[Title 25 CFR M]
[Code of Federal Regulations (annual edition) - April 1, 2004 Edition]
[Title 25 - INDIANS]
[Chapter I - BUREAU OF INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR]
[Subchapter M - INDIAN SELF-DETERMINATION AND EDUCATION ASSISTANCE ACT]
[From the U.S. Government Printing Office]


25INDIANS12004-04-012004-04-01falseINDIAN SELF-DETERMINATION AND EDUCATION ASSISTANCE ACTMSUBCHAPTER MINDIANSBUREAU OF INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR
  SUBCHAPTER M_INDIAN SELF-DETERMINATION AND EDUCATION ASSISTANCE ACT 
                                 PROGRAM


PART 273_EDUCATION CONTRACTS UNDER JOHNSON-O'MALLEY ACT--Table of Contents




                      Subpart A_General Provisions

Sec.
273.1 Purpose and scope.
273.2 Definitions.
273.3 Revision or amendment of regulations.
273.4 Policy of maximum Indian participation.

                      Subpart B_Application Process

273.11 Eligible applicants.
273.12 Eligible students.
273.13 Proposals eligible for contracts.
273.14 Preparing the education plan.
273.15 Establishment of Indian Education Committee.
273.16 Powers and duties of Indian Education Committee.
273.17 Programs approved by Indian Education Committee.
273.18 Additional requirements for education plan.
273.19 Obtaining application forms.
273.20 Content of application to contract.
273.21 Tribal request for contract.
273.22 Application approval officials.
273.23 Submitting application to Area Office.
273.24 Area Office review and decision.
273.25 Deadline for Area Office action.
273.26 Submitting application to Central Office.
273.27 Central Office review and decision.
273.28 Deadline for Central Office action.
273.29 Negotiating the contract.

                      Subpart C_Funding Provisions

273.31 Distribution formula.
273.32 Pro rata requirement.
273.33 Use of funds for operational support.
273.34 Use of other Federal, State and local funds.
273.35 Capital outlay or debt retirement.
273.36 Eligible subcontractors.
273.37 Use of funds outside of schools.
273.38 Equal quality and standard of education.

                 Subpart D_General Contract Requirements

273.41 Special program provisions to be included in contract.
273.42 Civil Rights Act violations.
273.43 Advance payments.
273.44 Use and transfer of Government property.
273.45 Indian preference.
273.46 Liability and motor vehicle insurance.
273.47 Recordkeeping.
273.48 Audit and inspection.
273.49 Freedom of information.
273.50 Annual reporting.
273.51 Penalties.
273.52 State school laws.
273.53 Applicable procurement regulations.
273.54 Privacy Act requirements.

               Subpart E_Contract Revision or Cancellation

273.61 Contract revision or amendment.
273.62 Cancelling a contract for cause.

                            Subpart F_Appeals

273.71 Contract appeal.
273.72 Appeal from decision to cancel contract for cause.
273.73 Other appeals.

    Authority: Secs. 201-203, Pub. L. 93-638, 88 Stat. 2203, 2213-2214 
(25 U.S.C. 455-457), unless otherwise noted.

    Source: 40 FR 51303, Nov. 4, 1975, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 273.1  Purpose and scope.

    (a) The purpose of the regulations in this part is to set forth the 
application and approval process for education contracts under the 
Johnson-O'Malley Act. Such contracts shall be for the purpose of 
financially assisting those efforts designed to meet the specialized and 
unique educational needs of eligible Indian students, including programs 
supplemental to the regular school program and school operational 
support, where such support is necessary to maintain established State 
educational standards.
    (b) The application and approval process in this part applies 
specifically to contracts with a State, school district, or Indian 
corporation.
    (c) Contracts with tribal organizations for supplemental and 
operational support will be entered into only upon the request of an 
Indian tribe(s), and

[[Page 677]]

shall be subject to the provisions of part 900 of this chapter and 41 
CFR part 14H-70, except as provided in Sec. 273.11.
    (d) Nothing in these regulations shall be construed as:
    (1) Affecting, modifying, diminishing, or otherwise impairing the 
sovereign immunity from suit enjoyed by an Indian tribe;
    (2) Authorizing or requiring the terminiation of any existing trust 
responsibility of the United States with respect to the Indian people; 
or,
    (3) Permitting significant reduction in services to Indian people as 
a result of this part.
    (e) Nothing in these regulations shall be construed to mandate an 
Indian tribe to request a contract or contracts. Such requests are 
strictly voluntary.

[40 FR 51303, Nov. 4, 1975, as amended at 64 FR 13896, Mar. 23, 1999]



Sec. 273.2  Definitions.

    As used in this part:
    (a) ``Area Director'' means the official in charge of a Bureau of 
Indian Affairs Area Office.
    (b) ``Bureau'' means the Bureau of Indian Affairs.
    (c) ``Commissioner'' means the Commissioner of Indian Affairs, under 
the direction and supervision of the Assistant Secretary--Indian 
Affairs, who is responsible for the direction of day-to-day operations 
of the Bureau of Indian Affairs.
    (d) ``Days'' means calendar days.
    (e) ``Economic enterprise'' means any commercial, industrial, 
agricultural, or business activity that is at least 51 percent Indian 
owned, established or organized for the purpose of profit.
    (f) ``Education plan'' means a comprehensive plan for the 
programmatic and fiscal services of and accountability by a contractor 
for the education of eligible Indian students under this part.
    (g) ``Indian tribe'' means any Indian tribe, band, nation, 
rancheria, pueblo, colony or community, including any Alaska Native 
village or regional or village corporation as defined in or established 
pursuant to the Alaska Native Claims Settlement Act (85 Stat. 688) which 
is federally recognized as eligible by the U.S. Government through the 
Secretary for the special programs and services provided by the 
Secretary to Indians because of their status as Indians.
    (h) ``Indian corporation'' means a legally established organization 
of Indians chartered under State or Federal law and which is not 
included within the definition of ``tribal organization'' given in 
paragraph (v) of this section.
    (i) ``Indian Education Committee'' means one of the entities 
specified by Sec. 273.15.
    (j) ``Indian'' means a person who is a member of an Indian tribe.
    (k) ``Johnson-O'Malley Act'' means the Act of April 16, 1934 (48 
Stat. 596), as amended by the Act of June 4, 1936 (49 Stat. 1458, 25 
U.S.C. 452-456), and further amended by the Act of January 4, 1975 (88 
Stat. 2203).
    (l) ``Operational support'' means those expenditures for school 
operational costs in order to meet established State educational 
standards or State-wide requirements.
    (m) ``Pub. L. 93-638'' means the Indian Self-Determination and 
Education Assistance Act (Pub. L. 93-638; 88 Stat. 2203).
    (n) ``Previously private school'' means a school (other than a 
Federal school formerly operated by the Bureau) that is operated 
primarily for Indian students from age 3 years through grades 12; and, 
which at the time of application is controlled, sanctioned, or chartered 
by the government body(s) of an Indian tribe(s).
    (o) ``Reservation'' or ``Indian reservation'' means any Indian 
tribe's reservation, pueblo, colony, or rancheria, including former 
reservations in Oklahoma, Alaska Natives regions established pursuant to 
the Alaska Native Claims Settlement Act (85 Stat. 688), and Indian 
allotments.
    (p) ``School district'' or ``local education agency'' means that 
subdivision of the State which contains the public elementary and 
secondary educational institutions providing educational services and is 
controlled by a duly elected board, commission, or similarly constituted 
assembly.
    (q) ``Secretary'' means the Secretary of the Interior.

[[Page 678]]

    (r) ``State'' means a State of the United States of America or any 
political subdivision of a State.
    (s) ``Superintendent'' means the official in charge of a Bureau of 
Indian Affairs Agency Office.
    (t) ``Supplemental programs'' means those programs designed to meet 
the specialized and unique educational needs of eligible Indian students 
which may have resulted from socio-economic conditions of the parents, 
from cultural or language differences or other factors, and as provided 
by Sec. 273.34(b).
    (u) ``Tribal government,'' ``tribal governing body'' and ``tribal 
Council'' means the recognized governing body of an Indian tribe.
    (v) ``Tribal organization,'' means the recognized governing body of 
any Indian tribe or any legally established organization of Indians or 
tribes which is controlled, sanctioned, or chartered by such governing 
body or bodies, or which is democratically elected by the adult members 
of the Indian community to be served by such organization and which 
includes the maximum participation of Indians in all phases of its 
activities; Provided, That a request for a contract must be made by the 
Indian tribe that will receive services under the contract; Provided 
further, That in any case where a contract is let to an organization to 
perform services benefiting more than one Indian tribe, the approval of 
each such Indian tribe shall be a prerequisite to the letting of such 
contract.
    (w) ``Assistant Secretary--Indian Affairs'' means the Assistant 
Secretary--Indian Affairs who discharges the responsibility of the 
Secretary for activities pertaining to Indians and Indian Affairs.

[40 FR 51303, Nov. 4, 1975, as amended at 41 FR 5098, Feb. 4, 1976; 43 
FR 37445, Aug. 23, 1978; 45 FR 13451, Feb. 29, 1980]



Sec. 273.3  Revision or amendment of regulations.

    In order to make any substantive revision or amendments to 
regulations in this part, the Secretary shall take the following 
actions:
    (a) Consult with Indian tribes and national and regional Indian 
organizations to the extent practicable about the need for revision or 
amendment and consider their views in preparing the proposed revision or 
amendment.
    (b) Publish the proposed revisions or amendments in the Federal 
Register as proposed rulemaking to provide adequate notice to, and 
receive comments from, all interested parties.
    (c) After consideration of all comments received, publish the 
regulations in the Federal Register in final form not less than 30 days 
before the date they are made effective.
    (d) Annually consult with Indian tribes and national and regional 
Indian organizations about the need for revision or amendment, and 
consider their views in preparing the revision or amendment.
    (e) Nothing in this section shall preclude Indian tribes or national 
or regional Indian organizations from initiating request for revisions 
or amendments subject to paragraphs (a), (b), and (c) of this section.



Sec. 273.4  Policy of maximum Indian participation.

    The meaningful participation in all aspects of educational program 
development and implementation by those affected by such programs is an 
essential requisite for success. Such participation not only enhances 
program responsiveness to the needs of those served, but also provides 
them with the opportunity to determine and affect the desired level of 
educational achievement and satisfaction which education can and should 
provide. Consistent with this concept, maximum Indian participation in 
the development, approval and implementation of all programs contracted 
under this part shall be required.



                      Subpart B_Application Process



Sec. 273.11  Eligible applicants.

    (a) Any State, school district, tribal organization or Indian 
corporation is eligible to apply for contracts for supplemental or 
operational support programs. For the purposes of this part, previously 
private schools as defined in Sec. 273.2(n) are considered tribal 
organizations.
    (b) States, school districts, or Indian corporations shall apply for 
contracts

[[Page 679]]

for supplemental or operational support programs as required in this 
part.
    (c) Tribal organizations must comply with the following requirements 
to obtain contracts for supplemental programs or operational support:
    (1) The application submitted by the tribal organization shall meet 
the requirements in Sec. 273.20 in addition to those in Sec. 271.14 of 
this chapter.
    (2) The requirements in Sec. Sec. 271.1 through 271.27, 271.41 
through 271.52, 271.54, 271.61 through 271.66, and 271.81 through 271.84 
shall apply to such contracts with tribal organizations.
    (3) The provisions in Sec. Sec. 271.71 through 271.77 of this 
chapter concerning retrocession and reassumption of programs do not 
apply to a tribal organization retroceding a contract for supplemental 
programs or operational support as the Bureau does not operate education 
programs authorized to be contracted under the Johnson-O'Malley Act. 
However, the tribal organization may retrocede such a contract and the 
Bureau will then contract with a State, school district, or Indian 
corporation under this part for the supplemental programs or operational 
support.
    (4) The requirements in Sec. Sec. 273.12 through 273.18, 273.20, 
273.21, 273.31 through 273.38, 273.41, 273.51 and 273.52 shall apply to 
such contracts with tribal organizations.
    (5) The requirements in 41 CFR part 14H-70 shall apply to such 
contracts with tribal organizations.

[40 FR 51303, Nov. 4, 1975, as amended at 41 FR 5098, Feb. 4, 1976]



Sec. 273.12  Eligible students.

    Indian students, from age 3 years through grade(s) 12, except those 
who are enrolled in Bureau or sectarian operated schools, shall be 
eligible for benefits provided by a contract pursuant to this part if 
they are \1/4\ or more degree Indian blood and recognized by the 
Secretary as being eligible for Bureau services. Priority shall be given 
to contracts (a) which would serve Indian students on or near 
reservations and (b) where a majority of such Indian students will be 
members of the tribe(s) of such reservations (as defined in Sec. 
273.2(o)).



Sec. 273.13  Proposals eligible for contracts.

    (a) Any proposal to contract for funding a program which meets the 
definition of a supplemental program given in Sec. 273.2(t) will be 
considered an eligible proposal under this part.
    (b)(1) To contract for operational support, a public school district 
shall be required to establish as part of the proposal that:
    (i) It cannot meet the applicable minimum State standards or 
requirements without such funds.
    (ii) It has made a reasonable tax effort with a mill levy at least 
equal to the State average in support of educational programs.
    (iii) It has fully utilized all other sources of financial aid, 
including all forms of State aid and Pub. L. 874 payments. The State aid 
contribution per pupil must be at least equal to the State average.
    (iv) There is at least 70 percent eligible Indian enrollment within 
the school district.
    (v) It shall clearly identify the educational needs of the students 
intended to benefit from the contract.
    (vi) It has made a good faith effort in computing State and local 
contributions without regard to contract funds pursuant to this part.
    (vii) It shall not budget or project a deficit by using contract 
funds pursuant to this part.
    (2) The requirements given in paragraph (b)(1) of this section do 
not apply to previously private schools.
    (c) At his discretion, the Commissioner may consider as eligible a 
proposal to contract under which a school district will be reimbursed 
for the full per capita costs of educating Indian students who meet all 
of the following:
    (1) Are members of recognized Indian tribes.
    (2) Do not normally reside in the State in which the school district 
is located.
    (3) Are residing in Federal boarding facilities for the purpose of 
attending public schools within the school district.

[[Page 680]]



Sec. 273.14  Preparing the education plan.

    A prospective contractor in consultation with its Indian Education 
Committee(s) shall formulate an education plan and submit it to the 
appropriate Area Director as a part of the application to contract 
required by Sec. 273.20. Such plan shall become a part of any contract 
awarded. The education plan shall contain:
    (a) The education programs approved by the Indian Education 
Committee(s) as required in Sec. 273.17.
    (b) Other requirements for the education plan given in Sec. 273.18.



Sec. 273.15  Establishment of Indian Education Committee.

    (a) When a school district to be affected by a contract(s) for the 
education of Indians pursuant to this part has a local school board not 
composed of a majority of Indians, the tribal governing body(s) of the 
Indian tribe(s) affected by the contract(s) under this part shall 
specify one of the following entities to serve as the Indian Education 
Committee for the purpose of this part:
    (1) An Indian Education committee to be elected from among the 
parents (including persons acting in loco parentis except school 
administrators or officials) of eligible Indian students enrolled in the 
school(s) affected by a contract(s) under this part; or
    (2) A local Indian committee established pursuant to section 
305(b)(2)(B)(ii) of the Act of January 23, 1972 (86 Stat. 235) and 
existing prior to January 4, 1975; or
    (3) An Indian advisory school board or Indian Education Committee 
established pursuant to the Johnson-O'Malley Act and existing prior to 
January 4, 1975.
    (b) When the local school board is not composed of a majority of 
Indians and the tribal governing body(s) of the Indian tribe(s) affected 
by a contract(s) under this part determine which of the entities 
provided for in paragraph (a) of this section is to serve as the Indian 
Education Committee for the purpose of this part, it shall notify the 
Area Director of such determination by January 15 preceding the school 
year for which the contract will be let.
    (c) The Indian Education Committee established under paragraph (a) 
of this section and its members shall establish procedures under which 
the Committee shall serve. Such procedures shall be set forth in the 
Committee's organizational documents and by-laws. Each Committee shall 
file a copy of its organizational documents and by-laws with the 
appropriate Area Director, together with a list of its officers and 
members as soon as practicable after the Committee is organized.
    (d) The existence of an Indian Education Committee shall not limit 
the continuing participation of the rest of the Indian community in all 
aspects of programs contracted under this part.



Sec. 273.16  Powers and duties of Indian Education Committee.

    (a) Consistent with the purpose of the Indian Education Committee, 
each such Committee shall be vested with the authority to:
    (1) Participate fully in the planning, development, implementation, 
and evaluation of all programs, including both supplemental and 
operational support, conducted under a contract or contracts pursuant to 
this part. Such participation shall include further authority to:
    (i) Recommend curricula, including texts, materials, and teaching 
methods to be used in the contracted program or programs.
    (ii) Approve budget preparation and execution.
    (iii) Recommend criteria for employment in the program.
    (iv) Nominate a reasonable number of qualified prospective 
educational programmatic staff members from which the contractor would 
be required to select.
    (v) Evaluate staff performance and program results and recommend 
appropriate action to the contractor.
    (2) Approve and disapprove all programs to be contracted under this 
part. All programs contracted pursuant to this part shall require the 
prior approval of the appropriate Indian Education Committee.
    (3) Secure a copy of the negotiated contract(s) which include the 
program(s) approved by the Indian Education Committee.

