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  <AMDDATE>July 1, 2003</AMDDATE>
  <FMTR>
    <TITLEPG>
      <CODE>CODE OF FEDERAL REGULATIONS</CODE>
      <PRTPAGE P="1"/>
      <TITLENUM>32</TITLENUM>
      <PARTS>Parts 1 to 190</PARTS>
      <REVISED>Revised as of July 1, 2003</REVISED>
      <SUBJECT>National Defense</SUBJECT>
      <CONTAINS>Containing a codification of documents of general applicability and future effect</CONTAINS>
      <DATE>As of July 1, 2003</DATE>
      <ANCIL>With Ancillaries</ANCIL>
      <PUB>
        <P>Published by</P>
        <P>Office of the Federal Register</P>
        <P>National Archives and Records</P>
        <P>Administration</P>
      </PUB>
      <SPECED>A Special Edition of the Federal Register</SPECED>
    </TITLEPG>
    <BTITLE>
      <PRTPAGE P="ii"/>
      <GPO>U.S. GOVERNMENT PRINTING OFFICE</GPO>
      <CITY>WASHINGTON : 2003</CITY>
      <FORSALE>
        <P>For sale by the Superintendent of Documents, U.S. Government Printing Office</P>
        <P>Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800</P>
        <P>Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001</P>
      </FORSALE>
    </BTITLE>
    <TOC>
      <PRTPAGE P="iii"/>
      <HD SOURCE="HED">Table of Contents</HD>
      <PGHD>Page</PGHD>
      <EXPL>
        <SUBJECT>Explanation</SUBJECT>
        <PG>v</PG>
      </EXPL>
      <TITLENO>
        <HD SOURCE="HED">Title 32:</HD>
        <SUBTI>
          <HD SOURCE="HED">Subtitle A—Department of Defense</HD>
        </SUBTI>
        <CHAPTI>
          <SUBJECT>Chapter I— Office of the Secretary of Defense</SUBJECT>
          <PG>5</PG>
        </CHAPTI>
      </TITLENO>
      <FAIDS>
        <HD SOURCE="HED">Finding Aids:</HD>
        <SUBJECT>Table of CFR Titles and Chapters</SUBJECT>
        <PG>761</PG>
        <SUBJECT>Alphabetical List of Agencies Appearing in the CFR</SUBJECT>
        <PG>779</PG>
        <SUBJECT>List of CFR Sections Affected</SUBJECT>
        <PG>789</PG>
      </FAIDS>
    </TOC>
    <CITE>
      <PRTPAGE P="iv"/>
      <P>Cite this Code:<E T="01">CFR</E>
      </P>

      <CITEP>To cite the regulations in this volume use title, part and section number. Thus, <E T="01">32 CFR 2.1</E> refers to title 32, part 2, section 1.</CITEP>
    </CITE>
    <EXPLA>
      <PRTPAGE P="v"/>
      <HD SOURCE="HED">Explanation</HD>
      <P>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.</P>
      <P>Each volume of the Code is revised at least once each calendar year and issued on a quarterly basis approximately as follows:</P>
      <IPAR>
        <P SOURCE="P1">Title 1 through Title 16 </P>
        <STUB>as of January 1</STUB>
        <P SOURCE="P1">Title 17 through Title 27 </P>
        <STUB>as of April 1</STUB>
        <P SOURCE="P1">Title 28 through Title 41 </P>
        <STUB>as of July 1</STUB>
        <P SOURCE="P1">Title 42 through Title 50 </P>
        <STUB>as of October 1</STUB>
      </IPAR>
      <P>The appropriate revision date is printed on the cover of each volume.</P>
      <SIDEHED>
        <HD SOURCE="HED">LEGAL STATUS</HD>
        <P>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).</P>
      </SIDEHED>
      <SIDEHED>
        <HD SOURCE="HED">HOW TO USE THE CODE OF FEDERAL REGULATIONS</HD>
        <P>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.</P>
        <P>To determine whether a Code volume has been amended since its revision date (in this case, July 1, 2003), 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.</P>
      </SIDEHED>
      <SIDEHED>
        <HD SOURCE="HED">EFFECTIVE AND EXPIRATION DATES</HD>
        <P>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 exercised by the user in determining the actual effective date. In 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.</P>
      </SIDEHED>
      <SIDEHED>
        <HD SOURCE="HED">OMB CONTROL NUMBERS</HD>

        <P>The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires Federal agencies to display an OMB control number with their information collection request. <PRTPAGE P="vi"/>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.</P>
      </SIDEHED>
      <SIDEHED>
        <HD SOURCE="HED">OBSOLETE PROVISIONS</HD>
        <P>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, 2001, consult either the List of CFR Sections Affected, 1949-1963, 1964-1972, 1973-1985, or 1986-2000, published in 11 separate volumes. For the period beginning January 1, 2001, a “List of CFR Sections Affected” is published at the end of each CFR volume.</P>
      </SIDEHED>
      <SIDEHED>
        <HD SOURCE="HED">CFR INDEXES AND TABULAR GUIDES</HD>

        <P>A subject index to the Code of Federal Regulations is contained in a separate volume, revised annually as of January 1, entitled CFR <E T="04">Index and Finding Aids.</E> 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.</P>
        <P>An index to the text of “Title 3—The President” is carried within that volume.</P>
        <P>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.</P>
        <P>A List of CFR Sections Affected (LSA) is published monthly, keyed to the revision dates of the 50 CFR titles.</P>
      </SIDEHED>
      <SIDEHED>
        <HD SOURCE="HED">REPUBLICATION OF MATERIAL</HD>
        <P>There are no restrictions on the republication of material appearing in the Code of Federal Regulations.</P>
      </SIDEHED>
      <SIDEHED>
        <HD SOURCE="HED">INQUIRIES</HD>
        <P>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.</P>
        <P>For inquiries concerning CFR reference assistance, call 202-741-6000 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.</P>
      </SIDEHED>
      <SIDEHED>
        <HD SOURCE="HED">SALES</HD>
        <P>The Government Printing Office (GPO) processes all sales and distribution of the CFR. For payment by credit card, call toll free, 866-512-1800, or DC area, 202-512-1800, M-F 8 a.m. to 4 p.m. e.s.t. or fax your order to 202-512-2250, 24 hours a day. For payment by check, write to the Superintendent of Documents, Attn: New Orders, P.O. Box 371954, Pittsburgh, PA 15250-7954. For GPO Customer Service call 202-512-1803.</P>
      </SIDEHED>
      <SIDEHED>
        <HD SOURCE="HED">ELECTRONIC SERVICES</HD>

        <P>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 format at www.access.gpo.gov/nara (“GPO Access”). For more information, contact Electronic Information Dissemination Services, U.S. Government Printing Office. Phone 202-512-1530, or 888-293-6498 (toll-free). E-mail, gpoaccess@gpo.gov.<PRTPAGE P="vii"/>
        </P>
        <P>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 information.  Connect to NARA's web site at www.archives.gov/federal_register. The NARA site also contains links to GPO Access.</P>
      </SIDEHED>
      <SIG>
        <NAME>Raymond A. Mosley,</NAME>
        <POSITION>Director,</POSITION>
        <OFFICE>Office of the Federal Register.</OFFICE>
      </SIG>
      <DATE>July 1, 2003.</DATE>
    </EXPLA>
    <THISTITL>
      <PRTPAGE P="ix"/>
      <HD SOURCE="HED">THIS TITLE</HD>
      <P>Title 32—<E T="04">National Defense</E> 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, 2003.</P>
      <P>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.</P>
      <GPH DEEP="544" SPAN="1">
        <PRTPAGE P="x"/>
        <GID>CFRORDR.FRM</GID>
      </GPH>
    </THISTITL>
  </FMTR>
  <TITLE>
    <CFRTITLE>
      <LRH>32 CFR Ch. I (7-1-03 Edition)</LRH>
      <RRH>Office of the Secretary of Defense</RRH>
      <TITLEHD>
        <PRTPAGE P="1"/>
        <HD SOURCE="HED">Title 32—National Defense</HD>
        <P>(This book contains parts 1 to 190)</P>
      </TITLEHD>
      <CFRTOC>
        <PTHD>Part</PTHD>
        <SUBTI>
          <HD SOURCE="HED">SUBTITLE A—<E T="04">Department of Defense</E>
          </HD>
        </SUBTI>
        <CHAPTI>
          <SUBJECT>
            <E T="04">chapter i</E>—Office of the Secretary of Defense</SUBJECT>
          <PG>2</PG>
        </CHAPTI>
        <CROSSREF>
          <HD SOURCE="HED">Cross References:</HD>
          <P>For Department of Defense Federal Acquisition Regulations, see 48 CFR chapter 2.</P>
        </CROSSREF>
      </CFRTOC>
    </CFRTITLE>
    <SUBTITLE>
      <PRTPAGE P="3"/>
      <HD SOURCE="HED">Subtitle A—Department of Defense</HD>
      <CHAPTER>
        <TOC>
          <TOCHD>
            <PRTPAGE P="5"/>
            <HD SOURCE="HED">CHAPTER I—OFFICE OF THE SECRETARY OF DEFENSE</HD>
            <P>(Parts 1 to 190)</P>
          </TOCHD>
          <SUBCHAP>
            <HD SOURCE="HED">SUBCHAPTER A—ACQUISITION</HD>
          </SUBCHAP>
          <PTHD>Part</PTHD>
          <PGHD>Page</PGHD>
          <CHAPTI>
            <PT>1</PT>
            <RESERVED>[Reserved]</RESERVED>
            <PT>2</PT>
            <SUBJECT>Pilot program policy</SUBJECT>
            <PG>11</PG>
            <PT>3</PT>
            <SUBJECT>Transactions other than contracts, grants, or cooperative agreements for prototype projects</SUBJECT>
            <PG>13</PG>
            <PT>4-8</PT>
            <RESERVED>[Reserved]</RESERVED>
          </CHAPTI>
          <SUBCHAP>
            <HD SOURCE="HED">SUBCHAPTER B—MILITARY COMMISSIONS</HD>
          </SUBCHAP>
          <CHAPTI>
            <PT>9</PT>
            <SUBJECT>Procedures for Trails by Military Commissions of Certain</SUBJECT>
            <PG>21</PG>
            <PT>10</PT>
            <SUBJECT>Military Commission Instructions</SUBJECT>
            <PG>30</PG>
            <PT>11</PT>
            <SUBJECT>Crimes and Elements of Trails by Military Commission</SUBJECT>
            <PG>31</PG>
            <PT>12</PT>
            <SUBJECT>Responsibilities of the Chief Prosecutor, Prosecutors, and Assistant Prosecutors</SUBJECT>
            <PG>42</PG>
            <PT>13</PT>
            <SUBJECT>Responsibilities of the Chief Defense Counsel, Detailed Defense Counsel, and Civilian Defense Counsel</SUBJECT>
            <PG>44</PG>
            <PT>14</PT>
            <SUBJECT>Qualification of Civilian Defense Counsel</SUBJECT>
            <PG>47</PG>
            <PT>15</PT>
            <SUBJECT>Reporting Relationships for Military Commission Personnel</SUBJECT>
            <PG>52</PG>
            <PT>16</PT>
            <SUBJECT>Sentencing</SUBJECT>
            <PG>53</PG>
            <PT>17</PT>
            <SUBJECT>Administrative Procedures</SUBJECT>
            <PG>54</PG>
            <PT>18-20</PT>
            <RESERVED>[Reserved]</RESERVED>
          </CHAPTI>
          <SUBCHAP>
            <HD SOURCE="HED">SUBCHAPTER C—DOD GRANT AND AGREEMENT REGULATIONS</HD>
          </SUBCHAP>
          <CHAPTI>
            <PT>21</PT>
            <SUBJECT>DoD grants and agreements—General matters</SUBJECT>
            <PG>57</PG>
            <PT>22</PT>
            <SUBJECT>DoD grants and agreements—Award and administration</SUBJECT>
            <PG>64</PG>
            <PT>25</PT>
            <SUBJECT>Governmentwide debarment and suspension (nonprocurement) and governmentwide requirements for drug-free workplace (grants)</SUBJECT>
            <PG>97<PRTPAGE P="6"/>
            </PG>
            <PT>28</PT>
            <SUBJECT>New restrictions on lobbying</SUBJECT>
            <PG>116</PG>
            <PT>32</PT>
            <SUBJECT>Administrative requirements for grants and agreements with institutions of higher education, hospitals, and other non-profit organizations</SUBJECT>
            <PG>128</PG>
            <PT>33</PT>
            <SUBJECT>Uniform administrative requirements for grants and cooperative agreements to State and local governments</SUBJECT>
            <PG>157</PG>
            <PT>34</PT>
            <SUBJECT>Administrative requirements for grants and agreements with for-profit organizations</SUBJECT>
            <PG>185</PG>
          </CHAPTI>
          <SUBCHAP>
            <HD SOURCE="HED">SUBCHAPTER D—PERSONNEL, MILITARY AND CIVILIAN</HD>
          </SUBCHAP>
          <CHAPTI>
            <PT>43</PT>
            <SUBJECT>Personal commercial solicitation on DoD installations</SUBJECT>
            <PG>205</PG>
            <PT>44</PT>
            <SUBJECT>Screening the Ready Reserve</SUBJECT>
            <PG>212</PG>
            <PT>45</PT>
            <SUBJECT>Certificate of release or discharge from active duty (DD Form 214/5 Series)</SUBJECT>
            <PG>216</PG>
            <PT>47</PT>
            <SUBJECT>Active duty service for civilian or contractual groups</SUBJECT>
            <PG>231</PG>
            <PT>48</PT>
            <SUBJECT>Retired serviceman's family protection plan</SUBJECT>
            <PG>236</PG>
            <PT>53</PT>
            <SUBJECT>Wearing of the uniform</SUBJECT>
            <PG>246</PG>
            <PT>54</PT>
            <SUBJECT>Allotments for child and spousal support</SUBJECT>
            <PG>246</PG>
            <PT>56</PT>
            <SUBJECT>Nondiscrimination on the basis of handicap in programs and activities assisted or conducted by the Department of Defense</SUBJECT>
            <PG>251</PG>
            <PT>57</PT>
            <SUBJECT>Provision of early intervention and special education services to eligible DoD dependents in overseas areas</SUBJECT>
            <PG>270</PG>
            <PT>58</PT>
            <SUBJECT>Human Immunodeficiency Virus (HIV-1)</SUBJECT>
            <PG>292</PG>
            <PT>59</PT>
            <SUBJECT>Voluntary military pay allotments</SUBJECT>
            <PG>299</PG>
            <PT>61</PT>
            <SUBJECT>Medical malpractice claims against military and civilian personnel of the Armed Forces</SUBJECT>
            <PG>302</PG>
            <PT>62b</PT>
            <SUBJECT>Drunk and drugged driving by DoD personnel</SUBJECT>
            <PG>302</PG>
            <PT>64</PT>
            <SUBJECT>Management and mobilization of regular and reserve retired military members</SUBJECT>
            <PG>312</PG>
            <PT>67</PT>
            <SUBJECT>Educational requirements for appointment of reserve component officers to a grade above first lieutenant or lieutenant (junior grade)</SUBJECT>
            <PG>317</PG>
            <PT>68</PT>
            <SUBJECT>Provision of free public education for eligible children pursuant to section 6, Public Law 81-874</SUBJECT>
            <PG>319</PG>
            <PT>69</PT>
            <SUBJECT>School boards for Department of Defense domestic dependent elementary and secondary schools</SUBJECT>
            <PG>325</PG>
            <PT>70</PT>
            <SUBJECT>Discharge review board (DRB) procedures and standards</SUBJECT>
            <PG>329</PG>
            <PT>71</PT>
            <SUBJECT>Eligibility requirements for education of minor dependents in overseas areas</SUBJECT>
            <PG>364</PG>
            <PT>73</PT>
            <SUBJECT>Training simulators and devices</SUBJECT>
            <PG>369<PRTPAGE P="7"/>
            </PG>
            <PT>74</PT>
            <SUBJECT>Appointment of doctors of osteopathy as medical officers</SUBJECT>
            <PG>373</PG>
            <PT>75</PT>
            <SUBJECT>Conscientious objectors</SUBJECT>
            <PG>374</PG>
            <PT>77</PT>
            <SUBJECT>Program to encourage public and community service</SUBJECT>
            <PG>382</PG>
            <PT>78</PT>
            <SUBJECT>Voluntary State tax withholding from retired pay</SUBJECT>
            <PG>392</PG>
            <PT>80</PT>
            <SUBJECT>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</SUBJECT>
            <PG>395</PG>
            <PT>81</PT>
            <SUBJECT>Paternity claims and adoption proceedings involving members and former members of the Armed Forces</SUBJECT>
            <PG>418</PG>
            <PT>85</PT>
            <SUBJECT>Health promotion</SUBJECT>
            <PG>420</PG>
            <PT>86</PT>
            <SUBJECT>Criminal history background checks on individuals in child care services</SUBJECT>
            <PG>424</PG>
            <PT>88</PT>
            <SUBJECT>Transition assistance for military personnel</SUBJECT>
            <PG>435</PG>
            <PT>93</PT>
            <SUBJECT>Acceptance of service of process; release of official information in litigation; and testimony by NSA personnel as witnesses</SUBJECT>
            <PG>438</PG>
            <PT>94</PT>
            <SUBJECT>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</SUBJECT>
            <PG>443</PG>
            <PT>96</PT>
            <SUBJECT>Acquisition and use of criminal history record information by the military services</SUBJECT>
            <PG>446</PG>
            <PT>97</PT>
            <SUBJECT>Release of official information in litigation and testimony by DoD personnel as witnesses</SUBJECT>
            <PG>448</PG>
            <PT>99</PT>
            <SUBJECT>Procedures for States and localities to request indemnification</SUBJECT>
            <PG>451</PG>
            <PT>100</PT>
            <SUBJECT>Unsatisfactory performance of ready reserve obligation</SUBJECT>
            <PG>453</PG>
            <PT>101</PT>
            <SUBJECT>Participation in Reserve training programs</SUBJECT>
            <PG>458</PG>
            <PT>104</PT>
            <SUBJECT>Civilian employment and reemployment rights of applicants for, and Service members and former Service members of the Uniformed Services</SUBJECT>
            <PG>461</PG>
            <PT>105</PT>
            <SUBJECT>Employment and volunteer work of spouses of military personnel</SUBJECT>
            <PG>471</PG>
            <PT>107</PT>
            <SUBJECT>Personal services authority for direct health care providers</SUBJECT>
            <PG>473</PG>
            <PT>110</PT>
            <SUBJECT>Standardized rates of subsistence allowance and commutation instead of uniforms for members of the Senior Reserve Officers’ Training Corps</SUBJECT>
            <PG>474</PG>
            <PT>112</PT>
            <SUBJECT>Indebtedness of military personnel</SUBJECT>
            <PG>480</PG>
            <PT>113</PT>
            <SUBJECT>Indebtedness procedures of military personnel</SUBJECT>
            <PG>483</PG>
            <PT>142</PT>
            <SUBJECT>Copyrighted sound and video recordings</SUBJECT>
            <PG>499<PRTPAGE P="8"/>
            </PG>
            <PT>143</PT>
            <SUBJECT>DoD policy on organizations that seek to represent or organize members of the Armed Forces in negotiation or collective bargaining</SUBJECT>
            <PG>500</PG>
            <PT>144</PT>
            <SUBJECT>Service by members of the Armed Forces on State and local juries</SUBJECT>
            <PG>503</PG>
            <PT>145</PT>
            <SUBJECT>Cooperation with the Office of Special Counsel of the Merit Systems Protection Board</SUBJECT>
            <PG>505</PG>
            <PT>146</PT>
            <SUBJECT>Compliance of DoD members, employees, and family members outside the United States with court orders</SUBJECT>
            <PG>510</PG>
            <PT>147</PT>
            <SUBJECT>Adjudicative guidelines for determining eligibility for access to classified information</SUBJECT>
            <PG>512</PG>
            <PT>148</PT>
            <SUBJECT>National policy and implementation of reciprocity of facilities</SUBJECT>
            <PG>525</PG>
            <PT>149</PT>
            <SUBJECT>Policy on technical surveillance countermeasures</SUBJECT>
            <PG>528</PG>
          </CHAPTI>
          <SUBCHAP>
            <HD SOURCE="HED">SUBCHAPTER E—REGULATIONS PERTAINING TO MILITARY JUSTICE</HD>
          </SUBCHAP>
          <CHAPTI>
            <PT>150</PT>
            <SUBJECT>Courts of criminal appeals rules of practice and procedure</SUBJECT>
            <PG>530</PG>
            <PT>151</PT>
            <SUBJECT>Status of forces policies and information</SUBJECT>
            <PG>538</PG>
            <PT>152</PT>
            <SUBJECT>Review of the manual for courts-martial</SUBJECT>
            <PG>544</PG>
            <PT>153</PT>
            <SUBJECT>Legal assistance matters</SUBJECT>
            <PG>547</PG>
          </CHAPTI>
          <SUBCHAP>
            <HD SOURCE="HED">SUBCHAPTER F—SECURITY</HD>
          </SUBCHAP>
          <CHAPTI>
            <PT>154</PT>
            <SUBJECT>Department of Defense personnel security program regulation</SUBJECT>
            <PG>551</PG>
            <PT>155</PT>
            <SUBJECT>Defense industrial personnel security clearance program</SUBJECT>
            <PG>614</PG>
            <PT>156</PT>
            <SUBJECT>Department of Defense personnel security program (DoDPSP)</SUBJECT>
            <PG>621</PG>
            <PT>158</PT>
            <SUBJECT>Guidelines for systematic declassification review of classified information in permanently valuable DoD records</SUBJECT>
            <PG>623</PG>
          </CHAPTI>
          <SUBCHAP>
            <HD SOURCE="HED">SUBCHAPTER G—DEFENSE CONTRACTING</HD>
          </SUBCHAP>
          <CHAPTI>
            <PT>160</PT>
            <SUBJECT>Defense acquisition regulatory system</SUBJECT>
            <PG>631</PG>
            <PT>162</PT>
            <SUBJECT>Productivity Enhancing Capital Investment (PECI)</SUBJECT>
            <PG>633</PG>
            <PT>165</PT>
            <SUBJECT>Recoupment of nonrecurring costs on sales of U.S. items</SUBJECT>
            <PG>637</PG>
            <PT>168a</PT>
            <SUBJECT>National defense science and engineering graduate fellowships</SUBJECT>
            <PG>641</PG>
            <PT>169</PT>
            <SUBJECT>Commercial activities program</SUBJECT>
            <PG>642</PG>
            <PT>169a</PT>
            <SUBJECT>Commercial activities program procedures</SUBJECT>
            <PG>646</PG>
            <PT>171</PT>
            <SUBJECT>Implementation of Wildfire Suppression Aircraft Transfer Act of 1996</SUBJECT>
            <PG>688</PG>
            <PT>172</PT>
            <SUBJECT>Disposition of proceeds from DoD sales of surplus personal property</SUBJECT>
            <PG>691<PRTPAGE P="9"/>
            </PG>
            <PT>173</PT>
            <SUBJECT>Competitive information certificate and profit reduction clause</SUBJECT>
            <PG>697</PG>
          </CHAPTI>
          <SUBCHAP>
            <HD SOURCE="HED">SUBCHAPTER H—CLOSURES AND REALIGNMENT</HD>
          </SUBCHAP>
          <CHAPTI>
            <PT>174</PT>
            <SUBJECT>Revitalizing base closure communities</SUBJECT>
            <PG>701</PG>
            <PT>175</PT>
            <SUBJECT>Revitalizing base closure communities—Base closure community assistance</SUBJECT>
            <PG>702</PG>
            <PT>176</PT>
            <SUBJECT>Revitalizing base closure communities and community assistance—Community redevelopment and homeless assistance</SUBJECT>
            <PG>717</PG>
          </CHAPTI>
          <SUBCHAP>
            <HD SOURCE="HED">SUBCHAPTER I—CIVIL DEFENSE</HD>
          </SUBCHAP>
          <CHAPTI>
            <PT>185</PT>
            <SUBJECT>Military support to civil authorities (MSCA)</SUBJECT>
            <PG>727</PG>
          </CHAPTI>
          <SUBCHAP>
            <RESERVED>SUBCHAPTERS J-K [RESERVED]</RESERVED>
          </SUBCHAP>
          <SUBCHAP>
            <HD SOURCE="HED">SUBCHAPTER L—ENVIRONMENT</HD>
          </SUBCHAP>
          <CHAPTI>
            <PT>187</PT>
            <SUBJECT>Environmental effects abroad of major Department of Defense actions</SUBJECT>
            <PG>739</PG>
            <PT>189</PT>
            <SUBJECT>Mineral exploration and extraction on DoD lands</SUBJECT>
            <PG>748</PG>
            <PT>190</PT>
            <SUBJECT>Natural Resources Management Program</SUBJECT>
            <PG>750</PG>
          </CHAPTI>
        </TOC>
        <SUBCHAP TYPE="N">
          <PRTPAGE P="11"/>
          <HD SOURCE="HED">SUBCHAPTER A—ACQUISITION</HD>
          <PART>
            <RESERVED>PART 1 [RESERVED]</RESERVED>
          </PART>
          <PART>
            <EAR>Pt. 2</EAR>
            <HD SOURCE="HED">PART 2—PILOT PROGRAM POLICY</HD>
            <CONTENTS>
              <SECHD>Sec.</SECHD>
              <SECTNO>2.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <SECTNO>2.2</SECTNO>
              <SUBJECT>Statutory relief for participating programs.</SUBJECT>
              <SECTNO>2.3</SECTNO>
              <SUBJECT>Regulatory relief for participating programs.</SUBJECT>
              <SECTNO>2.4</SECTNO>
              <SUBJECT>Designation of participating programs.</SUBJECT>
              <SECTNO>2.5</SECTNO>
              <SUBJECT>Criteria for designation of participating programs.</SUBJECT>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>10 U.S.C. 2340 note.</P>
            </AUTH>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>62 FR 17549, Apr. 10, 1997, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>§ 2.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <P>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.</P>
              <P>(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.</P>
              <P>(b) Standard commercial, industrial practices include, but are not limited to:</P>
              <P>(1) Innovative contracting policies and practices;</P>
              <P>(2) Performance and commercial specifications and standards;</P>
              <P>(3) Innovative budget policies;</P>
              <P>(4) Establishing fair and reasonable prices without cost data;</P>
              <P>(5) Maintenance of long-term relationships with quality suppliers;</P>
              <P>(6) Acquisition of commercial and non-developmental items (including components); and</P>
              <P>(7) Other best commercial practices.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 2.2</SECTNO>
              <SUBJECT>Statutory relief for participating programs.</SUBJECT>
              <P>(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.</P>
              <P>(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.</P>

              <P>(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 <PRTPAGE P="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.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 2.3</SECTNO>
              <SUBJECT>Regulatory relief for participating programs.</SUBJECT>
              <P>(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) <SU>1</SU>
                <FTREF/>, the Defense FAR Supplement (DFARS) <SU>2</SU>
                <FTREF/>, 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.</P>
              <FTNT>
                <P>
                  <SU>1</SU> Copies of this Department of Defense publication may be obtained from the Government Printing Office, Superintendent of Documents, Washington, DC 20402.</P>
              </FTNT>
              <FTNT>
                <P>
                  <SU>2</SU> See footnote 1 to § 2.3(a).</P>
              </FTNT>
              <P>(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.</P>
              <P>(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.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 2.4</SECTNO>
              <SUBJECT>Designation of participating programs.</SUBJECT>
              <P>(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.</P>
              <P>(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, <SU>3</SU>
                <FTREF/> 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)</P>
              <FTNT>
                <P>
                  <SU>3</SU> Copies may be obtained, at cost, from the National Technical Information Service, 5285 Port Royal Road, Springfield, VA 22161.</P>
              </FTNT>
              <P>(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.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 2.5</SECTNO>
              <SUBJECT>Criteria for designation of participating programs.</SUBJECT>

              <P>(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.<PRTPAGE P="13"/>
              </P>
              <P>(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.</P>
              <P>(c) Nomination of candidate programs must be accompanied by a list of waivers being requested to Statutes, FAR, DFARS, DoD Directives <SU>4</SU>
                <FTREF/> and Instructions,<SU>5</SU>
                <FTREF/> and where applicable, DoD Component regulations. Waivers being requested must be accompanied by rationale and justification for the waiver. The justification must include:</P>
              <FTNT>
                <P>
                  <SU>4</SU> See footnote 3 to § 2.4(b).</P>
              </FTNT>
              <FTNT>
                <P>
                  <SU>5</SU> See footnote 3 to § 2.4(b).</P>
              </FTNT>
              <P>(1) The provision of law proposed to be waived or limited.</P>
              <P>(2) The effects of the provision of law on the acquisition, including specific examples.</P>
              <P>(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</P>
              <P>(4) A discussion of the efficiencies or savings, if any, that will result from the waiver or limitation.</P>
              <P>(d) No nominated program shall be accepted until the Under Secretary of Defense has determined that the candidate program is properly planned.</P>
            </SECTION>
          </PART>
          <PART>
            <EAR>Pt. 3</EAR>
            <HD SOURCE="HED">PART 3—TRANSACTIONS OTHER THAN CONTRACTS, GRANTS, OR COOPERATIVE AGREEMENTS FOR PROTOTYPE PROJECTS</HD>
            <CONTENTS>
              <SECHD>Sec.</SECHD>
              <SECTNO>3.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <SECTNO>3.2</SECTNO>
              <SUBJECT>Background.</SUBJECT>
              <SECTNO>3.3</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
              <SECTNO>3.4</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>3.5</SECTNO>
              <SUBJECT>Appropriate use.</SUBJECT>
              <SECTNO>3.6</SECTNO>
              <SUBJECT>Limitations on cost-sharing.</SUBJECT>
              <SECTNO>3.7</SECTNO>
              <SUBJECT>Comptroller General access.</SUBJECT>
              <SECTNO>3.8</SECTNO>
              <SUBJECT>DoD access to records policy.</SUBJECT>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>Sec. 845, Pub. L. 103-160, 107 Stat. 1547, as amended.</P>
            </AUTH>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>66 FR 57383, Nov. 15, 2001, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>§ 3.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <P>This part consolidates rules that implement section 845 of the National Defense Authorization Act for Fiscal Year 1994, Public Law 103-160, 107 Stat. 1547, as amended, and have a significant impact on the public. Section 845 authorizes the Secretary of a Military Department, the Director of Defense Advanced Research Projects Agency, and any other official designated by the Secretary of Defense, to enter into transactions other than contracts, grants, or cooperative agreements in certain situations for prototype projects that are directly relevant to weapons or weapon systems proposed to be acquired or developed by the Department of Defense.</P>
              <CITA>[67 FR 54956, Aug. 27, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>§ 3.2</SECTNO>
              <SUBJECT>Background.</SUBJECT>
              <P>“Other transactions” is the term commonly used to refer to the 10 U.S.C. 2371 authority to enter into transactions other than contracts, grants or cooperative agreements. “Other transactions” are generally not subject to the Federal laws and regulations limited in applicability to contracts, grants or cooperative agreements. As such, they are not required to comply with the Federal Acquisition Regulation (FAR) and its supplements (48 CFR).</P>
              <CITA>[67 FR 54956, Aug. 27, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>§ 3.3</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
              <P>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.</P>
              <CITA>[65  FR 35576, June 5, 2000. Redesignated at 67 FR 54956, Aug. 27, 2002]</CITA>
            </SECTION>
            <SECTION>
              <PRTPAGE P="14"/>
              <SECTNO>§ 3.4</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>
                <E T="03">Agency point of contact (POC).</E> The individual identified by the military department or defense agency as its POC for prototype OTs.</P>
              <P>
                <E T="03">Agreements Officer.</E> An individual with the authority to enter into, administer, or terminate OTs for prototype projects and make related determinations and findings.</P>
              <P>
                <E T="03">Approving Official.</E> The official responsible for approving the OTs acquisition strategy and resulting OT agreement. This official must be at least one level above the Agreements Officer and at no lower level than existing agency thresholds associated with procurement contracts.</P>
              <P>
                <E T="03">Awardee.</E> Any business unit that is the direct recipient of an OT agreement.</P>
              <P>
                <E T="03">Business unit.</E> Any segment of an organization, or an entire business organization which is not divided into segments.</P>
              <P>
                <E T="03">Contracting activity.</E> An element of an agency designated by the 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.</P>
              <P>
                <E T="03">Cost-type OT.</E> Agreements where payments are based on amounts generated from the awardee's financial or cost records or that require at least one third of the total costs to be provided by non-Federal parties pursuant to statute or require submittal of financial or cost records/reports to determine whether additional effort can be accomplished for the fixed amount.</P>
              <P>
                <E T="03">Fixed-price type OT.</E> Agreements where payments are not based on amounts generated from the awardee's financial or cost records.</P>
              <P>
                <E T="03">Head of the contracting activity (HCA).</E> The official who has overall responsibility for managing the contracting activity.</P>
              <P>
                <E T="03">Nontraditional Defense contractor.</E> A business unit that has not, for a period of at least one year prior to the date of the OT agreement, entered into or performed on (1) any contract that is subject to full coverage under the cost accounting standards prescribed pursuant to section 26 of the Office of Federal Procurement Policy Act (41 U.S.C. 422) and the regulations implementing such section; or (2) any other contract in excess of $500,000 to carry out prototype projects or to perform basic, applied, or advanced research projects for a Federal agency, that is subject to the Federal Acquisition Regulation.</P>
              <P>
                <E T="03">Procurement contract.</E> A contract awarded pursuant to the Federal Acquisition Regulation.</P>
              <P>
                <E T="03">Qualified Independent Public Accountant.</E> An accountant that is licensed or works for a firm that is licensed in the state or other political jurisdiction where they operate their professional practice and comply with the applicable provisions of the public accountancy law and rules of the jurisdiction where the audit is being conducted.</P>
              <P>
                <E T="03">Segment.</E> One of two or more divisions, product departments, plants, or other subdivisions of an organization reporting directly to a home office, usually identified with responsibility for profit and/or producing a product or service.</P>
              <P>
                <E T="03">Senior Procurement Executive.</E> The following individuals:</P>
              <P>(1) Department of the Army—Assistant Secretary of the Army (Acquisition, Logistics and Technology);</P>
              <P>(2) Department of the Navy—Assistant Secretary of the Navy (Research, Development and Acquisition);</P>
              <P>(3) Department of the Air Force—Assistant Secretary of the Air Force (Acquisition).</P>
              <P>(4) The Directors of Defense Agencies who have been delegated authority to act as Senior Procurement Executive for their respective agencies.</P>
              <P>
                <E T="03">Single Audit Act.</E> Establishes uniform audit requirements for audits of state and local government, universities, and non-profit organizations that expend Federal awards.</P>
              <P>
                <E T="03">Subawardee.</E> Any business unit of a party, entity or subordinate element performing effort under the OT agreement, other than the awardee.</P>
              <P>
                <E T="03">Traditional Defense contractor.</E> Any business unit that does not meet the definition of a nontraditional Defense contractor.</P>
              <CITA>[68 FR 27457, May 20, 2003]</CITA>
            </SECTION>
            <SECTION>
              <PRTPAGE P="15"/>
              <SECTNO>§ 3.5</SECTNO>
              <SUBJECT>Appropriate use.</SUBJECT>
              <P>In accordance with statute, this authority may be used only when:</P>
              <P>(a) At least one nontraditional Defense contractor is participating to a significant extent in the prototype project; or</P>
              <P>(b) No nontraditional Defense contractor is participating to a significant extent in the prototype project, but at least one of the following circumstances exists:</P>
              <P>(1) At least one third of the total cost of the prototype project is to be paid out of funds provided by non-Federal parties to the transaction.</P>
              <P>(2) The Senior Procurement Executive for the agency determines in writing that exceptional circumstances justify the use of a transaction that provides for innovative business arrangements or structures that would not be feasible or appropriate under a procurement contract.</P>
              <CITA>[67 FR 54956, Aug. 27, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>§ 3.6</SECTNO>
              <SUBJECT> Limitations on cost-sharing.</SUBJECT>
              <P>(a) When a nontraditional Defense contractor is not participating to a significant extent in the prototype project and cost-sharing is the reason for using OT authority, then the non-Federal amounts counted as provided, or to be provided, by the business units of an awardee or subawardee participating in the performance of the OT agreement may not include costs that were incurred before the date on which the OT agreement becomes effective. Costs that were incurred for a prototype project by the business units of an awardee or subawardee after the beginning of negotiations, but prior to the date the OT agreement becomes effective, may be counted as non-Federal amounts if and to the extent that the Agreements Officer determines in writing that:</P>
              <P>(1) The awardee or subawardee incurred the costs in anticipation of entering into the OT agreement; and</P>
              <P>(2) It was appropriate for the awardee or subawardee to incur the costs before the OT agreement became effective in order to ensure the successful implementation of the OT agreement.</P>
              <P>(b) As a matter of policy, these limitations on cost-sharing apply any time cost-sharing may be recognized when using OT authority for prototype projects.</P>
              <CITA>[67 FR 54956, Aug. 27, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>§ 3.7</SECTNO>
              <SUBJECT>Comptroller General access.</SUBJECT>
              <P>(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.</P>
              <P>(b) The clause referenced in paragraph (a) of this section will not apply with respect to a party or entity, or 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.</P>

              <P>(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 <PRTPAGE P="16"/>1994 (Pub. L. 103-160; 10 U.S.C. 2371 note).</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(g) The clause referenced in paragraph (a) of this section, must provide for the following:</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(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).</P>
              <P>(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.</P>
              <P>(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.</P>

              <P>(5) The Comptroller General shall have access to the records described in this clause until three years after the <PRTPAGE P="17"/>date the final payment is made by the United States under this agreement.</P>
              <P>(6) The recipient of the agreement shall flow down this provision to any entity that participates in the performance of the agreement.</P>
              <CITA>[65 FR 35576, June 5, 2000. Redesignated at 67 FR 54956, Aug. 27, 2002]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>§ 3.8</SECTNO>
              <SUBJECT>DoD access to records policy.</SUBJECT>
              <P>(a) <E T="03">Applicability.</E> This section provides policy concerning DoD access to awardee and subawardee records on OT agreements for prototype projects. This access is separate and distinct from Comptroller General access.</P>
              <P>(1) <E T="03">Fixed-price type OT agreements.</E> (i) <E T="03">General</E>—DoD access to records is not generally required for fixed-price type OT agreements. In order for an agreement to be considered a fixed-price type OT agreement, it must adequately specify the effort to be accomplished for a fixed amount and provide for defined payable milestones, with no provision for financial or cost reporting that would be a basis for making adjustment in either the work scope or price of the effort.</P>
              <P>(ii) <E T="03">Termination considerations.</E> The need to provide for DoD access to records in the case of termination of a fixed-price type OT can be avoided by limiting potential termination settlements to an amount specified in the original agreement or to payment for the last completed milestone. However, if a fixed-price agreement provides that potential termination settlement amounts may be based on amounts generated from cost or financial records and the agreement exceeds the specified threshold, the OT should provide that DoD will have access to records in the event of termination.</P>
              <P>(2) <E T="03">Cost-type OT agreements.</E> (i) <E T="03">Single Audit Act</E>—In accordance with the requirements of Public Law 98-502, as amended by Public Law 104-156, 110 STAT. 1396-1404, when a business unit that will perform the OT agreement, or a subawardee, meets the criteria for an audit pursuant to the Single Audit Act, the DoD must have sufficient access to the entity's records to assure compliance with the provisions of the Act.</P>
              <P>(ii) <E T="03">Traditional Defense contractors.</E> The DoD shall have access to records on cost-type OT agreements with traditional Defense contractors that provide for total Government payments in excess of $5,000,000. The content of the access to records clause shall be in accordance with paragraph (c) of this section. The value establishing the threshold is the total value of the agreement including all options.</P>
              <P>(iii) <E T="03">Nontraditional Defense contractors.</E> The DoD should have access to records on cost-type OT agreements with nontraditional Defense contractors that provide for total Government payments in excess of $5,000,000. The content of the access to records clause should be in accordance with paragraph (c) of this section. The value establishing the threshold is the total value of the agreement including all options.</P>
              <P>(iv) <E T="03">DoD access below threshold.</E> The Agreements Officer has the discretion to determine whether to include DoD access to records when the OT does not meet any of the requirements in (a)(2)(i) through (a)(2)(iii) of this section. The content of that access to records clause should be tailored to meet the particular circumstances of the agreement.</P>
              <P>(v) <E T="03">Examples of cost-type OT agreements.</E> (A) An agreement that requires at least one-third cost share pursuant to statute.</P>
              <P>(B) An agreement that includes payable milestones, but provides for adjustment of the milestone amounts based on actual costs or reports generated from the awardee's financial or cost records.</P>
              <P>(C) An agreement that is for a fixed-Government amount, but the agreement provides for submittal of financial or cost records/reports to determine whether additional effort can be accomplished for the fixed amount.</P>
              <P>(3) <E T="03">Subawardees.</E> When a DoD access to records provision is included in the OT agreement, the awardee shall use the criteria established in paragraphs (a)(2)(i) through (a)(2)(iii) of this section to determine whether DoD access to records clauses should be included in subawards.</P>
              <P>(b) <E T="03">Exceptions.</E> (1) <E T="03">Nontraditional Defense contractors</E>—(i) The Agreements Officers may deviate, in part or in <PRTPAGE P="18"/>whole, from the application of this access to records policy for a nontraditional Defense contractor when application of the policy would adversely impact the government's ability to incorporate commercial technology or execute the prototype project.</P>
              <P>(ii) The Agreements Officer will document:</P>
              <P>(A) What aspect of the audit policy was not applied;</P>
              <P>(B) Why it was problematic;</P>
              <P>(C) What means will be used to protect the Government's interest; and</P>
              <P>(D) Why the benefits of deviating from the policy outweigh the potential risks.</P>
              <P>(iii) This determination will be reviewed by the approving official as part of the pre-award approval of the agreement and submitted to the agency POC within 10 days of award.</P>
              <P>(iv) The agency POC will forward all such documentation received in any given fiscal year, to the Director, Defense Procurement by 15 October of each year.</P>
              <P>(2) <E T="03">Traditional Defense contractor.</E> (i) Any departure from this policy for other than nontraditional Defense contractors must be approved by the Head of the Contracting Activity prior to award and set forth the exceptional circumstances justifying deviation.</P>
              <P>(ii) Additionally, the justification will document:</P>
              <P>(A) What aspect of the policy was not applied;</P>
              <P>(B) Why it was problematic;</P>
              <P>(C) What means will be used to protect the Government's interest; and</P>
              <P>(D) Why the benefits of deviating from the policy outweigh the potential risks.</P>
              <P>(iii) The HCA will forward documentation associated with such waivers in any given fiscal year, to the Director, Defense Procurement by 15 October of each year.</P>
              <P>(3) <E T="03">DoD access below the threshold.</E> When the Agreements Officer determines that access to records is appropriate for an agreement below the $5,000,000 threshold, the content, length and extent of access may be mutually agreed to by the parties, without documenting reasons for departing from the policy of this section.</P>
              <P>(4) <E T="03">Flow down provisions.</E> The awardee shall submit justification for any exception to the DoD access to records policy to the Agreements Officer for subawardees. The Agreements Officer will review and obtain appropriate approval, as set forth in paragraphs (b)(1) and (b)(2) of this section.</P>
              <P>(c) <E T="03">Content of DoD access to records clause.</E> When a DoD access to records clause is included as part of the OT agreement, address the following areas during the negotiation of the clause:</P>
              <P>(1) <E T="03">Frequency of audits.</E> Audits will be performed when the Agreements Officer determines it is necessary to verify statutory cost share or to verify amounts generated from financial or cost records that will be used as the basis for payment or adjustment of payment.</P>
              <P>(2) <E T="03">Means of accomplishing audits.</E> (i) <E T="03">Business units subject to the Single Audit Act</E>—When the awardee or subawardee is a state government, local government, or nonprofit organization whose Federal cost reimbursement contracts and financial assistance agreements are subject to the Single Audit Act (Public Law 98-502, as amended by Public Law 104-156, 110 STAT. 1396-1404), the clause must apply the provisions of that Act for purposes of performing audits of the awardee or subawardee under the agreement.</P>
              <P>(ii) <E T="03">Business units not subject to the Single Audit Act currently performing on procurement contracts.</E> The clause must provide that DCAA will perform any necessary audits if, at the time of agreement award, the awardee or subawardee is not subject to the Single Audit Act and is performing a procurement contract that is subject to the Cost Principles Applicable to Commercial Organizations (48 CFR part 31.2) and/or the Cost Accounting Standards (48 CFR part 99).</P>
              <P>(iii) <E T="03">Other business units.</E> DCAA or a qualified IPA may perform any necessary audit of a business unit of the awardee or subawardee if, at the time of agreement award, the business unit does not meet the criteria in (c)(2)(i) or (c)(2)(ii) of this section. The clause must provide for the use of a qualified IPA if such a business unit will not accept the agreement if the Government has access to the business unit's <PRTPAGE P="19"/>records. The Agreements Officer will include a statement in the file that the business unit is not performing on a procurement contract subject to the Cost Principles or Cost Accounting Standards at the time of agreement award, and will not accept the agreement if the government has access to the business unit's records. The Agreements Officer will also prepare a report (Part III to the annual report submission) for the Director, Defense Procurement that identifies, for each business unit that is permitted to use an IPA: the business unit's name, address and the expected value of its award. When the clause provides for use of an IPA to perform any necessary audits, the clause must state that:</P>

              <P>(A) The IPA will perform the audit in accordance with Generally Accepted Government Auditing Standards (GAGAS). Electronic copies of the standards may be accessed at <E T="03">www.gao.gov.</E> Printed copies may be purchased from the U.S. Government Printing Office (for ordering information, call (202) 512-1800 or access the Internet Site at <E T="03">www.gpo.gov</E>).</P>
              <P>(B) The Agreements Officers' authorized representative has the right to examine the IPA's audit report and working papers for 3 years after final payment or three years after issuance of the audit report, whichever is later, unless notified otherwise by the Agreements Officer.</P>
              <P>(C) The IPA will send copies of the audit report to the Agreements Officer and the Assistant Inspector General (Audit Policy and Oversight) [AIG(APO)], 400 Army Navy Drive, Suite 737, Arlington, VA 22202.</P>
              <P>(D) The IPA will report instances of suspected fraud directly to the DoDIG.</P>
              <P>(E) The Government has the right to require corrective action by the awardee or subawardee if the Agreements Officer determines (subject to appeal under the disputes clause of the agreement) that the audit has not been performed or has not been performed in accordance with GAGAS. The Agreements Officer should take action promptly once the Agreements Officer determines that the audit is not being accomplished in a timely manner or the audit is not performed in accordance with GAGAS but generally no later than twelve (12) months of the date requested by the Agreements Officer. The awardee or subawardee may take corrective action by having the IPA correct any deficiencies identified by the Agreements Officer, having another IPA perform the audit, or electing to have the Government perform the audit. If corrective action is not taken, the Agreements Officer has the right to take one or more of the following actions:</P>
              <P>(<E T="03">1</E>) Withhold or disallow a specified percentage of costs until the audit is completed satisfactorily. The agreement should include a specified percentage that is sufficient to enhance performance of corrective action while also not being unfairly punitive.</P>
              <P>(<E T="03">2</E>) Suspend performance until the audit is completed satisfactorily; and/or</P>
              <P>(<E T="03">3</E>) Terminate the agreement if the agreements officer determines that imposition of either (c)(2)(iii)(E)(1) or (c)(2)(iii)(e)(2) of this section is not practical.</P>
              <P>(F) If it is found that the awardee or subawardee was performing a procurement contract subject to Cost Principles Applicable to Commercial Organizations (48 CFR part 31.2) and/or Cost Accounting Standards (48 CFR part 99) at the time of agreement award, the Agreements Officer, or an authorized representative, has the right to audit records of the awardee or subawardee to verify the actual costs or reporting information used as the basis for payment or to verify statutorily required cost share under the agreement, and the IPA is to be paid by the awardee or subawardee. The cost of an audit performed in accordance with this policy is reimbursable based on the business unit's established accounting practices and subject to any limitations in the agreement.</P>
              <P>(3) <E T="03">Scope of audit.</E> The Agreements Officer should coordinate with the auditor regarding the nature of any audit envisioned.</P>
              <P>(4) <E T="03">Length and extent of access.</E> (i) <E T="03">Clauses that do not provide for use of an IPA</E>—The clause must provide for the Agreements Officer's authorized representative to have access to directly pertinent records of those business units of the awardee or subawardee's <PRTPAGE P="20"/>performing effort under the OT agreement, when needed to verify the actual costs or reporting used as the basis for payment or to verify statutorily required cost share under the agreement.</P>
              <P>(ii) <E T="03">Clauses that provide for use of an IPA to perform the audits.</E> The clause must:</P>
              <P>(A) Provide the Agreements Officer's authorized representative access to the IPA's audit reports and working papers to ensure that the IPA has performed the audit in accordance with GAGAS.</P>
              <P>(B) State that the Government will make copies of contractor records contained in the IPA's work papers if needed to demonstrate that the audit was not performed in accordance with GAGAS.</P>
              <P>(C) State that the Government has no direct access to any awardee or subawardee records unless it is found that the awardee or subawardee was performing a procurement contract subject to Cost Principles (48 CFR part 31) and/or Cost Accounting Standards (48 CFR part 99) at the time of agreement award.</P>
              <P>(iii) <E T="03">Business Units subject to the Single Audit Act.</E> The clause must provide access to the extent authorized by the Single Audit Act.</P>
              <P>(iv) <E T="03">Record Retention/Period of Access.</E> The clause must require that the awardee and subawardee retain, and provide access to, the records referred to in (c)(4)(i) and (c)(4)(ii) of this section for three years after final payment, unless notified of a shorter or longer period by the Agreements Officer.</P>
              <P>(5) <E T="03">Awardee flow down responsibilities.</E> Agreements must require awardees to include the necessary provisions in subawards that meet the conditions set forth in this DoD access to records policy.</P>
              <P>(d) <E T="03">DoDIG and GAO access.</E> In accordance with statute, if an agreement gives the Agreements Officer or another DoD component official access to a business unit's records, the DoDIG or GAO are granted the same access to those records.</P>
              <CITA>[68 FR 27457, May 20, 2003]</CITA>
            </SECTION>
          </PART>
          <PART>
            <RESERVED>PARTS 4-8 [RESERVED]</RESERVED>
          </PART>
        </SUBCHAP>
        <SUBCHAP TYPE="P">
          <PRTPAGE P="21"/>
          <HD SOURCE="HED">SUBCHAPTER B—MILITARY COMMISSIONS</HD>
          <PART>
            <EAR>Pt. 9</EAR>
            <HD SOURCE="HED">PART 9—PROCEDURES FOR TRIALS BY MILITARY COMMISSIONS OF CERTAIN NON-UNITED STATES CITIZENS IN THE WAR AGAINST TERROISM</HD>
            <CONTENTS>
              <SECHD>Sec.</SECHD>
              <SECTNO>9.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <SECTNO>9.2</SECTNO>
              <SUBJECT>Establishment of Military Commissions.</SUBJECT>
              <SECTNO>9.3</SECTNO>
              <SUBJECT>Jurisdiction.</SUBJECT>
              <SECTNO>9.4</SECTNO>
              <SUBJECT>Commission personnel.</SUBJECT>
              <SECTNO>9.5</SECTNO>
              <SUBJECT>Procedures accorded the accused.</SUBJECT>
              <SECTNO>9.6</SECTNO>
              <SUBJECT>Conduct of the trial.</SUBJECT>
              <SECTNO>9.7</SECTNO>
              <SUBJECT>Regulations.</SUBJECT>
              <SECTNO>9.8</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
              <SECTNO>9.9</SECTNO>
              <SUBJECT>Protection of State secrets.</SUBJECT>
              <SECTNO>9.10</SECTNO>
              <SUBJECT>Other.</SUBJECT>
              <SECTNO>9.11</SECTNO>
              <SUBJECT>Amendment.</SUBJECT>
              <SECTNO>9.12</SECTNO>
              <SUBJECT>Delegation. </SUBJECT>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>5 U.S.C. 552(1)(a)(1)(C) and (D).</P>
            </AUTH>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>68 FR 39374, July 1, 2003, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>§ 9.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <P>This part implements policy, assigns responsibilities, and prescribes procedures under the United States Constitution, Article II, section 2 and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism” (3 CFR, 2001 comp., p. 918, 66 FR 57833), for trials before military commissions of individuals subject to the President's Military Order. These procedures shall be implemented and construed so as to ensure that any such individual receives a full and fair trial before a military commission, as required by the President's Military Order. Unless otherwise directed by the Secretary of Defense, and except for supplemental procedures established pursuant to the President's Military Order or this part, the procedures prescribed herein and no others shall govern such trials.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 9.2</SECTNO>
              <SUBJECT>Establishment of Military Commissions.</SUBJECT>
              <P>In accordance with the President's Military Order, the Secretary of Defense or a designee (“Appointing Authority”) may issue orders from time to time appointing one or more military commissions to try individuals subject to the President's Military Order and appointing any other personnel necessary to facilitate such trials.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 9.3</SECTNO>
              <SUBJECT>Jurisdiction.</SUBJECT>
              <P>(a) Over persons. A military commission appointed under this part (“Commission”) shall have jurisdiction over only an individual or individuals (“the Accused”):</P>
              <P>(1) Subject to the President's Military Order; and</P>
              <P>(2) Alleged to have committed an offense in a charge that has been referred to the Commission by the Appointing Authority.</P>
              <P>(b) <E T="03">Over offenses.</E> Commissions established hereunder shall have jurisdiction over violations of the laws of war and all other offenses triable by military commission.</P>
              <P>(c) <E T="03">Maintaining integrity of commission proceedings.</E> The Commission may exercise jurisdiction over participants in its proceedings as necessary to preserve the integrity and order of the proceedings.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 9.4</SECTNO>
              <SUBJECT>Commission personnel.</SUBJECT>
              <P>(a) <E T="03">Members</E>—(1) <E T="03">Appointment.</E> The Appointing Authority shall appoint the members and the alternate member or members of each Commission. The alternate member or members shall attend all sessions of the Commission, but the absence of an alternate member shall not preclude the Commission from conducting proceedings. In case of incapacity, resignation, or removal of any member, an alternate member shall take the place of that member. Any vacancy among the members or alternate members occurring after a trial has begun may be filled by the Appointing Authority, but the substance of all prior proceedings and evidence taken in that case shall be made known to that new member or alternate member before the trial proceeds.</P>
              <P>(2) <E T="03">Number of members.</E> Each Commission shall consist of at least three but <PRTPAGE P="22"/>no more than seven members, the number being determined by the Appointing Authority. For each such Commission, there shall also be one or two alternate members, the number being determined by the Appointing Authority.</P>
              <P>(3) <E T="03">Qualifications.</E> Each member and alternate member shall be a commissioned officer of the United States armed forces (“Military Officer”), including without limitation reserve personnel on active duty, National Guard personnel on active duty in Federal service, and retired personnel recalled to active duty. The Appointing Authority shall appoint members and alternate members determined to be competent to perform the duties involved. The Appointing Authority may remove members and alternate members for good cause.</P>
              <P>(4) <E T="03">Presiding Officer.</E> From among the members of each Commission, the Appointing Authority shall designate a Presiding Officer to preside over the proceedings of that Commission. The Presiding Officer shall be a Military Officer who is a judge advocate of any United States armed force.</P>
              <P>(5) <E T="03">Duties of the Presiding Officer.</E> (i) The Presiding Officer shall admit or exclude evidence at trial in accordance with section 6(d) of this part. The Presiding Officer shall have authority to close proceedings or portions of proceedings in accordance with §9.6(b)(3) of this part and for any other reason necessary for the conduct of a full and fair trial.</P>
              <P>(ii) The Presiding Officer shall ensure that the discipline, dignity, and decorum of the proceedings are maintained, shall exercise control over the proceedings to ensure proper implementation of the President's Military Order and this part, and shall have authority to act upon any contempt or breach of Commission rules and procedures. Any attorney authorized to appear before a Commission who is thereafter found not to satisfy the requirements for eligibility or who fails to comply with laws, rules, regulations, or other orders applicable to the Commission proceedings or any other individual who violates such laws, rules, regulations, or orders may be disciplined as the Presiding Officer deems appropriate, including but not limited to revocation of eligibility to appear before that Commission. The Appointing Authority may further revoke that attorney's or any other person's eligibility to appear before any other Commission convened under this part.</P>
              <P>(iii) The Presiding Officer shall ensure the expeditious conduct of the trial. In no circumstance shall accommodation of counsel be allowed to delay proceedings unreasonably.</P>
              <P>(iv) The Presiding Officer shall certify all interlocutory questions, the disposition of which would effect a termination of proceedings with respect to a charge, for decision by the Appointing Authority. The Presiding Officer may certify other interlocutory questions to the Appointing Authority as the Presiding Officer deems appropriate.</P>
              <P>(b) <E T="03">Prosecution</E>—(1) <E T="03">Office of the Chief Prosecutor.</E> The Chief Prosecutor shall be a judge advocate of any United States armed force, shall supervise the overall prosecution efforts under the President's Military Order, and shall ensure proper management of personnel and resources.</P>
              <P>(2) <E T="03">Prosecutors and Assistant Prosecutors.</E> (i) Consistent with any supplementary regulations or instructions issued under § 9.7(a), the Chief Prosecutor shall detail a Prosecutor and, as appropriate, one or more Assistant Prosecutors to prepare charges and conduct the prosecution for each case before a Commission (“Prosecution”). Prosecutors and Assistant Prosecutors shall be:</P>
              <P>(A) Military Officers who are judge advocates of any United States armed force, or</P>
              <P>(B) Special trial counsel of the Department of Justice who may be made available by the Attorney General of the United States.</P>
              <P>(ii) The duties of the Prosecution are:</P>
              <P>(A) To prepare charges for approval and referral by the Appointing Authority;</P>
              <P>(B) To conduct the prosecution before the Commission of all cases referred for trial; and</P>
              <P>(C) To represent the interests of the Prosecution in any review process.</P>
              <P>(c) <E T="03">Defense</E>—(1) <E T="03">Office of the Chief Defense Counsel.</E> The Chief Defense Counsel shall be a judge advocate of any <PRTPAGE P="23"/>United States armed force, shall supervise the overall defense efforts under the President's Military Order, shall ensure proper management of personnel and resources, shall preclude conflicts of interest, and shall facilitate proper representation of all Accused.</P>
              <P>(2) <E T="03">Detailed Defense Counsel.</E> Consistent with any supplementary regulations or instructions issued under § 9.7(a), the Chief Defense Counsel shall detail one or more Military Officers who are judge advocates of any United States armed force to conduct the defense for each case before a Commission (“Detailed Defense Counsel”). The duties of the Detailed Defense Counsel are:</P>
              <P>(i) To defend the Accused zealously within the bounds of the law without regard to personal opinion as to the guilt of the Accused; and</P>
              <P>(ii) To represent the interests of the Accused in any review process as provided by this part.</P>
              <P>(iii) <E T="03">Choice of Counsel.</E> (A) The Accused may select a Military Officer who is a judge advocate of any United States armed force to replace the Accused's Detailed Defense Counsel, provided that Military Officer has been determined to be available in accordance with any applicable supplementary regulations or instructions issued under § 9.7(a). After such selection of a new Detailed Defense Counsel, the original Detailed Defense Counsel will be relieved of all duties with respect to that case. If requested by the Accused, however, the Appointing Authority may allow the original Detailed Defense Counsel to continue to assist in representation of the Accused as another Detailed Defense Counsel.</P>
              <P>(B) The Accused may also retain the services of a civilian attorney of the Accused's own choosing and at no expense to the United States Government (“Civilian Defense Counsel”), provided that attorney:</P>
              <P>(<E T="03">1</E>) Is a United States citizen;</P>
              <P>(<E T="03">2</E>) Is admitted to the practice of law in a State, district, territory, or possession of the United States, or before a Federal court;</P>
              <P>(<E T="03">3</E>) Has not been the subject of any sanction or disciplinary action by any court, bar, or other competent governmental authority for relevant misconduct;</P>
              <P>(<E T="03">4</E>) Has been determined to be eligible for access to information classified at the level SECRET or higher under the authority of and in accordance with the procedures prescribed in DoD 5200.2-R <SU>1</SU>
                <FTREF/>; and</P>
              <FTNT>
                <P>
                  <SU>1</SU> Available from <E T="03">www.ditc.mil/whs/directives.</E>
                </P>
              </FTNT>
              <P>(<E T="03">5</E>) Has signed a written agreement to comply with all applicable regulations or instructions for counsel, including any rules of court for conduct during the course of proceedings. Civilian attorneys may be pre-qualified as members of the pool of available attorneys if, at the time of application, they meet the relevant criteria, or they may be qualified on an <E T="03">ad hoc</E> basis after being requested by an Accused. Representation by Civilian Defense Counsel will not relieve Detailed Defense Counsel of the duties specified in paragraph (c)(2) of this section. The qualification of a Civilian Defense Counsel does not guarantee that person's presence at closed Commission proceedings or that person's access to any information protected under § 9.6(d)(5).</P>
              <P>(4) <E T="03">Continuity of representation.</E> The Accused must be represented at all relevant times by Detailed Defense Counsel. Detailed Defense Counsel and Civilian Defense Counsel shall be herein referred to collectively as “Defense Counsel.” The Accused and Defense Counsel shall be herein referred to collectively as “the Defense.”</P>
              <P>(d) <E T="03">Other Personnel.</E> Other personnel, such as court reporters, interpreters, security personnel, bailiffs, and clerks may be detailed or employed by the Appointing Authority, as necessary.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 9.5</SECTNO>
              <SUBJECT>Procedures accorded the accused.</SUBJECT>
              <P>The following procedures shall apply with respect to the Accused:</P>
              <P>(a) The Prosecution shall furnish to the Accused, sufficiently in advance of trial to prepare a defense, a copy of the charges in English and, if appropriate, in another language that the Accused understands.</P>
              <P>(b) The Accused shall be presumed innocent until proven guilty.</P>

