[Title 2 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2017 Edition]
[From the U.S. Government Publishing Office]



[[Page i]]

          
          
          Title 2

Grants and Agreements

                         Revised as of January 1, 2017

          Containing a codification of documents of general 
          applicability and future effect

          As of January 1, 2017
                    Published by the Office of the Federal Register 
                    National Archives and Records Administration as a 
                    Special Edition of the Federal Register

[[Page ii]]

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[[Page iii]]




                            Table of Contents



                                                                    Page
  Explanation.................................................     vii

  Title 2:
          SUBTITLE A--Office of Management and Budget Guidance 
          for Grants and Agreements                                  3
          Chapter I--Office of Management and Budget 
          Governmentwide Guidance for Grants and Agreements          9
          Chapter II--Office of Management and Budget Guidance      75
    SUBTITLE B--Federal Agency Regulations for Grants and 
      Agreements
          Chapter III--Department of Health and Human Services     233
          Chapter IV--Department of Agriculture                    241
          Chapter VI--Department of State                          277
          Chapter VII--Agency for International Development        283
          Chapter VIII--Department of Veterans Affairs             301
          Chapter IX--Department of Energy                         309
          Chapter X--Department of Treasury                        357
          Chapter XI--Department of Defense                        361
          Chapter XII--Department of Transportation                369
          Chapter XIII--Department of Commerce                     375
          Chapter XIV--Department of the Interior                  383

[[Page iv]]

          Chapter XV--Environmental Protection Agency              399

          Chapter XVIII--National Aeronautics and Space 
          Administration                                           417

          Chapter XX--United States Nuclear Regulatory 
          Commission                                               443

          Chapter XXII--Corporation for National and Community 
          Service                                                  447

          Chapter XXIII--Social Security Administration            453

          Chapter XXIV--Department of Housing and Urban 
          Development                                              459

          Chapter XXV--National Science Foundation                 471

          Chapter XXVI--National Archives and Records 
          Administration                                           475

          Chapter XXVII--Small Business Administration             479

          Chapter XXVIII--Department of Justice                    487

          Chapter XXIX--Department of Labor                        493

          Chapter XXX--Department of Homeland Security             503

          Chapter XXXI--Institute of Museum and Library 
          Services                                                 511

          Chapter XXXII--National Endowment for the Arts           521

          Chapter XXXIII--National Endowment for the 
          Humanities                                               527

          Chapter XXXIV--Department of Education                   533

          Chapter XXXV--Export-Import Bank of the United 
          States                                                   545
          CHAPTER XXXVI--Office of National Drug Control 
          Policy, Executive Office of the President                549
          Chapter XXXVII--Peace Corps                              553
          Chapter LVIII--Election Assistance Commission            557
          CHAPTER LIX--Gulf Coast Ecosystem Restoration 
          Council                                                  563


[[Page v]]


  Finding Aids:
      Table of CFR Titles and Chapters........................     569
      Alphabetical List of Agencies Appearing in the CFR......     589
      List of CFR Sections Affected...........................     599

[[Page vi]]





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

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 2 CFR 1.100 refers 
                       to title 2, part 1, 
                       section 100.

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

[[Page vii]]



                               EXPLANATION

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

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

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

LEGAL STATUS

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

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
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    To determine whether a Code volume has been amended since its 
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EFFECTIVE AND EXPIRATION DATES

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OMB CONTROL NUMBERS

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

[[Page viii]]

Many agencies have begun publishing numerous OMB control numbers as 
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PAST PROVISIONS OF THE CODE

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INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
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    (b) The matter incorporated is in fact available to the extent 
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this volume.

[[Page ix]]

    An index to the text of ``Title 3--The President'' is carried within 
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available at www.ecfr.gov.

    Oliver A. Potts,
    Director,
    Office of the Federal Register.
    January 1, 2017.







[[Page xi]]



                               THIS TITLE

    Title 2--Grants and Agreements is composed of one volume. This 
volume is comprised of Subtitle A--Office of Management and Budget 
Guidance for Grants and Agreements and Subtitle B--Federal Agency 
Regulations for Grants and Agreements. The contents of this volume 
represent all current regulations codified under this title of the CFR 
as of January 1, 2017.

    For this volume, Susannah C. Hurley was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of John 
Hyrum Martinez, assisted by Stephen J. Frattini.

[[Page 1]]



                     TITLE 2--GRANTS AND AGREEMENTS




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

  SUBTITLE A--Office of Management and Budget Guidance for Grants and 
                                Agreements

                                                                    Part

chapter i--Office of Management and Budget Governmentwide 
  Guidance for Grants and Agreements........................         175

chapter ii--Office of Management and Budget Guidance........         200

    SUBTITLE B--Federal Agency Regulations for Grants and Agreements 

chapter iii--Department of Health and Human Services........         376

chapter iv--Department of Agriculture.......................         417

chapter vi--Department of State.............................         601

chapter xvii--Agency for International Development..........         780

chapter viii--Department of Veterans Affairs................         801

chapter ix--Department of Energy............................         901

chapter xi--Department of Defense...........................        1125

chapter xii--Department of Transportation...................        1200

chapter xiii--Department of Commerce........................        1326

chapter xiv--Department of the Interior.....................        1400

chapter xv--Environmental Protection Agency.................        1532

chapter xviii--National Aeronautics and Space Administration        1880

[[Page 2]]


chapter xx--United States Nuclear Regulatory Commission.....        2000

chapter xxii--Corporation for National and Community Service        2200

chapter xxiii--Social Security Administration...............        2336

chapter xxiv--Department of Housing and Urban Development...        2424

chapter xxv--National Science Foundation....................        2520

chapter xxvi--National Archives and Records Administration..        2600

chapter xxvii--Small Business Administration................        2700

chapter xxviii--Department of Justice.......................        2867

chapter xxx--Department of Homeland Security................        3000

chapter xxxi--Institute of Museum and Library Services......        3185

chapter xxxii--National Endowment for the Arts..............        3254

chapter xxxiii--National Endowment for the Humanities.......        3369

chapter xxxiv--Department of Education......................        3485

chapter xxxv--Export-Import Bank of the United States.......        3513

chapter xxxvii--Peace Corps.................................        3700

chapter lviii--Election Assistance Commission...............        5800

[[Page 3]]

  Subtitle A--Office of Management and Budget Guidance for Grants and 
                               Agreements

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

Part                                                                Page
1               About Title 2 of the Code of Federal 
                    Regulations and Subtitle A..............           5

[[Page 5]]



PART 1_ABOUT TITLE 2 OF THE CODE OF FEDERAL REGULATIONS 
AND SUBTITLE A--Table of Contents



              Subpart A_Introduction to Title 2 of the CFR

Sec.
1.100 Content of this title.
1.105 Organization and subtitle content.
1.110 Issuing authorities.

                  Subpart B_Introduction to Subtitle A

1.200 Purpose of chapters I and II.
1.205 Applicability to grants and other funding instruments.
1.210 Applicability to Federal agencies and others.
1.215 Relationship to previous issuances.
1.220 Federal agency implementation of this subtitle.
1.230 Maintenance of this subtitle.

         Subpart C_Responsibilities of OMB and Federal Agencies

1.300 OMB responsibilities.
1.305 Federal agency responsibilities.

    Authority: 31 U.S.C. 503; 31 U.S.C. 1111; 41 U.S.C. 405; 
Reorganization Plan No. 2 of 1970; E.O. 11541, 35 FR 10737, 3 CFR, 1966-
1970, p. 939.

    Source: 69 FR 26280, May 11, 2004, unless otherwise noted.



              Subpart A_Introduction to Title 2 of the CFR



Sec.  1.100  Content of this title.

    This title contains--
    (a) Office of Management and Budget (OMB) guidance to Federal 
agencies on government-wide policies and procedures for the award and 
administration of grants and agreements; and
    (b) Federal agency regulations implementing that OMB guidance.



Sec.  1.105  Organization and subtitle content.

    (a) This title is organized into two subtitles.
    (b) The OMB guidance described in Sec.  1.100(a) is published in 
subtitle A. Publication of the OMB guidance in the CFR does not change 
its nature--it is guidance and not regulation.
    (c) Each Federal agency that publishes regulations implementing the 
OMB guidance has a chapter in subtitle B in which it issues those 
regulations. The Federal agency regulations in subtitle B differ in 
nature from the OMB guidance in subtitle A because the OMB guidance is 
not regulatory (Federal agency regulations in subtitle B may give 
regulatory effect to the OMB guidance, to the extent that the agency 
regulations require compliance with all or portions of the guidance).



Sec.  1.110  Issuing authorities.

    OMB issues this subtitle. Each Federal agency that has a chapter in 
subtitle B of this title issues that chapter.



                  Subpart B_Introduction to Subtitle A



Sec.  1.200  Purpose of chapters I and II.

    (a) Chapters I and II of subtitle A provide OMB guidance to Federal 
agencies that helps ensure consistent and uniform government-wide 
policies and procedures for management of the agencies' grants and 
agreements.
    (b) There are two chapters for publication of the guidance because 
portions of it may be revised as a result of ongoing efforts to 
streamline and simplify requirements for the award and administration of 
grants and other financial assistance (and thereby implement the Federal 
Financial Assistance Management Improvement Act of 1999, Pub. L. 106-
107).
    (c) The OMB guidance in its initial form--before completion of 
revisions described in paragraph (b) of this section--is published in 
chapter II of this subtitle. When revisions to a part of the guidance 
are finalized, that part is published in chapter I and removed from 
chapter II.



Sec.  1.205  Applicability to grants and other funding instruments.

    The types of instruments that are subject to the guidance in this 
subtitle vary from one portion of the guidance to another (note that 
each part identifies the types of instruments to which it applies). All 
portions of the guidance apply to grants and cooperative agreements, 
some portions also apply to other types of financial assistance or 
nonprocurement instruments, and some portions also apply to procurement 
contracts. For example, the:

[[Page 6]]

    (a) Guidance on debarment and suspension in part 180 of this 
subtitle applies broadly to all financial assistance and other 
nonprocurement transactions, and not just to grants and cooperative 
agreements.
    (b) Cost principles in parts 220, 225 and 230 of this subtitle apply 
to procurement contracts, as well as to financial assistance, although 
those principles are implemented for procurement contracts through the 
Federal Acquisition Regulation in title 48 of the CFR, rather than 
through Federal agency regulations on grants and agreements in this 
title.

[70 FR 51863, Aug. 31, 2005]



Sec.  1.210  Applicability to Federal agencies and others.

    (a) This subtitle contains guidance that directly applies only to 
Federal agencies.
    (b) The guidance in this subtitle may affect others through each 
Federal agency's implementation of the guidance, portions of which may 
apply to--
    (1) The agency's awarding or administering officials;
    (2) Non-Federal entities that receive or apply for the agency's 
grants or agreements or receive subawards under those grants or 
agreements; or
    (3) Any other entities involved in agency transactions subject to 
the guidance in this chapter.



Sec.  1.215  Relationship to previous issuances.

    Although some of the guidance was organized differently within OMB 
circulars or other documents, much of the guidance in this subtitle 
existed prior to the establishment of title 2 of the CFR. Specifically:

------------------------------------------------------------------------
                                                       Previously was in
        Guidance in * * *              On * * *              * * *
------------------------------------------------------------------------
(a) Chapter I, part 180.........  Nonprocurement      OMB guidance that
                                   debarment and       conforms with the
                                   suspension.         government-wide
                                                       common rule (see
                                                       60 FR 33036, June
                                                       26, 1995).
(b) Chapter I, part 182.........  Drug-free           OMB guidance (54
                                   workplace           FR 4946, January
                                   requirements.       31, 1989) and a
                                                       government-wide
                                                       common rule (as
                                                       amended at 68 FR
                                                       66534, November
                                                       26, 2003).
(c) Chapter II, part 200........  Uniform             OMB Circulars A-
                                   administrative      21, ``Cost
                                   requirements,       Principles for
                                   cost principles,    Educational
                                   and audit           Institutions''
                                   requirements for    (Chapter II, part
                                   federal awards.     225); A-87,
                                                       ``Cost Principles
                                                       for State, Local
                                                       and Indian Tribal
                                                       Governments''
                                                       (Chapter II, part
                                                       225); A-89,
                                                       ``Federal
                                                       Domestic
                                                       Assistance
                                                       Program
                                                       Information'';
                                                       ''; A-102 and a
                                                       government-wide
                                                       common rule (53
                                                       FR 8034, March
                                                       11, 1988); A-110,
                                                       ``Uniform
                                                       Administrative
                                                       Requirements for
                                                       Awards and Other
                                                       Agreements with
                                                       Institutions of
                                                       Higher Education,
                                                       Hospitals, and
                                                       Other Nonprofit
                                                       Organizations''
                                                       (Chapter II, part
                                                       215); A-122,
                                                       ``Cost Principles
                                                       for Non-Profit
                                                       Organizations''
                                                       (Chapter II, part
                                                       230); and A-133
                                                       ``Audits of
                                                       States, Local
                                                       Governments and
                                                       Non-Profit
                                                       Organizations''.
------------------------------------------------------------------------


[79 FR 75878, Dec. 19, 2014]



Sec.  1.220  Federal agency implementation of this subtitle.

    A Federal agency that awards grants and agreements subject to the 
guidance in this subtitle implements the guidance in agency regulations 
in subtitle B of this title and/or in policy and procedural issuances, 
such as internal instructions to the agency's awarding and administering 
officials. An applicant or recipient would see the effect of that 
implementation in the organization and content of the agency's 
announcements of funding opportunities and in its award terms and 
conditions.



Sec.  1.230  Maintenance of this subtitle.

    OMB issues guidance in this subtitle after publication in the 
Federal Register. Any portion of the guidance that has a potential 
impact on the public is published with an opportunity for public 
comment.

[[Page 7]]



         Subpart C_Responsibilities of OMB and Federal Agencies



Sec.  1.300  OMB responsibilities.

    OMB is responsible for:
    (a) Issuing and maintaining the guidance in this subtitle, as 
described in Sec.  1.230.
    (b) Interpreting the policy requirements in this subtitle.
    (c) Reviewing Federal agency regulations implementing the 
requirements of this subtitle, as required by Executive Order 12866.
    (d) Conducting broad oversight of government-wide compliance with 
the guidance in this subtitle.
    (e) Performing other OMB functions specified in this subtitle.



Sec.  1.305  Federal agency responsibilities.

    The head of each Federal agency that awards and administers grants 
and agreements subject to the guidance in this subtitle is responsible 
for:
    (a) Implementing the guidance in this subtitle.
    (b) Ensuring that the agency's components and subcomponents comply 
with the agency's implementation of the guidance.
    (c) Performing other functions specified in this subtitle.

[[Page 9]]



 CHAPTER I--OFFICE OF MANAGEMENT AND BUDGET GOVERNMENTWIDE GUIDANCE FOR 
                          GRANTS AND AGREEMENTS




  --------------------------------------------------------------------
Part                                                                Page
2-24

[Reserved]

25              Universal identifier and system for award 
                    management..............................          11
26-169

[Reserved]

170             Reporting subaward and Executive 
                    compensation information................          15
171-174

[Reserved]

175             Award term for trafficking in persons.......          19
176             Award terms for assistance agreements that 
                    include funds under the American 
                    Recovery and Reinvestment Act of 2009, 
                    Public Law 111-5........................          21
177-179

[Reserved]

180             OMB guidelines to agencies on governmentwide 
                    debarment and suspension 
                    (nonprocurement)........................          42
181

[Reserved]

182             Governmentwide requirements for drug-free 
                    workplace (financial assistance)........          67
183-199

[Reserved]

[[Page 11]]







                          PARTS 2	24 [RESERVED]



PART 25_UNIVERSAL IDENTIFIER AND SYSTEM FOR AWARD 
MANAGEMENT--Table of Contents



                            Subpart A_General

Sec.
25.100 Purposes of this part.
25.105 Types of awards to which this part applies.
25.110 Types of recipient and subrecipient entities to which this part 
          applies.
25.115 Deviations.

                            Subpart B_Policy

25.200 Requirements for program announcements, regulations, and 
          application instructions.
25.205 Effect of noncompliance with a requirement to obtain a unique 
          entity identifier or register in the SAM.
25.210 Authority to modify agency application forms or formats.
25.215 Requirements for agency information systems.
25.220 Use of award term.

                          Subpart C_Definitions

25.300 Agency.
25.305 Award.
25.310 System of Award Management (SAM).
25.315 Unique entity identifier.
25.320 Entity.
25.325 For-profit organization.
25.330 Foreign public entity.
25.335 Indian Tribe (or ``Federally recognized Indian Tribe'').
25.340 Local government.
25.345 Nonprofit organization.
25.350 State.
25.355 Subaward.
25.360 Subrecipient.

Appendix A to Part 25--Award Term

    Authority: Pub. L. 109-282; 31 U.S.C. 6102.

    Source: 75 FR 55673, Sept. 14, 2010, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 25 appear at 79 FR 
75879, Dec. 19, 2014.



                            Subpart A_General



Sec.  25.100  Purposes of this part.

    This part provides guidance to agencies to establish:
    (a) The unique entity identifier as a universal identifier for 
Federal financial assistance applicants, as well as recipients and their 
direct subrecipients.
    (b) The System for Award Management (SAM) as the repository for 
standard information about applicants and recipients.

[75 FR 55673, Sept. 14, 2010, as amended at 79 FR 75879, Dec. 19, 2014; 
80 FR 54407, Sept. 10, 2015]



Sec.  25.105  Types of awards to which this part applies.

    This part applies to an agency's grants, cooperative agreements, 
loans, and other types of Federal financial assistance included in the 
definition of ``award'' in Sec.  25.305. The requirements in this part 
must be implemented for grants and cooperative agreements by October 1, 
2010. The requirements in this part must be implemented for all other 
award forms listed in Sec.  25.200 requirement at a date to be specified 
in the future.



Sec.  25.110  Types of recipient and subrecipient entities to which 
this part applies.

    (a) General. Through an agency's implementation of the guidance in 
this part, this part applies to all entities, other than those exempted 
in paragraphs (b), (c), and (d) of this section, that--
    (1) Apply for or receive agency awards; or
    (2) Receive subawards directly from recipients of those agency 
awards.
    (b) Exemptions for individuals. None of the requirements in this 
part apply to an individual who applies for or receives Federal 
financial assistance as a natural person (i.e., unrelated to any 
business or non-profit organization he or she may own or operate in his 
or her name).
    (c) Exemptions for Federal agencies. The requirement in this part to 
maintain a current registration in the SAM does not apply to an agency 
of the Federal Government that receives an award from another agency.

[[Page 12]]

    (d) Other exemptions. (1) Under a condition identified in paragraph 
(d)(2) of this section, an agency may exempt an entity from an 
applicable requirement to obtain a unique entity identifier, register in 
the SAM, or both.
    (i) In that case, the agency must use a generic unique entity 
identifier in data it reports to USASpending.gov if reporting for a 
prime award to the entity is required by the Federal Funding 
Accountability and Transparency Act (Pub. L. 109-282, hereafter cited as 
``Transparency Act'').
    (ii) Agency use of a generic unique entity identifier should be used 
rarely for prime award reporting because it prevents prime awardees from 
being able to fulfill the subward or executive compensation reporting 
required by the Transparency Act.
    (2) The conditions under which an agency may exempt an entity are--
    (i) For any entity, if the agency determines that it must protect 
information about the entity from disclosure, to avoid compromising 
classified information or national security or jeopardizing the personal 
safety of the entity's clients.
    (ii) For a foreign entity applying for or receiving an award or 
subaward for a project or program performed outside the United States 
valued at less than $25,000, if the agency deems it to be impractical 
for the entity to comply with the requirement(s).
    (3) Agencies' use of generic unique entity identifier, as described 
in paragraphs (d)(1) and (2) of this section, should be rare. Having a 
generic unique entity identifier limits a recipient's ability to use 
Governmentwide systems that are needed to comply with some reporting 
requirements.

[75 FR 55673, Sept. 14, 2010, as amended at 79 FR 75879, Dec. 19, 2014]



Sec.  25.115  Deviations.

    Deviations from this part require the prior approval of the Office 
of Management and Budget (OMB).



                            Subpart B_Policy



Sec.  25.200  Requirements for program announcements, regulations,
and application instructions.

    (a) Each agency that awards types of Federal financial assistance 
included in the definition of ``award'' in Sec.  25.305 must include the 
requirements described in paragraph (b) of this section in each program 
announcement, regulation, or other issuance containing instructions for 
applicants that either:
    (1) Is issued on or after the effective date of this part; or
    (2) Has application or plan due dates after October 1, 2010.
    (b) The program announcement, regulation, or other issuance must 
require each entity that applies and does not have an exemption under 
Sec.  25.110 to:
    (1) Be registered in the SAM prior to submitting an application or 
plan;
    (2) Maintain an active SAM registration with current information at 
all times during which it has an active Federal award or an application 
or plan under consideration by an agency; and
    (3) Provide its unique entity identifier in each application or plan 
it submits to the agency.
    (c) For purposes of this policy:
    (1) The applicant is the entity that meets the agency's or program's 
eligibility criteria and has the legal authority to apply and to receive 
the award. For example, if a consortium applies for an award to be made 
to the consortium as the recipient, the consortium must have a unique 
entity identifier. If a consortium is eligible to receive funding under 
an agency program but the agency's policy is to make the award to a lead 
entity for the consortium, the unique entity identifier of the lead 
entity will be used.
    (2) A ``program announcement'' is any paper or electronic issuance 
that an agency uses to announce a funding opportunity, whether it is 
called a ``program announcement,'' ``notice of funding availability,'' 
``broad agency announcement,'' ``research announcement,'' 
``solicitation,'' or some other term.
    (3) To remain registered in the SAM database after the initial 
registration, the applicant is required to review and update on an 
annual basis from the

[[Page 13]]

date of initial registration or subsequent updates its information in 
the SAM database to ensure it is current, accurate and complete.

[75 FR 55673, Sept. 14, 2010, as amended at 79 FR 75879, Dec. 19, 2014]



Sec.  25.205  Effect of noncompliance with a requirement to obtain a 
unique entity identifier or register in the SAM.

    (a) An agency may not make an award to an entity until the entity 
has complied with the requirements described in Sec.  25.200 to provide 
a valid unique entity identifier and maintain an active SAM registration 
with current information (other than any requirement that is not 
applicable because the entity is exempted under Sec.  25.110).
    (b) At the time an agency is ready to make an award, if the intended 
recipient has not complied with an applicable requirement to provide a 
unique entity identifier or maintain an active SAM registration with 
current information, the agency:
    (1) May determine that the applicant is not qualified to receive an 
award; and
    (2) May use that determination as a basis for making an award to 
another applicant.

[75 FR 55673, Sept. 14, 2010, as amended at 79 FR 75879, Dec. 19, 2014]



Sec.  25.210  Authority to modify agency application forms or formats.

    To implement the policies in Sec. Sec.  25.200 and 25.205, an agency 
may add a unique entity identifier field to application forms or formats 
previously approved by OMB, without having to obtain further approval to 
add the field.

[75 FR 55673, Sept. 14, 2010, as amended at 79 FR 75879, Dec. 19, 2014]



Sec.  25.215  Requirements for agency information systems.

    Each agency that makes awards (as defined in Sec.  25.325) must 
ensure that systems processing information related to the awards, and 
other systems as appropriate, are able to accept and use the unique 
entity identifier as the universal identifier for financial assistance 
applicants and recipients.

[75 FR 55673, Sept. 14, 2010, as amended at 79 FR 75879, Dec. 19, 2014]



Sec.  25.220  Use of award term.

    (a) To accomplish the purposes described in Sec.  25.100, an agency 
must include in each award (as defined in Sec.  25.305) the award term 
in appendix A to this part.
    (b) An agency may use different letters and numbers than those in 
appendix A to this part to designate the paragraphs of the award term, 
if necessary, to conform the system of paragraph designations with the 
one used in other terms and conditions in the agency's awards.



                          Subpart C_Definitions



Sec.  25.300  Agency.

    Agency means a Federal agency as defined at 5 U.S.C. 551(1) and 
further clarified by 5 U.S.C. 552(f).



Sec.  25.305  Award.

    (a) Award, for the purposes of this part, means an award of Federal 
financial assistance that a non-Federal entity described in Sec.  
25.110(a) receives or administers in the form of--
    (1) A grant;
    (2) A cooperative agreement (which does not include a cooperative 
research and development agreement pursuant to the Federal Technology 
Transfer Act of 1986, as amended (15 U.S.C. 3710a));
    (3) A loan;
    (4) A loan guarantee;
    (5) A subsidy;
    (6) Insurance;
    (7) Food commodities;
    (8) A direct appropriation;
    (9) Assessed or voluntary contributions; or
    (10) Any other financial assistance transaction that authorizes the 
non-Federal entity's expenditure of Federal funds.
    (b) An Award does not include:
    (1) Technical assistance, which provides services in lieu of money; 
and
    (2) A transfer of title to Federally owned property provided in lieu 
of

[[Page 14]]

money, even if the award is called a grant.



Sec.  25.310   System of Award Management (SAM).

    System for Award Management has the meaning given in paragraph C.1 
of the award term in appendix A to this part.

[75 FR 55673, Sept. 14, 2010, as amended at 79 FR 75879, Dec. 19, 2014; 
80 FR 54407, Sept. 10, 2015]



Sec.  25.315  Unique entity identifier.

    Unique entity identifier has the meaning given in paragraph C.2 of 
the award term in appendix A to this part.

[75 FR 55673, Sept. 14, 2010, as amended at 79 FR 75879, Dec. 19, 2014]



Sec.  25.320  Entity.

    Entity, as it is used in this part, has the meaning given in 
paragraph C.3 of the award term in Appendix A to this part.



Sec.  25.325  For-profit organization.

    For-profit organization means a non-Federal entity organized for 
profit. It includes, but is not limited to:
    (a) An ``S corporation'' incorporated under Subchapter S of the 
Internal Revenue Code;
    (b) A corporation incorporated under another authority;
    (c) A partnership;
    (d) A limited liability corporation or partnership; and
    (e) A sole proprietorship.



Sec.  25.330  Foreign public entity.

    Foreign public entity means:
    (a) A foreign government or foreign governmental entity;
    (b) A public international organization, which is an organization 
entitled to enjoy privileges, exemptions, and immunities as an 
international organization under the International Organizations 
Immunities Act (22 U.S.C. 288-288f);
    (c) An entity owned (in whole or in part) or controlled by a foreign 
government; and
    (d) Any other entity consisting wholly or partially of one or more 
foreign governments or foreign governmental entities.



Sec.  25.335  Indian Tribe (or ``Federally recognized Indian Tribe'').

    Indian Tribe (or ``Federally recognized Indian Tribe'') means any 
Indian Tribe, band, nation, or other organized group or community, 
including any Alaskan Native village or regional or village corporation 
(as defined in, or established under, the Alaskan Native Claims 
Settlement Act (43 U.S.C. 1601, et seq.)) that is recognized by the 
United States as eligible for the special programs and services provided 
by the United States to Indians because of their status as Indians.



Sec.  25.340  Local government.

    Local government means a:
    (a) County;
    (b) Borough;
    (c) Municipality;
    (d) City;
    (e) Town;
    (f) Township;
    (g) Parish;
    (h) Local public authority, including any public housing agency 
under the United States Housing Act of 1937;
    (i) Special district;
    (j) School district;
    (k) Intrastate district;
    (l) Council of governments, whether or not incorporated as a 
nonprofit corporation under State law; and
    (m) Any other instrumentality of a local government.



Sec.  25.345  Nonprofit organization.

    Nonprofit organization--
    (a) Means any corporation, trust, association, cooperative, or other 
organization that--
    (1) Is operated primarily for scientific, educational, service, 
charitable, or similar purposes in the public interest;
    (2) Is not organized primarily for profit; and
    (3) Uses net proceeds to maintain, improve, or expand the operations 
of the organization.
    (b) Includes nonprofit--
    (1) Institutions of higher education;
    (2) Hospitals; and
    (3) Tribal organizations other than those included in the definition 
of ``Indian Tribe.''

[[Page 15]]



Sec.  25.350  State.

    State means--
    (a) Any State of the United States;
    (b) The District of Columbia;
    (c) Any agency or instrumentality of a State other than a local 
government or State-controlled institution of higher education;
    (d) The Commonwealths of Puerto Rico and the Northern Mariana 
Islands; and
    (e) The United States Virgin Islands, Guam, American Samoa, and a 
territory or possession of the United States.



Sec.  25.355  Subaward.

    Subaward has the meaning given in paragraph C.4 of the award term in 
Appendix A to this part.



Sec.  25.360  Subrecipient.

    Subrecipient has the meaning given in paragraph C.5 of the award 
term in Appendix A to this part.



                 Sec. Appendix A to Part 25--Award Term

  I. System for Award Management and Universal Identifier Requirements

             A. Requirement for System for Award Management

    Unless you are exempted from this requirement under 2 CFR 25.110, 
you as the recipient must maintain the currency of your information in 
the SAM until you submit the final financial report required under this 
award or receive the final payment, whichever is later. This requires 
that you review and update the information at least annually after the 
initial registration, and more frequently if required by changes in your 
information or another award term.

               B. Requirement for unique entity identifier

    If you are authorized to make subawards under this award, you:
    1. Must notify potential subrecipients that no entity (see 
definition in paragraph C of this award term) may receive a subaward 
from you unless the entity has provided its unique entity identifier to 
you.
    2. May not make a subaward to an entity unless the entity has 
provided its unique entity identifier to you.

                             C. Definitions

    For purposes of this award term:
    1.  System for Award Management (SAM) means the Federal repository 
into which an entity must provide information required for the conduct 
of business as a recipient. Additional information about registration 
procedures may be found at the SAM Internet site (currently at http://
www.sam.gov).
    2. Unique entity identifier means the identifier required for SAM 
registration to uniquely identify business entities.
    3. Entity, as it is used in this award term, means all of the 
following, as defined at 2 CFR part 25, subpart C:
    a. A Governmental organization, which is a State, local government, 
or Indian Tribe;
    b. A foreign public entity;
    c. A domestic or foreign nonprofit organization;
    d. A domestic or foreign for-profit organization; and
    e. A Federal agency, but only as a subrecipient under an award or 
subaward to a non-Federal entity.
    4. Subaward:
    a. This term means a legal instrument to provide support for the 
performance of any portion of the substantive project or program for 
which you received this award and that you as the recipient award to an 
eligible subrecipient.
    b. The term does not include your procurement of property and 
services needed to carry out the project or program (for further 
explanation, see 2 CFR 200.330).
    c. A subaward may be provided through any legal agreement, including 
an agreement that you consider a contract.
    5. Subrecipient means an entity that:
    a. Receives a subaward from you under this award; and
    b. Is accountable to you for the use of the Federal funds provided 
by the subaward.

[75 FR 55673, Sept. 14, 2010, as amended at 79 FR 75879, Dec. 19, 2014; 
80 FR 54407, Sept. 10, 2015]

                         PARTS 26	169 [RESERVED]



PART 170_REPORTING SUBAWARD AND EXECUTIVE COMPENSATION 
INFORMATION--Table of Contents



                            Subpart A_General

Sec.
170.100 Purposes of this part.
170.105 Types of awards to which this part applies.
170.110 Types of entities to which this part applies.
170.115 Deviations.

                            Subpart B_Policy

170.200 Requirements for program announcements, regulations, and 
          application instructions.
170.220 Award term

[[Page 16]]

                          Subpart C_Definitions

170.300 Agency.
170.305 Award.
170.310 Entity.
170.315 Executive
170.320 Federal financial assistance subject to the Transparency Act.
170.325 Subaward.
170.330 Total compensation.

Appendix A to Part 170--Award term

    Authority: Pub. L. 109-282; 31 U.S.C. 6102.

    Source: 75 FR 55669, Sept. 14, 2010, unless otherwise noted.



                            Subpart A_General



Sec.  170.100  Purposes of this part.

    This part provides guidance to agencies to establish requirements 
for recipients' reporting of information on subawards and executive 
total compensation, as required by the Federal Funding Accountability 
and Transparency Act of 2006 (Pub. L. 109-282), as amended by section 
6202 of Public Law 110-252, hereafter referred to as ``the Transparency 
Act''.



Sec.  170.105  Types of awards to which this part applies.

    This part applies to an agency's grants, cooperative agreements, 
loans, and other forms of Federal financial assistance subject to the 
Transparency Act, as defined in Sec.  170.320.



Sec.  170.110  Types of entities to which this part applies.

    (a) General. Through an agency's implementation of the guidance in 
this part, this part applies to all entities, other than those excepted 
in paragraph (b) of this section, that--
    (1) Apply for or receive agency awards; or
    (2) Receive subawards under those awards.
    (b) Exceptions. (1) None of the requirements in this part apply to 
an individual who applies for or receives an award as a natural person 
(i.e., unrelated to any business or non-profit organization he or she 
may own or operate in his or her name).
    (2) None of the requirements regarding reporting names and total 
compensation of an entity's five most highly compensated executives 
apply unless in the entity's preceding fiscal year, it received--
    (i) 80 percent or more of its annual gross revenue in Federal 
procurement contracts (and subcontracts) and Federal financial 
assistance awards subject to the Transparency Act, as defined at Sec.  
170.320 (and subawards); and
    (ii) $25,000,000 or more in annual gross revenue from Federal 
procurement contracts (and subcontracts) and Federal financial 
assistance awards subject to the Transparency Act, as defined at Sec.  
170.320; and
    (3) The public does not have access to information about the 
compensation of the senior executives through periodic reports filed 
under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 
U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 
1986.



Sec.  170.115  Deviations.

    Deviations from this part require the prior approval of the Office 
of Management and Budget (OMB).



                            Subpart B_Policy



Sec.  170.200  Requirements for program announcements, regulations, 
and application instructions.

    (a) Each agency that makes awards of Federal financial assistance 
subject to the Transparency Act must include the requirements described 
in paragraph (b) of this section in each program announcement, 
regulation, or other issuance containing instructions for applicants:
    (1) Under which awards may be made that are subject to Transparency 
Act reporting requirements; and
    (2) That either:
    (i) Is issued on or after the effective date of this part; or
    (ii) Has application or plan due dates after October 1, 2010.
    (b) The program announcement, regulation, or other issuance must 
require each entity that applies and does not have an exception under 
Sec.  170.110(b) to ensure they have the necessary processes and systems 
in place to comply with the reporting requirements should they receive 
funding.
    (c) Federal agencies that obtain post-award data on subaward 
obligations outside of this policy should take the

[[Page 17]]

necessary steps to ensure that their recipients are not required, due to 
the combination of agency-specific and Transparency Act reporting 
requirements, to submit the same or similar data multiple times during a 
given reporting period.



Sec.  170.220  Award term.

    (a) To accomplish the purposes described in Sec.  170.100, an agency 
must include the award term in Appendix A to this part in each award to 
a non-Federal entity under which the total funding will include $25,000 
or more in Federal funding at any time during the project or program 
period.
    (b) An agency--
    (1) Consistent with paragraph (a) of this section, is not required 
to include the award term in Appendix A to this part if it determines 
that there is no possibility that the total amount of Federal funding 
under the award will equal or exceed $25,000. However, the agency must 
subsequently amend the award to add the award term if changes in 
circumstances increase the total Federal funding under the award to 
$25,000 or more during the project or program period.



                          Subpart C_Definitions



Sec.  170.300  Agency.

    Agency means a Federal agency as defined at 5 U.S.C. 551(1) and 
further clarified by 5 U.S.C. 552(f).



Sec.  170.305  Award.

    Award, for the purposes of this part, effective October 1, 2010, 
means a grant or cooperative agreement. On future dates to be specified 
by OMB in policy memoranda available at the OMB Web site, award also 
will include other types of awards of Federal financial assistance 
subject to the Transparency Act, as defined in Sec.  170.320.



Sec.  170.310  Entity.

    Entity has the meaning given in 2 CFR part 25.



Sec.  170.315  Executive.

    Executive means officers, managing partners, or any other employees 
in management positions.



Sec.  170.320  Federal financial assistance subject to the Transparency Act.

    Federal financial assistance subject to the Transparency Act means 
assistance that non-Federal entities described in Sec.  170.105 receive 
or administer in the form of--
    (a) Grants;
    (b) Cooperative agreements (which does not include cooperative 
research and development agreements pursuant to the Federal Technology 
Transfer Act of 1986, as amended (15 U.S.C. 3710a));
    (c) Loans;
    (d) Loan guarantees;
    (e) Subsidies;
    (f) Insurance;
    (g) Food commodities;
    (h) Direct appropriations;
    (i) Assessed and voluntary contributions; and
    (j) Other financial assistance transactions that authorize the non-
Federal entities' expenditure of Federal funds.
    (b) Does not include--
    (1) Technical assistance, which provides services in lieu of money;
    (2) A transfer of title to Federally owned property provided in lieu 
of money, even if the award is called a grant;
    (3) Any classified award; or
    (4) Any award funded in whole or in part with Recovery funds, as 
defined in section 1512 of the American Recovery and Reinvestment Act of 
2009 (Pub. L. 111-5).

    Editorial Note: At 75 FR 55669, Sept. 14, 2010, Sec.  170.320 was 
added with two paragraph (b)s.



Sec.  170.325  Subaward.

    Subaward has the meaning given in paragraph e.3 of the award term in 
Appendix A to this part.



Sec.  170.330  Total compensation.

    Total Compensation has the meaning given in paragraph e.5 of the 
award term in Appendix A to this part.



                 Sec. Appendix A to Part 170--Award term

    I. Reporting Subawards and Executive Compensation.
    a. Reporting of first-tier subawards.
    1. Applicability. Unless you are exempt as provided in paragraph d. 
of this award term, you must report each action that obligates

[[Page 18]]

$25,000 or more in Federal funds that does not include Recovery funds 
(as defined in section 1512(a)(2) of the American Recovery and 
Reinvestment Act of 2009, Pub. L. 111-5) for a subaward to an entity 
(see definitions in paragraph e. of this award term).
    2. Where and when to report.
    i. You must report each obligating action described in paragraph 
a.1. of this award term to http://www.fsrs.gov.
    ii. For subaward information, report no later than the end of the 
month following the month in which the obligation was made. (For 
example, if the obligation was made on November 7, 2010, the obligation 
must be reported by no later than December 31, 2010.)
    3. What to report. You must report the information about each 
obligating action that the submission instructions posted at http://
www.fsrs.gov specify.
    b. Reporting Total Compensation of Recipient Executives.
    1. Applicability and what to report. You must report total 
compensation for each of your five most highly compensated executives 
for the preceding completed fiscal year, if--
    i. the total Federal funding authorized to date under this award is 
$25,000 or more;
    ii. in the preceding fiscal year, you received--
    (A) 80 percent or more of your annual gross revenues from Federal 
procurement contracts (and subcontracts) and Federal financial 
assistance subject to the Transparency Act, as defined at 2 CFR 170.320 
(and subawards); and
    (B) $25,000,000 or more in annual gross revenues from Federal 
procurement contracts (and subcontracts) and Federal financial 
assistance subject to the Transparency Act, as defined at 2 CFR 170.320 
(and subawards); and
    iii. The public does not have access to information about the 
compensation of the executives through periodic reports filed under 
section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 
78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986. 
(To determine if the public has access to the compensation information, 
see the U.S. Security and Exchange Commission total compensation filings 
at http://www.sec.gov/answers/execomp.htm.)
    2. Where and when to report. You must report executive total 
compensation described in paragraph b.1. of this award term:
    i. As part of your registration profile at https://www.sam.gov.
    ii. By the end of the month following the month in which this award 
is made, and annually thereafter.
    c. Reporting of Total Compensation of Subrecipient Executives.
    1. Applicability and what to report. Unless you are exempt as 
provided in paragraph d. of this award term, for each first-tier 
subrecipient under this award, you shall report the names and total 
compensation of each of the subrecipient's five most highly compensated 
executives for the subrecipient's preceding completed fiscal year, if--
    i. in the subrecipient's preceding fiscal year, the subrecipient 
received--
    (A) 80 percent or more of its annual gross revenues from Federal 
procurement contracts (and subcontracts) and Federal financial 
assistance subject to the Transparency Act, as defined at 2 CFR 170.320 
(and subawards); and
    (B) $25,000,000 or more in annual gross revenues from Federal 
procurement contracts (and subcontracts), and Federal financial 
assistance subject to the Transparency Act (and subawards); and
    ii. The public does not have access to information about the 
compensation of the executives through periodic reports filed under 
section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 
78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986. 
(To determine if the public has access to the compensation information, 
see the U.S. Security and Exchange Commission total compensation filings 
at http://www.sec.gov/answers/execomp.htm.)
    2. Where and when to report. You must report subrecipient executive 
total compensation described in paragraph c.1. of this award term:
    i. To the recipient.
    ii. By the end of the month following the month during which you 
make the subaward. For example, if a subaward is obligated on any date 
during the month of October of a given year (i.e., between October 1 and 
31), you must report any required compensation information of the 
subrecipient by November 30 of that year.
    d. Exemptions
    If, in the previous tax year, you had gross income, from all 
sources, under $300,000, you are exempt from the requirements to report:
    i. Subawards,
    and
    ii. The total compensation of the five most highly compensated 
executives of any subrecipient.
    e. Definitions. For purposes of this award term:
    1. Entity means all of the following, as defined in 2 CFR part 25:
    i. A Governmental organization, which is a State, local government, 
or Indian tribe;
    ii. A foreign public entity;
    iii. A domestic or foreign nonprofit organization;
    iv. A domestic or foreign for-profit organization;
    v. A Federal agency, but only as a subrecipient under an award or 
subaward to a non-Federal entity.
    2. Executive means officers, managing partners, or any other 
employees in management positions.
    3. Subaward:

[[Page 19]]

    i. This term means a legal instrument to provide support for the 
performance of any portion of the substantive project or program for 
which you received this award and that you as the recipient award to an 
eligible subrecipient.
    ii. The term does not include your procurement of property and 
services needed to carry out the project or program (for further 
explanation, see Sec. ---- .210 of the attachment to OMB Circular A-133, 
``Audits of States, Local Governments, and Non-Profit Organizations'').
    iii. A subaward may be provided through any legal agreement, 
including an agreement that you or a subrecipient considers a contract.
    4. Subrecipient means an entity that:
    i. Receives a subaward from you (the recipient) under this award; 
and
    ii. Is accountable to you for the use of the Federal funds provided 
by the subaward.
    5. Total compensation means the cash and noncash dollar value earned 
by the executive during the recipient's or subrecipient's preceding 
fiscal year and includes the following (for more information see 17 CFR 
229.402(c)(2)):
    i. Salary and bonus.
    ii. Awards of stock, stock options, and stock appreciation rights. 
Use the dollar amount recognized for financial statement reporting 
purposes with respect to the fiscal year in accordance with the 
Statement of Financial Accounting Standards No. 123 (Revised 2004) (FAS 
123R), Shared Based Payments.
    iii. Earnings for services under non-equity incentive plans. This 
does not include group life, health, hospitalization or medical 
reimbursement plans that do not discriminate in favor of executives, and 
are available generally to all salaried employees.
    iv. Change in pension value. This is the change in present value of 
defined benefit and actuarial pension plans.
    v. Above-market earnings on deferred compensation which is not tax-
qualified.
    vi. Other compensation, if the aggregate value of all such other 
compensation (e.g. severance, termination payments, value of life 
insurance paid on behalf of the employee, perquisites or property) for 
the executive exceeds $10,000.

[75 FR 55669, Sept. 14, 2010, as amended at 79 FR 75879, Dec. 19, 2014]

                        PARTS 171	174 [RESERVED]



PART 175_AWARD TERM FOR TRAFFICKING IN PERSONS--Table of Contents



Sec.
175.5 Purpose of this part.
175.10 Statutory requirement.
175.15 Award term.
175.20 Referral.
175.25 Definitions.

    Authority: 22 U.S.C. 7104(g); 31 U.S.C. 503; 31 U.S.C. 1111; 41 
U.S.C. 405; Reorganization Plan No. 2 of 1970; E.O. 11541, 35 FR 10737, 
3 CFR, 1966-1970, p. 939.

    Source: 72 FR 63783, Nov. 13, 2007, unless otherwise noted.



Sec.  175.5  Purpose of this part.

    This part establishes a Governmentwide award term for grants and 
cooperative agreements to implement the requirement in paragraph (g) of 
section 106 of the Trafficking Victims Protection Act of 2000 (TVPA), as 
amended (22 U.S.C. 7104(g)).



Sec.  175.10  Statutory requirement.

    In each agency award (i.e., grant or cooperative agreement) under 
which funding is provided to a private entity, section 106(g) of the 
TVPA, as amended, requires the agency to include a condition that 
authorizes the agency to terminate the award, without penalty, if the 
recipient or a subrecipient--
    (a) Engages in severe forms of trafficking in persons during the 
period of time that the award is in effect;
    (b) Procures a commercial sex act during the period of time that the 
award is in effect; or
    (c) Uses forced labor in the performance of the award or subawards 
under the award.



Sec.  175.15  Award term.

    (a) To implement the trafficking in persons requirement in section 
106(g) of the TVPA, as amended, a Federal awarding agency must include 
the award term in paragraph (b) of this section in--
    (1) A grant or cooperative agreement to a private entity, as defined 
in Sec.  175.25(d); and
    (2) A grant or cooperative agreement to a State, local government, 
Indian tribe or foreign public entity, if funding could be provided 
under the award to a private entity as a subrecipient.
    (b) The award term that an agency must include, as described in 
paragraph (a) of this section, is:

    I. Trafficking in persons.
    a. Provisions applicable to a recipient that is a private entity.

[[Page 20]]

    1. You as the recipient, your employees, subrecipients under this 
award, and subrecipients' employees may not--
    i. Engage in severe forms of trafficking in persons during the 
period of time that the award is in effect;
    ii. Procure a commercial sex act during the period of time that the 
award is in effect; or
    iii. Use forced labor in the performance of the award or subawards 
under the award.
    2. We as the Federal awarding agency may unilaterally terminate this 
award, without penalty, if you or a subrecipient that is a private 
entity --
    i. Is determined to have violated a prohibition in paragraph a.1 of 
this award term; or
    ii. Has an employee who is determined by the agency official 
authorized to terminate the award to have violated a prohibition in 
paragraph a.1 of this award term through conduct that is either--
    A. Associated with performance under this award; or
    B. Imputed to you or the subrecipient using the standards and due 
process for imputing the conduct of an individual to an organization 
that are provided in 2 CFR part 180, ``OMB Guidelines to Agencies on 
Governmentwide Debarment and Suspension (Nonprocurement),'' as 
implemented by our agency at [agency must insert reference here to its 
regulatory implementation of the OMB guidelines in 2 CFR part 180 (e.g., 
``2 CFR part XX'')].
    b. Provision applicable to a recipient other than a private entity. 
We as the Federal awarding agency may unilaterally terminate this award, 
without penalty, if a subrecipient that is a private entity--
    1. Is determined to have violated an applicable prohibition in 
paragraph a.1 of this award term; or
    2. Has an employee who is determined by the agency official 
authorized to terminate the award to have violated an applicable 
prohibition in paragraph a.1 of this award term through conduct that is 
either--
    i. Associated with performance under this award; or
    ii. Imputed to the subrecipient using the standards and due process 
for imputing the conduct of an individual to an organization that are 
provided in 2 CFR part 180, ``OMB Guidelines to Agencies on 
Governmentwide Debarment and Suspension (Nonprocurement),'' as 
implemented by our agency at [agency must insert reference here to its 
regulatory implementation of the OMB guidelines in 2 CFR part 180 (e.g., 
``2 CFR part XX'')].
    c. Provisions applicable to any recipient.
    1. You must inform us immediately of any information you receive 
from any source alleging a violation of a prohibition in paragraph a.1 
of this award term.
    2. Our right to terminate unilaterally that is described in 
paragraph a.2 or b of this section:
    i. Implements section 106(g) of the Trafficking Victims Protection 
Act of 2000 (TVPA), as amended (22 U.S.C. 7104(g)), and
    ii. Is in addition to all other remedies for noncompliance that are 
available to us under this award.
    3. You must include the requirements of paragraph a.1 of this award 
term in any subaward you make to a private entity.
    d. Definitions. For purposes of this award term:
    1. ``Employee'' means either:
    i. An individual employed by you or a subrecipient who is engaged in 
the performance of the project or program under this award; or
    ii. Another person engaged in the performance of the project or 
program under this award and not compensated by you including, but not 
limited to, a volunteer or individual whose services are contributed by 
a third party as an in-kind contribution toward cost sharing or matching 
requirements.
    2. ``Forced labor'' means labor obtained by any of the following 
methods: the recruitment, harboring, transportation, provision, or 
obtaining of a person for labor or services, through the use of force, 
fraud, or coercion for the purpose of subjection to involuntary 
servitude, peonage, debt bondage, or slavery.
    3. ``Private entity'':
    i. Means any entity other than a State, local government, Indian 
tribe, or foreign public entity, as those terms are defined in 2 CFR 
175.25.
    ii. Includes:
    A. A nonprofit organization, including any nonprofit institution of 
higher education, hospital, or tribal organization other than one 
included in the definition of Indian tribe at 2 CFR 175.25(b).
    B. A for-profit organization.
    4. ``Severe forms of trafficking in persons,'' ``commercial sex 
act,'' and ``coercion'' have the meanings given at section 103 of the 
TVPA, as amended (22 U.S.C. 7102).

    (c) An agency may use different letters and numbers to designate the 
paragraphs of the award term in paragraph (b) of this section, if 
necessary, to conform the system of paragraph designations with the one 
used in other terms and conditions in the agency's awards.



Sec.  175.20  Referral.

    An agency official should inform the agency's suspending or 
debarring official if he or she terminates an award based on a violation 
of a prohibition contained in the award term under Sec.  175.15.

[[Page 21]]



Sec.  175.25  Definitions.

    Terms used in this part are defined as follows:
    (a) Foreign public entity means:
    (1) A foreign government or foreign governmental entity;
    (2) A public international organization, which is an organization 
entitled to enjoy privileges, exemptions, and immunities as an 
international organization under the International Organizations 
Immunities Act (22 U.S.C. 288-288f);
    (3) An entity owned (in whole or in part) or controlled by a foreign 
government; and
    (4) Any other entity consisting wholly or partially of one or more 
foreign governments or foreign governmental entities.
    (b) Indian tribe means any Indian tribe, band, nation, or other 
organized group or community, including any Alaskan Native village or 
regional or village corporation (as defined in, or established under, 
the Alaskan Native Claims Settlement Act (43 U.S.C. 1601, et seq.)) that 
is recognized by the United States as eligible for the special programs 
and services provided by the United States to Indians because of their 
status as Indians.
    (c) Local government means a:
    (1) County;
    (2) Borough;
    (3) Municipality;
    (4) City;
    (5) Town;
    (6) Township;
    (7) Parish;
    (8) Local public authority, including any public housing agency 
under the United States Housing Act of 1937;
    (9) Special district;
    (10) School district;
    (11) Intrastate district;
    (12) Council of governments, whether or not incorporated as a 
nonprofit corporation under State law; and
    (13) Any other instrumentality of a local government.
    (d) Private entity. (1) This term means any entity other than a 
State, local government, Indian tribe, or foreign public entity.
    (2) This term includes:
    (i) A nonprofit organization, including any nonprofit institution of 
higher education, hospital, or tribal organization other than one 
included in the definition of Indian tribe in paragraph (b) of this 
section.
    (ii) A for-profit organization.
    (e) State, consistent with the definition in section 103 of the 
TVPA, as amended (22 U.S.C. 7102), means:
    (1) Any State of the United States;
    (2) The District of Columbia;
    (3) Any agency or instrumentality of a State other than a local 
government or State-controlled institution of higher education;
    (4) The Commonwealths of Puerto Rico and the Northern Mariana 
Islands; and
    (5) The United States Virgin Islands, Guam, American Samoa, and a 
territory or possession of the United States.



PART 176_AWARD TERMS FOR ASSISTANCE AGREEMENTS THAT INCLUDE FUNDS UNDER THE 
AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009, PUBLIC LAW 111	5--Table of Contents



Sec.
176.10 Purpose of this part.
176.20 Agency responsibilities (general).
176.30 Definitions.

Subpart A_Reporting and Registration Requirements under Section 1512 of 
           the American Recovery and Reinvestment Act of 2009

176.40 Procedure.
176.50 Award term--Reporting and registration requirements under section 
          1512 of the Recovery Act.

 Subpart B_Buy American Requirement under Section 1605 of the American 
                  Recovery and Reinvestment Act of 2009

176.60 Statutory requirement.
176.70 Policy.
176.80 Exceptions.
176.90 Acquisitions covered under international agreements.
176.100 Timely determination concerning the inapplicability of section 
          1605 of the Recovery Act.
176.110 Evaluating proposals of foreign iron, steel, and/or manufactured 
          goods.
176.120 Determinations on late requests.
176.130 Noncompliance.
176.140 Award term--Required Use of American Iron, Steel, and 
          Manufactured Goods--Section 1605 of the American Recovery and 
          Reinvestment Act of 2009.

[[Page 22]]

176.150 Notice of Required Use of American Iron, Steel, and Manufactured 
          Goods--Section 1605 of the American Recovery and Reinvestment 
          Act of 2009.
176.160 Award term--Required Use of American Iron, Steel, and 
          Manufactured Goods (covered under International Agreements)--
          Section 1605 of the American Recovery and Reinvestment Act of 
          2009.
176.170 Notice of Required Use of American Iron, Steel, and Manufactured 
          Goods (covered under International Agreements)--Section 1605 
          of the American Recovery and Reinvestment Act of 2009.

Appendix to Subpart B of Part 176--U.S. States, Other Sub-Federal 
          Entities, and Other Entities Subject to U.S. Obligations Under 
          International Agreements (as of February 16, 2010)

  Subpart C_Wage Rate Requirements under Section 1606 of the American 
                  Recovery and Reinvestment Act of 2009

176.180 Procedure.
176.190 Award term--Wage rate requirements under Section 1606 of the 
          Recovery Act.

 Subpart D_Single Audit Information for Recipients of Recovery Act Funds

176.200 Procedure.
176.210 Award term--Recovery Act transactions listed in Schedule of 
          Expenditures of Federal Awards and Recipient Responsibilities 
          for Informing Subrecipients.

    Authority: American Recovery and Reinvestment Act of 2009, Public 
Law 111-5; Federal Funding Accountability and Transparency Act of 2006, 
(Pub. L. 109-282), as amended.

    Source: 74 FR 18450, Apr. 23, 2009, unless otherwise noted.



Sec.  176.10  Purpose of this part.

    This part establishes Federal Governmentwide award terms for 
financial assistance awards, namely, grants, cooperative agreements, and 
loans, to implement the cross-cutting requirements of the American 
Recovery and Reinvestment Act of 2009, Public Law 111-5 (Recovery Act). 
These requirements are cross-cutting in that they apply to more than one 
agency's awards.



Sec.  176.20  Agency responsibilities (general).

    (a) In any assistance award funded in whole or in part by the 
Recovery Act, the award official shall indicate that the award is being 
made under the Recovery Act, and indicate what projects and/or 
activities are being funded under the Recovery Act. This requirement 
applies whenever Recovery Act funds are used, regardless of the 
assistance type.
    (b) To maximize transparency of Recovery Act funds required for 
reporting by the assistance recipient, the award official shall consider 
structuring assistance awards to allow for separately tracking Recovery 
Act funds.
    (c) Award officials shall ensure that recipients comply with the 
Recovery Act requirements of Subpart A. If the recipient fails to comply 
with the reporting requirements or other award terms, the award official 
or other authorized agency action official shall take the appropriate 
enforcement or termination action in accordance with 2 CFR 215.62 or the 
agency's implementation of the OMB Circular A-102 grants management 
common rule. OMB Circular A-102 is available at http://
www.whitehouse.gov/omb/circulars/a102/a102.html.
    (d) The award official shall make the recipient's failure to comply 
with the reporting requirements a part of the recipient's performance 
record.



Sec.  176.30  Definitions.

    As used in this part--
    Award means any grant, cooperative agreement or loan made with 
Recovery Act funds. Award official means a person with the authority to 
enter into, administer, and/or terminate financial assistance awards and 
make related determinations and findings.
    Classified or ``classified information'' means any knowledge that 
can be communicated or any documentary material, regardless of its 
physical form or characteristics, that--
    (1)(i) Is owned by, is produced by or for, or is under the control 
of the United States Government; or
    (ii) Has been classified by the Department of Energy as privately 
generated restricted data following the procedures in 10 CFR 1045.21; 
and
    (2) Must be protected against unauthorized disclosure according to 
Executive Order 12958, Classified National Security Information, April 
17, 1995, or

[[Page 23]]

classified in accordance with the Atomic Energy Act of 1954.
    Recipient means any entity other than an individual that receives 
Recovery Act funds in the form of a grant, cooperative agreement or loan 
directly from the Federal Government.
    Recovery funds or Recovery Act funds are funds made available 
through the appropriations of the American Recovery and Reinvestment Act 
of 2009, Public Law 111-5.
    Subaward means--
    (1) A legal instrument to provide support for the performance of any 
portion of the substantive project or program for which the recipient 
received this award and that the recipient awards to an eligible 
subrecipient;
    (2) The term does not include the recipient's procurement of 
property and services needed to carry out the project or program (for 
further explanation, see Sec. ----.210 of the attachment to OMB Circular 
A-133, ``Audits of States, Local Governments, and Non-Profit 
Organizations''). OMB Circular A-133 is available at http://
www.whitehouse.gov/omb/circulars/a133/a133.html.
    (3) A subaward may be provided through any legal agreement, 
including an agreement that the recipient or a subrecipient considers a 
contract.
    Subcontract means a legal instrument used by a recipient for 
procurement of property and services needed to carry out the project or 
program.
    Subrecipient or Subawardee means a non-Federal entity that expends 
Federal awards received from a pass-through entity to carry out a 
Federal program, but does not include an individual that is a 
beneficiary of such a program. A subrecipient may also be a recipient of 
other Federal awards directly from a Federal awarding agency. Guidance 
on distinguishing between a subrecipient and a vendor is provided in 
Sec. ----.210 of OMB Circular A-133.



Subpart A_Reporting and Registration Requirements Under Section 1512 of 
           the American Recovery and Reinvestment Act of 2009



Sec.  176.40  Procedure.

    The award official shall insert the standard award term in this 
subpart in all awards funded in whole or in part with Recovery Act 
funds, except for those that are classified, awarded to individuals, or 
awarded under mandatory and entitlement programs, except as specifically 
required by OMB, or expressly exempted from the reporting requirement in 
the Recovery Act.



Sec.  176.50  Award term--Reporting and registration requirements under 
section 1512 of the Recovery Act.

    Agencies are responsible for ensuring that their recipients report 
information required under the Recovery Act in a timely manner. The 
following award term shall be used by agencies to implement the 
recipient reporting and registration requirements in section 1512:
    (a) This award requires the recipient to complete projects or 
activities which are funded under the American Recovery and Reinvestment 
Act of 2009 (Recovery Act) and to report on use of Recovery Act funds 
provided through this award. Information from these reports will be made 
available to the public.
    (b) The reports are due no later than ten calendar days after each 
calendar quarter in which the recipient receives the assistance award 
funded in whole or in part by the Recovery Act.
    (c) Recipients and their first-tier recipients must maintain current 
registrations in the System of Award Management (http://www.ccr.gov) at 
all times during which they have active federal awards funded with 
Recovery Act funds. A Dun and Bradstreet Data Universal Numbering System 
(DUNS) Number (http://www.dnb.com) is one of the requirements for 
registration in the System of Award Management.
    (d) The recipient shall report the information described in section 
1512(c) of the Recovery Act using the reporting instructions and data 
elements that will be provided online at http://

[[Page 24]]

www.FederalReporting.gov and ensure that any information that is pre-
filled is corrected or updated as needed.



 Subpart B_Buy American Requirement Under Section 1605 of the American 
                  Recovery and Reinvestment Act of 2009



Sec.  176.60  Statutory requirement.

    Section 1605 of the Recovery Act prohibits use of recovery funds for 
a project for the construction, alteration, maintenance, or repair of a 
public building or public work unless all of the iron, steel, and 
manufactured goods used in the project are produced in the United 
States. The law requires that this prohibition be applied in a manner 
consistent with U.S. obligations under international agreements, and it 
provides for waiver under three circumstances:
    (a) Iron, steel, or relevant manufactured goods are not produced in 
the United States in sufficient and reasonably available quantities and 
of a satisfactory quality;
    (b) Inclusion of iron, steel, or manufactured goods produced in the 
United States will increase the cost of the overall project by more than 
25 percent; or
    (c) Applying the domestic preference would be inconsistent with the 
public interest.



Sec.  176.70  Policy.

    Except as provided in Sec.  176.80 or Sec.  176.90--
    (a) None of the funds appropriated or otherwise made available by 
the Recovery Act may be used for a project for the construction, 
alteration, maintenance, or repair of a public building or public work 
(see definitions at Sec. Sec.  176.140 and 176.160) unless--
    (1) The public building or public work is located in the United 
States; and
    (2) All of the iron, steel, and manufactured goods used in the 
project are produced or manufactured in the United States.
    (i) Production in the United States of the iron or steel used in the 
project requires that all manufacturing processes must take place in the 
United States, except metallurgical processes involving refinement of 
steel additives. These requirements do not apply to iron or steel used 
as components or subcomponents of manufactured goods used in the 
project.
    (ii) There is no requirement with regard to the origin of components 
or subcomponents in manufactured goods used in the project, as long as 
the manufacturing occurs in the United States.
    (b) Paragraph (a) of this section shall not apply where the Recovery 
Act requires the application of alternative Buy American requirements 
for iron, steel, and manufactured goods.



Sec.  176.80  Exceptions.

    (a) When one of the following exceptions applies in a case or 
category of cases, the award official may allow the recipient to use 
foreign iron, steel and/or manufactured goods in the project without 
regard to the restrictions of section 1605 of the Recovery Act:
    (1) Nonavailability. The head of the Federal department or agency 
may determine that the iron, steel or relevant manufactured good is not 
produced or manufactured in the United States in sufficient and 
reasonably available commercial quantities of a satisfactory quality. 
The determinations of nonavailability of the articles listed at 48 CFR 
25.104(a) and the procedures at 48 CFR 25.103(b)(1) also apply if any of 
those articles are manufactured goods needed in the project.
    (2) Unreasonable cost. The head of the Federal department or agency 
may determine that the cost of domestic iron, steel, or relevant 
manufactured goods will increase the cost of the overall project by more 
than 25 percent in accordance with Sec.  176.110.
    (3) Inconsistent with public interest. The head of the Federal 
department or agency may determine that application of the restrictions 
of section 1605 of the Recovery Act would be inconsistent with the 
public interest.
    (b) When a determination is made for any of the reasons stated in 
this section that certain foreign iron, steel, and/or manufactured goods 
may be used--
    (1) The award official shall list the excepted materials in the 
award; and

[[Page 25]]

    (2) The head of the Federal department or agency shall publish a 
notice in the Federal Register within two weeks after the determination 
is made, unless the item has already been determined to be domestically 
nonavailable. A list of items that are not domestically available is at 
48 CFR 25.104(a). The Federal Register notice or information from the 
notice may be posted by OMB to Recovery.gov. The notice shall include--
    (i) The title ``Buy American Exception under the American Recovery 
and Reinvestment Act of 2009'';
    (ii) The dollar value and brief description of the project; and
    (iii) A detailed written justification as to why the restriction is 
being waived.



Sec.  176.90  Acquisitions covered under international agreements.

    Section 1605(d) of the Recovery Act provides that the Buy American 
requirement in section 1605 shall be applied in a manner consistent with 
U.S. obligations under international agreements.
    (a) The Buy American requirement set out in Sec.  176.70 shall not 
be applied where the iron, steel, or manufactured goods used in the 
project are from a Party to an international agreement, listed in 
paragraph (b) of this section, and the recipient is required under an 
international agreement, described in the appendix to this subpart, to 
treat the goods and services of that Party the same as domestic goods 
and services. As of January 1, 2010, this obligation shall only apply to 
projects with an estimated value of $7,804,000 or more and projects that 
are not specifically excluded from the application of those agreements.
    (b) The international agreements that obligate recipients that are 
covered under an international agreement to treat the goods and services 
of a Party the same as domestic goods and services and the respective 
Parties to the agreements are:
    (1) The World Trade Organization Government Procurement Agreement 
(Aruba, Austria, Belgium, Bulgaria, Canada, Chinese Taipei (Taiwan), 
Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, 
Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, 
Korea (Republic of), Latvia, Liechtenstein, Lithuania, Luxembourg, 
Malta, Netherlands, Norway, Poland, Portugal, Romania, Singapore, Slovak 
Republic, Slovenia, Spain, Sweden, Switzerland, and United Kingdom);
    (2) The following Free Trade Agreements:
    (i) Dominican Republic-Central America-United States Free Trade 
Agreement (Costa Rica, Dominican Republic, El Salvador, Guatemala, 
Honduras, Nicaragua);
    (ii) North American Free Trade Agreement (NAFTA) (Canada and 
Mexico);
    (iii) United States-Australia Free Trade Agreement;
    (iv) United States-Bahrain Free Trade Agreement;
    (v) United States-Chile Free Trade Agreement;
    (vi) United States-Israel Free Trade Agreement;
    (vii) United States-Morocco Free Trade Agreement;
    (viii) United States-Oman Free Trade Agreement;
    (ix) United States-Peru Trade Promotion Agreement; and
    (x) United States-Singapore Free Trade Agreement.
    (3) United States-European Communities Exchange of Letters (May 15, 
1995): Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, 
Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, 
Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, 
Romania, Slovak Republic, Slovenia, Spain, Sweden, and United Kingdom; 
and
    (4) Agreement between the Government of Canada and the Government of 
the United States of America on Government Procurement.

[74 FR 18450, Apr. 23, 2009, as amended at 75 FR 14323, Mar. 25, 2010]



Sec.  176.100  Timely determination concerning the inapplicability of 
section 1605 of the Recovery Act.

    (a) The head of the Federal department or agency involved may make a 
determination regarding inapplicability of section 1605 to a particular 
case or to a category of cases.

[[Page 26]]

    (b) Before Recovery Act funds are awarded by the Federal agency or 
obligated by the recipient for a project for the construction, 
alteration, maintenance, or repair of a public building or public work, 
an applicant or recipient may request from the award official a 
determination concerning the inapplicability of section 1605 of the 
Recovery Act for specifically identified items.
    (c) The time for submitting the request and the information and 
supporting data that must be included in the request are to be specified 
in the agency's and recipient's request for applications and/or 
proposals, and as appropriate, in other written communications. The 
content of those communications should be consistent with the notice in 
Sec.  176.150 or Sec.  176.170, whichever applies.
    (d) The award official must evaluate all requests based on the 
information provided and may supplement this information with other 
readily available information.
    (e) In making a determination based on the increased cost to the 
project of using domestic iron, steel, and/or manufactured goods, the 
award official must compare the total estimated cost of the project 
using foreign iron, steel and/or relevant manufactured goods to the 
estimated cost if all domestic iron, steel, and/or relevant manufactured 
goods were used. If use of domestic iron, steel, and/or relevant 
manufactured goods would increase the cost of the overall project by 
more than 25 percent, then the award official shall determine that the 
cost of the domestic iron, steel, and/or relevant manufactured goods is 
unreasonable.



Sec.  176.110  Evaluating proposals of foreign iron, steel, and/or 
manufactured goods.

    (a) If the award official receives a request for an exception based 
on the cost of certain domestic iron, steel, and/or manufactured goods 
being unreasonable, in accordance with Sec.  176.80, then the award 
official shall apply evaluation factors to the proposal to use such 
foreign iron, steel, and/or manufactured goods as follows:
    (1) Use an evaluation factor of 25 percent, applied to the total 
estimated cost of the project, if the foreign iron, steel, and/or 
manufactured goods are to be used in the project based on an exception 
for unreasonable cost requested by the applicant.
    (2) Total evaluated cost = project cost estimate + (.25 x project 
cost estimate, if paragraph (a)(1) of this section applies).
    (b) Applicants or recipients also may submit alternate proposals 
based on use of equivalent domestic iron, steel, and/or manufactured 
goods to avoid possible denial of Recovery Act funding for the proposal 
if the Federal Government determines that an exception permitting use of 
the foreign item(s) does not apply.
    (c) If the award official makes an award to an applicant that 
proposed foreign iron, steel, and/or manufactured goods not listed in 
the applicable notice in the request for applications or proposals, then 
the award official must add the excepted materials to the list in the 
award term.



Sec.  176.120  Determinations on late requests.

    (a) If a recipient requests a determination regarding the 
inapplicability of section 1605 of the Recovery Act after obligating 
Recovery Act funds for a project for construction, alteration, 
maintenance, or repair (late request), the recipient must explain why it 
could not request the determination before making the obligation or why 
the need for such determination otherwise was not reasonably 
foreseeable. If the award official concludes that the recipient should 
have made the request before making the obligation, the award official 
may deny the request.
    (b) The award official must base evaluation of any late request for 
a determination regarding the inapplicability of section 1605 of the 
Recovery Act on information required by Sec.  176.150(c) and (d) or 
Sec.  176.170(c) and (d) and/or other readily available information.
    (c) If a determination, under Sec.  176.80 is made after Recovery 
Act funds were obligated for a project for construction, alteration, 
maintenance, or repair that an exception to section 1605 of the Recovery 
Act applies, the award official must amend the award to allow use of the 
foreign iron, steel, and/or relevant manufactured goods. When

[[Page 27]]

the basis of the exception is nonavailability or public interest, the 
amended award shall reflect adjustment of the award amount, 
redistribution of budgeted funds, and/or other appropriate actions taken 
to cover costs associated with acquiring or using the foreign iron, 
steel, and/or manufactured goods. When the basis for the exception is 
the unreasonable cost of domestic iron, steel, and/or manufactured goods 
the award official shall adjust the award amount or the budget, as 
appropriate, by at least the differential established in Sec.  
176.110(a).



Sec.  176.130  Noncompliance.

    The award official must--
    (a) Review allegations of violations of section 1605 of the Recovery 
Act;
    (b) Unless fraud is suspected, notify the recipient of the apparent 
unauthorized use of foreign iron, steel, and/or manufactured goods and 
request a reply, to include proposed corrective action; and
    (c) If the review reveals that a recipient or subrecipient has used 
foreign iron, steel, and/or manufactured goods without authorization, 
take appropriate action, including one or more of the following:
    (1) Process a determination concerning the inapplicability of 
section 1605 of the Recovery Act in accordance with Sec.  176.120.
    (2) Consider requiring the removal and replacement of the 
unauthorized foreign iron, steel, and/or manufactured goods.
    (3) If removal and replacement of foreign iron, steel, and/or 
manufactured goods used in a public building or a public work would be 
impracticable, cause undue delay, or otherwise be detrimental to the 
interests of the Federal Government, the award official may determine in 
writing that the foreign iron, steel, and/or manufactured goods need not 
be removed and replaced. A determination to retain foreign iron, steel, 
and/or manufactured goods does not constitute a determination that an 
exception to section 1605 of the Recovery Act applies, and this should 
be stated in the determination. Further, a determination to retain 
foreign iron, steel, and/or manufactured goods does not affect the 
Federal Government's right to reduce the amount of the award by the cost 
of the steel, iron, or manufactured goods that are used in the project 
or to take enforcement or termination action in accordance with the 
agency's grants management regulations.
    (4) If the noncompliance is sufficiently serious, consider 
exercising appropriate remedies, such as withholding cash payments 
pending correction of the deficiency, suspending or terminating the 
award, and withholding further awards for the project. Also consider 
preparing and forwarding a report to the agency suspending or debarring 
official in accordance with the agency's debarment rule implementing 2 
CFR part 180. If the noncompliance appears to be fraudulent, refer the 
matter to other appropriate agency officials, such as the officer 
responsible for criminal investigation.



Sec.  176.140  Award term--Required Use of American Iron, Steel, and 
Manufactured Goods--Section 1605 of the American Recovery and
Reinvestment Act of 2009.

    When awarding Recovery Act funds for construction, alteration, 
maintenance, or repair of a public building or public work that does not 
involve iron, steel, and/or manufactured goods covered under 
international agreements, the agency shall use the award term described 
in the following paragraphs:
    (a) Definitions. As used in this award term and condition--
    (1) Manufactured good means a good brought to the construction site 
for incorporation into the building or work that has been--
    (i) Processed into a specific form and shape; or
    (ii) Combined with other raw material to create a material that has 
different properties than the properties of the individual raw 
materials.
    (2) Public building and public work means a public building of, and 
a public work of, a governmental entity (the United States; the District 
of Columbia; commonwealths, territories, and minor outlying islands of 
the United States; State and local governments; and multi-State, 
regional, or interstate entities which have governmental functions). 
These buildings and works may include, without limitation,

[[Page 28]]

bridges, dams, plants, highways, parkways, streets, subways, tunnels, 
sewers, mains, power lines, pumping stations, heavy generators, 
railways, airports, terminals, docks, piers, wharves, ways, lighthouses, 
buoys, jetties, breakwaters, levees, and canals, and the construction, 
alteration, maintenance, or repair of such buildings and works.
    (3) Steel means an alloy that includes at least 50 percent iron, 
between .02 and 2 percent carbon, and may include other elements.
    (b) Domestic preference. (1) This award term and condition 
implements Section 1605 of the American Recovery and Reinvestment Act of 
2009 (Recovery Act) (Pub. L. 111-5), by requiring that all iron, steel, 
and manufactured goods used in the project are produced in the United 
States except as provided in paragraph (b)(3) and (b)(4) of this section 
and condition.
    (2) This requirement does not apply to the material listed by the 
Federal Government as follows:
________________________________________________________________________

    [Award official to list applicable excepted materials or indicate 
``none'']

    (3) The award official may add other iron, steel, and/or 
manufactured goods to the list in paragraph (b)(2) of this section and 
condition if the Federal Government determines that--
    (i) The cost of the domestic iron, steel, and/or manufactured goods 
would be unreasonable. The cost of domestic iron, steel, or manufactured 
goods used in the project is unreasonable when the cumulative cost of 
such material will increase the cost of the overall project by more than 
25 percent;
    (ii) The iron, steel, and/or manufactured good is not produced, or 
manufactured in the United States in sufficient and reasonably available 
quantities and of a satisfactory quality; or
    (iii) The application of the restriction of section 1605 of the 
Recovery Act would be inconsistent with the public interest.
    (c) Request for determination of inapplicability of Section 1605 of 
the Recovery Act. (1)(i) Any recipient request to use foreign iron, 
steel, and/or manufactured goods in accordance with paragraph (b)(3) of 
this section shall include adequate information for Federal Government 
evaluation of the request, including--
    (A) A description of the foreign and domestic iron, steel, and/or 
manufactured goods;
    (B) Unit of measure;
    (C) Quantity;
    (D) Cost;
    (E) Time of delivery or availability;
    (F) Location of the project;
    (G) Name and address of the proposed supplier; and
    (H) A detailed justification of the reason for use of foreign iron, 
steel, and/or manufactured goods cited in accordance with paragraph 
(b)(3) of this section.
    (ii) A request based on unreasonable cost shall include a reasonable 
survey of the market and a completed cost comparison table in the format 
in paragraph (d) of this section.
    (iii) The cost of iron, steel, and/or manufactured goods material 
shall include all delivery costs to the construction site and any 
applicable duty.
    (iv) Any recipient request for a determination submitted after 
Recovery Act funds have been obligated for a project for construction, 
alteration, maintenance, or repair shall explain why the recipient could 
not reasonably foresee the need for such determination and could not 
have requested the determination before the funds were obligated. If the 
recipient does not submit a satisfactory explanation, the award official 
need not make a determination.
    (2) If the Federal Government determines after funds have been 
obligated for a project for construction, alteration, maintenance, or 
repair that an exception to section 1605 of the Recovery Act applies, 
the award official will amend the award to allow use of the foreign 
iron, steel, and/or relevant manufactured goods. When the basis for the 
exception is nonavailability or public interest, the amended award shall 
reflect adjustment of the award amount, redistribution of budgeted 
funds, and/or other actions taken to cover costs associated with 
acquiring or using the foreign iron, steel, and/or relevant manufactured 
goods. When the basis for the exception is the unreasonable cost of the 
domestic iron,

[[Page 29]]

steel, or manufactured goods, the award official shall adjust the award 
amount or redistribute budgeted funds by at least the differential 
established in 2 CFR 176.110(a).
    (3) Unless the Federal Government determines that an exception to 
section 1605 of the Recovery Act applies, use of foreign iron, steel, 
and/or manufactured goods is noncompliant with section 1605 of the 
American Recovery and Reinvestment Act.
    (d) Data. To permit evaluation of requests under paragraph (b) of 
this section based on unreasonable cost, the Recipient shall include the 
following information and any applicable supporting data based on the 
survey of suppliers:

                                   Foreign and Domestic Items Cost Comparison
----------------------------------------------------------------------------------------------------------------
                         Description                           Unit of measure      Quantity     Cost (dollars)*
----------------------------------------------------------------------------------------------------------------
Item 1:......................................................
    Foreign steel, iron, or manufactured good................      ----------       ----------       ----------
    Domestic steel, iron, or manufactured good...............      ----------       ----------       ----------
Item 2:......................................................
    Foreign steel, iron, or manufactured good................      ----------       ----------       ----------
    Domestic steel, iron, or manufactured good...............      ----------       ----------       ----------
----------------------------------------------------------------------------------------------------------------
[List name, address, telephone number, email address, and contact for suppliers surveyed. Attach copy of
  response; if oral, attach summary.]
[Include other applicable supporting information.]
[*Include all delivery costs to the construction site.]



Sec.  176.150  Notice of Required Use of American Iron, Steel, 
and Manufactured Goods--Section 1605 of the American Recovery 
and Reinvestment Act of 2009.

    When requesting applications or proposals for Recovery Act programs 
or activities that may involve construction, alteration, maintenance, or 
repair of a public building or public work, and do not involve iron, 
steel, and/or manufactured goods covered under international agreements, 
the agency shall use the notice described in the following paragraphs in 
their solicitations:
    (a) Definitions. Manufactured good, public building and public work, 
and steel, as used in this notice, are defined in the 2 CFR 176.140.
    (b) Requests for determinations of inapplicability. A prospective 
applicant requesting a determination regarding the inapplicability of 
section 1605 of the American Recovery and Reinvestment Act of 2009 (Pub. 
L. 111-5) (Recovery Act) should submit the request to the award official 
in time to allow a determination before submission of applications or 
proposals. The prospective applicant shall include the information and 
applicable supporting data required by paragraphs at 2 CFR 176.140(c) 
and (d) in the request. If an applicant has not requested a 
determination regarding the inapplicability of 1605 of the Recovery Act 
before submitting its application or proposal, or has not received a 
response to a previous request, the applicant shall include the 
information and supporting data in the application or proposal.
    (c) Evaluation of project proposals. If the Federal Government 
determines that an exception based on unreasonable cost of domestic 
iron, steel, and/or manufactured goods applies, the Federal Government 
will evaluate a project requesting exception to the requirements of 
section 1605 of the Recovery Act by adding to the estimated total cost 
of the project 25 percent of the project cost, if foreign iron, steel, 
or manufactured goods are used in the project based on unreasonable cost 
of comparable manufactured domestic iron, steel, and/or manufactured 
goods.
    (d) Alternate project proposals. (1) When a project proposal 
includes foreign iron, steel, and/or manufactured goods not listed by 
the Federal Government at 2 CFR 176.140(b)(2), the applicant also may 
submit an alternate proposal based on use of equivalent domestic iron, 
steel, and/or manufactured goods.
    (2) If an alternate proposal is submitted, the applicant shall 
submit a separate cost comparison table prepared in accordance with 2 
CFR

[[Page 30]]

176.140(c) and (d) for the proposal that is based on the use of any 
foreign iron, steel, and/or manufactured goods for which the Federal 
Government has not yet determined an exception applies.
    (3) If the Federal Government determines that a particular exception 
requested in accordance with 2 CFR 176.140(b) does not apply, the 
Federal Government will evaluate only those proposals based on use of 
the equivalent domestic iron, steel, and/or manufactured goods, and the 
applicant shall be required to furnish such domestic items.



Sec.  176.160  Award term--Required Use of American Iron, Steel, 
and Manufactured Goods (covered under International
Agreements)--Section 1605 of the American Recovery and 
Reinvestment Act of 2009.

    When awarding Recovery Act funds for construction, alteration, 
maintenance, or repair of a public building or public work that involves 
iron, steel, and/or manufactured goods materials covered under 
international agreements, the agency shall use the award term described 
in the following paragraphs:
    (a) Definitions. As used in this award term and condition--
    Designated country--(1) A World Trade Organization Government 
Procurement Agreement country (Aruba, Austria, Belgium, Bulgaria, 
Canada, Chinese Taipei (Taiwan), Cyprus, Czech Republic, Denmark, 
Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, 
Ireland, Israel, Italy, Japan, Korea (Republic of), Latvia, 
Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, 
Poland, Portugal, Romania, Singapore, Slovak Republic, Slovenia, Spain, 
Sweden, Switzerland, and United Kingdom;
    (2) A Free Trade Agreement (FTA) country (Australia, Bahrain, 
Canada, Chile, Costa Rica, Dominican Republic, El Salvador, Guatemala, 
Honduras, Israel, Mexico, Morocco, Nicaragua, Oman, Peru, or Singapore);
    (3) A United States-European Communities Exchange of Letters (May 
15, 1995) country: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, 
Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, 
Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, 
Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden, and United 
Kingdom; or
    (4) An Agreement between Canada and the United States of America on 
Government Procurement country (Canada).
    Designated country iron, steel, and/or manufactured goods--(1) Is 
wholly the growth, product, or manufacture of a designated country; or
    (2) In the case of a manufactured good that consist in whole or in 
part of materials from another country, has been substantially 
transformed in a designated country into a new and different 
manufactured good distinct from the materials from which it was 
transformed.
    Domestic iron, steel, and/or manufactured good--(1) Is wholly the 
growth, product, or manufacture of the United States; or
    (2) In the case of a manufactured good that consists in whole or in 
part of materials from another country, has been substantially 
transformed in the United States into a new and different manufactured 
good distinct from the materials from which it was transformed. There is 
no requirement with regard to the origin of components or subcomponents 
in manufactured goods or products, as long as the manufacture of the 
goods occurs in the United States.
    Foreign iron, steel, and/or manufactured good means iron, steel and/
or manufactured good that is not domestic or designated country iron, 
steel, and/or manufactured good.
    Manufactured good means a good brought to the construction site for 
incorporation into the building or work that has been--
    (1) Processed into a specific form and shape; or
    (2) Combined with other raw material to create a material that has 
different properties than the properties of the individual raw 
materials.
    Public building and public work means a public building of, and a 
public work of, a governmental entity (the United States; the District 
of Columbia; commonwealths, territories, and minor outlying islands of 
the United States; State and local governments; and

[[Page 31]]

multi-State, regional, or interstate entities which have governmental 
functions). These buildings and works may include, without limitation, 
bridges, dams, plants, highways, parkways, streets, subways, tunnels, 
sewers, mains, power lines, pumping stations, heavy generators, 
railways, airports, terminals, docks, piers, wharves, ways, lighthouses, 
buoys, jetties, breakwaters, levees, and canals, and the construction, 
alteration, maintenance, or repair of such buildings and works.
    Steel means an alloy that includes at least 50 percent iron, between 
.02 and 2 percent carbon, and may include other elements.
    (b) Iron, steel, and manufactured goods. (1) The award term and 
condition described in this section implements--
    (i) Section 1605(a) of the American Recovery and Reinvestment Act of 
2009 (Pub. L. 111-5) (Recovery Act), by requiring that all iron, steel, 
and manufactured goods used in the project are produced in the United 
States; and
    (ii) Section 1605(d), which requires application of the Buy American 
requirement in a manner consistent with U.S. obligations under 
international agreements. The restrictions of section 1605 of the 
Recovery Act do not apply to designated country iron, steel, and/or 
manufactured goods. The Buy American requirement in section 1605 shall 
not be applied where the iron, steel or manufactured goods used in the 
project are from a Party to an international agreement that obligates 
the recipient to treat the goods and services of that Party the same as 
domestic goods and services. As of January 1, 2010, this obligation 
shall only apply to projects with an estimated value of $7,804,000 or 
more.
    (2) The recipient shall use only domestic or designated country 
iron, steel, and manufactured goods in performing the work funded in 
whole or part with this award, except as provided in paragraphs (b)(3) 
and (b)(4) of this section.
    (3) The requirement in paragraph (b)(2) of this section does not 
apply to the iron, steel, and manufactured goods listed by the Federal 
Government as follows:
________________________________________________________________________

    [Award official to list applicable excepted materials or indicate 
``none'']

    (4) The award official may add other iron, steel, and manufactured 
goods to the list in paragraph (b)(3) of this section if the Federal 
Government determines that--
    (i) The cost of domestic iron, steel, and/or manufactured goods 
would be unreasonable. The cost of domestic iron, steel, and/or 
manufactured goods used in the project is unreasonable when the 
cumulative cost of such material will increase the overall cost of the 
project by more than 25 percent;
    (ii) The iron, steel, and/or manufactured good is not produced, or 
manufactured in the United States in sufficient and reasonably available 
commercial quantities of a satisfactory quality; or
    (iii) The application of the restriction of section 1605 of the 
Recovery Act would be inconsistent with the public interest.
    (c) Request for determination of inapplicability of section 1605 of 
the Recovery Act or the Buy American Act. (1)(i) Any recipient request 
to use foreign iron, steel, and/or manufactured goods in accordance with 
paragraph (b)(4) of this section shall include adequate information for 
Federal Government evaluation of the request, including--
    (A) A description of the foreign and domestic iron, steel, and/or 
manufactured goods;
    (B) Unit of measure;
    (C) Quantity;
    (D) Cost;
    (E) Time of delivery or availability;
    (F) Location of the project;
    (G) Name and address of the proposed supplier; and
    (H) A detailed justification of the reason for use of foreign iron, 
steel, and/or manufactured goods cited in accordance with paragraph 
(b)(4) of this section.
    (ii) A request based on unreasonable cost shall include a reasonable 
survey of the market and a completed cost comparison table in the format 
in paragraph (d) of this section.
    (iii) The cost of iron, steel, or manufactured goods shall include 
all delivery costs to the construction site and any applicable duty.

[[Page 32]]

    (iv) Any recipient request for a determination submitted after 
Recovery Act funds have been obligated for a project for construction, 
alteration, maintenance, or repair shall explain why the recipient could 
not reasonably foresee the need for such determination and could not 
have requested the determination before the funds were obligated. If the 
recipient does not submit a satisfactory explanation, the award official 
need not make a determination.
    (2) If the Federal Government determines after funds have been 
obligated for a project for construction, alteration, maintenance, or 
repair that an exception to section 1605 of the Recovery Act applies, 
the award official will amend the award to allow use of the foreign 
iron, steel, and/or relevant manufactured goods. When the basis for the 
exception is nonavailability or public interest, the amended award shall 
reflect adjustment of the award amount, redistribution of budgeted 
funds, and/or other appropriate actions taken to cover costs associated 
with acquiring or using the foreign iron, steel, and/or relevant 
manufactured goods.. When the basis for the exception is the 
unreasonable cost of the domestic iron, steel, or manufactured goods, 
the award official shall adjust the award amount or redistribute 
budgeted funds, as appropriate, by at least the differential established 
in 2 CFR 176.110(a).
    (3) Unless the Federal Government determines that an exception to 
section 1605 of the Recovery Act applies, use of foreign iron, steel, 
and/or manufactured goods other than designated country iron, steel, 
and/or manufactured goods is noncompliant with the applicable Act.
    (d) Data. To permit evaluation of requests under paragraph (b) of 
this section based on unreasonable cost, the applicant shall include the 
following information and any applicable supporting data based on the 
survey of suppliers:

               Foreign and Domestic Items Cost Comparison
------------------------------------------------------------------------
                                   Unit of                      Cost
          Description              measure      Quantity     (dollars)*
------------------------------------------------------------------------
Item 1:
    Foreign steel, iron, or      ----------    ----------    ----------
     manufactured good........
    Domestic steel, iron, or     ----------    ----------    ----------
     manufactured good........
Item 2:
    Foreign steel, iron, or      ----------    ----------    ----------
     manufactured good........
    Domestic steel, iron, or     ----------    ----------    ----------
     manufactured good........
------------------------------------------------------------------------
[List name, address, telephone number, email address, and contact for
  suppliers surveyed. Attach copy of response; if oral, attach summary.]
[Include other applicable supporting information.]
[*Include all delivery costs to the construction site.]