[[Page 681]]

    (4) Recommend to the Commissioner through the appropriate Bureau 
contracting officer cancellation or suspension of a contract(s) which 
contains the program(s) approved by the Indian Education Committee if 
the contractor fails to permit such Committee to exercise its powers and 
duties as specified by this section.
    (b) The organizational papers and by-laws of the Indian Education 
Committee may include additional powers and duties which would permit 
the Committee to:
    (1) Participate in negotiations concerning all contracts under this 
part.
    (2) Make an annual assessment of the learning needs of Indian 
children in the community affected.
    (3) Have access to all reports, evaluations, surveys, and other 
program and budget related documents determined necessary by the 
Committee to carry out its responsibilities, subject only to the 
provisions of Sec. 273.49.
    (4) Request periodic reports and evaluations regarding the Indian 
education program.
    (5) Hear grievances related to programs in the education plan.
    (6) Meet regularly with the professional staff serving Indian 
children and with the local education agency.
    (7) Hold committee meetings on a regular basis which are open to the 
public.
    (8) Have such additional powers as are consistent with these 
regulations.



Sec. 273.17  Programs approved by Indian Education Committee.

    (a) All programs contracted under this part shall:
    (1) Be developed and approved in full compliance with the powers and 
duties of the Indian Education Committee as set out in Sec. 273.16 and 
as may be contained in the Committee's organizational documents and by-
laws.
    (2) Be included as a part of the education plan provided for in 
Sec. 273.14.
    (b) No program contracted pursuant to this part shall be changed 
from the time of its original approval by the Indian Education Committee 
to the end of the contract period without the prior approval, in 
writing, of the Committee.
    (c) Programs developed or approved by the Indian Education Committee 
pursuant to this part may, at the option of such Committee, include 
funds for the performance of Committee duties, including the following:
    (1) Members' attendance at regular and special meetings, workshops 
and training sessions, as the Committee deems appropriate.
    (2) Such other reasonable expenses incurred by the Committee in 
performing its primary duties, including the planning, development, 
implementation and evaluation of the program.



Sec. 273.18  Additional requirements for education plan.

    In addition to incorporating the programs approved by the Indian 
Education Committee(s) as required by Sec. 273.14(a), the education 
plan prepared by the prospective contractor shall:
    (a) Contain educational goals and objectives which adequately 
address the educational needs of the Indian students to be served by the 
contract.
    (b) Incorporate the program or programs developed and approved by 
the Indian Education Committee(s). As provided in Sec. 273.17(b), 
changes in such programs must have prior written approval of the Indian 
Education Committee(s).
    (c) Contain procedures for hearing grievances from Indian students, 
parents, community members, and tribal representatives relating to the 
program(s) contracted under this part. Such procedures shall provide for 
adequate advance notice of the hearing.
    (d) Identify established State standards and requirements which 
shall be maintained in operating programs and services contracted under 
this part.
    (e) Describe how the State standards and requirements will be 
maintained.
    (f) Provide that the contractor shall comply in full with the 
requirements concerning meaningful participation by the Indian Education 
Committee as required by Sec. 273.4.
    (g) Provide that education facilities receiving funds shall be open 
to visits

[[Page 682]]

and consultations by the Indian Education Committee(s), tribal 
representatives, Indian parents in the community, and by duly authorized 
representatives of the Federal and State Governments.
    (h) Outline procedures of administrative and fiscal management to be 
used by the contractor.
    (i) Contain justification for requesting funds for operational 
support. The public school district must establish in its justification 
that it meets the requirements given in Sec. 273.13(b). The information 
given should include rec ords of receipt of local, State, and Federal 
funds.
    (j) Include budget estimates and financial information needed to 
determine program costs to contract for services. This includes, but is 
not limited to, the following:
    (1) State and district average operational cost per pupil.
    (2) Other sources of Federal funding the applicant is receiving, the 
amount received from each, the programs being funded, and the number of 
eligible Indian students served by such funding.
    (3) Administrative costs involved, total number of employees, and 
total number of Indian employees.
    (4) Costs which parents normally are expected to pay for each 
school.
    (5) Supplemental and operational funds outlined in a separate 
budget, by line item, to facilitate accountability.
    (6) Total number of employees for each special program and number of 
Indian employees for that program.
    (k) State the total enrollment of school or district, by age and 
grade level.
    (l) State the eligible Indian enrollment--total and classification 
by tribal affiliation(s) and by age and grade level.
    (m) State the total number of school board members and number of 
Indian school board members.
    (n) List Government equipment needed to carry out the contract.
    (o) State the period of contract term requested.
    (p) Include the signature of the authorized representative of 
applicant.
    (q) Provide written information regarding:
    (1) Program goals and objectives related to the learning needs of 
potential target students.
    (2) Procedures and methods to be used in achieving program 
objectives, including ways whereby parents, students and communities 
have been involved in determining needs and priorities.
    (3) Overall program implementation including staffing practices, 
parental and community involvement, evaluation of program results, and 
dissemination thereof.
    (4) Determination of staff and program effectiveness in meeting the 
stated needs of target students.



Sec. 273.19  Obtaining application forms.

    Application forms, instructions, and related application materials 
are available from Agency Superintendents, Area Directors and the 
Commissioner. Use of standard application forms will facilitate 
processing of applications. However, they are not required if the 
information required by Sec. 273.20 is given in the application to 
contract.



Sec. 273.20  Content of application to contract.

    An application for a contract under this part shall be in writing 
and shall contain the following:
    (a) Name, address, and telephone number of the proposed contractor.
    (b) Name, address, and telephone number of the tribe(s) to be served 
by the contract.
    (c) Descriptive narrative of the contract proposal.
    (d) The education plan required by Sec. 273.14.
    (e) A separate budget outlining the Johnson-O'Malley funds for 
operational support and/or supplemental programs, by line item, to 
facilitate accountability.
    (f) A clear identification of what educational needs the Johnson-
O'Malley funds requested for operational support will address.
    (g) Documentation of the requirements for operational support in 
Sec. 273.13(b)(1).



Sec. 273.21  Tribal request for contract.

    (a) An Indian tribal governing body(s) that desires that a contract 
be

[[Page 683]]

entered into with a tribal organization must so notify the Area Director 
no later than February 1 preceding the school year for which the 
contract will be let.
    (b) If the tribal governing body's notice is not received by the 
date given in paragraph (a) of this section, the Area Director may 
contract with the State, school district, or Indian corporation under 
this part.



Sec. 273.22  Application approval officials.

    (a) Each Area Director is authorized to approve the contract(s) 
submitted by the State, school district, or Indian corporation under 
this part which will provide services to Indian children within the 
jurisdiction of that Area Office.
    (b) When a proposed contract(s) will provide services to Indian 
children within the jurisdiction of more than one Area Office, the 
contract must be approved by the Commissioner.



Sec. 273.23  Submitting application to Area Office.

    When services under the proposed contract will be provided to Indian 
children within the jurisdiction of a single Area Office, the completed 
application shall be submitted to the Area Director of that Area Office.



Sec. 273.24  Area Office review and decision.

    Upon receiving a contract application, the Area Director shall:
    (a) Notify the applicant in writing that the application has been 
received. This notice shall be made within fourteen (14) days after the 
Area Office receives the application.
    (b) Review the application for completeness and request within 20 
days any additional information from the applicant which will be needed 
to reach a decision.
    (c) On receiving an application for operational support, make formal 
written determination and findings supporting the need for such funds. 
In arriving at such a determination, the Area Director must be assured 
that each local education agency has made a good faith effort in 
computing State and local contributions without regard to funds 
requested pursuant to this part.
    (d) Assess the completed application to determine if the contract 
proposal is feasible and if the proposal and the application comply with 
the appropriate requirements of the Johnson-O'Malley Act and of the 
regulations in this part.
    (e) Approve or disapprove the application after fully reviewing and 
assessing the application and any additional information submitted by 
the applicant.
    (f) Promptly notify the applicant in writing of the decision to 
approve or disapprove the application. If the application is 
disapproved, the notice will give the reasons for disapproval and the 
applicant's right to appeal pursuant to part 2 of this chapter.



Sec. 273.25  Deadline for Area Office action.

    (a) The Area Director shall approve or disapprove an application for 
a contract within sixty (60) days after the Area Office receives the 
application and any additional information requested in Sec. 273.24(b). 
The sixty (60) day deadline can be extended after obtaining the written 
consent of the applicant.
    (b) An application under this part cannot be approved before 
February 1 preceding the school year for which the contract will be let.



Sec. 273.26  Submitting application to Central Office.

    When services under the proposed contract will be provided to Indian 
children within the jurisdiction of two or more Area Offices, the 
completed application shall be submitted to the Commissioner through the 
respective Area Offices.



Sec. 273.27  Central Office review and decision.

    Upon receiving a contract application, the Commissioner shall:
    (a) Notify the applicant in writing that the application has been 
received. This notice shall be made within fourteen (14) days after the 
Central Office receives the application.
    (b) Review the application for completeness and request within 20 
days any additional information from the

[[Page 684]]

applicant which will be needed to reach a decision.
    (c) On receiving an application for operational support, make formal 
written determination and findings supporting the need for such funds. 
In arriving at such a determination, the Commissioner must be assured 
that each local education agency has made a good faith effort in 
computing State and local contributions without regard to funds 
requested pursuant to this part.
    (d) Assess the completed application to determine if the contract 
proposal is feasible and if the proposal and the application comply with 
the appropriate requirements of the Johnson-O'Malley Act and of the 
regulations in this part.
    (e) Approve or disapprove the application after fully reviewing and 
assessing the application and any additional information submitted by 
the applicant.
    (f) Promptly notify the applicant in writing of the decision to 
approve or disapprove the application. If the application is 
disapproved, the notice will give the reasons for disapproval and the 
applicant's right to appeal pursuant to part 2 of this chapter.



Sec. 273.28  Deadline for Central Office action.

    (a) The Commissioner shall approve or disapprove an application for 
a contract within sixty (60) days after the Central Office receives the 
application, and any additional Information requested in Sec. 
273.27(b). The sixty (60) day deadline can be extended after obtaining 
the written consent of the applicant.
    (b) An application under this part cannot be approved before 
February 1 preceding the school year for which the contract will be let.



Sec. 273.29  Negotiating the contract.

    After the proposal for a contract has been approved by the Area 
Director or Commissioner as provided in Sec. 273.22, the contract will 
be negotiated by a Bureau contracting officer assisted by Bureau 
education personnel.



                      Subpart C_Funding Provisions



Sec. 273.31  Distribution formula.

    (a) Funds shall be distributed to eligible contractors based upon 
the number of eligible Indian students to be served times twenty-five 
(25%) percent of the higher of the State or national average per pupil 
operating cost. Notwithstanding any other provisions of the law, Federal 
funds appropriated for the purpose shall be allotted pro rata in 
accordance with the distribution method outlined in this formula.
    (b) The Assistant Secretary may make exceptions to the provisions of 
paragraph (a) of this section based on the special cultural, linguistic, 
social or educational needs of the communities involved including the 
actual cost of education in the community only after consultation with 
all tribes who may be affected by such exceptions.

(25 U.S.C. 452-456; sec. 202, Pub. L. 93-638, 88 Stat. 2203, and Pub. L. 
95-561, sec. 1102 (a) and (b))

[45 FR 9241, Feb. 11, 1980]



Sec. 273.32  Pro rata requirement.

    All monies provided by a contract pursuant to this part, shall be 
expended only for the benefit of eligible Indian students. Where 
students other than eligible Indian students participate in programs 
contracted under this part, money expended under such contract shall be 
prorated to cover the participation of only the eligible Indian 
students, except where the participation of non-eligible students is so 
incidental as to be de minimus. Such de minimus participation must be 
approved by the Indian Education Committee.



Sec. 273.33  Use of funds for operational support.

    All funds for school operational support shall be used to meet 
established State educational standards or State-wide requirements.



Sec. 273.34  Use of other Federal, State and local funds.

    (a) Contract funds under this part shall supplement, and not 
supplant, Federal, State and local funds. Each

[[Page 685]]

contract shall require that the use of these contract funds will not 
result in a decrease in State, local, or Federal funds which would be 
made available for Indian students if there were no funds under this 
part.
    (b) State, local and other Federal funds must be used to provide 
comparable services to non-Indian and Indian students prior to the use 
of contract funds.
    (c) Except as hereinafter provided, the school lunch program of the 
United States Department of Agriculture (USDA) shall constitute the only 
federally-funded school lunch program for Indian students in public 
schools. Where Indian students do not qualify to receive free lunches 
under the National School Lunch Program of USDA because such students 
are non-needy and do not meet the family size and income guidelines for 
free USDA lunches, plans prepared pursuant to Sec. 273.18 may provide, 
to the extent of funding available for Johnson-O'Malley programs, for 
free school lunches for those students who do not qualify for free USDA 
lunches but who are eligible students under Sec. 273.12.

[47 FR 57275, Dec. 23, 1982]



Sec. 273.35  Capital outlay or debt retirement.

    In no instance shall contract funds provided under this part be used 
as payment for capital outlay or debt retirement expenses; except that, 
such costs are allowable if they are considered to be a part of the full 
per capita cost of educating eligible Indian students who reside in 
Federal boarding facilities for the purpose of attending public schools.



Sec. 273.36  Eligible subcontractors.

    No contract funds under the Johnson-O'Malley Act shall be made 
available by the Bureau directly to other than tribal organizations, 
States, school districts and Indian corporations. However, tribal 
organizations, States, school districts, and Indian corporations 
receiving funds under this part may use the funds to subcontract for 
necessary services with any appropriate individual, organization or 
corporation.



Sec. 273.37  Use of funds outside of schools.

    Nothing in these regulations shall prevent the Commissioner from 
contracting with Indian corporations who will expend all or part of the 
funds in places other than the public or private schools in the 
community affected.



Sec. 273.38  Equal quality and standard of education.

    Contracts with State education agencies or school districts 
receiving funds under the provisions of this part shall provide 
educational opportunities to all Indian children within that school 
district on the same terms and under the same conditions that apply to 
all other students provided that it will not affect the rights of 
eligible Indian children to receive benefits from the supplemental 
programs as provided for in this part. School districts receiving funds 
under this part must insure that Indian children receive all aid from 
the State, and other proper sources other than this contract, which 
other schools in the district and other school districts similarly 
situated in the State are entitled to receive. In no instance shall 
there be discrimination against Indians or schools enrolling such 
Indians.



                 Subpart D_General Contract Requirements



Sec. 273.41  Special program provisions to be included in contract.

    All contracts under this part shall contain the following:
    (a) The education plan required by Sec. Sec. 273.14 and 273.18 and, 
as part of the education plan, the education programs approved by the 
Indian Education Committee(s) under Sec. 273.17.
    (b) Any formal written determination and findings made by the Area 
Director or Commissioner supporting the need for operational support as 
required by Sec. Sec. 273.24(c) and 273.27(c).
    (c) The provision that State, local, and other Federal Funds shall 
be used to provide comparable services to non-Indian and Indian students 
prior to the use of Johnson-O'Malley funds for the provision of 
supplementary program services to Indian children, as required in Sec. 
273.34(b).

[[Page 686]]



Sec. 273.42  Civil Rights Act violations.

    In no instance shall there be discrimination against Indians or 
schools enrolling such Indians. When informed by a complainant or 
through its own discovery that possible violation of title VI of the 
Civil Rights Act of 1964 exists within a State school district receiving 
funds under this part, the Department of the Interior shall, in 
accordance with Federal requirements, notify the Department of Health, 
Education, and Welfare of the possible violation of title VI. The 
Department of Health, Education, and Welfare will conduct an 
investigation into the matters alleged, pursuant to a Memorandum of 
Understanding between the Department of the Interior and the Department 
of Health, Education, and Welfare. If the report of the investigation 
conducted by the Department of Health, Education, and Welfare discloses 
a failure or threatened failure to comply with this part, and if the 
non-compliance cannot be corrected by informal means, compliance with 
this part may be effected by the suspension or termination of or refusal 
to contract or to continue financial assistance under the Johnson-
O'Malley Act or by any other means authorized by law. As delineated in 
43 CFR 17.1, 17.8, and 17.9, such other means may include reference to 
the Department of Justice with a recommendation that appropriate legal 
proceedings be brought by the United States to secure compliance or by 
formal hearing before the Commissioner or, at his discretion, before an 
administrative law judge designated in accordance with section 11 of the 
Administrative Procedure Act. The Secretary, may, by agreement with one 
or more other Federal departments, provide for the conduct of 
consolidated or joint hearings as prescribed in 43 CFR 17.8(e).



Sec. 273.43  Advance payments.