              <P>(c) A Commission member shall vote for a finding of Guilty as to an offense if and only if that member is convinced <PRTPAGE P="24"/>beyond a reasonable doubt, based on the evidence admitted at trial, that the Accused is guilty of the offense.</P>
              <P>(d) At least one Detailed Defense Counsel shall be made available to the Accused sufficiently in advance of trial to prepare a defense and until any findings and sentence become final in accordance with § 9.6(h)(2).</P>
              <P>(e) The Prosecution shall provide the Defense with access to evidence the Prosecution intends to introduce at trial and with access to evidence known to the Prosecution that tends to exculpate the Accused. Such access shall be consistent with § 9.6(d)(5) and subject to § 9.9.</P>
              <P>(f) The Accused shall not be required to testify during trial. A Commission shall draw no adverse inference from an Accused's decision not to testify. This subsection shall not preclude admission of evidence of prior statements or conduct of the Accused.</P>
              <P>(g) If the Accused so elects, the Accused may testify at trial on the Accused's own behalf and shall then be subject to cross-examination.</P>
              <P>(h) The Accused may obtain witnesses and documents for the Accused's defense, to the extent necessary and reasonably available as determined by the Presiding Officer. Such access shall be consistent with the requirements of § 9.6(d)(5) and subject to § 9.9. The Appointing Authority shall order that such investigative or other resources be made available to the Defense as the Appointing Authority deems necessary for a full and fair trial.</P>
              <P>(i) The Accused may have Defense Counsel present evidence at trial in the Accused's defense and cross-examine each witness presented by the Prosecution who appears before the Commission.</P>
              <P>(j) The Prosecution shall ensure that the substance of the charges, the proceedings, and any documentary evidence are provided in English and, if appropriate, in another language that the Accused understands. The Appointing Authority may appoint one or more interpreters to assist the Defense, as necessary.</P>
              <P>(k) The Accused may be present at every stage of the trial before the Commission, consistent with § 9.6(b)(3), unless the Accused engages in disruptive conduct that justifies exclusion by the Presiding Officer. Detailed Defense Counsel may not be excluded from any trial proceeding or portion thereof.</P>
              <P>(l) Except by order of the Commission for good cause shown, the Prosecution shall provide the Defense with access before sentencing proceedings to evidence the Prosecution intends to present in such proceedings. Such access shall be consistent with § 9.6(d)(5) of this part and subject to § 9.9.</P>
              <P>(m) The Accused may make a statement during sentencing proceedings.</P>
              <P>(n) The Accused may have Defense Counsel submit evidence to the Commission during sentencing proceedings.</P>
              <P>(o) The Accused shall be afforded a trial open to the public (except proceedings closed by the Presiding Officer), consistent with § 9.6(b).</P>
              <P>(p) The Accused shall not again be tried by any Commission for a charge once a Commission's finding on that charge becomes final in accordance with § 9.6(h)(2).</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 9.6</SECTNO>
              <SUBJECT>Conduct of the trial.</SUBJECT>
              <P>(a) <E T="03">Pretrial procedures</E>—(1) Preparation of the Charges. The Prosecution shall prepare charges for approval by the Appointing Authority, as provided in § 9.4(b)(2)(i).</P>
              <P>(2) <E T="03">Referral to the Commission.</E> The Appointing Authority may approve and refer for trial any charge against an individual or individuals within the jurisdiction of a Commission in accordance with § 9.3(a) and alleging an offense within the jurisdiction of a Commission in accordance with § 9.3(b).</P>
              <P>(3) <E T="03">Notification of the accused.</E> The Prosecution shall provide copies of the charges approved by the Appointing Authority to the Accused and Defense Counsel. The Prosecution also shall submit the charges approved by the Appointing Authority to the Presiding Officer of the Commission to which they were referred.</P>
              <P>(4) <E T="03">Plea Agreements.</E> The Accused, through Defense Counsel, and the Prosecution may submit for approval to the Appointing Authority a plea agreement mandating a sentence limitation or any other provision in exchange for an agreement to plead guilty, or any other consideration. Any agreement to plead <PRTPAGE P="25"/>guilty must include a written stipulation of fact, signed by the Accused, that confirms the guilt of the Accused and the voluntary and informed nature of the plea of guilty. If the Appointing Authority approves the plea agreement, the Commission will, after determining the voluntary and informed nature of the plea agreement, admit the plea agreement and stipulation into evidence and be bound to adjudge findings and a sentence pursuant to that plea agreement.</P>
              <P>(5) <E T="03">Issuance and service of process; obtaining evidence.</E> (i) The Commission shall have power to:</P>
              <P>(A) Summon witnesses to attend trial and testify;</P>
              <P>(B) Administer oaths or affirmations to witnesses and other persons and to question witnesses;</P>
              <P>(C) Require the production of documents and other evidentiary material; and</P>
              <P>(D) Designate special commissioners to take evidence.</P>
              <P>(ii) The Presiding Officer shall exercise these powers on behalf of the Commission at the Presiding Officer's own initiative, or at the request of the Prosecution or the Defense, as necessary to ensure a full and fair trial in accordance with the President's Military Order and this part. The Commission shall issue its process in the name of the Department of Defense over the signature of the Presiding Officer. Such process shall be served as directed by the Presiding Officer in a manner calculated to give reasonable notice to persons required to take action in accordance with that process.</P>
              <P>(b) <E T="03">Duties of the Commission during trial.</E> The Commission shall:</P>
              <P>(1) Provide a full and fair trial.</P>
              <P>(2) Proceed impartially and expeditiously, strictly confining the proceedings to a full and fair trial of the charges, excluding irrelevant evidence, and preventing any unnecessary interference or delay.</P>

              <P>(3) Hold open proceedings except where otherwise decided by the Appointing Authority or the Presiding Officer in accordance with the President's Military Order and this part. Grounds for closure include the protection of information classified or classifiable under Executive Order 12958; information protected by law or rule from unauthorized disclosure; the physical safety of participants in Commission proceedings, including prospective witnesses; intelligence and law enforcement sources, methods, or activities; and other national security interests. The Presiding Officer may decide to close all or part of a proceeding on the Presiding Officer's own initiative or based upon a presentation, including an <E T="03">ex parte,</E>
                <E T="03">in camera</E> presentation by either the Prosecution or the Defense. A decision to close a proceeding or portion thereof may include a decision to exclude the Accused, Civilian Defense Counsel, or any other person, but Detailed Defense Counsel may not be excluded from any trial proceeding or portion thereof. Except with the prior authorization of the Presiding Officer and subject to section 9 of this part, Defense Counsel may not disclose any information presented during a closed session to individuals excluded from such proceeding or part thereof. Open proceedings may include, at the discretion of the Appointing Authority, attendance by the public and accredited press, and public release of transcripts at the appropriate time. Proceedings should be open to the maximum extent practicable. Photography, video, or audio broadcasting, or recording of or at Commission proceedings shall be prohibited, except photography, video, and audio recording by the Commission pursuant to the direction of the Presiding Officer as necessary for preservation of the record of trial.</P>
              <P>(4) Hold each session at such time and place as may be directed by the Appointing Authority. Members of the Commission may meet in closed conference at any time.</P>
              <P>(5) As soon as practicable at the conclusion of a trial, transmit an authenticated copy of the record of trial to the Appointing Authority.</P>
              <P>(c) <E T="03">Oaths.</E> (1) Members of a Commission, all Prosecutors, all Defense Counsel, all court reporters, all security personnel, and all interpreters shall take an oath to perform their duties faithfully.</P>

              <P>(2) Each witness appearing before a Commission shall be examined under oath, as provided in paragraph (d)(2)(ii) of this section.<PRTPAGE P="26"/>
              </P>
              <P>(3) An oath includes an affirmation. Any formulation that appeals to the conscience of the person to whom the oath is administered and that binds that person to speak the truth, or, in the case of one other than a witness, properly to perform certain duties, is sufficient.</P>
              <P>(d) <E T="03">Evidence</E>—(1) <E T="03">Admissibility.</E> Evidence shall be admitted if, in the opinion of the Presiding Officer (or instead, if any other member of the Commission so requests at the time the Presiding Officer renders that opinion, the opinion of the Commission rendered at that time by a majority of the Commission), the evidence would have probative value to a reasonable person.</P>
              <P>(2) <E T="03">Witnesses</E>—(i) <E T="03">Production of witnesses.</E> The Prosecution or the Defense may request that the Commission hear the testimony of any person, and such testimony shall be received if found to be admissible and not cumulative. The Commission may also summon and hear witnesses on its own initiative. The Commission may permit the testimony of witnesses by telephone, audiovisual means, or other means; however, the Commission shall consider the ability to test the veracity of that testimony in evaluating the weight to be given to the testimony of the witness.</P>
              <P>(ii) <E T="03">Testimony.</E> Testimony of witnesses shall be given under oath or affirmation. The Commission may still hear a witness who refuses to swear an oath or make a solemn undertaking; however, the Commission shall consider the refusal to swear an oath or give an affirmation in evaluating the weight to be given to the testimony of the witness.</P>
              <P>(iii) <E T="03">Examination of witnesses.</E> A witness who testifies before the Commission is subject to both direct examination and cross-examination. The Presiding Officer shall maintain order in the proceedings and shall not permit badgering of witnesses or questions that are not material to the issues before the Commission. Members of the Commission may question witnesses at any time.</P>
              <P>(iv) <E T="03">Protection of witnesses.</E> The Presiding Officer shall consider the safety of witnesses and others, as well as the safeguarding of Protected Information as defined in paragraph (d)(5)(i) of this section, in determining the appropriate methods of receiving testimony and evidence. The Presiding Officer may hear any presentation by the Prosecution or the Defense, including an <E T="03">ex parte</E>, <E T="03">in camera</E> presentation, regarding the safety of potential witnesses before determining the ways in which witnesses and evidence will be protected. The Presiding Officer may authorize any methods appropriate for the protection of witnesses and evidence. Such methods may include, but are not limited to: testimony by telephone, audiovisual means, or other electronic means; closure of the proceedings; introduction of prepared declassified summaries of evidence; and the use of pseudonyms.</P>
              <P>(3) <E T="03">Other evidence.</E> Subject to the requirements of paragraph (d)(1) of this section concerning admissibility, the Commission may consider any other evidence including, but not limited to, testimony from prior trials and proceedings, sworn or unsworn written statements, physical evidence, or scientific or other reports.</P>
              <P>(4) <E T="03">Notice.</E> The Commission may, after affording the Prosecution and the Defense an opportunity to be heard, take conclusive notice of facts that are not subject to reasonable dispute either because they are generally known or are capable of determination by resort to sources that cannot reasonably be contested.</P>
              <P>(5) <E T="03">Protection of Information</E>—(i) <E T="03">Protective Order.</E> The Presiding Officer may issue protective orders as necessary to carry out the Military Order and this part, including to safeguard “Protected Information,” which includes:</P>
              <P>(A) Information classified or classifiable pursuant to Executive Order 12958;</P>
              <P>(B) Information protected by law or rule from unauthorized disclosure;</P>
              <P>(C) Information the disclosure of which may endanger the physical safety of participants in Commission proceedings, including prospective witnesses;</P>
              <P>(D) Information concerning intelligence and law enforcement sources, methods, or activities; or</P>

              <P>(E) Information concerning other national security interests. As soon as practicable, counsel for either side will <PRTPAGE P="27"/>notify the Presiding Officer of any intent to offer evidence involving Protected Information.</P>
              <P>(ii) <E T="03">Limited disclosure.</E> The Presiding Officer, upon motion of the Prosecution or <E T="03">sua sponte,</E> shall, as necessary to protect the interests of the United States and consistent with § 9.9, direct:</P>
              <P>(A) The deletion of specified items of Protected Information from documents to be made available to the Accused, Detailed Defense Counsel, or Civilian Defense Counsel;</P>
              <P>(B) The substitution of a portion or summary of the information for such Protected Information; or</P>

              <P>(C) The substitution of a statement of the relevant facts that the Protected Information would tend to prove. The Prosecution's motion and any materials submitted in support thereof or in response thereto shall, upon request of the Prosecution, be considered by the Presiding Officer <E T="03">ex parte</E>, <E T="03">in camera</E>, but no Protected Information shall be admitted into evidence for consideration by the Commission if not presented to Detailed Defense Counsel.</P>
              <P>(iii) <E T="03">Closure of proceedings.</E> The Presiding Officer may direct the closure of proceedings in accordance with paragraph (b)(3) of this section.</P>
              <P>(iv) <E T="03">Protected information as part of the record of trial.</E> All exhibits admitted as evidence but containing Protected Information shall be sealed and annexed to the record of trial. Additionally, any Protected Information not admitted as evidence but reviewed <E T="03">in camera</E> and subsequently withheld from the Defense over Defense objection shall, with the associated motions and responses and any materials submitted in support thereof, be sealed and annexed to the record of trial as additional exhibits. Such sealed material shall be made available to reviewing authorities in closed proceedings.</P>
              <P>(e) <E T="03">Proceedings during trial.</E> The proceedings at each trial will be conducted substantially as follows, unless modified by the Presiding Officer to suit the particular circumstances:</P>
              <P>(1) Each charge will be read, or its substance communicated, in the presence of the Accused and the Commission.</P>
              <P>(2) The Presiding Officer shall ask each Accused whether the Accused pleads “Guilty” or “Not Guilty.” Should the Accused refuse to enter a plea, the Presiding Officer shall enter a plea of “Not Guilty” on the Accused's behalf. If the plea to an offense is “Guilty,” the Presiding Officer shall enter a finding of Guilty on that offense after conducting sufficient inquiry to form an opinion that the plea is voluntary and informed. Any plea of Guilty that is not determined to be voluntary and informed shall be changed to a plea of Not Guilty. Plea proceedings shall then continue as to the remaining charges. If a plea of “Guilty” is made on all charges, the Commission shall proceed to sentencing proceedings; if not, the Commission shall proceed to trial as to the charges for which a “Not Guilty” plea has been entered.</P>
              <P>(3) The Prosecution shall make its opening statement.</P>
              <P>(4) The witnesses and other evidence for the Prosecution shall be heard or received.</P>
              <P>(5) The Defense may make an opening statement after the Prosecution's opening statement or prior to presenting its case.</P>
              <P>(6) The witnesses and other evidence for the Defense shall be heard or received.</P>
              <P>(7) Thereafter, the Prosecution and the Defense may introduce evidence in rebuttal and surrebuttal.</P>
              <P>(8) The Prosecution shall present argument to the Commission. Defense Counsel shall be permitted to present argument in response, and then the Prosecution may reply in rebuttal.</P>
              <P>(9) After the members of the Commission deliberate and vote on findings in closed conference, the Presiding Officer shall announce the Commission's findings in the presence of the Commission, the Prosecution, the Accused, and Defense Counsel. The individual votes of the members of the Commission shall not be disclosed.</P>

              <P>(10) In the event a finding of Guilty is entered for an offense, the Prosecution and the Defense may present information to aid the Commission in determining an appropriate sentence. The Accused may testify and shall be subject to cross-examination regarding any such testimony.<PRTPAGE P="28"/>
              </P>
              <P>(11) The Prosecution and, thereafter, the Defense shall present argument to the Commission regarding sentencing.</P>
              <P>(12) After the members of the Commission deliberate and vote on a sentence in closed conference, the Presiding Officer shall announce the Commission's sentence in the presence of the Commission, the Prosecution, the Accused, and Defense Counsel. The individual votes of the members of the Commission shall not be disclosed.</P>
              <P>(f) <E T="03">Voting.</E> Members of the Commission shall deliberate and vote in closed conference. A Commission member shall vote for a finding of Guilty as to an offense if and only if that member is convinced beyond a reasonable doubt, based on the evidence admitted at trial, that the Accused is guilty of the offense. An affirmative vote of two-thirds of the members is required for a finding of Guilty. When appropriate, the Commission may adjust a charged offense by exceptions and substitutions of language that do not substantially change the nature of the offense or increase its seriousness, or it may vote to convict of a lesser-included offense. An affirmative vote of two-thirds of the members is required to determine a sentence, except that a sentence of death requires a unanimous, affirmative vote of all of the members. Votes on findings and sentences shall be taken by secret, written ballot.</P>
              <P>(g) <E T="03">Sentence.</E> Upon conviction of an Accused, the Commission shall impose a sentence that is appropriate to the offense or offenses for which there was a finding of Guilty, which sentence may include death, imprisonment for life or for any lesser term, payment of a fine or restitution, or such other lawful punishment or condition of punishment as the Commission shall determine to be proper. Only a Commission of seven members may sentence an Accused to death. A Commission may (subject to rights of third parties) order confiscation of any property of a convicted Accused, deprive that Accused of any stolen property, or order the delivery of such property to the United States for disposition.</P>
              <P>(h) <E T="03">Post-trial procedures</E>—(1) <E T="03">Record of Trial.</E> Each Commission shall make a verbatim transcript of its proceedings, apart from all Commission deliberations, and preserve all evidence admitted in the trial (including any sentencing proceedings) of each case brought before it, which shall constitute the record of trial. The court reporter shall prepare the official record of trial and submit it to the Presiding Officer for authentication upon completion. The Presiding Officer shall transmit the authenticated record of trial to the Appointing Authority. If the Secretary of Defense is serving as the Appointing Authority, the record shall be transmitted to the Review Panel constituted under paragraph (h)(4) of this section.</P>
              <P>(2) <E T="03">Finality of findings and sentence.</E> A Commission finding as to a charge and any sentence of a Commission becomes final when the President or, if designated by the President, the Secretary of Defense makes a final decision thereon pursuant to section 4(c)(8) of the President's Military Order and in accordance with paragraph (h)(6) of this section. An authenticated finding of Not Guilty as to a charge shall not be changed to a finding of Guilty. Any sentence made final by action of the President or the Secretary of Defense shall be carried out promptly. Adjudged confinement shall begin immediately following the trial.</P>
              <P>(3) <E T="03">Review by the Appointing Authority.</E> If the Secretary of Defense is not the Appointing Authority, the Appointing Authority shall promptly perform an administrative review of the record of trial. If satisfied that the proceedings of the Commission were administratively complete, the Appointing Authority shall transmit the record of trial to the Review Panel constituted under paragraph (h)(4) of this section. If not so satisfied, the Appointing Authority shall return the case for any necessary supplementary proceedings.</P>
              <P>(4) <E T="03">Review Panel.</E> The Secretary of Defense shall designate a Review Panel consisting of three Military Officers, which may include civilians commissioned pursuant to section 603 of title 10, United States Code. At least one member of each Review Panel shall have experience as a judge. The Review Panel shall review the record of trial and, in its discretion, any written submissions from the Prosecution and the Defense and shall deliberate in closed <PRTPAGE P="29"/>conference. The Review Panel shall disregard any variance from procedures specified in this part or elsewhere that would not materially have affected the outcome of the trial before the Commission. Within thirty days after receipt of the record of trial, the Review Panel shall either:</P>
              <P>(i) Forward the case to the Secretary of Defense with a recommendation as to disposition, or</P>
              <P>(ii) Return the case to the Appointing Authority for further proceedings, provided that a majority of the Review Panel has formed a definite and firm conviction that a material error of law occurred.</P>
              <P>(5) <E T="03">Review by the Secretary of Defense.</E> The Secretary of Defense shall review the record of trial and the recommendation of the Review Panel and either return the case for further proceedings or, unless making the final decision pursuant to a Presidential designation under section 4(c)(8) of the President's Military Order, forward it to the President with a recommendation as to disposition.</P>
              <P>(6) <E T="03">Final decision.</E> After review by the Secretary of Defense, the record of trial and all recommendations will be forwarded to the President for review and final decision (unless the President has designated the Secretary of Defense to perform this function). If the President has so designated the Secretary of Defense, the Secretary may approve or disapprove findings or change a finding of Guilty to a finding of Guilty to a lesser-included offense, or mitigate, commute, defer, or suspend the sentence imposed or any portion thereof. If the Secretary of Defense is authorized to render the final decision, the review of the Secretary of Defense under paragraph (h)(5) of this section shall constitute the final decision.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 9.7</SECTNO>
              <SUBJECT>Regulations.</SUBJECT>
              <P>(a) <E T="03">Supplementary regulations and instructions.</E> The Appointing Authority shall, subject to approval of the General Counsel of the Department of Defense if the Appointing Authority is not the Secretary of Defense, publish such further regulations consistent with the President's Military Order and this part as are necessary or appropriate for the conduct of proceedings by Commissions under the President's Military Order. The General Counsel shall issue such instructions consistent with the President's Military Order and this part as the General Counsel deems necessary to facilitate the conduct of proceedings by such Commissions, including those governing the establishment of Commission-related offices and performance evaluation and reporting relationships.</P>
              <P>(b) <E T="03">Construction.</E> In the event of any inconsistency between the President's Military Order and this part, including any supplementary regulations or instructions issued under paragraph (a) of this section, the provisions of the President's Military Order shall govern. In the event of any inconsistency between this part and any regulations or instructions issued under paragraph (a) of this section, the provisions of this part shall govern.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 9.8</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
              <P>Nothing in this part shall be construed to limit in any way the authority of the President as Commander in Chief of the Armed Forces or the power of the President to grant reprieves and pardons. Nothing in this part shall affect the authority to constitute military commissions for a purpose not governed by the President's Military Order.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 9.9</SECTNO>
              <SUBJECT>Protection of State secrets.</SUBJECT>
              <P>Nothing in this part shall be construed to authorize disclosure of state secrets to any person not authorized to receive them.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 9.10</SECTNO>
              <SUBJECT>Other.</SUBJECT>

              <P>This part is not intended to and does not create any right, benefit, or privilege, substantive or procedural, enforceable by any party, against the United States, its departments, agencies, or other entities, its officers or employees, or any other person. No provision in this part shall be construed to be a requirement of the United States Constitution. Section and subsection captions in this document are for convenience only and shall not be used in construing the requirements of this part. Failure to meet a time period specified in this <PRTPAGE P="30"/>part, or supplementary regulations or instructions issued under § 9.7(a), shall not create a right to relief for the Accused or any other person. DoD Directive 5025.1 <SU>2</SU>
                <FTREF/> shall not apply to this part or any supplementary regulations or instructions issued under § 9.7(a).</P>
              <FTNT>
                <P>
                  <SU>2</SU> Available from <E T="03">www.ditc.mil/whs/directives.</E>
                </P>
              </FTNT>
            </SECTION>
            <SECTION>
              <SECTNO>§ 9.11</SECTNO>
              <SUBJECT>Amendment.</SUBJECT>
              <P>The Secretary of Defense may amend this part from time to time.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 9.12</SECTNO>
              <SUBJECT>Delegation.</SUBJECT>
              <P>The authority of the Secretary of Defense to make requests for assistance under section 5 of the President's Military Order is delegated to the General Counsel of the Department of Defense. The Executive Secretary of the Department of Defense shall provide such assistance to the General Counsel as the General Counsel determines necessary for this purpose.</P>
            </SECTION>
          </PART>
          <PART>
            <EAR>Pt. 10</EAR>
            <HD SOURCE="HED">PART 10—MILITARY COMMISION INSTRUCTIONS</HD>
            <CONTENTS>
              <SECHD>Sec.</SECHD>
              <SECTNO>10.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <SECTNO>10.2</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
              <SECTNO>10.3</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
              <SECTNO>10.4</SECTNO>
              <SUBJECT>Policies and procedures.</SUBJECT>
              <SECTNO>10.5</SECTNO>
              <SUBJECT>Construction.</SUBJECT>
              <SECTNO>10.6</SECTNO>
              <SUBJECT>Non-creation of right.</SUBJECT>
              <SECTNO>10.7</SECTNO>
              <SUBJECT>Reservation of authority.</SUBJECT>
              <SECTNO>10.8</SECTNO>
              <SUBJECT>Amendment. </SUBJECT>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>10 U.S.C. 113Id) and 140(b).</P>
            </AUTH>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>68 FR 39380, July 1, 2003, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>§ 10.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <P>This part establishes policies for the issuance and interpretation of Military Commission Instructions promulgated pursuant to 32 CFR part 9, and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” (3 CFR, 2001 comp., p. 918, 66 FR 57833).</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 10.2</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
              <P>This part is issued pursuant to 32 CFR 9.7(a) and in accordance with 10 U.S.C. 113(d) and 140(b).</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 10.3</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
              <P>This part, and, unless stated otherwise, all other Military Commission Instructions apply throughout the Department of Defense, including to the Office of the Secretary of Defense, the Military Departments, the Chairman and Vice Chairman of the Joint Chiefs of Staff and the Joint Staff, the Combatant Commands, the Office of the Inspector General of the Department of Defense, the Defense Agencies, the Department of Defense Field Activities, and all other organizational entities within the Department of Defense, to any special trial counsel of the Department of Justice who may be made available by the Attorney General of the United States to serve as a prosecutor in trials before military commissions pursuant to 32 CFR 9.4(b)(2), to any civilian attorney who seeks qualification as a member of the pool of qualified Civilian Defense Counsel authorized in 32 CFR 9.4(c)(3)(ii), and to any attorney who has been qualified as a member of that pool.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 10.4</SECTNO>
              <SUBJECT>Policies and procedures.</SUBJECT>
              <P>(a) <E T="03">Promulgation.</E> Military Commission Instructions will be issued by the General Counsel of the Department of Defense (hereinafter General Counsel). Each Instruction will issue over the signature of the General Counsel and, unless otherwise specified therein, shall take effect upon the signature of the General Counsel. Instructions will be numbered in sequence.</P>
              <P>(b) <E T="03">Professional responsibility.</E> Compliance with these Instructions shall be deemed a professional responsibility obligation for the practice of law within the Department of Defense.</P>
              <P>(c) <E T="03">Compliance breaches.</E> Failure to adhere to these Instructions or any other failure to comply with any rule, regulation, or Instruction applicable to trials by military commission convened pursuant to 32 CFR part 9, and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” may be subject to appropriate action by the Appointing Authority, the General Counsel of the <PRTPAGE P="31"/>Department of Defense, or the Presiding Officer of a military commission. Such action may include permanently barring an individual from participating in any military commission proceeding convened pursuant to 32 CFR part 9, and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” punitive measures imposed under 10 U.S.C. 898, and any other lawful sanction.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 10.5</SECTNO>
              <SUBJECT>Construction.</SUBJECT>
              <P>Military Commission Instructions shall be construed in a manner consistent with 32 CFR part 9, and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism.” Nothing in these Military Commission Instructions applies with respect to the trial of crimes by military commissions convened under other authority. In the event of an inconsistency, the provisions of 32 CFR part 9, and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” shall govern as provided in Section 7(B) of Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism.” Pronouns referring to the male gender shall be construed as applying to both male and female.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 10.6</SECTNO>
              <SUBJECT>Non-creation of right.</SUBJECT>
              <P>Neither this part nor any Military Commission Instruction issued hereafter, is intended to and does not create any right, benefit, privilege, substantive or procedural, enforceable by any party, against the United States, its departments, agencies, or other entities, its officers or employees, or any other person. Alleged noncompliance with an Instruction does not, of itself, constitute error, give rise to judicial review, or establish a right to relief for the Accused or any other person.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 10.7</SECTNO>
              <SUBJECT>Reservation of authority.</SUBJECT>
              <P>Neither this part nor any Military Commission Instruction issued hereafter shall be construed to limit, impair, or otherwise affect any authority granted by the Constitution or laws of the United States or Department of Defense regulation or directive.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 10.8</SECTNO>
              <SUBJECT>Amendment.</SUBJECT>
              <P>The General Counsel may issue, supplement, amend, or revoke any Military Commission Instruction at any time.</P>
            </SECTION>
          </PART>
          <PART>
            <EAR>Pt. 11</EAR>
            <HD SOURCE="HED">PART 11—CRIMES AND ELEMENTS FOR TRIALS BY MILITARY COMMISSION</HD>
            <CONTENTS>
              <SECHD>Sec.</SECHD>
              <SECTNO>11.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <SECTNO>11.2</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
              <SECTNO>11.3</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <SECTNO>11.4</SECTNO>
              <SUBJECT>Applicable principles of law.</SUBJECT>
              <SECTNO>11.5</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>11.6</SECTNO>
              <SUBJECT>Crimes and elements. </SUBJECT>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>10 U.S.C. 821.</P>
            </AUTH>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>68 FR 39381, July 1, 2003, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>§ 11.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <P>This part provides guidance with respect to crimes that may be tried by military commissions established pursuant to 32 CFR part 9, and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” (3 CFR, 2001 comp., p. 918, 66 FR 57833) and enumerates the elements of those crimes.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 11.2</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
              <P>This part is issued pursuant to 32 CFR 9.7(a) and in accordance with Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” (66 FR 57833) and 10 U.S.C. 113(d), 140(b), and 821. The provisions of 32 CFR part 10 are applicable to this part.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 11.3</SECTNO>
              <SUBJECT>General.</SUBJECT>
              <P>(a) <E T="03">Background.</E> The following crimes and elements thereof are intended for use by military commissions established pursuant to 32 CFR part 9, and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” the jurisdiction of which extends to offenses or offenders that by statute or the law of armed <PRTPAGE P="32"/>conflict may be tried by military commission as limited by Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism.” No offense is cognizable in a trial by military commission if that offense did not exist prior to the conduct in question. These crimes and elements derive from the law of armed conflict, a body of law that is sometimes referred to as the law of war. They constitute violations of the law of armed conflict or offenses that, consistent with that body of law, are triable by military commission. Because this document is declarative of existing law, it does not preclude trial for crimes that occurred prior to its effective date.</P>
              <P>(b) <E T="03">Effect of other laws.</E> No conclusion regarding the applicability or persuasive authority of other bodies of law should be drawn solely from the presence, absence, or similarity of particular language in this part as compared to other articulations of law.</P>
              <P>(c) <E T="03">Non-exclusivity.</E> This part does not contain a comprehensive list of crimes triable by military commission. It is intended to be illustrative of applicable principles of the common law of war but not to provide an exclusive enumeration of the punishable acts recognized as such by that law. The absence of a particular offense from the corpus of those enumerated herein does not preclude trial for that offense.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 11.4</SECTNO>
              <SUBJECT>Applicable principles of law.</SUBJECT>
              <P>(a) <E T="03">General intent.</E> All actions taken by the Accused that are necessary for completion of a crime must be performed with general intent. This intent is not listed as a separate element. When the mens rea required for culpability to attach involves an intent that a particular consequence occur, or some other specific intent, an intent element is included. The necessary relationship between such intent element and the conduct constituting the actus reus is not articulated for each set of elements, but is presumed; a nexus between the two is necessary.</P>
              <P>(b) <E T="03">The element of wrongfulness and defenses.</E> Conduct must be wrongful to constitute one of the offenses enumerated herein or any other offense triable by military commission. Conduct is wrongful if it is done without justification or excuse cognizable under applicable law. The element of wrongfulness (or the absence of lawful justification or excuse), which may be required under the customary law of armed conflict, is not repeated in the elements of crimes in § 11.6. Conduct satisfying the elements found herein shall be inferred to be wrongful in the absence of evidence to the contrary. Similarly, this part does not enunciate defenses that may apply for specific offenses, though an Accused is entitled to raise any defense available under the law of armed conflict. Defenses potentially available to an Accused under the law of armed conflict, such as self-defense, mistake of fact, and duress, may be applicable to certain offenses subject to trial by military commission. In the absence of evidence to the contrary, defenses in individual cases shall be presumed not to apply. The burden of going forward with evidence of lawful justification or excuse or any applicable defense shall be upon the Accused. With respect to the issue of combatant immunity raised by the specific enumeration of an element requiring the absence thereof, the prosecution must affirmatively prove that element regardless of whether the issue is raised by the defense. Once an applicable defense or an issue of lawful justification or lawful excuse is fairly raised by the evidence presented, except for the defense of lack of mental responsibility, the burden is on the prosecution to establish beyond a reasonable doubt that the conduct was wrongful or that the defense does not apply. With respect to the defense of lack of mental responsibility, the Accused has the burden of proving by clear and convincing evidence that, as a result of a severe mental disease or defect, the Accused was unable to appreciate the nature and quality of the wrongfulness of the Accused's acts. As provided in 32 CFR 9.5(c), the prosecution bears the burden of establishing the Accused's guilt beyond a reasonable doubt in all cases tried by a military commission. Each element of an offense enumerated herein must be proven beyond a reasonable doubt.<PRTPAGE P="33"/>
              </P>
              <P>(c) <E T="03">Statute of limitations.</E> Violations of the laws of war listed herein are not subject to any statute of limitations.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 11.5</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>(a) <E T="03">Combatant immunity.</E> Under the law of armed conflict, only a lawful combatant enjoys “combatant immunity” or “belligerent privilege” for the lawful conduct of hostilities during armed conflict.</P>
              <P>(b) <E T="03">Enemy.</E> “Enemy” includes any entity with which the United States or allied forces may be engaged in armed conflict, or which is preparing to attack the United States. It is not limited to foreign nations, or foreign military organizations or members thereof. “Enemy” specifically includes any organization of terrorists with international reach.</P>
              <P>(c) <E T="03">In the context of and was associated with armed conflict.</E> Elements containing this language require a nexus between the conduct and armed hostilities. Such nexus could involve, but is not limited to, time, location, or purpose of the conduct in relation to the armed hostilities. The existence of such factors, however, may not satisfy the necessary nexus (<E T="03">e.g.</E>, murder committed between members of the same armed force for reasons of personal gain unrelated to the conflict, even if temporally and geographically associated with armed conflict, is not “in the context of” the armed conflict). The focus of this element is not the nature or characterization of the conflict, but the nexus to it. This element does not require a declaration of war, ongoing mutual hostilities, or confrontation involving a regular national armed force. A single hostile act or attempted act may provide sufficient basis for the nexus so long as its magnitude or severity rises to the level of an “armed attack” or an “act of war,” or the number, power, stated intent or organization of the force with which the actor is associated is such that the act or attempted act is tantamount to an attack by an armed force. Similarly, conduct undertaken or organized with knowledge or intent that it initiate or contribute to such hostile act or hostilities would satisfy the nexus requirement.</P>
              <P>(d) <E T="03">Military Objective.</E> “Military objectives” are those potential targets during an armed conflict which, by their nature, location, purpose, or use, effectively contribute to the opposing force's war-fighting or war-sustaining capability and whose total or partial destruction, capture, or neutralization would constitute a military advantage to the attacker under the circumstances at the time of the attack.</P>
              <P>(e) <E T="03">Object of the attack.</E> “Object of the attack” refers to the person, place, or thing intentionally targeted. In this regard, the term includes neither collateral damage nor incidental injury or death.</P>
              <P>(f) <E T="03">Protected property.</E> “Protected property” refers to property specifically protected by the law of armed conflict such as buildings dedicated to religion, education, art, science or charitable purposes, historic monuments, hospitals, or places where the sick and wounded are collected, provided they are not being used for military purposes or are not otherwise military objectives. Such property would include objects properly identified by one of the distinctive emblems of the Geneva Conventions but does not include all civilian property.</P>
              <P>(g) <E T="03">Protected under the law of war.</E> The person or object in question is expressly “protected” under one or more of the Geneva Conventions of 1949 or, to the extent applicable, customary international law. The term does not refer to all who enjoy some form of protection as a consequence of compliance with international law, but those who are expressly designated as such by the applicable law of armed conflict. For example, persons who either are <E T="03">hors de combat</E> or medical or religious personnel taking no active part in hostilities are expressly protected, but other civilians may not be.</P>
              <P>(h) <E T="03">Should have known.</E> The facts and circumstances were such that a reasonable person in the Accused's position would have had the relevant knowledge or awareness.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 11.6</SECTNO>
              <SUBJECT>Crimes and elements.</SUBJECT>
              <P>(a) <E T="03">Substantive offenses—war crimes.</E> The following enumerated offenses, if applicable, should be charged in separate counts. Elements are drafted to <PRTPAGE P="34"/>reflect conduct of the perpetrator. Each element need not be specifically charged.</P>
              <P>(1) <E T="03">Willful killing of protected persons</E>—(i) <E T="03">Elements.</E> (A) The accused killed one or more persons;</P>
              <P>(B) The accused intended to kill such person or persons;</P>
              <P>(C) Such person or persons were protected under the law of war;</P>
              <P>(D) The accused knew or should have known of the factual circumstances that established that protected status; and</P>
              <P>(E) The killing took place in the context of and was associated with armed conflict.</P>
              <P>(ii) <E T="03">Comments.</E> The intent required for this offense precludes its applicability with regard to collateral damage or injury incident to a lawful attack.</P>
              <P>(2) <E T="03">Attacking civilians.</E>—(i) <E T="03">Elements.</E> (A) The accused engaged in an attack;</P>
              <P>(B) The object of the attack was a civilian population as such or individual civilians not taking direct or active part in hostilities;</P>
              <P>(C) The accused intended the civilian population as such or individual civilians not taking direct or active part in hostilities to be an object of the attack; and</P>
              <P>(D) The attack took place in the context of and was associated with armed conflict.</P>
              <P>(ii) <E T="03">Comments.</E> The intent required for this offense precludes its applicability with regard to collateral damage or injury incident to a lawful attack.</P>
              <P>(3) <E T="03">Attacking civilian objects.</E>—(i) <E T="03">Elements.</E> (A) The accused engaged in an attack;</P>
              <P>(B) The object of the attack was civilian property, that is, property that was not a military objective;</P>
              <P>(C) The accused intended such property to be an object of the attack;</P>
              <P>(D) The accused knew or should have known that such property was not a military objective; and</P>
              <P>(E) The attack took place in the context of and was associated with armed conflict.</P>
              <P>(ii) <E T="03">Comments.</E> The intent required for this offense precludes its applicability with regard to collateral damage or injury incident to a lawful attack.</P>
              <P>(4) <E T="03">Attacking Protected Property</E>—(i) <E T="03">Elements.</E> (A) The accused engaged in an attack;</P>
              <P>(B) The object of the attack was protected property;</P>
              <P>(C) The accused intended such property to be an object of the attack;</P>
              <P>(D) The accused knew or should have known of the factual circumstances that established that protected status; and</P>
              <P>(E) The attack took place in the context of and was associated with armed conflict.</P>
              <P>(ii) <E T="03">Comments.</E> The intent required for this offense precludes its applicability with regard to collateral damage or injury incident to a lawful attack.</P>
              <P>(5) <E T="03">Pillaging</E>—(i) <E T="03">Elements.</E> (A) The accused appropriated or seized certain property;</P>
              <P>(B) The accused intended to appropriate or seize such property for private or personal use;</P>
              <P>(C) The appropriation or seizure was without the consent of the owner of the property or other person with authority to permit such appropriation or seizure; and</P>
              <P>(D) The appropriation or seizure took place in the context of and was associated with armed conflict.</P>
              <P>(ii) <E T="03">Comments.</E> As indicated by the use of the term “private or personal use,” legitimate captures or appropriations, or seizures justified by military necessity, cannot constitute the crime of pillaging.</P>
              <P>(6) <E T="03">Denying quarter</E>—(i) <E T="03">Elements.</E> (A) The accused declared, ordered, or otherwise indicated that there shall be no survivors or surrender accepted;</P>
              <P>(B) The accused thereby intended to threaten an adversary or to conduct hostilities such that there would be no survivors or surrender accepted;</P>
              <P>(C) It was foreseeable that circumstances would be such that a practicable and reasonable ability to accept surrender would exist;</P>
              <P>(D) The accused was in a position of effective command or control over the subordinate forces to which the declaration or order was directed; and</P>
              <P>(E) The conduct took place in the context of and was associated with armed conflict.</P>
              <P>(ii) <E T="03">Comments.</E> Paragraph (a)(6)(i)(C) of this section precludes this offense <PRTPAGE P="35"/>from being interpreted as limiting the application of lawful means or methods of warfare against enemy combatants. For example, a remotely delivered attack cannot give rise to this offense.</P>
              <P>(7) <E T="03">Taking Hostages</E>—(i) <E T="03">Elements.</E> (A) The accused seized, detained, or otherwise held hostage one or more persons;</P>
              <P>(B) The accused threatened to kill, injure, or continue to detain such person or persons;</P>
              <P>(C) The accused intended to compel a State, an international organization, a natural or legal person, or a group of persons to act or refrain from acting as an explicit or implicit condition for the safety or release of such person or persons; and</P>
              <P>(D) The conduct took place in the context of and was associated with armed conflict.</P>
              <P>(ii) <E T="03">Comments.</E> Consistent with § 11.4(b), this offense cannot be committed by lawfully detaining enemy combatants or other individuals as authorized by the law of armed conflict.</P>
              <P>(8) <E T="03">Employing poison or analogous weapons</E>—(i) <E T="03">Elements.</E> (A) The accused employed a substance or a weapon that releases a substance as a result of its employment;</P>
              <P>(B) The substance was such that exposure thereto causes death or serious damage to health in the ordinary course of events, through its asphyxiating, poisonous, or bacteriological properties;</P>
              <P>(C) The accused employed the substance or weapon with the intent of utilizing such asphyxiating, poisonous, or bacteriological properties as a method of warfare;</P>
              <P>(D) The accused knew or should have known of the nature of the substance or weapon; and</P>
              <P>(E) The conduct took place in the context of and was associated with armed conflict.</P>
              <P>(ii) <E T="03">Comments.</E> (A) The “death or serious damage to health” required by paragraph (a)(8)(i)(B) of this section must be a direct result of the substance's effect or effects on the human body (<E T="03">e.g.</E>, asphyxiation caused by the depletion of atmospheric oxygen secondary to a chemical or other reaction would not give rise to this offense).</P>
              <P>(B) The clause “serious damage to health” does not include temporary incapacitation or sensory irritation.</P>
              <P>(C) The use of the “substance or weapon” at issue must be proscribed under the law of armed conflict. It may include chemical or biological agents.</P>

              <P>(D) The specific intent element for this offense precludes liability for mere knowledge of potential collateral consequences (<E T="03">e.g.</E>, mere knowledge of a secondary asphyxiating or toxic effect would be insufficient to complete the offense).</P>
              <P>(9) <E T="03">Using protected persons as shields</E>—(i) <E T="03">Elements.</E> (A) The accused positioned, or took advantage of the location of, one or more civilians or persons protected under the law of war;</P>
              <P>(B) The accused intended to use the civilian or protected nature of the person or persons to shield a military objective from attack or to shield, favor, or impede military operations; and</P>
              <P>(C) The conduct took place in the context of and was associated with armed conflict.</P>
              <P>(ii) [Reserved]</P>
              <P>(10) <E T="03">Using protected property as shields</E>—(i) <E T="03">Elements.</E> (A) The accused positioned, or took advantage of the location of, civilian property or property protected under the law of war;</P>
              <P>(B) The accused intended to shield a military objective from attack or to shield, favor, or impede military operations; and</P>
              <P>(C) The conduct took place in the context of and was associated with armed conflict.</P>
              <P>(ii) [Reserved]</P>
              <P>(11) <E T="03">Torture</E>—(i) <E T="03">Elements.</E> (A) The accused inflicted severe physical or mental pain or suffering upon one or more persons;</P>
              <P>(B) The accused intended to inflict such severe physical or mental pain or suffering;</P>
              <P>(C) Such person or persons were in the custody or under the control of the accused; and</P>
              <P>(D) The conduct took place in the context of and was associated with armed conflict.</P>
              <P>(ii) <E T="03">Comments.</E> (A) Consistent with § 11.4(b), this offense does not include pain or suffering arising only from, inherent in, or incidental to, lawfully imposed punishments. This offense does <PRTPAGE P="36"/>not include the incidental infliction of pain or suffering associated with the legitimate conduct of hostilities.</P>
              <P>(B) Severe “mental pain or suffering” is the prolonged mental harm caused by or resulting from:</P>
              <P>(<E T="03">1</E>) The intentional infliction or threatened infliction of severe physical pain or suffering;</P>
              <P>(<E T="03">2</E>) The administration or application, or threatened administration or application, of mind-altering substances or other procedures calculated to disrupt profoundly the senses or the personality;</P>
              <P>(<E T="03">3</E>) The threat of imminent death; or</P>
              <P>(<E T="03">4</E>) The threat that another person will imminently be subjected to death, severe physical pain or suffering, or the administration or application of mind-altering substances or other procedures calculated to disrupt profoundly the senses or personality.</P>
              <P>(C) “Prolonged mental harm” is a harm of some sustained duration, though not necessarily permanent in nature, such as a clinically identifiable mental disorder.</P>
              <P>(D) Paragraph (a)(11)(i)(C) of this section does not require a particular formal relationship between the accused and the victim. Rather, it precludes prosecution for pain or suffering consequent to a lawful military attack.</P>
              <P>(12) <E T="03">Causing serious injury</E>—(i) <E T="03">Elements.</E> (A) The accused caused serious injury to the body or health of one or more persons;</P>
              <P>(B) The accused intended to inflict such serious injury;</P>
              <P>(C) Such person or persons were in the custody or under the control of the accused; and</P>
              <P>(D) The conduct took place in the context of and was associated with armed conflict.</P>
              <P>(ii) <E T="03">Comments.</E> “Serious injury” includes fractured or dislocated bones, deep cuts, torn members of the body, and serious damage to internal organs.</P>
              <P>(13) <E T="03">Mutilation or maiming</E>—(i) <E T="03">Elements.</E> (A) The accused subjected one or more persons to mutilation, in particular by permanently disfiguring the person or persons, or by permanently disabling or removing an organ or appendage;</P>
              <P>(B) The accused intended to subject such person or persons to such mutilation;</P>
              <P>(C) The conduct caused death or seriously damaged or endangered the physical or mental health or appearance of such person or persons.</P>
              <P>(D) The conduct was neither justified by the medical treatment of the person or persons concerned nor carried out in the interest of such person or persons;</P>
              <P>(E) Such person or persons were in the custody or control of the accused; and</P>
              <P>(F) The conduct took place in the context of and was associated with armed conflict.</P>
              <P>(ii) [Reserved]</P>
              <P>(14) <E T="03">Use of treachery or perfidy</E>—(i) <E T="03">Elements.</E> (A) The accused invited the confidence or belief of one or more persons that they were entitled to, or were obliged to accord, protection under the law of war;</P>
              <P>(B) The accused intended to betray that confidence or belief;</P>
              <P>(C) The accused killed, injured, or captured one or more persons;</P>
              <P>(D) The accused made use of that confidence or belief in killing, injuring, or capturing such person or persons; and</P>
              <P>(E) The conduct took place in the context of and was associated with armed conflict.</P>
              <P>(ii) [Reserved]</P>
              <P>(15) <E T="03">Improper use of flag of truce</E>—(i) <E T="03">Elements.</E> (A) The accused used a flag of truce;</P>
              <P>(B) The accused made such use in order to feign an intention to negotiate, surrender, or otherwise to suspend hostilities when there was no such intention on the part of the accused; and</P>
              <P>(C) The conduct took place in the context of and was associated with armed conflict.</P>
              <P>(ii) [Reserved]</P>
              <P>(16) <E T="03">Improper use of protective emblems</E>—(i) <E T="03">Elements.</E> (A) The accused used a protective emblem recognized by the law of armed conflict;</P>

              <P>(B) The accused undertook such use for combatant purposes in a manner prohibited by the law of armed conflict;<PRTPAGE P="37"/>
              </P>
              <P>(C) The accused knew or should have known of the prohibited nature of such use; and</P>
              <P>(D) The conduct took place in the context of and was associated with armed conflict.</P>
              <P>(ii) <E T="03">Comments.</E> “Combatant purposes,” as used in paragraph (a)(16)(i)(B) of this section, means purposes directly related to hostilities and does not include medical, religious, or similar activities.</P>
              <P>(17) <E T="03">Degrading treatment of a dead body</E>.—(i) <E T="03">Elements.</E> (A) The accused degraded or otherwise violated the dignity of the body of a dead person;</P>
              <P>(B) The accused intended to degrade or otherwise violate the dignity of such body;</P>
              <P>(C) The severity of the degradation or other violation was of such degree as to be generally recognized as an outrage upon personal dignity; and</P>
              <P>(D) The conduct took place in the context of and was associated with armed conflict.</P>
              <P>(ii) <E T="03">Comments.</E> Paragraph (a)(17)(i)(B) of this section precludes prosecution for actions justified by military necessity.</P>
              <P>(18) <E T="03">Rape</E>—(i) <E T="03">Elements.</E> (A) The accused invaded the body of a person by conduct resulting in penetration, however slight, of any part of the body of the victim or of the accused with a sexual organ, or of the anal or genital opening of the victim with any object or any other part of the body;</P>
              <P>(B) The invasion was committed by force, threat of force or coercion, or was committed against a person incapable of giving consent; and</P>
              <P>(C) The conduct took place in the context of and was associated with armed conflict.</P>
              <P>(ii) <E T="03">Comments.</E> (A) Paragraph (a)(18)(i)(B) of this section recognizes that consensual conduct does not give rise to this offense.</P>
              <P>(B) It is understood that a person may be incapable of giving consent if affected by natural, induced, or age-related incapacity.</P>
              <P>(C) The concept of “invasion” is linked to the inherent wrongfulness requirement for all offenses. In this case, for example, a legitimate body cavity search could not give rise to this offense.</P>
              <P>(D) The concept of “invasion” is gender neutral.</P>
              <P>(b) <E T="03">Substantive offenses—other offenses triable by military commission.</E> The following enumerated offenses, if applicable, should be charged in separate counts. Elements are drafted to reflect conduct of the perpetrator. Each element need not be specifically charged.</P>
              <P>(1) <E T="03">Hijacking or hazarding a vessel or aircraft</E>—(i) <E T="03">Elements.</E> (A) The accused seized, exercised control over, or endangered the safe navigation of a vessel or aircraft;</P>
              <P>(B) The accused intended to so seize, exercise control over, or endanger such vessel or aircraft; and</P>
              <P>(C) The conduct took place in the context of and was associated with armed conflict.</P>
              <P>(ii) <E T="03">Comments.</E> A seizure, exercise of control, or endangerment required by military necessity, or against a lawful military objective undertaken by military forces of a State in the exercise of their official duties, would not satisfy the wrongfulness requirement for this crime.</P>
              <P>(2) <E T="03">Terrorism</E>—(i) <E T="03">Elements.</E> (A) The accused killed or inflicted bodily harm on one or more persons or destroyed property;</P>
              <P>(B) The accused:</P>
              <P>(<E T="03">1</E>) Intended to kill or inflict bodily harm on one or more persons; or</P>
              <P>(<E T="03">2</E>) Intentionally engaged in an act that is inherently dangerous to another and evinces a wanton disregard of human life;</P>
              <P>(C) The killing, harm or destruction was intended to intimidate or coerce a civilian population, or to influence the policy of a government by intimidation or coercion; and</P>
              <P>(D) The killing, harm or destruction took place in the context of and was associated with armed conflict.</P>
              <P>(ii) <E T="03">Comments.</E> (A) Paragraph (b)(2)(i)(A) of this section includes the concept of causing death or bodily harm, even if indirectly.</P>

              <P>(B) The requirement that the conduct be wrongful for this crime necessitates that the conduct establishing this offense not constitute an attack against a lawful military objective undertaken by military forces of a State in the exercise of their official duties.<PRTPAGE P="38"/>
              </P>
              <P>(3) <E T="03">Murder by an unprivileged belligerent</E>—(i) <E T="03">Elements.</E> (A) The accused killed one or more persons;</P>
              <P>(B) The accused:</P>
              <P>(<E T="03">1</E>) Intended to kill or inflict great bodily harm on such person or persons; or</P>
              <P>(<E T="03">2</E>) Intentionally engaged in an act that is inherently dangerous to another and evinces a wanton disregard of human life;</P>
              <P>(C) The accused did not enjoy combatant immunity; and</P>
              <P>(D) The killing took place in the context of and was associated with armed conflict.</P>
              <P>(ii) <E T="03">Comments.</E> (A) The term “kill” includes intentionally causing death, whether directly or indirectly.</P>
              <P>(B) Unlike the crimes of willful killing or attacking civilians, in which the victim's status is a prerequisite to criminality, for this offense the victim's status is immaterial. Even an attack on a soldier would be a crime if the attacker did not enjoy “belligerent privilege” or “combatant immunity.”</P>
              <P>(4) <E T="03">Destruction of property by an unprivileged belligerent</E>—(i) <E T="03">Elements.</E> (A) The accused destroyed property;</P>
              <P>(B) The property belonged to another person, and the destruction was without that person's consent;</P>
              <P>(C) The accused intended to destroy such property;</P>
              <P>(D) The accused did not enjoy combatant immunity; and</P>
              <P>(E) The destruction took place in the context of and was associated with armed conflict.</P>
              <P>(ii) [Reserved]</P>
              <P>(5) <E T="03">Aiding the enemy</E>—(i) <E T="03">Elements.</E> (A) The accused aided the enemy;</P>
              <P>(B) The accused intended to aid the enemy; and</P>
              <P>(C) The conduct took place in the context of and was associated with armed conflict.</P>
              <P>(ii) <E T="03">Comments.</E> (A) Means of accomplishing paragraph (b)(5)(i)(A) of this section include, but are not limited to: providing arms, ammunition, supplies, money, other items or services to the enemy; harboring or protecting the enemy; or giving intelligence or other information to the enemy.</P>
              <P>(B) The requirement that conduct be wrongful for this crime necessitates that the accused act without proper authority. For example, furnishing enemy combatants detained during hostilities with subsistence or quarters in accordance with applicable orders or policy is not aiding the enemy.</P>
              <P>(C) The requirement that conduct be wrongful for this crime may necessitate that, in the case of a lawful belligerent, the accused owe allegiance or some duty to the United States of America or to an ally or coalition partner. For example, citizenship, resident alien status, or a contractual relationship in or with the United States or an ally or coalition partner is sufficient to satisfy this requirement so long as the relationship existed at a time relevant to the offense alleged.</P>
              <P>(6) <E T="03">Spying</E>—(i) <E T="03">Elements.</E> (A) The accused collected or attempted to collect certain information;</P>
              <P>(B) The accused intended to convey such information to the enemy;</P>
              <P>(C) The accused, in collecting or attempting to collect the information, was lurking or acting clandestinely, while acting under false pretenses; and</P>
              <P>(D) The conduct took place in the context of and was associated with armed conflict.</P>
              <P>(ii) <E T="03">Comments.</E> (A) Members of a military organization not wearing a disguise and others who carry out their missions openly are not spies, if, though they may have resorted to concealment, they have not acted under false pretenses.</P>
              <P>(B) Related to the requirement that conduct be wrongful or without justification or excuse in this case is the fact that, consistent with the law of war, a lawful combatant who, after rejoining the armed force to which that combatant belongs, is subsequently captured, can not be punished for previous acts of espionage. His successful rejoining of his armed force constitutes a defense.</P>
              <P>(7) <E T="03">Perjury or false testimony</E>—(i) <E T="03">Elements.</E>
              </P>