[74 FR 18450, Apr. 23, 2009, as amended at 75 FR 14323, Mar. 25, 2010]



Sec.  176.170  Notice of Required Use of American Iron, Steel, and 
Manufactured Goods (covered under International Agreements)--Section 
1605 of the American Recovery and Reinvestment Act of 2009.

    When requesting applications or proposals for Recovery Act programs 
or activities that may involve construction, alteration, maintenance, or 
repair of a public building or public work, and involve iron, steel, 
and/or manufactured goods covered under international agreements, the 
agency shall use the notice described in the following paragraphs in the 
solicitation:
    (a) Definitions. Designated country iron, steel, and/or manufactured 
goods, foreign iron, steel, and/or manufactured good, manufactured good, 
public building and public work, and steel, as used in this provision, 
are defined in 2 CFR 176.160(a).
    (b) Requests for determinations of inapplicability. A prospective 
applicant requesting a determination regarding the inapplicability of 
section 1605 of the American Recovery and Reinvestment Act of 2009 (Pub. 
L. 111-5) (Recovery Act) should submit the request to the

[[Page 33]]

award official in time to allow a determination before submission of 
applications or proposals. The prospective applicant shall include the 
information and applicable supporting data required by 2 CFR 176.160 (c) 
and (d) in the request. If an applicant has not requested a 
determination regarding the inapplicability of section 1605 of the 
Recovery Act before submitting its application or proposal, or has not 
received a response to a previous request, the applicant shall include 
the information and supporting data in the application or proposal.
    (c) Evaluation of project proposals. If the Federal Government 
determines that an exception based on unreasonable cost of domestic 
iron, steel, and/or manufactured goods applies, the Federal Government 
will evaluate a project requesting exception to the requirements of 
section 1605 of the Recovery Act by adding to the estimated total cost 
of the project 25 percent of the project cost if foreign iron, steel, or 
manufactured goods are used based on unreasonable cost of comparable 
domestic iron, steel, or manufactured goods.
    (d) Alternate project proposals. (1) When a project proposal 
includes foreign iron, steel, and/or manufactured goods, other than 
designated country iron, steel, and/or manufactured goods, that are not 
listed by the Federal Government in this Buy American notice in the 
request for applications or proposals, the applicant may submit an 
alternate proposal based on use of equivalent domestic or designated 
country iron, steel, and/or manufactured goods.
    (2) If an alternate proposal is submitted, the applicant shall 
submit a separate cost comparison table prepared in accordance with 
paragraphs 2 CFR 176.160(c) and (d) for the proposal that is based on 
the use of any foreign iron, steel, and/or manufactured goods for which 
the Federal Government has not yet determined an exception applies.
    (3) If the Federal Government determines that a particular exception 
requested in accordance with 2 CFR 176.160(b) does not apply, the 
Federal Government will evaluate only those proposals based on use of 
the equivalent domestic or designated country iron, steel, and/or 
manufactured goods, and the applicant shall be required to furnish such 
domestic or designated country items.



  Sec. Appendix to Subpart B of 2 CFR Part 176--U.S. States, Other Sub-
 Federal Entities, and Other Entities Subject to U.S. Obligations Under 
           International Agreements (as of February 16, 2010)

----------------------------------------------------------------------------------------------------------------
                                                                                          Relevant international
                States                     Entities covered            Exclusions               agreements
----------------------------------------------------------------------------------------------------------------
Arizona..............................  Executive branch         .......................  --WTO GPA.
                                        agencies.
                                                                                         --U.S.-Chile FTA.
                                                                                         --U.S.-Singapore FTA.
Arkansas.............................  Executive branch         Construction services..  --WTO GPA.
                                        agencies, including                              --DR-CAFTA.
                                        universities but                                 --U.S.-Australia FTA.
                                        excluding the Office                             --U.S.-Chile FTA.
                                        of Fish and Game.
                                                                                         --U.S.-Morocco FTA.
                                                                                         --U.S.-Peru TPA.
                                                                                         --U.S.-Singapore FTA.
California...........................  Executive branch         .......................  --WTO GPA.
                                        agencies.
                                                                                         --U.S.-Australia FTA.
                                                                                         --U.S.-Chile FTA.
                                                                                         --U.S.-Singapore FTA.
Colorado.............................  Executive branch         .......................  --WTO GPA.
                                        agencies.
                                                                                         --DR-CAFTA.
                                                                                         --U.S.-Australia FTA.
                                                                                         --U.S.-Chile FTA.
                                                                                         --U.S.-Morocco FTA.
                                                                                         --U.S.-Peru TPA.
                                                                                         --U.S.-Singapore FTA.

[[Page 34]]

 
Connecticut..........................  --Department of          .......................  --WTO GPA.
                                        Administrative                                   --DR-CAFTA.
                                        Services                                         --U.S.-Australia FTA.
                                       --Department of                                   --U.S.-Chile FTA.
                                        Transportation..                                 --U.S.-Morocco FTA.
                                       --Department of Public                            --U.S.-Singapore FTA.
                                        Works..
                                       --Constituent Units of
                                        Higher Education.
Delaware.............................  --Administrative         Construction-grade       --WTO GPA.
                                        Services (Central        steel (including        --DR-CAFTA (except
                                        Procurement Agency).     requirements on          Honduras).
                                       --State Universities...   subcontracts); motor    --U.S.-Australia FTA.
                                       --State Colleges.......   vehicles; coal.         --U.S.-Chile FTA.
                                                                                         --U.S.-Morocco FTA.
                                                                                         --U.S.-Singapore FTA.
Florida..............................  Executive branch         Construction-grade       --WTO GPA.
                                        agencies.                steel (including        --DR-CAFTA.
                                                                 requirements on         --U.S.-Australia FTA.
                                                                 subcontracts); motor    --U.S.-Chile FTA.
                                                                 vehicles; coal.
                                                                                         --U.S.-Morocco FTA.
                                                                                         --U.S.-Peru TPA.
                                                                                         --U.S.-Singapore FTA.
Georgia..............................  --Department of          Beef; compost; mulch...  --U.S.-Australia FTA.
                                        Administrative
                                        Services.
                                       --Georgia Technology
                                        Authority.
Hawaii...............................  Department of            Software developed in    --WTO GPA.
                                        Accounting and General   the State;              --DR-CAFTA (except
                                        Services.                construction.            Honduras).
                                                                                         --U.S.-Australia FTA.
                                                                                         --U.S.-Chile FTA.
                                                                                         --U.S.-Morocco FTA.
                                                                                         --U.S.-Singapore FTA.
Idaho................................  Central Procurement      .......................  --WTO GPA.
                                        Agency (including all                            --DR-CAFTA (except
                                        colleges and                                      Honduras).
                                        universities subject                             --U.S.-Australia FTA.
                                        to central purchasing                            --U.S.-Chile FTA.
                                        oversight).
                                                                                         --U.S.-Morocco FTA.
                                                                                         --U.S.-Singapore FTA.
Illinois.............................  --Department of Central  Construction-grade       --WTO GPA.
                                        Management Services.     steel (including        --U.S.-Australia FTA.
                                                                 requirements on         --U.S.-Chile FTA.
                                                                 subcontracts); motor
                                                                 vehicles; coal.
                                                                                         --U.S.-Peru TPA.
                                                                                         --U.S.-Singapore FTA.
                                                                                         --U.S.-EC.
                                                                                         Exchange of Letters
                                                                                          (applies to EC Member
                                                                                          States for procurement
                                                                                          not covered by WTO GPA
                                                                                          and only where the
                                                                                          State considers out-of-
                                                                                          State suppliers).
Iowa.................................  --Department of General  Construction-grade       --WTO GPA.
                                        Services                 steel (including        --U.S.-Chile FTA.
                                       --Department of           requirements on         --U.S.-Singapore FTA.
                                        Transportation..         subcontracts); motor
                                       --Board of Regents'       vehicles; coal.
                                        Institutions
                                        (universities).
Kansas...............................  Executive branch         Construction services;   --WTO GPA.
                                        agencies.                automobiles; aircraft.  --U.S.-Australia FTA.
                                                                                         --U.S.-Chile FTA.
                                                                                         --U.S.-Morocco FTA.
                                                                                         --U.S.-Singapore FTA.
Kentucky.............................  Division of Purchases,   Construction projects..  --WTO GPA.
                                        Finance and                                      --DR-CAFTA.
                                        Administration Cabinet.                          --U.S.-Australia FTA.
                                                                                         --U.S.-Chile FTA.
                                                                                         --U.S.-Morocco FTA.
                                                                                         --U.S.-Singapore FTA.
Louisiana............................  Executive branch         .......................  --WTO GPA.
                                        agencies.

[[Page 35]]

 
                                                                                         --DR-CAFTA.
                                                                                         --U.S.-Australia FTA.
                                                                                         --U.S.-Chile FTA.
                                                                                         --U.S.-Morocco FTA.
                                                                                         --U.S.-Singapore FTA.
Maine................................  --Department of          Construction-grade       --WTO GPA.
                                        Administrative and       steel (including        --U.S.-Australia FTA.
                                        Financial Services       requirements on         --U.S.-Chile FTA.
                                       --Bureau of General       subcontracts); motor    --U.S.-Singapore FTA.
                                        Services (covering       vehicles; coal.
                                        State government
                                        agencies and school
                                        construction).
                                       -- Department of
                                        Transportation..
Maryland.............................  --Office of the          Construction-grade       --WTO GPA.
                                        Treasury                 steel (including        --DR-CAFTA.
                                       --Department of the       requirements on         --U.S.-Australia FTA.
                                        Environment..            subcontracts); motor    --U.S.-Chile FTA.
                                       --Department of General   vehicles; coal.         --U.S.-Morocco FTA.
                                        Services..                                       --U.S.-Singapore FTA.
                                       --Department of Housing
                                        and Community
                                        Development..
                                       --Department of Human
                                        Resources..
                                       --Department of
                                        Licensing and
                                        Regulation..
                                       --Department of Natural
                                        Resources..
                                       --Department of Public
                                        Safety and
                                        Correctional Services..
                                       --Department of
                                        Personnel..
                                       --Department of
                                        Transportation..
Massachusetts........................  --Executive Office for   .......................  --WTO GPA.
                                        Administration and                               --U.S.-Chile FTA.
                                        Finance.
                                       --Executive Office of                             --U.S.-Singapore FTA.
                                        Communities and
                                        Development.
                                       --Executive Office of
                                        Consumer Affairs.
                                       --Executive Office of
                                        Economic Affairs.
                                       --Executive Office of
                                        Education.
                                       --Executive Office of
                                        Elder Affairs.
                                       --Executive Office of
                                        Environmental Affairs.
                                       --Executive Office of
                                        Health and Human
                                        Service.
                                       --Executive Office of
                                        Labor.
                                       --Executive Office of
                                        Public Safety.
                                       --Executive Office of
                                        Transportation and
                                        Construction.
Michigan.............................  Department of            Construction-grade       --WTO GPA.
                                        Management and Budget.   steel (including        --U.S.-Australia FTA.
                                                                 requirements on         --U.S.-Chile FTA.
                                                                 subcontracts); motor    --U.S.-Singapore FTA.
                                                                 vehicles; coal.
Minnesota............................  Executive branch         .......................  --WTO GPA.
                                        agencies.
                                                                                         --U.S.-Chile FTA.
                                                                                         --U.S.-Singapore FTA.
Mississippi..........................  Department of Finance    Services...............  --WTO GPA.
                                        and Administration.                              --DR-CAFTA.
                                                                                         --U.S.-Australia FTA.
                                                                                         --U.S.-Chile FTA.
                                                                                         --U.S.-Morocco FTA.
                                                                                         --U.S.-Peru TPA.
                                                                                         --U.S.-Singapore FTA.
Missouri.............................  --Office of              .......................  --WTO GPA.
                                        Administration.
                                       --Division of                                     --U.S.-Chile FTA.
                                        Purchasing and                                   --U.S.-Singapore FTA.
                                        Materials Management.
Montana..............................  Executive branch         Goods..................  --WTO GPA.
                                        agencies.
                                                                                         --U.S.-Chile FTA.
                                                                                         --U.S.-Singapore FTA.

[[Page 36]]

 
Nebraska.............................  Central Procurement      .......................  --WTO GPA.
                                        Agency.
                                                                                         --DR-CAFTA.
                                                                                         --U.S.-Australia FTA.
                                                                                         --U.S.-Chile FTA.
                                                                                         --U.S.-Morocco FTA.
                                                                                         --U.S.-Singapore FTA.
New Hampshire........................  Central Procurement      Construction-grade       --WTO GPA.
                                        Agency.                  steel (including        --DR-CAFTA.
                                                                 requirements on         --U.S.-Australia FTA.
                                                                 subcontracts), motor    --U.S.-Chile FTA.
                                                                 vehicles; coal.         --U.S.-Morocco FTA.
                                                                                         --U.S.-Singapore FTA.
New York.............................  --State agencies         Construction-grade       --WTO GPA.
                                       --State university        steel (including        --DR-CAFTA.
                                        system..                 requirements on         --U.S.-Australia FTA.
                                       --Public authorities      subcontracts); motor    --U.S.-Chile FTA.
                                        and public benefit       vehicles; coal;         --U.S.-Morocco FTA.
                                        corporations, with the   transit cars, buses     --U.S.-Peru TPA.
                                        exception of those       and related equipment.  --U.S.-Singapore FTA.
                                        entities with multi-
                                        State mandates..
North Dakota.........................  .......................  .......................  --U.S.-EC Exchange of
                                                                                          Letters (applies to EC
                                                                                          Member States and only
                                                                                          where the State
                                                                                          considers out-of-State
                                                                                          suppliers).
Oklahoma.............................  Department of Central    Construction services;   --WTO GPA.
                                        Services and all State   construction-grade      --U.S.-Australia FTA.
                                        agencies and             steel (including        --U.S.-Chile FTA.
                                        departments subject to   requirements on         --U.S.-Peru TPA.
                                        the Oklahoma Central     subcontracts); motor    --U.S.-Singapore FTA.
                                        Purchasing Act.          vehicles; coal.
Oregon...............................  Department of            .......................  --WTO GPA.
                                        Administrative                                   --DR-CAFTA (except
                                        Services.                                         Honduras).
                                                                                         --U.S.-Australia FTA.
                                                                                         --U.S.-Chile FTA.
                                                                                         --U.S.-Morocco FTA.
                                                                                         --U.S.-Singapore FTA.
Pennsylvania.........................  Executive branch         Construction-grade       --WTO GPA.
                                        agencies, including:     steel (including        --U.S.-Australia FTA.
                                       --Governor's Office....   requirements on         --U.S.-Chile FTA.
                                       --Department of the       subcontracts); motor    --U.S.-Singapore FTA.
                                        Auditor General..        vehicles; coal.
                                       --Treasury Department..
                                       --Department of
                                        Agriculture..
                                       --Department of Banking
                                       --Pennsylvania
                                        Securities Commission.
                                       --Department of Health.
                                       --Department of
                                        Transportation.
                                       --Insurance Department.
                                       --Department of Aging..
                                       --Department of
                                        Correction.
                                       --Department of Labor
                                        and Industry.
                                       --Department of
                                        Military Affairs.
                                       --Office of Attorney
                                        General.
                                       --Department of General
                                        Services.
                                       --Department of
                                        Education.
                                       --Public Utility
                                        Commission.
                                       --Department of Revenue
                                       --Department of State..
                                       --Pennsylvania State
                                        Police.
                                       --Department of Public
                                        Welfare.
                                       --Fish Commission......
                                       --Game Commission......
                                       --Department of
                                        Commerce.
                                       --Board of Probation
                                        and Parole.
                                       --Liquor Control Board.
                                       --Milk Marketing Board.

[[Page 37]]

 
                                       --Lieutenant Governor's
                                        Office.
                                       --Department of
                                        Community Affairs.
                                       --Pennsylvania
                                        Historical and Museum
                                        Commission.
                                       --Pennsylvania
                                        Emergency Management
                                        Agency.
                                       --State Civil Service
                                        Commission.
                                       --Pennsylvania Public
                                        Television Network.
                                       --Department of
                                        Environmental
                                        Resources.
                                       --State Tax
                                        Equalization Board.
                                       --Department of Public
                                        Welfare.
                                       --State Employees'
                                        Retirement System.
                                       --Pennsylvania
                                        Municipal Retirement
                                        Board.
                                       --Public School
                                        Employees' Retirement
                                        System.
                                       --Pennsylvania Crime
                                        Commission.
                                       --Executive Offices....
Rhode Island.........................  Executive branch         Boats, automobiles,      --WTO GPA.
                                        agencies.                buses and related       --DR-CAFTA (except
                                                                 equipment.               Honduras).
                                                                                         --U.S.-Australia FTA.
                                                                                         --U.S.-Chile FTA.
                                                                                         --U.S.-Morocco FTA.
                                                                                         --U.S.-Singapore FTA.
South Dakota.........................  Central Procuring        Beef...................  --WTO GPA.
                                        Agency (including                                --DR-CAFTA.
                                        universities and penal                           --U.S.-Australia FTA.
                                        institutions).
                                                                                         --U.S.-Chile FTA.
                                                                                         --U.S.-Morocco FTA.
                                                                                         --U.S.-Singapore FTA.
Tennessee............................  Executive branch         Services; construction.  --WTO GPA-U.S.-
                                        agencies.                                         Australia FTA.
                                                                                         --U.S.-Chile FTA.
                                                                                         --U.S.-Singapore FTA.
Texas................................  Texas Building and       .......................  --WTO GPA.
                                        Procurement Commission.                          --DR-CAFTA.
                                                                                         --U.S.-Australia FTA.
                                                                                         --U.S.-Chile FTA.
                                                                                         --U.S.-Morocco FTA.
                                                                                         --U.S.-Peru TPA.
                                                                                         --U.S.-Singapore FTA.
Utah.................................  Executive branch         .......................  --WTO GPA.
                                        agencies.                                        --DR-CAFTA (except
                                                                                          Honduras).
                                                                                         --U.S.-Australia FTA.
                                                                                         --U.S.-Chile FTA.
                                                                                         --U.S.-Morocco FTA.
                                                                                         --U.S.-Peru TPA.
                                                                                         --U.S.-Singapore FTA.
Vermont..............................  Executive branch         .......................  --WTO GPA.
                                        agencies.                                        --DR-CAFTA.
                                                                                         --U.S.-Australia FTA.
                                                                                         --U.S.-Chile FTA.
                                                                                         --U.S.-Morocco FTA.
                                                                                         --U.S.-Singapore FTA.
Washington...........................  Executive branch         Fuel; paper products;    --WTO GPA.
                                        agencies, including:     boats; ships; and       --DR-CAFTA.
                                       --General                 vessels.                --U.S.-Australia FTA.
                                        Administration..                                 --U.S.-Chile FTA.
                                       --Department of                                   --U.S.-Morocco FTA.
                                        Transportation..                                 --U.S.-Singapore FTA.
                                       --State Universities...

[[Page 38]]

 
West Virginia........................  .......................  .......................  --U.S.-EC Exchange of
                                                                                          Letters (applies to EC
                                                                                          Member States and only
                                                                                          where the State
                                                                                          considers out-of-State
                                                                                          suppliers).
Wisconsin............................  Executive branch         .......................  --WTO GPA.
                                        agencies, including:                             --U.S.-Chile FTA.
                                       --Department of                                   --U.S.-Singapore FTA.
                                        Administration..
                                       --State Correctional
                                        Institutions..
                                       --Department of
                                        Development..
                                       --Educational
                                        Communications Board..
                                       --Department of
                                        Employment Relations..
                                       --State Historical
                                        Society..
                                       --Department of Health
                                        and Social Services..
                                       --Insurance
                                        Commissioner..
                                       --Department of
                                        Justice..
                                       --Lottery Board........
                                       --Department of Natural
                                        Resources..
                                       --Administration for
                                        Public Instruction..
                                       --Racing Board.........
                                       --Department of
                                        Revenue..
                                       --State Fair Park
                                        Board..
                                       --Department of
                                        Transportation..
                                       --State University
                                        System..
Wyoming..............................  --Procurement Services   Construction-grade       --WTO GPA.
                                        Division                 steel (including        --DR-CAFTA.
                                       --Wyoming Department of   requirements on         --U.S.-Australia FTA.
                                        Transportation..         subcontracts); motor    --U.S.-Chile FTA.
                                       --University of           vehicles; coal.         --U.S.-Morocco FTA.
                                        Wyoming..                                        --U.S.-Singapore FTA.
----------------------------------------------------------------------------------------------------------------
      Other sub-federal entities           Entities covered            Exclusions         Relevant international
                                                                                                agreements
----------------------------------------------------------------------------------------------------------------
Puerto Rico..........................  --Department of State    Construction services..  --DR-CAFTA.
                                       --Department of                                   --U.S.-Peru TPA.
                                        Justice..
                                       --Department of the      --Department of
                                        Treasury.                Economic Development
                                       .......................   and Commerce.
                                       --Department of Labor
                                        and Human Resources.
                                       --Department of Natural
                                        and Environmental
                                        Resources.
                                       --Department of
                                        Consumer Affairs.
                                       --Department of Sports
                                        and Recreation.
Port Authority of New York and New     .......................  Restrictions attached    --WTO GPA (except
 Jersey.                                                         to Federal funds for     Canada).
                                                                 airport projects;       --U.S.-Chile FTA.
                                                                 maintenance, repair     --U.S.-Singapore FTA.
                                                                 and operating
                                                                 materials and supplies.
Port of Baltimore....................  .......................  Restrictions attached    --WTO GPA (except
                                                                 to Federal funds for     Canada).
                                                                 airport projects.       --U.S.-Chile FTA.
                                                                                         --U.S.-Singapore FTA.
New York Power Authority.............  .......................  Restrictions attached    --WTO GPA (except
                                                                 to Federal funds for     Canada).
                                                                 airport projects;       --U.S.-Chile FTA.
                                                                 conditions specified    --U.S.-Singapore FTA.
                                                                 for the State of New
                                                                 York

[[Page 39]]

 
Massachusetts Port Authority.........  .......................  .......................  U.S.-EC Exchange of
                                                                                          Letters (applies to EC
                                                                                          Member States and only
                                                                                          where the Port
                                                                                          Authority considers
                                                                                          out-of-State
                                                                                          suppliers).
Boston, Chicago, Dallas, Detroit,      .......................  .......................  U.S.-EC Exchange of
 Indianapolis, Nashville, and San                                                         Letters (only applies
 Antonio.                                                                                 to EC Member States
                                                                                          and where the city
                                                                                          considers out-of-city
                                                                                          suppliers).
----------------------------------------------------------------------------------------------------------------
            Other entities                 Entities covered            Exclusions         Relevant international
                                                                                                agreements
----------------------------------------------------------------------------------------------------------------
Rural Utilities Service (waiver of     Any recipient..........  .......................  --WTO GPA.
 Buy American restriction on                                                             --DR-CAFTA.
 financing for all power generation                                                      --NAFTA.
 projects).                                                                              --U.S.-Australia FTA.
                                                                                         --U.S.-Bahrain FTA.
                                                                                         --U.S.-Chile FTA.
                                                                                         --U.S.-Morocco FTA.
                                                                                         --U.S.-Oman FTA.
                                                                                         --U.S.-Peru TPA.
                                                                                         --U.S.-Singapore FTA.
Rural Utilities Service (waiver of     Any recipient..........  .......................  --NAFTA.
 Buy American restriction on                                                             --U.S.-Israel FTA.
 financing for telecommunications
 projects).
U.S. Department of Agriculture, Rural  Any recipient..........  .......................  U.S.-Canada Agreement.
 Utilities Services, Water and Waste
 Disposal Programs (exclusion of
 Canadian iron, steel and
 manufactured products from domestic
 purchasing restriction in Section
 1605 of American Recovery and
 Reinvestment Act of 2009).
U.S. Department of Agriculture, Rural  Any recipient..........  .......................  U.S.-Canada Agreement.
 Housing Service, Community
 Facilities Program (exclusion of
 Canadian iron, steel and
 manufactured products from domestic
 purchasing restriction in Section
 1605 of American Recovery and
 Reinvestment Act of 2009).
U.S. Department of Energy, Office of   Any recipient..........  .......................  U.S.-Canada Agreement.
 Energy Efficiency and Renewable
 Energy, Energy Efficiency and
 Conservation Block Grants (exclusion
 of Canadian iron, steel and
 manufactured products from domestic
 purchasing restriction in Section
 1605 of American Recovery and
 Reinvestment Act of 2009).
U.S. Department of Energy, Office of   Any recipient..........  .......................  U.S.-Canada Agreement.
 Energy Efficiency and Renewable
 Energy, State Energy Program
 (exclusion of Canadian iron, steel
 and manufactured products from
 domestic purchasing restriction in
 Section 1605 of American Recovery
 and Reinvestment Act of 2009 (ARRA).

[[Page 40]]

 
U.S. Department of Housing and Urban   Any recipient..........  .......................  U.S.-Canada Agreement.
 Development, Office of Community
 Planning and Development, Community
 Development Block Grants Recovery
 (CDBG-R) (exclusion of Canadian
 iron, steel and manufactured
 products from domestic purchasing
 restriction in Section 1605 of
 American Recovery and Reinvestment
 Act of 2009).
U.S. Department of Housing and Urban   Any recipient..........  .......................  U.S.-Canada Agreement.
 Development, Office of Public and
 Indian Housing, Public Housing
 Capital Fund (exclusion of Canadian
 iron, steel and manufactured
 products from domestic purchasing
 restriction in Section 1605 of
 American Recovery and Reinvestment
 Act of 2009).
U.S. Environmental Protection Clean    Any recipient..........  .......................  U.S.-Canada Agreement.
 Water and Drinking Water State
 Revolving Funds Agency for projects
 funded by reallocated ARRA funds
 where the contracts are signed after
 February 17, 2010 (exclusion of
 Canadian iron, steel and
 manufactured products from domestic
 purchasing restriction in Section
 1605 of American Recovery and
 Reinvestment Act of 2009).
----------------------------------------------------------------------------------------------------------------

    General Exceptions: The following restrictions and exceptions are 
excluded from U.S. obligations under international agreements:
    1. The restrictions attached to Federal funds to States for mass 
transit and highway projects.
    2. Dredging.
    The World Trade Organization Government Procurement Agreement (WTO 
GPA) Parties: Aruba, Austria, Belgium, Bulgaria, Canada, Chinese Taipei 
(Taiwan), Cyprus, Czech Republic, Denmark, Estonia, Finland, France, 
Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, 
Japan, Korea (Republic of), Latvia, Liechtenstein, Lithuania, 
Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, 
Singapore, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, and 
United Kingdom.
    The Free Trade Agreements and the respective Parties to the 
agreements are:
    (1) Dominican Republic-Central America-United States Free Trade 
Agreement (DR-CAFTA): Costa Rica, Dominican Republic, El Salvador, 
Guatemala, Honduras, and Nicaragua;
    (2) North American Free Trade Agreement (NAFTA): Canada and Mexico;
    (3) United States-Australia Free Trade Agreement (U.S.-Australia 
FTA);
    (4) United States-Bahrain Free Trade Agreement (U.S.-Bahrain FTA);
    (5) United States-Chile Free Trade Agreement (U.S.-Chile FTA);
    (6) United States-Israel Free Trade Agreement (U.S.-Israel FTA);
    (7) United States-Morocco Free Trade Agreement (U.S.-Morocco FTA);
    (8) United States-Oman Free Trade Agreement (U.S.-Oman FTA);
    (9) United States-Peru Trade Promotion Agreement (U.S.-Peru TPA); 
and
    (10) United States-Singapore Free Trade Agreement (U.S.-Singapore 
FTA).
    United States-European Communities Exchange of Letters (May 30, 
1995) (U.S.-EC Exchange of Letters) applies to EC Member States: 
Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, 
Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, 
Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, 
Slovak Republic, Slovenia, Spain, Sweden, and United Kingdom.
    Agreement between the Government of Canada and the Government of the 
United States of

[[Page 41]]

America on Government Procurement (Feb. 10, 2010) (U.S.-Canada 
Agreement): Applies only to Canada.

[75 FR 14324, Mar. 25, 2010]



  Subpart C_Wage Rate Requirements Under Section 1606 of the American 
                  Recovery and Reinvestment Act of 2009



Sec.  176.180  Procedure.

    The award official shall insert the standard award term in this 
subpart in all awards funded in whole or in part with Recovery Act 
funds.



Sec.  176.190  Award term--Wage rate requirements under 
Section 1606 of the Recovery Act.

    When issuing announcements or requesting applications for Recovery 
Act programs or activities that may involve construction, alteration, 
maintenance, or repair the agency shall use the award term described in 
the following paragraphs:
    (a) Section 1606 of the Recovery Act requires that all laborers and 
mechanics employed by contractors and subcontractors on projects funded 
directly by or assisted in whole or in part by and through the Federal 
Government pursuant to the Recovery Act shall be paid wages at rates not 
less than those prevailing on projects of a character similar in the 
locality as determined by the Secretary of Labor in accordance with 
subchapter IV of chapter 31 of title 40, United States Code.
    Pursuant to Reorganization Plan No. 14 and the Copeland Act, 40 
U.S.C. 3145, the Department of Labor has issued regulations at 29 CFR 
parts 1, 3, and 5 to implement the Davis-Bacon and related Acts. 
Regulations in 29 CFR 5.5 instruct agencies concerning application of 
the standard Davis-Bacon contract clauses set forth in that section. 
Federal agencies providing grants, cooperative agreements, and loans 
under the Recovery Act shall ensure that the standard Davis-Bacon 
contract clauses found in 29 CFR 5.5(a) are incorporated in any 
resultant covered contracts that are in excess of $2,000 for 
construction, alteration or repair (including painting and decorating).
    (b) For additional guidance on the wage rate requirements of section 
1606, contact your awarding agency. Recipients of grants, cooperative 
agreements and loans should direct their initial inquiries concerning 
the application of Davis-Bacon requirements to a particular federally 
assisted project to the Federal agency funding the project. The 
Secretary of Labor retains final coverage authority under Reorganization 
Plan Number 14.



 Subpart D_Single Audit Information for Recipients of Recovery Act Funds



Sec.  176.200  Procedure.

    The award official shall insert the standard award term in this 
subpart in all awards funded in whole or in part with Recovery Act 
funds.



Sec.  176.210  Award term--Recovery Act transactions listed in 
Schedule of Expenditures of Federal Awards and Recipient 
Responsibilities for Informing Subrecipients.

    The award term described in this section shall be used by agencies 
to clarify recipient responsibilities regarding tracking and documenting 
Recovery Act expenditures:
    (a) To maximize the transparency and accountability of funds 
authorized under the American Recovery and Reinvestment Act of 2009 
(Pub. L. 111-5) (Recovery Act) as required by Congress and in accordance 
with 2 CFR 215.21 ``Uniform Administrative Requirements for Grants and 
Agreements'' and OMB Circular A-102 Common Rules provisions, recipients 
agree to maintain records that identify adequately the source and 
application of Recovery Act funds. OMB Circular A-102 is available at 
http://www.whitehouse.gov/omb/circulars/a102/a102.html.
    (b) For recipients covered by the Single Audit Act Amendments of 
1996 and OMB Circular A-133, ``Audits of States, Local Governments, and 
Non-Profit Organizations,'' recipients agree to separately identify the 
expenditures for Federal awards under the Recovery Act on the Schedule 
of Expenditures of Federal Awards (SEFA) and the Data Collection Form 
(SF-SAC) required by OMB Circular A-133. OMB Circular A-133 is available 
at http://www.whitehouse.gov/omb/circulars/a133/

[[Page 42]]

a133.html. This shall be accomplished by identifying expenditures for 
Federal awards made under the Recovery Act separately on the SEFA, and 
as separate rows under Item 9 of Part III on the SF-SAC by CFDA number, 
and inclusion of the prefix ``ARRA-'' in identifying the name of the 
Federal program on the SEFA and as the first characters in Item 9d of 
Part III on the SF-SAC.
    (c) Recipients agree to separately identify to each subrecipient, 
and document at the time of subaward and at the time of disbursement of 
funds, the Federal award number, CFDA number, and amount of Recovery Act 
funds. When a recipient awards Recovery Act funds for an existing 
program, the information furnished to subrecipients shall distinguish 
the subawards of incremental Recovery Act funds from regular subawards 
under the existing program.
    (d) Recipients agree to require their subrecipients to include on 
their SEFA information to specifically identify Recovery Act funding 
similar to the requirements for the recipient SEFA described above. This 
information is needed to allow the recipient to properly monitor 
subrecipient expenditure of ARRA funds as well as oversight by the 
Federal awarding agencies, Offices of Inspector General and the 
Government Accountability Office.

                        PARTS 177	179 [RESERVED]



PART 180_OMB GUIDELINES TO AGENCIES ON GOVERNMENTWIDE DEBARMENT 
AND SUSPENSION (NONPROCUREMENT)--Table of Contents



Sec.
180.5 What does this part do?
180.10 How is this part organized?
180.15 To whom do these guidelines apply?
180.20 What must a Federal agency do to implement these guidelines?
180.25 What must a Federal agency address in its implementation of these 
          guidelines?
180.30 Where does a Federal agency implement these guidelines?
180.35 By when must a Federal agency implement these guidelines?
180.40 How are these guidelines maintained?
180.45 Do these guidelines cover persons who are disqualified, as well 
          as those who are excluded from nonprocurement transactions?

                            Subpart A_General

180.100 How are subparts A through I organized?
180.105 How is this part written?
180.110 Do terms in this part have special meanings?
180.115 What do subparts A through I of this part do?
180.120 Do subparts A through I of this part apply to me?
180.125 What is the purpose of the nonprocurement debarment and 
          suspension system?
180.130 How does an exclusion restrict a person's involvement in covered 
          transactions?
180.135 May a Federal agency grant an exception to let an excluded 
          person participate in a covered transaction?
180.140 Does an exclusion under the nonprocurement system affect a 
          person's eligibility for Federal procurement contracts?
180.145 Does an exclusion under the Federal procurement system affect a 
          person's eligibility to participate in nonprocurement 
          transactions?
180.150 Against whom may a Federal agency take an exclusion action?
180.155 How do I know if a person is excluded?

                     Subpart B_Covered Transactions

180.200 What is a covered transaction?
180.205 Why is it important to know if a particular transaction is a 
          covered transaction?
180.210 Which nonprocurement transactions are covered transactions?
180.215 Which nonprocurement transactions are not covered transactions?
180.220 Are any procurement contracts included as covered transactions?
180.225 How do I know if a transaction in which I may participate is a 
          covered transaction?

Subpart C_Responsibilities of Participants Regarding Transactions Doing 
                       Business With Other Persons

180.300 What must I do before I enter into a covered transaction with 
          another person at the next lower tier?
180.305 May I enter into a covered transaction with an excluded or 
          disqualified person?
180.310 What must I do if a Federal agency excludes a person with whom I 
          am already doing business in a covered transaction?

[[Page 43]]

180.315 May I use the services of an excluded person as a principal 
          under a covered transaction?
180.320 Must I verify that principals of my covered transactions are 
          eligible to participate?
180.325 What happens if I do business with an excluded person in a 
          covered transaction?
180.330 What requirements must I pass down to persons at lower tiers 
          with whom I intend to do business?

            Disclosing Information--Primary Tier Participants

180.335 What information must I provide before entering into a covered 
          transaction with a Federal agency?
180.340 If I disclose unfavorable information required under Sec.  
          180.335 will I be prevented from participating in the 
          transaction?
180.345 What happens if I fail to disclose information required under 
          Sec.  180.335?
180.350 What must I do if I learn of information required under Sec.  
          180.335 after entering into a covered transaction with a 
          Federal agency?

             Disclosing Information--Lower Tier Participants

180.355 What information must I provide to a higher tier participant 
          before entering into a covered transaction with that 
          participant?
180.360 What happens if I fail to disclose information required under 
          Sec.  180.355?
180.365 What must I do if I learn of information required under Sec.  
          180.355 after entering into a covered transaction with a 
          higher tier participant?

    Subpart D_Responsibilities of Federal Agency Officials Regarding 
                              Transactions

180.400 May I enter into a transaction with an excluded or disqualified 
          person?
180.405 May I enter into a covered transaction with a participant if a 
          principal of the transaction is excluded?
180.410 May I approve a participant's use of the services of an excluded 
          person?
180.415 What must I do if a Federal agency excludes the participant or a 
          principal after I enter into a covered transaction?
180.420 May I approve a transaction with an excluded or disqualified 
          person at a lower tier?
180.425 When do I check to see if a person is excluded or disqualified?
180.430 How do I check to see if a person is excluded or disqualified?
180.435 What must I require of a primary tier participant?
180.440 What action may I take if a primary tier participant knowingly 
          does business with an excluded or disqualified person?
180.445 What action may I take if a primary tier participant fails to 
          disclose the information required under Sec.  180.335?
180.450 What may I do if a lower tier participant fails to disclose the 
          information required under Sec.  180.355 to the next higher 
          tier?

            Subpart E_System for Award Management Exclusions

180.500 What is the purpose of the System for Award Management 
          Exclusions (SAM Exclusions)?
180.505 Who uses SAM Exclusions?
180.510 Who maintains SAM Exclusions?
180.515 What specific information is in SAM Exclusions?
180.520 Who places the information into SAM Exclusions?
180.525 Whom do I ask if I have questions about a person in SAM 
          Exclusions?
180.530 Where can I find SAM Exclusions?

   Subpart F_General Principles Relating to Suspension and Debarment 
                                 Actions

180.600 How do suspension and debarment actions start?
180.605 How does suspension differ from debarment?
180.610 What procedures does a Federal agency use in suspension and 
          debarment actions?
180.615 How does a Federal agency notify a person of a suspension or 
          debarment action?
180.620 Do Federal agencies coordinate suspension and debarment actions?
180.625 What is the scope of a suspension or debarment?
180.630 May a Federal agency impute the conduct of one person to 
          another?
180.635 May a Federal agency settle a debarment or suspension action?
180.640 May a settlement include a voluntary exclusion?
180.645 Do other Federal agencies know if an agency agrees to a 
          voluntary exclusion?
180.650 May an administrative agreement be the result of a settlement?
180.655 How will other Federal awarding agencies know about an 
          administrative agreement that is the result of a settlement?
180.660 Will administrative agreement information about me in the 
          designated integrity and performance system accessible through 
          SAM be corrected or updated?

                          Subpart G_Suspension

180.700 When may the suspending official issue a suspension?
180.705 What does the suspending official consider in issuing a 
          suspension?

[[Page 44]]

180.710 When does a suspension take effect?
180.715 What notice does the suspending official give me if I am 
          suspended?
180.720 How may I contest a suspension?
180.725 How much time do I have to contest a suspension?
180.730 What information must I provide to the suspending official if I 
          contest the suspension?
180.735 Under what conditions do I get an additional opportunity to 
          challenge the facts on which the suspension is based?
180.740 Are suspension proceedings formal?
180.745 How is fact-finding conducted?
180.750 What does the suspending official consider in deciding whether 
          to continue or terminate my suspension?
180.755 When will I know whether the suspension is continued or 
          terminated?
180.760 How long may my suspension last?

                           Subpart H_Debarment

180.800 What are the causes for debarment?
180.805 What notice does the debarring official give me if I am proposed 
          for debarment?
180.810 When does a debarment take effect?
180.815 How may I contest a proposed debarment?
180.820 How much time do I have to contest a proposed debarment?
180.825 What information must I provide to the debarring official if I 
          contest the proposed debarment?
180.830 Under what conditions do I get an additional opportunity to 
          challenge the facts on which the proposed debarment is based?
180.835 Are debarment proceedings formal?
180.840 How is fact-finding conducted?
180.845 What does the debarring official consider in deciding whether to 
          debar me?
180.850 What is the standard of proof in a debarment action?
180.855 Who has the burden of proof in a debarment action?
180.860 What factors may influence the debarring official's decision?
180.865 How long may my debarment last?
180.870 When do I know if the debarring official debars me?
180.875 May I ask the debarring official to reconsider a decision to 
          debar me?
180.880 What factors may influence the debarring official during 
          reconsideration?
180.885 May the debarring official extend a debarment?

                          Subpart I_Definitions

180.900 Adequate evidence.
180.905 Affiliate.
180.910 Agent or representative.
180.915 Civil judgment.
180.920 Conviction.
180.925 Debarment.
180.930 Debarring official.
180.935 Disqualified.
180.940 Excluded or exclusion.
180.945 System for Award Management Exclusions (SAM Exclusions).
180.950 Federal agency.
180.955 Indictment.
180.960 Ineligible or ineligibility.
180.965 Legal proceedings.
180.970 Nonprocurement transaction.
180.975 Notice.
180.980 Participant.
180.985 Person.
180.990 Preponderance of the evidence.
180.995 Principal.
180.1000 Respondent.
180.1005 State.
180.1010 Suspending official.
180.1015 Suspension.
180.1020 Voluntary exclusion or voluntarily excluded.

Appendix to Part 180--Covered Transactions

    Authority: Sec. 2455, Pub. L. 103-355, 108 Stat. 3327; E.O. 12549, 3 
CFR, 1986 Comp., p.189; E.O. 12689, 3 CFR, 1989 Comp., p. 235.

    Source: 70 FR 51865, Aug. 31, 2005, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 180 appear at 79 FR 
75879, Dec. 19, 2014.



Sec.  180.5  What does this part do?

    This part provides Office of Management and Budget (OMB) guidance 
for Federal agencies on the governmentwide debarment and suspension 
system for nonprocurement programs and activities.



Sec.  180.10  How is this part organized?

    This part is organized in two segments.
    (a) Sections 180.5 through 180.45 contain general policy direction 
for Federal agencies' use of the standards in subparts A through I of 
this part.
    (b) Subparts A through I of this part contain uniform governmentwide 
standards that Federal agencies are to use to specify--
    (1) The types of transactions that are covered by the nonprocurement 
debarment and suspension system;
    (2) The effects of an exclusion under that nonprocurement system, 
including reciprocal effects with the governmentwide debarment and 
suspension system for procurement;
    (3) The criteria and minimum due process to be used in 
nonprocurement debarment and suspension actions; and

[[Page 45]]

    (4) Related policies and procedures to ensure the effectiveness of 
those actions.



Sec.  180.15  To whom does the guidance apply?

    The guidance provides OMB guidance only to Federal agencies. 
Publication of the guidance in the CFR does not change its nature--it is 
guidance and not regulation. Federal agencies' implementation of the 
guidance governs the rights and responsibilities of other persons 
affected by the nonprocurement debarment and suspension system.



Sec.  180.20  What must a Federal agency do to implement these guidelines?

    As required by Section 3 of E.O. 12549, each Federal agency with 
nonprocurement programs and activities covered by subparts A through I 
of the guidance must issue regulations consistent with those subparts.



Sec.  180.25  What must a Federal agency address in its 
implementation of the guidance?

    Each Federal agency implementing regulation:
    (a) Must establish policies and procedures for that agency's 
nonprocurement debarment and suspension programs and activities that are 
consistent with the guidance. When adopted by a Federal agency, the 
provisions of the guidance have regulatory effect for that agency's 
programs and activities.
    (b) Must address some matters for which these guidelines give each 
Federal agency some discretion. Specifically, the regulation must--
    (1) Identify either the Federal agency head or the title of the 
designated official who is authorized to grant exceptions under Sec.  
180.135 to let an excluded person participate in a covered transaction.
    (2) State whether the agency includes as covered transactions an 
additional tier of contracts awarded under covered nonprocurement 
transactions, as permitted under Sec.  180.220(c).
    (3) Identify the method(s) an agency official may use, when entering 
into a covered transaction with a primary tier participant, to 
communicate to the participant the requirements described in Sec.  
180.435. Examples of methods are an award term that requires compliance 
as a condition of the award; an assurance of compliance obtained at time 
of application; or a certification.
    (4) State whether the Federal agency specifies a particular method 
that participants must use to communicate compliance requirements to 
lower-tier participants, as described in Sec.  180.330(a). If there is a 
specified method, the regulation needs to require agency officials, when 
entering into covered transactions with primary tier participants, to 
communicate that requirement.
    (c) May also, at the agency's option:
    (1) Identify any specific types of transactions that the Federal 
agency includes as ``nonprocurement transactions'' in addition to the 
examples provided in Sec.  180.970.
    (2) Identify any types of nonprocurement transactions that the 
Federal agency exempts from coverage under these guidelines, as 
authorized under Sec.  180.215(g)(2).
    (3) Identify specific examples of types of individuals who would be 
``principals'' under the Federal agency's nonprocurement programs and 
transactions, in addition to the types of individuals described at Sec.  
180.995.
    (4) Specify the Federal agency's procedures, if any, by which a 
respondent may appeal a suspension or debarment decision.
    (5) Identify by title the officials designated by the Federal agency 
head as debarring officials under Sec.  180.930 or suspending officials 
under Sec.  180.1010.
    (6) Include a subpart covering disqualifications, as authorized in 
Sec.  180.45.
    (7) Include any provisions authorized by OMB.

[70 FR 51865, Aug. 31, 2005, as amended at 71 FR 66432, Nov. 15, 2006; 
79 FR 75879, Dec. 19, 2014]



Sec.  180.30  Where does a Federal agency implement these guidelines?

    Each Federal agency that participates in the governmentwide 
nonprocurement debarment and suspension system must issue a regulation 
implementing these guidelines within its chapter in subtitle B of this 
title of the Code of Federal Regulations.

[[Page 46]]



Sec.  180.35  By when must a Federal agency implement these guidelines?

    Federal agencies must submit proposed regulations to the OMB for 
review within nine months of the issuance of these guidelines and issue 
final regulations within eighteen months of these guidelines.



Sec.  180.40  How are these guidelines maintained?

    The Interagency Committee on Debarment and Suspension established by 
section 4 of E.O. 12549 recommends to the OMB any needed revisions to 
the guidelines in this part. The OMB publishes proposed changes to the 
guidelines in the Federal Register for public comment, considers 
comments with the help of the Interagency Committee on Debarment and 
Suspension, and issues the final guidelines.



Sec.  180.45  Do these guidelines cover persons who are disqualified, 
as well as those who are excluded from nonprocurement transactions?

    A Federal agency may add a subpart covering disqualifications to its 
regulation implementing these guidelines, but the guidelines in subparts 
A through I of this part--
    (a) Address disqualified persons only to--
    (1) Provide for their inclusion in SAM Exclusions; and
    (2) State responsibilities of Federal agencies and participants to 
check for disqualified persons before entering into covered 
transactions.
    (b) Do not specify the--
    (1) Transactions for which a disqualified person is ineligible. 
Those transactions vary on a case-by-case basis, because they depend on 
the language of the specific statute, Executive order or regulation that 
caused the disqualification;
    (2) Entities to which a disqualification applies; or
    (3) Process that a Federal agency uses to disqualify a person. 
Unlike exclusion under subparts A through I of this part, 
disqualification is frequently not a discretionary action that a Federal 
agency takes, and may include special procedures.



                            Subpart A_General



Sec.  180.100  How are subparts A through I organized?

    (a) Each subpart contains information related to a broad topic or 
specific audience with special responsibilities, as shown in the 
following table:

----------------------------------------------------------------------------------------------------------------
              In subpart . . .                             You will find provisions related to . . .
----------------------------------------------------------------------------------------------------------------
A...........................................  general information about Subparts A through I of this part.
B...........................................  the types of transactions that are covered by the Governmentwide
                                               nonprocurement suspension and debarment system.
C...........................................  the responsibilities of persons who participate in covered
                                               transactions.
D...........................................  the responsibilities of Federal agency officials who are
                                               authorized to enter into covered transactions.
E...........................................  the responsibilities of Federal agencies for entering information
                                               into SAM Exclusions
F...........................................  the general principles governing suspension, debarment, voluntary
                                               exclusion and settlement.
G...........................................  suspension actions.
H...........................................  debarment actions.
I...........................................  definitions of terms used in this part.
----------------------------------------------------------------------------------------------------------------

    (b) The following table shows which subparts may be of special 
interest to you, depending on who you are:

------------------------------------------------------------------------
          If you are . . .                   See Subpart(s) . . .
------------------------------------------------------------------------
(1) a participant or principal in a  A, B, C and I.
 nonprocurement transaction.
(2) a respondent in a suspension     A, B, F, G and I.
 action.
(3) a respondent in a debarment      A, B, F, H and I.
 action.
(4) a suspending official..........  A, B, E, F, G and I.
(5) a debarring official...........  A, B, D, F, H and I.
(6) an Federal agency official       A, B, D, E and I.
 authorized to enter into a covered
 transaction.
------------------------------------------------------------------------


[[Page 47]]



Sec.  180.105  How is this part written?

    (a) This part uses a ``plain language'' format to make it easier for 
the general public and business community to use. The section headings 
and text, often in the form of questions and answers, must be read 
together.
    (b) Pronouns used within this part, such as ``I'' and ``you,'' 
change from subpart to subpart depending on the audience being 
addressed.
    (c) The ``Covered Transactions'' diagram in the appendix to this 
part shows the levels or ``tiers'' at which a Federal agency may enforce 
an exclusion.



Sec.  180.110  Do terms in this part have special meanings?

    This part uses terms throughout the text that have special meaning. 
Those terms are defined in subpart I of this part. For example, three 
important terms are--
    (a) Exclusion or excluded, which refers only to discretionary 
actions taken by a suspending or debarring official under Executive 
Order 12549 and Executive Order 12689 or under the Federal Acquisition 
Regulation (48 CFR part 9, subpart 9.4);
    (b) Disqualification or disqualified, which refers to prohibitions 
under specific statutes, executive orders (other than Executive Order 
12549 and Executive Order 12689), or other authorities. 
Disqualifications frequently are not subject to the discretion of a 
Federal agency official, may have a different scope than exclusions, or 
have special conditions that apply to the disqualification; and
    (c) Ineligibility or ineligible, which generally refers to a person 
who is either excluded or disqualified.



Sec.  180.115  What do Subparts A through I of this part do?

    Subparts A through I of this part provide for reciprocal exclusion 
of persons who have been excluded under the Federal Acquisition 
Regulation, and provide for the consolidated listing of all persons who 
are excluded, or disqualified by statute, executive order or other legal 
authority.



Sec.  180.120  Do subparts A through I of this part apply to me?

    Portions of subparts A through I of this part (see table at Sec.  
180.100(b)) apply to you if you are a--
    (a) Person who has been, is, or may reasonably be expected to be, a 
participant or principal in a covered transaction;
    (b) Respondent (a person against whom a Federal agency has initiated 
a debarment or suspension action);
    (c) Federal agency debarring or suspending official; or
    (d) Federal agency official who is authorized to enter into covered 
transactions with non-Federal parties.



Sec.  180.125  What is the purpose of the nonprocurement 
debarment and suspension system?

    (a) To protect the public interest, the Federal Government ensures 
the integrity of Federal programs by conducting business only with 
responsible persons.
    (b) A Federal agency uses the nonprocurement debarment and 
suspension system to exclude from Federal programs persons who are not 
presently responsible.
    (c) An exclusion is a serious action that a Federal agency may take 
only to protect the public interest. A Federal agency may not exclude a 
person or commodity for the purposes of punishment.



Sec.  180.130  How does an exclusion restrict a person's involvement 
in covered transactions?

    With the exceptions stated in Sec. Sec.  180.135, 315, and 420, a 
person who is excluded by any Federal agency may not:
    (a) Be a participant in a Federal agency transaction that is a 
covered transaction; or
    (b) Act as a principal of a person participating in one of those 
covered transactions.



Sec.  180.135  May a Federal agency grant an exception to let an 
excluded person participate in a covered transaction?

    (a) A Federal agency head or designee may grant an exception 
permitting an excluded person to participate in a particular covered 
transaction. If the

[[Page 48]]

agency head or designee grants an exception, the exception must be in 
writing and state the reason(s) for deviating from the governmentwide 
policy in Executive Order 12549.
    (b) An exception granted by one Federal agency for an excluded 
person does not extend to the covered transactions of another Federal 
agency.



Sec.  180.140  Does an exclusion under the nonprocurement system affect 
a person's eligibility for Federal procurement contracts?

    If any Federal agency excludes a person under Executive Order 12549 
or Executive Order 12689, on or after August 25, 1995, the excluded 
person is also ineligible for Federal procurement transactions under the 
FAR. Therefore, an exclusion under this part has reciprocal effect in 
Federal procurement transactions.



Sec.  180.145  Does an exclusion under the Federal procurement 
system affect a person's eligibility to participate in nonprocurement 
transactions?

    If any Federal agency excludes a person under the FAR on or after 
August 25, 1995, the excluded person is also ineligible to participate 
in Federal agencies' nonprocurement covered transactions. Therefore, an 
exclusion under the FAR has reciprocal effect in Federal nonprocurement 
transactions.



Sec.  180.150  Against whom may a Federal agency take an exclusion action?

    Given a cause that justifies an exclusion under this part, a Federal 
agency may exclude any person who has been, is, or may reasonably be 
expected to be a participant or principal in a covered transaction.



Sec.  180.155  How do I know if a person is excluded?

    Check the Governmentwide System for Award Management Exclusions (SAM 
Exclusions) to determine whether a person is excluded. The General 
Services Administration (GSA) maintains the SAM Exclusions and makes it 
available, as detailed in Subpart E of this part. When a Federal agency 
takes an action to exclude a person under the nonprocurement or 
procurement debarment and suspension system, the agency enters the 
information about the excluded person into the SAM Exclusions.

[70 FR 51865, Aug. 31, 2005, as amended at 79 FR 75879, Dec. 19, 2014]



                     Subpart B_Covered Transactions



Sec.  180.200  What is a covered transaction?

    A covered transaction is a nonprocurement or procurement transaction 
that is subject to the prohibitions of this part. It may be a 
transaction at--
    (a) The primary tier, between a Federal agency and a person (see 
appendix to this part); or
    (b) A lower tier, between a participant in a covered transaction and 
another person.



Sec.  180.205  Why is it important if a particular transaction is a 
covered transaction?

    The importance of whether a transaction is a covered transaction 
depends upon who you are.
    (a) As a participant in the transaction, you have the 
responsibilities laid out in subpart C of this part. Those include 
responsibilities to the person or Federal agency at the next higher tier 
from whom you received the transaction, if any. They also include 
responsibilities if you subsequently enter into other covered 
transactions with persons at the next lower tier.
    (b) As a Federal official who enters into a primary tier 
transaction, you have the responsibilities laid out in subpart D of this 
part.
    (c) As an excluded person, you may not be a participant or principal 
in the transaction unless--
    (1) The person who entered into the transaction with you allows you 
to continue your involvement in a transaction that predates your 
exclusion, as permitted under Sec.  180.310 or Sec.  180.415; or
    (2) A Federal agency official obtains an exception from the agency 
head or designee to allow you to be involved in the transaction, as 
permitted under Sec.  180.135.

[[Page 49]]



Sec.  180.210  Which nonprocurement transactions are covered transactions?

    All nonprocurement transactions, as defined in Sec.  180.970, are 
covered transactions unless listed in the exemptions under Sec.  
180.215.



Sec.  180.215  Which nonprocurement transactions are not covered transactions?

    The following types of nonprocurement transactions are not covered 
transactions:
    (a) A direct award to--
    (1) A foreign government or foreign governmental entity;
    (2) A public international organization;
    (3) An entity owned (in whole or in part) or controlled by a foreign 
government; or
    (4) Any other entity consisting wholly or partially of one or more 
foreign governments or foreign governmental entities.
    (b) A benefit to an individual as a personal entitlement without 
regard to the individual's present responsibility (but benefits received 
in an individual's business capacity are not excepted). For example, if 
a person receives social security benefits under the Supplemental 
Security Income provisions of the Social Security Act, 42 U.S.C. 1301 et 
seq., those benefits are not covered transactions and, therefore, are 
not affected if the person is excluded.
    (c) Federal employment.
    (d) A transaction that a Federal agency needs to respond to a 
national or agency-recognized emergency or disaster.
    (e) A permit, license, certificate or similar instrument issued as a 
means to regulate public health, safety or the environment, unless a 
Federal agency specifically designates it to be a covered transaction.
    (f) An incidental benefit that results from ordinary governmental 
operations.
    (g) Any other transaction if--
    (1) The application of an exclusion to the transaction is prohibited 
by law; or
    (2) A Federal agency's regulation exempts it from coverage under 
this part.



Sec.  180.220  Are any procurement contracts included as covered transactions?

    (a) Covered transactions under this part--
    (1) Do not include any procurement contracts awarded directly by a 
Federal agency; but
    (2) Do include some procurement contracts awarded by non-Federal 
participants in nonprocurement covered transactions.
    (b) Specifically, a contract for goods or services is a covered 
transaction if any of the following applies:
    (1) The contract is awarded by a participant in a nonprocurement 
transaction that is covered under Sec.  180.210, and the amount of the 
contract is expected to equal or exceed $25,000.
    (2) The contract requires the consent of an official of a Federal 
agency. In that case, the contract, regardless of the amount, always is 
a covered transaction, and it does not matter who awarded it. For 
example, it could be a subcontract awarded by a contractor at a tier 
below a nonprocurement transaction, as shown in the appendix to this 
part.
    (3) The contract is for Federally-required audit services.
    (c) A subcontract also is a covered transaction if,--
    (1) It is awarded by a participant in a procurement transaction 
under a nonprocurement transaction of a Federal agency that extends the 
coverage of paragraph (b)(1) of this section to additional tiers of 
contracts (see the diagram in the appendix to this part showing that 
optional lower tier coverage); and
    (2) The value of the subcontract is expected to equal or exceed 
$25,000.

[70 FR 51865, Aug. 31, 2005, as amended at 71 FR 66432, Nov. 15, 2006]



Sec.  180.225  How do I know if a transaction in which I 
may participate is a covered transaction?

    As a participant in a transaction, you will know that it is a 
covered transaction because the Federal agency regulations governing the 
transaction, the appropriate Federal agency official or participant at 
the next higher tier who enters into the transaction with

[[Page 50]]

you, will tell you that you must comply with applicable portions of this 
part.



Subpart C_Responsibilities of Participants Regarding Transactions Doing 
                       Business With Other Persons



Sec.  180.300  What must I do before I enter into a covered transaction 
with another person at the next lower tier?

    When you enter into a covered transaction with another person at the 
next lower tier, you must verify that the person with whom you intend to 
do business is not excluded or disqualified. You do this by:
    (a) Checking SAM Exclusions; or
    (b) Collecting a certification from that person; or
    (c) Adding a clause or condition to the covered transaction with 
that person.

[70 FR 51865, Aug. 31, 2005, as amended at 71 FR 66432, Nov. 15, 2006]



Sec.  180.305  May I enter into a covered transaction with an excluded 
or disqualified person?

    (a) You as a participant may not enter into a covered transaction 
with an excluded person, unless the Federal agency responsible for the 
transaction grants an exception under Sec.  180.135.
    (b) You may not enter into any transaction with a person who is 
disqualified from that transaction, unless you have obtained an 
exception under the disqualifying statute, Executive order, or 
regulation.



Sec.  180.310  What must I do if a Federal agency excludes a person 
with whom I am already doing business in a covered transaction?

    (a) You as a participant may continue covered transactions with an 
excluded person if the transactions were in existence when the agency 
excluded the person. However, you are not required to continue the 
transactions, and you may consider termination. You should make a 
decision about whether to terminate and the type of termination action, 
if any, only after a thorough review to ensure that the action is proper 
and appropriate.
    (b) You may not renew or extend covered transactions (other than no-
cost time extensions) with any excluded person, unless the Federal 
agency responsible for the transaction grants an exception under Sec.  
180.135.



Sec.  180.315  May I use the services of an excluded person as a 
principal under a covered transaction?

    (a) You as a participant may continue to use the services of an 
excluded person as a principal under a covered transaction if you were 
using the services of that person in the transaction before the person 
was excluded. However, you are not required to continue using that 
person's services as a principal. You should make a decision about 
whether to discontinue that person's services only after a thorough 
review to ensure that the action is proper and appropriate.
    (b) You may not begin to use the services of an excluded person as a 
principal under a covered transaction unless the Federal agency 
responsible for the transaction grants an exception under Sec.  180.135.



Sec.  180.320  Must I verify that principals of my covered transactions
are eligible to participate?

    Yes, you as a participant are responsible for determining whether 
any of your principals of your covered transactions is excluded or 
disqualified from participating in the transaction.
    You may decide the method and frequency by which you do so. You may, 
but you are not required to, check SAM Exclusions.



Sec.  180.325  What happens if I do business with an excluded 
person in a covered transaction?

    If as a participant you knowingly do business with an excluded 
person, the Federal agency responsible for your transaction may disallow 
costs, annul or terminate the transaction, issue a stop work order, 
debar or suspend you, or take other remedies as appropriate.



Sec.  180.330  What requirements must I pass down to persons at lower 
tiers with whom I intend to do business?

    Before entering into a covered transaction with a participant at the 
next

[[Page 51]]

lower tier, you must require that participant to--
    (a) Comply with this subpart as a condition of participation in the 
transaction. You may do so using any method(s), unless the regulation of 
the Federal agency responsible for the transaction requires you to use 
specific methods.
    (b) Pass the requirement to comply with this subpart to each person 
with whom the participant enters into a covered transaction at the next 
lower tier.

            Disclosing Information--Primary Tier Participants



Sec.  180.335  What information must I provide before entering into a 
covered transaction with a Federal agency?

    Before you enter into a covered transaction at the primary tier, you 
as the participant must notify the Federal agency office that is 
entering into the transaction with you, if you know that you or any of 
the principals for that covered transaction:
    (a) Are presently excluded or disqualified;
    (b) Have been convicted within the preceding three years of any of 
the offenses listed in Sec.  180.800(a) or had a civil judgment rendered 
against you for one of those offenses within that time period;
    (c) Are presently indicted for or otherwise criminally or civilly 
charged by a governmental entity (Federal, State or local) with 
commission of any of the offenses listed in Sec.  180.800(a); or
    (d) Have had one or more public transactions (Federal, State, or 
local) terminated within the preceding three years for cause or default.



Sec.  180.340  If I disclose unfavorable information required under 
Sec.  180.335, will I be prevented from participating in the transaction?

    As a primary tier participant, your disclosure of unfavorable 
information about yourself or a principal under Sec.  180.335 will not 
necessarily cause a Federal agency to deny your participation in the 
covered transaction. The agency will consider the information when it 
determines whether to enter into the covered transaction. The agency 
will also consider any additional information or explanation that you 
elect to submit with the disclosed information.



Sec.  180.345  What happens if I fail to disclose information 
required under Sec.  180.335?

    If a Federal agency later determines that you failed to disclose 
information under Sec.  180.335 that you knew at the time you entered 
into the covered transaction, the agency may--
    (a) Terminate the transaction for material failure to comply with 
the terms and conditions of the transaction; or
    (b) Pursue any other available remedies, including suspension and 
debarment.



Sec.  180.350  What must I do if I learn of information required under 
Sec.  180.335 after entering into a covered transaction with a 
Federal agency?

    At any time after you enter into a covered transaction, you must 
give immediate written notice to the Federal agency office with which 
you entered into the transaction if you learn either that--
    (a) You failed to disclose information earlier, as required by Sec.  
180.335; or
    (b) Due to changed circumstances, you or any of the principals for 
the transaction now meet any of the criteria in Sec.  180.335.

             Disclosing Information--Lower Tier Participants



Sec.  180.355  What information must I provide to a higher tier participant 
before entering into a covered transaction with that participant?

    Before you enter into a covered transaction with a person at the 
next higher tier, you as a lower tier participant must notify that 
person if you know that you or any of the principals are presently 
excluded or disqualified.



Sec.  180.360  What happens if I fail to disclose information required 
under Sec.  180.355?

    If a Federal agency later determines that you failed to tell the 
person at the higher tier that you were excluded or disqualified at the 
time you entered into the covered transaction with that

[[Page 52]]

person, the agency may pursue any available remedies, including 
suspension and debarment.



Sec.  180.365  What must I do if I learn of information required 
under Sec.  180.355 after entering into a covered transaction with 
a higher tier participant?

    At any time after you enter into a lower tier covered transaction 
with a person at a higher tier, you must provide immediate written 
notice to that person if you learn either that--
    (a) You failed to disclose information earlier, as required by Sec.  
180.355; or
    (b) Due to changed circumstances, you or any of the principals for 
the transaction now meet any of the criteria in Sec.  180.355.



    Subpart D_Responsibilities of Federal Agency Officials Regarding 
                              Transactions



Sec.  180.400  May I enter into a transaction with an excluded or 
disqualified person?

    (a) You as a Federal agency official may not enter into a covered 
transaction with an excluded person unless you obtain an exception under 
Sec.  180.135.
    (b) You may not enter into any transaction with a person who is 
disqualified from that transaction, unless you obtain a waiver or 
exception under the statute, Executive order, or regulation that is the 
basis for the person's disqualification.



Sec.  180.405  May I enter into a covered transaction with a participant if 
a principal of the transaction is excluded?

    As a Federal agency official, you may not enter into a covered 
transaction with a participant if you know that a principal of the 
transaction is excluded, unless you obtain an exception under Sec.  
180.135.



Sec.  180.410  May I approve a participant's use of the services of 
an excluded person?

    After entering into a covered transaction with a participant, you as 
a Federal agency official may not approve a participant's use of an 
excluded person as a principal under that transaction, unless you obtain 
an exception under Sec.  180.135.



Sec.  180.415  What must I do if a Federal agency excludes the participant 
or a principal after I enter into a covered transaction?

    (a) You as a Federal agency official may continue covered 
transactions with an excluded person, or under which an excluded person 
is a principal, if the transactions were in existence when the person 
was excluded. You are not required to continue the transactions, 
however, and you may consider termination. You should make a decision 
about whether to terminate and the type of termination action, if any, 
only after a thorough review to ensure that the action is proper.
    (b) You may not renew or extend covered transactions (other than no-
cost time extensions) with any excluded person, or under which an 
excluded person is a principal, unless you obtain an exception under 
Sec.  180.135.



Sec.  180.420  May I approve a transaction with an excluded or disqualified 
person at a lower tier?

    If a transaction at a lower tier is subject to your approval, you as 
a Federal agency official may not approve--
    (a) A covered transaction with a person who is currently excluded, 
unless you obtain an exception under Sec.  180.135; or
    (b) A transaction with a person who is disqualified from that 
transaction, unless you obtain a waiver or exception under the statute, 
Executive order, or regulation that is the basis for the person's 
disqualification.



Sec.  180.425  When do I check to see if a person is excluded or disqualified?

    As a Federal agency official, you must check to see if a person is 
excluded or disqualified before you--
    (a) Enter into a primary tier covered transaction;
    (b) Approve a principal in a primary tier covered transaction;
    (c) Approve a lower tier participant if your agency's approval of 
the lower tier participant is required; or
    (d) Approve a principal in connection with a lower tier transaction 
if your agency's approval of the principal is required.

[[Page 53]]



Sec.  180.430  How do I check to see if a person is excluded or disqualified?

    You check to see if a person is excluded or disqualified in two 
ways:
    (a) You as a Federal agency official must check SAM Exclusions when 
you take any action listed in Sec.  180.425.
    (b) You must review information that a participant gives you, as 
required by Sec.  180.335, about its status or the status of the 
principals of a transaction.



Sec.  180.435  What must I require of a primary tier participant?

    You as a Federal agency official must require each participant in a 
primary tier covered transaction to--
    (a) Comply with subpart C of this part as a condition of 
participation in the transaction; and
    (b) Communicate the requirement to comply with subpart C of this 
part to persons at the next lower tier with whom the primary tier 
participant enters into covered transactions.



Sec.  180.440  What action may I take if a primary tier participant 
knowingly does business with an excluded or disqualified person?

    If a participant knowingly does business with an excluded or 
disqualified person, you as a Federal agency official may refer the 
matter for suspension and debarment consideration. You may also disallow 
costs, annul or terminate the transaction, issue a stop work order, or 
take any other appropriate remedy.



Sec.  180.445  What action may I take if a primary tier participant fails 
to disclose the information required under Sec.  180.335?

    If you as a Federal agency official determine that a participant 
failed to disclose information, as required by Sec.  180.335, at the 
time it entered into a covered transaction with you, you may--
    (a) Terminate the transaction for material failure to comply with 
the terms and conditions of the transaction; or
    (b) Pursue any other available remedies, including suspension and 
debarment.



Sec.  180.450  What action may I take if a lower tier participant fails 
to disclose the information required under Sec.  180.355 to the 
next higher tier?

    If you as a Federal agency official determine that a lower tier 
participant failed to disclose information, as required by Sec.  
180.355, at the time it entered into a covered transaction with a 
participant at the next higher tier, you may pursue any remedies 
available to you, including the initiation of a suspension or debarment 
action.



            Subpart E_ System for Award Management Exclusions



Sec.  180.500  What is the purpose of the System for Award Management 
Exclusions (SAM Exclusions)?

    SAM Exclusions is a widely available source of the most current 
information about persons who are excluded or disqualified from covered 
transactions.



Sec.  180.505  Who uses SAM Exclusions?

    (a) Federal agency officials use SAM Exclusions to determine whether 
to enter into a transaction with a person, as required under Sec.  
180.430.
    (b) Participants also may, but are not required to, use SAM 
Exclusions to determine if--
    (1) Principals of their transactions are excluded or disqualified, 
as required under Sec.  180.320; or
    (2) Persons with whom they are entering into covered transactions at 
the next lower tier are excluded or disqualified.
    (c) Sam Exclusions are available to the general public.

[70 FR 51865, Aug. 31, 2005, as amended at 79 FR 75879, Dec. 19, 2014]



Sec.  180.510  Who maintains SAM Exclusions?

    The General Services Administration (GSA) maintains SAM Exclusions. 
When a Federal agency takes an action to exclude a person under the 
nonprocurement or procurement debarment and suspension system, the 
agency enters the information about the excluded person into SAM 
Exclusions.

[[Page 54]]



Sec.  180.515  What specific information is in SAM Exclusions?

    (a) At a minimum, SAM Exclusions indicates--
    (1) The full name (where available) and address of each excluded and 
disqualified person, in alphabetical order, with cross references if 
more than one name is involved in a single action;
    (2) The type of action;
    (3) The cause for the action;
    (4) The scope of the action;
    (5) Any termination date for the action;
    (6) The Federal agency and name and telephone number of the agency 
point of contact for the action; and
    (7) The unique entity identifier approved by the GSA, of the 
excluded or disqualified person, if available.
    (b)(1) The database for SAM Exclusions includes a field for the 
Taxpayer Identification Number (TIN) (the social security number (SSN) 
for an individual) of an excluded or disqualified person.
    (2) Agencies disclose the SSN of an individual to verify the 
identity of an individual, only if permitted under the Privacy Act of 
1974 and, if appropriate, the Computer Matching and Privacy Protection 
Act of 1988, as codified in 5 U.S.C. 552(a).

[70 FR 51865, Aug. 31, 2005, as amended at 79 FR 75879, Dec. 19, 2014]



Sec.  180.520  Who places the information into SAM Exclusions?

    Federal agency officials who take actions to exclude persons under 
this part or officials who are responsible for identifying disqualified 
persons must enter the following information about those persons into 
SAM Exclusions:
    (a) Information required by Sec.  180.515(a);
    (b) The Taxpayer Identification Number (TIN) of the excluded or 
disqualified person, including the social security number (SSN) for an 
individual, if the number is available and may be disclosed under law;
    (c) Information about an excluded or disqualified person, within 
three business days, after--
    (1) Taking an exclusion action;
    (2) Modifying or rescinding an exclusion action;
    (3) Finding that a person is disqualified; or
    (4) Finding that there has been a change in the status of a person 
who is listed as disqualified.

[70 FR 51865, Aug. 31, 2005, as amended at 80 FR 43308, July 22, 2015]



Sec.  180.525  Whom do I ask if I have questions about a person
in SAM Exclusions?

    If you have questions about a listed person in SAM Exclusions, ask 
the point of contact for the Federal agency that placed the person's 
name into SAM Exclusions. You may find the agency point of contact from 
SAM Exclusions.



Sec.  180.530  Where can I find SAM Exclusions?

    You may access SAM Exclusions through the Internet, currently at 
https://www.sam.gov.

[79 FR 75879, Dec. 19, 2014]



   Subpart F_General Principles Relating to Suspension and Debarment 
                                 Actions



Sec.  180.600  How do suspension and debarment actions start?

    When Federal agency officials receive information from any source 
concerning a cause for suspension or debarment, they will promptly 
report it and the agency will investigate. The officials refer the 
question of whether to suspend or debar you to their suspending or 
debarring official for consideration, if appropriate.



Sec.  180.605  How does suspension differ from debarment?

    Suspension differs from debarment in that--

------------------------------------------------------------------------
      A suspending official . . .           A debarring official . . .
------------------------------------------------------------------------
(a) Imposes suspension as a temporary    Imposes debarment for a
 status of in eligibility for             specified period as a final
 procurement and nonprocurement           determination that a person is
 transactions, pending completion of an   not presently responsible.
 investigation or legal proceedings.
(b) Must--

[[Page 55]]

 
    (1) Have adequate evidence that
     there may be a cause for debarment
     of a person; and
    (2) Conclude that immediate action   Must conclude, based on a
     is necessary to protect the          preponderance of the evidence,
     Federal interest                     that the person has engaged in
                                          conduct that warrants
                                          debarment.
(c) Usually imposes the suspension       Imposes debarment after giving
 first, and then promptly notifies the    the respondent notice of the
 suspended person, giving the person an   action and an opportunity to
 opportunity to contest the suspension    contest the proposed
 and have it lifted.                      debarment.
------------------------------------------------------------------------



Sec.  180.610  What procedures does a Federal agency use in suspension
and debarment actions?

    In deciding whether to suspend or debar you, a Federal agency 
handles the actions as informally as practicable, consistent with 
principles of fundamental fairness.
    (a) For suspension actions, a Federal agency uses the procedures in 
this subpart and subpart G of this part.
    (b) For debarment actions, a Federal agency uses the procedures in 
this subpart and subpart H of this part.



Sec.  180.615  How does a Federal agency notify a person of a 
suspension or debarment action?

    (a) The suspending or debarring official sends a written notice to 
the last known street address, facsimile number, or e-mail address of--
    (1) You or your identified counsel; or
    (2) Your agent for service of process, or any of your partners, 
officers, directors, owners, or joint venturers.
    (b) The notice is effective if sent to any of these persons.



Sec.  180.620  Do Federal agencies coordinate suspension and debarment actions?

    Yes, when more than one Federal agency has an interest in a 
suspension or debarment, the agencies may consider designating one 
agency as the lead agency for making the decision. Agencies are 
encouraged to establish methods and procedures for coordinating their 
suspension and debarment actions.



Sec.  180.625  What is the scope of a suspension or debarment?

    If you are suspended or debarred, the suspension or debarment is 
effective as follows:
    (a) Your suspension or debarment constitutes suspension or debarment 
of all of your divisions and other organizational elements from all 
covered transactions, unless the suspension or debarment decision is 
limited--
    (1) By its terms to one or more specifically identified individuals, 
divisions, or other organizational elements; or
    (2) To specific types of transactions.
    (b) Any affiliate of a participant may be included in a suspension 
or debarment action if the suspending or debarring official--
    (1) Officially names the affiliate in the notice; and
    (2) Gives the affiliate an opportunity to contest the action.



Sec.  180.630  May a Federal agency impute the conduct of one person 
to another?

    For purposes of actions taken under this part, a Federal agency may 
impute conduct as follows:
    (a) Conduct imputed from an individual to an organization. A Federal 
agency may impute the fraudulent, criminal, or other improper conduct of 
any officer, director, shareholder, partner, employee, or other 
individual associated with an organization, to that organization when 
the improper conduct occurred in connection with the individual's 
performance of duties for or on behalf of that organization, or with the 
organization's knowledge, approval or acquiescence. The organization's 
acceptance of the benefits derived from the conduct is evidence of 
knowledge, approval or acquiescence.
    (b) Conduct imputed from an organization to an individual, or 
between individuals. A Federal agency may impute the fraudulent, 
criminal, or other improper conduct of any organization to an 
individual, or from one individual to another individual, if the 
individual to whom the improper conduct is imputed either participated 
in, had knowledge

[[Page 56]]

of, or reason to know of the improper conduct.
    (c) Conduct imputed from one organization to another organization. A 
Federal agency may impute the fraudulent, criminal, or other improper 
conduct of one organization to another organization when the improper 
conduct occurred in connection with a partnership, joint venture, joint 
application, association or similar arrangement, or when the 
organization to whom the improper conduct is imputed has the power to 
direct, manage, control or influence the activities of the organization 
responsible for the improper conduct. Acceptance of the benefits derived 
from the conduct is evidence of knowledge, approval or acquiescence.



Sec.  180.635  May a Federal agency settle a debarment or suspension action?

    Yes, a Federal agency may settle a debarment or suspension action at 
any time if it is in the best interest of the Federal Government.



Sec.  180.640  May a settlement include a voluntary exclusion?

    Yes, if a Federal agency enters into a settlement with you in which 
you agree to be excluded, it is called a voluntary exclusion and has 
governmentwide effect.



Sec.  180.645  Do other Federal agencies know if an agency agrees to 
a voluntary exclusion?

    (a) Yes, the Federal agency agreeing to the voluntary exclusion 
enters information about it into SAM Exclusions.
    (b) Also, any agency or person may contact the Federal agency that 
agreed to the voluntary exclusion to find out the details of the 
voluntary exclusion.



Sec.  180.650  May an administrative agreement be the result of a settlement?

    Yes, a Federal agency may enter into an administrative agreement 
with you as part of the settlement of a debarment or suspension action.

[80 FR 43308, July 22, 2015]



Sec.  180.655  How will other Federal awarding agencies know about an 
administrative agreement that is the result of a settlement?

    The suspending or debarring official who enters into an 
administrative agreement with you must report information about the 
agreement to the designated integrity and performance system within 
three business days after entering into the agreement. This information 
is required by section 872 of the Duncan Hunter National Defense 
Authorization Act for Fiscal Year 2009 (41 U.S.C. 2313).

[80 FR 43308, July 22, 2015]



Sec.  180.660  Will administrative agreement information about me in 
the designated integrity and performance system accessible through
SAM be corrected or updated?

    Yes, the suspending or debarring official who entered information 
into the designated integrity and performance system about an 
administrative agreement with you:
    (a) Must correct the information within three business days if he or 
she subsequently learns that any of the information is erroneous.
    (b) Must correct in the designated integrity and performance system, 
within three business days, the ending date of the period during which 
the agreement is in effect, if the agreement is amended to extend that 
period.
    (c) Must report to the designated integrity and performance system, 
within three business days, any other modification to the administrative 
agreement.
    (d) Is strongly encouraged to amend the information in the 
designated integrity and performance system in a timely way to 
incorporate any update that he or she obtains that could be helpful to 
Federal awarding agencies who must use the system.

[80 FR 43308, July 22, 2015]

[[Page 57]]



                          Subpart G_Suspension



Sec.  180.700  When may the suspending official issue a suspension?

    Suspension is a serious action. Using the procedures of this subpart 
and subpart F of this part, the suspending official may impose 
suspension only when that official determines that--
    (a) There exists an indictment for, or other adequate evidence to 
suspect, an offense listed under Sec.  180.800(a), or
    (b) There exists adequate evidence to suspect any other cause for 
debarment listed under Sec.  180.800(b) through (d); and
    (c) Immediate action is necessary to protect the public interest.



Sec.  180.705  What does the suspending official consider in issuing
a suspension?

    (a) In determining the adequacy of the evidence to support the 
suspension, the suspending official considers how much information is 
available, how credible it is given the circumstances, whether or not 
important allegations are corroborated, and what inferences can 
reasonably be drawn as a result. During this assessment, the suspending 
official may examine the basic documents, including grants, cooperative 
agreements, loan authorizations, contracts, and other relevant 
documents.
    (b) An indictment, conviction, civil judgment, or other official 
findings by Federal, State, or local bodies that determine factual and/
or legal matters, constitutes adequate evidence for purposes of 
suspension actions.
    (c) In deciding whether immediate action is needed to protect the 
public interest, the suspending official has wide discretion. For 
example, the suspending official may infer the necessity for immediate 
action to protect the public interest either from the nature of the 
circumstances giving rise to a cause for suspension or from potential 
business relationships or involvement with a program of the Federal 
Government.



Sec.  180.710  When does a suspension take effect?

    A suspension is effective when the suspending official signs the 
decision to suspend.



Sec.  180.715  What notice does the suspending official give me if I 
am suspended?

    After deciding to suspend you, the suspending official promptly 
sends you a Notice of Suspension advising you--
    (a) That you have been suspended;
    (b) That your suspension is based on--
    (1) An indictment;
    (2) A conviction;
    (3) Other adequate evidence that you have committed irregularities 
which seriously reflect on the propriety of further Federal Government 
dealings with you; or
    (4) Conduct of another person that has been imputed to you, or your 
affiliation with a suspended or debarred person;
    (c) Of any other irregularities in terms sufficient to put you on 
notice without disclosing the Federal Government's evidence;
    (d) Of the cause(s) upon which the suspending official relied under 
Sec.  180.700 for imposing suspension;
    (e) That your suspension is for a temporary period pending the 
completion of an investigation or resulting legal or debarment 
proceedings;
    (f) Of the applicable provisions of this subpart, subpart F of this 
part, and any other agency procedures governing suspension 
decisionmaking; and
    (g) Of the governmentwide effect of your suspension from procurement 
and nonprocurement programs and activities.



Sec.  180.720  How may I contest a suspension?

    If you as a respondent wish to contest a suspension, you or your 
representative must provide the suspending official with information in 
opposition to the suspension. You may do this orally or in writing, but 
any information provided orally that you consider important must also be 
submitted in writing for the official record.



Sec.  180.725  How much time do I have to contest a suspension?

    (a) As a respondent you or your representative must either send, or 
make arrangements to appear and present, the information and argument to 
the

[[Page 58]]

suspending official within 30 days after you receive the Notice of 
Suspension.
    (b) The Federal agency taking the action considers the notice to be 
received by you--
    (1) When delivered, if the agency mails the notice to the last known 
street address, or five days after the agency sends it if the letter is 
undeliverable;
    (2) When sent, if the agency sends the notice by facsimile or five 
days after the agency sends it if the facsimile is undeliverable; or
    (3) When delivered, if the agency sends the notice by e-mail or five 
days after the agency sends it if the e-mail is undeliverable.



Sec.  180.730  What information must I provide to the suspending 
official if I contest the suspension?

    (a) In addition to any information and argument in opposition, as a 
respondent your submission to the suspending official must identify--
    (1) Specific facts that contradict the statements contained in the 
Notice of Suspension. A general denial is insufficient to raise a 
genuine dispute over facts material to the suspension;
    (2) All existing, proposed, or prior exclusions under regulations 
implementing Executive Order 12549 and all similar actions taken by 
Federal, State, or local agencies, including administrative agreements 
that affect only those agencies;
    (3) All criminal and civil proceedings not included in the Notice of 
Suspension that grew out of facts relevant to the cause(s) stated in the 
notice; and
    (4) All of your affiliates.
    (b) If you fail to disclose this information, or provide false 
information, the Federal agency taking the action may seek further 
criminal, civil or administrative action against you, as appropriate.



Sec.  180.735  Under what conditions do I get an additional opportunity 
to challenge the facts on which the suspension is based?

    (a) You as a respondent will not have an additional opportunity to 
challenge the facts if the suspending official determines that--
    (1) Your suspension is based upon an indictment, conviction, civil 
judgment, or other finding by a Federal, State, or local body for which 
an opportunity to contest the facts was provided;
    (2) Your presentation in opposition contains only general denials to 
information contained in the Notice of Suspension;
    (3) The issues raised in your presentation in opposition to the 
suspension are not factual in nature, or are not material to the 
suspending official's initial decision to suspend, or the official's 
decision whether to continue the suspension; or
    (4) On the basis of advice from the Department of Justice, an office 
of the United States Attorney, a State attorney general's office, or a 
State or local prosecutor's office, that substantial interests of the 
government in pending or contemplated legal proceedings based on the 
same facts as the suspension would be prejudiced by conducting fact-
finding.
    (b) You will have an opportunity to challenge the facts if the 
suspending official determines that--
    (1) The conditions in paragraph (a) of this section do not exist; 
and
    (2) Your presentation in opposition raises a genuine dispute over 
facts material to the suspension.
    (c) If you have an opportunity to challenge disputed material facts 
under this section, the suspending official or designee must conduct 
additional proceedings to resolve those facts.



Sec.  180.740  Are suspension proceedings formal?

    (a) Suspension proceedings are conducted in a fair and informal 
manner. The suspending official may use flexible procedures to allow you 
to present matters in opposition. In so doing, the suspending official 
is not required to follow formal rules of evidence or procedure in 
creating an official record upon which the official will base a final 
suspension decision.
    (b) You as a respondent or your representative must submit any 
documentary evidence you want the suspending official to consider.



Sec.  180.745  How is fact-finding conducted?

    (a) If fact-finding is conducted--

[[Page 59]]

    (1) You may present witnesses and other evidence, and confront any 
witness presented; and
    (2) The fact-finder must prepare written findings of fact for the 
record.
    (b) A transcribed record of fact-finding proceedings must be made, 
unless you as a respondent and the Federal agency agree to waive it in 
advance. If you want a copy of the transcribed record, you may purchase 
it.



Sec.  180.750  What does the suspending official consider in 
deciding whether to continue or terminate my suspension?

    (a) The suspending official bases the decision on all information 
contained in the official record. The record includes--
    (1) All information in support of the suspending official's initial 
decision to suspend you;
    (2) Any further information and argument presented in support of, or 
opposition to, the suspension; and
    (3) Any transcribed record of fact-finding proceedings.
    (b) The suspending official may refer disputed material facts to 
another official for findings of fact. The suspending official may 
reject any resulting findings, in whole or in part, only after 
specifically determining them to be arbitrary, capricious, or clearly 
erroneous.



Sec.  180.755  When will I know whether the suspension is continued 
or terminated?

    The suspending official must make a written decision whether to 
continue, modify, or terminate your suspension within 45 days of closing 
the official record. The official record closes upon the suspending 
official's receipt of final submissions, information and findings of 
fact, if any. The suspending official may extend that period for good 
cause.



Sec.  180.760  How long may my suspension last?

    (a) If legal or debarment proceedings are initiated at the time of, 
or during your suspension, the suspension may continue until the 
conclusion of those proceedings. However, if proceedings are not 
initiated, a suspension may not exceed 12 months.
    (b) The suspending official may extend the 12 month limit under 
paragraph (a) of this section for an additional 6 months if an office of 
a U.S. Assistant Attorney General, U.S. Attorney, or other responsible 
prosecuting official requests an extension in writing. In no event may a 
suspension exceed 18 months without initiating proceedings under 
paragraph (a) of this section.
    (c) The suspending official must notify the appropriate officials 
under paragraph (b) of this section of an impending termination of a 
suspension at least 30 days before the 12 month period expires to allow 
the officials an opportunity to request an extension.



                           Subpart H_Debarment



Sec.  180.800  What are the causes for debarment?

    A Federal agency may debar a person for--
    (a) Conviction of or civil judgment for--
    (1) Commission of fraud or a criminal offense in connection with 
obtaining, attempting to obtain, or performing a public or private 
agreement or transaction;
    (2) Violation of Federal or State antitrust statutes, including 
those proscribing price fixing between competitors, allocation of 
customers between competitors, and bid rigging;
    (3) Commission of embezzlement, theft, forgery, bribery, 
falsification or destruction of records, making false statements, tax 
evasion, receiving stolen property, making false claims, or obstruction 
of justice; or
    (4) Commission of any other offense indicating a lack of business 
integrity or business honesty that seriously and directly affects your 
present responsibility;
    (b) Violation of the terms of a public agreement or transaction so 
serious as to affect the integrity of an agency program, such as--
    (1) A willful failure to perform in accordance with the terms of one 
or more public agreements or transactions;
    (2) A history of failure to perform or of unsatisfactory performance 
of one or more public agreements or transactions; or

[[Page 60]]

    (3) A willful violation of a statutory or regulatory provision or 
requirement applicable to a public agreement or transaction;
    (c) Any of the following causes:
    (1) A nonprocurement debarment by any Federal agency taken before 
October 1, 1988, or a procurement debarment by any Federal agency taken 
pursuant to 48 CFR part 9, subpart 9.4, before August 25, 1995;
    (2) Knowingly doing business with an ineligible person, except as 
permitted under Sec.  180.135;
    (3) Failure to pay a single substantial debt, or a number of 
outstanding debts (including disallowed costs and overpayments, but not 
including sums owed the Federal Government under the Internal Revenue 
Code) owed to any Federal agency or instrumentality, provided the debt 
is uncontested by the debtor or, if contested, provided that the 
debtor's legal and administrative remedies have been exhausted;
    (4) Violation of a material provision of a voluntary exclusion 
agreement entered into under Sec.  180.640 or of any settlement of a 
debarment or suspension action; or
    (5) Violation of the provisions of the Drug-Free Workplace Act of 
1988 (41 U.S.C. 701); or
    (d) Any other cause of so serious or compelling a nature that it 
affects your present responsibility.



