sec. 34.13(a)(7), if it is 
to be used as cost sharing or matching.
    (3) The recipient also must obtain the grants officer's prior 
approval when a revision is necessary for either of the following 
reasons, if specifically required in the terms and conditions of the 
award document (i.e., if the award document is silent, these prior 
approvals are not required):
    (i) The transfer of funds among direct cost categories, functions 
and activities for awards in which the Federal share of the project 
exceeds $100,000 and the cumulative amount of such transfers exceeds or 
is expected to exceed 10 percent of the total budget as last approved by 
the DoD Component. No DoD Component shall permit a transfer that would 
cause any Federal appropriation or part thereof to be used for purposes 
other than those consistent with the original intent of the 
appropriation.
    (ii) For awards that provide support for both construction and 
nonconstruction work, any fund or budget transfers between the two types 
of work supported.
    (d) Within 30 calendar days from the date of receipt of the 
recipient's request for budget revisions, the grants officer shall 
review the request and notify the recipient whether the budget

[[Page 153]]

revisions have been approved. If the revision is still under 
consideration at the end of 30 calendar days, the grants officer shall 
inform the recipient in writing of the date when the recipient may 
expect the decision.



Sec. 34.16  Audits.

    (a) Any recipient that expends $300,000 or more in a year under 
Federal awards shall have an audit made for that year by an independent 
auditor, in accordance with paragraph (b) of this section. The audit 
generally should be made a part of the regularly scheduled, annual audit 
of the recipient's financial statements. However, it may be more 
economical in some cases to have the Federal awards separately audited, 
and a recipient may elect to do so, unless that option is precluded by 
award terms and conditions, or by Federal laws or regulations applicable 
to the program(s) under which the awards were made.
    (b) The auditor shall determine and report on whether:
    (1) The recipient has an internal control structure that provides 
reasonable assurance that it is managing Federal awards in compliance 
with Federal laws and regulations, and with the terms and conditions of 
the awards.
    (2) Based on a sampling of Federal award expenditures, the recipient 
has complied with laws, regulations, and award terms that may have a 
direct and material effect on Federal awards.
    (c) The recipient shall make the auditor's report available to DoD 
Components whose awards are affected.
    (d) The requirement for an annual independent audit is intended to 
ascertain the adequacy of the recipient's internal financial management 
systems and to curtail the unnecessary duplication and overlap that 
usually results when Federal agencies request audits of individual 
awards on a routine basis. Therefore, a grants officer:
    (1) Shall consider whether the independent audit satisfies his or 
her requirements, before requesting any additional audits; and
    (2) When requesting an additional audit, shall:
    (i) Limit the scope of such additional audit to areas not adequately 
addressed by the independent audit.
    (ii) Coordinate the audit request with the Federal agency with the 
predominant fiscal interest in the recipient, as the agency responsible 
for the scheduling and distribution of audits. If DoD has the 
predominant fiscal interest in the recipient, the Defense Contract 
Management Command (DCMC) is responsible for monitoring audits, ensuring 
resolution of audit findings, and distributing audit reports. When an 
additional audit is requested and DoD has the predominant fiscal 
interest in the recipient, DCMC shall, to the extent practicable, ensure 
that the additional audit builds upon the independent audit or other 
audits performed in accordance with this section.
    (e) There may be instances in which Federal auditors have recently 
performed audits, are performing audits, or are planning to perform 
audits, of a recipient. In these cases, the recipient and its Federal 
cognizant agency should seek to have the non-Federal, independent 
auditors work with the Federal auditors to develop a coordinated audit 
approach, to minimize duplication of audit work.
    (f) Audit costs (including a reasonable allocation of the costs of 
the audit of the recipient's financial statement, based on the relative 
benefit to the Government and the recipient) are allowable costs of DoD 
awards.



Sec. 34.17  Allowable costs.

    Allowability of costs shall be determined in accordance with the 
cost principles applicable to the type of entity incurring the costs, as 
follows:
    (a) For-profit organizations. Allowability of costs incurred by for-
profit organizations that are recipients of prime awards from DoD 
Components, and those that are subrecipients under prime awards to other 
organizations, is to be determined in accordance with:
    (1) The for-profit cost principles in 48 CFR parts 31 and 231 (in 
the Federal Acquisition Regulation, or FAR, and the Defense Federal 
Acquisition Regulation Supplement, or DFARS, respectively).
    (2) The supplemental information on allowability of audit costs, in 
Sec. 34.16(f).
    (b) Other types of organizations. Allowability of costs incurred by 
other types

[[Page 154]]

of organizations that may be subrecipients under a prime award to a for-
profit organization is determined as follows:
    (1) Institutions of higher education. Allowability is determined in 
accordance with OMB Circular A-21,\3\ `` Cost Principles for Educational 
Institutions.''
---------------------------------------------------------------------------

    \3\ For copies of the Circular, contact the Office of Management and 
Budget, EOP Publications, 725 17th St. N.W., New Executive Office 
Building, Washington, D.C. 20503.
---------------------------------------------------------------------------

    (2) Other nonprofit organizations. Allowability is determined in 
accordance with OMB Circular A-122,\4\ ``Cost Principles for Non-Profit 
Organizations.'' Note that Attachment C of the Circular identifies 
selected nonprofit organizations for whom cost allowability is 
determined in accordance with the FAR cost principles for for-profit 
organizations.
---------------------------------------------------------------------------

    \4\ See footnote 3 to paragraph (b)(1) of this section.
---------------------------------------------------------------------------

    (3) Hospitals. Allowability is determined in accordance with the 
provisions of 45 CFR part 74, Appendix E, ``Principles for Determining 
Costs Applicable to Research and Development Under Grants and Contracts 
with Hospitals.''
    (4) Governmental organizations. Allowability for State, local, or 
federally recognized Indian tribal governments is determined in 
accordance with OMB Circular A-87,\5\ ``Cost Principles for State and 
Local Governments.''
---------------------------------------------------------------------------

    \5\ See footnote 3 to paragraph (b)(1) of this section.
---------------------------------------------------------------------------



Sec. 34.18  Fee and profit.

    In accordance with 32 CFR 22.205(b), grants and cooperative 
agreements shall not:
    (a) Provide for the payment of fee or profit to the recipient.
    (b) Be used to carry out programs where fee or profit is necessary 
to achieving program objectives.

                           Property Standards



Sec. 34.20  Purpose of property standards.

    Sections 34.21 through 34.25 set forth uniform standards for 
management, use, and disposition of property. DoD Components shall 
encourage recipients to use existing property-management systems, to the 
extent that the systems meet these minimum requirements.



Sec. 34.21  Real property and equipment.

    (a) Prior approval for acquisition with Federal funds. Recipients 
may purchase real property or equipment in whole or in part with Federal 
funds under an award only with the prior approval of the grants officer.
    (b) Title. Title to such real property or equipment shall vest in 
the recipient upon acquisition. Unless a statute specifically authorizes 
a DoD Component to vest title in the recipient without further 
obligation to the Government, and the DoD Component elects to do so, the 
title shall be a conditional title. Title shall vest in the recipient 
subject to the conditions that the recipient:
    (1) Use the real property or equipment for the authorized purposes 
of the project until funding for the project ceases, or until the 
property is no longer needed for the purposes of the project.
    (2) Not encumber the property without approval of the grants 
officer.
    (3) Use and dispose of the property in accordance with paragraphs 
(d) and (e) of this section.
    (c) Federal interest in real property or equipment offered as cost-
share. A recipient may offer the full value of real property or 
equipment that is purchased with recipient's funds or that is donated by 
a third party to meet a portion of any required cost sharing or 
matching, subject to the prior approval requirement in Sec. 34.13(a)(7). 
If a recipient does so, the Government has a financial interest in the 
property, a share of the property value attributable to the Federal 
participation in the project. The property therefore shall be considered 
as if it had been acquired in part with Federal funds, and shall be 
subject to the provisions of paragraphs (b)(1), (b)(2) and (b)(3) of 
this section, and to the provisions of Sec. 34.23.
    (d) Use. If real property or equipment is acquired in whole or in 
part with Federal funds under an award, and the award provides that 
title vests conditionally in the recipient, the real property or 
equipment is subject to the following:

[[Page 155]]

    (1) During the time that the real property or equipment is used on 
the project or program for which it was acquired, the recipient shall 
make it available for use on other projects or programs, if such other 
use will not interfere with the work on the project or program for which 
the real property or equipment was originally acquired. Use of the real 
property or equipment on other projects will be in the following order 
of priority:
    (i) Activities sponsored by DoD Components' grants, cooperative 
agreements, or other assistance awards;
    (ii) Activities sponsored by other Federal agencies' grants, 
cooperative agreements, or other assistance awards;
    (iii) Activities under Federal procurement contracts, or activities 
not sponsored by any Federal agency. If so used, use charges shall be 
assessed to those activities. For real property or equipment, the use 
charges shall be at rates equivalent to those for which comparable real 
property or equipment may be leased. The use charges shall be treated as 
program income.
    (2) After Federal funding for the project ceases, or when the real 
property or equipment is no longer needed for the purposes of the 
project, the recipient may use the real property or equipment for other 
projects, insofar as:
    (i) There are Federally sponsored projects for which the real 
property or equipment may be used. If the only use for the real property 
or equipment is for projects that have no Federal sponsorship, the 
recipient shall proceed with disposition of the real property or 
equipment, in accordance with paragraph (e) of this section.
    (ii) The recipient obtains written approval from the grants officer 
to do so. The grants officer shall ensure that there is a formal change 
of accountability for the real property or equipment to a currently 
funded, Federal award.
    (iii) The recipient's use of the real property or equipment for 
other projects is in the same order of priority as described in 
paragraph (d)(1) of this section.
    (e) Disposition. (1) When an item of real property or equipment is 
no longer needed for Federally sponsored projects, the recipient shall 
proceed as follows:
    (i) If the property that is no longer needed is equipment (rather 
than real property), the recipient may wish to replace it with an item 
that is needed currently for the project. In that case, the recipient 
may use the original equipment as trade-in or sell it and use the 
proceeds to offset the costs of the replacement equipment, subject to 
the approval of the responsible agency (i.e., the DoD Component or the 
Federal agency to which the DoD Component delegated responsibility for 
administering the equipment).
    (ii) The recipient may elect to retain title, without further 
obligation to the Federal Government, by compensating the Federal 
Government for that percentage of the current fair market value of the 
real property or equipment that is attributable to the Federal 
participation in the project.
    (iii) If the recipient does not elect to retain title to real 
property or equipment (see paragraph (e)(1)(ii) of this section), or 
request approval to use equipment as trade-in or offset for replacement 
equipment (see paragraph (e)(1)(i) of this section), the recipient shall 
request disposition instructions from the responsible agency.
    (2) If a recipient requests disposition instructions, in accordance 
with paragraph (e)(1)(iii) of this section, the responsible grants 
officer shall:
    (i) For equipment (but not real property), consult with the Federal 
program manager and judge whether the age and nature of the equipment 
warrant a screening procedure, to determine whether the equipment is 
useful to a DoD Component or other Federal agency. If a screening 
procedure is warranted, the responsible agency shall determine whether 
the equipment can be used to meet a DoD Component's requirement. If no 
DoD requirement is found, the responsible agency shall report the 
availability of the equipment to the General Services Administration, to 
determine whether a requirement for the equipment exists in other 
Federal agencies.
    (ii) For either real property or equipment, issue instructions to 
the recipient for disposition of the property no

[[Page 156]]

later than 120 calendar days after the recipient's request. The grants 
officer's options for disposition are to direct the recipient to:
    (A) Transfer title to the real property or equipment to the Federal 
Government or to an eligible third party provided that, in such cases, 
the recipient shall be entitled to compensation for its attributable 
percentage of the current fair market value of the real property or 
equipment, plus any reasonable shipping or interim storage costs 
incurred. If title is transferred to the Federal Government, it shall be 
subject thereafter to provisions for Federally owned property in 
Sec. 34.22.
    (B) Sell the real property or equipment and pay the Federal 
Government for that percentage of the current fair market value of the 
property that is attributable to the Federal participation in the 
project (after deducting actual and reasonable selling and fix-up 
expenses, if any, from the sale proceeds). When the recipient is 
authorized or required to sell the real property or equipment, proper 
sales procedures shall be established that provide for competition to 
the extent practicable and result in the highest possible return.
    (3) If the responsible agency fails to issue disposition 
instructions within 120 calendar days of the recipient's request, as 
described in paragraph (e)(2)(ii) of this section, the recipient shall 
dispose of the real property or equipment through the option described 
in paragraph (e)(2)(ii)(B) of this section.



Sec. 34.22  Federally owned property.

    (a) Annual inventory. Recipients shall submit annually an inventory 
listing of all Federally owned property in their custody (property 
furnished by the Federal Government, rather than acquired by the 
recipient with Federal funds under the award), to the DoD Component or 
other Federal agency responsible for administering the property under 
the award.
    (b) Use on other activities. (1) Use of federally owned property on 
other activities is permissible, if authorized by the DoD Component 
responsible for administering the award to which the property currently 
is charged.
    (2) Use on other activities will be in the following order of 
priority:
    (i) Activities sponsored by DoD Components' grants, cooperative 
agreements, or other assistance awards;
    (ii) Activities sponsored by other Federal agencies' grants, 
cooperative agreements, or other assistance awards;
    (iii) Activities under Federal procurement contracts, or activities 
not sponsored by any Federal agency. If so used, use charges shall be 
assessed to those activities. For real property or equipment, the use 
charges shall be at rates equivalent to those for which comparable real 
property or equipment may be leased. The use charges shall be treated as 
program income.
    (c) Disposition of property. Upon completion of the award, the 
recipient shall report the property to the responsible agency. The 
agency may:
    (1) Use the property to meet another Federal Government need (e.g, 
by transferring accountability for the property to another Federal award 
to the same recipient, or by directing the recipient to transfer the 
property to a Federal agency that needs the property, or to another 
recipient with a currently funded award).
    (2) Declare the property to be excess property and either:
    (i) Report the property to the General Services Administration, in 
accordance with the Federal Property and Administrative Services Act of 
1949 (40 U.S.C. 483(b)(2)), as implemented by General Services 
Administration regulations at 41 CFR 101-47.202; or
    (ii) Dispose of the property by alternative methods, if there is 
statutory authority to do so (e.g., DoD Components are authorized by 15 
U.S.C. 3710(i), the Federal Technology Transfer Act, to donate research 
equipment to educational and nonprofit organizations for the conduct of 
technical and scientific education and research activities. Such 
donations shall be in accordance with the DoD implementation of E.O. 
12999 (3 CFR, 1996 Comp., p. 180), ``Educational Technology: Ensuring 
Opportunity for All Children in the Next Century,'' as applicable.) 
Appropriate instructions shall be issued to the recipient by the 
responsible agency.

[[Page 157]]



Sec. 34.23  Property management system.

    The recipient's property management system shall include the 
following, for property that is Federally owned, and for equipment that 
is acquired in whole or in part with Federal funds, or that is used as 
matching share:
    (a) Property records shall be maintained, to include the following 
information:
    (1) A description of the property.
    (2) Manufacturer's serial number, model number, Federal stock 
number, national stock number, or any other identification number.
    (3) Source of the property, including the award number.
    (4) Whether title vests in the recipient or the Federal Government.
    (5) Acquisition date (or date received, if the property was 
furnished by the Federal Government) and cost.
    (6) Information from which one can calculate the percentage of 
Federal participation in the cost of the property (not applicable to 
property furnished by the Federal Government).
    (7) The location and condition of the property and the date the 
information was reported.
    (8) Ultimate disposition data, including date of disposal and sales 
price or the method used to determine current fair market value where a 
recipient compensates the Federal Government for its share.
    (b) Federally owned equipment shall be marked, to indicate Federal 
ownership.
    (c) A physical inventory shall be taken and the results reconciled 
with the property records at least once every two years. Any differences 
between quantities determined by the physical inspection and those shown 
in the accounting records shall be investigated to determine the causes 
of the difference. The recipient shall, in connection with the 
inventory, verify the existence, current utilization, and continued need 
for the property.
    (d) A control system shall be in effect to insure adequate 
safeguards to prevent loss, damage, or theft of the property. Any loss, 
damage, or theft of property shall be investigated and fully documented; 
if the property was owned by the Federal Government, the recipient shall 
promptly notify the Federal agency responsible for administering the 
property.
    (e) Adequate maintenance procedures shall be implemented to keep the 
property in good condition.



Sec. 34.24  Supplies.

    (a) Title shall vest in the recipient upon acquisition for supplies 
acquired with Federal funds under an award.
    (b) Upon termination or completion of the project or program, the 
recipient shall retain any unused supplies. If the inventory of unused 
supplies exceeds $5,000 in total aggregate value and the items are not 
needed for any other Federally sponsored project or program, the 
recipient shall retain the items for use on non-Federal sponsored 
activities or sell them, but shall, in either case, compensate the 
Federal Government for its share.



Sec. 34.25  Intellectual property developed or produced under awards.

    (a) Patents. Grants and cooperative agreements with:
    (1) Small business concerns shall comply with 35 U.S.C. Chapter 18, 
as implemented by 37 CFR part 401, which applies to inventions made 
under grants and cooperative agreements with small business concerns for 
research and development. 37 CFR 401.14 provides a standard clause that 
is required in such grants and cooperative agreements in most cases, 37 
CFR 401.3 specifies when the clause shall be included, and 37 CFR 401.5 
specifies how the clause may be modified and tailored.
    (2) For-profit organizations other than small business concerns 
shall comply with 35 U.S.C. 210(c) and Executive Order 12591 (3 CFR, 
1987 Comp., p. 220) (which codifies a Presidential Memorandum on 
Government Patent Policy, dated February 18, 1983).
    (i) The Executive order states that, as a matter of policy, grants 
and cooperative agreements should grant to all for-profit organizations, 
regardless of size, title to patents made in whole or in part with 
Federal funds, in exchange for royalty-free use by or on behalf of the 
Government (i.e., it extends the applicability of 35 U.S.C. Chapter 18, 
to the extent permitted by law, to for-

[[Page 158]]

profit organizations other than small business concerns).
    (ii) 35 U.S.C. 210(c) states that 35 U.S.C. Chapter 18 is not 
intended to limit agencies' authority to agree to the disposition of 
rights in inventions in accordance with the Presidential memorandum 
codified by the Executive order. It also states that such grants and 
cooperative agreements shall provide for Government license rights 
required by 35 U.S.C. 202(c)(4) and march-in rights required by 35 
U.S.C. 203.
    (b) Copyright, data and software rights. Requirements concerning 
data and software rights are as follows:
    (1) The recipient may copyright any work that is subject to 
copyright and was developed under an award. DoD Components reserve 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.
    (2) Unless waived by the DoD Component making the award, the Federal 
Government has the right to:
    (i) Obtain, reproduce, publish or otherwise use for Federal 
Government purposes the data first produced under an award.
    (ii) Authorize others to receive, reproduce, publish, or otherwise 
use such data for Federal purposes.

                          Procurement Standards



Sec. 34.30  Purpose of procurement standards.

    Section 34.31 sets forth requirements necessary to ensure:
    (a) Compliance of recipients' procurements that use Federal funds 
with applicable Federal statutes and executive orders.
    (b) Proper stewardship of Federal funds used in recipients' 
procurements.



Sec. 34.31  Requirements.

    The following requirements pertain to recipients' procurements 
funded in whole or in part with Federal funds or with recipients' cost-
share or match:
    (a) Reasonable cost. Recipients procurement procedures shall make 
maximum practicable use of competition, or shall use other means that 
ensure reasonable cost for procured goods and services.
    (b) Pre-award review of certain procurements. Prior to awarding a 
procurement contract under an award, a recipient may be required to 
provide the grants officer administering the award with pre-award 
documents (e.g., requests for proposals, invitations for bids, or 
independent cost estimates) related to the procurement. Recipients will 
only be required to provide such documents for the grants officer's pre-
award review in exceptional cases where the grants officer judges that 
there is a compelling need to do so. In such cases, the grants officer 
must include a provision in the award that states the requirement.
    (c) Contract provisions. (1) Contracts in excess of the simplified 
acquisition threshold shall contain contractual provisions or conditions 
that allow for administrative, contractual, or legal remedies in 
instances in which a contractor violates or breaches the contract terms, 
and provide for such remedial actions as may be appropriate.
    (2) All contracts in excess of the simplified acquisition threshold 
shall contain suitable provisions for termination for default by the 
recipient or for termination due to circumstances beyond the control of 
the contractor.
    (3) All negotiated contracts in excess of the simplified acquisition 
threshold shall include a provision permitting access of the Department 
of Defense, the Comptroller General of the United States, or any of 
their duly authorized representatives, to any books, documents, papers, 
and records of the contractor that are directly pertinent to a specific 
program, for the purpose of making audits, examinations, excerpts, and 
transcriptions.
    (4) All contracts, including those for amounts less than the 
simplified acquisition threshold, awarded by recipients and their 
contractors shall contain the procurement provisions of Appendix A to 
this part, as applicable.

                           Reports and Records



Sec. 34.40  Purpose of reports and records.

    Sections 34.41 and 34.42 prescribe requirements for monitoring and 
reporting financial and program performance and for records retention.

[[Page 159]]



Sec. 34.41  Monitoring and reporting program and financial performance.

    Grants officers may use the provisions of 32 CFR 32.51 and 32.52 for 
awards to for-profit organizations, or may include equivalent technical 
and financial reporting requirements that ensure reasonable oversight of 
the expenditure of appropriated funds. As a minimum, equivalent 
requirements must include:
    (a) Periodic reports (at least annually, and no more frequently than 
quarterly) addressing both program status and business status, as 
follows:
    (1) The program portions of the reports must address progress toward 
achieving program performance goals, including current issues, problems, 
or developments.
    (2) The business portions of the reports shall provide summarized 
details on the status of resources (federal funds and non-federal cost 
sharing or matching), including an accounting of expenditures for the 
period covered by the report. The report should compare the resource 
status with any payment and expenditure schedules or plans provided in 
the original award; explain any major deviations from those schedules; 
and discuss actions that will be taken to address the deviations.
    (3) When grants officers previously authorized advance payments, 
pursuant to Sec. 34.12(a)(2), they should consult with the program 
official and consider whether program progress reported in the periodic 
report, in relation to reported expenditures, is sufficient to justify 
continued authorization of advance payments.
    (b) Unless inappropriate, a final performance report that addresses 
all major accomplishments under the award.



Sec. 34.42  Retention and access requirements for records.

    (a) This section sets forth requirements for records retention and 
access to records for awards to recipients.
    (b) Financial records, supporting documents, statistical records, 
and all other records pertinent to an award shall be retained for a 
period of three years from the date of submission of the final 
expenditure report. The only exceptions are the following:
    (1) If any litigation, claim, or audit is started before the 
expiration of the 3-year period, the records shall be retained until all 
litigation, claims or audit findings involving the records have been 
resolved and final action taken.
    (2) Records for real property and equipment acquired with Federal 
funds shall be retained for 3 years after final disposition.
    (3) When records are transferred to or maintained by the DoD 
Component that made the award, the 3-year retention requirement is not 
applicable to the recipient.
    (4) Indirect cost rate proposals, cost allocations plans, and 
related records, for which retention requirements are specified in 
Sec. 34.42(g).
    (c) Copies of original records may be substituted for the original 
records if authorized by the grants officer.
    (d) The grants officer shall request that recipients transfer 
certain records to DoD Component custody when he or she determines that 
the records possess long term retention value. However, in order to 
avoid duplicate recordkeeping, a grants officer may make arrangements 
for recipients to retain any records that are continuously needed for 
joint use.
    (e) DoD Components, the Inspector General, Comptroller General of 
the United States, or any of their duly authorized representatives, have 
the right of timely and unrestricted access to any books, documents, 
papers, or other records of recipients that are pertinent to the awards, 
in order to make audits, examinations, excerpts, transcripts and copies 
of such documents. This right also includes timely and reasonable access 
to a recipient's personnel for the purpose of interview and discussion 
related to such documents. The rights of access in this paragraph are 
not limited to the required retention period, but shall last as long as 
records are retained.
    (f) Unless required by statute, no DoD Component shall place 
restrictions on recipients that limit public access to the records of 
recipients that are pertinent to an award, except when the DoD Component 
can demonstrate

[[Page 160]]

that such records shall be kept confidential and would have been 
exempted from disclosure pursuant to the Freedom of Information Act (5 
U.S.C. 552) if the records had belonged to the DoD Component making the 
award.
    (g) Indirect cost proposals, cost allocation plans, and other cost 
accounting documents (such as documents related to computer usage 
chargeback rates), along with their supporting records, shall be 
retained for a 3-year period, as follows:
    (1) If a recipient is required to submit an indirect-cost proposal, 
cost allocation plan, or other computation to the cognizant Federal 
agency, for purposes of negotiating an indirect cost rate or other 
rates, the 3-year retention period starts on the date of the submission. 
This retention requirement also applies to subrecipients submitting 
similar documents for negotiation to the recipient.
    (2) If the recipient or the subrecipient is not required to submit 
the documents or supporting records for negotiating an indirect cost 
rate or other rates, the 3-year retention period for the documents and 
records starts at the end of the fiscal year (or other accounting 
period) covered by the proposal, plan, or other computation.
    (h) If the information described in this section is maintained on a 
computer, recipients shall retain the computer data on a reliable medium 
for the time periods prescribed. Recipients may transfer computer data 
in machine readable form from one reliable computer medium to another. 
Recipients' computer data retention and transfer procedures shall 
maintain the integrity, reliability, and security of the original 
computer data. Recipients shall also maintain an audit trail describing 
the data transfer. For the record retention time periods prescribed in 
this section, recipients shall not destroy, discard, delete, or write 
over such computer data.

                       Termination and Enforcement



Sec. 34.50  Purpose of termination and enforcement.

    Sections 34.51 through 34.53 set forth uniform procedures for 
suspension, termination, enforcement, and disputes.



Sec. 34.51  Termination.

    (a) Awards may be terminated in whole or in part only in accordance 
with one of the following:
    (1) By the grants officer, if a recipient materially fails to comply 
with the terms and conditions of an award.
    (2) By the grants officer with the consent of the recipient, in 
which case the two parties shall agree upon the termination conditions, 
including the effective date and, in the case of partial termination, 
the portion to be terminated.
    (3) By the recipient upon sending to the grants officer written 
notification setting forth the reasons for such termination, the 
effective date, and, in the case of partial termination, the portion to 
be terminated. The recipient must provide such notice at least 30 
calendar days prior to the effective date of the termination. However, 
if the grants officer determines in the case of partial termination that 
the reduced or modified portion of the award will not accomplish the 
purposes for which the award was made, he or she may terminate the award 
in its entirety.
    (b) If costs are allowed under an award, the responsibilities of the 
recipient referred to in Sec. 34.61(b), including those for property 
management as applicable, shall be considered in the termination of the 
award, and provision shall be made for continuing responsibilities of 
the recipient after termination, as appropriate.



Sec. 34.52  Enforcement.

    (a) Remedies for noncompliance. If a recipient materially fails to 
comply with the terms and conditions of an award, whether stated in a 
Federal statute, regulation, assurance, application, or notice of award, 
the grants officer may, in addition to imposing any of the special 
conditions outlined in Sec. 34.4, take one or more of the following 
actions, as appropriate in the circumstances:
    (1) Temporarily withhold cash payments pending correction of the 
deficiency by the recipient or more severe enforcement action by the 
grants officer and DoD Component.
    (2) Disallow (that is, deny both use of funds and any applicable 
matching

[[Page 161]]

credit for) all or part of the cost of the activity or action not in 
compliance.
    (3) Wholly or partly suspend or terminate the current award. In the 
case of termination, the recipient will be reimbursed for allowable 
costs incurred prior to termination, with the possible exception of 
those for activities and actions described in paragraph (a)(2) of this 
section.
    (4) Withhold further awards for the project or program.
    (5) Take other remedies that may be legally available.
    (b) Hearings and appeals. In taking an enforcement action, the 
grants officer and DoD Component shall provide the recipient an 
opportunity for hearing, appeal, or other administrative proceeding to 
which the recipient is entitled under any statute or regulation 
applicable to the action involved (see Sec. 34.53 and 32 CFR 22.815).
    (c) Effects of suspension and termination. Costs of a recipient 
resulting from obligations incurred by the recipient during a suspension 
or after termination of an award are not allowable unless the grants 
officer expressly authorizes them in the notice of suspension or 
termination or subsequently. Other recipient costs during suspension or 
after termination which are necessary and not reasonably avoidable are 
allowable if the costs:
    (1) Result from obligations which were properly incurred by the 
recipient before the effective date of suspension or termination, are 
not in anticipation of it, and in the case of a termination, are 
noncancellable; and
    (2) Would be allowable if the award were not suspended or expired 
normally at the end of the funding period in which the termination takes 
effect.
    (d) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude a recipient from being subject to debarment 
and suspension under 32 CFR part 25.



Sec. 34.53  Disputes and appeals.

    Recipients have the right to appeal certain decisions by grants 
officers. In resolving such issues, DoD policy is to use Alternative 
Dispute Resolution (ADR) techniques, to the maximum practicable extent. 
See 32 CFR 22.815 for standards for DoD Components' dispute resolution 
and formal, administrative appeal procedures.



                 Subpart C--After-the-Award Requirements



Sec. 34.60  Purpose.

    Sections 34.61 through 34.63 contain procedures for closeout and for 
subsequent disallowances and adjustments.



Sec. 34.61  Closeout procedures.

    (a) The cognizant grants officer shall, at least six months prior to 
the expiration date of the award, contact the recipient to establish:
    (1) All steps needed to close out the award, including submission of 
financial and performance reports, liquidation of obligations, and 
decisions on property disposition.
    (2) A schedule for completing those steps.
    (b) The following provisions shall apply to the closeout:
    (1) The responsible grants officer and payment office shall expedite 
completion of steps needed to close out awards and make prompt, final 
payments to a recipient for allowable reimbursable costs under the award 
being closed out.
    (2) The recipient shall promptly refund any unobligated balances of 
cash that the DoD Component has advanced or paid and that is not 
authorized to be retained by the recipient for use in other projects. 
For unreturned amounts that become delinquent debts, see 32 CFR 22.820.
    (3) When authorized by the terms and conditions of the award, the 
grants officer shall make a settlement for any upward or downward 
adjustments to the Federal share of costs after closeout reports are 
received.
    (4) The recipient shall account for any real property and personal 
property acquired with Federal funds or received from the Federal 
Government in accordance with Secs. 34.21 through 34.25.
    (5) If a final audit is required and has not been performed prior to 
the closeout of an award, the DoD Component

[[Page 162]]

shall retain the right to recover an appropriate amount after fully 
considering the recommendations on disallowed costs resulting from the 
final audit.



Sec. 34.62  Subsequent adjustments and continuing responsibilities.

    (a) The closeout of an award does not affect any of the following:
    (1) The right of the Department of Defense to disallow costs and 
recover funds on the basis of a later audit or other review.
    (2) The obligation of the recipient to return any funds due as a 
result of later refunds, corrections, or other transactions.
    (3) Audit requirements in Sec. 34.16.
    (4) Property management requirements in Secs. 34.21 through 34.25.
    (5) Records retention as required in Sec. 34.42.
    (b) After closeout of an award, a relationship created under an 
award may be modified or ended in whole or in part with the consent of 
the grants officer and the recipient, provided the responsibilities of 
the recipient referred to in Sec. 34.61(a), including those for property 
management as applicable, are considered and provisions made for 
continuing responsibilities of the recipient, as appropriate.



Sec. 34.63  Collection of amounts due.

    Any funds paid to a recipient in excess of the amount to which the 
recipient is finally determined to be entitled under the terms and 
conditions of the award constitute a debt to the Federal Government. 
Procedures for issuing the demand for payment and pursuing 
administrative offset and other remedies are described in 32 CFR 22.820.

               Appendix A to Part 34--Contract Provisions

    All contracts awarded by a recipient, including those for amounts 
less than the simplified acquisition threshold, shall contain the 
following provisions as applicable:
    1. Equal Employment Opportunity--All contracts shall contain a 
provision requiring compliance with E.O. 11246 (3 CFR, 1964-1965 Comp., 
p. 339), ``Equal Employment Opportunity,'' as amended by E.O. 11375 (3 
CFR, 1966-1970 Comp., p. 684), ``Amending Executive Order 11246 Relating 
to Equal Employment Opportunity,'' and as supplemented by regulations at 
41 CFR chapter 60, ``Office of Federal Contract Compliance Programs, 
Equal Employment Opportunity, Department of Labor.''
    2. Copeland ``Anti-Kickback'' Act (18 U.S.C. 874 and 40 U.S.C. 
276c)--All contracts and subawards in excess of $2000 for construction 
or repair awarded by recipients and subrecipients shall include a 
provision for compliance with the Copeland ``Anti-Kickback'' Act (18 
U.S.C. 874), as supplemented by Department of Labor regulations (29 CFR 
part 3, ``Contractors and Subcontractors on Public Building or Public 
Work Financed in Whole or in Part by Loans or Grants from the United 
States''). The Act provides that each contractor or subrecipient shall 
be prohibited from inducing, by any means, any person employed in the 
construction, completion, or repair of public work, to give up any part 
of the compensation to which he is otherwise entitled. The recipient 
shall report all suspected or reported violations to the responsible DoD 
Component.
    3. Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333)-
-Where applicable, all contracts awarded by recipients in excess of 
$100,000 for construction and other purposes that involve the employment 
of mechanics or laborers shall include a provision for compliance with 
Sections 102 and 107 of the Contract Work Hours and Safety Standards Act 
(40 U.S.C. 327-333), as supplemented by Department of Labor regulations 
(29 CFR part 5). Under Section 102 of the Act, each contractor shall be 
required to compute the wages of every mechanic and laborer on the basis 
of a standard work week of 40 hours. Work in excess of the standard work 
week is permissible provided that the worker is compensated at a rate of 
not less than 1\1/2\ times the basic rate of pay for all hours worked in 
excess of 40 hours in the work week. Section 107 of the Act is 
applicable to construction work and provides that no laborer or mechanic 
shall be required to work in surroundings or under working conditions 
which are unsanitary, hazardous or dangerous. These requirements do not 
apply to the purchases of supplies or materials or articles ordinarily 
available on the open market, or contracts for transportation or 
transmission of intelligence.
    4. Rights to Inventions Made Under a Contract, Grant or Cooperative 
Agreement--Contracts, grants, or cooperative agreements for the 
performance of experimental, developmental, or research work shall 
provide for the rights of the Federal Government and the recipient in 
any resulting invention in accordance with 37 CFR part 401, ``Rights to 
Inventions Made by Nonprofit Organizations and Small Business Firms 
Under Government Grants, Contracts and Cooperative Agreements.''
    5. Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water 
Pollution Control Act (33

[[Page 163]]

U.S.C. 1251 et seq.), as amended--Contracts and subawards of amounts in 
excess of $100,000 shall contain a provision that requires the recipient 
to agree to comply with all applicable standards, orders or regulations 
issued pursuant to the Clean Air Act (42 U.S.C. 7401 et seq.) and the 
Federal Water Pollution Control Act as amended (33 U.S.C. 1251 et seq.). 
Violations shall be reported to the responsible DoD Component and the 
Regional Office of the Environmental Protection Agency (EPA).
    6. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)--Contractors who 
apply or bid for an award of $100,000 or more shall file the required 
certification. Each tier certifies to the tier above that it will not 
and has not used Federal appropriated funds to pay any person or 
organization for influencing or attempting to influence an officer or 
employee of any agency, a member of Congress, officer or employee of 
Congress, or an employee of a member of Congress in connection with 
obtaining any Federal contract, grant or any other award covered by 31 
U.S.C. 1352. Each tier shall also disclose any lobbying with non-Federal 
funds that takes place in connection with obtaining any Federal award. 
Such disclosures are forwarded from tier to tier up to the recipient.
    7. Debarment and Suspension (E.O.s 12549 and 12689)--Contract awards 
that exceed the simplified acquisition threshold and certain other 
contract awards shall not be made to parties listed on nonprocurement 
portion of the General Services Administration's Lists of Parties 
Excluded from Federal Procurement and Nonprocurement Programs in 
accordance with E.O.s 12549 (3 CFR, 1986 Comp., p. 189) and 12689 (3 
CFR, 1989 Comp., p. 235), ``Debarment and Suspension.'' This list 
contains the names of parties debarred, suspended, or otherwise excluded 
by agencies, and contractors declared ineligible under statutory or 
regulatory authority other than E.O. 12549. Contractors with awards that 
exceed the small purchase threshold shall provide the required 
certification regarding its exclusion status and that of its principals.

[[Page 164]]



             SUBCHAPTER C--PERSONNEL, MILITARY AND CIVILIAN



    Cross Reference: For a revision of Standards for a Merit System of 
Personnel Administration, see 5 CFR part 900.



PART 43--PERSONAL COMMERCIAL SOLICITATION ON DoD INSTALLATIONS--Table of Contents




Sec.
43.1 Reissuance and purpose.
43.2 Applicability and scope.
43.3 Definitions.
43.4 Policy.
43.5 Responsibilities.
43.6 Procedures.

Appendix A to Part 43--Life Insurance Products and Securities
Appendix B to Part 43--The Overseas Life Insurance Accreditation Program

    Authority: 5 U.S.C. 301.

    Source: 51 FR 7552, Mar. 5, 1986, unless otherwise noted.



Sec. 43.1  Reissuance and purpose.

    This part:
    (a) Consolidates into a single document parts 43 and 276 of this 
title and update DoD policies and procedures governing personal 
commercial solicitation and insurance sales on DoD installations.
    (b) Continues the established annual DoD accreditation requirements 
for life insurance companies operating in overseas areas where neither 
Federal nor State consumer protection regulations apply.



Sec. 43.2  Applicability and scope.

    (a) This part applies to the Office of the Secretary of Defense 
(OSD), the Military Departments, the Organization of the Joint Chiefs of 
Staff (OJCS), the Unified Commands, and the Defense Agencies (hereafter 
referred to collectively as ``DoD Components''). The term ``Military 
Services,'' as used herein, refers to the Army, Navy, Air Force, Marine 
Corps, and Coast Guard.
    (b) The provisions of this part do not apply to services furnished 
by commercial companies, such as deliveries of milk, laundry, and 
related residence services when such services are authorized by the DoD 
installation commander.
    (c) Nothing in this part should be construed to preclude private, 
non-profit, tax-exempt organizations composed of active and retired 
members of the Military Services from holding membership meetings which 
do not involve commercial solicitation on DoD installations. Attendance 
at these meetings shall be voluntary and the time and place of such 
meetings are subject to the discretion of the installation commander or 
his or her designee.

[51 FR 7552, Mar. 5, 1986, as amended at 52 FR 25008, July 2, 1987]



Sec. 43.3  Definitions.

    Agent. An individual who receives remuneration as a salesperson or 
whose remuneration is dependent on volume of sales of a product or 
products.
    Association. Any organization, whether or not the word 
``Association'' appears in its title, composed of and serving 
exclusively members of the Military Services on active duty, in a 
Reserve status, in a retired status, and their dependents, which 
officers its members life insurance coverage, either as part of the 
membership dues, or as a separately purchased plan made available 
through an insurance carrier or the association as a self-insurer, or a 
combination of both.
    DoD installation. Any Federally owned, leased, or operated base, 
reservation, post, camp, building, or other facility to which DoD 
personnel are assigned for duty, including barracks, transient housing, 
and family quarters.
    DoD personnel. All active duty officers (commissioned and warrant) 
and enlisted members of the Military Services and all civilian 
employees, including nonappropriated fund employees and special 
Government employees of all offices, agencies, and departments carrying 
on functions on a Defense installation.
    General agent. A person who has a legal contract to represent a 
company solely and exclusively.

[[Page 165]]

    Insurance carrier. An insurance company issuing insurance through an 
association or reinsuring or coinsuring such insurance.
    Insurance product. A policy, annuity, or certificate of insurance 
issued by an insurer or evidence of insurance coverage issued by a self-
insured association.
    Insurer. Any company or association engaged in the business of 
selling insurance policies to DoD personnel.
    Normal home enterprises. Sales or services which are customarily 
conducted in a domestic setting and do not compete with an 
installation's officially sanctioned commerce.
    Securities. Mutual funds, stocks, bonds, or any product registered 
with the Securities and Exchange Commission except for any insurance or 
annuity product issued by a corporation subject to supervision by State 
insurance authorities.
    Solicitation. The conduct of any private business, including the 
offering and sale of insurance on a military installation. Solicitation 
on installations is a privilege as distinguished from a right, and its 
control is a responsibility vested in the DoD installation commander.



Sec. 43.4  Policy.

    It is the policy of the Department of Defense to safeguard and 
promote the welfare of DoD personnel as consumers by setting forth a 
uniform approach to the conduct of all personal commercial solicitation 
and sales to them by dealers and their agents.



Sec. 43.5  Responsibilities.

    (a) The Assistant Secretary of Defense (Force Management and 
Personnel) (ASD(FM&P)) shall be responsible for developing policies and 
procedures governing personal commercial solicitation activities 
conducted on DoD installations.
    (b) The Heads of DoD Components, or their designees, shall assure 
implementation of this Directive and compliance with its provisions.



Sec. 43.6  Procedures.

    (a) General. (1) No person has authority to enter upon a DoD 
installation and transact personal commercial solicitation as a matter 
of rights. Personal commercial solicitation will be permitted only if 
the following requirements are met:
    (i) The solicitor is duly licensed under applicable Federal, State, 
or municipal laws and has complied with installation regulations in 
accordance with paragraph (c) of this section.
    (ii) Personal commercial solicitation is permitted by the local 
installation commander.
    (iii) A specific appointment has been made with the individual 
concerned and conducted in family quarters or in other areas designated 
by the installation commander.
    (2) Those seeking to transact personal commercial solicitation on 
overseas installations shall be required to observe, in addition to the 
above, the applicable laws of the host country and, upon demand, present 
documentary evidence to the installation commander, or designee, that 
the company they represent, and its agents, meet the licensing 
requirements of the host country.
    (3) Organizations involved in sales are permitted to display 
literature on DoD installations in locations selected by the commander.
    (b) Life insurance products and securities. (1) Life insurance 
products and securities offered and sold to DoD personnel must meet the 
prerequisites described in Appendix A.
    (2) Insurers and their agents are authorized to solicit on DoD 
installations provided they are licensed under the insurance laws of the 
State in which the installation is located. In overseas areas, DoD 
Components shall limit this authorization to those insurers accredited 
under the provisions of Appendix B.
    (3) The conduct of all insurance business on DoD installations shall 
be by specific appointment. When establishing the appointment, insurance 
agents must identify themselves to the prospective purchaser as an agent 
for a specific company.
    (4) Installation commanders shall designate areas where interviews 
by appointment may be conducted. Invitations to conduct interviews shall 
be extended to all agents on an equitable

[[Page 166]]

basis. Where space and other considerations limit the number of agents 
using the interviewing area, the installation commander may develop and 
publish local policy consistent with this concept.
    (5) Installation commanders shall make disinterested third-party 
counseling available to DoD personnel desiring counseling.
    (6) In addition to the solicitation prohibitions contained in 
paragraph (d) of this section, DoD Components shall prohibit:
    (i) DoD personnel from representing any insurer, or dealing directly 
or indirectly with any insurer or any recognized representative of any 
insurer on the installation, as an agent or in any official or business 
capacity with or without compensation.
    (ii) The use of an agent as a participant in any Military Services-
sponsored insurance education or orientation program.
    (iii) The designation of any agent or the use by any agent of titles 
such as ``Battalion Insurance Counselor,'' ``Unit Insurance Advisor,'' 
``Servicemen's Group Life Insurance Conversion Consultant,'' etc.
    (iv) The assignment of desk space for interviews for other than a 
specific prearranged appointment. During such appointment, the agent 
shall not be permitted to display desk or other signs announcing his or 
her name or company affiliation.
    (v) The use of the ``Daily Bulletin'' or any other notice, official 
or unofficial, announcing the presence of an agent and his or her 
availability.
    (c) Supervision of on-base commercial activities. (1) All pertinent 
installation regulations shall be posted in a place easily accessible to 
those conducting personal commercial solicitation activities on the 
installation.
    (2) When practicable, as determined by the installation commander, a 
copy of the applicable installation regulations shall be given to those 
conducting on-base commercial activities with the warning that any 
infractions of the regulations will result in the withdrawal of 
solicitation privileges.
    (d) Prohibited practices. The following commercial solicitation 
practices shall be prohibited on all DoD installations:
    (1) Solicitation of recruits, trainees, and transient personnel in a 
``mass'' or ``captive'' audience.
    (2) Making appointments with or soliciting military personnel who 
are in an ``on-duty'' status.
    (3) Soliciting without appointment in areas utilized for the housing 
or processing of transient personnel, in barracks areas used as 
quarters, in unit areas, in family quarters areas, and in areas provided 
by installation commanders for interviews by appointment.
    (4) Use of official identification cards by retired or reserve 
members of the Military Services to gain access to DoD installations for 
the purpose of soliciting.
    (5) Procuring, or attempting to procure, or supplying roster 
listings of DoD personnel for purposes of commercial solicitation, 
except for releases granted in accordance with DoD Directive 5400.7.
    (6) Offering unfair, improper, and deceptive inducements to purchase 
or trade.
    (7) Using rebates to facilitate transactions or to eliminate 
competition.
    (8) Using manipulative, deceptive, or fraudulent devices, schemes, 
or artifices, including misleading advertising and sales literature.
    (9) Using oral or written representations to suggest or give the 
appearance that the Department of Defense sponsors or endorses any 
particular company, its agents, or the goods, services, and commodities 
it sells.
    (10) Full-time DoD personnel making personal commercial 
solicitations or sales to DoD personnel who are junior in rank or grade 
as provided in DoD Directive 5500.7 \1\.
---------------------------------------------------------------------------

    \1\ Copies may be obtained, if needed, from the US Naval 
Publications and Forms Center 5801 Tabor Avenue, ATTN: Code 301, 
Philadelphia PA 19120.
---------------------------------------------------------------------------

    (11) Entering into any unauthorized or restricted area.
    (12) Using any portion of installation facilities, including 
quarters, as a showroom or store for the sale of goods or services, 
except as specifically authorized by DoD Directives 1330.9 \2\ and 
1330.17 \3\ and DoD Instructions 1330.18 \4\

[[Page 167]]

and 1000.15 \5\. This is not intended to preclude normal home 
enterprises, providing applicable State and local laws are complied 
with.
---------------------------------------------------------------------------

    \2--5\ See footnote 1 to paragraph (d)(10) of this section.
---------------------------------------------------------------------------

    (13) Soliciting door to door.
    (14) Advertising addresses or telephone numbers of commercial sales 
activities conducted on the installation, except for authorized 
activities conducted by members of military families residing in family 
housing.
    (e) Denial and revocation of on-base solicitation. (1) The 
installation commander shall deny or revoke permission to a company and 
its agents to conduct commercial activities on the base if such action 
is in the best interests of the command. The grounds for taking this 
action shall include, but not be limited to, the following:
    (i) Failure to meet the licensing and other regulatory requirements 
prescribed in paragraphs (a) and (b) of this section.
    (ii) Commission of any of the practices prohibited in paragraphs 
(b)(6) and (d) of this section.
    (iii) Substantiated complaints or adverse reports regarding quality 
of goods, services, and commodities and the manner in which they are 
offered for sale.
    (iv) Knowing and willful violations of Pub. L. 90-321.
    (v) Personal misconduct by a company's agent or representative while 
on the installation.
    (vi) The possession of or any attempt to obtain supplies of 
allotment forms used by the Military Departments, or possession or use 
of facsimiles thereof.
    (vii) Failure to incorporate and abide by the Standards of Fairness 
policies contained in DoD Directive 1344.9.\6\
---------------------------------------------------------------------------

    \6\ See footnote 1 to paragraph (d)(10) of this section.
---------------------------------------------------------------------------

    (2) In withdrawing solicitation privileges, the commander shall 
determine whether to limit it to the agent alone or extend it to the 
company the agent represents. This decision shall be communicated to the 
agent and to the company the agent represents and shall be based on the 
circumstances of the particular case, including, among others, the 
nature of the violations, frequency of violations, the extent to which 
other agents of the company have engaged in such practices, and any 
other matters tending to show the company's culpability.
    (i) Upon withdrawing solicitation privileges, the commander shall 
promptly inform the agent and the company the agent represents orally or 
in writing.
    (ii) If the grounds for the action involve the eligibility of the 
agent or company to hold a State license or to meet other regulatory 
requirements, the appropriate authorities will be notified.
    (iii) The commander shall afford the individual or company an 
opportunity to show cause why the action should not be taken. To ``show 
cause'' means an opportunity must be given for the grieved party to 
present facts on his or her behalf on an informal basis for the 
consideration of the installation commander.
    (iv) If warranted, the commander shall recommend to the Military 
Department concerned that the action taken be extended to other DoD 
installations. If so approved, and when appropriate, the Assistant 
Secretary of Defense (Force Management and Personnel) (ASD(FM&P)), 
following consultation with the Military Department concerned, shall 
order the action extended to other Military Departments.
    (v) All denials or withdrawals of privileges will be for a set 
period of time, at the end of which the individual may reapply for 
permission to solicit through the Military Department originally 
imposing the restriction. Denial or withdrawal of soliciting privileges 
may or may not be continued, as warranted.
    (vi) When such denials or withdrawals are lifted, the Office of the 
ASD(FM&P) shall be notified for parallel action if the same denial or 
withdrawal has been extended to other Military Departments.
    (vii) The commanding officer may, if circumstances dictate, make 
immediate suspensions of solicitation privileges for a period of 30 days 
while an investigation is conducted. Exceptions to this amount of time 
must be approved by the Military Department concerned.

[[Page 168]]

    (3) Upon receipt of the information outlined above, the Secretaries 
of the Military Departments may direct the Armed Forces Disciplinary 
Control Boards in all geographical areas in which the grounds for action 
have occurred to consider the charges and take appropriate action.
    (f) Advertising policies. (1) The Department of Defense expects 
voluntary observance of the highest business ethics both by commercial 
enterprises soliciting DoD personnel through advertisements in 
unofficial military publications, and by the publishers of those 
publications in describing goods, services, and commodities, and the 
terms of the sale (including guarantees, warranties, and the like).
    (2) The advertising of credit terms shall conform to the provisions 
of Pub. L. 90-321 as implemented by Regulation Z.
    (g) Educational programs. (1) The Military Departments shall develop 
and disseminate information and education programs for members of the 
Military Services on how to conduct their personal commercial affairs, 
including such subjects as the Truth-in-Lending Act, insurance, 
Government benefits, savings, and budgeting. The services of 
representatives of credit unions, banks, and those nonprofit military 
associations (provided such associations are not underwritten by a 
commercial insurance company) approved by the Military Departments may 
be used for this purpose. Under no circumstances shall commercial 
agents, including representatives of loan, finance, insurance or 
investment companies, be used for this purpose. Educational materials 
prepared or presented by outside organizations expert in this field may, 
with appropriate disclaimers and permission, be adapted or used if 
approved by the Military Department concerned. Presentations by approved 
organizations shall only be conducted at the express request of the 
installation commander.
    (2) The Military Departments shall also make qualified personnel and 
facilities available for individual counseling on loans and consumer 
credit transactions in order to encourage thrift and financial 
responsibility and promote a better understanding of the wise use of 
credit, as prescribed in DoD Directive 1344.9.\7\
---------------------------------------------------------------------------

    \7\ See footnote 1 to Sec. 43.6(d)(10).
---------------------------------------------------------------------------

    (3) Military members shall be encouraged to seek advice from a legal 
assistance officer or their own lawyer before making a substantial loan 
or credit commitment.
    (4) Each Military Department shall provide advice and guidance to 
military personnel who have a complaint under Pub. L. 90-321 or who 
allege a criminal violation of its provisions, including referral to the 
appropriate regulatory agency for processing of the complaint.