    Advance payments to States, school districts and Indian corporations 
will be made in accordance with the applicable provisions of 41 CFR part 
1 as supplemented by 41 CFR part 14 and 41 CFR part 14H except 41 CFR 
part 14H-70.



Sec. 273.44  Use and transfer of Government property.

    (a) The use of Government-owned facilities for school purposes may 
be authorized when not needed for Government activities. Transfer of 
title to such facilities (except land) may be arranged under the 
provisions of the Act of June 4, 1953 (67 Stat. 41) subject to the 
approval of the tribal government if such property is located on a 
reservation.
    (b) In carrying out a contract made under this part, the Area 
Director or Commissioner may, with the approval of the tribal 
government, permit a contractor to use existing buildings, facilities, 
and related equipment and other personal property owned by the Bureau 
within his jurisdiction under terms and conditions agreed upon for their 
use and maintenance. The property at the time of transfer must conform 
to the minimum standards established by the Occupational Safety and 
Health Act of 1970 (84 Stat. 1590), as amended (29 U.S.C. 651). Use of 
Government property is subject to the following conditions:
    (1) When nonexpendable Government property is turned over to public 
school authorities or Indian corporations under a use permit, the 
permittee shall insure such property against damage by flood, fire, rain 
windstorm, vandalism, snow, and tornado in amounts and with companies 
satisfactory to the Federal officer in charge of the property. In case 
of damage or destruction of the property by flood, fire, rain, 
windstorm, vandalism, snow or tornado, the insurance money collected 
shall be expended only for repair or replacement of property. Otherwise, 
insurance proceeds shall be paid to the Bureau.
    (2) If the public school authority is self-insured and can present 
evidence of that fact to the Area Director or Commissioner, insurance 
for lost or damaged property will not be required. However, the public 
school authority will be responsible for replacement of such lost or 
damaged property at no cost to the Government or for paying the 
Government enough to replace the property.
    (3) The permittee shall maintain the property in a reasonable state 
of repair

[[Page 687]]

consistent with the intended use and educational purposes.
    (c) The contractor may have access to existing Bureau records needed 
to carry out a contract under this part, as follows:
    (1) The Bureau will make the records available subject to the 
provisions of the Freedom of Information Act (5 U.S.C. 552), as amended 
by the Act of November 21, 1974 (Pub. L. 93-502, 88 Stat. 1561).
    (2) The contractor may have access to needed Bureau records at the 
appropriate Bureau office for review and making copies of selected 
records.
    (3) If the contractor needs a small volume of identifiable Bureau 
records, the Bureau will furnish the copies to the contractor.



Sec. 273.45  Indian preference.

    (a) Any contract made by the Bureau with a State, school district or 
Indian corporation shall provide that the contractor shall, to the 
greatest extent feasible, give preference in and opportunities for 
employment and training to Indians.
    (b) Any contract made by the Bureau with a State, school district or 
Indian corporation shall provide that the contractor shall, to the 
greatest extent feasible, give preference in the award of subcontracts 
to Indian organizations and Indian-owned economic enterprises.
    (c) All subcontractors employed by the contractor shall, to the 
extent possible, give preference to Indians for employment and training 
and shall be required to include in their bid submission a plan to 
achieve maximum use of Indian personnel.
    (d) In the performance of contracts under this part 273 and subject 
to the provisions of part 14H of title 41, a tribal governing body may 
develop its own Indian preference requirements to the extent that such 
requirements are not inconsistent with the purpose and intent of 
paragraphs (a), (b) and (c) of this section.



Sec. 273.46  Liability and motor vehicle insurance.

    (a) States, school districts and Indian corporations shall obtain 
public liability insurance under contracts entered into with the Bureau 
under this part. However, where the Bureau contracting officer 
determines that the risk of death, personal injury or property damage 
under the contract is small and that the time and cost of procuring the 
insurance is great in relation to the risk, the contractor may be 
exempted from this requirement.
    (b) Notwithstanding paragraph (a) of this section, any contract 
which requires or authorizes, either expressly or by implication, the 
use of motor vehicles must contain a provision requiring the State, 
school district, or Indian corporation to provide liability insurance, 
regardless of now small the risk.
    (c) If the public school authority is self-insured and can present 
evidence of that fact to the Area Director or Commissioner, liability 
and motor vehicle insurance will not be required.



Sec. 273.47  Recordkeeping.

    A contractor will be required to maintain a recordkeeping system 
which will allow the Bureau to meet its legal records program 
requirements under the Federal Records Act (44 U.S.C. 3101 et seq.). 
Such a record system shall:
    (a) Fully reflect all financial transactions involving the receipt 
and expenditure of funds provided under the contract in a manner which 
will provide accurate, current and complete disclosure of finanical 
status; correlation with budget or allowable cost schedules; and clear 
audit facilitating data.
    (b) Reflect the amounts and sources of funds other than Bureau 
contract funds which may be included in the operation of the contract.
    (c) Provide for the creation, maintenance and safeguarding of 
records of lasting value, including those involving individual rights, 
such as permanent records and transcripts.
    (d) Provide for the orderly retirement of permanent records in 
accordance with General Records Schedules and the Bureau Records Control 
Schedule, when there is no established system set up by the State, 
school district, or Indian corporation.

[[Page 688]]



Sec. 273.48  Audit and inspection.

    (a) During the term of a contract under this part and for three 
years after the project or undertaking is completed, the Comptroller 
General and the Secretary, or any of their duly authorized 
representatives, shall have access, for audit and examination purposes, 
to any of the contractor's books, documents, papers, and records which, 
in their opinion, may be related or pertinent to the contract or any 
subcontract.
    (b) The contractor will be responsible for maintaining all documents 
such as invoices, purchase orders, canceled checks, balance sheets and 
all other records relating to financial transactions in a manner which 
will facilitate auditing. The contractor will be responsible for 
maintaining files of correspondence and other documents relating to the 
administration of the contract properly separated from general records 
or cross-referenced to general files.
    (c) The contractor receiving funds under this part shall be 
responsible for contract compliance.
    (d) The records involved in any claim or expenditure that has been 
questioned shall be further maintained until final determination has 
been made on the questioned expenditures.
    (e) All contracts, non-confidential records concerning all students 
served by the program, reports, budgets, budget estimates, plans, and 
other documents pertaining to preceding and current year administration 
of the contract program shall be made available by the contractor and 
local school officials to each member of the Indian Education Committee 
and to members of the public upon request. The contractor or local 
school official shall provide, free of charge, single copies of such 
documents upon request.



Sec. 273.49  Freedom of information.

    (a) Unless otherwise required by law, the Bureau shall not place 
restrictions on contractors which will limit public access to the 
contractor's records except when records must remain confidential.
    (b) A contractor under this part shall make all reports and 
information concerning the contract available to the Indian people which 
the contract affects. Reports and information may be withheld from 
disclosure only when both of the following conditions exist:
    (1) The reports and information fall within one of the following 
exempt categories:
    (i) Specifically required by statute or Executive Order to be kept 
secret.
    (ii) Commercial or financial information obtained from a person or 
firm on a privileged or confidential basis.
    (iii) Personnel, medical, social, psychological, academic 
achievement and similar files where disclosure would be a clearly 
unwarranted invasion of personal privacy.
    (2) Disclosure is prohibited by statue or Executive Order or sound 
grounds exist for using the exemption given in paragraph (b)(1) of this 
section.
    (c) A request to inspect or copy reports and information shall be in 
writing and must reasonably describe the reports and information 
requested. The request may be delivered or mailed to the contractor. 
Within ten (10) working days after receiving the request, the contractor 
shall determine whether to grant or deny the request. The requester 
shall be notified immediately of the determination.
    (d) The time limit for making a determination may be extended up to 
an additional ten (10) working days for good reason. The requester shall 
be notified in writing of the extension, reasons for the extension, and 
date on which the determination is expected to be made.



Sec. 273.50  Annual reporting.

    (a) A contractor under this part shall make a detailed annual report 
to the approving official before September 15 of each year and covering 
the previous school year. The report shall include, but not be limited 
to, an accounting of the amounts and purposes for which the contract 
funds were expended, information on the conduct of the program, a 
quantitative evaluation of the effectiveness of the contract program in 
meeting the stated objectives contained in the applicant's educational 
plans, and a complete accounting of actual receipts at the end of the 
contract period.

[[Page 689]]

    (b) In addition to the yearly reporting requirement given in 
paragraph (a) of this section, the contractor shall furnish other 
contracted-related reports when and as required by the Area Director or 
Commissioner.
    (c) A contractor under this part shall send copies of the reports 
required by paragraphs (a) and (b) of this section to the Indian 
Education Committee(s) and to the tribe(s) under the contract at the 
same time as the reports are sent to the Bureau.



Sec. 273.51  Penalties.

    If any officer, director, agent, or employee of, or connected with, 
any contractor or subcontractor under this part embezzles, willfully 
misapplies, steals, or obtains by fraud any of the funds or property 
connected with the contract or subcontract, he shall be subject to the 
following penalties:
    (a) If the amount involved does not exceed $100, he shall be fined 
not more than $1,000 or imprisoned not more than one year, or both.
    (b) If the amount involved exceeds $100, he shall be fined not more 
than $10,000 or imprisoned for not more than two years, or both.



Sec. 273.52  State school laws.

    In those States where Pub. L. 83-280, 18 U.S.C. 1162 and 28 U.S.C. 
1360 do not confer civil jurisdiction, State employees may be permitted 
to enter upon Indian tribal lands, reservations, or allotments if the 
duly-constituted governing body of the tribe adopts a resolution of 
consent for the following purposes:
    (a) Inspecting school conditions in the public schools located on 
Indian tribal lands, reservations, or allotments.
    (b) Enforcing State compulsory school attendance laws against Indian 
children, parents or persons standing in loco parentis.



Sec. 273.53  Applicable procurement regulations.

    States, school districts, or Indian corporations wanting to contract 
with the Bureau under this part must comply with the applicable 
requirements in the Federal Procurement Regulations (41 CFR part 1), as 
supplemented by the Interior Procurement Regulations (41 CFR part 14), 
and the Bureau of Indian Affairs Procurement Regulations (41 CFR part 
14H), except 41 CFR part 14H-70.



Sec. 273.54  Privacy Act requirements.

    (a) When a contractor operates a system of records to accomplish a 
Bureau function, the contractor shall comply with subpart D of 43 CFR 
part 2 which implements the Privacy Act (5 U.S.C. 552a). Examples of the 
contractor's responsibilities are:
    (1) To continue maintaining those systems of records declared by the 
Bureau to be subject to the Privacy Act as published in the Federal 
Register.
    (2) To make such records available to individuals involved.
    (3) To disclose an individual's record to third parties only after 
receiving permission from the individual to whom the record pertains. 43 
CFR 2.56 lists exceptions to this procedure.
    (4) To establish a procedure to account for access, disclosures, 
denials, and amendments to records.
    (5) To provide safeguards for the protection of the records.
    (b) The contractor may not:
    (1) Discontinue or alter any established systems of records without 
prior approval of the appropriate Bureau systems manager.
    (2) Deny requests for notification or access of records without 
prior approval of the appropriate Bureau systems manager.
    (3) Approve or deny requests for amendments of records without prior 
approval of the appropriate Bureau systems manager.
    (4) Establish a new system of records without prior approval of the 
Department of Interior and the Office of Management and Budget.
    (5) Collect information about an individual unless it is relevant or 
necessary to accomplish a purpose of the Bureau as required by statue or 
Executive Order.
    (c) The contractor is subject to the penalties provided in section 
(i) of 5 U.S.C. 552a.

[[Page 690]]



               Subpart E_Contract Revision or Cancellation



Sec. 273.61  Contract revision or amendment.

    Any contract made under this part may be revised or amended as 
deemed necessary to carry out the purposes of the program being 
contracted. A contractor may make a written request for a revision or 
amendment of a contract to the Bureau contracting officer. However, no 
program approved by the Indian Education Committee shall be altered from 
the time of its original approval to the end of the contract period 
without the written approval of the Committee.



Sec. 273.62  Cancelling a contract for cause.

    (a) Any contract entered into under this part may be cancelled for 
cause when the contractor fails to perform the work called for under the 
contract or fails to permit an Indian Education Committee to perform its 
duties pursuant to this part.
    (b) Before cancelling the contract, the Bureau will advise the 
contractor in writing of the following:
    (1) The reasons why the Bureau is considering cancelling the 
contract.
    (2) The contractor will be given an opportunity to bring its work up 
to an acceptable level.
    (c) If the contractor does not overcome the deficiencies in its 
contract performance, the Bureau shall cancel the contract for cause. 
The Bureau will notify the contractor, in writing, of the cancellation. 
The notice shall give the reasons for the cancellation and the right of 
the contractor to appeal under subpart C of 43 CFR part 4.
    (d) When a contract is cancelled for cause, the Bureau will attempt 
to perform the work by another contract.
    (e) Any contractor that has a contract cancelled for cause must 
demonstrate that the cause(s) which led to the cancellation have been 
remedied before it will be considered for another contract.



                            Subpart F_Appeals



Sec. 273.71  Contract appeal.

    A contractor may appeal an adverse decision or action of a Bureau 
contracting officer regarding a contract under this part as provided in 
subpart C of 43 CFR part 4.



Sec. 273.72  Appeal from decision to cancel contract for cause.

    A contractor may appeal the decision of a Bureau official to cancel 
a contract under this part for cause. The appeal shall be made as 
provided in subpart C of 43 CFR part 4.



Sec. 273.73  Other appeals.

    Any decision or action taken by a Bureau official under this part, 
other than those given in Sec. Sec. 273.71 and 273.72, may be appealed 
as provided in part 2 of this chapter.



PART 275_STAFFING--Table of Contents




Sec.
275.1 Purpose and scope.
275.2 Definitions.
275.3 Methods for staffing.
275.4 Implementing regulations.

    Authority: Sec. 502, Pub. L. 91-648, 84 Stat. 1909, 1925 (42 U.S.C. 
4762); Sec. 105, Pub. L. 93-638, 88 Stat. 2203, 2208-2210 (25 U.S.C. 
450i); 26 U.S.C. 48.

    Source: 40 FR 51316, Nov. 4, 1975, unless otherwise noted.



Sec. 275.1  Purpose and scope.

    The purpose of this part is to outline methods available to tribes 
for utilizing the services of Bureau employees. These regulations are 
not intended to prevent an Indian tribe or tribal organization from 
staffing their programs by other methods they feel appropriate. However, 
when an Indian tribe or tribal organization decides to provide Bureau 
employees certain Federal benefits, Civil Service Commission regulations 
must be adhered to.



Sec. 275.2  Definitions.

    As used in this part:
    (a) Act means the Indian Self-Determination and Education Assistance 
Act (Pub. L. 93-638, 88 Stat. 2203).

[[Page 691]]

    (b) Area Director means the official in charge of a Bureau of Indian 
Affairs Area Office.
    (c) Bureau means the Bureau of Indian Affairs.
    (d) Commissioner means the Commissioner of Indian Affairs, under the 
direction and supervision of the Assistant Secretary--Indian Affairs, 
who is responsible for the direction of the day-to-day operations of the 
Bureau of Indian Affairs.
    (e) Days means calendar days.
    (f) Indian tribe means any Indian tribe, band, nation, rancheria, 
pueblo, colony, or community, including any Alaska Native village or 
regional or village corporation as defined in or established pursuant to 
the Alaska Native Claims Settlement Act (85 Stat. 688) which is 
federally recognized as eligible by the U.S. Government through the 
Secretary for the special programs and services provided by the 
Secretary to Indians because of their status as Indians.
    (g) Indian means a person who is a member of an Indian tribe.
    (h) Superintendent means the official in charge of a Bureau of 
Indian Affairs Agency Office.
    (i) Tribal Chairman means tribal chairman, governor, chief or other 
person recognized by the tribal government as its chief executive 
officer.
    (j) Tribal government, tribal governing body, and tribal council 
means the recognized governing body of any Indian tribe.
    (k) Tribal organization means the recognized governing body of any 
Indian tribe; or any legally established organization of Indians or 
tribes which is controlled, sanctioned, or chartered by such governing 
body or bodies or which is democratically elected by the adult members 
of the Indian community to be served by such organization and which 
includes the maximum participation of Indians in all phases of its 
activities.
    (l) Assistant Secretary--Indian Affairs means the Assistant 
Secretary--Indian Affairs who discharges the authority and 
responsibility of the Secretary for activities pertaining to Indians and 
Indian affairs.

[40 FR 51316, Nov. 4, 1975, as amended at 43 FR 37446, Aug. 23, 1978; 45 
FR 13452, Feb. 29, 1980]



Sec. 275.3  Methods for staffing.