Sec.  180.805  What notice does the debarring official give me if I am
proposed for debarment?

    After consideration of the causes in Sec.  180.800, if the debarring 
official proposes to debar you, the official sends you a Notice of 
Proposed Debarment, pursuant to Sec.  180.615, advising you--
    (a) That the debarring official is considering debarring you;
    (b) Of the reasons for proposing to debar you in terms sufficient to 
put you on notice of the conduct or transactions upon which the proposed 
debarment is based;
    (c) Of the cause(s) under Sec.  180.800 upon which the debarring 
official relied for proposing your debarment;
    (d) Of the applicable provisions of this subpart, subpart F of this 
part, and any other agency procedures governing debarment; and
    (e) Of the governmentwide effect of a debarment from procurement and 
nonprocurement programs and activities.



Sec.  180.810  When does a debarment take effect?

    Unlike suspension, a debarment is not effective until the debarring 
official issues a decision. The debarring official does not issue a 
decision until the respondent has had an opportunity to contest the 
proposed debarment.



Sec.  180.815  How may I contest a proposed debarment?

    If you as a respondent wish to contest a proposed debarment, you or 
your representative must provide the debarring official with information 
in opposition to the proposed debarment. You may do this orally or in 
writing, but any information provided orally that you consider important 
must also be submitted in writing for the official record.



Sec.  180.820  How much time do I have to contest a proposed debarment?

    (a) As a respondent you or your representative must either send, or 
make arrangements to appear and present, the information and argument to 
the debarring official within 30 days after you receive the Notice of 
Proposed Debarment.
    (b) The Federal agency taking the action considers the Notice of 
Proposed Debarment to be received by you--
    (1) When delivered, if the agency mails the notice to the last known 
street address, or five days after the agency sends it if the letter is 
undeliverable;
    (2) When sent, if the agency sends the notice by facsimile or five 
days after the agency sends it if the facsimile is undeliverable; or
    (3) When delivered, if the agency sends the notice by e-mail or five 
days after the agency sends it if the e-mail is undeliverable.



Sec.  180.825  What information must I provide to the debarring official
if I contest the proposed debarment?

    (a) In addition to any information and argument in opposition, as a 
respondent your submission to the debarring official must identify--

[[Page 61]]

    (1) Specific facts that contradict the statements contained in the 
Notice of Proposed Debarment. Include any information about any of the 
factors listed in Sec.  180.860. A general denial is insufficient to 
raise a genuine dispute over facts material to the debarment;
    (2) All existing, proposed, or prior exclusions under regulations 
implementing Executive Order 12549 and all similar actions taken by 
Federal, State, or local agencies, including administrative agreements 
that affect only those agencies;
    (3) All criminal and civil proceedings not included in the Notice of 
Proposed Debarment that grew out of facts relevant to the cause(s) 
stated in the notice; and
    (4) All of your affiliates.
    (b) If you fail to disclose this information, or provide false 
information, the Federal agency taking the action may seek further 
criminal, civil or administrative action against you, as appropriate.



Sec.  180.830  Under what conditions do I get an additional 
opportunity to challenge the facts on which the proposed 
debarment is based?

    (a) You as a respondent will not have an additional opportunity to 
challenge the facts if the debarring official determines that--
    (1) Your debarment is based upon a conviction or civil judgment;
    (2) Your presentation in opposition contains only general denials to 
information contained in the Notice of Proposed Debarment; or
    (3) The issues raised in your presentation in opposition to the 
proposed debarment are not factual in nature, or are not material to the 
debarring official's decision whether to debar.
    (b) You will have an additional opportunity to challenge the facts 
if the debarring official determines that--
    (1) The conditions in paragraph (a) of this section do not exist; 
and
    (2) Your presentation in opposition raises a genuine dispute over 
facts material to the proposed debarment.
    (c) If you have an opportunity to challenge disputed material facts 
under this section, the debarring official or designee must conduct 
additional proceedings to resolve those facts.



Sec.  180.835  Are debarment proceedings formal?

    (a) Debarment proceedings are conducted in a fair and informal 
manner. The debarring official may use flexible procedures to allow you 
as a respondent to present matters in opposition. In so doing, the 
debarring official is not required to follow formal rules of evidence or 
procedure in creating an official record upon which the official will 
base the decision whether to debar.
    (b) You or your representative must submit any documentary evidence 
you want the debarring official to consider.



Sec.  180.840  How is fact-finding conducted?

    (a) If fact-finding is conducted--
    (1) You may present witnesses and other evidence, and confront any 
witness presented; and
    (2) The fact-finder must prepare written findings of fact for the 
record.
    (b) A transcribed record of fact-finding proceedings must be made, 
unless you as a respondent and the Federal agency agree to waive it in 
advance. If you want a copy of the transcribed record, you may purchase 
it.



Sec.  180.845  What does the debarring official consider in 
deciding whether to debar me?

    (a) The debarring official may debar you for any of the causes in 
Sec.  180.800. However, the official need not debar you even if a cause 
for debarment exists. The official may consider the seriousness of your 
acts or omissions and the mitigating or aggravating factors set forth at 
Sec.  180.860.
    (b) The debarring official bases the decision on all information 
contained in the official record. The record includes--
    (1) All information in support of the debarring official's proposed 
debarment;
    (2) Any further information and argument presented in support of, or 
in opposition to, the proposed debarment; and
    (3) Any transcribed record of fact-finding proceedings.
    (c) The debarring official may refer disputed material facts to 
another official for findings of fact. The debarring

[[Page 62]]

official may reject any resultant findings, in whole or in part, only 
after specifically determining them to be arbitrary, capricious, or 
clearly erroneous.



Sec.  180.850  What is the standard of proof in a debarment action?

    (a) In any debarment action, the Federal agency must establish the 
cause for debarment by a preponderance of the evidence.
    (b) If the proposed debarment is based upon a conviction or civil 
judgment, the standard of proof is met.



Sec.  180.855  Who has the burden of proof in a debarment action?

    (a) The Federal agency has the burden to prove that a cause for 
debarment exists.
    (b) Once a cause for debarment is established, you as a respondent 
have the burden of demonstrating to the satisfaction of the debarring 
official that you are presently responsible and that debarment is not 
necessary.



Sec.  180.860  What factors may influence the debarring official's decision?

    This section lists the mitigating and aggravating factors that the 
debarring official may consider in determining whether to debar you and 
the length of your debarment period. The debarring official may consider 
other factors if appropriate in light of the circumstances of a 
particular case. The existence or nonexistence of any factor, such as 
one of those set forth in this section, is not necessarily determinative 
of your present responsibility. In making a debarment decision, the 
debarring official may consider the following factors:
    (a) The actual or potential harm or impact that results or may 
result from the wrongdoing.
    (b) The frequency of incidents and/or duration of the wrongdoing.
    (c) Whether there is a pattern or prior history of wrongdoing. For 
example, if you have been found by another Federal agency or a State 
agency to have engaged in wrongdoing similar to that found in the 
debarment action, the existence of this fact may be used by the 
debarring official in determining that you have a pattern or prior 
history of wrongdoing.
    (d) Whether you are or have been excluded or disqualified by an 
agency of the Federal Government or have not been allowed to participate 
in State or local contracts or assistance agreements on a basis of 
conduct similar to one or more of the causes for debarment specified in 
this part.
    (e) Whether you have entered into an administrative agreement with a 
Federal agency or a State or local government that is not governmentwide 
but is based on conduct similar to one or more of the causes for 
debarment specified in this part.
    (f) Whether and to what extent you planned, initiated, or carried 
out the wrongdoing.
    (g) Whether you have accepted responsibility for the wrongdoing and 
recognize the seriousness of the misconduct that led to the cause for 
debarment.
    (h) Whether you have paid or agreed to pay all criminal, civil and 
administrative liabilities for the improper activity, including any 
investigative or administrative costs incurred by the government, and 
have made or agreed to make full restitution.
    (i) Whether you have cooperated fully with the government agencies 
during the investigation and any court or administrative action. In 
determining the extent of cooperation, the debarring official may 
consider when the cooperation began and whether you disclosed all 
pertinent information known to you.
    (j) Whether the wrongdoing was pervasive within your organization.
    (k) The kind of positions held by the individuals involved in the 
wrongdoing.
    (l) Whether your organization took appropriate corrective action or 
remedial measures, such as establishing ethics training and implementing 
programs to prevent recurrence.
    (m) Whether your principals tolerated the offense.
    (n) Whether you brought the activity cited as a basis for the 
debarment to the attention of the appropriate government agency in a 
timely manner.
    (o) Whether you have fully investigated the circumstances 
surrounding the cause for debarment and, if so,

[[Page 63]]

made the result of the investigation available to the debarring 
official.
    (p) Whether you had effective standards of conduct and internal 
control systems in place at the time the questioned conduct occurred.
    (q) Whether you have taken appropriate disciplinary action against 
the individuals responsible for the activity which constitutes the cause 
for debarment.
    (r) Whether you have had adequate time to eliminate the 
circumstances within your organization that led to the cause for the 
debarment.
    (s) Other factors that are appropriate to the circumstances of a 
particular case.



Sec.  180.865  How long may my debarment last?

    (a) If the debarring official decides to debar you, your period of 
debarment will be based on the seriousness of the cause(s) upon which 
your debarment is based. Generally, debarment should not exceed three 
years. However, if circumstances warrant, the debarring official may 
impose a longer period of debarment.
    (b) In determining the period of debarment, the debarring official 
may consider the factors in Sec.  180.860. If a suspension has preceded 
your debarment, the debarring official must consider the time you were 
suspended.
    (c) If the debarment is for a violation of the provisions of the 
Drug-Free Workplace Act of 1988, your period of debarment may not exceed 
five years.



Sec.  180.870  When do I know if the debarring official debars me?

    (a) The debarring official must make a written decision whether to 
debar within 45 days of closing the official record. The official record 
closes upon the debarring official's receipt of final submissions, 
information and findings of fact, if any. The debarring official may 
extend that period for good cause.
    (b) The debarring official sends you written notice, pursuant to 
Sec.  180.615 that the official decided, either--
    (1) Not to debar you; or
    (2) To debar you. In this event, the notice:
    (i) Refers to the Notice of Proposed Debarment;
    (ii) Specifies the reasons for your debarment;
    (iii) States the period of your debarment, including the effective 
dates; and
    (iv) Advises you that your debarment is effective for covered 
transactions and contracts that are subject to the Federal Acquisition 
Regulation (48 CFR chapter 1), throughout the executive branch of the 
Federal Government unless an agency head or an authorized designee 
grants an exception.



Sec.  180.875  May I ask the debarring official to reconsider a decision
to debar me?

    Yes, as a debarred person you may ask the debarring official to 
reconsider the debarment decision or to reduce the time period or scope 
of the debarment. However, you must put your request in writing and 
support it with documentation.



Sec.  180.880  What factors may influence the debarring official 
during reconsideration?

    The debarring official may reduce or terminate your debarment based 
on--
    (a) Newly discovered material evidence;
    (b) A reversal of the conviction or civil judgment upon which your 
debarment was based;
    (c) A bona fide change in ownership or management;
    (d) Elimination of other causes for which the debarment was imposed; 
or
    (e) Other reasons the debarring official finds appropriate.



Sec.  180.885  May the debarring official extend a debarment?

    (a) Yes, the debarring official may extend a debarment for an 
additional period, if that official determines that an extension is 
necessary to protect the public interest.
    (b) However, the debarring official may not extend a debarment 
solely on the basis of the facts and circumstances upon which the 
initial debarment action was based.
    (c) If the debarring official decides that a debarment for an 
additional period is necessary, the debarring official must follow the 
applicable procedures in this subpart, and subpart F of this part, to 
extend the debarment.

[[Page 64]]



                          Subpart I_Definitions



Sec.  180.900  Adequate evidence.

    Adequate evidence means information sufficient to support the 
reasonable belief that a particular act or omission has occurred.



Sec.  180.905  Affiliate.

    Persons are affiliates of each other if, directly or indirectly, 
either one controls or has the power to control the other or a third 
person controls or has the power to control both. The ways a Federal 
agency may determine control include, but are not limited to--
    (a) Interlocking management or ownership;
    (b) Identity of interests among family members;
    (c) Shared facilities and equipment;
    (d) Common use of employees; or
    (e) A business entity which has been organized following the 
exclusion of a person which has the same or similar management, 
ownership, or principal employees as the excluded person.



Sec.  180.910  Agent or representative.

    Agent or representative means any person who acts on behalf of, or 
who is authorized to commit a participant in a covered transaction.



Sec.  180.915  Civil judgment.

    Civil judgment means the disposition of a civil action by any court 
of competent jurisdiction, whether by verdict, decision, settlement, 
stipulation, other disposition which creates a civil liability for the 
complained of wrongful acts, or a final determination of liability under 
the Program Fraud Civil Remedies Act of 1988 (31 U.S.C. 3801-3812).



Sec.  180.920  Conviction.

Conviction means--
    (a) A judgment or any other determination of guilt of a criminal 
offense by any court of competent jurisdiction, whether entered upon a 
verdict or plea, including a plea of nolo contendere; or
    (b) Any other resolution that is the functional equivalent of a 
judgment, including probation before judgment and deferred prosecution. 
A disposition without the participation of the court is the functional 
equivalent of a judgment only if it includes an admission of guilt.



Sec.  180.925  Debarment.

    Debarment means an action taken by a debarring official under 
Subpart H of this part to exclude a person from participating in covered 
transactions and transactions covered under the Federal Acquisition 
Regulation (48 CFR chapter 1). A person so excluded is debarred.



Sec.  180.930  Debarring official.

    Debarring official means an agency official who is authorized to 
impose debarment. A debarring official is either--
    (a) The agency head; or
    (b) An official designated by the agency head.



Sec.  180.935  Disqualified.

    Disqualified means that a person is prohibited from participating in 
specified Federal procurement or nonprocurement transactions as required 
under a statute, Executive order (other than Executive Orders 12549 and 
12689) or other authority. Examples of disqualifications include persons 
prohibited under--
    (a) The Davis-Bacon Act (40 U.S.C. 276(a));
    (b) The equal employment opportunity acts and Executive orders; or
    (c) The Clean Air Act (42 U.S.C. 7606), Clean Water Act (33 U.S.C. 
1368) and Executive Order 11738 (3 CFR, 1973 Comp., p. 799).



Sec.  180.940  Excluded or exclusion.

    Excluded or exclusion means--
    (a) That a person or commodity is prohibited from being a 
participant in covered transactions, whether the person has been 
suspended; debarred; proposed for debarment under 48 CFR part 9, subpart 
9.4; voluntarily excluded; or
    (b) The act of excluding a person.



Sec.  180.945  System for Award Management Exclusions (SAM Exclusions).

    System for Award Management Exclusions (SAM Exclusions) means the 
list maintained and disseminated by the General Services Administration 
(GSA)

[[Page 65]]

containing the names and other information about persons who are 
ineligible.

[79 FR 75880, Dec. 19, 2014]



Sec.  180.950  Federal agency.

    Federal agency means any United States executive department, 
military department, defense agency or any other agency of the executive 
branch. Other agencies of the Federal Government are not considered 
``agencies'' for the purposes of this part unless they issue regulations 
adopting the governmentwide Debarment and Suspension system under 
Executive Orders 12549 and 12689.



Sec.  180.955  Indictment.

    Indictment means an indictment for a criminal offense. A 
presentment, information, or other filing by a competent authority 
charging a criminal offense shall be given the same effect as an 
indictment.



Sec.  180.960  Ineligible or ineligibility.

    Ineligible or ineligibility means that a person or commodity is 
prohibited from covered transactions because of an exclusion or 
disqualification.



Sec.  180.965  Legal proceedings.

    Legal proceedings means any criminal proceeding or any civil 
judicial proceeding, including a proceeding under the Program Fraud 
Civil Remedies Act (31 U.S.C. 3801-3812), to which the Federal 
Government or a State or local government or quasi-governmental 
authority is a party. The term also includes appeals from those 
proceedings.



Sec.  180.970  Nonprocurement transaction.

    (a) Nonprocurement transaction means any transaction, regardless of 
type (except procurement contracts), including, but not limited to the 
following:
    (1) Grants.
    (2) Cooperative agreements.
    (3) Scholarships.
    (4) Fellowships.
    (5) Contracts of assistance.
    (6) Loans.
    (7) Loan guarantees.
    (8) Subsidies.
    (9) Insurances.
    (10) Payments for specified uses.
    (11) Donation agreements.
    (b) A nonprocurement transaction at any tier does not require the 
transfer of Federal funds.



Sec.  180.975  Notice.

    Notice means a written communication served in person, sent by 
certified mail or its equivalent, or sent electronically by e-mail or 
facsimile. (See Sec.  180.615.)



Sec.  180.980  Participant.

    Participant means any person who submits a proposal for or who 
enters into a covered transaction, including an agent or representative 
of a participant.



Sec.  180.985  Person.

    Person means any individual, corporation, partnership, association, 
unit of government, or legal entity, however organized.



Sec.  180.990  Preponderance of the evidence.

    Preponderance of the evidence means proof by information that, 
compared with information opposing it, leads to the conclusion that the 
fact at issue is more probably true than not.



Sec.  180.995  Principal.

    Principal means--
    (a) An officer, director, owner, partner, principal investigator, or 
other person within a participant with management or supervisory 
responsibilities related to a covered transaction; or
    (b) A consultant or other person, whether or not employed by the 
participant or paid with Federal funds, who--
    (1) Is in a position to handle Federal funds;
    (2) Is in a position to influence or control the use of those funds; 
or,
    (3) Occupies a technical or professional position capable of 
substantially influencing the development or outcome of an activity 
required to perform the covered transaction.



Sec.  180.1000  Respondent.

    Respondent means a person against whom an agency has initiated a 
debarment or suspension action.

[[Page 66]]



Sec.  180.1005  State.

    (a) State means--
    (1) Any of the states of the United States;
    (2) The District of Columbia;
    (3) The Commonwealth of Puerto Rico;
    (4) Any territory or possession of the United States; or
    (5) Any agency or instrumentality of a state.
    (b) For purposes of this part, State does not include institutions 
of higher education, hospitals, or units of local government.



Sec.  180.1010  Suspending official.

    (a) Suspending official means an agency official who is authorized 
to impose suspension. The suspending official is either:
    (1) The agency head; or
    (2) An official designated by the agency head.



Sec.  180.1015  Suspension.

    Suspension is an action taken by a suspending official under subpart 
G of this part that immediately prohibits a person from participating in 
covered transactions and transactions covered under the Federal 
Acquisition Regulation (48 CFR chapter 1) for a temporary period, 
pending completion of an agency investigation and any judicial or 
administrative proceedings that may ensue. A person so excluded is 
suspended.



Sec.  180.1020  Voluntary exclusion or voluntarily excluded.

    (a) Voluntary exclusion means a person's agreement to be excluded 
under the terms of a settlement between the person and one or more 
agencies. Voluntary exclusion must have governmentwide effect.
    (b) Voluntarily excluded means the status of a person who has agreed 
to a voluntary exclusion.



             Sec. Appendix to Part 180--Covered Transactions

[[Page 67]]

[GRAPHIC] [TIFF OMITTED] TR31AU05.000

                           PART 181 [RESERVED]



PART 182_GOVERNMENTWIDE REQUIREMENTS FOR DRUG-FREE WORKPLACE 
(FINANCIAL ASSISTANCE)--Table of Contents



Sec.
182.5 What does this part do?
182.10 How is this part organized?
182.15 To whom does the guidance apply?
182.20 What must a Federal agency do to implement the guidance?
182.25 What must a Federal agency address in its implementation of the 
          guidance?
182.30 Where does a Federal agency implement the guidance?
182.35 By when must a Federal agency implement the guidance?
182.40 How is the guidance maintained?

                     Subpart A_Purpose and Coverage

182.100 How is this part written?
182.105 Do terms in this part have special meanings?
182.110 What do subparts A through F of this part do?
182.115 Does this part apply to me?
182.120 Are any of my Federal assistance awards exempt from this part?
182.125 Does this part affect the Federal contracts that I receive?

      Subpart B_Requirements for Recipients Other Than Individuals

182.200 What must I do to comply with this part?
182.205 What must I include in my drug-free workplace statement?
182.210 To whom must I distribute my drug-free workplace statement?

[[Page 68]]

182.215 What must I include in my drug-free awareness program?
182.220 By when must I publish my drug-free workplace statement and 
          establish my drug-free awareness program?
182.225 What actions must I take concerning employees who are convicted 
          of drug violations in the workplace?
182.230 How and when must I identify workplaces?

        Subpart C_Requirements for Recipients Who Are Individuals

182.300 What must I do to comply with this part if I am an individual 
          recipient?

         Subpart D_Responsibilities of Agency Awarding Officials

182.400 What are my responsibilities as an agency awarding official?

           Subpart E_Violations of This Part and Consequences

182.500 How are violations of this part determined for recipients other 
          than individuals?
182.505 How are violations of this part determined for recipients who 
          are individuals?
182.510 What actions will the Federal Government take against a 
          recipient determined to have violated this part?
182.515 Are there any exceptions to those actions?

                          Subpart F_Definitions

182.605 Award.
182.610 Controlled substance.
182.615 Conviction.
182.620 Cooperative agreement.
182.625 Criminal drug statute.
182.630 Debarment.
182.635 Drug-free workplace.
182.640 Employee.
182.645 Federal agency or agency.
182.650 Grant.
182.655 Individual.
182.660 Recipient.
182.665 State.
182.670 Suspension.

    Authority: 41 U.S.C. 701, et seq.

    Source: 74 FR 28150, June 15, 2009, unless otherwise noted.



Sec.  182.5  What does this part do?

    This part provides Office of Management and Budget (OMB) guidance 
for Federal agencies on the portion of the Drug-Free Workplace Act of 
1988 (41 U.S.C. 701-707, as amended) that applies to grants. It also 
applies the provisions of the Act to cooperative agreements and other 
financial assistance awards, as a matter of Federal Government policy.



Sec.  182.10  How is this part organized?

    This part is organized in two segments.
    (a) Sections 182.5 through 182.40 contain general policy direction 
for Federal agencies' use of the uniform policies and procedures in 
subparts A through F of this part.
    (b) Subparts A through F of this part contain uniform governmentwide 
policies and procedures for Federal agency use to specify the--
    (1) Types of awards that are covered by drug-free workplace 
requirements;
    (2) Drug-free workplace requirements with which a recipient must 
comply;
    (3) Actions required of an agency awarding official; and
    (4) Consequences of a violation of drug-free workplace requirements.



Sec.  182.15  To whom does the guidance apply?

    This part provides OMB guidance only to Federal agencies. 
Publication of this guidance in the Code of Federal Regulations does not 
change its nature--it is guidance and not regulation. Federal agencies' 
implementation of the guidance governs the rights and responsibilities 
of other persons affected by the drug-free workplace requirements.



Sec.  182.20  What must a Federal agency do to implement the guidance?

    To comply with the requirement in Section 41 U.S.C. 705 for 
Governmentwide regulations, each Federal agency that awards grants or 
cooperative agreements or makes other financial assistance awards that 
are subject to the drug-free workplace requirements in subparts A 
through F of the guidance must issue a regulation consistent with those 
subparts.



Sec.  182.25  What must a Federal agency address in its implementation of the guidance?

    Each Federal agency's implementing regulation:
    (a) Must establish drug-free workplace policies and procedures for 
that

[[Page 69]]

agency's awards that are consistent with the guidance in this part. When 
adopted by a Federal agency, the provisions of the guidance have 
regulatory effect for that agency's awards.
    (b) Must address some matters for which the guidance in this part 
gives the agency discretion. Specifically, the regulation must--
    (1) State whether the agency:
    (i) Has a central point to which a recipient may send the 
notification of a conviction that is required under Sec.  182.225(a) or 
Sec.  182.300(b); or
    (ii) Requires the recipient to send the notification to the awarding 
official for each agency award, or to his or her official designee.
    (2) Either:
    (i) State that the agency head is the official authorized to 
determine under Sec.  182.500 or Sec.  182.505 that a recipient has 
violated the drug-free workplace requirements; or
    (ii) Provide the title of the official designated to make that 
determination.
    (c) May also, at the agency's option, identify any specific types of 
financial assistance awards, in addition to grants and cooperative 
agreements, to which the Federal agency makes this guidance applicable.



Sec.  182.30  Where does a Federal agency implement the guidance?

    Each Federal agency that awards grants or cooperative agreements or 
makes other financial assistance awards that are subject to the drug-
free workplace guidance in this part must issue a regulation 
implementing the guidance within its chapter in subtitle B of this title 
of the Code of Federal Regulations.



Sec.  182.35  By when must a Federal agency implement the guidance?

    Federal agencies must submit proposed regulations to the OMB for 
review within nine months of the issuance of this part and issue final 
regulations within eighteen months of the guidance.



Sec.  182.40  How is the guidance maintained?

    The OMB publishes proposed changes to the guidance in the Federal 
Register for public comment, considers comments with the help of 
appropriate interagency working groups, and then issues any changes to 
the guidance in final form.



                     Subpart A_Purpose and Coverage



Sec.  182.100  How is this part written?

    (a) This part uses a ``plain language'' format to make it easier for 
the general public and business community to use and understand. The 
section headings and text, often in the form of questions and answers, 
must be read together.
    (b) Pronouns used within this part, such as ``I'' and ``you,'' 
change from subpart to subpart depending on the audience being 
addressed.



Sec.  182.105  Do terms in this part have special meanings?

    This part uses terms that have special meanings. Those terms are 
defined in subpart F of this part.



Sec.  182.110  What do subparts A through F of this part do?

    Subparts A through F of this part specify standard policies and 
procedures to carry out the Drug-Free Workplace Act of 1988 for 
financial assistance awards.



Sec.  182.115  Does this part apply to me?

    (a) Portions of this part apply to you if you are either--
    (1) A recipient of a Federal assistance award (see definitions of 
award and recipient in Sec. Sec.  182.605 and 182.660, respectively); or
    (2) A Federal agency awarding official.
    (b) The following table shows the subparts that apply to you:

------------------------------------------------------------------------
             If you are * * *                    See subparts * * *
------------------------------------------------------------------------
(1) a recipient who is not an individual.  A, B and E.
(2) a recipient who is an individual.....  A, C and E.
(3) a Federal agency awarding official...  A, D and E.
------------------------------------------------------------------------



Sec.  182.120  Are any of my Federal assistance awards exempt 
from this part?

    This part does not apply to any award to which the agency head, or 
his or her designee, determines that the

[[Page 70]]

application of this part would be inconsistent with the international 
obligations of the United States or the laws or regulations of a foreign 
government.



Sec.  182.125  Does this part affect the Federal contracts 
that I receive?

    This part will affect future contract awards indirectly if you are 
debarred or suspended for a violation of the requirements of this part, 
as described in Sec.  182.510(c). However, this part does not apply 
directly to procurement contracts. The portion of the Drug-Free 
Workplace Act of 1988 that applies to Federal procurement contracts is 
carried out through the Federal Acquisition Regulation in chapter 1 of 
Title 48 of the Code of Federal Regulations (the drug-free workplace 
coverage currently is in 48 CFR part 23, subpart 23.5).



      Subpart B_Requirements for Recipients Other Than Individuals



Sec.  182.200  What must I do to comply with this part?

    There are two general requirements if you are a recipient other than 
an individual.
    (a) First, you must make a good faith effort, on a continuing basis, 
to maintain a drug-free workplace. You must agree to do so as a 
condition for receiving any award covered by this part. The specific 
measures that you must take in this regard are described in more detail 
in subsequent sections of this subpart. Briefly, those measures are to--
    (1) Publish a drug-free workplace statement and establish a drug-
free awareness program for your employees (see Sec. Sec.  182.205 
through 182.220); and
    (2) Take actions concerning employees who are convicted of violating 
drug statutes in the workplace (see Sec.  182.225).
    (b) Second, you must identify all known workplaces under your 
Federal awards (see Sec.  182.230).



Sec.  182.205  What must I include in my drug-free workplace statement?

    You must publish a statement that--
    (a) Tells your employees that the unlawful manufacture, 
distribution, dispensing, possession, or use of a controlled substance 
is prohibited in your workplace;
    (b) Specifies the actions that you will take against employees for 
violating that prohibition; and
    (c) Lets each employee know that, as a condition of employment under 
any award, he or she:
    (1) Will abide by the terms of the statement; and
    (2) Must notify you in writing if he or she is convicted for a 
violation of a criminal drug statute occurring in the workplace and must 
do so no more than five calendar days after the conviction.



Sec.  182.210  To whom must I distribute my drug-free workplace statement?

    You must require that a copy of the statement described in Sec.  
182.205 be given to each employee who will be engaged in the performance 
of any Federal award.



Sec.  182.215  What must I include in my drug-free awareness program?

    You must establish an ongoing drug-free awareness program to inform 
employees about--
    (a) The dangers of drug abuse in the workplace;
    (b) Your policy of maintaining a drug-free workplace;
    (c) Any available drug counseling, rehabilitation, and employee 
assistance programs; and
    (d) The penalties that you may impose upon them for drug abuse 
violations occurring in the workplace.



Sec.  182.220  By when must I publish my drug-free workplace statement 
and establish my drug-free awareness program?

    If you are a new recipient that does not already have a policy 
statement as described in Sec.  182.205 and an ongoing awareness program 
as described in Sec.  182.215, you must publish the statement and 
establish the program by the time given in the following table:

[[Page 71]]



------------------------------------------------------------------------
                If * * *                          Then you * * *
------------------------------------------------------------------------
(a) the performance period of the award  must have the policy statement
 is less than 30 days.                    and program in place as soon
                                          as possible, but before the
                                          date on which performance is
                                          expected to be completed.
(b) the performance period of the award  must have the policy statement
 is 30 days or more.                      and program in place within 30
                                          days after award.
(c) you believe there are extraordinary  may ask the agency awarding
 circumstances that will require more     official to give you more time
 than 30 days for you to publish the      to do so. The amount of
 policy statement and establish the       additional time, if any, to be
 awareness program.                       given is at the discretion of
                                          the awarding official.
------------------------------------------------------------------------



Sec.  182.225  What actions must I take concerning employees who are 
convicted of drug violations in the workplace?

    There are two actions you must take if an employee is convicted of a 
drug violation in the workplace:
    (a) First, you must notify Federal agencies if an employee who is 
engaged in the performance of an award informs you about a conviction, 
as required by Sec.  182.205(c)(2), or you otherwise learn of the 
conviction. Your notification to the Federal agencies must--
    (1) Be in writing;
    (2) Include the employee's position title;
    (3) Include the identification number(s) of each affected award;
    (4) Be sent within ten calendar days after you learn of the 
conviction; and
    (5) Be sent to every Federal agency on whose award the convicted 
employee was working. It must be sent to every awarding official or his 
or her official designee, unless the Federal agency has specified a 
central point for the receipt of the notices.
    (b) Second, within 30 calendar days of learning about an employee's 
conviction, you must either--
    (1) Take appropriate personnel action against the employee, up to 
and including termination, consistent with the requirements of the 
Rehabilitation Act of 1973 (29 U.S.C. 794), as amended; or
    (2) Require the employee to participate satisfactorily in a drug 
abuse assistance or rehabilitation program approved for these purposes 
by a Federal, State or local health, law enforcement, or other 
appropriate agency.



Sec.  182.230  How and when must I identify workplaces?

    (a) You must identify all known workplaces under each agency award. 
A failure to do so is a violation of your drug-free workplace 
requirements. You may identify the workplaces--
    (1) To the agency official that is making the award, either at the 
time of application or upon award; or
    (2) In documents that you keep on file in your offices during the 
performance of the award, in which case you must make the information 
available for inspection upon request by agency officials or their 
designated representatives.
    (b) Your workplace identification for an award must include the 
actual address of buildings (or parts of buildings) or other sites where 
work under the award takes place. Categorical descriptions may be used 
(e.g., all vehicles of a mass transit authority or State highway 
department while in operation, State employees in each local 
unemployment office, performers in concert halls or radio studios).
    (c) If you identified workplaces to the agency awarding official at 
the time of application or award, as described in paragraph (a)(1) of 
this section, and any workplace that you identified changes during the 
performance of the award, you must inform the agency awarding official.



        Subpart C_Requirements for Recipients Who Are Individuals



Sec.  182.300  What must I do to comply with this part if I am an 
individual recipient?

    As a condition of receiving a Federal agency award, if you are an 
individual recipient, you must agree that--
    (a) You will not engage in the unlawful manufacture, distribution, 
dispensing, possession, or use of a controlled substance in conducting 
any activity related to the award; and
    (b) If you are convicted of a criminal drug offense resulting from a 
violation occurring during the conduct of any

[[Page 72]]

award activity, you will report the conviction:
    (1) In writing.
    (2) Within 10 calendar days of the conviction.
    (3) To the Federal agency awarding official or other designee for 
each award that you currently have, unless the agency designates a 
central point for the receipt of the notices, either in the award 
document or its regulation implementing the guidance in this part. When 
notice is made to a central point, it must include the identification 
number(s) of each affected award.



         Subpart D_Responsibilities of Agency Awarding Officials



Sec.  182.400  What are my responsibilities as an agency 
awarding official?

    As a Federal agency awarding official, you must obtain each 
recipient's agreement, as a condition of the award, to comply with the 
requirements in--
    (a) Subpart B of this part, if the recipient is not an individual; 
or
    (b) Subpart C of this part, if the recipient is an individual.



           Subpart E_Violations of This Part and Consequences



Sec.  182.500  How are violations of this part determined for recipients 
other than individuals?

    A recipient other than an individual is in violation of the 
requirements of this part if the agency head or his or her designee 
determines, in writing, that--
    (a) The recipient has violated the requirements of subpart B of this 
part; or
    (b) The number of convictions of the recipient's employees for 
violating criminal drug statutes in the workplace is large enough to 
indicate that the recipient has failed to make a good faith effort to 
provide a drug-free workplace.



Sec.  182.505  How are violations of this part determined for recipients
who are individuals?

    An individual recipient is in violation of the requirements of this 
part if the agency head or his or her designee determines, in writing, 
that--
    (a) The recipient has violated the requirements of subpart C of this 
part; or
    (b) The recipient is convicted of a criminal drug offense resulting 
from a violation occurring during the conduct of any award activity.



Sec.  182.510  What actions will the Federal Government take against a 
recipient determined to have violated this part?

    If a recipient is determined to have violated this part, as 
described in Sec.  182.500 or Sec.  182.505, the agency may take one or 
more of the following actions--
    (a) Suspension of payments under the award;
    (b) Suspension or termination of the award; and
    (c) Suspension or debarment of the recipient under the agency's 
regulation implementing the OMB guidance on nonprocurement debarment and 
suspension (2 CFR part 180), for a period not to exceed five years.



Sec.  182.515  Are there any exceptions to those actions?

    The agency head may waive with respect to a particular award, in 
writing, a suspension of payments under an award, suspension or 
termination of an award, or suspension or debarment of a recipient if 
the agency head determines that such a waiver would be in the public 
interest. This exception authority cannot be delegated to any other 
official.



                          Subpart F_Definitions



Sec.  182.605  Award.

    Award means an award of financial assistance by a Federal agency 
directly to a recipient.
    (a) The term award includes:
    (1) A Federal grant or cooperative agreement, in the form of money 
or property in lieu of money.
    (2) A block grant or a grant in an entitlement program, whether or 
not the grant is exempted from coverage under the Governmentwide rule 
that implements OMB Circular A-102 (for availability of OMB circulars, 
see 5 CFR 1310.3) and specifies uniform administrative requirements.
    (b) The term award does not include:

[[Page 73]]

    (1) Technical assistance that provides services instead of money.
    (2) Loans.
    (3) Loan guarantees.
    (4) Interest subsidies.
    (5) Insurance.
    (6) Direct appropriations.
    (7) Veterans' benefits to individuals (i.e., any benefit to 
veterans, their families, or survivors by virtue of the service of a 
veteran in the Armed Forces of the United States).



Sec.  182.610  Controlled substance.

    Controlled substance means a controlled substance in schedules I 
through V of the Controlled Substances Act (21 U.S.C. 812), and as 
further defined by regulation at 21 CFR 1308.11 through 1308.15.



Sec.  182.615  Conviction.

    Conviction means a finding of guilt (including a plea of nolo 
contendere) or imposition of sentence, or both, by any judicial body 
charged with the responsibility to determine violations of the Federal 
or State criminal drug statutes.



Sec.  182.620  Cooperative agreement.

    Cooperative agreement means an award of financial assistance that, 
consistent with 31 U.S.C. 6305, is used to enter into the same kind of 
relationship as a grant (see definition of grant in Sec.  182.650), 
except that substantial involvement is expected between the Federal 
agency and the recipient when carrying out the activity contemplated by 
the award. The term does not include cooperative research and 
development agreements as defined in 15 U.S.C. 3710a.



Sec.  182.625  Criminal drug statute.

    Criminal drug statute means a Federal or non-Federal criminal 
statute involving the manufacture, distribution, dispensing, use, or 
possession of any controlled substance.



Sec.  182.630  Debarment.

    Debarment means an action taken by a Federal agency to prohibit a 
recipient from participating in Federal Government procurement contracts 
and covered nonprocurement transactions. A recipient so prohibited is 
debarred, in accordance with the Federal Acquisition Regulation for 
procurement contracts (48 CFR part 9, subpart 9.4) and agency 
regulations implementing the OMB guidance on nonprocurement debarment 
and suspension (2 CFR part 180, which implements Executive Orders 12549 
and 12689).



Sec.  182.635  Drug-free workplace.

    Drug-free workplace means a site for the performance of work done in 
connection with a specific award at which employees of the recipient are 
prohibited from engaging in the unlawful manufacture, distribution, 
dispensing, possession, or use of a controlled substance.



Sec.  182.640  Employee.

    (a) Employee means the employee of a recipient directly engaged in 
the performance of work under the award, including--
    (1) All direct charge employees;
    (2) All indirect charge employees, unless their impact or 
involvement in the performance of work under the award is insignificant 
to the performance of the award; and
    (3) Temporary personnel and consultants who are directly engaged in 
the performance of work under the award and who are on the recipient's 
payroll.
    (b) This definition does not include workers not on the payroll of 
the recipient (e.g., volunteers, even if used to meet a matching 
requirement; consultants or independent contractors not on the payroll; 
or employees of subrecipients or subcontractors in covered workplaces).



Sec.  182.645  Federal agency or agency.

    Federal agency or agency means any United States executive 
department, military department, government corporation, government 
controlled corporation, any other establishment in the executive branch 
(including the Executive Office of the President), or any independent 
regulatory agency.



Sec.  182.650  Grant.

    Grant means an award of financial assistance that, consistent with 
31 U.S.C. 6304, is used to enter into a relationship--

[[Page 74]]

    (a) The principal purpose of which is to transfer a thing of value 
to the recipient to carry out a public purpose of support or stimulation 
authorized by a law of the United States, rather than to acquire 
property or services for the Federal Government's direct benefit or use; 
and
    (b) In which substantial involvement is not expected between the 
Federal agency and the recipient when carrying out the activity 
contemplated by the award.



Sec.  182.655  Individual.

    Individual means a natural person.



Sec.  182.660  Recipient.

    Recipient means any individual, corporation, partnership, 
association, unit of government (except a Federal agency) or legal 
entity, however organized, that receives an award directly from a 
Federal agency.



Sec.  182.665  State.

    State means any of the States of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, or any territory or 
possession of the United States.



Sec.  182.670  Suspension.

    Suspension means an action taken by a Federal agency that 
immediately prohibits a recipient from participating in Federal 
Government procurement contracts and covered nonprocurement transactions 
for a temporary period, pending completion of an investigation and any 
judicial or administrative proceedings that may ensue. A recipient so 
prohibited is suspended, in accordance with the Federal Acquisition 
Regulation for procurement contracts (48 CFR part 9, subpart 9.4) and 
agency regulations implementing the OMB guidance on nonprocurement 
debarment and suspension (2 CFR part 180, which implements Executive 
Orders 12549 and 12689). Suspension of a recipient is a distinct and 
separate action from suspension of an award or suspension of payments 
under an award.

                        PARTS 183	199 [RESERVED]

[[Page 75]]



          CHAPTER II--OFFICE OF MANAGEMENT AND BUDGET GUIDANCE




  --------------------------------------------------------------------
Part                                                                Page
200             Uniform administrative requirements, cost 
                    principles, and audit requirements for 
                    Federal awards..........................          77
201-299

[Reserved]

[[Page 77]]









PART 200_UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT 
REQUIREMENTS FOR FEDERAL AWARDS--Table of Contents





                   Subpart A_Acronyms and Definitions

                                Acronyms

Sec.
200.0 Acronyms.
200.1 Definitions.
200.2 Acquisition cost.
200.3 Advance payment.
200.4 Allocation.
200.5 Audit finding.
200.6 Auditee.
200.7 Auditor.
200.8 Budget.
200.9 Central service cost allocation plan.
200.10 Catalog of Federal Domestic Assistance (CFDA) number.
200.11 CFDA program title.
200.12 Capital assets.
200.13 Capital expenditures.
200.14 Claim.
200.15 Class of Federal awards.
200.16 Closeout.
200.17 Cluster of programs.
200.18 Cognizant agency for audit.
200.19 Cognizant agency for indirect costs.
200.20 Computing devices.
200.21 Compliance supplement.
200.22 Contract.
200.23 Contractor.
200.24 Cooperative agreement.
200.25 Cooperative audit resolution.
200.26 Corrective action.
200.27 Cost allocation plan.
200.28 Cost objective.
200.29 Cost sharing or matching.
200.30 Cross-cutting audit finding.
200.31 [Reserved]
200.32 Data Universal Numbering System (DUNS) number.
200.33 Equipment.
200.34 Expenditures.
200.35 Federal agency.
200.36 Federal Audit Clearinghouse (FAC).
200.37 Federal awarding agency.
200.38 Federal award.
200.39 Federal award date.
200.40 Federal financial assistance.
200.41 Federal interest.
200.42 Federal program.
200.43 Federal share.
200.44 Final cost objective.
200.45 Fixed amount awards.
200.46 Foreign public entity.
200.47 Foreign organization.
200.48 General purpose equipment.
200.49 Generally Accepted Accounting Principles (GAAP).
200.50 Generally Accepted Government Auditing Standards (GAGAS).
200.51 Grant agreement.
200.52 Hospital.
200.53 Improper payment.
200.54 Indian tribe (or ``federally recognized Indian tribe'').
200.55 Institutions of Higher Education (IHEs).
200.56 Indirect (facilities & administrative (F&A)) costs.
200.57 Indirect cost rate proposal.
200.58 Information technology systems.
200.59 Intangible property.
200.60 Intermediate cost objective.
200.61 Internal controls.
200.62 Internal control over compliance requirements for Federal awards.
200.63 Loan.
200.64 Local government.
200.65 Major program.
200.66 Management decision.
200.67 Micro-purchase.
200.68 Modified Total Direct Cost (MTDC).
200.69 Non-Federal entity.
200.70 Nonprofit organization.
200.71 Obligations.
200.72 Office of Management and Budget (OMB).
200.73 Oversight agency for audit.
200.74 Pass-through entity.
200.75 Participant support costs.
200.76 Performance goal.
200.77 Period of performance.
200.78 Personal property.
200.79 Personally Identifiable Information (PII).
200.80 Program income.
200.81 Property.
200.82 Protected Personally Identifiable Information (Protected PII).
200.83 Project cost.
200.84 Questioned cost.
200.85 Real property.
200.86 Recipient.
200.87 Research and Development (R&D).
200.88 Simplified acquisition threshold.
200.89 Special purpose equipment.
200.90 State.
200.91 Student Financial Aid (SFA).
200.92 Subaward.
200.93 Subrecipient.
200.94 Supplies.
200.95 Termination.
200.96 Third-party in-kind contributions.
200.97 Unliquidated obligations.
200.98 Unobligated balance.
200.99 Voluntary committed cost sharing.

[[Page 78]]

                      Subpart B_General Provisions

200.100 Purpose.
200.101 Applicability.
200.102 Exceptions.
200.103 Authorities.
200.104 Supersession.
200.105 Effect on other issuances.
200.106 Agency implementation.
200.107 OMB responsibilities.
200.108 Inquiries.
200.109 Review date.
200.110 Effective/applicability date.
200.111 English language.
200.112 Conflict of interest.
200.113 Mandatory disclosures.

 Subpart C_Pre-Federal Award Requirements and Contents of Federal Awards

200.200 Purpose.
200.201 Use of grant agreements (including fixed amount awards), 
          cooperative agreements, and contracts.
200.202 Requirement to provide public notice of Federal financial 
          assistance programs.
200.203 Notices of funding opportunities.
200.204 Federal awarding agency review of merit of proposals.
200.205 Federal awarding agency review of risk posed by applicants.
200.206 Standard application requirements.
200.207 Specific conditions.
200.208 Certifications and representations.
200.209 Pre-award costs.
200.210 Information contained in a Federal award.
200.211 Public access to Federal award information.
200.212 Reporting a determination that a non-Federal entity is not 
          qualified for a Federal award.
200.213 Suspension and debarment.

                Subpart D_Post Federal Award Requirements

             Standards for Financial and Program Management

200.300 Statutory and national policy requirements.
200.301 Performance measurement.
200.302 Financial management.
200.303 Internal controls.
200.304 Bonds.
200.305 Payment.
200.306 Cost sharing or matching.
200.307 Program income.
200.308 Revision of budget and program plans.
200.309 Period of performance.

                           Property Standards

200.310 Insurance coverage.
200.311 Real property.
200.312 Federally-owned and exempt property.
200.313 Equipment.
200.314 Supplies.
200.315 Intangible property.
200.316 Property trust relationship.

                          Procurement Standards

200.317 Procurements by states.
200.318 General procurement standards.
200.319 Competition.
200.320 Methods of procurement to be followed.
200.321 Contracting with small and minority businesses, women's business 
          enterprises, and labor surplus area firms.
200.322 Procurement of recovered materials.
200.323 Contract cost and price.
200.324 Federal awarding agency or pass-through entity review.
200.325 Bonding requirements.
200.326 Contract provisions.

           Performance and Financial Monitoring and Reporting

200.327 Financial reporting.
200.328 Monitoring and reporting program performance.
200.329 Reporting on real property.

                 Subrecipient Monitoring and Management

200.330 Subrecipient and contractor determinations.
200.331 Requirements for pass-through entities.
200.332 Fixed amount subawards.

                       Record Retention and Access

200.333 Retention requirements for records.
200.334 Requests for transfer of records.
200.335 Methods for collection, transmission and storage of information.
200.336 Access to records.
200.337 Restrictions on public access to records.

                       Remedies for Noncompliance

200.338 Remedies for noncompliance.
200.339 Termination.
200.340 Notification of termination requirement.
200.341 Opportunities to object, hearings and appeals.
200.342 Effects of suspension and termination.

                                Closeout

200.343 Closeout.

        Post-Closeout Adjustments and Continuing Responsibilities

200.344 Post-closeout adjustments and continuing responsibilities.

[[Page 79]]

                        Collection of Amounts Due

200.345 Collection of amounts due.

                        Subpart E_Cost Principles

                           General Provisions

200.400 Policy guide.
200.401 Application.

                          Basic Considerations

200.402 Composition of costs.
200.403 Factors affecting allowability of costs.
200.404 Reasonable costs.
200.405 Allocable costs.
200.406 Applicable credits.
200.407 Prior written approval (prior approval).
200.408 Limitation on allowance of costs.
200.409 Special considerations.
200.410 Collection of unallowable costs.
200.411 Adjustment of previously negotiated indirect (F&A) cost rates 
          containing unallowable costs.

                     Direct and Indirect (F&A) Costs

200.412 Classification of costs.
200.413 Direct costs.
200.414 Indirect (F&A) costs.
200.415 Required certifications.

 Special Considerations for States, Local Governments and Indian Tribes

200.416 Cost allocation plans and indirect cost proposals.
200.417 Interagency service.

       Special Considerations for Institutions of Higher Education

200.418 Costs incurred by states and local governments.
200.419 Cost accounting standards and disclosure statement.

              General Provisions for Selected Items of Cost

200.420 Considerations for selected items of cost.
200.421 Advertising and public relations.
200.422 Advisory councils.
200.423 Alcoholic beverages.
200.424 Alumni/ae activities.
200.425 Audit services.
200.426 Bad debts.
200.427 Bonding costs.
200.428 Collections of improper payments.
200.429 Commencement and convocation costs.
200.430 Compensation--personal services.
200.431 Compensation--fringe benefits.
200.432 Conferences.
200.433 Contingency provisions.
200.434 Contributions and donations.
200.435 Defense and prosecution of criminal and civil proceedings, 
          claims, appeals and patent infringements.
200.436 Depreciation.
200.437 Employee health and welfare costs.
200.438 Entertainment costs.
200.439 Equipment and other capital expenditures.
200.440 Exchange rates.
200.441 Fines, penalties, damages and other settlements.
200.442 Fund raising and investment management costs.
200.443 Gains and losses on disposition of depreciable assets.
200.444 General costs of government.
200.445 Goods or services for personal use.
200.446 Idle facilities and idle capacity.
200.447 Insurance and indemnification.
200.448 Intellectual property.
200.449 Interest.
200.450 Lobbying.
200.451 Losses on other awards or contracts.
200.452 Maintenance and repair costs.
200.453 Materials and supplies costs, including costs of computing 
          devices.
200.454 Memberships, subscriptions, and professional activity costs.
200.455 Organization costs.
200.456 Participant support costs.
200.457 Plant and security costs.
200.458 Pre-award costs.
200.459 Professional service costs.
200.460 Proposal costs.
200.461 Publication and printing costs.
200.462 Rearrangement and reconversion costs.
200.463 Recruiting costs.
200.464 Relocation costs of employees.
200.465 Rental costs of real property and equipment.
200.466 Scholarships and student aid costs.
200.467 Selling and marketing costs.
200.468 Specialized service facilities.
200.469 Student activity costs.
200.470 Taxes (including Value Added Tax).
200.471 Termination costs.
200.472 Training and education costs.
200.473 Transportation costs.
200.474 Travel costs.
200.475 Trustees.

                      Subpart F_Audit Requirements

                                 General

200.500 Purpose.

                                 Audits

200.501 Audit requirements.
200.502 Basis for determining Federal awards expended.
200.503 Relation to other audit requirements.
200.504 Frequency of audits.
200.505 Sanctions.
200.506 Audit costs.

[[Page 80]]

200.507 Program-specific audits.

                                Auditees

200.508 Auditee responsibilities.
200.509 Auditor selection.
200.510 Financial statements.
200.511 Audit findings follow-up.
200.512 Report submission.

                            Federal Agencies

200.513 Responsibilities.

                                Auditors

200.514 Scope of audit.
200.515 Audit reporting.
200.516 Audit findings.
200.517 Audit documentation.
200.518 Major program determination.
200.519 Criteria for Federal program risk.
200.520 Criteria for a low-risk auditee.

                          Management Decisions

200.521 Management decision.

Appendix I to Part 200--Full Text of Notice of Funding Opportunity
Appendix II to Part 200--Contract Provisions for Non-Federal Entity 
          Contracts Under Federal Awards
Appendix III to Part 200--Indirect (F&A) Costs Identification and 
          Assignment, and Rate Determination for Institutions of Higher 
          Education (IHEs)
Appendix IV to Part 200--Indirect (F&A) Costs Identification and 
          Assignment, and Rate Determination for Nonprofit Organizations
Appendix V to Part 200-- State/Local Governmentwide Central Service Cost 
          Allocation Plans
Appendix VI to Part 200--Public Assistance Cost Allocation Plans
Appendix VII to Part 220--States and Local Government and Indian Tribe 
          Indirect Cost Proposals
Appendix VIII to Part 200--Nonprofit Organizations Exempted From Subpart 
          E--Cost Principles of Part 200
Appendix IX to Part 200--Hospital Cost Principles
Appendix X to Part 200--Data Collection Form (Form SF-SAC)
Appendix XI to Part 200--Compliance Supplement
Appendix XII to Part 200--Award Term and Condition for Recipient 
          Integrity and Performance Matters

    Authority: 31 U.S.C. 503

    Source: 78 FR 78608, Dec. 26, 2013, unless otherwise noted.



                   Subpart A_Acronyms and Definitions

                                Acronyms



Sec.  200.0  Acronyms.

                              Acronym Term

CAS Cost Accounting Standards
CFDA Catalog of Federal Domestic Assistance
CFR Code of Federal Regulations
CMIA Cash Management Improvement Act
COG Councils Of Governments
COSO Committee of Sponsoring Organizations of the Treadway Commission


EPA Environmental Protection Agency
ERISA Employee Retirement Income Security Act of 1974 (29 U.S.C. 1301-
    1461)
EUI Energy Usage Index
F&A Facilities and Administration
FAC Federal Audit Clearinghouse
FAIN Federal Award Identification Number
FAPIIS Federal Awardee Performance and Integrity Information System
FAR Federal Acquisition Regulation
FFATA Federal Funding Accountability and Transparency Act of 2006 or 
    Transparency Act--Public Law 109-282, as amended by section 6202(a) 
    of Public Law 110-252 (31 U.S.C. 6101)
FICA Federal Insurance Contributions Act
FOIA Freedom of Information Act
FR Federal Register
FTE Full-time equivalent
GAAP Generally Accepted Accounting Principles
GAGAS Generally Accepted Government Auditing Standards
GAO Government Accountability Office
GOCO Government owned, contractor operated
GSA General Services Administration
IBS Institutional Base Salary
IHE Institutions of Higher Education
IRC Internal Revenue Code
ISDEAA Indian Self-Determination and Education and Assistance Act
MTC Modified Total Cost

[[Page 81]]

MTDC Modified Total Direct Cost
OMB Office of Management and Budget
PII Personally Identifiable Information
PMS Payment Management System
PRHP Post-retirement Health Plans
PTE Pass-through Entity
REUI Relative Energy Usage Index
SAM System for Award Management (accessible at https://www.sam.gov)
SFA Student Financial Aid
SNAP Supplemental Nutrition Assistance Program
SPOC Single Point of Contact
TANF Temporary Assistance for Needy Families
TFM Treasury Financial Manual
U.S.C. United States Code
VAT Value Added Tax

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75880, Dec. 19, 2014; 
80 FR 43308, July 22, 2015]



Sec.  200.1  Definitions.

    These are the definitions for terms used in this part. Different 
definitions may be found in Federal statutes or regulations that apply 
more specifically to particular programs or activities. These 
definitions could be supplemented by additional instructional 
information provided in governmentwide standard information collections.



Sec.  200.2  Acquisition cost.

    Acquisition cost means the cost of the asset including the cost to 
ready the asset for its intended use. Acquisition cost for equipment, 
for example, means the net invoice price of the equipment, including the 
cost of any modifications, attachments, accessories, or auxiliary 
apparatus necessary to make it usable for the purpose for which it is 
acquired. Acquisition costs for software includes those development 
costs capitalized in accordance with generally accepted accounting 
principles (GAAP). Ancillary charges, such as taxes, duty, protective in 
transit insurance, freight, and installation may be included in or 
excluded from the acquisition cost in accordance with the non-Federal 
entity's regular accounting practices.



Sec. 200.3  Advance payment.

    Advance payment means a payment that a Federal awarding agency or 
pass-through entity makes by any appropriate payment mechanism, 
including a predetermined payment schedule, before the non-Federal 
entity disburses the funds for program purposes.



Sec.  200.4  Allocation.

    Allocation means the process of assigning a cost, or a group of 
costs, to one or more cost objective(s), in reasonable proportion to the 
benefit provided or other equitable relationship. The process may entail 
assigning a cost(s) directly to a final cost objective or through one or 
more intermediate cost objectives.



Sec.  200.5  Audit finding.

    Audit finding means deficiencies which the auditor is required by 
Sec.  200.516 Audit findings, paragraph (a) to report in the schedule of 
findings and questioned costs.



Sec.  200.6  Auditee.

    Auditee means any non-Federal entity that expends Federal awards 
which must be audited under Subpart F--Audit Requirements of this part.



Sec.  200.7  Auditor.

    Auditor means an auditor who is a public accountant or a Federal, 
state, local government, or Indian tribe audit organization, which meets 
the general standards specified for external auditors in generally 
accepted government auditing standards (GAGAS). The term auditor does 
not include internal auditors of nonprofit organizations.

[79 FR 75880, Dec. 19, 2014]



Sec.  200.8  Budget.

    Budget means the financial plan for the project or program that the 
Federal awarding agency or pass-through entity approves during the 
Federal award process or in subsequent amendments to the Federal award. 
It may include the Federal and non-Federal share or only the Federal 
share, as determined by the Federal awarding agency or pass-through 
entity.

[[Page 82]]



Sec.  200.9  Central service cost allocation plan.

    Central service cost allocation plan means the documentation 
identifying, accumulating, and allocating or developing billing rates 
based on the allowable costs of services provided by a state, local 
government, or Indian tribe on a centralized basis to its departments 
and agencies. The costs of these services may be allocated or billed to 
users.



Sec.  200.10  Catalog of Federal Domestic Assistance (CFDA) number.

    CFDA number means the number assigned to a Federal program in the 
CFDA.



Sec.  200.11  CFDA program title.

    CFDA program title means the title of the program under which the 
Federal award was funded in the CFDA.



Sec.  200.12  Capital assets.

    Capital assets means tangible or intangible assets used in 
operations having a useful life of more than one year which are 
capitalized in accordance with GAAP. Capital assets include:
    (a) Land, buildings (facilities), equipment, and intellectual 
property (including software) whether acquired by purchase, 
construction, manufacture, lease-purchase, exchange, or through capital 
leases; and
    (b) Additions, improvements, modifications, replacements, 
rearrangements, reinstallations, renovations or alterations to capital 
assets that materially increase their value or useful life (not ordinary 
repairs and maintenance).



Sec.  200.13  Capital expenditures.

    Capital expenditures means expenditures to acquire capital assets or 
expenditures to make additions, improvements, modifications, 
replacements, rearrangements, reinstallations, renovations, or 
alterations to capital assets that materially increase their value or 
useful life.



Sec.  200.14  Claim.

    Claim means, depending on the context, either:
    (a) A written demand or written assertion by one of the parties to a 
Federal award seeking as a matter of right:
    (1) The payment of money in a sum certain;
    (2) The adjustment or interpretation of the terms and conditions of 
the Federal award; or
    (3) Other relief arising under or relating to a Federal award.
    (b) A request for payment that is not in dispute when submitted.



Sec.  200.15  Class of Federal awards.

    Class of Federal awards means a group of Federal awards either 
awarded under a specific program or group of programs or to a specific 
type of non-Federal entity or group of non-Federal entities to which 
specific provisions or exceptions may apply.



Sec.  200.16  Closeout.

    Closeout means the process by which the Federal awarding agency or 
pass-through entity determines that all applicable administrative 
actions and all required work of the Federal award have been completed 
and takes actions as described in Sec.  200.343 Closeout.



Sec.  200.17  Cluster of programs.

    Cluster of programs means a grouping of closely related programs 
that share common compliance requirements. The types of clusters of 
programs are research and development (R&D), student financial aid 
(SFA), and other clusters. ``Other clusters'' are as defined by OMB in 
the compliance supplement or as designated by a state for Federal awards 
the state provides to its subrecipients that meet the definition of a 
cluster of programs. When designating an ``other cluster,'' a state must 
identify the Federal awards included in the cluster and advise the 
subrecipients of compliance requirements applicable to the cluster, 
consistent with Sec.  200.331 Requirements for pass-through entities, 
paragraph (a). A cluster of programs must be considered as one program 
for determining major programs, as described in Sec.  200.518 Major 
program determination, and, with the exception of R&D as described in 
Sec.  200.501 Audit requirements, paragraph (c), whether a program-
specific audit may be elected.

[[Page 83]]



Sec.  200.18  Cognizant agency for audit.

    Cognizant agency for audit means the Federal agency designated to 
carry out the responsibilities described in Sec.  200.513 
Responsibilities, paragraph (a). The cognizant agency for audit is not 
necessarily the same as the cognizant agency for indirect costs. A list 
of cognizant agencies for audit may be found at the FAC Web site.



Sec.  200.19  Cognizant agency for indirect costs.

    Cognizant agency for indirect costs means the Federal agency 
responsible for reviewing, negotiating, and approving cost allocation 
plans or indirect cost proposals developed under this part on behalf of 
all Federal agencies. The cognizant agency for indirect cost is not 
necessarily the same as the cognizant agency for audit. For assignments 
of cognizant agencies see the following:
    (a) For IHEs: Appendix III to Part 200--Indirect (F&A) Costs 
Identification and Assignment, and Rate Determination for Institutions 
of Higher Education (IHEs), paragraph C.11.
    (b) For nonprofit organizations: Appendix IV to Part 200--Indirect 
(F&A) Costs Identification and Assignment, and Rate Determination for 
Nonprofit Organizations, paragraph C.2.a.
    (c) For state and local governments: Appendix V to Part 200--State/
Local Governmentwide Central Service Cost Allocation Plans, paragraph 
F.1.
    (d) For Indian tribes: Appendix VII to Part 200--States and Local 
Government and Indian Tribe Indirect Cost Proposal, paragraph D.1.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75880, Dec. 19, 2014; 
80 FR 54407, Sept. 10, 2015]



Sec.  200.20  Computing devices.

    Computing devices means machines used to acquire, store, analyze, 
process, and publish data and other information electronically, 
including accessories (or ``peripherals'') for printing, transmitting 
and receiving, or storing electronic information. See also Sec. Sec.  
200.94 Supplies and 200.58 Information technology systems.



Sec.  200.21  Compliance supplement.

    Compliance supplement means Appendix XI to Part 200--Compliance 
Supplement (previously known as the Circular A-133 Compliance 
Supplement).



Sec.  200.22  Contract.

    Contract means a legal instrument by which a non-Federal entity 
purchases property or services needed to carry out the project or 
program under a Federal award. The term as used in this part does not 
include a legal instrument, even if the non-Federal entity considers it 
a contract, when the substance of the transaction meets the definition 
of a Federal award or subaward (see Sec.  200.92 Subaward).



Sec.  200.23  Contractor.

    Contractor means an entity that receives a contract as defined in 
Sec.  200.22 Contract.



Sec.  200.24  Cooperative agreement.

    Cooperative agreement means a legal instrument of financial 
assistance between a Federal awarding agency or pass-through entity and 
a non-Federal entity that, consistent with 31 U.S.C. 6302-6305:
    (a) Is used to enter into a relationship the principal purpose of 
which is to transfer anything of value from the Federal awarding agency 
or pass-through entity to the non-Federal entity to carry out a public 
purpose authorized by a law of the United States (see 31 U.S.C. 
6101(3)); and not to acquire property or services for the Federal 
Government or pass-through entity's direct benefit or use;
    (b) Is distinguished from a grant in that it provides for 
substantial involvement between the Federal awarding agency or pass-
through entity and the non-Federal entity in carrying out the activity 
contemplated by the Federal award.
    (c) The term does not include:
    (1) A cooperative research and development agreement as defined in 
15 U.S.C. 3710a; or
    (2) An agreement that provides only:
    (i) Direct United States Government cash assistance to an 
individual;
    (ii) A subsidy;
    (iii) A loan;
    (iv) A loan guarantee; or

[[Page 84]]

    (v) Insurance.



Sec.  200.25  Cooperative audit resolution.

    Cooperative audit resolution means the use of audit follow-up 
techniques which promote prompt corrective action by improving 
communication, fostering collaboration, promoting trust, and developing 
an understanding between the Federal agency and the non-Federal entity. 
This approach is based upon:
    (a) A strong commitment by Federal agency and non-Federal entity 
leadership to program integrity;
    (b) Federal agencies strengthening partnerships and working 
cooperatively with non-Federal entities and their auditors; and non-
Federal entities and their auditors working cooperatively with Federal 
agencies;
    (c) A focus on current conditions and corrective action going 
forward;
    (d) Federal agencies offering appropriate relief for past 
noncompliance when audits show prompt corrective action has occurred; 
and
    (e) Federal agency leadership sending a clear message that continued 
failure to correct conditions identified by audits which are likely to 
cause improper payments, fraud, waste, or abuse is unacceptable and will 
result in sanctions.



Sec.  200.26  Corrective action.

    Corrective action means action taken by the auditee that:
    (a) Corrects identified deficiencies;
    (b) Produces recommended improvements; or
    (c) Demonstrates that audit findings are either invalid or do not 
warrant auditee action.



Sec.  200.27  Cost allocation plan.

    Cost allocation plan means central service cost allocation plan or 
public assistance cost allocation plan.



Sec.  200.28  Cost objective.

    Cost objective means a program, function, activity, award, 
organizational subdivision, contract, or work unit for which cost data 
are desired and for which provision is made to accumulate and measure 
the cost of processes, products, jobs, capital projects, etc. A cost 
objective may be a major function of the non-Federal entity, a 
particular service or project, a Federal award, or an indirect 
(Facilities & Administrative (F&A)) cost activity, as described in 
Subpart E--Cost Principles of this Part. See also Sec. Sec.  200.44 
Final cost objective and 200.60 Intermediate cost objective.



Sec.  200.29  Cost sharing or matching.

    Cost sharing or matching means the portion of project costs not paid 
by Federal funds (unless otherwise authorized by Federal statute). See 
also Sec.  200.306 Cost sharing or matching.



Sec.  200.30  Cross-cutting audit finding.

    Cross-cutting audit finding means an audit finding where the same 
underlying condition or issue affects Federal awards of more than one 
Federal awarding agency or pass-through entity.



Sec.  200.31  Disallowed costs.

    Disallowed costs means those charges to a Federal award that the 
Federal awarding agency or pass-through entity determines to be 
unallowable, in accordance with the applicable Federal statutes, 
regulations, or the terms and conditions of the Federal award.



Sec.  200.32  [Reserved]



Sec.  200.33  Equipment.

    Equipment means tangible personal property (including information 
technology systems) having a useful life of more than one year and a 
per-unit acquisition cost which equals or exceeds the lesser of the 
capitalization level established by the non-Federal entity for financial 
statement purposes, or $5,000. See also Sec. Sec.  200.12 Capital 
assets, 200.20 Computing devices, 200.48 General purpose equipment, 
200.58 Information technology systems, 200.89 Special purpose equipment, 
and 200.94 Supplies.



Sec.  200.34  Expenditures.

    Expenditures means charges made by a non-Federal entity to a project 
or program for which a Federal award was received.
    (a) The charges may be reported on a cash or accrual basis, as long 
as the methodology is disclosed and is consistently applied.
    (b) For reports prepared on a cash basis, expenditures are the sum 
of:

[[Page 85]]

    (1) Cash disbursements for direct charges for property and services;
    (2) The amount of indirect expense charged;
    (3) The value of third-party in-kind contributions applied; and
    (4) The amount of cash advance payments and payments made to 
subrecipients.
    (c) For reports prepared on an accrual basis, expenditures are the 
sum of:
    (1) Cash disbursements for direct charges for property and services;
    (2) The amount of indirect expense incurred;
    (3) The value of third-party in-kind contributions applied; and
    (4) The net increase or decrease in the amounts owed by the non-
Federal entity for:
    (i) Goods and other property received;
    (ii) Services performed by employees, contractors, subrecipients, 
and other payees; and
    (iii) Programs for which no current services or performance are 
required such as annuities, insurance claims, or other benefit payments.



Sec.  200.35  Federal agency.

    Federal agency means an ``agency'' as defined at 5 U.S.C. 551(1) and 
further clarified by 5 U.S.C. 552(f).



Sec.  200.36  Federal Audit Clearinghouse (FAC).

    FAC means the clearinghouse designated by OMB as the repository of 
record where non-Federal entities are required to transmit the reporting 
packages required by Subpart F--Audit Requirements of this part. The 
mailing address of the FAC is Federal Audit Clearinghouse, Bureau of the 
Census, 1201 E. 10th Street, Jeffersonville, IN 47132 and the web 
address is: http://harvester.census.gov/sac/. Any future updates to the 
location of the FAC may be found at the OMB Web site.



Sec.  200.37  Federal awarding agency.

    Federal awarding agency means the Federal agency that provides a 
Federal award directly to a non-Federal entity.



Sec.  200.38  Federal award.

    Federal award has the meaning, depending on the context, in either 
paragraph (a) or (b) of this section:
    (a)(1) The Federal financial assistance that a non-Federal entity 
receives directly from a Federal awarding agency or indirectly from a 
pass-through entity, as described in Sec.  200.101 Applicability; or
    (2) The cost-reimbursement contract under the Federal Acquisition 
Regulations that a non-Federal entity receives directly from a Federal 
awarding agency or indirectly from a pass-through entity, as described 
in Sec.  200.101 Applicability.
    (b) The instrument setting forth the terms and conditions. The 
instrument is the grant agreement, cooperative agreement, other 
agreement for assistance covered in paragraph (b) of Sec.  200.40 
Federal financial assistance, or the cost-reimbursement contract awarded 
under the Federal Acquisition Regulations.
    (c) Federal award does not include other contracts that a Federal 
agency uses to buy goods or services from a contractor or a contract to 
operate Federal Government owned, contractor operated facilities 
(GOCOs).
    (d) See also definitions of Federal financial assistance, grant 
agreement, and cooperative agreement.



Sec.  200.39  Federal award date.

    Federal award date means the date when the Federal award is signed 
by the authorized official of the Federal awarding agency.



Sec.  200.40  Federal financial assistance.

    (a) Federal financial assistance means assistance that non-Federal 
entities receive or administer in the form of:
    (1) Grants;
    (2) Cooperative agreements;
    (3) Non-cash contributions or donations of property (including 
donated surplus property);
    (4) Direct appropriations;
    (5) Food commodities; and
    (6) Other financial assistance (except assistance listed in 
paragraph (b) of this section).
    (b) For Sec.  200.202 Requirement to provide public notice of 
Federal financial assistance programs and Subpart F--

[[Page 86]]

Audit Requirements of this part, Federal financial assistance also 
includes assistance that non-Federal entities receive or administer in 
the form of:
    (1) Loans;
    (2) Loan Guarantees;
    (3) Interest subsidies; and
    (4) Insurance.
    (c) Federal financial assistance does not include amounts received 
as reimbursement for services rendered to individuals as described in 
Sec.  200.502 Basis for determining Federal awards expended, paragraph 
(h) and (i) of this part.

[78 FR 78608, Dec. 26, 2013, as amended at 80 FR 54407, Sept. 10, 2015]



Sec.  200.41  Federal interest.

    Federal interest means, for purposes of Sec.  200.329 Reporting on 
real property or when used in connection with the acquisition or 
improvement of real property, equipment, or supplies under a Federal 
award, the dollar amount that is the product of the:
    (a) Federal share of total project costs; and
    (b) Current fair market value of the property, improvements, or 
both, to the extent the costs of acquiring or improving the property 
were included as project costs.



Sec.  200.42  Federal program.

    Federal program means:
    (a) All Federal awards which are assigned a single number in the 
CFDA.
    (b) When no CFDA number is assigned, all Federal awards to non-
Federal entities from the same agency made for the same purpose must be 
combined and considered one program.
    (c) Notwithstanding paragraphs (a) and (b) of this definition, a 
cluster of programs. The types of clusters of programs are:
    (1) Research and development (R&D);
    (2) Student financial aid (SFA); and
    (3) ``Other clusters,'' as described in the definition of Cluster of 
Programs.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75880, Dec. 19, 2014]



Sec.  200.43  Federal share.

    Federal share means the portion of the total project costs that are 
paid by Federal funds.



Sec.  200.44  Final cost objective.

    Final cost objective means a cost objective which has allocated to 
it both direct and indirect costs and, in the non-Federal entity's 
accumulation system, is one of the final accumulation points, such as a 
particular award, internal project, or other direct activity of a non-
Federal entity. See also Sec. Sec.  200.28 Cost objective and 200.60 
Intermediate cost objective.



Sec.  200.45  Fixed amount awards.

    Fixed amount awards means a type of grant agreement under which the 
Federal awarding agency or pass-through entity provides a specific level 
of support without regard to actual costs incurred under the Federal 
award. This type of Federal award reduces some of the administrative 
burden and record-keeping requirements for both the non-Federal entity 
and Federal awarding agency or pass-through entity. Accountability is 
based primarily on performance and results. See Sec. Sec.  200.201 Use 
of grant agreements (including fixed amount awards), cooperative 
agreements, and contracts, paragraph (b) and 200.332 Fixed amount 
subawards.



Sec.  200.46  Foreign public entity.

    Foreign public entity means:
    (a) A foreign government or foreign governmental entity;
    (b) A public international organization, which is an organization 
entitled to enjoy privileges, exemptions, and immunities as an 
international organization under the International Organizations 
Immunities Act (22 U.S.C. 288-288f);
    (c) An entity owned (in whole or in part) or controlled by a foreign 
government; or
    (d) Any other entity consisting wholly or partially of one or more 
foreign governments or foreign governmental entities.



Sec.  200.47  Foreign organization.

    Foreign organization means an entity that is:
    (a) A public or private organization located in a country other than 
the United States and its territories that is subject to the laws of the 
country in which it is located, irrespective of the

[[Page 87]]

citizenship of project staff or place of performance;
    (b) A private nongovernmental organization located in a country 
other than the United States that solicits and receives cash 
contributions from the general public;
    (c) A charitable organization located in a country other than the 
United States that is nonprofit and tax exempt under the laws of its 
country of domicile and operation, and is not a university, college, 
accredited degree-granting institution of education, private foundation, 
hospital, organization engaged exclusively in research or scientific 
activities, church, synagogue, mosque or other similar entities 
organized primarily for religious purposes; or
    (d) An organization located in a country other than the United 
States not recognized as a Foreign Public Entity.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75880, Dec. 19, 2014]



Sec.  200.48  General purpose equipment.

    General purpose equipment means equipment which is not limited to 
research, medical, scientific or other technical activities. Examples 
include office equipment and furnishings, modular offices, telephone 
networks, information technology equipment and systems, air conditioning 
equipment, reproduction and printing equipment, and motor vehicles. See 
also Equipment and Special Purpose Equipment.



Sec.  200.49  Generally Accepted Accounting Principles (GAAP).

    GAAP has the meaning specified in accounting standards issued by the 
Government Accounting Standards Board (GASB) and the Financial 
Accounting Standards Board (FASB).



Sec.  200.50  Generally Accepted Government Auditing Standards (GAGAS).

    GAGAS, also known as the Yellow Book, means generally accepted 
government auditing standards issued by the Comptroller General of the 
United States, which are applicable to financial audits.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75880, Dec. 19, 2014]



Sec.  200.51  Grant agreement.

    Grant agreement means a legal instrument of financial assistance 
between a Federal awarding agency or pass-through entity and a non-
Federal entity that, consistent with 31 U.S.C. 6302, 6304:
    (a) Is used to enter into a relationship the principal purpose of 
which is to transfer anything of value from the Federal awarding agency 
or pass-through entity to the non-Federal entity to carry out a public 
purpose authorized by a law of the United States (see 31 U.S.C. 
6101(3)); and not to acquire property or services for the Federal 
awarding agency or pass-through entity's direct benefit or use;
    (b) Is distinguished from a cooperative agreement in that it does 
not provide for substantial involvement between the Federal awarding 
agency or pass-through entity and the non-Federal entity in carrying out 
the activity contemplated by the Federal award.
    (c) Does not include an agreement that provides only:
    (1) Direct United States Government cash assistance to an 
individual;
    (2) A subsidy;
    (3) A loan;
    (4) A loan guarantee; or
    (5) Insurance.



Sec.  200.52  Hospital.

    Hospital means a facility licensed as a hospital under the law of 
any state or a facility operated as a hospital by the United States, a 
state, or a subdivision of a state.



Sec.  200.53  Improper payment.

    (a) Improper payment means any payment that should not have been 
made or that was made in an incorrect amount (including overpayments and 
underpayments) under statutory, contractual, administrative, or other 
legally applicable requirements; and
    (b) Improper payment includes any payment to an ineligible party, 
any payment for an ineligible good or service, any duplicate payment, 
any payment for a good or service not received (except for such payments 
where authorized by law), any payment that does not account for credit 
for applicable discounts, and any payment where insufficient or lack of 
documentation

[[Page 88]]

prevents a reviewer from discerning whether a payment was proper.



Sec.  200.54  Indian tribe (or ``federally recognized Indian tribe'').

    Indian tribe means any Indian tribe, band, nation, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established pursuant to 
the Alaska Native Claims Settlement Act (43 U.S.C. Chapter 33), which is 
recognized as eligible for the special programs and services provided by 
the United States to Indians because of their status as Indians (25 
U.S.C. 450b(e)). See annually published Bureau of Indian Affairs list of 
Indian Entities Recognized and Eligible to Receive Services.



Sec.  200.55  Institutions of Higher Education (IHEs).

    IHE is defined at 20 U.S.C. 1001.



Sec.  200.56  Indirect (facilities & administrative (F&A)) costs.

    Indirect (F&A) costs means those costs incurred for a common or 
joint purpose benefitting more than one cost objective, and not readily 
assignable to the cost objectives specifically benefitted, without 
effort disproportionate to the results achieved. To facilitate equitable 
distribution of indirect expenses to the cost objectives served, it may 
be necessary to establish a number of pools of indirect (F&A) costs. 
Indirect (F&A) cost pools must be distributed to benefitted cost 
objectives on bases that will produce an equitable result in 
consideration of relative benefits derived.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75880, Dec. 19, 2014]



Sec.  200.57  Indirect cost rate proposal.

    Indirect cost rate proposal means the documentation prepared by a 
non-Federal entity to substantiate its request for the establishment of 
an indirect cost rate as described in Appendix III to Part 200--Indirect 
(F&A) Costs Identification and Assignment, and Rate Determination for 
Institutions of Higher Education (IHEs) through Appendix VII to Part 
200--States and Local Government and Indian Tribe Indirect Cost 
Proposals of this part, and Appendix IX to Part 200--Hospital Cost 
Principles.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75880, Dec. 19, 2014]



Sec.  200.58  Information technology systems.

    Information technology systems means computing devices, ancillary 
equipment, software, firmware, and similar procedures, services 
(including support services), and related resources. See also Sec. Sec.  
200.20 Computing devices and 200.33 Equipment.



Sec.  200.59  Intangible property.

    Intangible property means property having no physical existence, 
such as trademarks, copyrights, patents and patent applications and 
property, such as loans, notes and other debt instruments, lease 
agreements, stock and other instruments of property ownership (whether 
the property is tangible or intangible).



Sec.  200.60  Intermediate cost objective.

    Intermediate cost objective means a cost objective that is used to 
accumulate indirect costs or service center costs that are subsequently 
allocated to one or more indirect cost pools or final cost objectives. 
See also Sec.  200.28 Cost objective and Sec.  200.44 Final cost 
objective.



Sec.  200.61  Internal controls.

    Internal controls means a process, implemented by a non-Federal 
entity, designed to provide reasonable assurance regarding the 
achievement of objectives in the following categories:
    (a) Effectiveness and efficiency of operations;
    (b) Reliability of reporting for internal and external use; and
    (c) Compliance with applicable laws and regulations.



Sec.  200.62  Internal control over compliance requirements for Federal awards.

    Internal control over compliance requirements for Federal awards 
means a process implemented by a non-Federal entity designed to provide 
reasonable assurance regarding the achievement of the following 
objectives for Federal awards:

[[Page 89]]

    (a) Transactions are properly recorded and accounted for, in order 
to:
    (1) Permit the preparation of reliable financial statements and 
Federal reports;
    (2) Maintain accountability over assets; and
    (3) Demonstrate compliance with Federal statutes, regulations, and 
the terms and conditions of the Federal award;
    (b) Transactions are executed in compliance with:
    (1) Federal statutes, regulations, and the terms and conditions of 
the Federal award that could have a direct and material effect on a 
Federal program; and
    (2) Any other Federal statutes and regulations that are identified 
in the Compliance Supplement; and
    (c) Funds, property, and other assets are safeguarded against loss 
from unauthorized use or disposition.



Sec.  200.63  Loan.

    Loan means a Federal loan or loan guarantee received or administered 
by a non-Federal entity, except as used in the definition of Sec.  
200.80 Program income.
    (a) The term ``direct loan'' means a disbursement of funds by the 
Federal Government to a non-Federal borrower under a contract that 
requires the repayment of such funds with or without interest. The term 
includes the purchase of, or participation in, a loan made by another 
lender and financing arrangements that defer payment for more than 90 
days, including the sale of a Federal Government asset on credit terms. 
The term does not include the acquisition of a federally guaranteed loan 
in satisfaction of default claims or the price support loans of the 
Commodity Credit Corporation.
    (b) The term ``direct loan obligation'' means a binding agreement by 
a Federal awarding agency to make a direct loan when specified 
conditions are fulfilled by the borrower.
    (c) The term ``loan guarantee'' means any Federal Government 
guarantee, insurance, or other pledge with respect to the payment of all 
or a part of the principal or interest on any debt obligation of a non-
Federal borrower to a non-Federal lender, but does not include the 
insurance of deposits, shares, or other withdrawable accounts in 
financial institutions.
    (d) The term ``loan guarantee commitment'' means a binding agreement 
by a Federal awarding agency to make a loan guarantee when specified 
conditions are fulfilled by the borrower, the lender, or any other party 
to the guarantee agreement.



Sec.  200.64  Local government.

    Local government means any unit of government within a state, 
including a:
    (a) County;
    (b) Borough;
    (c) Municipality;
    (d) City;
    (e) Town;
    (f) Township;
    (g) Parish;
    (h) Local public authority, including any public housing agency 
under the United States Housing Act of 1937;
    (i) Special district;
    (j) School district;
    (k) Intrastate district;
    (l) Council of governments, whether or not incorporated as a 
nonprofit corporation under state law; and
    (m) Any other agency or instrumentality of a multi-, regional, or 
intra-state or local government.



Sec.  200.65  Major program.

    Major program means a Federal program determined by the auditor to 
be a major program in accordance with Sec.  200.518 Major program 
determination or a program identified as a major program by a Federal 
awarding agency or pass-through entity in accordance with Sec.  200.503 
Relation to other audit requirements, paragraph (e).



Sec.  200.66  Management decision.

    Management decision means the evaluation by the Federal awarding 
agency or pass-through entity of the audit findings and corrective 
action plan and the issuance of a written decision to the auditee as to 
what corrective action is necessary.



Sec.  200.67  Micro-purchase.

    Micro-purchase means a purchase of supplies or services using 
simplified acquisition procedures, the aggregate amount of which does 
not exceed the

[[Page 90]]

micro-purchase threshold. Micro-purchase procedures comprise a subset of 
a non-Federal entity's small purchase procedures. The non-Federal entity 
uses such procedures in order to expedite the completion of its lowest-
dollar small purchase transactions and minimize the associated 
administrative burden and cost. The micro-purchase threshold is set by 
the Federal Acquisition Regulation at 48 CFR Subpart 2.1 (Definitions). 
It is $3,000 except as otherwise discussed in Subpart 2.1 of that 
regulation, but this threshold is periodically adjusted for inflation.



Sec.  200.68  Modified Total Direct Cost (MTDC).

    MTDC means all direct salaries and wages, applicable fringe 
benefits, materials and supplies, services, travel, and up to the first 
$25,000 of each subaward (regardless of the period of performance of the 
subawards under the award). MTDC excludes equipment, capital 
expenditures, charges for patient care, rental costs, tuition remission, 
scholarships and fellowships, participant support costs and the portion 
of each subaward in excess of $25,000. Other items may only be excluded 
when necessary to avoid a serious inequity in the distribution of 
indirect costs, and with the approval of the cognizant agency for 
indirect costs.

[79 FR 75880, Dec. 19, 2014]



Sec.  200.69  Non-Federal entity.

    Non-Federal entity means a state, local government, Indian tribe, 
institution of higher education (IHE), or nonprofit organization that 
carries out a Federal award as a recipient or subrecipient.



Sec.  200.70  Nonprofit organization.

    Nonprofit organization means any corporation, trust, association, 
cooperative, or other organization, not including IHEs, that:
    (a) Is operated primarily for scientific, educational, service, 
charitable, or similar purposes in the public interest;
    (b) Is not organized primarily for profit; and
    (c) Uses net proceeds to maintain, improve, or expand the operations 
of the organization.



Sec.  200.71  Obligations.

    When used in connection with a non-Federal entity's utilization of 
funds under a Federal award, obligations means orders placed for 
property and services, contracts and subawards made, and similar 
transactions during a given period that require payment by the non-
Federal entity during the same or a future period.



Sec.  200.72  Office of Management and Budget (OMB).

    OMB means the Executive Office of the President, Office of 
Management and Budget.



Sec.  200.73  Oversight agency for audit.

    Oversight agency for audit means the Federal awarding agency that 
provides the predominant amount of funding directly to a non-Federal 
entity not assigned a cognizant agency for audit. When there is no 
direct funding, the Federal awarding agency which is the predominant 
source of pass-through funding must assume the oversight 
responsibilities. The duties of the oversight agency for audit and the 
process for any reassignments are described in Sec.  200.513 
Responsibilities, paragraph (b).



Sec.  200.74  Pass-through entity.

    Pass-through entity means a non-Federal entity that provides a 
subaward to a subrecipient to carry out part of a Federal program.



Sec.  200.75  Participant support costs.

    Participant support costs means direct costs for items such as 
stipends or subsistence allowances, travel allowances, and registration 
fees paid to or on behalf of participants or trainees (but not 
employees) in connection with conferences, or training projects.



Sec.  200.76  Performance goal.

    Performance goal means a target level of performance expressed as a 
tangible, measurable objective, against which actual achievement can be 
compared, including a goal expressed as a quantitative standard, value, 
or rate. In some instances (e.g., discretionary research awards), this 
may be limited to the requirement to submit technical

[[Page 91]]

performance reports (to be evaluated in accordance with agency policy).



Sec.  200.77  Period of performance.

    Period of performance means the time during which the non-Federal 
entity may incur new obligations to carry out the work authorized under 
the Federal award. The Federal awarding agency or pass-through entity 
must include start and end dates of the period of performance in the 
Federal award (see Sec. Sec.  200.210 Information contained in a Federal 
award paragraph (a)(5) and 200.331 Requirements for pass-through 
entities, paragraph (a)(1)(iv)).



Sec.  200.78  Personal property.

    Personal property means property other than real property. It may be 
tangible, having physical existence, or intangible.



Sec.  200.79  Personally Identifiable Information (PII).

    PII means information that can be used to distinguish or trace an 
individual's identity, either alone or when combined with other personal 
or identifying information that is linked or linkable to a specific 
individual. Some information that is considered to be PII is available 
in public sources such as telephone books, public Web sites, and 
university listings. This type of information is considered to be Public 
PII and includes, for example, first and last name, address, work 
telephone number, email address, home telephone number, and general 
educational credentials. The definition of PII is not anchored to any 
single category of information or technology. Rather, it requires a 
case-by-case assessment of the specific risk that an individual can be 
identified. Non-PII can become PII whenever additional information is 
made publicly available, in any medium and from any source, that, when 
combined with other available information, could be used to identify an 
individual.



Sec.  200.80  Program income.