[51 FR 7552, Mar. 5, 1986, as amended at 52 FR 25008, July 2, 1987]

      Appendix A to Part 43--Life Insurance Products and Securities

             A. Life Insurance Product Content Prerequisites

    1. Insurance products, other than certificates or other evidence of 
insurance issued by a self-insured association, offered and sold 
worldwide to personnel on DoD installations, must:
    a. Comply with the insurance laws of the State or country in which 
the installation is located and the procedural requirements of this 
Directive.
    b. Contain no restrictions by reason of military service or military 
occupational specialty of the insured, unless such restrictions are 
clearly indicated on the face of the contract.
    c. Plainly indicate any extra premium charges imposed by reason of 
military service or military occupational specialty.
    d. Contain no variation in the amount of death benefit or premium 
based upon the length of time the contract has been in force, unless all 
such variations are clearly described therein.
    2. To comply with paragraphs A.1.b., c., and d., above, an 
appropriate reference stamped on the face of the contract shall draw the 
attention of the policyholder to any extra premium charges and any 
variations in the amount of death benefit or premium based upon the 
length of time the contract has been in force.
    3. Variable life insurance products may be offered provided they 
meet the criteria of the appropriate insurance regulatory agency and the 
Securities and Exchange Commission.
    4. Premiums shall reflect only the actual premiums payable for the 
life insurance product.

[[Page 169]]

                          B. Sale of Securities

    1. All securities must be registered with the Securities and 
Exchange Commission.
    2. All sales of securities must comply with existing and appropriate 
Securities and Exchange Commission regulations.
    3. All securities representatives must apply directly to the 
commander of the installation on which they desire to solicit the sale 
of securities.
    4. Where the accredited insurer's policy permits, an overseas 
accredited life insurance agent--if duly qualified to engage in security 
activities either as a registered representative of the National 
Association of Securities Dealers or as an associate of a broker or 
dealer registered with the Securities and Exchange Commission--may offer 
life insurance and securities for sale simultaneously. In cases of 
commingled sales, the allotment of pay for the purchase of securities 
cannot be made to the insurer.

                  C. Use of the Allotment of Pay System

    1. Allotments of military pay for life insurance products shall be 
made in accordance with DoD Directive 7330.1.\8\
---------------------------------------------------------------------------

    \8\ See footnote 1 to Sec. 43.6(d)(10).
---------------------------------------------------------------------------

    2. For personnel in pay grades E-1, E-2, and E-3, at least seven 
days shall elapse for counseling between the signing of a life insurance 
application and the certification of an allotment. The purchaser's 
commanding officer may grant a waiver of this requirement for good 
cause, such as the purchaser's imminent permanent change of station.

                         D. Association--General

    The recent growth and general acceptability of quasimilitary 
associations offering various insurance plans to military personnel are 
acknowledged. Some associations are not organized within the supervision 
of insurance laws of either a State or the Federal Government. While 
some are organized for profit, others function as nonprofit associations 
under Internal Revenue Service regulations. Regardless of the manner in 
which insurance plans are offered to members, the management of the 
association is responsible for complying fully with the instructions 
contained herein and the spirit of this part.

Appendix B to Part 43--The Overseas Life Insurance Accreditation Program

                        A. Accreditation Criteria

    1. Initial Accreditation.
    a. Insurers must demonstrate continuous successful operation in the 
life insurance business for a period of not less than five years on 
December 31 of the year preceding the date of filing the application.
    b. Insurers must be listed in Best's Life-Health Insurance Reports 
and be assigned a rating of B+ (Very Good) or better for the business 
year preceding the Government's fiscal year for which accreditation is 
sought.
    2. Reaccreditation.
    a. Insurers must demonstrate continuous successful operation in the 
life insurance business, as described in subsection A.1.a., above.
    b. Insurers must retain a Best's rating of B+ or better, as 
described in paragraph A.1.b., above.
    c. Insurers must establish an agency sales force in one of the 
overseas commands within two years of initial accreditation.
    3. Waiver Provisions.
    Waivers of the initial accreditation and reaccreditation provisions 
will be considered for those insurers demonstrating substantial 
compliance with the aforementioned criteria.

                       B. Application Instructions

    1. Applications Filed Annually. During the months of May and June of 
each year insurers may apply for solicitation privileges for personnel 
assigned to U.S. military installations in foreign areas for the fiscal 
year beginning the following October 1.
    2. Application Prerequisites. A letter of application, signed by the 
president, vice president, or designated official of the insurance 
company shall be forwarded to the Assistant Secretary of Defense (Force 
Management and Personnel), Attention: Personnel Administration and 
Services Directorate, ODASD(MM&PP), The Pentagon, Washington, DC 20301-
4000. The letter shall contain the information set forth below, 
submitted in the order listed. Where not applicable, so state.
    a. The overseas commands (e.g., European, Pacific, Atlantic , 
Southern) where the company is presently soliciting, or planning to 
solicit on U.S. military installations.
    b. A statement that the company has complied with, or will comply 
with, the applicable laws of the country or countries wherein it 
proposes to solicit. ``Laws of the country'' means all natural, 
provincial, city, or county laws or ordinances of any country, as 
applicable.
    c. A statement that the products to be offered for sale conform to 
the standards prescribed in Appendix A and contain only the standard 
provisions such as those prescribed by the laws of the State where the 
company's headquarters are located.
    d. A statement that the company shall assume full responsibility for 
the acts of its agents with respect to solicitation. Sales personnel 
will be limited in numbers to one general agent and no more than 50 
sales personnel for each overseas area. If warranted,

[[Page 170]]

the number of agents may be further limited by the overseas command 
concerned.
    e. A statement that the company will not utilize agents who have not 
been accredited by the appropriate overseas command to sell to DoD 
personnel on or off its DoD installations.
    f. Any explanatory or supplemental comments that will assist in 
evaluating the application.
    g. If the Department of Defense requires facts or statistics beyond 
those normally involved in accreditation, the company shall make 
separate arrangements to provide them.
    h. A statement that the company's general agent and other accredited 
agents are appointed in accordance with the prerequisites established in 
section C., below.
    3. If a company is a life insurance company subsidiary, it must be 
accredited separately on its own merits.

                          C. Agent Requirements

    Unified commanders shall apply the following principles:
    1. An agent must possess a current State license. The overseas 
commander may waive this requirement for an accredited agent 
continuously residing and successfully selling life insurance in foreign 
areas, who, through no fault of his or her own, due to State law (or 
regulation) governing domicile requirements, or requiring that the 
agent's company be licensed to do business in that State, forfeits 
eligibility for a State license. The request for a waiver shall contain 
the name of the State or jurisdiction which would not renew the agent's 
license.
    2. General agents and agents shall represent only one accredited 
commercial insurance company. This requirement may be waived by the 
overseas commander if multiple representation can be proven to be in the 
best interest of DoD personnel.
    3. An agent must have at least one year of successful life insurance 
underwriting in the United States or its territories, generally within 
the five years preceding the date of application, in order to be 
designated as accredited and employed for overseas solicitation.
    4. Appropriate overseas commanders shall exercise further agent 
control procedures as deemed necessary.
    5. An agent, once accredited in an overseas area, may not change 
affiliation from the staff of one general agent to another and retain 
accreditation, unless the previous employer certifies in writing that 
the release is without justifiable prejudice. Unified commanders will 
have final authority to determine justifiable prejudice. Indebtedness of 
an agent to a previous employer is an example of justifiable prejudice.

                       D. Announcement of Findings

    1. Accreditation by the Department of defense upon annual 
applications of insurers shall be announced as soon as practicable by a 
notice to each applicant and by a listing released annually in September 
to the appropriate overseas commander. This approval does not constitute 
DoD endorsement of the insurer. Any advertising by insurers which 
suggests such endorsement is prohibited.
    2. In the event accreditation is denied, specific reasons for such 
findings shall be submitted to the applicant.
    a. Upon receipt of notification of an unfavorable finding, the 
insurer shall have 30 days from the receipt of such notification 
(forwarded certified mail, return recipt requested) in which to request 
reconsideration of the original decision. This request must be 
accompanied by substantiating data or information in rebuttal of the 
specific reasons upon which the adverse findings are based.
    b. Action by the Assistant Secretary of Defense (Force Management 
and Personnel) on appeal is final.
    c. If the applicant is presently accredited as an insurer, up to 90 
days from final action on an unfavorable finding shall be granted in 
which to close out operations.
    3. Upon receiving the annual letter of accreditation, each company 
shall send to the applicable unified commander a verified list of agents 
currently accredited for overseas solicitation. Where applicable, the 
company shall also include the names of new agents for whom original 
accreditation and permission to solicit on base is requested. Insurers 
initially accredited will be furnished instructions by the Department of 
Defense for agent accreditation procedures in overseas areas.
    4. Material changes affecting the corporate status and financial 
conditions of the company which may occur during the fiscal year of 
accreditation must be reported as they occur.
    a. The Department of Defense reserves the right to terminate 
accreditation if such material changes appear to substantially affect 
the financial and operational criteria described in section A., above, 
on which accreditation was based.
    b. Failure to report such material changes can result in termination 
of accreditation regardless of how it affects the criteria.
    5. If an analysis of information furnished by the company indicates 
that unfavorable trends are developing which may possibly adversely 
affect its future operations, the Department of Defense may, at its 
option, bring such matters to the attention of the company and request a 
statement as to what action, if any, is contemplated to deal with such 
unfavorable trends.

[[Page 171]]



PART 44--SCREENING THE READY RESERVE--Table of Contents




Sec.
44.1 Purpose.
44.2 Applicability.
44.3 Definitions.
44.4 Policy.
44.5 Responsibilities.

Appendix A to Part 44--Guidance

    Authority: 10 U.S.C. 10145.

    Source: 64 FR 72027, Dec. 23, 1999, unless otherwise noted.



Sec. 44.1  Purpose.

    Updates DoD policy and responsibilities for the screening of Ready 
Reservists under 10 U.S.C. 1003, 1005, and 1209.



Sec. 44.2  Applicability.

    This part applies to the Office of the Secretary of Defense, the 
Military Departments (including the Coast Guard, when it is not 
operating as a Military Service in the Navy by agreement with the 
Department of Transportation), the Chairman of the Joint Chiefs of 
Staff, the Combatant Commands, the Inspector General of the Department 
of Defense, the Defense Agencies, the DoD Field Activities and all other 
organizational entities within the Department of Defense (hereafter 
referred to collectively as the ``DoD Components''). The term ``Military 
Services'' as used in this part, refers to the Army, the Navy, the Air 
Force and the Marine Corps.



Sec. 44.3  Definitions.

    For purposes of this part, the following definitions apply:
    Extreme community hardship. A situation that, because of a 
Reservist's mobilization, may have a substantially adverse effect on the 
health, safety, or welfare of the community. Any request for a 
determination of such hardship shall be made by the Reservist and must 
be supported by documentation, as required by the Secretary concerned.
    Extreme personal hardship. An adverse impact on a Reservist's 
dependents resulting from his or her mobilization. Any request for a 
determination of such hardship shall be made by the Reservist and must 
be supported by documentation, as required by the Secretary concerned.
    Individual Ready Reserve. Within the Ready Reserve of each of the 
Reserve Components there is an Individual Ready Reserve. The Individual 
Ready Reserve consists of members of the Ready Reserve who are not in 
the Selected Reserve or the Inactive National Guard.
    Key employee. Any Federal employee occupying a key position.
    Key position. A Federal position that shall not be vacated during a 
national emergency or mobilization without SERIOUSLY impairing the 
capability of the parent Federal Agency or office to function 
effectively. The four categories of Federal key positions are set out in 
this paragraph. The first three categories are, by definition, key 
positions. However, the third category, Article III Judges, provides for 
exceptions on a case-by-case basis. The fourth category requires a case-
by-case determination and designation as described in the following:
    (1) The Vice President of the United States or any official 
specified in the order of presidential succession as in 3 U.S.C. 19.
    (2) The members of the Congress and the heads of the Federal 
Agencies appointed by the President with the consent of the Senate. For 
this part, the term ``the heads of the Federal Agencies'' does not-
include any person appointed by the President with the consent of the 
Senate to a Federal Agency as a member of a multimember board or 
commission. Such positions may be designated as key positions only in 
accordance with paragraph (4) of this definition.
    (3) Article III Judges. However, each Article III Judge, who is a 
member of the Ready Reserve and desires to remain in the Ready Reserve, 
must have his or her position reviewed by the Chief Judge of the 
affected Judge's Circuit. If the Chief Judge determines that 
mobilization of the Article III Judge concerned will not seriously 
impair the capability of the Judge's court to function effectively, the 
Chief Judge will provide a certification to that effect to the Secretary 
of the Military Department concerned. Concurrently, the affected Judge 
will provide a statement to the Secretary concerned requesting continued 
service in the

[[Page 172]]

Ready Reserve and acknowledging that he or she may be involuntarily 
called to active duty (AD) under the laws of the United States and the 
Directives and Regulations of the Department of Defense and pledging not 
to seek to be excused from such orders based upon his or her judicial 
duties.
    (4) Other Federal positions determined by the Federal Agency heads, 
or their designees, to be key positions in accordance with the 
guidelines in the appendix to this part.
    Mobilization. Involuntary call-up of Reserve component members in 
accordance with 10 U.S.C. 12301, 12302, or 12304. That includes full 
mobilization, partial mobilization and, selective mobilization 
(Presidential Reserve Call-Up Authority).
    Ready reserve. Reserve unit members or individual Reserve and 
National Guard members, or both, liable for AD, as provided in 10 U.S.C. 
12301, 12302, and, for some members, 10 U.S.C. 12304. It consists of the 
Selected Reserve, the Individual Ready Reserve, and the Inactive 
National Guard.
    Selected reserve. A category of the Ready Reserve in each of the 
Reserve components. The Selected Reserve consists of units, and, as 
designated by the Secretary concerned, of individual Reserve members, 
trained as prescribed in 10 U.S.C. 10147(a)(1) or 32 U.S.C. 502(a), as 
appropriate.
    Standby reserve. The Standby Reserve consists of those units or 
members, or both, of the Reserve components, other than those in the 
Ready Reserve or the Retired Reserve, who are liable for active duty 
only as provided for in 10 U.S.C. 12301 and 12306. The Standby Reserve 
consists of personnel who are maintaining their military affiliation 
without being in the Ready Reserve, but have been designated ``key 
civilian employees,'' or have a temporary hardship or disability. Those 
individuals are not required to perform training and are not part of the 
Ready Reserve. The Standby Reserve is a pool of trained individuals who 
may be mobilized as needed to fill manpower needs in specific skills. 
The Standby Reserve consists of the active status list and the inactive 
status list categories.



Sec. 44.4  Policy.

    It is DoD policy that:
    (a) Members of the Ready Reserve shall be screened (see the appendix 
to this part for specific screening guidance) at least annually to meet 
the provisions of 10 U.S.C. 10149 and to provide a Ready Reserve force 
composed of members who:
    (1) Meet Military Service wartime standards of mental, moral, 
professional, and physical fitness.
    (2) Possess the military qualifications required in the various 
ranks, ratings, and specialties.
    (3) Are available immediately for active duty (AD) during a 
mobilization or as otherwise required by law.
    (b) On mobilization under 10 U.S.C. 12301(a) or 10 U.S.C. 12302, all 
personnel actions relating to the screening program shall be held in 
abeyance, and all members remaining in the Ready Reserve shall be 
considered immediately available for AD service. After such a 
mobilization is ordered, no deferment, delay, or exemption from 
mobilization shall be granted to Ready Reservists because of their 
civilian employment. On involuntary activation of Reserve members under 
10 U.S.C. 12304 (Presidential Reserve Call-Up Authority), the Secretary 
of Defense, or designee, shall make a determination regarding the 
continuation or cessation of personnel actions related to the screening 
program.
    (c) All Ready Reservists shall be retained in the Ready Reserve for 
the entire period of their statutory obligation or voluntary contract. 
Exceptions to that policy are made in paragraphs (g), (h), and (i) of 
this section, or may be made by the Secretaries concerned, in accordance 
with 10 U.S.C. 10145 and 10146.
    (d) A member of the Army National Guard of the United States or the 
Air National Guard of the United States may be transferred to the 
Standby Reserve only with the consent of the governor or other 
applicable authority of the State, commonwealth, or territory concerned 
(including the District of Columbia) in accordance with 10 U.S.C. 10146.
    (e) Any eligible member of the Standby Reserve may be transferred 
back to the Ready Reserve when the reason for

[[Page 173]]

the member's transfer to the Standby Reserve no longer exists in 
accordance with 10 U.S.C. 10150 and DoD Instruction 1200.15.1
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    \1\ Copies may be obtained at http://web7.whs.osd.mil/corres.htm.
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    (f) Ready Reservists whose immediate recall to AD during an 
emergency would create an extreme personal or community hardship shall 
be transferred to the Standby Reserve or the Retired Reserve, or shall 
be discharged, as applicable, except as specified in paragraph (b) of 
this section.
    (g) Ready Reservists who are designated key employees or who occupy 
key positions, as defined in this section, shall be transferred to the 
Standby Reserve or the Retired Reserve, or shall be discharged, as 
appropriate, except as specified in paragraph (b) of this section.
    (h) Ready Reservists who are also DoD civilian employees may not 
hold a mobilization assignment to the same positions that they fill as 
civilian employees. Those Ready Reservists shall be reassigned or 
transferred, as applicable. Reserve component military technicians (dual 
status), as members of Reserve units, are excluded from this provision.
    (i) Ready Reservists who are preparing for the ministry in an 
accredited theology or divinity school cannot be involuntarily called to 
AD or required to participate in inactive duty training (IDT) in 
accordance with 10 U.S.C. 12317. Accordingly, such Ready Reservists 
(other than those participating in a military Chaplain Candidate or 
Theology Student Program) shall be transferred to the Standby Reserve 
(active status list) for the duration of their ministerial studies and 
duties at accredited theology or divinity schools. Ready Reservists 
participating in a military Chaplain Candidate or Theology Student 
Program may continue their Ready Reserve affiliation and engage in AD 
and IDT.
    (j) Ready Reservists may not be transferred from the Ready Reserve 
solely because they are students, interns, residents, or fellows in the 
healthcare professions. On mobilization, they either shall be deferred 
or shall be mobilized in a student, intern, resident, or fellow status 
until qualified in the applicable medical specialty, as prescribed by 
the Secretaries of the Military Departments.
    (k) The Secretaries concerned, or their designees, shall make 
determinations for mobilization availability on a case-by-case basis, 
consistent with this part, and not by class or group determinations.



Sec. 44.5  Responsibilities.

    (a) The Deputy Secretary of Defense shall adjudicate, before 
mobilization, conflicts between the mobilization manpower needs of the 
civilian sector and the military that the Ready Reserve Screening 
process has identified, but has not resolved.
    (b) The Assistant Secretary of Defense for Reserve Affairs, under 
the Under Secretary of Defense for Personnel and Readiness, shall:
    (1) Provide oversight and policy support to the overall Ready 
Reserve screening program, and manage and control the Federal sector 
screening program in accordance with 10 U.S.C. 10149, Executive Order 
11190, and pp. 63-66 of House Appropriations Committee Report 95-451, 
which is available from the Government Printing Office, Washington, DC 
20401.
    (2) Annually, provide Federal Agencies with a listing of all Federal 
employees who are also Ready Reservists to assist them in conducting 
employer screening activities.
    (3) Prepare an annual report on the status of Ready Reservists 
employed by the Federal Government.
    (4) Employ the guidance in appendix A of this part in coordinating 
the screening program with employers of Ready Reservists.
    (5) Coordinate conflicts between the mobilization manpower needs of 
the civilian sector and the military identified but not resolved through 
the Ready Reserve Screening process.
    (c) The Secretaries of the Military Departments shall:
    (1) Screen, at least annually, all Ready Reservists under their 
jurisdiction to ensure their immediate availability for active duty (AD) 
and to ensure compliance with 10 U.S.C. 10149.

[[Page 174]]

    (2) Ensure coordination with the Assistant Secretary of Defense for 
Reserve Affairs to resolve conflicts (identified, but not resolved 
through the Ready Reserve screening process) between the mobilization 
manpower needs of the civilian sector and the military.
    (3) Review recommendations for removal of both Federal and other 
civilian employees from the Ready Reserve submitted by employers and 
take applicable action.
    (4) After making a removal determination in response to a petition 
for such action, promptly transmit the results of that determination to 
the Ready Reservist concerned and his/her employer.
    (5) Transfer Ready Reservists identified as occupying key positions 
to the Standby Reserve or the Retired Reserve, or discharge them, as 
applicable.
    (6) Ensure that Ready Reservists not on AD are examined as to 
physical fitness in accordance with DoD Directive 1332.18.2
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    \2\ See footnote 1 to Sec. 44.4(e).
---------------------------------------------------------------------------

    (7) Process members of the Ready Reserve who do not participate 
satisfactorily in accordance with DoD Instruction 1200.15 and DoD 
Directive 1215.13.3
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    \3\ See footnote 1 to Sec. 44.4(e).
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    (8) Ensure that all Ready Reservists have a favorably completed 
background check for military service suitability on file (e.g., 
Entrance National Agency Check (ENTNAC), NAC).
    (9) Ensure that personnel records systems incorporate information on 
any factors that limit the mobilization availability of a Ready 
Reservist.
    (10) Develop and maintain current information pertaining to the 
mobilization availability of Ready Reservists.

                     Appendix A to Part 44--Guidance

                       Deputy Secretary of Defense

    The Deputy Secretary of Defense shall adjudicate, before 
mobilization, conflicts between the mobilization manpower needs of the 
civilian sector and the military that the Ready Reserve screening 
process has identified, but has not resolved.

                      Employers of Ready Reservists

                          (a) Federal Employers

    (1) To ensure that Federal employees essential to the continuity of 
the Federal Government are not retained as members of the Ready Reserve, 
the following guidance is provided:
    (i) Conduct annual screening program as provided for by the 
Assistant Secretary of Defense for Reserve Affairs.
    (ii) Responses from Federal Agencies shall be reported under 
Interagency Report Control Number 0912-DoD-AN, ``Ready Reservists in the 
Federal Government,'' in accordance with DoD 8910.1-M.4
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    \4\ See footnote 1 to Sec. 44.4(e).
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    (iii) Federal Agency heads, or their designees, concerned shall 
designate those positions that are of essential nature to, and within, 
the organization as ``key positions,'' and shall require that they shall 
NOT be filled by Ready Reservists to preclude such positions from being 
vacated during a mobilization. Upon request from Federal Agencies, 
Secretaries of the Military Departments shall verify the essential 
nature of the positions being designated as ``key,'' and shall transfer 
Ready Reservists occupying key positions to the Standby Reserve or the 
Retired Reserve or shall discharge them, as applicable, under 10 U.S.C. 
10149, except as specified in Sec. 44.4 (b).
    (iv) In determining whether or not a position should be designated 
as a ``key position,'' the following questions should be considered by 
the Federal Agency concerned:
    (A) Can the position be filled in a reasonable time after 
mobilization?
    (B) Does the position require technical or managerial skills that 
are possessed uniquely by the incumbent employee?
    (C) Is the position associated directly with defense mobilization?
    (D) Does the position include a mobilization or relocation 
assignment in an Agency having emergency functions, as designated by 
Executive Order 12656?
    (E) Is the position directly associated with industrial or manpower 
mobilization, as designated in Executive Orders 12656 and 12919?
    (F) Are there other factors related to the national defense, health, 
or safety that will make the incumbent of the position unavailable for 
mobilization?
    (2) [Reserved]
    (b) Non-Federal Employers of Ready Reservists. Non-Federal employers 
of Ready Reservists, particularly in the fields of public health and 
safety and defense support industries, are encouraged to adopt personnel 
management procedures designed to preclude conflicts between the 
emergency manpower needs of civilian activities and the military during 
a mobilization. Employers also are

[[Page 175]]

encouraged to use the Federal key position guidelines contained in this 
appendix for making their own key position designations and, when 
applicable, for recommending key employees for removal from the Ready 
Reserve.
    (c) All employers who determine that a Ready Reservist is a key 
employee, in accordance with the guidelines in this appendix, should 
promptly report that determination, using the letter format at the end 
of this appendix, to the applicable Reserve personnel center, requesting 
the employee be removed from the Ready Reserve.

                       Individual Ready Reservists

    (a) Each Ready Reservist who is not a member of the Selected Reserve 
is obligated to notify the Secretary concerned of any change of address, 
marital status, number of dependents, or civilian employment and any 
other change that would prevent a member from meeting mobilization 
standards prescribed by the Military Service concerned (10 U.S.C. 
10205).
    (b) All Ready Reservists shall inform their employers of their 
Reserve military obligation.

      List of Reserve Personnel Centers to Which Reserve Screening 
          Determination and Removal Requests Shall be Forwarded

                              Army Reserve

Army Reserve Personnel Command
1 Reserve Way
ATTN: ARPC-PSP-T
St. Louis, MO 63132

                              Naval Reserve

Commander
Navy Personnel Command (Pers 91)
5720 Integrity Drive
Millington, TN 38055-9100

                          Marine Corps Reserve

Commanding General
Marine Corps Reserve Support Command
ATTN: IRR Division
15303 Andrews Road
Kansas City, MO 64147-1207

                            Air Force Reserve

Commander
Air Reserve Personnel Center/DPAF
6760 E. Irvington Pl. 2600
Denver, CO 80280-2600

                       Army and Air National Guard

    Submit requests to the adjutant general of the applicable State, 
commonwealth, or territory (including the District of Columbia).

                           Coast Guard Reserve

Commander (CGPC-RPM)
U.S. Coast Guard Personnel Command
2100 Second St. S.W.
Washington, DC 20593

 Letter Format to Reserve Personnel Centers Requesting That Employee be 
                     Removed From the Ready Reserve

From: (Employer-Agency or Company)
To: (Appropriate Reserve Personnel Center)
Subject: Request for Employee to Be Removed from the Ready Reserve

    This is to certify that the employee identified below is vital to 
the nation's defense efforts in (his or her) civilian job and cannot be 
mobilized with the Military Services in an emergency for the following 
reasons: [STATE REASONS]
    Therefore, I request that (he/she) be removed from the Ready Reserve 
and that you advise me accordingly when this action has been completed.
    The employee is:

1. Name of employee (last, first, M.I.):
2. Military grade and Reserve component:
3. Social security number:
4. Current home address (street, city, State, and ZIP code):
5. Military unit to which assigned (location and unit number):
6. Title of employee's civilian position:
7. Grade or salary level of civilian position:
8. Date (YYMMDD) hired or assigned to position:

Signature and Title of Agency or Company Official.



PART 45--CERTIFICATE OF RELEASE OR DISCHARGE FROM ACTIVE DUTY (DD FORM 214/5 SERIES)--Table of Contents




Sec.
45.1 Purpose.
45.2 Applicability and scope.
45.3 Policy and procedures.
45.4 Responsibilities.

Appendix A to Part 45--DD Form 214
Appendix B to Part 45--DD Form 214WS
Appendix C to Part 45--DD Form 215
Appendix D to Part 45--State Directors of Veterans Affairs

    Authority: 10 U.S.C. 1168 and 972.

    Source: 54 FR 7409, Feb. 21, 1989, unless otherwise noted.



Sec. 45.1  Purpose.

    (a) This document revises 32 CFR part 45.
    (b) Prescribes procedures concerning the preparation and 
distribution of revised DD Form 214 to comport with the

[[Page 176]]

requirements of 10 U.S.C. 1168, 972, and 32 CFR part 41 and the control 
and publication of separation program designators (SPDs).



Sec. 45.2  Applicability and scope.

    (a) The provisions of this part apply to the Office of the Secretary 
of Defense, the Military Services, the Joint Staff, and the Defense 
Agencies (hereafter referred to as ``DoD Components''). The term 
``Military Services,'' as used here, refers to the Army, Navy, the Air 
Force, the Marine Corps and, by agreement with the Department of 
Transportation, to the Coast Guard.
    (b) Its provisions include procedures on the preparation and 
distribution of DD Forms 214, 214WS, 215 (Appendices A, B, and C) which 
record and report the transfer or separation of military personnel from 
a period of active duty. (NOTE: Computer-generated formats are 
acceptable substitutes provided Assistant Secretary of Defense (Force 
Management and Personnel) approval is obtained.) DD Forms 214 and 215 
(or their substitutes) will provide:
    (1) The Military Services with a source of information relating to 
military personnel for administrative purposes, and for making 
determinations of eligibility for enlistment or reenlistment.
    (2) The Service member with a brief, clear-cut record of the 
member's active service with the Armed Forces at the time of transfer, 
release, or discharge, or when the member changes status or component 
while on active duty.
    (3) Appropriate governmental agencies with an authoritative source 
of information which they require in the administration of Federal and 
State laws applying to personnel who have been discharged, otherwise 
released, or transferred to a Reserve component while on active duty.
    (c) Its provisions include procedures on the control and 
distribution of all lists of SPDs.



Sec. 45.3  Policy and procedures.

    (a) Administrative issuance or reissuance of DD Forms 214 and 215.
    (1) The DD Form 214 will normally be issued by the command from 
which the member was separated. In those instances where a DD Form 214 
was not issued, the Services concerned may establish procedures for 
administrative issuance.
    (2) The DD Form 214, once issued, will not be reissued except:
    (i) When directed by appropriate appellate authority, Executive 
Order, or by the Secretary concerned.
    (ii) When it is determined by the Service concerned that the 
original DD Form 214 cannot be properly corrected by issuance of a DD 
Form 215 or if the correction would require issuance of more than two DD 
Forms 215.
    (iii) When two DD Forms 215 have been issued and an additional 
correction is required.
    (3) Whenever a DD Form 214 is administratively issued or reissued, 
an appropriate entry stating that fact and the date of such action will 
be made in Block 18, Remarks, of the DD Form 214 unless the appellate 
authority, Executive Order, or Secretarial directive specifies 
otherwise.
    (b) The Military Services will ensure that every member (except as 
limited in paragraph (b)(2) of this section and excluding those listed 
in paragraph (c) of this section being separated from the Military 
Services is given a completed DD Form 214 describing relevant data 
regarding the member's service, and the circumstances of termination. DD 
Form 214 may also be issued under other circumstances prescribed by the 
Military Service concerned. A continuation sheet, if required, will be 
bond paper, and will reference: The DD Form 214 being continued; 
information from blocks 1 through 4; the appropriate block(s) being 
continued; the member's signature, date; and the authorizing official's 
signature. DD Forms 214 are not intended to have any legal effect on 
termination of the member's service.
    (1) Release or discharge from active service. (i) The original of DD 
Form 214 showing separation from a period of active service with a 
Military Service, including release from a status that is legally 
determined to be void, will be physically delivered to the separate 
prior to departure from the separation activity on the effective date of 
separation; or on the date authorized travel time commences.
    (A) Copy No. 4, containing the statutory or regulatory authority, 
reentry code, SPD code, and narrative reason

[[Page 177]]

for separation also will be physically delivered to the separatee prior 
to departure, if he/she so requested by initiating Block 30, Member 
Requests Copy 4.
    (B) Remaining copies of DD Form 214 will be distributed on the day 
following the effective date of separation.
    (ii) When separation is effected under emergency conditions which 
preclude physical delivery, or when the recipient departs in advance of 
normal departure time (e.g., on leave in conjunction with retirement; or 
at home awaiting separation for disability), the original DD Form 214 
will be mailed to the recipient on the effective date of separation.
    (iii) If the separation activity is unable to complete all items on 
the DD Form 214, the form will be prepared as completely as possible and 
delivered to the separatee. The separatee will be advised that a DD Form 
215 will be issued by the Military Service concerned when the missing 
information becomes available; and that it will not be necessary for the 
separatee to request a DD Form 215 for such information.
    (iv) If an optical character recognition format is utilized by a 
Military Service, the first carbon copy of the document will be 
physically delivered or mailed to the separatee as prescribed in 
paragraphs (b) (i) through (iii) of this section.
    (2) Release from active duty for training, full-time training duty, 
or active duty for special work. Personnel being separated from a period 
of active duty for training, full-time training duty, or active duty for 
special work will be furnished a DD Form 214 when they have served 90 
days or more, or when required by the Secretary concerned for shorter 
periods. Personnel shall be furnished a DD Form 214 upon separation for 
cause or for physical disability regardless of the length of time served 
on active duty.
    (3) Continuing on active duty. Members who change their status or 
component, as outlined below, while they are serving on active duty will 
be provided a completed DD form 214 upon:
    (i) Discharge for immediate enlistment or reenlistment (optional--at 
the discretion of the Military Services). However, Military Services not 
providing the DD Form 214 will furnish the member a DD Form 256, 
``Honorable Discharge Certificate,'' and will issue instructions 
requiring those military offices which maintain a member's records to 
provide necessary Service data to the member for application to 
appropriate civilian individuals, groups, and governmental agencies. 
Such data will include Service component, entry data and grades.
    (ii) Termination of enlisted status to accept an appointment to 
warrant or commissioned officer grade.
    (iii) Termination of a temporary appointment to accept a permanent 
warrant or commission in the Regular or Reserve components of the Armed 
Forces.
    (iv) Termination of an officer appointment in one of the Military 
Services to accept appointment in another Service.
    (c) DD Form 214 need not be prepared for: (1) Personnel found 
disqualified upon reporting for active duty and who do not enter 
actively upon duties in accordance with orders.
    (2) Personnel whose active duty, active duty for training, full-time 
training duty or active duty for special work is terminated by death.
    (3) Personnel being removed from the Temporary Disability Retired 
List.
    (4) Enlisted personnel receiving temporary appointments to warrant 
or commissioned officer grades.
    (5) Personnel whose temporary warrant or commissioned officer status 
is terminated and who remain on active duty to complete an enlistment.
    (6) Personnel who terminate their Reserve component status to 
integrate into a Regular component.
    (7) Personnel separated or discharged who have been furnished a 
prior edition of this form, unless that form is in need of reissuance 
for some other reason.
    (d) Preparation. The Military Departments will issue instructions 
governing the preparation of DD Form 214, consistent with the following:
    (1) DD Form 214 is an important record of service which must be 
prepared accurately and completely. Any unavoidable corrections and 
changes made in the unshaded areas of the form

[[Page 178]]

during preparation shall be neat, legible and initialed on all copies by 
the authenticating official. The recipient will be informed that making 
any unauthorized change or alteration of the form will render it void.
    (2) Since DD Form 214 is often used by civilian personnel, 
abbreviations should be avoided.
    (3) Copies of DD Form 214 transmitted to various governmental 
agencies shall be legible, especially those provided to the Veterans 
Administration (Department of Veterans Affairs, effective March 15, 
1989, in accordance with section 18(a), Public Law 100-527 and the 
Department of Labor).
    (4) The authority for a member's transfer or discharge will be cited 
by reference to the appropriate Military Service regulation, 
instruction, or manual, followed by the appropriate separation program 
designator on copies 2, 4, 7, and 8 only. A narrative description to 
identify the reason for transfer or separation will not be used on copy 
1.
    (5) To assist the former Service member in employment placement and 
job counseling, formal inservice training courses successfully completed 
during the period covered by the form will be listed in Block 14, 
Military Education; e.g., medical, dental, electronics, supply, 
administration, personnel or heavy equipment operations. Training 
courses for combat skills will not be listed. See 1978 Guide to the 
Evaluation of Educational Experiences in the Armed Services for commonly 
accepted course titles and abbreviations.
    (6) For the purpose of reemployment rights (DoD Directive 1205.12) 
\1\) all extensions of service, except those under 10 U.S.C. 972, are 
considered to be at the request and for the convenience of the 
Government. In these cases, Block 18 of DD Form 214 will be annotated to 
indicate ``Extension of service was at the request and for the 
convenience of the Government.''
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    \1\ Copies may be obtained if needed, from the U.S. Naval 
Publications and forms Center, Attn: Code 1062, 5801 Tabor Avenue, 
Philadelphia, PA.
---------------------------------------------------------------------------

    (7) When one or more of the data items on the DD Form 214 are not 
available and the document is issued to the separatee, the applicable 
block(s) will be annotated ``See Remarks.'' In such cases, Block 18 will 
contain the entry ``DD Form 215 will be issued to provide missing 
information.'' When appropriate, Block 18 will also reflect the amount 
of disability pay, and the inclusive dates of any nonpay/excess leave 
days.
    (8) The authorizing official (E-7, GS-7 or above) will sign the 
original in ink ensuring that the signature is legible on all carbon 
copies. If not, a second signature may be necessary on a subsequent 
carbon copy. The authorized official shall be an E-7, GS-7, or higher 
grade, except that the Service concerned may authorize chiefs of 
installation separation activities (E-5, GS-5, or above) to serve in 
this capacity if designated in writing by the responsible commander and/
or director (0-4, or above).
    (9) The following are the only authorized entries in Block 24, 
Character of Service, as appropriate: ``Honorable,'' ``Under Honorable 
Conditions (General),'' ``Under Other Than Honorable Conditions,'' ``Bad 
Conduct,'' ``Dishonorable,'' or ``Uncharacterized.'' When a discharge 
has been upgraded, the DD Form 214 will be annotated on copies 2 through 
8 in Block 18 to indicate the character of service has been upgraded; 
the date the application for upgrade was made; and the effective date of 
the corrective action.
    (10) The date entered in Block 12.a. shall be the date of enlistment 
for the earliest period of continuous active service for which a DD Form 
214 was not previously issued. For members who have previously 
reenlisted without being issued a DD Form 214, and who are being 
separated with any discharge characterization except ``Honorable,'' the 
following statement shall appear as the first entry in Block 18., 
``Remarks,'' on the DD Form 214: ``CONTINUOUS HONORABLE ACTIVE SERVICE 
FROM (applicable date) UNTIL (applicable date).'' The ``from'' date 
shall be the date of initial entry into active duty, or the first day of 
service for which a DD Form 214 was not previously issued, as 
applicable; the ``until'' date shall be the date before commencement of 
the current enlistment.

[[Page 179]]

    (11) For Service members retiring from active duty enter in Block 
18., ``Subject to active duty recall by Service Secretary.''
    (12) For Service members being transferred to the Individual Ready 
Reserve, enter in Block 18., ``Subject to active duty recall and/or 
annual screening.''
    (e) Distribution. The Military Services will prescribe procedures 
governing the distribution of copies of the DD Forms 214 and 215, 
consistent with their internal requirements, and the following:
    (1) DD Form 214--(i) Copy No. 1 (original). To the member.
    (ii) Copy No. 2. To be used as the Military Services' record copy.
    (iii) Copy No. 3. To the Veterans Administration (Department of 
Veterans Affairs, effective March 15, 1989, in accordance with section 
18(a), Data Processing Center (214), 1614 E. Woodword Street, Austin, 
Texas 78772. A reproduced copy will also be provided to the hospital 
with the medical records if the individual is transferred to a VA 
hospital. If the individual completes VA Form 21-5267, ``Veterans 
Application for Compensation or Pension,'' include a copy of the DD Form 
214 with medical records forwarded to the VA regional office having 
jurisdiction over the member's permanent address. When an individual is 
in Service and enlisting or reenlisting in an active duty status or 
otherwise continuing on active duty in another status, copy No. 3 will 
not be forwarded to the VA.
    (iv) Copy No. 4. To the member, if the member so requested by having 
initialed Block 30. If the member does not request this copy, it may be 
retained in the master military personnel record, to be available in 
case the member requests a copy later.
    (v) Copy No. 5. To Louisiana UCX/UCFE, Claims Control Center, 
Louisiana Department of Labor, P.O. Box 94246, Capitol Station, Baton 
Rouge, Louisiana 70804-9246.
    (vi) Copy No. 6. To the appropriate State Director of Veterans 
Affairs (see enclosure 4), if the member so requested by having checked 
``Yes'' in Block 20, ``Member Requests Copy Be Sent to Director of 
Veterans Affairs.'' The member must specify the State. If the member 
does not request the copy be mailed, it may be utilized as prescribed by 
the Military Service concerned.
    (vii) Copies No. 7 and 8. To be distributed in accordance with 
regulations issued by the Military Service concerned.
    (viii) Additional Copy Requirements. Discharged Alien Deserters. 
Provide one reproduced copy of Copy No. 1 to the U.S. Department of 
State, Visa Office--SCA/VO, State Annex No. 2, Washington, DC 20520, to 
assist the Visa Office in precluding the unwarranted issuance of visas 
to discharged and alien deserters in accordance with DoD Directive 
1325.2 \2\. Place of birth will be entered in Block 18.
---------------------------------------------------------------------------

    \2\ See footnote 1 to Sec. 545.3(d)(6).
---------------------------------------------------------------------------

    (2) DD Form 214-ws. Utilized to facilitate the preparation of DD 
Form 214. The document will be used and disposed of in accordance with 
regulations issued by the Military Service concerned.
    (3) DD Form 215. Utilized to correct errors in DD Form 214 
discovered after the original has been delivered and/or distribution of 
copies of the form has been made, and to furnish to separatee 
information not available when the DD Form 214 was prepared. The 
distribution of DD Form 215 will be identical to the distribution of DD 
Form 214.
    (4) Requests for Copies of DD Form 214 Subsequent to Separation. 
Agencies maintaining a separatee's DD Form 214 will provide a copy only 
upon written request by the member. Agencies will provide the member 
with 1 copy with the Special Additional Information section, and 1 copy 
with that information deleted. In the case of DD Form 214 issued prior 
to July 1, 1979, agencies will provide the member with 1 copy containing 
all items of information completed, and 1 copy with the following items 
deleted from the form: Specific authority and narrative reason for 
separation, reenlistment eligibility code, and separation program 
designator/number.
    (i) In those cases where the member has supplied an authorization to 
provide a copy of the DD Form 214 to another individual or group, the 
copy furnished will not contain the Special Additional Information 
section or, in the

[[Page 180]]

case of DD forms issued prior to July 1, 1979, those items listed in 
paragraph (e)(4) of this section.
    (ii) A copy will be provided to authorized personnel for official 
purposes only.
    (f) Procurement. Arrangements for procurement of DD Forms 214, 214-
ws, and 215 will be made by the Military Services.
    (g) Modification of Forms. The modification of the content or format 
of DD Forms 214, 214-ws, and 215 may not be accomplished without prior 
authorization of the Assistant Secretary of Defense (Force Management 
and Personnel) (ASD(FM&P)). Requests to add or delete information will 
be coordinated with the other Military Services in writing, prior to 
submission to the ASD(FM&P). If a Military Service uses computer 
capability to generate forms, the items of information may be arranged, 
the size of the information blocks may be increased or decreased, and 
copies 7 and/or 8 may be deleted at the discretion of the Service.



Sec. 45.4  Responsibilities.

    (a) The DD Forms 214 and 215 are a source of significant and 
authoritative information used by civilian and governmental agencies to 
validate veteran eligibility for benefits. As such, they are valuable 
forms and, therefore, vulnerable to fraudulent use. Since they are 
sensitive, the forms must be safeguarded at all times. They will be 
transmitted, stored, and destroyed in a manner which will prevent 
unauthorized use. The Military Services will issue instructions 
consistent with the following:
    (1) All DD Forms 214 will be surprinted with a reproducible screen 
tint using appropriate security ink on Blocks 1, 3, 4.a, 4.b, 12, and 18 
through 30. In addition Blocks 1, 3, 5, and 7 of the DD Form 215 will be 
similarly surprinted to make alterations readily discernible. No 
corrections will be permitted in the screened areas.
    (2) All forms will be secured after duty hours.
    (3) All obsolete forms will be destroyed.
    (4) All forms to be discarded, including those which are blank or 
partially completed, and reproduced copies of DD Form 214, will be 
destroyed. No forms will be discarded intact.
    (5) Blank forms given to personnel for educational or instructional 
purposes, and forms maintained for such use, are to be clearly voided in 
an unalterable manner.
    (6) The commander or commanding officer of each unit or activity 
authorized to issue DD Form 214 will appoint, in writing, a commissioned 
officer, warrant officer, enlisted member (grade E-7 or above), or DoD 
civilian (GS-7 or above) who will requisition, control, and issue blank 
DD Forms 214 and 215. The Service concerned may authorize an E-5 or GS-5 
to serve in this capacity.
    (7) The Military Services will monitor the use of DD Form 214 and 
review periodically its issuance to insure compliance with procedures 
for safeguarding.
    (b) The DD Form 214-ws will contain the word ``WORKSHEET'' on the 
body of the form (see Appendix B). This DD Form 214-ws will be treated 
in the same manner as the DD Form 214.
    (c) The Military Services will issue appropriate instructions to 
separation activities stressing the importance of the DD Forms 214 and 
215 in obtaining veterans benefits, reemployment rights, and 
unemployment insurance.
    (d) Standard separation program designator (SPD) codes for officer 
and enlisted personnel developed under the provisions of DoD Instruction 
5000.12 \3\ are published in DoD 5000.12-M.
---------------------------------------------------------------------------

    \3\ See footnote 1 to Sec. 45.3(d)(6).
---------------------------------------------------------------------------

    (1) Requests to add, change, or delete an SPD code shall be 
forwarded by the DoD Component concerned with appropriate justification 
to the Assigned Responsible Agency accountable for evaluating, 
recommending approval of, and maintaining such codes: Department of the 
Navy, Office of The Chief of Naval Operations, (Attention: OP-161), room 
1514, Arlington Annex, Washington, DC 20350-2000.
    (2) Requests to add, change, or delete an SPD code will be submitted 
in accordance with section V., DoD Instruction 5000.12 with prior 
written approval by the ASD (FM&P), or his/her designee.

[[Page 181]]

    (e) All lists of SPD codes, including supplemental lists, published 
by the DoD Components will be stamped ``For Official Use Only'' and will 
not be furnished to any agency or individual outside the Department of 
Defense.
    (1) Appropriate provisions of the Freedom of Information Act will be 
used to deny the release of the lists to the public. An individual being 
separated or discharged is entitled access only to his/her SPD code. It 
is not intended that these codes stigmatize an individual in any manner. 
They are intended for internal use by the Department of Defense in 
collecting data to analyze statistical reporting trends that may, in 
turn, influence changes in separation policy.
    (2) Agencies or individuals who come into the possession of these 
lists are cautioned on their use because a particular list may be 
outdated and not reveal correctly the full circumstances relating to an 
individual's separation or discharge.
                   Appendix A to Part 45--DD Form 214
      [GRAPHIC] [TIFF OMITTED] TC23OC91.003
      

[[Page 182]]


[GRAPHIC] [TIFF OMITTED] TC23OC91.004


[[Page 183]]


[GRAPHIC] [TIFF OMITTED] TC23OC91.005


[[Page 184]]


[GRAPHIC] [TIFF OMITTED] TC23OC91.006

[54 FR 9985, Mar. 9, 1989]

[[Page 185]]

                  Appendix B to Part 45--DD Form 214ws
      [GRAPHIC] [TIFF OMITTED] TC23OC91.007
      

[[Page 186]]


                   Appendix C to Part 45--DD Form 215
      [GRAPHIC] [TIFF OMITTED] TC21OC91.050
      

[[Page 187]]



       Appendix D to Part 45--State Directors of Veterans Affairs

                                 Alabama

Director, Department of Veterans Affairs, P.O. Box 1509, Montgomery, AL 
36192-3701.

                                 Alaska

Director, Division of Veterans Affairs, Department of Military & 
Veterans Affairs, 3601 C Street, suite 620, Anchorage, AK 99503.

                             American Samoa

Veterans Affairs Officer, Office of Veterans Affairs, American Samoa 
Government, P.O. Box 2586, Pago Pago, AS 96799.

                                 Arizona

Director of Veterans Affairs, Arizona Veterans Service Commission, 3225 
N. Central Avenue, suite 910, Phoenix, AZ 85012.

                                Arkansas

Director, 1200 West 3rd, room 105, Box 1280, Little Rock, AR 72201.

                               California

Director, Department of Veterans Affairs, 1227 O Street, room 200A, 
Sacramento, CA 95814.

                                Colorado

Director, Division of Veterans Affairs, Department of Social Services, 
1575 Sherman Street, room 122, Denver, CO 80203.

                                Delaware

Chairman, Commission of Veterans Affairs, P.O. Box 1401, Dover, DE 
19901.

                          District of Columbia

Chief, Office of Veterans Affairs, 941 North Capitol Street NE., room 
1211 F, Washington, DC 20421.

                                 Florida

Director, Division of Veterans Affairs, P.O. Box 1437, St. Petersburg, 
FL 33731.

                                 Georgia

Commissioner, Department of Veterans Service, Floyd Veterans Memorial 
Bldg, suite E-970, Atlanta, GA 30334.

                                  Guam

Office of Veterans Affairs, P.O. Box 3279, Agana, Guam 96910.

                                 Hawaii

Director, Department of Social Services & Housing, Veterans Affairs 
Section, 3949 Diamond Head Road, Honolulu, HI 96809-0339.

                                  Idaho

Administrator, Division of Veterans Service, P.O. Box 6675, Boise, ID 
83707.

                               Connecticut

Commandant, Veterans Home and Hospital, 287 West Street, Rocky Hill, CT 
06067.

                                 Indiana

Director, Department of Veterans Affairs, 707 State Office Building, 100 
N. Senate Avenue, Indianapolis, IN 46204.

                                  Iowa

Administrator, Veterans Affairs Division, 7700 NW. Beaver Drive, Camp 
Dodge, Johnston, IA 50131-1902.

                                 Kansas

Executive Director, Kansas Veterans Commission, Jayhawk Tower, suite 
701, 700 SW. Jackson Street, Topeka, KS 66603-3150.

                                Kentucky

Director, Kentucky Center for Veterans Affairs, 600 Federal Place room 
1365, Louisville, KY 40202.

                                Louisiana

Executive Director, Department of Veterans Affairs, P.O. Box 94095, 
Capitol Station, Baton Rouge, LA 70804-4095.

                                  Maine

Director, Bureau of Veterans Services, State Office Building Station 
117, Augusta, ME 04333.