              <P>(A) The accused testified at a military commission, in proceedings ancillary to a military commission, or provided information in a writing executed under an oath to tell the truth or a declaration acknowledging the applicability of penalties of perjury in connection with such proceedings;<PRTPAGE P="39"/>
              </P>
              <P>(B) Such testimony or information was material;</P>
              <P>(C) Such testimony or information was false; and</P>
              <P>(D) The accused knew such testimony or information to be false.</P>
              <P>(ii) [Reserved]</P>
              <P>(8) <E T="03">Obstruction of justice related to military commissions</E>—(i) <E T="03">Elements.</E> (A) The accused did an act;</P>
              <P>(B) The accused intended to influence, impede, or otherwise obstruct the due administration of justice; and</P>
              <P>(C) The accused did such act in the case of a certain person against whom the accused had reason to believe:</P>
              <P>(<E T="03">1</E>) There were or would be proceedings before a military commission; or</P>
              <P>(<E T="03">2</E>) There was an ongoing investigation of offenses triable by military commission.</P>
              <P>(ii) [Reserved]</P>
              <P>(c) <E T="03">Other forms of liability and related offenses.</E> A person is criminally liable as a principal for a completed substantive offense if that person commits the offense (perpetrator), aids or abets the commission of the offense, solicits commission of the offense, or is otherwise responsible due to command responsibility. Such a person would be charged as a principal even if another individual more directly perpetrated the offense. In proving culpability, however, the below listed definitions and elements are applicable. Additionally, if a substantive offense was completed, a person may be criminally liable for the separate offense of accessory after the fact. If the substantive offense was not completed, a person may be criminally liable of the lesser-included offense of attempt or the separate offense of solicitation. Finally, regardless of whether the substantive offense was completed, a person may be criminally liable of the separate offense of conspiracy in addition to the substantive offense. Each element need not be specifically charged.</P>
              <P>(1) <E T="03">Aiding or abetting</E>—(i) <E T="03">Elements.</E> (A) The accused committed an act that aided or abetted another person or entity in the commission of a substantive offense triable by military commission;</P>
              <P>(B) Such other person or entity committed or attempted to commit the substantive offense; and</P>
              <P>(C) The accused intended to or knew that the act would aid or abet such other person or entity in the commission of the substantive offense or an associated criminal purpose or enterprise.</P>
              <P>(ii) <E T="03">Comments.</E> (A) The term “aided or abetted” in paragraph (c)(1)(i)(A) of this section includes: assisting, encouraging, advising, instigating, counseling, ordering, or procuring another to commit a substantive offense; assisting, encouraging, advising, counseling, or ordering another in the commission of a substantive offense; and in any other way facilitating the commission of a substantive offense.</P>
              <P>(B) In some circumstances, inaction may render one liable as an aider or abettor. If a person has a legal duty to prevent or thwart the commission of a substantive offense, but does not do so, that person may be considered to have aided or abetted the commission of the offense if such noninterference is intended to and does operate as an aid or encouragement to the actual perpetrator.</P>
              <P>(C) An accused charged with aiding or abetting should be charged with the related substantive offense as a principal.</P>
              <P>(2) <E T="03">Solicitation</E>—(i) <E T="03">Elements.</E> (A) The accused solicited, ordered, induced, or advised a certain person or persons to commit one or more substantive offenses triable by military commission; and</P>
              <P>(B) The accused intended that the offense actually be committed.</P>
              <P>(ii) <E T="03">Comments.</E> (A) The offense is complete when a solicitation is made or advice is given with the specific wrongful intent to induce a person or persons to commit any offense triable by military commission. It is not necessary that the person or persons solicited, ordered, induced, advised, or assisted agree to or act upon the solicitation or advice. If the offense solicited is actually committed, however, the accused is liable under the law of armed conflict for the substantive offense. An accused should not be convicted of both solicitation and the substantive offense solicited if criminal liability for the substantive offense is based upon the solicitation.<PRTPAGE P="40"/>
              </P>
              <P>(B) Solicitation may be by means other than speech or writing. Any act or conduct that reasonably may be construed as a serious request, order, inducement, advice, or offer of assistance to commit any offense triable by military commission may constitute solicitation. It is not necessary that the accused act alone in the solicitation, order, inducement, advising, or assistance. The accused may act through other persons in committing this offense.</P>
              <P>(C) An accused charged with solicitation of a completed substantive offense should be charged for the substantive offense as a principal. An accused charged with solicitation of an uncompleted offense should be charged for the separate offense of solicitation. Solicitation is not a lesser-included offense of the related substantive offense.</P>
              <P>(3) <E T="03">Command/superior responsibility—perpetrating</E>—(i) <E T="03">Elements.</E> (A) The accused had command and control, or effective authority and control, over one or more subordinates;</P>
              <P>(B) One or more of the accused's subordinates committed, attempted to commit, conspired to commit, solicited to commit, or aided or abetted the commission of one or more substantive offenses triable by military commission;</P>
              <P>(C) The accused either knew or should have known that the subordinate or subordinates were committing, attempting to commit, conspiring to commit, soliciting, or aiding or abetting such offense or offenses; and</P>
              <P>(D) The accused failed to take all necessary and reasonable measures within his power to prevent or repress the commission of the offense or offenses.</P>
              <P>(ii) <E T="03">Comments.</E>
              </P>
              <P>(A) The phrase “effective authority and control” in paragraph (c)(3)(i)(A) of this section includes the concept of relative authority over the subject matter or activities associated with the perpetrator's conduct. This may be relevant to a civilian superior who should not be held responsible for the behavior of subordinates involved in activities that have no relationship to such superior's sphere of authority. Subject matter authority need not be demonstrated for command responsibility as it applies to a military commander.</P>
              <P>(B) A commander or other military or civilian superior, not in command, charged with failing adequately to prevent or repress a substantive offense triable by military commission should be charged for the related substantive offense as a principal.</P>
              <P>(4) <E T="03">Command/superior responsibility—misprision</E>—(i) <E T="03">Elements.</E> (A) The accused had command and control, or effective authority and control, over one or more subordinates;</P>
              <P>(B) One or more of the accused's subordinates had committed, attempted to commit, conspired to commit, solicited to commit, or aided or abetted the commission of one or more substantive offenses triable by military commission;</P>
              <P>(C) The accused knew or should have known that the subordinate or subordinates had committed, attempted to commit, conspired to commit, solicited, or aided or abetted such offense or offenses; and</P>
              <P>(D) The accused failed to submit the matter to competent authorities for investigation or prosecution as appropriate.</P>
              <P>(ii) <E T="03">Comments.</E>
              </P>
              <P>(A) The phrase, “effective authority and control” in paragraph (c)(4)(i)(A) of this section includes the concept of relative authority over the subject matter or activities associated with the perpetrator's conduct. This may be relevant to a civilian superior who cannot be held responsible under this offense for the behavior of subordinates involved in activities that have nothing to do with such superior's sphere of authority.</P>

              <P>(B) A commander or superior charged with failing to take appropriate punitive or investigative action subsequent to the perpetration of a substantive offense triable by military commission should not be charged for the substantive offense as a principal. Such commander or superior should be charged for the separate offense of failing to submit the matter for investigation and/or prosecution as detailed in these elements. This offense is not a lesser-included offense of the related substantive offense.<PRTPAGE P="41"/>
              </P>
              <P>(5) <E T="03">Accessory after the fact</E>—(i) <E T="03">Elements.</E> (A) The accused received, comforted, or assisted a certain person;</P>
              <P>(B) Such person had committed an offense triable by military commission;</P>
              <P>(C) The accused knew that such person had committed such offense or believed such person had committed a similar or closely related offense; and</P>
              <P>(D) The accused intended to hinder or prevent the apprehension, trial, or punishment of such person.</P>
              <P>(ii) <E T="03">Comments.</E> Accessory after the fact should be charged separately from the related substantive offense. It is not a lesser-included offense of the related substantive offense.</P>
              <P>(6) <E T="03">Conspiracy</E>—(i) <E T="03">Elements.</E> (A) The accused entered into an agreement with one or more persons to commit one or more substantive offenses triable by military commission or otherwise joined an enterprise of persons who shared a common criminal purpose that involved, at least in part, the commission or intended commission of one or more substantive offenses triable by military commission;</P>
              <P>(B) The accused knew the unlawful purpose of the agreement or the common criminal purpose of the enterprise and joined in it willfully, that is, with the intent to further the unlawful purpose; and</P>
              <P>(C) One of the conspirators or enterprise members, during the existence of the agreement or enterprise, knowingly committed an overt act in order to accomplish some objective or purpose of the agreement or enterprise.</P>
              <P>(ii) <E T="03">Comments.</E> (A) Two or more persons are required in order to have a conspiracy. Knowledge of the identity of co-conspirators and their particular connection with the agreement or enterprise need not be established. A person may be guilty of conspiracy although incapable of committing the intended offense. The joining of another conspirator after the conspiracy has been established does not create a new conspiracy or affect the status of the other conspirators. The agreement or common criminal purpose in a conspiracy need not be in any particular form or manifested in any formal words.</P>
              <P>(B) The agreement or enterprise must, at least in part, involve the commission or intended commission of one or more substantive offenses triable by military commission. A single conspiracy may embrace multiple criminal objectives. The agreement need not include knowledge that any relevant offense is in fact “triable by military commission.”</P>
              <P>(C) The overt act must be done by one or more of the conspirators, but not necessarily the accused, and it must be done to effectuate the object of the conspiracy or in furtherance of the common criminal purpose. The accused need not have entered the agreement or criminal enterprise at the time of the overt act.</P>
              <P>(D) The overt act need not be in itself criminal, but it must advance the purpose of the conspiracy. It is not essential that any substantive offense be committed.</P>
              <P>(E) Each conspirator is liable for all offenses committed pursuant to or in furtherance of the conspiracy by any of the co-conspirators, after such conspirator has joined the conspiracy and while the conspiracy continues and such conspirator remains a party to it.</P>
              <P>(F) A party to the conspiracy who withdraws from or abandons the agreement or enterprise before the commission of an overt act by any conspirator is not guilty of conspiracy. An effective withdrawal or abandonment must consist of affirmative conduct that is wholly inconsistent with adherence to the unlawful agreement or common criminal purpose and that shows that the party has severed all connection with the conspiracy. A conspirator who effectively withdraws from or abandons the conspiracy after the performance of an overt act by one of the conspirators remains guilty of conspiracy and of any offenses committed pursuant to the conspiracy up to the time of the withdrawal or abandonment. The withdrawal of a conspirator from the conspiracy does not affect the status of the remaining members.</P>
              <P>(G) That the object of the conspiracy was impossible to effect is not a defense to this offense.</P>

              <P>(H) Conspiracy to commit an offense is a separate and distinct offense from any offense committed pursuant to or in furtherance of the conspiracy, and <PRTPAGE P="42"/>both the conspiracy and any related offense may be charged, tried, and punished separately. Conspiracy should be charged separately from the related substantive offense. It is not a lesser-included offense of the substantive offense.</P>
              <P>(7) <E T="03">Attempt</E>—(i) <E T="03">Elements.</E> (A) The accused committed an act;</P>
              <P>(B) The accused intended to commit one or more substantive offenses triable by military commission;</P>
              <P>(C) The act amounted to more than mere preparation; and</P>
              <P>(D) The act apparently tended to effect the commission of the intended offense.</P>
              <P>(ii) <E T="03">Comments.</E> (A) To constitute an attempt there must be a specific intent to commit the offense accompanied by an act that tends to accomplish the unlawful purpose. This intent need not involve knowledge that the offense is in fact “triable by military commission.”</P>
              <P>(B) Preparation consists of devising or arranging means or measures apparently necessary for the commission of the offense. The act need not be the last act essential to the consummation of the offense. The combination of specific intent to commit an offense, plus the commission of an act apparently tending to further its accomplishment, constitutes the offense of attempt. Failure to complete the offense, whatever the cause, is not a defense.</P>
              <P>(C) A person who purposely engages in conduct that would constitute the offense if the attendant circumstances were as that person believed them to be is guilty of an attempt.</P>
              <P>(D) It is a defense to an attempt offense that the person voluntarily and completely abandoned the intended offense, solely because of the person's own sense that it was wrong, prior to the completion of the substantive offense. The voluntary abandonment defense is not allowed if the abandonment results, in whole or in part, from other reasons, for example, the person feared detection or apprehension, decided to await a better opportunity for success, was unable to complete the crime, or encountered unanticipated difficulties or unexpected resistance.</P>
              <P>(E) Attempt is a lesser-included offense of any substantive offense triable by military commission and need not be charged separately. An accused may be charged with attempt without being charged with the substantive offense.</P>
            </SECTION>
          </PART>
          <PART>
            <EAR>Pt. 12</EAR>
            <HD SOURCE="HED">PART 12—RESPONSIBILITIES OF THE CHIEF PROSECUTOR, PROSECUTORS, AND ASSISTANT PROSECUTORS</HD>
            <CONTENTS>
              <SECHD>Sec.</SECHD>
              <SECTNO>12.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <SECTNO>12.2</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
              <SECTNO>12.3</SECTNO>
              <SUBJECT>Office of the Chief Prosecutor.</SUBJECT>
              <SECTNO>12.4</SECTNO>
              <SUBJECT>Duties and responsibilities of the prosecution.</SUBJECT>
              <SECTNO>12.5</SECTNO>
              <SUBJECT>Policies.</SUBJECT>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>10 U.S.C. 113(d) and 140(b).</P>
            </AUTH>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>68 FR 39388, July 1, 2003, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>§ 12.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <P>This part establishes the responsibilities of the Office of the Chief Prosecutor and components thereof.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 12.2</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
              <P>This part is issued pursuant to 32 CFR 9.7(a) and in accordance with Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” (3 CFR, 2001 comp., p. 918, 66 FR 57833) and 10 U.S.C. 113(d) and 140(b). The provisions of 32 CFR part 10 are applicable to this part.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 12.3</SECTNO>
              <SUBJECT>Office of the Chief Prosecutor.</SUBJECT>
              <P>(a) <E T="03">General.</E> The Office of the Chief Prosecutor shall be a component of the Office of Military Commissions and shall be comprised of the Chief Prosecutor, Prosecutors, and other persons properly under the supervision of the Chief Prosecutor.</P>
              <P>(b) <E T="03">Chief Prosecutor.</E> (1) The Chief Prosecutor shall be a judge advocate of any United States armed force and shall be designated by the General Counsel of the Department of Defense.</P>
              <P>(2) The Chief Prosecutor shall report directly to the Deputy General Counsel (Legal Counsel) of the Department of Defense.</P>

              <P>(3) The Chief Prosecutor shall have authority to subpoena any individual to appear as a witness, to testify, or to produce any evidence in a case referred to military commissions or in a criminal investigation associated with a <PRTPAGE P="43"/>case that may be referred to a military commission.</P>
              <P>(4) The Chief Prosecutor shall direct the overall prosecution effort pursuant to 32 CFR part 9, and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” ensuring proper supervision and management of all personnel and resources assigned to the Office of the Chief Prosecutor.</P>
              <P>(5) The Chief Prosecutor shall ensure that all personnel assigned to the Office of the Chief Prosecutor review, and attest that they understand and will comply with, 32 CFR part 9, and Military Order of November 13, 2001,” Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” and all Supplementary Regulations and Instructions issued in accordance therewith.</P>
              <P>(6) The Chief Prosecutor shall inform the Deputy General Counsel (Legal Counsel) of all requirements for personnel, office space, equipment, and supplies to ensure the successful functioning and mission accomplishment of the Office of the Chief Prosecutor.</P>
              <P>(7) The Chief Prosecutor shall supervise all Prosecutors and other personnel assigned to the Office of the Chief Prosecutor including any special trial counsel of the Department of Justice who may be made available by the Attorney General of the United States.</P>
              <P>(8) The Chief Prosecutor, or his designee, shall fulfill applicable performance evaluation requirements associated with Prosecutors and other personnel properly under the supervision of the Office of the Chief Prosecutor.</P>
              <P>(9) The Chief Prosecutor shall detail a Prosecutor and, as appropriate, one or more Assistant Prosecutors to perform the duties of the prosecution as set forth in 32 CFR 9.4(b)(2). The Chief Prosecutor may detail himself to perform such duties.</P>
              <P>(10) The Chief Prosecutor shall ensure that all Prosecutors and Assistant Prosecutors faithfully represent the United States in discharging their prosecutorial duties before military commissions conducted pursuant to 32 CFR part 9, and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism.”</P>
              <P>(11) The Chief Prosecutor shall ensure that all Prosecutors and Assistant Prosecutors have taken an oath to perform their duties faithfully.</P>
              <P>(12) The Chief Prosecutor shall ensure that all personnel properly under the supervision of the Office of the Chief Prosecutor possess the appropriate security clearances.</P>
              <P>(c) <E T="03">Prosecutors.</E> (1) Prosecutors shall be detailed by the Chief Prosecutor and may be either judge advocates of any United States armed force or special trial counsel of the Department of Justice who may be made available by the Attorney General of the United States.</P>
              <P>(2) Prosecutors shall represent the United States as Prosecutors or Assistant Prosecutors as directed by the Chief Prosecutor and in accordance with 32 CFR part 9, and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism.”</P>
              <P>(3) Prosecutors shall fulfill all responsibilities detailed in 32 CFR part 9, and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” those set forth in this part, and those assigned by the Chief Prosecutor.</P>
              <P>(4) Prosecutors shall ensure that all court reporters, security personnel, and interpreters who are to perform duties in relation to a military commission proceeding have taken an oath to perform their duties faithfully. As directed by the Presiding Officer, Prosecutors also shall administer appropriate oaths to witnesses during military commission proceedings.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 12.4</SECTNO>
              <SUBJECT>Duties and responsibilities of the prosecution.</SUBJECT>
              <P>(a) <E T="03">Regular duties.</E> The Prosecution shall perform all duties specified or implied in 32 CFR part 9 as responsibilities of the Prosecution.</P>
              <P>(b) <E T="03">Administrative duties.</E> The Prosecution shall, as directed by the Presiding Officer or the Appointing Authority, prepare any documentation necessary to facilitate the conduct of military commissions proceedings. The Prosecution shall, as directed by the Deputy <PRTPAGE P="44"/>General Counsel (Legal Counsel), prepare a trial guide to provide a standardized administrative plan for the conduct of military commission proceedings. Unless directed otherwise by the Appointing Authority, the Presiding Officer may, in his discretion, depart from this guide as appropriate.</P>
              <P>(c) <E T="03">Special duties.</E> The Prosecution shall perform all other functions, consistent with 32 CFR part 9, and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” as may be directed by the Appointing Authority or the General Counsel of the Department of Defense.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 12.5</SECTNO>
              <SUBJECT>Policies.</SUBJECT>
              <P>(a) <E T="03">Prohibition on Prosecutors serving as Defense Counsel.</E> Judge advocates assigned to the Office of the Chief Prosecutor shall be deemed unavailable for service as Defense Counsel under 32 CFR 9.4(c)(3)(i).</P>
              <P>(b) <E T="03">Prohibition on certain disclosures.</E> All Prosecutors must strictly comply with 32 CFR 9.6(d)(5) and 9.9 to ensure they do not improperly disclose classified information, national security information, or state secrets to any person not specifically authorized to receive such information.</P>
              <P>(c) <E T="03">Statements to the media.</E> Consistent with DoD Directive 5122.5 <SU>1</SU>
                <FTREF/>, the Assistant Secretary of Defense for Public Affairs shall serve as the sole release authority for DoD information and audiovisual materials regarding military commissions. Personnel assigned to the Office of the Chief Prosecutor may communicate with news media representatives regarding cases and other matters related to military commissions only when approved by the Appointing Authority or the General Counsel of the Department of Defense.</P>
              <FTNT>
                <P>
                  <SU>1</SU> Available at <E T="03">http://www.dtic.mil/whs/directives.</E>
                </P>
              </FTNT>
            </SECTION>
          </PART>
          <PART>
            <EAR>Pt. 13</EAR>
            <HD SOURCE="HED">PART 13—RESPONSIBILITIES OF THE CHIEF DEFENSE COUNSEL, DETAILED DEFENSE COUNSEL, AND CIVILIAN DEFENSE COUNSEL</HD>
            <CONTENTS>
              <SECHD>Sec.</SECHD>
              <SECTNO>13.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <SECTNO>13.2</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
              <SECTNO>13.3</SECTNO>
              <SUBJECT>Office of the Chief Defense Counsel.</SUBJECT>
              <SECTNO>13.4</SECTNO>
              <SUBJECT>Duties and responsibilities of the defense.</SUBJECT>
              <SECTNO>13.5</SECTNO>
              <SUBJECT>Policies.</SUBJECT>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>10 U.S.C. 113(d) and 140(b).</P>
            </AUTH>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>68 FR 39389, July 1, 2003, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>§ 13.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <P>This part establishes the responsibilities of the Office of Chief Defense Counsel and components thereof.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 13.2</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
              <P>This part is issued pursuant to 32 CFR 9.7(a) and in accordance with Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” (3 CFR, 2001 comp., p. 918, 66 FR 57833) and 10 U.S.C. 113(d) and 140(b). The provisions of 32 CFR part 10 are applicable to this part.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 13.3</SECTNO>
              <SUBJECT>Office of the Chief Defense Counsel.</SUBJECT>
              <P>(a) <E T="03">General.</E> The Office of the Chief Defense Counsel shall be a component of the Office of Military Commissions and shall be comprised of the Chief Defense Counsel, Defense Counsel, and other such persons properly under the supervision of the Chief Defense Counsel.</P>
              <P>(b) <E T="03">Chief Defense Counsel.</E> (1) The Chief Defense Counsel shall be a judge advocate of any United States armed force and shall be designated by the General Counsel of the Department of Defense.</P>
              <P>(2) The Chief Defense Counsel shall report directly to the Deputy General Counsel (Personnel and Health Policy) of the Department of Defense.</P>

              <P>(3) The Chief Defense Counsel shall supervise all defense activities and the efforts of Detailed Defense Counsel and other office personnel and resources pursuant to 32 CFR part 9, and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” ensuring proper supervision and management of all personnel and resources assigned to the Office of the Chief Defense Counsel and facilitating the proper representation of all Accused referred to trial before a military commission appointed pursuant to 32 <PRTPAGE P="45"/>CFR part 9, and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism.”</P>
              <P>(4) The Chief Defense Counsel shall ensure that all personnel assigned to the Office of the Chief Defense Counsel review, and attest that they understand and will comply with, 32 CFR part 9, and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” and all Supplementary Regulations and Instructions issued in accordance therewith. Furthermore, the Chief Defense Counsel shall regulate the conduct of Detailed Defense Counsel as deemed necessary, consistent with 32 CFR part 9, and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” and subordinate instructions and regulations, and specifically shall ensure that Detailed Defense Counsel have been directed to conduct their activities consistent with applicable prescriptions and proscriptions specified in Section II of the Affidavit And Agreement By Civilian Defense Counsel at Appendix B to 32 CFR part 14.</P>
              <P>(5) The Chief Defense Counsel shall inform the Deputy General Counsel (Personnel and Health Policy) of the Department of Defense of all requirements for personnel, office space, equipment, and supplies to ensure the successful functioning and mission accomplishment of the Office of the Chief Defense Counsel.</P>
              <P>(6) The Chief Defense Counsel shall supervise all Defense Counsel and other personnel assigned to the Office of the Chief Defense Counsel.</P>
              <P>(7) The Chief Defense Counsel, or his designee, shall fulfill applicable performance evaluation requirements associated with Defense Counsel and other personnel properly under the supervision of the Chief Defense Counsel.</P>
              <P>(8) The Chief Defense Counsel shall detail a judge advocate of any United States armed force to perform the duties of the Detailed Defense Counsel as set forth in 32 CFR 9.4(c)(2) and shall detail or employ any other personnel as directed by the Appointing Authority or the Presiding Officer in a particular case. The Chief Defense Counsel may not detail himself to perform the duties of Detailed Defense Counsel, nor does he form an attorney-client relationship with accused persons or incur any concomitant confidentiality obligations.</P>
              <P>(i) The Chief Defense Counsel may, when appropriate, detail an additional judge advocate as Assistant Detailed Defense Counsel to assist in performing the duties of the Detailed Defense Counsel.</P>
              <P>(ii) The Chief Defense Counsel may structure the Office of the Chief Defense Counsel so as to include subordinate supervising attorneys who may incur confidentiality obligations in the context of fulfilling their supervisory responsibilities with regard to Detailed Defense Counsel.</P>
              <P>(9) The Chief Defense Counsel shall take appropriate measures to preclude Defense Counsel conflicts of interest arising from the representation of Accused before military commissions. The Chief Defense Counsel shall be provided sufficient information (potentially including protected information) to fulfill this responsibility.</P>
              <P>(10) The Chief Defense Counsel shall take appropriate measures to ensure that each Detailed Defense Counsel is capable of zealous representation, unencumbered by any conflict of interest. In this regard, the Chief Defense Counsel shall monitor the activities of all Defense Counsel (Detailed and Civilian) and take appropriate measures to ensure that Defense Counsel do not enter into agreements with other Accused or Defense Counsel that might cause them or the Accused they represent to incur an obligation of confidentiality with such other Accused or Defense Counsel or to effect some other impediment to representation.</P>
              <P>(11) The Chief Defense Counsel shall ensure that an Accused tried before a military commission pursuant to 32 CFR part 9, and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” is represented at all relevant times by Detailed Defense Counsel.</P>

              <P>(12) The Chief Defense Counsel shall administer all requests for replacement Detailed Defense Counsel requested in <PRTPAGE P="46"/>accordance with 32 CFR 9.4(c)(3). He shall determine the availability of such counsel in accordance with this part.</P>
              <P>(13) The Chief Defense Counsel shall administer the Civilian Defense Counsel pool, screening all requests for pre-qualification and ad hoc qualification, making qualification determinations and recommendations in accordance with 32 CFR part 9, this part, and 32 CFR part 14, and ensuring appropriate notification to an Accused of civilian attorneys available to represent Accused before a military commission.</P>
              <P>(14) The Chief Defense Counsel shall ensure that all Detailed Defense Counsel and Civilian Defense Counsel who are to perform duties in relation to a military commission have taken an oath to perform their duties faithfully.</P>
              <P>(15) The Chief Defense Counsel shall ensure that all personnel properly under the supervision of the Office of the Chief Defense Counsel possess the appropriate security clearances.</P>
              <P>(c) <E T="03">Detailed Defense Counsel.</E> (1) Detailed Defense Counsel shall be judge advocates of any United States armed force.</P>
              <P>(2) Detailed Defense Counsel shall represent the Accused before military commissions when detailed in accordance with 32 CFR part 9, and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism.” In this regard Detailed Defense Counsel shall: defend the Accused to whom detailed zealously within the bounds of the law and without regard to personal opinion as to guilt; represent the interests of the Accused in any review process as provided by 32 CFR part 9; and comply with the procedures accorded the Accused pursuant to 32 CFR 9.5 and 9.6. Detailed Defense Counsel shall so serve notwithstanding any intention expressed by the Accused to represent himself.</P>
              <P>(3) Detailed Defense Counsel shall have primary responsibility to prevent conflicts of interest related to the handling of the cases to which detailed.</P>
              <P>(4) Detailed Defense Counsel shall fulfill all responsibilities detailed in 32 CFR part 9, and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” those set forth in this part, and those assigned by the Chief Defense Counsel.</P>
              <P>(d) <E T="03">Selected Detailed Defense Counsel.</E> (1) The Accused may select a judge advocate of any United States armed force to replace the Accused's Detailed Defense Counsel, provided that judge advocate has been determined to be available by the Chief Defense Counsel in consultation with the Judge Advocate General of that judge advocate's military department.</P>
              <P>(2) A judge advocate shall be determined not to be available if assigned duties: as a general or flag officer; as a military judge; as a prosecutor in the Office of Military Commissions; as a judge advocate assigned to the Department of Defense Criminal Investigation Task Force or Joint Task Force Guantanamo; as a principal legal advisor to a command, organization, or agency; as an instructor or student at a service school, academy, college or university; or in any other capacity that the Judge Advocate General of the Military Department concerned may determine not to be available because of the nature or responsibilities of their assignments, exigent circumstances, military necessity, or other appropriate reasons.</P>
              <P>(3) Consistent with 32 CFR 9.6(b), the selection and replacement of new Detailed Defense Counsel shall not unreasonably delay military commission proceedings.</P>
              <P>(4) Unless otherwise directed by the Appointing Authority or the General Counsel of the Department of Defense, the Chief Defense Counsel will, after selection of a new Detailed Defense Counsel, relieve the original Detailed Defense Counsel of all duties with respect to that case.</P>
              <P>(e) <E T="03">Qualified Civilian Defense Counsel.</E> (1) The Accused may, at no expense to the United States, retain the services of a civilian attorney of the Accused's own choosing to assist in the conduct of his defense before a military commission, provided that the civilian attorney retained has been determined to be qualified pursuant to 32 CFR 9.4(c)(3)(ii).</P>

              <P>(2) Consistent with 32 CFR 9.6(b), the retention of Civilian Defense Counsel shall not unreasonably delay military commission proceedings.<PRTPAGE P="47"/>
              </P>
              <P>(3) Representation by Civilian Defense Counsel will not relieve Detailed Defense Counsel of the duties specified in 32 CFR 9.4(c)(2).</P>
              <P>(4) Neither qualification of a Civilian Defense Counsel for membership in the pool of available Civilian Defense Counsel nor the entry of appearance in a specific case guarantees that counsel's presence at closed military commission proceedings or access to information protected under 32 CFR 9.6(d)(5).</P>
              <P>(5) The Chief Defense Counsel shall monitor the conduct of all qualified Civilian Defense Counsel for compliance with all rules, regulations, and instructions governing military commissions. The Chief Defense Counsel will report all instances of noncompliance with the rules, regulations, and instructions governing military commissions to the Appointing Authority and to the General Counsel of the Department of Defense with a recommendation as to any appropriate action consistent with 32 CFR part 9 and this part.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 13.4</SECTNO>
              <SUBJECT>Duties and responsibilities of the defense.</SUBJECT>
              <P>(a) <E T="03">Regular duties.</E> The Defense shall perform all duties specified or implied in 32 CFR part 9 as responsibilities of the Defense.</P>
              <P>(b) <E T="03">Special duties.</E> The Office of the Chief Defense Counsel shall perform such other functions, consistent with 32 CFR part 9, and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” and the mission of the Office of the Chief Defense Counsel, as may be directed by the Appointing Authority or the General Counsel of the Department of Defense.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 13.5</SECTNO>
              <SUBJECT>Policies.</SUBJECT>
              <P>(a) <E T="03">Prohibition on certain agreements.</E> No Defense Counsel may enter into agreements with any detainee other than his client, or such detainee's Defense Counsel, that might cause him or the client he represents to incur an obligation of confidentiality with such other detainee or Defense Counsel or to effect some other impediment to representation.</P>
              <P>(b) <E T="03">Prohibition on certain disclosures.</E> All Defense Counsel must strictly comply with 32 CFR 9.6(d)(5) and 9.9 to ensure they do not improperly disclose classified information, national security information, or state secrets to an Accused or potential Accused or to any other person not specifically authorized to receive such information.</P>
              <P>(c) <E T="03">Statements to the media.</E> Consistent with DoD Directive 5122.5 <SU>1</SU>
                <FTREF/>, the Assistant Secretary of Defense for Public Affairs shall serve as the sole release authority for DoD information and audiovisual materials regarding military commissions. Personnel assigned to the Office of the Chief Defense Counsel, as well as all members of the Civilian Defense Counsel pool and associated personnel may communicate with news media representatives regarding cases and other matters related to military commissions only when approved by the Appointing Authority or the General Counsel of the Department of Defense.</P>
              <FTNT>
                <P>
                  <SU>1</SU> Available at <E T="03">http://www.dtic.mil/whs/directives.</E>
                </P>
              </FTNT>
            </SECTION>
          </PART>
          <PART>
            <EAR>Pt. 14</EAR>
            <HD SOURCE="HED">PART 14—QUALIFICATION OF CIVILIAN DEFENSE COUNSEL</HD>
            <CONTENTS>
              <SECHD>Sec.</SECHD>
              <SECTNO>14.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <SECTNO>14.2</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
              <SECTNO>14.3</SECTNO>
              <SUBJECT>Policies and procedures.</SUBJECT>
              <APP>Appendix A to Part 14—United States of America Authorization for Release of Information</APP>
              <APP>Appendix B to Part 14—Affidavit and Agreement by Civilian Defense Counsel</APP>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>10 U.S.C. 113(d) and 140(b).</P>
            </AUTH>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>68 FR 39392, July 1, 2003, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>§ 14.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <P>This part establishes policies and procedures for the creation and management of the pool of qualified Civilian Defense Counsel authorized in 32 CFR 9.4 (c)(3)(ii) in accordance with Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” (3 CFR 2001 Comp., 918, 66 FR 57833).</P>
            </SECTION>
            <SECTION>
              <PRTPAGE P="48"/>
              <SECTNO>§ 14.2</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
              <P>This part is issued pursuant to 32 CFR 9.7(a) and in accordance with Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” and 10 U.S.C. 113(d) and 140(b). The provisions of 32 CFR part 10 are applicable to this part.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 14.3</SECTNO>
              <SUBJECT>Policies and procedures.</SUBJECT>
              <P>(a) <E T="03">Application procedures.</E> (1) Civilian attorneys may be prequalified as members of the pool of attorneys eligible to represent Accused before military commissions at no expense to the United States if, at the time of application, they meet the eligibility criteria set forth in 32 CFR 9.4(c)(3)(ii) as further detailed in this part, or they may be qualified on an ad hoc basis after being requested by an Accused. In both cases, qualification results in membership in the pool of available Civilian Defense Counsel.</P>
              <P>(2) An attorney seeking qualification as a member of the pool of available Civilian Defense Counsel shall submit an application, by letter, to: Office of the General Counsel, Department of Defense, (Attn: Chief Defense Counsel, Office of Military Commissions), 1600 Defense Pentagon, Washington, DC 20301-1600. Applications will be comprised of the letter requesting qualification for membership, together with the following documents that demonstrate satisfaction of the criteria set forth in 32 CFR 9.4(c)(3)(ii):</P>

              <P>(i) Civilian Defense Counsel shall be United States citizens (32 CFR 9.4(c)(3)(ii)(A)). Applicants will provide proof of citizenship (<E T="03">e.g.</E>, certified true copy of passport, birth certificate, or certificate of naturalization).</P>
              <P>(ii) Civilian Defense Counsel shall be admitted to the practice of law in a State, district, territory or possession of the United States, or before a Federal court (32 CFR 9.4(c)(3)(ii)(B)). Applicants will submit an official certificate showing that the applicant is an active member in good standing with the bar of a qualifying jurisdiction. The certificate must be dated within three months of the date of the Chief Defense Counsel's receipt of the application.</P>
              <P>(iii) Civilian Defense Counsel shall not have been the subject of any sanction or disciplinary action by any court, bar, or other competent governmental authority for relevant misconduct (32 CFR 9.4(c)(2)(iii)).</P>
              <P>(A) An applicant shall submit a statement detailing all sanctions or disciplinary actions, pending or final, to which he has been subject, whether by a court, bar or other competent governmental authority, for misconduct of any kind. The statement shall identify the jurisdiction or authority that imposed the sanction or disciplinary action, together with any explanation deemed appropriate by the applicant. Additionally, the statement shall identify and explain any formal challenge to the attorney's fitness to practice law, regardless of the outcome of any subsequent proceedings. In the event that no sanction, disciplinary action or challenge has been imposed on or made against an applicant, the statement shall so state. Further, the applicant's statement shall identify each jurisdiction in which he has been admitted or to which he has applied to practice law, regardless of whether the applicant maintains a current active license in that jurisdiction, together with any dates of admission to or rejection by each such jurisdiction and, if no longer active, the date of and basis for inactivation. The information shall be submitted either in the form of a sworn notarized statement or as a declaration under penalty of perjury of the laws of the United States. The sworn statement or declaration must be executed and dated within three months of the date of the Chief Defense Counsel's receipt of the application.</P>
              <P>(B) Further, applicants shall submit a properly executed Authorization for Release of Information (Appendix A to this part), authorizing the Chief Defense Counsel or his designee to obtain information relevant to qualification of the applicant as a member of the Civilian Defense Counsel pool from each jurisdiction in which the applicant has been admitted or to which he has applied to practice law.</P>

              <P>(iv) Civilian Defense Counsel shall be determined to be eligible for access to information classified at the level SECRET or higher under the authority of <PRTPAGE P="49"/>and in accordance with the procedures described in Department of Defense Regulation, DoD 5200.2-R, “Personnel Security Program.” <SU>1</SU>
                <FTREF/> (32 CFR 9.4(c)(2)(iv)</P>
              <P>(A) Civilian Defense Counsel applicants who possess a valid current security clearance of SECRET or higher shall provide, in writing, the date of their background investigation, the date such clearance was granted, the level of the clearance, and the adjudicating authority.</P>
              <P>(B) Civilian Defense Counsel applicants who do not possess a valid current security clearance of SECRET or higher shall state in writing their willingness to submit to a background investigation in accordance with DoD 5200.2-R and to pay any actual costs associated with the processing of the same. The security clearance application, investigation, and adjudication process will not be initiated until the applicant has submitted an application that otherwise fully complies with this part and the Chief Defense Counsel has determined that the applicant would otherwise be qualified for membership in the Civilian Defense Counsel pool. Favorable adjudication of the applicant's personnel security investigation must be completed before an applicant will be qualified for membership in the pool of Civilian Defense Counsel. The Chief Defense Counsel may, at his discretion, withhold qualification and wait to initiate the security clearance process until such time as the Civilian Defense Counsel's services are likely to be sought.</P>
              <FTNT>
                <P>
                  <SU>1</SU> Available at <E T="03">http://www.dtic.mil/whs/directives.</E>
                </P>
              </FTNT>

              <P>(v) Civilian Defense Counsel shall have signed a written agreement to comply with all applicable regulations or instructions for counsel, including any rules of court for conduct during the course of proceedings (32 CFR 9.4(c)(2)(v)). This requirement shall be satisfied by the execution of the Affidavit And Agreement By Civilian Defense Counsel at Appendix B to this part. The Affidavit And Agreement By Civilian Defense Counsel shall be executed and agreed to without change, (<E T="03">i.e.</E>, no omissions, additions or substitutions). Proper execution shall require the notarized signature of the applicant. The Affidavit And Agreement By Civilian Defense Counsel shall be dated within three months of the date of the Chief Defense Counsel's receipt of the application.</P>
              <P>(3) Applications mailed in a franked U.S. Government envelope or received through U.S. Government distribution will not be considered. Telefaxed or electronic mail application materials will not be accepted. Failure to provide all of the requisite information and documentation may result in rejection of the application. A false statement in any part of the application may preclude qualification and/or render the applicant liable for disciplinary or criminal sanction, including under 18 U.S.C. 1001.</P>
              <P>(b) <E T="03">Application review.</E> (1) The Chief Defense Counsel or his designee shall review all Civilian Defense Counsel pool applications for compliance with 32 CFR part 9 and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” and with this part.</P>
              <P>(2) The Chief Defense Counsel shall consider all applicants for qualification as members of the Civilian Defense Counsel pool without regard to race, religion, color, sex, age, national origin, or other non-disqualifying physical or mental disability.</P>
              <P>(3) The Chief Defense Counsel may reject any Civilian Defense Counsel application that is incomplete or otherwise fails to comply with 32 CFR part 9 and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” or with this part.</P>

              <P>(4) Subject to review by the General Counsel of the Department of Defense, the Chief Defense Counsel shall determine the number of qualified attorneys that shall constitute the pool of available Civilian Defense Counsel. Similarly, subject to review by the General Counsel of the Department of Defense, the Chief Defense Counsel shall determine the qualification of applicants for membership in such pool. This shall include determinations as to whether any sanction, disciplinary action, or <PRTPAGE P="50"/>challenge is related to relevant misconduct that would disqualify the Civilian Defense Counsel applicant.</P>
              <P>(5) The Chief Defense Counsel's determination as to each applicant's qualification for membership in the pool of qualified Civilian Defense Counsel shall be deemed effective as of the date of the Chief Defense Counsel's written notification publishing such determination to the applicant. Subsequent to this notification, the retention of qualified Civilian Defense Counsel is effected upon written entry of appearance, communicated to the military commission through the Chief Defense Counsel.</P>
              <P>(6) The Chief Defense Counsel may reconsider his determination as to an individual's qualification as a member of the Civilian Defense Counsel pool on the basis of subsequently discovered information indicating material nondisclosure or misrepresentation in the application, or material violation of obligations of the Civilian Defense Counsel, or other good cause, or the matter may be referred to the Appointing Authority or the General Counsel of the Department of Defense, who may revoke or suspend the qualification of any member of the Civilian Defense Counsel pool.</P>
            </SECTION>
            <APPENDIX>
              <HD SOURCE="HED">Appendix A to Part 14—United States of America Authorization for Release of Information</HD>
              <HD SOURCE="HD2">United States of America</HD>
              <HD SOURCE="HD3">Authorization for Release of Information</HD>
              <FP>(Carefully read this authorization to release information about you, then sign and date it in ink.)</FP>
              
              <P>I authorize the Chief Defense Counsel, Office of Military Commissions, Department of Defense, his designee or other duly authorized representative of the Department of Defense who may be charged with assessing or determining my qualification for membership in the pool of Civilian Defense Counsel available to represent Accused before military commissions, to obtain any information from any court, the bar of any State, locality, district, territory or possession of the United States, or from any other governmental authority.</P>
              <P>This information may include, but is not limited to, information relating to: Any application for a security clearance; my admission or application for admission to practice law in any jurisdiction, including action by the jurisdiction upon such application, together with my current status with regard to the practice of law in such jurisdiction; any sanction or disciplinary action to which I have been subject for misconduct of any kind; and any formal challenge to my fitness to practice law, regardless of the outcome of subsequent proceedings.</P>
              <P>I authorize custodians of such records or information and other sources of information pertaining to me to release such at the request of the officials named above, regardless of any previous agreement to the contrary.</P>
              <P>I understand that for certain custodians or sources of information a separate specific release may be required and that I may be contacted for the purposes of executing such at a later date.</P>
              <P>I understand that the records or information released by custodians and other sources of information are for official use by the Department of Defense, only for the purposes provided herein, and that they may be redisclosed by the Department of Defense only as authorized by law.</P>

              <P>Copies of this authorization that show my signature are as valid as the original signed by me. This authorization is valid for five (5) years from the date signed or upon termination of my affiliation with the Department of Defense, whichever is later.
              </P>
              <FP SOURCE="FP-DASH"/>
              <FP>Signature (sign in ink) SSN</FP>
              
              <FP SOURCE="FP-DASH"/>
              <FP>Date</FP>
            </APPENDIX>
            <APPENDIX>
              <HD SOURCE="HED">Appendix B to Part 14—Affidavit and Agreement by Civilian Defense Counsel</HD>
              <HD SOURCE="HD1">Affidavit and Agreement by Civilian Defense Counsel</HD>

              <P>Pursuant to Section 4(C)(3)(b) of Department of Defense Military Commission Order No. 1, “Procedures for Trials by Military Commissions of Certain Non-United States Citizens in the War Against Terrorism,” dated March 21, 2002 (“MCO No. 1”), Military Commission Instructions No. 4, “Responsibilities of the Chief Defense Counsel, Detailed Defense Counsel, and Civilian Defense Counsel” (“MCI No. 4”) and No. 5, “Qualification of Civilian Defense Counsel” (“MCI No. 5”), and in accordance with the President's Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” 66 FR 57833 (Nov. 16, 2001) (“President's Military Order”), I [Name of Civilian Attorney], make this Affidavit and Agreement for the purposes of applying for qualification as a member of the pool of Civilian Defense Counsel available to represent Accused before military commissions and serving in that capacity.<PRTPAGE P="51"/>
              </P>
              <P>I. <E T="03">Oaths or Affirmations.</E> I swear or affirm that the following information is true to the best of my knowledge and belief:</P>
              <P>A. I have read and understand the President's Military Order, MCO No. 1, MCI No. 4, MCI No. 5, and all other Military Commission Orders and Instructions concerning the rules, regulations and instructions applicable to trial by military commissions. I will read all future Orders and Instructions applicable to trials by military commissions.</P>
              <P>B. I am aware that my qualification as a Civilian Defense Counsel does not guarantee my presence at closed military commission proceedings or guarantee my access to any information protected under Section 6(D)(5) or Section 9 of MCO No. 1.</P>
              <P>II. <E T="03">Agreements.</E> I hereby agree to comply with all applicable regulations and instructions for counsel, including any rules of court for conduct during the course of proceedings, and specifically agree, without limitation, to the following:</P>
              <P>A. I will notify the Chief Defense Counsel and, as applicable, the relevant Presiding Officer immediately if, after the execution of this Affidavit and Agreement but prior to the conclusion of proceedings (defined as the review and final decision of the President or, if designated, the Secretary of Defense), if there is any change in any of the information provided in my application, including this Affidavit and Agreement, for qualification as member of the Civilian Defense Counsel pool. I understand that such notification shall be in writing and shall set forth the substantive nature of the changed information.</P>
              <P>B. I will be well-prepared and will conduct the defense zealously, representing the Accused throughout the military commission process, from the inception of my representation through the completion of any post trial proceedings as detailed in Section 6(H) of MCO No. 1. I will ensure that these proceedings are my primary duty. I will not seek to delay or to continue the proceedings for reasons relating to matters that arise in the course of my law practice or other professional or personal activities that are not related to military commission proceedings.</P>
              <P>C. The Defense Team shall consist entirely of myself, Detailed Defense Counsel, and other personnel provided by the Chief Defense Counsel, the Presiding Officer, or the Appointing Authority. I will make no claim against the U.S. Government for any fees or costs associated with my conduct of the defense or related activities or efforts.</P>
              <P>D. Recognizing that my representation does not relieve Detailed Defense Counsel of duties specified in Section 4(C)(2) of MCO No. 1, I will work cooperatively with such counsel to ensure coordination of efforts and to ensure such counsel is capable of conducting the defense independently if necessary.</P>
              <P>E. During the pendency of the proceedings, unless I obtain approval in advance from the Presiding Officer to do otherwise, I will comply with the following restrictions on my travel and communications:</P>
              <P>1. I will not travel or transmit documents from the site of the proceedings without the approval of the Appointing Authority or the Presiding Officer. The Defense Team and I will otherwise perform all of our work relating to the proceedings, including any electronic or other research, at the site of the proceedings (except that this shall not apply during post-trial proceedings detailed in Section 6(H) of MCO No. 1).</P>
              <P>2. I will not discuss or otherwise communicate or share documents or information about the case with anyone except persons who have been designated as members of the Defense Team in accordance with this Affidavit and Agreement and other applicable rules, regulations and instructions.</P>
              <P>F. At no time, to include any period subsequent to the conclusion of the proceedings, will I make any public or private statements regarding any closed sessions of the proceedings or any classified information or material, or document or material constituting protected information under MCO No. 1.</P>
              <P>G. I understand and agree to comply with all rules, regulations and instructions governing the handling of classified information and material. Furthermore, no document or material constituting protected information under MCO No. 1, regardless of its classification level, may leave the site of the proceedings.</P>
              <P>H. I understand that there may be reasonable restrictions on the time and duration of contact I may have with my client, as imposed by the Appointing Authority, the Presiding Officer, detention authorities, or regulation.</P>
              <P>I. I understand that my communications with my client, even if traditionally covered by the attorney-client privilege, may be subject to monitoring or review by government officials, using any available means, for security and intelligence purposes. I understand that any such monitoring will only take place in limited circumstances when approved by proper authority, and that any evidence or information derived from such communications will not be used in proceedings against the Accused who made or received the relevant communication. I further understand that communications are not protected if they would facilitate criminal acts or a conspiracy to commit criminal acts, or if those communications are not related to the seeking or providing of legal advice.</P>

              <P>J. I agree that I shall reveal to the Chief Defense Counsel and any other appropriate authorities, information relating to the representation of my client to the extent that I reasonably believe necessary to prevent the <PRTPAGE P="52"/>commission of a future criminal act that I believe is likely to result in death or substantial bodily harm, or significant impairment of national security.</P>
              <P>K. I understand and agree that nothing in this Affidavit and Agreement creates any substantive, procedural, or other rights for me as counsel or for my client(s).</P>
              <FP SOURCE="FP-DASH">/s/</FP>
              <FP SOURCE="FP-DASH">Print Name:</FP>
              <FP SOURCE="FP-DASH">Address:</FP>
              <FP SOURCE="FP-DASH">Date:</FP>
              
              <FP SOURCE="FP-1">State of)</FP>
              <FP SOURCE="FP-1">County of)</FP>
              
              <P>Sworn to and subscribed before me, by _____, this __ day of ____, 20__.</P>
              <HD SOURCE="HD3">Notary</HD>
              <FP SOURCE="FP-DASH">My commission expires:</FP>
            </APPENDIX>
          </PART>
          <PART>
            <EAR>Pt. 15</EAR>
            <HD SOURCE="HED">PART 15—REPORTING RELATIONSHIPS FOR MILITARY COMMISSION PERSONNEL</HD>
            <CONTENTS>
              <SECHD>Sec.</SECHD>
              <SECTNO>15.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <SECTNO>15.2</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
              <SECTNO>15.3</SECTNO>
              <SUBJECT>Policies and procedures.</SUBJECT>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>10 U.S.C. 113(d) and 140(b).</P>
            </AUTH>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>68 FR 39395, July 1, 2003, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>§ 15.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <P>This part establishes supervisory and performance evaluation relationships for military commission personnel.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 15.2</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
              <P>This part is issued pursuant to 32 CFR 9.7(a) and in accordance with Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” (3 CFR 2001 Comp., p. 918, 66 FR 57833) and 10 U.S.C. 113(d) and 140(b). The provisions of 32 CFR part 10 are applicable to this part.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 15.3</SECTNO>
              <SUBJECT>Policies and Procedures.</SUBJECT>
              <P>(a) <E T="03">Supervisory and performance evaluation relationships.</E> Individuals appointed, assigned, detailed, designated or employed in a capacity related to the conduct of military commission proceedings conducted in accordance with 32 CFR part 9 and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” shall be subject to the relationships set forth in paragraphs (a)(1) through (a)(9) of this section. Unless stated otherwise, the person to whom an individual “reports,” as set forth in paragraphs (a)(1) through (a)(9) of this section, shall be deemed to be such individual's supervisor and shall, to the extent possible, fulfill all performance evaluation responsibilities normally associated with the function of direct supervisor in accordance with the subordinate's Military Service performance evaluation regulations.</P>
              <P>(1) Appointing Authority: Any Appointing Authority designated by the Secretary of Defense pursuant to 32 CFR part 9 shall report to the Secretary of Defense in accordance with 10 U.S.C. 113(d).</P>
              <P>(2) Legal Advisor to Appointing Authority: The Legal Advisor to the Appointing Authority shall report to the Appointing Authority.</P>
              <P>(3) Chief Prosecutor: The Chief Prosecutor shall report to the Deputy General Counsel (Legal Counsel) of the Department of Defense and then to the General Counsel of the Department of Defense.</P>
              <P>(4) Prosecutors and Assistant Prosecutors: Prosecutors and Assistant Prosecutors shall report to the Chief Prosecutor and then to the Deputy General Counsel (Legal Counsel) of the Department of Defense.</P>
              <P>(5) Chief Defense Counsel: The Chief Defense Counsel shall report to the Deputy General Counsel (Personnel and Health Policy) of the Department of Defense and then to the General Counsel of the Department of Defense.</P>
              <P>(6) Detailed Defense Counsel: Detailed Defense Counsel shall report to the Chief Defense Counsel and then to the Deputy General Counsel (Personnel and Health Policy) of the Department of Defense.</P>
              <P>(7) Review Panel members: Members of the Review Panel shall report to the Secretary of Defense.</P>

              <P>(8) Commission members: Commission members shall continue to report to their parent commands. The consideration or evaluation of the performance of duty as a member of a military commission is prohibited in preparing effectiveness, fitness, or evaluation reports of a commission member.<PRTPAGE P="53"/>
              </P>
              <P>(9) Other personnel: All other military commission personnel, such as court reporters, interpreters, security personnel, bailiffs, and clerks detailed or employed by the Appointing Authority pursuant to 32 CFR 9.4(d), if not assigned to the Office of the Chief Prosecutor or the Office of the Chief Defense Counsel, shall report to the Appointing Authority or his designee.</P>
              <P>(b) <E T="03">Responsibilities of supervisory/reporting officials.</E> Officials designated in this part as supervisory/reporting officials shall:</P>
              <P>(1) Supervise subordinates in the performance of their duties.</P>
              <P>(2) Prepare fitness or performance evaluation reports and, as appropriate, process awards and citations for subordinates. To the extent practicable, a reporting official shall comply with the rated subordinate's Military Service regulations regarding the preparation of fitness or performance evaluation reports and in executing related duties.</P>
            </SECTION>
          </PART>
          <PART>
            <EAR>Pt. 16</EAR>
            <HD SOURCE="HED">PART 16—SENTENCING</HD>
            <CONTENTS>
              <SECHD>Sec.</SECHD>
              <SECTNO>16.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <SECTNO>16.2</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
              <SECTNO>16.3</SECTNO>
              <SUBJECT>Available sentences.</SUBJECT>
              <SECTNO>16.4</SECTNO>
              <SUBJECT>Sentencing procedures.</SUBJECT>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>10 U.S.C. 113(d) and 140(b).</P>
            </AUTH>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>68 FR 39396, July 1, 2003, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>§ 16.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <P>This part promulgates policy, assigns responsibilities, and prescribes procedures for matters related to sentencing of persons with regard to whom a finding of guilty is entered for an offense referred for trial by a military commission appointed pursuant to 32 CFR part 9 and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism” (3 CFR 2001 Comp., p. 918, 66 FR 57833).</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 16.2</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
              <P>This part is issued pursuant to 32 CFR 9.7(a) and in accordance with Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” and 10 U.S.C. 113(d) and 140(b). The provisions of 32 CFR part 10 are applicable to this part.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 16.3</SECTNO>
              <SUBJECT>Available sentences.</SUBJECT>
              <P>(a) <E T="03">General.</E> 32 CFR part 9 permits a military commission wide latitude in sentencing. Any lawful punishment or condition of punishment is authorized, including death, so long as the prerequisites detailed in 32 CFR part 9 are met. Detention associated with an individual's status as an enemy combatant shall not be considered to fulfill any term of imprisonment imposed by a military commission. The sentence determination should be made while bearing in mind that there are several principal reasons for a sentence given to those who violate the law. Such reasons include: punishment of the wrongdoer; protection of society from the wrongdoer; deterrence of the wrongdoer and those who know of his crimes and sentence from committing the same or similar offenses; and rehabilitation of the wrongdoer. In determining an appropriate sentence, the weight to be accorded any or all of these reasons rests solely within the discretion of commission members. All sentences should, however, be grounded in a recognition that military commissions are a function of the President's war-fighting role as Commander-in-Chief of the Armed Forces of the United States and of the broad deterrent impact associated with a sentence's effect on adherence to the laws and customs of war in general.</P>
              <P>(b) <E T="03">Conditions of imprisonment.</E> Decisions regarding the location designated for any imprisonment, the conditions under which a sentence to imprisonment is served, or the privileges accorded one during any period of imprisonment should generally not be made by the commission. Those decisions and actions, however, may be appropriate subjects for recommendation to the person making a final decision on the sentence in accordance with of 32 CFR 9.6(h).</P>
              <P>(c) <E T="03">Prospective recommendations for sentence modification.</E> A sentence imposed by military commission may be accompanied by a recommendation to suspend, remit, commute or otherwise modify the adjudged sentence in concert with one or more conditions upon <PRTPAGE P="54"/>which the suspension, remission, commutation, or other modification is contingent (usually relating to the performance, behavior or conduct of the Accused). Unless otherwise directed, a decision or action in accordance with such a recommendation will be effected by direction or delegation to the Appointing Authority by the official making a final decision on the sentence in accordance with of 32 CFR 9.6(h).</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 16.4</SECTNO>
              <SUBJECT>Sentencing procedures.</SUBJECT>
              <P>(a) <E T="03">General.</E> 32 CFR part 9 permits the military commission substantial discretion regarding the conduct of sentencing proceedings. Sentencing proceedings should normally proceed expeditiously. In the discretion of the Presiding Officer, as limited by the Appointing Authority, reasonable delay between the announcement of findings and the commencement of sentencing proceedings may be authorized to facilitate the conduct of proceedings in accordance with of 32 CFR 9.6(b).</P>
              <P>(b) <E T="03">Information relevant to sentencing.</E> 32 CFR 9.6(e)(10) permits the Prosecution and Defense to present information to aid the military commission in determining an appropriate sentence. Such information may include a recommendation of an appropriate sentence, information regarding sentence ranges for analogous offenses (<E T="03">e.g.</E>, the sentencing range under the Federal Sentencing Guidelines that could be applicable to the Accused for the most analogous federal offenses), and other relevant information. Regardless of any presentation by the Prosecution or Defense, the military commission shall consider any evidence admitted for consideration prior to findings regarding guilt. The Presiding Officer may limit or require the presentation of certain information consistent with 32 CFR part 9 and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism'.</P>
              <P>(c) <E T="03">Cases involving plea agreements.</E> In accordance with 32 CFR 9.6(a)(4), after determining the voluntary and informed nature of a plea agreement approved by the Appointing Authority, the military commission is bound to adjudge findings and a sentence pursuant to that plea agreement. Accordingly, the Presiding Officer may exercise the authority granted in of 32 CFR 9.6(e) to curtail or preclude the presentation of information and argument relative to the military commission's determination of an appropriate sentence.</P>
              <P>(d) <E T="03">Special duties.</E> In cases involving plea agreements or recommendations for certain conditions of imprisonment or prospective sentence modification, the Prosecution and Defense shall provide whatever post-trial information or recommendation as is relevant to any subsequent decision regarding such condition or suspension, remission, commutation, or other modification recommendation associated with the sentence.</P>
            </SECTION>
          </PART>
          <PART>
            <EAR>Pt. 17</EAR>
            <HD SOURCE="HED">PART 17—ADMINISTRATIVE PROCEDURES</HD>
            <CONTENTS>
              <SECHD>Sec.</SECHD>
              <SECTNO>17.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <SECTNO>17.2</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
              <SECTNO>17.3</SECTNO>
              <SUBJECT>Commission personnel.</SUBJECT>
              <SECTNO>17.4</SECTNO>
              <SUBJECT>Interlocutory questions.</SUBJECT>
              <SECTNO>17.5</SECTNO>
              <SUBJECT>Implied duties of the presiding officer.</SUBJECT>
              <SECTNO>17.6</SECTNO>
              <SUBJECT>Disclosures.</SUBJECT>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>10 U.S.C. 113(d) and 140(b).</P>
            </AUTH>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>68 FR 39397, July 1, 2003, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>§ 17.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <P>This part promulgates policy, assigns responsibilities, and prescribes procedures for the conduct of trials by a military commission appointed pursuant to 32 CFR part 9 and Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” (3 CFR 2001 Comp., p. 918, 66 FR 57833).</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 17.2</SECTNO>
              <SUBJECT>Authority.</SUBJECT>
              <P>This part is issued pursuant to 32 CFR 9.7(a) and in accordance with Military Order of November 13, 2001, “Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism,” and 10 U.S.C. 113(d) and 140(b). The provisions of 32 CFR part 10 are applicable to this part.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 17.3</SECTNO>
              <SUBJECT>Commission personnel.</SUBJECT>
              <P>(a) <E T="03">Appointment and removal of Commission members.</E> (1) In accordance with <PRTPAGE P="55"/>32 CFR part 9, the Appointing Authority shall appoint at least three but no more than seven members and one or two alternate members. The Appointing Authority may remove members and alternate members for good cause. In the event a member (or alternate member) is removed for good cause, the Appointing Authority may replace the member, direct that an alternate member serve in the place of the original member, direct that proceedings simply continue without the member, or convene a new commission. In the absence of guidance from the Appointing Authority regarding replacement, the Presiding Officer shall select an alternate member to replace the member in question.</P>
              <P>(2) The Presiding Officer shall determine if it is necessary to conduct or permit questioning of members (including the Presiding Officer) on issues of whether there is good cause for their removal. The Presiding Officer may permit questioning in any manner he deems appropriate. Consistent with 32 CFR part 9, any such questioning shall be narrowly focused on issues pertaining to whether good cause may exist for the removal of any member.</P>
              <P>(3) From time to time, it may be appropriate for a Presiding Officer to forward to the Appointing Authority information and, if appropriate, a recommendation relevant to the question of whether a member (including the Presiding Officer) should be removed for good cause. While awaiting the Appointing Authority's decision on such matter, the Presiding Officer may elect either to hold proceedings in abeyance or to continue. The Presiding Officer may issue any appropriate instructions to the member whose continued service is in question. A military commission shall not engage in deliberations on findings or sentence prior to the Appointing Authority's decision in any case in which the Presiding Officer has recommended a member's removal.</P>
              <P>(b) <E T="03">Military commission security officer.</E> The Appointing Authority may detail a Security Officer to advise a military commission on matters related to classified and protected information. In addition to any other duties assigned by the Appointing Authority, the Security Officer shall ensure that all classified or protected evidence and information is appropriately safeguarded at all times and that only personnel with the appropriate clearances and authorizations are present when classified or protected materials are presented before military commissions.</P>
              <P>(c) <E T="03">Other military commission personnel.</E> The Appointing Authority may detail court reporters, interpreters, security personnel, bailiffs, clerks, and any other personnel to a military commission as deemed necessary. In the absence of a detailing by the Appointing Authority, the Chief Prosecutor shall be responsible to ensure the availability of necessary or appropriate personnel to facilitate the impartial and expeditious conduct of full and fair trials by military commission.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 17.4</SECTNO>
              <SUBJECT>Interlocutory questions.</SUBJECT>
              <P>(a) <E T="03">Certification of interlocutory questions.</E> The Presiding Officer shall generally adjudicate all motions and questions that arise during the course of a trial by military commission. In accordance with 32 CFR 9.4(a)(5)(iv), however, the Presiding Officer shall certify all interlocutory questions, the disposition of which would effect a termination of proceedings with respect to a charge, for decision by the Appointing Authority. In addition, the Presiding Officer may certify other interlocutory questions to the Appointing Authority as the Presiding Officer deems appropriate.</P>
              <P>(b) <E T="03">Submission of interlocutory questions.</E> The Presiding Officer shall determine what, if any, documentary or other materials should be forwarded to the Appointing Authority in conjunction with an interlocutory question.</P>
              <P>(c) <E T="03">Effect of interlocutory question certification on proceedings.</E> While decision by the Appointing Authority is pending on any certified interlocutory question, the Presiding Officer may elect either to hold proceedings in abeyance or to continue.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 17.5</SECTNO>
              <SUBJECT>Implied duties of the presiding officer.</SUBJECT>