    Program income means gross income earned by the non-Federal entity 
that is directly generated by a supported activity or earned as a result 
of the Federal award during the period of performance except as provided 
in Sec.  200.307 paragraph (f). (See Sec.  200.77 Period of 
performance.) Program income includes but is not limited to income from 
fees for services performed, the use or rental or real or personal 
property acquired under Federal awards, the sale of commodities or items 
fabricated under a Federal award, license fees and royalties on patents 
and copyrights, and principal and interest on loans made with Federal 
award funds. Interest earned on advances of Federal funds is not program 
income. Except as otherwise provided in Federal statutes, regulations, 
or the terms and conditions of the Federal award, program income does 
not include rebates, credits, discounts, and interest earned on any of 
them. See also Sec.  200.407 Prior written approval (prior approval). 
See also 35 U.S.C. 200-212 ``Disposition of Rights in Educational 
Awards'' applies to inventions made under Federal awards.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75880, Dec. 19, 2014]



Sec.  200.81  Property.

    Property means real property or personal property.



Sec.  200.82  Protected Personally Identifiable Information (Protected PII).

    Protected PII means an individual's first name or first initial and 
last name in combination with any one or more of types of information, 
including, but not limited to, social security number, passport number, 
credit card numbers, clearances, bank numbers, biometrics, date and 
place of birth, mother's maiden name, criminal, medical and financial 
records, educational transcripts. This does not include PII that is 
required by law to be disclosed. (See also Sec.  200.79 Personally 
Identifiable Information (PII)).



Sec.  200.83  Project cost.

    Project cost means total allowable costs incurred under a Federal 
award and all required cost sharing and voluntary committed cost 
sharing, including third-party contributions.



Sec.  200.84  Questioned cost.

    Questioned cost means a cost that is questioned by the auditor 
because of an audit finding:

[[Page 92]]

    (a) Which resulted from a violation or possible violation of a 
statute, regulation, or the terms and conditions of a Federal award, 
including for funds used to match Federal funds;
    (b) Where the costs, at the time of the audit, are not supported by 
adequate documentation; or
    (c) Where the costs incurred appear unreasonable and do not reflect 
the actions a prudent person would take in the circumstances.



Sec.  200.85  Real property.

    Real property means land, including land improvements, structures 
and appurtenances thereto, but excludes moveable machinery and 
equipment.



Sec.  200.86  Recipient.

    Recipient means a non-Federal entity that receives a Federal award 
directly from a Federal awarding agency to carry out an activity under a 
Federal program. The term recipient does not include subrecipients. See 
also Sec.  200.69 Non-Federal entity.



Sec.  200.87  Research and Development (R&D).

    R&D means all research activities, both basic and applied, and all 
development activities that are performed by non-Federal entities. The 
term research also includes activities involving the training of 
individuals in research techniques where such activities utilize the 
same facilities as other research and development activities and where 
such activities are not included in the instruction function.
    ``Research'' is defined as a systematic study directed toward fuller 
scientific knowledge or understanding of the subject studied. 
``Development'' is the systematic use of knowledge and understanding 
gained from research directed toward the production of useful materials, 
devices, systems, or methods, including design and development of 
prototypes and processes.



Sec.  200.88  Simplified acquisition threshold.

    Simplified acquisition threshold means the dollar amount below which 
a non-Federal entity may purchase property or services using small 
purchase methods. Non-Federal entities adopt small purchase procedures 
in order to expedite the purchase of items costing less than the 
simplified acquisition threshold. The simplified acquisition threshold 
is set by the Federal Acquisition Regulation at 48 CFR Subpart 2.1 
(Definitions) and in accordance with 41 U.S.C. 1908. As of the 
publication of this part, the simplified acquisition threshold is 
$150,000, but this threshold is periodically adjusted for inflation. 
(Also see definition of Sec.  200.67 Micro-purchase.)



Sec.  200.89  Special purpose equipment.

    Special purpose equipment means equipment which is used only for 
research, medical, scientific, or other technical activities. Examples 
of special purpose equipment include microscopes, x-ray machines, 
surgical instruments, and spectrometers. See also Sec. Sec.  200.33 
Equipment and 200.48 General purpose equipment.



Sec.  200.90  State.

    State means any state of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, U.S. Virgin Islands, Guam, 
American Samoa, the Commonwealth of the Northern Mariana Islands, and 
any agency or instrumentality thereof exclusive of local governments.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75880, Dec. 19, 2014]



Sec.  200.91  Student Financial Aid (SFA).

    SFA means Federal awards under those programs of general student 
assistance, such as those authorized by Title IV of the Higher Education 
Act of 1965, as amended, (20 U.S.C. 1070-1099d), which are administered 
by the U.S. Department of Education, and similar programs provided by 
other Federal agencies. It does not include Federal awards under 
programs that provide fellowships or similar Federal awards to students 
on a competitive basis, or for specified studies or research.



Sec.  200.92  Subaward.

    Subaward means an award provided by a pass-through entity to a 
subrecipient for the subrecipient to carry out part of a Federal award 
received by

[[Page 93]]

the pass-through entity. It does not include payments to a contractor or 
payments to an individual that is a beneficiary of a Federal program. A 
subaward may be provided through any form of legal agreement, including 
an agreement that the pass-through entity considers a contract.



Sec.  200.93  Subrecipient.

    Subrecipient means a non-Federal entity that receives a subaward 
from a pass-through entity to carry out part of a Federal program; but 
does not include an individual that is a beneficiary of such program. A 
subrecipient may also be a recipient of other Federal awards directly 
from a Federal awarding agency.



Sec.  200.94  Supplies.

    Supplies means all tangible personal property other than those 
described in Sec.  200.33 Equipment. A computing device is a supply if 
the acquisition cost is less than the lesser of the capitalization level 
established by the non-Federal entity for financial statement purposes 
or $5,000, regardless of the length of its useful life. See also 
Sec. Sec.  200.20 Computing devices and 200.33 Equipment.



Sec.  200.95  Termination.

    Termination means the ending of a Federal award, in whole or in part 
at any time prior to the planned end of period of performance.



Sec.  200.96  Third-party in-kind contributions.

    Third-party in-kind contributions means the value of non-cash 
contributions (i.e., property or services) that--
    (a) Benefit a federally assisted project or program; and
    (b) Are contributed by non-Federal third parties, without charge, to 
a non-Federal entity under a Federal award.



Sec.  200.97  Unliquidated obligations.

    Unliquidated obligations means, for financial reports prepared on a 
cash basis, obligations incurred by the non-Federal entity that have not 
been paid (liquidated). For reports prepared on an accrual expenditure 
basis, these are obligations incurred by the non-Federal entity for 
which an expenditure has not been recorded.



Sec.  200.98  Unobligated balance.

    Unobligated balance means the amount of funds under a Federal award 
that the non-Federal entity has not obligated. The amount is computed by 
subtracting the cumulative amount of the non-Federal entity's 
unliquidated obligations and expenditures of funds under the Federal 
award from the cumulative amount of the funds that the Federal awarding 
agency or pass-through entity authorized the non-Federal entity to 
obligate.



Sec.  200.99  Voluntary committed cost sharing.

    Voluntary committed cost sharing means cost sharing specifically 
pledged on a voluntary basis in the proposal's budget or the Federal 
award on the part of the non-Federal entity and that becomes a binding 
requirement of Federal award.



                      Subpart B_General Provisions



Sec.  200.100  Purpose.

    (a)(1) This part establishes uniform administrative requirements, 
cost principles, and audit requirements for Federal awards to non-
Federal entities, as described in Sec.  200.101 Applicability. Federal 
awarding agencies must not impose additional or inconsistent 
requirements, except as provided in Sec. Sec.  200.102 Exceptions and 
200.210 Information contained in a Federal award, or unless specifically 
required by Federal statute, regulation, or Executive Order.
    (2) This part provides the basis for a systematic and periodic 
collection and uniform submission by Federal agencies of information on 
all Federal financial assistance programs to the Office of Management 
and Budget (OMB). It also establishes Federal policies related to the 
delivery of this information to the public, including through the use of 
electronic media. It prescribes the manner in which General Services 
Administration (GSA), OMB, and Federal agencies that administer Federal 
financial assistance programs are to carry out their statutory 
responsibilities under the Federal Program Information Act (31 U.S.C. 
6101-6106).

[[Page 94]]

    (b) Administrative requirements. Subparts B through D of this part 
set forth the uniform administrative requirements for grant and 
cooperative agreements, including the requirements for Federal awarding 
agency management of Federal grant programs before the Federal award has 
been made, and the requirements Federal awarding agencies may impose on 
non-Federal entities in the Federal award.
    (c) Cost Principles. Subpart E--Cost Principles of this part 
establishes principles for determining the allowable costs incurred by 
non-Federal entities under Federal awards. The principles are for the 
purpose of cost determination and are not intended to identify the 
circumstances or dictate the extent of Federal Government participation 
in the financing of a particular program or project. The principles are 
designed to provide that Federal awards bear their fair share of cost 
recognized under these principles except where restricted or prohibited 
by statute.
    (d) Single Audit Requirements and Audit Follow-up. Subpart F--Audit 
Requirements of this part is issued pursuant to the Single Audit Act 
Amendments of 1996, (31 U.S.C. 7501-7507). It sets forth standards for 
obtaining consistency and uniformity among Federal agencies for the 
audit of non-Federal entities expending Federal awards. These provisions 
also provide the policies and procedures for Federal awarding agencies 
and pass-through entities when using the results of these audits.
    (e) For OMB guidance to Federal awarding agencies on Challenges and 
Prizes, please see M-10-11 Guidance on the Use of Challenges and Prizes 
to Promote Open Government, issued March 8, 2010, or its successor.



Sec.  200.101  Applicability.

    (a) General applicability to Federal agencies. The requirements 
established in this part apply to Federal agencies that make Federal 
awards to non-Federal entities. These requirements are applicable to all 
costs related to Federal awards.
    (b)(1) Applicability to different types of Federal awards. The 
following table describes what portions of this part apply to which 
types of Federal awards. The terms and conditions of Federal awards 
(including this part) flow down to subawards to subrecipients unless a 
particular section of this part or the terms and conditions of the 
Federal award specifically indicate otherwise. This means that non-
Federal entities must comply with requirements in this part regardless 
of whether the non-Federal entity is a recipient or subrecipient of a 
Federal award. Pass-through entities must comply with the requirements 
described in Subpart D--Post Federal Award Requirements of this part, 
Sec. Sec.  200.330 Subrecipient and contractor determinations through 
200.332 Fixed amount Subawards, but not any requirements in this part 
directed towards Federal awarding agencies unless the requirements of 
this part or the terms and conditions of the Federal award indicate 
otherwise.

------------------------------------------------------------------------
 This table must be read along with the other provisions of this section
-------------------------------------------------------------------------
                                   Are applicable to
                                     the following    Are NOT applicable
                                   types of Federal    to the following
                                   Awards and Fixed-   types of Federal
 The following portions of this     Price Contracts    Awards and Fixed-
              Part                 and Subcontracts     Price Contracts
                                   (except as noted    and Subcontracts:
                                   in paragraphs (d)
                                    and (e) below):
------------------------------------------------------------------------
Subpart A--Acronyms and           --All.............
 Definitions.
Subpart B--General Provisions,    --All.............
 except for Sec.  Sec.   200.111
 English Language, 200.112
 Conflict of Interest, 200.113
 Mandatory Disclosures.
Sec.  Sec.   200.111 English      --Grant Agreements  --Agreements for
 Language, 200.112 Conflict of     and cooperative     loans, loan
 Interest, 200.113 Mandatory       agreements.         guarantees,
 Disclosures.                                          interest
                                                       subsidies and
                                                       insurance.
                                                      --Procurement
                                                       contracts awarded
                                                       by Federal
                                                       Agencies under
                                                       the Federal
                                                       Acquisition
                                                       Regulation and
                                                       subcontracts
                                                       under those
                                                       contracts.

[[Page 95]]

 
Subparts C-D, except for Sec.     --Grant Agreements  --Agreements for
 Sec.   200.202 Requirement to     and cooperative     loans, loan
 provide public notice of          agreements.         guarantees,
 Federal financial assistance                          interest
 programs, 200.303 Internal                            subsidies and
 controls, 200.330-332                                 insurance.
 Subrecipient Monitoring and                          --Procurement
 Management.                                           contracts awarded
                                                       by Federal
                                                       Agencies under
                                                       the Federal
                                                       Acquisition
                                                       Regulation and
                                                       subcontracts
                                                       under those
                                                       contracts.
Sec.   200.202 Requirement to     --Grant Agreements  --Procurement
 provide public notice of          and cooperative     contracts awarded
 Federal financial assistance      agreements.         by Federal
 programs.                        --Agreements for     Agencies under
                                   loans, loan         the Federal
                                   guarantees,         Acquisition
                                   interest            Regulation and
                                   subsidies and       subcontracts
                                   insurance.          under those
                                                       contracts.
Sec.  Sec.   200.303 Internal     --All.............
 controls, 200.330-332
 Subrecipient Monitoring and
 Management.
Subpart E--Cost Principles......  --Grant Agreements  --Grant agreements
                                   and cooperative     and cooperative
                                   agreements,         agreements
                                   except those        providing foods
                                   providing food      commodities.
                                   commodities.       --Fixed amount
                                  --All procurement    awards.
                                   contracts under    --Agreements for
                                   the Federal         loans, loans
                                   Acquisition         guarantees,
                                   Regulations         interest
                                   except those that   subsidies and
                                   are not             insurance.
                                   negotiated.        --Federal awards
                                                       to hospitals (see
                                                       Appendix IX
                                                       Hospital Cost
                                                       Principles).
Subpart F--Audit Requirements...  --Grant Agreements  --Fixed-price
                                   and cooperative     contracts and
                                   agreements.         subcontracts
                                  --Contracts and      awarded under the
                                   subcontracts,       Federal
                                   except for fixed    Acquisition
                                   price contacts      Regulation.
                                   and subcontracts,
                                   awarded under the
                                   Federal
                                   Acquisition
                                   Regulation.
                                  --Agreements for
                                   loans, loans
                                   guarantees,
                                   interest
                                   subsidies and
                                   insurance and
                                   other forms of
                                   Federal Financial
                                   Assistance as
                                   defined by the
                                   Single Audit Act
                                   Amendment of 1996.
------------------------------------------------------------------------

    (2) Federal award of cost-reimbursement contract under the FAR to a 
non-Federal entity. When a non-Federal entity is awarded a cost-
reimbursement contract, only Subpart D--Post Federal Award Requirements 
of this part, Sec. Sec.  200.330 Subrecipient and contractor 
determinations through 200.332 Fixed amount Subawards (in addition to 
any FAR related requirements for subaward monitoring), Subpart E--Cost 
Principles of this part and Subpart F--Audit Requirements of this part 
are incorporated by reference into the contract. However, when the Cost 
Accounting Standards (CAS) are applicable to the contract, they take 
precedence over the requirements of this part except for Subpart F--
Audit Requirements of this part when they are in conflict. In addition, 
costs that are made unallowable under 10 U.S.C. 2324(e) and 41 U.S.C. 
4304(a) as described in the FAR subpart 31.2 and subpart 31.603 are 
always unallowable. For requirements other than those covered in Subpart 
D--Post Federal Award Requirements of this part, Sec. Sec.  200.330 
Subrecipient and contractor determinations through 200.332 Fixed amount 
Subawards, Subpart E--Cost Principles of this part and Subpart F--Audit 
Requirements of this part, the terms of the contract and the FAR apply.
    (3) With the exception of Subpart F--Audit Requirements of this 
part, which is required by the Single Audit Act, in any circumstances 
where the provisions of Federal statutes or regulations differ from the 
provisions of this part, the provision of the Federal statutes or 
regulations govern. This includes, for

[[Page 96]]

agreements with Indian tribes, the provisions of the Indian Self-
Determination and Education and Assistance Act (ISDEAA), as amended, 25 
U.S.C 450-458ddd-2.
    (c) Federal awarding agencies may apply subparts A through E of this 
part to for-profit entities, foreign public entities, or foreign 
organizations, except where the Federal awarding agency determines that 
the application of these subparts would be inconsistent with the 
international obligations of the United States or the statutes or 
regulations of a foreign government.
    (d) Except for Sec.  200.202 Requirement to provide public notice of 
Federal financial assistance programs and Sec. Sec.  200.330 
Subrecipient and contractor determinations through 200.332 Fixed amount 
Subawards of Subpart D--Post Federal Award Requirements of this part, 
the requirements in Subpart C--Pre-Federal Award Requirements and 
Contents of Federal Awards, Subpart D--Post Federal Award Requirements 
of this part, and Subpart E--Cost Principles of this part do not apply 
to the following programs:
    (1) The block grant awards authorized by the Omnibus Budget 
Reconciliation Act of 1981 (including Community Services), except to the 
extent that Subpart E--Cost Principles of this Part apply to 
subrecipients of Community Services Block Grant funds pursuant to 42 
U.S.C. 9916(a)(1)(B);
    (2) Federal awards to local education agencies under 20 U.S.C. 7702-
7703b, (portions of the Impact Aid program);
    (3) Payments under the Department of Veterans Affairs' State Home 
Per Diem Program (38 U.S.C. 1741); and
    (4) Federal awards authorized under the Child Care and Development 
Block Grant Act of 1990, as amended:
    (i) Child Care and Development Block Grant (42 U.S.C. 9858)
    (ii) Child Care Mandatory and Matching Funds of the Child Care and 
Development Fund (42 U.S.C. 9858)
    (e) Except for Sec.  200.202 Requirement to provide public notice of 
Federal financial assistance programs the guidance in Subpart C--Pre-
Federal Award Requirements and Contents of Federal Awards of this part 
does not apply to the following programs:
    (1) Entitlement Federal awards to carry out the following programs 
of the Social Security Act:
    (i) Temporary Assistance to Needy Families (title IV-A of the Social 
Security Act, 42 U.S.C. 601-619);
    (ii) Child Support Enforcement and Establishment of Paternity (title 
IV-D of the Social Security Act, 42 U.S.C. 651-669b);
    (iii) Foster Care and Adoption Assistance (title IV-E of the Act, 42 
U.S.C. 670-679c);
    (iv) Aid to the Aged, Blind, and Disabled (titles I, X, XIV, and 
XVI-AABD of the Act, as amended);
    (v) Medical Assistance (Medicaid) (title XIX of the Act, 42 U.S.C. 
1396-1396w-5) not including the State Medicaid Fraud Control program 
authorized by section 1903(a)(6)(B) of the Social Security Act (42 
U.S.C. 1396b(a)(6)(B)); and
    (vi) Children's Health Insurance Program (title XXI of the Act, 42 
U.S.C. 1397aa-1397mm).
    (2) A Federal award for an experimental, pilot, or demonstration 
project that is also supported by a Federal award listed in paragraph 
(e)(1) of this section;
    (3) Federal awards under subsection 412(e) of the Immigration and 
Nationality Act and subsection 501(a) of the Refugee Education 
Assistance Act of 1980 (Pub. L. 96-422, 94 Stat. 1809), for cash 
assistance, medical assistance, and supplemental security income 
benefits to refugees and entrants and the administrative costs of 
providing the assistance and benefits (8 U.S.C. 1522(e));
    (4) Entitlement awards under the following programs of The National 
School Lunch Act:
    (i) National School Lunch Program (section 4 of the Act, 42 U.S.C. 
1753),
    (ii) Commodity Assistance (section 6 of the Act, 42 U.S.C. 1755),
    (iii) Special Meal Assistance (section 11 of the Act, 42 U.S.C. 
1759a),
    (iv) Summer Food Service Program for Children (section 13 of the 
Act, 42 U.S.C. 1761), and
    (v) Child and Adult Care Food Program (section 17 of the Act, 42 
U.S.C. 1766).

[[Page 97]]

    (5) Entitlement awards under the following programs of The Child 
Nutrition Act of 1966:
    (i) Special Milk Program (section 3 of the Act, 42 U.S.C. 1772),
    (ii) School Breakfast Program (section 4 of the Act, 42 U.S.C. 
1773), and
    (iii) State Administrative Expenses (section 7 of the Act, 42 U.S.C. 
section 1776).
    (6) Entitlement awards for State Administrative Expenses under The 
Food and Nutrition Act of 2008 (section 16 of the Act, 7 U.S.C. 2025).
    (7) Non-discretionary Federal awards under the following non-
entitlement programs:
    (i) Special Supplemental Nutrition Program for Women, Infants and 
Children (section 17 of the Child Nutrition Act of 1966) 42 U.S.C. 
section 1786;
    (ii) The Emergency Food Assistance Programs (Emergency Food 
Assistance Act of 1983) 7 U.S.C. section 7501 note; and
    (iii) Commodity Supplemental Food Program (section 5 of the 
Agriculture and Consumer Protection Act of 1973) 7 U.S.C. section 612c 
note.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75880, Dec. 19, 2014; 
80 FR 54407, Sept. 10, 2015]



Sec.  200.102  Exceptions.

    (a) With the exception of Subpart F--Audit Requirements of this 
part, OMB may allow exceptions for classes of Federal awards or non-
Federal entities subject to the requirements of this part when 
exceptions are not prohibited by statute. However, in the interest of 
maximum uniformity, exceptions from the requirements of this part will 
be permitted only in unusual circumstances. Exceptions for classes of 
Federal awards or non-Federal entities will be published on the OMB Web 
site at www.whitehouse.gov/omb.
    (b) Exceptions on a case-by-case basis for individual non-Federal 
entities may be authorized by the Federal awarding agency or cognizant 
agency for indirect costs, except where otherwise required by law or 
where OMB or other approval is expressly required by this part.
    (c) The Federal awarding agency may apply more restrictive 
requirements to a class of Federal awards or non-Federal entities when 
approved by OMB, or when, required by Federal statutes or regulations, 
except for the requirements in Subpart F--Audit Requirements of this 
part. A Federal awarding agency may apply less restrictive requirements 
when making fixed amount awards as defined in Subpart A--Acronyms and 
Definitions of this part, except for those requirements imposed by 
statute or in Subpart F--Audit Requirements of this part.
    (d) On a case-by-case basis, OMB will approve new strategies for 
Federal awards when proposed by the Federal awarding agency in 
accordance with OMB guidance (such as M-13-17) to develop additional 
evidence relevant to addressing important policy challenges or to 
promote cost-effectiveness in and across Federal programs. Proposals may 
draw on the innovative program designs discussed in M-13-17 to expand or 
improve the use of effective practices in delivering Federal financial 
assistance while also encouraging innovation in service delivery. 
Proposals submitted to OMB in accordance with M-13-17 may include 
requests to waive requirements other than those in Subpart F--Audit 
Requirements of this part.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75881, Dec. 19, 2014]



Sec.  200.103  Authorities.

    This part is issued under the following authorities.
    (a) Subpart B--General Provisions of this part through Subpart D--
Post Federal Award Requirements of this part are authorized under 31 
U.S.C. 503 (the Chief Financial Officers Act, Functions of the Deputy 
Director for Management), 31 U.S.C. 1111 (Improving Economy and 
Efficiency of the United States Government), 41 U.S.C. 1101-1131 (the 
Office of Federal Procurement Policy Act), Reorganization Plan No. 2 of 
1970, and Executive Order 11541 (``Prescribing the Duties of the Office 
of Management and Budget and the Domestic Policy Council in the 
Executive Office of the President''), the Single Audit Act Amendments of 
1996, (31 U.S.C. 7501-7507), as well as The Federal Program Information 
Act (Public Law 95-220 and Public Law 98-169, as amended, codified at 31 
U.S.C. 6101-6106).

[[Page 98]]

    (b) Subpart E--Cost Principles of this part is authorized under the 
Budget and Accounting Act of 1921, as amended; the Budget and Accounting 
Procedures Act of 1950, as amended (31 U.S.C. 1101-1125); the Chief 
Financial Officers Act of 1990 (31 U.S.C. 503-504); Reorganization Plan 
No. 2 of 1970; and Executive Order No. 11541, ``Prescribing the Duties 
of the Office of Management and Budget and the Domestic Policy Council 
in the Executive Office of the President.''
    (c) Subpart F--Audit Requirements of this part is authorized under 
the Single Audit Act Amendments of 1996, (31 U.S.C. 7501-7507).



Sec.  200.104  Supersession.

    As described in Sec.  200.110 Effective/applicability date, this 
part supersedes the following OMB guidance documents and regulations 
under Title 2 of the Code of Federal Regulations:
    (a) A-21, ``Cost Principles for Educational Institutions'' (2 CFR 
part 220);
    (b) A-87, ``Cost Principles for State, Local and Indian Tribal 
Governments'' (2 CFR part 225) and also Federal Register notice 51 FR 
552 (January 6, 1986);
    (c) A-89, ``Federal Domestic Assistance Program Information'';
    (d) A-102, ``Grant Awards and Cooperative Agreements with State and 
Local Governments'';
    (e) A-110, ``Uniform Administrative Requirements for Awards and 
Other Agreements with Institutions of Higher Education, Hospitals, and 
Other Nonprofit Organizations'' (codified at 2 CFR 215);
    (f) A-122, ``Cost Principles for Non-Profit Organizations'' (2 CFR 
part 230);
    (g) A-133, ``Audits of States, Local Governments and Non-Profit 
Organizations ''; and
    (h) Those sections of A-50 related to audits performed under Subpart 
F--Audit Requirements of this part.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75882, Dec. 19, 2014]



Sec.  200.105  Effect on other issuances.

    For Federal awards subject to this part, all administrative 
requirements, program manuals, handbooks and other non-regulatory 
materials that are inconsistent with the requirements of this part must 
be superseded upon implementation of this part by the Federal agency, 
except to the extent they are required by statute or authorized in 
accordance with the provisions in Sec.  200.102 Exceptions.



Sec.  200.106  Agency implementation.

    The specific requirements and responsibilities of Federal agencies 
and non-Federal entities are set forth in this part. Federal agencies 
making Federal awards to non-Federal entities must implement the 
language in the Subpart C--Pre-Federal Award Requirements and Contents 
of Federal Awards of this part through Subpart F--Audit Requirements of 
this part in codified regulations unless different provisions are 
required by Federal statute or are approved by OMB.



Sec.  200.107  OMB responsibilities.

    OMB will review Federal agency regulations and implementation of 
this part, and will provide interpretations of policy requirements and 
assistance to ensure effective and efficient implementation. Any 
exceptions will be subject to approval by OMB. Exceptions will only be 
made in particular cases where adequate justification is presented.



Sec.  200.108  Inquiries.

    Inquiries concerning this part may be directed to the Office of 
Federal Financial Management Office of Management and Budget, in 
Washington, DC. Non-Federal entities' inquiries should be addressed to 
the Federal awarding agency, cognizant agency for indirect costs, 
cognizant or oversight agency for audit, or pass-through entity as 
appropriate.



Sec.  200.109  Review date.

    OMB will review this part at least every five years after December 
26, 2013.



Sec.  200.110  Effective/applicability date.

    (a) The standards set forth in this part which affect administration 
of Federal awards issued by Federal awarding agencies become effective 
once implemented by Federal awarding

[[Page 99]]

agencies or when any future amendment to this part becomes final. 
Federal awarding agencies must implement the policies and procedures 
applicable to Federal awards by promulgating a regulation to be 
effective by December 26, 2014 unless different provisions are required 
by statute or approved by OMB. For the procurement standards in 
Sec. Sec.  200.317-200.326, non-Federal entities may continue to comply 
with the procurement standards in previous OMB guidance (superseded by 
this part as described in Sec.  200.104) for two additional fiscal years 
after this part goes into effect. If a non-Federal entity chooses to use 
the previous procurement standards for an additional two fiscal years 
before adopting the procurement standards in this part, the non-Federal 
entity must document this decision in their internal procurement 
policies.
    (b) The standards set forth in Subpart F--Audit Requirements of this 
part and any other standards which apply directly to Federal agencies 
will be effective December 26, 2013 and will apply to audits of fiscal 
years beginning on or after December 26, 2014.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75882, Dec. 19, 2014; 
80 FR 54408, Sept. 10, 2015]



Sec.  200.111  English language.

    (a) All Federal financial assistance announcements and Federal award 
information must be in the English language. Applications must be 
submitted in the English language and must be in the terms of U.S. 
dollars. If the Federal awarding agency receives applications in another 
currency, the Federal awarding agency will evaluate the application by 
converting the foreign currency to United States currency using the date 
specified for receipt of the application.
    (b) Non-Federal entities may translate the Federal award and other 
documents into another language. In the event of inconsistency between 
any terms and conditions of the Federal award and any translation into 
another language, the English language meaning will control. Where a 
significant portion of the non-Federal entity's employees who are 
working on the Federal award are not fluent in English, the non-Federal 
entity must provide the Federal award in English and the language(s) 
with which employees are more familiar.



Sec.  200.112  Conflict of interest.

    The Federal awarding agency must establish conflict of interest 
policies for Federal awards. The non-Federal entity must disclose in 
writing any potential conflict of interest to the Federal awarding 
agency or pass-through entity in accordance with applicable Federal 
awarding agency policy.



Sec.  200.113  Mandatory disclosures.

    The non-Federal entity or applicant for a Federal award must 
disclose, in a timely manner, in writing to the Federal awarding agency 
or pass-through entity all violations of Federal criminal law involving 
fraud, bribery, or gratuity violations potentially affecting the Federal 
award. Non-Federal entities that have received a Federal award including 
the term and condition outlined in Appendix XII--Award Term and 
Condition for Recipient Integrity and Performance Matters are required 
to report certain civil, criminal, or administrative proceedings to SAM. 
Failure to make required disclosures can result in any of the remedies 
described in Sec.  200.338 Remedies for noncompliance, including 
suspension or debarment. (See also 2 CFR part 180, 31 U.S.C. 3321, and 
41 U.S.C. 2313.)

[80 FR 43308, July 22, 2015]



 Subpart C_Pre-Federal Award Requirements and Contents of Federal Awards



Sec.  200.200  Purpose.

    (a) Sections 200.201 Use of grant agreements (including fixed amount 
awards), cooperative agreements, and contracts through 200.208 
Certifications and representations prescribe instructions and other pre-
award matters to be used in the announcement and application process.
    (b) Use of Sec. Sec.  200.203 Notices of funding opportunities, 
200.204 Federal awarding agency review of merit of proposals, 200.205 
Federal awarding agency review of risk posed by applicants, and 200.207 
Specific conditions, is required only for

[[Page 100]]

competitive Federal awards, but may also be used by the Federal awarding 
agency for non-competitive awards where appropriate or where required by 
Federal statute.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75882, Dec. 19, 2014]



Sec.  200.201  Use of grant agreements (including fixed amount awards),
cooperative agreements, and contracts.

    (a) The Federal awarding agency or pass-through entity must decide 
on the appropriate instrument for the Federal award (i.e., grant 
agreement, cooperative agreement, or contract) in accordance with the 
Federal Grant and Cooperative Agreement Act (31 U.S.C. 6301-08).
    (b) Fixed Amount Awards. In addition to the options described in 
paragraph (a) of this section, Federal awarding agencies, or pass-
through entities as permitted in Sec.  200.332 Fixed amount subawards, 
may use fixed amount awards (see Sec.  200.45 Fixed amount awards) to 
which the following conditions apply:
    (1) The Federal award amount is negotiated using the cost principles 
(or other pricing information) as a guide. The Federal awarding agency 
or pass-through entity may use fixed amount awards if the project scope 
is specific and if adequate cost, historical, or unit pricing data is 
available to establish a fixed amount award based on a reasonable 
estimate of actual cost. Payments are based on meeting specific 
requirements of the Federal award. Accountability is based on 
performance and results. Except in the case of termination before 
completion of the Federal award, there is no governmental review of the 
actual costs incurred by the non-Federal entity in performance of the 
award. Some of the ways in which the Federal award may be paid include, 
but are not limited to:
    (i) In several partial payments, the amount of each agreed upon in 
advance, and the ``milestone'' or event triggering the payment also 
agreed upon in advance, and set forth in the Federal award;
    (ii) On a unit price basis, for a defined unit or units, at a 
defined price or prices, agreed to in advance of performance of the 
Federal award and set forth in the Federal award; or,
    (iii) In one payment at Federal award completion.
    (2) A fixed amount award cannot be used in programs which require 
mandatory cost sharing or match.
    (3) The non-Federal entity must certify in writing to the Federal 
awarding agency or pass-through entity at the end of the Federal award 
that the project or activity was completed or the level of effort was 
expended. If the required level of activity or effort was not carried 
out, the amount of the Federal award must be adjusted.
    (4) Periodic reports may be established for each Federal award.
    (5) Changes in principal investigator, project leader, project 
partner, or scope of effort must receive the prior written approval of 
the Federal awarding agency or pass-through entity.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75882, Dec. 19, 2014]



Sec.  200.202  Requirement to provide public notice of Federal
financial assistance programs.

    (a) The Federal awarding agency must notify the public of Federal 
programs in the Catalog of Federal Domestic Assistance (CFDA), 
maintained by the General Services Administration (GSA).
    (1) The CFDA, or any OMB-designated replacement, is the single, 
authoritative, governmentwide comprehensive source of Federal financial 
assistance program information produced by the executive branch of the 
Federal Government.
    (2) The information that the Federal awarding agency must submit to 
GSA for approval by OMB is listed in paragraph (b) of this section. GSA 
must prescribe the format for the submission.
    (3) The Federal awarding agency may not award Federal financial 
assistance without assigning it to a program that has been included in 
the CFDA as required in this section unless there are exigent 
circumstances requiring otherwise, such as timing requirements imposed 
by statute.

[[Page 101]]

    (b) For each program that awards discretionary Federal awards, non-
discretionary Federal awards, loans, insurance, or any other type of 
Federal financial assistance, the Federal awarding agency must submit 
the following information to GSA:
    (1) Program Description, Purpose, Goals and Measurement. A brief 
summary of the statutory or regulatory requirements of the program and 
its intended outcome. Where appropriate, the Program Description, 
Purpose, Goals, and Measurement should align with the strategic goals 
and objectives within the Federal awarding agency's performance plan and 
should support the Federal awarding agency's performance measurement, 
management, and reporting as required by Part 6 of OMB Circular A-11;
    (2) Identification of whether the program makes Federal awards on a 
discretionary basis or the Federal awards are prescribed by Federal 
statute, such as in the case of formula grants.
    (3) Projected total amount of funds available for the program. 
Estimates based on previous year funding are acceptable if current 
appropriations are not available at the time of the submission;
    (4) Anticipated Source of Available Funds: The statutory authority 
for funding the program and, to the extent possible, agency, sub-agency, 
or, if known, the specific program unit that will issue the Federal 
awards, and associated funding identifier (e.g., Treasury Account 
Symbol(s));
    (5) General Eligibility Requirements: The statutory, regulatory or 
other eligibility factors or considerations that determine the 
applicant's qualification for Federal awards under the program (e.g., 
type of non-Federal entity); and
    (6) Applicability of Single Audit Requirements as required by 
Subpart F--Audit Requirements of this part.



Sec.  200.203  Notices of funding opportunities.

    For competitive grants and cooperative agreements, the Federal 
awarding agency must announce specific funding opportunities by 
providing the following information in a public notice:
    (a) Summary Information in Notices of Funding Opportunities. The 
Federal awarding agency must display the following information posted on 
the OMB-designated governmentwide Web site for finding and applying for 
Federal financial assistance, in a location preceding the full text of 
the announcement:
    (1) Federal Awarding Agency Name;
    (2) Funding Opportunity Title;
    (3) Announcement Type (whether the funding opportunity is the 
initial announcement of this funding opportunity or a modification of a 
previously announced opportunity);
    (4) Funding Opportunity Number (required, if applicable). If the 
Federal awarding agency has assigned or will assign a number to the 
funding opportunity announcement, this number must be provided;
    (5) Catalog of Federal Domestic Assistance (CFDA) Number(s);
    (6) Key Dates. Key dates include due dates for applications or 
Executive Order 12372 submissions, as well as for any letters of intent 
or pre-applications. For any announcement issued before a program's 
application materials are available, key dates also include the date on 
which those materials will be released; and any other additional 
information, as deemed applicable by the relevant Federal awarding 
agency.
    (b) The Federal awarding agency must generally make all funding 
opportunities available for application for at least 60 calendar days. 
The Federal awarding agency may make a determination to have a less than 
60 calendar day availability period but no funding opportunity should be 
available for less than 30 calendar days unless exigent circumstances 
require as determined by the Federal awarding agency head or delegate.
    (c) Full Text of Funding Opportunities. The Federal awarding agency 
must include the following information in the full text of each funding 
opportunity. For specific instructions on the content required in this 
section, refer to Appendix I to Part 200--Full Text of Notice of Funding 
Opportunity to this part.
    (1) Full programmatic description of the funding opportunity.
    (2) Federal award information, including sufficient information to 
help

[[Page 102]]

an applicant make an informed decision about whether to submit an 
application. (See also Sec.  200.414 Indirect (F&A) costs, paragraph 
(c)(4)).
    (3) Specific eligibility information, including any factors or 
priorities that affect an applicant's or its application's eligibility 
for selection.
    (4) Application Preparation and Submission Information, including 
the applicable submission dates and time.
    (5) Application Review Information including the criteria and 
process to be used to evaluate applications. See also Sec. Sec.  200.204 
Federal awarding agency review of merit proposals and 200.205 Federal 
awarding agency review of risk posed by applicants.
    (6) Federal Award Administration Information. See also Sec.  200.210 
Information contained in a Federal award.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75882, Dec. 19, 2014; 
80 FR 43308, July 22, 2015; 80 FR 54408, Sept. 10, 2015]



Sec.  200.204  Federal awarding agency review of merit of proposals.

    For competitive grants or cooperative agreements, unless prohibited 
by Federal statute, the Federal awarding agency must design and execute 
a merit review process for applications. This process must be described 
or incorporated by reference in the applicable funding opportunity (see 
Appendix I to this part, Full text of the Funding Opportunity.) See also 
Sec.  200.203 Notices of funding opportunities.



Sec.  200.205  Federal awarding agency review of risk posed by applicants.

    (a) Review of OMB-designated repositories of governmentwide data. 
(1) Prior to making a Federal award, the Federal awarding agency is 
required by 31 U.S.C. 3321 and 41 U.S.C. 2313 note to review information 
available through any OMB-designated repositories of governmentwide 
eligibility qualification or financial integrity information as 
appropriate. See also suspension and debarment requirements at 2 CFR 
part 180 as well as individual Federal agency suspension and debarment 
regulations in title 2 of the Code of Federal Regulations.
    (2) In accordance 41 U.S.C. 2313, the Federal awarding agency is 
required to review the non-public segment of the OMB-designated 
integrity and performance system accessible through SAM (currently the 
Federal Awardee Performance and Integrity Information System (FAPIIS)) 
prior to making a Federal award where the Federal share is expected to 
exceed the simplified acquisition threshold, defined in 41 U.S.C. 134, 
over the period of performance. At a minimum, the information in the 
system for a prior Federal award recipient must demonstrate a 
satisfactory record of executing programs or activities under Federal 
grants, cooperative agreements, or procurement awards; and integrity and 
business ethics. The Federal awarding agency may make a Federal award to 
a recipient who does not fully meet these standards, if it is determined 
that the information is not relevant to the current Federal award under 
consideration or there are specific conditions that can appropriately 
mitigate the effects of the non-Federal entity's risk in accordance with 
Sec.  200.207 Specific conditions.
    (b) In addition, for competitive grants or cooperative agreements, 
the Federal awarding agency must have in place a framework for 
evaluating the risks posed by applicants before they receive Federal 
awards. This evaluation may incorporate results of the evaluation of the 
applicant's eligibility or the quality of its application. If the 
Federal awarding agency determines that a Federal award will be made, 
special conditions that correspond to the degree of risk assessed may be 
applied to the Federal award. Criteria to be evaluated must be described 
in the announcement of funding opportunity described in Sec.  200.203 
Notices of funding opportunities.
    (c) In evaluating risks posed by applicants, the Federal awarding 
agency may use a risk-based approach and may consider any items such as 
the following:
    (1) Financial stability;
    (2) Quality of management systems and ability to meet the management 
standards prescribed in this part;
    (3) History of performance. The applicant's record in managing 
Federal awards, if it is a prior recipient of Federal awards, including 
timeliness of compliance with applicable reporting requirements, 
conformance to the

[[Page 103]]

terms and conditions of previous Federal awards, and if applicable, the 
extent to which any previously awarded amounts will be expended prior to 
future awards;
    (4) Reports and findings from audits performed under Subpart F--
Audit Requirements of this part or the reports and findings of any other 
available audits; and
    (5) The applicant's ability to effectively implement statutory, 
regulatory, or other requirements imposed on non-Federal entities.
    (d) In addition to this review, the Federal awarding agency must 
comply with the guidelines on governmentwide suspension and debarment in 
2 CFR part 180, and must require non-Federal entities to comply with 
these provisions. These provisions restrict Federal awards, subawards 
and contracts with certain parties that are debarred, suspended or 
otherwise excluded from or ineligible for participation in Federal 
programs or activities.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75882, Dec. 19, 2014; 
80 FR 43308, July 22, 2015; 80 FR 69111, Nov. 9, 2015]



Sec.  200.206  Standard application requirements.

    (a) Paperwork clearances. The Federal awarding agency may only use 
application information collections approved by OMB under the Paperwork 
Reduction Act of 1995 and OMB's implementing regulations in 5 CFR part 
1320, Controlling Paperwork Burdens on the Public. Consistent with these 
requirements, OMB will authorize additional information collections only 
on a limited basis.
    (b) If applicable, the Federal awarding agency may inform applicants 
and recipients that they do not need to provide certain information 
otherwise required by the relevant information collection.



Sec.  200.207  Specific conditions.

    (a) The Federal awarding agency or pass-through entity may impose 
additional specific award conditions as needed, in accordance with 
paragraphs (b) and (c) of this section, under the following 
circumstances:
    (1) Based on the criteria set forth in Sec.  200.205 Federal 
awarding agency review of risk posed by applicants;
    (2) When an applicant or recipient has a history of failure to 
comply with the general or specific terms and conditions of a Federal 
award;
    (3) When an applicant or recipient fails to meet expected 
performance goals as described in Sec.  200.210 Information contained in 
a Federal award; or
    (4) When an applicant or recipient is not otherwise responsible.
    (b) These additional Federal award conditions may include items such 
as the following:
    (1) Requiring payments as reimbursements rather than advance 
payments;
    (2) Withholding authority to proceed to the next phase until receipt 
of evidence of acceptable performance within a given period of 
performance;
    (3) Requiring additional, more detailed financial reports;
    (4) Requiring additional project monitoring;
    (5) Requiring the non-Federal entity to obtain technical or 
management assistance; or
    (6) Establishing additional prior approvals.
    (c) The Federal awarding agency or pass-through entity must notify 
the applicant or non-Federal entity as to:
    (1) The nature of the additional requirements;
    (2) The reason why the additional requirements are being imposed;
    (3) The nature of the action needed to remove the additional 
requirement, if applicable;
    (4) The time allowed for completing the actions if applicable, and
    (5) The method for requesting reconsideration of the additional 
requirements imposed.
    (d) Any specific conditions must be promptly removed once the 
conditions that prompted them have been corrected.

[79 FR 75882, Dec. 19, 2014]



Sec.  200.208  Certifications and representations.

    Unless prohibited by Federal statutes or regulations, each Federal 
awarding

[[Page 104]]

agency or pass-through entity is authorized to require the non-Federal 
entity to submit certifications and representations required by Federal 
statutes, or regulations on an annual basis. Submission may be required 
more frequently if the non-Federal entity fails to meet a requirement of 
a Federal award.



Sec.  200.209  Pre-award costs.

    For requirements on costs incurred by the applicant prior to the 
start date of the period of performance of the Federal award, see Sec.  
200.458 Pre-award costs.



Sec.  200.210  Information contained in a Federal award.

    A Federal award must include the following information:
    (a) General Federal Award Information. The Federal awarding agency 
must include the following general Federal award information in each 
Federal award:
    (1) Recipient name (which must match the name associated with its 
unique entity identifier as defined at 2 CFR 25.315);
    (2) Recipient's unique entity identifier;
    (3) Unique Federal Award Identification Number (FAIN);
    (4) Federal Award Date (see Sec.  200.39 Federal award date);
    (5) Period of Performance Start and End Date;
    (6) Amount of Federal Funds Obligated by this action;
    (7) Total Amount of Federal Funds Obligated;
    (8) Total Amount of the Federal Award;
    (9) Budget Approved by the Federal Awarding Agency;
    (10) Total Approved Cost Sharing or Matching, where applicable;
    (11) Federal award project description, (to comply with statutory 
requirements (e.g., FFATA));
    (12) Name of Federal awarding agency and contact information for 
awarding official,
    (13) CFDA Number and Name;
    (14) Identification of whether the award is R&D; and
    (15) Indirect cost rate for the Federal award (including if the de 
minimis rate is charged per Sec.  200.414 Indirect (F&A) costs).
    (b) General Terms and Conditions (1) Federal awarding agencies must 
incorporate the following general terms and conditions either in the 
Federal award or by reference, as applicable:
    (i) Administrative requirements implemented by the Federal awarding 
agency as specified in this part.
    (ii) National policy requirements. These include statutory, 
executive order, other Presidential directive, or regulatory 
requirements that apply by specific reference and are not program-
specific. See Sec.  200.300 Statutory and national policy requirements.
    (iii) Recipient integrity and performance matters. If the total 
Federal share of the Federal award may include more than $500,000 over 
the period of performance, the Federal awarding agency must include the 
term and condition available in Appendix XII--Award Term and Condition 
for Recipient Integrity and Performance Matters. See also Sec.  200.113 
Mandatory disclosures.
    (2) The Federal award must include wording to incorporate, by 
reference, the applicable set of general terms and conditions. The 
reference must be to the Web site at which the Federal awarding agency 
maintains the general terms and conditions.
    (3) If a non-Federal entity requests a copy of the full text of the 
general terms and conditions, the Federal awarding agency must provide 
it.
    (4) Wherever the general terms and conditions are publicly 
available, the Federal awarding agency must maintain an archive of 
previous versions of the general terms and conditions, with effective 
dates, for use by the non-Federal entity, auditors, or others.
    (c) Federal Awarding Agency, Program, or Federal Award Specific 
Terms and Conditions. The Federal awarding agency may include with each 
Federal award any terms and conditions necessary to communicate 
requirements that are in addition to the requirements outlined in the 
Federal awarding agency's general terms and conditions. Whenever 
practicable, these specific terms and conditions also should be

[[Page 105]]

shared on a public Web site and in notices of funding opportunities (as 
outlined in Sec.  200.203 Notices of funding opportunities) in addition 
to being included in a Federal award. See also Sec.  200.206 Standard 
application requirements.
    (d) Federal Award Performance Goals. The Federal awarding agency 
must include in the Federal award an indication of the timing and scope 
of expected performance by the non-Federal entity as related to the 
outcomes intended to be achieved by the program. In some instances 
(e.g., discretionary research awards), this may be limited to the 
requirement to submit technical performance reports (to be evaluated in 
accordance with Federal awarding agency policy). Where appropriate, the 
Federal award may include specific performance goals, indicators, 
milestones, or expected outcomes (such as outputs, or services performed 
or public impacts of any of these) with an expected timeline for 
accomplishment. Reporting requirements must be clearly articulated such 
that, where appropriate, performance during the execution of the Federal 
award has a standard against which non-Federal entity performance can be 
measured. The Federal awarding agency may include program-specific 
requirements, as applicable. These requirements should be aligned with 
agency strategic goals, strategic objectives or performance goals that 
are relevant to the program. See also OMB Circular A-11, Preparation, 
Submission and Execution of the Budget Part 6 for definitions of 
strategic objectives and performance goals.
    (e) Any other information required by the Federal awarding agency.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75882, Dec. 19, 2014; 
80 FR 43308, July 22, 2015]



Sec.  200.211  Public access to Federal award information.

    (a) In accordance with statutory requirements for Federal spending 
transparency (e.g., FFATA), except as noted in this section, for 
applicable Federal awards the Federal awarding agency must announce all 
Federal awards publicly and publish the required information on a 
publicly available OMB-designated governmentwide Web site (at time of 
publication, www.USAspending.gov).
    (b) All information posted in the designated integrity and 
performance system accessible through SAM (currently FAPIIS) on or after 
April 15, 2011 will be publicly available after a waiting period of 14 
calendar days, except for:
    (1) Past performance reviews required by Federal Government 
contractors in accordance with the Federal Acquisition Regulation (FAR) 
42.15;
    (2) Information that was entered prior to April 15, 2011; or
    (3) Information that is withdrawn during the 14-calendar day waiting 
period by the Federal Government official.
    (c) Nothing in this section may be construed as requiring the 
publication of information otherwise exempt under the Freedom of 
Information Act (5 U.S.C 552), or controlled unclassified information 
pursuant to Executive Order 13556.

[78 FR 78608, Dec. 26, 2013, as amended at 80 FR 43309, July 22, 2015]



Sec.  200.212  Reporting a determination that a non-Federal entity 
is not qualified for a Federal award.

    (a) If a Federal awarding agency does not make a Federal award to a 
non-Federal entity because the official determines that the non-Federal 
entity does not meet either or both of the minimum qualification 
standards as described in Sec.  200.205, Federal awarding agency review 
of risk posed by applicants, paragraph (a)(2), the Federal awarding 
agency must report that determination to the designated integrity and 
performance system accessible through SAM (currently FAPIIS), only if 
all of the following apply:
    (1) The only basis for the determination described in paragraph (a) 
of this section is the non-Federal entity's prior record of executing 
programs or activities under Federal awards or its record of integrity 
and business ethics, as described in Sec.  200.205 Federal awarding 
agency review of risk posed by applicants, paragraph (a)(2) (i.e., the 
entity was determined to be qualified based on all factors other than 
those two standards), and
    (2) The total Federal share of the Federal award that otherwise 
would be

[[Page 106]]

made to the non-Federal entity is expected to exceed the simplified 
acquisition threshold over the period of performance.
    (b) The Federal awarding agency is not required to report a 
determination that a non-Federal entity is not qualified for a Federal 
award if they make the Federal award to the non-Federal entity and 
includes specific award terms and conditions, as described in Sec.  
200.207 Specific conditions.
    (c) If a Federal awarding agency reports a determination that a non-
Federal entity is not qualified for a Federal award, as described in 
paragraph (a) of this section, the Federal awarding agency also must 
notify the non-Federal entity that--
    (1) The determination was made and reported to the designated 
integrity and performance system accessible through SAM, and include 
with the notification an explanation of the basis for the determination;
    (2) The information will be kept in the system for a period of five 
years from the date of the determination, as required by section 872 of 
Public Law 110-417, as amended (41 U.S.C. 2313), then archived;
    (3) Each Federal awarding agency that considers making a Federal 
award to the non-Federal entity during that five year period must 
consider that information in judging whether the non-Federal entity is 
qualified to receive the Federal award when the total Federal share of 
the Federal award is expected to include an amount of Federal funding in 
excess of the simplified acquisition threshold over the period of 
performance;
    (4) The non-Federal entity may go to the awardee integrity and 
performance portal accessible through SAM (currently the Contractor 
Performance Assessment Reporting System (CPARS)) and comment on any 
information the system contains about the non-Federal entity itself; and
    (5) Federal awarding agencies will consider that non-Federal 
entity's comments in determining whether the non-Federal entity is 
qualified for a future Federal award.
    (d) If a Federal awarding agency enters information into the 
designated integrity and performance system accessible through SAM about 
a determination that a non-Federal entity is not qualified for a Federal 
award and subsequently:
    (1) Learns that any of that information is erroneous, the Federal 
awarding agency must correct the information in the system within three 
business days;
    (2) Obtains an update to that information that could be helpful to 
other Federal awarding agencies, the Federal awarding agency is strongly 
encouraged to amend the information in the system to incorporate the 
update in a timely way.
    (e) Federal awarding agencies shall not post any information that 
will be made publicly available in the non-public segment of designated 
integrity and performance system that is covered by a disclosure 
exemption under the Freedom of Information Act. If the recipient asserts 
within seven calendar days to the Federal awarding agency that posted 
the information that some or all of the information made publicly 
available is covered by a disclosure exemption under the Freedom of 
Information Act, the Federal awarding agency that posted the information 
must remove the posting within seven calendar days of receiving the 
assertion. Prior to reposting the releasable information, the Federal 
awarding agency must resolve the issue in accordance with the agency's 
Freedom of Information Act procedures.

[80 FR 43309, July 22, 2015]



Sec.  200.213  Suspension and debarment.

    Non-federal entities are subject to the non-procurement debarment 
and suspension regulations implementing Executive Orders 12549 and 
12689, 2 CFR part 180. These regulations restrict awards, subawards, and 
contracts with certain parties that are debarred, suspended, or 
otherwise excluded from or ineligible for participation in Federal 
assistance programs or activities.

[80 FR 43309, July 22, 2015]

[[Page 107]]



                Subpart D_Post Federal Award Requirements

             Standards for Financial and Program Management



Sec.  200.300  Statutory and national policy requirements.

    (a) The Federal awarding agency must manage and administer the 
Federal award in a manner so as to ensure that Federal funding is 
expended and associated programs are implemented in full accordance with 
U.S. statutory and public policy requirements: including, but not 
limited to, those protecting public welfare, the environment, and 
prohibiting discrimination. The Federal awarding agency must communicate 
to the non-Federal entity all relevant public policy requirements, 
including those in general appropriations provisions, and incorporate 
them either directly or by reference in the terms and conditions of the 
Federal award.
    (b) The non-Federal entity is responsible for complying with all 
requirements of the Federal award. For all Federal awards, this includes 
the provisions of FFATA, which includes requirements on executive 
compensation, and also requirements implementing the Act for the non-
Federal entity at 2 CFR part 25 Financial Assistance Use of Universal 
Identifier and System for Award Management and 2 CFR part 170 Reporting 
Subaward and Executive Compensation Information. See also statutory 
requirements for whistleblower protections at 10 U.S.C. 2409, 41 U.S.C. 
4712, and 10 U.S.C. 2324, 41 U.S.C. 4304 and 4310.

[78 FR 78608, Dec. 26, 2013, as amended at 80 FR 43309, July 22, 2015]



Sec.  200.301  Performance measurement.

    The Federal awarding agency must require the recipient to use OMB-
approved standard information collections when providing financial and 
performance information. As appropriate and in accordance with above 
mentioned information collections, the Federal awarding agency must 
require the recipient to relate financial data to performance 
accomplishments of the Federal award. Also, in accordance with above 
mentioned standard information collections, and when applicable, 
recipients must also provide cost information to demonstrate cost 
effective practices (e.g., through unit cost data). The recipient's 
performance should be measured in a way that will help the Federal 
awarding agency and other non-Federal entities to improve program 
outcomes, share lessons learned, and spread the adoption of promising 
practices. The Federal awarding agency should provide recipients with 
clear performance goals, indicators, and milestones as described in 
Sec.  200.210 Information contained in a Federal award. Performance 
reporting frequency and content should be established to not only allow 
the Federal awarding agency to understand the recipient progress but 
also to facilitate identification of promising practices among 
recipients and build the evidence upon which the Federal awarding 
agency's program and performance decisions are made.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75883, Dec. 19, 2014]



Sec.  200.302  Financial management.

    (a) Each state must expend and account for the Federal award in 
accordance with state laws and procedures for expending and accounting 
for the state's own funds. In addition, the state's and the other non-
Federal entity's financial management systems, including records 
documenting compliance with Federal statutes, regulations, and the terms 
and conditions of the Federal award, must be sufficient to permit the 
preparation of reports required by general and program-specific terms 
and conditions; and the tracing of funds to a level of expenditures 
adequate to establish that such funds have been used according to the 
Federal statutes, regulations, and the terms and conditions of the 
Federal award. See also Sec.  200.450 Lobbying.
    (b) The financial management system of each non-Federal entity must 
provide for the following (see also Sec. Sec.  200.333 Retention 
requirements for records, 200.334 Requests for transfer of records, 
200.335 Methods for collection, transmission and storage of information, 
200.336 Access to records, and 200.337 Restrictions on public access to 
records):

[[Page 108]]

    (1) Identification, in its accounts, of all Federal awards received 
and expended and the Federal programs under which they were received. 
Federal program and Federal award identification must include, as 
applicable, the CFDA title and number, Federal award identification 
number and year, name of the Federal agency, and name of the pass-
through entity, if any.
    (2) Accurate, current, and complete disclosure of the financial 
results of each Federal award or program in accordance with the 
reporting requirements set forth in Sec. Sec.  200.327 Financial 
reporting and 200.328 Monitoring and reporting program performance. If a 
Federal awarding agency requires reporting on an accrual basis from a 
recipient that maintains its records on other than an accrual basis, the 
recipient must not be required to establish an accrual accounting 
system. This recipient may develop accrual data for its reports on the 
basis of an analysis of the documentation on hand. Similarly, a pass-
through entity must not require a subrecipient to establish an accrual 
accounting system and must allow the subrecipient to develop accrual 
data for its reports on the basis of an analysis of the documentation on 
hand.
    (3) Records that identify adequately the source and application of 
funds for federally-funded activities. These records must contain 
information pertaining to Federal awards, authorizations, obligations, 
unobligated balances, assets, expenditures, income and interest and be 
supported by source documentation.
    (4) Effective control over, and accountability for, all funds, 
property, and other assets. The non-Federal entity must adequately 
safeguard all assets and assure that they are used solely for authorized 
purposes. See Sec.  200.303 Internal controls.
    (5) Comparison of expenditures with budget amounts for each Federal 
award.
    (6) Written procedures to implement the requirements of Sec.  
200.305 Payment.
    (7) Written procedures for determining the allowability of costs in 
accordance with Subpart E--Cost Principles of this part and the terms 
and conditions of the Federal award.



Sec.  200.303  Internal controls.

    The non-Federal entity must:
    (a) Establish and maintain effective internal control over the 
Federal award that provides reasonable assurance that the non-Federal 
entity is managing the Federal award in compliance with Federal 
statutes, regulations, and the terms and conditions of the Federal 
award. These internal controls should be in compliance with guidance in 
``Standards for Internal Control in the Federal Government'' issued by 
the Comptroller General of the United States or the ``Internal Control 
Integrated Framework'', issued by the Committee of Sponsoring 
Organizations of the Treadway Commission (COSO).
    (b) Comply with Federal statutes, regulations, and the terms and 
conditions of the Federal awards.
    (c) Evaluate and monitor the non-Federal entity's compliance with 
statutes, regulations and the terms and conditions of Federal awards.
    (d) Take prompt action when instances of noncompliance are 
identified including noncompliance identified in audit findings.
    (e) Take reasonable measures to safeguard protected personally 
identifiable information and other information the Federal awarding 
agency or pass-through entity designates as sensitive or the non-Federal 
entity considers sensitive consistent with applicable Federal, state, 
local, and tribal laws regarding privacy and obligations of 
confidentiality.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75883, Dec. 19, 2014]



Sec.  200.304  Bonds.

    The Federal awarding agency may include a provision on bonding, 
insurance, or both in the following circumstances:
    (a) Where the Federal Government guarantees or insures the repayment 
of money borrowed by the recipient, the Federal awarding agency, at its 
discretion, may require adequate bonding and insurance if the bonding 
and insurance requirements of the non-Federal entity are not deemed 
adequate to protect the interest of the Federal Government.

[[Page 109]]

    (b) The Federal awarding agency may require adequate fidelity bond 
coverage where the non-Federal entity lacks sufficient coverage to 
protect the Federal Government's interest.
    (c) Where bonds are required in the situations described above, the 
bonds must be obtained from companies holding certificates of authority 
as acceptable sureties, as prescribed in 31 CFR Part 223, ``Surety 
Companies Doing Business with the United States.''



Sec.  200.305  Payment.

    (a) For states, payments are governed by Treasury-State CMIA 
agreements and default procedures codified at 31 CFR Part 205 ``Rules 
and Procedures for Efficient Federal-State Funds Transfers'' and TFM 4A-
2000 Overall Disbursing Rules for All Federal Agencies.
    (b) For non-Federal entities other than states, payments methods 
must minimize the time elapsing between the transfer of funds from the 
United States Treasury or the pass-through entity and the disbursement 
by the non-Federal entity whether the payment is made by electronic 
funds transfer, or issuance or redemption of checks, warrants, or 
payment by other means. See also Sec.  200.302 Financial management 
paragraph (b)(6). Except as noted elsewhere in this part, Federal 
agencies must require recipients to use only OMB-approved standard 
governmentwide information collection requests to request payment.
    (1) The non-Federal entity must be paid in advance, provided it 
maintains or demonstrates the willingness to maintain both written 
procedures that minimize the time elapsing between the transfer of funds 
and disbursement by the non-Federal entity, and financial management 
systems that meet the standards for fund control and accountability as 
established in this part. Advance payments to a non-Federal entity must 
be limited to the minimum amounts needed and be timed to be in 
accordance with the actual, immediate cash requirements of the non-
Federal entity in carrying out the purpose of the approved program or 
project. The timing and amount of advance payments must be as close as 
is administratively feasible to the actual disbursements by the non-
Federal entity for direct program or project costs and the proportionate 
share of any allowable indirect costs. The non-Federal entity must make 
timely payment to contractors in accordance with the contract 
provisions.
    (2) Whenever possible, advance payments must be consolidated to 
cover anticipated cash needs for all Federal awards made by the Federal 
awarding agency to the recipient.
    (i) Advance payment mechanisms include, but are not limited to, 
Treasury check and electronic funds transfer and must comply with 
applicable guidance in 31 CFR part 208.
    (ii) Non-Federal entities must be authorized to submit requests for 
advance payments and reimbursements at least monthly when electronic 
fund transfers are not used, and as often as they like when electronic 
transfers are used, in accordance with the provisions of the Electronic 
Fund Transfer Act (15 U.S.C. 1693-1693r).
    (3) Reimbursement is the preferred method when the requirements in 
paragraph (b) cannot be met, when the Federal awarding agency sets a 
specific condition per Sec.  200.207 Specific conditions, or when the 
non-Federal entity requests payment by reimbursement. This method may be 
used on any Federal award for construction, or if the major portion of 
the construction project is accomplished through private market 
financing or Federal loans, and the Federal award constitutes a minor 
portion of the project. When the reimbursement method is used, the 
Federal awarding agency or pass-through entity must make payment within 
30 calendar days after receipt of the billing, unless the Federal 
awarding agency or pass-through entity reasonably believes the request 
to be improper.
    (4) If the non-Federal entity cannot meet the criteria for advance 
payments and the Federal awarding agency or pass-through entity has 
determined that reimbursement is not feasible because the non-Federal 
entity lacks sufficient working capital, the Federal awarding agency or 
pass-through entity may provide cash on a working capital advance basis. 
Under this procedure, the Federal awarding agency or

[[Page 110]]

pass-through entity must advance cash payments to the non-Federal entity 
to cover its estimated disbursement needs for an initial period 
generally geared to the non-Federal entity's disbursing cycle. 
Thereafter, the Federal awarding agency or pass-through entity must 
reimburse the non-Federal entity for its actual cash disbursements. Use 
of the working capital advance method of payment requires that the pass-
through entity provide timely advance payments to any subrecipients in 
order to meet the subrecipient's actual cash disbursements. The working 
capital advance method of payment must not be used by the pass-through 
entity if the reason for using this method is the unwillingness or 
inability of the pass-through entity to provide timely advance payments 
to the subrecipient to meet the subrecipient's actual cash 
disbursements.
    (5) Use of resources before requesting cash advance payments. To the 
extent available, the non-Federal entity must disburse funds available 
from program income (including repayments to a revolving fund), rebates, 
refunds, contract settlements, audit recoveries, and interest earned on 
such funds before requesting additional cash payments.
    (6) Unless otherwise required by Federal statutes, payments for 
allowable costs by non-Federal entities must not be withheld at any time 
during the period of performance unless the conditions of Sec. Sec.  
200.207 Specific conditions, Subpart D--Post Federal Award Requirements 
of this part, 200.338 Remedies for Noncompliance, or one or more of the 
following applies:
    (i) The non-Federal entity has failed to comply with the project 
objectives, Federal statutes, regulations, or the terms and conditions 
of the Federal award.
    (ii) The non-Federal entity is delinquent in a debt to the United 
States as defined in OMB Guidance A-129, ``Policies for Federal Credit 
Programs and Non-Tax Receivables.'' Under such conditions, the Federal 
awarding agency or pass-through entity may, upon reasonable notice, 
inform the non-Federal entity that payments must not be made for 
obligations incurred after a specified date until the conditions are 
corrected or the indebtedness to the Federal Government is liquidated.
    (iii) A payment withheld for failure to comply with Federal award 
conditions, but without suspension of the Federal award, must be 
released to the non-Federal entity upon subsequent compliance. When a 
Federal award is suspended, payment adjustments will be made in 
accordance with Sec.  200.342 Effects of suspension and termination.
    (iv) A payment must not be made to a non-Federal entity for amounts 
that are withheld by the non-Federal entity from payment to contractors 
to assure satisfactory completion of work. A payment must be made when 
the non-Federal entity actually disburses the withheld funds to the 
contractors or to escrow accounts established to assure satisfactory 
completion of work.
    (7) Standards governing the use of banks and other institutions as 
depositories of advance payments under Federal awards are as follows.
    (i) The Federal awarding agency and pass-through entity must not 
require separate depository accounts for funds provided to a non-Federal 
entity or establish any eligibility requirements for depositories for 
funds provided to the non-Federal entity. However, the non-Federal 
entity must be able to account for the receipt, obligation and 
expenditure of funds.
    (ii) Advance payments of Federal funds must be deposited and 
maintained in insured accounts whenever possible.
    (8) The non-Federal entity must maintain advance payments of Federal 
awards in interest-bearing accounts, unless the following apply.
    (i) The non-Federal entity receives less than $120,000 in Federal 
awards per year.
    (ii) The best reasonably available interest-bearing account would 
not be expected to earn interest in excess of $500 per year on Federal 
cash balances.
    (iii) The depository would require an average or minimum balance so 
high that it would not be feasible within the expected Federal and non-
Federal cash resources.
    (iv) A foreign government or banking system prohibits or precludes 
interest bearing accounts.

[[Page 111]]

    (9) Interest earned amounts up to $500 per year may be retained by 
the non-Federal entity for administrative expense. Any additional 
interest earned on Federal advance payments deposited in interest-
bearing accounts must be remitted annually to the Department of Health 
and Human Services Payment Management System (PMS) through an electronic 
medium using either Automated Clearing House (ACH) network or a Fedwire 
Funds Service payment. Remittances must include pertinent information of 
the payee and nature of payment in the memo area (often referred to as 
``addenda records'' by Financial Institutions) as that will assist in 
the timely posting of interest earned on federal funds. Pertinent 
details include the Payee Account Number (PAN) if the payment originated 
from PMS, or Agency information if the payment originated from ASAP, NSF 
or another federal agency payment system. The remittance must be 
submitted as follows:
    (i) For ACH Returns:

Routing Number: 051036706
Account number: 303000
Bank Name and Location: Credit Gateway--ACH Receiver St. Paul, MN

    (ii) For Fedwire Returns*:

Routing Number: 021030004
Account number: 75010501
Bank Name and Location: Federal Reserve Bank Treas NYC/Funds Transfer 
Division New York, NY
(* Please note organization initiating payment is likely to incur a 
charge from your Financial Institution for this type of payment)

    (iii) For International ACH Returns:

Beneficiary Account: Federal Reserve Bank of New York/ITS (FRBNY/ITS)
Bank: Citibank N.A. (New York)
Swift Code: CITIUS33
Account Number: 36838868
Bank Address: 388 Greenwich Street, New York, NY 10013 USA
Payment Details (Line 70): Agency
Name (abbreviated when possible) and ALC Agency POC: Michelle Haney, 
(301) 492-5065

    (iv) For recipients that do not have electronic remittance 
capability, please make check** payable to: ``The Department of Health 
and Human Services.''

    Mail Check to Treasury approved lockbox:

HHS Program Support Center, P.O. Box 530231, Atlanta, GA 30353-0231
(** Please allow 4-6 weeks for processing of a payment by check to be 
applied to the appropriate PMS account)

    (v) Any additional information/instructions may be found on the PMS 
Web site at http://www.dpm.psc.gov/.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75883, Dec. 19, 2014; 
80 FR 54408, Sept. 10, 2015]



Sec.  200.306  Cost sharing or matching.

    (a) Under Federal research proposals, voluntary committed cost 
sharing is not expected. It cannot be used as a factor during the merit 
review of applications or proposals, but may be considered if it is both 
in accordance with Federal awarding agency regulations and specified in 
a notice of funding opportunity. Criteria for considering voluntary 
committed cost sharing and any other program policy factors that may be 
used to determine who may receive a Federal award must be explicitly 
described in the notice of funding opportunity. See also Sec. Sec.  
200.414 Indirect (F&A) costs, 200.203 Notices of funding opportunities, 
and Appendix I to Part 200--Full Text of Notice of Funding Opportunity.
    (b) For all Federal awards, any shared costs or matching funds and 
all contributions, including cash and third party in-kind contributions, 
must be accepted as part of the non-Federal entity's cost sharing or 
matching when such contributions meet all of the following criteria:
    (1) Are verifiable from the non-Federal entity's records;
    (2) Are not included as contributions for any other Federal award;
    (3) Are necessary and reasonable for accomplishment of project or 
program objectives;
    (4) Are allowable under Subpart E--Cost Principles of this part;
    (5) Are not paid by the Federal Government under another Federal 
award, except where the Federal statute authorizing a program 
specifically provides that Federal funds made available for such program 
can be applied to matching or cost sharing requirements of other Federal 
programs;

[[Page 112]]

    (6) Are provided for in the approved budget when required by the 
Federal awarding agency; and
    (7) Conform to other provisions of this part, as applicable.
    (c) Unrecovered indirect costs, including indirect costs on cost 
sharing or matching may be included as part of cost sharing or matching 
only with the prior approval of the Federal awarding agency. Unrecovered 
indirect cost means the difference between the amount charged to the 
Federal award and the amount which could have been charged to the 
Federal award under the non-Federal entity's approved negotiated 
indirect cost rate.
    (d) Values for non-Federal entity contributions of services and 
property must be established in accordance with the cost principles in 
Subpart E--Cost Principles. If a Federal awarding agency authorizes the 
non-Federal entity to donate buildings or land for construction/
facilities acquisition projects or long-term use, the value of the 
donated property for cost sharing or matching must be the lesser of 
paragraphs (d)(1) or (2) of this section.
    (1) The value of the remaining life of the property recorded in the 
non-Federal entity's accounting records at the time of donation.
    (2) The current fair market value. However, when there is sufficient 
justification, the Federal awarding agency may approve the use of the 
current fair market value of the donated property, even if it exceeds 
the value described in (1) above at the time of donation.
    (e) Volunteer services furnished by third-party professional and 
technical personnel, consultants, and other skilled and unskilled labor 
may be counted as cost sharing or matching if the service is an integral 
and necessary part of an approved project or program. Rates for third-
party volunteer services must be consistent with those paid for similar 
work by the non-Federal entity. In those instances in which the required 
skills are not found in the non-Federal entity, rates must be consistent 
with those paid for similar work in the labor market in which the non-
Federal entity competes for the kind of services involved. In either 
case, paid fringe benefits that are reasonable, necessary, allocable, 
and otherwise allowable may be included in the valuation.
    (f) When a third-party organization furnishes the services of an 
employee, these services must be valued at the employee's regular rate 
of pay plus an amount of fringe benefits that is reasonable, necessary, 
allocable, and otherwise allowable, and indirect costs at either the 
third-party organization's approved federally negotiated indirect cost 
rate or, a rate in accordance with Sec.  200.414 Indirect (F&A) costs, 
paragraph (d), provided these services employ the same skill(s) for 
which the employee is normally paid. Where donated services are treated 
as indirect costs, indirect cost rates will separate the value of the 
donated services so that reimbursement for the donated services will not 
be made.
    (g) Donated property from third parties may include such items as 
equipment, office supplies, laboratory supplies, or workshop and 
classroom supplies. Value assessed to donated property included in the 
cost sharing or matching share must not exceed the fair market value of 
the property at the time of the donation.
    (h) The method used for determining cost sharing or matching for 
third-party-donated equipment, buildings and land for which title passes 
to the non-Federal entity may differ according to the purpose of the 
Federal award, if paragraph (h)(1) or (2) of this section applies.
    (1) If the purpose of the Federal award is to assist the non-Federal 
entity in the acquisition of equipment, buildings or land, the aggregate 
value of the donated property may be claimed as cost sharing or 
matching.
    (2) If the purpose of the Federal award is to support activities 
that require the use of equipment, buildings or land, normally only 
depreciation charges for equipment and buildings may be made. However, 
the fair market value of equipment or other capital assets and fair 
rental charges for land may be allowed, provided that the Federal 
awarding agency has approved the charges. See also Sec.  200.420 
Considerations for selected items of cost.
    (i) The value of donated property must be determined in accordance 
with

[[Page 113]]

the usual accounting policies of the non-Federal entity, with the 
following qualifications:
    (1) The value of donated land and buildings must not exceed its fair 
market value at the time of donation to the non-Federal entity as 
established by an independent appraiser (e.g., certified real property 
appraiser or General Services Administration representative) and 
certified by a responsible official of the non-Federal entity as 
required by the Uniform Relocation Assistance and Real Property 
Acquisition Policies Act of 1970, as amended, (42 U.S.C. 4601-4655) 
(Uniform Act) except as provided in the implementing regulations at 49 
CFR part 24.
    (2) The value of donated equipment must not exceed the fair market 
value of equipment of the same age and condition at the time of 
donation.
    (3) The value of donated space must not exceed the fair rental value 
of comparable space as established by an independent appraisal of 
comparable space and facilities in a privately-owned building in the 
same locality.
    (4) The value of loaned equipment must not exceed its fair rental 
value.
    (j) For third-party in-kind contributions, the fair market value of 
goods and services must be documented and to the extent feasible 
supported by the same methods used internally by the non-Federal entity.
    (k) For IHEs, see also OMB memorandum M-01-06, dated January 5, 
2001, Clarification of OMB A-21 Treatment of Voluntary Uncommitted Cost 
Sharing and Tuition Remission Costs.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75883, Dec. 19, 2014]



Sec.  200.307  Program income.

    (a) General. Non-Federal entities are encouraged to earn income to 
defray program costs where appropriate.
    (b) Cost of generating program income. If authorized by Federal 
regulations or the Federal award, costs incidental to the generation of 
program income may be deducted from gross income to determine program 
income, provided these costs have not been charged to the Federal award.
    (c) Governmental revenues. Taxes, special assessments, levies, 
fines, and other such revenues raised by a non-Federal entity are not 
program income unless the revenues are specifically identified in the 
Federal award or Federal awarding agency regulations as program income.
    (d) Property. Proceeds from the sale of real property, equipment, or 
supplies are not program income; such proceeds will be handled in 
accordance with the requirements of Subpart D--Post Federal Award 
Requirements of this part, Property Standards Sec. Sec.  200.311 Real 
property, 200.313 Equipment, and 200.314 Supplies, or as specifically 
identified in Federal statutes, regulations, or the terms and conditions 
of the Federal award.
    (e) Use of program income. If the Federal awarding agency does not 
specify in its regulations or the terms and conditions of the Federal 
award, or give prior approval for how program income is to be used, 
paragraph (e)(1) of this section must apply. For Federal awards made to 
IHEs and nonprofit research institutions, if the Federal awarding agency 
does not specify in its regulations or the terms and conditions of the 
Federal award how program income is to be used, paragraph (e)(2) of this 
section must apply. In specifying alternatives to paragraphs (e)(1) and 
(2) of this section, the Federal awarding agency may distinguish between 
income earned by the recipient and income earned by subrecipients and 
between the sources, kinds, or amounts of income. When the Federal 
awarding agency authorizes the approaches in paragraphs (e)(2) and (3) 
of this section, program income in excess of any amounts specified must 
also be deducted from expenditures.
    (1) Deduction. Ordinarily program income must be deducted from total 
allowable costs to determine the net allowable costs. Program income 
must be used for current costs unless the Federal awarding agency 
authorizes otherwise. Program income that the non-Federal entity did not 
anticipate at the time of the Federal award must be used to reduce the 
Federal award and non-Federal entity contributions rather than to 
increase the funds committed to the project.
    (2) Addition. With prior approval of the Federal awarding agency 
(except

[[Page 114]]

for IHEs and nonprofit research institutions, as described in paragraph 
(e) of this section) program income may be added to the Federal award by 
the Federal agency and the non-Federal entity. The program income must 
be used for the purposes and under the conditions of the Federal award.
    (3) Cost sharing or matching. With prior approval of the Federal 
awarding agency, program income may be used to meet the cost sharing or 
matching requirement of the Federal award. The amount of the Federal 
award remains the same.
    (f) Income after the period of performance. There are no Federal 
requirements governing the disposition of income earned after the end of 
the period of performance for the Federal award, unless the Federal 
awarding agency regulations or the terms and conditions of the Federal 
award provide otherwise. The Federal awarding agency may negotiate 
agreements with recipients regarding appropriate uses of income earned 
after the period of performance as part of the grant closeout process. 
See also Sec.  200.343 Closeout.
    (g) Unless the Federal statute, regulations, or terms and conditions 
for the Federal award provide otherwise, the non-Federal entity has no 
obligation to the Federal awarding agency with respect to program income 
earned from license fees and royalties for copyrighted material, 
patents, patent applications, trademarks, and inventions made under a 
Federal award to which 37 CFR part 401,``Rights to Inventions Made by 
Nonprofit Organizations and Small Business Firms Under Government 
Awards, Contracts and Cooperative Agreements'' is applicable.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75884, Dec. 19, 2014]



Sec.  200.308  Revision of budget and program plans.

    (a) The approved budget for the Federal award summarizes the 
financial aspects of the project or program as approved during the 
Federal award process. It may include either the Federal and non-Federal 
share (see Sec.  200.43 Federal share) or only the Federal share, 
depending upon Federal awarding agency requirements. It must be related 
to performance for program evaluation purposes whenever appropriate.
    (b) Recipients are required to report deviations from budget or 
project scope or objective, and request prior approvals from Federal 
awarding agencies for budget and program plan revisions, in accordance 
with this section.
    (c)(1) For non-construction Federal awards, recipients must request 
prior approvals from Federal awarding agencies for one or more of the 
following program or budget-related reasons:
    (i) Change in the scope or the objective of the project or program 
(even if there is no associated budget revision requiring prior written 
approval).
    (ii) Change in a key person specified in the application or the 
Federal award.
    (iii) The disengagement from the project for more than three months, 
or a 25 percent reduction in time devoted to the project, by the 
approved project director or principal investigator.
    (iv) The inclusion, unless waived by the Federal awarding agency, of 
costs that require prior approval in accordance with Subpart E--Cost 
Principles of this part or 45 CFR part 75 Appendix IX, ``Principles for 
Determining Costs Applicable to Research and Development under Awards 
and Contracts with Hospitals,'' or 48 CFR part 31, ``Contract Cost 
Principles and Procedures,'' as applicable.
    (v) The transfer of funds budgeted for participant support costs as 
defined in Sec.  200.75 Participant support costs to other categories of 
expense.
    (vi) Unless described in the application and funded in the approved 
Federal awards, the subawarding, transferring or contracting out of any 
work under a Federal award, including fixed amount subawards as 
described in Sec.  200.332 Fixed amount subawards. This provision does 
not apply to the acquisition of supplies, material, equipment or general 
support services.
    (vii) Changes in the approved cost-sharing or matching provided by 
the non-Federal entity.
    (viii) The need arises for additional Federal funds to complete the 
project.

[[Page 115]]

    (2) No other prior approval requirements for specific items may be 
imposed unless an exception has been approved by OMB. See also 
Sec. Sec.  200.102 Exceptions and 200.407 Prior written approval (prior 
approval).
    (d) Except for requirements listed in paragraph (c)(1) of this 
section, the Federal awarding agency is authorized, at its option, to 
waive prior written approvals required by paragraph (c) this section. 
Such waivers may include authorizing recipients to do any one or more of 
the following:
    (1) Incur project costs 90 calendar days before the Federal awarding 
agency makes the Federal award. Expenses more than 90 calendar days pre-
award require prior approval of the Federal awarding agency. All costs 
incurred before the Federal awarding agency makes the Federal award are 
at the recipient's risk (i.e., the Federal awarding agency is under no 
obligation to reimburse such costs if for any reason the recipient does 
not receive a Federal award or if the Federal award is less than 
anticipated and inadequate to cover such costs). See also Sec.  200.458 
Pre-award costs.
    (2) Initiate a one-time extension of the period of performance by up 
to 12 months unless one or more of the conditions outlined in paragraphs 
(d)(2)(i) through (iii) of this section apply. For one-time extensions, 
the recipient must notify the Federal awarding agency in writing with 
the supporting reasons and revised period of performance at least 10 
calendar days before the end of the period of performance specified in 
the Federal award. This one-time extension may not be exercised merely 
for the purpose of using unobligated balances. Extensions require 
explicit prior Federal awarding agency approval when:
    (i) The terms and conditions of the Federal award prohibit the 
extension.
    (ii) The extension requires additional Federal funds.
    (iii) The extension involves any change in the approved objectives 
or scope of the project.
    (3) Carry forward unobligated balances to subsequent periods of 
performance.
    (4) For Federal awards that support research, unless the Federal 
awarding agency provides otherwise in the Federal award or in the 
Federal awarding agency's regulations, the prior approval requirements 
described in paragraph (d) are automatically waived (i.e., recipients 
need not obtain such prior approvals) unless one of the conditions 
included in paragraph (d)(2) applies.
    (e) The Federal awarding agency may, at its option, restrict the 
transfer of funds among direct cost categories or programs, functions 
and activities for Federal awards in which the Federal share of the 
project exceeds the Simplified Acquisition Threshold and the cumulative 
amount of such transfers exceeds or is expected to exceed 10 percent of 
the total budget as last approved by the Federal awarding agency. The 
Federal awarding agency cannot permit a transfer that would cause any 
Federal appropriation to be used for purposes other than those 
consistent with the appropriation.
    (f) All other changes to non-construction budgets, except for the 
changes described in paragraph (c) of this section, do not require prior 
approval (see also Sec.  200.407 Prior written approval (prior 
approval)).
    (g) For construction Federal awards, the recipient must request 
prior written approval promptly from the Federal awarding agency for 
budget revisions whenever paragraph (g)(1), (2), or (3) of this section 
applies.
    (1) The revision results from changes in the scope or the objective 
of the project or program.
    (2) The need arises for additional Federal funds to complete the 
project.
    (3) A revision is desired which involves specific costs for which 
prior written approval requirements may be imposed consistent with 
applicable OMB cost principles listed in Subpart E--Cost Principles of 
this part.
    (4) No other prior approval requirements for budget revisions may be 
imposed unless an exception has been approved by OMB.
    (5) When a Federal awarding agency makes a Federal award that 
provides support for construction and non-construction work, the Federal 
awarding agency may require the recipient to obtain prior approval from 
the Federal awarding agency before making any

[[Page 116]]

fund or budget transfers between the two types of work supported.
    (h) When requesting approval for budget revisions, the recipient 
must use the same format for budget information that was used in the 
application, unless the Federal awarding agency indicates a letter of 
request suffices.
    (i) Within 30 calendar days from the date of receipt of the request 
for budget revisions, the Federal awarding agency must review the 
request and notify the recipient whether the budget revisions have been 
approved. If the revision is still under consideration at the end of 30 
calendar days, the Federal awarding agency must inform the recipient in 
writing of the date when the recipient may expect the decision.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75884, Dec. 19, 2014; 
80 FR 54409, Sept. 10, 2015]



Sec.  200.309  Period of performance.

    A non-Federal entity may charge to the Federal award only allowable 
costs incurred during the period of performance (except as described in 
Sec.  200.461 Publication and printing costs) and any costs incurred 
before the Federal awarding agency or pass-through entity made the 
Federal award that were authorized by the Federal awarding agency or 
pass-through entity.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75884, Dec. 19, 2014]

                           Property Standards



Sec.  200.310  Insurance coverage.

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



Sec.  200.311  Real property.

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

[[Page 117]]

cost of any improvements) to the current fair market value of the 
property.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75884, Dec. 19, 2014]



Sec.  200.312  Federally-owned and exempt property.

    (a) Title to federally-owned property remains vested in the Federal 
Government. The non-Federal entity must submit annually an inventory 
listing of federally-owned property in its custody to the Federal 
awarding agency. Upon completion of the Federal award or when the 
property is no longer needed, the non-Federal entity must report the 
property to the Federal awarding agency for further Federal agency 
utilization.
    (b) If the Federal awarding agency has no further need for the 
property, it must declare the property excess and report it for disposal 
to the appropriate Federal disposal authority, unless the Federal 
awarding agency has statutory authority to dispose of the property by 
alternative methods (e.g., the authority provided by the Federal 
Technology Transfer Act (15 U.S.C. 3710 (i)) to donate research 
equipment to educational and non-profit organizations in accordance with 
Executive Order 12999, ``Educational Technology: Ensuring Opportunity 
for All Children in the Next Century.''). The Federal awarding agency 
must issue appropriate instructions to the non-Federal entity.
    (c) Exempt federally-owned property means property acquired under a 
Federal award where the Federal awarding agency has chosen to vest title 
to the property to the non-Federal entity without further obligation to 
the Federal Government, based upon the explicit terms and conditions of 
the Federal award. The Federal awarding agency may exercise this option 
when statutory authority exists. Absent statutory authority and specific 
terms and conditions of the Federal award, title to exempt federally-
owned property acquired under the Federal award remains with the Federal 
Government.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75884, Dec. 19, 2014]



Sec.  200.313  Equipment.

    See also Sec.  200.439 Equipment and other capital expenditures.
    (a) Title. Subject to the obligations and conditions set forth in 
this section, title to equipment acquired under a Federal award will 
vest upon acquisition in the non-Federal entity. Unless a statute 
specifically authorizes the Federal agency to vest title in the non-
Federal entity without further obligation to the Federal Government, and 
the Federal agency elects to do so, the title must be a conditional 
title. Title must vest in the non-Federal entity subject to the 
following conditions:
    (1) Use the equipment for the authorized purposes of the project 
during the period of performance, or until the property is no longer 
needed for the purposes of the project.
    (2) Not encumber the property without approval of the Federal 
awarding agency or pass-through entity.
    (3) Use and dispose of the property in accordance with paragraphs 
(b), (c) and (e) of this section.
    (b) A state must use, manage and dispose of equipment acquired under 
a Federal award by the state in accordance with state laws and 
procedures. Other non-Federal entities must follow paragraphs (c) 
through (e) of this section.
    (c) Use. (1) Equipment must be used by the non-Federal entity in the 
program or project for which it was acquired as long as needed, whether 
or not the project or program continues to be supported by the Federal 
award, and the non-Federal entity must not encumber the property without 
prior approval of the Federal awarding agency. When no longer needed for 
the original program or project, the equipment may be used in other 
activities supported by the Federal awarding agency, in the following 
order of priority:
    (i) Activities under a Federal award from the Federal awarding 
agency which funded the original program or project, then
    (ii) Activities under Federal awards from other Federal awarding 
agencies. This includes consolidated equipment for information 
technology systems.
    (2) During the time that equipment is used on the project or program 
for

[[Page 118]]

which it was acquired, the non-Federal entity must also make equipment 
available for use on other projects or programs currently or previously 
supported by the Federal Government, provided that such use will not 
interfere with the work on the projects or program for which it was 
originally acquired. First preference for other use must be given to 
other programs or projects supported by Federal awarding agency that 
financed the equipment and second preference must be given to programs 
or projects under Federal awards from other Federal awarding agencies. 
Use for non-federally-funded programs or projects is also permissible. 
User fees should be considered if appropriate.
    (3) Notwithstanding the encouragement in Sec.  200.307 Program 
income to earn program income, the non-Federal entity must not use 
equipment acquired with the Federal award to provide services for a fee 
that is less than private companies charge for equivalent services 
unless specifically authorized by Federal statute for as long as the 
Federal Government retains an interest in the equipment.
    (4) When acquiring replacement equipment, the non-Federal entity may 
use the equipment to be replaced as a trade-in or sell the property and 
use the proceeds to offset the cost of the replacement property.
    (d) Management requirements. Procedures for managing equipment 
(including replacement equipment), whether acquired in whole or in part 
under a Federal award, until disposition takes place will, as a minimum, 
meet the following requirements:
    (1) Property records must be maintained that include a description 
of the property, a serial number or other identification number, the 
source of funding for the property (including the FAIN), who holds 
title, the acquisition date, and cost of the property, percentage of 
Federal participation in the project costs for the Federal award under 
which the property was acquired, the location, use and condition of the 
property, and any ultimate disposition data including the date of 
disposal and sale price of the property.
    (2) A physical inventory of the property must be taken and the 
results reconciled with the property records at least once every two 
years.
    (3) A control system must be developed to ensure adequate safeguards 
to prevent loss, damage, or theft of the property. Any loss, damage, or 
theft must be investigated.
    (4) Adequate maintenance procedures must be developed to keep the 
property in good condition.
    (5) If the non-Federal entity is authorized or required to sell the 
property, proper sales procedures must be established to ensure the 
highest possible return.
    (e) Disposition. When original or replacement equipment acquired 
under a Federal award is no longer needed for the original project or 
program or for other activities currently or previously supported by a 
Federal awarding agency, except as otherwise provided in Federal 
statutes, regulations, or Federal awarding agency disposition 
instructions, the non-Federal entity must request disposition 
instructions from the Federal awarding agency if required by the terms 
and conditions of the Federal award. Disposition of the equipment will 
be made as follows, in accordance with Federal awarding agency 
disposition instructions:
    (1) Items of equipment with a current per unit fair market value of 
$5,000 or less may be retained, sold or otherwise disposed of with no 
further obligation to the Federal awarding agency.
    (2) Except as provided in Sec.  200.312 Federally-owned and exempt 
property, paragraph (b), or if the Federal awarding agency fails to 
provide requested disposition instructions within 120 days, items of 
equipment with a current per-unit fair-market value in excess of $5,000 
may be retained by the non-Federal entity or sold. The Federal awarding 
agency is entitled to an amount calculated by multiplying the current 
market value or proceeds from sale by the Federal awarding agency's 
percentage of participation in the cost of the original purchase. If the 
equipment is sold, the Federal awarding agency may permit the non-
Federal entity to deduct and retain from the Federal share $500 or ten 
percent of the proceeds, whichever is less, for its selling and handling 
expenses.