    (a) An Indian tribal organization may use any of the following three 
methods to employ or obtain the services of Bureau employees:
    (1) Agreement in accordance with the Intergovernmental Personnel Act 
of 1970 (5 U.S.C. 3371-3376). The agreement may be arranged between the 
tribal organization, the employee, and the Area Director or 
Commissioner. Assistance will be provided by the Area Personnel Office 
in complying with Civil Service instructions (Federal Personnel Manual, 
chapter 334) for completing an agreement.
    (2) Employment of Bureau employees on or before December 31, 1985, 
when serving under an appointment not limited to one year or less. A 
mutual agreement will be made between a tribal organization and the 
employee before leaving Federal employment to retain coverage for any of 
the following Federal benefits:
    (i) Compensation for work injuries.
    (ii) Retirement.
    (iii) Health insurance.
    (iv) Life insurance.
    (3) An agreement by an Indian tribe in accordance with the 1834 Act 
(25 U.S.C. 48) may be made in connection with contracts under section 
102 of the Act.
    (i) The agreement may provide for the tribal government to direct 
the day-to-day activities of Bureau employees. Tribal government 
direction of Bureau employees means the tribal chairman or other tribal 
official, as designated by the tribal governing body, is responsible for 
the planning, coordination, and completion of the daily on-the-job 
assignments of Bureau employees. The daily assignments of each such 
Bureau employee are limited to those that fall within the general range 
of duties prescribed in the employee's Bureau position.
    (ii) The agreement to direct day-to-day activities of Bureau 
employees shall include all employees:

[[Page 692]]

    (A) Whose positions are in the program or portion of the program to 
be contracted; or
    (B) In a portion of the program to continue under Bureau operation 
in connection with a contract for other portions of the program.
    (iii) The proposed agreement will be worked out between the tribe, 
the Superintendent, and the Area Director and forwarded to the 
Commissioner for final approval.
    (b) When a contract application under part 900 of this chapter does 
not include a proposed agreement for direction of Bureau employees, the 
application must be submitted at least 120 days in advance of the 
proposed effective date of the contract to allow time for placement of 
affected employees.

[40 FR 51316, Nov. 4, 1975, as amended at 41 FR 5098, Feb. 4, 1976; 64 
FR 13896, Mar. 23, 1999]



Sec. 275.4  Implementing regulations.

    Regulations to implement section 105 of the Act will be issued by 
the Civil Service Commission. The regulations will cover the situations 
described in paragraphs (a)(1) and (a)(2) of Sec. 275.3.



PART 276_UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS--Table of Contents




Sec.
276.1 Purpose and scope.
276.2 Definitions.
276.3 Cash depositories.
276.4 Bondings and insurance.
276.5 Recordkeeping.
276.6 Program income.
276.7 Standards for grantee financial management systems.
276.8 Financial reporting requirements.
276.9 Monitoring and reporting program performances.
276.10 Grant payment requirements.
276.11 Property management standards.
276.12 Procurement standards.
276.13 Indian preference in grant administration.
276.14 Budget revision.
276.15 Grant closeout.
276.16 Subgrants and subcontracts to nonprofit organizations.
276.17 Printing.

Appendix A to Part 276--Principles for Determining Costs Applicable to 
          Grants
Appendix B to Part 276--Financial Reporting Requirements

    Authority: 34 CFR 256; Sec. 104, Pub. L. 93-638, 88 Stat. 2203, 2207 
(25 U.S.C. 450h).

    Source: 40 FR 51316, Nov. 4, 1975, unless otherwise noted.



Sec. 276.1  Purpose and scope.

    (a) The purpose of the regulations in this part is to give the 
uniform administrative requirements for grants awarded by the Bureau of 
Indian Affairs.
    (b) The regulations in this part shall apply to all grants awarded 
by the Bureau of Indian Affairs unless the part which gives the 
application process and special requirements for the specific type of 
grant states otherwise.



Sec. 276.2  Definitions.

    As used in this part:
    (a) Advance by Treasury check means a payment made by a Treasury 
check to a grantee upon its request or through the use of predetermined 
payment schedules before payments are made by the grantee.
    (b) Date of completion means the date when all work under a grant is 
completed or the date in the grant award document, or any supplement or 
amendment thereto, on which Federal assistance ends.
    (c) Disallowed costs means those charges to a grant which the Bureau 
or its representative determines to be unallowable.
    (d) Economic enterprise means any commercial, industrial, 
agricultural or business activity that is at least 51 percent Indian 
owned, established or organized for the purpose of profit.
    (e) Excess property means property under the control of the Bureau 
which, as determined by the Commissioner, is no longer required for its 
needs.
    (f) Expendable personal property means all tangible personal 
property other than nonexpendable property.
    (g) Grant closeout means the process by which the Bureau determines 
that all applicable administrative actions and all required work of the 
grant have been completed by the grantee and the Bureau.
    (h) Grantee means the entity which is responsible for administration 
of the grant.
    (i) Indian tribe means any Indian tribe, band, nation, rancheria, 
pueblo,

[[Page 693]]

colony or community, including any Alaska Native village or regional or 
village corporation as defined in or established pursuant to the Alaska 
Native Claims Settlement Act (85 Stat. 688) which is federally 
recognized as eligible by the United States Government through the 
Secretary for the special programs and services provided by the 
Secretary to Indians because of their status as Indians.
    (j) Letter of credit means an instrument certified by an authorized 
official of the Bureau which authorizes a grantee to draw funds when 
needed from the Treasury, through a Regional Disbursing Office, in 
accordance with the provisions of Treasury Circular No. 1075 as modified 
and supplemented by a memorandum of understanding between the Bureau of 
Government Financial Operation, Department of the Treasury and the 
Department of the Interior.
    (k) Nonexpendable personal property means tangible personal property 
having useful life of more than one year and an acquisition cost of $300 
or more per unit. A grantee may use its own definition of nonexpendable 
personal property provided that such definition would at least include 
all tangible personal property as defined above.
    (l) Personal property means property of any kind except real 
property. It may be tangible--having physical existence, or intangible--
having no physical existence, such as patents, inventions, and 
copyrights.
    (m) Real property means land, land improvements, structures and 
appurtenances thereto, excluding removable personal property, machinery 
and equipment.
    (n) Reimbursement by Treasury check means a payment made to a 
grantee with a Treasury check upon request for reimbursement from the 
grantee.
    (o) Suspension of a grant means an action by the Bureau which 
temporarily suspends assistance under the grant pending corrective 
action by the grantee or pending decision to terminate the grant by the 
Bureau.
    (p) Termination of a grant means the cancellation of Federal 
assistance, in whole or in part, under a grant at any time prior to the 
date of completion.
    (q) Tribal government, tribal governing body, and tribal council 
means the recognized governing body of an Indian tribe.
    (r) Tribal organization means the recognized governing body of any 
Indian tribe or any legally established organization of Indians which is 
controlled, sanctioned, or chartered by such governing body or bodies of 
which is democratically elected by the adult members of the Indian 
community to be served by such organization and which includes the 
maximum participation of Indians in all phases of its activities.



Sec. 276.3  Cash depositories.

    (a) Except for situations described in paragraphs (b) and (c) of 
this section, the Bureau will not:
    (1) Require physical segregation of cash depositories for Bureau 
grant funds provided to a grantee.
    (2) Establish any eligibility requirements for cash depositories in 
which Bureau grant funds are deposited by grantees or their subgrantees.
    (b) A separate bank account shall be used when payments under letter 
of credit are made on a ``check-paid'' basis in accordance with 
agreements entered into by a grantee, the Bureau, and the banking 
institutions involved. A check-paid basis letter of credit is one under 
which funds are not drawn from the Treasury until the grantee's checks 
have been presented to its bank for payment.
    (c) Consistent with the national goal of expanding the opportunities 
for minority business enterprises, grantees are encouraged to use 
minority banks.



Sec. 276.4  Bondings and insurance.

    In administering Bureau grants, grantees shall observe their regular 
requirements and practices with respect to bonding and insurance. The 
Bureau will not impose additional bonding and insurance requirements, 
including fidelity bonds, except as provided in paragraphs (a) and (b) 
of this section.
    (a) The recipient of a Bureau grant which requires contracting for 
construction or facility improvement (including any Bureau grant which 
provides for alterations or renovations of real property) shall follow 
its own requirements and practices relating to

[[Page 694]]

bid guarantees, performance bonds, and payment bonds except for 
contracts exceeding $100,000. For contracts exceeding $100,000, the 
minimum requirements shall be as follows:
    (1) A bid guarantee from each bidder equivalent to five percent of 
the bid price. The bid guarantee shall consist of a firm commitment such 
as a bid bond, certified check, or other negotiable instrument 
accompanying a bid as assurance that the bidder will, upon acceptance of 
his bid, execute such contractual documents as may be required within 
the time specified.
    (2) A performance bond on the part of the contractor for 100 percent 
of the contract price. A performance bond is one executed in connection 
with a contract to secure fulfillment of all the contractor's 
obligations under the contract.
    (3) A payment bond on the part of the contractor for 100 per cent of 
the contract price. A payment bond is one executed in connection with a 
contract to assure payment as required by law of all persons supplying 
labor and material in the execution of the work provided for in the 
contract.
    (b) Where, in connection with a Bureau grant, the Bureau also 
guarantees the payment of money borrowed by the grantee, the Bureau may 
at its discretion require adequate bonding and insurance if the bonding 
and insurance requirements of the grantee are not deemed to be 
sufficient to protect adequately the interests of the Federal 
Government.



Sec. 276.5  Recordkeeping.

    (a) The Bureau shall not impose record retention requirements over 
and above those established by the grantee except that financial 
records, supporting documents, statistical rec ords, and all other 
records pertinent to a Bureau grant, or to any subgrant (or negotiated 
contract exceeding $2500) under a grant, shall be retained for a period 
of three years, with the following qualifications:
    (1) The records shall be retained beyond the three-year period if 
audit findings have not been resolved.
    (2) Records for nonexpendable property which was acquired with 
Bureau grant funds shall be retained for three years after its final 
disposition.
    (3) When grant records are transferred to or maintained by the 
Bureau, the three-year retention requirement is not applicable to the 
grantee.
    (b) The retention period starts from the date of submission of the 
final expenditure report or, for grants which are renewed annually, from 
the date of the submission of the annual expenditure report.
    (c) Grantees are authorized, if they desire, to substitute microfilm 
copies in lieu of original records.
    (d) The Bureau shall request transfer of certain records to its 
custody from grantees when it determines that the records possess long-
term retention value. However, in order to avoid duplicate recordkeeping 
the Bureau may make arrangements with the grantee for the grantee to 
retain any records which are continuously needed for joint use.
    (e) The Secretary of the Interior and 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 grantees 
and their subgrantees which are pertinent to a specific grant program 
for the purpose of making audit, examination, excerpts, transcripts and 
copies at government expense.
    (f) Unless otherwise required by law, the Bureau shall not place 
restrictions on grantees which will limit public access to the grantee's 
records created as part of the grant except when rec ords must remain 
confidential. Following are some of the reasons for withholding records:
    (1) Prevent a clearly unwarranted invasion of personal privacy;
    (2) Specifically required by statute or Executive Order to be kept 
secret;
    (3) Commercial or financial information obtained from a person or 
firm on a privileged or confidential basis.



Sec. 276.6  Program income.

    (a) No grantee receiving a grant shall be held accountable for 
interest earned on grant funds, pending their disbursement for program 
purposes.
    (b) Proceeds from the sale of real or personal property, either 
provided by

[[Page 695]]

the Federal Government or purchased in whole or in part with Federal 
funds, shall be handled in accordance with Sec. 276.11.
    (c) Royalties received from copyrights and patents produced under 
the grant during the grant period shall be retained by the grantee and, 
in accordance with the grant agreement, be either added to the funds 
already committed to the program or deducted from total allowable 
project costs for the purpose of determining the net costs on which the 
Bureau share of costs will be based. After termination or completion of 
the grant, the Bureau share of royalties in excess of $200 received 
annually shall be returned to the Bureau in the absence of other 
specific agreements between the Bureau and the grantee. The Bureau share 
of royalties shall be computed on the same ratio basis as the Bureau 
share of the total project cost.
    (d) All other program income earned during the grant period shall be 
retained by the grantee and, in accordance with the grant agreement, 
shall be either:
    (1) Added to funds committed to the project by the Bureau and the 
grantee and be used to further eligible program objectives, or
    (2) Deducted from the total project costs for the purpose of 
determining the net costs on which the Bureau share of costs will be 
based.
    (e) Grantees shall record the receipt and expenditures of revenues 
(such as taxes, special assessments, levies, fines, etc.) as a part of 
grant project transactions when such revenues are specifically earmarked 
for a grant project in accordance with grant agreements.



Sec. 276.7  Standards for grantee financial management systems.

    (a) Grantee financial management systems for grants and subgrantee 
financial management systems for subgrants shall provide for:
    (1) Accurate, current, and complete disclosure of the financial 
results of each grant program in accordance with Federal reporting 
requirements and for each subgrant in accordance with the grantees' 
requirements. Except when specifically required by law, the Bureau wll 
not require financial reporting on the accrual basis from tribal 
organizations whose rec ords are not maintained on that basis. However, 
when accrual reporting is required by law, tribal organizations whose 
records are not maintained on that basis will not be required to convert 
their accounting systems to the accrual basis; they may develop the 
accrual information through an analysis of the documentation on hand or 
on the basis of best estimates.
    (2) Records which identify adequately the source and application of 
funds for grant--or subgrant--supported activities. These records shall 
contain information pertaining to grant or subgrant awards and 
authorizations, obligations, unobligated balances, assets, liabilities, 
outlays, and income.
    (3) Effective control over and accountability for all grant or 
subgrant funds, and real and personal property acquired with grant or 
subgrant funds. Grantees and subgrantees shall adequately safeguard all 
such property and shall assure that it is used solely for authorized 
purposes.
    (4) Comparison of actual with budgeted amounts for each grant or 
subgrant, and, when specifically required by the performance reporting 
requirements of the grant or subgrant, relation of financial information 
with performance or productivity data, including the production of unit 
cost information.
    (5) Procedures to minimize the time elapsing between the transfer of 
funds from the U.S. Treasury and the disbursement by the grantee, 
whenever funds are advanced by the Federal Government. When advances are 
made by a letter-of-credit method, the grantees shall make drawdowns 
from the U.S. Treasury as close as possible to the time of making the 
disbursements. Subgrantees shall institute similar procedures when funds 
are advanced by the grantee.
    (6) Procedures for determining the allowability and allocability of 
costs shall be in accordance with the applicable cost principles 
prescribed in appendix A of this part.
    (7) Accounting records which are supported by source documentation.

[[Page 696]]

    (8) A systematic method to assure timely and appropriate resolution 
of audit findings and recommendations.
    (b) Grantees shall require subgrantees (recipients of grants which 
are passed through by the grantee) to adopt all of the standards in 
paragraph (a) of this section.



Sec. 276.8  Financial reporting requirements.

    Requirements for grantees to report financial information to the 
Bureau, and to request advances and reimbursment when a letter of credit 
method is not used, are prescribed in appendix B of this part.



Sec. 276.9  Monitoring and reporting program performances.

    (a) Grantees shall constantly monitor the performance under grant-
supported activities to assure that adequate progress is being made 
toward achieving the goals of the grant. This review shall be made for 
each program, function, or activity of each grant as set forth in the 
approved grant application.
    (b) Grantees shall submit a performance report for each grant which 
briefly presents the following for each program, function, or activity 
involved:
    (1) A comparison of actual accomplishments to the goals established 
for the period. Where the output of grant programs can be readily 
quantified, such quantitative data should be related to cost data for 
computation of unit costs.
    (2) Reasons for slippage in those cases were established goals were 
not met.
    (3) Other pertinent information including, when appropriate, 
analysis and explanation of cost overruns or high unit costs.
    (c) Grantees shall submit the performance reports to the Bureau with 
the Financial Status Reports (prescribed in appendix B of this part) in 
the frequency established by appendix B. The Bureau shall prescribe the 
frequency with which the performance reports will be submitted with the 
Request for Advance or Reimbursement (prescribed in appendix B) when 
that form is used in lieu of the Financial Status Report. In no case 
shall the performance reports be required more frequently than quarterly 
or less frequently than annually.
    (d) Between the required performance reporting dates, events may 
occur which have significant impact upon the project or program. In such 
cases, the grantee shall inform the Bureau as soon as the following 
types of conditions become known:
    (1) Problems, delays, or adverse conditions which will materially 
affect the ability to attain program objectives, prevent the meeting of 
time schedules and goals, or preclude the attainment of project work 
units by established time periods. This disclosure shall be accomplished 
by a statement of the action taken, or contemplated, and any Bureau 
assistance needed to resolve the situation.
    (2) Favorable developments or events which enable meeting time 
schedules and goals sooner than anticipated or producing more work units 
than originally projected.
    (e) If any performance review conducted by the grantee discloses the 
need for change in the budget estimates in accordance with the criteria 
established in Sec. 276.14, the grantee shall submit a request for 
budget revision.
    (f) The bureau shall make site visits as frequently as practicable 
to:
    (1) Review program accomplishments and management control systems.
    (2) Provide such technical assistance as may be required, or 
requested.



Sec. 276.10  Grant payment requirements.