                                Maryland

Executive Director, Maryland Veterans Commission, Federal Bldg.--room 
110, 31 Hopkins Plaza, Baltimore, MD 21201.

                                Illinois

Director, Department of Veterans Affairs, 208 West Cook Street, 
Springfield, IL 62705.

                                Michigan

Director, Michigan Veterans Trust Fund, P.O. Box 30026, Ottawa Bldg, No. 
Tower, 3rd Floor, Lansing, MI 48909.

                                Minnesota

Commissioner, Department of Veterans Affairs, Veterans Service Building, 
2nd Floor, St. Paul, MN 55155.

                               Mississippi

President, State Veterans Affairs Board, 120 North State Street, War 
Memorial Building, room B-100, Jackson, MS 39201.

[[Page 188]]

                                Missouri

Director, Division of Veterans Affairs, P.O. Drawer 147, Jefferson City, 
MO 65101.

                                 Montana

Administrator, Veterans Affairs Division, P.O. Box 5715, Helena, MT 
59604.

                                Nebraska

Director, Department of Veterans Affairs, P.O. Box 95083, State Office 
Building, Lincoln, NE 68509.

                                 Nevada

Commissioner, Commission for Veterans Affairs, 1201 Terminal Way, room 
108, Reno, NV 89520.

                              Massachusetts

Commissioner, Department of Veterans Services, 100 Cambridge Street--
room 1002, Boston, MA 02202.

                               New Jersey

Director, Division of Veterans Programs & Special Services, 143 E. State 
Street, room 505, Trenton, NJ 08608.

                               New Mexico

Director, Veterans Service Commission, P.O. Box 2324, Santa Fe, NM 
87503.

                                New York

Director, Division of Veterans Affairs, State Office Building 
6A-19, Veterans Highway, Hauppauge, NY 11788.

                             North Carolina

Asst Secretary for Veterans Affairs, Division of Veterans Affairs, 227 
E. Edenton Street, Raleigh, NC 27601.

                              North Dakota

Commissioner, Department of Veterans Affairs, 15 North Broadway, suite 
613, Fargo, ND 58102.

                                  Ohio

Director, Division of Soldiers Claims & Veterans Affairs, State House 
Annex, room 11, Columbus, OH 43215.

                                Oklahoma

Director, Department of Veterans Affairs, P.O. Box 53067, Oklahoma City, 
OK 73152.

                              New Hampshire

Director, State Veterans Council, 359 Lincoln Street, Manchester, NH 
03103.

                                 Oregon

Director, Department of Veterans Affairs, Oregon Veterans Building, 700 
Summer Street NE., suite 150, Salem, OR 97310-1270.

                              Pennsylvania

Director, Department of Military Affairs, Bureau for Veterans Affairs, 
Fort Indiantown Gap, Bldg 5-0-47, Annville, PA 17003-5002.

                               Puerto Rico

Director, Bureau of Veterans Affairs & Human Resources, Department of 
Labor, 505 Munoz Rivera Avenue, Hato Rey, PR 00918.

                              Rhode Island

Chief, Veterans Affairs Office, Metacom Avenue, Bristol, RI 02809.

                             South Carolina

Director, Department of Veterans Affairs, Brown State Office Building, 
1205 Pendleton Street, Columbia, SC 29201.

                              South Dakota

Director, Division of Veterans Affairs, 500 East Capitol Avenue, State 
Capitol Building, Pierre, SD 57501-5083.

                                Tennessee

Commissioner, Department of Veterans Affairs, 215 8th Avenue, North, 
Nashville, TN 37203.

                                  Texas

Executive Director, Veterans Affairs Commission of Texas, Box 12277, 
Capitol Station, Austin, TX 78711.

                                  Utah

No DVA.

                                 Vermont

Director, Veterans Affairs Office, State Office Building, Montpelier, VT 
05602.

                                Virginia

Director, Division of War Veterans Claims, 210 Franklin Road, SW., room 
1002, P.O. Box 809, Roanoke, VA 24004.

                             Virgin Islands

Director, Division of Veterans Affairs, P.O. Box 890, Christiansted, St. 
Croix, VI 00820.

                               Washington

Director, Department of Veterans Affairs, P.O. Box 9778, Mail Stop PM-
41, Olympia, WA 95804.

[[Page 189]]

                              West Virginia

Director, Department of Veterans Affairs, 605 Atlas Building, 
Charleston, WV 25301-9778.

                                Wisconsin

Secretary, Department of Veterans Affairs, P.O. Box 7843, 77 North 
Dickinson Street, Madison, WI 53707.



PART 47--ACTIVE DUTY SERVICE FOR CIVILIAN OR CONTRACTUAL GROUPS--Table of Contents




Sec.
47.1 Purpose.
47.2 Applicability and scope.
47.3 Definitions.
47.4 Policy.
47.5 Responsibilities.
47.6 Procedures.

Appendix A to Part 47--Instructions for Submitting Group Applications 
          Under Public Law 95-202
Appendix B to Part 47--The DoD Civilian/Military Service Review Board 
          and the Advisory Panel

    Authority: 38 U.S.C. 106 note.

    Source: 54 FR 39993, Sept. 29, 1989, unless otherwise noted.



Sec. 47.1  Purpose.

    This document:
    (a) Revises 32 CFR part 47 and implements Public Law 95-202.
    (b) Directs the Secretary of the Air Force to determine if an 
established group of civilian employees or contract workers provided 
service to the U.S. Armed Forces in a manner considered active military 
service for Department of Veterans Affairs (VA) benefits.
    (c) Establishes the DoD Civilian/Military Service Review Board and 
the Advisory Panel.
    (d) Establishes policy, assigns responsibilities, prescribes 
application procedures for groups and individuals, and clarifies the 
factors used to determine active duty (AD) service.



Sec. 47.2  Applicability and scope.

    This part:
    (a) Applies to the Office of the Secretary of Defense (OSD), the 
Military Departments, and by agreement with the Department of 
Transportation (DoT), the U.S. Coast Guard.
    (b) Applies to any group application considered under Public Law 95-
202 after September 11, 1989 and to any individual who applies for 
discharge documents as a member of a group recognized by the Secretary 
of the Air Force.



Sec. 47.3  Definitions.

    Armed conflict. A prolonged period of sustained combat involving 
members of the U.S. Armed Forces against a foreign belligerent. The term 
connotes more than a military engagement of limited duration or for 
limited objectives, and involves a significant use of military and 
civilian forces.
    (a) Examples of armed conflict are World Wars I and II, and the 
Korean and Vietnam Conflicts.
    (b) Examples of military actions that are not armed conflicts are as 
follows:
    (1) The incursion into Lebanon in 1958, and the peacekeeping force 
there in 1983 and 1984.
    (2) The incursions into the Dominican Republic in 1965 and into 
Libya in 1986.
    (3) The intervention into Grenada in 1983.
    Civilian or contractual group. An organization similarly situated to 
the Women's Air Forces Service Pilots (a group of Federal civilian 
employees attached to the U.S. Army Air Force in World War II). Those 
organization members rendered service to the U.S. Armed Forces during a 
period of armed conflict in a capacity that was then considered civilian 
employment with the Armed Forces, or the result of a contract with the 
U.S. Government, to provide direct support to the Armed Forces.
    Recognized group. A group whose service the Secretary of the Air 
Force administratively has determined to have been ``active duty for the 
purposes of all laws administered by the Department of Veterans 
Affairs''; i.e., VA benefits under 38 U.S.C. 101.
    Similarly situated. A civilian or contractual group is similarly 
situated to the Women's Air Forces Service Pilots when it existed as an 
identifiable group at the time the service was being rendered to the 
U.S. Armed Forces during a period of armed conflict. Persons who 
individually provided support through civilian employment or contract, 
but

[[Page 190]]

who were not members of an identifiable group at the time the services 
were rendered, are not ``similarly situated'' to the Women's Air Forces 
Service Pilots of World War II.



Sec. 47.4  Policy.

    (a) Eligibility for consideration. To be eligible to apply for 
consideration under Public Law 95-202 and this part, a group must:
    (1) Have been similarly situated to the Women's Air Forces Service 
Pilots of World War II.
    (2) Have rendered service to the United States in what was 
considered civilian employment with the U.S. Armed Forces either through 
formal Civil Service hiring or less formal hiring if the engagement was 
created under the exigencies of war, or as the result of a contract with 
the U.S. Government to provide direct support to the U.S. Armed Forces.
    (3) Have rendered that service during a period of armed conflict.
    (4) Consist of living persons to whom VA benefits can accrue.
    (5) Not have already received benefits from the Federal Government 
for the service in question.
    (b) A determination of AD service that is considered to be 
equivalent to active military service is made on the extent to which the 
group was under the control of the U.S. Armed Forces in support of a 
military operation or mission during an armed conflict. The extent of 
control exerted over the group must be similar to that exerted over 
military personnel and shall be determined by, but not necessarily 
limited to, the following:
    (1) Incidents favoring equivalency--(i) Uniqueness of service. 
Civilian service (civilian employment or contractual service) is a vital 
element of the war-fighting capability of the Armed Forces. Civilian 
service during a period of armed conflict is not necessarily equivalent 
to active military service, even when performed in a combat zone. 
Service must be beyond that generally performed by civilian employees 
and must be occasioned by unique circumstances. For civilian service to 
be recognized under this part, the following factors must be present:
    (A) The group was created or organized by U.S. Government 
authorities to fill a wartime need or, if a group was not created 
specifically for a wartime need, but existed before that time, then its 
wartime mission was of a nature to substantially alter the 
organization's prewar character.
    (B) If the application is based on service in a combat zone, the 
mission of the group in a combat zone must have been substantially 
different from the mission of similar groups not in a combat zone.
    (ii) Organizational authority over the group. The concept of 
military control is reinforced if the military command authority 
determines such things as the structure of the civilian organization, 
the location of the group, the mission and activities of the group, and 
the staffing requirements to include the length of employment and pay 
grades of the members of the group.
    (iii) Integration into the military organization. Integrated 
civilian groups are subject to the regulations, standards, and control 
of the military command authority.
    (A) Examples include the following:
    (1) Exchanging military courtesies.
    (2) Wearing military clothing, insignia, and devices.
    (3) Assimilating the group into the military organizational 
structure.
    (4) Emoluments associated with military personnel; i.e., the use of 
commissaries and exchanges, and membership in military clubs.
    (B) A group fully integrated into the military would give the 
impression that the members of the group were military, except that they 
were paid and accounted for as civilians.
    (C) Integration into the military may lead to an expectation by 
members of the group that the service of the group imminently would be 
recognized as active military service. Such integration acts in favor of 
recognition.
    (iv) Subjection to military discipline. During past armed conflicts, 
U.S. military commanders sometimes restricted the rights or liberties of 
civilian members as if they were military members.
    (A) Examples include the following:
    (1) Placing members under a curfew.
    (2) Requiring members to work extended hours or unusual shifts.

[[Page 191]]

    (3) Changing duty assignments and responsibilities.
    (4) Restricting proximity travel to and from the military 
installation.
    (5) Imposing dress and grooming standards.
    (B) Consequences for noncompliance might include a loss of some 
privilege, dismissal from the group, or trial under military law. Such 
military discipline acts in favor of recognition.
    (v) Subjection to military justice. Military members are subject to 
the military criminal justice system. During times of war, ``persons 
serving with or accompanying an Armed Force in the field'' are subject 
to the military criminal justice code. Those who were serving with the 
U.S. Armed Forces may have been treated as if they were military and 
subjected to court-martial jurisdiction to maintain discipline. Such 
treatment is a factor in favor of recognition.
    (vi) Prohibition against members of the group joining the armed 
forces. Some organizations may have been formed to serve in a military 
capacity to overcome the operation of existing laws or treaty or because 
of a governmentally established policy to retain individuals in the 
group as part of a civilian force. These factors act in favor of 
recognition.
    (vii) Receipt of military training and/or achievement of military 
capability. If a group employed skills or resources that were enhanced 
as the result of military training or equipment designed or issued for 
that purpose, this acts toward recognition.
    (2) Incidents not favoring equivalency--(i) Submission to the U.S. 
Armed Forces for protection. A group that seeks protection and 
assistance from the U.S. Armed Forces and submits to military control 
for its own well-being is not deemed to have provided service to the 
Armed Forces equivalent to AD military service, even though the group 
may have been as follows:
    (A) Armed by the U.S. military for defensive purposes.
    (B) Routed by the U.S. military to avoid the enemy.
    (C) Instructed by the U.S. military for the defense of the group 
when attacked by, or in danger of attack by, the enemy.
    (D) Otherwise submitted themselves to the U.S. military for 
sustenance and protection.
    (ii) Permitted to resign. The ability of members to resign at will 
and without penalty acts against military control. Penalty may be direct 
and severe, such as confinement, or indirect and moderate, such as 
difficult and costly transportation from an overseas location.
    (iii) Prior recognition of group service. Recognition of a group's 
service by agencies of State or local government does not provide 
support in favor of recognition under this part.
    (3) Status of group in international law. In addition to other 
factors, consideration will be given to whether members of the group 
were regarded and treated as civilians, or assimilated to the Armed 
Forces as reflected in treaties, customary international law, judicial 
decisions, and U.S. diplomatic practice.
    (c) Reconsideration. Applications by groups previously denied a 
favorable determination by the Secretary of the Air Force shall be 
reconsidered under this part if the group submits evidence that is new, 
relevant, and substantive. Any request that the DoD Civilian/Military 
Service Review Board established hereunder (see Sec. 47.5(b)) determines 
does not provide new, relevant, and substantive evidence shall be 
returned to the applicant with the reasons for nonacceptance.
    (d) Counsel Representation. Neither the Department of Defense nor 
Department of Transportation shall provide representation by counsel or 
defray the cost of such representation with respect to any matter 
covered by this part.



Sec. 47.5  Responsibilities.

    (a) The Assistant Secretary of Defense (Force Management and 
Personnel) (ASD(FM&P)) shall:
    (1) Appoint a primary and an alternate member in the grade of O-6 or 
GM-15 or higher to the DoD Civilian/Military Service Review Board.
    (2) Exercise oversight over the Military Departments and the U.S. 
Coast Guard for compliance with this Directive and in the issuance of 
discharge documents and casualty reports to members of recognized 
groups.

[[Page 192]]

    (b) The Secretary of the Air Force, as the designated Executive 
Agent of the Secretary of Defense for the administration of Public Law 
95-202 shall:
    (1) Establish the DoD Civilian/Military Service Review Board and the 
Advisory Panel.
    (2) Appoint as board president a member or employee of the Air Force 
in grade O-6 or GM-15 or higher.
    (3) Request the Secretary of Transportation to appoint an additional 
voting member from the U.S. Coast Guard when the board is considering 
the application of a group claiming active Coast Guard service.
    (4) Provide a recorder and an assistant to maintain the records of 
the board and administer the functions of this part.
    (5) Provide nonvoting legal advisors and historians.
    (6) Publish notices of group applications and other Public Law 95-
202 announcements in the Federal Register.
    (7) Consider the rationale and recommendations of the DoD Civilian/
Military Service Review Board.
    (8) Determine whether the service rendered by a civilian or 
contractual group shall be considered AD service to the U.S. Armed 
Forces for all laws administered by the VA. The decision of the 
Secretary of the Air Force is final. There is no appeal.
    (9) Notify the following persons in writing when a group 
determination is made (if the Secretary of the Air Force disagrees with 
the rationale or recommendations of the board, the Secretary of the Air 
Force shall provide the decision and reasons for it in writing to these 
persons):
    (i) The applicant(s) for the group.
    (ii) The Secretary of the Department of Veterans Affairs.
    (iii) The Secretary of the Army.
    (iv) The Secretary of the Navy.
    (v) The ASD (FM&P).
    (vi) The Secretary of Transportation (when a group claims active 
Coast Guard service).
    (c) The Secretary of the Army, Secretary of the Navy, Secretary of 
the Air Force, and Commandant of the Coast Guard shall:
    (1) Appoint to the board a primary and an alternate member in the 
grades of O-6 or GM-15 or higher from their respective Military 
Services.
    (2) Process applications for discharge documents from individuals 
claiming membership in a recognized group in accordance with applicable 
laws, Directives, the Secretary of the Air Force rationale and 
instrument effecting a group determination, and any other instructions 
of the board.
    (3) Determine whether the applicant was a member of a recognized 
group after considering the individual's evidence of membership and 
verifying the service against available Government records.
    (4) Issue a DD Form 214, ``Certificate of Release or Discharge from 
Active Duty,'' and a DD Form 256, ``Honorable Discharge Certificate,'' 
or a DD Form 257, ``General Discharge Certificate,'' as appropriate, 
consistent with DoD Instruction 1336.1 \1\ and DoD Directive 1332.14 \2\ 
and the implementing documents of the appropriate statutes of the 
Military Department concerned or the DoT and the instructions of the DoD 
Civilian/Military Service Review Board.
---------------------------------------------------------------------------

    \1\ Copies may be obtained, if needed, from the U.S. Naval 
Publications and Forms Center, Attn: 1053, 5801 Tabor Avenue, 
Philadelphia, PA 19120.
    \2\ See footnote 1 to Sec. 47.5(c)(4).
---------------------------------------------------------------------------

    (5) Issue a DD Form 1300, ``Report of Casualty,'' in accordance with 
DoD Instruction 1300.9 \3\ if a verified member was killed during the 
period of AD service.
---------------------------------------------------------------------------

    \3\ See footnote 1 to Sec. 47.5(c)(4).
---------------------------------------------------------------------------

    (6) Ensure that each DD Form 214, ``Certificate of Release or 
Discharge from Active Duty,'' and each DD Form 1300, ``Report of 
Casualty,'' have the following statement entered in the ``Remarks'' 
section:

    This document, issued under Public Law 95-202 (38 U.S.C. 106 Note), 
administratively establishes active duty service for the purposes of 
Department of Veterans Affairs benefits.

    (7) Determine the equivalent military pay grade, when required by 
the Department of Veterans Affairs. For VA benefits, a pay grade is 
needed only in cases when an individual was killed or received service-
connected injuries or disease during the recognized period

[[Page 193]]

of AD service. A DD Form 1300 shall be issued with the equivalent pay 
grade annotated for a member who died during the recognized period of 
service. A DD Form 214 shall not include pay grade, unless the 
Department of Veterans Affairs requests that a grade determination be 
given. Determinations of equivalent grade shall be based on the 
following criteria in order of importance:
    (i) Officially recognized organizational grade or equivalent rank.
    (ii) The corresponding rank for civilian pay grade.
    (iii) If neither of the criteria in paragraphs (c)(7) (i) and (ii) 
of this section, and applies, only one of three grades may be issued; 
i.e., O-1, E-4, or E-1. Selection depends on the nature of the job 
performed, the level of supervision exercised, and the military 
privileges to which the individual was entitled.
    (8) Adjudicate applicant challenges to the period of AD service, 
characterization of service, or other administrative aspects of the 
discharge documents issued.



Sec. 47.6  Procedures.

    (a) Submitting group applications. Applications on behalf of a 
civilian or contractual group shall be submitted to the Secretary of the 
Air Force using the instructions in appendix A to this part.
    (b) Processing group applications. (1) When received, the recorder 
shall review the application for sufficiency and either return it for 
more information or accept it for consideration and announce acceptance 
in the Federal Register.
    (2) The recorder shall send the application to the appropriate 
advisory panel for historical review and analysis.
    (3) When received, the recorder shall send the advisory panel's 
report to the applicant for comment. The applicant's comments shall be 
referred to the advisory panel if significant disagreement requires 
resolution. Additional comments from the historians also shall be 
referred to the applicant for comment.
    (4) The DoD Civilian/Military Service Board shall consider the group 
application, as established, in paragraph (a) and paragraphs (b) (1) 
through (3) of this section.
    (5) After the Secretary of the Air Force makes a decision, the 
recorder shall notify the applicant of the decision and announce it in 
the ``Federal Register.''
    (c) Submitting individual applications. When a group is recognized, 
individual members may apply to the appropriate Military Department or 
to the Coast Guard for discharge documents. Submit applications on DD 
Form 2168, ``Application for Discharge of Member or Survivor of Member 
of Group Certified to Have Performed Active Duty with the Armed Forces 
of the United States.'' An application on behalf of a deceased or 
incompetent member submitted by the next of kin must be accompanied by 
proof of death or incompetence.

 Appendix A to Part 47--Instructions for Submitting Group Applications 
                         Under Public Law 95-202

    A. In Submitting a Group Application: 1. Define the group to include 
the time period that your group provided service to the U.S. Armed 
Forces.
    2. Show the relationship that the group had with the U.S. Armed 
Forces, the manner in which members of the group were employed, and the 
services the members of the group provided to the Armed Forces.
    3. Address each of the factors in Sec. 47.4.
    4. Substantiate and document the application. (The burden of proof 
rests with the applicant.)
    B. Send Completed Group Applications To: Secretary of the Air Force 
(SAF/MRC), DoD Civilian/Military Service Review Board, Washington, DC 
20330-1000.

 Appendix B to Part 47--The DoD Civilian/Military Service Review Board 
                         and the Advisory Panel

                     A. Organization and Management

    1. The board shall consist of a president selected from the 
Department of the Air Force and one representative each from the OSD, 
the Department of the Army, the Department of the Navy, the Department 
of the Air Force, and the U.S. Coast Guard (when the group claims active 
Coast Guard service). Each member shall have one vote except that the 
president shall vote only to break a tie. The board's decision is 
determined by majority vote. The president and two voting members shall 
constitute a quorum.
    2. The advisory panel shall act as a nonvoting adjunct to the board. 
It shall consist

[[Page 194]]

of historians selected by the Secretaries of the Military Departments 
and, if required, by the Secretary of Transportation. The respective 
Military Departments and the DOT shall ensure that the advisory panel is 
provided with administrative and legal support.

                              B. Functions

    1. The board shall meet in executive session at the call of the 
president, and shall limit its reviews to the following:
    a. Written submissions by an applicant on behalf of a civilian or 
contractual group. Presentations to the board are not allowed.
    b. Written report(s) prepared by the advisory panel.
    c. Any other relevant written information available.
    d. Factors established in this part for determining AD service.
    2. The board shall return to the applicant any application that does 
not meet the eligibility criteria established in Sec. 47.4(a). The board 
only needs to state the reasons why the group is ineligible for 
consideration under this part.
    3. If the board determines that an application is eligible for 
consideration under Sec. 47.4(a), the board shall provide, to the 
Secretary of the Air Force, a recommendation on the AD service 
determination for the group and the rationale for that recommendation 
that shall include, but not be limited to, a discussion of the factors 
listed in Sec. 47.4.
    a. No factors shall be established that require automatic 
recognition. Neither the board nor the Secretary of the Air Force shall 
be bound by any method in reaching a decision.
    b. Prior group determinations made under Public Law 95-202 do not 
bind the board or the Secretary of the Air Force. The board and the 
Secretary of the Air Force fully and impartially shall consider each 
group on its own merit in relation to the factors listed in section D. 
of this Directive.



PART 48--RETIRED SERVICEMAN'S FAMILY PROTECTION PLAN--Table of Contents




                     Subpart A--General Information

Sec.
48.101 Purpose.
48.102 Definitions.

                     Subpart B--Election of Options

48.201 Options.
48.202 Limitation on number of annuities.
48.203 Election of options.
48.204 Change or revocation of election.
48.205 Election form.
48.206 Information regarding elections.

                 Subpart C--Designation of Beneficiaries

48.301 Designation.
48.302 Substantiating evidence regarding dependency and age of 
          dependents.
48.303 Condition affecting entitlement of widow or widower.

                   Subpart D--Reduction of Retired Pay

48.401 Computation of reduction.
48.402 Effective date of reduction.
48.403 Payment of nonwithheld reduction of retired pay.
48.404 Ages to be used.
48.405 Action upon removal from temporary disability retired list.
48.406 Withdrawal and reduction of percentage or amount of 
          participation.

                           Subpart E--Annuity

48.501 General information.
48.502 Effective date of annuity.
48.503 Claims for annuity payments.
48.504 Payment to children.
48.505 Establishing eligibility of annuitants.
48.506 Recovery of erroneous annuity payments.
48.507 Restriction on participation.
48.508 Certain 100 percent disability retirements.

                        Subpart F--Miscellaneous

48.601 Annual report.
48.602 Organization.
48.603 Correction of administrative deficiencies.
48.604 Transition and protective clauses.

    Authority: Sec. 1444, 70A Stat. 111; 10 U.S.C. 1444.

    Source: 34 FR 12092, July 18, 1969, unless otherwise noted.



                     Subpart A--General Information



Sec. 48.101  Purpose.

    The purpose of the Retired Serviceman's Family Protection Plan is to 
permit each member of the uniformed services to elect to receive a 
reduced amount of any retired pay which may be awarded him as a result 
of service in his uniformed service in order to provide an annuity 
payable after his death (while entitled to retired pay) to his widow, 
child, or children, subject to certain limitations specified in the law 
and elaborated in the regulations in this part.

[[Page 195]]



Sec. 48.102  Definitions.

    (a) The terms Plan or RSFPP as hereinafter used means the Retired 
Serviceman's Family Protection Plan (formerly called the Uniformed 
Services Contingency Option Act).
    (b) The term uniformed services means the Army, Navy, Air Force, 
Marine Corps, Coast Guard, Commissioned Corps of Environmental Science 
Services Administration, and Commissioned Corps of Public Health 
Service.
    (c) The term member means a commissioned officer, commissioned 
warrant officer, warrant officer, nurse, flight officer, or a person in 
an enlisted grade (including an aviation cadet) of any of the uniformed 
services, and a person in any of these categories who is entitled to or 
is in receipt of retired pay, except persons excluded in title 10, U.S. 
Code, section 1431(a), as amended.
    (d) The term widow includes widower and refers to the lawful spouse 
of the member on the date of retirement with pay.
    (e) The term child means, in all cases, a member's child, who is 
living on the date of retirement of the member with pay and who meets 
the following requirements:
    (1) A legitimate child under 18 years of age and unmarried.
    (2) A stepchild, under 18 years of age and unmarried, who is in fact 
dependent on the member for support (see paragraphs (f) and (g) of this 
section).
    (3) A legally adopted child, under 18 years of age and unmarried.
    (4) A child, as defined above, who is 18 or more years of age and 
unmarried, and who is incapable of self-support because of being 
mentally defective or physically incapacitated if that condition existed 
prior to reaching age 18.
    (5) A child as defined above, who is at least 18, but under 23 years 
of age and unmarried, who is pursuing a full-time course of study or 
training in a high school, trade school, technical or vocational 
institute, junior college, college, university, or comparable recognized 
educational institution. (Applicable only in the case of members who 
retired on or after Nov. 1, 1968).
    (6) A child loses his eligibility for an annuity under this part if 
he is adopted by a third person before the parent-member's death. His 
eligibility is not affected if he is adopted by a third person after the 
parent-member's death (36 Comp. Gen. 325).
    (f) The term stepchild means a child of a member's spouse by a 
former marriage. The stepchild relationship terminates upon the divorce 
of the parent spouse, but not upon the death of the parent spouse.
    (g) The term in fact dependent means that the stepchild must be 
dependent on the member for over half of his or her support.
    (h) The term retirement means retirement with eligibility to receive 
retired pay.
    (i) The term retired pay includes retired, retirement, equivalent 
and retainer pay awarded as a result of service in the uniformed 
services.
    (j) The term reduced retired pay means the retired pay remaining 
after the cost of participation in RSFPP has been subtracted.
    (k) The term department concerned means (1) the Department of the 
Army with respect to the Army, (2) the Department of the Navy with 
respect to the Navy and Marine Corps, (3) the Department of the Air 
Force with respect to the Air Force, (4) the Department of 
Transportation with respect to the Coast Guard, (5) the Department of 
Commerce with respect to the Environmental Science Services 
Administration, and (6) the Department of Health, Education, and Welfare 
with respect to the Public Health Service.
    (l) The term dependent means the prospective annuitants described in 
paragraphs (d) and (e) of this section.
    (m) The term Board of Actuaries means the Government Actuary in the 
Department of the Treasury, the Chief Actuary of the Social Security 
Administration, and a member of the Society of Actuaries appointed by 
the President to advise the Secretary of Defense on the administration 
of the Plan.
    (n) The term Joint Board means representatives of the uniformed 
services appointed under the provisions of Sec. 48.602.
    (o) The term years of service means years of service creditable in 
the computation of basic pay.
    (p) The term election means the choice of options made by the member 
under the RSFPP. This term includes a

[[Page 196]]

modification of a previous election or an election submitted after a 
revocation of a previous option(s) elected.
    (q) The term elections in effect means valid elections existing on 
the day of retirement.
    (r) A recognized educational institution is defined as a high 
school, trade school, technical or vocational institute, junior college, 
college, university, or comparable recognized educational institution 
which meets one or more of the following criteria:
    (1) It is operated or directly supported by the United States, or a 
State, or local governmental agency.
    (2) It is accredited by a nationally recognized or State recognized 
accrediting agency.
    (3) It is approved as an educational institution by a State or local 
governmental agency.
    (4) Its credits are accepted for transfer (or for admission) by 
three or more accredited schools on the same basis as credits from an 
accredited school.



                     Subpart B--Election of Options



Sec. 48.201  Options.

    As provided in Sec. 48.203, a member may elect one or more of the 
following annuities. The amount must be specified at time of election, 
and may not be for more than 50 per centum nor less than 12\1/2\ per 
centum of his retired pay, in no case may be less than a $25 monthly 
annuity be elected. If the election is made in terms of dollars, the 
amount may be more than 50 per centum of the retired pay that he would 
receive if he were to retire at the time of election; however, if such 
elected amount exceeds 50 per centum of his retired pay when he does 
retire, it shall be reduced to an amount equal to such 50 per centum. 
Also, if the dollar amount elected is less than 12\1/2\ per centum of 
his retired pay when he does retire, it shall be increased to an amount 
equal to such 12\1/2\ per centum.
    (a) Option 1 is an annuity payable to or on behalf of his widow, the 
annuity to terminate upon her death or remarriage.
    (b) Option 2 is an annuity payable to or on behalf of his surviving 
child or children as defined in Sec. 48.102, the annuity to terminate 
when there ceases to be at least one such surviving child eligible to 
receive the annuity. Each payment under such annuity shall be paid in 
equal shares to or on behalf of the surviving children remaining 
eligible at the time the payment is due. A member who had this option in 
effect on the date of retirement, and who retired on or after November 
1, 1968, may apply to the Secretary concerned to have a child (other 
than a child described in Sec. 48.102(e)(4)) who is at least 18 but less 
than 23 years of age considered not to be an eligible beneficiary under 
this paragraph (b) or Sec. 48.202. Normally such applications will be 
approved.
    (c) Option 3 is an annuity to or on behalf of his widow and 
surviving child or children. Such annuity shall be paid to the widow 
until death or remarriage, and thereafter each payment under such 
annuity shall be paid in equal shares to or on behalf of the surviving 
children remaining eligible at the time the payment is due. A member may 
provide for allocating, during the period of the surviving spouse's 
eligibility, a part of the annuity under this subpart B for payment to 
those of his surviving children who are not children of that spouse. The 
sum allotted will not exceed the equitable share for which such children 
would be eligible after the death of the widow.
    (d) When no eligible beneficiary remains to benefit from the option 
elected, the member's retired pay will be restored (except as provided 
in Sec. 48.604, for certain members retired before Aug. 13, 1968). All 
elections on file on Aug. 13, 1968, for members not entitled to receive 
retired pay will be considered to include the restoration feature with 
attendant cost factors being applied at time of retirement. For the 
purpose of this paragraph, a child (other than a child described in 
Sec. 48.102(e)(4)) who is at least 18 but less than 23 years of age, and 
is not pursuing a course of study as defined in Sec. 48.102(e)(5), shall 
be considered an eligible beneficiary unless an approved application by 
the member pursuant to Sec. 48.201(b) that such a child is not to be 
considered an eligible beneficiary is in effect (for members who retire 
on or after Nov. 1, 1968).

[[Page 197]]



Sec. 48.202  Limitation on number of annuities.

    When a member desires to provide both the annuity provided by Option 
1 and Option 2, he may elect amounts that, in total, meet the 
limitations specified in Sec. 48.201. The cost of each annuity, and the 
amount of each annuity shall be determined separately. A member may not 
elect the combination of Options 1 and 3 or Options 2 and 3 in any case. 
The combined amount of the annuities may not be more than 50 per centum 
nor less than 12\1/2\ per centum of his retired pay. In no case may less 
than a $25 per month combined annuity be provided.



Sec. 48.203  Election of options.

    (a) A member who has completed less than 19 years of service as 
defined in Sec. 48.102(o) may elect to receive a reduced amount of 
retired pay in order to provide one or more of the annuities as 
specified in Secs. 48.201 and 48.202, payable after his death while 
entitled to retired pay to or on behalf of his surviving widow, child, 
or children. To be effective, the election by such a member must be 
dated, signed, witnessed, and delivered to appropriate service 
officials, or postmarked not later than midnight on the day in which he 
completes 19 years of service. Such an election will become effective 
immediately upon subsequent retirement. The latest election, change, or 
revocation made in accordance with this subsection will, if otherwise 
valid, be the effective election, unless superseded by a change as 
provided in paragraph (b) of this section.
    (b) Except as provided in paragraph (c) of this section, a member 
who fails or declines to make an election before completion of 19 years 
of service may make an election after that time. However, unless the 
election is made at least 2 years prior to the date the member becomes 
entitled to receive retired pay, it will not be effective. The same 
applies to subsequent changes or revocations made prior to retirement.
    (c) If an election, revocation, or change was made prior to August 
13, 1968, the 19-year and 2-year provisions are automatically in effect 
on August 13, 1968, for members who were not entitled to retired pay on 
such date, unless the member applies under Sec. 48.604(d) to remain 
under the provisions of the law prior to August 13, 1968. In this case 
the ``18 years of service'' and ``3 years prior to receipt of retired 
pay'' rules will apply.
    (d) A member retired for physical disability on or after November 1, 
1968 who is awarded retired pay prior to completion of 19 years of 
service may make an election which is subject to the restrictions set 
forth in Sec. 48.507. The election by such member shall be made before 
the first day for which he is entitled to retired pay. Elections made 
under this paragraph prior to November 1, 1968, must be made by the 
member retiring for physical disability prior to completing 18 years.
    (e) If, because of military operations, a member is assigned to an 
isolated station, or is missing, interned in a neutral country, captured 
by a hostile force, or beleaguered or besieged, and for that reason is 
unable to make an election before completing 19 years of service, he may 
make the election within 1 year after he ceases to be assigned to that 
station or returns to the jurisdiction of his service as the case may 
be, and such election shall become effective immediately upon subsequent 
retirement.
    (f) A member to whom retired pay is granted retroactively, and who 
is otherwise eligible to make an election, may make the election within 
90 days after receiving notice that such pay has been granted him.
    (g) Whenever a member is determined to be mentally incompetent by 
medical officers of the uniformed services or of the Veterans 
Administration, or is adjudged mentally incompetent by a court of 
competent jurisdiction and because of such mental incompetency is 
incapable of making any election within the time limitations prescribed 
by the Plan, the Secretary of the Department concerned may make the 
appropriate election on behalf of such member upon request of the 
spouse, or if there be no spouse, by or on behalf of the child or 
children of such member. If such member is subsequently determined to be 
mentally competent by the Veterans Administration or a court of 
competent jurisdiction, he may, within 180 days after such determination 
or

[[Page 198]]

judgment, change or revoke the election made on his behalf. In such a 
case, the change or revocation will be effective on the date of the 
member's request for such change or revocation. Deductions previously 
made shall not be refunded.
    (h) All elections on file on August 13, 1968, for members not 
entitled to receive retired pay shall be subject to the provisions of 
this section unless the member makes the application specified in 
Sec. 48.604(d).
    (i) A person who was a former member of the armed forces on November 
1, 1953, and who is granted retired pay after that date, may, at the 
time he is granted that pay, make an election as provided in 
Sec. 48.201.



Sec. 48.204  Change or revocation of election.

    (a) A change of election is a change in the amount of the annuity or 
annuities under any option, or a change in any option or options 
selected. A revocation is a cancellation of a previous election and 
constitutes a withdrawal from coverage under the Plan.
    (b) A member may change or revoke his election as often as he 
desires prior to the completion of 19 years of service. Such a change or 
revocation must be dated, signed, witnessed, and delivered to 
appropriate service officials, or postmarked not later than midnight on 
the day in which the member completes 19 years of service. The latest 
election, change, or revocation which is submitted in accordance with 
this subsection will be effective at retirement.
    (c) A member who desires to make an election or change or revoke his 
election after he has completed 19 years of service may do so prior to 
his retirement. However, such an election, change or revocation will be 
effective only if at least 2 years elapse between the date of the 
election, change, or revocation and the date of eligibility to receive 
retired pay.
    (d) A revocation will not prohibit the filing of a new election at a 
later date which will become valid under applicable validation 
provisions.
    (e) A member may, on or after November 1, 1968, at any time prior to 
his retirement, change or revoke his election (provided the change does 
not increase the amount of the annuity elected) to reflect a change in 
the marital or dependency status of the member of his family caused by 
death, divorce, annulment, remarriage, or acquisition of a child, if 
such change or revocation is made within 2 years of such change in 
status.
    (f) Notification of a change in family status is not a change of 
election.
    (g) All changes and revocations on file on August 13, 1968, for 
members not entitled to retired pay shall be subject to the provisions 
of this section unless the member makes the application specified in 
Sec. 48.604(d).



Sec. 48.205  Election form.

    The form for making election after October 31, 1968, is prescribed 
as Election of Options, Retired Serviceman's Family Protection Plan, DD 
Form 1688. \1\ It will be submitted as directed herein. All copies will 
be signed, and any otherwise complete, signed copy, when properly 
submitted, may be used to substantiate the fact of election, 
modification, revocation, or change in family status.
---------------------------------------------------------------------------

    \1\ Filed as part of the original document. Copies may be obtained 
from Military Personnel Office.
---------------------------------------------------------------------------



Sec. 48.206  Information regarding elections.

    (a) All members of the Reserve component who will have accumulated 
sufficient service to be eligible for retired pay at age 60, will be 
counseled on the Plan before reaching their 57th birth dates in order to 
insure that valid elections can be made prior to their 58th birth dates. 
An election, modification, or revocation submitted subsequent to 
attaining age 58 will be valid only if it is made and submitted at least 
2 years prior to the first date for which retired pay is granted.
    (b) It is the responsibility of the department concerned to provide 
election forms and to promulgate information concerning the benefits of 
the Plan to all members so as to allow a timely election.
    (c) Members retiring for physical disability prior to the completion 
of 19

[[Page 199]]

years of service will, prior to retirement, be counseled and furnished 
information concerning the operation of the Plan.



                 Subpart C--Designation of Beneficiaries



Sec. 48.301  Designation.

    (a) All legal beneficiaries described in Sec. 48.102 must be named 
at the date of retirement pursuant to the option elected. Although a 
member without dependents may make an election, it will not be effective 
unless he has eligible dependents at the time of his retirement.
    (b) When a change in family status occurs prior to retirement which 
would effect a change as provided in Sec. 48.204(e), new DD Form 
1688,1 Election of Options, Retired Servicemen's Family 
Protection Plan, should be filed to evidence such change.
---------------------------------------------------------------------------

    \1\ See footnote 1 to Sec. 48.205.
---------------------------------------------------------------------------



Sec. 48.302  Substantiating evidence regarding dependency and age of dependents.

    At the time of submitting the election, or prior to retirement, the 
member must indicate his wife's and youngest child birth date as 
applicable to the option elected. At or before the time of his 
retirement, he must submit proof of final dissolution of prior 
marriages, if any, both for himself and his spouse. The age of the 
dependents must be substantiated by a birth certificate or other 
competent evidence. The birth date of a member must be verified by his 
service record. All required substantiating evidence must be at the 
disbursing office which would normally pay the member retired pay or 
retainer pay immediately following retirement so as to permit the 
establishment of accurate pay accounts and to prevent the creation of 
indebtedness or overpayments.



Sec. 48.303  Condition affecting entitlement of widow or widower.

    A member may have a different lawful spouse at the time of 
retirement from the lawful spouse he had at the time of election. The 
lawful spouse at the time of retirement is the spouse eligible for an 
annuity at the time of member's death. Divorce of the member will remove 
the former spouse as a prospective annuitant.



                   Subpart D--Reduction of Retired Pay



Sec. 48.401  Computation of reduction.

    (a) The reduction to be made in the retired pay of a member who has 
made an election shall be computed by the uniformed service concerned in 
each individual case, based upon tables of factors prepared by the Board 
of Actuaries. The computation shall be based upon the applicable table 
in effect on the date of retirement.
    (b) An adjustment may be made in the reduction of retired pay upon 
the finding of an administrative error or a mistake of fact (see 
Sec. 48.603).
    (c) If a member elects to be covered by option 3, and on the date he 
is awarded retired pay has no children eligible to receive the annuity, 
or has only a child or children aged 18-22 (other than a child described 
in Sec. 48.102(e)(4) and elects, at retirement, that such child or 
children shall not be considered to be eligible beneficiaries, he shall 
have his costs computed as though he had elected option 1. If he elects 
option 3, and on the date he is awarded retired pay has no wife eligible 
for the annuity, he shall have his costs computed as though he had 
elected option 2.
    (d) If a member elects option 3, and after he becomes entitled to 
retired pay, there is no eligible spouse because of death or divorce, 
upon the retired member's application, no deductions from his retired 
pay shall be made after the last day of the month in which there ceases 
to be an eligible spouse. Children otherwise eligible will continue to 
be eligible for the annuity in event of the member's death. No amounts 
by which the member's retired pay is reduced before that date may be 
refunded to or credited on behalf of that person.
    (e) The amount of reduction in retired pay and the annuity payable 
established for each individual at the time of his retirement shall 
remain unaltered except as provided in Sec. 48.203(g), paragraphs (b) 
and (d) of this

[[Page 200]]

section, and Sec. 48.406, regardless of future pay increases or 
decreases.



Sec. 48.402  Effective date of reduction.

    The effective date of reduction in retired pay will be the effective 
date of retirement with pay. The reduction in retired pay will be 
terminated on the date the member ceases to be entitled to retired pay 
or on the first day of the month following that in which there is no 
eligible beneficiary (for exception to this rule see Sec. 48.604).



Sec. 48.403  Payment of nonwithheld reduction of retired pay.

    (a) A member of a uniformed service who is entitled to retired pay 
and has made an election shall, during any period in which he is not 
receiving retired pay (including periods of active duty), deposit the 
amount which would have been withheld from his retired pay had he been 
receiving that pay.
    (b) Such deposit will be payable to Treasurer of the United States 
and shall be forwarded monthly to the disbursing office which would 
normally pay the member his retired pay.
    (c) The disbursing office will in all cases inform the member of the 
amount to be deposited and when such deposits are to be made.
    (d) In the event deposits are not made within 30 days of the due 
date, the disbursing office will inform the member concerned that he is 
delinquent from such due date and thereafter his designated 
beneficiaries will not be eligible for the annuity provided under the 
Plan until the arrears have been paid. The notification of delinquency 
will advise the member that 15 additional days have been granted to him 
in which to remit his deposit, and that if the arrears are not deposited 
within that period, the member will be charged interest to include the 
first day of delinquency. In no case will the expiration date of the 15 
days exceed a date later than 45 days from the date the deposit was due. 
The interest will be computed monthly and the rate will be that used in 
computing the cost tables in effect on the date of the member's 
retirement. If such member later becomes in receipt of retired pay, any 
arrears with compound interest will be withheld.



Sec. 48.404  Ages to be used.

    Ages to be used for calculating reductions of retired pay will be 
the ages of the member and his eligible dependents on their nearest 
birth dates as of the date of the member's retirement.



Sec. 48.405  Action upon removal from temporary disability retired list.

    (a) Any member on the temporary disability retired list established 
pursuant to title 10, United States Code, chapter 61, who has elected to 
receive reduced retired pay in order to provide one or more of the 
annuities specified in the Plan, and who is subsequently removed from 
the list due to any reason other than permanent retirement, shall have 
refunded to him a sum which represents the difference between the amount 
by which his retired pay has been reduced and the cost of an amount of 
term insurance which is equal to the protection provided his dependents 
during the period he was on the temporary disability retired list.
    (b) If the member concerned is returned to active duty, his election 
as previously made will continue or he may change or revoke the election 
as provided in Sec. 48.204.
    (c) Time creditable for the purpose of the two year interval 
required to make a change, revocation or new election valid includes 
service before, during, and after temporary disability retirement. (See 
Secs. 48.203 and 48.204 and Comptroller Decision B-144158, Dec. 23, 
1960.) Active duty after removal from a temporary disability retired 
list is a necessity in such a case.



Sec. 48.406  Withdrawal and reduction of percentage or amount of participation.

    A retired member who is participating in the Plan may revoke his 
election and withdraw from participation, or he may reduce the amount of 
the survivor annuity; however, an approved withdrawal or reduction will 
not be effective earlier than the first day of the seventh month 
beginning after the date his application is received by the Finance 
Center controlling his pay record. (For special rules covering 
participating members retired before Aug. 13, 1968, without option 4, 
see Sec. 48.604.)

[[Page 201]]

No application for reduction will be approved which requests a change in 
options. A request to reduce an annuity or to withdraw from the Plan is 
irrevocable, and a retired member who withdraws may never again 
participate in the Plan. Approval of a request for a reduction will not 
be made when such reduction results in an annuity of less than 12\1/2\ 
per centum of the member's retired pay or less than a $25 monthly 
annuity. The new cost, after such reduction in survivor annuity, will be 
computed from the applicable cost table at the time of retirement. No 
amounts by which a member's retired pay is reduced may be refunded to, 
or credited on behalf of, the member by virtue of an application made by 
him under this section.



                           Subpart E--Annuity



Sec. 48.501  General information.

    Except as provided in Sec. 48.506(a), no annuity payable under the 
Plan shall be assignable, or subject to execution, levy, attachment, 
garnishment, or other legal process. Annuities payable under this Plan 
shall be in addition to any pensions or other payments to which the 
beneficiaries may now or hereafter be entitled under other provisions of 
law (except as provided in Sec. 48.507), and may not be considered as 
income under any law administered by the Veterans Administration, except 
for the purpose of title 38 U.S. Code, section 415(g) and chapter 15.



Sec. 48.502  Effective date of annuity.

    All annuities payable under this Plan except those payable to 
beneficiaries described in Sec. 48.102(e)(5) shall accrue from the first 
day of the month in which the retired member dies and shall be due and 
payable not later than the 15th day of each month following that month 
and in equal monthly installments thereafter, except that no annuity 
shall accrue or be paid for the month in which entitlement to that 
annuity terminates.



Sec. 48.503  Claims for annuity payments.

    Upon official notification of the death of a retired member who has 
elected under the Plan, the department concerned shall forward to the 
eligible surviving beneficiaries the necessary information and forms (DD 
Form 768. Application for Annuity Under Retired Serviceman's Family 
Protection Plan) for making application for annuity payments. Such 
information shall include the place to which the application should be 
forwarded and to which questions regarding annuity payments should be 
addressed.



Sec. 48.504  Payment to children.

    (a) Annuities for a child or children will be paid to the child's 
guardian, or if there is no guardian, to the person(s) who has care, 
custody, and control of the child or children.
    (b) Annuities payable to or on behalf of an eligible child as 
defined in Sec. 48.102(e)(5) accrue as of the first day of the month in 
which--
    (1) The member (upon whose retired pay the annuity is based) dies if 
the eligible child's 18th birthday occurs in the same or a preceding 
month, or
    (2) The 18th birthday of an eligible child occurs if the member 
(upon whose retired pay the annuity is based) died in a preceding month, 
or
    (3) A child first becomes (or again becomes) eligible, if that 
eligible child's 18th birthday and the death of the member (upon whose 
retired pay the annuity is based) both occurred in a preceding month or 
months. An eligible child under this paragraph might become ineligible 
at age 18 and again become eligible by furnishing proof of pursuit of a 
full time course of study or training as enumerated in 
Sec. 48.102(e)(5).



Sec. 48.505  Establishing eligibility of annuitants.

    (a) Eligibility for the annuity will be established by such evidence 
as may be required by the department concerned.
    (b) If a child as defined in Sec. 48.102(e)(4) is a designated 
annuitant, the department concerned shall require proof that the 
incapacity for self-support existed prior to the child's reaching age 
18. Proof that continued incapacitation exists will be required every 2 
years after the child passes the age of 18 years, except in a case where 
medical prognosis indicates recovery is impossible.
    (c) If a child as defined in Sec. 48.102(e)(5) is a designated 
annuitant, as specified

[[Page 202]]

in Sec. 48.504(b), the department concerned shall require proof from the 
institution at least semiannually that the child is pursuing a full-time 
course of training as prescribed. For the purpose of proving 
eligibility, a child is considered to be pursuing a full-time course of 
study or training during an interval between school periods that does 
not exceed 150 days if he has demonstrated to the satisfaction of the 
department concerned that he has a bona fide intention of commencing, 
resuming, or continuing to pursue a full-time course of study or 
training in a recognized educational institution immediately after that 
interval.



Sec. 48.506  Recovery of erroneous annuity payments.

    (a) The Secretary of the Department concerned is empowered to use 
any means provided by law to recover amounts of annuities erroneously 
paid to any individual under the Plan. He may authorize such recovery by 
adjustment in subsequent payments to which the individual is entitled.
    (b) There need be no recovery when in the judgment of the Secretary 
of the Department concerned and the Comptroller General of the United 
States, the individual to whom the erroneous payment was made is without 
fault and recovery would be contrary to the purpose of the Plan or would 
be against equity and good conscience.



Sec. 48.507  Restriction on participation.

    (a) If a person who has made an election under the Plan retires with 
a physical disability before the completion of 19 years of service and 
then dies in retirement, his widow and eligible children can receive 
monthly survivor annuities only if they are not eligible for Dependency 
and Indemnity Compensation payments from the Veterans Administration. If 
either the widow or children are eligible for dependency and indemnity 
compensation payments, then payment of annuities under the Plan may not 
be made to any member of the family. If the retired member's death was 
not service connected and his widow or children are not eligible for 
payments from the Veterans Administration, they may receive the provided 
annuity payments under the Plan.
    (b) If the beneficiaries on whose behalf the election was made are 
restricted as in paragraph (a) of this section, from receiving 
annuities, the amounts withheld from the elector's retired pay as a 
result of the election will be refunded to the beneficiaries, less the 
amount of any annuity paid, and without interest.
    (c) Upon notification of the death of the member in such a case, the 
department concerned will take the following actions:
    (1) Notify the Central Office of the Veterans Administration of the 
death of the member and request that the department concerned be advised 
if an award is made under chapter 11 or 13, title 38 U.S. Code.
    (2) Request the Central Office of the Veterans Administration to 
forward to the eligible widow and/or children an application form for 
survivor benefits under chapter 11 or 13, title 38 U.S. Code, with 
instructions for completion and submission.