              <P>The Presiding Officer shall ensure the execution of all ancillary functions necessary for the impartial and expeditious conduct of a full and fair trial by military commission in accordance <PRTPAGE P="56"/>with 32 CFR part 9. Such functions include, for example, scheduling the time and place of convening of a military commission, ensuring that an oath or affirmation is administered to witnesses and military commission personnel as appropriate, conducting appropriate <E T="03">in camera</E> meetings to facilitate efficient trial proceedings, and providing necessary instructions to other commission members. The Presiding Officer shall rule on appropriate motions or, at his discretion consistent with 32 CFR part 9, may submit them to the commission for decision or to the Appointing Authority as a certified interlocutory question.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 17.6</SECTNO>
              <SUBJECT>Disclosures.</SUBJECT>
              <P>(a) <E T="03">General.</E> Unless directed otherwise by the Presiding Officer upon a showing of good cause or for some other reason, counsel for the Prosecution and the Defense shall provide to opposing counsel, at least one week prior to the scheduled convening of a military commission, copies of all information intended for presentation as evidence at trial, copies of all motions the party intends to raise before the military commission, and names and contact information of all witnesses a party intends to call. Motions shall also be provided to the Presiding Officer at the time they are provided to opposing counsel. Unless directed otherwise by the Presiding Officer, written responses to any motions will be provided to opposing counsel and the Presiding Officer no later than three days prior to the scheduled convening of a military commission.</P>
              <P>(b) <E T="03">Notifications by the prosecution.</E> The Prosecution shall provide the Defense with access to evidence known to the Prosecution that tends to exculpate the Accused as soon as practicable, and in no instance later than one week prior to the scheduled convening of a military commission.</P>
              <P>(c) <E T="03">Notifications by the defense.</E> The Defense shall give notice to the Prosecution of any intent to raise an affirmative defense to any charge at least one week prior to the scheduled convening of a military commission.</P>
              <P>(d) <E T="03">Evidence related to mental responsibility.</E> If the Defense indicates an intent to raise a defense of lack of mental responsibility or introduce expert testimony regarding an Accused's mental condition, the prosecution may require that the Accused submit to a mental examination by a military psychologist or psychiatrist, and both parties shall have access to the results of that examination.</P>
            </SECTION>
          </PART>
          <PART>
            <RESERVED>PARTS 18-20[RESERVED]</RESERVED>
          </PART>
        </SUBCHAP>
        <SUBCHAP TYPE="P">
          <PRTPAGE P="57"/>
          <HD SOURCE="HED">SUBCHAPTER C—DoD GRANT AND AGREEMENT REGULATIONS</HD>
          <PART>
            <EAR>Pt. 21</EAR>
            <HD SOURCE="HED">PART 21—DoD GRANTS AND AGREEMENTS—GENERAL MATTERS</HD>
            <CONTENTS>
              <SUBPART>
                <HD SOURCE="HED">Subpart A—Defense Grant and Agreement Regulatory System</HD>
                <SECHD>Sec.</SECHD>
                <SECTNO>21.100</SECTNO>
                <SUBJECT>Scope.</SUBJECT>
                <SECTNO>21.105</SECTNO>
                <SUBJECT>Authority, purpose, and issuance.</SUBJECT>
                <SECTNO>21.110</SECTNO>
                <SUBJECT>Applicability and relationship to acquisition regulations.</SUBJECT>
                <SECTNO>21.115</SECTNO>
                <SUBJECT>Compliance and implementation.</SUBJECT>
                <SECTNO>21.120</SECTNO>
                <SUBJECT>Publication and maintenance.</SUBJECT>
                <SECTNO>21.125</SECTNO>
                <SUBJECT>Deviations.</SUBJECT>
                <SECTNO>21.130</SECTNO>
                <SUBJECT>Definitions.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart B—Authorities and Responsibilities</HD>
                <SECTNO>21.200</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <SECTNO>21.205</SECTNO>
                <SUBJECT>DoD Components’ authorities.</SUBJECT>
                <SECTNO>21.210</SECTNO>
                <SUBJECT>Vesting and delegation of authority.</SUBJECT>
                <SECTNO>21.215</SECTNO>
                <SUBJECT>Contracting activities.</SUBJECT>
                <SECTNO>21.220</SECTNO>
                <SUBJECT>Grants officers.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart C—Information Reporting on Grants, Cooperative Agreements, and Other Nonprocurement Instruments</HD>
                <SECTNO>21.300</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <SECTNO>21.305</SECTNO>
                <SUBJECT>Defense Assistance Awards Data System.</SUBJECT>
                <SECTNO>21.310</SECTNO>
                <SUBJECT>Catalog of Federal Domestic Assistance.</SUBJECT>
                <SECTNO>21.315</SECTNO>
                <SUBJECT>Uniform grants and agreements numbering system.</SUBJECT>
              </SUBPART>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>5 U.S.C. 301 and 10 U.S.C. 113.</P>
            </AUTH>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>63 FR 12160, Mar. 12, 1998, unless otherwise noted.</P>
            </SOURCE>
            <SUBPART>
              <HD SOURCE="HED">Subpart A—Defense Grant and Agreement Regulatory System</HD>
              <SECTION>
                <SECTNO>§ 21.100</SECTNO>
                <SUBJECT>Scope.</SUBJECT>
                <P>The purposes of this part, which is one portion of the DoD Grant and Agreement Regulations (DoDGARs), are to:</P>
                <P>(a) Provide general information about the DoDGARs.</P>
                <P>(b) Set forth general policies and procedures related to DoD Components’ overall management of functions related to grants and cooperative agreements.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 21.105</SECTNO>
                <SUBJECT>Authority, purpose, and issuance.</SUBJECT>
                <P>(a) DoD Directive 3210.6<SU>1</SU>
                  <FTREF/> 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.</P>
                <FTNT>
                  <P>
                    <SU>1</SU> 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.</P>
                </FTNT>
                <P>(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:</P>
                <P>(1) Efficient program execution, effective program oversight, and proper stewardship of Federal funds.</P>
                <P>(2) Compliance with relevant statutes; Executive orders; and applicable guidance, such as Office of Management and Budget (OMB) circulars.</P>
                <P>(3) Collection from DoD Components, retention, and dissemination of management and fiscal data related to grants and agreements.</P>
                <P>(c) The Director of Defense Research and Engineering, or his or her designee:</P>
                <P>(1) Develops and implements DGARS policies and procedures.</P>
                <P>(2) Issues and maintains the DoD Grant and Agreement Regulations and other DoD publications that comprise the DGARS.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 21.110</SECTNO>
                <SUBJECT>Applicability and relationship to acquisition regulations.</SUBJECT>
                <P>(a) <E T="03">Applicability to grants and cooperative agreements.</E> The DoD Grant and Agreement Regulations (DoDGARs) apply to all DoD grants and cooperative agreements.<PRTPAGE P="58"/>
                </P>
                <P>(b) <E T="03">Applicability to other nonprocurement instruments.</E> (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)).</P>
                <P>(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:</P>
                <P>(i) Requirements for reporting to the Defense Assistance Award Data System, in subpart C of this part.</P>
                <P>(ii) The rule on nonprocurement debarment and suspension in 32 CFR part 25, subparts A through E.</P>
                <P>(iii) Drug-free workplace requirements in 32 CFR part 25, subpart F.</P>
                <P>(iv) Restrictions on lobbying in 32 CFR part 28.</P>
                <P>(v) Administrative requirements for grants, cooperative agreements, and other financial assistance to:</P>
                <P>(A) Universities and other nonprofit organizations, in 32 CFR part 32.</P>
                <P>(B) State and local governments, in 32 CFR part 33.</P>
                <P>(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.</P>
                <P>(c) <E T="03">Relationship to acquisition regulations.</E> 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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 21.115</SECTNO>
                <SUBJECT>Compliance and implementation.</SUBJECT>
                <P>The Head of each DoD Component that awards or administers grants and cooperative agreements, or his or her designee:</P>
                <P>(a) Is responsible for ensuring compliance with the DoDGARs within that DoD Component.</P>
                <P>(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:</P>

                <P>(1) Requesting class deviations from the DoDGARs (see § 21.125) or exemptions from the provisions of 31 U.S.C. 6301 <E T="03">et seq.</E>, that govern the appropriate use of contracts, grants, and cooperative agreements (see 32 CFR 22.220).</P>
                <P>(2) Designating one or more Grant Appeal Authorities to resolve claims, disputes, and appeals (see 32 CFR 22.815).</P>

                <P>(3) Reporting data on assistance awards and programs, as required by 31 U.S.C. chapter 61 (see subpart C of this part).<PRTPAGE P="59"/>
                </P>
                <P>(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).</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 21.120</SECTNO>
                <SUBJECT>Publication and maintenance.</SUBJECT>
                <P>(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 § 21.115 in part 21 would be to 32 CFR 21.115).</P>
                <P>(b) Updates to the DoDGARs are published in the <E T="04">Federal Register</E>. When finalized, updates also are published as Defense Grant and Agreement Circulars, with revised pages for the separate, loose-leaf edition.</P>
                <P>(c) Revisions to the DoDGARs are recommended to the Director of Defense Research and Engineering (DDR&amp;E) by a standing working group. The DDR&amp;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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 21.125</SECTNO>
                <SUBJECT>Deviations.</SUBJECT>
                <P>(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.</P>
                <P>(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&amp;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.</P>
                <P>(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.</P>
                <P>(d) Copies of requests and approvals for individual and class deviations shall be maintained in award files.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 21.130</SECTNO>
                <SUBJECT>Definitions.</SUBJECT>
                <P>
                  <E T="03">Acquisition.</E> 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.</P>
                <P>
                  <E T="03">Assistance.</E> 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.</P>
                <P>
                  <E T="03">Contract.</E> See the definition for procurement contract in this section.</P>
                <P>
                  <E T="03">Contracting activity.</E> An activity to which the Head of a DoD Component has delegated broad authority regarding acquisition functions, pursuant to 48 CFR 1.601.</P>
                <P>
                  <E T="03">Contracting officer.</E> 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.</P>
                <P>
                  <E T="03">Cooperative agreement.</E> 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.</P>
                <P>
                  <E T="03">Deviation.</E> The issuance or use of a policy or procedure that is inconsistent with the DoDGARs.<PRTPAGE P="60"/>
                </P>
                <P>
                  <E T="03">DoD Components.</E> The Office of the Secretary of Defense, the Military Departments, the Defense Agencies, and DoD Field Activities.</P>
                <P>
                  <E T="03">Grant.</E> A legal instrument which, consistent with 31 U.S.C. 6304, is used to enter into a relationship:</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>
                  <E T="03">Grants officer.</E> An official with the authority to enter into, administer, and/or terminate grants or cooperative agreements.</P>
                <P>
                  <E T="03">Nonprocurement instrument.</E> 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.</P>
                <P>
                  <E T="03">Procurement contract.</E> 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.</P>
                <P>
                  <E T="03">Recipient.</E> An organization or other entity receiving a grant or cooperative agreement from a DoD Component.</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart B—Authorities and Responsibilities</HD>
              <SECTION>
                <SECTNO>§ 21.200</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <P>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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 21.205</SECTNO>
                <SUBJECT>DoD Components’ authorities.</SUBJECT>
                <P>(a) In accordance with 31 U.S.C. 6301 <E T="03">et seq.</E>, DoD Components shall use grants and cooperative agreements as legal instruments reflecting assistance relationships between the United States Government and recipients.</P>
                <P>(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:</P>
                <P>(1) <E T="03">Authorities that statutes provide to the Secretary of Defense.</E> 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:</P>
                <P>(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.</P>
                <P>(ii) Authority under 10 U.S.C. 2413 to enter into cooperative agreements with entities that furnish procurement technical assistance to businesses.</P>
                <P>(2) <E T="03">Authorities that statutes may provide directly to Heads of DoD Components.</E> 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 <PRTPAGE P="61"/>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.</P>
                <P>(3) <E T="03">Authorities that arise indirectly as the result of statute.</E> For example, authority to use a grant or cooperative agreement may result from:</P>
                <P>(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.</P>
                <P>(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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 21.210</SECTNO>
                <SUBJECT>Vesting and delegation of authority.</SUBJECT>
                <P>(a) The authority and responsibility for awarding grants and cooperative agreements is vested in the Head of each DoD Component that has such authority.</P>
                <P>(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 § 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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 21.215</SECTNO>
                <SUBJECT>Contracting activities.</SUBJECT>
                <P>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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 21.220</SECTNO>
                <SUBJECT>Grants officers.</SUBJECT>
                <P>(a) <E T="03">Authority.</E> 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.</P>
                <P>(b) <E T="03">Responsibilities.</E> Grants officers should be allowed wide latitude to exercise judgment in performing their responsibilities. Grants officers are responsible for ensuring that:</P>
                <P>(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.</P>
                <P>(2) Sufficient funds are available for obligation.</P>
                <P>(3) Recipients of grants and cooperative agreements receive impartial, fair, and equitable treatment.</P>
                <P>(c) <E T="03">Selection, appointment and termination of appointment of grants officers.</E> Each DoD Component that awards grants or enters into cooperative agreements shall have a formal process (see § 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.</P>
                <P>(1) <E T="03">Selection.</E> In selecting grants officers, appointing officials shall consider the complexity and dollar value of the grants and cooperative agreements to <PRTPAGE P="62"/>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.</P>
                <P>(2) <E T="03">Appointment.</E> 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.</P>
                <P>(3) <E T="03">Termination.</E> Written statements of termination are required, unless the written statement of appointment provides for automatic termination. No termination shall be retroactive.</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart C—Information Reporting on Grants, Cooperative Agreements, and Other Nonprocurement Instruments</HD>
              <SECTION>
                <SECTNO>§ 21.300</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <P>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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 21.305</SECTNO>
                <SUBJECT>Defense Assistance Awards Data System.</SUBJECT>
                <P>(a) <E T="03">Purposes of the system.</E> Data from the Defense Assistance Awards Data System (DAADS) are used to provide:</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(b) <E T="03">Responsibilities.</E> (1) The Deputy Director, Defense Research and Engineering (DDDR&amp;E), or his or her designee, shall issue the manual described in paragraph (b)(2)(ii) of this section.</P>
                <P>(2) The Director for Information Operations and Reports, Washington Headquarters Services (DIOR, WHS) shall, consistent with guidance issued by the DDDR&amp;E:</P>
                <P>(i) Process DAADS information on a quarterly basis and prepare recurring and special reports using such information.</P>
                <P>(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&amp;E, shall specify procedures, formats, and editing processes to be used by DoD Components, including magnetic tape layout and error correction schedules.</P>
                <P>(3) The following offices shall serve as central points for collecting DAADS information from contracting activities within the DoD Components:</P>
                <P>(i) For the Army: As directed by the U.S. Army Contracting Support Agency.</P>
                <P>(ii) For the Navy: As directed by the Office of Naval Research.</P>
                <P>(iii) For the Air Force: As directed by SAF/AQCP.</P>
                <P>(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.</P>
                <P>(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:</P>

                <P>(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.<PRTPAGE P="63"/>
                </P>
                <P>(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.</P>
                <P>(iii) Submit to the DDDR&amp;E, at the address given in § 21.125(c), any recommended changes to the DAADS or to the instruction manual described in paragraph (b)(2)(ii) of this section.</P>
                <P>(c) <E T="03">Reporting procedures.</E> The data required by the DD Form 2566 shall be:</P>
                <P>(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 § 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).</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(d) <E T="03">Report control symbol.</E> 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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 21.310</SECTNO>
                <SUBJECT>Catalog of Federal Domestic Assistance.</SUBJECT>
                <P>(a) <E T="03">Purpose and scope of the reporting requirement.</E> (1) Under the Federal Program Information Act (31 U.S.C. 6101 <E T="03">et seq.</E>), as implemented through OMB Circular A-89,<SU>2</SU>
                  <FTREF/> 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.</P>
                <FTNT>
                  <P>
                    <SU>2</SU> Contact the Office of Management and Budget, EOP Publications, 725 17th St. N.W., New Executive Office Building, Washington, D.C. 20503.</P>
                </FTNT>
                <P>(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.</P>
                <P>(b) <E T="03">Responsibilities.</E> (1) Each DoD Component that provides domestic financial assistance shall:</P>
                <P>(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.</P>
                <P>(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.</P>

                <P>(2) The DIOR, WHS shall act as the Department of Defense's single office for collecting, compiling and reporting <PRTPAGE P="64"/>such program information to OMB and GSA.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 21.315</SECTNO>
                <SUBJECT>Uniform grants and agreements numbering system.</SUBJECT>
                <P>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:</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(c) The 9th position shall be a number: “1” for grants; “2” for cooperative agreements; and “3” for other nonprocurement instruments.</P>
                <P>(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.</P>
              </SECTION>
            </SUBPART>
          </PART>
          <PART>
            <EAR>Pt. 22</EAR>
            <HD SOURCE="HED">PART 22—DoD GRANTS AND AGREEMENTS—AWARD AND ADMINISTRATION</HD>
            <CONTENTS>
              <SUBPART>
                <HD SOURCE="HED">Subpart A—General</HD>
                <SECHD>Sec.</SECHD>
                <SECTNO>22.100</SECTNO>
                <SUBJECT>Purpose, relation to other parts, and organization.</SUBJECT>
                <SECTNO>22.105</SECTNO>
                <SUBJECT>Definitions.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart B—Selecting the Appropriate Instrument</HD>
                <SECTNO>22.200</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <SECTNO>22.205</SECTNO>
                <SUBJECT>Distinguishing assistance from procurement.</SUBJECT>
                <SECTNO>22.210</SECTNO>
                <SUBJECT>Authority for providing assistance.</SUBJECT>
                <SECTNO>22.215</SECTNO>
                <SUBJECT>Distinguishing grants and cooperative agreements.</SUBJECT>
                <SECTNO>22.220</SECTNO>
                <SUBJECT>Exemptions.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart C—Competition</HD>
                <SECTNO>22.300</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <SECTNO>22.305</SECTNO>
                <SUBJECT>General policy and requirement for competition.</SUBJECT>
                <SECTNO>22.310</SECTNO>
                <SUBJECT>Statutes concerning certain research, development, and facilities construction grants.</SUBJECT>
                <SECTNO>22.315</SECTNO>
                <SUBJECT>Merit-based, competitive procedures.</SUBJECT>
                <SECTNO>22.320</SECTNO>
                <SUBJECT>Special competitions.</SUBJECT>
                <SECTNO>22.325</SECTNO>
                <SUBJECT>Historically Black colleges and universities (HBCUs) and other minority institutions (MIs).</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart D—Recipient Qualification Matters—General Policies and Procedures</HD>
                <SECTNO>22.400</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <SECTNO>22.405</SECTNO>
                <SUBJECT>Policy.</SUBJECT>
                <SECTNO>22.410</SECTNO>
                <SUBJECT>Grants officers’ responsibilities.</SUBJECT>
                <SECTNO>22.415</SECTNO>
                <SUBJECT>Standards.</SUBJECT>
                <SECTNO>22.420</SECTNO>
                <SUBJECT>Pre-award procedures.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart E—National Policy Matters</HD>
                <SECTNO>22.505</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <SECTNO>22.510</SECTNO>
                <SUBJECT>Certifications, representations, and assurances.</SUBJECT>
                <SECTNO>22.515</SECTNO>
                <SUBJECT>Provisions of annual appropriations acts.</SUBJECT>
                <SECTNO>22.520</SECTNO>
                <SUBJECT>Military recruiting on campus.</SUBJECT>
                <SECTNO>22.525</SECTNO>
                <SUBJECT>Paperwork Reduction Act.</SUBJECT>
                <SECTNO>22.530</SECTNO>
                <SUBJECT>Metric system of measurement.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart F—Award</HD>
                <SECTNO>22.600</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <SECTNO>22.605</SECTNO>
                <SUBJECT>Grants officers’ responsibilities.</SUBJECT>
                <SECTNO>22.610</SECTNO>
                <SUBJECT>Award instruments.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart G—Field Administration</HD>
                <SECTNO>22.700</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <SECTNO>22.705</SECTNO>
                <SUBJECT>Policy.</SUBJECT>
                <SECTNO>22.710</SECTNO>
                <SUBJECT>Assignment of grants administration offices.</SUBJECT>
                <SECTNO>22.715</SECTNO>
                <SUBJECT>Grants administration office functions.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart H—Post-Award Administration</HD>
                <SECTNO>22.800</SECTNO>
                <SUBJECT>Purpose and relation to other parts.</SUBJECT>
                <SECTNO>22.805</SECTNO>
                <SUBJECT>Post-award requirements in other parts.</SUBJECT>
                <SECTNO>22.810</SECTNO>
                <SUBJECT>Payments.</SUBJECT>
                <SECTNO>22.815</SECTNO>
                <SUBJECT>Claims, disputes, and appeals.</SUBJECT>
                <SECTNO>22.820</SECTNO>
                <SUBJECT>Debt collection.</SUBJECT>
                <SECTNO>22.825</SECTNO>
                <SUBJECT>Closeout audits.</SUBJECT>
                <APP>Appendix A to Part 22—Proposal Provision for Required Certifications.</APP>
                <APP>Appendix B to Part 22—Suggested Award Provisions for National Policy Requirements That Often Apply.</APP>
                <APP>Appendix C to Part 22—Administrative Requirements and Issues To Be Addressed in Award Terms and Conditions.</APP>
              </SUBPART>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>5 U.S.C. 301 and 10 U.S.C. 113.</P>
            </AUTH>
            <SOURCE>
              <PRTPAGE P="65"/>
              <HD SOURCE="HED">Source:</HD>
              <P>63 FR 12164, Mar. 12, 1998, unless otherwise noted.</P>
            </SOURCE>
            <SUBPART>
              <HD SOURCE="HED">Subpart A—General</HD>
              <SECTION>
                <SECTNO>§ 22.100</SECTNO>
                <SUBJECT>Purpose, relation to other parts, and organization.</SUBJECT>
                <P>(a) This part outlines grants officers’ and DoD Components’ responsibilities related to the award and administration of grants and cooperative agreements.</P>
                <P>(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:</P>
                <P>(1) Governmentwide rules on debarment, suspension and drug-free workplace requirements, in 32 CFR part 25.</P>
                <P>(2) The Governmentwide rule on lobbying restrictions, in 32 CFR part 28.</P>
                <P>(3) Administrative requirements for grants and agreements awarded to specific types of recipients:</P>
                <P>(i) For State and local governmental organizations, in the Governmentwide rule at 32 CFR part 33.</P>
                <P>(ii) For institutions of higher education and other nonprofit organizations, at 32 CFR part 32.</P>
                <P>(iii) For for-profit organizations, at 32 CFR part 34.</P>
                <P>(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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.105</SECTNO>
                <SUBJECT>Definitions.</SUBJECT>
                <P>Other than the terms defined in this section, terms used in this part are defined in 32 CFR 21.130.</P>
                <P>
                  <E T="03">Administrative offset.</E> 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.</P>
                <P>
                  <E T="03">Advanced research.</E> 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&amp;E).</P>
                <P>
                  <E T="03">Applied research.</E> 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&amp;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.”</P>
                <P>
                  <E T="03">Basic research.</E> 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&amp;E). For the purposes of this part, basic research includes:</P>
                <P>(1) Research-related, science and engineering education, including graduate fellowships and research traineeships.</P>

                <P>(2) Research instrumentation and other activities designed to enhance <PRTPAGE P="66"/>the infrastructure for science and engineering research.</P>
                <P>
                  <E T="03">Claim.</E> 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.</P>
                <P>
                  <E T="03">Debt.</E> 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.</P>
                <P>
                  <E T="03">Delinquent debt.</E> A debt:</P>
                <P>(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</P>
                <P>(2) With respect to which the debtor has elected not to exercise any available appeals or has exhausted all agency appeal processes.</P>
                <P>
                  <E T="03">Development.</E> 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.</P>
                <P>
                  <E T="03">Electronic commerce.</E> 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.</P>
                <P>
                  <E T="03">Electronic data interchange.</E> 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.<SU>1</SU>
                  <FTREF/>
                </P>
                <FTNT>
                  <P>
                    <SU>1</SU> 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.</P>
                </FTNT>
                <P>
                  <E T="03">Electronic funds transfer.</E> 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.</P>
                <P>
                  <E T="03">Historically Black colleges and universities.</E> 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.</P>
                <P>
                  <E T="03">Institution of higher education.</E> 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 § 22.520, as given at § 22.520(b)(2).</P>
                <P>
                  <E T="03">Minority institutions.</E> Institutions of higher education that meet the criteria for <E T="03">minority institutions</E> specified in 10 <PRTPAGE P="67"/>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 <E T="03">minority institutions</E> under 10 U.S.C. 2323 from that DoD Component's Small and Disadvantaged Business Utilization office (the list of <E T="03">minority institutions</E> changes periodically, based on Department of Education data on institutions’ enrollments of minority students).</P>
                <P>
                  <E T="03">Research.</E> Basic, applied, and advanced research, as defined in this section.</P>
                <P>
                  <E T="03">Subaward.</E> 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.</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart B—Selecting the Appropriate Instrument</HD>
              <SECTION>
                <SECTNO>§ 22.200</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <P>This subpart provides the bases for determining the appropriate type of instrument in a given situation.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.205</SECTNO>
                <SUBJECT>Distinguishing assistance from procurement.</SUBJECT>
                <P>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:</P>
                <P>(a) <E T="03">Purpose.</E> (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:</P>
                <P>(i) When a statute specifically provides otherwise; or</P>
                <P>(ii) When an exemption is granted, in accordance with § 22.220.</P>
                <P>(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.</P>
                <P>(b) <E T="03">Fee or profit.</E> 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:</P>
                <P>(1) Fee or profit is to be paid to the recipient of the instrument; or</P>
                <P>(2) The instrument is to be used to carry out a program where fee or profit is necessary to achieving program objectives.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.210</SECTNO>
                <SUBJECT>Authority for providing assistance.</SUBJECT>
                <P>(a) Before a grant or cooperative agreement may be used, the grants officer must:</P>
                <P>(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)).</P>
                <P>(2) Review the program statute to determine if it contains requirements that affect the:</P>

                <P>(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.<PRTPAGE P="68"/>
                </P>
                <P>(ii) Terms and conditions of the award. For example, some program statutes require a specific level of cost sharing or matching.</P>
                <P>(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:</P>
                <P>(1) Necessary to the responsibilities of the DoD Component.</P>
                <P>(2) Related to weapons systems and other military needs or of potential interest to the DoD Component.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.215</SECTNO>
                <SUBJECT>Distinguishing grants and cooperative agreements.</SUBJECT>
                <P>(a) Once a grants officer judges, in accordance with §§ 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:</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.220</SECTNO>
                <SUBJECT>Exemptions.</SUBJECT>
                <P>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:</P>
                <P>(a) In cases where 31 U.S.C. chapter 63 would require use of a contract and an exemption from that requirement is desired:</P>
                <P>(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).</P>
                <P>(2) The DDP, after coordination with the Director of Defense Research and Engineering (DDR&amp;E), shall transmit the request to OMB or notify the DoD Component that the request has been disapproved.</P>
                <P>(b) In other cases, the DoD Component shall submit a request for the exemption through appropriate channels to the DDR&amp;E. The DDR&amp;E shall transmit the request to OMB or notify the DoD Component that the request has been disapproved.</P>
                <P>(c) Where an exemption is granted, documentation of the approval shall be maintained in the award file.</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart C—Competition</HD>
              <SECTION>
                <SECTNO>§ 22.300</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <P>This subpart establishes DoD policy and implements statutes related to the use of competitive procedures in the award of grants and cooperative agreements.</P>
              </SECTION>
              <SECTION>
                <PRTPAGE P="69"/>
                <SECTNO>§ 22.305</SECTNO>
                <SUBJECT>General policy and requirement for competition.</SUBJECT>
                <P>(a) It is DoD policy to maximize use of competition in the award of grants and cooperative agreements. This also conforms with:</P>
                <P>(1) 31 U.S.C. 6301(3), which encourages the use of competition in awarding all grants and cooperative agreements.</P>
                <P>(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.</P>
                <P>(b) Grants officers shall use merit-based, competitive procedures (as defined by § 22.315) to award grants and cooperative agreements:</P>
                <P>(1) In every case where required by statute (e.g., 10 U.S.C. 2361, as implemented in § 22.310, for certain grants to institutions of higher education).</P>
                <P>(2) To the maximum extent practicable in all cases where not required by statute.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.310</SECTNO>
                <SUBJECT>Statutes concerning certain research, development, and facilities construction grants.</SUBJECT>
                <P>(a) <E T="03">Definitions specific to this section.</E> For the purposes of implementing the requirements of 10 U.S.C. 2374 in this section, the following terms are defined:</P>
                <P>(1) <E T="03">Follow-on grant.</E> 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.</P>
                <P>(2) <E T="03">New grant.</E> A grant that is not a follow-on grant.</P>
                <P>(b) <E T="03">Statutory requirement to use competitive procedures.</E> (1) A grants officer shall not award a grant by other than merit-based, competitive procedures (as defined by § 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:</P>
                <P>(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;</P>
                <P>(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</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(c) <E T="03">Subsequent statutes.</E> 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 § 22.315, unless:</P>
                <P>(1) <E T="03">Institutions of higher education—new grants for research and development.</E> In the case of a new grant for research and development to an institution of higher education, such provision of law specifically:</P>
                <P>(i) Identifies the particular institution of higher education involved;</P>
                <P>(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</P>
                <P>(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).</P>
                <P>(2) <E T="03">Institutions of higher education—follow-on grants for research and development and grants for the construction of any research or other facility.</E> In the case of any such grant to an institution of <PRTPAGE P="70"/>higher education, such provision of law specifically:</P>
                <P>(i) Identifies the particular institution of higher education involved; and</P>
                <P>(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).</P>
                <P>(3) <E T="03">Other entities—new grants for research and development—</E>(i) <E T="03">General.</E> 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:</P>
                <P>(A) Identifies the particular entity involved;</P>
                <P>(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).</P>
                <P>(ii) <E T="03">Exception.</E> 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:</P>
                <P>(A) Investigate, examine, or experiment upon any subject of science or art of significance to the Department of Defense or any Military Department; and</P>
                <P>(B) Report on such matters to the Congress or any agency of the Federal Government.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.315</SECTNO>
                <SUBJECT>Merit-based, competitive procedures.</SUBJECT>
                <P>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:</P>

                <P>(a) Notice to prospective proposers. The notice may be a notice of funding availability or Broad Agency Announcement published in the <E T="04">Federal Register</E> 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:</P>
                <P>(1) Programmatic area(s) of interest, in which proposals or applications are sought.</P>
                <P>(2) Eligibility criteria for potential recipients (see subpart D of this part).</P>
                <P>(3) Criteria that will be used to select the applications or proposals that will be funded, and the method for conducting the evaluation.</P>
                <P>(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.</P>
                <P>(5) Instructions for preparation and submission of a proposal or application, including the time by which it must be submitted.</P>
                <P>(b) At least two eligible, prospective proposers.</P>
                <P>(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:</P>
                <P>(1) Technical merits of the proposed research and development; and</P>
                <P>(2) Potential relationship of the proposed research and development to Department of Defense missions.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.320</SECTNO>
                <SUBJECT>Special competitions.</SUBJECT>
                <P>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.</P>
              </SECTION>
              <SECTION>
                <PRTPAGE P="71"/>
                <SECTNO>§ 22.325</SECTNO>
                <SUBJECT>Historically Black colleges and universities (HBCUs) and other minority institutions (MIs).</SUBJECT>
                <P>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.</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart D—Recipient Qualification Matters—General Policies and Procedures</HD>
              <SECTION>
                <SECTNO>§ 22.400</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <P>The purpose of this subpart is to specify policies and procedures for grants officers’ determination of recipient qualifications prior to award.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.405</SECTNO>
                <SUBJECT>Policy.</SUBJECT>
                <P>(a) <E T="03">General.</E> Grants officers normally shall award grants or cooperative agreements only to qualified recipients that meet the standards in § 22.415. This practice conforms with the Governmentwide policy, stated at 32 CFR 25.115(a), to do business only with responsible persons.</P>
                <P>(b) <E T="03">Exception.</E> In exceptional circumstances, grants officers may make awards to recipients that do not fully meet the standards in § 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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.410</SECTNO>
                <SUBJECT>Grants officers’ responsibilities.</SUBJECT>
                <P>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:</P>
                <P>(a) The potential recipient meets the standards in § 22.415 and is qualified to receive the grant or cooperative agreement; or</P>
                <P>(b) An award is justified to a recipient that does not fully meet the standards, pursuant to § 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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.415</SECTNO>
                <SUBJECT>Standards.</SUBJECT>
                <P>To be qualified, a potential recipient must:</P>
                <P>(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.</P>
                <P>(b) Have a satisfactory record of executing such programs or activities (if a prior recipient of an award).</P>
                <P>(c) Have a satisfactory record of integrity and business ethics.</P>
                <P>(d) Be otherwise qualified and eligible to receive a grant or cooperative agreement under applicable laws and regulations (see § 22.420(c)).</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.420</SECTNO>
                <SUBJECT>Pre-award procedures.</SUBJECT>
                <P>(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:</P>
                <P>(1) DoD's past experience with the recipient;</P>
                <P>(2) Whether the recipient has previously received cost-type contracts, grants, or cooperative agreements from the Federal Government; and</P>
                <P>(3) The amount of the prospective award and complexity of the project to be carried out under the award.</P>

                <P>(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 § 22.415 (a), (b), and (c).<PRTPAGE P="72"/>
                </P>
                <P>(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 § 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 <SU>2</SU>
                  <FTREF/> will satisfy the need (see § 22.715(a)(1)).</P>
                <FTNT>
                  <P>
                    <SU>2</SU> Contact the Office of Management and Budget, EOP Publications, 725 17th St. NW, New Executive Office Building, Washington, DC 20503.</P>
                </FTNT>
                <P>(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:</P>
                <P>(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</P>
                <P>(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.</P>
                <P>(c) In deciding whether a recipient is otherwise qualified and eligible in accordance with the standard in § 22.415(d), the grants officer shall ensure that the potential recipient:</P>
                <P>(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:</P>
                <P>(i) Potential recipients of prime awards, as described at 32 CFR 25.505(d);</P>
                <P>(ii) A recipient's principals (e.g., officers, directors, or other key employees, as defined at 32 CFR 25.105); and</P>
                <P>(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)).</P>
                <P>(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 § 22.510).</P>
                <P>(3) Meets any eligibility criteria that may be specified in the statute authorizing the specific program under which the award is being made (see § 22.210(a)(2)).</P>
                <P>(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).</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart E—National Policy Matters</HD>
              <SECTION>
                <SECTNO>§ 22.505</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <P>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:</P>
                <P>(a) The other parts of the DoDGARs (32 CFR parts 32, 33, and 34) that implement the Governmentwide guidance in OMB Circulars A-102 <SU>3</SU>
                  <FTREF/> and A-110 <SU>4</SU>
                  <FTREF/> on administrative requirements for grants and cooperative agreements. Those parts address some national policy matters that appear in the OMB Circulars.</P>
                <FTNT>
                  <P>
                    <SU>3</SU> See footnote 2 to § 22.420(b)(1).</P>
                </FTNT>
                <FTNT>
                  <P>
                    <SU>4</SU> See footnote 2 to § 22.420(b)(1).</P>
                </FTNT>
                <P>(b) DoD regulations other than the DoDGARs.</P>
                <P>(c) Other Federal agencies’ regulations.</P>
              </SECTION>
              <SECTION>
                <PRTPAGE P="73"/>
                <SECTNO>§ 22.510</SECTNO>
                <SUBJECT>Certifications, representations, and assurances.</SUBJECT>
                <P>(a) <E T="03">Certifications</E>—(1) <E T="03">Policy.</E> 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.</P>
                <P>(2) <E T="03">Procedures.</E> (i) When necessary, grants officers may obtain individual, written certifications.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(b) <E T="03">Representations and assurances.</E> 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 § 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 <SU>5</SU>)<FTREF/> or other means at the time of proposal.</P>
                <FTNT>
                  <P>
                    <SU>5</SU> 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. ”</P>
                </FTNT>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.515</SECTNO>
                <SUBJECT>Provisions of annual appropriations acts.</SUBJECT>

                <P>An annual appropriations act can include general provisions stating national policy requirements that apply to the use of funds (e.g., obligation <PRTPAGE P="74"/>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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.520</SECTNO>
                <SUBJECT>Military recruiting on campus.</SUBJECT>
                <P>(a) <E T="03">Purpose.</E> 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.”</P>
                <P>(b) <E T="03">Definitions specific to this section.</E> In this section:</P>
                <P>(1) <E T="03">Directory information</E> 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.</P>
                <P>(2) <E T="03">Institution of higher education</E> 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 § 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).</P>
                <P>(c) <E T="03">Statutory requirement.</E> 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.</P>
                <P>(d) <E T="03">Policy—</E>(1) <E T="03">Applicability to subordinate elements of institutions of higher education.</E> 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.</P>
                <P>(2) <E T="03">Applicability to cooperative agreements.</E> 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.</P>
                <P>(3) <E T="03">Deviations.</E> 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&amp;E(R), 3080 Defense Pentagon, Washington, DC 20301-3080.</P>
                <P>(e) <E T="03">Grants officers’ responsibilities.</E> A grants officer shall:</P>

                <P>(1) Not award any grant or cooperative agreement to an institution of higher education that has been identified pursuant to the procedures of 32 <PRTPAGE P="75"/>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).</P>
                <P>(2) [Reserved]</P>
                <P>(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.</P>
                <P>(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).</P>
                <P>(5) If an institution of higher education refuses to accept the clause in paragraph (f) of this section:</P>
                <P>(i) Determine that the institution is not qualified with respect to the award. The grants officer may award to an alternative recipient.</P>
                <P>(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.</P>
                <P>(f) <E T="03">Clause for award documents.</E> The following clause is to be included in grants and cooperative agreements with institutions of higher education:
                </P>
                <EXTRACT>
                  <FP>“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.”</FP>
                </EXTRACT>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.525</SECTNO>
                <SUBJECT>Paperwork Reduction Act.</SUBJECT>
                <P>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.):</P>
                <P>(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:</P>
                <P>(1) Identical questions from ten or more persons other than agencies, instrumentalities, or employees of the United States.</P>
                <P>(2) Questions from agencies, instrumentalities, or employees of the United States which are to be used for statistical compilations of general public interest.</P>
                <P>(b) The Act applies to similar collections of information by recipients of grants or cooperative agreements only when:</P>
                <P>(1) A recipient collects information at the specific request of the awarding Federal agency; or</P>
                <P>(2) The terms and conditions of the award require specific approval by the agency of the information collection or the collection procedures.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.530</SECTNO>
                <SUBJECT>Metric system of measurement.</SUBJECT>
                <P>(a) <E T="03">Statutory requirement.</E> 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:</P>

                <P>(1) The metric system is the preferred measurement system for U.S. trade and commerce.<PRTPAGE P="76"/>
                </P>
                <P>(2) The metric system of measurement will be used, to the extent economically feasible, in federal agencies’ procurements, grants, and other business-related activities.</P>
                <P>(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.</P>
                <P>(b) <E T="03">Responsibilities.</E> 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.</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart F—Award</HD>
              <SECTION>
                <SECTNO>§ 22.600</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <P>This subpart sets forth grants officers’ responsibilities relating to the award document and other actions at the time of award.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.605</SECTNO>
                <SUBJECT>Grants officers’ responsibilities.</SUBJECT>
                <P>At the time of award, the grants officer is responsible for ensuring that:</P>
                <P>(a) The award instrument contains the appropriate terms and conditions, in accordance with § 22.610.</P>
                <P>(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).</P>
                <P>(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.</P>
                <P>(2) For any award subject to the electronic funds transfer (EFT) requirement described in § 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<SU>6</SU>
                  <FTREF/>) 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.</P>
                <FTNT>
                  <P>
                    <SU>6</SU> See footnote 5 to § 22.510(b).</P>
                </FTNT>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.610</SECTNO>
                <SUBJECT>Award instruments.</SUBJECT>
                <P>(a) Each award document shall include terms and conditions that:</P>
                <P>(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.</P>
                <P>(2) Provide for the recipient's compliance with:</P>
                <P>(i) Pertinent Federal statutes or Executive orders that apply broadly to Federal or DoD assistance awards.</P>
                <P>(ii) Any program-specific requirements that are prescribed in the program statute (see § 22.210(a)(2)), or appropriation-specific requirements that are stated in the pertinent Congressional appropriations (see § 22.515).</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(b) To assist grants officers:<PRTPAGE P="77"/>
                </P>
                <P>(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).</P>
                <P>(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.</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart G—Field Administration</HD>
              <SECTION>
                <SECTNO>§ 22.700</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <P>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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.705</SECTNO>
                <SUBJECT>Policy.</SUBJECT>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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 § 22.710.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.710</SECTNO>
                <SUBJECT>Assignment of grants administration offices.</SUBJECT>
                <P>In accordance with the policy stated in § 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,<SU>7</SU>
                  <FTREF/> for specific addresses of administration offices):</P>
                <FTNT>
                  <P>
                    <SU>7</SU> 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.</P>
                </FTNT>
                <P>(a) Regional offices of the Office of Naval Research, for grants and cooperative agreements with:</P>
                <P>(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.<SU>8</SU>
                  <FTREF/>
                </P>
                <FTNT>
                  <P>
                    <SU>8</SU> See footnote 2 to § 22.420(b)(1).</P>
                </FTNT>
                <P>(2) Nonprofit organizations that are subject to the cost principles in OMB Circular A-122,<SU>9</SU>
                  <FTREF/> if their principal business with the Department of Defense is research and development.</P>
                <FTNT>
                  <P>
                    <SU>9</SU> See footnote 2 to § 22.420(b)(1).</P>
                </FTNT>
                <P>(b) Field offices of the Defense Contract Management Command, for grants and cooperative agreements with all other entities, including:</P>
                <P>(1) For-profit organizations.</P>
                <P>(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.</P>

                <P>(3) Nonprofit organizations subject to the cost principles in OMB Circular A-122, if their principal business with the <PRTPAGE P="78"/>Department of Defense is other than research and development.</P>
                <P>(4) State and local governments.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.715</SECTNO>
                <SUBJECT>Grants administration office functions.</SUBJECT>
                <P>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:</P>
                <P>(a) Conducting reviews and coordinating reviews, audits, and audit requests. This includes:</P>
                <P>(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 §§ 22.420(b) and 22.825(b)).</P>
                <P>(2) Performing pre-award surveys, when requested by a grants officer, after providing advice described in paragraph (a)(1) of this section.</P>
                <P>(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:</P>
                <P>(i) Reviewing recipients’ financial management, property management, and purchasing systems, to determine the adequacy of such systems.</P>
                <P>(ii) Determining that recipients have drug-free workplace programs, as required under 32 CFR part 25.</P>
                <P>(4) Notifying the Office of the Assistant Inspector General for Policy and Oversight (OAIG(P&amp;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&amp;O):</P>
                <P>(i) The recipient's audit report under OMB Circular A-133.</P>
                <P>(ii) The OAIG(P&amp;O)'s desk review of the recipient's audit report, or a letter stating that the OAIG(P&amp;O) has decided not to conduct a desk review.</P>
                <P>(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.</P>
                <P>(c) Ensuring timely submission of required reports.</P>
                <P>(d) Executing administrative closeout procedures.</P>
                <P>(e) Establishing recipients’ indirect cost rates, where the Department of Defense is the cognizant or oversight Federal agency with the responsibility for doing so.</P>
                <P>(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.</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart H—Post-Award Administration</HD>
              <SECTION>
                <SECTNO>§ 22.800</SECTNO>
                <SUBJECT>Purpose and relation to other parts.</SUBJECT>
                <P>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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.805</SECTNO>
                <SUBJECT>Post-award requirements in other parts.</SUBJECT>
                <P>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:</P>
                <P>(a) <E T="03">Awards to domestic recipients.</E> Standard administrative requirements for grants and cooperative agreements with domestic recipients are specified in other parts of the DoDGARs, as follows:<PRTPAGE P="79"/>
                </P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(b) <E T="03">Awards to foreign recipients.</E> 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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.810</SECTNO>
                <SUBJECT>Payments.</SUBJECT>
                <P>(a) <E T="03">Purpose.</E> This section prescribes policies and grants officers’ post-award responsibilities, with respect to payments to recipients of grants and cooperative agreements.</P>
                <P>(b) <E T="03">Policy.</E> (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).</P>
                <P>(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 § 22.605(c), and in postaward administration, as described in § 22.810(c)(3)(iv).</P>
                <P>(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.</P>
                <P>(c) <E T="03">Post-award responsibilities.</E> 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:</P>
                <P>(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).</P>
                <P>(2) Reviewing each payment request to ensure that:</P>
                <P>(i) The request complies with the award terms.</P>
                <P>(ii) Available funds are adequate to pay the request.</P>
                <P>(iii) The recipient will not have excess cash on hand, based on expenditure patterns.</P>
                <P>(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:</P>

                <P>(i) Should be generally familiar with policies and procedures for disbursing <PRTPAGE P="80"/>offices that are contained in Chapter 19 of Volume 10 of the DoD Financial Management Regulation (the FMR, DoD 7000.14-R<SU>10</SU>
                  <FTREF/>).</P>
                <FTNT>
                  <P>
                    <SU>10</SU> 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.</P>
                </FTNT>
                <P>(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:</P>
                <P>(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).</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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).</P>
                <P>(iv) For each award that is required to be paid by EFT (see § 22.605(c) and (§ 22.810(b)(2)), shall prominently indicate that fact in the payment authorization.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.815</SECTNO>
                <SUBJECT>Claims, disputes, and appeals.</SUBJECT>
                <P>(a) <E T="03">Award terms.</E> Grants officers shall include in grants and cooperative agreements a term or condition that incorporates the procedures of this section for:</P>
                <P>(1) Processing recipient claims and disputes.</P>
                <P>(2) Deciding appeals of grants officers’ decisions.</P>
                <P>(b) <E T="03">Submission of claims</E>—(1) <E T="03">Recipient claims.</E> 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:</P>
                <P>(i) Be submitted in writing to the grants officer for decision;</P>
                <P>(ii) Specify the nature and basis for the relief requested; and</P>
                <P>(iii) Include all data that supports the claim.</P>
                <P>(2) <E T="03">DoD Component claims.</E> Claims by a DoD Component shall be the subject of a written decision by a grants officer.</P>
                <P>(c) <E T="03">Alternative Dispute Resolution (ADR)</E>—(1) <E T="03">Policy.</E> 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.</P>
                <P>(2) <E T="03">Procedures.</E> (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.</P>

                <P>(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).<PRTPAGE P="81"/>
                </P>
                <P>(d) <E T="03">Grants officer decisions.</E> (1) Within 60 calendar days of receipt of a written claim, the grants officer shall either:</P>
                <P>(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</P>
                <P>(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).</P>
                <P>(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.</P>
                <P>(e) <E T="03">Formal administrative appeals</E>—(1) <E T="03">Grant appeal authorities.</E> 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:</P>
                <P>(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</P>
                <P>(ii) A board chaired by such an individual.</P>
                <P>(2) <E T="03">Right of appeal.</E> 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).</P>
                <P>(3) <E T="03">Appeal procedures</E>—(i) <E T="03">Notice of appeal.</E> 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.</P>
                <P>(ii) <E T="03">Appeal file.</E> 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.</P>
                <P>(iii) <E T="03">Decision.</E> 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.</P>
                <P>(f) <E T="03">Representation.</E> 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.</P>
                <P>(g) <E T="03">Non-exclusivity of remedies.</E> Nothing in this section is intended to limit a recipient's right to any remedy under the law.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.820</SECTNO>
                <SUBJECT>Debt collection.</SUBJECT>
                <P>(a) <E T="03">Purpose.</E> This section prescribes procedures for establishing debts owed by recipients of grants and cooperative agreements, and transferring them to payment offices for collection.</P>
                <P>(b) <E T="03">Resolution of indebtedness.</E> 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).<PRTPAGE P="82"/>
                </P>
                <P>(c) <E T="03">Grants officer's decision.</E> 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 § 22.815(b)(2). The grants officer shall prepare and transmit to the recipient a written notice that:</P>
                <P>(1) Describes the debt, including the amount, the name and address of the official who determined the debt (e.g., the grants officer under § 22.815(d)), and a copy of that determination.</P>
                <P>(2) Informs the recipient that:</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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 § 22.815(e)(3)(i).</P>
                <P>(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.</P>
                <P>(d) <E T="03">Follow-up.</E> Depending upon the response from the recipient, the grants officer shall proceed as follows:</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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:</P>
                <P>(i) Describe the debt, including the amount, the name and address of the official that determined the debt (e.g., the grants officer under § 22.815(d)), and a copy of that determination.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(e) <E T="03">Administrative offset.</E> 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 <PRTPAGE P="83"/>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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 22.825</SECTNO>
                <SUBJECT>Closeout audits.</SUBJECT>
                <P>(a) <E T="03">Purpose.</E> This section establishes DoD policy for obtaining audits at closeout of individual grants and cooperative agreements. It thereby supplements the closeout procedures specified in:</P>
                <P>(1) 32 CFR 32.71 and 32.72, for awards to institutions of higher education and other nonprofit organizations.</P>
                <P>(2) 32 CFR 33.50 and 33.51, for awards to State and local governments.</P>
                <P>(3) 32 CFR 34.61 and 34.62, for awards to for-profit entities.</P>
                <P>(b) <E T="03">Policy.</E> 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:</P>
                <P>(1) The amount of the award.</P>
                <P>(2) DoD's past experience with the recipient, including the presence or lack of findings of material deficiencies in recent:</P>
                <P>(i) Audits of individual awards; or</P>
                <P>(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 § 22.715(a)(1)).</P>
              </SECTION>
              <APPENDIX>
                <PRTPAGE P="84"/>
                <EAR>Pt. 22, App. A</EAR>
                <HD SOURCE="HED">Appendix A to Part 22—Proposal Provision for Required Certifications</HD>
                <GPH DEEP="470" SPAN="2">
                  <GID>ER12MR98.000</GID>
                </GPH>
              </APPENDIX>
              <APPENDIX>
                <PRTPAGE P="85"/>
                <EAR>Pt. 22, App. B</EAR>
                <HD SOURCE="HED">Appendix B to Part 22—Suggested Award Provisions for National Policy Requirements That Often Apply</HD>
                <GPH DEEP="470" SPAN="2">
                  <GID>ER12MR98.001</GID>
                </GPH>
                <GPH DEEP="470" SPAN="2">
                  <PRTPAGE P="86"/>
                  <GID>ER12MR98.002</GID>
                </GPH>
                <GPH DEEP="470" SPAN="2">
                  <PRTPAGE P="87"/>
                  <GID>ER12MR98.003</GID>
                </GPH>
                <GPH DEEP="470" SPAN="2">
                  <PRTPAGE P="88"/>
                  <GID>ER12MR98.004</GID>
                </GPH>
                <GPH DEEP="470" SPAN="2">
                  <PRTPAGE P="89"/>
                  <GID>ER12MR98.005</GID>
                </GPH>
                <GPH DEEP="470" SPAN="2">
                  <PRTPAGE P="90"/>
                  <GID>ER12MR98.006</GID>
                </GPH>
                <GPH DEEP="470" SPAN="2">
                  <PRTPAGE P="91"/>
                  <GID>ER12MR98.007</GID>
                </GPH>
                <GPH DEEP="470" SPAN="2">
                  <PRTPAGE P="92"/>
                  <GID>ER12MR98.008</GID>
                </GPH>
              </APPENDIX>
              <APPENDIX>
                <PRTPAGE P="93"/>
                <EAR>Pt. 22, App. C</EAR>
                <HD SOURCE="HED">Appendix C to Part 22—Administrative Requirements and Issues To Be Addressed in Award Terms and Conditions</HD>
                <GPH DEEP="400" SPAN="2">
                  <GID>ER16MR00.024</GID>
                </GPH>
                <GPH DEEP="425" SPAN="2">
                  <PRTPAGE P="94"/>
                  <GID>ER16MR00.025</GID>
                </GPH>
                <GPH DEEP="425" SPAN="2">
                  <PRTPAGE P="95"/>
                  <GID>ER16MR00.026</GID>
                </GPH>
                <GPH DEEP="425" SPAN="2">
                  <PRTPAGE P="96"/>
                  <GID>ER16MR00.027</GID>
                </GPH>
                <CITA>[65 FR 14411, Mar. 16, 2000]</CITA>
              </APPENDIX>
            </SUBPART>
          </PART>
          <PART>
            <PRTPAGE P="97"/>
            <EAR>Pt. 25</EAR>
            <HD SOURCE="HED">PART 25—GOVERNMENTWIDE DEBARMENT AND SUSPENSION (NONPROCUREMENT) AND GOVERNMENTWIDE REQUIREMENTS FOR DRUG-FREE WORKPLACE (GRANTS)</HD>
            <CONTENTS>
              <SUBPART>
                <HD SOURCE="HED">Subpart A—General</HD>
                <SECHD>Sec.</SECHD>
                <SECTNO>25.100</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <SECTNO>25.105</SECTNO>
                <SUBJECT>Definitions.</SUBJECT>
                <SECTNO>25.110</SECTNO>
                <SUBJECT>Coverage.</SUBJECT>
                <SECTNO>25.115</SECTNO>
                <SUBJECT>Policy.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart B—Effect of Action</HD>
                <SECTNO>25.200</SECTNO>
                <SUBJECT>Debarment or suspension.</SUBJECT>
                <SECTNO>25.205</SECTNO>
                <SUBJECT>Ineligible persons.</SUBJECT>
                <SECTNO>25.210</SECTNO>
                <SUBJECT>Voluntary exclusion.</SUBJECT>
                <SECTNO>25.215</SECTNO>
                <SUBJECT>Exception provision.</SUBJECT>
                <SECTNO>25.220</SECTNO>
                <SUBJECT>Continuation of covered transactions.</SUBJECT>
                <SECTNO>25.225</SECTNO>
                <SUBJECT>Failure to adhere to restrictions.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart C—Debarment</HD>
                <SECTNO>25.300</SECTNO>
                <SUBJECT>General.</SUBJECT>
                <SECTNO>25.305</SECTNO>
                <SUBJECT>Causes for debarment.</SUBJECT>
                <SECTNO>25.310</SECTNO>
                <SUBJECT>Procedures.</SUBJECT>
                <SECTNO>25.311</SECTNO>
                <SUBJECT>Investigation and referral.</SUBJECT>
                <SECTNO>25.312</SECTNO>
                <SUBJECT>Notice of proposed debarment.</SUBJECT>
                <SECTNO>25.313</SECTNO>
                <SUBJECT>Opportunity to contest proposed debarment.</SUBJECT>
                <SECTNO>25.314</SECTNO>
                <SUBJECT>Debarring official's decision.</SUBJECT>
                <SECTNO>25.315</SECTNO>
                <SUBJECT>Settlement and voluntary exclusion.</SUBJECT>
                <SECTNO>25.320</SECTNO>
                <SUBJECT>Period of debarment.</SUBJECT>
                <SECTNO>25.325</SECTNO>
                <SUBJECT>Scope of debarment.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart D—Suspension</HD>
                <SECTNO>25.400</SECTNO>
                <SUBJECT>General.</SUBJECT>
                <SECTNO>25.405</SECTNO>
                <SUBJECT>Causes for suspension.</SUBJECT>
                <SECTNO>25.410</SECTNO>
                <SUBJECT>Procedures.</SUBJECT>
                <SECTNO>25.411</SECTNO>
                <SUBJECT>Notice of suspension.</SUBJECT>
                <SECTNO>25.412</SECTNO>
                <SUBJECT>Opportunity to contest suspension.</SUBJECT>
                <SECTNO>25.413</SECTNO>
                <SUBJECT>Suspending official's decision.</SUBJECT>
                <SECTNO>25.415</SECTNO>
                <SUBJECT>Period of suspension.</SUBJECT>
                <SECTNO>25.420</SECTNO>
                <SUBJECT>Scope of suspension.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart E—Responsibilities of GSA, Agencies and Participants</HD>
                <SECTNO>25.500</SECTNO>
                <SUBJECT>GSA responsibilities.</SUBJECT>
                <SECTNO>25.505</SECTNO>
                <SUBJECT>Military Departments and Defense Agencies’ responsibility.</SUBJECT>
                <SECTNO>25.510</SECTNO>
                <SUBJECT>Participants’ responsibilities.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart F—Drug-Free Workplace Requirements (Grants)</HD>
                <SECTNO>25.600</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <SECTNO>25.605</SECTNO>
                <SUBJECT>Definitions.</SUBJECT>
                <SECTNO>25.610</SECTNO>
                <SUBJECT>Coverage.</SUBJECT>
                <SECTNO>25.615</SECTNO>
                <SUBJECT>Grounds for suspension of payments, suspension or termination of grants, or suspension or debarment.</SUBJECT>
                <SECTNO>25.616</SECTNO>
                <SUBJECT>Determinations of grantee violations.</SUBJECT>
                <SECTNO>25.620</SECTNO>
                <SUBJECT>Effect of violation.</SUBJECT>
                <SECTNO>25.625</SECTNO>
                <SUBJECT>Exception provision.</SUBJECT>
                <SECTNO>25.630</SECTNO>
                <SUBJECT>Certification requirements and procedures.</SUBJECT>
                <SECTNO>25.635</SECTNO>
                <SUBJECT>Reporting of and employee sanctions for convictions of criminal drug offenses.</SUBJECT>
                <APP>Appendix A to Part 25—Certification Regarding Debarment, Suspension, and Other Responsibility Matters—Primary Covered Transactions</APP>
                <APP>Appendix B to Part 25—Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion—Lower Tier Covered Transactions</APP>
                <APP>Appendix C to Part 25—Certification Regarding Drug-Free Workplace Requirements</APP>
              </SUBPART>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>41 U.S.C. 701 <E T="03">et seq.</E>; 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.</P>
            </AUTH>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>53 FR 19190 and 19204, May 26, 1988, unless otherwise noted. Redesignated at 57 FR 6199, Feb. 21, 1992.</P>
            </SOURCE>
            <CROSSREF>
              <HD SOURCE="HED">Cross Reference:</HD>
              <P>See also Office of Management and Budget notice published at 55 FR 21697, May 25, 1990, and 60 FR 33036, June 26, 1995.</P>
            </CROSSREF>
            <SUBPART>
              <HD SOURCE="HED">Subpart A—General</HD>
              <SECTION>
                <SECTNO>§ 25.100</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <P>(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.</P>
                <P>(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:</P>
                <P>(1) Prescribing the programs and activities that are covered by the governmentwide system;</P>
                <P>(2) Prescribing the governmentwide criteria and governmentwide minimum due process procedures that each agency shall use;</P>