[[Page 119]]

    (3) The non-Federal entity may transfer title to the property to the 
Federal Government or to an eligible third party provided that, in such 
cases, the non-Federal entity must be entitled to compensation for its 
attributable percentage of the current fair market value of the 
property.
    (4) In cases where a non-Federal entity fails to take appropriate 
disposition actions, the Federal awarding agency may direct the non-
Federal entity to take disposition actions.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75884, Dec. 19, 2014]



Sec.  200.314  Supplies.

    See also Sec.  200.453 Materials and supplies costs, including costs 
of computing devices.
    (a) Title to supplies will vest in the non-Federal entity upon 
acquisition. If there is a residual inventory of unused supplies 
exceeding $5,000 in total aggregate value upon termination or completion 
of the project or program and the supplies are not needed for any other 
Federal award, the non-Federal entity must retain the supplies for use 
on other activities or sell them, but must, in either case, compensate 
the Federal Government for its share. The amount of compensation must be 
computed in the same manner as for equipment. See Sec.  200.313 
Equipment, paragraph (e)(2) for the calculation methodology.
    (b) As long as the Federal Government retains an interest in the 
supplies, the non-Federal entity must not use supplies acquired under a 
Federal award to provide services to other organizations for a fee that 
is less than private companies charge for equivalent services, unless 
specifically authorized by Federal statute.



Sec.  200.315  Intangible property.

    (a) Title to intangible property (see Sec.  200.59 Intangible 
property) acquired under a Federal award vests upon acquisition in the 
non-Federal entity. The non-Federal entity must use that property for 
the originally-authorized purpose, and must not encumber the property 
without approval of the Federal awarding agency. When no longer needed 
for the originally authorized purpose, disposition of the intangible 
property must occur in accordance with the provisions in Sec.  200.313 
Equipment paragraph (e).
    (b) The non-Federal entity may copyright any work that is subject to 
copyright and was developed, or for which ownership was acquired, under 
a Federal award. The Federal awarding agency reserves a royalty-free, 
nonexclusive and irrevocable right to reproduce, publish, or otherwise 
use the work for Federal purposes, and to authorize others to do so.
    (c) The non-Federal entity is subject to applicable regulations 
governing patents and inventions, including governmentwide regulations 
issued by the Department of Commerce at 37 CFR Part 401, ``Rights to 
Inventions Made by Nonprofit Organizations and Small Business Firms 
Under Government Awards, Contracts and Cooperative Agreements.''
    (d) The Federal Government has the right to:
    (1) Obtain, reproduce, publish, or otherwise use the data produced 
under a Federal award; and
    (2) Authorize others to receive, reproduce, publish, or otherwise 
use such data for Federal purposes.
    (e) Freedom of Information Act (FOIA).
    (1) In response to a Freedom of Information Act (FOIA) request for 
research data relating to published research findings produced under a 
Federal award that were used by the Federal Government in developing an 
agency action that has the force and effect of law, the Federal awarding 
agency must request, and the non-Federal entity must provide, within a 
reasonable time, the research data so that they can be made available to 
the public through the procedures established under the FOIA. If the 
Federal awarding agency obtains the research data solely in response to 
a FOIA request, the Federal awarding agency may charge the requester a 
reasonable fee equaling the full incremental cost of obtaining the 
research data. This fee should reflect costs incurred by the Federal 
agency and the non-Federal entity. This fee is in addition to any fees 
the Federal awarding agency may assess under the FOIA (5 U.S.C. 
552(a)(4)(A)).

[[Page 120]]

    (2) Published research findings means when:
    (i) Research findings are published in a peer-reviewed scientific or 
technical journal; or
    (ii) A Federal agency publicly and officially cites the research 
findings in support of an agency action that has the force and effect of 
law. ``Used by the Federal Government in developing an agency action 
that has the force and effect of law'' is defined as when an agency 
publicly and officially cites the research findings in support of an 
agency action that has the force and effect of law.
    (3) Research data means the recorded factual material commonly 
accepted in the scientific community as necessary to validate research 
findings, but not any of the following: preliminary analyses, drafts of 
scientific papers, plans for future research, peer reviews, or 
communications with colleagues. This ``recorded'' material excludes 
physical objects (e.g., laboratory samples). Research data also do not 
include:
    (i) Trade secrets, commercial information, materials necessary to be 
held confidential by a researcher until they are published, or similar 
information which is protected under law; and
    (ii) Personnel and medical information and similar information the 
disclosure of which would constitute a clearly unwarranted invasion of 
personal privacy, such as information that could be used to identify a 
particular person in a research study.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75884, Dec. 19, 2014]



Sec.  200.316  Property trust relationship.

    Real property, equipment, and intangible property, that are acquired 
or improved with a Federal award must be held in trust by the non-
Federal entity as trustee for the beneficiaries of the project or 
program under which the property was acquired or improved. The Federal 
awarding agency may require the non-Federal entity to record liens or 
other appropriate notices of record to indicate that personal or real 
property has been acquired or improved with a Federal award and that use 
and disposition conditions apply to the property.

                          Procurement Standards



Sec.  200.317  Procurements by states.

    When procuring property and services under a Federal award, a state 
must follow the same policies and procedures it uses for procurements 
from its non-Federal funds. The state will comply with Sec.  200.322 
Procurement of recovered materials and ensure that every purchase order 
or other contract includes any clauses required by section Sec.  200.326 
Contract provisions. All other non-Federal entities, including 
subrecipients of a state, will follow Sec. Sec.  200.318 General 
procurement standards through 200.326 Contract provisions.



Sec.  200.318  General procurement standards.

    (a) The non-Federal entity must use its own documented procurement 
procedures which reflect applicable State, local, and tribal laws and 
regulations, provided that the procurements conform to applicable 
Federal law and the standards identified in this part.
    (b) Non-Federal entities must maintain oversight to ensure that 
contractors perform in accordance with the terms, conditions, and 
specifications of their contracts or purchase orders.
    (c)(1) The non-Federal entity must maintain written standards of 
conduct covering conflicts of interest and governing the actions of its 
employees engaged in the selection, award and administration of 
contracts. No employee, officer, or agent may participate in the 
selection, award, or administration of a contract supported by a Federal 
award if he or she has a real or apparent conflict of interest. Such a 
conflict of interest would arise when the employee, officer, or agent, 
any member of his or her immediate family, his or her partner, or an 
organization which employs or is about to employ any of the parties 
indicated herein, has a financial or other interest in or a tangible 
personal benefit from a firm considered for a contract. The officers, 
employees, and agents of the non-Federal entity may neither solicit nor 
accept gratuities, favors, or anything of monetary value from 
contractors or parties to subcontracts. However, non-Federal entities 
may set

[[Page 121]]

standards for situations in which the financial interest is not 
substantial or the gift is an unsolicited item of nominal value. The 
standards of conduct must provide for disciplinary actions to be applied 
for violations of such standards by officers, employees, or agents of 
the non-Federal entity.
    (2) If the non-Federal entity has a parent, affiliate, or subsidiary 
organization that is not a state, local government, or Indian tribe, the 
non-Federal entity must also maintain written standards of conduct 
covering organizational conflicts of interest. Organizational conflicts 
of interest means that because of relationships with a parent company, 
affiliate, or subsidiary organization, the non-Federal entity is unable 
or appears to be unable to be impartial in conducting a procurement 
action involving a related organization.
    (d) The non-Federal entity's procedures must avoid acquisition of 
unnecessary or duplicative items. Consideration should be given to 
consolidating or breaking out procurements to obtain a more economical 
purchase. Where appropriate, an analysis will be made of lease versus 
purchase alternatives, and any other appropriate analysis to determine 
the most economical approach.
    (e) To foster greater economy and efficiency, and in accordance with 
efforts to promote cost-effective use of shared services across the 
Federal Government, the non-Federal entity is encouraged to enter into 
state and local intergovernmental agreements or inter-entity agreements 
where appropriate for procurement or use of common or shared goods and 
services.
    (f) The non-Federal entity is encouraged to use Federal excess and 
surplus property in lieu of purchasing new equipment and property 
whenever such use is feasible and reduces project costs.
    (g) The non-Federal entity is encouraged to use value engineering 
clauses in contracts for construction projects of sufficient size to 
offer reasonable opportunities for cost reductions. Value engineering is 
a systematic and creative analysis of each contract item or task to 
ensure that its essential function is provided at the overall lower 
cost.
    (h) The non-Federal entity must award contracts only to responsible 
contractors possessing the ability to perform successfully under the 
terms and conditions of a proposed procurement. Consideration will be 
given to such matters as contractor integrity, compliance with public 
policy, record of past performance, and financial and technical 
resources. See also Sec.  200.213 Suspension and debarment.
    (i) The non-Federal entity must maintain records sufficient to 
detail the history of procurement. These records will include, but are 
not necessarily limited to the following: rationale for the method of 
procurement, selection of contract type, contractor selection or 
rejection, and the basis for the contract price.
    (j)(1) The non-Federal entity may use a time and materials type 
contract only after a determination that no other contract is suitable 
and if the contract includes a ceiling price that the contractor exceeds 
at its own risk. Time and materials type contract means a contract whose 
cost to a non-Federal entity is the sum of:
    (i) The actual cost of materials; and
    (ii) Direct labor hours charged at fixed hourly rates that reflect 
wages, general and administrative expenses, and profit.
    (2) Since this formula generates an open-ended contract price, a 
time-and-materials contract provides no positive profit incentive to the 
contractor for cost control or labor efficiency. Therefore, each 
contract must set a ceiling price that the contractor exceeds at its own 
risk. Further, the non-Federal entity awarding such a contract must 
assert a high degree of oversight in order to obtain reasonable 
assurance that the contractor is using efficient methods and effective 
cost controls.
    (k) The non-Federal entity alone must be responsible, in accordance 
with good administrative practice and sound business judgment, for the 
settlement of all contractual and administrative issues arising out of 
procurements. These issues include, but are not limited to, source 
evaluation, protests, disputes, and claims. These

[[Page 122]]

standards do not relieve the non-Federal entity of any contractual 
responsibilities under its contracts. The Federal awarding agency will 
not substitute its judgment for that of the non-Federal entity unless 
the matter is primarily a Federal concern. Violations of law will be 
referred to the local, state, or Federal authority having proper 
jurisdiction.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75885, Dec. 19, 2014; 
80 FR 43309, July 22, 2015]



Sec.  200.319  Competition.

    (a) All procurement transactions must be conducted in a manner 
providing full and open competition consistent with the standards of 
this section. In order to ensure objective contractor performance and 
eliminate unfair competitive advantage, contractors that develop or 
draft specifications, requirements, statements of work, or invitations 
for bids or requests for proposals must be excluded from competing for 
such procurements. Some of the situations considered to be restrictive 
of competition include but are not limited to:
    (1) Placing unreasonable requirements on firms in order for them to 
qualify to do business;
    (2) Requiring unnecessary experience and excessive bonding;
    (3) Noncompetitive pricing practices between firms or between 
affiliated companies;
    (4) Noncompetitive contracts to consultants that are on retainer 
contracts;
    (5) Organizational conflicts of interest;
    (6) Specifying only a ``brand name'' product instead of allowing 
``an equal'' product to be offered and describing the performance or 
other relevant requirements of the procurement; and
    (7) Any arbitrary action in the procurement process.
    (b) The non-Federal entity must conduct procurements in a manner 
that prohibits the use of statutorily or administratively imposed state, 
local, or tribal geographical preferences in the evaluation of bids or 
proposals, except in those cases where applicable Federal statutes 
expressly mandate or encourage geographic preference. Nothing in this 
section preempts state licensing laws. When contracting for 
architectural and engineering (A/E) services, geographic location may be 
a selection criterion provided its application leaves an appropriate 
number of qualified firms, given the nature and size of the project, to 
compete for the contract.
    (c) The non-Federal entity must have written procedures for 
procurement transactions. These procedures must ensure that all 
solicitations:
    (1) Incorporate a clear and accurate description of the technical 
requirements for the material, product, or service to be procured. Such 
description must not, in competitive procurements, contain features 
which unduly restrict competition. The description may include a 
statement of the qualitative nature of the material, product or service 
to be procured and, when necessary, must set forth those minimum 
essential characteristics and standards to which it must conform if it 
is to satisfy its intended use. Detailed product specifications should 
be avoided if at all possible. When it is impractical or uneconomical to 
make a clear and accurate description of the technical requirements, a 
``brand name or equivalent'' description may be used as a means to 
define the performance or other salient requirements of procurement. The 
specific features of the named brand which must be met by offers must be 
clearly stated; and
    (2) Identify all requirements which the offerors must fulfill and 
all other factors to be used in evaluating bids or proposals.
    (d) The non-Federal entity must ensure that all prequalified lists 
of persons, firms, or products which are used in acquiring goods and 
services are current and include enough qualified sources to ensure 
maximum open and free competition. Also, the non-Federal entity must not 
preclude potential bidders from qualifying during the solicitation 
period.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75885, Dec. 19, 2014]



Sec.  200.320  Methods of procurement to be followed.

    The non-Federal entity must use one of the following methods of 
procurement.

[[Page 123]]

    (a) Procurement by micro-purchases. Procurement by micro-purchase is 
the acquisition of supplies or services, the aggregate dollar amount of 
which does not exceed the micro-purchase threshold (Sec.  200.67 Micro-
purchase). To the extent practicable, the non-Federal entity must 
distribute micro-purchases equitably among qualified suppliers. Micro-
purchases may be awarded without soliciting competitive quotations if 
the non-Federal entity considers the price to be reasonable.
    (b) Procurement by small purchase procedures. Small purchase 
procedures are those relatively simple and informal procurement methods 
for securing services, supplies, or other property that do not cost more 
than the Simplified Acquisition Threshold. If small purchase procedures 
are used, price or rate quotations must be obtained from an adequate 
number of qualified sources.
    (c) Procurement by sealed bids (formal advertising). Bids are 
publicly solicited and a firm fixed price contract (lump sum or unit 
price) is awarded to the responsible bidder whose bid, conforming with 
all the material terms and conditions of the invitation for bids, is the 
lowest in price. The sealed bid method is the preferred method for 
procuring construction, if the conditions in paragraph (c)(1) of this 
section apply.
    (1) In order for sealed bidding to be feasible, the following 
conditions should be present:
    (i) A complete, adequate, and realistic specification or purchase 
description is available;
    (ii) Two or more responsible bidders are willing and able to compete 
effectively for the business; and
    (iii) The procurement lends itself to a firm fixed price contract 
and the selection of the successful bidder can be made principally on 
the basis of price.
    (2) If sealed bids are used, the following requirements apply:
    (i) Bids must be solicited from an adequate number of known 
suppliers, providing them sufficient response time prior to the date set 
for opening the bids, for local, and tribal governments, the invitation 
for bids must be publicly advertised;
    (ii) The invitation for bids, which will include any specifications 
and pertinent attachments, must define the items or services in order 
for the bidder to properly respond;
    (iii) All bids will be opened at the time and place prescribed in 
the invitation for bids, and for local and tribal governments, the bids 
must be opened publicly;
    (iv) A firm fixed price contract award will be made in writing to 
the lowest responsive and responsible bidder. Where specified in bidding 
documents, factors such as discounts, transportation cost, and life 
cycle costs must be considered in determining which bid is lowest. 
Payment discounts will only be used to determine the low bid when prior 
experience indicates that such discounts are usually taken advantage of; 
and
    (v) Any or all bids may be rejected if there is a sound documented 
reason.
    (d) Procurement by competitive proposals. The technique of 
competitive proposals is normally conducted with more than one source 
submitting an offer, and either a fixed price or cost-reimbursement type 
contract is awarded. It is generally used when conditions are not 
appropriate for the use of sealed bids. If this method is used, the 
following requirements apply:
    (1) Requests for proposals must be publicized and identify all 
evaluation factors and their relative importance. Any response to 
publicized requests for proposals must be considered to the maximum 
extent practical;
    (2) Proposals must be solicited from an adequate number of qualified 
sources;
    (3) The non-Federal entity must have a written method for conducting 
technical evaluations of the proposals received and for selecting 
recipients;
    (4) Contracts must be awarded to the responsible firm whose proposal 
is most advantageous to the program, with price and other factors 
considered; and
    (5) The non-Federal entity may use competitive proposal procedures 
for qualifications-based procurement of architectural/engineering (A/E) 
professional services whereby competitors' qualifications are evaluated 
and the most qualified competitor is selected,

[[Page 124]]

subject to negotiation of fair and reasonable compensation. The method, 
where price is not used as a selection factor, can only be used in 
procurement of A/E professional services. It cannot be used to purchase 
other types of services though A/E firms are a potential source to 
perform the proposed effort.
    (e) [Reserved]
    (f) Procurement by noncompetitive proposals. Procurement by 
noncompetitive proposals is procurement through solicitation of a 
proposal from only one source and may be used only when one or more of 
the following circumstances apply:
    (1) The item is available only from a single source;
    (2) The public exigency or emergency for the requirement will not 
permit a delay resulting from competitive solicitation;
    (3) The Federal awarding agency or pass-through entity expressly 
authorizes noncompetitive proposals in response to a written request 
from the non-Federal entity; or
    (4) After solicitation of a number of sources, competition is 
determined inadequate.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75885, Dec. 19, 2014; 
80 FR 54409, Sept. 10, 2015]



Sec.  200.321  Contracting with small and minority businesses, women's 
business enterprises, and labor surplus area firms.

    (a) The non-Federal entity must take all necessary affirmative steps 
to assure that minority businesses, women's business enterprises, and 
labor surplus area firms are used when possible.
    (b) Affirmative steps must include:
    (1) Placing qualified small and minority businesses and women's 
business enterprises on solicitation lists;
    (2) Assuring that small and minority businesses, and women's 
business enterprises are solicited whenever they are potential sources;
    (3) Dividing total requirements, when economically feasible, into 
smaller tasks or quantities to permit maximum participation by small and 
minority businesses, and women's business enterprises;
    (4) Establishing delivery schedules, where the requirement permits, 
which encourage participation by small and minority businesses, and 
women's business enterprises;
    (5) Using the services and assistance, as appropriate, of such 
organizations as the Small Business Administration and the Minority 
Business Development Agency of the Department of Commerce; and
    (6) Requiring the prime contractor, if subcontracts are to be let, 
to take the affirmative steps listed in paragraphs (1) through (5) of 
this section.



Sec.  200.322  Procurement of recovered materials.

    A non-Federal entity that is a state agency or agency of a political 
subdivision of a state and its contractors must comply with section 6002 
of the Solid Waste Disposal Act, as amended by the Resource Conservation 
and Recovery Act. The requirements of Section 6002 include procuring 
only items designated in guidelines of the Environmental Protection 
Agency (EPA) at 40 CFR part 247 that contain the highest percentage of 
recovered materials practicable, consistent with maintaining a 
satisfactory level of competition, where the purchase price of the item 
exceeds $10,000 or the value of the quantity acquired during the 
preceding fiscal year exceeded $10,000; procuring solid waste management 
services in a manner that maximizes energy and resource recovery; and 
establishing an affirmative procurement program for procurement of 
recovered materials identified in the EPA guidelines.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75885, Dec. 19, 2014]



Sec.  200.323  Contract cost and price.

    (a) The non-Federal entity must perform a cost or price analysis in 
connection with every procurement action in excess of the Simplified 
Acquisition Threshold including contract modifications. The method and 
degree of analysis is dependent on the facts surrounding the particular 
procurement situation, but as a starting point, the non-Federal entity 
must make independent estimates before receiving bids or proposals.

[[Page 125]]

    (b) The non-Federal entity must negotiate profit as a separate 
element of the price for each contract in which there is no price 
competition and in all cases where cost analysis is performed. To 
establish a fair and reasonable profit, consideration must be given to 
the complexity of the work to be performed, the risk borne by the 
contractor, the contractor's investment, the amount of subcontracting, 
the quality of its record of past performance, and industry profit rates 
in the surrounding geographical area for similar work.
    (c) Costs or prices based on estimated costs for contracts under the 
Federal award are allowable only to the extent that costs incurred or 
cost estimates included in negotiated prices would be allowable for the 
non-Federal entity under Subpart E--Cost Principles of this part. The 
non-Federal entity may reference its own cost principles that comply 
with the Federal cost principles.
    (d) The cost plus a percentage of cost and percentage of 
construction cost methods of contracting must not be used.



Sec.  200.324  Federal awarding agency or pass-through entity review.

    (a) The non-Federal entity must make available, upon request of the 
Federal awarding agency or pass-through entity, technical specifications 
on proposed procurements where the Federal awarding agency or pass-
through entity believes such review is needed to ensure that the item or 
service specified is the one being proposed for acquisition. This review 
generally will take place prior to the time the specification is 
incorporated into a solicitation document. However, if the non-Federal 
entity desires to have the review accomplished after a solicitation has 
been developed, the Federal awarding agency or pass-through entity may 
still review the specifications, with such review usually limited to the 
technical aspects of the proposed purchase.
    (b) The non-Federal entity must make available upon request, for the 
Federal awarding agency or pass-through entity pre-procurement review, 
procurement documents, such as requests for proposals or invitations for 
bids, or independent cost estimates, when:
    (1) The non-Federal entity's procurement procedures or operation 
fails to comply with the procurement standards in this part;
    (2) The procurement is expected to exceed the Simplified Acquisition 
Threshold and is to be awarded without competition or only one bid or 
offer is received in response to a solicitation;
    (3) The procurement, which is expected to exceed the Simplified 
Acquisition Threshold, specifies a ``brand name'' product;
    (4) The proposed contract is more than the Simplified Acquisition 
Threshold and is to be awarded to other than the apparent low bidder 
under a sealed bid procurement; or
    (5) A proposed contract modification changes the scope of a contract 
or increases the contract amount by more than the Simplified Acquisition 
Threshold.
    (c) The non-Federal entity is exempt from the pre-procurement review 
in paragraph (b) of this section if the Federal awarding agency or pass-
through entity determines that its procurement systems comply with the 
standards of this part.
    (1) The non-Federal entity may request that its procurement system 
be reviewed by the Federal awarding agency or pass-through entity to 
determine whether its system meets these standards in order for its 
system to be certified. Generally, these reviews must occur where there 
is continuous high-dollar funding, and third party contracts are awarded 
on a regular basis;
    (2) The non-Federal entity may self-certify its procurement system. 
Such self-certification must not limit the Federal awarding agency's 
right to survey the system. Under a self-certification procedure, the 
Federal awarding agency may rely on written assurances from the non-
Federal entity that it is complying with these standards. The non-
Federal entity must cite specific policies, procedures, regulations, or 
standards as being in compliance with these requirements and have its 
system available for review.

[[Page 126]]



Sec.  200.325  Bonding requirements.

    For construction or facility improvement contracts or subcontracts 
exceeding the Simplified Acquisition Threshold, the Federal awarding 
agency or pass-through entity may accept the bonding policy and 
requirements of the non-Federal entity provided that the Federal 
awarding agency or pass-through entity has made a determination that the 
Federal interest is adequately protected. If such a determination has 
not been made, the minimum requirements must be as follows:
    (a) A bid guarantee from each bidder equivalent to five percent of 
the bid price. The ``bid guarantee'' must consist of a firm commitment 
such as a bid bond, certified check, or other negotiable instrument 
accompanying a bid as assurance that the bidder will, upon acceptance of 
the bid, execute such contractual documents as may be required within 
the time specified.
    (b) A performance bond on the part of the contractor for 100 percent 
of the contract price. A ``performance bond'' is one executed in 
connection with a contract to secure fulfillment of all the contractor's 
obligations under such contract.
    (c) A payment bond on the part of the contractor for 100 percent of 
the contract price. A ``payment bond'' is one executed in connection 
with a contract to assure payment as required by law of all persons 
supplying labor and material in the execution of the work provided for 
in the contract.



Sec.  200.326  Contract provisions.

    The non-Federal entity's contracts must contain the applicable 
provisions described in Appendix II to Part 200--Contract Provisions for 
non-Federal Entity Contracts Under Federal Awards.

           Performance and Financial Monitoring and Reporting



Sec.  200.327  Financial reporting.

    Unless otherwise approved by OMB, the Federal awarding agency may 
solicit only the standard, OMB-approved governmentwide data elements for 
collection of financial information (at time of publication the Federal 
Financial Report or such future collections as may be approved by OMB 
and listed on the OMB Web site). This information must be collected with 
the frequency required by the terms and conditions of the Federal award, 
but no less frequently than annually nor more frequently than quarterly 
except in unusual circumstances, for example where more frequent 
reporting is necessary for the effective monitoring of the Federal award 
or could significantly affect program outcomes, and preferably in 
coordination with performance reporting.



200.328  Monitoring and reporting program performance.

    (a) Monitoring by the non-Federal entity. The non-Federal entity is 
responsible for oversight of the operations of the Federal award 
supported activities. The non-Federal entity must monitor its activities 
under Federal awards to assure compliance with applicable Federal 
requirements and performance expectations are being achieved. Monitoring 
by the non-Federal entity must cover each program, function or activity. 
See also Sec.  200.331 Requirements for pass-through entities.
    (b) Non-construction performance reports. The Federal awarding 
agency must use standard, OMB-approved data elements for collection of 
performance information (including performance progress reports, 
Research Performance Progress Report, or such future collections as may 
be approved by OMB and listed on the OMB Web site).
    (1) The non-Federal entity must submit performance reports at the 
interval required by the Federal awarding agency or pass-through entity 
to best inform improvements in program outcomes and productivity. 
Intervals must be no less frequent than annually nor more frequent than 
quarterly except in unusual circumstances, for example where more 
frequent reporting is necessary for the effective monitoring of the 
Federal award or could significantly affect program outcomes. Annual 
reports must be due 90 calendar days after the reporting period; 
quarterly or semiannual reports must be due 30 calendar days after the 
reporting period. Alternatively, the Federal awarding agency or pass-
through entity may require annual reports before

[[Page 127]]

the anniversary dates of multiple year Federal awards. The final 
performance report will be due 90 calendar days after the period of 
performance end date. If a justified request is submitted by a non-
Federal entity, the Federal agency may extend the due date for any 
performance report.
    (2) The non-Federal entity must submit performance reports using 
OMB-approved governmentwide standard information collections when 
providing performance information. As appropriate in accordance with 
above mentioned information collections, these reports will contain, for 
each Federal award, brief information on the following unless other 
collections are approved by OMB:
    (i) A comparison of actual accomplishments to the objectives of the 
Federal award established for the period. Where the accomplishments of 
the Federal award can be quantified, a computation of the cost (for 
example, related to units of accomplishment) may be required if that 
information will be useful. Where performance trend data and analysis 
would be informative to the Federal awarding agency program, the Federal 
awarding agency should include this as a performance reporting 
requirement.
    (ii) The reasons why established goals were not met, if appropriate.
    (iii) Additional pertinent information including, when appropriate, 
analysis and explanation of cost overruns or high unit costs.
    (c) Construction performance reports. For the most part, onsite 
technical inspections and certified percentage of completion data are 
relied on heavily by Federal awarding agencies and pass-through entities 
to monitor progress under Federal awards and subawards for construction. 
The Federal awarding agency may require additional performance reports 
only when considered necessary.
    (d) Significant developments. Events may occur between the scheduled 
performance reporting dates that have significant impact upon the 
supported activity. In such cases, the non-Federal entity must inform 
the Federal awarding agency or pass-through entity as soon as the 
following types of conditions become known:
    (1) Problems, delays, or adverse conditions which will materially 
impair the ability to meet the objective of the Federal award. This 
disclosure must include a statement of the action taken, or 
contemplated, and any assistance needed to resolve the situation.
    (2) Favorable developments which enable meeting time schedules and 
objectives sooner or at less cost than anticipated or producing more or 
different beneficial results than originally planned.
    (e) The Federal awarding agency may make site visits as warranted by 
program needs.
    (f) The Federal awarding agency may waive any performance report 
required by this part if not needed.



Sec.  200.329  Reporting on real property.

    The Federal awarding agency or pass-through entity must require a 
non-Federal entity to submit reports at least annually on the status of 
real property in which the Federal Government retains an interest, 
unless the Federal interest in the real property extends 15 years or 
longer. In those instances where the Federal interest attached is for a 
period of 15 years or more, the Federal awarding agency or pass-through 
entity, at its option, may require the non-Federal entity to report at 
various multi-year frequencies (e.g., every two years or every three 
years, not to exceed a five-year reporting period; or a Federal awarding 
agency or pass-through entity may require annual reporting for the first 
three years of a Federal award and thereafter require reporting every 
five years).

                 Subrecipient Monitoring and Management



Sec.  200.330  Subrecipient and contractor determinations.

    The non-Federal entity may concurrently receive Federal awards as a 
recipient, a subrecipient, and a contractor, depending on the substance 
of its agreements with Federal awarding agencies and pass-through 
entities. Therefore, a pass-through entity must make case-by-case 
determinations whether each agreement it makes for the disbursement of 
Federal program funds casts the party receiving the

[[Page 128]]

funds in the role of a subrecipient or a contractor. The Federal 
awarding agency may supply and require recipients to comply with 
additional guidance to support these determinations provided such 
guidance does not conflict with this section.
    (a) Subrecipients. A subaward is for the purpose of carrying out a 
portion of a Federal award and creates a Federal assistance relationship 
with the subrecipient. See Sec.  200.92 Subaward. Characteristics which 
support the classification of the non-Federal entity as a subrecipient 
include when the non-Federal entity:
    (1) Determines who is eligible to receive what Federal assistance;
    (2) Has its performance measured in relation to whether objectives 
of a Federal program were met;
    (3) Has responsibility for programmatic decision making;
    (4) Is responsible for adherence to applicable Federal program 
requirements specified in the Federal award; and
    (5) In accordance with its agreement, uses the Federal funds to 
carry out a program for a public purpose specified in authorizing 
statute, as opposed to providing goods or services for the benefit of 
the pass-through entity.
    (b) Contractors. A contract is for the purpose of obtaining goods 
and services for the non-Federal entity's own use and creates a 
procurement relationship with the contractor. See Sec.  200.22 Contract. 
Characteristics indicative of a procurement relationship between the 
non-Federal entity and a contractor are when the contractor:
    (1) Provides the goods and services within normal business 
operations;
    (2) Provides similar goods or services to many different purchasers;
    (3) Normally operates in a competitive environment;
    (4) Provides goods or services that are ancillary to the operation 
of the Federal program; and
    (5) Is not subject to compliance requirements of the Federal program 
as a result of the agreement, though similar requirements may apply for 
other reasons.
    (c) Use of judgment in making determination. In determining whether 
an agreement between a pass-through entity and another non-Federal 
entity casts the latter as a subrecipient or a contractor, the substance 
of the relationship is more important than the form of the agreement. 
All of the characteristics listed above may not be present in all cases, 
and the pass-through entity must use judgment in classifying each 
agreement as a subaward or a procurement contract.

[78 FR 78608, Dec. 26, 2013, as amended at 80 FR 54409, Sept. 10, 2015]



Sec.  200.331  Requirements for pass-through entities.

    All pass-through entities must:
    (a) Ensure that every subaward is clearly identified to the 
subrecipient as a subaward and includes the following information at the 
time of the subaward and if any of these data elements change, include 
the changes in subsequent subaward modification. When some of this 
information is not available, the pass-through entity must provide the 
best information available to describe the Federal award and subaward. 
Required information includes:
    (1) Federal Award Identification.
    (i) Subrecipient name (which must match the name associated with its 
unique entity identifier);
    (ii) Subrecipient's unique entity identifier;
    (iii) Federal Award Identification Number (FAIN);
    (iv) Federal Award Date (see Sec.  200.39 Federal award date) of 
award to the recipient by the Federal agency;
    (v) Subaward Period of Performance Start and End Date;
    (vi) Amount of Federal Funds Obligated by this action by the pass-
through entity to the subrecipient;
    (vii) Total Amount of Federal Funds Obligated to the subrecipient by 
the pass-through entity including the current obligation;
    (viii) Total Amount of the Federal Award committed to the 
subrecipient by the pass-through entity;
    (ix) Federal award project description, as required to be responsive 
to the Federal Funding Accountability and Transparency Act (FFATA);
    (x) Name of Federal awarding agency, pass-through entity, and 
contact information for awarding official of the Pass-through entity;

[[Page 129]]

    (xi) CFDA Number and Name; the pass-through entity must identify the 
dollar amount made available under each Federal award and the CFDA 
number at time of disbursement;
    (xii) Identification of whether the award is R&D; and
    (xiii) Indirect cost rate for the Federal award (including if the de 
minimis rate is charged per Sec.  200.414 Indirect (F&A) costs).
    (2) All requirements imposed by the pass-through entity on the 
subrecipient so that the Federal award is used in accordance with 
Federal statutes, regulations and the terms and conditions of the 
Federal award;
    (3) Any additional requirements that the pass-through entity imposes 
on the subrecipient in order for the pass-through entity to meet its own 
responsibility to the Federal awarding agency including identification 
of any required financial and performance reports;
    (4) An approved federally recognized indirect cost rate negotiated 
between the subrecipient and the Federal Government or, if no such rate 
exists, either a rate negotiated between the pass-through entity and the 
subrecipient (in compliance with this part), or a de minimis indirect 
cost rate as defined in Sec.  200.414 Indirect (F&A) costs, paragraph 
(f);
    (5) A requirement that the subrecipient permit the pass-through 
entity and auditors to have access to the subrecipient's records and 
financial statements as necessary for the pass-through entity to meet 
the requirements of this part; and
    (6) Appropriate terms and conditions concerning closeout of the 
subaward.
    (b) Evaluate each subrecipient's risk of noncompliance with Federal 
statutes, regulations, and the terms and conditions of the subaward for 
purposes of determining the appropriate subrecipient monitoring 
described in paragraphs (d) and (e) of this section, which may include 
consideration of such factors as:
    (1) The subrecipient's prior experience with the same or similar 
subawards;
    (2) The results of previous audits including whether or not the 
subrecipient receives a Single Audit in accordance with Subpart F--Audit 
Requirements of this part, and the extent to which the same or similar 
subaward has been audited as a major program;
    (3) Whether the subrecipient has new personnel or new or 
substantially changed systems; and
    (4) The extent and results of Federal awarding agency monitoring 
(e.g., if the subrecipient also receives Federal awards directly from a 
Federal awarding agency).
    (c) Consider imposing specific subaward conditions upon a 
subrecipient if appropriate as described in Sec.  200.207 Specific 
conditions.
    (d) Monitor the activities of the subrecipient as necessary to 
ensure that the subaward is used for authorized purposes, in compliance 
with Federal statutes, regulations, and the terms and conditions of the 
subaward; and that subaward performance goals are achieved. Pass-through 
entity monitoring of the subrecipient must include:
    (1) Reviewing financial and performance reports required by the 
pass-through entity.
    (2) Following-up and ensuring that the subrecipient takes timely and 
appropriate action on all deficiencies pertaining to the Federal award 
provided to the subrecipient from the pass-through entity detected 
through audits, on-site reviews, and other means.
    (3) Issuing a management decision for audit findings pertaining to 
the Federal award provided to the subrecipient from the pass-through 
entity as required by Sec.  200.521 Management decision.
    (e) Depending upon the pass-through entity's assessment of risk 
posed by the subrecipient (as described in paragraph (b) of this 
section), the following monitoring tools may be useful for the pass-
through entity to ensure proper accountability and compliance with 
program requirements and achievement of performance goals:
    (1) Providing subrecipients with training and technical assistance 
on program-related matters; and
    (2) Performing on-site reviews of the subrecipient's program 
operations;
    (3) Arranging for agreed-upon-procedures engagements as described in 
Sec.  200.425 Audit services.

[[Page 130]]

    (f) Verify that every subrecipient is audited as required by Subpart 
F--Audit Requirements of this part when it is expected that the 
subrecipient's Federal awards expended during the respective fiscal year 
equaled or exceeded the threshold set forth in Sec.  200.501 Audit 
requirements.
    (g) Consider whether the results of the subrecipient's audits, on-
site reviews, or other monitoring indicate conditions that necessitate 
adjustments to the pass-through entity's own records.
    (h) Consider taking enforcement action against noncompliant 
subrecipients as described in Sec.  200.338 Remedies for noncompliance 
of this part and in program regulations.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75885, Dec. 19, 2014; 
80 FR 54409, Sept. 10, 2015]



Sec.  200.332  Fixed amount subawards.

    With prior written approval from the Federal awarding agency, a 
pass-through entity may provide subawards based on fixed amounts up to 
the Simplified Acquisition Threshold, provided that the subawards meet 
the requirements for fixed amount awards in Sec.  200.201 Use of grant 
agreements (including fixed amount awards), cooperative agreements, and 
contracts.

                       Record Retention and Access



Sec.  200.333  Retention requirements for records.

    Financial records, supporting documents, statistical records, and 
all other non-Federal entity records pertinent to a Federal award must 
be retained for a period of three years from the date of submission of 
the final expenditure report or, for Federal awards that are renewed 
quarterly or annually, from the date of the submission of the quarterly 
or annual financial report, respectively, as reported to the Federal 
awarding agency or pass-through entity in the case of a subrecipient. 
Federal awarding agencies and pass-through entities must not impose any 
other record retention requirements upon non-Federal entities. The only 
exceptions are the following:
    (a) If any litigation, claim, or audit is started before the 
expiration of the 3-year period, the records must be retained until all 
litigation, claims, or audit findings involving the records have been 
resolved and final action taken.
    (b) When the non-Federal entity is notified in writing by the 
Federal awarding agency, cognizant agency for audit, oversight agency 
for audit, cognizant agency for indirect costs, or pass-through entity 
to extend the retention period.
    (c) Records for real property and equipment acquired with Federal 
funds must be retained for 3 years after final disposition.
    (d) When records are transferred to or maintained by the Federal 
awarding agency or pass-through entity, the 3-year retention requirement 
is not applicable to the non-Federal entity.
    (e) Records for program income transactions after the period of 
performance. In some cases recipients must report program income after 
the period of performance. Where there is such a requirement, the 
retention period for the records pertaining to the earning of the 
program income starts from the end of the non-Federal entity's fiscal 
year in which the program income is earned.
    (f) Indirect cost rate proposals and cost allocations plans. This 
paragraph applies to the following types of documents and their 
supporting records: indirect cost rate computations or proposals, cost 
allocation plans, and any similar accounting computations of the rate at 
which a particular group of costs is chargeable (such as computer usage 
chargeback rates or composite fringe benefit rates).
    (1) If submitted for negotiation. If the proposal, plan, or other 
computation is required to be submitted to the Federal Government (or to 
the pass-through entity) to form the basis for negotiation of the rate, 
then the 3-year retention period for its supporting records starts from 
the date of such submission.
    (2) If not submitted for negotiation. If the proposal, plan, or 
other computation is not required to be submitted to the Federal 
Government (or to the pass-through entity) for negotiation

[[Page 131]]

purposes, then the 3-year retention period for the proposal, plan, or 
computation and its supporting records starts from the end of the fiscal 
year (or other accounting period) covered by the proposal, plan, or 
other computation.



Sec.  200.334  Requests for transfer of records.

    The Federal awarding agency must request transfer of certain records 
to its custody from the non-Federal entity when it determines that the 
records possess long-term retention value. However, in order to avoid 
duplicate recordkeeping, the Federal awarding agency may make 
arrangements for the non-Federal entity to retain any records that are 
continuously needed for joint use.



Sec.  200.335  Methods for collection, transmission and 
storage of information.

    In accordance with the May 2013 Executive Order on Making Open and 
Machine Readable the New Default for Government Information, the Federal 
awarding agency and the non-Federal entity should, whenever practicable, 
collect, transmit, and store Federal award-related information in open 
and machine readable formats rather than in closed formats or on paper. 
The Federal awarding agency or pass-through entity must always provide 
or accept paper versions of Federal award-related information to and 
from the non-Federal entity upon request. If paper copies are submitted, 
the Federal awarding agency or pass-through entity must not require more 
than an original and two copies. When original records are electronic 
and cannot be altered, there is no need to create and retain paper 
copies. When original records are paper, electronic versions may be 
substituted through the use of duplication or other forms of electronic 
media provided that they are subject to periodic quality control 
reviews, provide reasonable safeguards against alteration, and remain 
readable.



Sec.  200.336  Access to records.

    (a) Records of non-Federal entities. The Federal awarding agency, 
Inspectors General, the Comptroller General of the United States, and 
the pass-through entity, or any of their authorized representatives, 
must have the right of access to any documents, papers, or other records 
of the non-Federal entity which are pertinent to the Federal award, in 
order to make audits, examinations, excerpts, and transcripts. The right 
also includes timely and reasonable access to the non-Federal entity's 
personnel for the purpose of interview and discussion related to such 
documents.
    (b) Only under extraordinary and rare circumstances would such 
access include review of the true name of victims of a crime. Routine 
monitoring cannot be considered extraordinary and rare circumstances 
that would necessitate access to this information. When access to the 
true name of victims of a crime is necessary, appropriate steps to 
protect this sensitive information must be taken by both the non-Federal 
entity and the Federal awarding agency. Any such access, other than 
under a court order or subpoena pursuant to a bona fide confidential 
investigation, must be approved by the head of the Federal awarding 
agency or delegate.
    (c) Expiration of right of access. The rights of access in this 
section are not limited to the required retention period but last as 
long as the records are retained. Federal awarding agencies and pass-
through entities must not impose any other access requirements upon non-
Federal entities.



Sec.  200.337  Restrictions on public access to records.

    No Federal awarding agency may place restrictions on the non-Federal 
entity that limit public access to the records of the non-Federal entity 
pertinent to a Federal award, except for protected personally 
identifiable information (PII) or when the Federal awarding agency can 
demonstrate that such records will be kept confidential and would have 
been exempted from disclosure pursuant to the Freedom of Information Act 
(5 U.S.C. 552) or controlled unclassified information pursuant to 
Executive Order 13556 if the records had belonged to the Federal 
awarding agency. The Freedom of Information Act (5 U.S.C. 552) (FOIA)

[[Page 132]]

does not apply to those records that remain under a non-Federal entity's 
control except as required under Sec.  200.315 Intangible property. 
Unless required by Federal, state, local, and tribal statute, non-
Federal entities are not required to permit public access to their 
records. The non-Federal entity's records provided to a Federal agency 
generally will be subject to FOIA and applicable exemptions.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75885, Dec. 19, 2014]

                       Remedies for Noncompliance



Sec.  200.338  Remedies for noncompliance.

    If a non-Federal entity fails to comply with Federal statutes, 
regulations or the terms and conditions of a Federal award, the Federal 
awarding agency or pass-through entity may impose additional conditions, 
as described in Sec.  200.207 Specific conditions. If the Federal 
awarding agency or pass-through entity determines that noncompliance 
cannot be remedied by imposing additional conditions, the Federal 
awarding agency or pass-through entity may take one or more of the 
following actions, as appropriate in the circumstances:
    (a) Temporarily withhold cash payments pending correction of the 
deficiency by the non-Federal entity or more severe enforcement action 
by the Federal awarding agency or pass-through entity.
    (b) Disallow (that is, deny both use of funds and any applicable 
matching credit for) all or part of the cost of the activity or action 
not in compliance.
    (c) Wholly or partly suspend or terminate the Federal award.
    (d) Initiate suspension or debarment proceedings as authorized under 
2 CFR part 180 and Federal awarding agency regulations (or in the case 
of a pass-through entity, recommend such a proceeding be initiated by a 
Federal awarding agency).
    (e) Withhold further Federal awards for the project or program.
    (f) Take other remedies that may be legally available.



Sec.  200.339  Termination.

    (a) The Federal award may be terminated in whole or in part as 
follows:
    (1) By the Federal awarding agency or pass-through entity, if a non-
Federal entity fails to comply with the terms and conditions of a 
Federal award;
    (2) By the Federal awarding agency or pass-through entity for cause;
    (3) By the Federal awarding agency or pass-through entity with the 
consent of the non-Federal entity, in which case the two parties must 
agree upon the termination conditions, including the effective date and, 
in the case of partial termination, the portion to be terminated; or
    (4) By the non-Federal entity upon sending to the Federal awarding 
agency or pass-through entity written notification setting forth the 
reasons for such termination, the effective date, and, in the case of 
partial termination, the portion to be terminated. However, if the 
Federal awarding agency or pass-through entity determines in the case of 
partial termination that the reduced or modified portion of the Federal 
award or subaward will not accomplish the purposes for which the Federal 
award was made, the Federal awarding agency or pass-through entity may 
terminate the Federal award in its entirety.
    (b) When a Federal awarding agency terminates a Federal award prior 
to the end of the period of performance due to the non-Federal entity's 
material failure to comply with the Federal award terms and conditions, 
the Federal awarding agency must report the termination to the OMB-
designated integrity and performance system accessible through SAM 
(currently FAPIIS).
    (1) The information required under paragraph (b) of this section is 
not to be reported to designated integrity and performance system until 
the non-Federal entity either--
    (i) Has exhausted its opportunities to object or challenge the 
decision, see Sec.  200.341 Opportunities to object, hearings and 
appeals; or
    (ii) Has not, within 30 calendar days after being notified of the 
termination, informed the Federal awarding agency that it intends to 
appeal the Federal awarding agency's decision to terminate.
    (2) If a Federal awarding agency, after entering information into 
the

[[Page 133]]

designated integrity and performance system about a termination, 
subsequently:
    (i) Learns that any of that information is erroneous, the Federal 
awarding agency must correct the information in the system within three 
business days;
    (ii) Obtains an update to that information that could be helpful to 
other Federal awarding agencies, the Federal awarding agency is strongly 
encouraged to amend the information in the system to incorporate the 
update in a timely way.
    (3) Federal awarding agencies, shall not post any information that 
will be made publicly available in the non-public segment of designated 
integrity and performance system that is covered by a disclosure 
exemption under the Freedom of Information Act. If the non-Federal 
entity asserts within seven calendar days to the Federal awarding agency 
who posted the information, that some of the information made publicly 
available is covered by a disclosure exemption under the Freedom of 
Information Act, the Federal awarding agency who posted the information 
must remove the posting within seven calendar days of receiving the 
assertion. Prior to reposting the releasable information, the Federal 
agency must resolve the issue in accordance with the agency's Freedom of 
Information Act procedures.
    (c) When a Federal award is terminated or partially terminated, both 
the Federal awarding agency or pass-through entity and the non-Federal 
entity remain responsible for compliance with the requirements in 
Sec. Sec.  200.343 Closeout and 200.344 Post-closeout adjustments and 
continuing responsibilities.

[78 FR 78608, Dec. 26, 2013, as amended at 80 FR 43309, July 22, 2015]



Sec.  200.340  Notification of termination requirement.

    (a) The Federal agency or pass-through entity must provide to the 
non-Federal entity a notice of termination.
    (b) If the Federal award is terminated for the non-Federal entity's 
material failure to comply with the Federal statutes, regulations, or 
terms and conditions of the Federal award, the notification must state 
that--
    (1) The termination decision will be reported to the OMB-designated 
integrity and performance system accessible through SAM (currently 
FAPIIS);
    (2) The information will be available in the OMB-designated 
integrity and performance system for a period of five years from the 
date of the termination, then archived;
    (3) Federal awarding agencies that consider making a Federal award 
to the non-Federal entity during that five year period must consider 
that information in judging whether the non-Federal entity is qualified 
to receive the Federal award, when the Federal share of the Federal 
award is expected to exceed the simplified acquisition threshold over 
the period of performance;
    (4) The non-Federal entity may comment on any information the OMB-
designated integrity and performance system contains about the non-
Federal entity for future consideration by Federal awarding agencies. 
The non-Federal entity may submit comments to the awardee integrity and 
performance portal accessible through SAM (currently (CPARS).
    (5) Federal awarding agencies will consider non-Federal entity 
comments when determining whether the non-Federal entity is qualified 
for a future Federal award.
    (c) Upon termination of a Federal award, the Federal awarding agency 
must provide the information required under FFATA to the Federal Web 
site established to fulfill the requirements of FFATA, and update or 
notify any other relevant governmentwide systems or entities of any 
indications of poor performance as required by 41 U.S.C. 417b and 31 
U.S.C. 3321 and implementing guidance at 2 CFR part 77 (forthcoming at 
time of publication). See also the requirements for Suspension and 
Debarment at 2 CFR part 180.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75885, Dec. 19, 2014; 
80 FR 43310, July 22, 2015]



Sec.  200.341  Opportunities to object, hearings and appeals.

    Upon taking any remedy for non-compliance, the Federal awarding

[[Page 134]]

agency must provide the non-Federal entity an opportunity to object and 
provide information and documentation challenging the suspension or 
termination action, in accordance with written processes and procedures 
published by the Federal awarding agency. The Federal awarding agency or 
pass-through entity must comply with any requirements for hearings, 
appeals or other administrative proceedings to which the non-Federal 
entity is entitled under any statute or regulation applicable to the 
action involved.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75885, Dec. 19, 2014]



Sec.  200.342  Effects of suspension and termination.

    Costs to the non-Federal entity resulting from obligations incurred 
by the non-Federal entity during a suspension or after termination of a 
Federal award or subaward are not allowable unless the Federal awarding 
agency or pass-through entity expressly authorizes them in the notice of 
suspension or termination or subsequently. However, costs during 
suspension or after termination are allowable if:
    (a) The costs result from obligations which were properly incurred 
by the non-Federal entity before the effective date of suspension or 
termination, are not in anticipation of it; and
    (b) The costs would be allowable if the Federal award was not 
suspended or expired normally at the end of the period of performance in 
which the termination takes effect.

                                Closeout



Sec.  200.343  Closeout.

    The Federal awarding agency or pass-through entity will close-out 
the Federal award when it determines that all applicable administrative 
actions and all required work of the Federal award have been completed 
by the non-Federal entity. This section specifies the actions the non-
Federal entity and Federal awarding agency or pass-through entity must 
take to complete this process at the end of the period of performance.
    (a) The non-Federal entity must submit, no later than 90 calendar 
days after the end date of the period of performance, all financial, 
performance, and other reports as required by the terms and conditions 
of the Federal award. The Federal awarding agency or pass-through entity 
may approve extensions when requested by the non-Federal entity.
    (b) Unless the Federal awarding agency or pass-through entity 
authorizes an extension, a non-Federal entity must liquidate all 
obligations incurred under the Federal award not later than 90 calendar 
days after the end date of the period of performance as specified in the 
terms and conditions of the Federal award.
    (c) The Federal awarding agency or pass-through entity must make 
prompt payments to the non-Federal entity for allowable reimbursable 
costs under the Federal award being closed out.
    (d) The non-Federal entity must promptly refund any balances of 
unobligated cash that the Federal awarding agency or pass-through entity 
paid in advance or paid and that are not authorized to be retained by 
the non-Federal entity for use in other projects. See OMB Circular A-129 
and see Sec.  200.345 Collection of amounts due, for requirements 
regarding unreturned amounts that become delinquent debts.
    (e) Consistent with the terms and conditions of the Federal award, 
the Federal awarding agency or pass-through entity must make a 
settlement for any upward or downward adjustments to the Federal share 
of costs after closeout reports are received.
    (f) The non-Federal entity must account for any real and personal 
property acquired with Federal funds or received from the Federal 
Government in accordance with Sec. Sec.  200.310 Insurance coverage 
through 200.316 Property trust relationship and 200.329 Reporting on 
real property.
    (g) The Federal awarding agency or pass-through entity should 
complete all closeout actions for Federal awards no later than one year 
after receipt and acceptance of all required final reports.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75885, Dec. 19, 2014]

[[Page 135]]

        Post-Closeout Adjustments and Continuing Responsibilities



Sec.  200.344  Post-closeout adjustments and continuing responsibilities.

    (a) The closeout of a Federal award does not affect any of the 
following:
    (1) The right of the Federal awarding agency or pass-through entity 
to disallow costs and recover funds on the basis of a later audit or 
other review. The Federal awarding agency or pass-through entity must 
make any cost disallowance determination and notify the non-Federal 
entity within the record retention period.
    (2) The obligation of the non-Federal entity to return any funds due 
as a result of later refunds, corrections, or other transactions 
including final indirect cost rate adjustments.
    (3) Audit requirements in Subpart F--Audit Requirements of this 
part.
    (4) Property management and disposition requirements in Subpart D--
Post Federal Award Requirements of this part, Sec. Sec.  200.310 
Insurance Coverage through 200.316 Property trust relationship.
    (5) Records retention as required in Subpart D--Post Federal Award 
Requirements of this part, Sec. Sec.  200.333 Retention requirements for 
records through 200.337 Restrictions on public access to records.
    (b) After closeout of the Federal award, a relationship created 
under the Federal award may be modified or ended in whole or in part 
with the consent of the Federal awarding agency or pass-through entity 
and the non-Federal entity, provided the responsibilities of the non-
Federal entity referred to in paragraph (a) of this section, including 
those for property management as applicable, are considered and 
provisions made for continuing responsibilities of the non-Federal 
entity, as appropriate.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75885, Dec. 19, 2014]

                        Collection of Amounts Due



Sec.  200.345  Collection of amounts due.

    (a) Any funds paid to the non-Federal entity in excess of the amount 
to which the non-Federal entity is finally determined to be entitled 
under the terms of the Federal award constitute a debt to the Federal 
Government. If not paid within 90 calendar days after demand, the 
Federal awarding agency may reduce the debt by:
    (1) Making an administrative offset against other requests for 
reimbursements;
    (2) Withholding advance payments otherwise due to the non-Federal 
entity; or
    (3) Other action permitted by Federal statute.
    (b) Except where otherwise provided by statutes or regulations, the 
Federal awarding agency will charge interest on an overdue debt in 
accordance with the Federal Claims Collection Standards (31 CFR parts 
900 through 999). The date from which interest is computed is not 
extended by litigation or the filing of any form of appeal.



                        Subpart E_Cost Principles

                           General Provisions



Sec.  200.400  Policy guide.

    The application of these cost principles is based on the fundamental 
premises that:
    (a) The non-Federal entity is responsible for the efficient and 
effective administration of the Federal award through the application of 
sound management practices.
    (b) The non-Federal entity assumes responsibility for administering 
Federal funds in a manner consistent with underlying agreements, program 
objectives, and the terms and conditions of the Federal award.
    (c) The non-Federal entity, in recognition of its own unique 
combination of staff, facilities, and experience, has the primary 
responsibility for employing whatever form of sound organization and 
management techniques may be necessary in order to assure proper and 
efficient administration of the Federal award.
    (d) The application of these cost principles should require no 
significant changes in the internal accounting policies and practices of 
the non-Federal entity. However, the accounting practices of the non-
Federal entity must be consistent with these cost

[[Page 136]]

principles and support the accumulation of costs as required by the 
principles, and must provide for adequate documentation to support costs 
charged to the Federal award.
    (e) In reviewing, negotiating and approving cost allocation plans or 
indirect cost proposals, the cognizant agency for indirect costs should 
generally assure that the non-Federal entity is applying these cost 
accounting principles on a consistent basis during their review and 
negotiation of indirect cost proposals. Where wide variations exist in 
the treatment of a given cost item by the non-Federal entity, the 
reasonableness and equity of such treatments should be fully considered. 
See Sec.  200.56 Indirect (facilities & administrative (F&A)) costs.
    (f) For non-Federal entities that educate and engage students in 
research, the dual role of students as both trainees and employees 
(including pre- and post-doctoral staff) contributing to the completion 
of Federal awards for research must be recognized in the application of 
these principles.
    (g) The non-Federal entity may not earn or keep any profit resulting 
from Federal financial assistance, unless explicitly authorized by the 
terms and conditions of the Federal award. See also Sec.  200.307 
Program income.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75885, Dec. 19, 2014]



Sec.  200.401  Application.

    (a) General. These principles must be used in determining the 
allowable costs of work performed by the non-Federal entity under 
Federal awards. These principles also must be used by the non-Federal 
entity as a guide in the pricing of fixed-price contracts and 
subcontracts where costs are used in determining the appropriate price. 
The principles do not apply to:
    (1) Arrangements under which Federal financing is in the form of 
loans, scholarships, fellowships, traineeships, or other fixed amounts 
based on such items as education allowance or published tuition rates 
and fees.
    (2) For IHEs, capitation awards, which are awards based on case 
counts or number of beneficiaries according to the terms and conditions 
of the Federal award.
    (3) Fixed amount awards. See also Subpart A--Acronyms and 
Definitions, Sec. Sec.  200.45 Fixed amount awards and 200.201 Use of 
grant agreements (including fixed amount awards), cooperative 
agreements, and contracts.
    (4) Federal awards to hospitals (see Appendix IX to Part 200--
Hospital Cost Principles).
    (5) Other awards under which the non-Federal entity is not required 
to account to the Federal Government for actual costs incurred.
    (b) Federal Contract. Where a Federal contract awarded to a non-
Federal entity is subject to the Cost Accounting Standards (CAS), it 
incorporates the applicable CAS clauses, Standards, and CAS 
administration requirements per the 48 CFR Chapter 99 and 48 CFR part 30 
(FAR Part 30). CAS applies directly to the CAS-covered contract and the 
Cost Accounting Standards at 48 CFR parts 9904 or 9905 takes precedence 
over the cost principles in this Subpart E--Cost Principles of this part 
with respect to the allocation of costs. When a contract with a non-
Federal entity is subject to full CAS coverage, the allowability of 
certain costs under the cost principles will be affected by the 
allocation provisions of the Cost Accounting Standards (e.g., CAS 414--
48 CFR 9904.414, Cost of Money as an Element of the Cost of Facilities 
Capital, and CAS 417--48 CFR 9904.417, Cost of Money as an Element of 
the Cost of Capital Assets Under Construction), apply rather the 
allowability provisions of Sec.  200.449 Interest. In complying with 
those requirements, the non-Federal entity's application of cost 
accounting practices for estimating, accumulating, and reporting costs 
for other Federal awards and other cost objectives under the CAS-covered 
contract still must be consistent with its cost accounting practices for 
the CAS-covered contracts. In all cases, only one set of accounting 
records needs to be maintained for the allocation of costs by the non-
Federal entity.
    (c) Exemptions. Some nonprofit organizations, because of their size 
and nature of operations, can be considered to be similar to for-profit 
entities for purpose of applicability of cost principles.

[[Page 137]]

Such nonprofit organizations must operate under Federal cost principles 
applicable to for-profit entities located at 48 CFR 31.2. A listing of 
these organizations is contained in Appendix VIII to Part 200--Nonprofit 
Organizations Exempted From Subpart E--Cost Principles of this part. 
Other organizations, as approved by the cognizant agency for indirect 
costs, may be added from time to time.

                          Basic Considerations



Sec.  200.402  Composition of costs.

    Total cost. The total cost of a Federal award is the sum of the 
allowable direct and allocable indirect costs less any applicable 
credits.



Sec.  200.403  Factors affecting allowability of costs.

    Except where otherwise authorized by statute, costs must meet the 
following general criteria in order to be allowable under Federal 
awards:
    (a) Be necessary and reasonable for the performance of the Federal 
award and be allocable thereto under these principles.
    (b) Conform to any limitations or exclusions set forth in these 
principles or in the Federal award as to types or amount of cost items.
    (c) Be consistent with policies and procedures that apply uniformly 
to both federally-financed and other activities of the non-Federal 
entity.
    (d) Be accorded consistent treatment. A cost may not be assigned to 
a Federal award as a direct cost if any other cost incurred for the same 
purpose in like circumstances has been allocated to the Federal award as 
an indirect cost.
    (e) Be determined in accordance with generally accepted accounting 
principles (GAAP), except, for state and local governments and Indian 
tribes only, as otherwise provided for in this part.
    (f) Not be included as a cost or used to meet cost sharing or 
matching requirements of any other federally-financed program in either 
the current or a prior period. See also Sec.  200.306 Cost sharing or 
matching paragraph (b).
    (g) Be adequately documented. See also Sec. Sec.  200.300 Statutory 
and national policy requirements through 200.309 Period of performance 
of this part.



Sec.  200.404  Reasonable costs.

    A cost is reasonable if, in its nature and amount, it does not 
exceed that which would be incurred by a prudent person under the 
circumstances prevailing at the time the decision was made to incur the 
cost. The question of reasonableness is particularly important when the 
non-Federal entity is predominantly federally-funded. In determining 
reasonableness of a given cost, consideration must be given to:
    (a) Whether the cost is of a type generally recognized as ordinary 
and necessary for the operation of the non-Federal entity or the proper 
and efficient performance of the Federal award.
    (b) The restraints or requirements imposed by such factors as: sound 
business practices; arm's-length bargaining; Federal, state, local, 
tribal, and other laws and regulations; and terms and conditions of the 
Federal award.
    (c) Market prices for comparable goods or services for the 
geographic area.
    (d) Whether the individuals concerned acted with prudence in the 
circumstances considering their responsibilities to the non-Federal 
entity, its employees, where applicable its students or membership, the 
public at large, and the Federal Government.
    (e) Whether the non-Federal entity significantly deviates from its 
established practices and policies regarding the incurrence of costs, 
which may unjustifiably increase the Federal award's cost.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75885, Dec. 19, 2014]



Sec.  200.405  Allocable costs.

    (a) A cost is allocable to a particular Federal award or other cost 
objective if the goods or services involved are chargeable or assignable 
to that Federal award or cost objective in accordance with relative 
benefits received. This standard is met if the cost:
    (1) Is incurred specifically for the Federal award;

[[Page 138]]

    (2) Benefits both the Federal award and other work of the non-
Federal entity and can be distributed in proportions that may be 
approximated using reasonable methods; and
    (3) Is necessary to the overall operation of the non-Federal entity 
and is assignable in part to the Federal award in accordance with the 
principles in this subpart.
    (b) All activities which benefit from the non-Federal entity's 
indirect (F&A) cost, including unallowable activities and donated 
services by the non-Federal entity or third parties, will receive an 
appropriate allocation of indirect costs.
    (c) Any cost allocable to a particular Federal award under the 
principles provided for in this part may not be charged to other Federal 
awards to overcome fund deficiencies, to avoid restrictions imposed by 
Federal statutes, regulations, or terms and conditions of the Federal 
awards, or for other reasons. However, this prohibition would not 
preclude the non-Federal entity from shifting costs that are allowable 
under two or more Federal awards in accordance with existing Federal 
statutes, regulations, or the terms and conditions of the Federal 
awards.
    (d) Direct cost allocation principles. If a cost benefits two or 
more projects or activities in proportions that can be determined 
without undue effort or cost, the cost must be allocated to the projects 
based on the proportional benefit. If a cost benefits two or more 
projects or activities in proportions that cannot be determined because 
of the interrelationship of the work involved, then, notwithstanding 
paragraph (c) of this section, the costs may be allocated or transferred 
to benefitted projects on any reasonable documented basis. Where the 
purchase of equipment or other capital asset is specifically authorized 
under a Federal award, the costs are assignable to the Federal award 
regardless of the use that may be made of the equipment or other capital 
asset involved when no longer needed for the purpose for which it was 
originally required. See also Sec. Sec.  200.310 Insurance coverage 
through 200.316 Property trust relationship and 200.439 Equipment and 
other capital expenditures.
    (e) If the contract is subject to CAS, costs must be allocated to 
the contract pursuant to the Cost Accounting Standards. To the extent 
that CAS is applicable, the allocation of costs in accordance with CAS 
takes precedence over the allocation provisions in this part.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75885, Dec. 19, 2014]



Sec.  200.406  Applicable credits.

    (a) Applicable credits refer to those receipts or reduction-of-
expenditure-type transactions that offset or reduce expense items 
allocable to the Federal award as direct or indirect (F&A) costs. 
Examples of such transactions are: purchase discounts, rebates or 
allowances, recoveries or indemnities on losses, insurance refunds or 
rebates, and adjustments of overpayments or erroneous charges. To the 
extent that such credits accruing to or received by the non-Federal 
entity relate to allowable costs, they must be credited to the Federal 
award either as a cost reduction or cash refund, as appropriate.
    (b) In some instances, the amounts received from the Federal 
Government to finance activities or service operations of the non-
Federal entity should be treated as applicable credits. Specifically, 
the concept of netting such credit items (including any amounts used to 
meet cost sharing or matching requirements) must be recognized in 
determining the rates or amounts to be charged to the Federal award. 
(See Sec. Sec.  200.436 Depreciation and 200.468 Specialized service 
facilities, for areas of potential application in the matter of Federal 
financing of activities.)

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75885, Dec. 19, 2014]



Sec.  200.407  Prior written approval (prior approval).

    Under any given Federal award, the reasonableness and allocability 
of certain items of costs may be difficult to determine. In order to 
avoid subsequent disallowance or dispute based on unreasonableness or 
nonallocability, the non-Federal entity may seek the prior written 
approval of the cognizant agency for indirect costs or the Federal

[[Page 139]]

awarding agency in advance of the incurrence of special or unusual 
costs. Prior written approval should include the timeframe or scope of 
the agreement. The absence of prior written approval on any element of 
cost will not, in itself, affect the reasonableness or allocability of 
that element, unless prior approval is specifically required for 
allowability as described under certain circumstances in the following 
sections of this part:
    (a) Sec.  200.201 Use of grant agreements (including fixed amount 
awards), cooperative agreements, and contracts, paragraph (b)(5);
    (b) Sec.  200.306 Cost sharing or matching;
    (c) Sec.  200.307 Program income;
    (d) Sec.  200.308 Revision of budget and program plans;
    (e) Sec.  200.311 Real property;
    (f) Sec.  200.313 Equipment;
    (g) Sec.  200.332 Fixed amount subawards;
    (h) Sec.  200.413 Direct costs, paragraph (c);
    (i) Sec.  200.430 Compensation--personal services, paragraph (h);
    (j) Sec.  200.431 Compensation--fringe benefits;
    (k) Sec.  200.438 Entertainment costs;
    (l) Sec.  200.439 Equipment and other capital expenditures;
    (m) Sec.  200.440 Exchange rates;
    (n) Sec.  200.441 Fines, penalties, damages and other settlements;
    (o) Sec.  200.442 Fund raising and investment management costs;
    (p) Sec.  200.445 Goods or services for personal use;
    (q) Sec.  200.447 Insurance and indemnification;
    (r) Sec.  200.454 Memberships, subscriptions, and professional 
activity costs, paragraph (c);
    (s) Sec.  200.455 Organization costs;
    (t) Sec.  200.456 Participant support costs;
    (u) Sec.  200.458 Pre-award costs;
    (v) Sec.  200.462 Rearrangement and reconversion costs;
    (w) Sec.  200.467 Selling and marketing costs;
    (x) Sec.  200.470 Taxes (including Value Added Tax); and
    (y) Sec.  200.474 Travel costs.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75885, Dec. 19, 2014]



Sec.  200.408  Limitation on allowance of costs.

    The Federal award may be subject to statutory requirements that 
limit the allowability of costs. When the maximum amount allowable under 
a limitation is less than the total amount determined in accordance with 
the principles in this part, the amount not recoverable under the 
Federal award may not be charged to the Federal award.



Sec.  200.409  Special considerations.

    In addition to the basic considerations regarding the allowability 
of costs highlighted in this subtitle, other subtitles in this part 
describe special considerations and requirements applicable to states, 
local governments, Indian tribes, and IHEs. In addition, certain 
provisions among the items of cost in this subpart, are only applicable 
to certain types of non-Federal entities, as specified in the following 
sections:
    (a) Direct and Indirect (F&A) Costs (Sec. Sec.  200.412 
Classification of costs through 200.415 Required certifications) of this 
subpart;
    (b) Special Considerations for States, Local Governments and Indian 
Tribes (Sec. Sec.  200.416 Cost allocation plans and indirect cost 
proposals and 200.417 Interagency service) of this subpart; and
    (c) Special Considerations for Institutions of Higher Education 
(Sec. Sec.  200.418 Costs incurred by states and local governments and 
200.419 Cost accounting standards and disclosure statement) of this 
subpart.



Sec.  200.410  Collection of unallowable costs.

    Payments made for costs determined to be unallowable by either the 
Federal awarding agency, cognizant agency for indirect costs, or pass-
through entity, either as direct or indirect costs, must be refunded 
(including interest) to the Federal Government in accordance with 
instructions from the Federal agency that determined the costs are 
unallowable unless Federal statute or regulation directs otherwise. See 
also Subpart D--Post Federal Award Requirements of this part, Sec. Sec.  
200.300 Statutory and national policy requirements through 200.309 
Period of performance.

[[Page 140]]



Sec.  200.411  Adjustment of previously negotiated indirect (F&A) cost
rates containing unallowable costs.

    (a) Negotiated indirect (F&A) cost rates based on a proposal later 
found to have included costs that:
    (1) Are unallowable as specified by Federal statutes, regulations or 
the terms and conditions of a Federal award; or
    (2) Are unallowable because they are not allocable to the Federal 
award(s), must be adjusted, or a refund must be made, in accordance with 
the requirements of this section. These adjustments or refunds are 
designed to correct the proposals used to establish the rates and do not 
constitute a reopening of the rate negotiation. The adjustments or 
refunds will be made regardless of the type of rate negotiated 
(predetermined, final, fixed, or provisional).
    (b) For rates covering a future fiscal year of the non-Federal 
entity, the unallowable costs will be removed from the indirect (F&A) 
cost pools and the rates appropriately adjusted.
    (c) For rates covering a past period, the Federal share of the 
unallowable costs will be computed for each year involved and a cash 
refund (including interest chargeable in accordance with applicable 
regulations) will be made to the Federal Government. If cash refunds are 
made for past periods covered by provisional or fixed rates, appropriate 
adjustments will be made when the rates are finalized to avoid duplicate 
recovery of the unallowable costs by the Federal Government.
    (d) For rates covering the current period, either a rate adjustment 
or a refund, as described in paragraphs (b) and (c) of this section, 
must be required by the cognizant agency for indirect costs. The choice 
of method must be at the discretion of the cognizant agency for indirect 
costs, based on its judgment as to which method would be most practical.
    (e) The amount or proportion of unallowable costs included in each 
year's rate will be assumed to be the same as the amount or proportion 
of unallowable costs included in the base year proposal used to 
establish the rate.

                     Direct and Indirect (F&A) Costs



Sec.  200.412  Classification of costs.

    There is no universal rule for classifying certain costs as either 
direct or indirect (F&A) under every accounting system. A cost may be 
direct with respect to some specific service or function, but indirect 
with respect to the Federal award or other final cost objective. 
Therefore, it is essential that each item of cost incurred for the same 
purpose be treated consistently in like circumstances either as a direct 
or an indirect (F&A) cost in order to avoid possible double-charging of 
Federal awards. Guidelines for determining direct and indirect (F&A) 
costs charged to Federal awards are provided in this subpart.



Sec.  200.413  Direct costs.

    (a) General. Direct costs are those costs that can be identified 
specifically with a particular final cost objective, such as a Federal 
award, or other internally or externally funded activity, or that can be 
directly assigned to such activities relatively easily with a high 
degree of accuracy. Costs incurred for the same purpose in like 
circumstances must be treated consistently as either direct or indirect 
(F&A) costs. See also Sec.  200.405 Allocable costs.
    (b) Application to Federal awards. Identification with the Federal 
award rather than the nature of the goods and services involved is the 
determining factor in distinguishing direct from indirect (F&A) costs of 
Federal awards. Typical costs charged directly to a Federal award are 
the compensation of employees who work on that award, their related 
fringe benefit costs, the costs of materials and other items of expense 
incurred for the Federal award. If directly related to a specific award, 
certain costs that otherwise would be treated as indirect costs may also 
include extraordinary utility consumption, the cost of materials 
supplied from stock or services rendered by specialized facilities or 
other institutional service operations.
    (c) The salaries of administrative and clerical staff should 
normally be treated as indirect (F&A) costs. Direct

[[Page 141]]

charging of these costs may be appropriate only if all of the following 
conditions are met:
    (1) Administrative or clerical services are integral to a project or 
activity;
    (2) Individuals involved can be specifically identified with the 
project or activity;
    (3) Such costs are explicitly included in the budget or have the 
prior written approval of the Federal awarding agency; and
    (4) The costs are not also recovered as indirect costs.
    (d) Minor items. Any direct cost of minor amount may be treated as 
an indirect (F&A) cost for reasons of practicality where such accounting 
treatment for that item of cost is consistently applied to all Federal 
and non-Federal cost objectives.
    (e) The costs of certain activities are not allowable as charges to 
Federal awards. However, even though these costs are unallowable for 
purposes of computing charges to Federal awards, they nonetheless must 
be treated as direct costs for purposes of determining indirect (F&A) 
cost rates and be allocated their equitable share of the non-Federal 
entity's indirect costs if they represent activities which:
    (1) Include the salaries of personnel,
    (2) Occupy space, and
    (3) Benefit from the non-Federal entity's indirect (F&A) costs.
    (f) For nonprofit organizations, the costs of activities performed 
by the non-Federal entity primarily as a service to members, clients, or 
the general public when significant and necessary to the non-Federal 
entity's mission must be treated as direct costs whether or not 
allowable, and be allocated an equitable share of indirect (F&A) costs. 
Some examples of these types of activities include:
    (1) Maintenance of membership rolls, subscriptions, publications, 
and related functions. See also Sec.  200.454 Memberships, 
subscriptions, and professional activity costs.
    (2) Providing services and information to members, legislative or 
administrative bodies, or the public. See also Sec. Sec.  200.454 
Memberships, subscriptions, and professional activity costs and 200.450 
Lobbying.
    (3) Promotion, lobbying, and other forms of public relations. See 
also Sec. Sec.  200.421 Advertising and public relations and 200.450 
Lobbying.
    (4) Conferences except those held to conduct the general 
administration of the non-Federal entity. See also Sec.  200.432 
Conferences.
    (5) Maintenance, protection, and investment of special funds not 
used in operation of the non-Federal entity. See also Sec.  200.442 Fund 
raising and investment management costs.
    (6) Administration of group benefits on behalf of members or 
clients, including life and hospital insurance, annuity or retirement 
plans, and financial aid. See also Sec.  200.431 Compensation--fringe 
benefits.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75885, Dec. 19, 2014]



Sec.  200.414  Indirect (F&A) costs.

    (a) Facilities and Administration Classification. For major IHEs and 
major nonprofit organizations, indirect (F&A) costs must be classified 
within two broad categories: ``Facilities'' and ``Administration.'' 
``Facilities'' is defined as depreciation on buildings, equipment and 
capital improvement, interest on debt associated with certain buildings, 
equipment and capital improvements, and operations and maintenance 
expenses. ``Administration'' is defined as general administration and 
general expenses such as the director's office, accounting, personnel 
and all other types of expenditures not listed specifically under one of 
the subcategories of ``Facilities'' (including cross allocations from 
other pools, where applicable). For nonprofit organizations, library 
expenses are included in the ``Administration'' category; for 
institutions of higher education, they are included in the 
``Facilities'' category. Major IHEs are defined as those required to use 
the Standard Format for Submission as noted in Appendix III to Part 
200--Indirect (F&A) Costs Identification and Assignment, and Rate 
Determination for Institutions of Higher Education (IHEs) paragraph C. 
11. Major nonprofit organizations are those which receive more than $10 
million dollars in direct Federal funding.
    (b) Diversity of nonprofit organizations. Because of the diverse 
characteristics

[[Page 142]]

and accounting practices of nonprofit organizations, it is not possible 
to specify the types of cost which may be classified as indirect (F&A) 
cost in all situations. Identification with a Federal award rather than 
the nature of the goods and services involved is the determining factor 
in distinguishing direct from indirect (F&A) costs of Federal awards. 
However, typical examples of indirect (F&A) cost for many nonprofit 
organizations may include depreciation on buildings and equipment, the 
costs of operating and maintaining facilities, and general 
administration and general expenses, such as the salaries and expenses 
of executive officers, personnel administration, and accounting.
    (c) Federal Agency Acceptance of Negotiated Indirect Cost Rates. 
(See also Sec.  200.306 Cost sharing or matching.)
    (1) The negotiated rates must be accepted by all Federal awarding 
agencies. A Federal awarding agency may use a rate different from the 
negotiated rate for a class of Federal awards or a single Federal award 
only when required by Federal statute or regulation, or when approved by 
a Federal awarding agency head or delegate based on documented 
justification as described in paragraph (c)(3) of this section.
    (2) The Federal awarding agency head or delegate must notify OMB of 
any approved deviations.
    (3) The Federal awarding agency must implement, and make publicly 
available, the policies, procedures and general decision making criteria 
that their programs will follow to seek and justify deviations from 
negotiated rates.
    (4) As required under Sec.  200.203 Notices of funding 
opportunities, the Federal awarding agency must include in the notice of 
funding opportunity the policies relating to indirect cost rate 
reimbursement, matching, or cost share as approved under paragraph 
(e)(1) of this section. As appropriate, the Federal agency should 
incorporate discussion of these policies into Federal awarding agency 
outreach activities with non-Federal entities prior to the posting of a 
notice of funding opportunity.
    (d) Pass-through entities are subject to the requirements in Sec.  
200.331 Requirements for pass-through entities, paragraph (a)(4).
    (e) Requirements for development and submission of indirect (F&A) 
cost rate proposals and cost allocation plans are contained in 
Appendices III-VII and Appendix IX as follows:
    (1) Appendix III to Part 200--Indirect (F&A) Costs Identification 
and Assignment, and Rate Determination for Institutions of Higher 
Education (IHEs);
    (2) Appendix IV to Part 200--Indirect (F&A) Costs Identification and 
Assignment, and Rate Determination for Nonprofit Organizations;
    (3) Appendix V to Part 200--State/Local Governmentwide Central 
Service Cost Allocation Plans;
    (4) Appendix VI to Part 200--Public Assistance Cost Allocation 
Plans;
    (5) Appendix VII to Part 200--States and Local Government and Indian 
Tribe Indirect Cost Proposals; and
    (6) Appendix IX to Part 200--Hospital Cost Principles.
    (f) In addition to the procedures outlined in the appendices in 
paragraph (e) of this section, any non-Federal entity that has never 
received a negotiated indirect cost rate, except for those non-Federal 
entities described in Appendix VII to Part 200--States and Local 
Government and Indian Tribe Indirect Cost Proposals, paragraph D.1.b, 
may elect to charge a de minimis rate of 10% of modified total direct 
costs (MTDC) which may be used indefinitely. As described in Sec.  
200.403 Factors affecting allowability of costs, costs must be 
consistently charged as either indirect or direct costs, but may not be 
double charged or inconsistently charged as both. If chosen, this 
methodology once elected must be used consistently for all Federal 
awards until such time as a non-Federal entity chooses to negotiate for 
a rate, which the non-Federal entity may apply to do at any time.
    (g) Any non-Federal entity that has a current federally negotiated 
indirect cost rate may apply for a one-time extension of the rates in 
that agreement for a period of up to four years. This extension will be 
subject to the review and approval of the cognizant agency for indirect 
costs. If an extension is granted the non-Federal entity may not request 
a rate review until the extension period ends. At the end of the

[[Page 143]]

4-year extension, the non-Federal entity must re-apply to negotiate a 
rate. Subsequent one-time extensions (up to four years) are permitted if 
a renegotiation is completed between each extension request.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75886, Dec. 19, 2014]



Sec.  200.415  Required certifications.

    Required certifications include:
    (a) To assure that expenditures are proper and in accordance with 
the terms and conditions of the Federal award and approved project 
budgets, the annual and final fiscal reports or vouchers requesting 
payment under the agreements must include a certification, signed by an 
official who is authorized to legally bind the non-Federal entity, which 
reads as follows: ``By signing this report, I certify to the best of my 
knowledge and belief that the report is true, complete, and accurate, 
and the expenditures, disbursements and cash receipts are for the 
purposes and objectives set forth in the terms and conditions of the 
Federal award. I am aware that any false, fictitious, or fraudulent 
information, or the omission of any material fact, may subject me to 
criminal, civil or administrative penalties for fraud, false statements, 
false claims or otherwise. (U.S. Code Title 18, Section 1001 and Title 
31, Sections 3729-3730 and 3801-3812).''
    (b) Certification of cost allocation plan or indirect (F&A) cost 
rate proposal. Each cost allocation plan or indirect (F&A) cost rate 
proposal must comply with the following:
    (1) A proposal to establish a cost allocation plan or an indirect 
(F&A) cost rate, whether submitted to a Federal cognizant agency for 
indirect costs or maintained on file by the non-Federal entity, must be 
certified by the non-Federal entity using the Certificate of Cost 
Allocation Plan or Certificate of Indirect Costs as set forth in 
Appendices III through VII, and Appendix IX. The certificate must be 
signed on behalf of the non-Federal entity by an individual at a level 
no lower than vice president or chief financial officer of the non-
Federal entity that submits the proposal.
    (2) Unless the non-Federal entity has elected the option under Sec.  
200.414 Indirect (F&A) costs, paragraph (f), the Federal Government may 
either disallow all indirect (F&A) costs or unilaterally establish such 
a plan or rate when the non-Federal entity fails to submit a certified 
proposal for establishing such a plan or rate in accordance with the 
requirements. Such a plan or rate may be based upon audited historical 
data or such other data that have been furnished to the cognizant agency 
for indirect costs and for which it can be demonstrated that all 
unallowable costs have been excluded. When a cost allocation plan or 
indirect cost rate is unilaterally established by the Federal Government 
because the non-Federal entity failed to submit a certified proposal, 
the plan or rate established will be set to ensure that potentially 
unallowable costs will not be reimbursed.
    (c) Certifications by non-profit organizations as appropriate that 
they did not meet the definition of a major nonprofit organization as 
defined in Sec.  200.414 Indirect (F&A) costs, paragraph (a).
    (d) See also Sec.  200.450 Lobbying for another required 
certification.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75886, Dec. 19, 2014]

 Special Considerations for States, Local Governments and Indian Tribes



Sec.  200.416  Cost allocation plans and indirect cost proposals.

    (a) For states, local governments and Indian tribes, certain 
services, such as motor pools, computer centers, purchasing, accounting, 
etc., are provided to operating agencies on a centralized basis. Since 
Federal awards are performed within the individual operating agencies, 
there needs to be a process whereby these central service costs can be 
identified and assigned to benefitted activities on a reasonable and 
consistent basis. The central service cost allocation plan provides that 
process.
    (b) Individual operating agencies (governmental department or 
agency), normally charge Federal awards for indirect costs through an 
indirect cost rate. A separate indirect cost rate(s) proposal for each 
operating agency is usually necessary to claim indirect

[[Page 144]]

costs under Federal awards. Indirect costs include:
    (1) The indirect costs originating in each department or agency of 
the governmental unit carrying out Federal awards and
    (2) The costs of central governmental services distributed through 
the central service cost allocation plan and not otherwise treated as 
direct costs.
    (c) The requirements for development and submission of cost 
allocation plans (for central service costs and public assistance 
programs) and indirect cost rate proposals are contained in appendices 
IV, V and VI to this part.



Sec.  200.417  Interagency service.

    The cost of services provided by one agency to another within the 
governmental unit may include allowable direct costs of the service plus 
a pro-rated share of indirect costs. A standard indirect cost allowance 
equal to ten percent of the direct salary and wage cost of providing the 
service (excluding overtime, shift premiums, and fringe benefits) may be 
used in lieu of determining the actual indirect costs of the service. 
These services do not include centralized services included in central 
service cost allocation plans as described in Appendix V to Part 200--
State/Local Government and Indian Tribe-Wide Central Service Cost 
Allocation Plans.

       Special Considerations for Institutions of Higher Education



Sec.  200.418  Costs incurred by states and local governments.

    Costs incurred or paid by a state or local government on behalf of 
its IHEs for fringe benefit programs, such as pension costs and FICA and 
any other costs specifically incurred on behalf of, and in direct 
benefit to, the IHEs, are allowable costs of such IHEs whether or not 
these costs are recorded in the accounting records of the institutions, 
subject to the following:
    (a) The costs meet the requirements of Sec. Sec.  200.402 
Composition of costs through 200.411 Adjustment of previously negotiated 
indirect (F&A) cost rates containing unallowable costs, of this subpart;
    (b) The costs are properly supported by approved cost allocation 
plans in accordance with applicable Federal cost accounting principles 
in this part; and
    (c) The costs are not otherwise borne directly or indirectly by the 
Federal Government.



Sec.  200.419  Cost accounting standards and disclosure statement.

    (a) An IHE that receives aggregate Federal awards totaling $50 
million or more in Federal awards subject to this part in its most 
recently completed fiscal year must comply with the Cost Accounting 
Standards Board's cost accounting standards located at 48 CFR 9905.501, 
9905.502, 9905.505, and 9905.506. CAS-covered contracts awarded to the 
IHEs are subject to the CAS requirements at 48 CFR 9900 through 9999 and 
48 CFR part 30 (FAR Part 30).
    (b) Disclosure statement. An IHE that receives aggregate Federal 
awards totaling $50 million or more subject to this part during its most 
recently completed fiscal year must disclose their cost accounting 
practices by filing a Disclosure Statement (DS-2), which is reproduced 
in Appendix III to Part 200--Indirect (F&A) Costs Identification and 
Assignment, and Rate Determination for Institutions of Higher Education 
(IHEs). With the approval of the cognizant agency for indirect costs, an 
IHE may meet the DS-2 submission by submitting the DS-2 for each 
business unit that received $50 million or more in Federal awards.
    (1) The DS-2 must be submitted to the cognizant agency for indirect 
costs with a copy to the IHE's cognizant agency for audit.
    (2) An IHE is responsible for maintaining an accurate DS-2 and 
complying with disclosed cost accounting practices. An IHE must file 
amendments to the DS-2 to the cognizant agency for indirect costs six 
months in advance of a disclosed practice being changed to comply with a 
new or modified standard, or when a practice is changed for other 
reasons. An IHE may proceed with implementing the change only if it has 
not been notified by the Federal cognizant agency for indirect costs 
that either a longer period will be needed for review or there are 
concerns with the potential change within the

[[Page 145]]

six months period. Amendments of a DS-2 may be submitted at any time. 
Resubmission of a complete, updated DS-2 is discouraged except when 
there are extensive changes to disclosed practices.
    (3) Cost and funding adjustments. Cost adjustments must be made by 
the cognizant agency for indirect costs if an IHE fails to comply with 
the cost policies in this part or fails to consistently follow its 
established or disclosed cost accounting practices when estimating, 
accumulating or reporting the costs of Federal awards, and the aggregate 
cost impact on Federal awards is material. The cost adjustment must 
normally be made on an aggregate basis for all affected Federal awards 
through an adjustment of the IHE's future F&A costs rates or other means 
considered appropriate by the cognizant agency for indirect costs. Under 
the terms of CAS covered contracts, adjustments in the amount of funding 
provided may also be required when the estimated proposal costs were not 
determined in accordance with established cost accounting practices.
    (4) Overpayments. Excess amounts paid in the aggregate by the 
Federal Government under Federal awards due to a noncompliant cost 
accounting practice used to estimate, accumulate, or report costs must 
be credited or refunded, as deemed appropriate by the cognizant agency 
for indirect costs. Interest applicable to the excess amounts paid in 
the aggregate during the period of noncompliance must also be determined 
and collected in accordance with applicable Federal agency regulations.
    (5) Compliant cost accounting practice changes. Changes from one 
compliant cost accounting practice to another compliant practice that 
are approved by the cognizant agency for indirect costs may require cost 
adjustments if the change has a material effect on Federal awards and 
the changes are deemed appropriate by the cognizant agency for indirect 
costs.
    (6) Responsibilities. The cognizant agency for indirect cost must:
    (i) Determine cost adjustments for all Federal awards in the 
aggregate on behalf of the Federal Government. Actions of the cognizant 
agency for indirect cost in making cost adjustment determinations must 
be coordinated with all affected Federal awarding agencies to the extent 
necessary.
    (ii) Prescribe guidelines and establish internal procedures to 
promptly determine on behalf of the Federal Government that a DS-2 
adequately discloses the IHE's cost accounting practices and that the 
disclosed practices are compliant with applicable CAS and the 
requirements of this part.
    (iii) Distribute to all affected Federal awarding agencies any DS-2 
determination of adequacy or noncompliance.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75886, Dec. 19, 2014]

              General Provisions for Selected Items of Cost



Sec.  200.420  Considerations for selected items of cost.