    (a) Except for construction grants for which the letter-of-credit 
method is optional, the letter-of-credit funding method shall be used by 
the Bureau where all of the following conditions exist:
    (1) When there is or will be a continuing relationship between a 
grantee and the Bureau for at least a 12-month period and the total 
amount of advances to be received within that period from the Bureau is 
$120,000, or more, as prescribed by Treasury Circular No. 1075.
    (2) When the grantee has established or demonstrated to the Bureau 
the willingness and ability to establish procedures that will minimize 
the time

[[Page 697]]

elapsing between the transfer of funds and their disbursement by the 
grantee.
    (3) When the grantee's financial management system meets the 
standards for fund control and accountability prescribed in Sec. 276.7.
    (b) The method of advancing funds by Treasury check shall be used, 
in accordance with the provisions of Treasury Circular No. 1075, when 
the grantee meets all of the requirements specified in paragraphs (a)(2) 
and (3) of this section.
    (c) The reimbursement by Treasury check method shall be the 
preferred method when the grantee does not meet the requirements 
specified in either paragraph (a)(2) or (a)(3), or both. This method may 
also be used when the major portion of the program is accomplished 
through private market financing or Federal loans, and when the Bureau 
grant assistance constitutes a minor portion of the program.
    (d) Unless otherwise required by law, the Bureau shall not withhold 
payments for proper charges made by grantees at any time during the 
grant period unless:
    (1) A grantee has failed to comply with the program objectives, 
grant award conditions, or Bureau reporting requirements; or
    (2) The grantee is indebted to the United States and collection of 
the indebtedness will not impair accomplishment of the objectives of any 
grant program sponsored by the United States. Under such conditions, the 
Bureau may, upon reasonable notice, inform the grantee that payments 
will not be made for obligations incurred after a specified date until 
the conditions are corrected or the indebtedness to the Federal 
Government is liquidated.
    (e) Appendix B of this part provides the procedures for requesting 
advances or reimbursements.

[40 FR 51316, Nov. 4, 1975, as amended at 41 FR 5099, Feb. 4, 1976]



Sec. 276.11  Property management standards.

    (a) Grantees may follow their own property management policies and 
procedures if they observe the requirements of this section. With 
respect to property covered by this section, the Bureau may not impose 
on grantees any requirements (including property reporting 
requirements)--not authorized by this part unless specifically required 
by Federal law.
    (b) Title to real property to be acquired in whole or in part from a 
Bureau grant under part 900 of this chapter shall vest in one of the 
following manners:
    (1) Title may be taken by the United States in trust for the Indian 
tribe upon the request of the tribe and when the real property to be 
acquired is within the reservation boundaries or adjoins on at least two 
sides other trust or restricted lands as prescribed in part 900 of this 
chapter.
    (2) Fee title to the acquired real property shall vest in the Indian 
tribe whenever the acquisition does not meet the criteria in paragraph 
(b)(1) of this section, unless for other reasons a tribe requests title 
to be taken in the name of the United States. In the absence of 
applicable statutory authority governing the disposition of real 
property acquired by a tribe, the tribe shall use the real property for 
the authorized purposes and in accordance with any other requirements 
imposed by the terms and conditions of the original grant. Changes in 
use compatible to other tribal programs may be authorized by the Bureau. 
When no longer needed for the authorized purposes, the real property 
shall be used in accordance with the standards set forth in Sec. 
276.11(d)(1) for non-expendable personal property. Accordingly, the 
following priority order for use of such property shall be:
    (i) Other grants from the Bureau.
    (ii) Grants from other Federal agencies.
    (iii) Tribal purposes consistent with those authorized for support 
by Bureau grants.
    (iv) Tribal official activities.
    (3) In those instances where the Indian tribe requests, title may be 
acquired by the United States. Use of these acquired real property 
interests will be subject to the authorized purposes and in accordance 
with the provisions of the original grant. Upon a determination that the 
real property is no longer needed for the authorized purposes, 
disposition may be made by

[[Page 698]]

declaring it excess under provisions of the Act of January 2, 1975 (88 
Stat. 1954) and title transferred to the Secretary to be held by the 
United States in trust for the tribe. Where real property does not meet 
the requirements under the Act of January 2, 1975 (88 Stat. 1954), the 
tribe may elect to acquire title under applicable enabling statutory 
authorities, or in the absence of statutory authority, request 
withholding disposition in aid of legislation, or authorize disposal 
under the General Services Administration procedures.
    (c) The provisions of paragraphs (b)(2) and (3) of this section 
shall also apply when real property is acquired in whole or in part by a 
Bureau grant other than that provided under part 900 of this chapter. 
However, when such property is acquired by a grantee other than an 
Indian tribe, or a tribal governing body, fee simple title to the 
property shall vest in the grantee upon acquisition. In the absence of 
applicable statutory provisions governing the use or disposition of such 
property, it shall be subject to the following requirments, in addition 
to any other requirements imposed by the terms and conditions of the 
grant:
    (1) The grantee shall use the real property for the authorized 
purpose of the original grant as long as needed.
    (2) The grantee shall obtain approval by the Bureau for the use of 
the real property in other projects when the grantee determines that the 
property is no longer needed for the original grant purposes. Use in 
other projects shall be limited to those under other Federal grant 
programs, or programs that have purposes consistent with those 
authorized for support by the grantor.
    (3) When the real property is no longer needed as provided in 
paragraphs (c)(1) and (2) of this section, the grantee shall return all 
real property furnished or purchased wholly with Bureau grant funds to 
the control of the Bureau. In the case of property purchased in part 
with Bureau grant funds, the grantee may be permitted to take title to 
the Federal interest therein upon compensating the Federal Government 
for its fair share of the property. The Federal share of the property 
shall be the amount computed by applying the percentage of the Federal 
participation in the total cost of the grant program for which the 
property was acquired to the current fair market value of the property.
    (d) Standards and procedures governing ownership, use, and 
disposition of nonexpendable personal property furnished by the Bureau 
or acquired with Bureau funds are set forth below:
    (1) Nonexpendable personal property acquired with Bureau funds. When 
nonexpendable personal property is acquired by a grantee wholly or in 
part with Bureau funds, title will not be taken by the Bureau except as 
provided in paragraph (d)(1)(iv) of this section but shall be vested in 
the grantee subject to the following restrictions on use and disposition 
of the property:
    (i) The grantee shall retain the property acquired with Bureau funds 
in the grant program as long as there is a need for the property to 
accomplish the purpose of the grant program whether or not the program 
continues to be supported by Bureau funds. When there is no longer a 
need for the property to accomplish the purpose of the grant program, 
the grantee shall use the property in connection with the other Federal 
grants it has received in the following order of priority:
    (A) Other grants from the Bureau needing the property.
    (B) Grants of other Federal agencies needing the property.
    (ii) When the grantee no longer has need for the property in any of 
its Federal grant programs, or programs that have purposes consistent 
with those authorized for support by the grantor, the property may be 
used for its own official activities in accordance with the following 
standards:
    (A) Nonexpendable property with an acquisition cost of less than 
$500 and used four years or more. The grantee may use the property for 
its own official activities without reimbursement to the Federal 
government or sell the property and retain the proceeds.
    (B) All other nonexpendable property. The grantee may retain the 
property for its own use if a fair compensation is made to the Bureau 
for the latter's share of the property. The amount of compensation shall 
be computed by applying the percentage of

[[Page 699]]

Bureau participation in the grant program to the current fair market 
value of the property.
    (iii) If the grantee has no need for the property, disposition of 
the property shall be made as follows:
    (A) Nonexpendable property with an acquisition cost of $1,000 or 
less. Except for that property which meets the criteria of paragraph 
(d)(1)(ii)(A) of this section, the grantee shall sell the property and 
reimburse the Bureau an amount which is computed in accordance with 
paragraph (d)(1)(iii) of this section.
    (B) Nonexpendable property with an acquisition cost of over $1,000. 
The grantee shall request disposition instructions from the Bureau. The 
Bureau shall determine whether the property can be used to meet the 
Bureau's requirement. If no requirement exists within the Bureau, the 
availability of the property shall be reported to the General Services 
Administration (GSA) by the Bureau to determine whether a requirement 
for the property exists in other Federal agencies. The Bureau shall 
issue instructions to the grantee within 120 days and the following 
procedures shall govern:
    (1) If the grantee is instructed to ship the property elsewhere, the 
grantee shall be reimbursed by the benefiting Federal agency with an 
amount which is computed by applying the percentage of the grantee's 
participation in the grant program to the current fair market value of 
the property, plus any shipping or interim storage costs incurred.
    (2) If the grantee is instructed to otherwise dispose of the 
property, he shall be reimbursed by the Bureau of such costs incurred in 
its disposition.
    (3) If disposition instructions are not issued within 120 days after 
reporting, the grantee shall sell the property and reimburse the Bureau 
and amount which is computed by applying the percentage of Bureau 
participation in the grant program to the sales proceeds. Further, the 
grantee shall be permitted to retain $100 or 10 percent of the proceeds, 
whichever is greater, for the grantee's selling and handling expenses.
    (iv) Where the Bureau determines that property with an acquisition 
cost of $1,000 or more and financed solely with Bureau funds is unique, 
different, or costly to replace, it may reserve title to such property, 
subject to the following provisions:
    (A) The property shall be appropriately identified in the grant 
agreement or otherwise made known to the grantee.
    (B) The Bureau shall issue disposition instructions within 120 days 
after the completion of the need for the property under the grant for 
which it was acquired. If the Bureau fails to issue disposition 
instructions within 120 days, the grantee shall apply the standards of 
paragraphs (d)(1)(i), (d)(1)(ii)(B), and (d)(1)(iii)(B) of this section.
    (2) Federally owned nonexpendable personal property. Unless 
statutory authority to transfer title has been granted to an agency, 
title to Federally owned property (property to which the Federal 
Government retains title including excess property made available by the 
Bureau to grantees) remains vested by law in the Federal Government. 
Upon termination of the grant or need for the property, such property 
shall be reported to the Bureau for further Bureau use or, if 
appropriate, for reporting to the General Services Administration for 
other Federal agency use. Appropriate disposition instructions will be 
issued to the grantee after completion of Bureau review.
    (e) The grantee's property management standards for nonexpendable 
personal property shall also include the following procedural 
requirements:
    (1) Property records shall be maintained accurately and provide for 
a description of the property; manufacturer's serial number or other 
identification number; acquisition date and cost; source of the 
property; percentage of Federal funds used in the purchase of property; 
location, use, and condition of the property; and ultimate disposition 
data including sales price or the method used to determine current fair 
market value if the grantee reimburses the bureau for its share.
    (2) A physical inventory of property shall be taken and the results 
reconciled with the property records at least once every two years to 
verify the

[[Page 700]]

existence, current use, and continued need for the property.
    (3) A control system shall be in effect to insure adequate 
safeguards to prevent loss, damage, or theft to the property. Any loss, 
damage, or theft of nonexpendable property shall be investigated and 
fully documented.
    (4) Adequate maintenance procedures shall be implemented to keep the 
property in good condition.
    (5) Proper sales procedures shall be established for unneeded 
property which would provide for competition to the extent practicable 
and result in the highest possible return.
    (f) When the total inventory value of any unused expendable personal 
property exceeds $500 at the expiration of need for any grant purposes, 
the grantee may retain the property or sell the property as long as he 
compensates the Bureau for its share in the cost. The amount of 
compensation shall be computed in accordance with paragraph 
(d)(1)(ii)(B) of this section.
    (g) Specific standards for control of intangible property are 
provided as follows:
    (1) If any program produces patentable items, patent rights, 
processes, or inventions, in the course of work aided by a Bureau grant, 
such fact shall be promptly and fully reported to the Bureau. Unless 
there is prior agreement between the grantee and Bureau on disposition 
of such items, the Bureau shall determine whether protection on such 
invention or discovery shall be sought and how the rights in the 
invention or discovery--including rights under any patent issued on it--
shall be allocated and administered in order to protect the public 
interest consistent with ``Government Patent Policy'' (President's 
memorandum for heads of executive departments and agencies), dated 
August 23, 1971, and Statement of Government Patent Policy as printed in 
36 FR 16889.
    (2) Where the grant results in a book or other copyrightable 
material, the author or grantee is eligible to copyright the work if it 
is found that (i) the retention of the copyright is not precluded by 
statute and (ii) equity or the public interest is best served by doing 
so, by reason of special circumstances. If it is found that the public 
interest is best served by limiting the term of any copyright to be 
obtained, such limits shall be set forth in the grant agreement. 
``Developmental'' copyrights may be requested during the development, 
testing, or evaluation of copyrightable materials in order to prevent 
them from prematurely falling into the public domain. The copyright will 
be in accordance with copyright laws. However, the Government shall 
receive a royalty-free, nonexclusive and irrevocable license to 
reproduce, publish, or otherwise use, and to authorize others to use the 
work for Government purposes. A copy of any copyright obtained by a 
grantee shall be provided to the Bureau. Program income received as 
royalties from copyrights on materials produced under grants is retained 
by the grantee during the grant period and is to be used according to 
the provisions of Sec. 276.6(c). Specific agreements between the Bureau 
and the grantee shall be entered into before the grant is awarded to 
determine the uses of the royalty income after the grant is completed or 
terminated.
    (h) The use of Bureau-owned facilities under the jurisdiction of the 
Commissioner by a grantee for purposes of carrying out a grant may be 
authorized when the facilities are not needed for Bureau purposes.

[40 FR 51316, Nov. 4, 1975, as amended at 43 FR 37446, Aug. 23, 1978; 64 
FR 13897, Mar. 23, 1999]



Sec. 276.12  Procurement standards.

    (a) The standards contained in this section do not relieve the 
grantee of the contractual responsibilities arising under its contracts. 
The grantee is the responsible authority, without recourse to the Bureau 
regarding the settlement and satisfaction of all contractual and 
administrative issues arising out of procurements entered into, in 
support of a grant. This includes but is not limited to: disputes, 
claims, protests of award, source evaluation or other matters of a 
contractual nature. Matters concerning violation of law are to be 
referred to the tribal, Federal or other authority which has proper 
jurisdiction.
    (b) Grantees may use their own procurement regulations provided that 
procurements made with Bureau grant

[[Page 701]]

funds adhere to the standards set forth as follows:
    (1) The grantee shall maintain a code or standards of conduct which 
shall govern the performance of its officers, employees, or agents in 
contracting with and expending Bureau grant funds. Grantee's officers, 
employees or agents, shall neither solicit nor accept gratuities, 
favors, or anything of monetary value from contractors or potential 
contractors. To the extent permissible by law, rules or regulations, 
such standards shall provide for penalties, sanctions, or other 
disciplinary actions to be applied for violations of such standards by 
either the grantee officers, employees, or agents, or by contractors or 
their agents.
    (2) All procurement transactions regardless of whether negotiated or 
advertised and without regard to dollar value shall be conducted in a 
manner so as to provide maximum open and free competition. The grantee 
should be alert to organizational conflicts of interest or non-
competitive practices among contractors which may restrict or eliminate 
competition or otherwise restrain trade. However, this provision will 
apply only after the Indian preference requirements prescribed in Sec. 
276.13 have been met.
    (3) The grantee shall establish procurement procedures which provide 
for, as a minimum, the following procedural requirements:
    (i) Proposed procurement actions shall be reviewed by grantee 
official to avoid purchasing unnecessary or duplicative items. Where 
appropriate, an analysis shall be made of lease and purchase 
alternatives to determine which would be the most economical, practical 
procurement.
    (ii) Invitations for bids or requests for proposals shall be based 
upon a clear and accurate description of the technical requirements for 
the material, product, or service to be procured. In competitive 
procurements, such description shall not contain features which unduly 
restrict competition. ``Brand name or equal'' description may be used as 
a means to define the performance or other salient requirements of a 
procurement. When so used, the specific features of the named brand 
which must be met by offerors should be clearly specified.
    (iii) Positive efforts shall be made by the grantees to use small 
business and minority-owned business sources of supplies and services. 
Such efforts should allow these sources the maximum feasible opportunity 
to compete for contracts to be performed using Bureau grant funds. 
However, this provision will apply only after the Indian preference 
requirements prescribed in Sec. 276.13 have been met.
    (iv) The type of procuring instruments used (i.e., fixed price 
contracts, cost reimbursable contracts, etc.) shall be appropriate for 
the particular procurement and for promoting the best interest of the 
grant program involved. The ``cost-plus-a-percentage-of-cost'' method of 
contracting shall not be used.
    (v) Formal advertising, with adequate purchase description, sealed 
bids, and public openings shall be the required method of procurement 
unless negotiation pursuant to paragraph (b)(3)(vi) of this section is 
necessary to accomplish sound procurement. However, procurement of 
$10,000 or less need not be so advertised. Where such advertised bids 
are obtained the awards shall be made to the responsible bidder whose 
bid is responsive to the invitation and is most advantageous to the 
grantee, price and other factors considered. (Factors such as discounts, 
transportation costs, taxes may be considered in determining the lowest 
bid.) Invitations for bids shall clearly set forth all requirements 
which the bidder must fulfill in order for his bid to be evaluated by 
the grantee. Any or all bids may be rejected when it is in the grantee's 
interest to do so.
    (vi) Procurements may be negotiated if it is impractical and 
unfeasible to use formal advertising. Generally, procurements may be 
negotiated by the grantee if:
    (A) The public exigency will not permit the delay incident to 
advertising;
    (B) The material or service to be procured is available from only 
one person or firm; (all contemplated sole source procurements where the 
aggregate expenditure is expected to exceed $5,000 shall be referred to 
the Bureau for prior approval).