Sec. 48.508  Certain 100 percent disability retirement.

    An election filed on or after August 13, 1968 is not effective if 
the member dies within 30 days following retirement from a disability of 
100 per centum (under the standard schedule of rating disabilities in 
use by the Veterans Administration) for which he was retired under 
chapter 61, title 10 U.S. Code, unless--
    (a) Such disability was the result of injury or disease received in 
line of duty as a direct result of armed conflict, or
    (b) His widow or children are not entitled to dependency and 
indemnity compensation under chapter 13, title 38 U.S. Code.



                        Subpart F--Miscellaneous



Sec. 48.601  Annual report.

    Information and data for the preparation of the annual report of the 
Board of Actuaries will be compiled by the Office of the Secretary of 
Defense after promulgation of appropriate instructions to each of the 
uniformed services.

[[Page 203]]

These instructions will be in consonance with Executive Order 10499 
directing the Secretary of Defense to administer the provisions of the 
law.



Sec. 48.602  Organization.

    (a) The Joint Board for the Retired Serviceman's Family Protection 
Plan shall consist of a principal and alternate member for each of the 
uniformed services appointed by the Department Secretary concerned. 
Alternate members will be authorized to act in the absence of the 
principal. The Board shall meet on call of the Chairman. A quorum shall 
consist of representatives of at least four of the participating 
services.
    (b) The Board shall establish procedures for the orderly conduct of 
business to be approved by the Assistant Secretary of Defense (Manpower 
and Reserve Affairs).
    (c) The duties of the Board will include but not be limited to the 
following:
    (1) Making recommendations to the Secretary of Defense for:
    (i) Changes to the Executive order delegating to him functions 
conferred on the President by law,
    (ii) Changes to these regulations,
    (iii) Changes to the law, and
    (iv) Measures to insure uniform operating policies.
    (2) Promulgating tables of annuity costs as prescribed by the Board 
of Actuaries.
    (3) Promulgating cost of term insurance as required in Sec. 48.405.
    (d) The Chairmanship of the Joint Board will be designated by the 
Assistant Secretary of Defense (Manpower and Reserve Affairs).



Sec. 48.603  Correction of administrative deficiencies.

    (a) The Secretary of the Department concerned may correct any 
election or any change or revocation of an election when he considers it 
necessary to correct an administrative error. Information on such 
corrections shall be compiled by each department for inclusion in the 
report prescribed by Sec. 48.601.
    (b) Except when procured by fraud, a correction under the section is 
final and conclusive on all officers of the United States.
    (c) Information on all corrections to elections under this Plan 
which are made under title 10, section 1552, United States Code, shall 
be compiled and this information forwarded to the Board of Actuaries for 
an actuarial analysis.



Sec. 48.604  Transition and protective clauses.

    (a) A retired member who is participating in the Plan without 
inclusion of former option 4, which provided for restoration of retired 
pay when no eligible beneficiary remained in his election, may before 
September 1, 1969, elect to have that option included in his election. 
The election to include such option 4 becomes effective on the first day 
of the month following the month in which that election was made. The 
retired member must on or before the effective date agree to pay to the 
Treasury both the total additional amount to cover the option had it 
been effective when he retired, and the interest which would have 
accrued on the additional amount up to the effective date of the new 
option 4. No such additional amount (except interest) shall accrue for 
months after the first month for which the individual had no eligible 
beneficiary. However, if undue hardship or financial burden would 
result, payments may be made in from 2 to 12 monthly installments when 
the monthly amount involved is $25 or less, or in from 2 to 36 
installments when the monthly amounts involved exceed $25. No amounts by 
which a member's retired pay was reduced may be refunded to, or credited 
on behalf of, the retired member by virtue of an application made by him 
under this section. A retired member who does not make the additional 
election provided under this section within the time limits will not be 
allowed to reduce an annuity or withdraw from participation in the Plan 
as provided by Sec. 48.406.
    (b) Members who have elected and are not yet retired will 
automatically participate under the provisions of Sec. 48.201.
    (c) Elections in effect on August 13, 1968, will remain under the 
cost tables applicable on the date of the member's retirement.

[[Page 204]]

    (d) Any member who has filed an election, modification, or 
revocation prior to August 13, 1968, may before September 1, 1969, 
submit a written application to the Secretary concerned requesting that 
such election, modification, or revocation remain under the time-of-
election provisions of the law applicable on the date it was filed.



PART 53--WEARING OF THE UNIFORM--Table of Contents




Sec.
53.1 Purpose.
53.2 Policy.

    Authority: 5 U.S.C. 301, 10 U.S.C. 772.



Sec. 53.1  Purpose.

    This part prescribes limitations on wearing of the uniform by 
members of the Armed Forces, and establishes policy with respect to 
wearing of the uniform by former members of the Armed Forces.

[35 FR 1236, Jan. 30, 1970]



Sec. 53.2  Policy.

    (a) Members of the Armed Forces (including retired members and 
members of reserve components). The wearing of the uniform is prohibited 
under any of the following circumstances:
    (1) At any meeting or demonstration which is a function of, or 
sponsored by an organization, association, movement, group, or 
combination of persons which the Attorney General of the United States 
has designated, pursuant to E.O. 10450 as amended, as totalitarian, 
fascist, communist, or subversive, or as having adopted a policy of 
advocating or approving the commission of acts of force or violence to 
deny others their rights under The Constitution of the United States, or 
as seeking to alter the form of Government of the United States by 
unconstitutional means.
    (2) During or in connection with the furtherance of political 
activities, private employment or commercial interests, when an 
inference of official sponsorship for the activity or interest could be 
drawn.
    (3) Except when authorized by competent Service authority, when 
participating in activities such as public speeches, interviews, picket 
lines, marches, rallies or any public demonstrations (including those 
pertaining to civil rights), which may imply Service Sanction of the 
cause for which the demonstration or activity is conducted.
    (4) When wearing of the uniform would tend to bring discredit upon 
the Armed Forces.
    (5) When specifically prohibited by regulations of the department 
concerned.
    (b) Former members of the Armed Forces. (1) Unless qualified under 
another provision of this part or under the provisions of 10 U.S.C. 772, 
former members who served honorably during a declared or undeclared war 
and whose most recent service was terminated under honorable conditions 
may wear the uniform in the highest grade held during such war service 
only upon the following occasions and in the course of travel incidents 
thereto:
    (i) Military funerals, memorial services, weddings, and inaugurals.
    (ii) Parades on national or State holidays; or other parades or 
ceremonies of a patriotic character in which any active or reserve U.S. 
military unit is taking part.
    (2) Wearing of the uniform or any part thereof at any other time or 
for any other purpose is prohibited.
    (c) Medal of Honor holders. Persons who have been awarded the Medal 
of Honor may wear the uniform at their pleasure except under the 
circumstances set forth in paragraph (a) of this section.

[35 FR 1236, Jan. 30, 1970]



PART 54--ALLOTMENTS FOR CHILD AND SPOUSAL SUPPORT--Table of Contents




Sec.
54.1 Purpose.
54.2 Applicability and scope.
54.3 Definitions.
54.4 Policy.
54.5 Responsibilities.
54.6 Procedures.

    Authority: 15 U.S.C. 1673, 37 U.S.C. 101, 42 U.S.C. 665.

    Source: 51 FR 23755, July 1, 1986, unless otherwise noted.

[[Page 205]]



Sec. 54.1  Purpose.

    Under section 65 of title 42, United States Code, this part provides 
policy on statutorily required child or child and spousal support 
allotments, assigns responsibilities, and prescribes procedures.



Sec. 54.2  Applicability and scope.

    (a) This part applies to the Office of the Secretary of Defense 
(OSD) and the Military Departments. The term ``Military Services,'' as 
used herein, refers to the Army, Navy, Air Force, and Marine Corps.
    (b) Its provisions cover members of the Military Services on 
extended active duty. This does not include a member under a call or 
order to active duty for a period of less than 30 days.



Sec. 54.3  Definitions.

    (a) Authorized person. Any agent or attorney of any State having in 
effect a plan approved under part D of title IV of the Social Security 
Act (42 U.S.C. 651-664), who has the duty or authority to seek recovery 
of any amounts owed as child or child and spousal support (including, 
when authorized under the State plan, any official of a political 
subdivision); and the court that has authority to issue an order against 
a member for the support and maintenance of a child or any agent of such 
court.
    (b) Child support. Periodic payments for the support and maintenance 
of a child or children, subject to and in accordance with State or local 
law. This includes, but is not limited to, payments to provide for 
health care, education, recreation, and clothing or to meet other 
specific needs of such a child or children.
    (c) Designated official. The representative of the Military Service 
concerned who is authorized to receive and to process notices under this 
part. See Sec. 54.6(f) for a listing of designed officials.
    (d) Notice. A court order, letter, or similar documentation issued 
by an authorized person providing notification that a member has failed 
to make periodic support payments under a support order.
    (e) Spousal support. Periodic payments for the support and 
maintenance of a spouse or former spouse, in accordance with State and 
local law. It includes, but is not limited to, separate maintenance, 
alimony while litigation continues, and maintenance. Spousal support 
does not include any payment for tranfer of property or its value by an 
individual to his or her spouse or former spouse in compliance with any 
community property settlement, equitable distribution of property, or 
other division of property between spouses or former spouses.
    (f) Support order. Any order providing for child or child and 
spousal support issued by a Court of competent jurisdiction within any 
State, territory, or possession of the United States, including Indian 
tribal courts, or in accordance with administrative procedures 
established under State law that affords substantial due process and is 
subject to judicial review.



Sec. 54.4  Policy.

    The Department of Defense is obligated by 42 U.S.C. 665 to require 
child, or child and spousal, support allotments from the pay and 
allowances of a member who has failed to make periodic payments under a 
support order in a total amount equal to the support payable for 2 
months or longer. The member's allotment shall be established by the 
Secretary of the Military Department concerned, or the Secretary's 
designee, provided all requirements of this part have been met.



Sec. 54.5  Responsibilities.

    (a) The Assistant Secretary of Defense (Comptroller) (ASD(C)) shall 
provide guidance, monitor compliance with this part, and have the 
authority to change or modify the procedures in Sec. 54.6.
    (b) The Secretaries of the Military Departments shall comply with 
this part.



Sec. 54.6  Procedures.

    (a) Notice to designated official. (1) An authorized person shall 
send to the designated official of the member's Military Service a 
signed notice that includes:
    (i) A statement that delinquent support payments equal or exceed the 
amount of support payable for 2

[[Page 206]]

months under a support order, and a request that an allotment be 
initiated pursuant to 42 U.S.C. 665.
    (ii) A certified copy of the support order.
    (iii) The amount of the monthly support payment. Such amount may 
include arrearages, if a support order specifies the payment of such 
arrearages. The notice shall indicate how much of the amount payable 
shall be applied toward liquidation of the arrearages.
    (iv) A statement that delinquent support payments are more than 12 
weeks in arrears, if appropriate.
    (v) Sufficient information identifying the member to enable 
processing by the designated official. The following information is 
requested:
    (A) Full name;
    (B) Social Security Number;
    (C) Military Service (Army, Navy, Air Force, or Marine Corps).
    (vi) The full name and address of the allottee. The allottee shall 
be an authorized person, the authorized person's designee, or the 
recipient named in the support order.
    (vii) Any limitations on the duration of the support allotment.
    (viii) A certificate that the official sending the notice is an 
authorized person.
    (2) The notice shall be sent by mail or delivered in person to the 
appropriate designated official of the Military Service. The designated 
official shall note the date and time of receipt on the notice.
    (3) The notice is effective when it is received in the office of the 
designated official.
    (4) When the notice does not sufficiently identify the member, it 
shall be returned directly to the authorized person with an explanation 
of the deficiency. However, before the notice is returned, if there is 
sufficient time, an attempt shall be made to inform the authorized 
person who sent the notice that it will not be honored unless adequate 
information is supplied.
    (5) Upon receipt of effective notice of delinquent support payments, 
together with all required supplementary documents and information, the 
designated official shall identify the member from whom moneys are due 
and payable. Under Sec. 54.6(d), the allotment shall be established in 
the amount necessary to comply with the support order and to liquidate 
arrearages if provided by a support order when the maximum amount to be 
allotted under this provision, together with any other moneys withheld 
for support from the member, does not exceed:
    (i) Fifty percent of the member's disposable earnings for any month 
in which the member asserts by affidavit or other acceptable evidence 
that he or she is supporting a spouse, dependent child, or both, other 
than a party in the support order. When the member submits evidence, 
copies shall be sent to the authorized person, together with 
notification that the member's support claim shall be honored. If the 
support claim is contested by the authorized person, that authorized 
person may refer this matter to the appropriate court or other authority 
for resolution.
    (ii) Sixty percent of the member's disposable earnings for any month 
in which the member fails to assert by affidavit or other acceptable 
evidence that he or she is supporting a spouse, dependent child, or 
both.
    (iii) Regardless of the limitations above, an additional 5 percent 
of the member's disposable earnings shall be withheld when the notice 
states that the total amount of the member's support payments is 12 or 
more weeks in arrears.
    (b) Disposable Earnings. (1) In determining disposable earnings for 
a member assigned within the contiguous United States, include the 
following payments. For definitions of these items, see DoD 5000.12-M.
    (i) Basic pay (including Military Service academy cadet and 
midshipman pay).
    (ii) Basic allowance for quarters for members with dependents, and 
for members without dependents in grade E-7 or higher.
    (iii) Basic allowance for subsistence for commissioned and warrant 
officers.
    (iv) Special pay for physicians, dentists, optometrists, and 
veterinarians.
    (v) Submarine pay.
    (vi) Flying pay (all crew members).
    (vii) Diving pay.
    (viii) Proficiency pay or special duty assignment pay.

[[Page 207]]

    (ix) Career sea pay.
    (2) To determine disposable earnings for a member assigned outside 
of the contiguous United States, the following shall supplement the 
payments listed in paragraph (b)(1) of this section:
    (i) Foreign duty pay.
    (ii) Special pay for duty subject to hostile fire (applies only to 
members permanently assigned in a designated area).
    (iii) Family separation allowances (only under certain type-II 
conditions).
    (iv) Special pay for overseas extensions
    (c) Calculations of disposable earnings shall exclude:
    (1) Amounts owed by the member to the United States.
    (2) Amounts mandatorily withheld for the U.S. Soldiers' and Airmen's 
Home.
    (3) Fines and forfeitures ordered by a court-martial or by a 
commanding officer.
    (4) Federal and State employment and income taxes withheld to the 
extent that the amount deducted is consistent with the member's tax 
liability.
    (5) Deductions for the Servicemen's Group Life Insurance coverage.
    (6) Advances of pay received by the member before receipt of notice 
(see paragraph (c)(1) of this section) that may be due and payable by 
the member at some future date. Requests for advances received after 
notice for a statutorily required support allotment shall be reduced by 
the amount of the statutorily required support allotment.
    (7) Other amounts required by law to be deducted.
    (d) Notice to member and member's Commanding Officer.
    (1) As soon as possible, but not later than 15 calendar days after 
the date of receipt of notice, the designated official shall send to the 
member, at his or her duty station, written notice:
    (i) That notice has been received from an authorized person, 
including a copy of the documents submitted.
    (ii) Of the maximum limitations provided in 15 U.S.C. 1673, with a 
request that the member submit supporting affidavits or other 
documentation necessary for determining the applicable percentage 
limitation.
    (iii) That the member may submit supporting affidavits or other 
documentation as evidence that the information contained in the notice 
is in error.
    (iv) That by submitting supporting affidavits or other necessary 
documentation, the member consents to the disclosure of such information 
to the party requesting the support allotment.
    (v) Of the amount or percentage that will be deducted if the member 
fails to submit the documentation necessary to enable the designated 
official to respond to the notice within the prescribed time limits.
    (vi) That a consultation with a judge advocate or legal officer will 
be provided by the Military Service, if possible, and that the member 
should immediately contact the nearest legal services office.
    (vii) Of the date that the allotment is scheduled to begin.
    (2) The designated official shall notify the member's commanding 
officer, or designee, of the need for consultation between the member 
and a judge advocate or legal officer. The designated official shall 
provide the member's commanding officer, or designee, with a copy of the 
notice and other legal documentation served on the designated official.
    (3) The Military Services shall provide the member with the 
following:
    (i) When possible, an in-person consultation with a judge advocate 
or legal officer of the Military Service concerned, to discuss the legal 
and other factors, involved in the member's support obligation and 
failure to make payment.
    (ii) Copies any other documents submitted with the notice.
    (4) The member's commanding officer, or designee, shall confirm in 
writing to the designated official within 30 days of notice that the 
member received a consultation concerning the member's support 
obligation and the consequences of failure to make payments, or when 
appropriate, of the inability to arrange such consultation and the 
status of continuing efforts to fulfill the consultation requirement.
    (5) If, within 30 days of the date of the notice, the member has 
furnished

[[Page 208]]

the designated official affidavits or other documentation showing the 
information in the notice to be in error, the designated official shall 
consider the member's response. The designated official may return to 
the authorized person, without action, the notice for a statutorily 
required support allotment together with the member's affidavit and 
other documentation, if the member submits substantial proof of error, 
such as:
    (i) The support payments are not delinquent.
    (ii) The underlying support order in the notice has been amended, 
superseded, or set aside.
    (e) Payments. (1) Except as provided in paragraph (e)(3) the 
Secretary of the Military Department concerned, or designee, shall make 
the support allotment by the first end-of-month payday after the 
designated official is notified that the member has had a consultation 
with a judge advocate or legal officer, or that a consultation was not 
possible, but not later than the first end-of-month payday after 30 days 
have elapsed from the date of the notice to the member. The Military 
Services will not be required to vary their normal military allotment 
payment cycle to comply with the notice.
    (2) If several notices are sent with respect to the same member, 
payments shall be satisfied on a first-come, first-served basis within 
the amount limitations in paragraph (a)(5) of this section.
    (3) When the member identified in the notice is found not to be 
entitled to money due from or payable by the Military Service, the 
designated official shall return the notice to the authorized person and 
shall advise him or her that no money is due from or payable by the 
Military Service to the named individual. When it appears that amounts 
are exhausted temporarily or otherwise unavailable, the authorized 
person shall be told why, and for how long, any money is unavailable, if 
known. If the member separates from active duty, the authorized person 
shall be informed that the allotment is discontinued.
    (4) Payment of statutorily required allotments shall be enforced 
over other voluntary deductions and allotments when the gross amount of 
pay and allowances is not sufficient to permit all authorized deductions 
and collections.
    (5) The authorized person or allottee shall notify the designated 
official promptly if the operative court order upon which the allotment 
is based is vacated, modified, or set aside. The designated official 
shall also be notified of any events affecting the allottee's 
eligibility to receive the allotment, such as the former spouse's 
remarriage, if a part of the payment is for spousal support, and notice 
of a change in eligibility for child support payments under 
circumstances of death, emancipation, adoption, or attainment of 
majority of a child whose support is provided through the allotment.
    (6) An allotment established under this Directive shall be adjusted 
or discontinued upon notice from the authorized person.
    (7) Neither the Department of Defense, nor any officer or employee 
thereof, shall be liable for any payment made from moneys due from, or 
payable by, the Department of Defense to any individual pursuant to 
notice regular on its face, if such payment is made in accordance with 
this part. If a designated official receives notices based on a support 
order which, on its face, appears to conform to the laws of the 
jurisdiction from which it was issued, the designated official shall not 
be required to ascertain whether the authority that issued the order had 
obtained personal jurisdiction over the member.
    (f) List of designated officials.

    Army--Commander, U.S. Army Finance and Accounting Center, ATTN: 
FINCL-G, Indianapolis, IN 46249-0160, (317) 542-2155.
    Navy--Director, Navy Family Allowance Activity, Anthony J. 
Celebrezze Federal Building, Cleveland, OH 44199, (216) 522-5301.
    Air Force--Commander, Air Force Accounting and Finance Center, ATTN: 
JA, Denver, CO 80279, (303) 370-7524.
    Marine Corps--Commanding Officer, Marine Corps Finance Center (Code 
AA), Kansas City, MO 64197, (816) 926-7103.

[[Page 209]]



PART 56--NONDISCRIMINATION ON THE BASIS OF HANDICAP IN PROGRAMS AND ACTIVITIES ASSISTED OR CONDUCTED BY THE DEPARTMENT OF DEFENSE--Table of Contents




Sec.
56.1 Purpose.
56.2 Applicability and scope.
56.3 Definitions.
56.4 Policy.
56.5 Responsibilities.
56.6 Information requirements.
56.7 Programs and activities subject to this part.
56.8 Guidelines for determining discriminatory practices.
56.9 Ensuring compliance with this part in Federal financial assistance 
          programs and activities.
56.10 Ensuring compliance with this part in programs and activities 
          conducted by the Department of Defense.

    Authority: Pub. L. 93-112, sec. 504 29 U.S.C. 794, as amended by 
Pub. L. 95-602, 92 Stat. 2982; Pub. L. 93-112, sec. 7, 29 U.S.C. 706, as 
amended by Pub. L. 93-516, 88 Stat. 1619; Executive Order 12250; 
Executive Order 12291; Executive Order 12067.

    Source: 47 FR 15124, Apr. 8, 1982, unless otherwise noted.



Sec. 56.1  Purpose.

    This part implements section 504 of Public Law 93-112, 
``Rehabilitation Act of 1973,'' September 26, 1973 (29 U.S.C. 794) 
(1976); section 111 of Pub. L. 93-516, ``Rehabilitation Act Amendments 
of 1974,'' December 7, 1974 (29 U.S.C. 706, 780, 790) (1976); section 
119 of Pub. L. 95-602, ``Rehabilitation, Comprehensive Services, and 
Developmental Disabilities Amendments of 1978,'' November 6, 1978 (29 
U.S.C. 794) (supp. III 1979); and Department of Justice Regulation, 
``Implementation of Executive Order 12250, Nondiscrimination on the 
Basis of Handicap in Federally Assisted Programs,'' August 11, 1981 (28 
CFR part 41) to prohibit discrimination based on handicap in programs 
and activities receiving Federal financial assistance disbursed by the 
Department of Defense and in programs and activities conducted by the 
Department of Defense.



Sec. 56.2  Applicability and scope.

    (a) This part applies to the Office of the Secretary of Defense, the 
Military Departments, the Organization of the Joint Chiefs of Staff, the 
National Guard Bureau, and the Defense Agencies (hereafter referred to 
as ``DoD Components'') insofar as they:
    (1) Extend Federal financial assistance to programs and activities 
that affect handicapped persons in the United States and that are 
covered by this part (see Sec. 56.7(b)).
    (2) Conduct programs and activities that affect handicapped persons 
in the United States and that are covered by this part (see 
Sec. 56.7(c)).
    (b) This part also applies to each recipient of Federal financial 
assistance disbursed by the Department of Defense and to each program 
and activity that receives or benefits from such assistance, insofar as 
such recipient, program, or activity affects a handicapped person in the 
United States.



Sec. 56.3  Definitions.

    (a) Facility. All or any portion of buildings, structures, 
equipment, roads, walks, parking lots, or other real or personal 
property or any interest in such property.
    (b) Federal financial assistance. Any grant, loan, contract (other 
than a procurement contract or a contract of insurance or guaranty), or 
any other arrangement by which the Federal Government provides or 
otherwise makes available assistance in the form of:
    (1) Funds.
    (2) Services performed by Federal personnel, including technical 
assistance, counseling, training, and provision of statistical or expert 
information.
    (3) Real and personal property or any interest in or use of such 
property, including:
    (i) Transfers or leases of such property for less than fair market 
value or for reduced consideration.
    (ii) Proceeds from a subsequent transfer or lease of such property 
if the Federal share of its fair market value is not returned to the 
Federal government.
    (c) Handicapped person. Any person who has a physical or mental 
impairment that substantially limits one or more major life activities, 
has a record of such an impairment, or is regarded as having such an 
impairment. For

[[Page 210]]

purposes of this Directive as it relates to employment programs of 
recipients, such term does not include any individual who is an 
alcoholic or drug abuser and whose current use of alcohol or drugs 
prevents such individual from performing the duties of the job in 
question, or whose employment, by reason of such current alcohol or drug 
abuse, would constitute a direct threat to property or to the safety of 
others. As used in this paragraph:
    (1) Physical or mental impairment. Any physiological disorder or 
condition, cosmetic disfigurement, or anatomical loss affecting one or 
more of the following body systems: Neurological; musculoskeletal and 
special sense organs; respiratory, including speech organs; 
cardiovascular; reproductive; digestive; genito-urinary; hemic and 
lymphatic; skin; and endocrine; or any mental or psychological disorder, 
such as mental retardation, organic brain syndrome, emotional or mental 
illness, and specific learning disabilities. The term includes such 
diseases and conditions as orthopedic, visual, speech, and hearing 
impairments; cerebral palsy, epilepsy, and muscular dystrophy; multiple 
sclerosis; cancer; heart disease; diabetes; drug abuse; and alcoholism.
    (2) Major life activities. Functions such as caring for one's self, 
performing manual tasks, walking, seeing, hearing, speaking, breathing, 
learning, and working.
    (3) Has a record of such an impairment. Has a history of, or has 
been misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities.
    (4) Is regarded as having an impairment. Has: (i) A physical or 
mental impairment that does not substantially limit major life 
activities but is treated by a recipient or DoD Component as 
constituting such a limitation;
    (ii) A physical or a mental impairment that substantially limits 
major life activities only as a result of the attitudes of others toward 
such impairment; or
    (iii) None of the impairments defined above, but is treated by a 
recipient or DoD Component as having such an impairment.
    (d) Historic properties. Those properties listed or eligible for 
listing in the National Register of Historic Places.
    (e) Include; such as. Not all the possible items are covered, 
whether like or unlike the ones named.
    (f) Qualified handicapped person. A handicapped person who:
    (1) With respect to employment, can perform the essential functions 
of the job in question with reasonable accommodation.
    (2) With respect to services, meets the essential eligibility 
requirements for receiving the services in question.
    (g) Recipient. Any State or political subdivision or instrumentality 
thereof, any public or private agency, institution, organization, or 
other entity, or any person that receives Federal financial assistance 
directly or through another recipient, including any successor, 
assignee, or transferee of a recipient, but not the ultimate beneficiary 
of the assistance. The term includes persons and entities applying to be 
recipients.
    (h) Substantial impairment. A significant loss of the integrity of 
finished materials, design quality, or special character resulting from 
a permanent alteration.



Sec. 56.4  Policy.

    It is DoD policy that no qualified handicapped person shall be 
subjected to discrimination on the basis of handicap under any program 
or activity that receives or benefits from Federal financial assistance 
disbursed by a DoD Component or under any Federal program or activity 
that is conducted by a DoD Component. Guidelines for determining actions 
that discriminate against handicapped persons are prescribed in 
Sec. 56.8.



Sec. 56.5  Responsibilities.

    (a) The Assistant Secretary of Defense (Manpower, Reserve Affairs, 
and Logistics) (ASD(MRA&L)), or designee, shall monitor compliance with 
this part. In discharging this responsibility, the ASD(MRA&L), or 
designee, shall:
    (1) Coordinate efforts of DoD Components to enforce this part.

[[Page 211]]

    (2) Assist in the development of standards and procedures 
promulgated pursuant to Sec. 56.9.
    (3) Perform the responsibilities assigned to the ASD(MRA&L) in 
Sec. 56.8, 9, and 10.
    (4) Otherwise assist DoD Components in implementing this part.
    (b) The Heads of DoD Components shall comply with this part. In 
discharging this responsibility, they shall:
    (1) Designate a policy-level official to ensure compliance with this 
part receive and investigate complaints filed under this part and 
otherwise manage DoD Component responsibilities under this part.
    (2) Notify the ASD(MRA&L), or designee, of the name, position, 
location, and telephone number of persons selected by them to be policy-
level officials within 15 calendar days of such a selection.
    (3) Issue guidelines pursuant to Sec. 56.9.
    (4) Cooperate fully with the ASD(MRA&L), or designee, in that 
official's performance of the responsibilities assigned herein, 
including furnishing to the ASD(MRA&L), or designee, in a timely fashion 
any requested reports and information.
    (5) Assign sufficient personnel to implement and to ensure effective 
enforcement of this part.



Sec. 56.6  Information requirements.

    (a) Each DoD Component shall maintain a log of all complaints that 
are filed with it or its recipients under this part. The log shall 
contain the complainant's name (last name, first, and middle initial) 
and address (street address, city, State, and zip code), the recipient's 
name (if this refers to a person, last name, first, and middle initial) 
and address (street address, city, State, and zip code), the nature of 
the complaint, and the current status of the complaint investigation or 
resolution. Each DoD Component shall submit a narrative summary report 
on complaints by memorandum to the ASD(MRA&L), or designee, before July 
15 and January 15 of each year. This reporting requirement has been 
assigned Report Control Symbol DD-M(SA)1596.
    (b) Each DoD Component shall submit a narrative report by memorandum 
to the ASD(MRA&L), or designee, whenever, pursuant to enclosure 4 of 
this directive, the DoD Component notifies an applicant or recipient 
that noncompliance with this part is indicated. The report shall include 
the recipient's name (if this refers to a person, last name, first, and 
middle initial) and address (street address, city, State, and zip code), 
the date (YYMMDD) and nature of the finding, and the name of the 
applicable federally assisted program or activity. This reporting 
requirement has been assigned Report Control Symbol DD-M(AR)1597.
    (c) The recordkeeping requirements contained in Sec. 56.9(c)(2), 
have been approved by the Office of Management and Budget (OMB) under 44 
U.S.C. chapter 35 and have been assigned OMB No. 0704-0102.



Sec. 56.7  Programs and activities subject to this part.

    (a) This part applies to all DoD Components and recipients of 
Federal financial assistance disbursed by a DoD Component insofar as the 
programs and activities of the DoD Components and recipients affect 
handicapped persons in the United States. Existing programs and 
activities that are assisted or conducted by a DoD Component and that 
are subject to this part but do not appear in paragraph (b) or (c) of 
this section, are covered even though not listed. DoD Components must 
report new programs and activities that are subject to this part to the 
ASD (MRA&L), or designee, within 15 calendar days of their creation or 
funding.
    (b) Federal financial assistance programs subject to this part 
include: (1) title 32, United States Code, sections 101-716 (1976 and 
supp. III 1979): the Army and Air National Guard.
    (2) Title 40, U.S. Code, sections 483, 484, and 512 (1976); title 
49, U.S. Code, sections 1101 and 1107 (1976); and title 10, U.S. Code, 
sections 2541, 2544, 2571, 2576, 2662, 7308, 7541, 7542, 7545, 7546, and 
7547 (1976 and supp. IV 1980): Various programs involving the loan or 
other disposition of surplus, obsolete, or unclaimed property.
    (3) Title 10 U.S. Code, sections 4307-4311 (1976), and the annual 
Department

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of Defense Appropriations Act: National Program for the Promotion of 
Rifle Practice.
    (4) Secretary of the Navy Instruction 5720.19E, ``Navy Science 
Cruiser Program,'' February 24, 1977.
    (5) Title 10 U.S. Code, section 9441 (1976 and supp. IV 1980): Civil 
Air Patrol.
    (6) Title 41 U.S. Code, sections 501-509 (supp. III 1979): Federal 
grants and cooperative agreements.
    (7) Title 33 U.S. Code, section 426 (1976 and supp. III 1979): Army 
Corps of Engineers participation in cooperative investigations and 
studies concerning the erosion of shores of coastal and lake waters.
    (8) Title 33 U.S. Code, sections 426e-426h (1976): Army Corps of 
Engineers assistance in the construction of works for the restoration 
and protection of shores.
    (9) Title 16 U.S. Code, section 460d (1976): Construction and 
operation of public park and recreational facilities in water resource 
development projects under the administrative jurisdiction of the 
Department of the Army.
    (10) Title 33 U.S. Code, section 701c-3 (1976): Payment to States of 
lease receipts from lands acquired by the United States for flood 
control, navigation, and allied purposes.
    (11) Title 33 U.S. Code, sections 558c and 702d-1 (1976); title 10, 
U.S. Code, sections 2668 and 2669 (1976); title 43, U.S. Code, section 
961 (1976); and title 40, U.S. Code, section 319 (1976): Grants of 
easements without consideration, or at a nominal or reduced 
consideration, on land under the control of the Department of the Army 
at water resource development projects.
    (12) Title 33 U.S. Code, sections 540 and 577 (1976): Army Corps of 
Engineers assistance in the construction of small boat harbor projects.
    (13) Title 33 U.S. Code, section 701s (1976): Emergency bank 
protection works constructed by the Army Corps of Engineers for 
protection of highways, bridge approaches, and public works.
    (14) Title 33 U.S. Code, section 633 (1976): Army Corps of Engineers 
contracts for the protection, alteration, reconstruction, relocation, or 
replacement of structures and facilities.
    (15) Title 50 U.S. Code, section 453 (1976): Defense Logistics 
Agency loans of industrial equipment to educational institutions (Tools 
for Schools).
    (16) Title 33 U.S. Code, section 610 (1976): Provision of 
specialized services or technical information by the Army Corps of 
Engineers to State and local governments for the control of aquatic 
plant growths in rivers, harbors, and allied waters.
    (17) Title 42 U.S. Code, section 1962d-16 (1976): Provision of 
specialized services by the Army Corps of Engineers to any State for the 
preparation of comprehensive plans for drainage basins located within 
the boundaries of said State.
    (18) Title 33 U.S. Code, section 603a (1976): Provision of 
specialized services by the Army Corps of Engineers to improve channels 
for navigation.
    (19) Title 33 U.S. Code, section 701g (1976): Provision of 
specialized services by the Army Corps of Engineers to reduce flood 
damage.
    (20) Title 24 U.S. Code, sections 44c and 47 (1976): United States 
Soldiers' and Airmen's Home.
    (21) Title 10 U.S. Code, chapter 55, as implemented by DoD 6010.8-R, 
``Civilian Health and Medical Program of the Uniformed Services 
(CHAMPUS),'' January 10, 1977.
    (c) All programs and activities conducted by the Department of 
Defense that affect handicapped persons in the United States are subject 
to this part. They include:
    (1) Promulgation of rules and regulations for public comment in a 
manner that grants handicapped persons a reasonable opportunity for such 
comment (such as by making cassette recordings of proposed rules).
    (2) Public meetings, conferences, or seminars sponsored or conducted 
by a DoD Component but held in nongovernmental buildings.
    (3) Public meetings, conferences, or seminars sponsored or conducted 
by a DoD Component or by a non-DoD organization but held in a DoD 
building.
    (4) Open houses, memorial services, tours, or other ceremonies held 
on or in DoD property.
    (5) Military museums.
    (6) Historic vessels.

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    (7) Historic buildings and properties maintained by a DoD Component 
and properties designated as historic under a statute of the appropriate 
State or local governmental body.
    (8) Schools operated by the Department of Defense within the United 
States pursuant to section 6 of Public Law 81-874, title 20, U.S. Code, 
section 241 (1976).



Sec. 56.8  Guidelines for determining discriminatory practices.

    (a) General prohibitions against discrimination. (1) No qualified 
handicapped person shall, on the basis of handicap, be excluded from 
participation in, be denied the benefit of, or otherwise be subjected to 
discrimination under any program or activity that is conducted by the 
Department of Defense or that receives or benefits from Federal 
financial assistance disbursed by the Department of Defense.
    (2) A recipient or DoD Component may not, directly or through 
contractual, licensing, or other arrangements, on the basis of handicap:
    (i) Provide different or separate aid, benefits, or services to 
handicapped persons than is provided to others unless such action is 
necessary to provide qualified handicapped persons with aid, benefits, 
or services that are equal to those provided to others;
    (ii) Deny a qualified handicapped person the opportunity to 
participate in or benefit from the aid, benefit, or service;
    (iii) Afford a qualified handicapped person an opportunity to 
participate in or benefit from the aid, benefit, or service that is not 
equal to that afforded others;
    (iv) Provide a qualified handicapped person with an aid, benefit, or 
service that is not as effective as that afforded to others; or
    (v) Otherwise limit a qualified handicapped person in the enjoyment 
of any right, privilege, advantage, or opportunity granted to others 
receiving the aid, benefit, or service.
    (3) A recipient or DoD Component may not deny a qualified 
handicapped person the opportunity to participate in programs or 
activities that are not separate or different from regular programs or 
activities, even if such separate or different programs and activities 
are permissible under paragraph (a)(2)(i) of this section.
    (4) A recipient or DoD Component may not provide assistance to an 
agency, organization, or person that discriminates on the basis of 
handicap in providing any aid, benefit, or service to beneficiaries of 
the recipient's program or activity.
    (5) A recipient of DoD Component may not deny, on the basis of 
handicap, a qualified handicapped person the opportunity to participate 
as a member of planning or advisory boards.
    (6) A recipient or DoD Component may not use, directly or through 
contractual or other arrangements, criteria or methods of administration 
that:
    (i) Subject qualified handicapped persons to discrimination on the 
basis of handicap;
    (ii) Defeat or substantially impair accomplishment of the objectives 
of the recipient's or DoD Component's program or activity with respect 
to handicapped persons; or
    (iii) Perpetuate discrimination by another recipient if both 
recipients are subject to common administrative control or are agencies 
of the same State.
    (7) In determining the site or location of a facility, a recipient 
or DoD Component may not make selections that:
    (i) Exclude handicapped persons from, deny them the benefits of, or 
otherwise subject them to discrimination under any program or activity 
that receives or benefits from Federal financial assistance; or
    (ii) Defeat or substantially impair, with respect to handicapped 
persons, the accomplishment of the objectives of the program or 
activity.
    (8) Recipients and DoD Components shall administer programs and 
activities in the most integrated setting appropriate to the needs of 
qualified handicapped persons.
    (9) Recipients and DoD Components shall take appropriate steps to 
make communications with their applicants, employees, and beneficiaries 
available to persons with impaired vision and hearing.
    (10) This section may not be interpreted to prohibit the exclusion 
of:

[[Page 214]]

    (i) Persons who are not handicapped from benefits, programs, and 
activities limited by Federal statute or Executive order to handicapped 
persons; or
    (ii) One class of handicapped persons from a program or activity 
limited by Federal statute or Executive order to a different class of 
handicapped persons.
    (11) Recipients and DoD Components shall take appropriate steps to 
ensure that no handicapped individual is denied the benefits of, 
excluded from participation in, or otherwise subjected to discrimination 
under any program or activity receiving or benefiting from Federal 
financial assistance disbursed by the Department of Defense or under any 
program or activity conducted by the Department of Defense because of 
the absence of auxiliary aids, such as certified sign-language 
interpreters, telecommunication devises (TDDs), or other telephonic 
devices for individuals with impaired sensory, manual, or speaking 
skills.
    (b) Prohibitions against employment discrimination by recipients. 
(1) No qualified handicapped person shall, on the basis of handicap, be 
subjected to discrimination in employment under any program or activity 
that receives or benefits from Federal financial assistance disbursed by 
the Department of Defense.
    (2) The prohibition against discrimination in employment applies to 
the following:
    (i) Recruitment, advertising, and processing of applications for 
employment.
    (ii) Hiring, upgrading, promotion, award of tenure, demotion, 
transfer, layoff, termination, right of return from layoff, and 
rehiring.
    (iii) Rates of pay or any other form of compensation and changes in 
compensation.
    (iv) Job assignments, job classifications, organizational 
structures, position descriptions, lines of progression, and seniority 
lists.
    (v) Leaves of absence, sick leave, or any other leave.
    (vi) Fringe benefits available by virtue of employment, whether or 
not administered by the recipient.
    (vii) Selection and financial support for training, including 
apprenticeship, professional meetings, conferences and other related 
activities, and selection for leaves of absence for training.
    (viii) Programs and activities sponsored by the employer, including 
social and recreational programs.
    (ix) Any other term, condition, or privilege of employment.
    (3) A recipient may not participate in a contractual or other 
relationship that subjects qualified handicapped applicants or employees 
to discrimination prohibited by this section, including relationships 
with employment and referral agencies, labor unions, organizations 
providing or administering fringe benefits to employees of the 
recipient, and organizations providing training and apprenticeship 
programs.
    (4) A recipient shall make reasonable accommodation to the known 
physical or mental limitations of an otherwise qualified handicapped 
applicant or employee unless the recipient can demonstrate that the 
accommodation would impose an undue hardship on the operation of its 
program. Reasonable accommodation includes providing ramps, accessible 
restrooms, drinking fountains, interpreters for deaf employees, readers 
for blind employees, amplified telephones, TDDs such as Teletypewriters 
or Telephone Writers (TTYs), and tactile signs on elevators.
    (5) A recipient may not use employment tests or criteria that 
discriminate against handicapped persons, and shall ensure that 
employment tests are adapted for use by persons who have handicaps that 
impair sensory, manual, or speaking skills.
    (6) A recipient may not conduct a preemployment medical examination 
or make a preemployment inquiry about whether an applicant is a 
handicapped person or about the nature or severity of a handicap. A 
recipient may make, however, a preemployment inquiry into an applicant's 
ability to perform job-related functions.
    (7) When a recipient is taking remedial action to correct the 
effects of past discrimination or is taking voluntary action to overcome 
the effects of conditions that have resulted in limited participation by 
handicapped persons in its federally assisted program or activity, the 
recipient may invite applicants for employment to indicate

[[Page 215]]

whether and to what extent they are handicapped if:
    (i) The recipient makes clear to the applicants that the information 
is intended for use solely in connection with its remedial action 
obligations or its voluntary affirmative action efforts.
    (ii) The recipient makes clear to the applicants that the 
information is being requested on a voluntary basis, that it will be 
kept confidential as provided in paragraph (b)(9) in this section, that 
refusal to provide it will not subject the applicants to any adverse 
treatment, and that it will be used only in accordance with this part.
    (8) Nothing in this section shall prohibit a recipient from 
conditioning an offer of employment on the results of a medical 
examination conducted prior to the employee's entrance on duty if:
    (i) All entering employees are subjected to such an examination, 
regardless of handicap.
    (ii) The results of such an examination are used only in accordance 
with this part which prohibits discrimination against a qualified 
handicapped person on the basis of handicap.
    (9) Information obtained under this section concerning the medical 
condition or history of applicants shall be collected and maintained on 
separate forms that shall be accorded confidentiality as medical 
records, except that:
    (i) Supervisors and managers may be informed about restrictions on 
the work or duties of handicapped persons and about necessary 
accommodations.
    (ii) First aid and safety personnel may be informed, when 
appropriate, if a handicapping condition might require emergency 
treatment.
    (iii) Government officials investigating compliance with section 
504, Pub. L. 93-112, and this part shall be provided relevant 
information upon request.
    (c) Program accessibility--(1) General requirements. No qualified 
handicapped person shall, because a recipient's or DoD Component's 
facilities are inaccessible to or not usable by handicapped persons, be 
denied the benefits of, be excluded from participation in, or otherwise 
be subjected to discrimination under any program or activity that 
receives or benefits from Federal financial assistance disbursed by the 
Department of Defense or under any program or activity conducted by the 
Department of Defense.
    (2) Existing facilities. (i) A recipient or DoD Component shall 
operate each program or activity so that the program or activity, when 
viewed in its entirety, is readily accessible to and usable by 
handicapped persons. This does not necessarily require a recipient or 
DoD Component to make each of its existing facilities or every part of 
an existing facility accessible to and usable by handicapped persons. 
For guidance in determining the accessibility of facilities, see chapter 
18 of DoD 4270.1-M, ``Department of Defense Construction Criteria 
Manual,'' June 1, 1978, and Department of the Army, Office of the Chief 
of Engineers, Manual EM 1110-1-103, ``Design for the Physically 
Handicapped,'' October 15, 1976. Inquiries on specific accessibility 
design problems may be addressed to the ASD (MRA&L), or designee.
    (ii) When structural changes are necessary to make programs or 
activities in existing facilities accessible to the exent required by 
paragraph (c)(1) of this section.
    (A) Such changes shall be made as soon as practicable, but not later 
than 3 years after the effective date of this part however, if the 
program or activity is a particular mode of transportation (such as a 
subway station) that can be made accessible only through extraordinarily 
expensive structural changes to, or replacement of, existing facilities 
and if other accessible modes of transportation are available, the DoD 
Component concerned may extend this period of time. This extension shall 
be for a reasonable and definite period, which shall be determined after 
consultation with the ASD(MRA&L), or designee.
    (B) The recipient or DoD Component shall develop, with the 
assistance of interested persons or organizations and within a period to 
be established in each DoD Component's guidelines, a transition plan 
setting forth the steps necessary to complete such changes.
    (C) The recipient or DoD Component shall make a copy of the 
transition plan available for public inspection. At a minimum, the plan 
shall:

[[Page 216]]

    (1) Identify physical obstacles in the recipient's or DoD 
Component's facilities that limit the accessibility of its program or 
activity to handicapped persons.
    (2) Describe in detail the methods that will be used to make the 
facilities accessible.
    (3) Specify the schedule for taking the steps necessary to achieve 
full program accessibility and, if the time period of the transition 
plan is longer than 1 year, identify steps that will be taken during 
each year of the transition period.
    (4) Indicate the person (last name, first, and middle initial) 
responsible for implementation of the transition plan.
    (iii) A recipient or DoD Component may comply with paragraphs 
(c)(2)(i) and (c)(2)(ii) of this section, through such means as the 
acquisition or redesign of equipment, such as telecommunication or other 
telephonic devices; relocation of classes or other services to 
accessible buildings; assignment of aides to beneficiaries, such as 
readers or certified sign-language interpreters; home visits; delivery 
of health, welfare, or other services at accessible alternate sites; 
alteration of existing facilities and construction of new facilities in 
conformance with paragraph (c)(3) in this section; or any other method 
that results in making the program or activity of the recipient or DoD 
Component accessible to handicapped persons.
    (iv) A recipient or DoD Component is not required to make structural 
changes in existing facilities when other methods are effective in 
achieving compliance with this section.
    (v) In choosing among available methods for meeting the requirements 
of this section, a recipient or DoD Component shall give priority to 
those methods that offer programs and activities to handicapped persons 
in the most integrated setting appropriate with nonhandicapped persons.
    (3) New Construction. New facilities shall be designed and 
constructed to be readily accessible to and usable by handicapped 
persons. Alterations to existing facilities shall be designed and 
constructed, to the maximum extent feasible, to be readily accessible to 
and usable by handicapped persons. For guidance in determining the 
accessibility of facilities, see chapter 18 of DoD 4270.1-M and 
Department of the Army, Office of the Chief of Engineers, Manual EM 
1110-1-103. Inquiries about specific accessibility design problems may 
be addressed to the ASD(MRA&L), or designee.
    (4) Historic properties. (i) In the case of historic properties, 
program accessibility shall mean that, when viewed in their entirety, 
programs are readily accessible to and usable by handicapped persons. 
Because the primary benefit of historic properties is the experience of 
the property itself, DoD Components and recipients shall give priority 
to those methods of achieving program accessibility that make the 
historic property, or portions thereof, physically accessible to 
handicapped persons.
    (ii) Methods of achieving program accessibility include:
    (A) Making physical alterations that give handicapped persons access 
to otherwise inaccessible areas or features of historic properties.
    (B) Using audiovisual materials and devices to depict otherwise 
inaccessible areas or features of historic properties.
    (C) Assigning individuals to guide handicapped persons into or 
through otherwise inaccessible portions of historic properties.
    (D) Adopting other innovative methods.
    (iii) When program accessibility cannot be achieved without causing 
a substantial impairment of significant historic features, the DoD 
Component or recipient may seek a modification or waiver of access 
standards from the ASD (MRA&L), or designee.
    (A) A decision to grant a modification or waiver shall be based on 
consideration of the following:
    (1) Scale of the property, reflecting its ability to absorb 
alterations.
    (2) Use of the property, whether primarily for public or private 
purposes.
    (3) Importance of the historic features of the property to the 
conduct of the program.
    (4) Costs of alterations in comparison to the increase in 
accessibility.
    (B) The ASD(MRA&L), or designee, shall review periodically any 
waiver granted under this paragraph and may

[[Page 217]]

withdraw it if technological advances or other changes warrant.
    (iv) The decision by the ASD(MRA&L), or designee, to grant a 
modification or waiver of access standards is subject to section 106 of 
the National Historic Preservation Act, as amended, and shall be made in 
accordance with the Advisory Council on Historic Preservation regulation 
on ``Protection of Historic and Cultural Properties'' (36 CFR part 800). 
When the property is federally owned or when Federal funds may be used 
for alterations, the ASD(MRA&L), or designee, shall obtain the comments 
of the Advisory Council on Historic Preservation when required by 
section 106 of the National Historic Preservation Act and the Advisory 
Council on Historic Preservation regulation on ``Protection of Historic 
and Cultural Properties'' (36 CFR part 800) prior to effectuation of 
structural alterations.
    (v) DoD Component guidelines prepared in accordance with Sec. 56.10 
shall include a listing of all historic properties, including historic 
ships, subject to this part and a plan for compliance with paragraph 
(c)(4) of this section.
    (5) Military museums. (i) In the case of military museums, program 
accessibility shall mean that exhibits, displays, tours, lectures, 
circulating or traveling exhibits, and other programs of military 
museums are accessible to and usable by handicapped persons. Methods of 
meeting this requirement include the following:
    (A) Museum programs may be made accessible to deaf and hearing-
impaired persons by means such as training museum staff, such as 
docents, in sign language; providing qualified sign-language 
interpreters to accompany deaf or hearing-impaired visitors; ensuring 
that clear, concise language is used on all museum signs and display 
labels; providing amplification devices; or providing printed scripts 
for films, videotapes, lectures, or tours. DoD Components are encouraged 
to use ``Museums and Handicapped Students: Guidelines for Educators,'' 
published by the National Air and Space Museum, Smithsonian Institution, 
Washington, DC 20560.
    (B) Museum programs may be made accessible to blind and visually-
impaired persons by means such as providing museum catalogues in a 
large-print edition printed over braille; providing cassette tapes, 
records, or discs for museum tours or exhibits; providing readers to 
accompany blind or visually impaired visitors; using large-print and 
braille display cards at exhibits; providing raised-line maps of the 
museum building; using raised-line drawings, reproductions, or models of 
large exhibits to facilitate tactile experiences when touching exhibits 
is prohibited; placing large-print and braille signs to identify 
galleries, elevators, restrooms, and other service areas; and permitting 
guide dogs in all museum facilities.
    (C) Museum programs may be made accessible to other physically 
impaired persons by means such as lowering display cases; spacing 
exhibits to facilitate movement; using ramps in galleries; increasing 
lighting in exhibit areas to facilitate viewing from a distance; 
providing places to sit in exhibit areas; making restrooms accessible; 
using large-print exhibit display cards to facilitate reading from a 
distance; and sensitizing museum staff to consider the needs of 
handicapped visitors when organizing exhibits.
    (ii) DoD Component guidelines developed in accordance with paragraph 
(c)(5) of this section shall identify military museums subject to 
paragraph (c) of this section and shall contain a plan for making museum 
programs accessible to handicapped persons. Technical assistance in the 
preparation and content of these plans may be obtained from the National 
Access Center, 1419 27th Street, NW., Washington, DC 20007 ((202) 333-
1712 or TTY (202) 333-1339). In addition, community organizations that 
serve handicapped persons and handicapped persons themselves shall be 
consulted in the preparation of these plans.
    (d) Reasonable accommodation. (1) A recipient or DoD Component shall 
make reasonable accommodation to the known physical or mental 
limitations of an otherwise qualified handicapped applicant or employee 
unless the recipient or DoD Component demonstrates to the ASD(MRA&L), or 
designee, that the accommodation would

[[Page 218]]

impose an undue hardship on the operation of its program.
    (2) Reasonable accommodation includes the following:
    (i) Making facilities used by employees readily accessible to and 
usable by handicapped persons.
    (ii) Job restructuring; part-time or modified work schedules; 
acquisition or modification of equipment or devices, such as 
telecommunication or other telephonic instruments; the provision of 
readers or certified sign-language interpreters; and similar actions.
    (3) In determining whether an accommodation would impose an undue 
hardship on the operation of a recipient's or DoD Component's program, 
the ASD(MRA&L), or designee, shall consider the following factors, at a 
minimum:
    (i) The overall size of the recipient's or DoD Component's program 
or activity, such as the number of employees, number and type of 
facilities, and size of budget.
    (ii) The size of the recipient's or DoD Component's operations, 
including the composition and structure of the recipient's or DoD 
Component's workforce.
    (iii) The nature and cost of the accommodation needed.
    (4) A recipient or DoD Component may not deny any employment 
opportunity to a qualified handicapped employee or applicant for 
employment if the basis for the denial is the need to make reasonable 
accommodation to the physical or mental limitations of the employee or 
applicant.