    This section provides principles to be applied in establishing the 
allowability of certain items involved in determining cost, in addition 
to the requirements of Subtitle II. Basic Considerations of this 
subpart. These principles apply whether or not a particular item of cost 
is properly treated as direct cost or indirect (F&A) cost. Failure to 
mention a particular item of cost is not intended to imply that it is 
either allowable or unallowable; rather, determination as to 
allowability in each case should be based on the treatment provided for 
similar or related items of cost, and based on the principles described 
in Sec. Sec.  200.402 Composition of costs through 200.411 Adjustment of 
previously negotiated indirect (F&A) cost rates containing unallowable 
costs. In case of a discrepancy between the provisions of a specific 
Federal award and the provisions below, the Federal award governs. 
Criteria outlined in Sec.  200.403 Factors affecting allowability of 
costs must be applied in determining allowability. See also Sec.  
200.102 Exceptions.



Sec.  200.421  Advertising and public relations.

    (a) The term advertising costs means the costs of advertising media 
and corollary administrative costs. Advertising media include magazines, 
newspapers, radio and television, direct

[[Page 146]]

mail, exhibits, electronic or computer transmittals, and the like.
    (b) The only allowable advertising costs are those which are solely 
for:
    (1) The recruitment of personnel required by the non-Federal entity 
for performance of a Federal award (See also Sec.  200.463 Recruiting 
costs);
    (2) The procurement of goods and services for the performance of a 
Federal award;
    (3) The disposal of scrap or surplus materials acquired in the 
performance of a Federal award except when non-Federal entities are 
reimbursed for disposal costs at a predetermined amount; or
    (4) Program outreach and other specific purposes necessary to meet 
the requirements of the Federal award.
    (c) The term ``public relations'' includes community relations and 
means those activities dedicated to maintaining the image of the non-
Federal entity or maintaining or promoting understanding and favorable 
relations with the community or public at large or any segment of the 
public.
    (d) The only allowable public relations costs are:
    (1) Costs specifically required by the Federal award;
    (2) Costs of communicating with the public and press pertaining to 
specific activities or accomplishments which result from performance of 
the Federal award (these costs are considered necessary as part of the 
outreach effort for the Federal award); or
    (3) Costs of conducting general liaison with news media and 
government public relations officers, to the extent that such activities 
are limited to communication and liaison necessary to keep the public 
informed on matters of public concern, such as notices of funding 
opportunities, financial matters, etc.
    (e) Unallowable advertising and public relations costs include the 
following:
    (1) All advertising and public relations costs other than as 
specified in paragraphs (b) and (d) of this section;
    (2) Costs of meetings, conventions, convocations, or other events 
related to other activities of the entity (see also Sec.  200.432 
Conferences), including:
    (i) Costs of displays, demonstrations, and exhibits;
    (ii) Costs of meeting rooms, hospitality suites, and other special 
facilities used in conjunction with shows and other special events; and
    (iii) Salaries and wages of employees engaged in setting up and 
displaying exhibits, making demonstrations, and providing briefings;
    (3) Costs of promotional items and memorabilia, including models, 
gifts, and souvenirs;
    (4) Costs of advertising and public relations designed solely to 
promote the non-Federal entity.



Sec.  200.422  Advisory councils.

    Costs incurred by advisory councils or committees are unallowable 
unless authorized by statute, the Federal awarding agency or as an 
indirect cost where allocable to Federal awards. See Sec.  200.444 
General costs of government, applicable to states, local governments and 
Indian tribes.



Sec.  200.423  Alcoholic beverages.

    Costs of alcoholic beverages are unallowable.



Sec.  200.424  Alumni/ae activities.

    Costs incurred by IHEs for, or in support of, alumni/ae activities 
are unallowable.



Sec.  200.425  Audit services.

    (a) A reasonably proportionate share of the costs of audits required 
by, and performed in accordance with, the Single Audit Act Amendments of 
1996 (31 U.S.C. 7501-7507), as implemented by requirements of this part, 
are allowable. However, the following audit costs are unallowable:
    (1) Any costs when audits required by the Single Audit Act and 
Subpart F--Audit Requirements of this part have not been conducted or 
have been conducted but not in accordance therewith; and
    (2) Any costs of auditing a non-Federal entity that is exempted from 
having an audit conducted under the Single Audit Act and Subpart F--
Audit Requirements of this part because its expenditures under Federal 
awards are less than $750,000 during the non-Federal entity's fiscal 
year.

[[Page 147]]

    (b) The costs of a financial statement audit of a non-Federal entity 
that does not currently have a Federal award may be included in the 
indirect cost pool for a cost allocation plan or indirect cost proposal.
    (c) Pass-through entities may charge Federal awards for the cost of 
agreed-upon-procedures engagements to monitor subrecipients (in 
accordance with Subpart D--Post Federal Award Requirements of this part, 
Sec. Sec.  200.330 Subrecipient and contractor determinations through 
200.332 Fixed Amount Subawards) who are exempted from the requirements 
of the Single Audit Act and Subpart F--Audit Requirements of this part. 
This cost is allowable only if the agreed-upon-procedures engagements 
are:
    (1) Conducted in accordance with GAGAS attestation standards;
    (2) Paid for and arranged by the pass-through entity; and
    (3) Limited in scope to one or more of the following types of 
compliance requirements: activities allowed or unallowed; allowable 
costs/cost principles; eligibility; and reporting.



Sec.  200.426  Bad debts.

    Bad debts (debts which have been determined to be uncollectable), 
including losses (whether actual or estimated) arising from 
uncollectable accounts and other claims, are unallowable. Related 
collection costs, and related legal costs, arising from such debts after 
they have been determined to be uncollectable are also unallowable. See 
also Sec.  200.428 Collections of improper payments.



Sec.  200.427  Bonding costs.

    (a) Bonding costs arise when the Federal awarding agency requires 
assurance against financial loss to itself or others by reason of the 
act or default of the non-Federal entity. They arise also in instances 
where the non-Federal entity requires similar assurance, including: 
bonds as bid, performance, payment, advance payment, infringement, and 
fidelity bonds for employees and officials.
    (b) Costs of bonding required pursuant to the terms and conditions 
of the Federal award are allowable.
    (c) Costs of bonding required by the non-Federal entity in the 
general conduct of its operations are allowable as an indirect cost to 
the extent that such bonding is in accordance with sound business 
practice and the rates and premiums are reasonable under the 
circumstances.



Sec.  200.428  Collections of improper payments.

    The costs incurred by a non-Federal entity to recover improper 
payments are allowable as either direct or indirect costs, as 
appropriate. Amounts collected may be used by the non-Federal entity in 
accordance with cash management standards set forth in Sec.  200.305 
Payment.



Sec.  200.429  Commencement and convocation costs.

    For IHEs, costs incurred for commencements and convocations are 
unallowable, except as provided for in Appendix III to Part 200--
Indirect (F&A) Costs Identification and Assignment, and Rate 
Determination for Institutions of Higher Education (IHEs), paragraph 
(B)(9) Student Administration and Services, as student activity costs.



Sec.  200.430  Compensation--personal services.

    (a) General. Compensation for personal services includes all 
remuneration, paid currently or accrued, for services of employees 
rendered during the period of performance under the Federal award, 
including but not necessarily limited to wages and salaries. 
Compensation for personal services may also include fringe benefits 
which are addressed in Sec.  200.431 Compensation--fringe benefits. 
Costs of compensation are allowable to the extent that they satisfy the 
specific requirements of this part, and that the total compensation for 
individual employees:
    (1) Is reasonable for the services rendered and conforms to the 
established written policy of the non-Federal entity consistently 
applied to both Federal and non-Federal activities;
    (2) Follows an appointment made in accordance with a non-Federal 
entity's laws and/or rules or written policies

[[Page 148]]

and meets the requirements of Federal statute, where applicable; and
    (3) Is determined and supported as provided in paragraph (i) of this 
section, Standards for Documentation of Personnel Expenses, when 
applicable.
    (b) Reasonableness. Compensation for employees engaged in work on 
Federal awards will be considered reasonable to the extent that it is 
consistent with that paid for similar work in other activities of the 
non-Federal entity. In cases where the kinds of employees required for 
Federal awards are not found in the other activities of the non-Federal 
entity, 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 non-Federal entity competes for the kind of employees involved.
    (c) Professional activities outside the non-Federal entity. Unless 
an arrangement is specifically authorized by a Federal awarding agency, 
a non-Federal entity must follow its written non-Federal entity-wide 
policies and practices concerning the permissible extent of professional 
services that can be provided outside the non-Federal entity for non-
organizational compensation. Where such non-Federal entity-wide written 
policies do not exist or do not adequately define the permissible extent 
of consulting or other non-organizational activities undertaken for 
extra outside pay, the Federal Government may require that the effort of 
professional staff working on Federal awards be allocated between:
    (1) Non-Federal entity activities, and
    (2) Non-organizational professional activities. If the Federal 
awarding agency considers the extent of non-organizational professional 
effort excessive or inconsistent with the conflicts-of-interest terms 
and conditions of the Federal award, appropriate arrangements governing 
compensation will be negotiated on a case-by-case basis.
    (d) Unallowable costs. (1) Costs which are unallowable under other 
sections of these principles must not be allowable under this section 
solely on the basis that they constitute personnel compensation.
    (2) The allowable compensation for certain employees is subject to a 
ceiling in accordance with statute. For the amount of the ceiling for 
cost-reimbursement contracts, the covered compensation subject to the 
ceiling, the covered employees, and other relevant provisions, see 10 
U.S.C. 2324(e)(1)(P), and 41 U.S.C. 1127 and 4304(a)(16). For other 
types of Federal awards, other statutory ceilings may apply.
    (e) Special considerations. Special considerations in determining 
allowability of compensation will be given to any change in a non-
Federal entity's compensation policy resulting in a substantial increase 
in its employees' level of compensation (particularly when the change 
was concurrent with an increase in the ratio of Federal awards to other 
activities) or any change in the treatment of allowability of specific 
types of compensation due to changes in Federal policy.
    (f) Incentive compensation. Incentive compensation to employees 
based on cost reduction, or efficient performance, suggestion awards, 
safety awards, etc., is allowable to the extent that the overall 
compensation is determined to be reasonable and such costs are paid or 
accrued pursuant to an agreement entered into in good faith between the 
non-Federal entity and the employees before the services were rendered, 
or pursuant to an established plan followed by the non-Federal entity so 
consistently as to imply, in effect, an agreement to make such payment.
    (g) Nonprofit organizations. For compensation to members of 
nonprofit organizations, trustees, directors, associates, officers, or 
the immediate families thereof, determination must be made that such 
compensation is reasonable for the actual personal services rendered 
rather than a distribution of earnings in excess of costs. This may 
include director's and executive committee member's fees, incentive 
awards, allowances for off-site pay, incentive pay, location allowances, 
hardship pay, and cost-of-living differentials.
    (h) Institutions of higher education (IHEs). (1) Certain conditions 
require special consideration and possible limitations in determining 
allowable personnel compensation costs under Federal awards. Among such 
conditions are the following:

[[Page 149]]

    (i) Allowable activities. Charges to Federal awards may include 
reasonable amounts for activities contributing and directly related to 
work under an agreement, such as delivering special lectures about 
specific aspects of the ongoing activity, writing reports and articles, 
developing and maintaining protocols (human, animals, etc.), managing 
substances/chemicals, managing and securing project-specific data, 
coordinating research subjects, participating in appropriate seminars, 
consulting with colleagues and graduate students, and attending meetings 
and conferences.
    (ii) Incidental activities. Incidental activities for which 
supplemental compensation is allowable under written institutional 
policy (at a rate not to exceed institutional base salary) need not be 
included in the records described in paragraph (i) of this section to 
directly charge payments of incidental activities, such activities must 
either be specifically provided for in the Federal award budget or 
receive prior written approval by the Federal awarding agency.
    (2) Salary basis. Charges for work performed on Federal awards by 
faculty members during the academic year are allowable at the IBS rate. 
Except as noted in paragraph (h)(1)(ii) of this section, in no event 
will charges to Federal awards, irrespective of the basis of 
computation, exceed the proportionate share of the IBS for that period. 
This principle applies to all members of faculty at an institution. IBS 
is defined as the annual compensation paid by an IHE for an individual's 
appointment, whether that individual's time is spent on research, 
instruction, administration, or other activities. IBS excludes any 
income that an individual earns outside of duties performed for the IHE. 
Unless there is prior approval by the Federal awarding agency, charges 
of a faculty member's salary to a Federal award must not exceed the 
proportionate share of the IBS for the period during which the faculty 
member worked on the award.
    (3) Intra-Institution of Higher Education (IHE) consulting. Intra-
IHE consulting by faculty is assumed to be undertaken as an IHE 
obligation requiring no compensation in addition to IBS. However, in 
unusual cases where consultation is across departmental lines or 
involves a separate or remote operation, and the work performed by the 
faculty member is in addition to his or her regular responsibilities, 
any charges for such work representing additional compensation above IBS 
are allowable provided that such consulting arrangements are 
specifically provided for in the Federal award or approved in writing by 
the Federal awarding agency.
    (4) Extra Service Pay normally represents overload compensation, 
subject to institutional compensation policies for services above and 
beyond IBS. Where extra service pay is a result of Intra-IHE consulting, 
it is subject to the same requirements of paragraph (b) above. It is 
allowable if all of the following conditions are met:
    (i) The non-Federal entity establishes consistent written policies 
which apply uniformly to all faculty members, not just those working on 
Federal awards.
    (ii) The non-Federal entity establishes a consistent written 
definition of work covered by IBS which is specific enough to determine 
conclusively when work beyond that level has occurred. This may be 
described in appointment letters or other documentations.
    (iii) The supplementation amount paid is commensurate with the IBS 
rate of pay and the amount of additional work performed. See paragraph 
(h)(2) of this section.
    (iv) The salaries, as supplemented, fall within the salary structure 
and pay ranges established by and documented in writing or otherwise 
applicable to the non-Federal entity.
    (v) The total salaries charged to Federal awards including extra 
service pay are subject to the Standards of Documentation as described 
in paragraph (i) of this section.
    (5) Periods outside the academic year. (i) Except as specified for 
teaching activity in paragraph (h)(5)(ii) of this section, charges for 
work performed by faculty members on Federal awards during periods not 
included in the base salary period will be at a rate not in excess of 
the IBS.

[[Page 150]]

    (ii) Charges for teaching activities performed by faculty members on 
Federal awards during periods not included in IBS period will be based 
on the normal written policy of the IHE governing compensation to 
faculty members for teaching assignments during such periods.
    (6) Part-time faculty. Charges for work performed on Federal awards 
by faculty members having only part-time appointments will be determined 
at a rate not in excess of that regularly paid for part-time 
assignments.
    (7) Sabbatical leave costs. Rules for sabbatical leave are as 
follow:
    (i) Costs of leaves of absence by employees for performance of 
graduate work or sabbatical study, travel, or research are allowable 
provided the IHE has a uniform written policy on sabbatical leave for 
persons engaged in instruction and persons engaged in research. Such 
costs will be allocated on an equitable basis among all related 
activities of the IHE.
    (ii) Where sabbatical leave is included in fringe benefits for which 
a cost is determined for assessment as a direct charge, the aggregate 
amount of such assessments applicable to all work of the institution 
during the base period must be reasonable in relation to the IHE's 
actual experience under its sabbatical leave policy.
    (8) Salary rates for non-faculty members. Non-faculty full-time 
professional personnel may also earn ``extra service pay'' in accordance 
with the non-Federal entity's written policy and consistent with 
paragraph (h)(1)(i) of this section.
    (i) Standards for Documentation of Personnel Expenses (1) Charges to 
Federal awards for salaries and wages must be based on records that 
accurately reflect the work performed. These records must:
    (i) Be supported by a system of internal control which provides 
reasonable assurance that the charges are accurate, allowable, and 
properly allocated;
    (ii) Be incorporated into the official records of the non-Federal 
entity;
    (iii) Reasonably reflect the total activity for which the employee 
is compensated by the non-Federal entity, not exceeding 100% of 
compensated activities (for IHE, this per the IHE's definition of IBS);
    (iv) Encompass both federally assisted and all other activities 
compensated by the non-Federal entity on an integrated basis, but may 
include the use of subsidiary records as defined in the non-Federal 
entity's written policy;
    (v) Comply with the established accounting policies and practices of 
the non-Federal entity (See paragraph (h)(1)(ii) above for treatment of 
incidental work for IHEs.); and
    (vi) [Reserved]
    (vii) Support the distribution of the employee's salary or wages 
among specific activities or cost objectives if the employee works on 
more than one Federal award; a Federal award and non-Federal award; an 
indirect cost activity and a direct cost activity; two or more indirect 
activities which are allocated using different allocation bases; or an 
unallowable activity and a direct or indirect cost activity.
    (viii) Budget estimates (i.e., estimates determined before the 
services are performed) alone do not qualify as support for charges to 
Federal awards, but may be used for interim accounting purposes, 
provided that:
    (A) The system for establishing the estimates produces reasonable 
approximations of the activity actually performed;
    (B) Significant changes in the corresponding work activity (as 
defined by the non-Federal entity's written policies) are identified and 
entered into the records in a timely manner. Short term (such as one or 
two months) fluctuation between workload categories need not be 
considered as long as the distribution of salaries and wages is 
reasonable over the longer term; and
    (C) The non-Federal entity's system of internal controls includes 
processes to review after-the-fact interim charges made to a Federal 
awards based on budget estimates. All necessary adjustment must be made 
such that the final amount charged to the Federal award is accurate, 
allowable, and properly allocated.
    (ix) Because practices vary as to the activity constituting a full 
workload (for IHEs, IBS), records may reflect categories of activities 
expressed as a

[[Page 151]]

percentage distribution of total activities.
    (x) It is recognized that teaching, research, service, and 
administration are often inextricably intermingled in an academic 
setting. When recording salaries and wages charged to Federal awards for 
IHEs, a precise assessment of factors that contribute to costs is 
therefore not always feasible, nor is it expected.
    (2) For records which meet the standards required in paragraph 
(i)(1) of this section, the non-Federal entity will not be required to 
provide additional support or documentation for the work performed, 
other than that referenced in paragraph (i)(3) of this section.
    (3) In accordance with Department of Labor regulations implementing 
the Fair Labor Standards Act (FLSA) (29 CFR part 516), charges for the 
salaries and wages of nonexempt employees, in addition to the supporting 
documentation described in this section, must also be supported by 
records indicating the total number of hours worked each day.
    (4) Salaries and wages of employees used in meeting cost sharing or 
matching requirements on Federal awards must be supported in the same 
manner as salaries and wages claimed for reimbursement from Federal 
awards.
    (5) For states, local governments and Indian tribes, substitute 
processes or systems for allocating salaries and wages to Federal awards 
may be used in place of or in addition to the records described in 
paragraph (1) if approved by the cognizant agency for indirect cost. 
Such systems may include, but are not limited to, random moment 
sampling, ``rolling'' time studies, case counts, or other quantifiable 
measures of work performed.
    (i) Substitute systems which use sampling methods (primarily for 
Temporary Assistance for Needy Families (TANF), the Supplemental 
Nutrition Assistance Program (SNAP), Medicaid, and other public 
assistance programs) must meet acceptable statistical sampling standards 
including:
    (A) The sampling universe must include all of the employees whose 
salaries and wages are to be allocated based on sample results except as 
provided in paragraph (i)(5)(iii) of this section;
    (B) The entire time period involved must be covered by the sample; 
and
    (C) The results must be statistically valid and applied to the 
period being sampled.
    (ii) Allocating charges for the sampled employees' supervisors, 
clerical and support staffs, based on the results of the sampled 
employees, will be acceptable.
    (iii) Less than full compliance with the statistical sampling 
standards noted in subsection (5)(i) may be accepted by the cognizant 
agency for indirect costs if it concludes that the amounts to be 
allocated to Federal awards will be minimal, or if it concludes that the 
system proposed by the non-Federal entity will result in lower costs to 
Federal awards than a system which complies with the standards.
    (6) Cognizant agencies for indirect costs are encouraged to approve 
alternative proposals based on outcomes and milestones for program 
performance where these are clearly documented. Where approved by the 
Federal cognizant agency for indirect costs, these plans are acceptable 
as an alternative to the requirements of paragraph (i)(1) of this 
section.
    (7) For Federal awards of similar purpose activity or instances of 
approved blended funding, a non-Federal entity may submit performance 
plans that incorporate funds from multiple Federal awards and account 
for their combined use based on performance-oriented metrics, provided 
that such plans are approved in advance by all involved Federal awarding 
agencies. In these instances, the non-Federal entity must submit a 
request for waiver of the requirements based on documentation that 
describes the method of charging costs, relates the charging of costs to 
the specific activity that is applicable to all fund sources, and is 
based on quantifiable measures of the activity in relation to time 
charged.
    (8) For a non-Federal entity where the records do not meet the 
standards described in this section, the Federal

[[Page 152]]

Government may require personnel activity reports, including prescribed 
certifications, or equivalent documentation that support the records as 
required in this section.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75886, Dec. 19, 2014]



Sec.  200.431  Compensation--fringe benefits.

    (a) Fringe benefits are allowances and services provided by 
employers to their employees as compensation in addition to regular 
salaries and wages. Fringe benefits include, but are not limited to, the 
costs of leave (vacation, family-related, sick or military), employee 
insurance, pensions, and unemployment benefit plans. Except as provided 
elsewhere in these principles, the costs of fringe benefits are 
allowable provided that the benefits are reasonable and are required by 
law, non-Federal entity-employee agreement, or an established policy of 
the non-Federal entity.
    (b) Leave. The cost of fringe benefits in the form of regular 
compensation paid to employees during periods of authorized absences 
from the job, such as for annual leave, family-related leave, sick 
leave, holidays, court leave, military leave, administrative leave, and 
other similar benefits, are allowable if all of the following criteria 
are met:
    (1) They are provided under established written leave policies;
    (2) The costs are equitably allocated to all related activities, 
including Federal awards; and,
    (3) The accounting basis (cash or accrual) selected for costing each 
type of leave is consistently followed by the non-Federal entity or 
specified grouping of employees.
    (i) When a non-Federal entity uses the cash basis of accounting, the 
cost of leave is recognized in the period that the leave is taken and 
paid for. Payments for unused leave when an employee retires or 
terminates employment are allowable in the year of payment.
    (ii) The accrual basis may be only used for those types of leave for 
which a liability as defined by GAAP exists when the leave is earned. 
When a non-Federal entity uses the accrual basis of accounting, 
allowable leave costs are the lesser of the amount accrued or funded.
    (c) The cost of fringe benefits in the form of employer 
contributions or expenses for social security; employee life, health, 
unemployment, and worker's compensation insurance (except as indicated 
in Sec.  200.447 Insurance and indemnification); pension plan costs (see 
paragraph (i) of this section); and other similar benefits are 
allowable, provided such benefits are granted under established written 
policies. Such benefits, must be allocated to Federal awards and all 
other activities in a manner consistent with the pattern of benefits 
attributable to the individuals or group(s) of employees whose salaries 
and wages are chargeable to such Federal awards and other activities, 
and charged as direct or indirect costs in accordance with the non-
Federal entity's accounting practices.
    (d) Fringe benefits may be assigned to cost objectives by 
identifying specific benefits to specific individual employees or by 
allocating on the basis of entity-wide salaries and wages of the 
employees receiving the benefits. When the allocation method is used, 
separate allocations must be made to selective groupings of employees, 
unless the non-Federal entity demonstrates that costs in relationship to 
salaries and wages do not differ significantly for different groups of 
employees.
    (e) Insurance. See also Sec.  200.447 Insurance and indemnification, 
paragraphs (d)(1) and (2).
    (1) Provisions for a reserve under a self-insurance program for 
unemployment compensation or workers' compensation are allowable to the 
extent that the provisions represent reasonable estimates of the 
liabilities for such compensation, and the types of coverage, extent of 
coverage, and rates and premiums would have been allowable had insurance 
been purchased to cover the risks. However, provisions for self-insured 
liabilities which do not become payable for more than one year after the 
provision is made must not exceed the present value of the liability.
    (2) Costs of insurance on the lives of trustees, officers, or other 
employees holding positions of similar responsibility are allowable only 
to the extent

[[Page 153]]

that the insurance represents additional compensation. The costs of such 
insurance when the non-Federal entity is named as beneficiary are 
unallowable.
    (3) Actual claims paid to or on behalf of employees or former 
employees for workers' compensation, unemployment compensation, 
severance pay, and similar employee benefits (e.g., post-retirement 
health benefits), are allowable in the year of payment provided that the 
non-Federal entity follows a consistent costing policy.
    (f) Automobiles. That portion of automobile costs furnished by the 
entity that relates to personal use by employees (including 
transportation to and from work) is unallowable as fringe benefit or 
indirect (F&A) costs regardless of whether the cost is reported as 
taxable income to the employees.
    (g) Pension Plan Costs. Pension plan costs which are incurred in 
accordance with the established policies of the non-Federal entity are 
allowable, provided that:
    (1) Such policies meet the test of reasonableness.
    (2) The methods of cost allocation are not discriminatory.
    (3) For entities using accrual based accounting, the cost assigned 
to each fiscal year is determined in accordance with GAAP.
    (4) The costs assigned to a given fiscal year are funded for all 
plan participants within six months after the end of that year. However, 
increases to normal and past service pension costs caused by a delay in 
funding the actuarial liability beyond 30 calendar days after each 
quarter of the year to which such costs are assignable are unallowable. 
Non-Federal entity may elect to follow the ``Cost Accounting Standard 
for Composition and Measurement of Pension Costs'' (48 CFR 9904.412).
    (5) Pension plan termination insurance premiums paid pursuant to the 
Employee Retirement Income Security Act (ERISA) of 1974 (29 U.S.C. 1301-
1461) are allowable. Late payment charges on such premiums are 
unallowable. Excise taxes on accumulated funding deficiencies and other 
penalties imposed under ERISA are unallowable.
    (6) Pension plan costs may be computed using a pay-as-you-go method 
or an acceptable actuarial cost method in accordance with established 
written policies of the non-Federal entity.
    (i) For pension plans financed on a pay-as-you-go method, allowable 
costs will be limited to those representing actual payments to retirees 
or their beneficiaries.
    (ii) Pension costs calculated using an actuarial cost-based method 
recognized by GAAP are allowable for a given fiscal year if they are 
funded for that year within six months after the end of that year. Costs 
funded after the six month period (or a later period agreed to by the 
cognizant agency for indirect costs) are allowable in the year funded. 
The cognizant agency for indirect costs may agree to an extension of the 
six month period if an appropriate adjustment is made to compensate for 
the timing of the charges to the Federal Government and related Federal 
reimbursement and the non-Federal entity's contribution to the pension 
fund. Adjustments may be made by cash refund or other equitable 
procedures to compensate the Federal Government for the time value of 
Federal reimbursements in excess of contributions to the pension fund.
    (iii) Amounts funded by the non-Federal entity in excess of the 
actuarially determined amount for a fiscal year may be used as the non-
Federal entity's contribution in future periods.
    (iv) When a non-Federal entity converts to an acceptable actuarial 
cost method, as defined by GAAP, and funds pension costs in accordance 
with this method, the unfunded liability at the time of conversion is 
allowable if amortized over a period of years in accordance with GAAP.
    (v) The Federal Government must receive an equitable share of any 
previously allowed pension costs (including earnings thereon) which 
revert or inure to the non-Federal entity in the form of a refund, 
withdrawal, or other credit.
    (h) Post-Retirement Health. Post-retirement health plans (PRHP) 
refers to costs of health insurance or health services not included in a 
pension plan covered by paragraph (g) of this section for retirees and 
their spouses, dependents, and survivors. PRHP costs may be computed 
using a pay-as-you-go

[[Page 154]]

method or an acceptable actuarial cost method in accordance with 
established written policies of the non-Federal entity.
    (1) For PRHP financed on a pay-as-you-go method, allowable costs 
will be limited to those representing actual payments to retirees or 
their beneficiaries.
    (2) PRHP costs calculated using an actuarial cost method recognized 
by GAAP are allowable if they are funded for that year within six months 
after the end of that year. Costs funded after the six month period (or 
a later period agreed to by the cognizant agency) are allowable in the 
year funded. The Federal cognizant agency for indirect costs may agree 
to an extension of the six month period if an appropriate adjustment is 
made to compensate for the timing of the charges to the Federal 
Government and related Federal reimbursements and the non-Federal 
entity's contributions to the PRHP fund. Adjustments may be made by cash 
refund, reduction in current year's PRHP costs, or other equitable 
procedures to compensate the Federal Government for the time value of 
Federal reimbursements in excess of contributions to the PRHP fund.
    (3) Amounts funded in excess of the actuarially determined amount 
for a fiscal year may be used as the non-Federal entity contribution in 
a future period.
    (4) When a non-Federal entity converts to an acceptable actuarial 
cost method and funds PRHP costs in accordance with this method, the 
initial unfunded liability attributable to prior years is allowable if 
amortized over a period of years in accordance with GAAP, or, if no such 
GAAP period exists, over a period negotiated with the cognizant agency 
for indirect costs.
    (5) To be allowable in the current year, the PRHP costs must be paid 
either to:
    (i) An insurer or other benefit provider as current year costs or 
premiums, or
    (ii) An insurer or trustee to maintain a trust fund or reserve for 
the sole purpose of providing post-retirement benefits to retirees and 
other beneficiaries.
    (6) The Federal Government must receive an equitable share of any 
amounts of previously allowed post-retirement benefit costs (including 
earnings thereon) which revert or inure to the non-Federal entity in the 
form of a refund, withdrawal, or other credit.
    (i) Severance Pay. (1) Severance pay, also commonly referred to as 
dismissal wages, is a payment in addition to regular salaries and wages, 
by non-Federal entities to workers whose employment is being terminated. 
Costs of severance pay are allowable only to the extent that in each 
case, it is required by (a) law, (b) employer-employee agreement, (c) 
established policy that constitutes, in effect, an implied agreement on 
the non-Federal entity's part, or (d) circumstances of the particular 
employment.
    (2) Costs of severance payments are divided into two categories as 
follows:
    (i) Actual normal turnover severance payments must be allocated to 
all activities; or, where the non-Federal entity provides for a reserve 
for normal severances, such method will be acceptable if the charge to 
current operations is reasonable in light of payments actually made for 
normal severances over a representative past period, and if amounts 
charged are allocated to all activities of the non-Federal entity.
    (ii) Measurement of costs of abnormal or mass severance pay by means 
of an accrual will not achieve equity to both parties. Thus, accruals 
for this purpose are not allowable. However, the Federal Government 
recognizes its obligation to participate, to the extent of its fair 
share, in any specific payment. Prior approval by the Federal awarding 
agency or cognizant agency for indirect cost, as appropriate, is 
required.
    (3) Costs incurred in certain severance pay packages which are in an 
amount in excess of the normal severance pay paid by the non-Federal 
entity to an employee upon termination of employment and are paid to the 
employee contingent upon a change in management control over, or 
ownership of, the non-Federal entity's assets, are unallowable.
    (4) Severance payments to foreign nationals employed by the non-
Federal entity outside the United States, to the extent that the amount 
exceeds the

[[Page 155]]

customary or prevailing practices for the non-Federal entity in the 
United States, are unallowable, unless they are necessary for the 
performance of Federal programs and approved by the Federal awarding 
agency.
    (5) Severance payments to foreign nationals employed by the non-
Federal entity outside the United States due to the termination of the 
foreign national as a result of the closing of, or curtailment of 
activities by, the non-Federal entity in that country, are unallowable, 
unless they are necessary for the performance of Federal programs and 
approved by the Federal awarding agency.
    (j)(1) For IHEs only. Fringe benefits in the form of undergraduate 
and graduate tuition or remission of tuition for individual employees 
are allowable, provided such benefits are granted in accordance with 
established non-Federal entity policies, and are distributed to all non-
Federal entity activities on an equitable basis. Tuition benefits for 
family members other than the employee are unallowable.
    (2) Fringe benefits in the form of tuition or remission of tuition 
for individual employees not employed by IHEs are limited to the tax-
free amount allowed per section 127 of the Internal Revenue Code as 
amended.
    (3) IHEs may offer employees tuition waivers or tuition reductions, 
provided that the benefit does not discriminate in favor of highly 
compensated employees. Employees can exercise these benefits at other 
institutions according to institutional policy. See Sec.  200.466 
Scholarships and student aid costs, for treatment of tuition remission 
provided to students.
    (k) For IHEs whose costs are paid by state or local governments, 
fringe benefit programs (such as pension costs and FICA) and any other 
benefits costs specifically incurred on behalf of, and in direct benefit 
to, the non-Federal entity, are allowable costs of such non-Federal 
entities whether or not these costs are recorded in the accounting 
records of the non-Federal entities, subject to the following:
    (1) The costs meet the requirements of Basic Considerations in 
Sec. Sec.  200.402 Composition of costs through 200.411 Adjustment of 
previously negotiated indirect (F&A) cost rates containing unallowable 
costs of this subpart;
    (2) The costs are properly supported by approved cost allocation 
plans in accordance with applicable Federal cost accounting principles; 
and
    (3) The costs are not otherwise borne directly or indirectly by the 
Federal Government.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75886, Dec. 19, 2014; 
80 FR 54409, Sept. 10, 2015]



Sec.  200.432  Conferences.

    A conference is defined as a meeting, retreat, seminar, symposium, 
workshop or event whose primary purpose is the dissemination of 
technical information beyond the non-Federal entity and is necessary and 
reasonable for successful performance under the Federal award. Allowable 
conference costs paid by the non-Federal entity as a sponsor or host of 
the conference may include rental of facilities, speakers' fees, costs 
of meals and refreshments, local transportation, and other items 
incidental to such conferences unless further restricted by the terms 
and conditions of the Federal award. As needed, the costs of 
identifying, but not providing, locally available dependent-care 
resources are allowable. Conference hosts/sponsors must exercise 
discretion and judgment in ensuring that conference costs are 
appropriate, necessary and managed in a manner that minimizes costs to 
the Federal award. The Federal awarding agency may authorize exceptions 
where appropriate for programs including Indian tribes, children, and 
the elderly. See also Sec. Sec.  200.438 Entertainment costs, 200.456 
Participant support costs, 200.474 Travel costs, and 200.475 Trustees.



Sec.  200.433  Contingency provisions.

    (a) Contingency is that part of a budget estimate of future costs 
(typically of large construction projects, IT systems, or other items as 
approved by the Federal awarding agency) which is associated with 
possible events or conditions arising from causes the precise outcome of 
which is indeterminable at

[[Page 156]]

the time of estimate, and that experience shows will likely result, in 
aggregate, in additional costs for the approved activity or project. 
Amounts for major project scope changes, unforeseen risks, or 
extraordinary events may not be included.
    (b) It is permissible for contingency amounts other than those 
excluded in paragraph (a) of this section to be explicitly included in 
budget estimates, to the extent they are necessary to improve the 
precision of those estimates. Amounts must be estimated using broadly-
accepted cost estimating methodologies, specified in the budget 
documentation of the Federal award, and accepted by the Federal awarding 
agency. As such, contingency amounts are to be included in the Federal 
award. In order for actual costs incurred to be allowable, they must 
comply with the cost principles and other requirements in this part (see 
also Sec. Sec.  200.300 Statutory and national policy requirements 
through 200.309 Period of performance of Subpart D of this part and 
200.403 Factors affecting allowability of costs); be necessary and 
reasonable for proper and efficient accomplishment of project or program 
objectives, and be verifiable from the non-Federal entity's records.
    (c) Payments made by the Federal awarding agency to the non-Federal 
entity's ``contingency reserve'' or any similar payment made for events 
the occurrence of which cannot be foretold with certainty as to the time 
or intensity, or with an assurance of their happening, are unallowable, 
except as noted in Sec. Sec.  200.431 Compensation--fringe benefits 
regarding self-insurance, pensions, severance and post-retirement health 
costs and 200.447 Insurance and indemnification.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75886, Dec. 19, 2014]



Sec.  200.434  Contributions and donations.

    (a) Costs of contributions and donations, including cash, property, 
and services, from the non-Federal entity to other entities, are 
unallowable.
    (b) The value of services and property donated to the non-Federal 
entity may not be charged to the Federal award either as a direct or 
indirect (F&A) cost. The value of donated services and property may be 
used to meet cost sharing or matching requirements (see Sec.  200.306 
Cost sharing or matching). Depreciation on donated assets is permitted 
in accordance with Sec.  200.436 Depreciation, as long as the donated 
property is not counted towards cost sharing or matching requirements.
    (c) Services donated or volunteered to the non-Federal entity may be 
furnished to a non-Federal entity by professional and technical 
personnel, consultants, and other skilled and unskilled labor. The value 
of these services may not be charged to the Federal award either as a 
direct or indirect cost. However, the value of donated services may be 
used to meet cost sharing or matching requirements in accordance with 
the provisions of Sec.  200.306 Cost sharing or matching.
    (d) To the extent feasible, services donated to the non-Federal 
entity will be supported by the same methods used to support the 
allocability of regular personnel services.
    (e) The following provisions apply to nonprofit organizations. The 
value of services donated to the nonprofit organization utilized in the 
performance of a direct cost activity must be considered in the 
determination of the non-Federal entity's indirect cost rate(s) and, 
accordingly, must be allocated a proportionate share of applicable 
indirect costs when the following circumstances exist:
    (1) The aggregate value of the services is material;
    (2) The services are supported by a significant amount of the 
indirect costs incurred by the non-Federal entity;
    (i) In those instances where there is no basis for determining the 
fair market value of the services rendered, the non-Federal entity and 
the cognizant agency for indirect costs must negotiate an appropriate 
allocation of indirect cost to the services.
    (ii) Where donated services directly benefit a project supported by 
the Federal award, the indirect costs allocated to the services will be 
considered as a part of the total costs of the project. Such indirect 
costs may be reimbursed under the Federal award or used to meet cost 
sharing or matching requirements.

[[Page 157]]

    (f) Fair market value of donated services must be computed as 
described in Sec.  200.306 Cost sharing or matching.
    (g) Personal Property and Use of Space.
    (1) Donated personal property and use of space may be furnished to a 
non-Federal entity. The value of the personal property and space may not 
be charged to the Federal award either as a direct or indirect cost.
    (2) The value of the donations may be used to meet cost sharing or 
matching share requirements under the conditions described in Sec. Sec.  
200.300 Statutory and national policy requirements through 200.309 
Period of performance of subpart D of this part. The value of the 
donations must be determined in accordance with Sec. Sec.  200.300 
Statutory and national policy requirements through 200.309 Period of 
performance. Where donations are treated as indirect costs, indirect 
cost rates will separate the value of the donations so that 
reimbursement will not be made.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75886, Dec. 19, 2014]



Sec.  200.435  Defense and prosecution of criminal and civil 
proceedings, claims, appeals and patent infringements.

    (a) Definitions for the purposes of this section. (1) Conviction 
means a judgment or conviction of a criminal offense by any court of 
competent jurisdiction, whether entered upon verdict or a plea, 
including a conviction due to a plea of nolo contendere.
    (2) Costs include the services of in-house or private counsel, 
accountants, consultants, or others engaged to assist the non-Federal 
entity before, during, and after commencement of a judicial or 
administrative proceeding, that bear a direct relationship to the 
proceeding.
    (3) Fraud means:
    (i) Acts of fraud or corruption or attempts to defraud the Federal 
Government or to corrupt its agents,
    (ii) Acts that constitute a cause for debarment or suspension (as 
specified in agency regulations), and
    (iii) Acts which violate the False Claims Act (31 U.S.C. 3729-3732) 
or the Anti-kickback Act (41 U.S.C. 1320a-7b(b)).
    (4) Penalty does not include restitution, reimbursement, or 
compensatory damages.
    (5) Proceeding includes an investigation.
    (b) Costs. (1) Except as otherwise described herein, costs incurred 
in connection with any criminal, civil or administrative proceeding 
(including filing of a false certification) commenced by the Federal 
Government, a state, local government, or foreign government, or joined 
by the Federal Government (including a proceeding under the False Claims 
Act), against the non-Federal entity, (or commenced by third parties or 
a current or former employee of the non-Federal entity who submits a 
whistleblower complaint of reprisal in accordance with 10 U.S.C. 2409 or 
41 U.S.C. 4712), are not allowable if the proceeding:
    (i) Relates to a violation of, or failure to comply with, a Federal, 
state, local or foreign statute, regulation or the terms and conditions 
of the Federal award, by the non-Federal entity (including its agents 
and employees); and
    (ii) Results in any of the following dispositions:
    (A) In a criminal proceeding, a conviction.
    (B) In a civil or administrative proceeding involving an allegation 
of fraud or similar misconduct, a determination of non-Federal entity 
liability.
    (C) In the case of any civil or administrative proceeding, the 
disallowance of costs or the imposition of a monetary penalty, or an 
order issued by the Federal awarding agency head or delegate to the non-
Federal entity to take corrective action under 10 U.S.C. 2409 or 41 
U.S.C. 4712.
    (D) A final decision by an appropriate Federal official to debar or 
suspend the non-Federal entity, to rescind or void a Federal award, or 
to terminate a Federal award by reason of a violation or failure to 
comply with a statute, regulation, or the terms and conditions of the 
Federal award.
    (E) A disposition by consent or compromise, if the action could have 
resulted in any of the dispositions described in paragraphs 
(b)(1)(ii)(A) through (D) of this section.

[[Page 158]]

    (2) If more than one proceeding involves the same alleged 
misconduct, the costs of all such proceedings are unallowable if any 
results in one of the dispositions shown in paragraph (b) of this 
section.
    (c) If a proceeding referred to in paragraph (b) of this section is 
commenced by the Federal Government and is resolved by consent or 
compromise pursuant to an agreement by the non-Federal entity and the 
Federal Government, then the costs incurred may be allowed to the extent 
specifically provided in such agreement.
    (d) If a proceeding referred to in paragraph (b) of this section is 
commenced by a state, local or foreign government, the authorized 
Federal official may allow the costs incurred if such authorized 
official determines that the costs were incurred as a result of:
    (1) A specific term or condition of the Federal award, or
    (2) Specific written direction of an authorized official of the 
Federal awarding agency.
    (e) Costs incurred in connection with proceedings described in 
paragraph (b) of this section, which are not made unallowable by that 
subsection, may be allowed but only to the extent that:
    (1) The costs are reasonable and necessary in relation to the 
administration of the Federal award and activities required to deal with 
the proceeding and the underlying cause of action;
    (2) Payment of the reasonable, necessary, allocable and otherwise 
allowable costs incurred is not prohibited by any other provision(s) of 
the Federal award;
    (3) The costs are not recovered from the Federal Government or a 
third party, either directly as a result of the proceeding or otherwise; 
and,
    (4) An authorized Federal official must determine the percentage of 
costs allowed considering the complexity of litigation, generally 
accepted principles governing the award of legal fees in civil actions 
involving the United States, and such other factors as may be 
appropriate. Such percentage must not exceed 80 percent. However, if an 
agreement reached under paragraph (c) of this section has explicitly 
considered this 80 percent limitation and permitted a higher percentage, 
then the full amount of costs resulting from that agreement are 
allowable.
    (f) Costs incurred by the non-Federal entity in connection with the 
defense of suits brought by its employees or ex-employees under section 
2 of the Major Fraud Act of 1988 (18 U.S.C. 1031), including the cost of 
all relief necessary to make such employee whole, where the non-Federal 
entity was found liable or settled, are unallowable.
    (g) Costs of prosecution of claims against the Federal Government, 
including appeals of final Federal agency decisions, are unallowable.
    (h) Costs of legal, accounting, and consultant services, and related 
costs, incurred in connection with patent infringement litigation, are 
unallowable unless otherwise provided for in the Federal award.
    (i) Costs which may be unallowable under this section, including 
directly associated costs, must be segregated and accounted for 
separately. During the pendency of any proceeding covered by paragraphs 
(b) and (f) of this section, the Federal Government must generally 
withhold payment of such costs. However, if in its best interests, the 
Federal Government may provide for conditional payment upon provision of 
adequate security, or other adequate assurance, and agreement to repay 
all unallowable costs, plus interest, if the costs are subsequently 
determined to be unallowable.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75886, Dec. 19, 2014]



Sec.  200.436  Depreciation.

    (a) Depreciation is the method for allocating the cost of fixed 
assets to periods benefitting from asset use. The non-Federal entity may 
be compensated for the use of its buildings, capital improvements, 
equipment, and software projects capitalized in accordance with GAAP, 
provided that they are used, needed in the non-Federal entity's 
activities, and properly allocated to Federal awards. Such compensation 
must be made by computing depreciation.
    (b) The allocation for depreciation must be made in accordance with 
Appendices III through IX.

[[Page 159]]

    (c) Depreciation is computed applying the following rules. The 
computation of depreciation must be based on the acquisition cost of the 
assets involved. For an asset donated to the non-Federal entity by a 
third party, its fair market value at the time of the donation must be 
considered as the acquisition cost. Such assets may be depreciated or 
claimed as matching but not both. For the purpose of computing 
depreciation, the acquisition cost will exclude:
    (1) The cost of land;
    (2) Any portion of the cost of buildings and equipment borne by or 
donated by the Federal Government, irrespective of where title was 
originally vested or where it is presently located;
    (3) Any portion of the cost of buildings and equipment contributed 
by or for the non-Federal entity where law or agreement prohibits 
recovery; and
    (4) Any asset acquired solely for the performance of a non-Federal 
award.
    (d) When computing depreciation charges, the following must be 
observed:
    (1) The period of useful service or useful life established in each 
case for usable capital assets must take into consideration such factors 
as type of construction, nature of the equipment, technological 
developments in the particular area, historical data, and the renewal 
and replacement policies followed for the individual items or classes of 
assets involved.
    (2) The depreciation method used to charge the cost of an asset (or 
group of assets) to accounting periods must reflect the pattern of 
consumption of the asset during its useful life. In the absence of clear 
evidence indicating that the expected consumption of the asset will be 
significantly greater in the early portions than in the later portions 
of its useful life, the straight-line method must be presumed to be the 
appropriate method. Depreciation methods once used may not be changed 
unless approved in advance by the cognizant agency. The depreciation 
methods used to calculate the depreciation amounts for indirect (F&A) 
rate purposes must be the same methods used by the non-Federal entity 
for its financial statements.
    (3) The entire building, including the shell and all components, may 
be treated as a single asset and depreciated over a single useful life. 
A building may also be divided into multiple components. Each component 
item may then be depreciated over its estimated useful life. The 
building components must be grouped into three general components of a 
building: building shell (including construction and design costs), 
building services systems (e.g., elevators, HVAC, plumbing system and 
heating and air-conditioning system) and fixed equipment (e.g., 
sterilizers, casework, fume hoods, cold rooms and glassware/washers). In 
exceptional cases, a cognizant agency may authorize a non-Federal entity 
to use more than these three groupings. When a non-Federal entity elects 
to depreciate its buildings by its components, the same depreciation 
methods must be used for indirect (F&A) purposes and financial 
statements purposes, as described in paragraphs (d)(1) and (2) of this 
section.
    (4) No depreciation may be allowed on any assets that have outlived 
their depreciable lives.
    (5) Where the depreciation method is introduced to replace the use 
allowance method, depreciation must be computed as if the asset had been 
depreciated over its entire life (i.e., from the date the asset was 
acquired and ready for use to the date of disposal or withdrawal from 
service). The total amount of use allowance and depreciation for an 
asset (including imputed depreciation applicable to periods prior to the 
conversion from the use allowance method as well as depreciation after 
the conversion) may not exceed the total acquisition cost of the asset.
    (e) Charges for depreciation must be supported by adequate property 
records, and physical inventories must be taken at least once every two 
years to ensure that the assets exist and are usable, used, and needed. 
Statistical sampling techniques may be used in taking these inventories. 
In addition, adequate depreciation records showing the amount of 
depreciation taken each period must also be maintained.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75886, Dec. 19, 2014]

[[Page 160]]



Sec.  200.437  Employee health and welfare costs.

    (a) Costs incurred in accordance with the non-Federal entity's 
documented policies for the improvement of working conditions, employer-
employee relations, employee health, and employee performance are 
allowable.
    (b) Such costs will be equitably apportioned to all activities of 
the non-Federal entity. Income generated from any of these activities 
will be credited to the cost thereof unless such income has been 
irrevocably sent to employee welfare organizations.
    (c) Losses resulting from operating food services are allowable only 
if the non-Federal entity's objective is to operate such services on a 
break-even basis. Losses sustained because of operating objectives other 
than the above are allowable only:
    (1) Where the non-Federal entity can demonstrate unusual 
circumstances; and
    (2) With the approval of the cognizant agency for indirect costs.



Sec.  200.438  Entertainment costs.

    Costs of entertainment, including amusement, diversion, and social 
activities and any associated costs are unallowable, except where 
specific costs that might otherwise be considered entertainment have a 
programmatic purpose and are authorized either in the approved budget 
for the Federal award or with prior written approval of the Federal 
awarding agency.



Sec.  200.439  Equipment and other capital expenditures.

    (a) See Sec. Sec.  200.13 Capital expenditures, 200.33 Equipment, 
200.89 Special purpose equipment, 200.48 General purpose equipment, 
200.2 Acquisition cost, and 200.12 Capital assets.
    (b) The following rules of allowability must apply to equipment and 
other capital expenditures:
    (1) Capital expenditures for general purpose equipment, buildings, 
and land are unallowable as direct charges, except with the prior 
written approval of the Federal awarding agency or pass-through entity.
    (2) Capital expenditures for special purpose equipment are allowable 
as direct costs, provided that items with a unit cost of $5,000 or more 
have the prior written approval of the Federal awarding agency or pass-
through entity.
    (3) Capital expenditures for improvements to land, buildings, or 
equipment which materially increase their value or useful life are 
unallowable as a direct cost except with the prior written approval of 
the Federal awarding agency, or pass-through entity. See Sec.  200.436 
Depreciation, for rules on the allowability of depreciation on 
buildings, capital improvements, and equipment. See also Sec.  200.465 
Rental costs of real property and equipment.
    (4) When approved as a direct charge pursuant to paragraphs (b)(1) 
through (3) of this section, capital expenditures will be charged in the 
period in which the expenditure is incurred, or as otherwise determined 
appropriate and negotiated with the Federal awarding agency.
    (5) The unamortized portion of any equipment written off as a result 
of a change in capitalization levels may be recovered by continuing to 
claim the otherwise allowable depreciation on the equipment, or by 
amortizing the amount to be written off over a period of years 
negotiated with the Federal cognizant agency for indirect cost.
    (6) Cost of equipment disposal. If the non-Federal entity is 
instructed by the Federal awarding agency to otherwise dispose of or 
transfer the equipment the costs of such disposal or transfer are 
allowable.
    (7) Equipment and other capital expenditures are unallowable as 
indirect costs. See Sec.  200.436 Depreciation.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75886, Dec. 19, 2014]



Sec.  200.440  Exchange rates.

    (a) Cost increases for fluctuations in exchange rates are allowable 
costs subject to the availability of funding. Prior approval of exchange 
rate fluctuations is required only when the change results in the need 
for additional Federal funding, or the increased costs result in the 
need to significantly reduce the scope of the project. The Federal 
awarding agency must however ensure that adequate funds are available to 
cover currency

[[Page 161]]

fluctuations in order to avoid a violation of the Anti-Deficiency Act.
    (b) The non-Federal entity is required to make reviews of local 
currency gains to determine the need for additional federal funding 
before the expiration date of the Federal award. Subsequent adjustments 
for currency increases may be allowable only when the non-Federal entity 
provides the Federal awarding agency with adequate source documentation 
from a commonly used source in effect at the time the expense was made, 
and to the extent that sufficient Federal funds are available.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75886, Dec. 19, 2014]



Sec.  200.441  Fines, penalties, damages and other settlements.

    Costs resulting from non-Federal entity violations of, alleged 
violations of, or failure to comply with, Federal, state, tribal, local 
or foreign laws and regulations are unallowable, except when incurred as 
a result of compliance with specific provisions of the Federal award, or 
with prior written approval of the Federal awarding agency. See also 
Sec.  200.435 Defense and prosecution of criminal and civil proceedings, 
claims, appeals and patent infringements.



Sec.  200.442  Fund raising and investment management costs.

    (a) Costs of organized fund raising, including financial campaigns, 
endowment drives, solicitation of gifts and bequests, and similar 
expenses incurred to raise capital or obtain contributions are 
unallowable. Fund raising costs for the purposes of meeting the Federal 
program objectives are allowable with prior written approval from the 
Federal awarding agency. Proposal costs are covered in Sec.  200.460 
Proposal costs.
    (b) Costs of investment counsel and staff and similar expenses 
incurred to enhance income from investments are unallowable except when 
associated with investments covering pension, self-insurance, or other 
funds which include Federal participation allowed by this part.
    (c) Costs related to the physical custody and control of monies and 
securities are allowable.
    (d) Both allowable and unallowable fund raising and investment 
activities must be allocated as an appropriate share of indirect costs 
under the conditions described in Sec.  200.413 Direct costs.



Sec.  200.443  Gains and losses on disposition of depreciable assets.

    (a) Gains and losses on the sale, retirement, or other disposition 
of depreciable property must be included in the year in which they occur 
as credits or charges to the asset cost grouping(s) in which the 
property was included. The amount of the gain or loss to be included as 
a credit or charge to the appropriate asset cost grouping(s) is the 
difference between the amount realized on the property and the 
undepreciated basis of the property.
    (b) Gains and losses from the disposition of depreciable property 
must not be recognized as a separate credit or charge under the 
following conditions:
    (1) The gain or loss is processed through a depreciation account and 
is reflected in the depreciation allowable under Sec. Sec.  200.436 
Depreciation and 200.439 Equipment and other capital expenditures.
    (2) The property is given in exchange as part of the purchase price 
of a similar item and the gain or loss is taken into account in 
determining the depreciation cost basis of the new item.
    (3) A loss results from the failure to maintain permissible 
insurance, except as otherwise provided in Sec.  200.447 Insurance and 
indemnification.
    (4) Compensation for the use of the property was provided through 
use allowances in lieu of depreciation.
    (5) Gains and losses arising from mass or extraordinary sales, 
retirements, or other dispositions must be considered on a case-by-case 
basis.
    (c) Gains or losses of any nature arising from the sale or exchange 
of property other than the property covered in paragraph (a) of this 
section, e.g., land, must be excluded in computing Federal award costs.
    (d) When assets acquired with Federal funds, in part or wholly, are 
disposed of, the distribution of the proceeds must be made in accordance 
with

[[Page 162]]

Sec. Sec.  200.310 Insurance Coverage through 200.316 Property trust 
relationship.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75886, Dec. 19, 2014]



Sec.  200.444  General costs of government.

    (a) For states, local governments, and Indian Tribes, the general 
costs of government are unallowable (except as provided in Sec.  200.474 
Travel costs). Unallowable costs include:
    (1) Salaries and expenses of the Office of the Governor of a state 
or the chief executive of a local government or the chief executive of 
an Indian tribe;
    (2) Salaries and other expenses of a state legislature, tribal 
council, or similar local governmental body, such as a county 
supervisor, city council, school board, etc., whether incurred for 
purposes of legislation or executive direction;
    (3) Costs of the judicial branch of a government;
    (4) Costs of prosecutorial activities unless treated as a direct 
cost to a specific program if authorized by statute or regulation 
(however, this does not preclude the allowability of other legal 
activities of the Attorney General as described in Sec.  200.435 Defense 
and prosecution of criminal and civil proceedings, claims, appeals and 
patent infringements); and
    (5) Costs of other general types of government services normally 
provided to the general public, such as fire and police, unless provided 
for as a direct cost under a program statute or regulation.
    (b) For Indian tribes and Councils of Governments (COGs) (see Sec.  
200.64 Local government), up to 50% of salaries and expenses directly 
attributable to managing and operating Federal programs by the chief 
executive and his or her staff can be included in the indirect cost 
calculation without documentation.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75886, Dec. 19, 2014]



Sec.  200.445  Goods or services for personal use.

    (a) Costs of goods or services for personal use of the non-Federal 
entity's employees are unallowable regardless of whether the cost is 
reported as taxable income to the employees.
    (b) Costs of housing (e.g., depreciation, maintenance, utilities, 
furnishings, rent), housing allowances and personal living expenses are 
only allowable as direct costs regardless of whether reported as taxable 
income to the employees. In addition, to be allowable direct costs must 
be approved in advance by a Federal awarding agency.



Sec.  200.446  Idle facilities and idle capacity.

    (a) As used in this section the following terms have the meanings 
set forth in this section:
    (1) Facilities means land and buildings or any portion thereof, 
equipment individually or collectively, or any other tangible capital 
asset, wherever located, and whether owned or leased by the non-Federal 
entity.
    (2) Idle facilities means completely unused facilities that are 
excess to the non-Federal entity's current needs.
    (3) Idle capacity means the unused capacity of partially used 
facilities. It is the difference between:
    (i) That which a facility could achieve under 100 percent operating 
time on a one-shift basis less operating interruptions resulting from 
time lost for repairs, setups, unsatisfactory materials, and other 
normal delays and;
    (ii) The extent to which the facility was actually used to meet 
demands during the accounting period. A multi-shift basis should be used 
if it can be shown that this amount of usage would normally be expected 
for the type of facility involved.
    (4) Cost of idle facilities or idle capacity means costs such as 
maintenance, repair, housing, rent, and other related costs, e.g., 
insurance, interest, and depreciation. These costs could include the 
costs of idle public safety emergency facilities, telecommunications, or 
information technology system capacity that is built to withstand major 
fluctuations in load, e.g., consolidated data centers.
    (b) The costs of idle facilities are unallowable except to the 
extent that:
    (1) They are necessary to meet workload requirements which may 
fluctuate and are allocated appropriately to all benefiting programs; or

[[Page 163]]

    (2) Although not necessary to meet fluctuations in workload, they 
were necessary when acquired and are now idle because of changes in 
program requirements, efforts to achieve more economical operations, 
reorganization, termination, or other causes which could not have been 
reasonably foreseen. Under the exception stated in this subsection, 
costs of idle facilities are allowable for a reasonable period of time, 
ordinarily not to exceed one year, depending on the initiative taken to 
use, lease, or dispose of such facilities.
    (c) The costs of idle capacity are normal costs of doing business 
and are a factor in the normal fluctuations of usage or indirect cost 
rates from period to period. Such costs are allowable, provided that the 
capacity is reasonably anticipated to be necessary to carry out the 
purpose of the Federal award or was originally reasonable and is not 
subject to reduction or elimination by use on other Federal awards, 
subletting, renting, or sale, in accordance with sound business, 
economic, or security practices. Widespread idle capacity throughout an 
entire facility or among a group of assets having substantially the same 
function may be considered idle facilities.



Sec.  200.447  Insurance and indemnification.

    (a) Costs of insurance required or approved and maintained, pursuant 
to the Federal award, are allowable.
    (b) Costs of other insurance in connection with the general conduct 
of activities are allowable subject to the following limitations:
    (1) Types and extent and cost of coverage are in accordance with the 
non-Federal entity's policy and 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 are 
unallowable except to the extent that the Federal awarding agency has 
specifically required or approved such costs.
    (3) Costs allowed for business interruption or other similar 
insurance must exclude coverage of management fees.
    (4) Costs of insurance on the lives of trustees, officers, or other 
employees holding positions of similar responsibilities are allowable 
only to the extent that the insurance represents additional compensation 
(see Sec.  200.431 Compensation--fringe benefits). The cost of such 
insurance when the non-Federal entity is identified as the beneficiary 
is unallowable.
    (5) Insurance against defects. Costs of insurance with respect to 
any costs incurred to correct defects in the non-Federal entity's 
materials or workmanship are unallowable.
    (6) Medical liability (malpractice) insurance. Medical liability 
insurance is an allowable cost of Federal research programs only to the 
extent that the Federal research programs involve human subjects or 
training of participants in research techniques. Medical liability 
insurance costs must be treated as a direct cost and must be assigned to 
individual projects based on the manner in which the insurer allocates 
the risk to the population covered by the insurance.
    (c) Actual losses which could have been covered by permissible 
insurance (through a self-insurance program or otherwise) are 
unallowable, unless expressly provided for in the Federal award. 
However, costs incurred because of losses not covered under nominal 
deductible insurance coverage provided in keeping with sound management 
practice, and minor losses not covered by insurance, such as spoilage, 
breakage, and disappearance of small hand tools, which occur in the 
ordinary course of operations, are allowable.
    (d) Contributions to a reserve for certain self-insurance programs 
including workers' compensation, unemployment compensation, and 
severance pay are allowable subject to the following provisions:
    (1) The type of coverage and the extent of coverage and the rates 
and premiums would have been allowed had insurance (including 
reinsurance) been purchased to cover the risks. However, provision for 
known or reasonably estimated self-insured liabilities, which do not 
become payable for more than one year after the provision is made, must 
not exceed the discounted present value of the liability. The rate used 
for

[[Page 164]]

discounting the liability must be determined by giving consideration to 
such factors as the non-Federal entity's settlement rate for those 
liabilities and its investment rate of return.
    (2) Earnings or investment income on reserves must be credited to 
those reserves.
    (3)(i) Contributions to reserves must be based on sound actuarial 
principles using historical experience and reasonable assumptions. 
Reserve levels must be analyzed and updated at least biennially for each 
major risk being insured and take into account any reinsurance, 
coinsurance, etc. Reserve levels related to employee-related coverages 
will normally be limited to the value of claims:
    (A) Submitted and adjudicated but not paid;
    (B) Submitted but not adjudicated; and
    (C) Incurred but not submitted.
    (ii) Reserve levels in excess of the amounts based on the above must 
be identified and justified in the cost allocation plan or indirect cost 
rate proposal.
    (4) Accounting records, actuarial studies, and cost allocations (or 
billings) must recognize any significant differences due to types of 
insured risk and losses generated by the various insured activities or 
agencies of the non-Federal entity. If individual departments or 
agencies of the non-Federal entity experience significantly different 
levels of claims for a particular risk, those differences are to be 
recognized by the use of separate allocations or other techniques 
resulting in an equitable allocation.
    (5) Whenever funds are transferred from a self-insurance reserve to 
other accounts (e.g., general fund or unrestricted account), refunds 
must be made to the Federal Government for its share of funds 
transferred, including earned or imputed interest from the date of 
transfer and debt interest, if applicable, chargeable in accordance with 
applicable Federal cognizant agency for indirect cost, claims collection 
regulations.
    (e) Insurance refunds must be credited against insurance costs in 
the year the refund is received.
    (f) Indemnification includes securing the non-Federal entity against 
liabilities to third persons and other losses not compensated by 
insurance or otherwise. The Federal Government is obligated to indemnify 
the non-Federal entity only to the extent expressly provided for in the 
Federal award, except as provided in paragraph (c) of this section.



Sec.  200.448  Intellectual property.

    (a) Patent costs. (1) The following costs related to securing 
patents and copyrights are allowable:
    (i) Costs of preparing disclosures, reports, and other documents 
required by the Federal award, and of searching the art to the extent 
necessary to make such disclosures;
    (ii) Costs of preparing documents and any other patent costs in 
connection with the filing and prosecution of a United States patent 
application where title or royalty-free license is required by the 
Federal Government to be conveyed to the Federal Government; and
    (iii) General counseling services relating to patent and copyright 
matters, such as advice on patent and copyright laws, regulations, 
clauses, and employee intellectual property agreements (See also Sec.  
200.459 Professional service costs).
    (2) The following costs related to securing patents and copyrights 
are unallowable:
    (i) Costs of preparing disclosures, reports, and other documents, 
and of searching the art to make disclosures not required by the Federal 
award;
    (ii) Costs in connection with filing and prosecuting any foreign 
patent application, or any United States patent application, where the 
Federal award does not require conveying title or a royalty-free license 
to the Federal Government.
    (b) Royalties and other costs for use of patents and copyrights. (1) 
Royalties on a patent or copyright or amortization of the cost of 
acquiring by purchase a copyright, patent, or rights thereto, necessary 
for the proper performance of the Federal award are allowable unless:
    (i) The Federal Government already has a license or the right to 
free use of the patent or copyright.

[[Page 165]]

    (ii) The patent or copyright has been adjudicated to be invalid, or 
has been administratively determined to be invalid.
    (iii) The patent or copyright is considered to be unenforceable.
    (iv) The patent or copyright is expired.
    (2) Special care should be exercised in determining reasonableness 
where the royalties may have been arrived at as a result of less-than-
arm's-length bargaining, such as:
    (i) Royalties paid to persons, including corporations, affiliated 
with the non-Federal entity.
    (ii) Royalties paid to unaffiliated parties, including corporations, 
under an agreement entered into in contemplation that a Federal award 
would be made.
    (iii) Royalties paid under an agreement entered into after a Federal 
award is made to a non-Federal entity.
    (3) In any case involving a patent or copyright formerly owned by 
the non-Federal entity, the amount of royalty allowed must not exceed 
the cost which would have been allowed had the non-Federal entity 
retained title thereto.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75886, Dec. 19, 2014]



Sec.  200.449  Interest.

    (a) General. Costs incurred for interest on borrowed capital, 
temporary use of endowment funds, or the use of the non-Federal entity's 
own funds, however represented, are unallowable. Financing costs 
(including interest) to acquire, construct, or replace capital assets 
are allowable, subject to the conditions in this section.
    (b)(1) Capital assets is defined as noted in Sec.  200.12 Capital 
assets. An asset cost includes (as applicable) acquisition costs, 
construction costs, and other costs capitalized in accordance with GAAP.
    (2) For non-Federal entity fiscal years beginning on or after 
January 1, 2016, intangible assets include patents and computer 
software. For software development projects, only interest attributable 
to the portion of the project costs capitalized in accordance with GAAP 
is allowable.
    (c) Conditions for all non-Federal entities. (1) The non-Federal 
entity uses the capital assets in support of Federal awards;
    (2) The allowable asset costs to acquire facilities and equipment 
are limited to a fair market value available to the non-Federal entity 
from an unrelated (arm's length) third party.
    (3) The non-Federal entity obtains the financing via an arm's-length 
transaction (that is, a transaction with an unrelated third party); or 
claims reimbursement of actual interest cost at a rate available via 
such a transaction.
    (4) The non-Federal entity limits claims for Federal reimbursement 
of interest costs to the least expensive alternative. For example, a 
capital lease may be determined less costly than purchasing through debt 
financing, in which case reimbursement must be limited to the amount of 
interest determined if leasing had been used.
    (5) The non-Federal entity expenses or capitalizes allowable 
interest cost in accordance with GAAP.
    (6) Earnings generated by the investment of borrowed funds pending 
their disbursement for the asset costs are used to offset the current 
period's allowable interest cost, whether that cost is expensed or 
capitalized. Earnings subject to being reported to the Federal Internal 
Revenue Service under arbitrage requirements are excludable.
    (7) The following conditions must apply to debt arrangements over $1 
million to purchase or construct facilities, unless the non-Federal 
entity makes an initial equity contribution to the purchase of 25 
percent or more. For this purpose, ``initial equity contribution'' means 
the amount or value of contributions made by the non-Federal entity for 
the acquisition of facilities prior to occupancy.
    (i) The non-Federal entity must reduce claims for reimbursement of 
interest cost by an amount equal to imputed interest earnings on excess 
cash flow attributable to the portion of the facility used for Federal 
awards.
    (ii) The non-Federal entity must impute interest on excess cash flow 
as follows:
    (A) Annually, the non-Federal entity must prepare a cumulative (from 
the inception of the project) report of

[[Page 166]]

monthly cash inflows and outflows, regardless of the funding source. For 
this purpose, inflows consist of Federal reimbursement for depreciation, 
amortization of capitalized construction interest, and annual interest 
cost. Outflows consist of initial equity contributions, debt principal 
payments (less the pro-rata share attributable to the cost of land), and 
interest payments.
    (B) To compute monthly cash inflows and outflows, the non-Federal 
entity must divide the annual amounts determined in step (i) by the 
number of months in the year (usually 12) that the building is in 
service.
    (C) For any month in which cumulative cash inflows exceed cumulative 
outflows, interest must be calculated on the excess inflows for that 
month and be treated as a reduction to allowable interest cost. The rate 
of interest to be used must be the three-month Treasury bill closing 
rate as of the last business day of that month.
    (8) Interest attributable to a fully depreciated asset is 
unallowable.
    (d) Additional conditions for states, local governments and Indian 
tribes. For costs to be allowable, the non-Federal entity must have 
incurred the interest costs for buildings after October 1, 1980, or for 
land and equipment after September 1, 1995.
    (1) The requirement to offset interest earned on borrowed funds 
against current allowable interest cost (paragraph (c)(5), above) also 
applies to earnings on debt service reserve funds.
    (2) The non-Federal entity will negotiate the amount of allowable 
interest cost related to the acquisition of facilities with asset costs 
of $1 million or more, as outlined in paragraph (c)(7) of this section. 
For this purpose, a non-Federal entity must consider only cash inflows 
and outflows attributable to that portion of the real property used for 
Federal awards.
    (e) Additional conditions for IHEs. For costs to be allowable, the 
IHE must have incurred the interest costs after July 1, 1982, in 
connection with acquisitions of capital assets that occurred after that 
date.
    (f) Additional condition for nonprofit organizations. For costs to 
be allowable, the nonprofit organization incurred the interest costs 
after September 29, 1995, in connection with acquisitions of capital 
assets that occurred after that date.
    (g) The interest allowability provisions of this section do not 
apply to a nonprofit organization subject to ``full coverage'' under the 
Cost Accounting Standards (CAS), as defined at 48 CFR 9903.201-2(a). The 
non-Federal entity's Federal awards are instead subject to CAS 414 (48 
CFR 9904.414), ``Cost of Money as an Element of the Cost of Facilities 
Capital'', and CAS 417 (48 CFR 9904.417), ``Cost of Money as an Element 
of the Cost of Capital Assets Under Construction''.

[78 FR 78608, Dec. 26, 2013, as amended at 80 FR 54409, Sept. 10, 2015]



Sec.  200.450  Lobbying.

    (a) The cost of certain influencing activities associated with 
obtaining grants, contracts, cooperative agreements, or loans is an 
unallowable cost. Lobbying with respect to certain grants, contracts, 
cooperative agreements, and loans is governed by relevant statutes, 
including among others, the provisions of 31 U.S.C. 1352, as well as the 
common rule, ``New Restrictions on Lobbying'' published at 55 FR 6736 
(February 26, 1990), including definitions, and the Office of Management 
and Budget ``Governmentwide Guidance for New Restrictions on Lobbying'' 
and notices published at 54 FR 52306 (December 20, 1989), 55 FR 24540 
(June 15, 1990), 57 FR 1772 (January 15, 1992), and 61 FR 1412 (January 
19, 1996).
    (b) Executive lobbying costs. Costs incurred in attempting to 
improperly influence either directly or indirectly, an employee or 
officer of the executive branch of the Federal Government to give 
consideration or to act regarding a Federal award or a regulatory matter 
are unallowable. Improper influence means any influence that induces or 
tends to induce a Federal employee or officer to give consideration or 
to act regarding a Federal award or regulatory matter on any basis other 
than the merits of the matter.
    (c) In addition to the above, the following restrictions are 
applicable to nonprofit organizations and IHEs:
    (1) Costs associated with the following activities are unallowable:

[[Page 167]]

    (i) Attempts to influence the outcomes of any Federal, state, or 
local election, referendum, initiative, or similar procedure, through 
in-kind or cash contributions, endorsements, publicity, or similar 
activity;
    (ii) Establishing, administering, contributing to, or paying the 
expenses of a political party, campaign, political action committee, or 
other organization established for the purpose of influencing the 
outcomes of elections in the United States;
    (iii) Any attempt to influence:
    (A)The introduction of Federal or state legislation;
    (B) The enactment or modification of any pending Federal or state 
legislation through communication with any member or employee of the 
Congress or state legislature (including efforts to influence state or 
local officials to engage in similar lobbying activity);
    (C) The enactment or modification of any pending Federal or state 
legislation by preparing, distributing, or using publicity or 
propaganda, or by urging members of the general public, or any segment 
thereof, to contribute to or participate in any mass demonstration, 
march, rally, fund raising drive, lobbying campaign or letter writing or 
telephone campaign; or
    (D) Any government official or employee in connection with a 
decision to sign or veto enrolled legislation;
    (iv) Legislative liaison activities, including attendance at 
legislative sessions or committee hearings, gathering information 
regarding legislation, and analyzing the effect of legislation, when 
such activities are carried on in support of or in knowing preparation 
for an effort to engage in unallowable lobbying.
    (2) The following activities are excepted from the coverage of 
paragraph (c)(1) of this section:
    (i) Technical and factual presentations on topics directly related 
to the performance of a grant, contract, or other agreement (through 
hearing testimony, statements, or letters to the Congress or a state 
legislature, or subdivision, member, or cognizant staff member thereof), 
in response to a documented request (including a Congressional Record 
notice requesting testimony or statements for the record at a regularly 
scheduled hearing) made by the non-Federal entity's member of congress, 
legislative body or a subdivision, or a cognizant staff member thereof, 
provided such information is readily obtainable and can be readily put 
in deliverable form, and further provided that costs under this section 
for travel, lodging or meals are unallowable unless incurred to offer 
testimony at a regularly scheduled Congressional hearing pursuant to a 
written request for such presentation made by the Chairman or Ranking 
Minority Member of the Committee or Subcommittee conducting such 
hearings;
    (ii) Any lobbying made unallowable by paragraph (c)(1)(iii) of this 
section to influence state legislation in order to directly reduce the 
cost, or to avoid material impairment of the non-Federal entity's 
authority to perform the grant, contract, or other agreement; or
    (iii) Any activity specifically authorized by statute to be 
undertaken with funds from the Federal award.
    (iv) Any activity excepted from the definitions of ``lobbying'' or 
``influencing legislation'' by the Internal Revenue Code provisions that 
require nonprofit organizations to limit their participation in direct 
and ``grass roots'' lobbying activities in order to retain their 
charitable deduction status and avoid punitive excise taxes, I.R.C. 
Sec. Sec.  501(c)(3), 501(h), 4911(a), including:
    (A) Nonpartisan analysis, study, or research reports;
    (B) Examinations and discussions of broad social, economic, and 
similar problems; and
    (C) Information provided upon request by a legislator for technical 
advice and assistance, as defined by I.R.C. Sec.  4911(d)(2) and 26 CFR 
56.4911-2(c)(1)-(c)(3).
    (v) When a non-Federal entity seeks reimbursement for indirect (F&A) 
costs, total lobbying costs must be separately identified in the 
indirect (F&A) cost rate proposal, and thereafter treated as other 
unallowable activity costs in accordance with the procedures of Sec.  
200.413 Direct costs.
    (vi) The non-Federal entity must submit as part of its annual 
indirect (F&A) cost rate proposal a certification that the requirements 
and standards of

[[Page 168]]

this section have been complied with. (See also Sec.  200.415 Required 
certifications.)
    (vii)(A) Time logs, calendars, or similar records are not required 
to be created for purposes of complying with the record keeping 
requirements in Sec.  200.302 Financial management with respect to 
lobbying costs during any particular calendar month when:
    (1) The employee engages in lobbying (as defined in paragraphs 
(c)(1) and (c)(2) of this section) 25 percent or less of the employee's 
compensated hours of employment during that calendar month; and
    (2) Within the preceding five-year period, the non-Federal entity 
has not materially misstated allowable or unallowable costs of any 
nature, including legislative lobbying costs.
    (B) When conditions in paragraph (c)(2)(vii)(A)(1) and (2) of this 
section are met, non-Federal entities are not required to establish 
records to support the allowability of claimed costs in addition to 
records already required or maintained. Also, when conditions in 
paragraphs (c)(2)(vii)(A)(1) and (2) of this section are met, the 
absence of time logs, calendars, or similar records will not serve as a 
basis for disallowing costs by contesting estimates of lobbying time 
spent by employees during a calendar month.
    (viii) The Federal awarding agency must establish procedures for 
resolving in advance, in consultation with OMB, any significant 
questions or disagreements concerning the interpretation or application 
of this section. Any such advance resolutions must be binding in any 
subsequent settlements, audits, or investigations with respect to that 
grant or contract for purposes of interpretation of this part, provided, 
however, that this must not be construed to prevent a contractor or non-
Federal entity from contesting the lawfulness of such a determination.



Sec.  200.451  Losses on other awards or contracts.

    Any excess of costs over income under any other award or contract of 
any nature is unallowable. This includes, but is not limited to, the 
non-Federal entity's contributed portion by reason of cost-sharing 
agreements or any under-recoveries through negotiation of flat amounts 
for indirect (F&A) costs. Also, any excess of costs over authorized 
funding levels transferred from any award or contract to another award 
or contract is unallowable. All losses are not allowable indirect (F&A) 
costs and are required to be included in the appropriate indirect cost 
rate base for allocation of indirect costs.



Sec.  200.452  Maintenance and repair costs.

    Costs incurred for utilities, insurance, security, necessary 
maintenance, janitorial services, repair, or upkeep of buildings and 
equipment (including Federal property unless otherwise provided for) 
which neither add to the permanent value of the property nor appreciably 
prolong its intended life, but keep it in an efficient operating 
condition, are allowable. Costs incurred for improvements which add to 
the permanent value of the buildings and equipment or appreciably 
prolong their intended life must be treated as capital expenditures (see 
Sec.  200.439 Equipment and other capital expenditures). These costs are 
only allowable to the extent not paid through rental or other 
agreements.



Sec.  200.453  Materials and supplies costs, including costs of 
computing devices.

    (a) Costs incurred for materials, supplies, and fabricated parts 
necessary to carry out a Federal award are allowable.
    (b) Purchased materials and supplies must be charged at their actual 
prices, net of applicable credits. Withdrawals from general stores or 
stockrooms must be charged at their actual net cost under any recognized 
method of pricing inventory withdrawals, consistently applied. Incoming 
transportation charges are a proper part of materials and supplies 
costs.
    (c) Materials and supplies used for the performance of a Federal 
award may be charged as direct costs. In the specific case of computing 
devices, charging as direct costs is allowable for devices that are 
essential and allocable, but not solely dedicated, to the performance of 
a Federal award.

[[Page 169]]

    (d) Where federally-donated or furnished materials are used in 
performing the Federal award, such materials will be used without 
charge.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75887, Dec. 19, 2014]



Sec.  200.454  Memberships, subscriptions, and professional activity costs.

    (a) Costs of the non-Federal entity's membership in business, 
technical, and professional organizations are allowable.
    (b) Costs of the non-Federal entity's subscriptions to business, 
professional, and technical periodicals are allowable.
    (c) Costs of membership in any civic or community organization are 
allowable with prior approval by the Federal awarding agency or pass-
through entity.
    (d) Costs of membership in any country club or social or dining club 
or organization are unallowable.
    (e) Costs of membership in organizations whose primary purpose is 
lobbying are unallowable. See also Sec.  200.450 Lobbying.



Sec.  200.455  Organization costs.

    Costs such as incorporation fees, brokers' fees, fees to promoters, 
organizers or management consultants, attorneys, accountants, or 
investment counselor, whether or not employees of the non-Federal entity 
in connection with establishment or reorganization of an organization, 
are unallowable except with prior approval of the Federal awarding 
agency.



Sec.  200.456  Participant support costs.

    Participant support costs as defined in Sec.  200.75 Participant 
support costs are allowable with the prior approval of the Federal 
awarding agency.



Sec.  200.457  Plant and security costs.

    Necessary and reasonable expenses incurred for protection and 
security of facilities, personnel, and work products are allowable. Such 
costs include, but are not limited to, wages and uniforms of personnel 
engaged in security activities; equipment; barriers; protective (non-
military) gear, devices, and equipment; contractual security services; 
and consultants. Capital expenditures for plant security purposes are 
subject to Sec.  200.439 Equipment and other capital expenditures.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75887, Dec. 19, 2014]



Sec.  200.458  Pre-award costs.

    Pre-award costs are those incurred prior to the effective date of 
the Federal award directly pursuant to the negotiation and in 
anticipation of the Federal award where such costs are necessary for 
efficient and timely performance of the scope of work. Such costs are 
allowable only to the extent that they would have been allowable if 
incurred after the date of the Federal award and only with the written 
approval of the Federal awarding agency.



Sec.  200.459  Professional service costs.

    (a) Costs of professional and consultant services rendered by 
persons who are members of a particular profession or possess a special 
skill, and who are not officers or employees of the non-Federal entity, 
are allowable, subject to paragraphs (b) and (c) when reasonable in 
relation to the services rendered and when not contingent upon recovery 
of the costs from the Federal Government. In addition, legal and related 
services are limited under Sec.  200.435 Defense and prosecution of 
criminal and civil proceedings, claims, appeals and patent 
infringements.
    (b) In determining the allowability of costs in a particular case, 
no single factor or any special combination of factors is necessarily 
determinative. However, the following factors are relevant:
    (1) The nature and scope of the service rendered in relation to the 
service required.
    (2) The necessity of contracting for the service, considering the 
non-Federal entity's capability in the particular area.
    (3) The past pattern of such costs, particularly in the years prior 
to Federal awards.
    (4) The impact of Federal awards on the non-Federal entity's 
business (i.e., what new problems have arisen).
    (5) Whether the proportion of Federal work to the non-Federal 
entity's total business is such as to influence the non-Federal entity 
in favor of incurring the cost, particularly where the

[[Page 170]]

services rendered are not of a continuing nature and have little 
relationship to work under Federal awards.
    (6) Whether the service can be performed more economically by direct 
employment rather than contracting.
    (7) The qualifications of the individual or concern rendering the 
service and the customary fees charged, especially on non-federally 
funded activities.
    (8) Adequacy of the contractual agreement for the service (e.g., 
description of the service, estimate of time required, rate of 
compensation, and termination provisions).
    (c) In addition to the factors in paragraph (b) of this section, to 
be allowable, retainer fees must be supported by evidence of bona fide 
services available or rendered.



Sec.  200.460  Proposal costs.

    Proposal costs are the costs of preparing bids, proposals, or 
applications on potential Federal and non-Federal awards or projects, 
including the development of data necessary to support the non-Federal 
entity's bids or proposals. Proposal costs of the current accounting 
period of both successful and unsuccessful bids and proposals normally 
should be treated as indirect (F&A) costs and allocated currently to all 
activities of the non-Federal entity. No proposal costs of past 
accounting periods will be allocable to the current period.



Sec.  200.461  Publication and printing costs.

    (a) Publication costs for electronic and print media, including 
distribution, promotion, and general handling are allowable. If these 
costs are not identifiable with a particular cost objective, they should 
be allocated as indirect costs to all benefiting activities of the non-
Federal entity.
    (b) Page charges for professional journal publications are allowable 
where:
    (1) The publications report work supported by the Federal 
Government; and
    (2) The charges are levied impartially on all items published by the 
journal, whether or not under a Federal award.
    (3) The non-Federal entity may charge the Federal award before 
closeout for the costs of publication or sharing of research results if 
the costs are not incurred during the period of performance of the 
Federal award.



Sec.  200.462  Rearrangement and reconversion costs.

    (a) Costs incurred for ordinary and normal rearrangement and 
alteration of facilities are allowable as indirect costs. Special 
arrangements and alterations costs incurred specifically for a Federal 
award are allowable as a direct cost with the prior approval of the 
Federal awarding agency or pass-through entity.
    (b) Costs incurred in the restoration or rehabilitation of the non-
Federal entity's facilities to approximately the same condition existing 
immediately prior to commencement of Federal awards, less costs related 
to normal wear and tear, are allowable.



Sec.  200.463  Recruiting costs.

    (a) Subject to paragraphs (b) and (c) of this section, and provided 
that the size of the staff recruited and maintained is in keeping with 
workload requirements, costs of ``help wanted'' advertising, operating 
costs of an employment office necessary to secure and maintain an 
adequate staff, costs of operating an aptitude and educational testing 
program, travel costs of employees while engaged in recruiting 
personnel, travel costs of applicants for interviews for prospective 
employment, and relocation costs incurred incident to recruitment of new 
employees, are allowable to the extent that such costs are incurred 
pursuant to the non-Federal entity's standard recruitment program. Where 
the non-Federal entity uses employment agencies, costs not in excess of 
standard commercial rates for such services are allowable.
    (b) Special emoluments, fringe benefits, and salary allowances 
incurred to attract professional personnel that do not meet the test of 
reasonableness or do not conform with the established practices of the 
non-Federal entity, are unallowable.
    (c) Where relocation costs incurred incident to recruitment of a new 
employee have been funded in whole or in part to a Federal award, and 
the newly

[[Page 171]]

hired employee resigns for reasons within the employee's control within 
12 months after hire, the non-Federal entity will be required to refund 
or credit the Federal share of such relocation costs to the Federal 
Government. See also Sec.  200.464 Relocation costs of employees.
    (d) Short-term, travel visa costs (as opposed to longer-term, 
immigration visas) are generally allowable expenses that may be proposed 
as a direct cost. Since short-term visas are issued for a specific 
period and purpose, they can be clearly identified as directly connected 
to work performed on a Federal award. For these costs to be directly 
charged to a Federal award, they must:
    (1) Be critical and necessary for the conduct of the project;
    (2) Be allowable under the applicable cost principles;
    (3) Be consistent with the non-Federal entity's cost accounting 
practices and non-Federal entity policy; and
    (4) Meet the definition of ``direct cost'' as described in the 
applicable cost principles.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75887, Dec. 19, 2014]



Sec.  200.464  Relocation costs of employees.

    (a) Relocation costs are costs incident to the permanent change of 
duty assignment (for an indefinite period or for a stated period of not 
less than 12 months) of an existing employee or upon recruitment of a 
new employee. Relocation costs are allowable, subject to the limitations 
described in paragraphs (b), (c), and (d) of this section, provided 
that:
    (1) The move is for the benefit of the employer.
    (2) Reimbursement to the employee is in accordance with an 
established written policy consistently followed by the employer.
    (3) The reimbursement does not exceed the employee's actual (or 
reasonably estimated) expenses.
    (b) Allowable relocation costs for current employees are limited to 
the following:
    (1) The costs of transportation of the employee, members of his or 
her immediate family and his household, and personal effects to the new 
location.
    (2) The costs of finding a new home, such as advance trips by 
employees and spouses to locate living quarters and temporary lodging 
during the transition period, up to maximum period of 30 calendar days.
    (3) Closing costs, such as brokerage, legal, and appraisal fees, 
incident to the disposition of the employee's former home. These costs, 
together with those described in (4), are limited to 8 per cent of the 
sales price of the employee's former home.
    (4) The continuing costs of ownership (for up to six months) of the 
vacant former home after the settlement or lease date of the employee's 
new permanent home, such as maintenance of buildings and grounds 
(exclusive of fixing-up expenses), utilities, taxes, and property 
insurance.
    (5) Other necessary and reasonable expenses normally incident to 
relocation, such as the costs of canceling an unexpired lease, 
transportation of personal property, and purchasing insurance against 
loss of or damages to personal property. The cost of canceling an 
unexpired lease is limited to three times the monthly rental.
    (c) Allowable relocation costs for new employees are limited to 
those described in paragraphs (b)(1) and (2) of this section. When 
relocation costs incurred incident to the recruitment of new employees 
have been charged to a Federal award and the employee resigns for 
reasons within the employee's control within 12 months after hire, the 
non-Federal entity must refund or credit the Federal Government for its 
share of the cost. However, the costs of travel to an overseas location 
must be considered travel costs in accordance with Sec.  200.474 Travel 
costs, and not this Sec.  200.464 Relocation costs of employees, for the 
purpose of this paragraph if dependents are not permitted at the 
location for any reason and the costs do not include costs of 
transporting household goods.
    (d) The following costs related to relocation are unallowable:
    (1) Fees and other costs associated with acquiring a new home.
    (2) A loss on the sale of a former home.