[[Page 702]]

    (C) The total amount involved does not exceed $10,000;
    (D) The contract is for personal or professional services, or for 
any service to be rendered by a university, college, or other 
educational institutions;
    (E) No acceptable bids have been received after formal advertising;
    (F) The purchases are for highly perishable materials or medical 
supplies; for material or services where the prices are established by 
law; for technical items or equipment requiring standardization and 
interchangeability of parts with existing equipment; for experimental, 
developmental or research work; for supplies purchased for authorized 
resale; and for technical or specialized supplies requiring substantial 
initial investment for manufacture;
    (G) Otherwise authorized by law, rules or regulations. 
Notwithstanding the existence of circumstances justifying negotiation, 
competition shall be obtained to the maximum extent practicable.
    (vii) Contracts shall be made only with responsible contractors who 
possess the potential ability to perform successfully under the terms 
and conditions of a proposed procurement. Consideration shall be given 
to such matters as contractor integrity, record of past performance, 
financial and technical resources, or accessibility to other necessary 
resources.
    (viii) Procurement records or files for purchases in amounts over 
$10,000 shall provide at least the following pertinent information: 
Justification for the use of negotiation in lieu of advertising, 
contractor selection, and the basis for the cost or price negotiation.
    (ix) A system for contract administration shall be maintained to 
assure contractor conformance with terms, conditions, and specifications 
of the contract or order, and to assure adequate and timely followup of 
all purchases.
    (c) In addition to provisions to define a sound and complete 
agreement, the grantee shall include the following provisions in all 
contracts and subgrants:
    (1) Contracts shall contain such contractual provisions or 
conditions which will allow for 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.
    (2) All contracts, amounts for which are over $10,000 shall contain 
suitable provisions for termination by the grantee including the manner 
by which it will be effected and the basis for settlement. In addition, 
such contracts shall describe conditions where 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.
    (3) In all contracts for construction or facility improvement 
awarded over $100,000, grantees shall observe the bonding requirements 
provided in Sec. 276.4.
    (4) All construction contracts awarded by recipients and their 
contractors or subgrantees having a value of more than $10,000, shall 
contain a provision requiring compliance with Executive Order 11246, 
entitled ``Equal Employment Opportunity,'' as amended by Labor 
Regulations (41 CFR part 87). However, this Equal Employment Opportunity 
provision will apply only after the Indian preference requirements 
prescribed in Sec. 276.13 have been met.
    (5) All contracts and subgrants for construction or repair shall 
include a provision for compliance with the Copeland ``Anti-Kick Back'' 
Act (18 U.S.C. 874) as supplemented in Department of Labor regulations 
(29 CFR part 3). This Act provides that each contractor or subgrantee 
shall be prohibited from inducing, by any means, any person employed in 
the construction, completion, or repair of public work, to give up any 
part of the compensation to which he is otherwise entitled. The grantee 
shall report all suspected or reported violations to the Bureau.
    (6) When required by the Federal grant program legislation, all 
construction contracts awarded by grantees and subgrantees over $2,000 
shall include a provision for compliance with the Davis-Bacon Act (40 
U.S.C. 276a to a-7) and as supplemented by Department of Labor 
regulations (29 CFR part 5). Under this Act, contractors shall be 
required to pay wages to laborers and

[[Page 703]]

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 often than once a week. The 
grantee 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 grantee shall report all suspected or reported 
violations to the Bureau.
    (7) Where applicable, all contracts awarded by grantees and 
subgrantees over $2,000 for construction contracts and over $2,500 for 
other contracts which involve the employment of mechanics or laborers 
shall include a provision for compliance with sections 103 and 107 of 
the Contract Work Hours and Safety Standards Act (40 U.S.C. 327-330) as 
supplemented by Department of Labor regulations (29 CFR part 5). Under 
section 103 of the Act, each contractor shall be required to compute the 
wages of every mechanic and laborer on the basis of a standard work day 
of 8 hours and a standard work week of 40 hours. Work in excess of the 
standard workday or workweek is permissible if the worker is compensated 
at a rate of not less than 1\1/2\ times the basic rate of pay for all 
hours worked over 8 hours in any calendar day or 40 hours in the work 
week. Section 107 of the Act applies to construction work and provides 
that no laborer or mechanic shall be required to work in surroundings or 
under working conditions which are unsanitary, hazardous, or dangerous 
to his health and safety as determined under construction, safety, and 
health standards promulgated by the Secretary of Labor. These 
requirements do not apply to the purchases of supplies or materials or 
articles ordinarily available on the open market, or contracts for 
transportation or transmission of intelligence.
    (8) Contracts or agreements, the principal purpose of which is to 
create, develop, or improve products, processes or methods; or for 
exploration into fields which directly concern public health, safety, or 
welfare; or constraints in the field of science or technology in which 
there has been little significant experience outside of work funded by 
Federal assistance, shall contain a notice to the effect that matters 
regarding rights to inventions, and materials generated under the 
contract or agreement are subject to the regulations issued by the 
Bureau. The contractor shall be advised as to the source of additional 
information regarding these matters.
    (9) All negotiated contracts (except those of $10,000 or less) 
awarded by grantees shall include a provision to the effect that the 
grantee, the Bureau, 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 grant program for the purpose of making 
audit, examination, excerpts, and transcriptions.
    (10) Contracts and subgrants of amounts over $100,000 shall contain 
a provision which requires the recipient to agree to comply with all 
applicable standards, orders, or regulations issued pursuant to the 
Clean Air Act of 1970 (42 U.S.C. 1251 et seq.) as amended. Violations 
shall be reported to the Bureau and the Regional Office of the 
Environmental Protection Agency.



Sec. 276.13  Indian preference in grant administration.

    Any grant or subgrant shall require that to the greatest extent 
feasible:
    (a) Preferences and opportunities for training and employment in 
connection with the administration of such a grant or subgrant shall be 
given to Indians.
    (b) Preference in the award of a subgrant, contract or subcontract 
in connection with administration of a grant shall be given to Indian 
organizations and economic enterprises.
    (c) A tribal governing body may develop its own Indian preference 
requirements to the extent that such requirements are not inconsistent 
with the purpose and intent of paragraphs (a) and (b) of this section 
for grants executed under this part.

[[Page 704]]



Sec. 276.14  Budget revision.

    Criteria and procedures to be followed by grantees in reporting 
deviations from grant budgets and requesting approval for budget 
revisions are as follows:
    (a) For nonconstruction grants, grantees shall request prior 
approvals promptly from the Bureau for budget revisions whenever:
    (1) The revision results from changes in the scope or the objective 
of the grant-supported program.
    (2) The revision indicates the need for additional Bureau funding.
    (3) The grant budget is over $100,000 and the cumulative amount of 
transfers among direct cost object class budget categories exceeds or is 
expected to exceed $10,000, or five percent of the grant budget, 
whichever is greater. The same criteria apply to cumulative amount of 
transfers among programs, functions, and activities when budgeted 
separately for a grant, except that the Bureau shall permit no transfer 
which would cause any Federal appropriation, or part thereof, to be used 
for purposes other than those intended.
    (4) The grant budget is $100,000, or less, and the cumulative amount 
of transfers among direct cost object class budget categories exceeds or 
is expected to exceed five percent of the grant budget. The same 
criteria apply to the cumulative amount of transfers among programs, 
functions, and activities when budgeted separately for a grant, except 
that the Bureau shall permit no transfer which would cause any Federal 
appropriation, or part thereof, to be used for purposes other than those 
intended.
    (5) The revisions involve the transfer of amounts budgeted for 
indirect costs to absorb increases in direct costs.
    (6) The revisions pertain to the addition of items requiring 
approval in accordance with the provisions of appendix A of this part.
    (b) All other changes to nonconstruction grant budgets, except for 
the changes described in paragraph (d) of this section do not require 
approval. These changes include:
    (1) The use of grantee funds in furtherance of program objectives 
over and above the grantee minimum share included in the approved grant 
budget and
    (2) The transfer of amounts budgeted for direct costs to absorb 
authorized increases in indirect costs.
    (c) For construction grants, grantees shall request prior approval 
promptly from the Bureau for budget revisions whenever:
    (1) The revision results from changes in the scope or the objective 
of the grant-supported programs.
    (2) The revision increases the budgeted amounts of Bureau funds 
needed to complete the project.
    (d) When the Bureau awards a grant which provides support for both 
construction and nonconstruction work, the Bureau may require, in the 
grant agreement, the grantee to request prior approval before making any 
fund or budget transfers between the two types of work supported.
    (e) For both construction and nonconstruction grants, the Bureau 
shall require tribal grantees to notify the Bureau promptly whenever the 
amount of Bureau authorized funds is expected to exceed the needs of the 
grantee by more than $5,000 or 5 percent of the Bureau grant, whichever 
is greater. This notification will not be required when applications for 
additional funding are submitted for continuing grants.
    (f) When requesting approval for budget revisions, grantees shall 
use the budget forms which were used in the grant application. However, 
grantees may request by letter the approvals required by the provisions 
of appendix A of this part.
    (g) Within 30 days from the date of receipt of the request for 
budget revisions, the Bureau shall review the request and notify the 
grantee whether or not the budget revisions have been approved. If the 
Bureau does not reach a decision prior to the end of the 30-day period 
or should the grantee not be notified of the Bureau's decision by the 
end of the 30-day period the grantee may appeal directly to the 
Commissioner.



Sec. 276.15  Grant closeout.

    (a) In closing out Bureau grants, the following shall be observed:
    (1) Upon request, the Bureau shall make prompt payments to a grantee

[[Page 705]]

for allowable reimbursable costs under the grant being closed out.
    (2) The grantee shall immediately refund to the Bureau any 
unencumbered balance of cash advanced to the grantee.
    (3) The Bureau shall obtain from the grantee within 90 days after 
the date of completion of the grant all financial, peformance, and other 
reports required as a condition of the grant. The Bureau may grant 
extensions when requested by the grantee.
    (4) The Bureau shall make a settlement for any upward or downward 
adjustments to the Federal share of costs after these reports are 
received.
    (5) The grantee shall account for any property acquired with grant 
funds, or received from the Government in accordance with the provisions 
of Sec. 276.11.
    (6) If a final audit has not been performed before the closeout of 
the grant, the Bureau shall retain the right to recover an appropriate 
amount after fully considering the recommendations on disallowed costs 
resulting from the final audit.
    (b) Suspension. When a grantee has materially failed to comply with 
the terms and conditions of a grant, the Bureau may after reasonable 
notice to the grantee, suspend the grant. The notice preceding 
suspension shall include the effective date of the suspension, the 
reasons for the suspension, the corrective measures necessary for 
reinstatement of the grant, and, if there is no immediate threat to 
safety, a reasonable time frame for corrective action prior to actual 
suspension. No obligations incurred by the grantee during the period of 
suspension shall be allowable under the suspended grant, except that the 
Bureau may at its discretion allow necessary and proper costs which the 
grantee could not reasonably avoid during the period of suspensions if 
such costs would otherwise be allowable under the applicable cost 
principles specified in appendix A of this part. Appropriate adjustments 
to the payments under the suspended grant will be made, either by 
withholding the payments or by not allowing the grantee credit for 
disbursements which he may make in liquidation of unauthorized 
obligations he incurs during the period of suspension. Suspensions shall 
remain in effect until the grantee has taken corrective action to the 
satisfaction of the Bureau or given assurances satisfactory to the 
Bureau that corrective action will be taken, or until the Bureau cancels 
the grant.
    (c)(1) Cancellation for cause. The Bureau may cancel any grant in 
whole, or in part, at any time before the date of completion, whenever 
it is determined that the grantee has:
    (i) Materially failed to comply with the terms and conditions of the 
grant;
    (ii) Violated the rights or endangered the health, safety, or 
welfare of any persons;
    (iii) Been grossly negligent in or has mismanaged the handling or 
use of funds provided under the grant.
    (2) When it appears that cancellation of a grant shall become 
necessary, the Bureau shall promptly notify the grantee in writing of 
this possibility. This written notice shall advise the grantee of the 
reason for the possible cancellation and the corrective action necessary 
to avoid cancellation. The Bureau shall also offer, and provide if 
requested by the grantee, any technical assistance which may be required 
to effect the corrective action. The grantee shall have 60 days in which 
to effect this corrective action before the Bureau provides notice of 
intent to cancel the grant as provided in paragraph (c)(3) of this 
section.
    (3) Upon deciding to cancel for cause, the Bureau shall promptly 
notify the grantee in writing of that decision, the reasons for the 
cancellation, and the effective date. The Bureau shall also provide a 
hearing for the grantee before cancellation, as provided in Sec. 
272.51. However, the Bureau may immediately cancel the grant, upon 
notice to the grantee, if the Bureau determines that continuance of the 
grant poses an immediate threat to safety. In this event, the Bureau 
shall provide a hearing for the grantee within ten (10) days of 
cancellation.
    (4) Payments made to grantees or recoveries by the Bureau under 
grants cancelled for cause shall be in accordance with the legal rights 
and obligations of the parties.
    (d)(1) Cancellation on other grounds. Except as provided in 
paragraph (c) of

[[Page 706]]

this section, grants may be cancelled in whole or in part only as 
follows:
    (i) By the Bureau with the consent of the grantee, in which case the 
two parties shall agree upon the cancellation conditions, including the 
effective date, and in the case of partial cancellation, the portion to 
be cancelled; or
    (ii) By the grantee, upon written notice to the Bureau, setting 
forth the reasons for the cancellation, the effective date, and, in the 
case of partial cancellation, the portion to be cancelled.
    (2) When a grant is cancelled in accordance with paragraph (d) of 
this section, the grantee shall not incur new obligations for the 
cancelled portion after the effective date, and shall cancel as many 
outstanding obligations as possible. The Bureau shall allow full credit 
to the grantee for the Bureau share of the noncancellable obligations 
properly incurred by the grantee before cancellation.

[40 FR 51316, Nov. 4, 1975, as amended at 45 FR 13452, Feb. 29, 1980]



Sec. 276.16  Subgrants and subcontracts to non-profit organizations.

    The uniform administrative requirements in this part, including the 
cost principles in appendix A, to this part, are applicable to all 
subgrants or subcontracts made by a grantee in accordance with the 
provisions of this chapter. However, these requirements and cost 
principles are applicable as minimum standards for subgrants or 
subcontracts made to nonprofit organizations. Accordingly, the grantee 
may prescribe additional or more stringent requirements with regard to 
subgrants or subcontracts made to non-profit organizations.



Sec. 276.17  Printing.

    As permitted by paragraph 36-2(c) in the Government Printing and 
Binding Regulations (October 1974, No. 23), published by the Joint 
Committee on Printing (JCP), printing required by a grantee in 
performing work under a grant is considered ``incidental printing'' 
(e.g., material which the grantee needs to use to respond to the terms 
of the grant). Whenever the incidental printing is likely to exceed the 
exclusions in paragraphs 36-3 and 36-4 of the Joint Committee on 
Printing (JCP) Printing and Binding Regulations, specific provisions on 
printing as may be required shall be included in the grant agreement. 
Grantees shall be given the option of using sources other than the 
Government Printing Office for incidental printing.

[43 FR 37446, Aug. 23, 1978]

 Appendix A to Part 276--Principles for Determining Costs Applicable to 
                                 Grants

                             part i--general

    A. Purpose and scope. 1. Objectives. This attachment sets forth 
principles for determining the allowable costs of programs administered 
by grantees under grants from the Bureau. The principles are for the 
purpose of cost determination and are not intended to identify the 
circumstances or dictate the extent of Bureau and tribal participation 
in the financing of a particular grant. They are designed to provide 
that Bureau assisted programs bear their fair share of costs recognized 
under these principles, except where restricted or prohibited by law. No 
provision for profit or other increment above cost is intended.
    2. Policy guides. The application of these principles is based on 
the fundamental premises that:
    a. Grantees are responsible for the efficient and effective 
administration of grant programs through the application of sound 
management practices.
    b. The grantee assumes the responsibility for seeing that Bureau 
assisted program funds have been expended and accounted for consistent 
with underlying agreements and program objectives.
    c. Each grantee organization, in recognition of its own unique 
combination of staff facilities and experience, will have the primary 
responsibility for employing whatever form of organization and 
management techniques may be necessary to assure proper and efficient 
administration.
    3. Application. These principles will be applied by the Bureau in 
determining costs incurred by grantees under Bureau grants (including 
subgrants, contracts by grantees and subcontracts).
    B. Definitions. 1. Approval or authorization of the Bureau means 
documentation evidencing consent prior to incurring specific cost.
    2. Cost allocation plan means the documentation identifying, 
accumulating, and distrtibuting allowable costs under grants and 
contracts together with the allocation methods used.