                <P>(3) Providing for the listing of debarred and suspended participants, participants declared ineligible (see <PRTPAGE P="98"/>definition of “ineligible” in § 25.105), and participants who have voluntarily excluded themselves from participation in covered transactions;</P>
                <P>(4) Setting forth the consequences of a debarment, suspension, determination of ineligibility, or voluntary exclusion; and</P>
                <P>(5) Offering such other guidance as necessary for the effective implementation and administration of the governmentwide system.</P>
                <P>(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—</P>
                <P>(1) Providing for the inclusion in the <E T="03">List of Parties Excluded from Federal Procurement and Nonprocurement Programs</E> 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</P>
                <P>(2) Setting forth the consequences of a debarment, suspension, determination of ineligibility, or voluntary exclusion.</P>
                <P>(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.</P>
                <CITA>[60 FR 33040, 33053, June 26, 1995]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.105</SECTNO>
                <SUBJECT>Definitions.</SUBJECT>
                <P>The following definitions apply to this part:</P>
                <P>
                  <E T="03">Adequate evidence.</E> Information sufficient to support the reasonable belief that a particular act or omission has occurred.</P>
                <P>
                  <E T="03">Affiliate.</E> Persons are affiliates of each other if, directly or indirectly, either one controls or has the power to control the other, <E T="03">or</E>, 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.</P>
                <P>
                  <E T="03">Agency.</E> Any executive department, military department or defense agency or other agency of the executive branch, excluding the independent regulatory agencies.</P>
                <P>(a) The meaning of <E T="03">agency</E> in Subpart F of this part, Drug-Free Workplace Requirements, is given at § 25.605(b)(6) and is different than the meaning given in this section for subparts A through E of this part. <E T="03">Agency</E> in Subpart F of this part means the Department of Defense or a Military Department only, and does not include any Defense Agency.</P>
                <P>(b) [Reserved]</P>
                <P>
                  <E T="03">Civil judgment.</E> 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).</P>
                <P>
                  <E T="03">Conviction.</E> 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.</P>
                <P>
                  <E T="03">Debarment.</E> 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.”</P>
                <P>
                  <E T="03">Debarring official.</E> An official authorized to impose debarment. The debarring official is either:</P>
                <P>(a) The agency head, or</P>
                <P>(b) An official designated by the agency head.</P>
                <P>(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.</P>
                <P>
                  <E T="03">Indictment.</E> 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.</P>
                <P>
                  <E T="03">Ineligible.</E> Excluded from participation in Federal nonprocurement programs pursuant to a determination of <PRTPAGE P="99"/>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.</P>
                <P>
                  <E T="03">Legal proceedings.</E> 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.</P>
                <P>
                  <E T="03">List of Parties Excluded from Federal Procurement and Nonprocurement Programs.</E> 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.</P>
                <P>
                  <E T="03">Notice.</E> 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.</P>
                <P>
                  <E T="03">Participant.</E> 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.</P>
                <P>
                  <E T="03">Person.</E> 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.</P>
                <P>
                  <E T="03">Preponderance of the evidence.</E> Proof by information that, compared with that opposing it, leads to the conclusion that the fact at issue is more probably true than not.</P>
                <P>
                  <E T="03">Principal.</E> 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:</P>
                <P>(a) Principal investigators.</P>
                <P>(b) Reserved.</P>
                <P>
                  <E T="03">Proposal.</E> 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.</P>
                <P>
                  <E T="03">Respondent.</E> A person against whom a debarment or suspension action has been initiated.</P>
                <P>
                  <E T="03">State.</E> 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.</P>
                <P>
                  <E T="03">Suspending official.</E> An official authorized to impose suspension. The suspending official is either:</P>
                <P>(a) The agency head, or</P>
                <P>(b) An official designated by the agency head.</P>

                <P>(c) DoD Components’ suspending officials for nonprocurement transactions are the same officials identified in 48 <PRTPAGE P="100"/>CFR part 209, subpart 209.4, as suspending officials for procurement contracts.</P>
                <P>
                  <E T="03">Suspension.</E> 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.”</P>
                <P>
                  <E T="03">Voluntary exclusion or voluntarily excluded.</E> A status of nonparticipation or limited participation in covered transactions assumed by a person pursuant to the terms of a settlement.</P>
                <CITA>[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]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.110</SECTNO>
                <SUBJECT>Coverage.</SUBJECT>
                <P>(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.”</P>
                <P>(1) <E T="03">Covered transaction.</E> 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.</P>
                <P>(i) <E T="03">Primary covered transaction.</E> 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.</P>
                <P>(ii) <E T="03">Lower tier covered transaction.</E> A lower tier covered transaction is:</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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:</P>
                <P>(<E T="03">1</E>) Principal investigators.</P>
                <P>(<E T="03">2</E>) Providers of federally-required audit services.</P>
                <P>(2) <E T="03">Exceptions.</E> The following transactions are not covered:</P>
                <P>(i) Statutory entitlements or mandatory awards (but not subtier awards thereunder which are not themselves mandatory), including deposited funds insured by the Federal Government;</P>
                <P>(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;</P>
                <P>(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);</P>
                <P>(iv) Federal employment;</P>
                <P>(v) Transactions pursuant to national or agency-recognized emergencies or disasters;</P>
                <P>(vi) Incidental benefits derived from ordinary governmental operations; and</P>
                <P>(vii) Other transactions where the application of these regulations would be prohibited by law.</P>
                <P>(b) <E T="03">Relationship to other sections.</E> This section describes the types of transactions to which a debarment or suspension under the regulations will <PRTPAGE P="101"/>apply. Subpart B, “Effect of Action,” § 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 § 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.</P>
                <P>(c) <E T="03">Relationship to Federal procurement activities.</E> 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.</P>
                <CITA>[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]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.115</SECTNO>
                <SUBJECT>Policy.</SUBJECT>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart B—Effect of Action</HD>
              <SECTION>
                <SECTNO>§ 25.200</SECTNO>
                <SUBJECT>Debarment or suspension.</SUBJECT>
                <P>(a) <E T="03">Primary covered transactions.</E> 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 § 25.215.</P>
                <P>(b) <E T="03">Lower tier covered transactions.</E> 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 § 25.110(a)(1)(ii)) for the period of their exclusion.</P>
                <P>(c) <E T="03">Exceptions.</E> Debarment or suspension does not affect a person's eligibility for—</P>
                <P>(1) Statutory entitlements or mandatory awards (but not subtier awards thereunder which are not themselves mandatory), including deposited funds insured by the Federal Government;</P>
                <P>(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;</P>

                <P>(3) Benefits to an individual as a personal entitlement without regard to the individual's present responsibility <PRTPAGE P="102"/>(but benefits received in an individual's business capacity are not excepted);</P>
                <P>(4) Federal employment;</P>
                <P>(5) Transactions pursuant to national or agency-recognized emergencies or disasters;</P>
                <P>(6) Incidental benefits derived from ordinary governmental operations; and</P>
                <P>(7) Other transactions where the application of these regulations would be prohibited by law.</P>
                <CITA>[60 FR 33041, 33053, June 26, 1995]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.205</SECTNO>
                <SUBJECT>Ineligible persons.</SUBJECT>
                <P>Persons who are ineligible, as defined in § 25.105(i), are excluded in accordance with the applicable statutory, executive order, or regulatory authority.</P>
                <CITA>[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.210</SECTNO>
                <SUBJECT>Voluntary exclusion.</SUBJECT>
                <P>Persons who accept voluntary exclusions under § 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.</P>
                <CITA>[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.215</SECTNO>
                <SUBJECT>Exception provision.</SUBJECT>
                <P>Military Departments &amp; 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 § 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 § 25.505(a).</P>
                <CITA>[60 FR 33041, 33053, June 26, 1995]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.220</SECTNO>
                <SUBJECT>Continuation of covered transactions.</SUBJECT>
                <P>(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.</P>
                <P>(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 § 25.215.</P>
                <CITA>[60 FR 33041, 33053, June 26, 1995]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.225</SECTNO>
                <SUBJECT>Failure to adhere to restrictions.</SUBJECT>
                <P>(a) Except as permitted under § 25.215 or § 25.220, a participant shall not knowingly do business under a covered transaction with a person who is—</P>
                <P>(1) Debarred or suspended;</P>
                <P>(2) Proposed for debarment under 48 CFR part 9, subpart 9.4; or</P>
                <P>(3) Ineligible for or voluntarily excluded from the covered transaction.</P>
                <P>(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.</P>

                <P>(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 <PRTPAGE P="103"/>do business with a person that filed an erroneous certification.</P>
                <CITA>[60 FR 33041, 33053, June 26, 1995]</CITA>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart C—Debarment</HD>
              <SECTION>
                <SECTNO>§ 25.300</SECTNO>
                <SUBJECT>General.</SUBJECT>
                <P>The debarring official may debar a person for any of the causes in § 25.305, using procedures established in §§ 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.</P>
                <CITA>[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.305</SECTNO>
                <SUBJECT>Causes for debarment.</SUBJECT>
                <P>Debarment may be imposed in accordance with the provisions of §§ 25.300 through 25.314 for:</P>
                <P>(a) Conviction of or civil judgment for:</P>
                <P>(1) Commission of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a public or private agreement or transaction;</P>
                <P>(2) Violation of Federal or State antitrust statutes, including those proscribing price fixing between competitors, allocation of customers between competitors, and bid rigging;</P>
                <P>(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</P>
                <P>(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.</P>
                <P>(b) Violation of the terms of a public agreement or transaction so serious as to affect the integrity of an agency program, such as:</P>
                <P>(1) A willful failure to perform in accordance with the terms of one or more public agreements or transactions;</P>
                <P>(2) A history of failure to perform or of unsatisfactory performance of one or more public agreements or transactions; or</P>
                <P>(3) A willful violation of a statutory or regulatory provision or requirement applicable to a public agreement or transaction.</P>
                <P>(c) Any of the following causes:</P>
                <P>(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;</P>
                <P>(2) Knowingly doing business with a debarred, suspended, ineligible, or voluntarily excluded person, in connection with a covered transaction, except as permitted in § 25.215 or § 25.220;</P>
                <P>(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;</P>
                <P>(4) Violation of a material provision of a voluntary exclusion agreement entered into under § 25.315 or of any settlement of a debarment or suspension action; or</P>
                <P>(5) Violation of any requirement of subpart F of this part, relating to providing a drug-free workplace, as set forth in § 25.615 of this part.</P>
                <P>(d) Any other cause of so serious or compelling a nature that it affects the present responsibility of a person.</P>
                <CITA>[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]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.310</SECTNO>
                <SUBJECT>Procedures.</SUBJECT>
                <P>Military Departments and Defense Agencies shall process debarment actions as informally as practicable, consistent with the principles of fundamental fairness, using the procedures in §§ 25.311 through 25.314.</P>
                <CITA>[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
              </SECTION>
              <SECTION>
                <PRTPAGE P="104"/>
                <SECTNO>§ 25.311</SECTNO>
                <SUBJECT>Investigation and referral.</SUBJECT>
                <P>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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.312</SECTNO>
                <SUBJECT>Notice of proposed debarment.</SUBJECT>
                <P>A debarment proceeding shall be initiated by notice to the respondent advising:</P>
                <P>(a) That debarment is being considered;</P>
                <P>(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;</P>
                <P>(c) Of the cause(s) relied upon under § 25.305 for proposing debarment;</P>
                <P>(d) Of the provisions of §§ 25.311 through 25.314, and any other Military Departments and Defense Agencies procedures, if applicable, governing debarment decisionmaking; and</P>
                <P>(e) Of the potential effect of a debarment.</P>
                <CITA>[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.313</SECTNO>
                <SUBJECT>Opportunity to contest proposed debarment.</SUBJECT>
                <P>(a) <E T="03">Submission in opposition.</E> 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.</P>
                <P>(b) <E T="03">Additional proceedings as to disputed material facts.</E> (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.</P>
                <P>(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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.314</SECTNO>
                <SUBJECT>Debarring official's decision.</SUBJECT>
                <P>(a) <E T="03">No additional proceedings necessary.</E> 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.</P>
                <P>(b) <E T="03">Additional proceedings necessary.</E> (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.</P>
                <P>(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.</P>
                <P>(3) The debarring official's decision shall be made after the conclusion of the proceedings with respect to disputed facts.</P>
                <P>(c) (1) <E T="03">Standard of proof.</E> 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.</P>
                <P>(2) <E T="03">Burden of proof.</E> The burden of proof is on the agency proposing debarment.</P>
                <P>(d) <E T="03">Notice of debarring official's decision.</E> (1) If the debarring official decides to impose debarment, the respondent shall be given prompt notice:</P>
                <P>(i) Referring to the notice of proposed debarment;</P>
                <P>(ii) Specifying the reasons for debarment;<PRTPAGE P="105"/>
                </P>
                <P>(iii) Stating the period of debarment, including effective dates; and</P>
                <P>(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 § 25.215.</P>
                <P>(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.</P>
                <CITA>[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.315</SECTNO>
                <SUBJECT>Settlement and voluntary exclusion.</SUBJECT>
                <P>(a) When in the best interest of the Government, Military Departments and Defense Agencies may, at any time, settle a debarment or suspension action.</P>
                <P>(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).</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.320</SECTNO>
                <SUBJECT>Period of debarment.</SUBJECT>
                <P>(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.</P>
                <P>(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.</P>

                <P>(2) In the case of a debarment for a violation of the requirements of subpart F of this part (<E T="03">see</E> § 25.305(c)(5)), the period of debarment shall not exceed five years.</P>
                <P>(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 §§ 25.311 through 25.314 shall be followed to extend the debarment.</P>
                <P>(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:</P>
                <P>(1) Newly discovered material evidence;</P>
                <P>(2) Reversal of the conviction or civil judgment upon which the debarment was based;</P>
                <P>(3) Bona fide change in ownership or management;</P>
                <P>(4) Elimination of other causes for which the debarment was imposed; or</P>
                <P>(5) Other reasons the debarring official deems appropriate.</P>
                <CITA>[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]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.325</SECTNO>
                <SUBJECT>Scope of debarment.</SUBJECT>
                <P>(a) <E T="03">Scope in general.</E> (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.</P>
                <P>(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 §§ 25.311 through 25.314).</P>
                <P>(b) <E T="03">Imputing conduct.</E> For purposes of determining the scope of debarment, conduct may be imputed as follows:</P>
                <P>(1) <E T="03">Conduct imputed to participant.</E> 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 <PRTPAGE P="106"/>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.</P>
                <P>(2) <E T="03">Conduct imputed to individuals associated with participant.</E> 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.</P>
                <P>(3) <E T="03">Conduct of one participant imputed to other participants in a joint venture.</E> 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.</P>
                <CITA>[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart D—Suspension</HD>
              <SECTION>
                <SECTNO>§ 25.400</SECTNO>
                <SUBJECT>General.</SUBJECT>
                <P>(a) The suspending official may suspend a person for any of the causes in § 25.405 using procedures established in §§ 25.410 through 25.413.</P>
                <P>(b) Suspension is a serious action to be imposed only when:</P>
                <P>(1) There exists adequate evidence of one or more of the causes set out in § 25.405, and</P>
                <P>(2) Immediate action is necessary to protect the public interest.</P>
                <P>(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.</P>
                <CITA>[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.405</SECTNO>
                <SUBJECT>Causes for suspension.</SUBJECT>
                <P>(a) Suspension may be imposed in accordance with the provisions of §§ 25.400 through 25.413 upon adequate evidence:</P>
                <P>(1) To suspect the commission of an offense listed in § 25.305(a); or</P>
                <P>(2) That a cause for debarment under § 25.305 may exist.</P>
                <P>(b) Indictment shall constitute adequate evidence for purposes of suspension actions.</P>
                <CITA>[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.410</SECTNO>
                <SUBJECT>Procedures.</SUBJECT>
                <P>(a) <E T="03">Investigation and referral.</E> 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.</P>
                <P>(b) <E T="03">Decisionmaking process.</E> Military Departments and Defense Agencies shall process suspension actions as informally as practicable, consistent with principles of fundamental fairness, using the procedures in §§ 25.411 through 25.413.</P>
                <CITA>[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.411</SECTNO>
                <SUBJECT>Notice of suspension.</SUBJECT>
                <P>When a respondent is suspended, notice shall immediately be given:</P>
                <P>(a) That suspension has been imposed;</P>

                <P>(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 <PRTPAGE P="107"/>Federal Government dealings with the respondent;</P>
                <P>(c) Describing any such irregularities in terms sufficient to put the respondent on notice without disclosing the Federal Government's evidence;</P>
                <P>(d) Of the cause(s) relied upon under § 25.405 for imposing suspension;</P>
                <P>(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;</P>
                <P>(f) Of the provisions of §§ 25.411 through 25.413 and any other Military Departments and Defense Agencies procedures, if applicable, governing suspension decisionmaking; and</P>
                <P>(g) Of the effect of the suspension.</P>
                <CITA>[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.412</SECTNO>
                <SUBJECT>Opportunity to contest suspension.</SUBJECT>
                <P>(a) <E T="03">Submission in opposition.</E> 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.</P>
                <P>(b) <E T="03">Additional proceedings as to disputed material facts.</E> (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:</P>
                <P>(i) The action is based on an indictment, conviction or civil judgment, or</P>
                <P>(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.</P>
                <P>(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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.413</SECTNO>
                <SUBJECT>Suspending official's decision.</SUBJECT>
                <P>The suspending official may modify or terminate the suspension (for example, see § 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:</P>
                <P>(a) <E T="03">No additional proceedings necessary.</E> 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.</P>
                <P>(b) <E T="03">Additional proceedings necessary.</E> (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.</P>
                <P>(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.</P>
                <P>(c) <E T="03">Notice of suspending official's decision.</E> Prompt written notice of the suspending official's decision shall be sent to the respondent.</P>
                <CITA>[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
              </SECTION>
              <SECTION>
                <PRTPAGE P="108"/>
                <SECTNO>§ 25.415</SECTNO>
                <SUBJECT>Period of suspension.</SUBJECT>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.420</SECTNO>
                <SUBJECT>Scope of suspension.</SUBJECT>
                <P>The scope of a suspension is the same as the scope of a debarment (see § 25.325), except that the procedures of §§ 25.410 through 25.413 shall be used in imposing a suspension.</P>
                <CITA>[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart E—Responsibilities of GSA, Agency and Participants</HD>
              <SECTION>
                <SECTNO>§ 25.500</SECTNO>
                <SUBJECT>GSA responsibilities.</SUBJECT>
                <P>(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.</P>
                <P>(b) At a minimum, this list shall indicate:</P>
                <P>(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;</P>
                <P>(2) The type of action;</P>
                <P>(3) The cause for the action;</P>
                <P>(4) The scope of the action;</P>
                <P>(5) Any termination date for each listing; and</P>
                <P>(6) The agency and name and telephone number of the agency point of contact for the action.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.505</SECTNO>
                <SUBJECT>Military Departments and Defense Agencies’ responsibilities.</SUBJECT>
                <P>(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 § 25.215 permitting participation by debarred, suspended, or voluntarily excluded persons.</P>
                <P>(b) Unless an alternative schedule is agreed to by GSA, the agency shall advise GSA of the information set forth in § 25.500(b) and of the exceptions granted under § 25.215 within five working days after taking such actions.</P>
                <P>(c) The agency shall direct inquiries concerning listed persons to the agency that took the action.</P>
                <P>(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. #).</P>
                <P>(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.</P>
                <CITA>[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.510</SECTNO>
                <SUBJECT>Participants’ responsibilities.</SUBJECT>
                <P>(a) <E T="03">Certification by participants in primary covered transactions.</E> Each participant shall submit the certification in <PRTPAGE P="109"/>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.</P>
                <P>(b) <E T="03">Certification by participants in lower tier covered transactions.</E> (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.</P>
                <P>(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. #).</P>
                <P>(c) <E T="03">Changed circumstances regarding certification.</E> 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.</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart F—Drug-Free Workplace Requirements (Grants)</HD>
              <SOURCE>
                <HD SOURCE="HED">Source:</HD>
                <P>55 FR 21688, 21697, May 25, 1990, unless otherwise noted. Redesignated at 57 FR 6199, Feb. 21, 1992.</P>
              </SOURCE>
              <SECTION>
                <SECTNO>§ 25.600</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <P>(a) The purpose of this subpart is to carry out the Drug-Free Workplace Act of 1988 by requiring that—</P>
                <P>(1) A grantee, other than an individual, shall certify to the agency that it will provide a drug-free workplace;</P>
                <P>(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.</P>
                <P>(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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.605</SECTNO>
                <SUBJECT>Definitions.</SUBJECT>
                <P>(a) Except as amended in this section, the definitions of § 25.105 apply to this subpart.</P>
                <P>(b) For purposes of this subpart—</P>
                <P>(1) <E T="03">Controlled substance</E> 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;</P>
                <P>(2) <E T="03">Conviction</E> 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;</P>
                <P>(3) <E T="03">Criminal drug statute</E> means a Federal or non-Federal criminal statute involving the manufacture, distribution, dispensing, use, or possession of any controlled substance;</P>
                <P>(4) <E T="03">Drug-free workplace</E> 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;<PRTPAGE P="110"/>
                </P>
                <P>(5) <E T="03">Employee</E> means the employee of a grantee directly engaged in the performance of work under the grant, including:</P>
                <P>(i) All <E T="03">direct charge</E> employees;</P>
                <P>(ii) All <E T="03">indirect charge</E> employees, unless their impact or involvement is insignificant to the performance of the grant; and,</P>
                <P>(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.</P>
                <FP>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);</FP>
                <P>(6) <E T="03">Federal agency</E> or <E T="03">agency</E> 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;</P>
                <P>(7) <E T="03">Grant</E> 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;</P>
                <P>(8) <E T="03">Grantee</E> means a person who applies for or receives a grant directly from a Federal agency (except another Federal agency);</P>
                <P>(9) <E T="03">Individual</E> means a natural person;</P>
                <P>(10) <E T="03">State</E> 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.</P>
                <CITA>[55 FR 21688 and 21697, May. 25, 1990. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.610</SECTNO>
                <SUBJECT>Coverage.</SUBJECT>
                <P>(a) This subpart applies to any grantee of the agency.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(2) [Reserved]</P>
                <P>(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.</P>
                <CITA>[53 FR 19190 and 19204, May 26, 1988. Redesignated and amended at 57 FR 6199, Feb. 21, 1992; 60 FR 33053, June 26, 1995]</CITA>
              </SECTION>
              <SECTION>
                <PRTPAGE P="111"/>
                <SECTNO>§ 25.615</SECTNO>
                <SUBJECT>Grounds for suspension of payments, suspension or termination of grants, or suspension or debarment.</SUBJECT>
                <P>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—</P>
                <P>(a) The grantee has made a false certification under § 25.630;</P>
                <P>(b) With respect to a grantee other than an individual—</P>
                <P>(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</P>
                <P>(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.</P>
                <P>(c) With respect to a grantee who is an individual—</P>
                <P>(1) The grantee has violated the certification by failing to carry out its requirements (Alternate II to Appendix C); or</P>
                <P>(2) The grantee is convicted of a criminal drug offense resulting from a violation occurring during the conduct of any grant activity.</P>
                <CITA>[55 FR 21688 and 21697, May 25, 1990. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.616</SECTNO>
                <SUBJECT>Determinations of grantee violations.</SUBJECT>
                <P>Heads of Defense Agencies, Heads of DoD Field Activities, and their designees are authorized to make determinations of grantee violations under § 25.615.</P>
                <CITA>[60 FR 33053, June 26, 1995]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.620</SECTNO>
                <SUBJECT>Effect of violation.</SUBJECT>
                <P>(a) In the event of a violation of this subpart as provided in § 25.615, and in accordance with applicable law, the grantee shall be subject to one or more of the following actions:</P>
                <P>(1) Suspension of payments under the grant;</P>
                <P>(2) Suspension or termination of the grant; and</P>
                <P>(3) Suspension or debarment of the grantee under the provisions of this part.</P>

                <P>(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 (<E T="03">see</E> § 25.320(a)(2) of this part).</P>
                <CITA>[55 FR 21688 and 21697, May 25, 1990. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.625</SECTNO>
                <SUBJECT>Exception provision.</SUBJECT>
                <P>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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.630</SECTNO>
                <SUBJECT>Certification requirements and procedures.</SUBJECT>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>

                <P>(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 <PRTPAGE P="112"/>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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 25.635</SECTNO>
                <SUBJECT>Reporting of and employee sanctions for convictions of criminal drug offenses.</SUBJECT>
                <P>(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:</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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</P>
                <P>(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.</P>
                <P>(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.</P>
                <APPRO>(Approved by the Office of Management and Budget under control number 0991-0002)</APPRO>
              </SECTION>
              <APPENDIX>
                <PRTPAGE P="113"/>
                <EAR>Pt. 25, App. A</EAR>
                <HD SOURCE="HED">Appendix A to Part 25—Certification Regarding Debarment, Suspension, and Other Responsibility Matters—Primary Covered Transactions</HD>
                <HD SOURCE="HD2">Instructions for Certification</HD>
                <P>1. By signing and submitting this proposal, the prospective primary participant is providing the certification set out below.</P>
                <P>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.</P>
                <P>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.</P>
                <P>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.</P>
                <P>5. The terms <E T="03">covered transaction, debarred, suspended, ineligible, lower tier covered transaction, participant, person, primary covered transaction, principal, proposal, and voluntarily excluded</E>, 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.</P>
                <P>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.</P>
                <P>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.</P>
                <P>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.</P>
                <P>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.</P>
                <P>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.</P>
                <HD SOURCE="HD2">Certification Regarding Debarment, Suspension, and Other Responsibility Matters—Primary Covered Transactions</HD>
                <P>(1) The prospective primary participant certifies to the best of its knowledge and belief, that it and its principals:</P>
                <P>(a) Are not presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded by any Federal department or agency;</P>

                <P>(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 <PRTPAGE P="114"/>embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, or receiving stolen property;</P>
                <P>(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</P>
                <P>(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.</P>
                <P>(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.</P>
                <CITA>[60 FR 33042, June 26, 1995]</CITA>
              </APPENDIX>
              <APPENDIX>
                <EAR>Pt. 25, App. B</EAR>
                <HD SOURCE="HED">Appendix B to Part 25—Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion—Lower Tier Covered Transactions</HD>
                <HD SOURCE="HD2">Instructions for Certification</HD>
                <P>1. By signing and submitting this proposal, the prospective lower tier participant is providing the certification set out below.</P>
                <P>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.</P>
                <P>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.</P>
                <P>4. The terms <E T="03">covered transaction, debarred, suspended, ineligible, lower tier covered transaction, participant, person, primary covered transaction, principal, proposal,</E> and <E T="03">voluntarily excluded,</E> 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.</P>
                <P>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.</P>
                <P>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.</P>
                <P>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.</P>
                <P>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.</P>
                <P>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.</P>
                <HD SOURCE="HD2">Certification Regarding Debarment, Suspension, Ineligibility an Voluntary Exclusion—Lower Tier Covered Transactions</HD>
                <P>(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.</P>

                <P>(2) Where the prospective lower tier participant is unable to certify to any of the statements in this certification, such prospective <PRTPAGE P="115"/>participant shall attach an explanation to this proposal.</P>
                <CITA>[60 FR 33042, June 26, 1995]</CITA>
              </APPENDIX>
              <APPENDIX>
                <EAR>Pt. 25, App. C</EAR>
                <HD SOURCE="HED">Appendix C to Part 25—Certification Regarding Drug-Free Workplace Requirements</HD>
                <HD SOURCE="HD2">Instructions for Certification</HD>
                <P>1. By signing and/or submitting this application or grant agreement, the grantee is providing the certification set out below.</P>
                <P>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.</P>
                <P>3. For grantees other than individuals, Alternate I applies.</P>
                <P>4. For grantees who are individuals, Alternate II applies.</P>
                <P>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.</P>
                <P>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).</P>
                <P>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).</P>
                <P>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:</P>
                <P>
                  <E T="03">Controlled substance</E> 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);</P>
                <P>
                  <E T="03">Conviction</E> 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;</P>
                <P>
                  <E T="03">Criminal drug statute</E> means a Federal or non-Federal criminal statute involving the manufacture, distribution, dispensing, use, or possession of any controlled substance;</P>
                <P>
                  <E T="03">Employee</E> means the employee of a grantee directly engaged in the performance of work under a grant, including: (i) All <E T="03">direct charge</E> employees; (ii) All <E T="03">indirect charge</E> 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).</P>
                <HD SOURCE="HD2">Certification Regarding Drug-Free Workplace Requirements</HD>
                <HD SOURCE="HD2">Alternate I. <E T="01">(Grantees Other Than Individuals)</E>
                </HD>
                <P>A. The grantee certifies that it will or will continue to provide a drug-free workplace by:</P>
                <P>(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;</P>
                <P>(b) Establishing an ongoing drug-free awareness program to inform employees about—</P>
                <P>(1) The dangers of drug abuse in the workplace;</P>
                <P>(2) The grantee's policy of maintaining a drug-free workplace;</P>
                <P>(3) Any available drug counseling, rehabilitation, and employee assistance programs; and</P>
                <P>(4) The penalties that may be imposed upon employees for drug abuse violations occurring in the workplace;</P>
                <P>(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);</P>
                <P>(d) Notifying the employee in the statement required by paragraph (a) that, as a condition of employment under the grant, the employee will—</P>
                <P>(1) Abide by the terms of the statement; and<PRTPAGE P="116"/>
                </P>
                <P>(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;</P>
                <P>(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;</P>
                <P>(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—</P>
                <P>(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</P>
                <P>(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;</P>
                <P>(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).</P>

                <P>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:
                </P>
                <FP SOURCE="FP-1">Place of Performance (Street address, city, county, State, zip code)</FP>
                <FP SOURCE="FP-DASH"/>
                <FP SOURCE="FP-DASH"/>
                <FP SOURCE="FP-DASH"/>
                
                <FP>Check ☐ if there are workplaces on file that are not identified here.</FP>
                <HD SOURCE="HD2">Alternate II. <E T="01">(Grantees Who Are Individuals)</E>
                </HD>
                <P>(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;</P>
                <P>(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.</P>
                <CITA>[55 FR 21690, 21697, May 25, 1990. Redesignated at 57 FR 6200, Feb. 21, 1992]</CITA>
              </APPENDIX>
            </SUBPART>
          </PART>
          <PART>
            <EAR>Pt. 28</EAR>
            <HD SOURCE="HED">PART 28—NEW RESTRICTIONS ON LOBBYING</HD>
            <CONTENTS>
              <SUBPART>
                <HD SOURCE="HED">Subpart A—General</HD>
                <SECHD>Sec.</SECHD>
                <SECTNO>28.100</SECTNO>
                <SUBJECT>Conditions on use of funds.</SUBJECT>
                <SECTNO>28.105</SECTNO>
                <SUBJECT>Definitions.</SUBJECT>
                <SECTNO>28.110</SECTNO>
                <SUBJECT>Certification and disclosure.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart B—Activities by Own Employees</HD>
                <SECTNO>28.200</SECTNO>
                <SUBJECT>Agency and legislative liaison.</SUBJECT>
                <SECTNO>28.205</SECTNO>
                <SUBJECT>Professional and technical services.</SUBJECT>
                <SECTNO>28.210</SECTNO>
                <SUBJECT>Reporting.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart C—Activities by Other Than Own Employees</HD>
                <SECTNO>28.300</SECTNO>
                <SUBJECT>Professional and technical services.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart D—Penalties and Enforcement</HD>
                <SECTNO>28.400</SECTNO>
                <SUBJECT>Penalties.</SUBJECT>
                <SECTNO>28.405</SECTNO>
                <SUBJECT>Penalty procedures.</SUBJECT>
                <SECTNO>28.410</SECTNO>
                <SUBJECT>Enforcement.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart E—Exemptions</HD>
                <SECTNO>28.500</SECTNO>
                <SUBJECT>Secretary of Defense.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart F—Agency Reports</HD>
                <SECTNO>28.600</SECTNO>
                <SUBJECT>Semi-annual compilation.</SUBJECT>
                <SECTNO>28.605</SECTNO>
                <SUBJECT>Inspector General report.</SUBJECT>
                <APP>Appendix A to Part 28—Certification Regarding Lobbying</APP>
                <APP>Appendix B to Part 28—Disclosure Form to Report Lobbying</APP>
              </SUBPART>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>Section 319, Public Law 102-121 (31 U.S.C. 1352); 5 U.S.C. section 301; 10 U.S.C. 113.</P>
            </AUTH>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>55 FR 6737 and 6752, Feb. 26, 1990. Redesignated at 57 FR 6199, Feb. 21, 1992.</P>
            </SOURCE>
            <CROSSREF>
              <HD SOURCE="HED">Cross reference:</HD>
              <P>See also Office of Management and Budget notice published at 54 FR 52306, December 20, 1989.</P>
            </CROSSREF>
            <SUBPART>
              <HD SOURCE="HED">Subpart A—General</HD>
              <SECTION>
                <SECTNO>§ 28.100</SECTNO>
                <SUBJECT>Conditions on use of funds.</SUBJECT>

                <P>(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 <PRTPAGE P="117"/>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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 28.105</SECTNO>
                <SUBJECT>Definitions.</SUBJECT>
                <P>For purposes of this part:</P>
                <P>(a) <E T="03">Agency,</E> 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).</P>
                <P>(b) <E T="03">Covered Federal action</E> means any of the following Federal actions:</P>
                <P>(1) The awarding of any Federal contract;</P>
                <P>(2) The making of any Federal grant;</P>
                <P>(3) The making of any Federal loan;</P>
                <P>(4) The entering into of any cooperative agreement; and,</P>
                <P>(5) The extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement.</P>
                <FP>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.</FP>
                <P>(c) <E T="03">Federal contract</E> 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.</P>
                <P>(d) <E T="03">Federal cooperative agreement</E> means a cooperative agreement entered into by an agency.</P>
                <P>(e) <E T="03">Federal grant</E> 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.</P>
                <P>(f) <E T="03">Federal loan</E> means a loan made by an agency. The term does not include loan guarantee or loan insurance.</P>
                <P>(g) <E T="03">Indian tribe</E> and <E T="03">tribal organization</E> 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 <PRTPAGE P="118"/>under the definitions of Indian tribes in that Act.</P>
                <P>(h) <E T="03">Influencing or attempting to influence</E> 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.</P>
                <P>(i) <E T="03">Loan guarantee</E> and <E T="03">loan insurance</E> means an agency's guarantee or insurance of a loan made by a person.</P>
                <P>(j) <E T="03">Local government</E> 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.</P>
                <P>(k) <E T="03">Officer or employee of an agency</E> includes the following individuals who are employed by an agency:</P>
                <P>(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;</P>
                <P>(2) A member of the uniformed services as defined in section 101(3), title 37, U.S. Code;</P>
                <P>(3) A special Government employee as defined in section 202, title 18, U.S. Code; and,</P>
                <P>(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.</P>
                <P>(l) <E T="03">Person</E> 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.</P>
                <P>(m) <E T="03">Reasonable compensation</E> 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.</P>
                <P>(n) <E T="03">Reasonable payment</E> 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.</P>
                <P>(o) <E T="03">Recipient</E> 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>
                <P>(p) <E T="03">Regularly employed</E> 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.</P>
                <P>(q) <E T="03">State</E> 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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 28.110</SECTNO>
                <SUBJECT>Certification and disclosure.</SUBJECT>

                <P>(a) Each person shall file a certification, and a disclosure form, if required, with each submission that initiates agency consideration of such person for:<PRTPAGE P="119"/>
                </P>
                <P>(1) Award of a Federal contract, grant, or cooperative agreement exceeding $100,000; or</P>
                <P>(2) An award of a Federal loan or a commitment providing for the United States to insure or guarantee a loan exceeding $150,000.</P>
                <P>(b) Each person shall file a certification, and a disclosure form, if required, upon receipt by such person of:</P>
                <P>(1) A Federal contract, grant, or cooperative agreement exceeding $100,000; or</P>
                <P>(2) A Federal loan or a commitment providing for the United States to insure or guarantee a loan exceeding $150,000,</P>
                <FP>Unless such person previously filed a certification, and a disclosure form, if required, under paragraph (a) of this section.</FP>
                <P>(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:</P>
                <P>(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</P>
                <P>(2) A change in the person(s) or individual(s) influencing or attempting to influence a covered Federal action; or,</P>
                <P>(3) A change in the officer(s), employee(s), or Member(s) contacted to influence or attempt to influence a covered Federal action.</P>
                <P>(d) Any person who requests or receives from a person referred to in paragraphs (a) or (b) of this section:</P>
                <P>(1) A subcontract exceeding $100,000 at any tier under a Federal contract;</P>
                <P>(2) A subgrant, contract, or subcontract exceeding $100,000 at any tier under a Federal grant;</P>
                <P>(3) A contract or subcontract exceeding $100,000 at any tier under a Federal loan exceeding $150,000; or,</P>

                <P>(4) A contract or subcontract exceeding $100,000 at any tier under a Federal cooperative agreement,
                </P>
                <FP>Shall file a certification, and a disclosure form, if required, to the next tier above.</FP>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(h) No reporting is required for an activity paid for with appropriated funds if that activity is allowable under either subpart B or C.</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart B—Activities by Own Employees</HD>
              <SECTION>
                <SECTNO>§ 28.200</SECTNO>
                <SUBJECT>Agency and legislative liaison.</SUBJECT>

                <P>(a) The prohibition on the use of appropriated funds, in § 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 <PRTPAGE P="120"/>if the payment is for agency and legislative liaison activities not directly related to a covered Federal action.</P>
                <P>(b) For purposes of paragraph (a) of this section, providing any information specifically requested by an agency or Congress is allowable at any time.</P>
                <P>(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:</P>
                <P>(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,</P>
                <P>(2) Technical discussions and other activities regarding the application or adaptation of the person's products or services for an agency's use.</P>
                <P>(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:</P>
                <P>(1) Providing any information not specifically requested but necessary for an agency to make an informed decision about initiation of a covered Federal action;</P>
                <P>(2) Technical discussions regarding the preparation of an unsolicited proposal prior to its official submission; and,</P>
                <P>(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.</P>
                <P>(e) Only those activities expressly authorized by this section are allowable under this section.</P>
                <CITA>[55 FR 6737 and 6752, Feb. 26, 1990. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 28.205</SECTNO>
                <SUBJECT>Professional and technical services.</SUBJECT>
                <P>(a) The prohibition on the use of appropriated funds, in § 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.</P>

                <P>(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.<PRTPAGE P="121"/>
                </P>
                <P>(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.</P>
                <P>(d) Only those services expressly authorized by this section are allowable under this section.</P>
                <CITA>[55 FR 6737 and 6752, Feb. 26, 1990. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 28.210</SECTNO>
                <SUBJECT>Reporting.</SUBJECT>
                <P>No reporting is required with respect to payments of reasonable compensation made to regularly employed officers or employees of a person.</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart C—Activities by Other Than Own Employees</HD>
              <SECTION>
                <SECTNO>§ 28.300</SECTNO>
                <SUBJECT>Professional and technical services.</SUBJECT>
                <P>(a) The prohibition on the use of appropriated funds, in § 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.</P>
                <P>(b) The reporting requirments in § 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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(e) Persons other than officers or employees of a person requesting or receiving a covered Federal action include consultants and trade associations.</P>
                <P>(f) Only those services expressly authorized by this section are allowable under this section.</P>
                <CITA>[55 FR 6737 and 6752, Feb. 26, 1990. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <PRTPAGE P="122"/>
              <HD SOURCE="HED">Subpart D—Penalties and Enforcement</HD>
              <SECTION>
                <SECTNO>§ 28.400</SECTNO>
                <SUBJECT>Penalties.</SUBJECT>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 28.405</SECTNO>
                <SUBJECT>Penalty procedures.</SUBJECT>
                <P>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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 28.410</SECTNO>
                <SUBJECT>Enforcement.</SUBJECT>
                <P>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.</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart E—Exemptions</HD>
              <SECTION>
                <SECTNO>§ 28.500</SECTNO>
                <SUBJECT>Secretary of Defense.</SUBJECT>
                <P>(a) <E T="03">Exemption authority.</E> 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.</P>
                <P>(b) <E T="03">Policy.</E> 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.</P>
                <P>(c) <E T="03">Procedures.</E> Each DoD Component that awards or administers Federal grants, Federal cooperative agreements, or Federal loans subject to this part shall establish procedures whereby:</P>
                <P>(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&amp;E(R), 3080 Defense Pentagon, Washington, DC. 20301-3080.</P>
                <P>(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.</P>
                <CITA>[63 FR 12188, Mar. 12, 1998]</CITA>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart F—Agency Reports</HD>
              <SECTION>
                <SECTNO>§ 28.600</SECTNO>
                <SUBJECT>Semi-annual compilation.</SUBJECT>

                <P>(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 <PRTPAGE P="123"/>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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(h) Agencies shall keep the originals of all disclosure reports in the official files of the agency.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 28.605</SECTNO>
                <SUBJECT>Inspector General report.</SUBJECT>
                <P>(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.</P>
                <P>(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.</P>
                <P>(c) The annual report shall be submitted at the same time the agency submits its annual budget justifications to Congress.</P>
                <P>(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.</P>
              </SECTION>
              <APPENDIX>
                <EAR>Pt. 28, App. A</EAR>
                <HD SOURCE="HED">Appendix A to Part 28—Certification Regarding Lobbying</HD>
                <HD SOURCE="HD2">Certification for Contracts, Grants, Loans, and Cooperative Agreements</HD>
                <P>The undersigned certifies, to the best of his or her knowledge and belief, that:</P>

                <P>(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 <PRTPAGE P="124"/>extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>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.</P>
                <HD SOURCE="HD2">Statement for Loan Guarantees and Loan Insurance</HD>
                <P>The undersigned states, to the best of his or her knowledge and belief, that:</P>
                <P>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.</P>
                <P>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.</P>
              </APPENDIX>
              <APPENDIX>
                <PRTPAGE P="125"/>
                <EAR>Pt. 28, App. B</EAR>
                <HD SOURCE="HED">Appendix B to Part 28—Disclosure Form to Report Lobbying</HD>
                <GPH DEEP="470" SPAN="2">
                  <GID>EC23OC91.000</GID>
                </GPH>
                <GPH DEEP="445" SPAN="2">
                  <PRTPAGE P="126"/>
                  <GID>EC23OC91.001</GID>
                </GPH>
                <GPH DEEP="466" SPAN="2">
                  <PRTPAGE P="127"/>
                  <GID>EC23OC91.002</GID>
                </GPH>
              </APPENDIX>
            </SUBPART>
          </PART>
          <PART>
            <PRTPAGE P="128"/>
            <EAR>Pt. 32</EAR>
            <HD SOURCE="HED">PART 32—ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, AND OTHER NON-PROFIT ORGANIZATIONS</HD>
            <CONTENTS>
              <SUBPART>
                <HD SOURCE="HED">Subpart A—General</HD>
                <SECHD>Sec.</SECHD>
                <SECTNO>32.1</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <SECTNO>32.2</SECTNO>
                <SUBJECT>Definitions</SUBJECT>
                <SECTNO>32.3</SECTNO>
                <SUBJECT>Effect on other issuances.</SUBJECT>
                <SECTNO>32.4</SECTNO>
                <SUBJECT>Deviations.</SUBJECT>
                <SECTNO>32.5</SECTNO>
                <SUBJECT>Subawards.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart B—Pre-Award Requirements</HD>
                <SECTNO>32.10</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <SECTNO>32.11</SECTNO>
                <SUBJECT>Pre-award policies.</SUBJECT>
                <SECTNO>32.12</SECTNO>
                <SUBJECT>Forms for applying for Federal assistance.</SUBJECT>
                <SECTNO>32.13</SECTNO>
                <SUBJECT>Debarment and suspension.</SUBJECT>
                <SECTNO>32.14</SECTNO>
                <SUBJECT>Special award conditions.</SUBJECT>
                <SECTNO>32.15</SECTNO>
                <SUBJECT>Metric system of measurement.</SUBJECT>
                <SECTNO>32.16</SECTNO>
                <SUBJECT>Resource Conservation and Recovery Act (RCRA).</SUBJECT>
                <SECTNO>32.17</SECTNO>
                <SUBJECT>Certifications and representations.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart C—Post-Award Requirements</HD>
                <SUBJGRP>
                  <HD SOURCE="HED">Financial and Program Management</HD>
                  <SECTNO>32.20</SECTNO>
                  <SUBJECT>Purpose of financial and program management.</SUBJECT>
                  <SECTNO>32.21</SECTNO>
                  <SUBJECT>Standards for financial management systems.</SUBJECT>
                  <SECTNO>32.22</SECTNO>
                  <SUBJECT>Payment.</SUBJECT>
                  <SECTNO>32.23</SECTNO>
                  <SUBJECT>Cost sharing or matching.</SUBJECT>
                  <SECTNO>32.24</SECTNO>
                  <SUBJECT>Program income.</SUBJECT>
                  <SECTNO>32.25</SECTNO>
                  <SUBJECT>Revision of budget and program plans.</SUBJECT>
                  <SECTNO>32.26</SECTNO>
                  <SUBJECT>Non-Federal audits.</SUBJECT>
                  <SECTNO>32.27</SECTNO>
                  <SUBJECT>Allowable costs.</SUBJECT>
                  <SECTNO>32.28</SECTNO>
                  <SUBJECT>Period of availability of funds.</SUBJECT>
                </SUBJGRP>
                <SUBJGRP>
                  <HD SOURCE="HED">Property Standards</HD>
                  <SECTNO>32.30</SECTNO>
                  <SUBJECT>Purpose of property standards.</SUBJECT>
                  <SECTNO>32.31</SECTNO>
                  <SUBJECT>Insurance coverage.</SUBJECT>
                  <SECTNO>32.32</SECTNO>
                  <SUBJECT>Real property.</SUBJECT>
                  <SECTNO>32.33</SECTNO>
                  <SUBJECT>Federally-owned and exempt property.</SUBJECT>
                  <SECTNO>32.34</SECTNO>
                  <SUBJECT>Equipment.</SUBJECT>
                  <SECTNO>32.35</SECTNO>
                  <SUBJECT>Supplies.</SUBJECT>
                  <SECTNO>32.36</SECTNO>
                  <SUBJECT>Intangible property.</SUBJECT>
                  <SECTNO>32.37</SECTNO>
                  <SUBJECT>Property trust relationship.</SUBJECT>
                </SUBJGRP>
                <SUBJGRP>
                  <HD SOURCE="HED">Procurement Standards</HD>
                  <SECTNO>32.40</SECTNO>
                  <SUBJECT>Purpose of procurement standards.</SUBJECT>
                  <SECTNO>32.41</SECTNO>
                  <SUBJECT>Recipient responsibilities.</SUBJECT>
                  <SECTNO>32.42</SECTNO>
                  <SUBJECT>Codes of conduct.</SUBJECT>
                  <SECTNO>32.43</SECTNO>
                  <SUBJECT>Competition.</SUBJECT>
                  <SECTNO>32.44</SECTNO>
                  <SUBJECT>Procurement procedures.</SUBJECT>
                  <SECTNO>32.45</SECTNO>
                  <SUBJECT>Cost and price analysis.</SUBJECT>
                  <SECTNO>32.46</SECTNO>
                  <SUBJECT>Procurement records.</SUBJECT>
                  <SECTNO>32.47</SECTNO>
                  <SUBJECT>Contract administration.</SUBJECT>
                  <SECTNO>32.48</SECTNO>
                  <SUBJECT>Contract provisions.</SUBJECT>
                  <SECTNO>32.49</SECTNO>
                  <SUBJECT>Resource Conservation and Recovery Act.</SUBJECT>
                </SUBJGRP>
                <SUBJGRP>
                  <HD SOURCE="HED">Reports and Records</HD>
                  <SECTNO>32.50</SECTNO>
                  <SUBJECT>Purpose of reports and records.</SUBJECT>
                  <SECTNO>32.51</SECTNO>
                  <SUBJECT>Monitoring and reporting program performance.</SUBJECT>
                  <SECTNO>32.52</SECTNO>
                  <SUBJECT>Financial reporting.</SUBJECT>
                  <SECTNO>32.53</SECTNO>
                  <SUBJECT>Retention and access requirements for records.</SUBJECT>
                </SUBJGRP>
                <SUBJGRP>
                  <HD SOURCE="HED">Termination and Enforcement</HD>
                  <SECTNO>32.60</SECTNO>
                  <SUBJECT>Purpose of termination and enforcement.</SUBJECT>
                  <SECTNO>32.61</SECTNO>
                  <SUBJECT>Termination.</SUBJECT>
                  <SECTNO>32.62</SECTNO>
                  <SUBJECT>Enforcement.</SUBJECT>
                </SUBJGRP>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart D—After-the-Award Requirements</HD>
                <SECTNO>32.70</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <SECTNO>32.71</SECTNO>
                <SUBJECT>Closeout procedures.</SUBJECT>
                <SECTNO>32.72</SECTNO>
                <SUBJECT>Subsequent adjustments and continuing responsibilities.</SUBJECT>
                <SECTNO>32.73</SECTNO>
                <SUBJECT>Collection of amounts due.</SUBJECT>
                <APP>Appendix A to Part 32—Contract Provisions</APP>
              </SUBPART>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>5 U.S.C. 301 and 10 U.S.C. 113.</P>
            </AUTH>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>63 FR 12188, Mar. 12, 1998, unless otherwise noted.</P>
            </SOURCE>
            <SUBPART>
              <HD SOURCE="HED">Subpart A—General</HD>
              <SECTION>
                <SECTNO>§ 32.1</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <P>(a) <E T="03">General.</E> This part implements OMB Circular A-110 <SU>1</SU>
                  <FTREF/> and establishes uniform administrative requirements for awards and subawards to institutions of higher education, hospitals, and other non-governmental, non-profit organizations.</P>
                <FTNT>
                  <P>
                    <SU>1</SU> 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.</P>
                </FTNT>
                <P>(b) <E T="03">Relationship to other parts.</E> 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 <PRTPAGE P="129"/>concerning internal policies and procedures should be helpful to recipients of DoD awards.</P>
                <P>(c) <E T="03">Prime awards.</E> 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 §§ 32.4 and 32.14, or unless specifically required by Federal statute or executive order.</P>
                <P>(d) <E T="03">Subawards.</E> 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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 32.2</SECTNO>
                <SUBJECT>Definitions.</SUBJECT>

                <P>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, <E T="03">suspension</E> 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.</P>
                <P>
                  <E T="03">Accrued expenditures.</E> The charges incurred by the recipient during a given period requiring the provision of funds for:</P>
                <P>(1) Goods and other tangible property received;</P>
                <P>(2) Services performed by employees, contractors, subrecipients, and other payees; and</P>
                <P>(3) Other amounts becoming owed under programs for which no current services or performance is required.</P>
                <P>
                  <E T="03">Accrued income.</E> The sum of:</P>
                <P>(1) Earnings during a given period from:</P>
                <P>(i) Services performed by the recipient; and</P>
                <P>(ii) Goods and other tangible property delivered to purchasers.</P>
                <P>(2) Amounts becoming owed to the recipient for which no current services or performance is required by the recipient.</P>
                <P>
                  <E T="03">Acquisition cost of equipment.</E> 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.</P>
                <P>
                  <E T="03">Advance.</E> 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.</P>
                <P>
                  <E T="03">Award.</E> 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.</P>
                <P>
                  <E T="03">Cash contributions.</E> The recipient's cash outlay, including the outlay of <PRTPAGE P="130"/>money contributed to the recipient by third parties.</P>
                <P>
                  <E T="03">Closeout.</E> 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.</P>
                <P>
                  <E T="03">Contract.</E> A procurement contract under an award or subaward, and a procurement subcontract under a recipient's or subrecipient's contract.</P>
                <P>
                  <E T="03">Cost sharing or matching.</E> That portion of project or program costs not borne by the Federal Government.</P>
                <P>
                  <E T="03">Date of completion.</E> 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.</P>
                <P>
                  <E T="03">Disallowed costs.</E> 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.</P>
                <P>
                  <E T="03">DoD Component.</E> 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.</P>
                <P>
                  <E T="03">Equipment.</E> 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.</P>
                <P>
                  <E T="03">Excess property.</E> 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.</P>
                <P>
                  <E T="03">Exempt property.</E> 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.</P>
                <P>
                  <E T="03">Federal funds authorized.</E> 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.</P>
                <P>
                  <E T="03">Federal share (of real property, equipment, or supplies).</E> That percentage of the property's acquisition costs and any improvement expenditures paid with Federal funds.</P>
                <P>
                  <E T="03">Funding period.</E> The period of time when Federal funding is available for obligation by the recipient.</P>
                <P>
                  <E T="03">Intangible property and debt instruments.</E> 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.</P>
                <P>
                  <E T="03">Obligations.</E> 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.</P>
                <P>
                  <E T="03">Outlays</E> or <E T="03">expenditures.</E> 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.<PRTPAGE P="131"/>
                </P>
                <P>
                  <E T="03">Personal property.</E> 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.</P>
                <P>
                  <E T="03">Prior approval.</E> Written approval by an authorized official evidencing prior consent.</P>
                <P>
                  <E T="03">Program income.</E> 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 § 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.</P>
                <P>
                  <E T="03">Project costs.</E> 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.</P>
                <P>
                  <E T="03">Project period.</E> The period established in the award document during which Federal sponsorship begins and ends.</P>
                <P>
                  <E T="03">Property.</E> Real property and personal property (equipment, supplies, intangible property and debt instruments), unless stated otherwise.</P>
                <P>
                  <E T="03">Real property.</E> Land, including land improvements, structures and appurtenances thereto, but excluding movable machinery and equipment.</P>
                <P>
                  <E T="03">Recipient.</E> 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.</P>
                <P>
                  <E T="03">Research and development.</E> All research activities, both basic and applied, and all development activities that are supported at universities, colleges, and other non-profit institutions. <E T="03">Research</E> is defined as a systematic study directed toward fuller scientific knowledge or understanding of the subject studied. <E T="03">Development</E> 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.</P>
                <P>
                  <E T="03">Small award.</E> An award not exceeding the simplified acquisition threshold fixed at 41 U.S.C. 403(11) (currently $100,000).</P>
                <P>
                  <E T="03">Subaward.</E> 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.</P>
                <P>
                  <E T="03">Subrecipient.</E> The legal entity to which a subaward is made and which is <PRTPAGE P="132"/>accountable to the recipient for the use of the funds provided.</P>
                <P>
                  <E T="03">Supplies.</E> 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.”</P>
                <P>
                  <E T="03">Suspension.</E> 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.</P>
                <P>
                  <E T="03">Termination.</E> The cancellation of an award, in whole or in part, at any time prior to the date of completion.</P>
                <P>
                  <E T="03">Third party in-kind contributions.</E> 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.</P>
                <P>
                  <E T="03">Unliquidated obligations.</E> The amount of obligations incurred by the recipient:</P>
                <P>(1) That have not been paid, if financial reports are prepared on a cash basis.</P>
                <P>(2) For which an outlay has not been recorded, if reports are prepared on an accrued expenditure basis.</P>
                <P>
                  <E T="03">Unobligated balance.</E> 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.</P>
                <P>
                  <E T="03">Unrecovered indirect cost.</E> The difference between the amount awarded and the amount which could have been awarded under the recipient's approved negotiated indirect cost rate.</P>
                <P>
                  <E T="03">Working capital advance.</E> A procedure whereby funds are advanced to the recipient to cover its estimated disbursement needs for a given initial period.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 32.3</SECTNO>
                <SUBJECT>Effect on other issuances.</SUBJECT>
                <P>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 § 32.4.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 32.4</SECTNO>
                <SUBJECT>Deviations.</SUBJECT>
                <P>(a) <E T="03">Individual deviations.</E> 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).</P>
                <P>(b) <E T="03">Small awards.</E> DoD Components may apply less restrictive requirements than the provisions of this part when awarding small awards, except for those requirements which are statutory.</P>
                <P>(c) <E T="03">Other class deviations.</E> (1) For classes of awards other than small awards, the Director of Defense Research and Engineering (DDR&amp;E), or his or her designee, may grant exceptions from the requirements of this part:</P>
                <P>(i) With the written concurrence of the Office of the Management and Budget (OMB). The DDR&amp;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</P>
                <P>(ii) When exceptions are not prohibited by statute.</P>
                <P>(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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 32.5</SECTNO>
                <SUBJECT>Subawards.</SUBJECT>

                <P>Unless sections of this part specifically exclude subrecipients from coverage, the provisions of this part shall be applied to subrecipients performing <PRTPAGE P="133"/>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.</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart B—Pre-Award Requirements</HD>
              <SECTION>
                <SECTNO>§ 32.10</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <P>Sections 32.11 through 32.17 prescribe application forms and instructions and other pre-award matters.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 32.11</SECTNO>
                <SUBJECT>Pre-award policies.</SUBJECT>
                <P>(a) <E T="03">Use of grants, cooperative agreements, and contracts.</E> (1) OMB Circular A-110 states that:</P>
                <P>(i) In each instance, the Federal awarding agency shall decide on the appropriate award instrument (i.e., grant, cooperative agreement, or contract).</P>
                <P>(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:</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.”</P>
                <P>(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.</P>
                <P>(b) <E T="03">Public notice and priority setting.</E> 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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 32.12</SECTNO>
                <SUBJECT>Forms for applying for Federal assistance.</SUBJECT>

                <P>(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 <E T="51">2</E>
                  <FTREF/> (SF-424) series.</P>
                <FTNT>
                  <P>
                    <SU>2</SU> 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.</P>
                </FTNT>
                <P>(b) Applicants shall use the SF-424 series or those forms and instructions prescribed by DoD Components.</P>
                <P>(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.</P>
                <P>(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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 32.13</SECTNO>
                <SUBJECT>Debarment and suspension.</SUBJECT>