Sec. 56.9  Ensuring compliance with this part in Federal financial assistance programs and activities.

    (a) Supplementary guidelines issued by DoD Components. (1) Whenever 
necessary, DoD Components shall publish supplementary guidelines for 
each type of program or activity to which they disburse Federal 
financial assistance within 120 days of the effective date of this part 
or of the effective date of any subsequent statute authorizing Federal 
financial assistance to a new type of program or activity. DoD 
Components shall obtain approval of these supplementary guidelines from 
the ASD(MRA&L), or designee, before issuing them. Prior to their 
issuance, the ASD(MRA&L), or designee, shall submit supplementary 
guidelines prepared pursuant to paragraph (a)(1) of this section to the 
Coordination and Review Section, Civil Rights Division, Department of 
Justice, for review and approval. To the extent that supplementary 
guidelines issued by DoD Components deal with the employment of 
civilians in programs and activities subject to this part the 
ASD(MRA&L), or designee, shall also obtain the approval of the Equal 
Employment Opportunity Commission (EEOC) in accordance with Executive 
Order 12067.
    (2) The ASD(MRA&L), or designee, and DoD Components shall ensure 
that their supplementary guidelines conform to the requirements of this 
part and that they provide:
    (i) A description of the types of programs and activities covered.
    (ii) Examples of prohibited practices likely to arise with respect 
to those types of programs and activities.
    (iii) A list of the data collection and reporting requirements of 
the recipients.
    (iv) Procedures for processing and investigating complaints.
    (v) Procedures for hearings to determine compliance by recipients 
with this part.
    (vi) Requirements or suggestions for affirmative action on behalf of 
qualified handicapped persons.
    (vii) Requirements for the dissemination of program and complaint 
information to the public.
    (viii) A description of the form of the assurances that must be 
executed pursuant to paragraph (b) of this section, and sample 
assurances.
    (ix) Requirements concerning the frequency and nature of 
postapproval reviews conducted pursuant to paragraph (h) of this 
section.
    (x) A period of time, provided for by Sec. 56.8(c)(2)(ii)(B), for 
the development of a transition plan that sets out the steps necessary 
to complete structural changes that might be required by Sec. 56.8(c).
    (xi) The maximum period of time that may be allowed for extensions 
that might be granted pursuant to Sec. 56.8(c)(2)(ii).

[[Page 219]]

    (xii) An appendix that contains a list of identified programs and 
activities of the type covered by the supplementary guidelines, 
including the names of the programs and activities and the authorizing 
statute, regulation, or directive for each program and activity.
    (xiii) Requirements for the recipient to designate a responsible 
official to coordinate the implementation of supplementary guidelines.
    (xiv) Requirements for any other actions or procedures necessary to 
implement this part.
    (3) When the head of a DoD Component determines that it would not be 
appropriate to include on or more of the provisions described in 
paragraph (a)(2) of this section, in the supplementary guidelines of 
that DoD Component or that it is not necessary to issue such guidelines 
at all, the reasons for such determination shall be stated in writing 
and submitted to the ASD(MRA&L), or designee, for review and approval. 
Once that determination is approved, the DoD Component shall make it 
available to the public upon request.
    (4) The heads of DoD Components, or designees, shall be responsible 
for keeping the supplementary guidelines current and accurate. When a 
DoD Component determines that a program or activity should be added to 
or deleted from the guidelines, the DoD Component shall notify the 
ASD(MRA&L), or designee, in writing.
    (b) Required assurances. (1) DoD Components shall require all 
recipients to file written assurances that their programs or activities 
will be conducted in accordance with this part and supplementary 
guidelines promulgated by DoD Components. If a recipient fails to 
provide an assurance that conforms to the requirements of this section, 
the DoD Component shall attempt to effect compliance pursuant to 
paragraphs (f) through (h) of this section, provided that if assistance 
is due and payable to the recipient based on an application approved 
prior to the effective date of this part the DoD Component shall 
continue the assistance while any proceedings required by paragraphs (n) 
through (v) of this section, are pending.
    (2) DoD Components shall advise each recipient of the required 
elements of the assurance and, with respect to each program or activity, 
of the extent to which those receiving assistance from recipients shall 
be required to execute similar assurances.
    (3) DoD Component shall ensure that each assurance:
    (i) Obligates the recipient to advise the DoD Component of any 
complaints received that allege discrimination against handicapped 
persons.
    (ii) Obligates the recipient to collect and provide the items of 
information that the DoD Component lists in its supplementary guidelines 
pursuant to paragraph (a)(2)(iii) of this section.
    (iii) Is made applicable to any Federal financial assistance that 
might be disbursed by a DoD Component without the submission of a new 
application.
    (iv) Obligates the recipient, when the financial assistance is in 
the form of proprerty, for the period during which the property is used 
under a financial assistance agreement or is possessed by the recipient.
    (v) Includes a provision recognizing that the U.S. Government has 
the right to seek judicial enforcement of section 504 and this part.
    (c) Self-evaluation and consultation with interested persons and 
organizations. (1) DoD Components shall require recipients to conduct, 
within 6 months of the effective date of this part or of first receiving 
Federal financial assistance disbursed by the Department of Defense, a 
self-evaluation with the assistance of interested persons, including 
handicapped persons or organizations that represent them. When 
appropriate, DoD Components also shall require recipients to consult at 
least annually with such persons. The ``Department of Health, Education, 
and Welfare Section 504 Technical Assistance Reserve Directory,'' April 
1980, shall be consulted to identify likely sources for consultation. In 
conducting its self-evaluation, each recipient shall:
    (i) Evaluate the effects of its policies and practices with respect 
to its compliance with this part and the applicable DoD Component's 
supplementary guidelines.
    (ii) Modify any policies that do not meet such requirements.

[[Page 220]]

    (iii) Take appropriate remedial steps to eliminate the 
discriminatory effects of any such policies or practices.
    (2) For at least 3 years following the completion of a self-
evaluation required under paragraph (c)(1) of this section, a recipient 
shall maintain on file, make available for public inspection, and 
provide to the ASD(MRA&L), or designee, upon request:
    (i) A list of the interested persons (last names, first names, and 
middle initials) consulted.
    (ii) A description of areas examined and problems identified, if 
any, with respect to those areas.
    (iii) A description of any modification made and remedial steps 
taken.
    (d) Dissemination of information. (1) Within 90 days of the 
effective date of this part or of first receiving assistance from the 
Department of Defense and on a continuing basis thereafter, each 
recipient shall notify beneficiaries and employees of their rights under 
this part and shall take appropriate steps to notify participants, 
beneficiaries, applicants for employment and employees, including those 
with impaired vision or hearing, and unions or professional 
organizations involved in collective bargaining or professional 
agreements with the recipient that the recipient does not discriminate 
on the basis of handicap in violation of this part. The notification 
shall state, when appropriate, that the recipient does not discriminate 
in admitting or providing access to or treating or employing persons in 
its programs and activities. Such notification may be accomplished by 
posting notices, publishing announcements in newspapers and magazines, 
placing notices in its publications, or distributing memoranda or other 
written communications.
    (2) If a recipient publishes or uses and makes available to 
participants, beneficiaries, applicants for employment, or employees 
recruitment materials or publications containing general information 
about the recipient's programs and activities, it shall include in those 
materials or publications a statement of the policy described in 
paragraph (d)(1) of this section. This may be accomplished by including 
appropriate inserts in existing materials and publications or by 
revising and reprinting the materials and publications.
    (3) Understandable materials developed in accordance with this 
section shall be provided to ensure that all beneficiaries and employees 
of the recipient understand the information. In addition, recipients 
shall disseminate appropriate and comprehensive information about formal 
and informal complaint and appeal procedures, including directions on 
how and where to file complaints and to appeal DoD Component decisions.
    (e) Intimidation and interference. Recipients and DoD Components 
shall take reasonable steps to ensure that no person intimidates, 
threatens, coerces, or discriminates against any individual for the 
purpose of retaliating against, interfering with, or discouraging the 
filing of a complaint, furnishing of information, or assisting or 
participating in an investigation, compliance review, hearing, or other 
activity related to the administration of this part.
    (f) Staff responsibilities. All DoD Component determinations of 
recipient compliance with this part shall be subject to reviews by the 
ASD(MRA&L), or designee. When responsibility for approving applications 
for Federal financial assistance disbursed by a DoD Component is 
assigned to regional or area offices of the DoD Component, personnel in 
such offices shall be designated to perform the functions described in 
paragraphs (h) and (o) through (w) of this section.
    (g) Access to records and facilities. Each recipient shall permit 
access to its premises by DoD officials during normal business hours 
when such access is necessary for conducting onsite compliance reviews 
or complaint investigations, and shall allow such officials to 
photograph facilities and to inspect and copy any books, records, 
accounts, and other material relevant to determining the recipient's 
compliance with this part. Information so obtained shall be used only in 
connection with the administration of this part. If the recipient does 
not have the information requested, it shall submit to the DoD Component 
a written report that contains a certification that the information is 
not available and describes the

[[Page 221]]

good-faith efforts made to obtain the information.
    (h) Compliance review. DoD Components shall determine the compliance 
of each recipient with this part as follows: (1) General. Whenever 
possible, DoD Components shall perform compliance reviews in conjunction 
with their review and audit efforts implementing title VI of the Civil 
Rights Act of 1964.
    (2) Desk audit application review. Before approving an application 
for Federal financial assistance, the DoD Component concerned shall make 
a written determination as to whether the recipient is in compliance 
with this part, based on a review of the assurance of compliance 
executed by a recipient pursuant to paragraph (b) of this section, and 
other data submitted by the recipient. When a determination cannot be 
made from the assurance and other data submitted by the recipient, the 
DoD Component concerned shall require the recipient to submit additional 
information and shall take other steps as necessary to determine the 
recipient's compliance with this part. If this additional information 
demonstrates that the recipient is in compliance with this part, the DoD 
Component shall notify the recipient promptly that it is in compliance.
    (3) Preapproval onsite review. (i) When a desk audit application 
review conducted pursuant to paragraph (h)(2) of this section indicates 
that the recipient might not be in compliance with this part, the DoD 
Component concerned may conduct a preapproval onsite review at the 
recipient's facilities before approving the disbursement of Federal 
financial assistance to the recipient. The DoD Component shall conduct 
such a review:
    (A) When appropriate, if a desk audit application review reveals 
that the recipient's compliance posture is questionable because of a 
history of discrimination complaints, current discrimination complaints, 
a noncompliance determination by another government agency or DoD 
Component, or other indications of possible noncompliance; or
    (B) If Federal financial assistance is requested for construction, 
except under extraordinary circumstances, to determine whether the 
location and design of the project would provide service on a 
nondiscriminatory basis, in conformity with Sec. 56.8(c).
    (ii) Preapproval onsite reviews shall be conducted under DoD 
Component supplementary guidelines and in accordance with the provisions 
of paragraph (h)(4) of this section, concerning postapproval reviews.
    (4) Postapproval reviews. DoD Components shall: (i) Establish and 
maintain effective programs of postapproval reviews.
    (ii) Conduct such reviews of each recipient, the frequency and the 
nature of which shall be prescribed in the DoD Component supplemetary 
guidelines implementing this part.
    (iii) Require recipients periodically to submit compliance reports 
to them.
    (iv) Record the results of the reviews, including findings of fact 
and recommendations.
    (5) A DoD Component shall complete a review within 180 calendar days 
of initiating it unless an extension of time is granted by the 
ASD(MRA&L), or designee, for good cause shown, and shall either:
    (i) Find the recipient to be in compliance and notify the recipient 
of that finding; or
    (ii) Notify the recipient and the ASD(MRA&L), or designee, of a 
finding of probable noncompliance, pursuant to paragraph (o) of this 
section.
    (i) Filing of complaints against recipients. (1) DoD Components 
shall establish and publish in their supplementary guidelines procedures 
for the prompt processing and disposition of complaints against 
recipients, consistent with this section.
    (2) A DoD Component shall consider all complaints that: (i) Are 
filed with it within 180 days of the alleged discrimination or within a 
longer period of time if an extension is granted for good cause by the 
DoD Component with the approval of the ASD(MRA&L), or designee.
    (ii) Include the name, address, and telephone number, if any, of the 
complainant; the name and address of the recipient committing the 
alleged discrimination; a description of the acts or omissions 
considered to be discriminatory; and other pertinent information.

[[Page 222]]

    (iii) Are signed by the complainant or the complainant's authorized 
representative (legal counsel or a person with power of attorney granted 
by the complainant).
    (3) DoD Components shall transmit a copy of each complaint filed 
with them to the ASD(MRA&L), or designee, within 10 calendar days after 
its receipt.
    (4) If the information in a complaint is incomplete, the DoD 
Component shall request the complainant to provide the additional 
information required. If the DoD Component does not receive this 
requested information within 30 calendar days of the date of the 
request, the case may be closed and the complainant so notified in 
writing.
    (5) If a complaint concerning a program or activity is filed with a 
DoD Component that does not have jurisdiction over it, the DoD Component 
shall refer the complaint to the ASD(MRA&L), or designee, and advise the 
complainant in writing of such referral. The ASD(MRA&L), or designee, 
then shall refer the complaint to the appropriate DoD Component and so 
notify the complainant in writing.
    (j) Investigation by DoD components. (1) DoD Components shall 
investigate complaints that involve recipients and that meet the 
standards described in paragraph (i) of this section, unless good cause 
for not investigating is stated in a written notification of the 
disposition of the complaint provided to the complainant.
    (2) If an investigation of a complaint is conducted, the DoD 
Component concerned shall maintain a case record that contains:
    (i) The name (last name, first, and middle initial), address (street 
address, city, State, and zip code), and telephone number of each person 
interviewed.
    (ii) Copies, transcripts, or summaries of pertinent documents.
    (iii) A reference to at least one program or activity conducted by 
the recipient and receiving Federal financial assistance disbursed by a 
DoD Component, and a description of the amount and nature of the 
assistance.
    (iv) A narrative report of the results of the investigation that 
contains references to relevant exhibits and other evidence that relates 
to the alleged violations.
    (k) Investigations by recipients. (1) A DoD Component may require or 
permit recipients to investigate complaints alleging violation of this 
part. In such cases, the DoD Component shall:
    (i) Ensure that the recipient investigates the complaints in 
accordance with the standards, procedures, and requirements prescribed 
in paragraph (j) of this section.
    (ii) Require the recipient to submit a written report of each 
complaint and investigation to the DoD Component.
    (iii) Retain a review responsibility over the investigation and 
disposition of each complaint.
    (iv) Ensure that each complaint investigation is completed within 
180 calendar days of the receipt of the complaint by the proper DoD 
Component, unless an extension of time is granted for good cause by the 
ASD(MRA&L), or designee.
    (v) Require the recipient to maintain a log of all complaints filed 
against it, as described in Sec. 56.6(a)(1).
    (2) DoD Components that require or permit complaint investigations 
to be conducted by recipients shall review recipient complaint 
investigations pursuant to paragraphs (k) and (l) of this section.
    (l) Results of investigations. (1) Within 180 days of the receipt of 
a complaint, the DoD Component, recipient, or the ASD(MRA&L), or 
designee, shall give written notification:
    (i) Of the disposition of the complaint to the complainant and, as 
the case may be, to the recipient or DoD Component.
    (ii) To the complainant that within 30 calendar days of receipt of 
the written notification, the complainant may request that the 
ASD(MRA&L), or designee, review the findings in the notification 
pursuant to paragraph (m) of this section.
    (2) If the complaint investigation results in a determination by the 
DoD Component that a recipient is not complying with this part the DoD 
Component shall proceed as prescribed in paragraph (n) through (v) of 
this section. If the DoD Component determines that the recipient is in 
compliance, the

[[Page 223]]

DoD Component shall submit the complete case file to the ASD(MRA&L), or 
designee, within 15 calendar days after the notification of the 
disposition of the investigation to the complainant.
    (m) Reviewing completed investigations. (1) The ASD(MRA&L), or 
designee, may review all completed investigations.
    (2) The ASD(MRA&L), or designee, shall review the results of any 
investigation of a complaint if the complainant requests such a review 
pursuant to paragraph (l)(1)(ii) of this section.
    (3) After reviewing the results of an investigation, the ASD(MRA&L), 
or designee, may:
    (i) Find that no further investigation is necessary and approve the 
results of the investigation;
    (ii) Request further investigation by the DoD Component; or
    (iii) Require the DoD Component to take appropriate corrective 
action.
    (n) Effecting compliance. (1) When a compliance review or complaint 
investigation indicates that a recipient has violated this part, the 
applicable DoD Component's supplementary guidelines, or the assurances 
executed pursuant to paragraph (b) of this section, the responsible DoD 
Component or the ASD(MRA&L), or designee, shall attempt to effect 
compliance in accordance with paragraphs (o) and (p) of this section. 
The inability of a DoD Component to comply with any time frame 
prescribed by this part does not relieve a recipient of the 
responsibility for compliance with this part.
    (2) The DoD Component may require, when necessary to overcome the 
effects of discrimination in violation of this part, a recipient to take 
remedial action:
    (i) With respect to handicapped persons who are no longer 
participants in the recipient's program or activity but who were 
participants in the program or activity when such discrimination 
occurred.
    (ii) With respect to handicapped persons who would have been 
participants in the recipient's program or activity had the 
discrimination not occurred.
    (iii) With respect to handicapped persons presently in the 
recipient's program or activity, but not receiving full benefits or 
equal and integrated treatment within the program or activity.
    (o) Written notice.  After evaluating the investigative report, the 
DoD Component shall issue to the recipient and, pursuant to paragraph 
(n)(2) of this section to the ASD(MRA&L), or designee, a written notice 
that:
    (1) Describes the apparent violation and the corrective actions 
necessary to achieve compliance.
    (2) Extends an offer to meet informally with the recipient.
    (3) Informs the recipient that failure to respond to the notice 
within 15 calendar days of its receipt shall result in the initiation of 
enforcement procedures described in paragraphs (r) through (v), of this 
section.
    (p) Attempting to achieve voluntary compliance by recipients. (1) If 
a DoD Component issues a notice pursuant to paragraph (o) of this 
section, the DoD Component shall attempt to meet with the recipient and 
shall attempt to persuade it to take the steps necessary to achieve 
compliance with this part.
    (2) If a recipient agrees to take remedial steps to achieve 
compliance, the DoD Component shall require that the agreement be in 
writing and:
    (i) Be signed by the head of the DoD Component concerned, or 
designee, and by the principal official of the recipient.
    (ii) Specify the action necessary to achieve compliance.
    (iii) Be made available to the public upon request.
    (iv) Be subject to the approval of the ASD(MRA&L), or designee.
    (3) If satisfactory adjustment or a written agreement has not been 
achieved within 60 calendar days of the recipient's receipt of the 
notice issued pursuant to paragraph (o) of this section, the DoD 
Component shall notify the ASD(MRA&L), or designee, and state the 
reasons therefor.
    (4) The DoD Component shall initiate the enforcement actions 
prescribed in paragraphs (r) through (v) of this section if:
    (i) The recipient does not respond to a notice pursuant to paragraph 
(o) of this section, within 15 calendar days of its receipt and 
satisfactory adjustments are not made within 45 calendar

[[Page 224]]

days of the date of the recipient's response; or
    (ii) The DoD Component or the ASD (MRA&L) determines at any time 
within 90 days after the recipient receives a notice pursuant to 
paragraph (o) of this section, that, despite reasonable efforts, it is 
not likely that the recipient will comply promptly and voluntarily.
    (5) If, pursuant to paragraph (p)(4) of this section, the DoD 
Component initiates enforcement action, it also shall continue its 
attempts to persuade the recipient to comply voluntarily.
    (q) Imposing sanctions--(1) Sanctions available. If a DoD Component 
has taken action pursuant to paragraphs (o) and (p) of this section, the 
DoD Component may, by order, subject to paragraph (q)(2) and (q)(3) of 
this section:
    (i) Terminate, suspend, or refuse to grant or continue assistance to 
such recipient.
    (ii) Refer the case to the Department of Justice for the initation 
of enforcement proceedings at a Federal, State, or local level.
    (iii) Pursue any remedies under State or local law.
    (iv) Impose other sanctions upon consultation with the ASD (MRASL), 
or designee.
    (2) Terminating, suspending, or refusing to grant or continue 
assistance. A DoD Component may not terminate or refuse to grant or 
continue Federal financial assistance unless:
    (i) Such action has been approved by the Secretary of Defense.
    (ii) The DoD Component has given the recipient an opportunity for a 
hearing pursuant to the procedures set out in paragraph (r) of this 
section, and a finding of noncompliance has resulted.
    (iii) Thirty calendar days have elapsed since the Secretary of 
Defense has filed a written report describing the violation and action 
to be taken with the committees of the House of Representatives and 
Senate that have jurisdiction over the program or activity in which the 
violation of this part exists.
    (iv) Such action is limited to affect only the particular activity 
or program, or portion thereof, of the recipient where the violation 
exists.
    (3) Other sanctions. A DoD Component may not impose the sanctions 
set out in paragraphs (q)(1) (iii) and (iv) of this section, unless:
    (i) The DoD Component has given the recipient an opportunity for a 
hearing pursuant to paragraph (r) of this section, and a finding of 
noncompliance has resulted.
    (ii) The action has been approved by the Secretary of Defense.
    (iii) Ten calendar days have elapsed since the mailing of a notice 
informing the recipient of its continuing failure to comply with this 
part the action necessary to achieve compliance, and the sanction to be 
imposed.
    (iv) During those 10 calendar days the DoD Component has made 
additional efforts to persuade the recipient to comply.
    (r) Hearings for recipients--(1) General. When, pursuant to 
paragraph (q)(2)(ii) of this section, an opportunity for a hearing is 
given to a recipient, the DoD Component involved shall follow the 
procedures prescribed in paragraphs (r)(2) through (r)(6) of this 
section.
    (2) Notice. The DoD Component concerned shall notify the recipient 
of the opportunity for a hearing by registered or certified mail, return 
receipt requested, when the recipient denies a tentative finding of 
noncompliance with this part.
    (i) The DoD Component shall ensure that the notice:
    (A) Describes the proposed sanctions to be imposed.
    (B) Cites the section of this part under which the proposed action 
is to be taken.
    (C) States the name and office of the DoD Component official who is 
responsible for conducting the hearing (hereafter referred to as the 
``responsible DoD official'').
    (D) Outlines the issues to be decided at the hearing.
    (E) Advises the recipient either of a date, not less than 20 
calendar days after the date that the notice is received, by which the 
recipient may request that the matter be scheduled for a hearing, or of 
a reasonable time and place of a hearing that is subject to change for 
good cause shown.
    (ii) When a time and place for a hearing are set, the DoD Component 
shall

[[Page 225]]

give the recipient and the complainant, if any, reasonable notice of 
such time and place.
    (3) Waiver of a hearing. A recipient may waive a hearing and submit 
to the responsible DoD official, in writing, information or arguments on 
or before the date stated pursuant to paragraph (r)(2)(i)(E) of this 
section.
    (i) A recipient waives its right to a hearing if it fails to request 
a hearing on or before a date stated pursuant to paragraph (r)(2)(i)(E) 
of this section, or fails to appear at a hearing that has been scheduled 
pursuant to that paragraph.
    (ii) If a recipient waives its right to a hearing under this 
section, the responsible DoD official shall decide the issues and render 
a final decision that is based on the information available and that 
conforms to the requirements of paragraph (s)(4) of this section.
    (4) Hearing examiner. Hearings shall be conducted by the responsible 
DoD official or by a hearing examiner designated by the official, 
provided that the hearing examiner shall be a field grade officer or 
civilian employee above the grade of GS-12 (or the equivalent) who is 
admitted to practice law before a Federal court or the highest court of 
a State, territory, commonwealth, or the District of Columbia.
    (5) Right to counsel. In all proceedings under this section, the 
recipient and the DoD Component may be represented by counsel. The 
representation of the recipient will not be at U.S. Government expense.
    (6) Procedures. Hearings authorized under this section shall be 
subject to the following: (i) Hearings shall be open to the public.
    (ii) Formal rules of evidence will not apply. The DoD Component 
concerned and the recipient shall be entitled to introduce all relevant 
evidence on the issues stated in the notice of hearing issued pursuant 
to paragraph (r)(2) of this section, and those designated by the 
responsible DoD official or the hearing examiner at the outset of or 
during the hearing. The responsible DoD official or hearing examiner, 
however, may exclude irrelevant, immaterial, or repetitious evidence.
    (iii) All witnesses may be examined or cross-examined, as the case 
may be, by each party.
    (iv) All parties shall have the opportunity to examine all evidence 
offered or admitted for the record.
    (v) A transcript of the proceedings shall be maintained in either 
electronic or typewritten form and made available to all parties.
    (s) Decisions--(1) Initial or proposed decisions by a hearing 
examiner. If a hearing is conducted by a hearing examiner who is 
designated by the responsible DoD official pursuant to paragraph (r)(4) 
of this section, the hearing examiner shall either:
    (i) Make an initial decision, if so authorized, that conforms to the 
requirements of paragraph (s)(4) of this section; or
    (ii) Certify the entire record and submit to the responsible DoD 
official recommended findings and a proposed decision.
    (2) Review of initial decisions. Initial decisions made by a hearing 
examiner pursuant to paragraph (s)(1)(i) of this section, shall be 
reviewed as follows:
    (i) A recipient may file exceptions to an initial decision within 30 
calendar days of receiving notice of such initial decision. Reasons 
shall be stated for each exception.
    (ii) If the recipient does not file exceptions pursuant to paragraph 
(s)(2)(i) of this section, the responsible DoD official may notify the 
recipient within 45 calendar days of the initial decision that the 
responsible DoD official will review the decisions.
    (iii) If exceptions are filed pursuant to paragraph (s)(2)(i) of 
this section, or a notice of review is issued pursuant to paragraph 
(s)(2)(ii) of this section, the responsible DoD official shall review 
the initial decision and, after giving the recipient reasonable 
opportunity to file a brief or other written statement of its 
contentions, issue a final decision that addresses each finding and 
conclusion in the initial decision and each exception, if any.
    (iv) If the exceptions described in paragraph (s)(2)(i) of this 
section are not filed and the responsible DoD official does not issue 
the notice of review described in paragraph (s)(2)(ii) of this section, 
the initial decision of the

[[Page 226]]

hearing examiner shall constitute the final decision of the responsible 
DoD official.
    (3) Decisions by the responsible DoD official who conducts a hearing 
or receives a certified record. If a hearing examiner who is designated 
by the responsible DoD official certifies the entire record and submits 
recommended findings and a proposed decision to the responsible DoD 
official pursuant to paragraph (s)(1)(ii) of this section, or if the 
responsible DoD official conducts the hearing, after giving the 
recipient a reasonable opportunity to file a brief or other written 
statement of its contentions, the responsible DoD official shall render 
a final decision that conforms to paragraph (s)(4) of this section.
    (4) Contents of decisions. Each decision of a hearing examiner or 
responsible DoD official shall state all findings and conclusions and 
identify each violation of this part. The final decision may contain an 
order pursuant to paragraph (q) of this section, providing for the 
suspension or termination of or refusal to grant or continue all or some 
of the Federal financial assistance under the program or activity 
involved and contain terms, conditions, and other provisions that are 
consistent with and intended to achieve compliance with this Directive.
    (5) Notice of decisions and certifications. The responsible DoD 
official shall provide a copy of any certified record of a hearing and 
any initial or final decision to the recipient and the complainant, if 
any.
    (6) Review by the Secretary of Defense. The responsible DoD official 
shall transmit promptly any final decision that orders a suspension, 
termination, or denial of Federal financial assistance through the 
ASD(MRA&L) to the Secretary of Defense. The Secretary may;
    (i) Approve the decision;
    (ii) Vacate the decision; or
    (iii) Remit or mitigate any sanction imposed.
    (t) Restoring eligibility for financial assistance. (1) A recipient 
that is affected adversely by a final decision issued under paragraph 
(s) of this section, may at any time request the responsible DoD 
official to restore fully its eligibility to receive Federal financial 
assistance.
    (2) If the responsible DoD official determines that the information 
supplied by the recipient demonstrates that it has satisfied the terms 
and conditions of the order entered pursuant to paragraph (s) of this 
section, and that is complying with and has provided reasonable 
assurance that it will continue to comply with this part the responsible 
DoD official shall restore such eligibility immediately.
    (3) If the responsible DoD official denies a request for restoration 
of eligibility, the recipient may submit a written request for a hearing 
that states why it believes the responsible DoD official erred in 
denying the request. Following such a written request, the recipient 
shall be given an expeditious hearing under rules of procedure issued by 
the responsible DoD official to determine whether the requirements 
described in paragraph (t)(2) of this section, have been met. While any 
such proceedings are pending, the sanctions imposed by the order issued 
under paragraph (s) of this section, shall remain in effect.
    (u) Interagency cooperation and delegation. (1) When several 
recipients are receiving assistance for the same or similar purposes 
from a DoD Component and another Federal agency, the DoD Component shall 
notify the ASD (MRA&L), or designee. Such notification shall be in 
writing and shall contain:
    (i) A description of the programs and activities involved.
    (ii) A statement of the amount of money expended on the programs and 
activities in the previous and current fiscal year by the DoD Component 
and the agency.
    (iii) A list of the known primary recipients.
    (2) The ASD(MRA&L), or designee, shall attempt to negotiate with the 
Federal agency a written delegation agreement that designates the agency 
or the DoD Component as the primary agency for purposes of ensuring 
compliance with section 504 of Public Law 93-112, as amended, and this 
part depending upon which of them administers a larger financial 
assistance program with the common recipients and other

[[Page 227]]

relevant factors. If necessary, the agreement shall establish procedures 
to ensure the enforcement of section 504 of Public Law 93-112, as 
amended, and this part. The ASD(MRA&L), or designee, shall provide 
written notification to recipients of an agreement reached under this 
subsection.
    (3) When several recipients are receiving assistance for the same or 
similar purposes from two or more DoD Components, the DoD Components may 
negotiate a proposed written delegation agreement that:
    (i) Assigns responsibility for ensuring that the recipient complies 
with this part to one of the DoD Components.
    (ii) Provides for the notification to recipients and the responsible 
program officials of the DoD Components involved of the assignment of 
enforcement responsibility.
    (4) No delegation agreement reached in accordance with paragraph 
(u)(3) to this section shall be effective until it is approved by the 
ASD(MRA&L), or designee.
    (5) When possible, existing delegation agreements relating to title 
VI of the Civil Rights Act of 1964 shall be amended to provide for the 
enforcement of this part.
    (6) Any DoD Component conducting a compliance review or 
investigating a complaint of an alleged violation by a recipient shall 
notify any other affected agency or DoD Component through the 
ASD(MRA&L), or designee, upon discovery that the agency or DoD Component 
has jurisdiction over the program or activity in question and shall 
subsequently inform it of the finding made. Such reviews or 
investigations may be conducted on a joint basis.
    (7) When a compliance review or complaint investigation under this 
part reveals a possible violation of Executive Order 11246, titles VI or 
VII of the Civil Rights Act of 1964, or any other Federal law, the DoD 
Component shall notify the appropriate agency, through the ASD(MRA&L), 
or designee.
    (v) Coordination with sections 502 and 503. (1) DoD Components shall 
use DoD 4270.1-M and Department of the Army, Office of the Chief of 
Engineers, Manual EM 1110-1-103, in developing requirements for the 
accessibility of facilities. If DoD Components encounter issues with 
respect to section 502 of the Rehabilitation Act of 1973, as amended, 
that are not covered by these publications, the ASD(MRA&L), or designee, 
may be consulted. If necessary, the ASD(MRA&L), or designee, shall 
consult with the Architectural and Transportation Barriers Compliance 
Board in resolving such problems.
    (2) DoD Components may advise recipients to consult directly with 
the Architectural and Transportation Barriers Compliance Board in 
developing accessibility criteria.
    (3) DoD Components shall coordinate enforcement actions relating to 
the accessibility of facilities with the Architectural and 
Transportation Barriers Compliance Board and shall notify the 
ASD(MRA&L), or designee, of such coordination.
    (4) If a recipient is also a Federal contractor subject to section 
503 of the Rehabilitation Act of 1973, as amended, and the regulations 
thereunder (41 CFR part 60-741) and if a DoD Component has reason to 
believe that the recipient is in violation thereof, the DoD Component 
shall coordinate enforcement actions with the Department of Labor, 
Office of Federal Contract Compliance Programs. The DoD Component shall 
notify the ASD(MRA&L), or designee, of such coordination.



Sec. 56.10  Ensuring compliance with this part in programs and activities conducted by the Department of Defense.

    (a) Supplementary guidelines. (1) Whenever necessary, the 
ASD(MRA&L), or designee, shall publish supplementary guidelines for 
programs and activities that are conducted by DoD Components and that 
are subject to this Directive. Prior to their issuance, the ASD(MRA&L), 
or designee, shall submit supplementary guidelines prepared pursuant to 
this subsection to the Coordination and Review Section, Civil Rights 
Division, Department of Justice, for review.
    (2) The heads of DoD Components, or designees, shall be responsible 
for keeping the supplementary guidelines described in this section 
current and accurate. When a DoD Component head determines that a 
program or activity

[[Page 228]]

should be added to or deleted from the guidelines, that official shall 
notify the ASD(MRA&L), or designee, in writing.
    (b) Staff responsibilities. The ASD(MRA&L), or designee, shall 
determine DoD Component compliance with this part as it pertains to 
programs and activities that are conducted by DoD Components and are 
subject to this part.
    (c) Filing of complaints. (1) Complaints of discrimination in a 
program or activity conducted by a DoD Component may be filed directly 
with the ASD(MRA&L), or designee.
    (2) DoD Components shall develop procedures, such as posters or 
other devices, to notify participants in the programs and activities 
listed in Sec. 56.7(c) of their right to be free of discrimination 
because of handicap in those programs and activities and of their right 
to file complaints of discrimination with the ASD(MRA&L), or designee.
    (d) Investigations of complaints. (1) The ASD(MRA&L), or designee, 
shall investigate complaints of discrimination in programs and 
activities that are conducted by DoD Components and are subject to this 
part.
    (2) A case record of each investigation shall be compiled in 
accordance with Sec. 56.9(j)(2).
    (e) Results of investigations. If the complaint investigation 
results in a determination by the ASD(MRA&L), or designee, that a DoD 
Component's program or activity is not complying with Sec. 56.9, the 
ASD(MRA&L), or designee, shall proceed as prescribed in Sec. 56.9 (n) 
through (v). Hearings prescribed under Sec. 56.9(r) however, need not be 
conducted. If the ASD(MRA&L), or designee, determines that the DoD 
Component is in compliance, the ASD(MRA&L), or designee, shall notify 
the complainant within 15 calendar days of such determination.
    (f) Written notice. If an investigative report concludes that there 
has been a violation of this part in a program or activity conducted by 
a DoD Component and the ASD(MRA&L), or designee, accepts that 
conclusion, that official shall issue to the head of the DoD Component a 
written notice describing the apparent violation, the corrective actions 
necessary to achieve compliance, and a suspense date for completion of 
the corrective actions.
    (g) Effecting compliance. When necessary to overcome the effects of 
discrimination in violation of this part the ASD(MRA&L), or designee, 
may require a DoD Component to take remedial action similar to that in 
Sec. 56.9(n)(2).
    (h) Employment. DoD Components that conduct Federal programs or 
activities covered by this part that involve employment of civilian 
persons to conduct such a program or activity must comply with section 
501 of the Rehabilitation Act of 1973, as amended, and the implementing 
rules and regulations of the EEOC.



PART 57--PROVISION OF EARLY INTERVENTION AND SPECIAL EDUCATION SERVICES TO ELIGIBLE DOD DEPENDENTS IN OVERSEAS AREAS--Table of Contents




Sec.
57.1 Purpose.
57.2 Applicability and scope.
57.3 Definitions.
57.4 Policy.
57.5 Responsibilities.
57.6 Procedures.

Appendix A to Part 57--Procedures for the Provision of Early 
          Intervention Services for Infants and Toddlers with 
          Disabilities and their Families
Appendix B to Part 57--Procedures for Education Programs and Services 
          for Children with Disabilities, Aged 3 to 21, Inclusive
Appendix C to Part 57--The National Advisory Panel (NAP) on the 
          Education of Dependents with Disabilities
Appendix D to Part 57--DoD Coordinating Committee on Early Intervention, 
          Special Education, and Medically Related Services
Appendix E to Part 57--DoD Inter-Component Coordinating Council (ICC) on 
          Early Intervention
Appendix F to Part 57--Mediation and Hearing Procedures

    Authority: 20 U.S.C. 921 and 1400.

    Source: 62 FR 2566, Jan. 17, 1997, unless otherwise noted.



Sec. 57.1  Purpose.

    This part:
    (a) Implement policy and update responsibilities and procedures 
under 20 U.S.C. 921-932, 20 U.S.C. 1400 et seq.,

[[Page 229]]

DoD Directive 1342.6 \1\, and DoD Directive 1342.13 \2\ for providing 
the following:
---------------------------------------------------------------------------

    \1\ Copies may be obtained, at cost, from the National Technical 
Information Service, 5285 Port Royal Road, Springfield, VA 22161.
    \2\ See footnote 1 to Sec. 57.1(a).
---------------------------------------------------------------------------

    (1) A free appropriate public education (FAPE) for children with 
disabilities who are eligible to enroll in the Department of Defense 
Dependent Schools (DoDDS).
    (2) Early intervention services for infants and toddlers birth 
through age 2 years who, but for their age, would be eligible to enroll 
in the DoDDS under DoD Directive 1342.13.
    (3) A comprehensive and multidisciplinary program for early 
intervention services for infants and toddlers with disabilities and 
their families.
    (b) Establishes a National Advisory Panel (NAP) on Education for 
Children with Disabilities, ages 3 to 21, inclusive, and a DoD Inter-
Component Council (ICC) on Early Intervention, in accordance with DoD 
Directive 5105.4 \3\.
---------------------------------------------------------------------------

    \3\ See footnote 1 to Sec. 57.1(a).
---------------------------------------------------------------------------

    (c) Establishes a DoD Coordinating Committee (DoD-CC) on Early 
Intervention, Special Education, and Medically Related Services (MRS).
    (d) Authorizes implementing instructions consistent with DoD 5025.1-
M \4\, and DoD forms consistent with DoD 83201-M \5\, DoD 8910.1-M \6\, 
and DoD Instruction 7750.7 \7\.
---------------------------------------------------------------------------

    \4\ See footnote 1 to Sec. 57.1(a).
    \5\ See footnote 1 to Sec. 57.1(a).
    \6\ See footnote 1 to Sec. 57.1(a).
    \7\ See footnote 1 to Sec. 57.1(a).
---------------------------------------------------------------------------



Sec. 57.2  Applicability and scope.

    This part:
    (a) Applies to the Office of the Secretary of Defense, the Military 
Departments, the Chairman of the Joint Chiefs of Staff, the Unified 
Combatant Commands, the Inspector General of the Department of Defense, 
the Defense Agencies, and the DoD Field Activities (hereafter referred 
to collectively as ``the DoD Components'').
    (b) Does not apply to schools operated by the Department of defense 
in the United States, the District of Columbia, the Commonwealth of 
Puerto Rico, the Commonwealth of the Northern Marianna Islands, and the 
possessions of the United States (excluding the Trust Territory of the 
Pacific Islands and Midway Islands).
    (c) Applies to infants, toddlers, and children receiving or entitled 
to receive early intervention services or special educational 
instruction and related services from the Department of Defense, and 
their parents.



Sec. 57.3  Definitions.

    Area superintendent. The Superintendent of a DoDDS area, or 
designee.
    Assessment. Techniques, procedures, and/or instruments used to 
measure the individual components of an evaluation.
    Assistive technology device. Any item, piece of equipment, or 
product system that is used to increase, maintain, or improve functional 
capabilities of children with disabilities.
    Assistive technology service. Any service that directly assists an 
individual with a disability in the selection, acquisition, or use of an 
assistive technology device. That term includes the following:
    (1) The evaluation of the needs of an individual with a disability, 
including a functional evaluation in the individual's customary 
environment.
    (2) Purchasing, leasing, or otherwise providing for the acquisition 
of assistive technology devices by individuals with disabilities.
    (3) Selecting, designing, fitting, customizing, adapting, applying, 
maintaining, repairing, or replacing assistive technology devices.
    (4) Coordinating and using other therapies, interventions, or 
services with assistive technology devices, such as those associated 
with existing educational and rehabilitative plans and programs.
    (5) Training or technical assistance for an individual with 
disabilities, or, the family of an individual with disabilities.
    (6) Training or technical assistance for professionals (including 
individuals providing educational rehabilitative services), employers, 
or other individuals who provide services to employ, or are otherwise 
substantially involved in the major life functions of an individual with 
a disability.

[[Page 230]]

    Audiology. A service that includes the following:
    (1) Identification of children with auditory impairments.
    (2) Determination of the range, nature, and degree of hearing loss, 
and communication functions including referral for medical or other 
professional attention for the habilitation of hearing.
    (3) Provision of habilitative activities, such as language 
habilitation, auditory training, speech-reading (lip-reading), hearing 
evaluation, and speech conservation.
    (4) Creation and administration of programs for the prevention of 
hearing loss.
    (5) Counseling and guidance of pupils for the prevention of hearing 
loss.
    (6) Determination of the child's need for group and individual 
amplification, selecting and fitting an aid, and evaluating the 
effectiveness of amplification.
    Autism. A development disability significantly affecting verbal and 
nonverbal communication and social interaction generally evident before 
age 3 that adversely affects educational performance. That term does not 
include a child with characteristics of the disability termed ``serious 
emotional disturbance.''
    Case study committee (CSC). (1) A school-level team comprised of, 
among others, the principal, other educators, parents, and MRS providers 
who do the following:
    (i) Oversee screening and referral of children who may require 
special education.
    (ii) Oversee the multidisciplinary evaluation of such children.
    (iii) Determine the eligibility of the student for special education 
and related services.
    (iv) Formulate an individualized education curriculum reflected in 
an Individualized Education Program (IEP), in accordance with this part.
    (v) Monitor the development, review, and revision of IEPs.
    (2) In addition to the required members of the CSC, other membership 
will vary depending on the purpose of the meeting. An area CSC, 
appointed by the DoDDS Area Superintendent, acts in the absence of a 
school CSC. Members of an area CSC may be assigned to augment a school 
CSC. The area CSC must have at least two members besides the parent. One 
of the DoDDS members must have the authority to commit DoDDS resources; 
one shall be qualified to provide, or supervise the provision of special 
education. Other members may be selected from the following groups:
    (i) DoDDS regular education personnel.
    (ii) DoDDS special education personnel.
    (iii) MRS personnel.
    Child-find. The ongoing process used by the DoDDS, the Military 
Departments, and the other DoD Components to seek and identify children 
from birth to age 21, inclusive, who may require early intervention 
services or special education and related services. Child-find 
activities include the dissemination of information to the public, the 
identification and screening of children, and the use of referral 
procedures.
    Children with disabilities (ages 3 To 21, inclusive). Children, 
before graduation from high school or completion of the General 
Education Degree, who have one or more impairments, as determined by a 
CSC and who need special education and related services.
    Consent. That term means the following:
    (1) The parent is fully informed of all information about the 
activity for which consent is sought in the native language or in 
another mode of communication, if necessary.
    (2) The parent understands and agrees in writing to the 
implementation of the activity for which permission is sought. That 
consent describes the activity, lists the child's records (if any) to be 
released outside the Department of Defense, and specifies to whom the 
records shall be sent. The signed consent acknowledges the parent's 
understanding that the parental consent is voluntary and may be revoked 
at any time.
    Counseling service. A service provided by a qualified social worker, 
psychologist, guidance counselor, or other qualified personnel.

[[Page 231]]

    Deaf-blindness. Concomitant hearing and visual impairments. That 
disability causes such severe communication, developmental, and 
educational problems that it cannot be accommodated in special education 
programs solely for children with deafness or blindness.
    Deafness. A severe hearing loss or deficit that impairs a child's 
ability to process linguistic information through hearing, with or 
without amplification, and affects the educational performance 
adversely.
    Developmental delay. That term means the following:
    (1) A significant discrepancy in the actual functioning of an 
infant, toddler, or child, birth through age 5, when compared with the 
functioning of a nondisabled infant, toddler, or child of the same 
chronological age in any of the following areas: physical, cognitive, 
communication, social or emotional, and adaptive developmental as 
measured using standardized evaluation instruments and confirmed by 
clinical observation and judgment.
    (2) High probability for developmental delay. An infant or toddler, 
birth through age 2, with a diagnosed physical or mental condition, such 
as chromosomal disorders and genetic syndromes, that places the infant 
or toddler at substantial risk of evidencing a developmental delay 
without the benefit of early intervention services.
    Early identification. The implementation of a formal plan for 
identifying a disability as early as possible in a child's life.
    Early intervention services. (1) Developmental services that meet 
the following criteria:
    (i) Are provided under the supervision of a Military medical 
Department.
    (ii) Are provided using Military Health Services System resources at 
no cost to the parents. Parents may be charged in those instances where 
Federal law provides for a system of payments by families including a 
schedule of sliding fees, if any, (and incidental fees identified in 
Service guidance) that are normally charged to infants, toddlers, and 
children without disabilities or to their parents.
    (iii) Are designed to meet the developmental needs of an infant or 
toddler with a disability in any one or more of the following areas:
    (A) Physical.
    (B) Cognitive.
    (C) Communication.
    (D) Social or emotional.
    (E) Adaptive development.
    (iv) Meet the standards developed or adopted by the Department of 
Defense.
    (v) Are provided by qualified personnel including early childhood 
special educators, speech and language pathologists and audiologists, 
occupational therapists, physical therapists, psychologists, social 
workers, nurses, nutritionists, family therapists, orientation and 
mobility specialists, and pediatricians and other physicians.
    (vi) Maximally, are provided in natural environments including the 
home and community settings where infants and toddlers without 
disabilities participate.
    (vii) Are provided in conformity with an Individualized Family 
Service Plan (IFSP).
    (2) Developmental services include, but are not limited to, the 
following services: family training, counseling, and home visits; 
special instruction; speech pathology and audiology; occupational 
therapy; physical therapy; psychological services; service coordination 
services; medical services only for diagnostic or evaluation purposes; 
early identification, screening and assessment services; vision 
services; and social work services. Also included are assistive 
technology devices and assistive technology services; health services 
necessary to enable the infant or toddler to benefit from the above 
early intervention services; and transportation and related costs 
necessary to enable an infant or toddler and the family to receive early 
intervention services.
    Eligible. The term refers to children who meet the age, command 
sponsorship, and dependency requirements established by the DDEA, as 
amended, 20 U.S.C. 921 et seq. and DoD Directive 1342.13. When those 
conditions are met, children without disabilities, ages 5 to 21, and 
children with disabilities, ages 3 to 21, inclusive, are authorized to 
receive educational instruction from the

[[Page 232]]

DoDDS. Additionally, an eligible infant or toddler with disabilities is 
a child from birth through age 2 years who meets all of the DoDDS 
eligibility requirements except for the age requirement. In school year 
1994 through 1995, multidisciplinary assessments, IFSPs, and case 
management services shall be required and beginning in school year 1995 
through 1996, an eligible infant or toddler is entitled to receive early 
intervention services, in accordance with 20 U.S.C. 1400 et seq.
    Evaluation. The synthesis of assessment information by a 
multidisciplinary team used to determine whether a particular child has 
a disability, the type and extent of the disability, and the child's 
eligibility to receive early intervention or special education and/or 
related services.
    Family training, counseling, and home visits. Services provided by 
social workers, psychologists, and other qualified personnel to assist 
the family of an infant or toddler eligible for early intervention 
services. Those services assist a family in understanding the special 
needs of the child and enhancing the child's development.
    Free appropriate public education (FAPE). Special education and 
related services that do the following:
    (1) Are provided at no cost to parents of a child with a disability, 
and are under the general supervision and direction of the DoDDS.
    (2) Are provided in the least restrictive environment at a 
preschool, elementary, or secondary school.
    (3) Are provided in conformity with an IEP.
    (4) Meet the requirements of this part.
    Functional vocational evaluation. A student-centered appraisal 
process for vocational development and career decision making. It allows 
students, educators, and others to gather information about such 
development and decision making. Functional vocational evaluation 
activities for transitional, vocational, and career planning; 
instructional goals; objectives; and implementation.
    Health services. Services necessary to enable an infant or toddler 
to benefit from the other early intervention services being received 
under this part. That term includes the following:
    (1) Services such as clean intermittent catheterization, tracheotomy 
care, tube feeding, changing of dressings or colostomy collection bags, 
and other health services.
    (2) Consultation by physicians with other service providers about 
the special healthcare needs of infants and toddlers with disabilities 
that shall need to be addressed in the course of providing other early 
intervention services.
    (3) That term does not include the following:
    (i) Services that are surgical or solely medical.
    (ii) Devices necessary to control or treat a medical condition.
    (iii) Medical or health services routinely recommended for all 
infants or toddlers.
    Hearing impairment. An impairment in hearing, whether permanent or 
fluctuating, which adversely affects a child's educational performance, 
but is not included under deafness.
    Independent evaluation. An evaluation conducted by a qualified 
examiner who is not employed by the DoDDS.
    Individualized education program (IEP). A written document defining 
specially designed instruction for a student with a disability, ages 3 
to 21, inclusive. That document is developed and implemented, in 
accordance with this part.
    Individualized family service plan (IFSP). A written document for an 
infant or toddler, age birth through 2, with a disability and the family 
of such infant or toddler that is based on a multidisciplinary 
assessment of the unique needs of the child and concerns and priorities 
of the family, and identifies the early intervention and other services 
appropriate to meet such needs, concerns, and priorities.
    Infants and toddlers with disabilities. Children, ages birth through 
2, who need early intervention services because they:
    (1) Are experiencing a developmental delay; or,
    (2) Have a diagnosed physical or mental condition that has high 
probability of resulting in a developmental delay.