[[Page 707]]

    3. Cost, as used herein, means cost as determined on a cash, 
accrual, or other basis acceptable to the Bureau as a discharge of the 
grantee's accountability for Bureau funds.
    4. Cost objective means a pool, center, or area established for the 
accumulation of cost. Such areas include organizational units, 
functions, objects or items of expense as well as ultimate cost 
objectives including specific grants, projects, contracts, and other 
activities.
    5. Federal agency means any department, agency, commission, or 
instrumentality in the executive branch of the Federal Government which 
makes grants to grantees.
    6. Grant means an agreement between the Bureau and a grantee whereby 
the Bureau provides funds or aid in kind to carry out specified 
programs, services, or activities. The principles and policies stated in 
this appendix as applicable to grants in general also apply to any 
Federally sponsored cost reimbursement type of agreement performed by a 
grantee, including contracts, subcontracts and subgrants.
    7. Grant program means those activities and operations of the 
grantee which are necessary to carry out the purposes of the grant, 
including any portion of the program financed by the grantee.
    8. Grantee means the entity which is responsible for administration 
of the grant.
    9. Services, as used herein, means goods and facilities, as well as 
services.
    10. Supporting services means auxiliary functions necessary to 
sustain the direct effort involved in administering a grant program or 
an activity providing service to the grant program. These services may 
be centralized in the grantee department or in some other agency, and 
include procurement, payroll, personnel functions, maintenance and 
operation of space, data processing, accounting, budgeting, auditing, 
mail and messenger service, and the like.
    C. Basic guidelines. 1. Factors affecting allowability of costs. To 
be allowable under a grant program, costs must meet the following 
general criteria:
    a. Be necessary and reasonable for proper and efficient 
administration of the grant program, be allocable thereto under these 
principles, and, except as specifically provided herein, not be a 
general expense required to carry out the overall responsibilities of a 
grantee.
    b. Be authorized or not prohibited under applicable laws or 
regulations.
    c. Conform to any limitations or exclusions set forth in these 
principles, Federal laws, or other governing limitations as to types or 
amounts of cost items.
    d. Be consistent with policies, regulations, and procedures that 
apply uniformly to both Federally assisted and other activities of which 
the grantee is a part.
    e. Be accorded consistent treatment through application of generally 
accepted accounting principles appropriate to the circumstances.
    f. Not be allocable to or included as a cost of any other Federally 
financed program in either the current or a prior period.
    g. Be net of all applicable credits.
    2. Allocable costs. a. A cost is allocable to a particular cost 
objective to the extent of benefits received by such objective.
    b. Any cost allocable to a particular grant or cost objective under 
the principles provided for in this appendix may not be shifted to other 
Federal grant programs to overcome funds deficiencies, avoid 
restrictions imposed by law or grant agreements, or for other reasons.
    c. Where an allocation of joint cost will ultimately result in 
charges to a grant program, an allocation plan will be required as 
prescribed in section I.
    3. Applicable credits. a. Applicable credits refer to those receipts 
or reduction of expenditure-type transactions which offset or reduce 
expense items allocable to grants as direct or indirect costs. Examples 
of such transactions are: purchase discounts; rebates or allowances; 
recoveries or indemnities on losses; sale of publications, equipment, 
and scrap; income from personal or incidental services; and adjustments 
of overpayments or erroneous charges.
    b. Applicable credits may also arise when Bureau funds are received 
or are available from sources other than the grant program involved to 
finance operations or capital items of the grantee. This includes costs 
arising from the use of depreciation of items donated or financed by the 
Bureau to fulfill matching requirements under another grant program. 
These types of credits should likewise be used to reduce related 
expenditures in determining the rates or amounts applicable to a given 
grant.
    D. Composition of cost. 1. Total cost. The total cost of a grant 
program is comprised of allowable direct cost incident to its 
performance, plus its allocable portion of allowable indirect costs, 
less applicable credits.
    2. Classification of costs. There is no universal rule for 
classifying certain costs as either direct or indirect under every 
accounting system. A cost may be direct with respect to some specific 
service or function, but indirect with respect to the grant or other 
ultimate cost objective. It is essential, therefore, that each item of 
cost be treated consistently either as a direct or an indirect cost. 
Specific guides for determining direct and indirect costs allocable 
under grant programs are provided in the sections which follow.
    E. Direct costs. 1. General. Direct costs are those that can be 
identified specifically with a particular cost objective. These costs 
may be charged directly to grants, contracts, or

[[Page 708]]

to other programs against which costs are finally lodged. Direct costs 
may also be charged to cost objectives used for the other ultimate cost 
objective.
    2. Application. Typical direct costs chargeable to grant programs 
are:
    a. Compensation of employees for the time and effort devoted 
specifically to the execution of grant programs.
    b. Cost of materials acquired, consumed, or expended specifically 
for the purpose of the grant.
    c. Equipment and other approved capital expenditures.
    d. Other items of expense incurred specifically to carry out the 
grant agreement.
    e. Services furnished specifically for the grant program by other 
agencies, provided such charges are consistent with criteria outlined in 
section G of these principles.
    F. Indirect costs. 1. General. Indirect costs are those (a) incurred 
for a common or joint purpose benefiting more than one cost objective, 
and (b) not readily assignable to the cost objectives specifically 
benefited, without effort disproportionate to the results achieved. The 
term ``indirect costs,'' as used herein, applies to costs of this type 
originating in the grantee department, as well as those incurred by 
other departments in supplying goods, services, and facilities, to the 
grantee department. To facilitate equitable distribution of indirect 
expenses to the cost objectives served, it may be necessary to establish 
a number of pools of indirect cost within a grantee department or in 
other agencies providing services to a grantee department. Indirect cost 
pools should be distributed to benefiting cost objectives on bases which 
will produce an equitable result in consideration or relative benefits 
derived.
    2. Grantee departmental indirect costs. All grantee departmental 
indirect costs, including the various levels of supervision, are 
eligible for allocation to grant programs provided they meet the 
conditions set forth in this part. In lieu of determining the actual 
amount of grantee departmental indirect cost allocable to a grant 
program, the following methods may be used:
    a. Predetermined fixed rates for indirect costs. A predetermined 
fixed rate for computing indirect costs applicable to a grant may be 
negotiated annually in situations where the cost experience and other 
pertinent facts available are deemed sufficient to enable the 
contracting parties to reach an informed judgment (1) as to the probable 
level of indirect costs in the grantee department during the period to 
be covered by the negotiated rate, and (2) that the amount allowable 
under the predetermined rate would not exceed actual indirect cost.
    b. Negotiated lump sum for overhead. A negotiated fixed amount in 
lieu of indirect costs may be appropriate under circumstances where the 
benefits derived from a grantee department's indirect services cannot be 
readily determined as in the case of small, self-contained or isolated 
activity. When this method is used, a determination should be made that 
the amount negotiated will be approximately the same as the actual 
indirect cost that may be incurred. Such amounts negotiated in lieu of 
indirect costs will be treated as an offset to total indirect expenses 
of the grantee department before allocation to remaining activities. The 
base on which such remaining expenses are allocated should be 
appropriately adjusted.
    3. Limitation on indirect costs. a. Bureau grants may be subject to 
laws that limit the amount of indirect costs that may be allowed. In 
this event, the Bureau will establish procedures which will assure that 
the amount actually allowed for indirect costs under each such grant 
does not exceed the maximum allowable under the statutory limitation or 
the amount otherwise allowable under this appendix, whichever is the 
smaller.
    b. When the amount allowable under a statutory limitation is less 
than the amount otherwise allocable as indirect costs under this 
appendix the amount not recoverable as indirect costs under a grant may 
not be shifted to another Federally sponsored grant program or contract.
    G. Cost incurred by organizations other than the grantee. 1. 
General. The cost of service provided by other organizations may only 
include allowable direct costs of the service plus a prorata share of 
allowable supporting costs and supervision directly required in 
performing the service, but not supervision of a general nature such as 
that provided by the head of an organization and his staff assistants 
not directly involved in operations. However, supervision by the head of 
an organization whose sole function is providing the service furnished 
would be an eligible cost. Supporting costs include those furnished by 
other units of the supplying organizations.
    2. Alternative methods of determining indirect cost. In lieu of 
determining actual indirect cost related to a particular service 
furnished by another organization, either of the following alternative 
methods may be used provided only one method is used for a specific 
service during the fiscal year involved.
    a. Standard indirect rate. An amount equal to ten percent of direct 
labor cost in providing the service performed by another organization 
(excluding overtime, shift, or holiday premiums and fringe benefits) may 
be allowed in lieu of actual allowable indirect cost for that service.
    b. Predetermined fixed rate. A predetermined fixed rate for indirect 
cost of the unit or activity providing service may be negotiated as set 
forth in section F.2.a.
    H. Cost incurred by grantee for others. 1. General. The principles 
provided in section G will

[[Page 709]]

also be used in determining the cost of services provided by the grantee 
to another agency.
    I. Cost allocation plan. 1. General. A plan for allocation of costs 
will be required to support the distribution of any joint costs related 
to the grant program. All costs included in the plan will be supported 
by formal accounting records which will substantiate the propriety of 
eventual charges.
    2. Requirements. The allocation plan of the grantee should cover all 
joint costs of the grantees as well as costs to be allocated under plans 
of other agencies or organizational units which are to be included in 
the costs of federally sponsored programs. The cost allocation plans of 
all the agencies rendering services to the grantee, to the extent 
feasible, should be presented in a single document. The allocation plan 
should contain, but not neessarily be limited to, the following:
    a. The nature and extent of services provided and their relevance to 
the federally sponsored programs.
    b. The items of expense to be included.
    c. The methods to be used in distributing cost.
    3. Instructions for preparation of cost allocation plans. The 
Bureau, in consultation with the other Federal agencies concerned, will 
be responsible for developing and issuing the instructions for use by 
grantees in preparation of cost allocation plans.
    4. Submission of indirect cost proposal and negotiation of indirect 
cost rates.
    a. A grantee should submit its indirect cost proposal to the Federal 
agency which provides the largest dollar volume of contracts and grants. 
However, once a Federal agency has handled an indirect cost proposal, 
that same Federal agency should continue to act upon the proposal even 
though the preponderance of financial interest may have shifted to 
another Federal agency, and grantee shall not resubmit its indirect cost 
proposal to a second Federal agency.
    b. Where the grantee submits its proposal to the Department of 
Interior, the proposal should be sent by the Bureau of Indian Affairs to 
the cognizant Regional Office of the Department's Office of Audit and 
Investigation. The Office of Audit and Investigation is responsible for 
the audit and review of the proposals and negotiation of the indirect 
cost rates.
    c. Grant administrators officers will usually, but are not required 
to, accept indirect cost rates negotiated by other Federal agencies.
    d. The Bureau of Indian Affairs will provide technical assistance in 
developing indirect cost proposals, if needed.

              Part II--Standards for Selected Items of Cost

    A. Purpose and applicability. 1. Objective. This attachment provides 
standards for determining the allowability of selected items of cost.
    2. Application. These standards will apply irrespective of whether a 
particular item of cost is treated as direct or indirect cost. Failure 
to mention a particular item of cost in the standards is not intended to 
imply that it is either allowable or unallowable, rather determination 
of allowability in each case should be based on the treatment of 
standards provided for similar or related items of cost. The 
allowability of the selected items of cost is subject to the general 
policies and principles stated in part I of this appendix.
    B. Allowable costs. 1. Accounting. The cost of establishing and 
maintaining accounting and other information systems required for the 
management of grant programs is allowable. This includes cost incurred 
by central service agencies for these purposes. The cost of maintaining 
central accounting records required for overall tribal government 
purposes, such as appropriation and fund accounts by the Treasurer, 
Comptroller, or similar officials, is considered to be a general expense 
of government and is not allowable.
    2. Advertising. Advertising media includes newspapers, magazines, 
radio and television programs, direct mail, trade papers, and the like. 
The advertising costs allowable are those which are solely for:
    a. Recruitment of personnel required for the grant program.
    b. Solicitation of bids for the procurement of goods and services 
required.
    c. Disposal of scrap or surplus materials acquired in the 
performance of the grant agreement.
    d. Other purposes specifically provided for in the grant agreement.
    3. Advisory councils. Costs incurred by grantee advisory councils or 
committees established pursuant to Bureau requirements to carry out 
grant programs are allowable. The cost of like organizations is 
allowable when provided for in the grant agreement.
    4. Audit service. The cost of audits necessary for the 
administration and management of functions related to grant programs is 
allowable.
    5. Bonding. Costs of premiums on bonds covering employees who handle 
grantee funds are allowable.
    6. Budgeting. Costs incurred for the development, preparation, 
presentation, and execution of budgets are allowable. Costs for services 
of a central budget office are generally not allowable since these are 
costs of general government. However, where employees of the central 
budget office activity

[[Page 710]]

participate in the grantee budget process, the cost of identifiable 
services is allowable.
    7. Building lease management. The administrative cost for lease 
management which includes review of lease proposals, maintenance of a 
list of available property for lease, and related activities is 
allowable.
    8. Central stores. The cost of maintaining and operating a central 
store's organization for supplies, equipment, and materials used either 
directly or indirectly for grant programs is allowable.
    9. Communications. Communication costs incurred for telephone calls 
or service, telegraph, teletype service, wide area telephone service 
(WATS), centrex, telpak (tie lines), postage, messenger service and 
similar expenses are allowable.
    10. Compensation for personal services. a. General. Compensation for 
personal services includes all remuneration, paid currently or accrued, 
for services rendered during the period of performance under the grant 
agreement, including but not necessarily limited to wages, salaries, and 
supplementary compensation and benefits. The costs of such compensation 
are allowable to the extent that total compensation for individual 
employees: (1) Is responsible for the services rendered, (2) follows an 
appointment made in accordance with tribal government ordinances and 
rules and which meets Federal merit system or other requirements, where 
applicable; and (3) is determined and supported as provided in b., 
below. Compensation for employees engaged in federally assisted 
actvities will be considered reasonable to the extent that it is 
consistent with that paid for similar work in other activities of the 
tribal government. In cases where the kinds of employees required for 
the federally assisted activities are not found in the other activities 
of the tribal government, compensation will be considered reasonable to 
the extent that it is comparable to that paid for similar work in the 
labor market in which the employing government competes for the kind of 
employees involved. Compensation surveys providing data representative 
of the labor market involved will be an acceptable basis for evaluating 
reasonableness.
    b. Payroll and distribution of time. Amounts charged to grant 
programs for personal services, regardless of whether treated as direct 
or indirect costs, will be based on payrolls documented and approved in 
accordance with generally accepted practice of the tribal government. 
Payrolls must be supported by time and attendance or equivalent records 
for individual employees. Salaries and wages of employees chargeable to 
more than one grant program or other cost objective will be supported by 
appropriate time distribution records. The method used should produce an 
equitable distribution of time and effort.
    11. Depreciation and use allowance. a. Grantees may be compensated 
for the use of their own buildings, capital improvements, and equipment 
through use allowances or depreciation. Use allowances are the means of 
providing compensation in lieu of depreciation or other equivalent 
costs. However, a combination of the two methods may not be used in 
connection with a single class of fixed assets.
    b. The computation of depreciation or use allowance will be based on 
acquisition cost. Where actual cost records have not been maintained, a 
reasonable estimate of the original acquisition cost may be used in the 
computation. The computation will exclude the cost or any portion of the 
cost of buildings and equipment donated or borne directly or indirectly 
by the Federal Government through charges to Federal grant programs or 
otherwise, irrespective of whether title was originally vested or where 
it presently resides. In addition, the computation will also exclude the 
cost of land. Depreciation or a use allowance on idle or excess 
facilities is not allowable, except when specifically authorized by the 
grantor Federal agency.
    c. Where the depreciation method is followed, adequate property 
records must be maintained, and any generally accepted method of 
computing depreciation must be consistently applied for any specific 
asset or class of assets for all affected Federally sponsored programs 
and must result in equitable charges considering the extent of the use 
of the assets for benefit of such programs.
    d. In lieu of depreciation, a use allowance for buildings and 
improvements may be computed at an annual rate not exceeding two percent 
of acquisition cost. The use allowance for equipment (excluding items 
properly capitalized as building cost) will be computed at an annual 
rate not exceeding six and two-thirds percent of acquisition cost of 
usable equipment.
    e. No depreciation or use charge may be allowed on any assets that 
would be considered as fully depreciated, provided, however, that 
reasonable use charges may be negotitated for any such assets if 
warranted after taking into consideration the cost of the facility or 
item involved, the estimated useful life remaining at time of 
negotiation, the effect of any increased maintenance charges or 
decreased efficiency due to age, and any other factors pertinent to 
utilization of the facility or item for the purpose contemplated.
    12. Disbursing service. The cost of disbursing grant program funds 
by the Treasurer or other designated officer is allowable. Disbursing 
services cover the processing of checks or warrants, from preparation to 
redemption, including the necessary records of accountability and 
reconciliation of such records with related cash accounts.