[[Page 172]]

    (3) Continuing mortgage principal and interest payments on a home 
being sold.
    (4) Income taxes paid by an employee related to reimbursed 
relocation costs.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75887, Dec. 19, 2014]



Sec.  200.465  Rental costs of real property and equipment.

    (a) Subject to the limitations described in paragraphs (b) through 
(d) of this section, rental costs are allowable to the extent that the 
rates are reasonable in light of such factors as: rental costs of 
comparable property, if any; market conditions in the area; alternatives 
available; and the type, life expectancy, condition, and value of the 
property leased. Rental arrangements should be reviewed periodically to 
determine if circumstances have changed and other options are available.
    (b) Rental costs under ``sale and lease back'' arrangements are 
allowable only up to the amount that would be allowed had the non-
Federal entity continued to own the property. This amount would include 
expenses such as depreciation, maintenance, taxes, and insurance.
    (c) Rental costs under ``less-than-arm's-length'' leases are 
allowable only up to the amount (as explained in paragraph (b) of this 
section). For this purpose, a less-than-arm's-length lease is one under 
which one party to the lease agreement is able to control or 
substantially influence the actions of the other. Such leases include, 
but are not limited to those between:
    (1) Divisions of the non-Federal entity;
    (2) The non-Federal entity under common control through common 
officers, directors, or members; and
    (3) The non-Federal entity and a director, trustee, officer, or key 
employee of the non-Federal entity or an immediate family member, either 
directly or through corporations, trusts, or similar arrangements in 
which they hold a controlling interest. For example, the non-Federal 
entity may establish a separate corporation for the sole purpose of 
owning property and leasing it back to the non-Federal entity.
    (4) Family members include one party with any of the following 
relationships to another party:
    (i) Spouse, and parents thereof;
    (ii) Children, and spouses thereof;
    (iii) Parents, and spouses thereof;
    (iv) Siblings, and spouses thereof;
    (v) Grandparents and grandchildren, and spouses thereof;
    (vi) Domestic partner and parents thereof, including domestic 
partners of any individual in 2 through 5 of this definition; and
    (vii) Any individual related by blood or affinity whose close 
association with the employee is the equivalent of a family 
relationship.
    (5) Rental costs under leases which are required to be treated as 
capital leases under GAAP are allowable only up to the amount (as 
explained in paragraph (b) of this section) that would be allowed had 
the non-Federal entity purchased the property on the date the lease 
agreement was executed. The provisions of GAAP must be used to determine 
whether a lease is a capital lease. Interest costs related to capital 
leases are allowable to the extent they meet the criteria in Sec.  
200.449 Interest. Unallowable costs include amounts paid for profit, 
management fees, and taxes that would not have been incurred had the 
non-Federal entity purchased the property.
    (6) The rental of any property owned by any individuals or entities 
affiliated with the non-Federal entity, to include commercial or 
residential real estate, for purposes such as the home office workspace 
is unallowable.



Sec.  200.466  Scholarships and student aid costs.

    (a) Costs of scholarships, fellowships, and other programs of 
student aid at IHEs are allowable only when the purpose of the Federal 
award is to provide training to selected participants and the charge is 
approved by the Federal awarding agency. However, tuition remission and 
other forms of compensation paid as, or in lieu of, wages to students 
performing necessary work are allowable provided that:
    (1) The individual is conducting activities necessary to the Federal 
award;

[[Page 173]]

    (2) Tuition remission and other support are provided in accordance 
with established policy of the IHE and consistently provided in a like 
manner to students in return for similar activities conducted under 
Federal awards as well as other activities; and
    (3) During the academic period, the student is enrolled in an 
advanced degree program at a non-Federal entity or affiliated 
institution and the activities of the student in relation to the Federal 
award are related to the degree program;
    (4) The tuition or other payments are reasonable compensation for 
the work performed and are conditioned explicitly upon the performance 
of necessary work; and
    (5) It is the IHE's practice to similarly compensate students under 
Federal awards as well as other activities.
    (b) Charges for tuition remission and other forms of compensation 
paid to students as, or in lieu of, salaries and wages must be subject 
to the reporting requirements in Sec.  200.430 Compensation--personal 
services, and must be treated as direct or indirect cost in accordance 
with the actual work being performed. Tuition remission may be charged 
on an average rate basis. See also Sec.  200.431 Compensation--fringe 
benefits.



Sec.  200.467  Selling and marketing costs.

    Costs of selling and marketing any products or services of the non-
Federal entity (unless allowed under Sec.  200.421 Advertising and 
public relations.) are unallowable, except as direct costs, with prior 
approval by the Federal awarding agency when necessary for the 
performance of the Federal award.



Sec.  200.468  Specialized service facilities.

    (a) The costs of services provided by highly complex or specialized 
facilities operated by the non-Federal entity, such as computing 
facilities, wind tunnels, and reactors are allowable, provided the 
charges for the services meet the conditions of either paragraphs (b) or 
(c) of this section, and, in addition, take into account any items of 
income or Federal financing that qualify as applicable credits under 
Sec.  200.406 Applicable credits.
    (b) The costs of such services, when material, must be charged 
directly to applicable awards based on actual usage of the services on 
the basis of a schedule of rates or established methodology that:
    (1) Does not discriminate between activities under Federal awards 
and other activities of the non-Federal entity, including usage by the 
non-Federal entity for internal purposes, and
    (2) Is designed to recover only the aggregate costs of the services. 
The costs of each service must consist normally of both its direct costs 
and its allocable share of all indirect (F&A) costs. Rates must be 
adjusted at least biennially, and must take into consideration over/
under applied costs of the previous period(s).
    (c) Where the costs incurred for a service are not material, they 
may be allocated as indirect (F&A) costs.
    (d) Under some extraordinary circumstances, where it is in the best 
interest of the Federal Government and the non-Federal entity to 
establish alternative costing arrangements, such arrangements may be 
worked out with the Federal cognizant agency for indirect costs.



Sec.  200.469  Student activity costs.

    Costs incurred for intramural activities, student publications, 
student clubs, and other student activities, are unallowable, unless 
specifically provided for in the Federal award.



Sec.  200.470  Taxes (including Value Added Tax).

    (a) For states, local governments and Indian tribes:
    (1) Taxes that a governmental unit is legally required to pay are 
allowable, except for self-assessed taxes that disproportionately affect 
Federal programs or changes in tax policies that disproportionately 
affect Federal programs.
    (2) Gasoline taxes, motor vehicle fees, and other taxes that are in 
effect user fees for benefits provided to the Federal Government are 
allowable.
    (3) This provision does not restrict the authority of the Federal 
awarding agency to identify taxes where Federal participation is 
inappropriate. Where

[[Page 174]]

the identification of the amount of unallowable taxes would require an 
inordinate amount of effort, the cognizant agency for indirect costs may 
accept a reasonable approximation thereof.
    (b) For nonprofit organizations and IHEs:
    (1) In general, taxes which the non-Federal entity is required to 
pay and which are paid or accrued in accordance with GAAP, and payments 
made to local governments in lieu of taxes which are commensurate with 
the local government services received are allowable, except for:
    (i) Taxes from which exemptions are available to the non-Federal 
entity directly or which are available to the non-Federal entity based 
on an exemption afforded the Federal Government and, in the latter case, 
when the Federal awarding agency makes available the necessary exemption 
certificates,
    (ii) Special assessments on land which represent capital 
improvements, and
    (iii) Federal income taxes.
    (2) Any refund of taxes, and any payment to the non-Federal entity 
of interest thereon, which were allowed as Federal award costs, will be 
credited either as a cost reduction or cash refund, as appropriate, to 
the Federal Government. However, any interest actually paid or credited 
to an non-Federal entity incident to a refund of tax, interest, and 
penalty will be paid or credited to the Federal Government only to the 
extent that such interest accrued over the period during which the non-
Federal entity has been reimbursed by the Federal Government for the 
taxes, interest, and penalties.
    (c) Value Added Tax (VAT) Foreign taxes charged for the purchase of 
goods or services that a non-Federal entity is legally required to pay 
in country is an allowable expense under Federal awards. Foreign tax 
refunds or applicable credits under Federal awards refer to receipts, or 
reduction of expenditures, which operate to offset or reduce expense 
items that are allocable to Federal awards as direct or indirect costs. 
To the extent that such credits accrued or received by the non-Federal 
entity relate to allowable cost, these costs must be credited to the 
Federal awarding agency either as costs or cash refunds. If the costs 
are credited back to the Federal award, the non-Federal entity may 
reduce the Federal share of costs by the amount of the foreign tax 
reimbursement, or where Federal award has not expired, use the foreign 
government tax refund for approved activities under the Federal award 
with prior approval of the Federal awarding agency.



Sec.  200.471  Termination costs.

    Termination of a Federal award generally gives rise to the 
incurrence of costs, or the need for special treatment of costs, which 
would not have arisen had the Federal award not been terminated. Cost 
principles covering these items are set forth in this section. They are 
to be used in conjunction with the other provisions of this part in 
termination situations.
    (a) The cost of items reasonably usable on the non-Federal entity's 
other work must not be allowable unless the non-Federal entity submits 
evidence that it would not retain such items at cost without sustaining 
a loss. In deciding whether such items are reasonably usable on other 
work of the non-Federal entity, the Federal awarding agency should 
consider the non-Federal entity's plans and orders for current and 
scheduled activity. Contemporaneous purchases of common items by the 
non-Federal entity must be regarded as evidence that such items are 
reasonably usable on the non-Federal entity's other work. Any acceptance 
of common items as allocable to the terminated portion of the Federal 
award must be limited to the extent that the quantities of such items on 
hand, in transit, and on order are in excess of the reasonable 
quantitative requirements of other work.
    (b) If in a particular case, despite all reasonable efforts by the 
non-Federal entity, certain costs cannot be discontinued immediately 
after the effective date of termination, such costs are generally 
allowable within the limitations set forth in this part, except that any 
such costs continuing after termination due to the negligent or willful 
failure of the non-Federal entity to discontinue such costs must be 
unallowable.

[[Page 175]]

    (c) Loss of useful value of special tooling, machinery, and 
equipment is generally allowable if:
    (1) Such special tooling, special machinery, or equipment is not 
reasonably capable of use in the other work of the non-Federal entity,
    (2) The interest of the Federal Government is protected by transfer 
of title or by other means deemed appropriate by the Federal awarding 
agency (see also Sec.  200.313 Equipment, paragraph (d), and
    (3) The loss of useful value for any one terminated Federal award is 
limited to that portion of the acquisition cost which bears the same 
ratio to the total acquisition cost as the terminated portion of the 
Federal award bears to the entire terminated Federal award and other 
Federal awards for which the special tooling, machinery, or equipment 
was acquired.
    (d) Rental costs under unexpired leases are generally allowable 
where clearly shown to have been reasonably necessary for the 
performance of the terminated Federal award less the residual value of 
such leases, if:
    (1) The amount of such rental claimed does not exceed the reasonable 
use value of the property leased for the period of the Federal award and 
such further period as may be reasonable, and
    (2) The non-Federal entity makes all reasonable efforts to 
terminate, assign, settle, or otherwise reduce the cost of such lease. 
There also may be included the cost of alterations of such leased 
property, provided such alterations were necessary for the performance 
of the Federal award, and of reasonable restoration required by the 
provisions of the lease.
    (e) Settlement expenses including the following are generally 
allowable:
    (1) Accounting, legal, clerical, and similar costs reasonably 
necessary for:
    (i) The preparation and presentation to the Federal awarding agency 
of settlement claims and supporting data with respect to the terminated 
portion of the Federal award, unless the termination is for cause (see 
Subpart D--Post Federal Award Requirements of this part, Sec. Sec.  
200.338 Remedies for Noncompliance through 200.342 Effects of Suspension 
and termination); and
    (ii) The termination and settlement of subawards.
    (2) Reasonable costs for the storage, transportation, protection, 
and disposition of property provided by the Federal Government or 
acquired or produced for the Federal award.
    (f) Claims under subawards, including the allocable portion of 
claims which are common to the Federal award and to other work of the 
non-Federal entity, are generally allowable. An appropriate share of the 
non-Federal entity's indirect costs may be allocated to the amount of 
settlements with contractors and/or subrecipients, provided that the 
amount allocated is otherwise consistent with the basic guidelines 
contained in Sec.  200.414 Indirect (F&A) costs. The indirect costs so 
allocated must exclude the same and similar costs claimed directly or 
indirectly as settlement expenses.



Sec.  200.472  Training and education costs.

    The cost of training and education provided for employee development 
is allowable.



Sec.  200.473  Transportation costs.

    Costs incurred for freight, express, cartage, postage, and other 
transportation services relating either to goods purchased, in process, 
or delivered, are allowable. When such costs can readily be identified 
with the items involved, they may be charged directly as transportation 
costs or added to the cost of such items. Where identification with the 
materials received cannot readily be made, inbound transportation cost 
may be charged to the appropriate indirect (F&A) cost accounts if the 
non-Federal entity follows a consistent, equitable procedure in this 
respect. Outbound freight, if reimbursable under the terms and 
conditions of the Federal award, should be treated as a direct cost.



Sec.  200.474  Travel costs.

    (a) General. Travel costs are the expenses for transportation, 
lodging, subsistence, and related items incurred by employees who are in 
travel status on official business of the non-Federal entity. Such costs 
may be charged on an actual cost basis, on a per diem or

[[Page 176]]

mileage basis in lieu of actual costs incurred, or on a combination of 
the two, provided the method used is applied to an entire trip and not 
to selected days of the trip, and results in charges consistent with 
those normally allowed in like circumstances in the non-Federal entity's 
non-federally-funded activities and in accordance with non-Federal 
entity's written travel reimbursement policies. Notwithstanding the 
provisions of Sec.  200.444 General costs of government, travel costs of 
officials covered by that section are allowable with the prior written 
approval of the Federal awarding agency or pass-through entity when they 
are specifically related to the Federal award.
    (b) Lodging and subsistence. Costs incurred by employees and 
officers for travel, including costs of lodging, other subsistence, and 
incidental expenses, must be considered reasonable and otherwise 
allowable only to the extent such costs do not exceed charges normally 
allowed by the non-Federal entity in its regular operations as the 
result of the non-Federal entity's written travel policy. In addition, 
if these costs are charged directly to the Federal award documentation 
must justify that:
    (1) Participation of the individual is necessary to the Federal 
award; and
    (2) The costs are reasonable and consistent with non-Federal 
entity's established travel policy.
    (c)(1) Temporary dependent care costs (as dependent is defined in 26 
U.S.C. 152) above and beyond regular dependent care that directly 
results from travel to conferences is allowable provided that:
    (i) The costs are a direct result of the individual's travel for the 
Federal award;
    (ii) The costs are consistent with the non-Federal entity's 
documented travel policy for all entity travel; and
    (iii) Are only temporary during the travel period.
    (2) Travel costs for dependents are unallowable, except for travel 
of duration of six months or more with prior approval of the Federal 
awarding agency. See also Sec.  200.432 Conferences.
    (d) In the absence of an acceptable, written non-Federal entity 
policy regarding travel costs, the rates and amounts established under 5 
U.S.C. 5701-11, (``Travel and Subsistence Expenses; Mileage 
Allowances''), or by the Administrator of General Services, or by the 
President (or his or her designee) pursuant to any provisions of such 
subchapter must apply to travel under Federal awards (48 CFR 31.205-
46(a)).
    (e) Commercial air travel. (1) Airfare costs in excess of the basic 
least expensive unrestricted accommodations class offered by commercial 
airlines are unallowable except when such accommodations would:
    (i) Require circuitous routing;
    (ii) Require travel during unreasonable hours;
    (iii) Excessively prolong travel;
    (iv) Result in additional costs that would offset the transportation 
savings; or
    (v) Offer accommodations not reasonably adequate for the traveler's 
medical needs. The non-Federal entity must justify and document these 
conditions on a case-by-case basis in order for the use of first-class 
or business-class airfare to be allowable in such cases.
    (2) Unless a pattern of avoidance is detected, the Federal 
Government will generally not question a non-Federal entity's 
determinations that customary standard airfare or other discount airfare 
is unavailable for specific trips if the non-Federal entity can 
demonstrate that such airfare was not available in the specific case.
    (f) Air travel by other than commercial carrier. Costs of travel by 
non-Federal entity-owned, -leased, or -chartered aircraft include the 
cost of lease, charter, operation (including personnel costs), 
maintenance, depreciation, insurance, and other related costs. The 
portion of such costs that exceeds the cost of airfare as provided for 
in paragraph (d) of this section, is unallowable.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75887, Dec. 19, 2014]



Sec.  200.475  Trustees.

    Travel and subsistence costs of trustees (or directors) at IHEs and 
nonprofit organizations are allowable. See also Sec.  200.474 Travel 
costs.

[[Page 177]]



                      Subpart F_Audit Requirements

                                 General



Sec.  200.500  Purpose.

    This part sets forth standards for obtaining consistency and 
uniformity among Federal agencies for the audit of non-Federal entities 
expending Federal awards.

                                 Audits



Sec.  200.501  Audit requirements.

    (a) Audit required. A non-Federal entity that expends $750,000 or 
more during the non-Federal entity's fiscal year in Federal awards must 
have a single or program-specific audit conducted for that year in 
accordance with the provisions of this part.
    (b) Single audit. A non-Federal entity that expends $750,000 or more 
during the non-Federal entity's fiscal year in Federal awards must have 
a single audit conducted in accordance with Sec.  200.514 Scope of audit 
except when it elects to have a program-specific audit conducted in 
accordance with paragraph (c) of this section.
    (c) Program-specific audit election. When an auditee expends Federal 
awards under only one Federal program (excluding R&D) and the Federal 
program's statutes, regulations, or the terms and conditions of the 
Federal award do not require a financial statement audit of the auditee, 
the auditee may elect to have a program-specific audit conducted in 
accordance with Sec.  200.507 Program-specific audits. A program-
specific audit may not be elected for R&D unless all of the Federal 
awards expended were received from the same Federal agency, or the same 
Federal agency and the same pass-through entity, and that Federal 
agency, or pass-through entity in the case of a subrecipient, approves 
in advance a program-specific audit.
    (d) Exemption when Federal awards expended are less than $750,000. A 
non-Federal entity that expends less than $750,000 during the non-
Federal entity's fiscal year in Federal awards is exempt from Federal 
audit requirements for that year, except as noted in Sec.  200.503 
Relation to other audit requirements, but records must be available for 
review or audit by appropriate officials of the Federal agency, pass-
through entity, and Government Accountability Office (GAO).
    (e) Federally Funded Research and Development Centers (FFRDC). 
Management of an auditee that owns or operates a FFRDC may elect to 
treat the FFRDC as a separate entity for purposes of this part.
    (f) Subrecipients and Contractors. An auditee may simultaneously be 
a recipient, a subrecipient, and a contractor. Federal awards expended 
as a recipient or a subrecipient are subject to audit under this part. 
The payments received for goods or services provided as a contractor are 
not Federal awards. Section Sec.  200.330 Subrecipient and contractor 
determinations sets forth the considerations in determining whether 
payments constitute a Federal award or a payment for goods or services 
provided as a contractor.
    (g) Compliance responsibility for contractors. In most cases, the 
auditee's compliance responsibility for contractors is only to ensure 
that the procurement, receipt, and payment for goods and services comply 
with Federal statutes, regulations, and the terms and conditions of 
Federal awards. Federal award compliance requirements normally do not 
pass through to contractors. However, the auditee is responsible for 
ensuring compliance for procurement transactions which are structured 
such that the contractor is responsible for program compliance or the 
contractor's records must be reviewed to determine program compliance. 
Also, when these procurement transactions relate to a major program, the 
scope of the audit must include determining whether these transactions 
are in compliance with Federal statutes, regulations, and the terms and 
conditions of Federal awards.
    (h) For-profit subrecipient. Since this part does not apply to for-
profit subrecipients, the pass-through entity is responsible for 
establishing requirements, as necessary, to ensure compliance by for-
profit subrecipients. The agreement with the for-profit subrecipient 
must describe applicable compliance requirements and the for-

[[Page 178]]

profit subrecipient's compliance responsibility. Methods to ensure 
compliance for Federal awards made to for-profit subrecipients may 
include pre-award audits, monitoring during the agreement, and post-
award audits. See also Sec.  200.331 Requirements for pass-through 
entities.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75887, Dec. 19, 2014]



Sec.  200.502  Basis for determining Federal awards expended.

    (a) Determining Federal awards expended. The determination of when a 
Federal award is expended must be based on when the activity related to 
the Federal award occurs. Generally, the activity pertains to events 
that require the non-Federal entity to comply with Federal statutes, 
regulations, and the terms and conditions of Federal awards, such as: 
expenditure/expense transactions associated with awards including 
grants, cost-reimbursement contracts under the FAR, compacts with Indian 
Tribes, cooperative agreements, and direct appropriations; the 
disbursement of funds to subrecipients; the use of loan proceeds under 
loan and loan guarantee programs; the receipt of property; the receipt 
of surplus property; the receipt or use of program income; the 
distribution or use of food commodities; the disbursement of amounts 
entitling the non-Federal entity to an interest subsidy; and the period 
when insurance is in force.
    (b) Loan and loan guarantees (loans). Since the Federal Government 
is at risk for loans until the debt is repaid, the following guidelines 
must be used to calculate the value of Federal awards expended under 
loan programs, except as noted in paragraphs (c) and (d) of this 
section:
    (1) Value of new loans made or received during the audit period; 
plus
    (2) Beginning of the audit period balance of loans from previous 
years for which the Federal Government imposes continuing compliance 
requirements; plus
    (3) Any interest subsidy, cash, or administrative cost allowance 
received.
    (c) Loan and loan guarantees (loans) at IHEs. When loans are made to 
students of an IHE but the IHE does not make the loans, then only the 
value of loans made during the audit period must be considered Federal 
awards expended in that audit period. The balance of loans for previous 
audit periods is not included as Federal awards expended because the 
lender accounts for the prior balances.
    (d) Prior loan and loan guarantees (loans). Loans, the proceeds of 
which were received and expended in prior years, are not considered 
Federal awards expended under this part when the Federal statutes, 
regulations, and the terms and conditions of Federal awards pertaining 
to such loans impose no continuing compliance requirements other than to 
repay the loans.
    (e) Endowment funds. The cumulative balance of Federal awards for 
endowment funds that are federally restricted are considered Federal 
awards expended in each audit period in which the funds are still 
restricted.
    (f) Free rent. Free rent received by itself is not considered a 
Federal award expended under this part. However, free rent received as 
part of a Federal award to carry out a Federal program must be included 
in determining Federal awards expended and subject to audit under this 
part.
    (g) Valuing non-cash assistance. Federal non-cash assistance, such 
as free rent, food commodities, donated property, or donated surplus 
property, must be valued at fair market value at the time of receipt or 
the assessed value provided by the Federal agency.
    (h) Medicare. Medicare payments to a non-Federal entity for 
providing patient care services to Medicare-eligible individuals are not 
considered Federal awards expended under this part.
    (i) Medicaid. Medicaid payments to a subrecipient for providing 
patient care services to Medicaid-eligible individuals are not 
considered Federal awards expended under this part unless a state 
requires the funds to be treated as Federal awards expended because 
reimbursement is on a cost-reimbursement basis.
    (j) Certain loans provided by the National Credit Union 
Administration. For purposes of this part, loans made from the National 
Credit Union Share Insurance Fund and the Central Liquidity Facility 
that are funded by contributions from insured non-Federal entities

[[Page 179]]

are not considered Federal awards expended.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75887, Dec. 19, 2014]



Sec.  200.503  Relation to other audit requirements.

    (a) An audit conducted in accordance with this part must be in lieu 
of any financial audit of Federal awards which a non-Federal entity is 
required to undergo under any other Federal statute or regulation. To 
the extent that such audit provides a Federal agency with the 
information it requires to carry out its responsibilities under Federal 
statute or regulation, a Federal agency must rely upon and use that 
information.
    (b) Notwithstanding subsection (a), a Federal agency, Inspectors 
General, or GAO may conduct or arrange for additional audits which are 
necessary to carry out its responsibilities under Federal statute or 
regulation. The provisions of this part do not authorize any non-Federal 
entity to constrain, in any manner, such Federal agency from carrying 
out or arranging for such additional audits, except that the Federal 
agency must plan such audits to not be duplicative of other audits of 
Federal awards. Prior to commencing such an audit, the Federal agency or 
pass-through entity must review the FAC for recent audits submitted by 
the non-Federal entity, and to the extent such audits meet a Federal 
agency or pass-through entity's needs, the Federal agency or pass-
through entity must rely upon and use such audits. Any additional audits 
must be planned and performed in such a way as to build upon work 
performed, including the audit documentation, sampling, and testing 
already performed, by other auditors.
    (c) The provisions of this part do not limit the authority of 
Federal agencies to conduct, or arrange for the conduct of, audits and 
evaluations of Federal awards, nor limit the authority of any Federal 
agency Inspector General or other Federal official. For example, 
requirements that may be applicable under the FAR or CAS and the terms 
and conditions of a cost-reimbursement contract may include additional 
applicable audits to be conducted or arranged for by Federal agencies.
    (d) Federal agency to pay for additional audits. A Federal agency 
that conducts or arranges for additional audits must, consistent with 
other applicable Federal statutes and regulations, arrange for funding 
the full cost of such additional audits.
    (e) Request for a program to be audited as a major program. A 
Federal awarding agency may request that an auditee have a particular 
Federal program audited as a major program in lieu of the Federal 
awarding agency conducting or arranging for the additional audits. To 
allow for planning, such requests should be made at least 180 calendar 
days prior to the end of the fiscal year to be audited. The auditee, 
after consultation with its auditor, should promptly respond to such a 
request by informing the Federal awarding agency whether the program 
would otherwise be audited as a major program using the risk-based audit 
approach described in Sec.  200.518 Major program determination and, if 
not, the estimated incremental cost. The Federal awarding agency must 
then promptly confirm to the auditee whether it wants the program 
audited as a major program. If the program is to be audited as a major 
program based upon this Federal awarding agency request, and the Federal 
awarding agency agrees to pay the full incremental costs, then the 
auditee must have the program audited as a major program. A pass-through 
entity may use the provisions of this paragraph for a subrecipient.



Sec.  200.504  Frequency of audits.

    Except for the provisions for biennial audits provided in paragraphs 
(a) and (b) of this section, audits required by this part must be 
performed annually. Any biennial audit must cover both years within the 
biennial period.
    (a) A state, local government, or Indian tribe that is required by 
constitution or statute, in effect on January 1, 1987, to undergo its 
audits less frequently than annually, is permitted to undergo its audits 
pursuant to this part biennially. This requirement must still be in 
effect for the biennial period.

[[Page 180]]

    (b) Any nonprofit organization that had biennial audits for all 
biennial periods ending between July 1, 1992, and January 1, 1995, is 
permitted to undergo its audits pursuant to this part biennially.



Sec.  200.505  Sanctions.

    In cases of continued inability or unwillingness to have an audit 
conducted in accordance with this part, Federal agencies and pass-
through entities must take appropriate action as provided in Sec.  
200.338 Remedies for noncompliance.



Sec.  200.506  Audit costs.

    See Sec.  200.425 Audit services.



Sec.  200.507  Program-specific audits.

    (a) Program-specific audit guide available. In many cases, a 
program-specific audit guide will be available to provide specific 
guidance to the auditor with respect to internal controls, compliance 
requirements, suggested audit procedures, and audit reporting 
requirements. A listing of current program-specific audit guides can be 
found in the compliance supplement beginning with the 2014 supplement 
including Federal awarding agency contact information and a Web site 
where a copy of the guide can be obtained. When a current program-
specific audit guide is available, the auditor must follow GAGAS and the 
guide when performing a program-specific audit.
    (b) Program-specific audit guide not available. (1) When a current 
program-specific audit guide is not available, the auditee and auditor 
must have basically the same responsibilities for the Federal program as 
they would have for an audit of a major program in a single audit.
    (2) The auditee must prepare the financial statement(s) for the 
Federal program that includes, at a minimum, a schedule of expenditures 
of Federal awards for the program and notes that describe the 
significant accounting policies used in preparing the schedule, a 
summary schedule of prior audit findings consistent with the 
requirements of Sec.  200.511 Audit findings follow-up, paragraph (b), 
and a corrective action plan consistent with the requirements of Sec.  
200.511 Audit findings follow-up, paragraph (c).
    (3) The auditor must:
    (i) Perform an audit of the financial statement(s) for the Federal 
program in accordance with GAGAS;
    (ii) Obtain an understanding of internal controls and perform tests 
of internal controls over the Federal program consistent with the 
requirements of Sec.  200.514 Scope of audit, paragraph (c) for a major 
program;
    (iii) Perform procedures to determine whether the auditee has 
complied with Federal statutes, regulations, and the terms and 
conditions of Federal awards that could have a direct and material 
effect on the Federal program consistent with the requirements of Sec.  
200.514 Scope of audit, paragraph (d) for a major program;
    (iv) Follow up on prior audit findings, perform procedures to assess 
the reasonableness of the summary schedule of prior audit findings 
prepared by the auditee in accordance with the requirements of Sec.  
200.511 Audit findings follow-up, and report, as a current year audit 
finding, when the auditor concludes that the summary schedule of prior 
audit findings materially misrepresents the status of any prior audit 
finding; and
    (v) Report any audit findings consistent with the requirements of 
Sec.  200.516 Audit findings.
    (4) The auditor's report(s) may be in the form of either combined or 
separate reports and may be organized differently from the manner 
presented in this section. The auditor's report(s) must state that the 
audit was conducted in accordance with this part and include the 
following:
    (i) An opinion (or disclaimer of opinion) as to whether the 
financial statement(s) of the Federal program is presented fairly in all 
material respects in accordance with the stated accounting policies;
    (ii) A report on internal control related to the Federal program, 
which must describe the scope of testing of internal control and the 
results of the tests;
    (iii) A report on compliance which includes an opinion (or 
disclaimer of opinion) as to whether the auditee complied with laws, 
regulations, and

[[Page 181]]

the terms and conditions of Federal awards which could have a direct and 
material effect on the Federal program; and
    (iv) A schedule of findings and questioned costs for the Federal 
program that includes a summary of the auditor's results relative to the 
Federal program in a format consistent with Sec.  200.515 Audit 
reporting, paragraph (d)(1) and findings and questioned costs consistent 
with the requirements of Sec.  200.515 Audit reporting, paragraph 
(d)(3).
    (c) Report submission for program-specific audits. (1) The audit 
must be completed and the reporting required by paragraph (c)(2) or 
(c)(3) of this section submitted within the earlier of 30 calendar days 
after receipt of the auditor's report(s), or nine months after the end 
of the audit period, unless a different period is specified in a 
program-specific audit guide. Unless restricted by Federal law or 
regulation, the auditee must make report copies available for public 
inspection. Auditees and auditors must ensure that their respective 
parts of the reporting package do not include protected personally 
identifiable information.
    (2) When a program-specific audit guide is available, the auditee 
must electronically submit to the FAC the data collection form prepared 
in accordance with Sec.  200.512 Report submission, paragraph (b), as 
applicable to a program-specific audit, and the reporting required by 
the program-specific audit guide.
    (3) When a program-specific audit guide is not available, the 
reporting package for a program-specific audit must consist of the 
financial statement(s) of the Federal program, a summary schedule of 
prior audit findings, and a corrective action plan as described in 
paragraph (b)(2) of this section, and the auditor's report(s) described 
in paragraph (b)(4) of this section. The data collection form prepared 
in accordance with Sec.  200.512 Report submission, paragraph (b), as 
applicable to a program-specific audit, and one copy of this reporting 
package must be electronically submitted to the FAC.
    (d) Other sections of this part may apply. Program-specific audits 
are subject to:
    (1) 200.500 Purpose through 200.503 Relation to other audit 
requirements, paragraph (d);
    (2) 200.504 Frequency of audits through 200.506 Audit costs;
    (3) 200.508 Auditee responsibilities through 200.509 Auditor 
selection;
    (4) 200.511 Audit findings follow-up;
    (5) 200.512 Report submission, paragraphs (e) through (h);
    (6) 200.513 Responsibilities;
    (7) 200.516 Audit findings through 200.517 Audit documentation;
    (8) 200.521 Management decision, and
    (9) Other referenced provisions of this part unless contrary to the 
provisions of this section, a program-specific audit guide, or program 
statutes and regulations.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75887, Dec. 19, 2014]

                                Auditees



Sec.  200.508  Auditee responsibilities.

    The auditee must:
    (a) Procure or otherwise arrange for the audit required by this part 
in accordance with Sec.  200.509 Auditor selection, and ensure it is 
properly performed and submitted when due in accordance with Sec.  
200.512 Report submission.
    (b) Prepare appropriate financial statements, including the schedule 
of expenditures of Federal awards in accordance with Sec.  200.510 
Financial statements.
    (c) Promptly follow up and take corrective action on audit findings, 
including preparation of a summary schedule of prior audit findings and 
a corrective action plan in accordance with Sec.  200.511 Audit findings 
follow-up, paragraph (b) and Sec.  200.511 Audit findings follow-up, 
paragraph (c), respectively.
    (d) Provide the auditor with access to personnel, accounts, books, 
records, supporting documentation, and other information as needed for 
the auditor to perform the audit required by this part.

[[Page 182]]



Sec.  200.509  Auditor selection.

    (a) Auditor procurement. In procuring audit services, the auditee 
must follow the procurement standards prescribed by the Procurement 
Standards in Sec. Sec.  200.317 Procurement by states through 20.326 
Contract provisions of Subpart D- Post Federal Award Requirements of 
this part or the FAR (48 CFR part 42), as applicable. When procuring 
audit services, the objective is to obtain high-quality audits. In 
requesting proposals for audit services, the objectives and scope of the 
audit must be made clear and the non-Federal entity must request a copy 
of the audit organization's peer review report which the auditor is 
required to provide under GAGAS. Factors to be considered in evaluating 
each proposal for audit services include the responsiveness to the 
request for proposal, relevant experience, availability of staff with 
professional qualifications and technical abilities, the results of peer 
and external quality control reviews, and price. Whenever possible, the 
auditee must make positive efforts to utilize small businesses, 
minority-owned firms, and women's business enterprises, in procuring 
audit services as stated in Sec.  200.321 Contracting with small and 
minority businesses, women's business enterprises, and labor surplus 
area firms, or the FAR (48 CFR part 42), as applicable.
    (b) Restriction on auditor preparing indirect cost proposals. An 
auditor who prepares the indirect cost proposal or cost allocation plan 
may not also be selected to perform the audit required by this part when 
the indirect costs recovered by the auditee during the prior year 
exceeded $1 million. This restriction applies to the base year used in 
the preparation of the indirect cost proposal or cost allocation plan 
and any subsequent years in which the resulting indirect cost agreement 
or cost allocation plan is used to recover costs.
    (c) Use of Federal auditors. Federal auditors may perform all or 
part of the work required under this part if they comply fully with the 
requirements of this part.



Sec.  200.510  Financial statements.

    (a) Financial statements. The auditee must prepare financial 
statements that reflect its financial position, results of operations or 
changes in net assets, and, where appropriate, cash flows for the fiscal 
year audited. The financial statements must be for the same 
organizational unit and fiscal year that is chosen to meet the 
requirements of this part. However, non-Federal entity-wide financial 
statements may also include departments, agencies, and other 
organizational units that have separate audits in accordance with Sec.  
200.514 Scope of audit, paragraph (a) and prepare separate financial 
statements.
    (b) Schedule of expenditures of Federal awards. The auditee must 
also prepare a schedule of expenditures of Federal awards for the period 
covered by the auditee's financial statements which must include the 
total Federal awards expended as determined in accordance with Sec.  
200.502 Basis for determining Federal awards expended. While not 
required, the auditee may choose to provide information requested by 
Federal awarding agencies and pass-through entities to make the schedule 
easier to use. For example, when a Federal program has multiple Federal 
award years, the auditee may list the amount of Federal awards expended 
for each Federal award year separately. At a minimum, the schedule must:
    (1) List individual Federal programs by Federal agency. For a 
cluster of programs, provide the cluster name, list individual Federal 
programs within the cluster of programs, and provide the applicable 
Federal agency name. For R&D, total Federal awards expended must be 
shown either by individual Federal award or by Federal agency and major 
subdivision within the Federal agency. For example, the National 
Institutes of Health is a major subdivision in the Department of Health 
and Human Services.
    (2) For Federal awards received as a subrecipient, the name of the 
pass-through entity and identifying number assigned by the pass-through 
entity must be included.
    (3) Provide total Federal awards expended for each individual 
Federal program and the CFDA number or other identifying number when the 
CFDA information is not available. For a cluster of programs also 
provide the total for the cluster.

[[Page 183]]

    (4) Include the total amount provided to subrecipients from each 
Federal program.
    (5) For loan or loan guarantee programs described in Sec.  200.502 
Basis for determining Federal awards expended, paragraph (b), identify 
in the notes to the schedule the balances outstanding at the end of the 
audit period. This is in addition to including the total Federal awards 
expended for loan or loan guarantee programs in the schedule.
    (6) Include notes that describe that significant accounting policies 
used in preparing the schedule, and note whether or not the auditee 
elected to use the 10% de minimis cost rate as covered in Sec.  200.414 
Indirect (F&A) costs.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75887, Dec. 19, 2014]



Sec.  200.511  Audit findings follow-up.

    (a) General. The auditee is responsible for follow-up and corrective 
action on all audit findings. As part of this responsibility, the 
auditee must prepare a summary schedule of prior audit findings. The 
auditee must also prepare a corrective action plan for current year 
audit findings. The summary schedule of prior audit findings and the 
corrective action plan must include the reference numbers the auditor 
assigns to audit findings under Sec.  200.516 Audit findings, paragraph 
(c). Since the summary schedule may include audit findings from multiple 
years, it must include the fiscal year in which the finding initially 
occurred. The corrective action plan and summary schedule of prior audit 
findings must include findings relating to the financial statements 
which are required to be reported in accordance with GAGAS.
    (b) Summary schedule of prior audit findings. The summary schedule 
of prior audit findings must report the status of all audit findings 
included in the prior audit's schedule of findings and questioned costs. 
The summary schedule must also include audit findings reported in the 
prior audit's summary schedule of prior audit findings except audit 
findings listed as corrected in accordance with paragraph (b)(1) of this 
section, or no longer valid or not warranting further action in 
accordance with paragraph (b)(3) of this section.
    (1) When audit findings were fully corrected, the summary schedule 
need only list the audit findings and state that corrective action was 
taken.
    (2) When audit findings were not corrected or were only partially 
corrected, the summary schedule must describe the reasons for the 
finding's recurrence and planned corrective action, and any partial 
corrective action taken. When corrective action taken is significantly 
different from corrective action previously reported in a corrective 
action plan or in the Federal agency's or pass-through entity's 
management decision, the summary schedule must provide an explanation.
    (3) When the auditee believes the audit findings are no longer valid 
or do not warrant further action, the reasons for this position must be 
described in the summary schedule. A valid reason for considering an 
audit finding as not warranting further action is that all of the 
following have occurred:
    (i) Two years have passed since the audit report in which the 
finding occurred was submitted to the FAC;
    (ii) The Federal agency or pass-through entity is not currently 
following up with the auditee on the audit finding; and
    (iii) A management decision was not issued.
    (c) Corrective action plan. At the completion of the audit, the 
auditee must prepare, in a document separate from the auditor's findings 
described in Sec.  200.516 Audit findings, a corrective action plan to 
address each audit finding included in the current year auditor's 
reports. The corrective action plan must provide the name(s) of the 
contact person(s) responsible for corrective action, the corrective 
action planned, and the anticipated completion date. If the auditee does 
not agree with the audit findings or believes corrective action is not 
required, then the corrective action plan must include an explanation 
and specific reasons.



Sec.  200.512  Report submission.

    (a) General. (1) The audit must be completed and the data collection 
form described in paragraph (b) of this section and reporting package 
described in

[[Page 184]]

paragraph (c) of this section must be submitted within the earlier of 30 
calendar days after receipt of the auditor's report(s), or nine months 
after the end of the audit period. If the due date falls on a Saturday, 
Sunday, or Federal holiday, the reporting package is due the next 
business day.
    (2) Unless restricted by Federal statutes or regulations, the 
auditee must make copies available for public inspection. Auditees and 
auditors must ensure that their respective parts of the reporting 
package do not include protected personally identifiable information.
    (b) Data Collection. The FAC is the repository of record for Subpart 
F--Audit Requirements of this part reporting packages and the data 
collection form. All Federal agencies, pass-through entities and others 
interested in a reporting package and data collection form must obtain 
it by accessing the FAC.
    (1) The auditee must submit required data elements described in 
Appendix X to Part 200--Data Collection Form (Form SF-SAC), which state 
whether the audit was completed in accordance with this part and 
provides information about the auditee, its Federal programs, and the 
results of the audit. The data must include information available from 
the audit required by this part that is necessary for Federal agencies 
to use the audit to ensure integrity for Federal programs. The data 
elements and format must be approved by OMB, available from the FAC, and 
include collections of information from the reporting package described 
in paragraph (c) of this section. A senior level representative of the 
auditee (e.g., state controller, director of finance, chief executive 
officer, or chief financial officer) must sign a statement to be 
included as part of the data collection that says that the auditee 
complied with the requirements of this part, the data were prepared in 
accordance with this part (and the instructions accompanying the form), 
the reporting package does not include protected personally identifiable 
information, the information included in its entirety is accurate and 
complete, and that the FAC is authorized to make the reporting package 
and the form publicly available on a Web site.
    (2) Exception for Indian Tribes and Tribal Organizations. An auditee 
that is an Indian tribe or a tribal organization (as defined in the 
Indian Self-Determination, Education and Assistance Act (ISDEAA), 25 
U.S.C. 450b(l)) may opt not to authorize the FAC to make the reporting 
package publicly available on a Web site, by excluding the authorization 
for the FAC publication in the statement described in paragraph (b)(1) 
of this section. If this option is exercised, the auditee becomes 
responsible for submitting the reporting package directly to any pass-
through entities through which it has received a Federal award and to 
pass-through entities for which the summary schedule of prior audit 
findings reported the status of any findings related to Federal awards 
that the pass-through entity provided. Unless restricted by Federal 
statute or regulation, if the auditee opts not to authorize publication, 
it must make copies of the reporting package available for public 
inspection.
    (3) Using the information included in the reporting package 
described in paragraph (c) of this section, the auditor must complete 
the applicable data elements of the data collection form. The auditor 
must sign a statement to be included as part of the data collection form 
that indicates, at a minimum, the source of the information included in 
the form, the auditor's responsibility for the information, that the 
form is not a substitute for the reporting package described in 
paragraph (c) of this section, and that the content of the form is 
limited to the collection of information prescribed by OMB.
    (c) Reporting package. The reporting package must include the:
    (1) Financial statements and schedule of expenditures of Federal 
awards discussed in Sec.  200.510 Financial statements, paragraphs (a) 
and (b), respectively;
    (2) Summary schedule of prior audit findings discussed in Sec.  
200.511 Audit findings follow-up, paragraph (b);
    (3) Auditor's report(s) discussed in Sec.  200.515 Audit reporting; 
and
    (4) Corrective action plan discussed in Sec.  200.511 Audit findings 
follow-up, paragraph (c).

[[Page 185]]

    (d) Submission to FAC. The auditee must electronically submit to the 
FAC the data collection form described in paragraph (b) of this section 
and the reporting package described in paragraph (c) of this section.
    (e) Requests for management letters issued by the auditor. In 
response to requests by a Federal agency or pass-through entity, 
auditees must submit a copy of any management letters issued by the 
auditor.
    (f) Report retention requirements. Auditees must keep one copy of 
the data collection form described in paragraph (b) of this section and 
one copy of the reporting package described in paragraph (c) of this 
section on file for three years from the date of submission to the FAC.
    (g) FAC responsibilities. The FAC must make available the reporting 
packages received in accordance with paragraph (c) of this section and 
Sec.  200.507 Program-specific audits, paragraph (c) to the public, 
except for Indian tribes exercising the option in (b)(2) of this 
section, and maintain a data base of completed audits, provide 
appropriate information to Federal agencies, and follow up with known 
auditees that have not submitted the required data collection forms and 
reporting packages.
    (h) Electronic filing. Nothing in this part must preclude electronic 
submissions to the FAC in such manner as may be approved by OMB.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75887, Dec. 19, 2014]

                            Federal Agencies



Sec.  200.513  Responsibilities.

    (a)(1) Cognizant agency for audit responsibilities. A non-Federal 
entity expending more than $50 million a year in Federal awards must 
have a cognizant agency for audit. The designated cognizant agency for 
audit must be the Federal awarding agency that provides the predominant 
amount of direct funding to a non-Federal entity unless OMB designates a 
specific cognizant agency for audit.
    (2) To provide for continuity of cognizance, the determination of 
the predominant amount of direct funding must be based upon direct 
Federal awards expended in the non-Federal entity's fiscal years ending 
in 2009, 2014, 2019 and every fifth year thereafter. For example, audit 
cognizance for periods ending in 2011 through 2015 will be determined 
based on Federal awards expended in 2009.
    (3) Notwithstanding the manner in which audit cognizance is 
determined, a Federal awarding agency with cognizance for an auditee may 
reassign cognizance to another Federal awarding agency that provides 
substantial funding and agrees to be the cognizant agency for audit. 
Within 30 calendar days after any reassignment, both the old and the new 
cognizant agency for audit must provide notice of the change to the FAC, 
the auditee, and, if known, the auditor. The cognizant agency for audit 
must:
    (i) Provide technical audit advice and liaison assistance to 
auditees and auditors.
    (ii) Obtain or conduct quality control reviews on selected audits 
made by non-Federal auditors, and provide the results to other 
interested organizations. Cooperate and provide support to the Federal 
agency designated by OMB to lead a governmentwide project to determine 
the quality of single audits by providing a statistically reliable 
estimate of the extent that single audits conform to applicable 
requirements, standards, and procedures; and to make recommendations to 
address noted audit quality issues, including recommendations for any 
changes to applicable requirements, standards and procedures indicated 
by the results of the project. This governmentwide audit quality project 
must be performed once every 6 years beginning in 2018 or at such other 
interval as determined by OMB, and the results must be public.
    (iii) Promptly inform other affected Federal agencies and 
appropriate Federal law enforcement officials of any direct reporting by 
the auditee or its auditor required by GAGAS or statutes and 
regulations.
    (iv) Advise the community of independent auditors of any noteworthy 
or important factual trends related to the quality of audits stemming 
from quality control reviews. Significant problems or quality issues 
consistently identified through quality control reviews of audit reports 
must be referred

[[Page 186]]

to appropriate state licensing agencies and professional bodies.
    (v) Advise the auditor, Federal awarding agencies, and, where 
appropriate, the auditee of any deficiencies found in the audits when 
the deficiencies require corrective action by the auditor. When advised 
of deficiencies, the auditee must work with the auditor to take 
corrective action. If corrective action is not taken, the cognizant 
agency for audit must notify the auditor, the auditee, and applicable 
Federal awarding agencies and pass-through entities of the facts and 
make recommendations for follow-up action. Major inadequacies or 
repetitive substandard performance by auditors must be referred to 
appropriate state licensing agencies and professional bodies for 
disciplinary action.
    (vi) Coordinate, to the extent practical, audits or reviews made by 
or for Federal agencies that are in addition to the audits made pursuant 
to this part, so that the additional audits or reviews build upon rather 
than duplicate audits performed in accordance with this part.
    (vii) Coordinate a management decision for cross-cutting audit 
findings (as defined in Sec.  200.30 Cross-cutting audit finding) that 
affect the Federal programs of more than one agency when requested by 
any Federal awarding agency whose awards are included in the audit 
finding of the auditee.
    (viii) Coordinate the audit work and reporting responsibilities 
among auditors to achieve the most cost-effective audit.
    (ix) Provide advice to auditees as to how to handle changes in 
fiscal years.
    (b) Oversight agency for audit responsibilities. An auditee who does 
not have a designated cognizant agency for audit will be under the 
general oversight of the Federal agency determined in accordance with 
Sec.  200.73 Oversight agency for audit. A Federal agency with oversight 
for an auditee may reassign oversight to another Federal agency that 
agrees to be the oversight agency for audit. Within 30 calendar days 
after any reassignment, both the old and the new oversight agency for 
audit must provide notice of the change to the FAC, the auditee, and, if 
known, the auditor. The oversight agency for audit:
    (1) Must provide technical advice to auditees and auditors as 
requested.
    (2) May assume all or some of the responsibilities normally 
performed by a cognizant agency for audit.
    (c) Federal awarding agency responsibilities. The Federal awarding 
agency must perform the following for the Federal awards it makes (See 
also the requirements of Sec.  200.210 Information contained in a 
Federal award):
    (1) Ensure that audits are completed and reports are received in a 
timely manner and in accordance with the requirements of this part.
    (2) Provide technical advice and counsel to auditees and auditors as 
requested.
    (3) Follow-up on audit findings to ensure that the recipient takes 
appropriate and timely corrective action. As part of audit follow-up, 
the Federal awarding agency must:
    (i) Issue a management decision as prescribed in Sec.  200.521 
Management decision;
    (ii) Monitor the recipient taking appropriate and timely corrective 
action;
    (iii) Use cooperative audit resolution mechanisms (see Sec.  200.25 
Cooperative audit resolution) to improve Federal program outcomes 
through better audit resolution, follow-up, and corrective action; and
    (iv) Develop a baseline, metrics, and targets to track, over time, 
the effectiveness of the Federal agency's process to follow-up on audit 
findings and on the effectiveness of Single Audits in improving non-
Federal entity accountability and their use by Federal awarding agencies 
in making award decisions.
    (4) Provide OMB annual updates to the compliance supplement and work 
with OMB to ensure that the compliance supplement focuses the auditor to 
test the compliance requirements most likely to cause improper payments, 
fraud, waste, abuse or generate audit finding for which the Federal 
awarding agency will take sanctions.
    (5) Provide OMB with the name of a single audit accountable official 
from among the senior policy officials of the Federal awarding agency 
who must be:

[[Page 187]]

    (i) Responsible for ensuring that the agency fulfills all the 
requirements of paragraph (c) of this section and effectively uses the 
single audit process to reduce improper payments and improve Federal 
program outcomes.
    (ii) Held accountable to improve the effectiveness of the single 
audit process based upon metrics as described in paragraph (c)(3)(iv) of 
this section.
    (iii) Responsible for designating the Federal agency's key 
management single audit liaison.
    (6) Provide OMB with the name of a key management single audit 
liaison who must:
    (i) Serve as the Federal awarding agency's management point of 
contact for the single audit process both within and outside the Federal 
Government.
    (ii) Promote interagency coordination, consistency, and sharing in 
areas such as coordinating audit follow-up; identifying higher-risk non-
Federal entities; providing input on single audit and follow-up policy; 
enhancing the utility of the FAC; and studying ways to use single audit 
results to improve Federal award accountability and best practices.
    (iii) Oversee training for the Federal awarding agency's program 
management personnel related to the single audit process.
    (iv) Promote the Federal awarding agency's use of cooperative audit 
resolution mechanisms.
    (v) Coordinate the Federal awarding agency's activities to ensure 
appropriate and timely follow-up and corrective action on audit 
findings.
    (vi) Organize the Federal cognizant agency for audit's follow-up on 
cross-cutting audit findings that affect the Federal programs of more 
than one Federal awarding agency.
    (vii) Ensure the Federal awarding agency provides annual updates of 
the compliance supplement to OMB.
    (viii) Support the Federal awarding agency's single audit 
accountable official's mission.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75887, Dec. 19, 2014]

                                Auditors



Sec.  200.514  Scope of audit.

    (a) General. The audit must be conducted in accordance with GAGAS. 
The audit must cover the entire operations of the auditee, or, at the 
option of the auditee, such audit must include a series of audits that 
cover departments, agencies, and other organizational units that 
expended or otherwise administered Federal awards during such audit 
period, provided that each such audit must encompass the financial 
statements and schedule of expenditures of Federal awards for each such 
department, agency, and other organizational unit, which must be 
considered to be a non-Federal entity. The financial statements and 
schedule of expenditures of Federal awards must be for the same audit 
period.
    (b) Financial statements. The auditor must determine whether the 
financial statements of the auditee are presented fairly in all material 
respects in accordance with generally accepted accounting principles. 
The auditor must also determine whether the schedule of expenditures of 
Federal awards is stated fairly in all material respects in relation to 
the auditee's financial statements as a whole.
    (c) Internal control. (1) The compliance supplement provides 
guidance on internal controls over Federal programs based upon the 
guidance in Standards for Internal Control in the Federal Government 
issued by the Comptroller General of the United States and the Internal 
Control--Integrated Framework, issued by the Committee of Sponsoring 
Organizations of the Treadway Commission (COSO).
    (2) In addition to the requirements of GAGAS, the auditor must 
perform procedures to obtain an understanding of internal control over 
Federal programs sufficient to plan the audit to support a low assessed 
level of control risk of noncompliance for major programs.
    (3) Except as provided in paragraph (c)(4) of this section, the 
auditor must:
    (i) Plan the testing of internal control over compliance for major 
programs to support a low assessed level of control risk for the 
assertions relevant to the compliance requirements for each major 
program; and

[[Page 188]]

    (ii) Perform testing of internal control as planned in paragraph 
(c)(3)(i) of this section.
    (4) When internal control over some or all of the compliance 
requirements for a major program are likely to be ineffective in 
preventing or detecting noncompliance, the planning and performing of 
testing described in paragraph (c)(3) of this section are not required 
for those compliance requirements. However, the auditor must report a 
significant deficiency or material weakness in accordance with Sec.  
200.516 Audit findings, assess the related control risk at the maximum, 
and consider whether additional compliance tests are required because of 
ineffective internal control.
    (d) Compliance. (1) In addition to the requirements of GAGAS, the 
auditor must determine whether the auditee has complied with Federal 
statutes, regulations, and the terms and conditions of Federal awards 
that may have a direct and material effect on each of its major 
programs.
    (2) The principal compliance requirements applicable to most Federal 
programs and the compliance requirements of the largest Federal programs 
are included in the compliance supplement.
    (3) For the compliance requirements related to Federal programs 
contained in the compliance supplement, an audit of these compliance 
requirements will meet the requirements of this part. Where there have 
been changes to the compliance requirements and the changes are not 
reflected in the compliance supplement, the auditor must determine the 
current compliance requirements and modify the audit procedures 
accordingly. For those Federal programs not covered in the compliance 
supplement, the auditor must follow the compliance supplement's guidance 
for programs not included in the supplement.
    (4) The compliance testing must include tests of transactions and 
such other auditing procedures necessary to provide the auditor 
sufficient appropriate audit evidence to support an opinion on 
compliance.
    (e) Audit follow-up. The auditor must follow-up on prior audit 
findings, perform procedures to assess the reasonableness of the summary 
schedule of prior audit findings prepared by the auditee in accordance 
with Sec.  200.511 Audit findings follow-up paragraph (b), and report, 
as a current year audit finding, when the auditor concludes that the 
summary schedule of prior audit findings materially misrepresents the 
status of any prior audit finding. The auditor must perform audit 
follow-up procedures regardless of whether a prior audit finding relates 
to a major program in the current year.
    (f) Data Collection Form. As required in Sec.  200.512 Report 
submission paragraph (b)(3), the auditor must complete and sign 
specified sections of the data collection form.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75887, Dec. 19, 2014]



Sec.  200.515  Audit reporting.

    The auditor's report(s) may be in the form of either combined or 
separate reports and may be organized differently from the manner 
presented in this section. The auditor's report(s) must state that the 
audit was conducted in accordance with this part and include the 
following:
    (a) An opinion (or disclaimer of opinion) as to whether the 
financial statements are presented fairly in all material respects in 
accordance with generally accepted accounting principles and an opinion 
(or disclaimer of opinion) as to whether the schedule of expenditures of 
Federal awards is fairly stated in all material respects in relation to 
the financial statements as a whole.
    (b) A report on internal control over financial reporting and 
compliance with provisions of laws, regulations, contracts, and award 
agreements, noncompliance with which could have a material effect on the 
financial statements. This report must describe the scope of testing of 
internal control and compliance and the results of the tests, and, where 
applicable, it will refer to the separate schedule of findings and 
questioned costs described in paragraph (d) of this section.
    (c) A report on compliance for each major program and a report on 
internal control over compliance. This report must describe the scope of 
testing of

[[Page 189]]

internal control over compliance, include an opinion or disclaimer of 
opinion as to whether the auditee complied with Federal statutes, 
regulations, and the terms and conditions of Federal awards which could 
have a direct and material effect on each major program and refer to the 
separate schedule of findings and questioned costs described in 
paragraph (d) of this section.
    (d) A schedule of findings and questioned costs which must include 
the following three components:
    (1) A summary of the auditor's results, which must include:
    (i) The type of report the auditor issued on whether the financial 
statements audited were prepared in accordance with GAAP (i.e., 
unmodified opinion, qualified opinion, adverse opinion, or disclaimer of 
opinion);
    (ii) Where applicable, a statement about whether significant 
deficiencies or material weaknesses in internal control were disclosed 
by the audit of the financial statements;
    (iii) A statement as to whether the audit disclosed any 
noncompliance that is material to the financial statements of the 
auditee;
    (iv) Where applicable, a statement about whether significant 
deficiencies or material weaknesses in internal control over major 
programs were disclosed by the audit;
    (v) The type of report the auditor issued on compliance for major 
programs (i.e., unmodified opinion, qualified opinion, adverse opinion, 
or disclaimer of opinion);
    (vi) A statement as to whether the audit disclosed any audit 
findings that the auditor is required to report under Sec.  200.516 
Audit findings paragraph (a);
    (vii) An identification of major programs by listing each individual 
major program; however in the case of a cluster of programs only the 
cluster name as shown on the Schedule of Expenditures of Federal Awards 
is required;
    (viii) The dollar threshold used to distinguish between Type A and 
Type B programs, as described in Sec.  200.518 Major program 
determination paragraph (b)(1), or (b)(3) when a recalculation of the 
Type A threshold is required for large loan or loan guarantees; and
    (ix) A statement as to whether the auditee qualified as a low-risk 
auditee under Sec.  200.520 Criteria for a low-risk auditee.
    (2) Findings relating to the financial statements which are required 
to be reported in accordance with GAGAS.
    (3) Findings and questioned costs for Federal awards which must 
include audit findings as defined in Sec.  200.516 Audit findings, 
paragraph (a).
    (i) Audit findings (e.g., internal control findings, compliance 
findings, questioned costs, or fraud) that relate to the same issue must 
be presented as a single audit finding. Where practical, audit findings 
should be organized by Federal agency or pass-through entity.
    (ii) Audit findings that relate to both the financial statements and 
Federal awards, as reported under paragraphs (d)(2) and (d)(3) of this 
section, respectively, must be reported in both sections of the 
schedule. However, the reporting in one section of the schedule may be 
in summary form with a reference to a detailed reporting in the other 
section of the schedule.
    (e) Nothing in this part precludes combining of the audit reporting 
required by this section with the reporting required by Sec.  200.512 
Report submission, paragraph (b) Data Collection when allowed by GAGAS 
and Appendix X to Part 200--Data Collection Form (Form SF-SAC).

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75887, Dec. 19, 2014]



Sec.  200.516  Audit findings.

    (a) Audit findings reported. The auditor must report the following 
as audit findings in a schedule of findings and questioned costs:
    (1) Significant deficiencies and material weaknesses in internal 
control over major programs and significant instances of abuse relating 
to major programs. The auditor's determination of whether a deficiency 
in internal control is a significant deficiency or material weakness for 
the purpose of reporting an audit finding is in relation to a type of 
compliance requirement for a major program identified in the Compliance 
Supplement.
    (2) Material noncompliance with the provisions of Federal statutes, 
regulations, or the terms and conditions of

[[Page 190]]

Federal awards related to a major program. The auditor's determination 
of whether a noncompliance with the provisions of Federal statutes, 
regulations, or the terms and conditions of Federal awards is material 
for the purpose of reporting an audit finding is in relation to a type 
of compliance requirement for a major program identified in the 
compliance supplement.
    (3) Known questioned costs that are greater than $25,000 for a type 
of compliance requirement for a major program. Known questioned costs 
are those specifically identified by the auditor. In evaluating the 
effect of questioned costs on the opinion on compliance, the auditor 
considers the best estimate of total costs questioned (likely questioned 
costs), not just the questioned costs specifically identified (known 
questioned costs). The auditor must also report known questioned costs 
when likely questioned costs are greater than $25,000 for a type of 
compliance requirement for a major program. In reporting questioned 
costs, the auditor must include information to provide proper 
perspective for judging the prevalence and consequences of the 
questioned costs.
    (4) Known questioned costs that are greater than $25,000 for a 
Federal program which is not audited as a major program. Except for 
audit follow-up, the auditor is not required under this part to perform 
audit procedures for such a Federal program; therefore, the auditor will 
normally not find questioned costs for a program that is not audited as 
a major program. However, if the auditor does become aware of questioned 
costs for a Federal program that is not audited as a major program 
(e.g., as part of audit follow-up or other audit procedures) and the 
known questioned costs are greater than $25,000, then the auditor must 
report this as an audit finding.
    (5) The circumstances concerning why the auditor's report on 
compliance for each major program is other than an unmodified opinion, 
unless such circumstances are otherwise reported as audit findings in 
the schedule of findings and questioned costs for Federal awards.
    (6) Known or likely fraud affecting a Federal award, unless such 
fraud is otherwise reported as an audit finding in the schedule of 
findings and questioned costs for Federal awards. This paragraph does 
not require the auditor to report publicly information which could 
compromise investigative or legal proceedings or to make an additional 
reporting when the auditor confirms that the fraud was reported outside 
the auditor's reports under the direct reporting requirements of GAGAS.
    (7) Instances where the results of audit follow-up procedures 
disclosed that the summary schedule of prior audit findings prepared by 
the auditee in accordance with Sec.  200.511 Audit findings follow-up, 
paragraph (b) materially misrepresents the status of any prior audit 
finding.
    (b) Audit finding detail and clarity. Audit findings must be 
presented in sufficient detail and clarity for the auditee to prepare a 
corrective action plan and take corrective action, and for Federal 
agencies and pass-through entities to arrive at a management decision. 
The following specific information must be included, as applicable, in 
audit findings:
    (1) Federal program and specific Federal award identification 
including the CFDA title and number, Federal award identification number 
and year, name of Federal agency, and name of the applicable pass-
through entity. When information, such as the CFDA title and number or 
Federal award identification number, is not available, the auditor must 
provide the best information available to describe the Federal award.
    (2) The criteria or specific requirement upon which the audit 
finding is based, including the Federal statutes, regulations, or the 
terms and conditions of the Federal awards. Criteria generally identify 
the required or desired state or expectation with respect to the program 
or operation. Criteria provide a context for evaluating evidence and 
understanding findings.
    (3) The condition found, including facts that support the deficiency 
identified in the audit finding.
    (4) A statement of cause that identifies the reason or explanation 
for the condition or the factors responsible for the difference between 
the situation that exists (condition) and the required

[[Page 191]]

or desired state (criteria), which may also serve as a basis for 
recommendations for corrective action.
    (5) The possible asserted effect to provide sufficient information 
to the auditee and Federal agency, or pass-through entity in the case of 
a subrecipient, to permit them to determine the cause and effect to 
facilitate prompt and proper corrective action. A statement of the 
effect or potential effect should provide a clear, logical link to 
establish the impact or potential impact of the difference between the 
condition and the criteria.
    (6) Identification of questioned costs and how they were computed. 
Known questioned costs must be identified by applicable CFDA number(s) 
and applicable Federal award identification number(s).
    (7) Information to provide proper perspective for judging the 
prevalence and consequences of the audit findings, such as whether the 
audit findings represent an isolated instance or a systemic problem. 
Where appropriate, instances identified must be related to the universe 
and the number of cases examined and be quantified in terms of dollar 
value. The auditor should report whether the sampling was a 
statistically valid sample.
    (8) Identification of whether the audit finding was a repeat of a 
finding in the immediately prior audit and if so any applicable prior 
year audit finding numbers.
    (9) Recommendations to prevent future occurrences of the deficiency 
identified in the audit finding.
    (10) Views of responsible officials of the auditee.
    (c) Reference numbers. Each audit finding in the schedule of 
findings and questioned costs must include a reference number in the 
format meeting the requirements of the data collection form submission 
required by Sec.  200.512 Report submission, paragraph (b) to allow for 
easy referencing of the audit findings during follow-up.



Sec.  200.517  Audit documentation.

    (a) Retention of audit documentation. The auditor must retain audit 
documentation and reports for a minimum of three years after the date of 
issuance of the auditor's report(s) to the auditee, unless the auditor 
is notified in writing by the cognizant agency for audit, oversight 
agency for audit, cognizant agency for indirect costs, or pass-through 
entity to extend the retention period. When the auditor is aware that 
the Federal agency, pass-through entity, or auditee is contesting an 
audit finding, the auditor must contact the parties contesting the audit 
finding for guidance prior to destruction of the audit documentation and 
reports.
    (b) Access to audit documentation. Audit documentation must be made 
available upon request to the cognizant or oversight agency for audit or 
its designee, cognizant agency for indirect cost, a Federal agency, or 
GAO at the completion of the audit, as part of a quality review, to 
resolve audit findings, or to carry out oversight responsibilities 
consistent with the purposes of this part. Access to audit documentation 
includes the right of Federal agencies to obtain copies of audit 
documentation, as is reasonable and necessary.



Sec.  200.518  Major program determination.

    (a) General. The auditor must use a risk-based approach to determine 
which Federal programs are major programs. This risk-based approach must 
include consideration of: current and prior audit experience, oversight 
by Federal agencies and pass-through entities, and the inherent risk of 
the Federal program. The process in paragraphs (b) through (h) of this 
section must be followed.
    (b) Step one. (1) The auditor must identify the larger Federal 
programs, which must be labeled Type A programs. Type A programs are 
defined as Federal programs with Federal awards expended during the 
audit period exceeding the levels outlined in the table in this 
paragraph (b)(1):

------------------------------------------------------------------------
       Total Federal awards expended             Type A/B threshold
------------------------------------------------------------------------
 Equal to or exceed $750,000 but less than  $750,000.
 or equal to $25 million.
Exceed $25 million but less than or equal   Total Federal awards
 to $100 million.                            expended times .03.
Exceed $100 million but less than or equal  $3 million.
 to $1 billion.

[[Page 192]]

 
Exceed $1 billion but less than or equal    Total Federal awards
 to $10 billion.                             expended times .003.
Exceed $10 billion but less than or equal   $30 million.
 to $20 billion.
Exceed $20 billion........................  Total Federal awards
                                             expended times .0015.
------------------------------------------------------------------------

    (2) Federal programs not labeled Type A under paragraph (b)(1) of 
this section must be labeled Type B programs.
    (3) The inclusion of large loan and loan guarantees (loans) must not 
result in the exclusion of other programs as Type A programs. When a 
Federal program providing loans exceeds four times the largest non-loan 
program it is considered a large loan program, and the auditor must 
consider this Federal program as a Type A program and exclude its values 
in determining other Type A programs. This recalculation of the Type A 
program is performed after removing the total of all large loan 
programs. For the purposes of this paragraph a program is only 
considered to be a Federal program providing loans if the value of 
Federal awards expended for loans within the program comprises fifty 
percent or more of the total Federal awards expended for the program. A 
cluster of programs is treated as one program and the value of Federal 
awards expended under a loan program is determined as described in Sec.  
200.502 Basis for determining Federal awards expended.
    (4) For biennial audits permitted under Sec.  200.504 Frequency of 
audits, the determination of Type A and Type B programs must be based 
upon the Federal awards expended during the two-year period.
    (c) Step two. (1) The auditor must identify Type A programs which 
are low-risk. In making this determination, the auditor must consider 
whether the requirements in Sec.  200.519 Criteria for Federal program 
risk paragraph (c), the results of audit follow-up, or any changes in 
personnel or systems affecting the program indicate significantly 
increased risk and preclude the program from being low risk. For a Type 
A program to be considered low-risk, it must have been audited as a 
major program in at least one of the two most recent audit periods (in 
the most recent audit period in the case of a biennial audit), and, in 
the most recent audit period, the program must have not had:
    (i) Internal control deficiencies which were identified as material 
weaknesses in the auditor's report on internal control for major 
programs as required under Sec.  200.515 Audit reporting, paragraph (c);
    (ii) A modified opinion on the program in the auditor's report on 
major programs as required under Sec.  200.515 Audit reporting, 
paragraph (c); or
    (iii) Known or likely questioned costs that exceed five percent of 
the total Federal awards expended for the program.
    (2) Notwithstanding paragraph (c)(1) of this section, OMB may 
approve a Federal awarding agency's request that a Type A program may 
not be considered low risk for a certain recipient. For example, it may 
be necessary for a large Type A program to be audited as a major program 
each year at a particular recipient to allow the Federal awarding agency 
to comply with 31 U.S.C. 3515. The Federal awarding agency must notify 
the recipient and, if known, the auditor of OMB's approval at least 180 
calendar days prior to the end of the fiscal year to be audited.
    (d) Step three. (1) The auditor must identify Type B programs which 
are high-risk using professional judgment and the criteria in Sec.  
200.519 Criteria for Federal program risk. However, the auditor is not 
required to identify more high-risk Type B programs than at least one 
fourth the number of low-risk Type A programs identified as low-risk 
under Step 2 (paragraph (c) of this section). Except for known material 
weakness in internal control or compliance problems as discussed in 
Sec.  200.519 Criteria for Federal program risk paragraphs (b)(1), 
(b)(2), and (c)(1), a single criteria in risk would seldom cause a Type 
B program to be considered high-risk. When identifying which Type B 
programs to risk assess, the auditor is encouraged to use an approach 
which provides an opportunity for different high-risk Type B programs to 
be audited as major over a period of time.
    (2) The auditor is not expected to perform risk assessments on 
relatively

[[Page 193]]

small Federal programs. Therefore, the auditor is only required to 
perform risk assessments on Type B programs that exceed twenty-five 
percent (0.25) of the Type A threshold determined in Step 1 (paragraph 
(b) of this section).
    (e) Step four. At a minimum, the auditor must audit all of the 
following as major programs:
    (1) All Type A programs not identified as low risk under step two 
(paragraph (c)(1) of this section).
    (2) All Type B programs identified as high-risk under step three 
(paragraph (d) of this section).
    (3) Such additional programs as may be necessary to comply with the 
percentage of coverage rule discussed in paragraph (f) of this section. 
This may require the auditor to audit more programs as major programs 
than the number of Type A programs.
    (f) Percentage of coverage rule. If the auditee meets the criteria 
in Sec.  200.520 Criteria for a low-risk auditee, the auditor need only 
audit the major programs identified in Step 4 (paragraph (e)(1) and (2) 
of this section) and such additional Federal programs with Federal 
awards expended that, in aggregate, all major programs encompass at 
least 20 percent (0.20) of total Federal awards expended. Otherwise, the 
auditor must audit the major programs identified in Step 4 (paragraphs 
(e)(1) and (2) of this section) and such additional Federal programs 
with Federal awards expended that, in aggregate, all major programs 
encompass at least 40 percent (0.40) of total Federal awards expended.
    (g) Documentation of risk. The auditor must include in the audit 
documentation the risk analysis process used in determining major 
programs.
    (h) Auditor's judgment. When the major program determination was 
performed and documented in accordance with this Subpart, the auditor's 
judgment in applying the risk-based approach to determine major programs 
must be presumed correct. Challenges by Federal agencies and pass-
through entities must only be for clearly improper use of the 
requirements in this part. However, Federal agencies and pass-through 
entities may provide auditors guidance about the risk of a particular 
Federal program and the auditor must consider this guidance in 
determining major programs in audits not yet completed.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75887, Dec. 19, 2014]



Sec.  200.519  Criteria for Federal program risk.

    (a) General. The auditor's determination should be based on an 
overall evaluation of the risk of noncompliance occurring that could be 
material to the Federal program. The auditor must consider criteria, 
such as described in paragraphs (b), (c), and (d) of this section, to 
identify risk in Federal programs. Also, as part of the risk analysis, 
the auditor may wish to discuss a particular Federal program with 
auditee management and the Federal agency or pass-through entity.
    (b) Current and prior audit experience. (1) Weaknesses in internal 
control over Federal programs would indicate higher risk. Consideration 
should be given to the control environment over Federal programs and 
such factors as the expectation of management's adherence to Federal 
statutes, regulations, and the terms and conditions of Federal awards 
and the competence and experience of personnel who administer the 
Federal programs.
    (i) A Federal program administered under multiple internal control 
structures may have higher risk. When assessing risk in a large single 
audit, the auditor must consider whether weaknesses are isolated in a 
single operating unit (e.g., one college campus) or pervasive throughout 
the entity.
    (ii) When significant parts of a Federal program are passed through 
to subrecipients, a weak system for monitoring subrecipients would 
indicate higher risk.
    (2) Prior audit findings would indicate higher risk, particularly 
when the situations identified in the audit findings could have a 
significant impact on a Federal program or have not been corrected.
    (3) Federal programs not recently audited as major programs may be 
of higher risk than Federal programs recently audited as major programs 
without audit findings.

[[Page 194]]

    (c) Oversight exercised by Federal agencies and pass-through 
entities. (1) Oversight exercised by Federal agencies or pass-through 
entities could be used to assess risk. For example, recent monitoring or 
other reviews performed by an oversight entity that disclosed no 
significant problems would indicate lower risk, whereas monitoring that 
disclosed significant problems would indicate higher risk.
    (2) Federal agencies, with the concurrence of OMB, may identify 
Federal programs that are higher risk. OMB will provide this 
identification in the compliance supplement.
    (d) Inherent risk of the Federal program. (1) The nature of a 
Federal program may indicate risk. Consideration should be given to the 
complexity of the program and the extent to which the Federal program 
contracts for goods and services. For example, Federal programs that 
disburse funds through third party contracts or have eligibility 
criteria may be of higher risk. Federal programs primarily involving 
staff payroll costs may have high risk for noncompliance with 
requirements of Sec.  200.430 Compensation--personal services, but 
otherwise be at low risk.
    (2) The phase of a Federal program in its life cycle at the Federal 
agency may indicate risk. For example, a new Federal program with new or 
interim regulations may have higher risk than an established program 
with time-tested regulations. Also, significant changes in Federal 
programs, statutes, regulations, or the terms and conditions of Federal 
awards may increase risk.
    (3) The phase of a Federal program in its life cycle at the auditee 
may indicate risk. For example, during the first and last years that an 
auditee participates in a Federal program, the risk may be higher due to 
start-up or closeout of program activities and staff.
    (4) Type B programs with larger Federal awards expended would be of 
higher risk than programs with substantially smaller Federal awards 
expended.



Sec.  200.520  Criteria for a low-risk auditee.

    An auditee that meets all of the following conditions for each of 
the preceding two audit periods must qualify as a low-risk auditee and 
be eligible for reduced audit coverage in accordance with Sec.  200.518 
Major program determination.
    (a) Single audits were performed on an annual basis in accordance 
with the provisions of this Subpart, including submitting the data 
collection form and the reporting package to the FAC within the 
timeframe specified in Sec.  200.512 Report submission. A non-Federal 
entity that has biennial audits does not qualify as a low-risk auditee.
    (b) The auditor's opinion on whether the financial statements were 
prepared in accordance with GAAP, or a basis of accounting required by 
state law, and the auditor's in relation to opinion on the schedule of 
expenditures of Federal awards were unmodified.
    (c) There were no deficiencies in internal control which were 
identified as material weaknesses under the requirements of GAGAS.
    (d) The auditor did not report a substantial doubt about the 
auditee's ability to continue as a going concern.
    (e) None of the Federal programs had audit findings from any of the 
following in either of the preceding two audit periods in which they 
were classified as Type A programs:
    (1) Internal control deficiencies that were identified as material 
weaknesses in the auditor's report on internal control for major 
programs as required under Sec.  200.515 Audit reporting, paragraph (c);
    (2) A modified opinion on a major program in the auditor's report on 
major programs as required under Sec.  200.515 Audit reporting, 
paragraph (c); or
    (3) Known or likely questioned costs that exceeded five percent of 
the total Federal awards expended for a Type A program during the audit 
period.

                          Management Decisions



Sec.  200.521  Management decision.

    (a) General. The management decision must clearly state whether or 
not

[[Page 195]]

the audit finding is sustained, the reasons for the decision, and the 
expected auditee action to repay disallowed costs, make financial 
adjustments, or take other action. If the auditee has not completed 
corrective action, a timetable for follow-up should be given. Prior to 
issuing the management decision, the Federal agency or pass-through 
entity may request additional information or documentation from the 
auditee, including a request for auditor assurance related to the 
documentation, as a way of mitigating disallowed costs. The management 
decision should describe any appeal process available to the auditee. 
While not required, the Federal agency or pass-through entity may also 
issue a management decision on findings relating to the financial 
statements which are required to be reported in accordance with GAGAS.
    (b) Federal agency. As provided in Sec.  200.513 Responsibilities, 
paragraph (a)(7), the cognizant agency for audit must be responsible for 
coordinating a management decision for audit findings that affect the 
programs of more than one Federal agency. As provided in Sec.  200.513 
Responsibilities, paragraph (c)(3), a Federal awarding agency is 
responsible for issuing a management decision for findings that relate 
to Federal awards it makes to non-Federal entities.
    (c) Pass-through entity. As provided in Sec.  200.331 Requirements 
for pass-through entities, paragraph (d), the pass-through entity must 
be responsible for issuing a management decision for audit findings that 
relate to Federal awards it makes to subrecipients.
    (d) Time requirements. The Federal awarding agency or pass-through 
entity responsible for issuing a management decision must do so within 
six months of acceptance of the audit report by the FAC. The auditee 
must initiate and proceed with corrective action as rapidly as possible 
and corrective action should begin no later than upon receipt of the 
audit report.
    (e) Reference numbers. Management decisions must include the 
reference numbers the auditor assigned to each audit finding in 
accordance with Sec.  200.516 Audit findings paragraph (c).



 Sec. Appendix I to Part 200--Full Text of Notice of Funding Opportunity

    The full text of the notice of funding opportunity is organized in 
sections. The required format outlined in this appendix indicates 
immediately following the title of each section whether that section is 
required in every announcement or is a Federal awarding agency option. 
The format is designed so that similar types of information will appear 
in the same sections in announcements of different Federal funding 
opportunities. Toward that end, there is text in each of the following 
sections to describe the types of information that a Federal awarding 
agency would include in that section of an actual announcement.
    A Federal awarding agency that wishes to include information that 
the format does not specifically discuss may address that subject in 
whatever section(s) is most appropriate. For example, if a Federal 
awarding agency chooses to address performance goals in the 
announcement, it might do so in the funding opportunity description, the 
application content, or the reporting requirements.
    Similarly, when this format calls for a type of information to be in 
a particular section, a Federal awarding agency wishing to address that 
subject in other sections may elect to repeat the information in those 
sections or use cross references between the sections (there should be 
hyperlinks for cross-references in any electronic versions of the 
announcement). For example, a Federal awarding agency may want to 
include Section A information about the types of non-Federal entities 
who are eligible to apply. The format specifies a standard location for 
that information in Section C.1 but does not preclude repeating the 
information in Section A or creating a cross reference between Section A 
and C.1, as long as a potential applicant can find the information 
quickly and easily from the standard location.
    The sections of the full text of the announcement are described in 
the following paragraphs.

                    A. Program Description--Required

    This section contains the full program description of the funding 
opportunity. It may be as long as needed to adequately communicate to 
potential applicants the areas in which funding may be provided. It 
describes the Federal awarding agency's funding priorities or the 
technical or focus areas in which the Federal awarding agency intends to 
provide assistance. As appropriate, it may include any program history 
(e.g., whether this is a new program or a new or changed area of program 
emphasis). This section may communicate indicators of successful 
projects (e.g., if the program encourages collaborative efforts) and may 
include examples of projects that have been funded previously.

[[Page 196]]

This section also may include other information the Federal awarding 
agency deems necessary, and must at a minimum include citations for 
authorizing statutes and regulations for the funding opportunity.

                 B. Federal Award Information--Required

    This section provides sufficient information to help an applicant 
make an informed decision about whether to submit a proposal. Relevant 
information could include the total amount of funding that the Federal 
awarding agency expects to award through the announcement; the 
anticipated number of Federal awards; the expected amounts of individual 
Federal awards (which may be a range); the amount of funding per Federal 
award, on average, experienced in previous years; and the anticipated 
start dates and periods of performance for new Federal awards. This 
section also should address whether applications for renewal or 
supplementation of existing projects are eligible to compete with 
applications for new Federal awards.
    This section also must indicate the type(s) of assistance instrument 
(e.g., grant, cooperative agreement) that may be awarded if applications 
are successful. If cooperative agreements may be awarded, this section 
either should describe the ``substantial involvement'' that the Federal 
awarding agency expects to have or should reference where the potential 
applicant can find that information (e.g., in the funding opportunity 
description in A. Program Description--Required or Federal award 
administration information in Section D. Application and Submission 
Information). If procurement contracts also may be awarded, this must be 
stated.

                       C. Eligibility Information

    This section addresses the considerations or factors that determine 
applicant or application eligibility. This includes the eligibility of 
particular types of applicant organizations, any factors affecting the 
eligibility of the principal investigator or project director, and any 
criteria that make particular projects ineligible. Federal agencies 
should make clear whether an applicant's failure to meet an eligibility 
criterion by the time of an application deadline will result in the 
Federal awarding agency returning the application without review or, 
even though an application may be reviewed, will preclude the Federal 
awarding agency from making a Federal award. Key elements to be 
addressed are:
    1. Eligible Applicants--Required. Announcements must clearly 
identify the types of entities that are eligible to apply. If there are 
no restrictions on eligibility, this section may simply indicate that 
all potential applicants are eligible. If there are restrictions on 
eligibility, it is important to be clear about the specific types of 
entities that are eligible, not just the types that are ineligible. For 
example, if the program is limited to nonprofit organizations subject to 
26 U.S.C. 501(c)(3) of the tax code (26 U.S.C. 501(c)(3)), the 
announcement should say so. Similarly, it is better to state explicitly 
that Native American tribal organizations are eligible than to assume 
that they can unambiguously infer that from a statement that nonprofit 
organizations may apply. Eligibility also can be expressed by exception, 
(e.g., open to all types of domestic applicants other than individuals). 
This section should refer to any portion of Section D specifying 
documentation that must be submitted to support an eligibility 
determination (e.g., proof of 501(c)(3) status as determined by the 
Internal Revenue Service or an authorizing tribal resolution). To the 
extent that any funding restriction in Section D.6 could affect the 
eligibility of an applicant or project, the announcement must either 
restate that restriction in this section or provide a cross-reference to 
its description in Section D.6.
    2. Cost Sharing or Matching--Required. Announcements must state 
whether there is required cost sharing, matching, or cost participation 
without which an application would be ineligible (if cost sharing is not 
required, the announcement must explicitly say so). Required cost 
sharing may be a certain percentage or amount, or may be in the form of 
contributions of specified items or activities (e.g., provision of 
equipment). It is important that the announcement be clear about any 
restrictions on the types of cost (e.g., in-kind contributions) that are 
acceptable as cost sharing. Cost sharing as an eligibility criterion 
includes requirements based in statute or regulation, as described in 
Sec.  200.306 Cost sharing or matching of this Part. This section should 
refer to the appropriate portion(s) of section D. Application and 
Submission Information stating any pre-award requirements for submission 
of letters or other documentation to verify commitments to meet cost-
sharing requirements if a Federal award is made.
    3. Other--Required, if applicable. If there are other eligibility 
criteria (i.e., criteria that have the effect of making an application 
or project ineligible for Federal awards, whether referred to as 
``responsiveness'' criteria, ``go-no go'' criteria, ``threshold'' 
criteria, or in other ways), must be clearly stated and must include a 
reference to the regulation of requirement that describes the 
restriction, as applicable. For example, if entities that have been 
found to be in violation of a particular Federal statute are ineligible, 
it is important to say so. This section must also state any limit on the 
number of applications an applicant may submit under the announcement 
and make clear whether the limitation is on the submitting organization,

[[Page 197]]

individual investigator/program director, or both. This section should 
also address any eligibility criteria for beneficiaries or for program 
participants other than Federal award recipients.

                D. Application and Submission Information

    1. Address to Request Application Package--Required. Potential 
applicants must be told how to get application forms, kits, or other 
materials needed to apply (if this announcement contains everything 
needed, this section need only say so). An Internet address where the 
materials can be accessed is acceptable. However, since high-speed 
Internet access is not yet universally available for downloading 
documents, and applicants may have additional accessibility 
requirements, there also should be a way for potential applicants to 
request paper copies of materials, such as a U.S. Postal Service mailing 
address, telephone or FAX number, Telephone Device for the Deaf (TDD), 
Text Telephone (TTY) number, and/or Federal Information Relay Service 
(FIRS) number.
    2. Content and Form of Application Submission--Required. This 
section must identify the required content of an application and the 
forms or formats that an applicant must use to submit it. If any 
requirements are stated elsewhere because they are general requirements 
that apply to multiple programs or funding opportunities, this section 
should refer to where those requirements may be found. This section also 
should include required forms or formats as part of the announcement or 
state where the applicant may obtain them.
    This section should specifically address content and form or format 
requirements for:
    i. Pre-applications, letters of intent, or white papers required or 
encouraged (see Section D.4), including any limitations on the number of 
pages or other formatting requirements similar to those for full 
applications.
    ii. The application as a whole. For all submissions, this would 
include any limitations on the number of pages, font size and typeface, 
margins, paper size, number of copies, and sequence or assembly 
requirements. If electronic submission is permitted or required, this 
could include special requirements for formatting or signatures.
    iii. Component pieces of the application (e.g., if all copies of the 
application must bear original signatures on the face page or the 
program narrative may not exceed 10 pages). This includes any pieces 
that may be submitted separately by third parties (e.g., references or 
letters confirming commitments from third parties that will be 
contributing a portion of any required cost sharing).
    iv. Information that successful applicants must submit after 
notification of intent to make a Federal award, but prior to a Federal 
award. This could include evidence of compliance with requirements 
relating to human subjects or information needed to comply with the 
National Environmental Policy Act (NEPA) (42 U.S.C. 4321-4370h).
    3. Unique entity identifier and System for Award Management (SAM)--
Required.
    This paragraph must state clearly that each applicant (unless the 
applicant is an individual or Federal awarding agency that is excepted 
from those requirements under 2 CFR Sec.  25.110(b) or (c), or has an 
exception approved by the Federal awarding agency under 2 CFR Sec.  
25.110(d)) is required to: (i) Be registered in SAM before submitting 
its application; (ii) provide a a valid unique entity identifier in its 
application; and (iii) continue to maintain an active SAM registration 
with current information at all times during which it has an active 
Federal award or an application or plan under consideration by a Federal 
awarding agency. It also must state that the Federal awarding agency may 
not make a Federal award to an applicant until the applicant has 
complied with all applicable unique entity identifier and SAM 
requirements and, if an applicant has not fully complied with the 
requirements by the time the Federal awarding agency is ready to make a 
Federal award, the Federal awarding agency may determine that the 
applicant is not qualified to receive a Federal award and use that 
determination as a basis for making a Federal award to another 
applicant.
    4. Submission Dates and Times--Required. Announcements must identify 
due dates and times for all submissions. This includes not only the full 
applications but also any preliminary submissions (e.g., letters of 
intent, white papers, or pre-applications). It also includes any other 
submissions of information before Federal award that are separate from 
the full application. If the funding opportunity is a general 
announcement that is open for a period of time with no specific due 
dates for applications, this section should say so. Note that the 
information on dates that is included in this section also must appear 
with other overview information in a location preceding the full text of 
the announcement (see Sec.  200.203 Notices of funding opportunities of 
this Part).
    Each type of submission should be designated as encouraged or 
required and, if required, any deadline date (or dates, if the Federal 
awarding agency plans more than one cycle of application submission, 
review, and Federal award under the announcement) should be specified. 
The announcement must state (or provide a reference to another document 
that states):
    i. Any deadline in terms of a date and local time. If the due date 
falls on a Saturday, Sunday, or Federal holiday, the reporting package 
is due the next business day.