[[Page 233]]

    Inter-component. Cooperation among DoD organizations and programs, 
ensuring coordination and integration of services to infants, toddlers, 
children with disabilities and to their families.
    Medical services. Those evaluative, diagnostic, therapeutic, and 
supervisory services provided by a licensed and /or credentialed 
physician to assist CSCs and to implement IEPs. Medical services include 
diagnosis, evaluation, and medical supervision of related services that, 
by statute, regulation, or professional tradition, are the 
responsibility of a licensed and credentialed physician.
    Medically related services. (1) Medical services (as defined in 
definition ``Medical services'') are those services provided under 
professional medical supervision, which are required by a CSC to 
determine a student's eligibility for special education and, if the 
student is eligible, the special education and related services required 
by the student under this part.
    (2) Direct or indirect services under the development or 
implementation of an IEP necessary for the student to benefit from the 
educational curriculum. Those services may include medical services for 
diagnostic or evaluative purpose, social work, community health nursing, 
dietary, occupational therapy, physical therapy, audiology, 
ophthalmology, and psychological testing and therapy.
    Meetings. All parties attending a meeting to determine eligibility 
or placement of a child shall appear personally at the meeting site on 
issuance of written notice and establishment of a date convenient to the 
concerned parties. When a necessary participant is unable to attend, 
electronic communication suitable to the occasion may be used to involve 
the unavailable party. Parents generally shall be responsible for the 
cost of travel to personally attend meetings about the eligibility or 
placement of their child.
    Mental retardation. Significantly subaverage general intellectual 
functioning, existing concurrently with deficits in adaptive behavior. 
That disability is manifested during the developmental period and 
adversely affects a child's educational performance.
    Multidisciplinary. The involvement of two or more disciplines or 
professions in the integration and coordination of services, including 
evaluation and assessment activities, and development of an IFSP or an 
IEP.
    Native language. When used with reference to an individual of 
limited English proficiency, the home language normally used by such 
individuals, or in the case of a child, the language normally used by 
the parent of the child.
    Natural environments. Settings that are natural or normal (e.g., 
home or day care setting) for the infant, toddler, or child's same-age 
peers who have no disability.
    Non-DoDDS placement. An assignment by the DoDDS of a child with a 
disability to a non-DoDDS school or facility.
    Non-DoDDS school or facility. A public or private school or other 
institution not operated by the DoDDS.
    Nutrition services. Those services to infants and toddlers include 
the following:
    (1) Conducting individual assessments in nutritional history and 
dietary intake; anthropometric, biochemical, and clinical variables; 
feeding skills and feeding problems; and food habits and food 
preferences.
    (2) Developing and monitoring plans to address the nutritional needs 
of infants and toddlers eligible for early intervention services.
    (3) Making referrals to community resources to carry out nutrition 
goals.
    Occupational therapy. That term includes services to address the 
functional needs of children (birth to age 21, inclusive) related to 
adaptive development; adaptive behavior and play; and sensory, motor, 
and postural development. Those services are designed to improve the 
child's functional ability to perform tasks in home, school, and 
community settings, and include the following:
    (1) Identification, assessment, and intervention.
    (2) Adaption of the environment and selection, design, and 
fabrication of assistive and orthotic devices to help development and 
promote the acquisition of functional skills.
    (3) Prevention or minimization of the impact of initial or future 
impairment,

[[Page 234]]

delay in development, or loss of functional ability.
    Orthopedic impairment. A severe physical impairment that adversely 
affects a child's educational performance. That term includes congenital 
impairments such as club foot or absence of some member; impairments 
caused by disease, such as poliomyelitis and bone tuberculosis, and 
impairments from other causes such as cerebra palsy, amputations, and 
fractures or burns causing contractures.
    Other health impairment. Limited strength, vitality, or alterness 
due to chronic or acute health problems that adversely affect a child's 
educational performance. Such impairments include heart condition, 
tuberculosis, rheumatic fever, nephritis, asthma, sickle cell anemia, 
hemophilia, seizure disorder, lead poisoning, leukemia, diabetes, or 
attention deficit disorder.
    Parent. The biological father or mother of a child; a person who, by 
order of a court of competent jurisdiction, has been declared the father 
or mother of a child by adoption; the legal guardian of a child; or a 
person in whose household a child resides, if such person stands in loco 
parentis to that child and contributes at least one-half of the child's 
support.
    Parent counseling and training. A service to assist parents in 
understanding the special needs of their child's development and by 
providing them with information on child development and special 
education.
    Personally identifiable information. Information that would make it 
possible to identify the infant, toddler, or child with reasonable 
certainty. Examples include name, parent's name, address, social 
security number, or a list of personal characteristics.
    Physical therapy. That term includes services to children (birth to 
age 21, inclusive) to address the promotion of sensorimotor function 
through enhancement of musculoskeletal status, neurobehavioral 
organization, perceptual and motor development, cardiopulmonary status, 
and effective environmental adaption. Those services include the 
following:
    (1) Screening, evaluation, and assessment to identify movement 
dysfunction.
    (2) Obtaining, interpreting, and integrating information to 
appropriate program planning to prevent, alleviate, or compensate for 
movement dysfunction and related functional problems.
    (3) Providing individual and group services or treatment to prevent, 
alleviate, or compensate for movement dysfunction and related functional 
problems.
    Primary referral source. Parents and the DoD Components, including 
child development centers, pediatric clinics, and newborn nurseries, 
that suspect an infant or toddler has a disability and brings the child 
to the attention of the EIP.
    Psychological services. A service that includes the following:
    (1) Administering psychological and educational tests and other 
assessment procedures.
    (2) Interpreting test and assessment results.
    (3) Obtaining, integrating, and interpreting information about a 
child's behavior and conditions to learning.
    (4) Consulting with other staff members, including service 
providers, to plan programs to meet the special needs of children, as 
indicated by psychological tests, interviews, and behavioral 
evaluations.
    (5) Planning and managing a program of psychological services, 
including psychological counseling for children and parents, family 
counseling, consultation on child development, parent training, and 
education programs.
    Public awareness program. Activities or print materials focusing on 
early identification of infants and toddlers with disabilities. 
Materials may include information prepared and disseminated by a 
military medical department to all primary referral sources and 
information for parents on the availability of early intervention 
services. Procedures to determine the availability of information on 
early intervention services to parents are also included in that 
program.
    Qualified. A person who meets the DoD-approved or recognized 
certification, licensing, or registration requirements or other 
comparable requirements in the area in which the person provides special 
education or related services or early intervention

[[Page 235]]

services to an infant, toddler, or child with a disability.
    Recreation. A related service that includes the following.
    (1) Assessment of leisure activities.
    (2) Therapeutic recreational activities.
    (3) Recreational programs in schools and community agencies.
    (4) Leisure education.
    Rehabilitation counseling. Services provided by a rehabilitation 
counselor or other qualified personnel in individual or group sessions 
that focus specifically on career development, employment preparation, 
achieving independence, and integration in the workplace and community 
of the student with a disability.
    Related services. Transportation and such developmental, corrective, 
and other supportive services as required to assist a child, age 3 to 
21, inclusive, with a disability to benefit from special education under 
the child's IEP. The term includes speech therapy and audiology, 
psychological services, physical and occupational therapy, recreation, 
early identification and assessment of disabilities in children, 
counseling services, and medical services for diagnostic or evaluative 
purposes. That term also includes rehabilitation counseling services, 
school health services, social work services in schools, and parent 
counseling. The sources for those services are school, community, and 
medical treatment facilities (MTFs).
    School health services. Services provided by a qualified school 
nurse or other qualified person.
    Separate facility. A school or a portion of a school, regardless of 
whether it is operated by the DoDDS, attended exclusively by children 
with disabilities.
    Serious emotional disturbance. A condition confirmed by clinical 
evaluation and diagnosis and that, over a long period of time and to a 
marked degree, adversely affect educational performance, and exhibits 
one or more of the following characteristics:
    (1) Inability to learn that cannot be explained by intellectual, 
sensory, or health factors.
    (2) Inability to build or maintain satisfactory interpersonal 
relationships with peers and teachers.
    (3) Inappropriate types of behavior under normal circumstances.
    (4) A tendency to develop physical symptoms or fears associated with 
personal or school problems.
    (5) A general pervasive mood of unhappiness or depression. Includes 
children who are schizophrenic, but does not include children who are 
socially maladjusted unless it is determined they are seriously 
emotionally disturbed.
    Service coordination. Activities of a service coordinator to assist 
and enable an infant or toddler and the family to receive the rights, 
procedural safeguards, and services that are authorized to be provided 
under the DoD EIP. Those activities include the following:
    (1) Coordinating the performance of evaluation and assessments.
    (2) Assisting families to identify their resources, concerns, and 
priorities.
    (3) Facilitating and participating in the development, review, and 
evaluation of IFSPs.
    (4) Assisting in identifying available service providers.
    (5) Coordinating and monitoring the delivery of available services.
    (6) Informing the family of support or advocacy services.
    (7) Coordinating with medical and health providers.
    (8) Facilitating the development of a transition plan to preschool 
services.
    Service provider. Any individual who provides services listed in an 
IEP or an IFSP.
    Social work services in schools. A service that includes the 
following:
    (1) Preparing a social or developmental history on a child with a 
disability.
    (2) Counseling a child and the family on a group or individual 
basis.
    (3) Working with those problems in a child's home, school, or 
community that adversely affect adjustment in school.
    (4) Using school and community resources to enable a child to 
receive maximum benefit from the educational program.
    Special education. Instruction and related services for which a 
child, age 3 to 21, inclusive, becomes entitled when a CSC determines a 
child's educational

[[Page 236]]

performance is adversely affected by one or more disabling conditions.
    (1) Special education is specially designed instruction, including 
physical education, which is provided at no cost to the parent or 
guardians to meet the unique needs of a child with a disability, 
including instruction conducted in the classroom, in the home, in 
hospitals and institutions, and in other settings.
    (2) That term includes speech therapy or any other related service 
if the service consists of specially designed instruction, at no cost to 
the parents, to meet the unique needs of a child with a disability.
    (3) That term also includes vocational education if it consists of 
specially designed instruction, at no cost to the parents, to meet the 
unique needs of a child with a disability.
    (4) At no cost. For a child eligible to attend the DoDDS without 
paying tuition, specially designed instruction and related services are 
provided without charge. Incidental fees normally charged to nondisabled 
students or their parents as a part of the regular educational program 
may be imposed.
    (5) Physical education. The development of the following:
    (i) Physical and motor fitness.
    (ii) Fundamental motor skills and patterns.
    (iii) Skills in aquatics, dance, and individual and group games and 
sports, including intramural and lifetime sports.
    (iv) A program that includes special physical education, adapted 
physical education, movement education, and motor development.
    (6) Vocational education. Organized educational programs for the 
preparation of individuals for paid or unpaid employment or for 
additional preparation for a career requiring other than a baccalaureate 
or advanced degree.
    Special instruction. That term includes the following:
    (1) The design of learning environments and activities to promote 
acquisition of skills in a variety of developmental areas, including 
cognitive processes and social interaction.
    (2) Curriculum planning, including the planned interaction of 
personnel, materials, time, and space, that leads to achieving the 
outcomes in an IEP or an IFSP.
    (3) Providing families with information, skills, and support to 
enhance skill development.
    (4) Working with a child to enhance development and cognitive 
processes.
    Specific learning impairment. A disorder in one or more of the basic 
psychological processes involved in understanding or in using spoken or 
written language that may manifest itself as an imperfect ability to 
listen, think, speak, read, write, spell, remember, or do mathematical 
calculations. That term includes such conditions as perceptual 
disabilities, brain injury, minimal brain dysfunction, dyslexia, and 
developmental aphasia. The term, commonly called, ``specific learning 
disability,'' does not include learning problems that are primarily the 
result of visual, hearing, or motor disabilities; mental retardation; 
emotional disturbance; or environmental, cultural, or economic 
differences.
    Speech and language impairments. A communication disorder, such as 
stuttering, impaired articulation, voice impairment, or a disorder in 
the receptive or expressive areas of language that adversely affects a 
child's educational performance.
    Speech therapy. That related service includes the following:
    (1) Identification of children with communicative or oropharyngeal 
disorders and delays in development of communication skills.
    (2) Diagnosis and appraisal of specific speech or language 
impairments.
    (3) Referral for medical or other professional attention to correct 
or habilitate speech or language impairments.
    (4) Provision of speech and language services for the correction, 
habilitation, and prevention of communicative impairments.
    (5) Counseling and guidance of children, parents, and teachers for 
speech and language impairments.
    Transition services. That term means the following:
    (1) A coordinated set of activities for a student that may be 
required to promote movement from early intervention, preschool, and 
other educational programs into different educational settings or 
programs.

[[Page 237]]

    (2) For students 14 years of age and older, transition services are 
designed in an outcome-oriented process which promotes movement from 
school to postschool activities; including, post-secondary education, 
vocational training, integrated employment; and including supported 
employment, continuing and adult education, adult services, independent 
living, or community participation. The coordinated set of activities 
shall be based on the individual student's needs, considering the 
student's preferences and interests, and shall include instruction, 
community experiences, the development of employment and other 
postschool adult living objectives, and acquisition of daily living 
skills and functional vocational evaluation.
    Transportation. A service that includes the following:
    (1) Services rendered under the IEP of a child with a disability:
    (i) Travel to and from school and between schools, including travel 
necessary to permit participation in educational and recreational 
activities and related services.
    (ii) Travel in and around school buildings.
    (iii) Specialized equipment, including special or adapted buses, 
lifts, and ramps, if required to provide transportation for a child with 
a disability.
    (2) Transportation and related costs for early intervention services 
include the cost of travel (e.g., mileage or travel by taxi, common 
carrier, or other means) and other costs (e.g., tolls and parking 
expenses) that are necessary to enable an eligible child and the family 
to receive early intervention services.
    Traumatic brain injury. An acquired injury to the brain caused by an 
external physical force resulting in total or partial functional 
disability or psychosocial impairment that adversely affects educational 
performance. That term includes open or closed head injuries resulting 
in mild, moderate, or severe impairments in one or more areas including 
cognition, language, memory, attention, reasoning, abstract thinking, 
judgment, problem solving, sensory, perceptual and motor abilities, 
psychosocial behavior, physical function, information processing, and 
speech. That term does not include brain injuries that are congenital or 
degenerative, or brain injuries that are induced by birth trauma.
    Vision services. Services necessary to habilitate or rehabilitate 
the effects of sensory impairment resulting from a loss of vision.
    Visual impairment. An impairment of vision that, even with 
correction, adversely affects a child's educational performance. That 
term includes both partially seeing and blind children.



Sec. 57.4  Policy.

    It is DoD policy that:
    (a) Eligible infants and toddlers with disabilities and their 
families shall be entitled to receive early intervention services 
consistent with Appendix A to this part.
    (b) Eligible children with disabilities, ages 3 to 21, inclusive, 
shall be provided a FAPE in the least restrictive environment, 
consistent with Appendix B to this part.
    (c) Parents of eligible infants, toddlers, and children with 
disabilities from birth to age 21, inclusive, shall be full participants 
in early intervention and special education services.



Sec. 57. 5  Responsibilities.

    (a) The Under Secretary of Defense for Personnel and Readiness 
shall:
    (1) Establish a NAP consistent with Appendix C to this part.
    (2) Establish and chair, or designate a ``Chair,'' of the DoD-CC on 
Early Intervention, Special Education, and MRS consistent with Appendix 
D to this part.
    (3) Establish and chair, or designate a ``Chair,'' of the DoD Inter-
Component Coordinating Council (ICC) on Early Intervention consistent 
with Appendix E to this part.
    (4) Ensure compliance with this part in the provision of early 
intervention services, special education, and related services through 
the DoD-CC, in accordance with DoD Instruction 1342.14 \8\ and other 
appropriate guidances.
---------------------------------------------------------------------------

    \8\ See footnote 1 to Sec. 57.1(a).
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    (5) In consultation with the General Counsel of the Department of 
Defense (GC, DoD) and the Secretaries of the Military Departments, do 
the following:

[[Page 238]]

    (i) Ensure that eligible infants and toddlers with disabilities and 
their families are provided early intervention services under 20 U.S.C. 
921 et seq. and 1400 et seq.
    (ii) Ensure the coordination of early intervention, special 
education, and related services.
    (iii) Ensure the development of a DoD-wide comprehensive child-find 
system to identify eligible infants, toddlers, and children ages birth 
to age 21, inclusive, under 20 U.S.C 921 et seq. and 1400 et seq. who 
may require early intervention or special education services.
    (iv) Ensure that DoD personnel are trained to provide the mediation 
services specified in Appendix F to this part.
    (v) Ensure that transition services are available to promote 
movement from early intervention, preschool, and other educational 
programs into different educational settings and postsecondary 
environments.
    (vi) Ensure that DoD personnel who provide services (e.g., child 
care, medical care, and recreation) to infants and toddlers and their 
families are participants in a comprehensive inter-Component system for 
early intervention services.
    (vii) Assign functions and geographic regions of responsibility to 
the Military Departments for providing MRS and early intervention 
services.
    (viii) Ensure that the Military Departments deliver the following:

    (A) A comprehensive, coordinated and multidisciplinary program of 
early intervention services for eligible infants and toddlers with 
disabilities.
    (B) MRS for eligible children with disabilities, ages 3 to 21, 
inclusive.
    (ix) Ensure that qualified personnel participate in providing 
transition services for eligible infants, toddlers, and children with 
disabilities from birth to age 21, inclusive.
    (x) Ensure the development and implementation of a comprehensive 
system of personnel development for the DoDDS and the Military 
Departments. That system shall include professionals, paraprofessionals, 
and primary referral source personnel in the areas of early 
intervention, special education, and MRS. That system may include the 
following:
    (A) Implementing innovative strategies and activities for the 
recruitment and retention of providers of early intervention services, 
special education, and MRS.
    (B) Ensuring that personnel requirements are established consistent 
with recognized certification, licensing, registration, or other 
comparable requirements for personnel providing early intervention 
services, special education, or MRS.
    (C) Ensuring that training is provided in and across disciplines.
    (D) Training providers of early intervention services, special 
education, and MRS to work overseas.
    (xi) Develop procedures to compile data on the numbers of eligible 
infants and toddlers with disabilities and their families in need of 
early intervention services, in accordance with DoD Directives 5400.7 
and 5400.11.\9\ Those data elements shall include the following:
---------------------------------------------------------------------------

    \9\ See footnote 1 to Sec. 57.1(a).
---------------------------------------------------------------------------

    (A) The number of infants and toddlers and their families served.
    (B) The types of services provided.
    (C) Other information required to evaluate the implementation of 
early intervention programs (EIPs).
    (xii) Resolve disputes in the DoD Components arising under Appendix 
A to this part.
    (b) The Secretaries of the Military Departments shall:
    (1) Provide MRS for eligible children with disabilities, ages 3 to 
21, inclusive.
    (2) Plan, develop, and implement a comprehensive, coordinated, 
intra-Component, and community-based system of early intervention 
services for eligible infants and toddlers with disabilities and their 
families.
    (3) Design and implement activities to ensure compliance through 
technical assistance and program evaluation for early intervention and 
MRS.
    (c) The Director, Department of Defense Education Activity, shall 
ensure that the Director, DoDDS, does the following:
    (1) Ensures that eligible children with disabilities, ages 3 to 21, 
inclusive, are provided a FAPE.
    (2) Ensures that the educational needs of children with and without 
disabilities are met comparably, consistent with Appendix B to this 
part.
    (3) Ensures that educational facilities and services operated by the 
DoDDS for children with and without disabilities are comparable.
    (4) Maintains records on special education and related services 
provided to eligible children with disabilities, ages 3 to 21, 
inclusive, consistent with DoD Directive 5400.11.
    (5) Provides any or all special education and related services 
required by a child with a disability, ages 3 to 21, inclusive, other 
than those furnished by the Secretaries of the Military Departments. The 
Director, DoDDS, may act through inter-Agency,

[[Page 239]]

intra-Agency, and inter-Service arrangements, or through contracts with 
private parties when funds are authorized and appropriated.
    (6) Participates in the development and implementation of a 
comprehensive system of personnel development.
    (7) Undertakes activities to ensure compliance by the DoDDS with 
this part through monitoring, technical assistance, and program 
evaluation of special education and those related services provided by 
the DoDDS.
    (d) The Director, Defense Office of Hearings and Appeals, under the 
General Counsel of the Department of Defense, shall ensure impartial due 
process hearings are provided consistent with Appendix F to this part.



Sec. 57.6  Procedures.

    (a) The procedures for early intervention services for infants and 
toddlers with disabilities and their families are prescribed in Appendix 
A to this part.
    (b) The procedures for educational programs and services for 
children with disabilities, ages 3 to 21, inclusive, are prescribed in 
Appendix B to this part.
    (c) The procedures for conducting hearings are prescribed in 
Appendix F to this part.

      Appendix A to Part 57--Procedures for the Provision of Early 
  Intervention Services for Infants and Toddlers With Disabilities and 
                             Their Families

         A. Requirements for an Early Intervention Program (EIP)

    1. All eligible infants and toddlers with disabilities from birth 
through age 2 and their families shall receive early intervention 
services, as follows:
    a. In school years 1991 through 1994, the Department of Defense 
planned and continues to develop a comprehensive, coordinated, 
multidisciplinary program of early intervention services for infants and 
toddlers with disabilities among DoD entities involved in providing such 
services.
    b. In school year 1994 through 1995, the Department of Defense 
implemented and shall continue to implement the following program 
components described in paragraph A.1.a. of this Appendix:
    (1) Multidisciplinary assessments.
    (2) IFSPs.
    (3) Service coordination.
    c. In school year 1995 through 1996, the Department of Defense shall 
implement the program described in paragraph A.1.a. of this Appendix. 
\1\
---------------------------------------------------------------------------

    \1\ The EIP shall be continuously implemented.
---------------------------------------------------------------------------

    2. Early intervention services shall be provided in the natural 
environment.
    3. Parents of infants and toddlers with disabilities are to be full 
and meaningful participants in the EIP.

                 B. Military Department Responsibilities

    Each Military Department shall develop and implement in its assigned 
geographic area a system to provide for the following:
    1. A comprehensive child find procedure coordinated with the DoDDS 
child find system and primary referral sources such as the child 
development center and the pediatric clinic.
    2. Administration and supervision of EIPs and services.
    3. Identification of available resources and coordination with those 
resource providers, including the DoD Components, who routinely provide 
services to infants and toddlers without disabilities and their 
families.
    4. Procedures to provide timely services for infants and toddlers 
with disabilities and their families.
    5. Procedures to resolve inter-Component disputes about the delivery 
of early intervention services.
    6. Procedures to collect and report data reflecting the number of 
infants and toddlers and their families served, the types of services 
provided, and other information required by the USD(P&R) implementation 
of early intervention services.
    7. Multidisciplinary, comprehensive, and functional assessment of 
the unique strengths and needs of infants or toddlers and the 
identification of services to meet those needs.
    8. Procedures for a family-directed assessment to determine 
resources, priorities, and concerns of a family and to identify services 
necessary to enhance a family's capacity to meet the child's needs.
    9. An IFSP that details the early intervention services and the 
coordination of those services.
    10. A public awareness program focusing on early identification of 
infants and toddlers with disabilities.
    11. A central directory that includes a description of the early 
intervention services and other relevant resources available in each 
military community overseas.
    12. Information to parents about their EIP procedural safeguards.
    13. Establishment of ICCs at appropriate levels. Memberships shall 
include parents and the DoD Components who are involved in the delivery 
of early intervention services.

[[Page 240]]

    14. Policies and procedures for the establishment and maintenance of 
standards to ensure that personnel necessary to carry out the EIP are 
prepared and trained.

                             C. Eligibility

    Infants and toddlers with disabilities from birth through age 2 are 
eligible for early intervention services because they meet one of the 
following criteria:
    1. The child is experiencing a developmental delay as measured by 
diagnostic instruments and procedures of 2 standard deviations below the 
mean in at least one area, or by a 25 percent delay in at least one area 
on assessment instruments that yield scores in months, or a 
developmental delay of 1.5 standard deviations below the mean in two or 
more areas, or by a 20 percent delay on assessment instruments that 
yield scores in months in two or more of the following areas of 
development: Cognitive, physical, communication, social or emotional, or 
adaptive.
    2. The child has a diagnosed physical or mental condition which has 
a high probability of resulting in developmental delay; e.g., 
chromosomal disorders or genetic syndromes.

                                 D. IFSP

    1. Each military medical department shall develop and implement 
procedures to ensure that an IFSP is developed by a multidisciplinary 
team including the parents of each infant or toddler with a disability 
who meets the eligibility criteria in section C.1. of this appendix.
    2. Meetings to develop and review the IFSP must include the 
following participants:
    a. The parent or parents of the child.
    b. Other family members, as requested by the parent, if possible.
    c. An advocate outside of the family, if the parent requests that 
person's participation.
    d. The EIP services coordinator who has worked with the family since 
the initial referral of the child or who has been designated as 
``responsible for the implementation of the IFSP.''
    e. The person(s) directly involved in conducting the evaluations and 
assessments.
    f. As appropriate, persons who shall provide services to the child 
or family.
    3. If a person listed in section D.2. of this appendix is unable to 
attend a meeting, arrangements must be made for the person's involvement 
through other means, including the following:
    a. Participating in a telephone conference call.
    b. Having a knowledgeable representative attend the meeting.
    c. Making pertinent records available at the meeting.
    4. The IFSP shall be written in a reasonable time after assessment 
and shall contain the following:
    a. A statement of the child's current developmental levels including 
physical, cognitive, communication, social or emotional, and adaptive 
behaviors based on acceptable objective criteria.
    b. A statement of the family's resources, priorities, and concerns 
on enhancing the child's development.
    c. A statement of the major outcomes expected to be achieved for the 
child and the family. Additionally, the statement shall contain the 
criteria, procedures, and timeliness used to determine the degree to 
which progress toward achieving the outcomes is being made and whether 
modification or revision of the outcomes and services are necessary.
    d. A statement of the specific early intervention services necessary 
to meet the unique needs of the child and the family including the 
frequency, intensity, and method of delivering services.
    e. A statement of the natural environments in which early 
intervention services shall be provided.
    f. The projected dates for initiation of services and the 
anticipated duration of those services.
    g. The name of the EIP service coordinator.
    h. The steps to be taken supporting the transition of the toddler 
with a disability to preschool or other services.
    5. The IFSP shall be evaluated at least once a year and the family 
shall be provided an opportunity to review the plan at 6-month intervals 
(or more frequently, based on the child and family needs).
    6. The contents of the IFSP shall be explained to the parents and an 
informed, written consent from the parents shall be obtained before 
providing early intervention services described in that plan.
    7. With the parent's consent, early intervention services may begin 
before the completion of the evaluation and assessment when it has been 
determined by a multidisciplinary team that a service is needed 
immediately by the child and/or the child's family. Although all 
assessments have not been completed, an IFSP must be developed before 
the start of services. The remaining assessments must then be completed 
in a timely manner.
    8. If a parent does not provide consent for participation in all 
early intervention services, the services shall still be provided for 
those interventions to which a parent does give consent.

[[Page 241]]

                   E. Procedural Safeguards in the EIP

    1. Parents of infants and toddlers with disabilities are afforded 
the following procedural safeguards to ensure that their children 
receive appropriate early intervention services:
    a. The timely administrative resolution of parental complaints, 
including hearing procedures in appendix F to this part.
    b. The right to confidentiality of personally identifiable 
information under DoD Directive 5400.11.\2\
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    \2\ Copies may be obtained, at cost, from the National Technical 
Information Service, 5285 Port Royal Road, Springfield, VA 22161.
---------------------------------------------------------------------------

    c. The right to written notice and consent to the release of 
relevant information outside the Department of Defense.
    d. The right to determine whether they, their child, or other family 
members shall accept or decline any early intervention services without 
jeopardizing other early intervention services.
    e. The opportunity to examine records on assessment, screening, 
eligibility determinations, and the development and implementation of 
the IFSP.
    f. The right to prior written notice when the EIP multidisciplinary 
team proposes, or refuses, to initiate or change the identification, 
evaluation, placement, or provision of early intervention services to 
the infant or toddler with a disability.
    g. The right to prior written notice in their native language, 
unless it clearly is not possible to do so, which informs them of all 
procedural safeguards.
    h. During the pendency of any proceeding or action involving a 
complaint, unless the EIP and the parents otherwise agree, the child 
shall continue to receive the appropriate early intervention services 
currently being provided, or, if applying for initial services, shall 
receive the services not in dispute.
    2. Parents shall be advised of their rights to due process, as 
defined in appendix F to this part.

Appendix B to Part 57--Procedures for Educational Programs and Services 
         for Children With Disabilities, Ages 3 to 21, Inclusive

                     A. Identification and Screening

    It is the responsibility of school officials of the DoDDS to locate, 
identify, and with the consent of a child's parent, evaluate all 
children who are eligible to enroll in the DoDDS under DoD Directive 
1342.13 \1\ who may require special education and related services.
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    \1\ Copies may be obtained, at cost, from the National Technical 
Information Service, 5285 Port Royal Road, Springfield, VA 22161.
---------------------------------------------------------------------------

    1. Procedures for Identification and Screening. The DoDDS officials 
shall conduct the following activities to determine if a child needs 
special education and related services:
    a. Screen educational records.
    b. Screen students using system-wide or other basic skill tests in 
the areas of reading, math, and language arts.
    c. Screen school health data such as reports of hearing, vision, 
speech, or language tests and reports from healthcare personnel about 
the health status of a child.
    d. Analyze school records to obtain pertinent information about the 
basis for suspensions, exclusions, withdrawals, and disciplinary 
actions.
    e. In cooperation with the Military Departments, conduct on-going 
child-finding activities and publish, periodically, any information, 
guidelines, and direction on child-find activities for eligible children 
with disabilities, ages 3 to 21, inclusive.
    f. Coordinate the transition of children from early intervention to 
preschool with the Military Services.
    2. Referral of a Child for Special Education or Related Services. 
The DoDDS officials, MRS providers, or others who suspect that a child 
has a possible disabling condition shall refer that child to the CSC.

                      B. Assessment and Evaluation

    Any eligible child who is referred to a CSC shall receive a full and 
comprehensive diagnostic evaluation of educational needs. An evaluation 
shall be conducted before an IEP is developed or placement is made in a 
special education program.
    1. Procedures for Assessment and Evaluation. A CSC shall ensure that 
the following elements are included in a comprehensive assessment and 
evaluation of a child:
    a. Assessment of visual and auditory acuity.
    b. A plan to assess the type and extent of the disability. A child 
shall be assessed in all areas related to the suspected disability. When 
necessary, the assessment plan shall include the following:
    (1) Assessment of the level of functioning academically, 
intellectually, emotionally, socially, and in the family.
    (2) Observation in an educational environment.
    (3) Assessment of physical status including perceptual and motor 
abilities.
    (4) Assessment of the need for transition services for students 14 
years and older, the acquisition of daily living skills, and functional 
vocational assessment.
    c. The involvement of parents, under this part.

[[Page 242]]

    d. The use of all locally available community, medical, and school 
resources to accomplish the assessment. At least one specialist with 
knowledge in the area of the suspected disability shall be a member of 
the multidisciplinary assessment team.
    e. The requirement that each assessor prepare an individual 
assessment report that describes the instruments and techniques used, 
the results of the testing, and the relationship of those findings to 
educational functioning.
    f. The inclusion of a description of the problem area constituting 
the basis for an MRS referral.
    2. Standards for Assessment Selection and Procedures. All DoD 
elements, including the CSC and MRS providers, shall ensure that 
assessment materials and evaluation procedures comply, as follows:
    a. Selected and administered so as not to be racially or culturally 
discriminatory.
    b. Administered in the native language or mode of communication of 
the child unless it clearly is not possible to do so.
    c. Validated for the specific purpose for which they are used or 
intended to be used.
    d. Administered by trained personnel in compliance with the 
instructions of the testing instrument.
    e. Administered such that no single procedure is the sole criterion 
for determining an appropriate educational program for a child with a 
disability.
    f. Selected to assess specific areas of educational needs and 
strengths and not merely to provide a single general intelligence 
quotient.
    g. Administered to a child with impaired sensor, motor, or 
communication skills so that the results reflect a child's actual 
ability or level of achievement, and simply not the impaired skill 
itself.
    3. Determination of Eligibility for Special Education and Related 
Services. The CSC shall be convened to determine the eligibility of a 
child for special education and related services. The CSC shall do the 
following:
    a. Ensure that the full comprehensive evaluation of a child is 
accomplished by a multidisciplinary team. The team shall be comprised of 
teachers or other specialists with knowledge in the area of the 
suspected disability.
    b. Meet as soon as possible after a child has been assessed to 
determine the eligibility of the child for services.
    c. Afford the child's parents the opportunity to participate in the 
CSC eligibility meeting.
    d. Issue a written eligibility report that contains the following:
    (1) A description of the nature of the child's disabling condition.
    (2) A synthesis of the formal and informal findings of the 
multidisciplinary assessment team of the child's academic progress.
    (3) A summary of information from the parents, the child, or other 
persons having significant previous contact with the child.
    (4) A determination of eligibility statement.
    (5) A list of the educational areas affected by a child's disability 
and a description of a child's educational needs.
    4. Reevaluation for Eligibility for Special Education and Related 
Services. School officials shall provide a comprehensive reevaluation of 
a child with a disability every 3 years, or more frequently, if 
conditions warrant. The scope and type of the comprehensive reevaluation 
shall be determined individually based on a child's performance, 
behavior, and needs during the reevaluation.

                C. Individualized Education Program (IEP)

    The DoDDS officials shall ensure that the CSC develops and 
implements an IEP for each child with a disability who is enrolled in 
the DoDDS or is placed in another institution by the DoDDS.
    1. The CSC Meeting for the Development and Implementation of an IEP. 
The CSC shall establish and convene a meeting to develop, review, or 
revise the IEP of a child with a disability. That meeting shall be 
scheduled as soon as possible following a determination by the school or 
area CSC that the child is eligible for special education and related 
services. The meeting participants shall, minimally, include the 
following:
    a. A principal or school representative other than the child's 
teacher who is qualified to provide or supervise the provision of 
special education.
    b. The child's teacher.
    c. A special education teacher.
    d. One or both of the child's parents.
    e. The child, if appropriate.
    f. For a child with a disability who has been evaluated for the 
first time, a representative of the evaluation team who is knowledgeable 
about the evaluation procedures used and is familiar with the results of 
the evaluation.
    g. Other individuals invited at the discretion of the parent or 
school.
    2. Requirements for the Development of the IEP. The CSC shall 
prepare the IEP with the following:
    a. A statement of the child's present levels of educational 
performance.
    b. A statement of annual goals including short-term instructional 
objectives.
    c. Objective criteria for determining, at least annually, whether 
the educational objectives are being achieved.
    d. A statement of the physical education program provided in one of 
the following settings:
    (1) In the regular education program.
    (2) In the regular education program with adaptations, 
modifications, or the use of assistive technology.

[[Page 243]]

    (3) Through specially designed instruction based on the goals and 
objectives included in the IEP.
    e. A statement of the transition services beginning at age 14 and 
annually, thereafter. When appropriate, include a statement of the 
inter-Agency responsibilities or linkages (or both) before the student 
leaves the school setting. If a specially designed instructional program 
is required, include the goals and objectives in the IEP.
    f. A statement of special transportation requirement.
    g. A statement of the amount of time a week that each special 
education and related service shall be provided to the child.
    h. The extent to which the child shall participate in regular 
educational programs, including the following:
    (1) The projected date for the initiation and the anticipated length 
of IEP activities and services.
    (2) Any statements requiring an adjusted school day or an extended 
school year program.
    i. A statement of the vocational education program for secondary 
students. If a specially designed instructional program is required, the 
necessary goals and objectives in the IEP shall be included.
    3. Requirements for the Implementation of the IEP. The DoDDS CSC 
shall:
    a. Obtain parental agreement and signature before implementation of 
the IEP.
    b. Provide a copy of the child's IEP to the parents.
    c. Ensure that the IEP is in effect before a child receives special 
education and related services.
    d. Review and revise the IEP for each child at least annually in a 
CSC meeting.
    e. Accept a child's current IEP when he or she transfers to the 
DoDDS if the CSC of the gaining school or the area CSC does the 
following:
    (1) Notifies and obtains consent of the parents to use the current 
IEP and all elements contained in it.
    (2) Involves the local DoD Component responsible for the delivery of 
the MRS of the medical requirements in the IEP.
    (3) Initiates a CSC meeting to revise the current IEP.
    (4) If necessary, initiates an evaluation of the child.
    f. Afford the child's parents the opportunity to participate in 
every CSC meeting to determine their child's initial or continuing 
eligibility for special education and related services, or to prepare or 
change the child's IEP or to determine or change the child's placement.
    g. Ensure that at least one parent understands the special education 
procedures including the due process procedures described in appendix F 
of this part and the importance of the parent's participation in those 
processes. School officials shall use devices or hire interpreters or 
other intermediaries who might be necessary to foster effective 
communications between the school and the parent about the child.
    h. Provide special education and related services, in accordance 
with the IEP. The Department of Defense and its constituent elements and 
personnel are not accountable if a child does not achieve the growth 
projected in the IEP.
    i. Ensure that all provisions developed for any child entitled to an 
education by the DoDDS are fully implemented in schools or in non-DoDDS 
schools or facilities including those requiring special facilities, 
other adaptations, or assistive devices.

        D. Placement Procedures and Least Restrictive Environment

    1. A child shall not be placed by the DoDDS in any special education 
program unless the CSC has developed an IEP. If a child with a 
disability is applying for initial admission to a school, the child 
shall enter on the same basis as a child without a disability. A child 
with a disability and with the consent of a parent and school officials 
may receive an initial placement in a special education program under 
procedures listed in paragraph C.3.e. of this appendix.
    2. A placement decision requires the following:
    a. A parent consent to the placement before actual placement of the 
child, except as otherwise provided in section F.2. of this appendix.
    b. Delivery of educational instruction and related services in the 
least restrictive environment. To the maximum extent, a child with a 
disability should be placed with children who are not disabled. Special 
classes, separate schooling, or other removal of a child with a 
disability from the regular education environment shall occur only when 
the type or severity of the disability is such that education in regular 
classes with the use of supplementary aids and services cannot be 
achieved satisfactorily.
    c. The CSC to base placements on the IEP and to review the IEP at 
least annually.
    d. A child shall participate, to the maximum extent, in school 
activities including meals, assemblies, recess periods, and field trips 
with children who are not disabled.
    e. Consideration of factors affecting the child's well-being 
including the effects of separation from parents.
    f. A child shall attend a DoDDS school that is located as close as 
possible to the residence of the parent who is sponsoring the child's 
attendance. Unless otherwise required by the IEP, the school should be 
the same school that the child would have attended had he or she not 
been disabled.

[[Page 244]]

  E. Children With Disabilities Who Are Placed in a Non-DOD School or 
                                Facility

    Children with disabilities who are eligible to receive a DoDDS 
education, but are placed in a non-DoDDS school or facility by the 
DoDDS, shall have all the rights of children with disabilities who are 
enrolled in a DoDDS school. A child with a disability may be placed in a 
non-DoDDS school or facility only if required by the IEP.

      1. Requirements for a Non-DoDDS School or Facility Placement

    a. Placement in a non-DoDDS school or facility shall be made under 
the host-nation requirements.
    b. Placement in a non-DoDDS school or facility is subject to all 
treaties, Executive agreements, and status of forces agreements between 
the United States and the host nations, and all DoD and DoDDS 
regulations.
    c. If the DoDDS places a child with a disability in a non-DoDDS 
school or facility as a means of providing special education and related 
services, the program of that institution including nonmedical care and 
room and board, as in the child's IEP, must be provided at no cost to 
the child or the child's parents. The DoDDS or the responsible DoD 
Component shall pay the costs in accordance with DoD 1010.13-R \2\.
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    \2\ See footnote 1 to section A. of this appendix.
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    d. Local school officials shall initiate and conduct a meeting to 
develop an IEP for the child before placement. A representative of the 
non-DoDDS school or facility should attend the meeting. If the 
representative cannot attend, the DoDDS officials shall communicate in 
other ways to ensure participation including individual or conference 
telephone calls. The IEP must meet the following standards:
    (1) Be signed by an authorized DoDDS official before it becomes 
valid.
    (2) Include a determination that the DoDDS does not currently have 
or cannot reasonably create an educational program appropriate to meet 
the needs of the child with a disability.
    (3) Include a determination that the non-DoDDS school or facility 
and its educational program and related services conform to the 
requirements of this part.
    2. Cost of Tuition For Non-DoDDS School or Facility. The Department 
of Defense is not authorized to fund non-DoDDS placement unless it is 
directed by the DoDDS Area Superintendent in coordination with the 
Director, DoDDS; or it is directed by an impartial hearing officer or 
court of competent jurisdiction. A valid IEP must document the necessity 
of the placement in a non-DoDDS school or facility.

            F. Procedural Safeguards for Children and Parents

    Parents of children with disabilities are afforded procedural 
safeguards to ensure that their children receive a free public education 
consistent with appendix F to this part.

                   1. Notice of Procedural Safeguards

    a. Parents shall be provided a written notice in a reasonable time 
before one of the following:
    (1) Receiving a proposal to initiate or change the identification, 
evaluation, or educational placement of the child or the provision of 
free public education to the child.
    (2) Receiving refusal from the DoDDS to initiate or change the 
identification, evaluation, or educational placement of the child or the 
provision of a free public education.
    b. The notice shall inform the parent of the following:
    (1) Parental procedural rights detailed in appendix F to this part.
    (2) A description of the action proposed or refused by the DoDDS 
with a brief explanation for the decision.
    c. The notice shall be provided so as to ensure the parent's 
understanding. That may be achieved by using simplified language, 
delivering the notice in the parent's native language, or using an 
interpreter or other person selected by the parents.

                           2. Parental Consent

    a. The consent of a parent of a child with a disability or suspected 
of having a disability shall be obtained before any of the following:
    (1) Initiation of formal evaluation procedures.
    (2) Initial educational placement.
    (3) Change in educational placement.
    b. If the parent refuses consent to any formal evaluation or initial 
placement in a special education program, the DoDDs or the parent may do 
the following:
    (1) Request a conference between the school and parents.
    (2) Request mediation.
    (3) Initiate an impartial due process hearing under appendix F to 
this part, to show cause as to why an evaluation or placement in a 
special education program should or should not occur without such 
consent. If the hearing officer sustains the DoDDS position in the 
impartial due process hearing, the DoDDS may evaluate or provide special 
education and related services to the child without the consent of a 
parent, subject to the further exercise of due process rights.

                        3. Independent Evaluation

    a. A parent is entitled to an independent evaluation at the expense 
of the DoDDS if

[[Page 245]]

the parent disagrees with the DoDDS evaluation of the child and 
successfully challenges the evaluation in an impartial due process 
hearing. An independent evaluation provided at the DoDDS expense must do 
the following:
    (1) Conform to the requirements of this part.
    (2) Be conducted, when possible, in the area where the child 
resides.
    (3) Meet DoD standards governing persons qualified to conduct an 
educational evaluation including an evaluation for MRS.
    b. If the final decision rendered in an impartial due process 
hearing sustains the DoDDS evaluation, the parent has the right to an 
independent evaluation, but not at the DoDDS expense.
    c. The DoDDS, the CSC, and a hearing officer appointed under this 
part shall consider any evaluation report presented by a parent.
    4. Access to Records. The parents of a child with a disability shall 
be afforded an opportunity to inspect and review educational records 
about the identification, evaluation, and educational placement of the 
child, and the provision of a free public education for the child.

                          5. Due Process Rights

    a. The parent of a child with a disability or the DoDDS has the 
opportunity to file a written petition for an impartial due process 
hearing at the DoDDS expense under appendix F to this part. The dispute 
may concern issues effecting a partial child's identification, 
evaluation, or placement, or the provision of a free and appropriate 
public education.
    b. While an impartial due process hearing or judicial proceeding is 
pending, unless the DoDDS and a parent of the child agree otherwise, the 
child shall remain in the present educational setting, subject to the 
disciplinary procedures prescribed in section H. of this appendix.
    6. Dispute Resolution--Other Complaints. A parent, teacher, or other 
person covered by this part may file a written complaint about any 
aspect of this part that is not a proper subject for adjudication by a 
due process hearing officer, in accordance with DSR 2500.10.\3\
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    \3\ Copies of the appropriate forms are available at every school 
office.
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                      G. Confidentiality of Records

    The DoDDS officials shall maintain all student records, in 
accordance with DoD Directive 5400.11.\4\
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    \4\ See footnote 1 to section A. of this appendix.
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                       H. Disciplinary Procedures

    All regular disciplinary rules and procedures applicable to children 
receiving educational instruction in the DoDDS shall apply to children 
with disabilities who violate school rules and regulations or disrupt 
regular classroom activities, subject to the following provisions:
    1. Before suspending or expelling a child with a disability, the CSC 
or, a child with a disability in a non-DoDDS school, authorized DoDDS 
officials, shall determine the following:
    a. Whether the behavioral conduct is the result of the child's 
disability.
    b. If any change in the educational placement is needed.
    2. If it is determined that the child's conduct results in whole or 
part from the disability, the child may not be subject to any regular 
disciplinary rules and procedures and the following procedures must be 
followed:
    a. The child's parents shall be notified of the right to have an IEP 
meeting before any change in the child's educational placement.
    b. The CSC or authorized DoDDS officials shall ensure that a meeting 
is held to determine the appropriate educational placement for the child 
in consideration of the child's conduct.
    c. The child may not be suspended for more than 10 days during a 
school year.
    3. A child with a disability may be suspended on an emergency basis 
when it reasonably appears that the child's behavior may endanger the 
health, welfare, or safety of self or any other child, teacher, or 
school personnel. The following conditions apply:
    a. The child's parents shall be notified immediately of that 
suspension and of the time, purpose, and location of the CSC meeting and 
of their right to attend the meeting.
    b. That suspension remains in effect only for the duration of the 
emergency.
    4. If it is determined that the child requires a change in 
educational placement, the CSC or, in the case of a child with a 
disability in a non-DoDDS school, authorized DoDDS officials shall 
ensure that a meeting is held to determine the appropriate educational 
placement for the child in consideration of the child's conduct.

    Appendix C to Part 57--The National Advisory Panel (Nap) on the 
                Education of Dependents With Disabilities

                              A. Membership

    The NAP shall meet as needed in publicly announced, accessible 
meetings open to the general public and shall comply with DoD

[[Page 246]]

Directive 5105.4\1\. The NAP members, appointed by the Secretary of 
Defense, or designee, shall include at least one representative from 
each of the following groups.
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    \1\ Copies may be obtained, at cost, from the National Technical 
Information Service, 5285 Port Royal Road, Springfield, VA 22161.
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    1. Persons with disabilities
    2. The DoDDS special education teachers
    3. The DoDDS regular education teachers.
    4. Parents of children, ages 3 to 21, inclusive, who are receiving 
special education from the DoDDS.
    5. The staff personnel of the DoDDS Headquarters.
    6. Special education program managers from the DoDDS field 
activities.
    7. Representatives of the Military Departments and overseas 
commands, including providers of related services.
    8. Providers of the DoD early intervention services.
    9. Other appropriate persons.

                              B. Activities

    1. The NAP shall perform the following activities:
    a. Review information about improvements in service provided to 
children with disabilities, ages 3 to 21, inclusive in the Department of 
Defense.
    b. Receive and consider comments from parents, students, 
professional groups, and individuals with disabilities.
    c. When necessary establish committees for short-term purposes 
comprised of representatives from parent, student, professional groups, 
and individuals with disabilities.
    d. Review the findings of fact and decisions of each impartial due 
process hearing conducted under appendix F of this part.
    e. Assist in developing and reporting such information and 
evaluations as may assist the Department of Defense.
    f. Make recommendations based on program and operational information 
for changes in policy and procedures and in the budget, organization, 
and general management of the special education program.
    g. Comment publicly on rules or standards about the education of 
children with disabilities, ages 3 to 21, inclusive.
    h. Perform such other tasks as may be requested by the USD(P&R) or 
the Director, DoDDS.
    2. The NAP members shall serve under appointments that shall be for 
a term not to exceed 3 years.

                        C. Reporting Requirements

    Submit an annual report of the NAP's activities and suggestions to 
the USD(P&R) and the Director, DoDDS, by July 31 of each year. That 
report is exempt from formal review and licensing under section E. of 
DoD Instruction 7750.7.\2\
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    \2\ See footnote 1 to section A. of this appendix.
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Appendix D to Part 57--DoD Coordinating Committee on Early Intervention, 
            Special Education, and Medically Related Services

                         A. Committee Membership

    The committee shall meet at least twice yearly to facilitate 
collaboration in early intervention, special education, and Medically 
Related Services (MRS) in the Department of Defense. The committee shall 
consist of the following members:
    1. A representative of the USD(P&R) or designee, who shall serve as 
the Chair.
    2. Representatives of the Secretaries of the Military Departments.
    3. Representatives of the Assistant Secretary of Defense (Health 
Affairs) (ASD(HA)).
    4. Representatives from the DoD school systems (domestic and 
overseas).
    5. Representatives from the GC, DoD.

                           B. Responsibilities

    1. Advise and assist the USD(P&R) in the performance of his or her 
responsibilities.
    2. At the direction of the USD(P&R), advise and assist the Military 
Departments, and the DoD school systems (overseas and domestic) in the 
coordination of services among providers of early intervention, special 
education, and MRS.
    3. Ensure compliance in the provision of early intervention services 
for infants and toddlers and special education and related services for 
children ages 3 to 21, inclusive.
    4. Oversee the coordination of early intervention, special 
education, and related services.
    5. Review the recommendations of the NAP and the Early Intervention 
ICC to identify common concerns, ensure coordination of effort, and 
forward issues requiring resolution to the USD(P&R).
    6. Promote the coordination of services and information sharing 
among the providers of early intervention, special education, and MRS.
    7. Assist in the coordination of assignments of sponsors who have 
children with disabilities who are or who may be eligible for special 
education and MRS in the DoDDS or the EIP through the Military 
Departments.