[[Page 711]]

    13. Employee fringe benefits. Costs identified under a. and b. below 
are allowable to the extent that total compensation for employees is 
reasonable as defined in section B.10.
    a. Employee benefits in the form of regular compensation paid to 
employees during periods of authorized absences from the job, such as 
for annual leave, sick leave, court leave, military leave, and the like, 
if they are: (1) Provided pursuant to an approved leave system, and (2) 
the cost thereof is equitably allocated to all related activities, 
including grant programs.
    b. Employee benefits in the form of employers' contribution or 
expenses for social security, employees' life and health insurance 
plans, unemployment insurance coverage, workmen's compensation 
insurance, pension plans, severance pay, and the like, provided such 
benefits are granted under approved plans and are distributed equitably 
to grant programs and in other activities.
    14. Employee morale, health and welfare costs. The costs of health 
or first-aid clinics and/or infirmaries, recreational facilities, 
employees' counseling services, employee information publications, and 
any related expenses incurred, are allowable. Income generated from any 
of these activities will be offset against expenses.
    15. Exhibits. Costs of exhibits relating specifically to the grant 
programs are allowable.
    16. Legal expenses. The cost of legal expenses required in the 
administration of grant programs is allowable. Legal services furnished 
by the chief legal officer of a tribal government or his staff solely 
for the purpose of discharging his general responsibilities as legal 
officer are unallowable. Legal expenses for the prosecution of claims 
against the Federal Government are unallowable.
    17. Maintenance and repair. Costs incurred for necessary 
maintenance, repair, or upkeep of property which neither add to the 
permanent value of the property nor appreciably prolong its intended 
life, but keep it in an efficient operating condition, are allowable.
    18. Materials and supplies. The cost of materials and supplies 
necessary to carry out the grant programs is allowable. Purchases made 
specifically for the grant program should be charged thereto at their 
actual prices after deducting all cash discounts, trade discounts, 
rebates, and allowances received by the grantee. Withdrawals from 
general stores or stockrooms should be charged at cost under any 
recognized method of pricing consistently applied. Incoming 
transportation charges are a proper part of material cost.
    19. Memberships, subscriptions and professional activities. a. 
Memberships. The cost of membership in civic, business, technical and 
professional organizations is allowable provided: (1) The benefit from 
the membership is related to the grant program, (2) the expenditure is 
for agency membership, (3) the cost of the membership is reasonably 
related to the value of the services or benefits received, and (4) the 
expenditure is not for membership in an organization which devotes a 
substantial part of its activities to influencing legislation.
    b. Reference material. The cost of books, and subscriptions to 
civic, business, professional, and technical periodicals is allowable 
when related to the grant program.
    c. Meetings and conferences. Costs are allowable when the purpose of 
the meeting is the dissemination of technical information relating to 
the grant program and they are consistent with regular practices 
followed for other activities of the grantee.
    20. Motor pools. The costs of a service organization which provides 
automobiles to grantees at a mileage or fixed rate and/or provides 
vehicle maintenance, inspection and repair services are allowable.
    21. Payroll preparation. The cost of preparing payrolls and 
maintaining necessary related wage records is allowable.
    22. Personnel administration. Costs for the recruitment, 
examination, certification, classification, training, establishment of 
pay standards, and related activities for grant programs, are allowable.
    23. Printing and reproduction. Cost for printing and reproduction 
services necessary for grant administration, including but not limited 
to forms, reports, manuals, and informational literature, are allowable. 
Publication costs of reports or other media relating to grant program 
accomplishments or results are allowable when provided for in the grant 
agreement.
    24. Procurement service. The cost of procurement service, including 
solicitation of bids, preparation and award of contracts, and all phases 
of contract administration in providing goods, facilities and services 
for grant programs, is allowable.
    25. Taxes. In general, taxes or payments in lieu of taxes which the 
grantee is legally required to pay are allowable.
    26. Training and education. The cost of in-service training, 
customarily provided for employee development which directly or 
indirectly benefits grant programs is allowable. Out-of-service training 
involving extended periods of time is allowable only when specifically 
authorized by the Bureau.
    27. Transportation. Costs incurred for freight, cartage, express, 
postage and other transportation costs relating either to goods 
purchased, delivered, or moved from one location to another are 
allowable.
    28. Travel. Travel costs are allowable for expenses for 
transportation, lodging, subsistence, and related items incurred by 
employees who are in travel status on official business incident to a 
grant program. Such costs may be charged on an actual basis, on a per 
diem or mileage basis in lieu of actual costs

[[Page 712]]

incurred, or on a combination of the two, provided the method used is 
applied to an entire trip, and results in charges consistent with those 
normally allowed in like circumstances in non-Federally sponsored 
activities. The difference in cost between first-class air 
accommodations and less-than-first-class air accommodations is 
unallowable except when less-than-first-class air accommodations are not 
reasonably available.
    C. Costs allowable with approval of the Bureau. 1. Automatic data 
processing. The cost of data processing services to grant programs is 
allowable. This cost may include rental of equipment or depreciation on 
grantee-owned equipment. The acquisition of equipment, whether by 
outright purchase, rental-purchase agreement or other method of 
purchase, is allowable only upon specific prior approval of the Bureau 
as provided under the selected item for capital expenditures. The Bureau 
must obtain required Departmental clearances before such approval can be 
given.
    2. Building space and related facilities. The cost of space in 
privately or publicly owned buildings used for the benefit of the grant 
program is allowable subject to the conditions stated below. The total 
cost of space, whether in a privately or publicly owned building, may 
not exceed the rental cost of comparable space and facilities in a 
privately owned building in the same locality. The cost of space 
procured for grant program usage may not be charged to the program for 
periods of nonoccupancy, without authorization of the Bureau.
    a. Rental cost. The rental cost of space in a privately owned 
building is allowable.
    b. Maintenance and operation. The cost of utilities, insurance, 
security, janitorial services, elevator service, upkeep of grounds, 
normal repairs and alterations and the like, are allowable to the extent 
they are not otherwise included in rental or other charges for space.
    c. Rearrangements and alterations. Cost incurred for rearrangement 
and alteration of facilities required specifically for the grant program 
or those that materially increase the value or useful life of the 
facilities (section C.3.) are allowable when specifically approved by 
the Bureau.
    d. Depreciation and use allowances on publicly owned buildings. 
These costs are allowable as provided in section B.11.
    e. Occupancy of space under rental-purchase or a lease with option-
to-purchase agreement. The cost of space procured under such 
arrangements is allowable when specifically approved by the Bureau.
    3. Capital expenditures. The cost of facilities, equipment, other 
capital assets, and repairs which materially increase the value or 
useful life of capital assets is allowable when such procurement is 
specifically approved by the Bureau. When assets acquired with Bureau 
grant funds are (a) sold, (b) no longer available for use in a Federally 
sponsored program or (c) used for purposes not authorized by the Bureau, 
the Bureau's equity in the asset will be refunded in the same proportion 
as Bureau participation in its cost. In case any assets are traded on 
new items, only the net cost of the newly acquired assets is allowable.
    4. Insurance and indemnification. a. Costs of insurance required, or 
approved and maintained pursuant to the grant agreement, is allowable.
    b. Costs of other insurance in connection with the general conduct 
of activities is allowable subject to the following limitations:
    (1) Types and extent and cost of coverage will be in accordance with 
sound business practice.
    (2) Costs of insurance or of contributions to any reserve covering 
the risk of loss of, or damage to, Federal Government property is 
unallowable except to the extent that the Bureau has specifically 
required or approved such costs.
    c. Contributions to a reserve for a self-insurance program approved 
by the Bureau are allowable to the extent that the type of coverage, 
extent of coverage, and the rates and premiums would have been allowed 
had insurance been purchased to cover the risks.
    d. Actual losses which could have been covered by permissible 
insurance (through an approved self-insurance program or otherwise) are 
unallowable unless expressly provided for in the grant agreement. 
However, costs incurred because of losses not covered under nominal 
deductible insurance coverage provided in keeping with sound management 
practice, and minor losses not covered by insurance, such as spoilage, 
breakage and disappearance of small hand tools which occur in the 
ordinary course of operations, are available.
    e. Indemnification includes securing the grantee against liabilities 
to third persons and other losses not compensated by insurance or 
otherwise. The Bureau is obligated to indemnify the grantee only to the 
extent expressly provided for in the grant agreement, except as provided 
in d. above.
    5. Management studies. The cost of management studies to improve the 
effectiveness and efficiency of grant management for ongoing programs is 
allowable except that the cost of studies performed by agencies other 
than the grantee or outside consultants is allowable only when 
authorized by the Bureau.
    6. Preagreement costs. Costs incurred prior to the effective date of 
the grant, whether or not they would have been allowable thereunder if 
incurred after such date, are allowable when specifically provided for 
in the grant agreement.
    7. Professional services. Cost of professional services rendered by 
individuals or organizations not a part of the grantee is allowable

[[Page 713]]

subject to such prior authorization as may be required by the Bureau.
    8. Proposal costs. Costs of preparing proposals on potential Federal 
Government grant agreements are allowable when specifically provided for 
in the grant agreement.
    9. Tribal government officer salaries and expenses. Identifiable 
salary and expense costs incurred as a direct result of a tribal 
government officer's service to a grant program provided under this 
chapter are allowable subject to advance agreement with an approval by 
the Bureau. A general limitation in this regard is prescribed in section 
D.6.
    D. Unallowable costs. 1. Bad debts. Any losses arising from 
uncollectible accounts and other claims, and related costs, are 
unallowable.
    2. Contingencies. Contributions to a contingency reserve or any 
similar provision for unforeseen events are unallowable.
    3. Contributions and donations. Unallowable.
    4. Entertainments. Costs of amusements, social activities, and 
incidental costs relating thereto, such as meals, beverages, lodgings, 
rentals, transportation, and gratuities, are unallowable.
    5. Fines and penalties. Costs resulting from violations of, or 
failure to comply with Federal, State and local laws and regulations are 
unallowable.
    6. Tribal officer salaries and expenses. The salaries and expenses 
of tribal government officers are considered a cost of general tribal 
government and are unallowable except as prescribed in section C.9.
    7. Interest and other financial costs. Interest on borrowing 
(however requested), bond discounts, cost of financing and refinancing 
operations, and legal and professional fees paid in connection 
therewith, are unallowable except when authorized by Federal 
legislation.
    8. Underrecovery of costs under grant agreements. Any excess of cost 
over the Federal contribution under one grant agreement is unallowable 
under other grant agreements.

        Appendix B to Part 276--Financial Reporting Requirements

    A. Purpose and scope. This appendix prescribes requirements for 
grantee to report financial information to the Bureau and to request 
advances and reimbursement when a letter-of-credit method is not used.
    B. Definitions. 1. Accrued expenditures. Accrued expenditures are 
the charges incurred by the grantee during a given period requiring the 
provision of funds for: (1) Goods and other tangible property received; 
(2) services performed by employes, contractors, subgrantees, and other 
payees; and (3) amounts becoming owed under programs for which no 
current services or performed are required.
    2. Accrued income. Accrued income is the earnings during a given 
period which is a source of funds resulting from: (1) Services performed 
by the grantee; (2) goods and other tangible property delivered to 
purchasers; and (3) amounts becoming owed to the grantee for which no 
current services or performance are required by the grantee.
    3. Disbursements. Disbursements are payments in cash or by check.
    4. Bureau funds authorized. Funds authorized represent the total 
amount of the Bureau funds authorized for obligations and establish the 
ceilings for obligation of Bureau funds. This amount may include any 
authorized carryover of unobligated funds from prior fiscal years.
    5. Obligations. Obligations are the amounts of orders placed, 
contracts and grants awarded, services received, and similar 
transactions during a given period, which will require payment during 
the same or a future period.
    6. Outlays. Outlays represent charges made to the grant project or 
program. Outlays can be reported on a cash or accrued expenditure basis.
    7. Program income. Program income represents earnings by the grantee 
realized from the grant-supported activities. Such earnings exclude 
interest income and may include, but will not be limited to, income from 
service fees, sale of commodities, usage or rental fees, sale of assets 
purchased with grant funds, and royalties on patents and copy-rights. 
Program income can be reported on a cash or accrued income basis.
    8. Unobligated balance. The unobligated balance is the portion of 
the funds authorized by the Bureau which has not been obligated by the 
grantee and is determined by deducting the cumulative obligations from 
the funds authorized.
    9. Unpaid obligations. Unpaid obligations represent the amout of 
obligations incurred by the grantee which have not been paid.
    C. Standard forms. 1. Only the following forms will be authorized 
for obtaining financial information from grantees for grant programs:
    a. Financial Status Report. (1) The Bureau shall require grantees to 
use a standard Financial Status Report to report the status of funds for 
all nonconstruction grant programs. The Bureau may, however, have the 
option of not requiring a Federal Status Report when a request for 
advance or reimbursement (paragraph 2a) is determined to provide 
adequate information to meet their needs, except that a final Financial 
Status Report shall be required at the completion of the grant when the 
Request for Advance or Reimbursement form is used only for advances.
    (2) The Bureau shall prescribe whether the report shall be on a cash 
or accrual basis. If the Bureau requires accrual information and the 
grantee's accouting records are not normally kept on the accrual basis, 
the grantee should develop such information through an

[[Page 714]]

analysis of the documentation on hand or on the basis of best estimates.
    (3) The grant agreement shall determine the frequency of the 
Financial Status Report for each grant program considering the size and 
complexity of the particular program. However, the report shall not be 
required more frequently than quarterly or less frequently than 
annually. Also, a final report shall be required at the completion of 
the grant.
    (4) The original and two copies of the Financial Status Report shall 
be submitted 30 days after the end of each specified reporting period. 
In addition, final reports shall be submitted 90 days after the end of 
the grant period or the completion of the project or program. Extensions 
to reporting due dates may be approved when requested by the grantee.
    b. Report of federal cash transactions. (1) When funds are advanced 
to grantees through letters of credit or with Treasury checks, each 
grantee shall submit a report of Federal Cash Transactions. The Bureau 
shall use this report to monitor cash advanced to grantees and to obtain 
disbursement or outlay information for each grant or project from the 
grantees.
    (2) The grant agreement may require forecasts of Federal cash 
requirement in the Remarks section of the report.
    (3) When practical and deemed necessary, the Bureau may require 
grantees to report in the Remarks section the amount of cash in excess 
of three days' requirements in the hands of subgrantees or other 
secondary recipients and to provide short narrative explanations of 
actions taken by the grantees to reduce the excess balances.
    (4) The Bureau shall accept the identical information from the 
grantees in a machine-usable format in lieu of the Report of Federal 
Cash Transactions.
    (5) Grantees shall submit the original and two copies of the Report 
of Federal Cash Transactions no later than 15 working days following the 
end of each quarter. For those grantees receiving annual grants 
totalling one million dollars or more, the Bureau shall require a 
monthly report.
    (6) The Bureau shall waive the requirement for submission of a 
Report of Federal Cash Transactions when monthly advances do not exceed 
$10,000 per grantee provided that such advances are monitored through 
other forms contained in this appendix or the grantee's accounting 
controls are adequate to minimize excessive Federal advances.
    2. Except as noted below, only the following forms will be 
authorized for the grantees in requesting advances and reimbursements.
    a. Request for advance or reimbursement. (1) The ``Request for 
Advance or Reimbursement'' form is the standard form for all 
nonconstruction grant programs when letters of credit or predetermined 
automatic advance methods are not used. The Bureau, however, has the 
option of using this form for construction programs in lieu of an 
``Outlay Report and Request for Reimbursement for Construction 
Programs'' (paragraph 2b) and shall specify in the grant agreement.
    (2) Grantees shall be authorized to submit requests for advances or 
reimbursement at least monthly when letters of credit are not used. 
Grantees shall submit the original and two copies of a Request for 
Advance or Reimbursement.
    b. Outlay Report and Request for Reimbursement for Construction 
Program. (1) The ``Outlay Report and Request for Reimbursement for 
Construction Programs'' form is the standard format to be used for 
requesting reimbursement for construction programs. The Bureau may, 
however, have the option of substituting a ``Request for Advance or 
Reimbursement'' form (paragraph 2a) in lieu of this form when the Bureau 
determines that the former provides adequate information to meet its 
needs as stated in the grant agreement.
    (2) Grantees shall be authorized to submit requests for 
reimbursement at least monthly when letters of credit are not used. 
Grantees shall submit the original and two copies of an ``Outlay Report 
and Request for Reimbursement for Construction Programs'' form.
    3. When the Bureau needs additional information in using these 
forms, the following shall be observed:
    a. When necessary to comply with future legislative requirements, 
the Bureau shall issue instructions to require grantees to submit such 
information under the Remarks section of the reports.
    b. When necessary to meet specific program needs, the Bureau shall 
submit the proposed reporting requirements to the General Services 
Administration for approval under the exception provision of this 
appendix.
    c. The Bureau, in obtaining information as in paragraphs a and b 
above, must also comply with report clearance requirements of the Office 
of Management and Budget Circular No. A-40, as revised.

[40 FR 51316, Nov. 4, 1975, as amended at 41 FR 5099, Feb. 4, 1976; 43 
FR 37447, Aug. 23, 1978]

[[Page 715]]