                <P>DoD Components and recipients shall comply with the nonprocurement debarment and suspension common rule at 32 CFR part 25. This common rule <PRTPAGE P="134"/>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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 32.14</SECTNO>
                <SUBJECT>Special award conditions.</SUBJECT>
                <P>(a) DoD Components may impose additional requirements as needed, over and above those provided in this part, if an applicant or recipient:</P>
                <P>(1) Has a history of poor performance;</P>
                <P>(2) Is not financially stable;</P>
                <P>(3) Has a management system that does not meet the standards prescribed in this part;</P>
                <P>(4) Has not conformed to the terms and conditions of a previous award; or</P>
                <P>(5) Is not otherwise responsible.</P>
                <P>(b) Before imposing additional requirements, DoD Components shall notify the applicant or recipient in writing as to:</P>
                <P>(1) The nature of the additional requirements;</P>
                <P>(2) The reason why the additional requirements are being imposed;</P>
                <P>(3) The nature of the corrective action needed;</P>
                <P>(4) The time allowed for completing the corrective actions; and</P>
                <P>(5) The method for requesting reconsideration of the additional requirements imposed.</P>
                <P>(c) Any special conditions shall be promptly removed once the conditions that prompted them have been corrected.</P>
                <P>(d) Grants officers:</P>
                <P>(1) Should coordinate the imposition and removal of special award conditions with the cognizant grants administration office identified in 32 CFR 22.710.</P>
                <P>(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).</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 32.15</SECTNO>
                <SUBJECT>Metric system of measurement.</SUBJECT>
                <P>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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 32.16</SECTNO>
                <SUBJECT>Resource Conservation and Recovery Act (RCRA).</SUBJECT>
                <P>Recipients’ procurements shall comply with applicable requirements of the Resource Conservation and Recovery Act (RCRA), as described at § 32.49.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 32.17</SECTNO>
                <SUBJECT>Certifications and representations.</SUBJECT>
                <P>(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.</P>
                <P>(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.</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart C—Post-Award Requirements</HD>
              <SUBJGRP>
                <HD SOURCE="HED">Financial and Program Management</HD>
                <SECTION>
                  <SECTNO>§ 32.20</SECTNO>
                  <SUBJECT>Purpose of financial and program management.</SUBJECT>
                  <P>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.</P>
                </SECTION>
                <SECTION>
                  <PRTPAGE P="135"/>
                  <SECTNO>§ 32.21</SECTNO>
                  <SUBJECT>Standards for financial management systems.</SUBJECT>
                  <P>(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.</P>
                  <P>(b) Recipients’ financial management systems shall provide for the following.</P>
                  <P>(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 § 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.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.”</P>
                  <P>(6) Written procedures for determining the reasonableness, allocability and allowability of costs in accordance with the provisions of the applicable Federal cost principles (see § 32.27) and the terms and conditions of the award.</P>
                  <P>(7) Accounting records including cost accounting records that are   supported by source documentation.</P>
                  <P>(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.</P>
                  <P>(d) The DoD Component may require adequate fidelity bond coverage where the recipient lacks sufficient coverage to protect the Federal Government's interest.</P>
                  <P>(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.”</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.22</SECTNO>
                  <SUBJECT>Payment.</SUBJECT>
                  <P>(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.</P>
                  <P>(b) Recipients are to be paid in advance, provided they maintain or demonstrate the willingness to maintain:</P>

                  <P>(1) Written procedures that minimize the time elapsing between the transfer of funds and disbursement by the recipient; and<PRTPAGE P="136"/>
                  </P>
                  <P>(2) Financial management systems that meet the standards for fund control and accountability as established in § 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.</P>
                  <P>(c) Whenever possible, advances shall be consolidated to cover anticipated cash needs for all awards made by the DoD Component to the recipient.</P>
                  <P>(1) Advance payment mechanisms include, but are not limited to, Treasury check and electronic funds transfer.</P>
                  <P>(2) Advance payment mechanisms are subject to 31 CFR part 205.</P>
                  <P>(3) Recipients shall be authorized to submit requests for advances and reimbursements at least monthly when electronic fund transfers are not used.</P>
                  <P>(d) Requests for Treasury check advance payment shall be submitted on SF-270,<SU>3</SU>
                    <FTREF/> “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.</P>
                  <FTNT>
                    <P>
                      <SU>3</SU> See footnote 2 to § 32.12(a).</P>
                  </FTNT>
                  <P>(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.</P>
                  <P>(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)).</P>
                  <P>(2) Recipients shall be authorized to submit requests for reimbursement at least monthly when electronic funds transfers are not used.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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:</P>
                  <P>(1) A recipient has failed to comply with the project objectives, the terms and conditions of the award, or Federal reporting requirements; or</P>

                  <P>(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 <PRTPAGE P="137"/>the Federal Government is liquidated (also see 32 CFR 22.420(b)(2) and 22.820).</P>
                  <P>(i) Standards governing the use of banks and other institutions as depositories of funds advanced under awards are as follows:</P>
                  <P>(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.</P>
                  <P>(2) Advances of Federal funds shall be deposited and maintained in insured accounts whenever possible.</P>
                  <P>(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).</P>
                  <P>(k) Recipients shall maintain advances of Federal funds in interest bearing accounts, unless:</P>
                  <P>(1) The recipient receives less than $120,000 in Federal awards per year;</P>
                  <P>(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</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(3) Recipients that do not have electronic remittance capability should use a check.</P>
                  <P>(4) Interest amounts up to $250 per year may be retained by the recipient for administrative expense.</P>
                  <P>(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.</P>
                  <P>(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,<SU>4</SU>
                    <FTREF/> “Outlay Report and Request for Reimbursement for Construction Programs.”</P>
                  <FTNT>
                    <P>
                      <SU>4</SU> See footnote 2 to § 32.12(a).</P>
                  </FTNT>
                  <P>(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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.23</SECTNO>
                  <SUBJECT>Cost sharing or matching.</SUBJECT>
                  <P>(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:</P>
                  <P>(1) Are verifiable from the recipient's records.</P>
                  <P>(2) Are not included as contributions for any other federally-assisted project or program.</P>
                  <P>(3) Are necessary and reasonable for proper and efficient accomplishment of project or program objectives.</P>
                  <P>(4) Are allowable under the applicable cost principles.</P>

                  <P>(5) Are not paid by the Federal Government under another award, except <PRTPAGE P="138"/>where authorized by Federal statute to be used for cost sharing or matching.</P>
                  <P>(6) Are provided for in the approved budget when required by the DoD Component.</P>
                  <P>(7) Conform to other provisions of this part, as applicable.</P>
                  <P>(b) Unrecovered indirect costs (see definition in § 32.2) may be included as part of cost sharing or matching.</P>
                  <P>(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:</P>
                  <P>(1) The certified value of the remaining life of the property recorded in the recipient's accounting records at the time of donation; or</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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:</P>
                  <P>(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</P>
                  <P>(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.</P>
                  <P>(h) The value of donated property shall be determined in accordance with the usual accounting policies of the recipient, with the following qualifications.</P>
                  <P>(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.</P>
                  <P>(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.</P>

                  <P>(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.<PRTPAGE P="139"/>
                  </P>
                  <P>(4) The value of loaned equipment shall not exceed its fair rental value.</P>
                  <P>(i) The following requirements pertain to the recipient's supporting records for in-kind contributions from third parties:</P>
                  <P>(1) Volunteer services shall be documented and, to the extent feasible, supported by the same methods used by the recipient for its own employees.</P>
                  <P>(2) The basis for determining the valuation for personal service and property shall be documented.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.24</SECTNO>
                  <SUBJECT>Program income.</SUBJECT>
                  <P>(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.</P>
                  <P>(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:</P>
                  <P>(1) Added to funds committed to the project by the DoD Component and recipient and used to further eligible project or program objectives.</P>
                  <P>(2) Used to finance the non-Federal share of the project or program.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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 § 32.14.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(g) Proceeds from the sale of property shall be handled in accordance with the requirements of the Property Standards (see §§ 32.30 through 32.37).</P>
                  <P>(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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.25</SECTNO>
                  <SUBJECT>Revision of budget and program plans.</SUBJECT>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.</P>

                  <P>(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).<PRTPAGE P="140"/>
                  </P>
                  <P>(2) Change in a key person specified in the application or award document.</P>
                  <P>(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.</P>
                  <P>(4) The need for additional Federal funding.</P>
                  <P>(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.</P>
                  <P>(6) The inclusion, unless waived by the DoD Component, of costs that require prior approval in accordance with OMB Circular A-21,<SU>5</SU>
                    <FTREF/> “Cost Principles for Institutions of Higher Education,” OMB Circular A-122,<SU>6</SU>
                    <FTREF/> “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.</P>
                  <FTNT>
                    <P>
                      <SU>5</SU> See footnote 1 to § 32.1(a).</P>
                  </FTNT>
                  <FTNT>
                    <P>
                      <SU>6</SU> See footnote 1 to § 32.1(a).</P>
                  </FTNT>
                  <P>(7) The transfer of funds allotted for training allowances (direct payment to trainees) to other categories of expense.</P>
                  <P>(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.</P>
                  <P>(9) If required by the DoD Component, the transfer of funds among direct cost categories that is described in paragraph (e) of this section.</P>
                  <P>(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).</P>
                  <P>(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:</P>
                  <P>(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).</P>
                  <P>(ii) Carrying forward unobligated balances to subsequent funding periods.</P>
                  <P>(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:</P>
                  <P>(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).</P>

                  <P>(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.<PRTPAGE P="141"/>
                  </P>
                  <P>(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.</P>
                  <P>(f) For construction awards, recipients shall request prior written approval promptly from grants officers for budget revisions whenever:</P>
                  <P>(1) The revision results from changes in the scope or the objective of the project or program;</P>
                  <P>(2) The need arises for additional Federal funds to complete the project; or</P>
                  <P>(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 § 32.27.</P>
                  <P>(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.</P>
                  <P>(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 § 32.4(c).</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.26</SECTNO>
                  <SUBJECT>Non-Federal audits.</SUBJECT>
                  <P>(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,<SU>7</SU>
                    <FTREF/> “Audits of States, Local Governments, and Non-Profit Organizations.”</P>
                  <FTNT>
                    <P>
                      <SU>7</SU> See footnote 1 to § 32.1(a).</P>
                  </FTNT>
                  <P>(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.”</P>
                  <P>(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.</P>
                  <P>(d) For-profit organizations that are subrecipients shall be subject to the audit requirements specified in 32 CFR 34.16.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.27</SECTNO>
                  <SUBJECT>Allowable costs.</SUBJECT>
                  <P>(a) <E T="03">General.</E> 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 <PRTPAGE P="142"/>cost principles applicable to the entity incurring the costs.</P>
                  <P>(b) <E T="03">Governmental organizations.</E> 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,<SU>8</SU>
                    <FTREF/> “Cost Principles for State and Local Governments.”</P>
                  <FTNT>
                    <P>
                      <SU>8</SU> See footnote 1 to § 32.1(a).</P>
                  </FTNT>
                  <P>(c) <E T="03">Non-profit organizations.</E> 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.”</P>
                  <P>(d) <E T="03">Higher educational institutions.</E> 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.”</P>
                  <P>(e) <E T="03">Hospitals.</E> 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.”</P>
                  <P>(f) <E T="03">For-profit organizations.</E> 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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.28</SECTNO>
                  <SUBJECT>Period of availability of funds.</SUBJECT>
                  <P>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 § 32.25(d)(2)(i)) authorized by the DoD Component.</P>
                </SECTION>
              </SUBJGRP>
              <SUBJGRP>
                <HD SOURCE="HED">Property Standards</HD>
                <SECTION>
                  <SECTNO>§ 32.30</SECTNO>
                  <SUBJECT>Purpose of property standards.</SUBJECT>
                  <P>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 §§ 32.31 through 32.37.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.31</SECTNO>
                  <SUBJECT>Insurance coverage.</SUBJECT>
                  <P>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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.32</SECTNO>
                  <SUBJECT>Real property.</SUBJECT>
                  <P>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:</P>
                  <P>(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.</P>

                  <P>(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 <PRTPAGE P="143"/>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.</P>
                  <P>(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:</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.33</SECTNO>
                  <SUBJECT>Federally-owned and exempt property.</SUBJECT>
                  <P>(a) <E T="03">Federally-owned property.</E> (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.</P>
                  <P>(2) If the DoD Component that made the award has no further need for the property, it shall be declared excess and either:</P>
                  <P>(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</P>
                  <P>(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.</P>
                  <P>(b) <E T="03">Exempt property.</E> (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.”</P>

                  <P>(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.<PRTPAGE P="144"/>
                  </P>
                  <P>(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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.34</SECTNO>
                  <SUBJECT>Equipment.</SUBJECT>
                  <P>(a) Title to equipment acquired by a recipient with Federal funds shall vest in the recipient, subject to conditions of this section.</P>
                  <P>(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.</P>
                  <P>(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:</P>
                  <P>(1) First, activities sponsored by the DoD Component that funded the original project.</P>
                  <P>(2) Second, activities sponsored by other DoD Components.</P>
                  <P>(3) Then, activities sponsored by other Federal agencies.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(f) The recipient's property management standards for equipment acquired with Federal funds and federally-owned property shall include all of the following:</P>
                  <P>(1) Records for equipment and federally-owned property shall be maintained accurately and shall include the following information:</P>
                  <P>(i) A description of the equipment or federally-owned property.</P>
                  <P>(ii) Manufacturer's serial number, model number, Federal stock number, national stock number, or other identification number.</P>
                  <P>(iii) Source of the equipment or federally-owned property, including the award number.</P>
                  <P>(iv) Whether title vests in the recipient or the Federal Government.</P>
                  <P>(v) Acquisition date (or date received, if the property was furnished by the Federal Government) and cost.</P>
                  <P>(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).</P>
                  <P>(vii) Location and condition of the equipment or federally-owned property and the date the information was reported.</P>
                  <P>(viii) Unit acquisition cost.</P>
                  <P>(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.</P>

                  <P>(2) Property owned by the Federal Government shall be identified to indicate Federal ownership.<PRTPAGE P="145"/>
                  </P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(5) Adequate maintenance procedures shall be implemented to keep the equipment or federally-owned property in good condition.</P>
                  <P>(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.</P>
                  <P>(g) When the recipient no longer needs the equipment, the equipment may be used for other activities in accordance with the following standards.</P>
                  <P>(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.</P>
                  <P>(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:</P>
                  <P>(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:</P>
                  <P>(A) The DoD Component shall determine whether the equipment can be used to meet DoD requirements.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.</P>

                  <P>(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.<PRTPAGE P="146"/>
                  </P>
                  <P>(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 § 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.</P>
                  <P>(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.</P>
                  <P>(3) When the DoD Component exercises its right to take title, the equipment shall be subject to the provisions for federally-owned property.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.35</SECTNO>
                  <SUBJECT>Supplies.</SUBJECT>
                  <P>(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.</P>
                  <P>(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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.36</SECTNO>
                  <SUBJECT>Intangible property.</SUBJECT>
                  <P>(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.</P>
                  <P>(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.”</P>
                  <P>(c) The Federal Government has the right to:</P>
                  <P>(1) Obtain, reproduce, publish or otherwise use the data first produced under an award; and</P>
                  <P>(2) Authorize others to receive, reproduce, publish, or otherwise use such data for Federal purposes.</P>
                  <P>(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)).</P>
                  <P>(2) The following definitions apply for purposes of this paragraph (d):</P>
                  <P>(i) <E T="03">Research data</E> 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 T="03">e.g.</E>, laboratory samples). <E T="03">Research data</E> also do not include:<PRTPAGE P="147"/>
                  </P>
                  <P>(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</P>
                  <P>(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.</P>
                  <P>(ii) <E T="03">Published</E> is defined as either when:</P>
                  <P>(A) Research findings are published in a peer-reviewed scientific or technical journal; or</P>
                  <P>(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.</P>
                  <P>(iii) <E T="03">Used by the Federal Government in developing an agency action that has the force and effect of law</E> 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.</P>
                  <P>(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 § 32.34(g).</P>
                  <CITA>[63 FR 12188, Mar. 12, 1998, as amended at 65 FR 14407, 14416, Mar. 16, 2000]</CITA>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.37</SECTNO>
                  <SUBJECT>Property trust relationship.</SUBJECT>
                  <P>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.</P>
                </SECTION>
              </SUBJGRP>
              <SUBJGRP>
                <HD SOURCE="HED">Procurement Standards</HD>
                <SECTION>
                  <SECTNO>§ 32.40</SECTNO>
                  <SUBJECT>Purpose of procurement standards.</SUBJECT>
                  <P>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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.41</SECTNO>
                  <SUBJECT>Recipient responsibilities.</SUBJECT>
                  <P>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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.42</SECTNO>
                  <SUBJECT>Codes of conduct.</SUBJECT>

                  <P>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 <PRTPAGE P="148"/>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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.43</SECTNO>
                  <SUBJECT>Competition.</SUBJECT>
                  <P>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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.44</SECTNO>
                  <SUBJECT>Procurement procedures.</SUBJECT>
                  <P>(a) All recipients shall establish written procurement procedures. These procedures shall provide, at a minimum, that:</P>
                  <P>(1) Recipients avoid purchasing unnecessary items;</P>
                  <P>(2) Where appropriate, an analysis is made of lease and purchase alternatives to determine which would be the most economical and practical procurement; and</P>
                  <P>(3) Solicitations for goods and services provide for all of the following:</P>
                  <P>(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.</P>
                  <P>(ii) Requirements which the bidder/offeror must fulfill and all other factors to be used in evaluating bids or proposals.</P>
                  <P>(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.</P>
                  <P>(iv) The specific features of “brand name or equal” descriptions that bidders are required to meet when such items are included in the solicitation.</P>
                  <P>(v) The acceptance, to the extent practicable and economically feasible, of products and services dimensioned in the metric system of measurement.</P>
                  <P>(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.</P>
                  <P>(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:</P>
                  <P>(1) Ensure that small businesses, minority-owned firms, and women's business enterprises are used to the fullest extent practicable.</P>
                  <P>(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.</P>
                  <P>(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.</P>

                  <P>(4) Encourage contracting with consortiums of small businesses, minority-owned firms and women's business enterprises when a contract is too large <PRTPAGE P="149"/>for one of these firms to handle individually.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.”</P>
                  <P>(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:</P>
                  <P>(1) A recipient's procurement procedures or operation fails to comply with the procurement standards in this part.</P>
                  <P>(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.</P>
                  <P>(3) The procurement, which is expected to exceed the simplified acquisition threshold, specifies a “brand name” product.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.45</SECTNO>
                  <SUBJECT>Cost and price analysis.</SUBJECT>
                  <P>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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.46</SECTNO>
                  <SUBJECT>Procurement records.</SUBJECT>
                  <P>Procurement records and files for purchases in excess of the simplified acquisition threshold shall include the following at a minimum:</P>
                  <P>(a) Basis for contractor selection;</P>
                  <P>(b) Justification for lack of competition when competitive bids or offers are not obtained; and</P>
                  <P>(c) Basis for award cost or price.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.47</SECTNO>
                  <SUBJECT>Contract administration.</SUBJECT>
                  <P>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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.48</SECTNO>
                  <SUBJECT>Contract provisions.</SUBJECT>

                  <P>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:<PRTPAGE P="150"/>
                  </P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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:</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(4) Where bonds are required in the situations described in §§ 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.”</P>
                  <P>(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.</P>
                  <P>(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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.49</SECTNO>
                  <SUBJECT>Resource Conservation and Recovery Act.</SUBJECT>

                  <P>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 <PRTPAGE P="151"/>recycled products pursuant to the EPA guidelines.</P>
                </SECTION>
              </SUBJGRP>
              <SUBJGRP>
                <HD SOURCE="HED">Reports and Records</HD>
                <SECTION>
                  <SECTNO>§ 32.50</SECTNO>
                  <SUBJECT>Purpose of reports and records.</SUBJECT>
                  <P>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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.51</SECTNO>
                  <SUBJECT>Monitoring and reporting program performance.</SUBJECT>
                  <P>(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 § 32.26.</P>
                  <P>(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.</P>
                  <P>(c) If inappropriate, a final technical or performance report shall not be required after completion of the project.</P>
                  <P>(d) When required, performance reports shall generally contain, for each award, brief information on each of the following:</P>
                  <P>(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 § 32.21 (a) and (b)(4)).</P>
                  <P>(2) Reasons why established goals were not met, if appropriate.</P>
                  <P>(3) Other pertinent information including, when appropriate, analysis and explanation of cost overruns or high unit costs.</P>
                  <P>(e) Recipients shall not be required to submit more than the original and two copies of performance reports.</P>
                  <P>(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.</P>
                  <P>(g) DoD Components’ representatives may make site visits, as needed.</P>
                  <P>(h) DoD Components shall comply with applicable clearance requirements of 5 CFR part 1320 when requesting performance data from recipients.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.52</SECTNO>
                  <SUBJECT>Financial reporting.</SUBJECT>
                  <P>(a) The following forms or such other forms as may be approved by OMB are authorized for obtaining financial information from recipients:</P>
                  <P>(1) <E T="03">SF-269 </E>
                    <SU>9</SU>
                    <FTREF/>
                    <E T="03"> or SF-269A,</E>
                    <SU>10</SU>
                    <FTREF/>
                    <E T="03"> Financial Status Report.</E> (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,<SU>11</SU>
                    <FTREF/> 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.</P>
                  <FTNT>
                    <P>
                      <SU>9</SU> See footnote 2 to § 32.12(a).</P>
                  </FTNT>
                  <FTNT>
                    <P>
                      <SU>10</SU> See footnote 2 to § 32.12(a).</P>
                  </FTNT>
                  <FTNT>
                    <P>
                      <SU>11</SU> See footnote 2 to § 32.12(a).</P>
                  </FTNT>

                  <P>(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 <PRTPAGE P="152"/>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.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(2) <E T="03">SF-272, Report of Federal Cash Transactions.</E> (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.<SU>12</SU>
                    <FTREF/> The grants officer shall use this report to monitor cash advanced to recipients and to obtain disbursement information for each award to the recipients.</P>
                  <FTNT>
                    <P>
                      <SU>12</SU> See footnote 2 to § 32.12(a).</P>
                  </FTNT>
                  <P>(ii) DoD Components may require forecasts of Federal cash requirements in the “Remarks” section of the report.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(v) DoD Components may waive the requirement for submission of the SF-272 for any one of the following reasons:</P>
                  <P>(A) When monthly advances do not exceed $25,000 per recipient, provided that such advances are monitored through other forms contained in this section;</P>
                  <P>(B) If, in the grants officer's opinion, the recipient's accounting controls are adequate to minimize excessive Federal advances; or</P>
                  <P>(C) When electronic payment mechanisms or SF-270 forms provide adequate data.</P>
                  <P>(b) When the DoD Component needs additional information or more frequent reports, the following shall be observed:</P>
                  <P>(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.</P>
                  <P>(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 § 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.</P>
                  <P>(3) Grants officers are encouraged to shade out any line item on any report if not necessary.</P>
                  <P>(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.</P>
                  <P>(5) DoD Components may provide computer or electronic outputs to recipients when it expedites or contributes to the accuracy of reporting.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.53</SECTNO>
                  <SUBJECT>Retention and access requirements for records.</SUBJECT>

                  <P>(a) This section sets forth requirements for record retention and access <PRTPAGE P="153"/>to records for awards to recipients. DoD Components shall not impose any other record retention or access requirements upon recipients.</P>
                  <P>(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:</P>
                  <P>(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.</P>
                  <P>(2) Records for real property and equipment acquired with Federal funds shall be retained for 3 years after final disposition.</P>
                  <P>(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.</P>
                  <P>(4) Indirect cost rate proposals, cost allocations plans, and related records, for which retention requirements are specified in paragraph (g) of this section.</P>
                  <P>(c) Copies of original records may be substituted for the original records if authorized by the grants officer.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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).</P>
                  <P>(1) <E T="03">If submitted for negotiation.</E> 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.</P>
                  <P>(2) <E T="03">If not submitted for negotiation.</E> 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.</P>

                  <P>(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 <PRTPAGE P="154"/>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.</P>
                </SECTION>
              </SUBJGRP>
              <SUBJGRP>
                <HD SOURCE="HED">Termination and Enforcement</HD>
                <SECTION>
                  <SECTNO>§ 32.60</SECTNO>
                  <SUBJECT>Purpose of termination and enforcement.</SUBJECT>
                  <P>Sections 32.61 and 32.62 set forth uniform suspension, termination and enforcement procedures.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.61</SECTNO>
                  <SUBJECT>Termination.</SUBJECT>
                  <P>(a) Awards may be terminated in whole or in part only as follows:</P>
                  <P>(1) By the grants officer, if a recipient materially fails to comply with the terms and conditions of an award;</P>
                  <P>(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</P>
                  <P>(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.</P>
                  <P>(b) If costs are allowed under an award, the responsibilities of the recipient referred to in § 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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 32.62</SECTNO>
                  <SUBJECT>Enforcement.</SUBJECT>
                  <P>(a) <E T="03">Remedies for noncompliance.</E> 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 § 32.14, take one or more of the following actions, as appropriate in the circumstances:</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(3) Wholly or partly suspend or terminate the current award.</P>
                  <P>(4) Withhold further awards for the project or program.</P>
                  <P>(5) Take other remedies that may be legally available.</P>
                  <P>(b) <E T="03">Hearings and appeals.</E> 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.</P>
                  <P>(c) <E T="03">Effects of suspension and termination.</E> 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:</P>

                  <P>(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<PRTPAGE P="155"/>
                  </P>
                  <P>(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.</P>
                  <P>(d) <E T="03">Relationship to debarment and suspension.</E> 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.</P>
                </SECTION>
              </SUBJGRP>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart D—After-the-Award Requirements</HD>
              <SECTION>
                <SECTNO>§ 32.70</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <P>Sections 32.71 through 32.73 contain closeout procedures and other procedures for subsequent disallowances and adjustments.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 32.71</SECTNO>
                <SUBJECT>Closeout procedures.</SUBJECT>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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<SU>13</SU>
                  <FTREF/> governs unreturned amounts that become delinquent debts (see 32 CFR 22.820).</P>
                <FTNT>
                  <P>
                    <SU>13</SU> See footnote 1 to § 32.1(a).</P>
                </FTNT>
                <P>(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.</P>
                <P>(f) The recipient shall account for any real and personal property acquired with Federal funds or received from the Federal Government in accordance with §§ 32.31 through 32.37.</P>
                <P>(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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 32.72</SECTNO>
                <SUBJECT>Subsequent adjustments and continuing responsibilities.</SUBJECT>
                <P>(a) The closeout of an award does not affect any of the following:</P>
                <P>(1) The right of the Department of Defense to disallow costs and recover funds on the basis of a later audit or other review.</P>
                <P>(2) The obligation of the recipient to return any funds due as a result of later refunds, corrections, or other transactions.</P>
                <P>(3) Audit requirements in § 32.26.</P>
                <P>(4) Property management requirements in §§ 32.31 through 32.37.</P>
                <P>(5) Records retention as required in § 32.53.</P>
                <P>(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 § 32.73(a), including those for property management as applicable, are considered and provisions made for continuing responsibilities of the recipient, as appropriate.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 32.73</SECTNO>
                <SUBJECT>Collection of amounts due.</SUBJECT>
                <P>(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.</P>
                <P>(b) OMB Circular A-110 informs each Federal agency that:</P>

                <P>(1) If a debt is not paid within a reasonable period after the demand for payment, the Federal agency may reduce the debt by:<PRTPAGE P="156"/>
                </P>
                <P>(i) Making administrative offset against other requests for reimbursement.</P>
                <P>(ii) Withholding advance payments otherwise due to the recipient.</P>
                <P>(iii) Taking other action permitted by statute.</P>
                <P>(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.”</P>
                <P>(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.</P>
              </SECTION>
              <APPENDIX>
                <EAR>Pt. 32, App. A</EAR>
                <HD SOURCE="HED">Appendix A to Part 32—Contract Provisions</HD>
                <P>All contracts awarded by a recipient, including those for amounts less than the simplified acquisition threshold, shall contain the following provisions as applicable:</P>
                <P>1. <E T="03">Equal Employment Opportunity</E>—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.”</P>
                <P>2. <E T="03">Copeland “Anti-Kickback” Act (18 U.S.C. 874 and 40 U.S.C. 276c)</E>—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.</P>
                <P>3. <E T="03">Davis-Bacon Act, as amended (40 U.S.C. 276a to a-7)</E>—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.</P>
                <P>4. <E T="03">Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333)</E>—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<FR>1/2</FR> 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.</P>
                <P>5. <E T="03">Rights to Inventions Made Under a Contract, Grant or Cooperative Agreement</E>—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 <PRTPAGE P="157"/>and Small Business Firms Under Government Grants, Contracts and Cooperative Agreements.”</P>
                <P>6. <E T="03">Clean Air Act</E> (42 U.S.C. 7401 <E T="03">et seq.</E>) and the Federal Water Pollution Control Act (33 U.S.C. 1251 <E T="03">et seq.</E>), 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 <E T="03">et seq.</E>) and the Federal Water Pollution Control Act as amended (33 U.S.C. 1251 <E T="03">et seq.</E>). Violations shall be reported to the responsible DoD Component and the Regional Office of the Environmental Protection Agency (EPA).</P>
                <P>7. <E T="03">Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)</E>—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.</P>
                <P>8. <E T="03">Debarment and Suspension (E.O.s 12549 and 12689)</E>—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.</P>
              </APPENDIX>
            </SUBPART>
          </PART>
          <PART>
            <EAR>Pt. 33</EAR>
            <HD SOURCE="HED">PART 33—UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE AGREEMENTS TO STATE AND LOCAL GOVERNMENTS</HD>
            <CONTENTS>
              <SUBPART>
                <HD SOURCE="HED">Subpart A—General</HD>
                <SECHD>Sec.</SECHD>
                <SECTNO>33.1</SECTNO>
                <SUBJECT>Purpose and scope of this part.</SUBJECT>
                <SECTNO>33.2</SECTNO>
                <SUBJECT>Scope of subpart.</SUBJECT>
                <SECTNO>33.3</SECTNO>
                <SUBJECT>Definitions.</SUBJECT>
                <SECTNO>33.4</SECTNO>
                <SUBJECT>Applicability.</SUBJECT>
                <SECTNO>33.5</SECTNO>
                <SUBJECT>Effect on other issuances.</SUBJECT>
                <SECTNO>33.6</SECTNO>
                <SUBJECT>Additions and exceptions.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart B—Pre-Award Requirements</HD>
                <SECTNO>33.10</SECTNO>
                <SUBJECT>Forms for applying for grants.</SUBJECT>
                <SECTNO>33.11</SECTNO>
                <SUBJECT>State plans.</SUBJECT>
                <SECTNO>33.12</SECTNO>
                <SUBJECT>Special grant or subgrant conditions for “high-risk” grantees.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart C—Post-Award Requirements</HD>
                <SUBJGRP>
                  <HD SOURCE="HED">Financial Administration</HD>
                  <SECTNO>33.20</SECTNO>
                  <SUBJECT>Standards for financial management systems.</SUBJECT>
                  <SECTNO>33.21</SECTNO>
                  <SUBJECT>Payment.</SUBJECT>
                  <SECTNO>33.22</SECTNO>
                  <SUBJECT>Allowable costs.</SUBJECT>
                  <SECTNO>33.23</SECTNO>
                  <SUBJECT>Period of availability of funds.</SUBJECT>
                  <SECTNO>33.24</SECTNO>
                  <SUBJECT>Matching or cost sharing.</SUBJECT>
                  <SECTNO>33.25</SECTNO>
                  <SUBJECT>Program income.</SUBJECT>
                  <SECTNO>33.26</SECTNO>
                  <SUBJECT>Non-Federal audit.</SUBJECT>
                </SUBJGRP>
                <SUBJGRP>
                  <HD SOURCE="HED">Changes, Property, and Subawards</HD>
                  <SECTNO>33.30</SECTNO>
                  <SUBJECT>Changes.</SUBJECT>
                  <SECTNO>33.31</SECTNO>
                  <SUBJECT>Real property.</SUBJECT>
                  <SECTNO>33.32</SECTNO>
                  <SUBJECT>Equipment.</SUBJECT>
                  <SECTNO>33.33</SECTNO>
                  <SUBJECT>Supplies.</SUBJECT>
                  <SECTNO>33.34</SECTNO>
                  <SUBJECT>Copyrights.</SUBJECT>
                  <SECTNO>33.35</SECTNO>
                  <SUBJECT>Subawards to debarred and suspended parties.</SUBJECT>
                  <SECTNO>33.36</SECTNO>
                  <SUBJECT>Procurement.</SUBJECT>
                  <SECTNO>33.37</SECTNO>
                  <SUBJECT>Subgrants.</SUBJECT>
                </SUBJGRP>
                <SUBJGRP>
                  <HD SOURCE="HED">Reports, Records Retention, and Enforcement</HD>
                  <SECTNO>33.40</SECTNO>
                  <SUBJECT>Monitoring and reporting program performance.</SUBJECT>
                  <SECTNO>33.41</SECTNO>
                  <SUBJECT>Financial reporting.</SUBJECT>
                  <SECTNO>33.42</SECTNO>
                  <SUBJECT>Retention and access requirements for records.</SUBJECT>
                  <SECTNO>33.43</SECTNO>
                  <SUBJECT>Enforcement.</SUBJECT>
                  <SECTNO>33.44</SECTNO>
                  <SUBJECT>Termination for convenience.</SUBJECT>
                </SUBJGRP>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart D—After-the-Grant Requirements</HD>
                <SECTNO>33.50</SECTNO>
                <SUBJECT>Closeout.</SUBJECT>
                <SECTNO>33.51</SECTNO>
                <SUBJECT>Later disallowances and adjustments.</SUBJECT>
                <SECTNO>33.52</SECTNO>
                <SUBJECT>Collections of amounts due.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <RESERVED>Subpart E—Entitlements [Reserved]</RESERVED>
              </SUBPART>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>5 U.S.C. 301; 10 U.S.C. 113.</P>
            </AUTH>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>53 FR 8070, 8087, Mar. 11, 1988. Redesignated at 57 FR 6200, Feb. 21, 1992.</P>
            </SOURCE>
            <SUBPART>
              <HD SOURCE="HED">Subpart A—General</HD>
              <SECTION>
                <SECTNO>§ 33.1</SECTNO>
                <SUBJECT>Purpose and scope of this part.</SUBJECT>

                <P>This part establishes uniform administrative rules for Federal grants and cooperative agreements and subawards <PRTPAGE P="158"/>to State, local and Indian tribal governments.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 33.2</SECTNO>
                <SUBJECT>Scope of subpart.</SUBJECT>
                <P>This subpart contains general rules pertaining to this part and procedures for control of exceptions from this part.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 33.3</SECTNO>
                <SUBJECT>Definitions.</SUBJECT>
                <P>As used in this part:</P>
                <P>
                  <E T="03">Accrued expenditures</E> mean the charges incurred by the grantee during a given period requiring the provision of funds for:</P>
                <P>(1) Goods and other tangible property received;</P>
                <P>(2) Services performed by employees, contractors, subgrantees, subcontractors, and other payees; and</P>
                <P>(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.</P>
                <P>
                  <E T="03">Accrued income</E> means the sum of:</P>
                <P>(1) Earnings during a given period from services performed by the grantee and goods and other tangible property delivered to purchasers, and</P>
                <P>(2) Amounts becoming owed to the grantee for which no current services or performance is required by the grantee.</P>
                <P>
                  <E T="03">Acquisition cost</E> 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.</P>
                <P>
                  <E T="03">Administrative</E> 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 “<E T="03">programmatic</E>” 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.</P>
                <P>
                  <E T="03">Awarding agency</E> means:</P>
                <P>(1) With respect to a grant, the Federal agency, and</P>
                <P>(2) With respect to a subgrant, the party that awarded the subgrant.</P>
                <P>
                  <E T="03">Cash contributions</E> 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.</P>
                <P>
                  <E T="03">Contract</E> means (except as used in the definitions for “<E T="03">grant</E>” and “<E T="03">subgrant</E>” in this section and except where qualified by “<E T="03">Federal</E>”) a procurement contract under a grant or subgrant, and means a procurement subcontract under a contract.</P>
                <P>
                  <E T="03">Cost sharing or matching</E> 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.</P>
                <P>
                  <E T="03">Cost-type contract</E> 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.</P>
                <P>
                  <E T="03">Equipment</E> 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.</P>
                <P>
                  <E T="03">Expenditure report</E> means:</P>
                <P>(1) For nonconstruction grants, the SF-269 “Financial Status Report” (or other equivalent report);</P>
                <P>(2) For construction grants, the SF-271 “Outlay Report and Request for Reimbursement” (or other equivalent report).</P>
                <P>
                  <E T="03">Federally recognized Indian tribal government</E> 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 <PRTPAGE P="159"/>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.</P>
                <P>
                  <E T="03">Government</E> means a State or local government or a federally recognized Indian tribal government.</P>
                <P>
                  <E T="03">Grant</E> 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.</P>
                <P>
                  <E T="03">Grantee</E> 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.</P>
                <P>
                  <E T="03">Local government</E> 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.</P>
                <P>
                  <E T="03">Obligations</E> 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.</P>
                <P>
                  <E T="03">OMB</E> means the United States Office of Management and Budget.</P>
                <P>
                  <E T="03">Outlays</E> (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.</P>
                <P>
                  <E T="03">Percentage of completion method</E> 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.</P>
                <P>
                  <E T="03">Prior approval</E> means documentation evidencing consent prior to incurring specific cost.</P>
                <P>
                  <E T="03">Real property</E> means land, including land improvements, structures and appurtenances thereto, excluding movable machinery and equipment.</P>
                <P>
                  <E T="03">Share</E>, 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.</P>
                <P>
                  <E T="03">State</E> 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.</P>
                <P>
                  <E T="03">Subgrant</E> 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 <PRTPAGE P="160"/>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 “<E T="03">grant</E>” in this part.</P>
                <P>
                  <E T="03">Subgrantee</E> 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.</P>
                <P>
                  <E T="03">Supplies</E> means all tangible personal property other than “<E T="03">equipment</E>” as defined in this part.</P>
                <P>
                  <E T="03">Suspension</E> means depending on the context, either:</P>
                <P>(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</P>
                <P>(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.</P>
                <P>
                  <E T="03">Termination</E> 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. “<E T="03">Termination</E>” does not include:</P>
                <P>(1) Withdrawal of funds awarded on the basis of the grantee's underestimate of the unobligated balance in a prior period;</P>
                <P>(2) Withdrawal of the unobligated balance as of the expiration of a grant;</P>
                <P>(3) Refusal to extend a grant or award additional funds, to make a competing or noncompeting continuation, renewal, extension, or supplemental award; or</P>
                <P>(4) Voiding of a grant upon determination that the award was obtained fraudulently, or was otherwise illegal or invalid from inception.</P>
                <P>
                  <E T="03">Terms of a grant or subgrant</E> mean all requirements of the grant or subgrant, whether in statute, regulations, or the award document.</P>
                <P>
                  <E T="03">Third party in-kind contributions</E> 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.</P>
                <P>
                  <E T="03">Unliquidated obligations</E> 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.</P>
                <P>
                  <E T="03">Unobligated balance</E> 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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 33.4</SECTNO>
                <SUBJECT>Applicability.</SUBJECT>
                <P>(a) <E T="03">General.</E> 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 § 33.6, or:</P>
                <P>(1) Grants and subgrants to State and local institutions of higher education or State and local hospitals.</P>
                <P>(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).</P>

                <P>(3) Entitlement grants to carry out the following programs of the Social Security Act:<PRTPAGE P="161"/>
                </P>
                <P>(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);</P>
                <P>(ii) Child Support Enforcement and Establishment of Paternity (title IV-D of the Act);</P>
                <P>(iii) Foster Care and Adoption Assistance (title IV-E of the Act);</P>
                <P>(iv) Aid to the Aged, Blind, and Disabled (titles I, X, XIV, and XVI-AABD of the Act); and</P>
                <P>(v) Medical Assistance (Medicaid) (title XIX of the Act) not including the State Medicaid Fraud Control program authorized by section 1903(a)(6)(B).</P>
                <P>(4) Entitlement grants under the following programs of The National School Lunch Act:</P>
                <P>(i) School Lunch (section 4 of the Act),</P>
                <P>(ii) Commodity Assistance (section 6 of the Act),</P>
                <P>(iii) Special Meal Assistance (section 11 of the Act),</P>
                <P>(iv) Summer Food Service for Children (section 13 of the Act), and</P>
                <P>(v) Child Care Food Program (section 17 of the Act).</P>
                <P>(5) Entitlement grants under the following programs of The Child Nutrition Act of 1966:</P>
                <P>(i) Special Milk (section 3 of the Act), and</P>
                <P>(ii) School Breakfast (section 4 of the Act).</P>
                <P>(6) Entitlement grants for State Administrative expenses under The Food Stamp Act of 1977 (section 16 of the Act).</P>
                <P>(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;</P>
                <P>(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;</P>
                <P>(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</P>
                <P>(10) Payments under the Veterans Administration's State Home Per Diem Program (38 U.S.C. 641(a)).</P>
                <P>(b) <E T="03">Entitlement programs.</E> Entitlement programs enumerated above in § 33.4(a) (3) through (8) are subject to subpart E.</P>
                <CITA>[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 33.5</SECTNO>
                <SUBJECT>Effect on other issuances.</SUBJECT>
                <P>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 § 33.6.</P>
                <CITA>[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 33.6</SECTNO>
                <SUBJECT>Additions and exceptions.</SUBJECT>

                <P>(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 <E T="04">Federal Register</E>.</P>
                <P>(b) Exceptions for classes of grants or grantees may be authorized only by OMB.</P>
                <P>(c) Exceptions on a case-by-case basis and for subgrantees may be authorized by the affected Federal agencies.</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart B—Pre-Award Requirements</HD>
              <SECTION>
                <SECTNO>§ 33.10</SECTNO>
                <SUBJECT>Forms for applying for grants.</SUBJECT>
                <P>(a) <E T="03">Scope.</E> (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.</P>

                <P>(2) This section applies only to applications to Federal agencies for grants, <PRTPAGE P="162"/>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.</P>
                <P>(b) <E T="03">Authorized forms and instructions for governmental organizations.</E> (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.</P>
                <P>(2) Applicants are not required to submit more than the original and two copies of preapplications or applications.</P>
                <P>(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.</P>
                <P>(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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 33.11</SECTNO>
                <SUBJECT>State plans.</SUBJECT>
                <P>(a) <E T="03">Scope.</E> 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.</P>
                <P>(b) <E T="03">Requirements.</E> A State need meet only Federal administrative or programmatic requirements for a plan that are in statutes or codified regulations.</P>
                <P>(c) <E T="03">Assurances.</E> 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:</P>
                <P>(1) Cite by number the statutory or regulatory provisions requiring the assurances and affirm that it gives the assurances required by those provisions,</P>
                <P>(2) Repeat the assurance language in the statutes or regulations, or</P>
                <P>(3) Develop its own language to the extent permitted by law.</P>
                <P>(d) <E T="03">Amendments.</E> 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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 33.12</SECTNO>
                <SUBJECT>Special grant or subgrant conditions for “high-risk” grantees.</SUBJECT>
                <P>(a) A grantee or subgrantee may be considered “high risk” if an awarding agency determines that a grantee or subgrantee:</P>
                <P>(1) Has a history of unsatisfactory performance, or</P>
                <P>(2) Is not financially stable, or</P>
                <P>(3) Has a management system which does not meet the management standards set forth in this part, or</P>
                <P>(4) Has not conformed to terms and conditions of previous awards, or</P>
                <P>(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.</P>
                <P>(b) Special conditions or restrictions may include:</P>
                <P>(1) Payment on a reimbursement basis;</P>
                <P>(2) Withholding authority to proceed to the next phase until receipt of evidence of acceptable performance within a given funding period;</P>
                <P>(3) Requiring additional, more detailed financial reports;</P>
                <P>(4) Additional project monitoring;<PRTPAGE P="163"/>
                </P>
                <P>(5) Requiring the grantee or subgrantee to obtain technical or management assistance; or</P>
                <P>(6) Establishing additional prior approvals.</P>
                <P>(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:</P>
                <P>(1) The nature of the special conditions/restrictions;</P>
                <P>(2) The reason(s) for imposing them;</P>
                <P>(3) The corrective actions which must be taken before they will be removed and the time allowed for completing the corrective actions and</P>
                <P>(4) The method of requesting reconsideration of the conditions/restrictions imposed.</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart C—Post-Award Requirements</HD>
              <SUBJGRP>
                <HD SOURCE="HED">Financial Administration</HD>
                <SECTION>
                  <SECTNO>§ 33.20</SECTNO>
                  <SUBJECT>Standards for financial management systems.</SUBJECT>
                  <P>(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—</P>
                  <P>(1) Permit preparation of reports required by this part and the statutes authorizing the grant, and</P>
                  <P>(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.</P>
                  <P>(b) The financial management systems of other grantees and subgrantees must meet the following standards:</P>
                  <P>(1) <E T="03">Financial reporting.</E> 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.</P>
                  <P>(2) <E T="03">Accounting records.</E> 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.</P>
                  <P>(3) <E T="03">Internal control.</E> 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.</P>
                  <P>(4) <E T="03">Budget control.</E> 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.</P>
                  <P>(5) <E T="03">Allowable cost.</E> 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.</P>
                  <P>(6) <E T="03">Source documentation.</E> 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.</P>
                  <P>(7) <E T="03">Cash management.</E> 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 <PRTPAGE P="164"/>standards of timing and amount as apply to advances to the grantees.</P>
                  <P>(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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 33.21</SECTNO>
                  <SUBJECT>Payment.</SUBJECT>
                  <P>(a) <E T="03">Scope.</E> 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.</P>
                  <P>(b) <E T="03">Basic standard.</E> 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.</P>
                  <P>(c) <E T="03">Advances.</E> 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.</P>
                  <P>(d) <E T="03">Reimbursement.</E> 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.</P>
                  <P>(e) <E T="03">Working capital advances.</E> 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.</P>
                  <P>(f) <E T="03">Effect of program income, refunds, and audit recoveries on payment.</E> (1) Grantees and subgrantees shall disburse repayments to and interest earned on a revolving fund before requesting additional cash payments for the same activity.</P>
                  <P>(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.</P>
                  <P>(g) <E T="03">Withholding payments.</E> (1) Unless otherwise required by Federal statute, awarding agencies shall not withhold payments for proper charges incurred by grantees or subgrantees unless—</P>
                  <P>(i) The grantee or subgrantee has failed to comply with grant award conditions or</P>
                  <P>(ii) The grantee or subgrantee is indebted to the United States.</P>
                  <P>(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 § 33.43(c).</P>
                  <P>(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.</P>
                  <P>(h) <E T="03">Cash depositories.</E> (1) Consistent with the national goal of expanding the opportunities for minority business enterprises, grantees and subgrantees are <PRTPAGE P="165"/>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.</P>
                  <P>(2) A grantee or subgrantee shall maintain a separate bank account only when required by Federal-State agreement.</P>
                  <P>(i) <E T="03">Interest earned on advances.</E> 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.</P>
                  <CITA>[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 33.22</SECTNO>
                  <SUBJECT>Allowable costs.</SUBJECT>
                  <P>(a) <E T="03">Limitation on use of funds.</E> Grant funds may be used only for:</P>
                  <P>(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</P>
                  <P>(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.</P>
                  <P>(b) <E T="03">Applicable cost principles.</E> 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.</P>
                  <GPOTABLE CDEF="s25,r25" COLS="2" OPTS="L2,i1">
                    <BOXHD>
                      <CHED H="1">For the costs of a—</CHED>
                      <CHED H="1">Use the principles in—</CHED>
                    </BOXHD>
                    <ROW>
                      <ENT I="01">State, local or Indian tribal government</ENT>
                      <ENT>OMB Circular A-87.</ENT>
                    </ROW>
                    <ROW>
                      <ENT I="01">Private nonprofit organization other than an (1) institution of higher education, (2) hospital, or (3) organization named in OMB Circular A-122 as not subject to that circular</ENT>
                      <ENT>OMB Circular A-122.</ENT>
                    </ROW>
                    <ROW>
                      <ENT I="01">Educational institutions.</ENT>
                      <ENT>OMB Circular A-21.</ENT>
                    </ROW>
                    <ROW>
                      <ENT I="01">For-profit organization other than a hospital and an organization named in OBM Circular A-122 as not subject to that circular</ENT>
                      <ENT>48 CFR part 31. Contract Cost Principles and Procedures, or uniform cost accounting standards that comply with cost principles acceptable to the Federal agency.</ENT>
                    </ROW>
                  </GPOTABLE>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 33.23</SECTNO>
                  <SUBJECT>Period of availability of funds.</SUBJECT>
                  <P>(a) <E T="03">General.</E> 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.</P>
                  <P>(b) <E T="03">Liquidation of obligations.</E> 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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 33.24</SECTNO>
                  <SUBJECT>Matching or cost sharing.</SUBJECT>
                  <P>(a) <E T="03">Basic rule: Costs and contributions acceptable.</E> 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:</P>
                  <P>(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.</P>
                  <P>(2) The value of third party in-kind contributions applicable to the period to which the cost sharing or matching requirements applies.</P>
                  <P>(b) <E T="03">Qualifications and exceptions</E>—(1) <E T="03">Costs borne by other Federal grant agreements.</E> 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.<PRTPAGE P="166"/>
                  </P>
                  <P>(2) <E T="03">General revenue sharing.</E> For the purpose of this section, general revenue sharing funds distributed under 31 U.S.C. 6702 are not considered Federal grant funds.</P>
                  <P>(3) <E T="03">Cost or contributions counted towards other Federal costs-sharing requirements.</E> 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.</P>
                  <P>(4) <E T="03">Costs financed by program income.</E> Costs financed by program income, as defined in § 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 § 33.25(g).)</P>
                  <P>(5) <E T="03">Services or property financed by income earned by contractors.</E> 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.</P>
                  <P>(6) <E T="03">Records.</E> 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.</P>
                  <P>(7) <E T="03">Special standards for third party in-kind contributions.</E> (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.</P>
                  <P>(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.</P>
                  <P>(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:</P>
                  <P>(A) An increase in the services or property provided under the contract (without additional cost to the grantee or subgrantee) or</P>
                  <P>(B) A cost savings to the grantee or subgrantee.</P>
                  <P>(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.</P>
                  <P>(c) <E T="03">Valuation of donated services</E>—(1) <E T="03">Volunteer services.</E> 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.</P>
                  <P>(2) <E T="03">Employees of other organizations.</E> 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 <PRTPAGE P="167"/>are in a different line of work, paragraph (c)(1) of this section applies.</P>
                  <P>(d) <E T="03">Valuation of third party donated supplies and loaned equipment or space.</E> (1) If a third party donates supplies, the contribution will be valued at the market value of the supplies at the time of donation.</P>
                  <P>(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.</P>
                  <P>(e) <E T="03">Valuation of third party donated equipment, buildings, and land.</E> 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:</P>
                  <P>(1) <E T="03">Awards for capital expenditures.</E> 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,</P>
                  <P>(2) <E T="03">Other awards.</E> 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:</P>
                  <P>(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.</P>
                  <P>(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 § 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.</P>
                  <P>(f) <E T="03">Valuation of grantee or subgrantee donated real property for construction/acquisition.</E> 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.</P>
                  <P>(g) <E T="03">Appraisal of real property.</E> 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.</P>
                  <CITA>[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 33.25</SECTNO>
                  <SUBJECT>Program income.</SUBJECT>
                  <P>(a) <E T="03">General.</E> 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.<PRTPAGE P="168"/>
                  </P>
                  <P>(b) <E T="03">Definition of program income.</E> 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.</P>
                  <P>(c) <E T="03">Cost of generating program income.</E> 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.</P>
                  <P>(d) <E T="03">Governmental revenues.</E> 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.</P>
                  <P>(e) <E T="03">Royalties.</E> 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 § 33.34.)</P>
                  <P>(f) <E T="03">Property.</E> Proceeds from the sale of real property or equipment will be handled in accordance with the requirements of §§ 33.31 and 33.32.</P>
                  <P>(g) <E T="03">Use of program income.</E> 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.</P>
                  <P>(1) <E T="03">Deduction.</E> 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.</P>
                  <P>(2) <E T="03">Addition.</E> 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.</P>
                  <P>(3) <E T="03">Cost sharing or matching.</E> 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.</P>
                  <P>(h) <E T="03">Income after the award period.</E> 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.</P>
                  <CITA>[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 33.26</SECTNO>
                  <SUBJECT>Non-Federal audit.</SUBJECT>
                  <P>(a) <E T="03">Basic rule.</E> 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.</P>
                  <P>(b) <E T="03">Subgrantees.</E> 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:</P>

                  <P>(1) Determine whether State or local subgrantees have met the audit requirements of the Act and whether subgrantees covered by OMB Circular A-<PRTPAGE P="169"/>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;</P>
                  <P>(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;</P>
                  <P>(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;</P>
                  <P>(4) Consider whether subgrantee audits necessitate adjustment of the grantee's own records; and</P>
                  <P>(5) Require each subgrantee to permit independent auditors to have access to the records and financial statements.</P>
                  <P>(c) <E T="03">Auditor selection.</E> In arranging for audit services, § 33.36 shall be followed.</P>
                  <CITA>[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]</CITA>
                </SECTION>
              </SUBJGRP>
              <SUBJGRP>
                <HD SOURCE="HED">Changes, Property, and Subawards</HD>
                <SECTION>
                  <SECTNO>§ 33.30</SECTNO>
                  <SUBJECT>Changes.</SUBJECT>
                  <P>(a) <E T="03">General</E>. 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.</P>
                  <P>(b) <E T="03">Relation to cost principles.</E> The applicable cost principles (see § 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.</P>
                  <P>(c) <E T="03">Budget changes—</E>(1) <E T="03">Nonconstruction projects.</E> 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:</P>
                  <P>(i) Any revision which would result in the need for additional funding.</P>
                  <P>(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.</P>
                  <P>(iii) Transfer of funds allotted for training allowances (i.e., from direct payments to trainees to other expense categories).</P>
                  <P>(2) <E T="03">Construction projects.</E> Grantees and subgrantees shall obtain prior written approval for any budget revision which would result in the need for additional funds.</P>
                  <P>(3) <E T="03">Combined construction and nonconstruction projects.</E> 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.</P>
                  <P>(d) <E T="03">Programmatic changes.</E> Grantees or subgrantees must obtain the prior approval of the awarding agency whenever any of the following actions is anticipated:</P>
                  <P>(1) Any revision of the scope or objectives of the project (regardless of whether there is an associated budget revision requiring prior approval).</P>
                  <P>(2) Need to extend the period of availability of funds.</P>

                  <P>(3) Changes in key persons in cases where specified in an application or a grant award. In research projects, a <PRTPAGE P="170"/>change in the project director or principal investigator shall always require approval unless waived by the awarding agency.</P>
                  <P>(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 § 33.36 but does not apply to the procurement of equipment, supplies, and general support services.</P>
                  <P>(e) <E T="03">Additional prior approval requirements.</E> The awarding agency may not require prior approval for any budget revision which is not described in paragraph (c) of this section.</P>
                  <P>(f) <E T="03">Requesting prior approval.</E> (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.</P>
                  <P>(2) A request for a prior approval under the applicable Federal cost principles (see § 33.22) may be made by letter.</P>
                  <P>(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.</P>
                  <CITA>[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 6199 and 6200, Feb. 21, 1992]</CITA>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 33.31</SECTNO>
                  <SUBJECT>Real property.</SUBJECT>
                  <P>(a) <E T="03">Title.</E> 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.</P>
                  <P>(b) <E T="03">Use.</E> 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.</P>
                  <P>(c) <E T="03">Disposition.</E> 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:</P>
                  <P>(1) <E T="03">Retention of title.</E> 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.</P>
                  <P>(2) <E T="03">Sale of property.</E> 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.</P>
                  <P>(3) <E T="03">Transfer of title.</E> 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.</P>
                </SECTION>
                <SECTION>
                  <PRTPAGE P="171"/>
                  <SECTNO>§ 33.32</SECTNO>
                  <SUBJECT>Equipment.</SUBJECT>
                  <P>(a) <E T="03">Title.</E> 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.</P>
                  <P>(b) <E T="03">States.</E> 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.</P>
                  <P>(c) <E T="03">Use.</E> (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.</P>
                  <P>(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.</P>
                  <P>(3) Notwithstanding the encouragement in § 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.</P>
                  <P>(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.</P>
                  <P>(d) <E T="03">Management requirements.</E> 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:</P>
                  <P>(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.</P>
                  <P>(2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years.</P>
                  <P>(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.</P>
                  <P>(4) Adequate maintenance procedures must be developed to keep the property in good condition.</P>
                  <P>(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.</P>
                  <P>(e) <E T="03">Disposition.</E> 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:</P>
                  <P>(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.</P>
                  <P>(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.</P>

                  <P>(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.<PRTPAGE P="172"/>
                  </P>
                  <P>(f) <E T="03">Federal equipment.</E> In the event a grantee or subgrantee is provided federally-owned equipment:</P>
                  <P>(1) Title will remain vested in the Federal Government.</P>
                  <P>(2) Grantees or subgrantees will manage the equipment in accordance with Federal agency rules and procedures, and submit an annual inventory listing.</P>
                  <P>(3) When the equipment is no longer needed, the grantee or subgrantee will request disposition instructions from the Federal agency.</P>
                  <P>(g) <E T="03">Right to transfer title.</E> 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:</P>
                  <P>(1) The property shall be identified in the grant or otherwise made known to the grantee in writing.</P>
                  <P>(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 § 33.32(e).</P>
                  <P>(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.</P>
                  <CITA>[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 6199 and 6201, Feb. 21, 1992]</CITA>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 33.33</SECTNO>
                  <SUBJECT>Supplies.</SUBJECT>
                  <P>(a) <E T="03">Title.</E> Title to supplies acquired under a grant or subgrant will vest, upon acquisition, in the grantee or subgrantee respectively.</P>
                  <P>(b) <E T="03">Disposition.</E> 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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 33.34</SECTNO>
                  <SUBJECT>Copyrights.</SUBJECT>
                  <P>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:</P>
                  <P>(a) The copyright in any work developed under a grant, subgrant, or contract under a grant or subgrant; and</P>
                  <P>(b) Any rights of copyright to which a grantee, subgrantee or a contractor purchases ownership with grant support.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 33.35</SECTNO>
                  <SUBJECT>Subawards to debarred and suspended parties.</SUBJECT>
                  <P>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.”</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 33.36</SECTNO>
                  <SUBJECT>Procurement.</SUBJECT>
                  <P>(a) <E T="03">States.</E> 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.</P>
                  <P>(b) <E T="03">Procurement standards.</E> (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.</P>
                  <P>(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.</P>

                  <P>(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 <PRTPAGE P="173"/>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:</P>
                  <P>(i) The employee, officer or agent,</P>
                  <P>(ii) Any member of his immediate family,</P>
                  <P>(iii) His or her partner, or</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(10) Grantees and subgrantees will use time and material type contracts only—</P>
                  <P>(i) After a determination that no other contract is suitable, and</P>
                  <P>(ii) If the contract includes a ceiling price that the contractor exceeds at its own risk.</P>
                  <P>(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.</P>