[[Page 247]]

Appendix E to Part 57--DoD Inter-Component Coordinating Council (ICC) on 
                           Early Intervention

                          A. Council Membership

    The USD(P&R) shall appoint members to the ICC. The Council shall 
meet at least yearly in publicly announced, open meetings that are 
accessible to the general public and shall comply with DoD Directive 
5105.4.\1\ The Council shall be comprised of the following:
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    \1\ Copies may be obtained, at cost, from the National Technical 
Information Service, 5285 Port Royal Road, Springfield, VA 22161.
---------------------------------------------------------------------------

    1. Parents. At least 20 percent of the members shall be parents with 
infants or toddlers with disabilities or children ages 12 or younger 
with disabilities, with knowledge of, or experience with, programs for 
infants and toddlers with disabilities. At least one such member shall 
be a parent of an infant or toddler or a child age 6 or younger.
    2. Representatives of the Surgeons General of the Military 
Departments.
    3. Representatives of the family support programs of the Military 
Departments.
    4. Representatives from the ASD(HA).
    5. Representative(s) from the DoDDS.
    6. A representative from the GC, DoD.

                           B. Responsibilities

    1. Advise and assist the Military medical Departments in the 
performance of their responsibilities, particularly the identification 
of appropriate resources and Agencies for providing early intervention 
services and the promoting of inter-Component agreements.
    2. Advise and assist the DoDDS on the transition of toddlers with 
disabilities to preschool services.
    3. Identify strategies to address areas of conflict, overlap, 
duplication, or omission of early intervention services.
    4. Review policy memoranda on effective inter-Department and inter-
Component collaboration.
    5. Review reports of technical assistance and monitoring activities 
and make recommendations to improve the policies, procedures, programs, 
and delivery of early intervention services.
    6. Make recommendations based on program and operational information 
for changes in the policy, procedures, budget, organization, and general 
management of the EIPs.
    7. Provide advice and technical assistance in the establishment, 
membership, and operation of installation or command level ICCs.
    8. When necessary, establish committees for short-term purposes 
comprised of parents of children with disabilities, service providers, 
and representatives of professional groups.
    9. Submit an annual report of its activities and suggestions to the 
USD(P&R) by July 31 of each year. That report is exempt from formal 
review and licensing under section E. of DoD Instruction 7750.7.\2\
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    \2\ See footnote 1 to section A. of this appendix.
---------------------------------------------------------------------------

                              C. Procedures

    1. The USD(P&R) shall nominate and select all members to the ICC to 
include those listed in section A.1. of this appendix.
    2. Appointments shall be for a term not to exceed 3 years except for 
DoD personnel who are not representing the parent category of 
membership.
    3. The USD(P&R), or designee, shall call and conduct the meeting of 
the Council.

         Appendix F to Part 57--Mediation and Hearing Procedures

                               A. Purpose

    This appendix establishes requirements for the resolution of 
conflicts through mediation and impartial due process hearings. Parents 
of infants, toddlers, and children who are covered by this Instruction 
and, as the case may be, the cognizant Military Department or the DoDDS 
are afforded impartial mediation and/or impartial due process hearings 
and administrative appeals about the provision of early intervention 
services, or the identification, evaluation, educational placement of, 
and the FAPE provided to, such children by the Department of Defense, in 
accordance with 20 U.S.C. 921 et seq. and 1400 et seq.

                              B. Mediation

    1. Mediation may be initiated by either a parent or the Military 
Department concerned, or the DoDDS to resolve informally a disagreement 
on the early intervention services for an infant or toddler or the 
identification, evaluation, educational placement of, or the FAPE 
provided to, a child age 3 to 21, inclusive. The cognizant Military 
Department, rather than the DoDDS, shall participate in mediation 
involving early intervention services. Mediation shall consist of, but 
not be limited to, an informal discussion of the differences between the 
parties in an effort to resolve those differences. The parents and the 
school or Military Department officials may attend mediation sessions.
    2. Mediation must be conducted, attempted, or refused in writing by 
a parent of the infant, toddler, or child whose early intervention or 
special education services (including related services) are at issue 
before a request for, or initiation of, a formal due process hearing 
authorized by this appendix. Any request by the DoDDS or the Military 
Department for a hearing under

[[Page 248]]

this appendix shall state how that requirement has been satisfied. No 
stigma may be attached to the refusal of a parent to mediate or to an 
unsuccessful attempt to mediate.

                        C. Hearing Administration

    1. The Defense Office of Hearings and Appeals (DOHA) shall have 
administrative responsibility for the proceedings authorized by sections 
D. through G. of this appendix.
    2. This appendix shall be administered to ensure that the findings, 
judgments, and determinations made are prompt, fair, and impartial.
    3. Impartial hearing officers who shall be DOHA Administrative 
Judges, shall be appointed by the Director, DOHA, and shall be attorneys 
in good standing of the bar of any State, the District of Columbia, or a 
territory or possession of the United States who are independent of the 
DoDDS or the Military Department concerned in proceedings conducted 
under this appendix. A parent shall have the right to be represented in 
such proceedings, at no cost to the Government, by counsel, and by 
persons with special knowledge or training with respect to the problems 
of individuals with disabilities. The DOHA Department counsel normally 
shall appear and represent the DoDDS in proceedings conducted under this 
appendix, when such proceedings involve a child age 3 to 21, inclusive. 
When an infant or toddler is involved, the Military Department 
responsible under this Instruction for delivering early intervention 
services shall either provide its own counsel or request counsel from 
DOHA.

                    D. Hearing Practice and Procedure

                               1. Hearing

    a. Should mediation be refused or otherwise fail to resolve the 
issues on the provision of early intervention services to an infant or 
toddler or the identification or evaluation of such an individual, the 
parent may request and shall receive a hearing before a hearing officer 
to resolve the matter. The parents of an infant or toddler and the 
Military Department concerned shall be the only parties to a hearing 
conducted under this appendix.
    b. Should mediation be refused or otherwise fail to resolve the 
issues on the provision of a FAPE to a child with a disability, age 3 to 
21, inclusive, or the identification, evaluation, or educational 
placement of such an individual, the parent or the school principal, for 
the DoDDS, may request and shall receive a hearing before a hearing 
officer to resolve the matter. The parents of a child age 3 to 21, 
inclusive, and the DoDDS shall be the only parties to a hearing 
conducted under this appendix.
    c. The party seeking the hearing shall submit a written request, in 
the form of a petition, setting forth the facts, issues, and proposed 
relief, to the Director, DOHA. The petitioner shall deliver a copy of 
the petition to the opposing party (i.e., the parent or the school 
principal, for the DoDDS, or the military MTF commander, for the 
Military Department), either in person or by first-class mail, postage 
prepaid. Delivery is complete on mailing. When the DoDDS or the Military 
Department petitions for a hearing, it shall inform the other parties of 
the deadline for filing an answer under paragraph D.1.c. of this 
appendix, and shall provide the other parties with a copy of this part.
    d. An opposing party shall submit an answer to the petition to the 
Director, DOHA, with a copy to the petitioner, within 15 calendar days 
of receipt of the petition. The answer shall be as full and complete as 
possible, addressing the issues, facts, and proposed relief. The 
submission of the answer is complete on mailing.
    e. In 10 calendar days after receiving the petition, the Director, 
DOHA, shall assign a hearing officer, who then shall have jurisdiction 
over the resulting proceedings. The Director, DOHA, shall forward all 
pleadings to the hearing officer.
    f. The questions for adjudication shall be based on the petition and 
the answer, if a party may amend a pleading if the amendment is filed 
with the hearing officer and is received by the other parties at least 5 
calendar days before the hearing.
    g. The Director, DOHA, shall arrange for the time and place of the 
hearing, and shall provide administrative support. Such arrangements 
shall be reasonably convenient to the parties.
    h. The purpose of a hearing is to establish the relevant facts 
necessary for the hearing officer to reach a fair and impartial 
determination of the case. Oral and documentary evidence that is 
relevant and material may be received. The technical rules of evidence 
shall be relaxed to permit the development of a full evidentiary record, 
with the ``Federal Rules of Evidence'' (Rules 1-1102) of 28 U.S.C., 
serving as a guide.
    i. The hearing officer shall be the presiding officer, with judicial 
powers to manage the proceeding and conduct the hearing. Those powers 
shall include the authority to order an independent evaluation of the 
child at the expense of the DoDDS or the Military Department concerned 
and to call and question witnesses.
    j. Those normally authorized to attend a hearing shall be the 
parents of the individual with disabilities, the counsel and personal 
representative of the parents, the counsel and professional employees of 
the DoDDS or the Military Department concerned, the hearing officer, and 
a person qualified to transcribe or record the proceedings. The

[[Page 249]]

hearing officer may permit other persons to attend the hearing, 
consistent with the privacy interests of the parents and the individual 
with disabilities, if the parents have the right to an open hearing on 
waiving in writing their privacy rights and those of the individual with 
disabilities.
    k. A verbatim transcription of the hearing shall be made in written 
or electronic form and shall become a permanent part of the record. A 
copy of the written transcript or electronic record of the hearing shall 
be made available to a parent on request and without cost. The hearing 
officer may allow corrections to the written transcript or electronic 
recording for conforming it to actual testimony after adequate notice of 
such changes is given to all parties.
    l. The hearing officer's decision of the case shall be based on the 
record, which shall include the petition, the answer, the written 
transcript or the electronic recording of the hearing, exhibits admitted 
into evidence, pleadings or correspondence properly filed and served on 
all parties, and such other matters as the hearing officer may include 
in the record, if such matter is made available to all parties before 
the record is closed under paragraph D.1.m. of this appendix.
    m. The hearing officer shall make a full and complete record of a 
case presented for adjudication.
    n. The hearing officer shall decide when the record in a case is 
closed.
    o. The hearing officer shall issue findings of fact and render a 
decision in a case not later than 50 calendar days after being assigned 
to the case, unless a discovery request under section D.2. of this 
appendix, is pending.

                              2. Discovery

    a. Full and complete discovery shall be available to parties to the 
proceeding, with the ``Federal Rules of Civil Procedure,'' Rules 26-37, 
codified at 28 U.S.C. serving as a guide.
    b. If voluntary discovery cannot be accomplished, a party seeking 
discovery may file a motion with the hearing officer to accomplish 
discovery, provided such motion is founded on the relevance and 
materiality of the proposed discovery to the issues. An order granting 
discovery shall be enforceable as is an order compelling testimony or 
the production of evidence.
    c. A copy of the written or electronic transcription of a deposition 
taken by the DoDDS or the Military Department concerned shall be made 
available free of charge to a parent.

                  3. Witnesses; Production of Evidence

    a. All witnesses testifying at the hearing shall be advised that it 
is a criminal offense knowingly and willfully to make a false statement 
or representation to a Department or Agency of the U.S. Government as to 
any matter in the jurisdiction of that Department or Agency. All 
witnesses shall be subject to cross-examination by the parties.
    b. A party calling a witness shall bear the witness' travel and 
incidental expenses associated with testifying at the hearing. The DoDDS 
or the Military Department concerned shall pay such expenses when a 
witness is called by the hearing officer.
    c. The hearing officer may issue an order compelling the attendance 
of witnesses or the production of evidence on the hearing officer's own 
motion or, if good cause be shown, on motion of a party.
    d. When the hearing officer determines that a person has failed to 
obey an order to testify or to produce evidence, and such failure is in 
knowing and willful disregard of the order, the hearing officer shall so 
certify.
    e. The party or the hearing officer seeking to compel testimony or 
the production of evidence may, on the certification provided for in 
paragraph D.3.d. of this appendix, file an appropriate action in a court 
of competent jurisdiction to compel compliance with the hearing 
officer's order.

           4. Hearing Officer's Findings of Fact and Decision

    a. The hearing officer shall make written findings of fact and shall 
issue a decision setting forth the questions presented, the resolution 
of those questions, and the rationale for the resolution. The hearing 
officer shall file the findings of fact and decision with the Director, 
DOHA, with a copy to the parties.
    b. The Director, DOHA, shall forward to the Director, DoDDS, or to 
the Military Department concerned, and to the NAP or the ICC, as 
appropriate, copies with all personally identifiable information 
deleted, of the hearing officer's findings of fact and decision or, in 
cases that are administratively appealed, of the final decision of the 
DOHA Appeal Board.
    c. The hearing officer shall have the authority to impose financial 
responsibility for early intervention services, educational placements, 
evaluations, and related services under his or her findings of fact and 
decision.
    d. The findings of fact and decision of the hearing officer shall 
become final unless a notice of appeal is filed under section F.1. The 
DoDDS or the Military Department concerned shall implement a decision as 
soon as practicable after it becomes final.

                    E. Determination Without Hearing

    1. At the request of a parent of an infant, toddler, or child age 3 
to 21, inclusive, when early intervention or special educational 
(including related) services are at issue, the requirement for a hearing 
may be waived, and

[[Page 250]]

the case may be submitted to the hearing officer on written documents 
filed by the parties. The hearing officer shall make findings of fact 
and issue a decision in the period fixed by paragraph D.1.o. of this 
appendix.
    2. The DoDDS or the Military Department concerned may oppose a 
request to waive that hearing. In that event, the hearing officer shall 
rule on that request.
    3. Documents submitted to the hearing officer in a case determined 
without a hearing shall comply with paragraph D.1.h. of this appendix. A 
party submitting such documents shall provide copies to all other 
parties.

                                F. Appeal

    1. A party may appeal the hearing officer's findings of fact and 
decision by filing a written notice of appeal with the Director, DOHA, 
within 5 calendar days of receipt of the findings of fact and decision. 
The notice of appeal must contain the appellant's certification that a 
copy of the notice of appeal has been provided to all other parties. 
Filing is complete on mailing.
    2. Within 10 calendar days of filing the notice of appeal, the 
appellant shall submit a written statement of issues and arguments to 
the Director, DOHA, with a copy to the other parties. The other parties 
shall submit a reply or replies to the Director, DOHA, within 15 
calendar days of receiving the statement, and shall deliver a copy of 
each reply to the appellant. Submission is complete on mailing.
    3. The Director, DOHA, shall refer the matter on appeal to the DOHA 
Appeal Board. It shall determine the matter, including the making of 
interlocutory rulings, within 60 calendar days of receiving timely 
submitted replies under section F.2. of this appendix. The DOHA Appeal 
Board may require oral argument at a time and place reasonably 
convenient to the parties.
    4. The determination of the DOHA Appeal Board shall be a final 
administrative decision and shall be in written form. It shall address 
the issues presented and set forth a rationale for the decision reached. 
A determination denying the appeal of a parent in whole or in part shall 
state that the parent has the right under 20 U.S.C. 921 et seq. and 1400 
et seq., to bring a civil action on the matters in dispute in a district 
court of the United States without regard to the amount in controversy.
    5. No provision of this Instruction or other DoD guidance may be 
construed as conferring a further right of administrative review. A 
party must exhaust all administrative remedies afforded by this appendix 
before seeking judicial review of a determination made under this 
appendix.

             G. Publication and Indexing of Final Decisions

    The Director, DOHA, shall ensure that final decisions in cases 
arising under this appendix are published and indexed to protect the 
privacy rights of the parents who are parties in those cases and the 
children of such parents, in accordance with DoD Directive 5400.11\1\.
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    \1\ Copies may be obtained, at cost, from the National Technical 
Information Service, 5285 Port Royal Road, Springfield, VA 22161.
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PART 58--HUMAN IMMUNODEFICIENCY VIRUS (HIV-1)--Table of Contents




Sec.
58.1 Purpose.
58.2 Applicability.
58.3 Definitions.
58.4 Policy.
58.5 Responsibilities.
58.6 Procedures.

Appendix A to Part 58--Administration of Officer Applicants
Appendix B to Part 58--HIV-1 Testing of DoD Civilian Employees
Appendix C to Part 58--Personnel Notification and Epidemiological 
          Investigation

    Authority: 10 U.S.C. 113.

    Source: 56 FR 15281, Apr. 16, 1991, unless otherwise noted.



Sec. 58.1  Purpose.

    This part supersedes Deputy Secretary of Defense Memorandum, 
``Policy on Identification, Surveillance, and Administration of 
Personnel Infected with Human Immunodeficiency Virus (HIV),'' August 4, 
1988, Deputy Secretary of Defense Memorandum, ``Recommendations for 
Revision of DoD Human Immunodeficiency Virus (HIV) Policies,'' March 8, 
1988, Assistant Secretary of Defense (Health Affairs) Memorandum, 
``Policy on Clinical Evaluation, Staging and Disease Coding of Military 
Personnel Infected with Human Immunodeficiency Virus (HIV),'' September 
11, 1987, Assistant Secretary of Defense (Health Affairs) Memorandum, 
``The DoD HTLV-III Testing Program,'' December 5, 1985, Assistant 
Secretary of Defense (Health Affairs) Memorandum, ``Military 
Implementation of Public Health Service Provisional Recommendations 
Concerning Testing Blood and Plasma for Antibodies to HTLV-III,'' July 
17, 1985,

[[Page 251]]

to update policy, responsibilities, and procedures on identification, 
surveillance, and administration of civilian and military personnel 
infected with HIV-1.



Sec. 58.2  Applicability.

    This part applies to the Office of the Secretary of Defense, the 
Military Departments (including their Reserve components), the Chairman 
of the Joint Chiefs of Staff and the Joint Staff, the Unified and 
Specified Commands, and the Defense Agencies (hereafter referred to 
collectively as ``the DoD Components''). The term ``Military Services,'' 
as used herein, refers to the Army, the Navy, the Air Force, and the 
Marine Corps.



Sec. 58.3  Definitions.

    (a) Human Immunodeficiency Virus-1 (HIV-1). The virus most commonly 
associated with the Acquired Immune Deficiency Syndrome (AIDS) in the 
United States.
    (b) HIV-1 and/or AIDS Education Program. Any combination of 
information, education, and behavior-change strategies designed to 
facilitate behavioral alteration that will improve or protect health. 
Included are those activities intended to support or influence 
individuals in managing their own health through lifestyle decisions and 
self-care. Operationally, such programs include community, worksite, and 
clinical aspects using appropriate public health education 
methodologies.
    (c) Serologic Evidence of HIV-1 Infection. A reactive result given 
by a Food and Drug Administration (FDA)-approved enzyme-linked 
immunosorbent assay (ELISA) serologic test that is confirmed by a 
reactive and diagnostic immunoelectrophoresis test (Western blot (WB)) 
test on two separate samples.
    (d) Host Nation. A foreign nation to which DoD U.S. civilian 
employees are assigned to perform their official duties.
    (e) DoD Civilian Employees. Current and prospective DoD U.S. 
civilian employees, including appropriated and nonappropriated fund 
personnel. This does not include members of the family of DoD civilian 
employees, employees of, or applicants for, positions with contractors 
performing work for the Department of Defense, or their families.
    (f) Epidemiological Assessment. The process by which personal and 
confidential information on the possible modes of transmission of HIV-1 
are obtained from an HIV-1 infected person. This information is used to 
determine if previous, present, or future contacts of the infected 
individual are at risk for infection with HIV-1 and to prevent further 
transmission of HIV-1.



Sec. 58.4  Policy.

    It is DoD policy to:
    (a) Deny eligibility for appointment or enlistment for Military 
Service to individuals with serologic evidence of HIV-1 infection.
    (b) Screen active duty (AD) and Reserve component military personnel 
periodically for serologic evidence of HIV-1 infection.
    (c) Refer AD personnel with serologic evidence of HIV-1 infection 
for a medical evaluation of fitness for continued service in the same 
manner as personnel with other progressive illnesses, as specified in 
DoD Directive 1332.18.\1\ Medical evaluation shall be conducted in 
accordance with the standard clinical protocol, as described in the 
Standard Clinical Protocol.\2\ Individuals with serologic evidence of 
HIV-1 infection who are fit for duty shall not be retired or separated 
solely on the basis of serologic evidence of HIV-1 infection. AD 
personnel with serological evidence of HIV-1 infection or who are ELISA 
repeatedly reactive, but WB negative or indeterminate, shall be advised 
to refrain from donating blood.
---------------------------------------------------------------------------

    \1\ Copies may be obtained at cost, from the National Technical 
Information Services, 5285 Port Royal Road, Springfield, VA 22161.
    \2\ Forward requests for copies to the Office of the Assistant 
Secretary of Defense (Health Affairs), the Pentagon, Washington, DC 
20301-1200.
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    (d) Deny eligibility for extended AD (duty for a period of more than 
30 days) to those Reserve component members with serologic evidence of 
HIV-1 infection (except under conditions of mobilization and on the 
decision of the Secretary of the Military Department concerned). Reserve 
component members who are not on extended AD or who are

[[Page 252]]

not on extended full-time National Guard duty, and who show serologic 
evidence of HIV-1 infection, shall be transferred involuntarily to the 
Standby Reserve only if they cannot be utilized in the Selected Reserve.
    (e) Retire or separate AD or Reserve Service members infected with 
HIV-1 who are determined to be unfit for further duty, as implemented in 
DoD Directive 1332.18.
    (f) Ensure the safety of the blood supply through policies of the 
Head of the Armed Services Blood Program Office, the FDA guidelines, and 
the accreditation requirements of the Head of the American Association 
of Blood Banks.
    (g) Comply with applicable statutory limitations on the use of the 
information obtained from a Service member during, or as a result of, an 
epidemiologic assessment interview and the results obtained from 
laboratory tests for HIV-1, as provided in this part.
    (h) Control transmission of HIV-1 through an aggressive disease 
surveillance and health education program.
    (i) Provide education and voluntary HIV-1 serologic screening for 
DoD healthcare beneficiaries (other than Service members).
    (j) Comply with host-nation requirements for HIV-1 screening of DoD 
civilian employees, as described in appendix B to this part.



Sec. 58.5  Responsibilities.

    (a) The Assistant Secretary of Defense (Health Affairs), in 
coordination with the Assistant Secretary of Defense (Force Management 
and Personnel) (ASD(FM&P)), the General Counsel of the Department of 
Defense (GC, DoD), and the Assistant Secretary of Defense (Reserve 
Affairs), is responsible for establishing policies, procedures, and 
standards for the identification, surveillance, and administration of 
personnel infected with HIV-1. The Assistant Secretary of Defense 
(Health Affairs) (ASD(HA)) shall provide overall policy guidance and 
approval for the HIV-1 and/or AIDS education and information efforts and 
shall establish the HIV-1 and/or AIDS Information and Education 
Coordinating Committee.
    (b) The Secretaries of the Military Departments shall establish 
Service policies, procedures, and standards for the identification, 
surveillance, education, and administration of personnel infected with 
HIV-1, based on and consistent with all sections of this part.
    (c) The Assistant Secretary of Defense (Force Management and 
Personnel) shall establish and revise policies governing HIV-1 screening 
of DoD civilian employees assigned to, performing official travel in, or 
deployed on ships with ports of call at host nations, in coordination 
with the ASD(HA), the Assistant Secretary of Defense (International 
Security Affairs), and the GC, DoD.
    (d) The Assistant Secretary of Defense (International Security 
Affairs) shall identify or confirm host-nation HIV-1 screening 
requirements for DoD civilians, transmit this information to the 
ASD(FM&P), and coordinate requests for screening with the Secretary of 
State.
    (e) The Heads of the DoD Components shall implement HIV-1 screening 
policies and procedures for DoD civilian employees identified in 
Sec. 58.5(c) and shall take the following actions:
    (1) Report newly established host-nation HIV-1 screening 
requirements to the ASD(FM&P) and provide sufficient background 
information to support a decision. This reporting requirement is exempt 
from licensing, in accordance with DoD 7750.5-M,\3\ paragraph E.4.b.
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    \3\ See footnote 1 to Sec. 58.4(c)
---------------------------------------------------------------------------

    (2) Develop and distribute policy implementing instructions.
    (3) Establish procedures to notify individuals who are evaluated as 
HIV-1 seropositive and provide initial counseling to them.



Sec. 58.6  Procedures.

    (a) Applicants for Military Service and, periodically, AD and 
Reserve component military personnel shall be screened for serologic 
evidence of HIV-1 infection. Testing and interpretation of results shall 
be in accordance with the procedures in HIV-1 Testing and Interpretation 
of Results.\4\ Test results shall be reported to the Reportable Disease 
Data Base, as described in the ASD(HA) Memorandum.
---------------------------------------------------------------------------

    \4\ See footnote 2 to Sec. 58.4(c)

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[[Page 253]]

    (b) Applicants for enlisted service shall be screened at the 
Military Entrance Processing Stations or the initial point of entry to 
Military Service. Applicants who enlist under a delayed enlistment 
program, but before entry on AD and who exhibit serologic evidence of 
HIV-1 infection, may be discharged due to erroneous enlistment.
    (c) Officer candidates shall be screened during their preappointment 
and/or precontracting physical examination. The disposition of officer 
applicants who are ineligible for appointment due to serologic evidence 
of HIV-1 infection shall be in accordance with the procedures in 
appendix A of this part.
    (d) Applicants for Reserve components shall be screened during the 
normal entry physical examinations or in the preappointment programs 
established for officers. Those individuals with serologic evidence of 
HIV-1 infection who are required to meet accession medical fitness 
standards to enlist, or be appointed, are not eligible for Military 
Service with the Reserve components.
    (e) Initial testing and periodic retesting of AD and Reserve 
component personnel shall be accomplished in the priority listed in 
Disease Surveillance and Health Education.\5\
---------------------------------------------------------------------------

    \5\ See footnote 2 to Sec. 58.4(c).
---------------------------------------------------------------------------

    (f) AD personnel (including Active Guard and/or Reserve) who exhibit 
serologic evidence of HIV-1 infection shall receive a medical 
evaluation. Guard and Reserve personnel, not on extended AD, must obtain 
a medical evaluation from a civilian physician.
    (g) The Head of each Military Service shall appoint an HIV-1 and/or 
AIDS education program coordinator to serve as the focal point for all 
HIV-1 and/or AIDS education program issues and to integrate the 
educational activities of the medical and personnel departments.
    (h) An HIV-1 and/or AIDS Information and Education Coordinating 
Committee shall be established to enhance communication among the Heads 
of the Military Services, recommend joint education policy and program 
actions, review education program implementation, and recommend 
methodologies and procedures for program evaluation. That committee 
shall be chaired by a representative of the ASD(HA). Members shall 
include two representatives from the Office of the ASD(FM&P) 
(OASD(FM&P)), and the HIV-1 and/or AIDS education program coordinator 
from each Military Service. Additional members shall represent the Armed 
Services Blood Program Office and, on an ad hoc basis, the Office of the 
ASD(HA). Policy and program proposals shall be coordinated with the 
Secretaries of the Military Departments.
    (i) The Head of each Military Service shall prepare a plan for the 
implementation of a comprehensive HIV-1 and/or AIDS education program 
that includes specific objectives with measurable action steps. The plan 
shall address information, education, and behavior-change strategies, as 
described in Disease Surveillance and Health Education.
    (j) Civilians may not be mandatorily tested for serologic evidence 
of HIV-1 infection except as necessary to comply with valid host-nation 
requirements for screening of DoD employees. Procedures for mandatory 
screening of DoD civilians shall be in accordance with appendix B of 
this part.
    (k) The medical assessment of each exposure to, and/or case of, HIV-
1 infection seen at a military medical treatment facility (MTF) shall 
include an epidemiological assessment of the potential transmission of 
HIV-1 to other persons at risk of infection, including sexual and other 
intimate contacts and family of the patient, and transfusion history. 
The occurrence of HIV-1 infection or serologic evidence of HIV-1 
infection may not be used as a basis for any disciplinary action against 
an individual, except as described in Limitations on the Use of 
Information.\6\
---------------------------------------------------------------------------

    \6\ See footnote 2 to Sec. 58.4(c).
---------------------------------------------------------------------------

    (l) Each Head of a military medical service shall ensure conduction 
of an ongoing clinical evaluation of each AD Service member with 
serological evidence of HIV-1 infection at least annually. CD4 
lymphocyte percentages or counts shall be monitored at least every 6 
months. Appropriate preventive

[[Page 254]]

medicine counseling shall also be provided to all individual patients, 
and public health education materials shall be made available to that 
medical services' beneficiary population. Each Head of a military 
medical service shall ensure conduction of longitudinal clinical 
evaluations of AD Service members with serologic evidence of HIV-1 
infection and shall ensure preparation of internal reports to facilitate 
timely review and reassessment of current policy guidelines.
    (m) All Heads of the military MTFs shall notify promptly the 
cognizant military health authority, when there is clinical or 
laboratory evidence indicative of infection with HIV-1, in accordance 
with appendix C of this part.
    (n) The Secretary of each Military Department shall ensure that a 
mechanism is established to gather data on the epidemiology of HIV-1 
infection of its members. Such epidemiological research shall be 
accomplished to ensure appropriate protection of information given by 
the Service member on the means of transmission.
    (o) The Secretary of the Army, as the Head of the lead Agency for 
infectious disease research within the Department of Defense, shall 
budget for and fund tri-Military Department DoD HIV-1 research efforts, 
in accordance with guidance provided by the ASD(HA). The research 
program shall focus on the epidemiology and natural history of HIV-1 
infections in military and military associated populations; on improving 
the methods for rapid diagnosis and patient evaluation; and on studies 
of the immune response to HIV-1 infection, including the potential for 
increased risk in the military operational environment.
    (p) Service members with serologic evidence of HIV-1 infection shall 
be assigned within the United States, including Alaska, Hawaii, and 
Puerto Rico, due to the high priority assigned to the continued medical 
evaluation of military personnel. The Secretaries of the Military 
Departments may restrict such individuals to nondeployable units or 
positions for purposes of force readiness. To protect the health and 
safety of Service members with serologic evidence of HIV-1 infection and 
of other Service members (and for no other reason), the Secretaries of 
the Military Departments may, on a case-by-case basis, limit assignment 
of HIV-1-infected individuals on the nature and location of the duties 
performed in accordance with operational requirements.
    (q) AD and Reserve component personnel with serologic evidence of 
HIV-1 infection shall be retained or separated in accordance with 
Retention and Separation.\7\
---------------------------------------------------------------------------

    \7\ See footnote 2 to Sec. 58.4(c).
---------------------------------------------------------------------------

    (r) The ASD(HA), in coordination with the Heads of the Military 
Services, shall revise Standard Clinical Protocol, HIV-1 Testing and 
Interpretation of Results, Disease Surveillance and Health Education, 
Procedure for Evaluating T-Helper Cell Count, as appropriate. The 
ASD(FM&P) shall revise appendix B to this part, as appropriate, through 
publication in the Federal Register. Revisions under this paragraph 
shall be in coordination with the GC, DoD.

       Appendix A to Part 58--Administration of Officer Applicants

    Administration of officer applicants who are ineligible for 
appointment, due to serologic evidence of HIV-1 infection, shall be in 
accordance with the following provisions:
    A. Enlisted members who are candidates for appointment through 
Officer Candidate School (OCS) or Officer Training School (OTS) programs 
shall be disenrolled immediately from the program. If OCS and/or OTS is 
the individual's initial entry training, the individual shall be 
discharged. If the sole basis for discharge is serologic evidence of 
HIV-1 infection, an honorable or entry-level discharge, as appropriate, 
shall be issued. A candidate who has completed initial entry training 
during the current period of service before entry into candidate status 
shall be administered in accordance with Service regulations for 
enlisted personnel.
    B. Individuals in preappointment programs, such as Reserve Officer 
Training Corps (ROTC) and Health Professions Scholarship Program 
participants, shall be disenrolled from the program. However, the Head 
of the Military Service concerned, or the designated representative, may 
delay disenrollment to the end of the academic term (i.e., semester, 
quarter, or similar period) in which serologic evidence of HIV-1 
infection is confirmed. Disenrolled participants shall be permitted to 
retain any financial support through the end of the academic

[[Page 255]]

term in which the disenrollment is effected. Financial assistance 
received in these programs is not subject to recoupment, if the sole 
basis for disenrollment is serologic evidence of HIV-1 infection.
    C. Service academy cadets, midshipmen, and personnel attending the 
Uniformed Services University of the Health Sciences (USUHS) shall be 
separated from the respective Service academy or USUHS and discharged. 
The Head of the Military Service concerned, or the designated 
representative, may delay separation to the end of the current academic 
year. A cadet or midshipman granted such a delay in the final academic 
year, who is otherwise qualified, may be graduated without commission 
and, thereafter, discharged. If the sole basis for discharge is 
serologic evidence of HIV-1 infection, an honorable discharge shall be 
issued.
    D. Commissioned officers in DoD-sponsored professional education 
programs leading to appointment in a professional military specialty 
(including, but not limited to, medical, dental, chaplain, and legal 
and/or judge advocate) shall be disenrolled from the program at the end 
of the academic term in which serologic evidence of HIV-1 infection is 
confirmed. Disenrolled officers shall be administered in accordance with 
Service regulations. Except as specifically prohibited by statute, any 
additional Service obligation incurred by participation in such programs 
shall be waived, and financial assistance received in these programs 
shall not be subject to recoupment. Periods spent by such officers in 
these programs shall be applied fully toward satisfaction of any 
preexisting Service obligation.
    E. All personnel disenrolled from officer programs who are to be 
separated shall be given appropriate counseling, to include preventive 
medicine counseling and advice to seek treatment from a civilian 
physician.

     Appendix B to Part 58--HIV-1 Testing of DoD Civilian Employees

    A. Requests for authority to screen DoD civilian employees for HIV-1 
shall be directed to the ASD(FM&P). Only requests that are based on a 
host-nation HIV-1 screening requirement shall be accepted. Requests 
based on other concerns, such as sensitive foreign policy or medical 
healthcare issues, shall not be considered under this part. Approvals 
shall be provided in writing by the ASD(FM&P). Approvals shall apply to 
all of the Heads of the DoD Components that may have activities located 
in the host nation.
    B. Specific HIV-1 screening requirements may apply to DoD civilian 
employees currently assigned to positions in the host nation, and to 
prospective employees. When applied to prospective employees, HIV-1 
screening shall be considered as a requirement imposed by another nation 
that must be met before the final decision to select the individual for 
a position or before approving temporary duty or detail to the host 
nation. The Secretary of Defense has made no official commitment, for 
positions located in host nations with HIV-1 screening requirements, to 
those individuals who refuse to cooperate with the screening requirement 
or to those who cooperate and are diagnosed as HIV-1 seropositive.
    C. DoD civilian employees who refuse to cooperate with the screening 
requirement shall be treated, as follows:
    1. Those who volunteered for the assignment, whether permanent or 
temporary, shall be retained in their official position without further 
action and without prejudice to employee benefits, career progression 
opportunities, or other personnel actions to which those employees are 
entitled under applicable law or regulation.
    2. Those who are obligated to accept asssignment to the host nation 
under the terms of an employment agreement, regularly scheduled tour of 
duty, or similar and/or prior obligation may be subjected to an 
appropriate adverse personnel action under the specific terms of the 
employment agreement or other authorities that may apply.
    3. Host-nation screening requirements, which apply to DoD civilian 
employees currently located in that county, also must be observed. 
Appropriate personnel actions may be taken, without prejudice to 
employee rights and privileges, to comply with the requirements.
    D. Individuals who are not employed in the host nation, who accept 
the screening, and who are evaluated as HIV-1 seropositive shall be 
denied the assignment on the basis that evidence of seronegativity is 
required by the host nation. If denied the assignment, such DoD 
employees shall be retained in their current positions without 
prejudice. Appropriate personnel actions may be taken, without prejudice 
to employee rights and privileges, on DoD civilian employees currently 
located in the host nation. In all cases, employees shall be given 
proper counseling and shall retain all the rights and benefits to which 
they are entitled, including accommodations for the handicapped as in 
the ASD(FM&P) Memorandum \1\ ``Information and Guidance on Human 
Immunodeficiency Virus (HIV)'' January 22, 1988 and FPM Bulletin, 792-42 
\2\ and for employees in the United States (29 U.S.C. 794). Non-DoD 
employees should be referred to appropriate support service 
organizations.
---------------------------------------------------------------------------

    \1\ See footnote 2 to Sec. 58.4(c).
    \2\ See footnote 2 to Sec. 58.4(c).
---------------------------------------------------------------------------

    E. Some host nations may not bar entry to HIV-1-seropositive DoD 
civilian employees, but may require reporting of such individuals to 
host-nation authorities. In such

[[Page 256]]

cases, DoD civilian employees who are evaluated as HIV-1 seropositive 
shall be informed of the reporting requirements. They shall be counseled 
and given the option of declining the assignment and retaining their 
official positions without prejudice or notification to the host nation. 
If assignment is accepted, the requesting authority shall release the 
HIV-1 seropositive result, as required. Employees currently located in 
the host nation may also decline to have seropositive results released. 
In such cases, they may request and shall be granted early return at 
Government expense or other appropriate personnel action without 
prejudice to employee rights and privileges.
    F. A positive confirmatory test by WB must be accomplished on an 
individual if the screening test (ELISA) is positive. A civilian 
employee may not be identified as HIV-1 antibody positive, unless the 
confirmatory test (WB) is positive. The clinical standards in this 
Directive shall be observed during initial and confirmatory testing.
    G. Procedures shall be established by the Heads of the DoD 
Components to protect the confidentiality of test results for all 
individuals, consistent with the ASD(FM&P) Memorandum and DoD Directive 
5400.11.\3\
---------------------------------------------------------------------------

    \3\ See footnote 1 to Sec. 58.4(c).
---------------------------------------------------------------------------

    H. Tests shall be provided by the Heads of the DoD Components at no 
cost to the DoD civilian employees, including applicants.
    I. DoD civilian employees infected with HIV-1 shall be counseled 
appropriately.

   Appendix C to Part 58--Personnel Notification and Epidemiological 
                              Investigation

                        A. Personnel Notification

    1. On notification by a medical health authority of an individual 
with serologic or other laboratory or clinical evidence of HIV-1 
infection, the cognizant military health authority shall undertake 
preventive medicine intervention, including counseling of the individual 
and others at risk of infection, such as his or her sexual contacts (who 
are military healthcare beneficiaries), on transmission of the virus. 
The cognizant military health authority shall coordinate with the Heads 
of the military and civilian blood bank organizations and preventive 
medicine authorities to trace back possible exposure through blood 
transfusion or donation of infected blood (ASD(HA)) Memorandum and refer 
appropriate case-contact information to the appropriate military or 
civilian health authority.
    2. All individuals with serologic evidence of HIV-1 infection who 
are military healthcare beneficiaries shall be counseled by a physician 
or a designated healthcare provider on the significance of a positive 
antibody test. They shall be advised as to the mode of transmission of 
that virus, the appropriate precautions and personal hygiene measures 
required to minimize transmission through sexual activities and/or 
intimate contact with blood or blood products, and of the need to advise 
any past sexual partners of their infection. Women shall be advised of 
the risk of perinatal transmission during past, current, and future 
pregnancies. The infected individuals shall be informed that they are 
ineligible to donate blood and shall be placed on a permanent donor 
deferral list.
    3. Service members identified to be at risk shall be counseled and 
tested for serologic evidence of HIV-1 infection. Other DoD 
beneficiaries, such as retirees and family members, identified to be at 
risk shall be informed of their risk and offered serologic testing, 
clinical evaluation, and counseling. The names of individuals identified 
to be at risk who are not eligible for military healthcare shall be 
provided to civilian health authorities in the local area where the 
index case is identified, unless prohibited by the appropriate State or 
host-nation civilian health authority. Such notification shall comply 
with the Privacy Act (5 U.S.C. 552a). Anonymity of the HIV-1 index case 
shall be maintained, unless reporting is required by civil authorities.
    4. Blood donors who demonstrate repeatedly reactive ELISA tests for 
HIV-1, but for whom WB or other confirmatory test is negative or 
indeterminate, and who cannot be reentered into the blood donor pool 
shall be appropriately counseled.

                    B. Epidemiological Investigation

    1. Epidemiological investigation shall attempt to determine 
potential contacts of patients who have serologic or other laboratory or 
clinical evidence of HIV-1 infection. The patient shall be informed of 
the importance of case-contact notification to interrupt disease 
transmission and shall be informed that contacts shall be advised or 
their potential exposure to HIV-1. Individuals at risk of infection 
include sexual contacts (male and female); children born to infected 
mothers; recipients of blood, blood products, organs, tissues, or sperm; 
and users of contaminated intravenous drug paraphernalia. Those 
individuals determined to be at risk who are identified and who are 
eligible for healthcare in the military medical system shall be 
notified. Additionally, the Secretaries of the Military Departments 
shall provide for the notification, either through local public health 
authorities or by DoD healthcare professionals, of the spouses of 
Reserve component members found to be HIV-1-infected. Such notifications 
shall comply with the Privacy Act (5 U.S.C. 552a). The Secretaries of 
the Military Departments

[[Page 257]]

shall designate all spouses (regardless of the Service affiliation of 
the HIV-1-infected Reservist) who are notified under this provision to 
receive serologic testing and counseling on a voluntary basis from MTFs 
under the Secretaries' of the Military Departments jurisdiction.
    2. Communicable disease reporting procedures of civil authorities 
shall be followed to the extent consistent with this Directive through 
liaison between the military public health authorities and the 
appropriate local, State, territorial, Federal, or host-nation health 
jurisdiction.



PART 59--VOLUNTARY MILITARY PAY ALLOTMENTS--Table of Contents




Sec.
59.1 Purpose.
59.2 Applicability.
59.3 Policy.
59.4 Responsibilities.

    Authority: 37 U.S.C. chapter 13.

    Source: 52 FR 34215, Sept. 10, 1987, unless otherwise noted.



Sec. 59.1  Purpose.

    This part updates the policies that implement title 37 U.S. Code, 
chapter 13 and govern voluntary allotments of pay and allowances for 
active and retired members.



Sec. 59.2  Applicability.

    This part applies to the Office of the Secretary of Defense and the 
Military Departments. The term ``Military Service,'' as used herein, 
refers to the Army, Navy, Air Force, and Marine Corps.



Sec. 59.3  Policy.

    (a) General. (1) The voluntary allotment system is provided 
primarily as a means to assist military members in accommodating their 
personal and family financial responsibilities to the exigencies of 
military service. It is a convenience and privilege not to be exploited 
or abused. To avoid unjustifiable expense to the government, its use 
shall be limited to the purposes outlined in the following paragraphs.
    (2) All existing approved registered allotments of military pay and 
allowances for active duty and retired members that were authorized 
previously by this part at the time registered may be continued as 
approved allotments. However, if any such allotments are discontinued, 
they may not be reestablished except as a new allotment in accordance 
with the requirements of this part. Any change in the allotment that is 
initiated by the service member is considered a discontinuance, except 
those that are beyond the control of the service member.
    (3) Changes beyond the control of the service member are changes 
that are of an administrative nature dictated by events incidental to 
the purpose of the allotment. Examples of administrative changes that 
are beyond the control of the service member are: name and address 
changes by the payee or amount changes due to contractual obligation 
existing at the time the allotment was executed, such as a mortgage 
payment change because of a variable rate mortgage or changing escrow 
requirements. Although the changes given above do not constitute a 
discontinuance, such administrative changes that adjust the amount of 
the allotment shall be accepted only when communicated by the service 
member on a new allotment request. Discontinuance occurs with any 
mortgage refinancing action.
    (4) A change in allotment initiated by an organizational allottee 
may be accepted when the change is documented properly, is of an 
administrative nature, and does not increase the amount allotted.
    (b) Active Military Service. Voluntary allotments of military pay 
and allowances of service members in active military service shall be 
limited to the following:
    (1) The purchase of U.S. savings bonds.
    (2) The payment of premiums for insurance on the life of the 
allotter, including U.S. Government Life Insurance, National Service 
Life Insurance, Veterans Group Life Insurance, Navy Mutual Aid 
Insurance, Army Mutual Aid Insurance, and commercial life insurance.
    (i) Allotments for insurance on the lives of a spouse or children.
    (ii) Allotments for health, accident, or hospitalization insurance 
or other contracts that, as a secondary or incidental feature, include 
insurance on the life of the service member are not authorized.

[[Page 258]]

    (iii) Requests to initiate commercial life insurance allotments 
shall be processed only after compliance with requirements of 32 CFR 
part 276.
    (3) The repayment of loans to the Navy Relief Society, Army 
Emergency Relief, Air Force Aid Society, and American Red Cross.
    (4) Allotments to a spouse, former spouses, other dependents, and 
relatives who are not designated legally as dependents. The payment of 
such an allotment to a financial institution or association shall not 
deprive a service member of the use of the allotments authorized by 
paragraph (b)(6) of this section.
    (5) The voluntary liquidation of indebtedness to the United States.
    (i) This includes indebtedness incurred by reason of defaulted notes 
insured by the Federal Housing Administration or guaranteed by the 
Veterans Administration (VA); payment of amounts due under the Retired 
Serviceman's Family Protection Plan, in the case of retired service 
members serving on active duty; payment of delinquent Federal income 
taxes; and other indebtedness to any department or agency of the U.S. 
Government, except to the department paying the service member.
    (ii) This includes repayment of debts owed to an organization for 
funds administered on behalf of the U.S. Government and any such debts 
assigned to a collection agency.
    (6) The payment to a financial organization for credit to an account 
of the service member. A financial organization is any bank, savings 
bank, savings and loan association or similar institution, or Federal or 
State chartered credit union. Monies thus credited to the service 
member's account may then be used for any purpose in accordance with the 
desires and direction of the service member. No more than two such 
allotments under this paragraph shall be allowed any service member at 
any one time.
    (7) Repayment of loans obtained for the purchase of a home, 
including a mobile home or house trailer used as a residence by the 
service member. This does not authorize repayment of loans for business 
purposes or for additions or improvements to homes, mobile homes, or 
house trailers. Allotments authorized herein are in addition to those 
authorized under paragraph (b)(6) of this section. Only one such 
allotment shall be allowed any service member at any one time.
    (8) Charitable contributions to the following:
    (i) A Combined Federal Campaign, in accordance with DOD Directive 
5035.1, ``Fund-Raising Within the Department of Defense,'' April 7, 
1978, and DOD Instruction 5035.5, ``DoD Combined Federal Campaign-
Overseas Areas (CFC-OA),'' August 23, 1978.
    (ii) Army Emergency Relief, Navy Relief Society, or affiliates of 
the Air Force Assistance Fund.
    (9) Deposits to the account of a service member participating in the 
Uniformed Services Savings Deposit Program under 10 U.S.C. 1035. This 
program is limited to service members in a missing status as a result of 
the Vietnam conflict.
    (10) Allotments to the VA for deposit to the Post-Vietnam Era 
Veterans Education Account within the periodic and cumulative depository 
limitations specified in DOD Directive 1322.8, ``Voluntary Educational 
Programs for Military Personnel,'' July 23, 1987. Once authorized by the 
service member, the allotments must run a minimum of 12 consecutive 
months, unless the service member suspends participation or disenrolls 
from the program because of personal hardship
    (11) Payment of delinquent State or local income or employment 
taxes.
    (12) Dental and health insurance allotments for the benefit of the 
families of service members.
    (c) Retired military personnel. (1) Voluntary allotments be service 
members receiving retired or retainer pay shall be limited to the 
following:
    (i) Purchase of U.S. savings bonds.
    (ii) Payment of premiums for insurance on the life of the service 
member including U.S. Government Life Insurance, National Service Life 
Insurance, Veterans Group Life Insurance, Navy Mutual Aid Insurance, 
Army Mutual Aid Insurance, and commercial life insurance, subject to the 
limitations prescribed in paragraph (b)(2) (i) and (ii) of this section.

[[Page 259]]

    (iii) Voluntary liquidation of indebtedness to the United States, 
subject to the limitations prescribed in paragraph (b)(5) of this 
section--
    (iv) Allotments to a spouse, former spouse, and/or children of the 
retired service member having a permanent residence other than that of 
the retired service member.
    (v) Charitable contributions to the Army Emergency Relief, Navy 
Relief Society, or affiliates of the Air Force Assistance Fund.
    (vi) The repayment of loans to the Army Emergency Relief, Navy 
Relief Society, Air Force Aid Society, or American Red Cross.
    (2) To assist personnel in the transition from active duty to 
retired status, all allotments authorized for active duty service 
members may be continued, except those allotments in paragraph (b) 
(8)(i), (9) and (10) of this section. However, if an allotment continued 
from active duty, but not authorized by paragraph (c)(1) of this section 
is discontinued by the retiree, such an allotment may not be 
reestablished.
    (d) Exclusions and Restrictions. (1) The amount of pay and 
allowances that may be allotted shall exclude amounts required to be 
withheld for taxes, liquidations of indebtedness determined under 
applicable provisions of law to be chargeable against the service 
member's pay account, or required premiums on Servicemen's Group Life 
Insurance.
    (2) The total amount that may be allotted shall comply with the 
restrictions in the DOD Military Pay and Allowances Entitlements Manual 
and DOD 1340.12-M, ``DOD Military Retired Pay Manual.''
    (e) Control and use of forms. (1) Allotment requests shall be 
accepted only on authorized allotment forms, unless otherwise provided 
in this part. Supplies of allotment forms shall not be made available to 
non-Federal organizations, except that each Military Department may 
authorize issuance of forms to the Army Emergency Relief, Navy Relief 
Society, the Air Force Aid Society, and American Red Cross.
    (2) Active duty enlisted service members shall sign the allotment 
authorization form in the presence of the service member's commanding 
officer, personnel or disbursing officer, or one of their representative 
who shall witness the signature. The Military Departments may waive this 
requirement for senior enlisted service members and loan repayment 
allotments payable to the Army Emergency Relief, Navy Relief Society, 
the Air Force Aid Society, and American Red Cross.
    (3) Charitable contribution allotment requests by enlisted members 
may be accepted without a witnessing official, when submitted on 
contribution forms in accordance with DOD Directive 5035.1 and DOD 
Instruction 5035.5.
    (4) Retired military personnel need not submit allotment requests on 
the prescribed forms. A signed personal letter may be used to support an 
allotment request, change, or cancellation by retired military members 
as long as all required information is provided.



Sec. 59.4  Responsibilities.

    (a) The Assistant Secretary of Defense (Comptroller) shall exercise 
primary management responsibility for the voluntary military pay 
allotment program and provide assistance to the Military Departments in 
the form of instructions, requirements, reviews, and other guidance.
    (b) The Secretaries of the Military Departments shall ensure that 
this part is implemented by the Military Services concerned.



PART 61--MEDICAL MALPRACTICE CLAIMS AGAINST MILITARY AND CIVILIAN PERSONNEL OF THE ARMED FORCES--Table of Contents




Sec.
61.1 Purpose.
61.2 Applicability.
61.3 Delegation of authority.
61.4 Procedures.

    Authority: Pub. L. 94-464, sec. 1(a), 90 Stat. 1985, 10 U.S.C. 
1089(f), 2733 and 5 U.S.C. 301.