                  <P>(12) Grantees and subgrantees will have protest procedures to handle and <PRTPAGE P="174"/>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:</P>
                  <P>(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</P>
                  <P>(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.</P>
                  <P>(c) <E T="03">Competition</E>. (1) All procurement transactions will be conducted in a manner providing full and open competition consistent with the standards of § 33.36. Some of the situations considered to be restrictive of competition include but are not limited to:</P>
                  <P>(i) Placing unreasonable requirements on firms in order for them to qualify to do business,</P>
                  <P>(ii) Requiring unnecessary experience and excessive bonding,</P>
                  <P>(iii) Noncompetitive pricing practices between firms or between affiliated companies,</P>
                  <P>(iv) Noncompetitive awards to consultants that are on retainer contracts,</P>
                  <P>(v) Organizational conflicts of interest,</P>
                  <P>(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</P>
                  <P>(vii) Any arbitrary action in the procurement process.</P>
                  <P>(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.</P>
                  <P>(3) Grantees will have written selection procedures for procurement transactions. These procedures will ensure that all solicitations:</P>
                  <P>(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</P>
                  <P>(ii) Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals.</P>
                  <P>(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.</P>
                  <P>(d) <E T="03">Methods of procurement to be followed—</E>(1) <E T="03">Procurement by small purchase procedures.</E> 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, price or rate quotations shall <PRTPAGE P="175"/>be obtained from an adequate number of qualified sources.</P>
                  <P>(2) Procurement by <E T="03">sealed bids</E> (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 § 33.36(d)(2)(i) apply.</P>
                  <P>(i) In order for sealed bidding to be feasible, the following conditions should be present:</P>
                  <P>(A) A complete, adequate, and realistic specification or purchase description is available;</P>
                  <P>(B) Two or more responsible bidders are willing and able to compete effectively and for the business; and</P>
                  <P>(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.</P>
                  <P>(ii) If sealed bids are used, the following requirements apply:</P>
                  <P>(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;</P>
                  <P>(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;</P>
                  <P>(C) All bids will be publicly opened at the time and place prescribed in the invitation for bids;</P>
                  <P>(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</P>
                  <P>(E) Any or all bids may be rejected if there is a sound documented reason.</P>
                  <P>(3) Procurement by <E T="03">competitive proposals.</E> 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:</P>
                  <P>(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;</P>
                  <P>(ii) Proposals will be solicited from an adequate number of qualified sources;</P>
                  <P>(iii) Grantees and subgrantees will have a method for conducting technical evaluations of the proposals received and for selecting awardees;</P>
                  <P>(iv) Awards will be made to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered; and</P>
                  <P>(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.</P>
                  <P>(4) Procurement by <E T="03">noncompetitive proposals</E> is procurement through solicitation of a proposal from only one source, or after solicitation of a number of sources, competition is determined inadequate.</P>
                  <P>(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:</P>
                  <P>(A) The item is available only from a single source;</P>

                  <P>(B) The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation;<PRTPAGE P="176"/>
                  </P>
                  <P>(C) The awarding agency authorizes noncompetitive proposals; or</P>
                  <P>(D) After solicitation of a number of sources, competition is determined inadequate.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(e) <E T="03">Contracting with small and minority firms, women's business enterprise and labor surplus area firms.</E> (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.</P>
                  <P>(2) Affirmative steps shall include:</P>
                  <P>(i) Placing qualified small and minority businesses and women's business enterprises on solicitation lists;</P>
                  <P>(ii) Assuring that small and minority businesses, and women's business enterprises are solicited whenever they are potential sources;</P>
                  <P>(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;</P>
                  <P>(iv) Establishing delivery schedules, where the requirement permits, which encourage participation by small and minority business, and women's business enterprises;</P>
                  <P>(v) Using the services and assistance of the Small Business Administration, and the Minority Business Development Agency of the Department of Commerce; and</P>
                  <P>(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.</P>
                  <P>(f) <E T="03">Contract cost and price.</E> (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.</P>
                  <P>(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.</P>
                  <P>(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 § 33.22). Grantees may reference their own cost principles that comply with the applicable Federal cost principles.</P>
                  <P>(4) The cost plus a percentage of cost and percentage of construction cost methods of contracting shall not be used.</P>
                  <P>(g) <E T="03">Awarding agency review.</E> (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 <PRTPAGE P="177"/>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.</P>
                  <P>(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:</P>
                  <P>(i) A grantee's or subgrantee's procurement procedures or operation fails to comply with the procurement standards in this section; or</P>
                  <P>(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</P>
                  <P>(iii) The procurement, which is expected to exceed the simplified acquisition threshold, specifies a “brand name” product; or</P>
                  <P>(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</P>
                  <P>(v) A proposed contract modification changes the scope of a contract or increases the contract amount by more than the simplified acquisition threshold.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(h) <E T="03">Bonding requirements.</E> 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:</P>
                  <P>(1) <E T="03">A bid guarantee from each bidder equivalent to five percent of the bid price.</E> 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.</P>
                  <P>(2) <E T="03">A performance bond on the part of the contractor for 100 percent of the contract price.</E> A “performance bond” is one executed in connection with a contract to secure fulfillment of all the contractor's obligations under such contract.</P>
                  <P>(3) <E T="03">A payment bond on the part of the contractor for 100 percent of the contract price.</E> 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.</P>
                  <P>(i) <E T="03">Contract provisions.</E> 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 <PRTPAGE P="178"/>clauses approved by the Office of Federal Procurement Policy.</P>
                  <P>(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)</P>
                  <P>(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)</P>
                  <P>(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)</P>
                  <P>(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)</P>
                  <P>(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)</P>
                  <P>(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)</P>
                  <P>(7) Notice of awarding agency requirements and regulations pertaining to reporting.</P>
                  <P>(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.</P>
                  <P>(9) Awarding agency requirements and regulations pertaining to copyrights and rights in data.</P>
                  <P>(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.</P>
                  <P>(11) Retention of all required records for three years after grantees or subgrantees make final payments and all other pending matters are closed.</P>
                  <P>(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)</P>
                  <P>(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).</P>
                  <CITA>[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]</CITA>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 33.37</SECTNO>
                  <SUBJECT>Subgrants.</SUBJECT>
                  <P>(a) <E T="03">States.</E> 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:</P>
                  <P>(1) Ensure that every subgrant includes any clauses required by Federal statute and executive orders and their implementing regulations;</P>
                  <P>(2) Ensure that subgrantees are aware of requirements imposed upon them by Federal statute and regulation;</P>
                  <P>(3) Ensure that a provision for compliance with § 33.42 is placed in every cost reimbursement subgrant; and</P>

                  <P>(4) Conform any advances of grant funds to subgrantees substantially to the same standards of timing and <PRTPAGE P="179"/>amount that apply to cash advances by Federal agencies.</P>
                  <P>(b) <E T="03">All other grantees.</E> 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:</P>
                  <P>(1) Ensure that every subgrant includes a provision for compliance with this part;</P>
                  <P>(2) Ensure that every subgrant includes any clauses required by Federal statute and executive orders and their implementing regulations; and</P>
                  <P>(3) Ensure that subgrantees are aware of requirements imposed upon them by Federal statutes and regulations.</P>
                  <P>(c) <E T="03">Exceptions.</E> By their own terms, certain provisions of this part do not apply to the award and administration of subgrants:</P>
                  <P>(1) Section 33.10;</P>
                  <P>(2) Section 33.11;</P>
                  <P>(3) The letter-of-credit procedures specified in Treasury Regulations at 31 CFR part 205, cited in § 33.21; and</P>
                  <P>(4) Section 33.50.</P>
                  <CITA>[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 6199 and 6201, Feb. 21, 1992]</CITA>
                </SECTION>
              </SUBJGRP>
              <SUBJGRP>
                <HD SOURCE="HED">Reports, Records, Retention, and Enforcement</HD>
                <SECTION>
                  <SECTNO>§ 33.40</SECTNO>
                  <SUBJECT>Monitoring and reporting program performance.</SUBJECT>
                  <P>(a) <E T="03">Monitoring by grantees.</E> 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.</P>
                  <P>(b) <E T="03">Nonconstruction performance reports.</E> 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.</P>
                  <P>(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.</P>
                  <P>(2) Performance reports will contain, for each grant, brief information on the following:</P>
                  <P>(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.</P>
                  <P>(ii) The reasons for slippage if established objectives were not met.</P>
                  <P>(iii) Additional pertinent information including, when appropriate, analysis and explanation of cost overruns or high unit costs.</P>
                  <P>(3) Grantees will not be required to submit more than the original and two copies of performance reports.</P>
                  <P>(4) Grantees will adhere to the standards in this section in prescribing performance reporting requirements for subgrantees.</P>
                  <P>(c) <E T="03">Construction performance reports.</E> 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.<PRTPAGE P="180"/>
                  </P>
                  <P>(d) <E T="03">Significant developments.</E> 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:</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(e) Federal agencies may make site visits as warranted by program needs.</P>
                  <P>(f) <E T="03">Waivers, extensions.</E> (1) Federal agencies may waive any performance report required by this part if not needed.</P>
                  <P>(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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 33.41</SECTNO>
                  <SUBJECT>Financial reporting.</SUBJECT>
                  <P>(a) <E T="03">General.</E> (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:</P>
                  <P>(i) Submitting financial reports to Federal agencies, or</P>
                  <P>(ii) Requesting advances or reimbursements when letters of credit are not used.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(4) Grantees will not be required to submit more than the original and two copies of forms required under this part.</P>
                  <P>(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.</P>
                  <P>(6) Federal agencies may waive any report required by this section if not needed.</P>
                  <P>(7) Federal agencies may extend the due date of any financial report upon receiving a justified request from a grantee.</P>
                  <P>(b) <E T="03">Financial Status Report</E>—(1) <E T="03">Form.</E> 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 § 33.41(e)(2)(iii).</P>
                  <P>(2) <E T="03">Accounting basis.</E> 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.</P>
                  <P>(3) <E T="03">Frequency.</E> 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.</P>
                  <P>(4) <E T="03">Due date.</E> When reports are required on a quarterly or semiannual basis, they will be due 30 days after the <PRTPAGE P="181"/>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.</P>
                  <P>(c) <E T="03">Federal Cash Transactions Report</E>—(1) <E T="03">Form.</E> (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.</P>
                  <P>(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.</P>
                  <P>(2) <E T="03">Forecasts of Federal cash requirements.</E> Forecasts of Federal cash requirements may be required in the “Remarks” section of the report.</P>
                  <P>(3) <E T="03">Cash in hands of subgrantees.</E> 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.</P>
                  <P>(4) <E T="03">Frequency and due date.</E> 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.</P>
                  <P>(d) <E T="03">Request for advance or reimbursement</E>—(1) <E T="03">Advance payments.</E> 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.)</P>
                  <P>(2) <E T="03">Reimbursements.</E> 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.)</P>
                  <P>(3) The frequency for submitting payment requests is treated in § 33.41(b)(3).</P>
                  <P>(e) <E T="03">Outlay report and request for reimbursement for construction programs</E>—(1) <E T="03">Grants that support construction activities paid by reimbursement method.</E> (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 § 33.41(d), instead of this form.</P>
                  <P>(ii) The frequency for submitting reimbursement requests is treated in § 33.41(b)(3).</P>
                  <P>(2) <E T="03">Grants that support construction activities paid by letter of credit, electronic funds transfer or Treasury check advance.</E> (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 § 33.41(b) (3) and (4).</P>
                  <P>(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 § 33.41(d).</P>

                  <P>(iii) The Federal agency may substitute the Financial Status Report specified in § 33.41(b) for the Outlay Report and Request for Reimbursement for Construction Programs.<PRTPAGE P="182"/>
                  </P>
                  <P>(3) <E T="03">Accounting basis.</E> The accounting basis for the Outlay Report and Request for Reimbursement for Construction Programs shall be governed by § 33.41(b)(2).</P>
                  <CITA>[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 6199 and 6201, Feb. 21, 1992]</CITA>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 33.42</SECTNO>
                  <SUBJECT>Retention and access requirements for records.</SUBJECT>
                  <P>(a) <E T="03">Applicability.</E> (1) This section applies to all financial and programmatic records, supporting documents, statistical records, and other records of grantees or subgrantees which are:</P>
                  <P>(i) Required to be maintained by the terms of this part, program regulations or the grant agreement, or</P>
                  <P>(ii) Otherwise reasonably considered as pertinent to program regulations or the grant agreement.</P>
                  <P>(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 § 33.36(i)(10).</P>
                  <P>(b) <E T="03">Length of retention period.</E> (1) Except as otherwise provided, records must be retained for three years from the starting date specified in paragraph (c) of this section.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(c) <E T="03">Starting date of retention period</E>—(1) <E T="03">General.</E> 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.</P>
                  <P>(2) <E T="03">Real property and equipment records.</E> 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.</P>
                  <P>(3) <E T="03">Records for income transactions after grant or subgrant support.</E> 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.</P>
                  <P>(4) <E T="03">Indirect cost rate proposals, cost allocations plans, etc.</E> 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).</P>
                  <P>(i) <E T="03">If submitted for negotiation.</E> 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.</P>
                  <P>(ii) <E T="03">If not submitted for negotiation.</E> 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) <PRTPAGE P="183"/>covered by the proposal, plan, or other computation.</P>
                  <P>(d) <E T="03">Substitution of microfilm.</E> Copies made by microfilming, photocopying, or similar methods may be substituted for the original records.</P>
                  <P>(e) <E T="03">Access to records—</E>(1) <E T="03">Records of grantees and subgrantees.</E> 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.</P>
                  <P>(2) <E T="03">Expiration of right of access.</E> 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.</P>
                  <P>(f) <E T="03">Restrictions on public access.</E> 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.</P>
                  <CITA>[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 6199 and 6201, Feb. 21, 1992]</CITA>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 33.43</SECTNO>
                  <SUBJECT>Enforcement.</SUBJECT>
                  <P>(a) <E T="03">Remedies for noncompliance.</E> 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:</P>
                  <P>(1) Temporarily withhold cash payments pending correction of the deficiency by the grantee or subgrantee or more severe enforcement action by the awarding agency,</P>
                  <P>(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,</P>
                  <P>(3) Wholly or partly suspend or terminate the current award for the grantee's or subgrantee's program,</P>
                  <P>(4) Withhold further awards for the program, or</P>
                  <P>(5) Take other remedies that may be legally available.</P>
                  <P>(b) <E T="03">Hearings, appeals.</E> 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.</P>
                  <P>(c) <E T="03">Effects of suspension and termination.</E> 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:</P>
                  <P>(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,</P>
                  <P>(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.</P>
                  <P>(d) <E T="03">Relationship to debarment and suspension.</E> 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 § 33.35).</P>
                  <CITA>[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 6199 and 6201, Feb. 21, 1992]</CITA>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 33.44</SECTNO>
                  <SUBJECT>Termination for convenience.</SUBJECT>
                  <P>Except as provided in § 33.43 awards may be terminated in whole or in part only as follows:</P>

                  <P>(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<PRTPAGE P="184"/>
                  </P>
                  <P>(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 § 33.43 or paragraph (a) of this section.</P>
                  <CITA>[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 6199 and 6201, Feb. 21, 1992]</CITA>
                </SECTION>
              </SUBJGRP>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart D—After-The-Grant Requirements</HD>
              <SECTION>
                <SECTNO>§ 33.50</SECTNO>
                <SUBJECT>Closeout.</SUBJECT>
                <P>(a) <E T="03">General.</E> 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.</P>
                <P>(b) <E T="03">Reports.</E> 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:</P>
                <P>(1) <E T="03">Final performance or progress report.</E>
                </P>
                <P>(2) <E T="03">Financial Status Report (SF 269) or Outlay Report and Request for Reimbursement for Construction Programs (SF-271) (as applicable).</E>
                </P>
                <P>(3) <E T="03">Final request for payment (SF-270) (if applicable).</E>
                </P>
                <P>(4) <E T="03">Invention disclosure (if applicable).</E>
                </P>
                <P>(5) <E T="03">Federally-owned property report:</E>
                </P>
                <FP>In accordance with § 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.</FP>
                <P>(c) <E T="03">Cost adjustment.</E> 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.</P>
                <P>(d) <E T="03">Cash adjustments.</E> (1) The Federal agency will make prompt payment to the grantee for allowable reimbursable costs.</P>
                <P>(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.</P>
                <CITA>[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 6199 and 6201, Feb. 21, 1992]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 33.51</SECTNO>
                <SUBJECT>Later disallowances and adjustments.</SUBJECT>
                <P>The closeout of a grant does not affect:</P>
                <P>(a) The Federal agency's right to disallow costs and recover funds on the basis of a later audit or other review;</P>
                <P>(b) The grantee's obligation to return any funds due as a result of later refunds, corrections, or other transactions;</P>
                <P>(c) Records retention as required in § 33.42;</P>
                <P>(d) Property management requirements in §§ 33.31 and 33.32; and</P>
                <P>(e) Audit requirements in § 33.26.</P>
                <CITA>[53 FR 8070 and 8087, Mar. 11, 1988. Redesignated and amended at 57 FR 6199 and 6201, Feb. 21, 1992]</CITA>
              </SECTION>
              <SECTION>
                <SECTNO>§ 33.52</SECTNO>
                <SUBJECT>Collection of amounts due.</SUBJECT>
                <P>(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:</P>
                <P>(1) Making an adminstrative offset against other requests for reimbursements,</P>
                <P>(2) Withholding advance payments otherwise due to the grantee, or</P>
                <P>(3) Other action permitted by law.</P>
                <P>(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.</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <RESERVED>Subpart E—Entitlement [Reserved]</RESERVED>
            </SUBPART>
          </PART>
          <PART>
            <PRTPAGE P="185"/>
            <EAR>Pt. 34</EAR>
            <HD SOURCE="HED">PART 34—ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND AGREEMENTS WITH FOR-PROFIT ORGANIZATIONS</HD>
            <CONTENTS>
              <SUBPART>
                <HD SOURCE="HED">Subpart A—General</HD>
                <SECHD>Sec.</SECHD>
                <SECTNO>34.1</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <SECTNO>34.2</SECTNO>
                <SUBJECT>Definitions.</SUBJECT>
                <SECTNO>34.3</SECTNO>
                <SUBJECT>Deviations.</SUBJECT>
                <SECTNO>34.4</SECTNO>
                <SUBJECT>Special award conditions.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart B—Post-Award Requirements</HD>
                <HD SOURCE="HD1">Financial and Program Management</HD>
                <SECTNO>34.10</SECTNO>
                <SUBJECT>Purpose of financial and program management.</SUBJECT>
                <SECTNO>34.11</SECTNO>
                <SUBJECT>Standards for financial management systems.</SUBJECT>
                <SECTNO>34.12</SECTNO>
                <SUBJECT>Payment.</SUBJECT>
                <SECTNO>34.13</SECTNO>
                <SUBJECT>Cost sharing or matching.</SUBJECT>
                <SECTNO>34.14</SECTNO>
                <SUBJECT>Program income.</SUBJECT>
                <SECTNO>34.15</SECTNO>
                <SUBJECT>Revision of budget and program plans.</SUBJECT>
                <SECTNO>34.16</SECTNO>
                <SUBJECT>Audits.</SUBJECT>
                <SECTNO>34.17</SECTNO>
                <SUBJECT>Allowable costs.</SUBJECT>
                <SECTNO>34.18</SECTNO>
                <SUBJECT>Fee and profit.</SUBJECT>
                <HD SOURCE="HD1">Property Standards</HD>
                <SECTNO>34.20</SECTNO>
                <SUBJECT>Purpose of property standards.</SUBJECT>
                <SECTNO>34.21</SECTNO>
                <SUBJECT>Real property and equipment.</SUBJECT>
                <SECTNO>34.22</SECTNO>
                <SUBJECT>Federally owned property.</SUBJECT>
                <SECTNO>34.23</SECTNO>
                <SUBJECT>Property management system.</SUBJECT>
                <SECTNO>34.24</SECTNO>
                <SUBJECT>Supplies.</SUBJECT>
                <SECTNO>34.25</SECTNO>
                <SUBJECT>Intellectual property developed or produced under awards.</SUBJECT>
                <HD SOURCE="HD1">Procurement Standards</HD>
                <SECTNO>34.30</SECTNO>
                <SUBJECT>Purpose of procurement standards.</SUBJECT>
                <SECTNO>34.31</SECTNO>
                <SUBJECT>Requirements.</SUBJECT>
                <HD SOURCE="HD1">Reports and Records</HD>
                <SECTNO>34.40</SECTNO>
                <SUBJECT>Purpose of reports and records.</SUBJECT>
                <SECTNO>34.41</SECTNO>
                <SUBJECT>Monitoring and reporting program and financial performance.</SUBJECT>
                <SECTNO>34.42</SECTNO>
                <SUBJECT>Retention and access requirements for records.</SUBJECT>
                <HD SOURCE="HD1">Termination and Enforcement</HD>
                <SECTNO>34.50</SECTNO>
                <SUBJECT>Purpose of termination and enforcement.</SUBJECT>
                <SECTNO>34.51</SECTNO>
                <SUBJECT>Termination.</SUBJECT>
                <SECTNO>34.52</SECTNO>
                <SUBJECT>Enforcement.</SUBJECT>
                <SECTNO>34.53</SECTNO>
                <SUBJECT>Disputes and appeals.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart C—After-the-Award Requirements</HD>
                <SECTNO>34.60</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <SECTNO>34.61</SECTNO>
                <SUBJECT>Closeout procedures.</SUBJECT>
                <SECTNO>34.62</SECTNO>
                <SUBJECT>Subsequent adjustments and continuing responsibilities.</SUBJECT>
                <SECTNO>34.63</SECTNO>
                <SUBJECT>Collection of amounts due.</SUBJECT>
                <APP>Appendix A to Part 34—Contract Provisions</APP>
              </SUBPART>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>5 U.S.C. 301 and 10 U.S.C. 113.</P>
            </AUTH>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>63 FR 12204, Mar. 12, 1998, unless otherwise noted.</P>
            </SOURCE>
            <SUBPART>
              <HD SOURCE="HED">Subpart A—General</HD>
              <SECTION>
                <SECTNO>§ 34.1</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <P>(a) This part prescribes administrative requirements for awards to for-profit organizations.</P>
                <P>(b) Applicability to prime awards and subawards is as follows:</P>
                <P>(1) <E T="03">Prime awards</E>. 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:</P>
                <P>(i) In accordance with the deviation procedures or special award conditions in § 34.3 or § 34.4, respectively; or</P>
                <P>(ii) As required by Federal statute, Executive order, or Federal regulation implementing a statute or Executive order.</P>
                <P>(2) <E T="03">Subawards</E>. (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 § 34.2) are financial assistance for substantive programmatic performance and do not include recipients’ procurement of goods and services.</P>
                <P>(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).</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 34.2</SECTNO>
                <SUBJECT>Definitions.</SUBJECT>

                <P>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).<PRTPAGE P="186"/>
                </P>
                <P>
                  <E T="03">Advance.</E> 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.</P>
                <P>
                  <E T="03">Award.</E> A grant or cooperative agreement.</P>
                <P>
                  <E T="03">Cash contributions.</E> The recipient's cash outlay, including the outlay of money contributed to the recipient by third parties.</P>
                <P>
                  <E T="03">Closeout.</E> 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.</P>
                <P>
                  <E T="03">Contract.</E> Either:</P>
                <P>(1) A procurement contract made by a recipient under a DoD Component's award or by a subrecipient under a subaward; or</P>
                <P>(2) A procurement subcontract under a contract awarded by a recipient or subrecipient.</P>
                <P>
                  <E T="03">Cost sharing or matching.</E> That portion of project or program costs not borne by the Federal Government.</P>
                <P>
                  <E T="03">Disallowed costs.</E> 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.</P>
                <P>
                  <E T="03">DoD Component.</E> 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.</P>
                <P>
                  <E T="03">Equipment.</E> 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.</P>
                <P>
                  <E T="03">Excess property.</E> 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.</P>
                <P>
                  <E T="03">Expenditures.</E> See the definition for outlays in this section.</P>
                <P>
                  <E T="03">Federally owned property.</E> Property in the possession of, or directly acquired by, the Government and subsequently made available to the recipient.</P>
                <P>
                  <E T="03">Funding period.</E> The period of time when Federal funding is available for obligation by the recipient.</P>
                <P>
                  <E T="03">Intellectual property.</E> Intangible personal property such as patents and patent applications, trademarks, copyrights, technical data, and software rights.</P>
                <P>
                  <E T="03">Obligations.</E> 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.</P>
                <P>
                  <E T="03">Outlays</E> or <E T="03">expenditures.</E> 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.</P>
                <P>
                  <E T="03">Personal property.</E> Property of any kind except real property. It may be:</P>
                <P>(1) Tangible, having physical existence (i.e., equipment and supplies); or</P>

                <P>(2) Intangible, having no physical existence, such as patents, copyrights, data and software.<PRTPAGE P="187"/>
                </P>
                <P>
                  <E T="03">Prior approval.</E> Written or electronic approval by an authorized official evidencing prior consent.</P>
                <P>
                  <E T="03">Program income.</E> 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.</P>
                <P>
                  <E T="03">Project costs.</E> 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.</P>
                <P>
                  <E T="03">Project period.</E> The period established in the award document during which Federal sponsorship begins and ends.</P>
                <P>
                  <E T="03">Property.</E> Real property and personal property (equipment, supplies, and intellectual property), unless stated otherwise.</P>
                <P>
                  <E T="03">Real property.</E> Land, including land improvements, structures and appurtenances thereto, but excludes movable machinery and equipment.</P>
                <P>
                  <E T="03">Recipient.</E> A for-profit organization receiving an award directly from a DoD Component to carry out a project or program.</P>
                <P>
                  <E T="03">Research.</E> Basic, applied, and advanced research activities. <E T="03">Basic research</E> is defined as efforts directed toward increasing knowledge or understanding in science and engineering. <E T="03">Applied research</E> 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).</P>
                <P>
                  <E T="03">Small award.</E> An award not exceeding the simplified acquisition threshold fixed at 41 U.S.C. 403(11) (currently $100,000).</P>
                <P>
                  <E T="03">Small business concern.</E> 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.”</P>
                <P>
                  <E T="03">Subaward.</E> 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.</P>
                <P>
                  <E T="03">Subrecipient.</E> The legal entity to which a subaward is made and which is accountable to the recipient for the use of the funds provided.</P>
                <P>
                  <E T="03">Supplies.</E> 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.</P>
                <P>
                  <E T="03">Suspension.</E> 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.</P>
                <P>
                  <E T="03">Termination.</E> The cancellation of an award, in whole or in part, under an agreement at any time prior to either:<PRTPAGE P="188"/>
                </P>
                <P>(1) The date on which all work under an award is completed; or</P>
                <P>(2) The date on which Federal sponsorship ends, as given on the award document or any supplement or amendment thereto.</P>
                <P>
                  <E T="03">Third party in-kind contributions.</E> 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.</P>
                <P>
                  <E T="03">Unobligated balance.</E> 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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 34.3</SECTNO>
                <SUBJECT>Deviations.</SUBJECT>
                <P>(a) <E T="03">Individual deviations.</E> Individual deviations affecting only one award may be approved by DoD Components in accordance with procedures stated in 32 CFR 21.125(a).</P>
                <P>(b) <E T="03">Small awards.</E> DoD Components may apply less restrictive requirements than the provisions of this part when awarding small awards, except for those requirements which are statutory.</P>
                <P>(c) <E T="03">Other class deviations.</E> 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).</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 34.4</SECTNO>
                <SUBJECT>Special award conditions.</SUBJECT>
                <P>(a) Grants officers may impose additional requirements as needed, over and above those provided in this part, if an applicant or recipient:</P>
                <P>(1) Has a history of poor performance;</P>
                <P>(2) Is not financially stable;</P>
                <P>(3) Has a management system that does not meet the standards prescribed in this part;</P>
                <P>(4) Has not conformed to the terms and conditions of a previous award; or</P>
                <P>(5) Is not otherwise responsible.</P>
                <P>(b) Before imposing additional requirements, DoD Components shall notify the applicant or recipient in writing as to:</P>
                <P>(1) The nature of the additional requirements;</P>
                <P>(2) The reason why the additional requirements are being imposed;</P>
                <P>(3) The nature of the corrective action needed;</P>
                <P>(4) The time allowed for completing the corrective actions; and</P>
                <P>(5) The method for requesting reconsideration of the additional requirements imposed.</P>
                <P>(c) Any special conditions shall be promptly removed once the conditions that prompted them have been corrected.</P>
                <P>(d) Grants officers:</P>
                <P>(1) Should coordinate the imposition and removal of special award conditions with the cognizant grants administration office identified in 32 CFR 22.710.</P>
                <P>(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).</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart B—Post-award Requirements</HD>
              <SUBJGRP>
                <HD SOURCE="HED">Financial and Program Management</HD>
                <SECTION>
                  <SECTNO>§ 34.10</SECTNO>
                  <SUBJECT>Purpose of financial and program management.</SUBJECT>
                  <P>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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 34.11</SECTNO>
                  <SUBJECT>Standards for financial management systems.</SUBJECT>

                  <P>(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:<PRTPAGE P="189"/>
                  </P>
                  <P>(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 § 34.17) and in the terms and conditions of the award.</P>
                  <P>(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:</P>
                  <P>(i) Contain information about receipts, authorizations, assets, expenditures, program income, and interest.</P>
                  <P>(ii) Be adequate to make comparisons of outlays with budgeted amounts for each award (as required for programmatic and financial reporting under § 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.</P>
                  <P>(3) To the extent that advance payments are authorized under § 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.</P>
                  <P>(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:</P>
                  <P>(i) Reflect an after the fact distribution of the actual activity of each employee.</P>
                  <P>(ii) Account for the total activity for which each employee is compensated.</P>
                  <P>(iii) Be prepared at least monthly, and coincide with one or more pay periods.</P>
                  <P>(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.</P>
                  <P>(c) The DoD Component may require adequate fidelity bond coverage where the recipient lacks sufficient coverage to protect the Federal Government's interest.</P>
                  <P>(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.”</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 34.12</SECTNO>
                  <SUBJECT>Payment.</SUBJECT>
                  <P>(a) <E T="03">Methods available.</E> Payment methods for awards with for-profit organizations are:</P>
                  <P>(1) <E T="03">Reimbursement.</E> 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.</P>
                  <P>(2) <E T="03">Advance payments.</E> 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.</P>
                  <P>(b) <E T="03">Selecting a method.</E> (1) The preferred payment method is the reimbursement method, as described in paragraph (a)(1) of this section</P>
                  <P>(2) Advance payments, as described in paragraph (a)(2) of this section, may be used in exceptional circumstances, subject to the following conditions:</P>

                  <P>(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 <PRTPAGE P="190"/>by a newly formed company). The rationale for the judgment shall be documented in the award file.</P>
                  <P>(ii) Cash advances shall be limited to the minimum amounts needed to carry out the program.</P>
                  <P>(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.</P>
                  <P>(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:</P>
                  <P>(A) The recipient receives less than $120,000 in Federal awards per year.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(c) <E T="03">Frequency of payments.</E> For either reimbursements or advance payments, recipients shall be authorized to submit requests for payment at least monthly.</P>
                  <P>(d) <E T="03">Forms for requesting payment.</E> DoD Components may authorize recipients to use the SF-270,<E T="51">1</E>

                    <FTREF/> “Request for Advance or Reimbursement;” the SF-271,<E T="51">2</E>
                    <FTREF/> “Outlay Report and Request for Reimbursement for Construction Programs;” or prescribe other forms or formats as necessary.</P>
                  <FTNT>
                    <P>
                      <SU>1</SU> 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.</P>
                  </FTNT>
                  <FTNT>
                    <P>
                      <SU>2</SU> See footnote 1 to this paragraph (d).</P>
                  </FTNT>
                  <P>(e) <E T="03">Timeliness of payments.</E> 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)).</P>
                  <P>(f) <E T="03">Precedence of other available funds.</E> 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.</P>
                  <P>(g) <E T="03">Withholding of payments.</E> 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:</P>
                  <P>(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 § 34.52.</P>
                  <P>(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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 34.13</SECTNO>
                  <SUBJECT>Cost sharing or matching.</SUBJECT>
                  <P>(a) <E T="03">Acceptable contributions.</E> 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:</P>
                  <P>(1) They are verifiable from the recipient's records.</P>
                  <P>(2) They are not included as contributions for any other federally-assisted project or program.</P>

                  <P>(3) They are necessary and reasonable for proper and efficient accomplishment of project or program objectives.<PRTPAGE P="191"/>
                  </P>
                  <P>(4) They are allowable under § 34.17.</P>
                  <P>(5) They are not paid by the Federal Government under another award, except:</P>
                  <P>(i) Costs that are authorized by Federal statute to be used for cost sharing or matching; or</P>
                  <P>(ii) Independent research and development (IR&amp;D) costs. In accordance with the for-profit cost principle in 48 CFR 31.205-18(e), use of IR&amp;D as cost sharing is permitted, whether or not the Government decides at a later date to reimburse any of the IR&amp;D as allowable indirect costs. In such cases, the IR&amp;D must meet all of the criteria in paragraphs (a) (1) through (4) and (a) (6) through (8) of this section.</P>
                  <P>(6) They are provided for in the approved budget, when approval of the budget is required by the DoD Component.</P>
                  <P>(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.</P>
                  <P>(8) They conform to other provisions of this part, as applicable.</P>
                  <P>(b) <E T="03">Valuing and documenting contributions</E>—(1) <E T="03">Valuing recipient's property or services of recipient's employees.</E> Values shall be established in accordance with the applicable cost principles in § 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:</P>
                  <P>(i) The certified value of the remaining life of the property recorded in the recipient's accounting records at the time of donation; or</P>
                  <P>(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.</P>
                  <P>(2) <E T="03">Valuing services of others’ employees.</E> 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.</P>
                  <P>(3) <E T="03">Valuing volunteer services.</E> 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.</P>
                  <P>(4) <E T="03">Valuing property donated by third parties.</E> (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.<PRTPAGE P="192"/>
                  </P>
                  <P>(ii) Normally only depreciation or use charges for equipment and buildings may be applied. However, the fair 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:</P>
                  <P>(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.</P>
                  <P>(B) The value of loaned equipment shall not exceed its fair rental value.</P>
                  <P>(5) <E T="03">Documentation.</E> The following requirements pertain to the recipient's supporting records for in-kind contributions from third parties:</P>
                  <P>(i) Volunteer services shall be documented and, to the extent feasible, supported by the same methods used by the recipient for its own employees.</P>
                  <P>(ii) The basis for determining the valuation for personal services and property shall be documented.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 34.14</SECTNO>
                  <SUBJECT>Program income.</SUBJECT>
                  <P>(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.</P>
                  <P>(b) Recipients shall have no obligation to the Government, unless the terms and conditions of the award provide otherwise, for program income earned:</P>
                  <P>(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 § 34.25, apply to inventions made under a research award.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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:</P>
                  <P>(1) Added to funds committed to the project by the DoD Component and recipient and used to further eligible project or program objectives.</P>
                  <P>(2) Used to finance the non-Federal share of the project or program.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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 § 34.4.</P>
                  <P>(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 §§ 34.20 through 34.25).</P>
                </SECTION>
                <SECTION>
                  <PRTPAGE P="193"/>
                  <SECTNO>§ 34.15</SECTNO>
                  <SUBJECT>Revision of budget and program plans.</SUBJECT>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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:</P>
                  <P>(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):</P>
                  <P>(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).</P>
                  <P>(ii) A need for additional Federal funding.</P>
                  <P>(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):</P>
                  <P>(i) A change in a key person specified in the application or award document.</P>
                  <P>(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.</P>
                  <P>(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 § 34.17 and § 34.13, respectively.</P>
                  <P>(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).</P>
                  <P>(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.</P>
                  <P>(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 § 34.21(a), if it is to be purchased with Federal funds, or § 34.13(a)(7), if it is to be used as cost sharing or matching.</P>
                  <P>(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):</P>
                  <P>(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.</P>
                  <P>(ii) For awards that provide support for both construction and nonconstruction work, any fund or budget transfers between the two types of work supported.</P>

                  <P>(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 <PRTPAGE P="194"/>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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 34.16</SECTNO>
                  <SUBJECT>Audits.</SUBJECT>
                  <P>(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.</P>
                  <P>(b) The auditor shall determine and report on whether:</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(c) The recipient shall make the auditor's report available to DoD Components whose awards are affected.</P>
                  <P>(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:</P>
                  <P>(1) Shall consider whether the independent audit satisfies his or her requirements, before requesting any additional audits; and</P>
                  <P>(2) When requesting an additional audit, shall:</P>
                  <P>(i) Limit the scope of such additional audit to areas not adequately addressed by the independent audit.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 34.17</SECTNO>
                  <SUBJECT>Allowable costs.</SUBJECT>
                  <P>Allowability of costs shall be determined in accordance with the cost principles applicable to the type of entity incurring the costs, as follows:</P>
                  <P>(a) <E T="03">For-profit organizations.</E> 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:</P>
                  <P>(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).</P>
                  <P>(2) The supplemental information on allowability of audit costs, in § 34.16(f).</P>
                  <P>(b) <E T="03">Other types of organizations.</E> Allowability of costs incurred by other types <PRTPAGE P="195"/>of organizations that may be subrecipients under a prime award to a for-profit organization is determined as follows:</P>
                  <P>(1) <E T="03">Institutions of higher education.</E> Allowability is determined in accordance with OMB Circular A-21,<SU>3</SU>
                    <FTREF/> “ Cost Principles for Educational Institutions.”</P>
                  <FTNT>
                    <P>
                      <SU>3</SU> 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.</P>
                  </FTNT>
                  <P>(2) <E T="03">Other nonprofit organizations.</E> Allowability is determined in accordance with OMB Circular A-122,<SU>4</SU>
                    <FTREF/> “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.</P>
                  <FTNT>
                    <P>
                      <SU>4</SU> See footnote 3 to paragraph (b)(1) of this section.</P>
                  </FTNT>
                  <P>(3) <E T="03">Hospitals.</E> 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.”</P>
                  <P>(4) <E T="03">Governmental organizations.</E> Allowability for State, local, or federally recognized Indian tribal governments is determined in accordance with OMB Circular A-87,<SU>5</SU>
                    <FTREF/> “Cost Principles for State and Local Governments.”</P>
                  <FTNT>
                    <P>
                      <SU>5</SU> See footnote 3 to paragraph (b)(1) of this section.</P>
                  </FTNT>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 34.18</SECTNO>
                  <SUBJECT>Fee and profit.</SUBJECT>
                  <P>In accordance with 32 CFR 22.205(b), grants and cooperative agreements shall not:</P>
                  <P>(a) Provide for the payment of fee or profit to the recipient.</P>
                  <P>(b) Be used to carry out programs where fee or profit is necessary to achieving program objectives.</P>
                </SECTION>
              </SUBJGRP>
              <SUBJGRP>
                <HD SOURCE="HED">Property Standards</HD>
                <SECTION>
                  <SECTNO>§ 34.20</SECTNO>
                  <SUBJECT>Purpose of property standards.</SUBJECT>
                  <P>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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 34.21</SECTNO>
                  <SUBJECT>Real property and equipment.</SUBJECT>
                  <P>(a) <E T="03">Prior approval for acquisition with Federal funds.</E> 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.</P>
                  <P>(b) <E T="03">Title.</E> 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:</P>
                  <P>(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.</P>
                  <P>(2) Not encumber the property without approval of the grants officer.</P>
                  <P>(3) Use and dispose of the property in accordance with paragraphs (d) and (e) of this section.</P>
                  <P>(c) <E T="03">Federal interest in real property or equipment offered as cost-share.</E> 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 § 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 § 34.23.</P>
                  <P>(d) <E T="03">Use.</E> 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:<PRTPAGE P="196"/>
                  </P>
                  <P>(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:</P>
                  <P>(i) Activities sponsored by DoD Components’ grants, cooperative agreements, or other assistance awards;</P>
                  <P>(ii) Activities sponsored by other Federal agencies’ grants, cooperative agreements, or other assistance awards;</P>
                  <P>(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.</P>
                  <P>(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:</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(e) <E T="03">Disposition.</E> (1) When an item of real property or equipment is no longer needed for Federally sponsored projects, the recipient shall proceed as follows:</P>
                  <P>(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).</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(2) If a recipient requests disposition instructions, in accordance with paragraph (e)(1)(iii) of this section, the responsible grants officer shall:</P>
                  <P>(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.</P>

                  <P>(ii) For either real property or equipment, issue instructions to the recipient for disposition of the property no <PRTPAGE P="197"/>later than 120 calendar days after the recipient's request. The grants officer's options for disposition are to direct the recipient to:</P>
                  <P>(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 § 34.22.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 34.22</SECTNO>
                  <SUBJECT>Federally owned property.</SUBJECT>
                  <P>(a) <E T="03">Annual inventory.</E> 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.</P>
                  <P>(b) <E T="03">Use on other activities.</E> (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.</P>
                  <P>(2) Use on other activities will be in the following order of priority:</P>
                  <P>(i) Activities sponsored by DoD Components’ grants, cooperative agreements, or other assistance awards;</P>
                  <P>(ii) Activities sponsored by other Federal agencies’ grants, cooperative agreements, or other assistance awards;</P>
                  <P>(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.</P>
                  <P>(c) <E T="03">Disposition of property.</E> Upon completion of the award, the recipient shall report the property to the responsible agency. The agency may:</P>
                  <P>(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).</P>
                  <P>(2) Declare the property to be excess property and either:</P>
                  <P>(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</P>
                  <P>(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.</P>
                </SECTION>
                <SECTION>
                  <PRTPAGE P="198"/>
                  <SECTNO>§ 34.23</SECTNO>
                  <SUBJECT>Property management system.</SUBJECT>
                  <P>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:</P>
                  <P>(a) Property records shall be maintained, to include the following information:</P>
                  <P>(1) A description of the property.</P>
                  <P>(2) Manufacturer's serial number, model number, Federal stock number, national stock number, or any other identification number.</P>
                  <P>(3) Source of the property, including the award number.</P>
                  <P>(4) Whether title vests in the recipient or the Federal Government.</P>
                  <P>(5) Acquisition date (or date received, if the property was furnished by the Federal Government) and cost.</P>
                  <P>(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).</P>
                  <P>(7) The location and condition of the property and the date the information was reported.</P>
                  <P>(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.</P>
                  <P>(b) Federally owned equipment shall be marked, to indicate Federal ownership.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(e) Adequate maintenance procedures shall be implemented to keep the property in good condition.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 34.24</SECTNO>
                  <SUBJECT>Supplies.</SUBJECT>
                  <P>(a) Title shall vest in the recipient upon acquisition for supplies acquired with Federal funds under an award.</P>
                  <P>(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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 34.25</SECTNO>
                  <SUBJECT>Intellectual property developed or produced under awards.</SUBJECT>
                  <P>(a) <E T="03">Patents.</E> Grants and cooperative agreements with:</P>
                  <P>(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.</P>
                  <P>(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).</P>

                  <P>(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-<PRTPAGE P="199"/>profit organizations other than small business concerns).</P>
                  <P>(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.</P>
                  <P>(b) <E T="03">Copyright, data and software rights.</E> Requirements concerning data and software rights are as follows:</P>
                  <P>(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.</P>
                  <P>(2) Unless waived by the DoD Component making the award, the Federal Government has the right to:</P>
                  <P>(i) Obtain, reproduce, publish or otherwise use for Federal Government purposes the data first produced under an award.</P>
                  <P>(ii) Authorize others to receive, reproduce, publish, or otherwise use such data for Federal purposes.</P>
                </SECTION>
              </SUBJGRP>
              <SUBJGRP>
                <HD SOURCE="HED">Procurement Standards</HD>
                <SECTION>
                  <SECTNO>§ 34.30</SECTNO>
                  <SUBJECT>Purpose of procurement standards.</SUBJECT>
                  <P>Section 34.31 sets forth requirements necessary to ensure:</P>
                  <P>(a) Compliance of recipients’ procurements that use Federal funds with applicable Federal statutes and executive orders.</P>
                  <P>(b) Proper stewardship of Federal funds used in recipients’ procurements.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 34.31</SECTNO>
                  <SUBJECT>Requirements.</SUBJECT>
                  <P>The following requirements pertain to recipients’ procurements funded in whole or in part with Federal funds or with recipients’ cost-share or match:</P>
                  <P>(a) <E T="03">Reasonable cost.</E> Recipients procurement procedures shall make maximum practicable use of competition, or shall use other means that ensure reasonable cost for procured goods and services.</P>
                  <P>(b) <E T="03">Pre-award review of certain procurements.</E> 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.</P>
                  <P>(c) <E T="03">Contract provisions.</E> (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.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                </SECTION>
              </SUBJGRP>
              <SUBJGRP>
                <HD SOURCE="HED">Reports and Records</HD>
                <SECTION>
                  <SECTNO>§ 34.40</SECTNO>
                  <SUBJECT>Purpose of reports and records.</SUBJECT>
                  <P>Sections 34.41 and 34.42 prescribe requirements for monitoring and reporting financial and program performance and for records retention.</P>
                </SECTION>
                <SECTION>
                  <PRTPAGE P="200"/>
                  <SECTNO>§ 34.41</SECTNO>
                  <SUBJECT>Monitoring and reporting program and financial performance.</SUBJECT>
                  <P>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:</P>
                  <P>(a) Periodic reports (at least annually, and no more frequently than quarterly) addressing both program status and business status, as follows:</P>
                  <P>(1) The program portions of the reports must address progress toward achieving program performance goals, including current issues, problems, or developments.</P>
                  <P>(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.</P>
                  <P>(3) When grants officers previously authorized advance payments, pursuant to § 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.</P>
                  <P>(b) Unless inappropriate, a final performance report that addresses all major accomplishments under the award.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 34.42</SECTNO>
                  <SUBJECT>Retention and access requirements for records.</SUBJECT>
                  <P>(a) This section sets forth requirements for records retention and access to records for awards to recipients.</P>
                  <P>(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:</P>
                  <P>(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.</P>
                  <P>(2) Records for real property and equipment acquired with Federal funds shall be retained for 3 years after final disposition.</P>
                  <P>(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.</P>
                  <P>(4) Indirect cost rate proposals, cost allocations plans, and related records, for which retention requirements are specified in § 34.42(g).</P>
                  <P>(c) Copies of original records may be substituted for the original records if authorized by the grants officer.</P>
                  <P>(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.</P>
                  <P>(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.</P>

                  <P>(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 <PRTPAGE P="201"/>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.</P>
                  <P>(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:</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                </SECTION>
              </SUBJGRP>
              <SUBJGRP>
                <HD SOURCE="HED">Termination and Enforcement</HD>
                <SECTION>
                  <SECTNO>§ 34.50</SECTNO>
                  <SUBJECT>Purpose of termination and enforcement.</SUBJECT>
                  <P>Sections 34.51 through 34.53 set forth uniform procedures for suspension, termination, enforcement, and disputes.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 34.51</SECTNO>
                  <SUBJECT>Termination.</SUBJECT>
                  <P>(a) Awards may be terminated in whole or in part only in accordance with one of the following:</P>
                  <P>(1) By the grants officer, if a recipient materially fails to comply with the terms and conditions of an award.</P>
                  <P>(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.</P>
                  <P>(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.</P>
                  <P>(b) If costs are allowed under an award, the responsibilities of the recipient referred to in § 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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 34.52</SECTNO>
                  <SUBJECT>Enforcement.</SUBJECT>
                  <P>(a) <E T="03">Remedies for noncompliance.</E> 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 § 34.4, take one or more of the following actions, as appropriate in the circumstances:</P>
                  <P>(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.</P>

                  <P>(2) Disallow (that is, deny both use of funds and any applicable matching <PRTPAGE P="202"/>credit for) all or part of the cost of the activity or action not in compliance.</P>
                  <P>(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.</P>
                  <P>(4) Withhold further awards for the project or program.</P>
                  <P>(5) Take other remedies that may be legally available.</P>
                  <P>(b) <E T="03">Hearings and appeals.</E> 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 § 34.53 and 32 CFR 22.815).</P>
                  <P>(c) <E T="03">Effects of suspension and termination.</E> 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:</P>
                  <P>(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</P>
                  <P>(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.</P>
                  <P>(d) <E T="03">Relationship to debarment and suspension.</E> 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.</P>
                </SECTION>
                <SECTION>
                  <SECTNO>§ 34.53</SECTNO>
                  <SUBJECT>Disputes and appeals.</SUBJECT>
                  <P>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.</P>
                </SECTION>
              </SUBJGRP>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart C—After-the-Award Requirements</HD>
              <SECTION>
                <SECTNO>§ 34.60</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <P>Sections 34.61 through 34.63 contain procedures for closeout and for subsequent disallowances and adjustments.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 34.61</SECTNO>
                <SUBJECT>Closeout procedures.</SUBJECT>
                <P>(a) The cognizant grants officer shall, at least six months prior to the expiration date of the award, contact the recipient to establish:</P>
                <P>(1) All steps needed to close out the award, including submission of financial and performance reports, liquidation of obligations, and decisions on property disposition.</P>
                <P>(2) A schedule for completing those steps.</P>
                <P>(b) The following provisions shall apply to the closeout:</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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 §§ 34.21 through 34.25.</P>

                <P>(5) If a final audit is required and has not been performed prior to the closeout of an award, the DoD Component <PRTPAGE P="203"/>shall retain the right to recover an appropriate amount after fully considering the recommendations on disallowed costs resulting from the final audit.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 34.62</SECTNO>
                <SUBJECT>Subsequent adjustments and continuing responsibilities.</SUBJECT>
                <P>(a) The closeout of an award does not affect any of the following:</P>
                <P>(1) The right of the Department of Defense to disallow costs and recover funds on the basis of a later audit or other review.</P>
                <P>(2) The obligation of the recipient to return any funds due as a result of later refunds, corrections, or other transactions.</P>
                <P>(3) Audit requirements in § 34.16.</P>
                <P>(4) Property management requirements in §§ 34.21 through 34.25.</P>
                <P>(5) Records retention as required in § 34.42.</P>
                <P>(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 § 34.61(a), including those for property management as applicable, are considered and provisions made for continuing responsibilities of the recipient, as appropriate.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 34.63</SECTNO>
                <SUBJECT>Collection of amounts due.</SUBJECT>
                <P>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.</P>
              </SECTION>
              <APPENDIX>
                <EAR>Pt. 34, App. A</EAR>
                <HD SOURCE="HED">Appendix A to Part 34—Contract Provisions</HD>
                <P>All contracts awarded by a recipient, including those for amounts less than the simplified acquisition threshold, shall contain the following provisions as applicable:</P>
                <P>1. <E T="03">Equal Employment Opportunity</E>—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.”</P>
                <P>2. <E T="03">Copeland “Anti-Kickback” Act (18 U.S.C. 874 and 40 U.S.C. 276c)</E>—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.</P>
                <P>3.<E T="03"> Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333)</E>—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<FR>1/2</FR> 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.</P>
                <P>4. <E T="03">Rights to Inventions Made Under a Contract, Grant or Cooperative Agreement</E>—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.”</P>
                <P>5. <E T="03">Clean Air Act</E> (42 U.S.C. 7401 <E T="03">et seq.</E>) and the Federal Water Pollution Control Act (33 <PRTPAGE P="204"/>U.S.C. 1251 <E T="03">et seq.</E>), 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 <E T="03">et seq.</E>) and the Federal Water Pollution Control Act as amended (33 U.S.C. 1251 <E T="03">et seq.</E>). Violations shall be reported to the responsible DoD Component and the Regional Office of the Environmental Protection Agency (EPA).</P>
                <P>6. <E T="03">Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)</E>—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.</P>
                <P>7. <E T="03">Debarment and Suspension (E.O.s 12549 and 12689)</E>—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.</P>
              </APPENDIX>
            </SUBPART>
          </PART>
        </SUBCHAP>
        <SUBCHAP TYPE="P">
          <PRTPAGE P="205"/>
          <HD SOURCE="HED">SUBCHAPTER D—PERSONNEL, MILITARY AND CIVILIAN</HD>
          <TEXT>
            <CROSSREF>
              <HD SOURCE="HED">Cross Reference:</HD>
              <P>For a revision of Standards for a Merit System of Personnel Administration, see 5 CFR part 900.</P>
            </CROSSREF>
          </TEXT>
          <PART>
            <EAR>Pt. 43</EAR>
            <HD SOURCE="HED">PART 43—PERSONAL COMMERCIAL SOLICITATION ON DoD INSTALLATIONS</HD>
            <CONTENTS>
              <SECHD>Sec.</SECHD>
              <SECTNO>43.1</SECTNO>
              <SUBJECT>Reissuance and purpose.</SUBJECT>
              <SECTNO>43.2</SECTNO>
              <SUBJECT>Applicability and scope.</SUBJECT>
              <SECTNO>43.3</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>43.4</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>43.5</SECTNO>
              <SUBJECT>Responsibilities.</SUBJECT>
              <SECTNO>43.6</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <APP>Appendix A to Part 43—Life Insurance Products and Securities</APP>
              <APP>Appendix B to Part 43—The Overseas Life Insurance Accreditation Program</APP>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>5 U.S.C. 301.</P>
            </AUTH>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>51 FR 7552, Mar. 5, 1986, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>§ 43.1</SECTNO>
              <SUBJECT>Reissuance and purpose.</SUBJECT>
              <P>This part:</P>
              <P>(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.</P>
              <P>(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.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 43.2</SECTNO>
              <SUBJECT>Applicability and scope.</SUBJECT>
              <P>(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.</P>
              <P>(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.</P>
              <P>(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.</P>
              <CITA>[51 FR 7552, Mar. 5, 1986, as amended at 52 FR 25008, July 2, 1987]</CITA>
            </SECTION>
            <SECTION>
              <SECTNO>§ 43.3</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>
                <E T="03">Agent.</E> An individual who receives remuneration as a salesperson or whose remuneration is dependent on volume of sales of a product or products.</P>
              <P>
                <E T="03">Association.</E> 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.</P>
              <P>
                <E T="03">DoD installation.</E> 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.</P>
              <P>
                <E T="03">DoD personnel.</E> 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.</P>
              <P>
                <E T="03">General agent.</E> A person who has a legal contract to represent a company solely and exclusively.<PRTPAGE P="206"/>
              </P>
              <P>
                <E T="03">Insurance carrier.</E> An insurance company issuing insurance through an association or reinsuring or coinsuring such insurance.</P>
              <P>
                <E T="03">Insurance product.</E> A policy, annuity, or certificate of insurance issued by an insurer or evidence of insurance coverage issued by a self-insured association.</P>
              <P>
                <E T="03">Insurer.</E> Any company or association engaged in the business of selling insurance policies to DoD personnel.</P>
              <P>
                <E T="03">Normal home enterprises.</E> Sales or services which are customarily conducted in a domestic setting and do not compete with an installation's officially sanctioned commerce.</P>
              <P>
                <E T="03">Securities.</E> 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.</P>
              <P>
                <E T="03">Solicitation.</E> 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.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 43.4</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>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.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 43.5</SECTNO>
              <SUBJECT>Responsibilities.</SUBJECT>
              <P>(a) The <E T="03">Assistant Secretary of Defense (Force Management and Personnel)</E> (ASD(FM&amp;P)) shall be responsible for developing policies and procedures governing personal commercial solicitation activities conducted on DoD installations.</P>
              <P>(b) The <E T="03">Heads of DoD Components,</E> or their designees, shall assure implementation of this Directive and compliance with its provisions.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 43.6</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(a) <E T="03">General.</E> (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:</P>
              <P>(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.</P>
              <P>(ii) Personal commercial solicitation is permitted by the local installation commander.</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(3) Organizations involved in sales are permitted to display literature on DoD installations in locations selected by the commander.</P>
              <P>(b) <E T="03">Life insurance products and securities.</E> (1) Life insurance products and securities offered and sold to DoD personnel must meet the prerequisites described in Appendix A.</P>
              <P>(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.</P>
              <P>(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.</P>

              <P>(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 <PRTPAGE P="207"/>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.</P>
              <P>(5) Installation commanders shall make disinterested third-party counseling available to DoD personnel desiring counseling.</P>
              <P>(6) In addition to the solicitation prohibitions contained in paragraph (d) of this section, DoD Components shall prohibit:</P>
              <P>(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.</P>
              <P>(ii) The use of an agent as a participant in any Military Services-sponsored insurance education or orientation program.</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(c) <E T="03">Supervision of on-base commercial activities.</E> (1) All pertinent installation regulations shall be posted in a place easily accessible to those conducting personal commercial solicitation activities on the installation.</P>
              <P>(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.</P>
              <P>(d) <E T="03">Prohibited practices.</E> The following commercial solicitation practices shall be prohibited on all DoD installations:</P>
              <P>(1) Solicitation of recruits, trainees, and transient personnel in a “mass” or “captive” audience.</P>
              <P>(2) Making appointments with or soliciting military personnel who are in an “on-duty” status.</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(6) Offering unfair, improper, and deceptive inducements to purchase or trade.</P>
              <P>(7) Using rebates to facilitate transactions or to eliminate competition.</P>
              <P>(8) Using manipulative, deceptive, or fraudulent devices, schemes, or artifices, including misleading advertising and sales literature.</P>
              <P>(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.</P>
              <P>(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 <SU>1</SU>
                <FTREF/>.</P>
              <FTNT>
                <P>
                  <SU>1</SU> Copies may be obtained, if needed, from the US Naval Publications and Forms Center 5801 Tabor Avenue, ATTN: Code 301, Philadelphia PA 19120.</P>
              </FTNT>
              <P>(11) Entering into any unauthorized or restricted area.</P>
              <P>(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 <SU>2</SU>
                <FTREF/> and <PRTPAGE P="208"/>1330.17 <SU>3</SU> and DoD Instructions 1330.18 <SU>4</SU> and 1000.15 <SU>5</SU>. This is not intended to preclude normal home enterprises, providing applicable State and local laws are complied with.</P>
              <FTNT>
                <P>
                  <E T="51">2—5</E> See footnote 1 to paragraph (d)(10) of this section.</P>
              </FTNT>
              <P>(13) Soliciting door to door.</P>
              <P>(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.</P>
              <P>(e) <E T="03">Denial and revocation of on-base solicitation.</E> (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:</P>
              <P>(i) Failure to meet the licensing and other regulatory requirements prescribed in paragraphs (a) and (b) of this section.</P>
              <P>(ii) Commission of any of the practices prohibited in paragraphs (b)(6) and (d) of this section.</P>
              <P>(iii) Substantiated complaints or adverse reports regarding quality of goods, services, and commodities and the manner in which they are offered for sale.</P>
              <P>(iv) Knowing and willful violations of Pub. L. 90-321.</P>
              <P>(v) Personal misconduct by a company's agent or representative while on the installation.</P>
              <P>(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.</P>
              <P>(vii) Failure to incorporate and abide by the Standards of Fairness policies contained in DoD Directive 1344.9.<SU>6</SU>
                <FTREF/>
              </P>
              <FTNT>
                <P>
                  <SU>6</SU> See footnote 1 to paragraph (d)(10) of this section.</P>
              </FTNT>
              <P>(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.</P>
              <P>(i) Upon withdrawing solicitation privileges, the commander shall promptly inform the agent and the company the agent represents orally or in writing.</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(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&amp;P)), following consultation with the Military Department concerned, shall order the action extended to other Military Departments.</P>
              <P>(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.</P>
              <P>(vi) When such denials or withdrawals are lifted, the Office of the ASD(FM&amp;P) shall be notified for parallel action if the same denial or withdrawal has been extended to other Military Departments.</P>

              <P>(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.<PRTPAGE P="209"/>
              </P>
              <P>(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.</P>
              <P>(f) <E T="03">Advertising policies.</E> (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).</P>
              <P>(2) The advertising of credit terms shall conform to the provisions of Pub. L. 90-321 as implemented by Regulation Z.</P>
              <P>(g) <E T="03">Educational programs.</E> (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.</P>
              <P>(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.<SU>7</SU>
                <FTREF/>
              </P>
              <FTNT>
                <P>
                  <SU>7</SU> See footnote 1 to § 43.6(d)(10).</P>
              </FTNT>
              <P>(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.</P>
              <P>(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.</P>
              <CITA>[51 FR 7552, Mar. 5, 1986, as amended at 52 FR 25008, July 2, 1987]</CITA>
            </SECTION>
            <APPENDIX>
              <EAR>Pt. 43, App. A</EAR>
              <HD SOURCE="HED">Appendix A to Part 43—Life Insurance Products and Securities</HD>
              <HD SOURCE="HD1">A. Life Insurance Product Content Prerequisites</HD>
              <P>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:</P>
              <P>a. Comply with the insurance laws of the State or country in which the installation is located and the procedural requirements of this Directive.</P>
              <P>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.</P>
              <P>c. Plainly indicate any extra premium charges imposed by reason of military service or military occupational specialty.</P>
              <P>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.</P>
              <P>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.</P>
              <P>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.</P>

              <P>4. Premiums shall reflect only the actual premiums payable for the life insurance product.<PRTPAGE P="210"/>
              </P>
              <HD SOURCE="HD1">B. Sale of Securities</HD>
              <P>1. All securities must be registered with the Securities and Exchange Commission.</P>
              <P>2. All sales of securities must comply with existing and appropriate Securities and Exchange Commission regulations.</P>
              <P>3. All securities representatives must apply directly to the commander of the installation on which they desire to solicit the sale of securities.</P>
              <P>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.</P>
              <HD SOURCE="HD1">C. Use of the Allotment of Pay System</HD>
              <P>1. Allotments of military pay for life insurance products shall be made in accordance with DoD Directive 7330.1.<SU>8</SU>
                <FTREF/>
              </P>
              <FTNT>
                <P>
                  <SU>8</SU> See footnote 1 to § 43.6(d)(10).</P>
              </FTNT>
              <P>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.</P>
              <HD SOURCE="HD1">D. Association—General</HD>
              <P>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.</P>
            </APPENDIX>
            <APPENDIX>
              <EAR>Pt. 43, App. B</EAR>
              <HD SOURCE="HED">Appendix B to Part 43—The Overseas Life Insurance Accreditation Program</HD>
              <HD SOURCE="HD1">A. Accreditation Criteria</HD>
              <P>1. <E T="03">Initial Accreditation.</E>
              </P>
              <P>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.</P>
              <P>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.</P>
              <P>2. <E T="03">Reaccreditation.</E>
              </P>
              <P>a. Insurers must demonstrate continuous successful operation in the life insurance business, as described in subsection A.1.a., above.</P>
              <P>b. Insurers must retain a Best's rating of B+ or better, as described in paragraph A.1.b., above.</P>
              <P>c. Insurers must establish an agency sales force in one of the overseas commands within two years of initial accreditation.</P>
              <P>3. <E T="03">Waiver Provisions.</E>
              </P>
              <P>Waivers of the initial accreditation and reaccreditation provisions will be considered for those insurers demonstrating substantial compliance with the aforementioned criteria.</P>
              <HD SOURCE="HD1">B. Application Instructions</HD>
              <P>1. <E T="03">Applications Filed Annually.</E> 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.</P>
              <P>2. <E T="03">Application Prerequisites.</E> 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&amp;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.</P>
              <P>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.</P>
              <P>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.</P>
              <P>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.</P>

              <P>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, <PRTPAGE P="211"/>the number of agents may be further limited by the overseas command concerned.</P>
              <P>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.</P>
              <P>f. Any explanatory or supplemental comments that will assist in evaluating the application.</P>
              <P>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.</P>
              <P>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.</P>
              <P>3. If a company is a life insurance company subsidiary, it must be accredited separately on its own merits.</P>
              <HD SOURCE="HD1">C. Agent Requirements</HD>
              <P>Unified commanders shall apply the following principles:</P>
              <P>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.</P>
              <P>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.</P>
              <P>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.</P>
              <P>4. Appropriate overseas commanders shall exercise further agent control procedures as deemed necessary.</P>
              <P>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.</P>
              <HD SOURCE="HD1">D. Announcement of Findings</HD>
              <P>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.</P>
              <P>2. In the event accreditation is denied, specific reasons for such findings shall be submitted to the applicant.</P>
              <P>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.</P>
              <P>b. Action by the Assistant Secretary of Defense (Force Management and Personnel) on appeal is final.</P>
              <P>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.</P>
              <P>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.</P>
              <P>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.</P>
              <P>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.</P>
              <P>b. Failure to report such material changes can result in termination of accreditation regardless of how it affects the criteria.</P>
              <P>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.</P>
            </APPENDIX>
          </PART>
          <PART>
            <PRTPAGE P="212"/>
            <EAR>Pt. 44</EAR>
            <HD SOURCE="HED">PART 44—SCREENING THE READY RESERVE</HD>
            <CONTENTS>
              <SECHD>Sec.</SECHD>
              <SECTNO>44.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <SECTNO>44.2</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
              <SECTNO>44.3</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>44.4</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>44.5</SECTNO>
              <SUBJECT>Responsibilities.</SUBJECT>
              <APP>Appendix A to Part 44—Guidance</APP>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>10 U.S.C. 10145.</P>
            </AUTH>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>64 FR 72027, Dec. 23, 1999, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>§ 44.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <P>Updates DoD policy and responsibilities for the screening of Ready Reservists under 10 U.S.C. 1003, 1005, and 1209.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 44.2</SECTNO>
              <SUBJECT>Applicability.</SUBJECT>
              <P>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.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 44.3</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>For purposes of this part, the following definitions apply:</P>
              <P>
                <E T="03">Extreme community hardship.</E> 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.</P>
              <P>
                <E T="03">Extreme personal hardship.</E> 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.</P>
              <P>
                <E T="03">Individual Ready Reserve.</E> 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.</P>
              <P>
                <E T="03">Key employee.</E> Any Federal employee occupying a key position.</P>
              <P>
                <E T="03">Key position.</E> 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:</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(3) <E T="03">Article III Judges.</E> 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 <PRTPAGE P="213"/>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.</P>
              <P>(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.</P>
              <P>
                <E T="03">Mobilization.</E> 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).</P>
              <P>
                <E T="03">Ready reserve.</E> 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.</P>
              <P>
                <E T="03">Selected reserve.</E> 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.</P>
              <P>
                <E T="03">Standby reserve.</E> 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.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 44.4</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>It is DoD policy that:</P>
              <P>(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:</P>
              <P>(1) Meet Military Service wartime standards of mental, moral, professional, and physical fitness.</P>
              <P>(2) Possess the military qualifications required in the various ranks, ratings, and specialties.</P>
              <P>(3) Are available immediately for active duty (AD) during a mobilization or as otherwise required by law.</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(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.</P>

              <P>(e) Any eligible member of the Standby Reserve may be transferred back to the Ready Reserve when the reason for <PRTPAGE P="214"/>the member's transfer to the Standby Reserve no longer exists in accordance with 10 U.S.C. 10150 and DoD Instruction 1200.15.<E T="51">1</E>
                <FTREF/>
              </P>
              <FTNT>
                <P>
                  <SU>1</SU> Copies may be obtained at http://web7.whs.osd.mil/corres.htm.</P>
              </FTNT>
              <P>(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.</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(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.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 44.5</SECTNO>
              <SUBJECT>Responsibilities.</SUBJECT>
              <P>(a) The <E T="03">Deputy Secretary of Defense</E> 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.</P>
              <P>(b) The <E T="03">Assistant Secretary of Defense for Reserve Affairs</E>, under the <E T="03">Under Secretary of Defense for Personnel and Readiness</E>, shall:</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(3) Prepare an annual report on the status of Ready Reservists employed by the Federal Government.</P>
              <P>(4) Employ the guidance in appendix A of this part in coordinating the screening program with employers of Ready Reservists.</P>
              <P>(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.</P>
              <P>(c) The <E T="03">Secretaries of the Military Departments</E> shall:</P>

              <P>(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.<PRTPAGE P="215"/>
              </P>
              <P>(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.</P>
              <P>(3) Review recommendations for removal of both Federal and other civilian employees from the Ready Reserve submitted by employers and take applicable action.</P>
              <P>(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.</P>
              <P>(5) Transfer Ready Reservists identified as occupying key positions to the Standby Reserve or the Retired Reserve, or discharge them, as applicable.</P>

              <P>(6) Ensure that Ready Reservists not on AD are examined as to physical fitness in accordance with DoD Directive 1332.18.<E T="51">2</E>
                <FTREF/>
              </P>
              <FTNT>
                <P>
                  <SU>2</SU> See footnote 1 to § 44.4(e).</P>
              </FTNT>

              <P>(7) Process members of the Ready Reserve who do not participate satisfactorily in accordance with DoD Instruction 1200.15 and DoD Directive 1215.13.<E T="51">3</E>
                <FTREF/>
              </P>
              <FTNT>
                <P>
                  <SU>3</SU> See footnote 1 to § 44.4(e).</P>
              </FTNT>

              <P>(8) Ensure that all Ready Reservists have a favorably completed background check for military service suitability on file (<E T="03">e.g.</E>, Entrance National Agency Check (ENTNAC), NAC).</P>
              <P>(9) Ensure that personnel records systems incorporate information on any factors that limit the mobilization availability of a Ready Reservist.</P>
              <P>(10) Develop and maintain current information pertaining to the mobilization availability of Ready Reservists.</P>
            </SECTION>
            <APPENDIX>
              <EAR>Pt. 44, App. A</EAR>
              <HD SOURCE="HED">Appendix A to Part 44—Guidance</HD>
              <HD SOURCE="HD1">Deputy Secretary of Defense</HD>
              <P>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.</P>
              <HD SOURCE="HD1">Employers of Ready Reservists</HD>
              <HD SOURCE="HD2">(a) Federal Employers</HD>
              <P>(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:</P>
              <P>(i) Conduct annual screening program as provided for by the Assistant Secretary of Defense for Reserve Affairs.</P>

              <P>(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.<E T="51">4</E>
                <FTREF/>
              </P>
              <FTNT>
                <P>
                  <SU>4</SU> See footnote 1 to § 44.4(e).</P>
              </FTNT>
              <P>(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 § 44.4 (b).</P>
              <P>(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:</P>
              <P>(A) Can the position be filled in a reasonable time after mobilization?</P>
              <P>(B) Does the position require technical or managerial skills that are possessed uniquely by the incumbent employee?</P>
              <P>(C) Is the position associated directly with defense mobilization?</P>
              <P>(D) Does the position include a mobilization or relocation assignment in an Agency having emergency functions, as designated by Executive Order 12656?</P>
              <P>(E) Is the position directly associated with industrial or manpower mobilization, as designated in Executive Orders 12656 and 12919?</P>
              <P>(F) Are there other factors related to the national defense, health, or safety that will make the incumbent of the position unavailable for mobilization?</P>
              <P>(2) [Reserved]</P>
              <P>(b) <E T="03">Non-Federal Employers of Ready Reservists.</E> 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 <PRTPAGE P="216"/>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.</P>
              <P>(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.</P>
              <HD SOURCE="HD1">Individual Ready Reservists</HD>
              <P>(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).</P>
              <P>(b) All Ready Reservists shall inform their employers of their Reserve military obligation.</P>
              <HD SOURCE="HD1">List of Reserve Personnel Centers to Which Reserve Screening Determination and Removal Requests Shall be Forwarded</HD>
              <HD SOURCE="HD2">Army Reserve</HD>
              <FP SOURCE="FP-1">Army Reserve Personnel Command</FP>
              <FP SOURCE="FP-1">1 Reserve Way</FP>
              <FP SOURCE="FP-1">ATTN: ARPC-PSP-T</FP>
              <FP SOURCE="FP-1">St. Louis, MO 63132</FP>
              <HD SOURCE="HD2">Naval Reserve</HD>
              <FP SOURCE="FP-1">Commander</FP>
              <FP SOURCE="FP-1">Navy Personnel Command (Pers 91)</FP>
              <FP SOURCE="FP-1">5720 Integrity Drive</FP>
              <FP SOURCE="FP-1">Millington, TN 38055-9100</FP>
              <HD SOURCE="HD2">Marine Corps Reserve</HD>
              <FP SOURCE="FP-1">Commanding General</FP>
              <FP SOURCE="FP-1">Marine Corps Reserve Support Command</FP>
              <FP SOURCE="FP-1">ATTN: IRR Division</FP>
              <FP SOURCE="FP-1">15303 Andrews Road</FP>
              <FP SOURCE="FP-1">Kansas City, MO 64147-1207</FP>
              <HD SOURCE="HD2">Air Force Reserve</HD>
              <FP SOURCE="FP-1">Commander</FP>
              <FP SOURCE="FP-1">Air Reserve Personnel Center/DPAF</FP>
              <FP SOURCE="FP-1">6760 E. Irvington Pl. #2600</FP>
              <FP SOURCE="FP-1">Denver, CO 80280-2600</FP>
              <HD SOURCE="HD2">Army and Air National Guard</HD>
              <P>Submit requests to the adjutant general of the applicable State, commonwealth, or territory (including the District of Columbia).</P>
              <HD SOURCE="HD2">Coast Guard Reserve</HD>
              <FP SOURCE="FP-1">Commander (CGPC-RPM)</FP>
              <FP SOURCE="FP-1">U.S. Coast Guard Personnel Command</FP>
              <FP SOURCE="FP-1">2100 Second St. S.W.</FP>
              <FP SOURCE="FP-1">Washington, DC 20593</FP>
              <HD SOURCE="HD1">Letter Format to Reserve Personnel Centers Requesting That Employee be Removed From the Ready Reserve</HD>
              <FP SOURCE="FP-1">From: (Employer-Agency or Company)</FP>
              <FP SOURCE="FP-1">To: (Appropriate Reserve Personnel Center)</FP>
              <FP SOURCE="FP-1">Subject: Request for Employee to Be Removed from the Ready Reserve</FP>
              
              <P>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]</P>
              <P>Therefore, I request that (he/she) be removed from the Ready Reserve and that you advise me accordingly when this action has been completed.</P>
              <P>The employee is:
              </P>
              <FP SOURCE="FP-1">1. Name of employee (last, first, M.I.):</FP>
              <FP SOURCE="FP-1">2. Military grade and Reserve component:</FP>
              <FP SOURCE="FP-1">3. Social security number:</FP>
              <FP SOURCE="FP-1">4. Current home address (street, city, State, and ZIP code):</FP>
              <FP SOURCE="FP-1">5. Military unit to which assigned (location and unit number):</FP>
              <FP SOURCE="FP-1">6. Title of employee's civilian position:</FP>
              <FP SOURCE="FP-1">7. Grade or salary level of civilian position:</FP>
              <FP SOURCE="FP-1">8. Date (YYMMDD) hired or assigned to position:</FP>
              
              <FP SOURCE="FP-1">Signature and Title of Agency or Company Official.</FP>
            </APPENDIX>
          </PART>
          <PART>
            <EAR>Pt. 45</EAR>
            <HD SOURCE="HED">PART 45—CERTIFICATE OF RELEASE OR DISCHARGE FROM ACTIVE DUTY (DD FORM 214/5 SERIES)</HD>
            <CONTENTS>
              <SECHD>Sec.</SECHD>
              <SECTNO>45.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <SECTNO>45.2</SECTNO>
              <SUBJECT>Applicability and scope.</SUBJECT>
              <SECTNO>45.3</SECTNO>
              <SUBJECT>Policy and procedures.</SUBJECT>
              <SECTNO>45.4</SECTNO>
              <SUBJECT>Responsibilities.</SUBJECT>
              <APP>Appendix A to Part 45—DD Form 214</APP>
              <APP>Appendix B to Part 45—DD Form 214WS</APP>
              <APP>Appendix C to Part 45—DD Form 215</APP>
              <APP>Appendix D to Part 45—State Directors of Veterans Affairs</APP>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>10 U.S.C. 1168 and 972.</P>
            </AUTH>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>54 FR 7409, Feb. 21, 1989, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>§ 45.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <P>(a) This document revises 32 CFR part 45.</P>

              <P>(b) Prescribes procedures concerning the preparation and distribution of revised DD Form 214 to comport with the <PRTPAGE P="217"/>requirements of 10 U.S.C. 1168, 972, and 32 CFR part 41 and the control and publication of separation program designators (SPDs).</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 45.2</SECTNO>
              <SUBJECT>Applicability and scope.</SUBJECT>
              <P>(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.</P>
              <P>(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:</P>
              <P>(1) <E T="03">The Military Services</E> with a source of information relating to military personnel for administrative purposes, and for making determinations of eligibility for enlistment or reenlistment.</P>
              <P>(2) <E T="03">The Service member</E> 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.</P>
              <P>(3) <E T="03">Appropriate governmental agencies</E> 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.</P>
              <P>(c) Its provisions include procedures on the control and distribution of all lists of SPDs.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 45.3</SECTNO>
              <SUBJECT>Policy and procedures.</SUBJECT>
              <P>(a) Administrative issuance or reissuance of DD Forms 214 and 215.</P>
              <P>(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.</P>
              <P>(2) The DD Form 214, once issued, will not be reissued except:</P>
              <P>(i) When directed by appropriate appellate authority, Executive Order, or by the Secretary concerned.</P>
              <P>(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.</P>
              <P>(iii) When two DD Forms 215 have been issued and an additional correction is required.</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(1) <E T="03">Release or discharge from active service.</E> (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.</P>

              <P>(A) Copy No. 4, containing the statutory or regulatory authority, reentry code, SPD code, and narrative reason <PRTPAGE P="218"/>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.</P>
              <P>(B) Remaining copies of DD Form 214 will be distributed on the day following the effective date of separation.</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(2) <E T="03">Release from active duty for training, full-time training duty, or active duty for special work.</E> 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.</P>
              <P>(3) <E T="03">Continuing on active duty.</E> 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:</P>
              <P>(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.</P>
              <P>(ii) Termination of enlisted status to accept an appointment to warrant or commissioned officer grade.</P>
              <P>(iii) Termination of a temporary appointment to accept a permanent warrant or commission in the Regular or Reserve components of the Armed Forces.</P>
              <P>(iv) Termination of an officer appointment in one of the Military Services to accept appointment in another Service.</P>
              <P>(c) <E T="03">DD Form 214 need not be prepared for:</E> (1) Personnel found disqualified upon reporting for active duty and who do not enter actively upon duties in accordance with orders.</P>
              <P>(2) Personnel whose active duty, active duty for training, full-time training duty or active duty for special work is terminated by death.</P>
              <P>(3) Personnel being removed from the Temporary Disability Retired List.</P>
              <P>(4) Enlisted personnel receiving temporary appointments to warrant or commissioned officer grades.</P>
              <P>(5) Personnel whose temporary warrant or commissioned officer status is terminated and who remain on active duty to complete an enlistment.</P>
              <P>(6) Personnel who terminate their Reserve component status to integrate into a Regular component.</P>
              <P>(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.</P>
              <P>(d) <E T="03">Preparation.</E> The Military Departments will issue instructions governing the preparation of DD Form 214, consistent with the following:</P>

              <P>(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 <PRTPAGE P="219"/>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.</P>
              <P>(2) Since DD Form 214 is often used by civilian personnel, abbreviations should be avoided.</P>
              <P>(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).</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(6) For the purpose of reemployment rights (DoD Directive 1205.12) <SU>1</SU>
                <FTREF/>) 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.”</P>
              <FTNT>
                <P>
                  <SU>1</SU> Copies may be obtained if needed, from the U.S. Naval Publications and forms Center, Attn: Code 1062, 5801 Tabor Avenue, Philadelphia, PA.</P>
              </FTNT>
              <P>(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.</P>
              <P>(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).</P>
              <P>(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.</P>

              <P>(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.<PRTPAGE P="220"/>
              </P>
              <P>(11) For Service members retiring from active duty enter in Block 18., “Subject to active duty recall by Service Secretary.”</P>
              <P>(12) For Service members being transferred to the Individual Ready Reserve, enter in Block 18., “Subject to active duty recall and/or annual screening.”</P>
              <P>(e) <E T="03">Distribution.</E> 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:</P>
              <P>(1) <E T="03">DD Form 214</E>—(i) <E T="03">Copy No. 1 (original).</E> To the member.</P>
              <P>(ii) <E T="03">Copy No. 2.</E> To be used as the Military Services’ record copy.</P>
              <P>(iii) <E T="03">Copy No. 3.</E> 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.</P>
              <P>(iv) <E T="03">Copy No. 4.</E> 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.</P>
              <P>(v) <E T="03">Copy No. 5.</E> To Louisiana UCX/UCFE, Claims Control Center, Louisiana Department of Labor, P.O. Box 94246, Capitol Station, Baton Rouge, Louisiana 70804-9246.</P>
              <P>(vi) <E T="03">Copy No. 6.</E> 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.</P>
              <P>(vii) <E T="03">Copies No. 7 and 8.</E> To be distributed in accordance with regulations issued by the Military Service concerned.</P>
              <P>(viii) <E T="03">Additional Copy Requirements.</E> 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 <SU>2</SU>
                <FTREF/>. Place of birth will be entered in Block 18.</P>
              <FTNT>
                <P>
                  <SU>2</SU> See footnote 1 to § 545.3(d)(6).</P>
              </FTNT>
              <P>(2) <E T="03">DD Form 214-ws.</E> 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.</P>
              <P>(3) <E T="03">DD Form 215.</E> 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.</P>
              <P>(4) <E T="03">Requests for Copies of DD Form 214 Subsequent to Separation.</E> 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.</P>

              <P>(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 <PRTPAGE P="221"/>case of DD forms issued prior to July 1, 1979, those items listed in paragraph (e)(4) of this section.</P>
              <P>(ii) A copy will be provided to authorized personnel for official purposes only.</P>
              <P>(f) <E T="03">Procurement.</E> Arrangements for procurement of DD Forms 214, 214-ws, and 215 will be made by the Military Services.</P>
              <P>(g) <E T="03">Modification of Forms.</E> 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&amp;P)). Requests to add or delete information will be coordinated with the other Military Services in writing, prior to submission to the ASD(FM&amp;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.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 45.4</SECTNO>
              <SUBJECT>Responsibilities.</SUBJECT>
              <P>(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:</P>
              <P>(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.</P>
              <P>(2) All forms will be secured after duty hours.</P>
              <P>(3) All obsolete forms will be destroyed.</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(7) The Military Services will monitor the use of DD Form 214 and review periodically its issuance to insure compliance with procedures for safeguarding.</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(d) Standard separation program designator (SPD) codes for officer and enlisted personnel developed under the provisions of DoD Instruction 5000.12 <SU>3</SU>
                <FTREF/> are published in DoD 5000.12-M.</P>
              <FTNT>
                <P>
                  <SU>3</SU> See footnote 1 to § 45.3(d)(6).</P>
              </FTNT>
              <P>(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.</P>

              <P>(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&amp;P), or his/her designee.<PRTPAGE P="222"/>
              </P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(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.</P>
            </SECTION>
            <APPENDIX>
              <PRTPAGE P="223"/>
              <EAR>Pt. 45, App. A</EAR>
              <HD SOURCE="HED">Appendix A to Part 45—DD Form 214</HD>
              <GPH DEEP="387" SPAN="2">
                <GID>EC23OC91.003</GID>
              </GPH>
              <GPH DEEP="460" SPAN="2">
                <PRTPAGE P="224"/>
                <GID>EC23OC91.004</GID>
              </GPH>
              <GPH DEEP="456" SPAN="2">
                <PRTPAGE P="225"/>
                <GID>EC23OC91.005</GID>
              </GPH>
              <GPH DEEP="199" SPAN="2">
                <PRTPAGE P="226"/>
                <GID>EC23OC91.006</GID>
              </GPH>
              <CITA>[54 FR 9985, Mar. 9, 1989]</CITA>
            </APPENDIX>
            <APPENDIX>
              <PRTPAGE P="227"/>
              <EAR>Pt. 45, App. B</EAR>
              <HD SOURCE="HED">Appendix B to Part 45—DD Form 214ws</HD>
              <GPH DEEP="453" SPAN="2">
                <GID>EC23OC91.007</GID>
              </GPH>
            </APPENDIX>
            <APPENDIX>
              <PRTPAGE P="228"/>
              <EAR>Pt. 45, App. C</EAR>
              <HD SOURCE="HED">Appendix C to Part 45—DD Form 215</HD>
              <GPH DEEP="470" SPAN="2">
                <GID>EC21OC91.050</GID>
              </GPH>
            </APPENDIX>
            <APPENDIX>
              <PRTPAGE P="229"/>
              <EAR>Pt. 45, App. D</EAR>
              <HD SOURCE="HED">Appendix D to Part 45—State Directors of Veterans Affairs</HD>
              <HD SOURCE="HD1">Alabama</HD>
              <FP SOURCE="FP-1">Director, Department of Veterans Affairs, P.O. Box 1509, Montgomery, AL 36192-3701.</FP>
              <HD SOURCE="HD1">Alaska</HD>
              <FP SOURCE="FP-1">Director, Division of Veterans Affairs, Department of Military &amp; Veterans Affairs, 3601 C Street, suite 620, Anchorage, AK 99503.</FP>
              <HD SOURCE="HD1">American Samoa</HD>
              <FP SOURCE="FP-1">Veterans Affairs Officer, Office of Veterans Affairs, American Samoa Government, P.O. Box 2586, Pago Pago, AS 96799.</FP>
              <HD SOURCE="HD1">Arizona</HD>
              <FP SOURCE="FP-1">Director of Veterans Affairs, Arizona Veterans Service Commission, 3225 N. Central Avenue, suite 910, Phoenix, AZ 85012.</FP>
              <HD SOURCE="HD1">Arkansas</HD>
              <FP SOURCE="FP-1">Director, 1200 West 3rd, room 105, Box 1280, Little Rock, AR 72201.</FP>
              <HD SOURCE="HD1">California</HD>
              <FP SOURCE="FP-1">Director, Department of Veterans Affairs, 1227 O Street, room 200A, Sacramento, CA 95814.</FP>
              <HD SOURCE="HD1">Colorado</HD>
              <FP SOURCE="FP-1">Director, Division of Veterans Affairs, Department of Social Services, 1575 Sherman Street, room 122, Denver, CO 80203.</FP>
              <HD SOURCE="HD1">Delaware</HD>
              <FP SOURCE="FP-1">Chairman, Commission of Veterans Affairs, P.O. Box 1401, Dover, DE 19901.</FP>
              <HD SOURCE="HD1">District of Columbia</HD>
              <FP SOURCE="FP-1">Chief, Office of Veterans Affairs, 941 North Capitol Street NE., room 1211 F, Washington, DC 20421.</FP>
              <HD SOURCE="HD1">Florida</HD>
              <FP SOURCE="FP-1">Director, Division of Veterans Affairs, P.O. Box 1437, St. Petersburg, FL 33731.</FP>
              <HD SOURCE="HD1">Georgia</HD>
              <FP SOURCE="FP-1">Commissioner, Department of Veterans Service, Floyd Veterans Memorial Bldg, suite E-970, Atlanta, GA 30334.</FP>
              <HD SOURCE="HD1">Guam</HD>
              <FP SOURCE="FP-1">Office of Veterans Affairs, P.O. Box 3279, Agana, Guam 96910.</FP>
              <HD SOURCE="HD1">Hawaii</HD>
              <FP SOURCE="FP-1">Director, Department of Social Services &amp; Housing, Veterans Affairs Section, 3949 Diamond Head Road, Honolulu, HI 96809-0339.</FP>
              <HD SOURCE="HD1">Idaho</HD>
              <FP SOURCE="FP-1">Administrator, Division of Veterans Service, P.O. Box 6675, Boise, ID 83707.</FP>
              <HD SOURCE="HD1">Connecticut</HD>
              <FP SOURCE="FP-1">Commandant, Veterans Home and Hospital, 287 West Street, Rocky Hill, CT 06067.</FP>
              <HD SOURCE="HD1">Indiana</HD>
              <FP SOURCE="FP-1">Director, Department of Veterans Affairs, 707 State Office Building, 100 N. Senate Avenue, Indianapolis, IN 46204.</FP>
              <HD SOURCE="HD1">Iowa</HD>
              <FP SOURCE="FP-1">Administrator, Veterans Affairs Division, 7700 NW. Beaver Drive, Camp Dodge, Johnston, IA 50131-1902.</FP>
              <HD SOURCE="HD1">Kansas</HD>
              <FP SOURCE="FP-1">Executive Director, Kansas Veterans Commission, Jayhawk Tower, suite 701, 700 SW. Jackson Street, Topeka, KS 66603-3150.</FP>
              <HD SOURCE="HD1">Kentucky</HD>
              <FP SOURCE="FP-1">Director, Kentucky Center for Veterans Affairs, 600 Federal Place room 1365, Louisville, KY 40202.</FP>
              <HD SOURCE="HD1">Louisiana</HD>
              <FP SOURCE="FP-1">Executive Director, Department of Veterans Affairs, P.O. Box 94095, Capitol Station, Baton Rouge, LA 70804-4095.</FP>
              <HD SOURCE="HD1">Maine</HD>
              <FP SOURCE="FP-1">Director, Bureau of Veterans Services, State Office Building Station 117, Augusta, ME 04333.</FP>
              <HD SOURCE="HD1">Maryland</HD>
              <FP SOURCE="FP-1">Executive Director, Maryland Veterans Commission, Federal Bldg.—room 110, 31 Hopkins Plaza, Baltimore, MD 21201.</FP>
              <HD SOURCE="HD1">Illinois</HD>
              <FP SOURCE="FP-1">Director, Department of Veterans Affairs, 208 West Cook Street, Springfield, IL 62705.</FP>
              <HD SOURCE="HD1">Michigan</HD>
              <FP SOURCE="FP-1">Director, Michigan Veterans Trust Fund, P.O. Box 30026, Ottawa Bldg, No. Tower, 3rd Floor, Lansing, MI 48909.</FP>
              <HD SOURCE="HD1">Minnesota</HD>
              <FP SOURCE="FP-1">Commissioner, Department of Veterans Affairs, Veterans Service Building, 2nd Floor, St. Paul, MN 55155.</FP>
              <HD SOURCE="HD1">Mississippi</HD>

              <FP SOURCE="FP-1">President, State Veterans Affairs Board, 120 North State Street, War Memorial Building, room B-100, Jackson, MS 39201.<PRTPAGE P="230"/>
              </FP>
              <HD SOURCE="HD1">Missouri</HD>
              <FP SOURCE="FP-1">Director, Division of Veterans Affairs, P.O. Drawer 147, Jefferson City, MO 65101.</FP>
              <HD SOURCE="HD1">Montana</HD>
              <FP SOURCE="FP-1">Administrator, Veterans Affairs Division, P.O. Box 5715, Helena, MT 59604.</FP>
              <HD SOURCE="HD1">Nebraska</HD>
              <FP SOURCE="FP-1">Director, Department of Veterans Affairs, P.O. Box 95083, State Office Building, Lincoln, NE 68509.</FP>
              <HD SOURCE="HD1">Nevada</HD>
              <FP SOURCE="FP-1">Commissioner, Commission for Veterans Affairs, 1201 Terminal Way, room 108, Reno, NV 89520.</FP>
              <HD SOURCE="HD1">Massachusetts</HD>
              <FP SOURCE="FP-1">Commissioner, Department of Veterans Services, 100 Cambridge Street—room 1002, Boston, MA 02202.</FP>
              <HD SOURCE="HD1">New Jersey</HD>
              <FP SOURCE="FP-1">Director, Division of Veterans Programs &amp; Special Services, 143 E. State Street, room 505, Trenton, NJ 08608.</FP>
              <HD SOURCE="HD1">New Mexico</HD>
              <FP SOURCE="FP-1">Director, Veterans Service Commission, P.O. Box 2324, Santa Fe, NM 87503.</FP>
              <HD SOURCE="HD1">New York</HD>
              <FP SOURCE="FP-1">Director, Division of Veterans Affairs, State Office Building #6A-19, Veterans Highway, Hauppauge, NY 11788.</FP>
              <HD SOURCE="HD1">North Carolina</HD>
              <FP SOURCE="FP-1">Asst Secretary for Veterans Affairs, Division of Veterans Affairs, 227 E. Edenton Street, Raleigh, NC 27601.</FP>
              <HD SOURCE="HD1">North Dakota</HD>
              <FP SOURCE="FP-1">Commissioner, Department of Veterans Affairs, 15 North Broadway, suite 613, Fargo, ND 58102.</FP>
              <HD SOURCE="HD1">Ohio</HD>
              <FP SOURCE="FP-1">Director, Division of Soldiers Claims &amp; Veterans Affairs, State House Annex, room 11, Columbus, OH 43215.</FP>
              <HD SOURCE="HD1">Oklahoma</HD>
              <FP SOURCE="FP-1">Director, Department of Veterans Affairs, P.O. Box 53067, Oklahoma City, OK 73152.</FP>
              <HD SOURCE="HD1">New Hampshire</HD>
              <FP SOURCE="FP-1">Director, State Veterans Council, 359 Lincoln Street, Manchester, NH 03103.</FP>
              <HD SOURCE="HD1">Oregon</HD>
              <FP SOURCE="FP-1">Director, Department of Veterans Affairs, Oregon Veterans Building, 700 Summer Street NE., suite 150, Salem, OR 97310-1270.</FP>
              <HD SOURCE="HD1">Pennsylvania</HD>
              <FP SOURCE="FP-1">Director, Department of Military Affairs, Bureau for Veterans Affairs, Fort Indiantown Gap, Bldg 5-0-47, Annville, PA 17003-5002.</FP>
              <HD SOURCE="HD1">Puerto Rico</HD>
              <FP SOURCE="FP-1">Director, Bureau of Veterans Affairs &amp; Human Resources, Department of Labor, 505 Munoz Rivera Avenue, Hato Rey, PR 00918.</FP>
              <HD SOURCE="HD1">Rhode Island</HD>
              <FP SOURCE="FP-1">Chief, Veterans Affairs Office, Metacom Avenue, Bristol, RI 02809.</FP>
              <HD SOURCE="HD1">South Carolina</HD>
              <FP SOURCE="FP-1">Director, Department of Veterans Affairs, Brown State Office Building, 1205 Pendleton Street, Columbia, SC 29201.</FP>
              <HD SOURCE="HD1">South Dakota</HD>
              <FP SOURCE="FP-1">Director, Division of Veterans Affairs, 500 East Capitol Avenue, State Capitol Building, Pierre, SD 57501-5083.</FP>
              <HD SOURCE="HD1">Tennessee</HD>
              <FP SOURCE="FP-1">Commissioner, Department of Veterans Affairs, 215 8th Avenue, North, Nashville, TN 37203.</FP>
              <HD SOURCE="HD1">Texas</HD>
              <FP SOURCE="FP-1">Executive Director, Veterans Affairs Commission of Texas, Box 12277, Capitol Station, Austin, TX 78711.</FP>
              <HD SOURCE="HD1">Utah</HD>
              <FP SOURCE="FP-1">No DVA.</FP>
              <HD SOURCE="HD1">Vermont</HD>
              <FP SOURCE="FP-1">Director, Veterans Affairs Office, State Office Building, Montpelier, VT 05602.</FP>
              <HD SOURCE="HD1">Virginia</HD>
              <FP SOURCE="FP-1">Director, Division of War Veterans Claims, 210 Franklin Road, SW., room 1002, P.O. Box 809, Roanoke, VA 24004.</FP>
              <HD SOURCE="HD1">Virgin Islands</HD>
              <FP SOURCE="FP-1">Director, Division of Veterans Affairs, P.O. Box 890, Christiansted, St. Croix, VI 00820.</FP>
              <HD SOURCE="HD1">Washington</HD>

              <FP SOURCE="FP-1">Director, Department of Veterans Affairs, P.O. Box 9778, Mail Stop PM-41, Olympia, WA 95804.<PRTPAGE P="231"/>
              </FP>
              <HD SOURCE="HD1">West Virginia</HD>
              <FP SOURCE="FP-1">Director, Department of Veterans Affairs, 605 Atlas Building, Charleston, WV 25301-9778.</FP>
              <HD SOURCE="HD1">Wisconsin</HD>
              <FP SOURCE="FP-1">Secretary, Department of Veterans Affairs, P.O. Box 7843, 77 North Dickinson Street, Madison, WI 53707.</FP>
            </APPENDIX>
          </PART>
          <PART>
            <EAR>Pt. 47</EAR>
            <HD SOURCE="HED">PART 47—ACTIVE DUTY SERVICE FOR CIVILIAN OR CONTRACTUAL GROUPS</HD>
            <CONTENTS>
              <SECHD>Sec.</SECHD>
              <SECTNO>47.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <SECTNO>47.2</SECTNO>
              <SUBJECT>Applicability and scope.</SUBJECT>
              <SECTNO>47.3</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <SECTNO>47.4</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <SECTNO>47.5</SECTNO>
              <SUBJECT>Responsibilities.</SUBJECT>
              <SECTNO>47.6</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <APP>Appendix A to Part 47—Instructions for Submitting Group Applications Under Public Law 95-202</APP>
              <APP>Appendix B to Part 47—The DoD Civilian/Military Service Review Board and the Advisory Panel</APP>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>38 U.S.C. 106 note.</P>
            </AUTH>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>54 FR 39993, Sept. 29, 1989, unless otherwise noted.</P>
            </SOURCE>
            <SECTION>
              <SECTNO>§ 47.1</SECTNO>
              <SUBJECT>Purpose.</SUBJECT>
              <P>This document:</P>
              <P>(a) Revises 32 CFR part 47 and implements Public Law 95-202.</P>
              <P>(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.</P>
              <P>(c) Establishes the DoD Civilian/Military Service Review Board and the Advisory Panel.</P>
              <P>(d) Establishes policy, assigns responsibilities, prescribes application procedures for groups and individuals, and clarifies the factors used to determine active duty (AD) service.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 47.2</SECTNO>
              <SUBJECT>Applicability and scope.</SUBJECT>
              <P>This part:</P>
              <P>(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.</P>
              <P>(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.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 47.3</SECTNO>
              <SUBJECT>Definitions.</SUBJECT>
              <P>
                <E T="03">Armed conflict.</E> 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.</P>
              <P>(a) Examples of armed conflict are World Wars I and II, and the Korean and Vietnam Conflicts.</P>
              <P>(b) Examples of military actions that are not armed conflicts are as follows:</P>
              <P>(1) The incursion into Lebanon in 1958, and the peacekeeping force there in 1983 and 1984.</P>
              <P>(2) The incursions into the Dominican Republic in 1965 and into Libya in 1986.</P>
              <P>(3) The intervention into Grenada in 1983.</P>
              <P>
                <E T="03">Civilian or contractual group.</E> 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.</P>
              <P>
                <E T="03">Recognized group.</E> 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.</P>
              <P>
                <E T="03">Similarly situated.</E> 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 <PRTPAGE P="232"/>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.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 47.4</SECTNO>
              <SUBJECT>Policy.</SUBJECT>
              <P>(a) <E T="03">Eligibility for consideration.</E> To be eligible to apply for consideration under Public Law 95-202 and this part, a group must:</P>
              <P>(1) Have been similarly situated to the Women's Air Forces Service Pilots of World War II.</P>
              <P>(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.</P>
              <P>(3) Have rendered that service during a period of armed conflict.</P>
              <P>(4) Consist of living persons to whom VA benefits can accrue.</P>
              <P>(5) Not have already received benefits from the Federal Government for the service in question.</P>
              <P>(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:</P>
              <P>(1) <E T="03">Incidents favoring equivalency—</E>(i) <E T="03">Uniqueness of service.</E> 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:</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(ii) <E T="03">Organizational authority over the group.</E> 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.</P>
              <P>(iii) <E T="03">Integration into the military organization.</E> Integrated civilian groups are subject to the regulations, standards, and control of the military command authority.</P>
              <P>(A) Examples include the following:</P>
              <P>(<E T="03">1</E>) Exchanging military courtesies.</P>
              <P>(<E T="03">2</E>) Wearing military clothing, insignia, and devices.</P>
              <P>(<E T="03">3</E>) Assimilating the group into the military organizational structure.</P>
              <P>(<E T="03">4</E>) Emoluments associated with military personnel; i.e., the use of commissaries and exchanges, and membership in military clubs.</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(iv) <E T="03">Subjection to military discipline.</E> During past armed conflicts, U.S. military commanders sometimes restricted the rights or liberties of civilian members as if they were military members.</P>
              <P>(A) Examples include the following:</P>
              <P>(<E T="03">1</E>) Placing members under a curfew.</P>
              <P>(<E T="03">2</E>) Requiring members to work extended hours or unusual shifts.<PRTPAGE P="233"/>
              </P>
              <P>(<E T="03">3</E>) Changing duty assignments and responsibilities.</P>
              <P>(<E T="03">4</E>) Restricting proximity travel to and from the military installation.</P>
              <P>(<E T="03">5</E>) Imposing dress and grooming standards.</P>
              <P>(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.</P>
              <P>(v) <E T="03">Subjection to military justice.</E> 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.</P>
              <P>(vi) <E T="03">Prohibition against members of the group joining the armed forces.</E> 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.</P>
              <P>(vii) <E T="03">Receipt of military training and/or achievement of military capability.</E> 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.</P>
              <P>(2) <E T="03">Incidents not favoring equivalency—</E>(i) <E T="03">Submission to the U.S. Armed Forces for protection.</E> 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:</P>
              <P>(A) Armed by the U.S. military for defensive purposes.</P>
              <P>(B) Routed by the U.S. military to avoid the enemy.</P>
              <P>(C) Instructed by the U.S. military for the defense of the group when attacked by, or in danger of attack by, the enemy.</P>
              <P>(D) Otherwise submitted themselves to the U.S. military for sustenance and protection.</P>
              <P>(ii) <E T="03">Permitted to resign.</E> 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.</P>
              <P>(iii) <E T="03">Prior recognition of group service.</E> Recognition of a group's service by agencies of State or local government does not provide support in favor of recognition under this part.</P>
              <P>(3) <E T="03">Status of group in international law.</E> 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.</P>
              <P>(c) <E T="03">Reconsideration.</E> 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 § 47.5(b)) determines does not provide new, relevant, and substantive evidence shall be returned to the applicant with the reasons for nonacceptance.</P>
              <P>(d) <E T="03">Counsel Representation.</E> 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.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 47.5</SECTNO>
              <SUBJECT>Responsibilities.</SUBJECT>
              <P>(a) The Assistant Secretary of Defense (Force Management and Personnel) (ASD(FM&amp;P)) shall:</P>
              <P>(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.</P>

              <P>(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.<PRTPAGE P="234"/>
              </P>
              <P>(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:</P>
              <P>(1) Establish the DoD Civilian/Military Service Review Board and the Advisory Panel.</P>
              <P>(2) Appoint as board president a member or employee of the Air Force in grade O-6 or GM-15 or higher.</P>
              <P>(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.</P>
              <P>(4) Provide a recorder and an assistant to maintain the records of the board and administer the functions of this part.</P>
              <P>(5) Provide nonvoting legal advisors and historians.</P>

              <P>(6) Publish notices of group applications and other Public Law 95-202 announcements in the <E T="04">Federal Register</E>.</P>
              <P>(7) Consider the rationale and recommendations of the DoD Civilian/Military Service Review Board.</P>
              <P>(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.</P>
              <P>(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):</P>
              <P>(i) The applicant(s) for the group.</P>
              <P>(ii) The Secretary of the Department of Veterans Affairs.</P>
              <P>(iii) The Secretary of the Army.</P>
              <P>(iv) The Secretary of the Navy.</P>
              <P>(v) The ASD (FM&amp;P).</P>
              <P>(vi) The Secretary of Transportation (when a group claims active Coast Guard service).</P>
              <P>(c) The Secretary of the Army, Secretary of the Navy, Secretary of the Air Force, and Commandant of the Coast Guard shall:</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(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.</P>
              <P>(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 <SU>1</SU>
                <FTREF/> and DoD Directive 1332.14 <SU>2</SU>
                <FTREF/> 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.</P>
              <FTNT>
                <P>
                  <SU>1</SU> Copies may be obtained, if needed, from the U.S. Naval Publications and Forms Center, Attn: 1053, 5801 Tabor Avenue, Philadelphia, PA 19120.</P>
              </FTNT>
              <FTNT>
                <P>
                  <SU>2</SU> See footnote 1 to § 47.5(c)(4).</P>
              </FTNT>
              <P>(5) Issue a DD Form 1300, “Report of Casualty,” in accordance with DoD Instruction 1300.9 <SU>3</SU>
                <FTREF/> if a verified member was killed during the period of AD service.</P>
              <FTNT>
                <P>
                  <SU>3</SU> See footnote 1 to § 47.5(c)(4).</P>
              </FTNT>

              <P>(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:
              </P>
              <EXTRACT>
                <P>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.</P>
              </EXTRACT>
              

              <P>(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 <PRTPAGE P="235"/>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:</P>
              <P>(i) Officially recognized organizational grade or equivalent rank.</P>
              <P>(ii) The corresponding rank for civilian pay grade.</P>
              <P>(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.</P>
              <P>(8) Adjudicate applicant challenges to the period of AD service, characterization of service, or other administrative aspects of the discharge documents issued.</P>
            </SECTION>
            <SECTION>
              <SECTNO>§ 47.6</SECTNO>
              <SUBJECT>Procedures.</SUBJECT>
              <P>(a) <E T="03">Submitting group applications.</E> 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.</P>
              <P>(b) <E T="03">Processing group applications.</E> (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 <E T="04">Federal Register.</E>
              </P>
              <P>(2) The recorder shall send the application to the appropriate advisory panel for historical review and analysis.</P>
              <P>(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.</P>
              <P>(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.</P>

              <P>(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 “<E T="04">Federal Register</E>.”</P>
              <P>(c) <E T="03">Submitting individual applications.</E> 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.</P>
            </SECTION>
            <APPENDIX>
              <EAR>Pt. 47, App. A</EAR>
              <HD SOURCE="HED">Appendix A to Part 47—Instructions for Submitting Group Applications Under Public Law 95-202</HD>
              <P>
                <E T="03">A. In Submitting a Group Application:</E> 1. Define the group to include the time period that your group provided service to the U.S. Armed Forces.</P>
              <P>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.</P>
              <P>3. Address each of the factors in § 47.4.</P>
              <P>4. Substantiate and document the application. (The burden of proof rests with the applicant.)</P>
              <P>
                <E T="03">B. Send Completed Group Applications To:</E> Secretary of the Air Force (SAF/MRC), DoD Civilian/Military Service Review Board, Washington, DC 20330-1000.</P>
            </APPENDIX>
            <APPENDIX>
              <EAR>Pt. 47, App. B</EAR>
              <HD SOURCE="HED">Appendix B to Part 47—The DoD Civilian/Military Service Review Board and the Advisory Panel</HD>
              <HD SOURCE="HD2">A. Organization and Management</HD>
              <P>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.</P>

              <P>2. The advisory panel shall act as a nonvoting adjunct to the board. It shall consist <PRTPAGE P="236"/>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.</P>
              <HD SOURCE="HD2">B. Functions</HD>
              <P>1. The board shall meet in executive session at the call of the president, and shall limit its reviews to the following:</P>
              <P>a. Written submissions by an applicant on behalf of a civilian or contractual group. Presentations to the board are not allowed.</P>
              <P>b. Written report(s) prepared by the advisory panel.</P>
              <P>c. Any other relevant written information available.</P>
              <P>d. Factors established in this part for determining AD service.</P>
              <P>2. The board shall return to the applicant any application that does not meet the eligibility criteria established in § 47.4(a). The board only needs to state the reasons why the group is ineligible for consideration under this part.</P>
              <P>3. If the board determines that an application is eligible for consideration under § 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 § 47.4.</P>
              <P>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.</P>
              <P>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.</P>
            </APPENDIX>
          </PART>
          <PART>
            <EAR>Pt. 48</EAR>
            <HD SOURCE="HED">PART 48—RETIRED SERVICEMAN'S FAMILY PROTECTION PLAN</HD>
            <CONTENTS>
              <SUBPART>
                <HD SOURCE="HED">Subpart A—General Information</HD>
                <SECHD>Sec.</SECHD>
                <SECTNO>48.101</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <SECTNO>48.102</SECTNO>
                <SUBJECT>Definitions.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart B—Election of Options</HD>
                <SECTNO>48.201</SECTNO>
                <SUBJECT>Options.</SUBJECT>
                <SECTNO>48.202</SECTNO>
                <SUBJECT>Limitation on number of annuities.</SUBJECT>
                <SECTNO>48.203</SECTNO>
                <SUBJECT>Election of options.</SUBJECT>
                <SECTNO>48.204</SECTNO>
                <SUBJECT>Change or revocation of election.</SUBJECT>
                <SECTNO>48.205</SECTNO>
                <SUBJECT>Election form.</SUBJECT>
                <SECTNO>48.206</SECTNO>
                <SUBJECT>Information regarding elections.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart C—Designation of Beneficiaries</HD>
                <SECTNO>48.301</SECTNO>
                <SUBJECT>Designation.</SUBJECT>
                <SECTNO>48.302</SECTNO>
                <SUBJECT>Substantiating evidence regarding dependency and age of dependents.</SUBJECT>
                <SECTNO>48.303</SECTNO>
                <SUBJECT>Condition affecting entitlement of widow or widower.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart D—Reduction of Retired Pay</HD>
                <SECTNO>48.401</SECTNO>
                <SUBJECT>Computation of reduction.</SUBJECT>
                <SECTNO>48.402</SECTNO>
                <SUBJECT>Effective date of reduction.</SUBJECT>
                <SECTNO>48.403</SECTNO>
                <SUBJECT>Payment of nonwithheld reduction of retired pay.</SUBJECT>
                <SECTNO>48.404</SECTNO>
                <SUBJECT>Ages to be used.</SUBJECT>
                <SECTNO>48.405</SECTNO>
                <SUBJECT>Action upon removal from temporary disability retired list.</SUBJECT>
                <SECTNO>48.406</SECTNO>
                <SUBJECT>Withdrawal and reduction of percentage or amount of participation.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart E—Annuity</HD>
                <SECTNO>48.501</SECTNO>
                <SUBJECT>General information.</SUBJECT>
                <SECTNO>48.502</SECTNO>
                <SUBJECT>Effective date of annuity.</SUBJECT>
                <SECTNO>48.503</SECTNO>
                <SUBJECT>Claims for annuity payments.</SUBJECT>
                <SECTNO>48.504</SECTNO>
                <SUBJECT>Payment to children.</SUBJECT>
                <SECTNO>48.505</SECTNO>
                <SUBJECT>Establishing eligibility of annuitants.</SUBJECT>
                <SECTNO>48.506</SECTNO>
                <SUBJECT>Recovery of erroneous annuity payments.</SUBJECT>
                <SECTNO>48.507</SECTNO>
                <SUBJECT>Restriction on participation.</SUBJECT>
                <SECTNO>48.508</SECTNO>
                <SUBJECT>Certain 100 percent disability retirements.</SUBJECT>
              </SUBPART>
              <SUBPART>
                <HD SOURCE="HED">Subpart F—Miscellaneous</HD>
                <SECTNO>48.601</SECTNO>
                <SUBJECT>Annual report.</SUBJECT>
                <SECTNO>48.602</SECTNO>
                <SUBJECT>Organization.</SUBJECT>
                <SECTNO>48.603</SECTNO>
                <SUBJECT>Correction of administrative deficiencies.</SUBJECT>
                <SECTNO>48.604</SECTNO>
                <SUBJECT>Transition and protective clauses.</SUBJECT>
              </SUBPART>
            </CONTENTS>
            <AUTH>
              <HD SOURCE="HED">Authority:</HD>
              <P>Sec. 1444, 70A Stat. 111; 10 U.S.C. 1444.</P>
            </AUTH>
            <SOURCE>
              <HD SOURCE="HED">Source:</HD>
              <P>34 FR 12092, July 18, 1969, unless otherwise noted.</P>
            </SOURCE>
            <SUBPART>
              <HD SOURCE="HED">Subpart A—General Information</HD>
              <SECTION>
                <SECTNO>§ 48.101</SECTNO>
                <SUBJECT>Purpose.</SUBJECT>
                <P>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.</P>
              </SECTION>
              <SECTION>
                <PRTPAGE P="237"/>
                <SECTNO>§ 48.102</SECTNO>
                <SUBJECT>Definitions.</SUBJECT>
                <P>(a) The terms <E T="03">Plan</E> or <E T="03">RSFPP</E> as hereinafter used means the Retired Serviceman's Family Protection Plan (formerly called the Uniformed Services Contingency Option Act).</P>
                <P>(b) The term <E T="03">uniformed services</E> means the Army, Navy, Air Force, Marine Corps, Coast Guard, Commissioned Corps of Environmental Science Services Administration, and Commissioned Corps of Public Health Service.</P>
                <P>(c) The term <E T="03">member</E> 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.</P>
                <P>(d) The term <E T="03">widow</E> includes <E T="03">widower</E> and refers to the lawful spouse of the member on the date of retirement with pay.</P>
                <P>(e) The term <E T="03">child</E> 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:</P>
                <P>(1) A legitimate child under 18 years of age and unmarried.</P>
                <P>(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).</P>
                <P>(3) A legally adopted child, under 18 years of age and unmarried.</P>
                <P>(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.</P>
                <P>(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).</P>
                <P>(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).</P>
                <P>(f) The term <E T="03">stepchild</E> 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.</P>
                <P>(g) The term <E T="03">in fact dependent</E> means that the stepchild must be dependent on the member for over half of his or her support.</P>
                <P>(h) The term <E T="03">retirement</E> means retirement with eligibility to receive retired pay.</P>
                <P>(i) The term <E T="03">retired pay</E> includes retired, retirement, equivalent and retainer pay awarded as a result of service in the uniformed services.</P>
                <P>(j) The term <E T="03">reduced retired pay</E> means the retired pay remaining after the cost of participation in RSFPP has been subtracted.</P>
                <P>(k) The term <E T="03">department concerned</E> 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.</P>
                <P>(l) The term <E T="03">dependent</E> means the prospective annuitants described in paragraphs (d) and (e) of this section.</P>
                <P>(m) The term <E T="03">Board of Actuaries</E> 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.</P>
                <P>(n) The term <E T="03">Joint Board</E> means representatives of the uniformed services appointed under the provisions of § 48.602.</P>
                <P>(o) The term <E T="03">years of service</E> means years of service creditable in the computation of basic pay.</P>
                <P>(p) The term <E T="03">election</E> means the choice of options made by the member under the RSFPP. This term includes a <PRTPAGE P="238"/>modification of a previous election or an election submitted after a revocation of a previous option(s) elected.</P>
                <P>(q) The term <E T="03">elections in effect</E> means valid elections existing on the day of retirement.</P>
                <P>(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:</P>
                <P>(1) It is operated or directly supported by the United States, or a State, or local governmental agency.</P>
                <P>(2) It is accredited by a nationally recognized or State recognized accrediting agency.</P>
                <P>(3) It is approved as an educational institution by a State or local governmental agency.</P>
                <P>(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.</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart B—Election of Options</HD>
              <SECTION>
                <SECTNO>§ 48.201</SECTNO>
                <SUBJECT>Options.</SUBJECT>
                <P>As provided in § 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<FR>1/2</FR> 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<FR>1/2</FR> per centum of his retired pay when he does retire, it shall be increased to an amount equal to such 12<FR>1/2</FR> per centum.</P>
                <P>(a) Option 1 is an annuity payable to or on behalf of his widow, the annuity to terminate upon her death or remarriage.</P>
                <P>(b) Option 2 is an annuity payable to or on behalf of his surviving child or children as defined in § 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 § 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 § 48.202. Normally such applications will be approved.</P>
                <P>(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.</P>
                <P>(d) When no eligible beneficiary remains to benefit from the option elected, the member's retired pay will be restored (except as provided in § 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 § 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 § 48.102(e)(5), shall be considered an eligible beneficiary unless an approved application by the member pursuant to § 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).</P>
              </SECTION>
              <SECTION>
                <PRTPAGE P="239"/>
                <SECTNO>§ 48.202</SECTNO>
                <SUBJECT>Limitation on number of annuities.</SUBJECT>
                <P>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 § 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<FR>1/2</FR> per centum of his retired pay. In no case may less than a $25 per month combined annuity be provided.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 48.203</SECTNO>
                <SUBJECT>Election of options.</SUBJECT>
                <P>(a) A member who has completed less than 19 years of service as defined in § 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 §§ 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.</P>
                <P>(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.</P>
                <P>(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 § 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.</P>
                <P>(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 § 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.</P>
                <P>(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.</P>
                <P>(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.</P>

                <P>(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 <PRTPAGE P="240"/>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.</P>
                <P>(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 § 48.604(d).</P>
                <P>(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 § 48.201.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 48.204</SECTNO>
                <SUBJECT>Change or revocation of election.</SUBJECT>
                <P>(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.</P>
                <P>(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.</P>
                <P>(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.</P>
                <P>(d) A revocation will not prohibit the filing of a new election at a later date which will become valid under applicable validation provisions.</P>
                <P>(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.</P>
                <P>(f) Notification of a change in family status is not a change of election.</P>
                <P>(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 § 48.604(d).</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 48.205</SECTNO>
                <SUBJECT>Election form.</SUBJECT>
                <P>The form for making election after October 31, 1968, is prescribed as Election of Options, Retired Serviceman's Family Protection Plan, DD Form 1688. <SU>1</SU>
                  <FTREF/> 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.</P>
                <FTNT>
                  <P>
                    <SU>1</SU> Filed as part of the original document. Copies may be obtained from Military Personnel Office.</P>
                </FTNT>
              </SECTION>
              <SECTION>
                <SECTNO>§ 48.206</SECTNO>
                <SUBJECT>Information regarding elections.</SUBJECT>
                <P>(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.</P>
                <P>(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.</P>

                <P>(c) Members retiring for physical disability prior to the completion of 19 <PRTPAGE P="241"/>years of service will, prior to retirement, be counseled and furnished information concerning the operation of the Plan.</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart C—Designation of Beneficiaries</HD>
              <SECTION>
                <SECTNO>§ 48.301</SECTNO>
                <SUBJECT>Designation.</SUBJECT>
                <P>(a) All legal beneficiaries described in § 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.</P>

                <P>(b) When a change in family status occurs prior to retirement which would effect a change as provided in § 48.204(e), new DD Form 1688,<E T="51">1</E>
                  <FTREF/> Election of Options, Retired Servicemen's Family Protection Plan, should be filed to evidence such change.</P>
                <FTNT>
                  <P>
                    <E T="51">1</E> See footnote 1 to § 48.205.</P>
                </FTNT>
              </SECTION>
              <SECTION>
                <SECTNO>§ 48.302</SECTNO>
                <SUBJECT>Substantiating evidence regarding dependency and age of dependents.</SUBJECT>
                <P>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.</P>
              </SECTION>
              <SECTION>
                <SECTNO>§ 48.303</SECTNO>
                <SUBJECT>Condition affecting entitlement of widow or widower.</SUBJECT>
                <P>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.</P>
              </SECTION>
            </SUBPART>
            <SUBPART>
              <HD SOURCE="HED">Subpart D