    Source: 43 FR 15148, Apr. 11, 1978, unless otherwise noted.



Sec. 61.1  Purpose.

    This Directive: (a) Delegates authority, with the power to 
redelegate, to the Secretaries of the Military Departments to provide 
relief to health care personnel of the Department of Defense

[[Page 260]]

from personal tort liability in connection with their authorized 
activities, and (b) establishes procedures to be followed in providing 
such relief.



Sec. 61.2  Applicability.

    The provisions of this Directive apply to the Office of the 
Secretary of Defense, the Military Departments, and all other Department 
of Defense Components.



Sec. 61.3  Delegation of authority.

    (a) The authority vested in the Secretary of Defense by title 10 
U.S.C. section 1089(f) hold harmless or provide liability insurance for 
Department of Defense health care personnel is hereby delegated to:
    (1) The Secretary of each Military Department for military members 
and civilian employees of his Department, and
    (2) The Secretary of the Army for civilian employees of the Office 
of the Secretary of Defense and Department of Defense Components other 
than the Military Departments (see DoD Directive 5515.9).\1\
---------------------------------------------------------------------------

    \1\ Filed as part of original. Copies may be obtained, if needed, 
from the U.S. Naval Publications and Forms Center, 5801 Tabor Avenue, 
Philadelphia, Pa. 19120 Attention: Code 301.
---------------------------------------------------------------------------

    (b) The authority delegated above may be redelegated as appropriate 
and necessary to carry out the provisions of title 10, U.S.C., section 
1089(f).



Sec. 61.4  Procedures.

    (a) In all cases under title 10 U.S.C. section 1089, medical 
personnel shall be required to:
    (1) Promptly forward all process served upon them or attested true 
copies thereof to the appropriate official designated by the Secretary 
of the Military Department concerned;
    (2) Furnish such other information and documents as the Attorney 
General may request; and
    (3) Comply with the directions of the Attorney General relative to 
the final disposition of a claim for damages.
    (b) The procedures set forth in title 10 U.S.C. section 2733 and 
regulations issued pursuant thereto shall be utilized in determining 
costs, settlements, or judgments under title 10 U.S.C. section 1089(f).



PART 62b--DRUNK AND DRUGGED DRIVING BY DoD PERSONNEL--Table of Contents




Sec.
62b.1 Purpose.
62b.2 Applicability.
62b.3 Policy.
62b.4 Procedures.
62b.5 Responsibilities.
62b.6 DoD Intoxicated Driving Prevention Task Force.
62b.7 Definitions.

Appendix 1 to Part 62b--Driver's License Information (Sample Letter)
Appendix 2 to Part 62b--State Driver's License Agencies

    Authority: 10 U.S.C. 131.

    Source: 48 FR 41581, Sept. 16, 1983, unless otherwise noted.



Sec. 62b.1  Purpose.

    This part:
    (a) Establishes DoD policy regarding drunk and drugged driving by 
DoD personnel (hereafter referred to as ``intoxicated driving'').
    (b) Assigns responsibility for and explains DoD policy and 
procedures on the establishment and operation of the DoD Intoxicated 
Driving Prevention Program, which is designed to address the problem of 
and increase the awareness and attention given to intoxicated driving by 
DoD personnel.
    (c) Establishes the DoD Intoxicated Driving Prevention Task Force 
(DIDPTF).



Sec. 62b.2  Applicability.

    This part applies to the Office of the Secretary of Defense, the 
Military Departments, the Organization of the Joint Chiefs of Staff, the 
Unified and Specified Commands, and the Defense Agencies (hereafter 
referred to collectively as ``DoD Components''). The term ``Military 
Services,'' as used herein, refers to the Army, Navy, Air Force, and 
Marine Corps.



Sec. 62b.3  Policy.

    (a) Intoxicated driving is incompatible with the maintenance of high 
standards of performance, military discipline, DoD personnel 
reliability, and

[[Page 261]]

readiness of military units and supporting activities. It is DoD policy 
to reduce significantly the incidence of intoxicated driving within the 
Department of Defense through a coordinated program of education, 
indentification, law enforcement, and treatment. Specifically, the goal 
of the DoD Intoxicated Driving Prevention Program is to reduce the 
number of fatalities and injuries suffered by DoD personnel and the 
amount of property damage that result from intoxicated driving. Persons 
who engage in intoxicated driving, regardless of the geographic location 
of the incident, have demonstrated a serious disregard for the safety of 
themselves and others. It is appropriate for military commanders, in the 
exercise of their inherent authority, to protect the mission of an 
installation and the safety of persons and property therein to restrict 
driving privileges of persons who engage in such actions.
    (b) The Department of Defense shall participate in the national 
effort to prevent intoxicated driving by maintaining appropriate 
relationships with other governmental agencies and private organizations 
and shall cooperate with responsible civil authorities consistent with 
statutory and regulatory constraints in detecting, identifying, 
apprehending, prosecuting, educating, and counseling intoxicated drivers 
and in reporting cases as required by State laws and applicable Status 
of Forces Agreements.



Sec. 62b.4  Procedures.

    (a) Education and training. (1) The Military Services shall provide 
drug and alcohol education that focuses on intoxicated driving for each 
of the following: law enforcement, public information, emergency room, 
and safety personnel. Club managers, bartenders, and waitresses serving 
alcoholic beverages and Class VI or package sales personnel shall 
receive annual refresher training. In addition, leadership curricula at 
all levels (PCO/PXO indoctrination, training for judge advocates and 
military judges, and officer and noncommissioned officer schools) shall 
include specific information and a review of current Military Service 
policy on intoxicated driving.
    (2) Other DoD Components shall provide similar instruction in 
conjunction with the training and education requirements of part 62a of 
this title.
    (3) DoD Components shall cooperate, to the extent feasible and 
permitted by law and regulation, with community leaders and existing 
grassroots organizations that are working to combat intoxicated driving, 
in planning and implementing local education efforts.
    (b) Suspension of driving privileges. Each DoD Component of its 
supporting agency that regulates driving privileges shall establish 
procedures for mandatory suspension of driving privileges on military 
installations and in areas subject to military traffic supervision. They 
shall establish procedures for acquiring arrest reports and other 
official documentation of intoxicated driving incidents consistent with 
applicable laws and regulations. Such procedures shall be sufficiently 
flexible to meet local needs.
    (1) Military personnel and their family members, retired members of 
the Military Services, DoD civilian personnel, and others with 
installation driving privileges may have those driving privileges 
suspended, regardless of the geographic location of an intoxicated 
driving incident.
    (i) Suspension is authorized for non-DoD civilians only with respect 
to incidents occurring on the military installation or in areas subject 
to military traffic supervision.
    (ii) With respect to DoD civilian personnel covered by a negotiated 
agreement, a suspension under this paragraph may be reviewed only to the 
extent required by the negotiated agreement applicable to the affected 
employee. Such matters mandatorily are excluded from DoD Component 
administrative grievance procedures. A grievance under such a procedure 
will not delay imposition of a preliminary or 1-year suspension of 
driving privileges.
    (iii) A notice of suspension will not become effective until 24 
hours after the incident for which a suspension is imposed. However, 
this provision does not preclude appropriate action to prevent an 
intoxicated person from operating a motor vehicle, nor does it affect 
the validity of an earlier suspension imposed on the same individual.

[[Page 262]]

    (iv) A hearing authorized under paragraph (b) (2), (3), or (5) of 
this section, shall be conducted by the installation commander. The 
power to conduct a hearing and make a decision may be delegated only to 
an official whose primary duties are not in the field of law 
enforcement. At a hearing under this paragraph, the individual shall 
have the right to present evidence and witnesses at his or her own 
expense. The individual may be represented by counsel at his or her own 
expense. DoD civilian personnel may have a personal representative 
present in accordance with applicable laws and regulations.
    (2) Suspension based upon lawful apprehension. (i) Preliminary 
suspension of driving privileges is mandatory based upon an arrest 
report or other official documentation of the circumstances of an 
apprehension for intoxicated driving.
    (ii) The individual shall be notified in writing of the preliminary 
suspension. The notice shall include the arrest report or other 
documentation and shall inform the individual that a 1-year suspension 
can be imposed upon conviction, imposition of nonjudicial punishment, or 
action by civilian authorities leading to suspension or revocation of 
the individual's driver's license. The notice shall inform the 
individual that he or she has the right to submit a request within 5 
working days to vacate the preliminary suspension and that failure to 
request such a hearing will result in continuation of the preliminary 
suspension.
    (iii) If a hearing has not been requested within 5 working days, the 
preliminary suspension shall be continued until there has been a 
criminal, nonjudicial, or administrative disposition.
    (iv) If the individual requests a hearing to vacate the preliminary 
suspension, it shall be held within 10 working days of the request. If 
the official conducting the hearing determines that the apprehension was 
based upon probable cause, the preliminary suspension shall be 
continued; if not, it shall be vacated. Such determinations are solely 
for purposes of acting on the preliminary suspension and are without 
prejudice to the rights of any party in a subsequent criminal or 
administrative proceeding involving the same or a related incident.
    (v) If the individual is acquitted, the charges are dismissed, or 
there is an equivalent determination in a nonjudicial punishment 
proceeding or civilian administrative action, the preliminary suspension 
shall be vacated.
    (vi) If there is a conviction, nonjudicial punishment, or civil 
suspension or revocation of driving privileges, the suspension shall be 
continued for 1 year from the date of the original preliminary 
suspension. Such action shall be taken only on the basis of an official 
report.
    (3) Suspension for refusal to take a blood alcohol content (BAC) 
test (i) Preliminary suspension of driving privileges is mandatory based 
upon an official report that an individual refused to submit to a 
lawfully requested BAC test.
    (ii) The individual shall be notified of the preliminary suspension 
in writing. The notice shall include the arrest report or other 
documentation and shall inform the individual that a 1-year suspension 
can be imposed after a hearing under paragraph (b)(3)(iv) of this 
section. The notice also shall inform the individual that he or she has 
the right within 5 working days to submit a request for a hearing to 
validate the preliminary suspension and that the suspension will be for 
1 year if a hearing is not requested.
    (iii) If a hearing is not requested within 5 working days, the 
suspension shall be for 1 year.
    (iv) If the individual requests a hearing to vacate the preliminary 
suspension, it shall be held within 10 working days of the request. The 
hearing shall consider the arrest report or other official 
documentation, information presented by the individual, and such other 
information as the hearing officer may deem appropriate. The official 
conducting the hearing shall consider the following issues: (A) Did the 
official have reasonable grounds to believe that the person had been 
operating or was in actual physical control of, a motor vehicle while 
intoxicated? (B) Was the person lawfully cited or apprehended for an 
intoxicated driving offense? (C) Was the individual lawfully requested 
to submit to a BAC test? (D)

[[Page 263]]

Did the person refuse to submit to or fail to complete a BAC test 
required by the law of the jurisdiction in which the test was requested? 
If, in view of these issues, the test was lawfully requested, the 
suspension shall be for 1 year, irrespective of the ultimate disposition 
of the underlying intoxicated driving offense. If not, the preliminary 
suspension shall be vacated. Such determinations are solely for purposes 
of acting on the preliminary suspension and are without prejudice to the 
rights of any party in a subsequent criminal or administrative 
proceeding involving the same or a related incident.
    (4) Suspension upon conviction, nonjudicial punishment, or civilian 
administrative action. (i) Suspension of driving privileges for 1 year 
is mandatory when there has been a conviction, nonjudicial punishment, 
or civilian revocation or suspension of driving privileges for 
intoxicated driving, regardless of any prior administrative 
determination under Sec. 62b.4 (b)(2), (b)(3), or (b)(5).
    (ii) Such action shall be taken only on the basis of an official 
report.
    (iii) The individual shall be notified in writing of the suspension 
and shall be notified that an exception may be granted only under 
paragraph (b)(6) of this section.
    (iv) The suspension shall be issued by the installation commander. 
This authority may be delegated only to an official whose primary 
responsibilities are not in the field of law enforcement.
    (5) Repeat offenders. (i) Preliminary increase in suspension of 
driving privileges is mandatory based upon an arrest report or other 
official documentation of an individual's driving in violation of a 
suspension imposed under this part or under similar rules previously 
issued by a DoD Component.
    (A) The individual shall be notified in writing of the preliminary 
increase in suspension. The notice shall include the arrest report or 
other documentation of the violation as well as documentation of the 
original suspension and shall inform the individual that his or her 
original suspension can be increased by 2 years after a hearing under 
paragraph (b)(5)(i)(C) of this section. The notice shall inform the 
individual that he or she has the right within 5 working days to submit 
a request for a hearing to vacate the preliminary increase in suspension 
and that the original suspension will be increased by 2 years if such a 
request is not submitted.
    (B) If a hearing has not been requested within 5 working days, the 
original suspension shall be increased by 2 years.
    (C) If the individual requests a hearing to vacate the preliminary 
suspension, it shall be held within 10 working days of the request. The 
hearing shall consider the arrest report or other official 
documentation, information presented by the individual, documentation of 
the original suspension, and such other information as the hearing 
officer may deem appropriate. If the official conducting the hearing 
determines that the allegation of driving in violation of a suspension 
is supported by a preponderance of the evidence, the original suspension 
shall be increased by 2 years. If not, the preliminary increase in 
suspension shall be vacated. Such determinations are without prejudice 
to the rights of any party in a subsequent criminal or administrative 
proceeding involving the same or a related incident.
    (D) If in a subsequent judicial, nonjudicial, or administrative 
proceeding, it is determined that the individual did not violate a 
suspension, the preliminary increase in suspensions shall be vacated.
    (ii) For each subsequent determination within a 5-year period that a 
1-year suspension is authorized under paragraph (b) (2) through (4) of 
this section, driving privileges shall be suspended for 2-years. Such 
period shall be in addition to any suspension perviously imposed. 
Military personnel shall be prohibited from obtaining or using a U.S. 
Government Motor Vehicle Operator's Indentification Card, Standard Form 
(SF) 46, for 6 months for each such incident. A determination whether 
DoD civilian personnel should be prohibited from obtaining or using an 
SE 46 shall be made under Federal Personnel Manual chapter 930 and other 
laws and regulations applicable to civilian personnel. Nothing in this 
paragraph precludes an installation commander from imposing a 
prohibition upon obtaining or using an SF

[[Page 264]]

46 for a first offense or for such other reasons as may be authorized 
under applicable laws and regulations.
    (6) Exceptions. (i) Exceptions to the mandatory suspension 
provisions in this part may be granted under regulations by the DoD 
Component concerned on a case-by-case basis. Requests for exceptions 
shall be in writing. Such exceptions may be granted only on the basis 
of:
    (A) Mission requirements;
    (B) Unusual personal or family hardship; or
    (C) In the case of a preliminary suspension following lawful 
apprehension, delays exceeding 90 days in the formal disposition of the 
allegations insofar as such delays are not attributable to the 
individual.
    (ii) With respect to a person who has no reasonably available 
alternate means of transportation to officially assigned duties, a 
limited exception shall be granted for the sole purpose of driving 
directly to and from such duties. This does not authorize a person to 
drive on a military installation if the person's driver's license is 
under suspension or revocation by a State, Federal, or host country 
civil court or administrative agency. Maximum reliance shall be placed 
on carpools, public transportation, and reasonably available parking 
facilities adjacent to the installation before such a limited exception 
is granted. Nothing in this provision precludes appropriate or other 
administrative action on the basis of an intoxicated driving incident or 
driving in violation of a previously imposed suspension.
    (iii) Exceptions granted under this paragraph shall be reported in 
writing to the next official in the chain of command.
    (7) Overseas commanders with authority to issue driver's licenses 
shall establish procedures for suspension of such licenses for 
intoxicated driving. Such procedures, insofar as the commanders deem 
practicable, shall be similar to the procedures for suspension of 
installation driving privileges prescribed in paragraph (b) (1) through 
(6) of this section.
    (8) Persons whose installation driving privileges are suspended for 
1 year or more under Sec. 62b.4(b) (2), (3), or (4), above, shall 
complete an alcohol or drug safety action program or equivalent alcohol 
education course (minimum of 8 hours) before their installation driving 
privileges may be reinstated.
    (c) Screening. Each DoD Component or its supporting agency shall 
establish procedures for screening military personnel charged with 
intoxicated driving offenses within 7 working days of issuance of notice 
of the preliminary suspension to determine whether a member is dependent 
on alcohol or other drugs. The results of this screening shall be made 
available to the command having jurisdiction over the case before 
adjudication. Information concerning personal alcohol and drug abuse 
provided by a member in response to screening questions may not be used 
against the member in a court-martial or on the issue of 
characterization in an administrative separation proceeding. Nothing in 
this provision precludes introduction of such evidence for other 
administrative purposes or for impeachment or rebuttal purposes in any 
proceeding in which evidence of alcohol or drug abuse (or lack thereof) 
first has been introduced by the member, nor does it preclude 
disciplinary or other action based on independently derived evidence. 
DoD civilian personnel charged with intoxicated driving shall be advised 
of the Civilian Employee Assistance Program or Installation Drug and 
Alcohol Program and the availability of evaluation in accordance with 
Federal Personnel Manual Supplement 792-2. Retired members of the 
Military Services shall be advised of the availability of evaluation and 
treatment programs.
    (d) Notification of State Driver's License Agencies. Each DoD 
Component or its supporting agency shall establish a systematic 
procedure in accordance with part 286a of this title to notify State 
driver's license agencies of DoD personnel whose installation driving 
privileges are suspended for 1 year or more following final adjudication 
of the intoxicated driving offense or upon suspension for refusal to 
submit to a lawful BAC test under paragraph (b) of this section. This 
notification shall include the basis for the suspension and the BAC 
level, if known. Exceptions

[[Page 265]]

shall be made only when such a suspension was increased for an 
additional 2 years for driving on an installation while installation 
driving privileges were suspended solely on the basis of driving in 
violation of suspension (see paragraph (b)(5) of this section). This 
notification shall be sent to the State in which the driver's license 
was issued and the State in which the installation is located. Sample 
letter format is provided in appendix 1, and State driver's license 
agencies are listed in Appendix 2. DoD Components shall establish a 
system to exchange intoxicated driving and driving privilege suspension 
data when DoD personnel transfer from one location to another to ensure 
that the receiving installation continues any remaining portion of the 
suspension. This information requirement is exempt from formal approval 
and licensing.
    (e) The Military Services shall include the intoxicated driving 
prevention program as an inspection item of special interest for 
Inspector General or administrative inspections.
    (f) The Military Services shall direct installation commanders to 
assess the availability of drug and alcohol in the vicinity of military 
installations through their Armed Forces Disciplinary Control Boards or 
Control Boards of other appropriate Federal agencies. Whenever the 
availability of alcohol or drugs, or both, at an establishment off-base 
presents a threat to the discipline, health, and welfare of DoD 
personnel, such establishments shall be dealt with as prescribed in the 
``Armed Forces Disciplinary Control Board and Off-Installation Military 
Enforcement Guidance'' (Army Regulation No. 190-24, Marine Corps Order 
No. 162.2A, BUPERS Inst. 1620.4A, Air Force Regulation No. 125.11, 
Commandant Instruction No. 1620.13).
    (g) Cases Involving Death or Serious Injury. (1) To the extent 
permitted by law and consistent with the Uniform Code of Military 
Justice (UCMJ) and the ``Manual for Courts-Martial'' and in accordance 
with trial counsel's judgement of appropriate tactical and ethical 
concerns, consideration shall be given to presenting a victim's impact 
statement (oral or written statement by victims or survivors) before 
sentencing in cases involving intoxicated driving.
    (2) Trial counsel are encouraged to make reasonable efforts to 
ensure that the victim or the victim's family is provided information 
about the progress and disposition of cases processed under the UCMJ.
    (h) DoD Components with field installations shall establish an 
awards and recognition program to recognize successful local 
installation intoxicated driving prevention programs.
    (i) Each DoD Component or its supporting agency is encouraged to 
use, as guidance, ``Report on a National Study of Preliminary Breath 
Test (PBT) and Illegal Per Se Laws'' and ``Interim Report to the Nation 
by the Presidential Commission on Drunk Driving.''



Sec. 62b.5  Responsibilities.

    (a) The Assistant Secretary of Defense (Health Affairs) (ASD(HA)) 
shall:
    (1) Develop a coordinated approach to the reduction of intoxicated 
driving, consistent with this part, recognizing that intoxicated driving 
prevention programs shall be designed to meet local needs.
    (2) Appoint the chair of the DIDPTF.
    (3) Monitor Military Service and DoD Component regulations that 
implement the DoD Intoxicated Driving Prevention Program.
    (4) Act as focal point for the Department of Defense for interagency 
and nongovernmental coordination of national intoxicated driving 
prevention programs.
    (5) Evaluate and report biennially to the Secretary of Defense on 
the effectiveness and efficiency of the DoD Intoxicated Driving 
Prevention Program.
    (b) The Assistant Secretary of Defense (Manpower, Reserve Affairs, 
and Logistics) (ASD(MRA&L)) shall:
    (1) Ensure the DoD Department Schools system and section VI schools 
include specific material in the curriculum (grades 7 through 12) on the 
effects that alcohol and drugs have on the impairment of driving skills.
    (2) Ensure that intoxicated driving, accident, mishap, and injury 
data include:
    (i) BAC of drivers in three categories--.01-.04, .05-.09, and .10 
and above.

[[Page 266]]

    (ii) Time of day and day of the week the mishap or injury occurred.
    (iii) Type of vehicle (include MOPEDs with motorcycle data).
    (iv) Death and injury data on DoD personnel killed or injured as a 
result of intoxicated driving, include those who were not intoxicated 
themselves but were involved in a mishap as a result of intoxicated 
driving by another party.
    (v) Government property damage cost.
    (vi) Cost of treatment of injured DoD personnel.
    (vii) Pertinent data on military personnel separated or retired as a 
result of injury or other action taken because of:
    (A) Intoxicated driving by the person being separated or retired; or
    (B) Intoxicated driving by another person.
    (viii) Other chemical substances causing intoxicated driving that 
contributed to an accident.
    (3) Provide an annual report to the Secretary of Defense that 
assesses the impact of intoxicated driving on the Department of Defense. 
The report shall include intoxicated driving arrest, apprehension, and 
conviction data as well as the number of exceptions granted to the 
mandatory suspension of driving privileges under paragraph (b)(6) of 
this section.
    (4) Establish procedures (when feasible) under which DoD personnel 
convicted for driving while intoxicated will pay administrative 
restitution to the government for property damage or medical expenses to 
the extent permitted by applicable law.
    (5) Amend appropriate DoD issuances to include the use of a 
preliminary or prearrest breath test (PBT) to be used by law enforcement 
personnel to indicate impairment when the arresting officer has reason 
to believe the operator of a motor vehicle may be intoxicated. (See 
``Report on a National Study of Preliminary Breath Test (PBT) and 
Illegal Per Se Laws'').
    (c) The Head of each DoD Component or its Supporting Agency shall 
establish and operate intoxicated driving prevention programs prescribed 
by this part.



Sec. 62b.6  DoD intoxicated driving prevention task force.

    (a) Organization and management. (1) The DIDPTF shall be chaired by 
a representative of the Deputy Assistant Secretary of Defense (Health 
Promotion), Office of the ASD(HA).
    (2) The DIDPTF shall consist of representatives of the Military 
Services' drug and alcohol programs and law enforcement communities and 
a representative of the Deputy Assistant Secretary of Defense (Equal 
Opportunity and Safety Policy), Office of the ASD(MRA&L).
    (3) Meetings generally shall be held bimonthly; however, special 
sessions may be required by the chair.
    (b) Functions. The DIDPTF shall:
    (1) Monitor Military Service and DoD Component policy as it applies 
to the prevention of intoxicated driving.
    (2) Review programs and policy developed by other Federal and State 
agencies and make recommendations of suitable adaptation within the 
Department of Defense.
    (3) Make recommendations to the ASD(HA) and the ASD(MRA&L) on 
matters pertaining to intoxicated driving.



Sec. 62b.7  Definitions.

    (a) Blood Alcohol Content (BAC). The percentage, by weight, of 
alcohol in a person's blood as determined by blood, urine, or breath 
analysis. Percent of weight by volume of alcohol in the blood is based 
on grams of alcohol per 100 milliliters of blood.
    (b) Conviction. An official determination or finding as authorized 
by State or Federal law or regulation, including a final conviction by a 
court or court-martial (whether based on a plea of guilty or a finding 
of guilty and regardless of whether the penalty is rebated, deferred, 
suspended, or probated), an unvacated forfeiture of bail or other 
collateral deposited to secure a defendant's appearance in court, a plea 
of nolo contendere accepted by a court, or a payment of a fine.
    (c) DoD issuances. DoD Directives, Instructions, publications and 
changes thereto.
    (d) DoD personnel--(1) Civilian personnel. Employees of the 
Department of Defense whose salary or wages are paid

[[Page 267]]

from appropriated or nonappropriated funds.
    (2) Military personnel. All U.S. military personnel on active duty, 
U.S. military reserve or National Guard personnel on active duty, and 
Military Service academy cadets.
    (e) Driving privileges. Operation of a privately owned motor vehicle 
on an installation or in areas where traffic operations are under 
military supervision.
    (f) Intoxicated driving. Includes one or more of the following:
    (1) Operating a motor vehicle under any intoxication caused by 
alcohol or drugs in violation of Article 111 of the UCMJ (see paragraphs 
190 and 191 of the ``Manual for Courts-Martial'' or a similar law of the 
jurisdiction in which the vehicle is being operated.
    (2) Operating a motor vehicle with a BAC of .10 or higher on a 
military installation or in an area where traffic operations are under 
military supervision.
    (3) Operating a motor vehicle with a BAC of .10 or higher in 
violation of the law of the jurisdiction in which the vehicle is being 
operated.
    (4) Operating a motor vehicle with a BAC of .05 but less than .10 in 
violation of the law of the jurisdiction in which the vehicle is being 
operated if the jurisdiction imposes a suspension or revocation solely 
on the basis of the BAC level.
    (g) Supporting agency. The agency that accepts the responsibility 
and performs the actions necessary to accomplish any of the requirements 
of this part (for example, one of the Military Services supporting a 
Defense Agency through installation vehicle registration, screening of 
intoxicated drivers, or supervisor education).

  Appendix 1 to Part 62b--Driver's License Information (Sample Letter)

FROM:
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
TO: Department of Vehicle Registration Licenses
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
SUBJECT: Notification of Person Convicted of an Intoxicated Driving 
          Offense.
    This letter is your notification that on
________________________________________________________________________
(date)
________________________________________________________________________
(last name, first name, middle initial
________________________________________________________________________
and social security number of person)
a member of
________________________________________________________________________
(branch of Military Service or DoD Component)
________________________________________________________________________
(and unit)
________________________________________________________________________
(installation location)
was found guilty of (intoxicated driving or refusal to take a blood 
alcohol content (BAC) test in a court-martial, non-judicial proceeding 
under Article 15 of the UCMJ, or civil court). (If civil court, give 
court name and case number.) (He or she ) holds a ---------- (State) 
driver's license, number ----------, issued ----------, expiring on ----
------. (He or she) was arrested
________________________________________________________________________
(date and base location)
by ---------- (State) (or military) police while driving vehicle license 
number ----------. A BAC test (was or was not) taken (with a reading of 
----------). Based on the above information, this individual's 
installation driving privileges have been suspended for ---- (insert 
number of years). The individual's current address is:
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

         Appendix 2 to Part 62b--State Driver's License Agencies

                                 Alabama

Data Processing Unit, Driver's Licensing Division, Department of Public 
Safety, Montgomery, Alabama 36192, (205) 832-5100

                                 Alaska

MVR Desk, Motor Vehicles, Pouch N, Juneau, Alaska 99811, (907) 465-4361

                                 Arizona

Phoenix City Magistrates Court (No street number required), Phoenix, 
Arizona 85001, (602) 262-4001

                                Arkansas

Driver's Control, P.O. Box 1272, Little Rock, Arkansas 72203, (501) 371-
1631

                               California

Information Services, Department of Motor Vehicles, P.O. Box 11231, 
Sacramento, California 95813

[[Page 268]]

                                Colorado

Motor Vehicle Division, Master File Section 44-489, 140 W. 6th Avenue, 
Denver, Colorado 80204, (303) 866-3751

                               Connecticut

Assistant Division Chief, 60 State Street, Wethersfield, Connecticut 
06109, (203) 566-3230

                                Delaware

Senior Clerk, Revocation Section, P.O. Box 698, Dover, Delaware 19901, 
(302) 736-4427

                                 Florida

Division of Drivers Licenses & Motor Vehicles, Department of Highway 
Safety, Kirkman Building, Tallahassee, Florida 32301, (904) 488-2117

                                 Georgia

Drivers Support Division, Department of Public Safety, P.O. Box 1456, 
Atlanta, Georgia 30371-2303, (404) 656-5704

                                 Hawaii

Administrator, District Court, 1111 Alakea Street, Honolulu, Hawaii 
96813, (808) 548-2467

                                  Idaho

Idaho Transportation Department, Driver Services, P.O. Box 34, Boise, 
Idaho 83731, (208) 334-2534

                                Illinois

Abstract Informational Unit, Motor Vehicle Services, 2701 S. Dirksen 
Parkway, Springfield, Illinois 62703, (217) 782-2720

                                 Indiana

Bureau of Motor Vehicles, Paid Mail Division, State Office Building, 
room 416, Indianapolis, Indiana 46204, (317) 232-2894

                                  Iowa

Chief Teletype Operator, Lucas State Office Building, Des Moines, Iowa 
50319, (515) 281-5559

                                 Kansas

Chief, Driver Control Bureau, State Office Building, Topeka, Kansas 
66626, (913) 296-3671

                                Kentucky

Division of Driver Licensing, Justice Cabinet, room 220, State Office 
Building, Frankfort, Kentucky 40601, (502) 564-6800

                                Louisiana

Department of Public Safety, Office of Motor Vehicles, P.O. Box 64886, 
Baton Rouge, Louisiana 70896

                                  Maine

Driver Record Section, Motor Vehicle Division, Statehouse Station 
29, Augusta, Maine 04333, (207) 289-2733

                                Maryland

Director, Driver Records, 6601 Ritchie Highway, NE, Glen Burnie, 
Maryland 21062, (301) 768-7225

                              Massachusetts

Registry Motor Vehicles, 100 Nashua Street, Boston, Massachusetts 02114

                                Michigan

Commercial Lookup Unit, Michigan Department of State, Bureau of Driver & 
Vehicle Services, Lansing, Michigan 48918

                                Minnesota

Driver License Division, 108 Transportation Building, St. Paul, 
Minnesota 55155, (612) 296-2023

                               Mississippi

Mississippi Highway Patrol, MVR Section, P.O. Box 958, Jackson, 
Mississippi 39205, (601) 982-1212, Ext. 268

                                Missouri

Division of Motor Vehicles & Driver Licensing, P.O. Box 629, Jefferson 
City, Missouri 65105, (No telephone inquiries)

                                 Montana

Office Manager, Driver Services, 303 North Roberts, Helena, Montana 
59620, (406) 449-3000

                                Nebraska

Administrator, P.O. Box 94789, Lincoln, Nebraska 68509, (402) 471-3888

                                 Nevada

Driver Record Section, 555 Wright Way, Carson City, Nevada 89701, (702) 
885-5505

                              New Hampshire

Department of Public Safety, Division of Motor Vehicles, Hazen Drive, 
Concord, New Hampshire 03105, (603) 271-2486

                               New Jersey

Supervisor, Abstract Section, Dept. of Motor Vehicles, 137 E. State 
Street, Trenton, New Jersey 08625, (609) 292-4558

[[Page 269]]

                               New Mexico

Chief, Motor Transportation Department, Manuel Lujan Building, Santa Fe, 
New Mexico 87503, (505) 827-2362

                                New York

New York State Dept. of Motor Vehicles, Public Service Bureau, Empire 
State Plaza, Albany, New York 12228, (518) 474-0705

                             North Carolina

Director, Driver License Section, Division of Motor Vehicles, 1100 New 
Bern Avenue, Raleigh, North Carolina 27697, (919) 733-9906

                              North Dakota

Driving Records, Drivers License Division, 600 E. Boulevard, Bismarck, 
North Dakota 58505, (701) 224-2603

                                  Ohio

Bureau of Motor Vehicles, Attn.: MVOSPA, P.O. Box 16520, Columbus, Ohio 
43216

                                Oklahoma

Oklahoma Department of Public Safety, Driver Improvement Division, Box 
11415, Oklahoma City, Oklahoma 73136, (405) 427-6541

                                 Oregon

Supervisor, Files and Correspondence DMV, 1905 Lana Avenue, NE, Salem, 
Oregon 97314, (503) 371-2225

                              Pennsylvania

Division Manager, Citation Processing Division, room 302, Bureau of 
Traffic Safety Operations, Department of Transportation, Harrisburg, 
Pennsylvania 17120

                              Rhode Island

Department of Motor Vehicles, State Office Building, Providence, Rhode 
Island 02903, (401) 277-2994

                             South Carolina

Motor Vehicle Administrator, P.O. Box 1498, Columbia, South Carolina 
29216, (803) 758-8428

                              South Dakota

Driver Improvement Program, 118 W. Capitol, Pierre, South Dakota 57501-
2080, (605) 773-4128

                                Tennessee

Financial Responsibility Section, P.O. Box 945, Nashville, Tennessee 
37202, (615) 741-3954

                                  Texas

Director, Motor Vehicle Division, 40th and Jackson Avenue, Austin, Texas 
78779, (512) 465-7611

                                  Utah

Chief, Drivers License Bureau, 317 State Office Building, Salt Lake 
City, Utah 84114, (801) 965-4411

                                 Vermont

Director of Law Administration, Department of Motor Vehicles, 120 State 
Street, Montpelier, Vermont 05603, (Mail inquiries only)

                                Virginia

Division of Motor Vehicles, Attn: Driver's Licensing and Information 
Department, 2300 W. Broad Street, Richmond, Virginia 23269, (804) 257-
0410

                               Washington

Department of Licensing, Driver Services Division, Highway Licensing 
Building, Olympia, Washington 98504, (206) 753-6976

                              West Virginia

Department of Motor Vehicles, 1800 Washington Street, East, Charleston, 
West Virginia 25317, (304) 348-0238

                                Wisconsin

Driver Record File, Department of Transportation, P.O. Box 7918, 
Madison, Wisconsin 53707-7918, (608) 266-2360

                                 Wyoming

Criminal Identification Division, Boyd Building, Cheyenne, Wyoming 82002

                                   NDR

National Driver Register, room 5117, NHTSA, 400 7th Street SW, 
Washington, DC 20509

                          District of Columbia

District of Columbia Department of Transportation, Bureau of Motor 
Vehicles Services, 301 C Street NW, Washington, DC 20001

                                  Guam

Mr. Patrick Wolfe, Deputy Director, Revenue and Taxation, Government of 
Guam, Agana, Guam 96910

                               Puerto Rico

Mr. Jose A. Zayas-Berdecia, Director, Bureau of Motor Vehicles, P.O. Box 
41243, Santurce, Puerto Rico 00940

                             Virgin Islands

(Does not participate in the National Driver Register)

[[Page 270]]



PART 64--MANAGEMENT AND MOBILIZATION OF REGULAR AND RESERVE RETIRED MILITARY MEMBERS--Table of Contents




Sec.
64.1 Purpose.
64.2 Applicability and scope.
64.3 Definitions.
64.4 Policy.
64.5 Responsibilities.
64.6 Procedures.

Appendix A to Part 64--Letter Format to Cognizant Service Personnel 
          Center Requesting Employee Be Screened From Retiree-Recall 
          Program
Appendix B to Part 64--List of Reserve Personnel Centers to which 
          Retiree-Recall Screening Determination Shall be Forwarded

    Authority: 10 U.S.C. 672(a), 675, 688, and 973.

    Source: 55 FR 9319, Mar. 13, 1990, unless otherwise noted.



Sec. 64.1  Purpose.

    This part implements sections 672(a), 675, 688, and 973 of title 10, 
United States Code, by prescribing uniform policy and procedures 
governing the peacetime management of retired military personnel, both 
Regular and Reserve, in preparation for their use during a mobilization.



Sec. 64.2  Applicability and scope.

    This part:
    (a) Applies to the Office of the Secretary of Defense (OSD); the 
Military Departments (including their National Guard and Reserve 
components); the Chairman, Joint Chiefs of Staff (Joint Staff); the 
Coast Guard and its Reserve component (by agreement with the Department 
of Transportation (DoT)); and the Defense Agencies (hereafter referred 
to collectively as ``DoD Components''). The term ``Military Services,'' 
as used herein, refers to the Army, Navy, Air Force, Marine Corps, and 
Coast Guard (by agreement with the DoT).
    (b) By agreement with non-DoD organizations that have DoD-related 
missions, includes organizations with Defense-related missions, such as 
the Federal Emergency Management Agency (FEMA), the Selective Service 
System (SSS), and the organizations with North Atlantic Treaty 
Organization (NATO)-related missions.



Sec. 64.3  Definitions.

    (a) Key employee. Any Reservist, or any military retiree (Regular or 
Reserve) identified by his or her employer, private or public, as 
filling a key position.
    (b) Key position. A civilian position, public or private (designated 
by the employers and approved by the Secretary concerned), that cannot 
be vacated during war or national emergency.
    (c) Military retiree categories--(1) Category I. Nondisability 
military retirees under age 60 who have been retired less than 5 years.
    (2) Category II. Nondisability military retirees under age 60 who 
have retired 5 years or more.
    (3) Category III. Military retirees, including those retired for 
disability, other than categories I or II retirees (includes warrant 
officers and health-care professionals who retire from active duty after 
age 60).
    (d) Military retirees or retired military members. (1) Regular and 
Reserve officers and enlisted members who retire from the Military 
Services under 10 U.S.C. chapters 61, 63, 65, 67, 367, 571, 573, or 867 
and 14 U.S.C. chapters 11 and 21.
    (2) Reserve officers and enlisted members eligible for retirement 
under one of the provisions of law in definition (d)(1) who have not 
reached age 60 and who have not elected discharge or are not members of 
the Ready Reserve or Standby Reserve (including members of the Inactive 
Standby Reserve).
    (3) Members of the Fleet Reserve and Fleet Marine Corps Reserve 
under 10 U.S.C. 6330.



Sec. 64.4  Policy.

    It is DoD policy that military retirees shall be ordered to active 
duty (as needed) to fill personnel shortfalls due to mobilization or 
other emergencies, as described in 10 U.S.C. 672 and 688. DoD Components 
and the Coast Guard shall plan to use as many retirees, as necessary, to 
meet national security needs. Military retirees may be used as follows:

[[Page 271]]

    (a) To fill shortages in, or to augment, deployed or deploying 
units.
    (b) To fill shortages in, or to augment, supporting units and 
activities in the Continental United States (CONUS), Alaska, and Hawaii.
    (c) To release other military members for deployment overseas.
    (d) Subject to the limitations of 10 U.S.C. 973, to fill Federal 
civilian workforce shortages within the Department of Defense, the Coast 
Guard, or other Government entities.
    (e) To meet national security needs in organizations outside the 
Department of Defense with Defense-related missions.



Sec. 64.5  Responsibilities.

    (a) The Assistant Secretary of Defense (Reserve Affairs) (ASD(RA)) 
and the Assistant Secretary of Defense (Force Management and Personnel) 
(ASD(FM&P)) shall provide overall policy guidance for the management and 
mobilization of DoD military retirees. In addition, the Assistant 
Secretary of Defense (Force Management and Personnel) (ASD(FM&P)) shall:
    (1) Validate positions identified by Defense and non-Defense 
Agencies as suitable for fill by military retirees.
    (2) Establish priorities for fill once all requirements are 
identified.
    (3) Provide redistribution guidance.
    (b) The Secretaries of the Military Departments and the Commandant 
of the Coast Guard shall ensure that plans for the management and 
mobilization of military retirees are consistent with this part.
    (c) The Directors of the Defense Agencies, the Director of the 
Federal Emergency Management Agency (FEMA) and the Director of the 
Selective Service System (SSS) and other Federal Organizations, as 
appropriate, shall, by agreement, assist in identifying military and 
Federal civilian wartime positions that are suitable for fill by 
military retirees, and provide a list of requirements to the Office of 
the Assistant Secretary of Defense (Force Management and Personnel) 
(OASD(FM&P)) for validation and prioritization before fill by the 
Military Services. The Services retain the right to disapprove the 
request if no military retiree is available. At least annually, the 
requesting Agency shall verify to the OASD(FM&P) the accuracy of their 
validated requirements and identify any new requirements.
    (d) The Secretaries of the Military Departments, or designees, 
shall:
    (1) Prepare plans and establish procedures for mobilization of 
military retirees in conformance with this part.
    (2) Determine the extent of military retiree mobilization 
requirements based on existing inventories and inventory projections for 
mobilization of qualified Reservists in an active status in the Ready 
Reserve, the Inactive National Guard, or the Standby Reserve.
    (3) Develop procedures for identifying categories I and II retirees 
and conduct screening of retirees using this part for guidance.
    (4) Maintain personnel records and other necessary records for 
military retirees, including date of birth, date of retirement, current 
address, and documentation of military qualifications. Maintain records 
for categories I and II military retirees, including retirees who are 
key employees and their availability for mobilization, civilian 
employment, and physical condition. Data shall be maintained on retired 
Reserve members in accordance with 32 CFR part 114.
    (5) Advise military retirees of their duty to provide the Military 
Services with accurate mailing addresses and any changes in civilian 
employment, military qualifications, availability for service, and 
physical condition.
    (6) Preassign retired members, when determined appropriate and as 
necessary.
    (7) Determine refresher training requirements in accordance with the 
criteria established in Sec. 64.6(a)(8).



Sec. 64.6  Procedures.

    (a) Premobilization--(1) Management of military retirees. Military 
retiree management systems should provide for rapid identification of 
retiree location and military skills to expedite reporting of retirees 
to a wide range of assignments and geographic locations in mobilization 
or crisis. As part of the criteria for assignment of individuals to 
specific mobilization billets, the Military Services should consider the 
criticality of the mobilization billet,

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the skills of the individual, and his or her geographic proximity to the 
place of assignment. To the extent possible, military retirees should be 
given the opportunity to volunteer for specific assignments. The 
Military Departments shall develop plans and procedures to identify 
military retirees excess to their needs. The Military Departments, other 
DoD Components, FEMA, SSS, and other Federal Agencies, as appropriate, 
shall provide a list of requirements to the Department of Defense. The 
Department of Defense shall establish priorities for fill once all 
requirements and excess personnel are identified and provide 
redistribution guidance.
    (2) Requirement validation. The OASD(FM&P) shall review and validate 
each mobilization requirement for a military retiree. The criteria 
considered shall be the structure of the organization, the expanded 
workload requirements in a mobilization environment, current manpower 
authorizations, and existing manpower infrastructures supporting the 
organizations.
    (3) Assignment priority. The priority for use of military retirees 
shall be:
    (i) Use by their own Service.
    (ii) Use by another Service or a Defense Agency.
    (iii) Use by a civilian Federal Department or Agency.
    (iv) Any other approved use.
    (4) Preassignment of categories I and II military retirees. When 
determined appropriate by the Military Service concerned, military 
retirees who physically are qualified maximally should be preassigned in 
peacetime, either voluntarily or involuntarily, to installations or to 
mobilization positions that must be filled within 30 days after 
mobilization. Key employees and category III retirees shall not be 
preassigned involuntarily. Severe hostilities may prevent the 
transmittal of mobilization orders to military retirees. All military 
retirees preassigned to mobilization positions or installations, either 
voluntarily or involuntarily, shall be issued preassignment or 
contingent preassignment orders.
    (5) Category III military retirees. The nature and extent of the 
mobilization of category III retirees shall be determined by each 
Military Service, based on the retiree's military skill and, if 
applicable, the nature and degree of the retiree's disability. Category 
III retirees generally should be assigned to civilian jobs, unless they 
have critical skills or volunteer for specific military jobs. Age or 
disability alone may not be the sole basis for excluding a retiree from 
active Military Service during mobilization.
    (6) Military retirees living overseas. Military retirees who live 
overseas maximally shall be preassigned in peacetime, as determined by 
the Military Service concerned, to meet mobilization augmentation 
requirements at overseas, U.S., or allied military installations or 
activities that are near their places of residence.
    (7) Military retiree information. The development and maintenance of 
current information on the mobilization availability of military 
retirees shall be the responsibility of the Military Services. Such 
information shall include, but not be limited to, date of retirement, 
date of birth, current address, and military qualifications. 
Additionally, the Military Services shall maintain information on the 
availability for mobilization and the physical condition of categories I 
and II military retirees. Indication of physical condition may be from 
certification by the individual military retiree.
    (8) Refresher training. Each Military Service shall determine the 
necessity for, and the frequency of, refresher training of military 
retirees, based on the needs of the Military Service and the specific 
military skill of the military retiree. Emphasis should be on voluntary 
refresher training. Civilian-acquired skills may eliminate the need for 
refresher training.
    (9) Screening of military retirees--(i) Each Military Service shall 
develop procedures for identifying categories I and II retirees, and 
shall conduct screening of retirees using this part and 32 CFR part 44 
as guidance in formulating screening criteria.
    (ii) All military retirees shall be advised to inform their 
employers concerning their liability for recall to active duty in a 
mobilization or national emergency, and, when applicable, the

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procedures for designating their position as a key position.
    (iii) Federal employers annually shall review their employment rolls 
to determine if they employ any military retirees who are filling key 
positions, as defined in Sec. 64.3.
    (iv) Non-Federal employers also are encouraged to use the key 
position guidelines for making their own key position designations and, 
when applicable, for recommending certain military retirees for key 
employees status.
    (v) Key position designation guidelines. In determining whether or 
not a position should be designated as a key position, employers should 
consider the following criteria:
    (A) Can the position be filled in a reasonable time after 
mobilization?
    (B) Does the position require technical or managerial skills that 
are possessed uniquely by the incumbent employee?
    (C) Is the position associated directly with Defense mobilization?
    (D) Does the position include a mobilization or relocation 
assignment in an Agency having emergency functions, as designated by 
E.O. 12656?
    (E) Is the position directly associated with industrial or manpower 
mobilization, as designated in E.O. 10480?
    (F) Are there other factors related to national defense, health, or 
safety that would make the incumbent of the position unavailable for 
mobilization?
    (vi) Employers who determine that a military retiree is filling a 
key position and should not be recalled to active duty in an emergency 
should report that determination to the cognizant military personnel 
center, using the letter format shown in Appendix A to this part. The 
list of Reserve personnel centers to which retiree-recall screening-
determination recommendations shall be forwarded is at Appendix B to 
this part.
    (b) Mobilization--(1) General. The Military Services shall establish 
plans and procedures to use those military retirees who meet specific 
skill and experience requirements to fill mobilization billets, when 
there is not enough active or qualified Reserve manpower available.
    (2) Involuntary order to active duty--(i) Twenty-year active 
military service retirees. The Secretary of a Military Department may 
order any retired Regular member, retired Reserve member who has 
completed at least 20 years of Active Service, or a member of the Fleet 
Reserve or Fleet Marine Corps Reserve to active duty at any time to 
perform duties deemed necessary in the interests of national defense in 
accordance with 10 U.S.C. 675 and 688. Retired Regular members of the 
Coast Guard may be ordered to active duty by the Secretary concerned 
only in time of war or national emergency in accordance with 14 U.S.C. 
331 and 359.
    (ii) Reserve. The Secretary of a Military Department may order any 
other retired member of a Reserve component of a Military Service to 
active duty for the duration of a war or emergency and for 6 months 
thereafter on the basis of required skills, provided:
    (A) War or national emergency has been declared by Congress.
    (B) The Secretary of the Military Department concerned, with the 
approval of the Secretary of Defense, determines there are not enough 
qualified Reserves in an Active status or in the Inactive National 
Guard, under 10 U.S.C. 672(a).
    (3) Graduated Mobilization Response. The Military Services shall 
develop plans and procedures for ordering military retirees to active 
duty in accordance with a schedule that includes pre-, partial, and full 
mobilization requirements.
    (c) Peacetime--(1) General. The Military Departments shall establish 
procedures to order military retirees to active duty during peacetime.
    (2) Voluntary order to active duty--(i) Twenty-year active military 
service retirees. The Secretary of a Military Department may order 
retired Regular members, retired Reserve members who have completed at 
least 20 years of active Military Service, or members of the Fleet 
Reserve or Fleet Marine Corps Reserve to active duty with their consent 
at any time in accordance with 10 U.S.C. 688.
    (ii) Other Reserve retirees. The Secretary of a Military Department 
may order other retired members of a Reserve component to active duty 
with their consent in accordance with 10 U.S.C. 672(d).

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    (3) Involuntary order to active duty. The Secretary of a Military 
Department may order any retired Regular member, retired Reserve member 
who has completed at least 20 years of active Military Service, or a 
member of the Fleet Reserve or Fleet Marine Corps Reserve to active duty 
without the member's consent at any time to perform duties deemed 
necessary in the interests of national defense in accordance with 10 
U.S.C. 688. This includes the authority to order a retired member who is 
subject to the Uniform Code of Military Justice (UCMJ) to active duty to 
facilitate the exercise of court-martial jurisdiction under 10 U.S.C. 
802(a). A retired member may not be involuntarily ordered to active duty 
solely for obtaining court-martial jurisdiction over the member.

  Appendix A to Part 64--Letter Format to Cognizant Service Personnel 
   Center Requesting Employee Be Screened From Retiree-Recall Program

From: (employer-Agency or company)
To: (appropriate Military Service personnel center)
Subject: Request for Employee to Be Removed from Retiree-Recall Program
    This is to certify that the employee identified below is essential 
to the nation's defense efforts in (his or her) civilian job and cannot 
be mobilized with the Military Services in an emergency for the 
following reasons:
    Therefore, I request that (he or she) be exempted from recall to 
active duty in a mobilization or national emergency and that you advise 
me accordingly when that action has been completed.
    The employee is:
Name of employee (last, first, M.I.)
Military grade and Military Service component
Social security number
Current home address (street, city, State, and ZIP code)
Title of employee's civilian position
Grade or salary level of civilian position
Date (YYMMDD) hired or assigned to position

________________________________________________________________________
Signature and Title of Agency
Company Official

   Appendix B to Part 64--List of Reserve Personnel Centers to Which 
        Retiree-Recall Screening Determination Shall Be Forwarded

                                  Army

    Commander
    U.S. Army Reserve Personnel Center
    ATTN: DARP-PAR-M
    9700 Page Boulevard
    St. Louis, MO 63132-5200

                                  Navy

    Commanding Officer
    Naval Reserve Personnel Center
    ATTN: NRPC Code 10
    New Orleans, LA 70149

                              Marine Corps

    Commandant (Code RES)
    Headquarters, U.S. Marine Corps
    Washington, DC