[[Page 198]]

    ii. What the deadline means (e.g., whether it is the date and time 
by which the Federal awarding agency must receive the application, the 
date by which the application must be postmarked, or something else) and 
how that depends, if at all, on the submission method (e.g., mail, 
electronic, or personal/courier delivery).
    iii. The effect of missing a deadline (e.g., whether late 
applications are neither reviewed nor considered or are reviewed and 
considered under some circumstances).
    iv. How the receiving Federal office determines whether an 
application or pre-application has been submitted before the deadline. 
This includes the form of acceptable proof of mailing or system-
generated documentation of receipt date and time.
    This section also may indicate whether, when, and in what form the 
applicant will receive an acknowledgement of receipt. This information 
should be displayed in ways that will be easy to understand and use. It 
can be difficult to extract all needed information from narrative 
paragraphs, even when they are well written. A tabular form for 
providing a summary of the information may help applicants for some 
programs and give them what effectively could be a checklist to verify 
the completeness of their application package before submission.
    5. Intergovernmental Review--Required, if applicable. If the funding 
opportunity is subject to Executive Order 12372, ``Intergovernmental 
Review of Federal Programs,'' the notice must say so. In alerting 
applicants that they must contact their state's Single Point of Contact 
(SPOC) to find out about and comply with the state's process under 
Executive Order 12372, it may be useful to inform potential applicants 
that the names and addresses of the SPOCs are listed in the Office of 
Management and Budget's Web site. www.whitehouse.gov/omb/grants/
spoc.html.
    6. Funding Restrictions--Required. Notices must include information 
on funding restrictions in order to allow an applicant to develop an 
application and budget consistent with program requirements. Examples 
are whether construction is an allowable activity, if there are any 
limitations on direct costs such as foreign travel or equipment 
purchases, and if there are any limits on indirect costs (or facilities 
and administrative costs). Applicants must be advised if Federal awards 
will not allow reimbursement of pre-Federal award costs.
    7. Other Submission Requirements-- Required. This section must 
address any other submission requirements not included in the other 
paragraphs of this section. This might include the format of submission, 
i.e., paper or electronic, for each type of required submission. 
Applicants should not be required to submit in more than one format and 
this section should indicate whether they may choose whether to submit 
applications in hard copy or electronically, may submit only in hard 
copy, or may submit only electronically.
    This section also must indicate where applications (and any pre-
applications) must be submitted if sent by postal mail, electronic 
means, or hand-delivery. For postal mail submission, this must include 
the name of an office, official, individual or function (e.g., 
application receipt center) and a complete mailing address. For 
electronic submission, this must include the URL or email address; 
whether a password(s) is required; whether particular software or other 
electronic capabilities are required; what to do in the event of system 
problems and a point of contact who will be available in the event the 
applicant experiences technical difficulties. \1\
---------------------------------------------------------------------------

    \1\ With respect to electronic methods for providing information 
about funding opportunities or accepting applicants' submissions of 
information, each Federal awarding agency is responsible for compliance 
with Section 508 of the Rehabilitation Act of 1973 (29 U.S.C. 794d).
---------------------------------------------------------------------------

                    E. Application Review Information

    1. Criteria--Required. This section must address the criteria that 
the Federal awarding agency will use to evaluate applications. This 
includes the merit and other review criteria that evaluators will use to 
judge applications, including any statutory, regulatory, or other 
preferences (e.g., minority status or Native American tribal 
preferences) that will be applied in the review process. These criteria 
are distinct from eligibility criteria that are addressed before an 
application is accepted for review and any program policy or other 
factors that are applied during the selection process, after the review 
process is completed. The intent is to make the application process 
transparent so applicants can make informed decisions when preparing 
their applications to maximize fairness of the process. The announcement 
should clearly describe all criteria, including any sub-criteria. If 
criteria vary in importance, the announcement should specify the 
relative percentages, weights, or other means used to distinguish among 
them. For statutory, regulatory, or other preferences, the announcement 
should provide a detailed explanation of those preferences with an 
explicit indication of their effect (e.g., whether they result in 
additional points being assigned).
    If an applicant's proposed cost sharing will be considered in the 
review process (as opposed to being an eligibility criterion described 
in Section C.2), the announcement must specifically address how it will 
be considered (e.g., to assign a certain number of additional points to 
applicants who offer cost sharing, or to break ties among applications 
with equivalent scores after evaluation

[[Page 199]]

against all other factors). If cost sharing will not be considered in 
the evaluation, the announcement should say so, so that there is no 
ambiguity for potential applicants. Vague statements that cost sharing 
is encouraged, without clarification as to what that means, are 
unhelpful to applicants. It also is important that the announcement be 
clear about any restrictions on the types of cost (e.g., in-kind 
contributions) that are acceptable as cost sharing.
    2. Review and Selection Process--Required. This section may vary in 
the level of detail provided. The announcement must list any program 
policy or other factors or elements, other than merit criteria, that the 
selecting official may use in selecting applications for Federal award 
(e.g., geographical dispersion, program balance, or diversity). The 
Federal awarding agency may also include other appropriate details. For 
example, this section may indicate who is responsible for evaluation 
against the merit criteria (e.g., peers external to the Federal awarding 
agency or Federal awarding agency personnel) and/or who makes the final 
selections for Federal awards. If there is a multi-phase review process 
(e.g., an external panel advising internal Federal awarding agency 
personnel who make final recommendations to the deciding official), the 
announcement may describe the phases. It also may include: the number of 
people on an evaluation panel and how it operates, the way reviewers are 
selected, reviewer qualifications, and the way that conflicts of 
interest are avoided. With respect to electronic methods for providing 
information about funding opportunities or accepting applicants' 
submissions of information, each Federal awarding agency is responsible 
for compliance with Section 508 of the Rehabilitation Act of 1973 (29 
U.S.C. 794d).
    In addition, if the Federal awarding agency permits applicants to 
nominate suggested reviewers of their applications or suggest those they 
feel may be inappropriate due to a conflict of interest, that 
information should be included in this section.
    3. For any Federal award under a notice of funding opportunity, if 
the Federal awarding agency anticipates that the total Federal share 
will be greater than the simplified acquisition threshold on any Federal 
award under a notice of funding opportunity may include, over the period 
of performance (see Sec.  200.88 Simplified Acquisition Threshold), this 
section must also inform applicants:
    i. That the Federal awarding agency, prior to making a Federal award 
with a total amount of Federal share greater than the simplified 
acquisition threshold, is required to review and consider any 
information about the applicant that is in the designated integrity and 
performance system accessible through SAM (currently FAPIIS) (see 41 
U.S.C. 2313);
    ii. That an applicant, at its option, may review information in the 
designated integrity and performance systems accessible through SAM and 
comment on any information about itself that a Federal awarding agency 
previously entered and is currently in the designated integrity and 
performance system accessible through SAM;
    iii. That the Federal awarding agency will consider any comments by 
the applicant, in addition to the other information in the designated 
integrity and performance system, in making a judgment about the 
applicant's integrity, business ethics, and record of performance under 
Federal awards when completing the review of risk posed by applicants as 
described in Sec.  200.205 Federal awarding agency review of risk posed 
by applicants.
    4. Anticipated Announcement and Federal Award Dates--Optional. This 
section is intended to provide applicants with information they can use 
for planning purposes. If there is a single application deadline 
followed by the simultaneous review of all applications, the Federal 
awarding agency can include in this section information about the 
anticipated dates for announcing or notifying successful and 
unsuccessful applicants and for having Federal awards in place. If 
applications are received and evaluated on a ``rolling'' basis at 
different times during an extended period, it may be appropriate to give 
applicants an estimate of the time needed to process an application and 
notify the applicant of the Federal awarding agency's decision.

               F. Federal Award Administration Information

    1. Federal Award Notices--Required. This section must address what a 
successful applicant can expect to receive following selection. If the 
Federal awarding agency's practice is to provide a separate notice 
stating that an application has been selected before it actually makes 
the Federal award, this section would be the place to indicate that the 
letter is not an authorization to begin performance (to the extent that 
it allows charging to Federal awards of pre-award costs at the non-
Federal entity's own risk). This section should indicate that the notice 
of Federal award signed by the grants officer (or equivalent) is the 
authorizing document, and whether it is provided through postal mail or 
by electronic means and to whom. It also may address the timing, form, 
and content of notifications to unsuccessful applicants. See also Sec.  
200.210 Information contained in a Federal award.
    2. Administrative and National Policy Requirements--Required. This 
section must identify the usual administrative and national policy 
requirements the Federal awarding

[[Page 200]]

agency's Federal awards may include. Providing this information lets a 
potential applicant identify any requirements with which it would have 
difficulty complying if its application is successful. In those cases, 
early notification about the requirements allows the potential applicant 
to decide not to apply or to take needed actions before receiving the 
Federal award. The announcement need not include all of the terms and 
conditions of the Federal award, but may refer to a document (with 
information about how to obtain it) or Internet site where applicants 
can see the terms and conditions. If this funding opportunity will lead 
to Federal awards with some special terms and conditions that differ 
from the Federal awarding agency's usual (sometimes called ``general'') 
terms and conditions, this section should highlight those special terms 
and conditions. Doing so will alert applicants that have received 
Federal awards from the Federal awarding agency previously and might not 
otherwise expect different terms and conditions. For the same reason, 
the announcement should inform potential applicants about special 
requirements that could apply to particular Federal awards after the 
review of applications and other information, based on the particular 
circumstances of the effort to be supported (e.g., if human subjects 
were to be involved or if some situations may justify special terms on 
intellectual property, data sharing or security requirements).
    3. Reporting--Required. This section must include general 
information about the type (e.g., financial or performance), frequency, 
and means of submission (paper or electronic) of post-Federal award 
reporting requirements. Highlight any special reporting requirements for 
Federal awards under this funding opportunity that differ (e.g., by 
report type, frequency, form/format, or circumstances for use) from what 
the Federal awarding agency's Federal awards usually require. Federal 
awarding agencies must also describe in this section all relevant 
requirements such as those at 2 CFR 180.335 and 2 CFR 180.350.
    If the Federal share of any Federal award may include more than 
$500,000 over the period of performance, this section must inform 
potential applicants about the post award reporting requirements 
reflected in Appendix XII--Award Term and Condition for Recipient 
Integrity and Performance Matters.

             G. Federal Awarding Agency Contact(s)--Required

    The announcement must give potential applicants a point(s) of 
contact for answering questions or helping with problems while the 
funding opportunity is open. The intent of this requirement is to be as 
helpful as possible to potential applicants, so the Federal awarding 
agency should consider approaches such as giving:
    i. Points of contact who may be reached in multiple ways (e.g., by 
telephone, FAX, and/or email, as well as regular mail).
    ii. A fax or email address that multiple people access, so that 
someone will respond even if others are unexpectedly absent during 
critical periods.
    iii. Different contacts for distinct kinds of help (e.g., one for 
questions of programmatic content and a second for administrative 
questions).

                     H. Other Information--Optional

    This section may include any additional information that will assist 
a potential applicant. For example, the section might:
    i. Indicate whether this is a new program or a one-time initiative.
    ii. Mention related programs or other upcoming or ongoing Federal 
awarding agency funding opportunities for similar activities.
    iii. Include current Internet addresses for Federal awarding agency 
Web sites that may be useful to an applicant in understanding the 
program.
    iv. Alert applicants to the need to identify proprietary information 
and inform them about the way the Federal awarding agency will handle 
it.
    v. Include certain routine notices to applicants (e.g., that the 
Federal Government is not obligated to make any Federal award as a 
result of the announcement or that only grants officers can bind the 
Federal Government to the expenditure of funds).

[78 FR 78608, Dec. 26, 2013, as amended at 80 FR 43310, July 22, 2015]



Sec. Appendix II to Part 200--Contract Provisions for Non-Federal Entity 
                     Contracts Under Federal Awards

    In addition to other provisions required by the Federal agency or 
non-Federal entity, all contracts made by the non-Federal entity under 
the Federal award must contain provisions covering the following, as 
applicable.
    (A) Contracts for more than the simplified acquisition threshold 
currently set at $150,000, which is the inflation adjusted amount 
determined by the Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) as authorized by 41 U.S.C. 
1908, must address administrative, contractual, or legal remedies in 
instances where contractors violate or breach contract terms, and 
provide for such sanctions and penalties as appropriate.
    (B) All contracts in excess of $10,000 must address termination for 
cause and for convenience by the non-Federal entity including the manner 
by which it will be effected and the basis for settlement.

[[Page 201]]

    (C) Equal Employment Opportunity. Except as otherwise provided under 
41 CFR Part 60, all contracts that meet the definition of ``federally 
assisted construction contract'' in 41 CFR Part 60-1.3 must include the 
equal opportunity clause provided under 41 CFR 60-1.4(b), in accordance 
with Executive Order 11246, ``Equal Employment Opportunity'' (30 FR 
12319, 12935, 3 CFR Part, 1964-1965 Comp., p. 339), as amended by 
Executive Order 11375, ``Amending Executive Order 11246 Relating to 
Equal Employment Opportunity,'' and implementing regulations at 41 CFR 
part 60, ``Office of Federal Contract Compliance Programs, Equal 
Employment Opportunity, Department of Labor.''
    (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required 
by Federal program legislation, all prime construction contracts in 
excess of $2,000 awarded by non-Federal entities must include a 
provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, 
and 3146-3148) as supplemented by Department of Labor regulations (29 
CFR Part 5, ``Labor Standards Provisions Applicable to Contracts 
Covering Federally Financed and Assisted Construction''). In accordance 
with the statute, contractors must be required to pay wages to laborers 
and mechanics at a rate not less than the prevailing wages specified in 
a wage determination made by the Secretary of Labor. In addition, 
contractors must be required to pay wages not less than once a week. The 
non-Federal entity must place a copy of the current prevailing wage 
determination issued by the Department of Labor in each solicitation. 
The decision to award a contract or subcontract must be conditioned upon 
the acceptance of the wage determination. The non-Federal entity must 
report all suspected or reported violations to the Federal awarding 
agency. The contracts must also include a provision for compliance with 
the Copeland ``Anti-Kickback'' Act (40 U.S.C. 3145), as supplemented by 
Department of Labor regulations (29 CFR Part 3, ``Contractors and 
Subcontractors on Public Building or Public Work Financed in Whole or in 
Part by Loans or Grants from the United States''). The Act provides that 
each contractor or subrecipient must 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 or she 
is otherwise entitled. The non-Federal entity must report all suspected 
or reported violations to the Federal awarding agency.
    (E) Contract Work Hours and Safety Standards Act (40 U.S.C. 3701-
3708). Where applicable, all contracts awarded by the non-Federal entity 
in excess of $100,000 that involve the employment of mechanics or 
laborers must include a provision for compliance with 40 U.S.C. 3702 and 
3704, as supplemented by Department of Labor regulations (29 CFR Part 
5). Under 40 U.S.C. 3702 of the Act, each contractor must be required to 
compute the wages of every mechanic and laborer on the basis of a 
standard work week of 40 hours. Work in excess of the standard work week 
is permissible provided that the worker is compensated at a rate of not 
less than one and a half times the basic rate of pay for all hours 
worked in excess of 40 hours in the work week. The requirements of 40 
U.S.C. 3704 are applicable to construction work and provide that no 
laborer or mechanic must be required to work in surroundings or under 
working conditions which are unsanitary, hazardous or dangerous. These 
requirements do not apply to the purchases of supplies or materials or 
articles ordinarily available on the open market, or contracts for 
transportation or transmission of intelligence.
    (F) Rights to Inventions Made Under a Contract or Agreement. If the 
Federal award meets the definition of ``funding agreement'' under 37 CFR 
Sec.  401.2 (a) and the recipient or subrecipient wishes to enter into a 
contract with a small business firm or nonprofit organization regarding 
the substitution of parties, assignment or performance of experimental, 
developmental, or research work under that ``funding agreement,'' the 
recipient or subrecipient must comply with the requirements of 37 CFR 
Part 401, ``Rights to Inventions Made by Nonprofit Organizations and 
Small Business Firms Under Government Grants, Contracts and Cooperative 
Agreements,'' and any implementing regulations issued by the awarding 
agency.
    (G) Clean Air Act (42 U.S.C. 7401-7671q.) and the Federal Water 
Pollution Control Act (33 U.S.C. 1251-1387), as amended--Contracts and 
subgrants of amounts in excess of $150,000 must contain a provision that 
requires the non-Federal award to agree to comply with all applicable 
standards, orders or regulations issued pursuant to the Clean Air Act 
(42 U.S.C. 7401-7671q) and the Federal Water Pollution Control Act as 
amended (33 U.S.C. 1251-1387). Violations must be reported to the 
Federal awarding agency and the Regional Office of the Environmental 
Protection Agency (EPA).
    (H) Debarment and Suspension (Executive Orders 12549 and 12689)--A 
contract award (see 2 CFR 180.220) must not be made to parties listed on 
the governmentwide exclusions in the System for Award Management (SAM), 
in accordance with the OMB guidelines at 2 CFR 180 that implement 
Executive Orders 12549 (3 CFR part 1986 Comp., p. 189) and 12689 (3 CFR 
part 1989 Comp., p. 235), ``Debarment and Suspension.'' SAM Exclusions 
contains the names of parties debarred, suspended, or otherwise excluded 
by agencies, as well as parties declared ineligible under statutory or 
regulatory authority other than Executive Order 12549.
    (I) Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)--Contractors that 
apply or bid

[[Page 202]]

for an award exceeding $100,000 must file the required certification. 
Each tier certifies to the tier above that it will not and has not used 
Federal appropriated funds to pay any person or organization for 
influencing or attempting to influence an officer or employee of any 
agency, a member of Congress, officer or employee of Congress, or an 
employee of a member of Congress in connection with obtaining any 
Federal contract, grant or any other award covered by 31 U.S.C. 1352. 
Each tier must also disclose any lobbying with non-Federal funds that 
takes place in connection with obtaining any Federal award. Such 
disclosures are forwarded from tier to tier up to the non-Federal award.
    (J) See Sec.  200.322 Procurement of recovered materials.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75888, Dec. 19, 2014]



 Sec. Appendix III to Part 200--Indirect (F&A) Costs Identification and 
Assignment, and Rate Determination for Institutions of Higher Education 
                                 (IHEs)

                               A. General

    This appendix provides criteria for identifying and computing 
indirect (or indirect (F&A)) rates at IHEs (institutions). Indirect 
(F&A) costs are those that are incurred for common or joint objectives 
and therefore cannot be identified readily and specifically with a 
particular sponsored project, an instructional activity, or any other 
institutional activity. See subsection B.1, Definition of Facilities and 
Administration, for a discussion of the components of indirect (F&A) 
costs.

                  1. Major Functions of an Institution

    Refers to instruction, organized research, other sponsored 
activities and other institutional activities as defined in this 
section:
    a. Instruction means the teaching and training activities of an 
institution. Except for research training as provided in subsection b, 
this term includes all teaching and training activities, whether they 
are offered for credits toward a degree or certificate or on a non-
credit basis, and whether they are offered through regular academic 
departments or separate divisions, such as a summer school division or 
an extension division. Also considered part of this major function are 
departmental research, and, where agreed to, university research.
    (1) Sponsored instruction and training means specific instructional 
or training activity established by grant, contract, or cooperative 
agreement. For purposes of the cost principles, this activity may be 
considered a major function even though an institution's accounting 
treatment may include it in the instruction function.
    (2) Departmental research means research, development and scholarly 
activities that are not organized research and, consequently, are not 
separately budgeted and accounted for. Departmental research, for 
purposes of this document, is not considered as a major function, but as 
a part of the instruction function of the institution.
    (3) Only mandatory cost sharing or cost sharing specifically 
committed in the project budget must be included in the organized 
research base for computing the indirect (F&A) cost rate or reflected in 
any allocation of indirect costs. Salary costs above statutory limits 
are not considered cost sharing.
    b. Organized research means all research and development activities 
of an institution that are separately budgeted and accounted for. It 
includes:
    (1) Sponsored research means all research and development activities 
that are sponsored by Federal and non-Federal agencies and 
organizations. This term includes activities involving the training of 
individuals in research techniques (commonly called research training) 
where such activities utilize the same facilities as other research and 
development activities and where such activities are not included in the 
instruction function.
    (2) University research means all research and development 
activities that are separately budgeted and accounted for by the 
institution under an internal application of institutional funds. 
University research, for purposes of this document, must be combined 
with sponsored research under the function of organized research.
    c. Other sponsored activities means programs and projects financed 
by Federal and non-Federal agencies and organizations which involve the 
performance of work other than instruction and organized research. 
Examples of such programs and projects are health service projects and 
community service programs. However, when any of these activities are 
undertaken by the institution without outside support, they may be 
classified as other institutional activities.
    d. Other institutional activities means all activities of an 
institution except for instruction, departmental research, organized 
research, and other sponsored activities, as defined in this section; 
indirect (F&A) cost activities identified in this Appendix paragraph B, 
Identification and assignment of indirect (F&A) costs; and specialized 
services facilities described in Sec.  200.468 Specialized service 
facilities of this Part.
    Examples of other institutional activities include operation of 
residence halls, dining halls, hospitals and clinics, student unions, 
intercollegiate athletics, bookstores, faculty housing, student 
apartments, guest houses, chapels, theaters, public museums, and other

[[Page 203]]

similar auxiliary enterprises. This definition also includes any other 
categories of activities, costs of which are ``unallowable'' to Federal 
awards, unless otherwise indicated in an award.

                      2. Criteria for Distribution

    a. Base period. A base period for distribution of indirect (F&A) 
costs is the period during which the costs are incurred. The base period 
normally should coincide with the fiscal year established by the 
institution, but in any event the base period should be so selected as 
to avoid inequities in the distribution of costs.
    b. Need for cost groupings. The overall objective of the indirect 
(F&A) cost allocation process is to distribute the indirect (F&A) costs 
described in Section B, Identification and assignment of indirect (F&A) 
costs, to the major functions of the institution in proportions 
reasonably consistent with the nature and extent of their use of the 
institution's resources. In order to achieve this objective, it may be 
necessary to provide for selective distribution by establishing separate 
groupings of cost within one or more of the indirect (F&A) cost 
categories referred to in subsection B.1, Definition of Facilities and 
Administration. In general, the cost groupings established within a 
category should constitute, in each case, a pool of those items of 
expense that are considered to be of like nature in terms of their 
relative contribution to (or degree of remoteness from) the particular 
cost objectives to which distribution is appropriate. Cost groupings 
should be established considering the general guides provided in 
subsection c of this section. Each such pool or cost grouping should 
then be distributed individually to the related cost objectives, using 
the distribution base or method most appropriate in light of the 
guidelines set forth in subsection d of this section.
    c. General considerations on cost groupings. The extent to which 
separate cost groupings and selective distribution would be appropriate 
at an institution is a matter of judgment to be determined on a case-by-
case basis. Typical situations which may warrant the establishment of 
two or more separate cost groupings (based on account classification or 
analysis) within an indirect (F&A) cost category include but are not 
limited to the following:
    (1) If certain items or categories of expense relate solely to one 
of the major functions of the institution or to less than all functions, 
such expenses should be set aside as a separate cost grouping for direct 
assignment or selective allocation in accordance with the guides 
provided in subsections b and d.
    (2) If any types of expense ordinarily treated as general 
administration or departmental administration are charged to Federal 
awards as direct costs, expenses applicable to other activities of the 
institution when incurred for the same purposes in like circumstances 
must, through separate cost groupings, be excluded from the indirect 
(F&A) costs allocable to those Federal awards and included in the direct 
cost of other activities for cost allocation purposes.
    (3) If it is determined that certain expenses are for the support of 
a service unit or facility whose output is susceptible of measurement on 
a workload or other quantitative basis, such expenses should be set 
aside as a separate cost grouping for distribution on such basis to 
organized research, instructional, and other activities at the 
institution or within the department.
    (4) If activities provide their own purchasing, personnel 
administration, building maintenance or similar service, the 
distribution of general administration and general expenses, or 
operation and maintenance expenses to such activities should be 
accomplished through cost groupings which include only that portion of 
central indirect (F&A) costs (such as for overall management) which are 
properly allocable to such activities.
    (5) If the institution elects to treat fringe benefits as indirect 
(F&A) charges, such costs should be set aside as a separate cost 
grouping for selective distribution to related cost objectives.
    (6) The number of separate cost groupings within a category should 
be held within practical limits, after taking into consideration the 
materiality of the amounts involved and the degree of precision 
attainable through less selective methods of distribution.
    d. Selection of distribution method.
    (1) Actual conditions must be taken into account in selecting the 
method or base to be used in distributing individual cost groupings. The 
essential consideration in selecting a base is that it be the one best 
suited for assigning the pool of costs to cost objectives in accordance 
with benefits derived; with a traceable cause-and-effect relationship; 
or with logic and reason, where neither benefit nor a cause-and-effect 
relationship is determinable.
    (2) If a cost grouping can be identified directly with the cost 
objective benefitted, it should be assigned to that cost objective.
    (3) If the expenses in a cost grouping are more general in nature, 
the distribution may be based on a cost analysis study which results in 
an equitable distribution of the costs. Such cost analysis studies may 
take into consideration weighting factors, population, or space occupied 
if appropriate. Cost analysis studies, however, must (a) be 
appropriately documented in sufficient detail for subsequent review by 
the cognizant agency for indirect costs, (b) distribute the costs to the 
related cost objectives in accordance

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with the relative benefits derived, (c) be statistically sound, (d) be 
performed specifically at the institution at which the results are to be 
used, and (e) be reviewed periodically, but not less frequently than 
rate negotiations, updated if necessary, and used consistently. Any 
assumptions made in the study must be stated and explained. The use of 
cost analysis studies and periodic changes in the method of cost 
distribution must be fully justified.
    (4) If a cost analysis study is not performed, or if the study does 
not result in an equitable distribution of the costs, the distribution 
must be made in accordance with the appropriate base cited in Section B, 
Identification and assignment of indirect (F&A) costs, unless one of the 
following conditions is met:
    (a) It can be demonstrated that the use of a different base would 
result in a more equitable allocation of the costs, or that a more 
readily available base would not increase the costs charged to Federal 
awards, or
    (b) The institution qualifies for, and elects to use, the simplified 
method for computing indirect (F&A) cost rates described in Section D, 
Simplified method for small institutions.
    (5) Notwithstanding subsection (3), effective July 1, 1998, a cost 
analysis or base other than that in Section B must not be used to 
distribute utility or student services costs. Instead, subsections B.4.c 
Operation and maintenance expenses, may be used in the recovery of 
utility costs.
    e. Order of distribution.
    (1) Indirect (F&A) costs are the broad categories of costs discussed 
in Section B.1, Definitions of Facilities and Administration
    (2) Depreciation, interest expenses, operation and maintenance 
expenses, and general administrative and general expenses should be 
allocated in that order to the remaining indirect (F&A) cost categories 
as well as to the major functions and specialized service facilities of 
the institution. Other cost categories may be allocated in the order 
determined to be most appropriate by the institutions. When cross 
allocation of costs is made as provided in subsection (3), this order of 
allocation does not apply.
    (3) Normally an indirect (F&A) cost category will be considered 
closed once it has been allocated to other cost objectives, and costs 
may not be subsequently allocated to it. However, a cross allocation of 
costs between two or more indirect (F&A) cost categories may be used if 
such allocation will result in a more equitable allocation of costs. If 
a cross allocation is used, an appropriate modification to the 
composition of the indirect (F&A) cost categories described in Section B 
is required.

        B. Identification and Assignment of Indirect (F&A) Costs

             1. Definition of Facilities and Administration

    See Sec.  200.414 Indirect (F&A) costs which provides the basis for 
these indirect cost requirements.

                             2. Depreciation

    a. The expenses under this heading are the portion of the costs of 
the institution's buildings, capital improvements to land and buildings, 
and equipment which are computed in accordance with Sec.  200.436 
Depreciation.
    b. In the absence of the alternatives provided for in Section A.2.d, 
Selection of distribution method, the expenses included in this category 
must be allocated in the following manner:
    (1) Depreciation on buildings used exclusively in the conduct of a 
single function, and on capital improvements and equipment used in such 
buildings, must be assigned to that function.
    (2) Depreciation on buildings used for more than one function, and 
on capital improvements and equipment used in such buildings, must be 
allocated to the individual functions performed in each building on the 
basis of usable square feet of space, excluding common areas such as 
hallways, stairwells, and rest rooms.
    (3) Depreciation on buildings, capital improvements and equipment 
related to space (e.g., individual rooms, laboratories) used jointly by 
more than one function (as determined by the users of the space) must be 
treated as follows. The cost of each jointly used unit of space must be 
allocated to benefitting functions on the basis of:
    (a) The employee full-time equivalents (FTEs) or salaries and wages 
of those individual functions benefitting from the use of that space; or
    (b) Institution-wide employee FTEs or salaries and wages applicable 
to the benefitting major functions (see Section A.1) of the institution.
    (4) Depreciation on certain capital improvements to land, such as 
paved parking areas, fences, sidewalks, and the like, not included in 
the cost of buildings, must be allocated to user categories of students 
and employees on a full-time equivalent basis. The amount allocated to 
the student category must be assigned to the instruction function of the 
institution. The amount allocated to the employee category must be 
further allocated to the major functions of the institution in 
proportion to the salaries and wages of all employees applicable to 
those functions.

[[Page 205]]

                               3. Interest

    Interest on debt associated with certain buildings, equipment and 
capital improvements, as defined in Sec.  200.449 Interest, must be 
classified as an expenditure under the category Facilities. These costs 
must be allocated in the same manner as the depreciation on the 
buildings, equipment and capital improvements to which the interest 
relates.

                  4. Operation and Maintenance Expenses

    a. The expenses under this heading are those that have been incurred 
for the administration, supervision, operation, maintenance, 
preservation, and protection of the institution's physical plant. They 
include expenses normally incurred for such items as janitorial and 
utility services; repairs and ordinary or normal alterations of 
buildings, furniture and equipment; care of grounds; maintenance and 
operation of buildings and other plant facilities; security; earthquake 
and disaster preparedness; environmental safety; hazardous waste 
disposal; property, liability and all other insurance relating to 
property; space and capital leasing; facility planning and management; 
and central receiving. The operation and maintenance expense category 
should also include its allocable share of fringe benefit costs, 
depreciation, and interest costs.
    b. In the absence of the alternatives provided for in Section A.2.d, 
the expenses included in this category must be allocated in the same 
manner as described in subsection 2.b for depreciation.
    c. A utility cost adjustment of up to 1.3 percentage points may be 
included in the negotiated indirect cost rate of the IHE for organized 
research, per the computation alternatives in paragraphs (c)(1) and (2) 
of this section:
    (1) Where space is devoted to a single function and metering allows 
unambiguous measurement of usage related to that space, costs must be 
assigned to the function located in that space.
    (2) Where space is allocated to different functions and metering 
does not allow unambiguous measurement of usage by function, costs must 
be allocated as follows:
    (i) Utilities costs should be apportioned to functions in the same 
manner as depreciation, based on the calculated difference between the 
site or building actual square footage for monitored research laboratory 
space (site, building, floor, or room), and a separate calculation 
prepared by the IHE using the ``effective square footage'' described in 
subsection (c)(2)(ii) of this section.
    (ii) ``Effective square footage'' allocated to research laboratory 
space must be calculated as the actual square footage times the relative 
energy utilization index (REUI) posted on the OMB Web site at the time 
of a rate determination.
    A. This index is the ratio of a laboratory energy use index (lab 
EUI) to the corresponding index for overall average college or 
university space (college EUI).
    B. In July 2012, values for these two indices (taken respectively 
from the Lawrence Berkeley Laboratory ``Labs for the 21st Century'' 
benchmarking tool http://labs21benchmarking.lbl.gov/CompareData.php and 
the US Department of Energy ``Buildings Energy Databook'' and http://
buildingsdatabook.eren.doe.gov/CBECS.aspx) were 310 kBtu/sq ft-yr. and 
155 kBtu/sq ft-yr., so that the adjustment ratio is 2.0 by this 
methodology. To retain currency, OMB will adjust the EUI numbers from 
time to time (no more often than annually nor less often than every 5 
years), using reliable and publicly disclosed data. Current values of 
both the EUIs and the REUI will be posted on the OMB Web site.

             5. General Administration and General Expenses

    a. The expenses under this heading are those that have been incurred 
for the general executive and administrative offices of educational 
institutions and other expenses of a general character which do not 
relate solely to any major function of the institution; i.e., solely to 
(1) instruction, (2) organized research, (3) other sponsored activities, 
or (4) other institutional activities. The general administration and 
general expense category should also include its allocable share of 
fringe benefit costs, operation and maintenance expense, depreciation, 
and interest costs. Examples of general administration and general 
expenses include: those expenses incurred by administrative offices that 
serve the entire university system of which the institution is a part; 
central offices of the institution such as the President's or 
Chancellor's office, the offices for institution-wide financial 
management, business services, budget and planning, personnel 
management, and safety and risk management; the office of the General 
Counsel; and the operations of the central administrative management 
information systems. General administration and general expenses must 
not include expenses incurred within non-university-wide deans' offices, 
academic departments, organized research units, or similar 
organizational units. (See subsection 6, Departmental administration 
expenses.)
    b. In the absence of the alternatives provided for in Section A.2.d, 
the expenses included in this category must be grouped first according 
to common major functions of the institution to which they render 
services or provide benefits. The aggregate expenses of each group must 
then be allocated to serviced or benefitted functions on the modified 
total cost basis. Modified total costs consist of the same elements as 
those in Section C.2. When an activity included in this indirect

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(F&A) cost category provides a service or product to another institution 
or organization, an appropriate adjustment must be made to either the 
expenses or the basis of allocation or both, to assure a proper 
allocation of costs.

                 6. Departmental Administration Expenses

    a. The expenses under this heading are those that have been incurred 
for administrative and supporting services that benefit common or joint 
departmental activities or objectives in academic deans' offices, 
academic departments and divisions, and organized research units. 
Organized research units include such units as institutes, study 
centers, and research centers. Departmental administration expenses are 
subject to the following limitations.
    (1) Academic deans' offices. Salaries and operating expenses are 
limited to those attributable to administrative functions.
    (2) Academic departments:
    (a) Salaries and fringe benefits attributable to the administrative 
work (including bid and proposal preparation) of faculty (including 
department heads) and other professional personnel conducting research 
and/or instruction, must be allowed at a rate of 3.6 percent of modified 
total direct costs. This category does not include professional business 
or professional administrative officers. This allowance must be added to 
the computation of the indirect (F&A) cost rate for major functions in 
Section C, Determination and application of indirect (F&A) cost rate or 
rates; the expenses covered by the allowance must be excluded from the 
departmental administration cost pool. No documentation is required to 
support this allowance.
    (b) Other administrative and supporting expenses incurred within 
academic departments are allowable provided they are treated 
consistently in like circumstances. This would include expenses such as 
the salaries of secretarial and clerical staffs, the salaries of 
administrative officers and assistants, travel, office supplies, 
stockrooms, and the like.
    (3) Other fringe benefit costs applicable to the salaries and wages 
included in subsections (1) and (2) are allowable, as well as an 
appropriate share of general administration and general expenses, 
operation and maintenance expenses, and depreciation.
    (4) Federal agencies may authorize reimbursement of additional costs 
for department heads and faculty only in exceptional cases where an 
institution can demonstrate undue hardship or detriment to project 
performance.
    b. The following guidelines apply to the determination of 
departmental administrative costs as direct or indirect (F&A) costs.
    (1) In developing the departmental administration cost pool, special 
care should be exercised to ensure that costs incurred for the same 
purpose in like circumstances are treated consistently as either direct 
or indirect (F&A) costs. For example, salaries of technical staff, 
laboratory supplies (e.g., chemicals), telephone toll charges, animals, 
animal care costs, computer costs, travel costs, and specialized shop 
costs must be treated as direct costs wherever identifiable to a 
particular cost objective. Direct charging of these costs may be 
accomplished through specific identification of individual costs to 
benefitting cost objectives, or through recharge centers or specialized 
service facilities, as appropriate under the circumstances. See 
Sec. Sec.  200.413 Direct costs, paragraph (c) and 200.468 Specialized 
service facilities.
    (2) Items such as office supplies, postage, local telephone costs, 
and memberships must normally be treated as indirect (F&A) costs.
    c. In the absence of the alternatives provided for in Section A.2.d, 
the expenses included in this category must be allocated as follows:
    (1) The administrative expenses of the dean's office of each college 
and school must be allocated to the academic departments within that 
college or school on the modified total cost basis.
    (2) The administrative expenses of each academic department, and the 
department's share of the expenses allocated in subsection (1) must be 
allocated to the appropriate functions of the department on the modified 
total cost basis.

                  7. Sponsored Projects Administration

    a. The expenses under this heading are limited to those incurred by 
a separate organization(s) established primarily to administer sponsored 
projects, including such functions as grant and contract administration 
(Federal and non-Federal), special security, purchasing, personnel, 
administration, and editing and publishing of research and other 
reports. They include the salaries and expenses of the head of such 
organization, assistants, and immediate staff, together with the 
salaries and expenses of personnel engaged in supporting activities 
maintained by the organization, such as stock rooms, print shops, and 
the like. This category also includes an allocable share of fringe 
benefit costs, general administration and general expenses, operation 
and maintenance expenses, and depreciation. Appropriate adjustments will 
be made for services provided to other functions or organizations.
    b. In the absence of the alternatives provided for in Section A.2.d, 
the expenses included in this category must be allocated to the major 
functions of the institution under which the sponsored projects are 
conducted on the basis of the modified total cost of sponsored projects.

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    c. An appropriate adjustment must be made to eliminate any duplicate 
charges to Federal awards when this category includes similar or 
identical activities as those included in the general administration and 
general expense category or other indirect (F&A) cost items, such as 
accounting, procurement, or personnel administration.

                           8. Library Expenses

    a. The expenses under this heading are those that have been incurred 
for the operation of the library, including the cost of books and 
library materials purchased for the library, less any items of library 
income that qualify as applicable credits under Sec.  200.406 Applicable 
credits. The library expense category should also include the fringe 
benefits applicable to the salaries and wages included therein, an 
appropriate share of general administration and general expense, 
operation and maintenance expense, and depreciation. Costs incurred in 
the purchases of rare books (museum-type books) with no value to Federal 
awards should not be allocated to them.
    b. In the absence of the alternatives provided for in Section A.2.d, 
the expenses included in this category must be allocated first on the 
basis of primary categories of users, including students, professional 
employees, and other users.
    (1) The student category must consist of full-time equivalent 
students enrolled at the institution, regardless of whether they earn 
credits toward a degree or certificate.
    (2) The professional employee category must consist of all faculty 
members and other professional employees of the institution, on a full-
time equivalent basis. This category may also include post-doctorate 
fellows and graduate students.
    (3) The other users category must consist of a reasonable factor as 
determined by institutional records to account for all other users of 
library facilities.
    c. Amount allocated in paragraph b of this section must be assigned 
further as follows:
    (1) The amount in the student category must be assigned to the 
instruction function of the institution.
    (2) The amount in the professional employee category must be 
assigned to the major functions of the institution in proportion to the 
salaries and wages of all faculty members and other professional 
employees applicable to those functions.
    (3) The amount in the other users category must be assigned to the 
other institutional activities function of the institution.

                 9. Student Administration and Services

    a. The expenses under this heading are those that have been incurred 
for the administration of student affairs and for services to students, 
including expenses of such activities as deans of students, admissions, 
registrar, counseling and placement services, student advisers, student 
health and infirmary services, catalogs, and commencements and 
convocations. The salaries of members of the academic staff whose 
responsibilities to the institution require administrative work that 
benefits sponsored projects may also be included to the extent that the 
portion charged to student administration is determined in accordance 
with Subpart E--Cost Principles of this Part. This expense category also 
includes the fringe benefit costs applicable to the salaries and wages 
included therein, an appropriate share of general administration and 
general expenses, operation and maintenance, interest expense, and 
depreciation.
    b. In the absence of the alternatives provided for in Section A.2.d, 
the expenses in this category must be allocated to the instruction 
function, and subsequently to Federal awards in that function.

  10. Offset for Indirect (F&A) Expenses Otherwise Provided for by the 
                           Federal Government

    a. The items to be accumulated under this heading are the 
reimbursements and other payments from the Federal Government which are 
made to the institution to support solely, specifically, and directly, 
in whole or in part, any of the administrative or service activities 
described in subsections 2 through 9.
    b. The items in this group must be treated as a credit to the 
affected individual indirect (F&A) cost category before that category is 
allocated to benefitting functions.

  C. Determination and Application of Indirect (F&A) Cost Rate or Rates

                      1. Indirect (F&A) Cost Pools

    a. (1) Subject to subsection b, the separate categories of indirect 
(F&A) costs allocated to each major function of the institution as 
prescribed in paragraph B of this paragraph C.1 Identification and 
assignment of indirect (F&A) costs, must be aggregated and treated as a 
common pool for that function. The amount in each pool must be divided 
by the distribution base described in subsection 2 to arrive at a single 
indirect (F&A) cost rate for each function.
    (2) The rate for each function is used to distribute indirect (F&A) 
costs to individual Federal awards of that function. Since a common pool 
is established for each major function of the institution, a separate 
indirect (F&A) cost rate would be established for each of the major 
functions described in Section A.1 under which Federal awards are 
carried out.
    (3) Each institution's indirect (F&A) cost rate process must be 
appropriately designed to ensure that Federal sponsors do not in

[[Page 208]]

any way subsidize the indirect (F&A) costs of other sponsors, 
specifically activities sponsored by industry and foreign governments. 
Accordingly, each allocation method used to identify and allocate the 
indirect (F&A) cost pools, as described in Sections A.2, Criteria for 
distribution, and B.2 through B.9, must contain the full amount of the 
institution's modified total costs or other appropriate units of 
measurement used to make the computations. In addition, the final rate 
distribution base (as defined in subsection 2) for each major function 
(organized research, instruction, etc., as described in Section A.1, 
Major functions of an institution) must contain all the programs or 
activities which utilize the indirect (F&A) costs allocated to that 
major function. At the time an indirect (F&A) cost proposal is submitted 
to a cognizant agency for indirect costs, each institution must describe 
the process it uses to ensure that Federal funds are not used to 
subsidize industry and foreign government funded programs.
    b. In some instances a single rate basis for use across the board on 
all work within a major function at an institution may not be 
appropriate. A single rate for research, for example, might not take 
into account those different environmental factors and other conditions 
which may affect substantially the indirect (F&A) costs applicable to a 
particular segment of research at the institution. A particular segment 
of research may be that performed under a single sponsored agreement or 
it may consist of research under a group of Federal awards performed in 
a common environment. The environmental factors are not limited to the 
physical location of the work. Other important factors are the level of 
the administrative support required, the nature of the facilities or 
other resources employed, the scientific disciplines or technical skills 
involved, the organizational arrangements used, or any combination 
thereof. If a particular segment of a sponsored agreement is performed 
within an environment which appears to generate a significantly 
different level of indirect (F&A) costs, provisions should be made for a 
separate indirect (F&A) cost pool applicable to such work. The separate 
indirect (F&A) cost pool should be developed during the regular course 
of the rate determination process and the separate indirect (F&A) cost 
rate resulting therefrom should be utilized; provided it is determined 
that (1) such indirect (F&A) cost rate differs significantly from that 
which would have been obtained under subsection a, and (2) the volume of 
work to which such rate would apply is material in relation to other 
Federal awards at the institution.

                        2. The Distribution Basis

    Indirect (F&A) costs must be distributed to applicable Federal 
awards and other benefitting activities within each major function (see 
section A.1, Major functions of an institution) on the basis of modified 
total direct costs (MTDC), consisting of all salaries and wages, fringe 
benefits, materials and supplies, services, travel, and up to the first 
$25,000 of each subaward (regardless of the period covered by the 
subaward). MTDC is defined in Sec.  200.68 Modified Total Direct Cost 
(MTDC). For this purpose, an indirect (F&A) cost rate should be 
determined for each of the separate indirect (F&A) cost pools developed 
pursuant to subsection 1. The rate in each case should be stated as the 
percentage which the amount of the particular indirect (F&A) cost pool 
is of the modified total direct costs identified with such pool.

             3. Negotiated Lump Sum for Indirect (F&A) Costs

    A negotiated fixed amount in lieu of indirect (F&A) costs may be 
appropriate for self-contained, off-campus, or primarily subcontracted 
activities where the benefits derived from an institution's indirect 
(F&A) services cannot be readily determined. Such negotiated indirect 
(F&A) costs will be treated as an offset before allocation to 
instruction, organized research, other sponsored activities, and other 
institutional activities. The base on which such remaining expenses are 
allocated should be appropriately adjusted.

             4. Predetermined Rates for Indirect (F&A) Costs

    Public Law 87-638 (76 Stat. 437) as amended (41 U.S.C. 4708) 
authorizes the use of predetermined rates in determining the ``indirect 
costs'' (indirect (F&A) costs) applicable under research agreements with 
educational institutions. The stated objectives of the law are to 
simplify the administration of cost-type research and development 
contracts (including grants) with educational institutions, to 
facilitate the preparation of their budgets, and to permit more 
expeditious closeout of such contracts when the work is completed. In 
view of the potential advantages offered by this procedure, negotiation 
of predetermined rates for indirect (F&A) costs for a period of two to 
four years should be the norm in those situations where the cost 
experience and other pertinent facts available are deemed sufficient to 
enable the parties involved to reach an informed judgment as to the 
probable level of indirect (F&A) costs during the ensuing accounting 
periods.

         5. Negotiated Fixed Rates and Carry-Forward Provisions

    When a fixed rate is negotiated in advance for a fiscal year (or 
other time period), the

[[Page 209]]

over- or under-recovery for that year may be included as an adjustment 
to the indirect (F&A) cost for the next rate negotiation. When the rate 
is negotiated before the carry-forward adjustment is determined, the 
carry-forward amount may be applied to the next subsequent rate 
negotiation. When such adjustments are to be made, each fixed rate 
negotiated in advance for a given period will be computed by applying 
the expected indirect (F&A) costs allocable to Federal awards for the 
forecast period plus or minus the carry-forward adjustment (over- or 
under-recovery) from the prior period, to the forecast distribution 
base. Unrecovered amounts under lump-sum agreements or cost-sharing 
provisions of prior years must not be carried forward for consideration 
in the new rate negotiation. There must, however, be an advance 
understanding in each case between the institution and the cognizant 
agency for indirect costs as to whether these differences will be 
considered in the rate negotiation rather than making the determination 
after the differences are known. Further, institutions electing to use 
this carry-forward provision may not subsequently change without prior 
approval of the cognizant agency for indirect costs. In the event that 
an institution returns to a post-determined rate, any over- or under-
recovery during the period in which negotiated fixed rates and carry-
forward provisions were followed will be included in the subsequent 
post-determined rates. Where multiple rates are used, the same procedure 
will be applicable for determining each rate.

         6. Provisional and Final Rates for Indirect (F&A) Costs

    Where the cognizant agency for indirect costs determines that cost 
experience and other pertinent facts do not justify the use of 
predetermined rates, or a fixed rate with a carry-forward, or if the 
parties cannot agree on an equitable rate, a provisional rate must be 
established. To prevent substantial overpayment or underpayment, the 
provisional rate may be adjusted by the cognizant agency for indirect 
costs during the institution's fiscal year. Predetermined or fixed rates 
may replace provisional rates at any time prior to the close of the 
institution's fiscal year. If a provisional rate is not replaced by a 
predetermined or fixed rate prior to the end of the institution's fiscal 
year, a final rate will be established and upward or downward 
adjustments will be made based on the actual allowable costs incurred 
for the period involved.

         7. Fixed Rates for the Life of the Sponsored Agreement

    7. Except as provided in paragraph (c)(1) of Sec.  200.414 Indirect 
(F&A) costs, Federal agencies must use the negotiated rates in effect at 
the time of the initial award throughout the life of the Federal award. 
Award levels for Federal awards may not be adjusted in future years as a 
result of changes in negotiated rates. ``Negotiated rates'' per the rate 
agreement include final, fixed, and predetermined rates and exclude 
provisional rates. ``Life'' for the purpose of this subsection means 
each competitive segment of a project. A competitive segment is a period 
of years approved by the Federal awarding agency at the time of the 
Federal award. If negotiated rate agreements do not extend through the 
life of the Federal award at the time of the initial award, then the 
negotiated rate for the last year of the Federal award must be extended 
through the end of the life of the Federal award.
    b. Except as provided in Sec.  200.414 Indirect (F&A) costs, when an 
educational institution does not have a negotiated rate with the Federal 
Government at the time of an award (because the educational institution 
is a new recipient or the parties cannot reach agreement on a rate), the 
provisional rate used at the time of the award must be adjusted once a 
rate is negotiated and approved by the cognizant agency for indirect 
costs.

         8. Limitation on Reimbursement of Administrative Costs

    a. Notwithstanding the provisions of subsection C.1.a, the 
administrative costs charged to Federal awards awarded or amended 
(including continuation and renewal awards) with effective dates 
beginning on or after the start of the institution's first fiscal year 
which begins on or after October 1, 1991, must be limited to 26% of 
modified total direct costs (as defined in subsection 2) for the total 
of General Administration and General Expenses, Departmental 
Administration, Sponsored Projects Administration, and Student 
Administration and Services (including their allocable share of 
depreciation, interest costs, operation and maintenance expenses, and 
fringe benefits costs, as provided by Section B, Identification and 
assignment of indirect (F&A) costs, and all other types of expenditures 
not listed specifically under one of the subcategories of facilities in 
Section B.
    b. Institutions should not change their accounting or cost 
allocation methods if the effect is to change the charging of a 
particular type of cost from F&A to direct, or to reclassify costs, or 
increase allocations from the administrative pools identified in 
paragraph B.1 of this Appendix to the other F&A cost pools or fringe 
benefits. Cognizant agencies for indirect cost are authorized to allow 
changes where an institution's charging practices are at variance with 
acceptable practices followed by a substantial majority of other 
institutions.

[[Page 210]]

             9. Alternative Method for Administrative Costs

    a. Notwithstanding the provisions of subsection C.1.a, an 
institution may elect to claim a fixed allowance for the 
``Administration'' portion of indirect (F&A) costs. The allowance could 
be either 24% of modified total direct costs or a percentage equal to 
95% of the most recently negotiated fixed or predetermined rate for the 
cost pools included under ``Administration'' as defined in Section B.1, 
whichever is less. Under this alternative, no cost proposal need be 
prepared for the ``Administration'' portion of the indirect (F&A) cost 
rate nor is further identification or documentation of these costs 
required (see subsection c). Where a negotiated indirect (F&A) cost 
agreement includes this alternative, an institution must make no further 
charges for the expenditure categories described in Section B.5, General 
administration and general expenses, Section B.6, Departmental 
administration expenses, Section B.7, Sponsored projects administration, 
and Section B.9, Student administration and services.
    b. In negotiations of rates for subsequent periods, an institution 
that has elected the option of subsection a may continue to exercise it 
at the same rate without further identification or documentation of 
costs.
    c. If an institution elects to accept a threshold rate as defined in 
subsection a of this section, it is not required to perform a detailed 
analysis of its administrative costs. However, in order to compute the 
facilities components of its indirect (F&A) cost rate, the institution 
must reconcile its indirect (F&A) cost proposal to its financial 
statements and make appropriate adjustments and reclassifications to 
identify the costs of each major function as defined in Section A.1, as 
well as to identify and allocate the facilities components. 
Administrative costs that are not identified as such by the 
institution's accounting system (such as those incurred in academic 
departments) will be classified as instructional costs for purposes of 
reconciling indirect (F&A) cost proposals to financial statements and 
allocating facilities costs.

                     10. Individual Rate Components

    In order to provide mutually agreed-upon information for management 
purposes, each indirect (F&A) cost rate negotiation or determination 
must include development of a rate for each indirect (F&A) cost pool as 
well as the overall indirect (F&A) cost rate.

           11. Negotiation and Approval of Indirect (F&A) Rate

    a. Cognizant agency for indirect costs is defined in Subpart A--
Acronyms and Definitions.
    (1) Cost negotiation cognizance is assigned to the Department of 
Health and Human Services (HHS) or the Department of Defense's Office of 
Naval Research (DOD), normally depending on which of the two agencies 
(HHS or DOD) provides more funds to the educational institution for the 
most recent three years. Information on funding must be derived from 
relevant data gathered by the National Science Foundation. In cases 
where neither HHS nor DOD provides Federal funding to an educational 
institution, the cognizant agency for indirect costs assignment must 
default to HHS. Notwithstanding the method for cognizance determination 
described in this section, other arrangements for cognizance of a 
particular educational institution may also be based in part on the 
types of research performed at the educational institution and must be 
decided based on mutual agreement between HHS and DOD. Where a non-
Federal entity only receives funds as a subrecipient, see Sec.  200.331 
Requirements for pass-through entities.
    (2) After cognizance is established, it must continue for a five-
year period.
    b. Acceptance of rates. See Sec.  200.414 Indirect (F&A) costs.
    c. Correcting deficiencies. The cognizant agency for indirect costs 
must negotiate changes needed to correct systems deficiencies relating 
to accountability for Federal awards. Cognizant agencies for indirect 
costs must address the concerns of other affected agencies, as 
appropriate, and must negotiate special rates for Federal agencies that 
are required to limit recovery of indirect costs by statute.
    d. Resolving questioned costs. The cognizant agency for indirect 
costs must conduct any necessary negotiations with an educational 
institution regarding amounts questioned by audit that are due the 
Federal Government related to costs covered by a negotiated agreement.
    e. Reimbursement. Reimbursement to cognizant agencies for indirect 
costs for work performed under this Part may be made by reimbursement 
billing under the Economy Act, 31 U.S.C. 1535.
    f. Procedure for establishing facilities and administrative rates 
must be established by one of the following methods:
    (1) Formal negotiation. The cognizant agency for indirect costs is 
responsible for negotiating and approving rates for an educational 
institution on behalf of all Federal agencies. Federal awarding agencies 
that do not have cognizance for indirect costs must notify the cognizant 
agency for indirect costs of specific concerns (i.e., a need to 
establish special cost rates) which could affect the negotiation 
process. The cognizant agency for indirect costs must address the 
concerns of all interested agencies, as appropriate. A pre-negotiation 
conference may be scheduled among all interested agencies, if necessary. 
The cognizant agency for indirect

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costs must then arrange a negotiation conference with the educational 
institution.
    (2) Other than formal negotiation. The cognizant agency for indirect 
costs and educational institution may reach an agreement on rates 
without a formal negotiation conference; for example, through 
correspondence or use of the simplified method described in this section 
D of this Appendix.
    g. Formalizing determinations and agreements. The cognizant agency 
for indirect costs must formalize all determinations or agreements 
reached with an educational institution and provide copies to other 
agencies having an interest. Determinations should include a description 
of any adjustments, the actual amount, both dollar and percentage 
adjusted, and the reason for making adjustments.
    h. Disputes and disagreements. Where the cognizant agency for 
indirect costs is unable to reach agreement with an educational 
institution with regard to rates or audit resolution, the appeal system 
of the cognizant agency for indirect costs must be followed for 
resolution of the disagreement.

                   12. Standard Format for Submission

    For facilities and administrative (indirect (F&A)) rate proposals, 
educational institutions must use the standard format, shown in section 
E of this appendix, to submit their indirect (F&A) rate proposal to the 
cognizant agency for indirect costs. The cognizant agency for indirect 
costs may, on an institution-by-institution basis, grant exceptions from 
all or portions of Part II of the standard format requirement. This 
requirement does not apply to educational institutions that use the 
simplified method for calculating indirect (F&A) rates, as described in 
Section D of this Appendix.
     As provided in section C.10 of this appendix, each F&A cost rate 
negotiation or determination must include development of a rate for each 
F&A cost pool as well as the overall F&A rate.

               D. Simplified Method for Small Institutions

                               1. General

    a. Where the total direct cost of work covered by this Part at an 
institution does not exceed $10 million in a fiscal year, the simplified 
procedure described in subsections 2 or 3 may be used in determining 
allowable indirect (F&A) costs. Under this simplified procedure, the 
institution's most recent annual financial report and immediately 
available supporting information must be utilized as a basis for 
determining the indirect (F&A) cost rate applicable to all Federal 
awards. The institution may use either the salaries and wages (see 
subsection 2) or modified total direct costs (see subsection 3) as the 
distribution basis.
    b. The simplified procedure should not be used where it produces 
results which appear inequitable to the Federal Government or the 
institution. In any such case, indirect (F&A) costs should be determined 
through use of the regular procedure.

            2. Simplified Procedure--Salaries and Wages Base

    a. Establish the total amount of salaries and wages paid to all 
employees of the institution.
    b. Establish an indirect (F&A) cost pool consisting of the 
expenditures (exclusive of capital items and other costs specifically 
identified as unallowable) which customarily are classified under the 
following titles or their equivalents:
    (1) General administration and general expenses (exclusive of costs 
of student administration and services, student activities, student aid, 
and scholarships).
    (2) Operation and maintenance of physical plant and depreciation 
(after appropriate adjustment for costs applicable to other 
institutional activities).
    (3) Library.
    (4) Department administration expenses, which will be computed as 20 
percent of the salaries and expenses of deans and heads of departments.
    In those cases where expenditures classified under subsection (1) 
have previously been allocated to other institutional activities, they 
may be included in the indirect (F&A) cost pool. The total amount of 
salaries and wages included in the indirect (F&A) cost pool must be 
separately identified.
    c. Establish a salary and wage distribution base, determined by 
deducting from the total of salaries and wages as established in 
subsection a from the amount of salaries and wages included under 
subsection b.
    d. Establish the indirect (F&A) cost rate, determined by dividing 
the amount in the indirect (F&A) cost pool, subsection b, by the amount 
of the distribution base, subsection c.
    e. Apply the indirect (F&A) cost rate to direct salaries and wages 
for individual agreements to determine the amount of indirect (F&A) 
costs allocable to such agreements.

        3. Simplified Procedure--Modified Total Direct Cost Base

    a. Establish the total costs incurred by the institution for the 
base period.
    b. Establish an indirect (F&A) cost pool consisting of the 
expenditures (exclusive of capital items and other costs specifically 
identified as unallowable) which customarily are classified under the 
following titles or their equivalents:

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    (1) General administration and general expenses (exclusive of costs 
of student administration and services, student activities, student aid, 
and scholarships).
    (2) Operation and maintenance of physical plant and depreciation 
(after appropriate adjustment for costs applicable to other 
institutional activities).
    (3) Library.
    (4) Department administration expenses, which will be computed as 20 
percent of the salaries and expenses of deans and heads of departments. 
In those cases where expenditures classified under subsection (1) have 
previously been allocated to other institutional activities, they may be 
included in the indirect (F&A) cost pool. The modified total direct 
costs amount included in the indirect (F&A) cost pool must be separately 
identified.
    c. Establish a modified total direct cost distribution base, as 
defined in Section C.2, The distribution basis, that consists of all 
institution's direct functions.
    d. Establish the indirect (F&A) cost rate, determined by dividing 
the amount in the indirect (F&A) cost pool, subsection b, by the amount 
of the distribution base, subsection c.
    e. Apply the indirect (F&A) cost rate to the modified total direct 
costs for individual agreements to determine the amount of indirect 
(F&A) costs allocable to such agreements.

                      E. Documentation Requirements

    The standard format for documentation requirements for indirect 
(indirect (F&A)) rate proposals for claiming costs under the regular 
method is available on the OMB Web site here: http://www.whitehouse.gov/
omb/grants--forms.

                            F. Certification

                       1. Certification of Charges

    To assure that expenditures for Federal awards are proper and in 
accordance with the agreement documents and approved project budgets, 
the annual and/or final fiscal reports or vouchers requesting payment 
under the agreements will include a certification, signed by an 
authorized official of the university, which reads ``By signing this 
report, I certify to the best of my knowledge and belief that the report 
is true, complete, and accurate, and the expenditures, disbursements and 
cash receipts are for the purposes and intent set forth in the award 
documents. I am aware that any false, fictitious, or fraudulent 
information, or the omission of any material fact, may subject me to 
criminal, civil or administrative penalties for fraud, false statements, 
false claims or otherwise. (U.S. Code, Title 18, Section 1001 and Title 
31, Sections 3729-3733 and 3801-3812)''.

                2. Certification of Indirect (F&A) Costs

    a. Policy. Cognizant agencies must not accept a proposed indirect 
cost rate unless such costs have been certified by the educational 
institution using the Certificate of indirect (F&A) Costs set forth in 
subsection F.2.c
    b. The certificate must be signed on behalf of the institution by 
the chief financial officer or an individual designated by an individual 
at a level no lower than vice president or chief financial officer.
    An indirect (F&A) cost rate is not binding upon the Federal 
Government if the most recent required proposal from the institution has 
not been certified. Where it is necessary to establish indirect (F&A) 
cost rates, and the institution has not submitted a certified proposal 
for establishing such rates in accordance with the requirements of this 
section, the Federal Government must unilaterally establish such rates. 
Such rates may be based upon audited historical data or such other data 
that have been furnished to the cognizant agency for indirect costs and 
for which it can be demonstrated that all unallowable costs have been 
excluded. When indirect (F&A) cost rates are unilaterally established by 
the Federal Government because of failure of the institution to submit a 
certified proposal for establishing such rates in accordance with this 
section, the rates established will be set at a level low enough to 
ensure that potentially unallowable costs will not be reimbursed.
    c. Certificate. The certificate required by this section must be in 
the following form:

                   Certificate of Indirect (F&A) Costs

    This is to certify that to the best of my knowledge and belief:
    (1) I have reviewed the indirect (F&A) cost proposal submitted 
herewith;
    (2) All costs included in this proposal [identify date] to establish 
billing or final indirect (F&A) costs rate for [identify period covered 
by rate] are allowable in accordance with the requirements of the 
Federal agreement(s) to which they apply and with the cost principles 
applicable to those agreements.
    (3) This proposal does not include any costs which are unallowable 
under applicable cost principles such as (without limitation): public 
relations costs, contributions and donations, entertainment costs, fines 
and penalties, lobbying costs, and defense of fraud proceedings; and
    (4) All costs included in this proposal are properly allocable to 
Federal agreements on the basis of a beneficial or causal relationship 
between the expenses incurred and the agreements to which they are 
allocated in accordance with applicable requirements.

I declare that the foregoing is true and correct.


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Institution of Higher Education:
 Signature:_____________________________________________________________
 Name of Official:______________________________________________________
 Title:_________________________________________________________________
 Date of Execution:_____________________________________________________

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75888, Dec. 19, 2014; 
80 FR 54409, Sept. 10, 2015]



 Sec. Appendix IV to Part 200--Indirect (F&A) Costs Identification and 
     Assignment, and Rate Determination for Nonprofit Organizations

                               A. General

    1. Indirect costs are those that have been incurred for common or 
joint objectives and cannot be readily identified with a particular 
final cost objective. Direct cost of minor amounts may be treated as 
indirect costs under the conditions described in Sec.  200.413 Direct 
costs paragraph (d) of this Part. After direct costs have been 
determined and assigned directly to awards or other work as appropriate, 
indirect costs are those remaining to be allocated to benefitting cost 
objectives. A cost may not be allocated to a Federal award as an 
indirect cost if any other cost incurred for the same purpose, in like 
circumstances, has been assigned to a Federal award as a direct cost.
    2. ``Major nonprofit organizations'' are defined in paragraph (a) of 
Sec.  200.414 Indirect (F&A) costs. See indirect cost rate reporting 
requirements in sections B.2.e and B.3.g of this Appendix.

B. Allocation of Indirect Costs and Determination of Indirect Cost Rates

                               1. General

    a. If a nonprofit organization has only one major function, or where 
all its major functions benefit from its indirect costs to approximately 
the same degree, the allocation of indirect costs and the computation of 
an indirect cost rate may be accomplished through simplified allocation 
procedures, as described in section B.2 of this Appendix.
    b. If an organization has several major functions which benefit from 
its indirect costs in varying degrees, allocation of indirect costs may 
require the accumulation of such costs into separate cost groupings 
which then are allocated individually to benefitting functions by means 
of a base which best measures the relative degree of benefit. The 
indirect costs allocated to each function are then distributed to 
individual Federal awards and other activities included in that function 
by means of an indirect cost rate(s).
    c. The determination of what constitutes an organization's major 
functions will depend on its purpose in being; the types of services it 
renders to the public, its clients, and its members; and the amount of 
effort it devotes to such activities as fundraising, public information 
and membership activities.
    d. Specific methods for allocating indirect costs and computing 
indirect cost rates along with the conditions under which each method 
should be used are described in section B.2 through B.5 of this 
Appendix.
    e. The base period for the allocation of indirect costs is the 
period in which such costs are incurred and accumulated for allocation 
to work performed in that period. The base period normally should 
coincide with the organization's fiscal year but, in any event, must be 
so selected as to avoid inequities in the allocation of the costs.

                     2. Simplified Allocation Method

    a. Where an organization's major functions benefit from its indirect 
costs to approximately the same degree, the allocation of indirect costs 
may be accomplished by (i) separating the organization's total costs for 
the base period as either direct or indirect, and (ii) dividing the 
total allowable indirect costs (net of applicable credits) by an 
equitable distribution base. The result of this process is an indirect 
cost rate which is used to distribute indirect costs to individual 
Federal awards. The rate should be expressed as the percentage which the 
total amount of allowable indirect costs bears to the base selected. 
This method should also be used where an organization has only one major 
function encompassing a number of individual projects or activities, and 
may be used where the level of Federal awards to an organization is 
relatively small.
    b. Both the direct costs and the indirect costs must exclude capital 
expenditures and unallowable costs. However, unallowable costs which 
represent activities must be included in the direct costs under the 
conditions described in Sec.  200.413 Direct costs, paragraph (e) of 
this Part.
    c. The distribution base may be total direct costs (excluding 
capital expenditures and other distorting items, such as subawards for 
$25,000 or more), direct salaries and wages, or other base which results 
in an equitable distribution. The distribution base must exclude 
participant support costs as defined in Sec.  200.75 Participant support 
costs.
    d. Except where a special rate(s) is required in accordance with 
section B.5 of this Appendix, the indirect cost rate developed under the 
above principles is applicable to all Federal awards of the 
organization. If a special rate(s) is required, appropriate 
modifications must be made in order to develop the special rate(s).
    e. For an organization that receives more than $10 million in direct 
Federal funding in a fiscal year, a breakout of the indirect cost

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component into two broad categories, Facilities and Administration as 
defined in paragraph (a) of Sec.  200.414 Indirect (F&A) costs, is 
required. The rate in each case must be stated as the percentage which 
the amount of the particular indirect cost category (i.e., Facilities or 
Administration) is of the distribution base identified with that 
category.

                   3. Multiple Allocation Base Method

    a. General. Where an organization's indirect costs benefit its major 
functions in varying degrees, indirect costs must be accumulated into 
separate cost groupings, as described in subparagraph b. Each grouping 
must then be allocated individually to benefitting functions by means of 
a base which best measures the relative benefits. The default allocation 
bases by cost pool are described in section B.3.c of this Appendix.
    b. Identification of indirect costs. Cost groupings must be 
established so as to permit the allocation of each grouping on the basis 
of benefits provided to the major functions. Each grouping must 
constitute a pool of expenses that are of like character in terms of 
functions they benefit and in terms of the allocation base which best 
measures the relative benefits provided to each function. The groupings 
are classified within the two broad categories: ``Facilities'' and 
``Administration,'' as described in section A.3 of this Appendix. The 
indirect cost pools are defined as follows:
    (1) Depreciation. The expenses under this heading are the portion of 
the costs of the organization's buildings, capital improvements to land 
and buildings, and equipment which are computed in accordance with Sec.  
200.436 Depreciation.
    (2) Interest. Interest on debt associated with certain buildings, 
equipment and capital improvements are computed in accordance with Sec.  
200.449 Interest.
    (3) Operation and maintenance expenses. The expenses under this 
heading are those that have been incurred for the administration, 
operation, maintenance, preservation, and protection of the 
organization's physical plant. They include expenses normally incurred 
for such items as: janitorial and utility services; repairs and ordinary 
or normal alterations of buildings, furniture and equipment; care of 
grounds; maintenance and operation of buildings and other plant 
facilities; security; earthquake and disaster preparedness; 
environmental safety; hazardous waste disposal; property, liability and 
other insurance relating to property; space and capital leasing; 
facility planning and management; and central receiving. The operation 
and maintenance expenses category must also include its allocable share 
of fringe benefit costs, depreciation, and interest costs.
    (4) General administration and general expenses. The expenses under 
this heading are those that have been incurred for the overall general 
executive and administrative offices of the organization and other 
expenses of a general nature which do not relate solely to any major 
function of the organization. This category must also include its 
allocable share of fringe benefit costs, operation and maintenance 
expense, depreciation, and interest costs. Examples of this category 
include central offices, such as the director's office, the office of 
finance, business services, budget and planning, personnel, safety and 
risk management, general counsel, management information systems, and 
library costs.
    In developing this cost pool, special care should be exercised to 
ensure that costs incurred for the same purpose in like circumstances 
are treated consistently as either direct or indirect costs. For 
example, salaries of technical staff, project supplies, project 
publication, telephone toll charges, computer costs, travel costs, and 
specialized services costs must be treated as direct costs wherever 
identifiable to a particular program. The salaries and wages of 
administrative and pooled clerical staff should normally be treated as 
indirect costs. Direct charging of these costs may be appropriate as 
described in Sec.  200.413 Direct Costs. Items such as office supplies, 
postage, local telephone costs, periodicals and memberships should 
normally be treated as indirect costs.
    c. Allocation bases. Actual conditions must be taken into account in 
selecting the base to be used in allocating the expenses in each 
grouping to benefitting functions. The essential consideration in 
selecting a method or a base is that it is the one best suited for 
assigning the pool of costs to cost objectives in accordance with 
benefits derived; a traceable cause and effect relationship; or logic 
and reason, where neither the cause nor the effect of the relationship 
is determinable. When an allocation can be made by assignment of a cost 
grouping directly to the function benefitted, the allocation must be 
made in that manner. When the expenses in a cost grouping are more 
general in nature, the allocation must be made through the use of a 
selected base which produces results that are equitable to both the 
Federal Government and the organization. The distribution must be made 
in accordance with the bases described herein unless it can be 
demonstrated that the use of a different base would result in a more 
equitable allocation of the costs, or that a more readily available base 
would not increase the costs charged to Federal awards. The results of 
special cost studies (such as an engineering utility study) must not be 
used to determine and allocate the indirect costs to Federal awards.
    (1) Depreciation. Depreciation expenses must be allocated in the 
following manner:
    (a) Depreciation on buildings used exclusively in the conduct of a 
single function,

[[Page 215]]

and on capital improvements and equipment used in such buildings, must 
be assigned to that function.
    (b) Depreciation on buildings used for more than one function, and 
on capital improvements and equipment used in such buildings, must be 
allocated to the individual functions performed in each building on the 
basis of usable square feet of space, excluding common areas, such as 
hallways, stairwells, and restrooms.
    (c) Depreciation on buildings, capital improvements and equipment 
related space (e.g., individual rooms, and laboratories) used jointly by 
more than one function (as determined by the users of the space) must be 
treated as follows. The cost of each jointly used unit of space must be 
allocated to the benefitting functions on the basis of:
    (i) the employees and other users on a full-time equivalent (FTE) 
basis or salaries and wages of those individual functions benefitting 
from the use of that space; or
    (ii) organization-wide employee FTEs or salaries and wages 
applicable to the benefitting functions of the organization.
    (d) Depreciation on certain capital improvements to land, such as 
paved parking areas, fences, sidewalks, and the like, not included in 
the cost of buildings, must be allocated to user categories on a FTE 
basis and distributed to major functions in proportion to the salaries 
and wages of all employees applicable to the functions.
    (2) Interest. Interest costs must be allocated in the same manner as 
the depreciation on the buildings, equipment and capital equipment to 
which the interest relates.
    (3) Operation and maintenance expenses. Operation and maintenance 
expenses must be allocated in the same manner as the depreciation.
    (4) General administration and general expenses. General 
administration and general expenses must be allocated to benefitting 
functions based on modified total costs (MTC). The MTC is the modified 
total direct costs (MTDC), as described in Subpart A--Acronyms and 
Definitions of Part 200, plus the allocated indirect cost proportion. 
The expenses included in this category could be grouped first according 
to major functions of the organization to which they render services or 
provide benefits. The aggregate expenses of each group must then be 
allocated to benefitting functions based on MTC.
    d. Order of distribution.
    (1) Indirect cost categories consisting of depreciation, interest, 
operation and maintenance, and general administration and general 
expenses must be allocated in that order to the remaining indirect cost 
categories as well as to the major functions of the organization. Other 
cost categories should be allocated in the order determined to be most 
appropriate by the organization. This order of allocation does not apply 
if cross allocation of costs is made as provided in section B.3.d.2 of 
this Appendix.
    (2) Normally, an indirect cost category will be considered closed 
once it has been allocated to other cost objectives, and costs must not 
be subsequently allocated to it. However, a cross allocation of costs 
between two or more indirect costs categories could be used if such 
allocation will result in a more equitable allocation of costs. If a 
cross allocation is used, an appropriate modification to the composition 
of the indirect cost categories is required.
    e. Application of indirect cost rate or rates. Except where a 
special indirect cost rate(s) is required in accordance with section B.5 
of this Appendix, the separate groupings of indirect costs allocated to 
each major function must be aggregated and treated as a common pool for 
that function. The costs in the common pool must then be distributed to 
individual Federal awards included in that function by use of a single 
indirect cost rate.
    f. Distribution basis. Indirect costs must be distributed to 
applicable Federal awards and other benefitting activities within each 
major function on the basis of MTDC (see definition in Sec.  200.68 
Modified Total Direct Cost (MTDC) of Part 200.
    g. Individual Rate Components. An indirect cost rate must be 
determined for each separate indirect cost pool developed. The rate in 
each case must be stated as the percentage which the amount of the 
particular indirect cost pool is of the distribution base identified 
with that pool. Each indirect cost rate negotiation or determination 
agreement must include development of the rate for each indirect cost 
pool as well as the overall indirect cost rate. The indirect cost pools 
must be classified within two broad categories: ``Facilities'' and 
``Administration,'' as described paragraph (a) of Sec.  200.414 Indirect 
(F&) costs.

                       4. Direct Allocation Method

    a. Some nonprofit organizations treat all costs as direct costs 
except general administration and general expenses. These organizations 
generally separate their costs into three basic categories: (i) General 
administration and general expenses, (ii) fundraising, and (iii) other 
direct functions (including projects performed under Federal awards). 
Joint costs, such as depreciation, rental costs, operation and 
maintenance of facilities, telephone expenses, and the like are prorated 
individually as direct costs to each category and to each Federal award 
or other activity using a base most appropriate to the particular cost 
being prorated.
    b. This method is acceptable, provided each joint cost is prorated 
using a base which accurately measures the benefits provided to each 
Federal award or other activity. The bases must be established in 
accordance with

[[Page 216]]

reasonable criteria, and be supported by current data. This method is 
compatible with the Standards of Accounting and Financial Reporting for 
Voluntary Health and Welfare Organizations issued jointly by the 
National Health Council, Inc., the National Assembly of Voluntary Health 
and Social Welfare Organizations, and the United Way of America.
    c. Under this method, indirect costs consist exclusively of general 
administration and general expenses. In all other respects, the 
organization's indirect cost rates must be computed in the same manner 
as that described in section B.2 Simplified allocation method of this 
Appendix.

                     5. Special Indirect Cost Rates

    In some instances, a single indirect cost rate for all activities of 
an organization or for each major function of the organization may not 
be appropriate, since it would not take into account those different 
factors which may substantially affect the indirect costs applicable to 
a particular segment of work. For this purpose, a particular segment of 
work may be that performed under a single Federal award or it may 
consist of work under a group of Federal awards performed in a common 
environment. These factors may include the physical location of the 
work, the level of administrative support required, the nature of the 
facilities or other resources employed, the scientific disciplines or 
technical skills involved, the organizational arrangements used, or any 
combination thereof. When a particular segment of work is performed in 
an environment which appears to generate a significantly different level 
of indirect costs, provisions should be made for a separate indirect 
cost pool applicable to such work. The separate indirect cost pool 
should be developed during the course of the regular allocation process, 
and the separate indirect cost rate resulting therefrom should be used, 
provided it is determined that (i) the rate differs significantly from 
that which would have been obtained under sections B.2, B.3, and B.4 of 
this Appendix, and (ii) the volume of work to which the rate would apply 
is material.

           C. Negotiation and Approval of Indirect Cost Rates

                             1. Definitions

    As used in this section, the following terms have the meanings set 
forth in this section:
    a. Cognizant agency for indirect costs means the Federal agency 
responsible for negotiating and approving indirect cost rates for a 
nonprofit organization on behalf of all Federal agencies.
    b. Predetermined rate means an indirect cost rate, applicable to a 
specified current or future period, usually the organization's fiscal 
year. The rate is based on an estimate of the costs to be incurred 
during the period. A predetermined rate is not subject to adjustment.
    c. Fixed rate means an indirect cost rate which has the same 
characteristics as a predetermined rate, except that the difference 
between the estimated costs and the actual costs of the period covered 
by the rate is carried forward as an adjustment to the rate computation 
of a subsequent period.
    d. Final rate means an indirect cost rate applicable to a specified 
past period which is based on the actual costs of the period. A final 
rate is not subject to adjustment.
    e. Provisional rate or billing rate means a temporary indirect cost 
rate applicable to a specified period which is used for funding, interim 
reimbursement, and reporting indirect costs on Federal awards pending 
the establishment of a final rate for the period.
    f. Indirect cost proposal means the documentation prepared by an 
organization to substantiate its claim for the reimbursement of indirect 
costs. This proposal provides the basis for the review and negotiation 
leading to the establishment of an organization's indirect cost rate.
    g. Cost objective means a function, organizational subdivision, 
contract, Federal award, or other work unit for which cost data are 
desired and for which provision is made to accumulate and measure the 
cost of processes, projects, jobs and capitalized projects.

                  2. Negotiation and Approval of Rates

    a. Unless different arrangements are agreed to by the Federal 
agencies concerned, the Federal agency with the largest dollar value of 
Federal awards with an organization will be designated as the cognizant 
agency for indirect costs for the negotiation and approval of the 
indirect cost rates and, where necessary, other rates such as fringe 
benefit and computer charge-out rates. Once an agency is assigned 
cognizance for a particular nonprofit organization, the assignment will 
not be changed unless there is a shift in the dollar volume of the 
Federal awards to the organization for at least three years. All 
concerned Federal agencies must be given the opportunity to participate 
in the negotiation process but, after a rate has been agreed upon, it 
will be accepted by all Federal agencies. When a Federal agency has 
reason to believe that special operating factors affecting its Federal 
awards necessitate special indirect cost rates in accordance with 
section B.5 of this Appendix, it will, prior to the time the rates are 
negotiated, notify the cognizant agency for indirect costs. (See also 
Sec.  200.414 Indirect (F&A) costs of Part 200.) Where a non-Federal 
entity only receives funds as a subrecipient, see the requirements of 
Sec.  200.331 Requirements for pass-through entities.
    b. Except as otherwise provided in Sec.  200.414 Indirect (F&A) 
costs paragraph (f) of this Part, a nonprofit organization which has not

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previously established an indirect cost rate with a Federal agency must 
submit its initial indirect cost proposal immediately after the 
organization is advised that a Federal award will be made and, in no 
event, later than three months after the effective date of the Federal 
award.
    c. Unless approved by the cognizant agency for indirect costs in 
accordance with Sec.  200.414 Indirect (F&A) costs paragraph (g) of this 
Part, organizations that have previously established indirect cost rates 
must submit a new indirect cost proposal to the cognizant agency for 
indirect costs within six months after the close of each fiscal year.
    d. A predetermined rate may be negotiated for use on Federal awards 
where there is reasonable assurance, based on past experience and 
reliable projection of the organization's costs, that the rate is not 
likely to exceed a rate based on the organization's actual costs.
    e. Fixed rates may be negotiated where predetermined rates are not 
considered appropriate. A fixed rate, however, must not be negotiated if 
(i) all or a substantial portion of the organization's Federal awards 
are expected to expire before the carry-forward adjustment can be made; 
(ii) the mix of Federal and non-Federal work at the organization is too 
erratic to permit an equitable carry-forward adjustment; or (iii) the 
organization's operations fluctuate significantly from year to year.
    f. Provisional and final rates must be negotiated where neither 
predetermined nor fixed rates are appropriate. Predetermined or fixed 
rates may replace provisional rates at any time prior to the close of 
the organization's fiscal year. If that event does not occur, a final 
rate will be established and upward or downward adjustments will be made 
based on the actual allowable costs incurred for the period involved.
    g. The results of each negotiation must be formalized in a written 
agreement between the cognizant agency for indirect costs and the 
nonprofit organization. The cognizant agency for indirect costs must 
make available copies of the agreement to all concerned Federal 
agencies.
    h. If a dispute arises in a negotiation of an indirect cost rate 
between the cognizant agency for indirect costs and the nonprofit 
organization, the dispute must be resolved in accordance with the 
appeals procedures of the cognizant agency for indirect costs.
    i. To the extent that problems are encountered among the Federal 
agencies in connection with the negotiation and approval process, OMB 
will lend assistance as required to resolve such problems in a timely 
manner.

                D. Certification of Indirect (F&A) Costs

    (1) Required Certification. No proposal to establish indirect (F&A) 
cost rates must be acceptable unless such costs have been certified by 
the non-profit organization using the Certificate of Indirect (F&A) 
Costs set forth in section j. of this appendix. The certificate must be 
signed on behalf of the organization by an individual at a level no 
lower than vice president or chief financial officer for the 
organization.
    (2) Each indirect cost rate proposal must be accompanied by a 
certification in the following form:

                   Certificate of Indirect (F&A) Costs

    This is to certify that to the best of my knowledge and belief:
    (1) I have reviewed the indirect (F&A) cost proposal submitted 
herewith;
    (2) All costs included in this proposal [identify date] to establish 
billing or final indirect (F&A) costs rate for [identify period covered 
by rate] are allowable in accordance with the requirements of the 
Federal awards to which they apply and with Subpart E--Cost Principles 
of Part 200.
    (3) This proposal does not include any costs which are unallowable 
under Subpart E--Cost Principles of Part 200 such as (without 
limitation): public relations costs, contributions and donations, 
entertainment costs, fines and penalties, lobbying costs, and defense of 
fraud proceedings; and
    (4) All costs included in this proposal are properly allocable to 
Federal awards on the basis of a beneficial or causal relationship 
between the expenses incurred and the Federal awards to which they are 
allocated in accordance with applicable requirements.

    I declare that the foregoing is true and correct.

 Nonprofit Organization:________________________________________________
 Signature:_____________________________________________________________
 Name of Official:______________________________________________________
 Title:_________________________________________________________________
 Date of Execution:_____________________________________________________

[78 FR 78608, Dec. 26, 2013, as amended at 80 FR 54410, Sept. 10, 2015]



Sec. Appendix V to Part 200--State/Local Governmentwide Central Service 
                          Cost Allocation Plans

                               A. General

    1. Most governmental units provide certain services, such as motor 
pools, computer centers, purchasing, accounting, etc., to operating 
agencies on a centralized basis. Since federally-supported awards are 
performed within the individual operating agencies, there needs to be a 
process whereby these central service costs can be identified and 
assigned to benefitted activities on a reasonable and consistent basis. 
The central service cost allocation plan provides that process. All 
costs and other data used to distribute the costs included in the plan 
should be supported by formal accounting and other

[[Page 218]]

records that will support the propriety of the costs assigned to Federal 
awards.
    2. Guidelines and illustrations of central service cost allocation 
plans are provided in a brochure published by the Department of Health 
and Human Services entitled ``A Guide for State, Local and Indian Tribal 
Governments: Cost Principles and Procedures for Developing Cost 
Allocation Plans and Indirect Cost Rates for Agreements with the Federal 
Government.'' A copy of this brochure may be obtained from the HHS Cost 
Allocation Services or at their Web site at https://rates.psc.gov.

                             B. Definitions

    1. Agency or operating agency means an organizational unit or sub-
division within a governmental unit that is responsible for the 
performance or administration of Federal awards or activities of the 
governmental unit.
    2. Allocated central services means central services that benefit 
operating agencies but are not billed to the agencies on a fee-for-
service or similar basis. These costs are allocated to benefitted 
agencies on some reasonable basis. Examples of such services might 
include general accounting, personnel administration, purchasing, etc.
    3. Billed central services means central services that are billed to 
benefitted agencies or programs on an individual fee-for-service or 
similar basis. Typical examples of billed central services include 
computer services, transportation services, insurance, and fringe 
benefits.
    4. Cognizant agency for indirect costs is defined in Sec.  200.19 
Cognizant agency for indirect costs of this Part. The determination of 
cognizant agency for indirect costs for states and local governments is 
described in section F.1, Negotiation and Approval of Central Service 
Plans.
    5. Major local government means local government that receives more 
than $100 million in direct Federal awards subject to this Part.

          C. Scope of the Central Service Cost Allocation Plans

    The central service cost allocation plan will include all central 
service costs that will be claimed (either as a billed or an allocated 
cost) under Federal awards and will be documented as described in 
section E. Costs of central services omitted from the plan will not be 
reimbursed.

                       D. Submission Requirements

    1. Each state will submit a plan to the Department of Health and 
Human Services for each year in which it claims central service costs 
under Federal awards. The plan should include (a) a projection of the 
next year's allocated central service cost (based either on actual costs 
for the most recently completed year or the budget projection for the 
coming year), and (b) a reconciliation of actual allocated central 
service costs to the estimated costs used for either the most recently 
completed year or the year immediately preceding the most recently 
completed year.
    2. Each major local government is also required to submit a plan to 
its cognizant agency for indirect costs annually.
    3. All other local governments claiming central service costs must 
develop a plan in accordance with the requirements described in this 
Part and maintain the plan and related supporting documentation for 
audit. These local governments are not required to submit their plans 
for Federal approval unless they are specifically requested to do so by 
the cognizant agency for indirect costs. Where a local government only 
receives funds as a subrecipient, the pass-through entity will be 
responsible for monitoring the subrecipient's plan.
    4. All central service cost allocation plans will be prepared and, 
when required, submitted within six months prior to the beginning of 
each of the governmental unit's fiscal years in which it proposes to 
claim central service costs. Extensions may be granted by the cognizant 
agency for indirect costs on a case-by-case basis.

            E. Documentation Requirements for Submitted Plans

    The documentation requirements described in this section may be 
modified, expanded, or reduced by the cognizant agency for indirect 
costs on a case-by-case basis. For example, the requirements may be 
reduced for those central services which have little or no impact on 
Federal awards. Conversely, if a review of a plan indicates that certain 
additional information is needed, and will likely be needed in future 
years, it may be routinely requested in future plan submissions. Items 
marked with an asterisk (*) should be submitted only once; subsequent 
plans should merely indicate any changes since the last plan.

                               1. General

    All proposed plans must be accompanied by the following: an 
organization chart sufficiently detailed to show operations including 
the central service activities of the state/local government whether or 
not they are shown as benefitting from central service functions; a copy 
of the Comprehensive Annual Financial Report (or a copy of the Executive 
Budget if budgeted costs are being proposed) to support the allowable 
costs of each central service activity included in the plan; and, a 
certification (see subsection 4.) that the plan was prepared in 
accordance with this Part, contains only allowable costs, and was 
prepared in a manner that treated similar costs consistently among the 
various

[[Page 219]]

Federal awards and between Federal and non-Federal awards/activities.

                      2. Allocated Central Services

    For each allocated central service*, the plan must also include the 
following: a brief description of the service, an identification of the 
unit rendering the service and the operating agencies receiving the 
service, the items of expense included in the cost of the service, the 
method used to distribute the cost of the service to benefitted 
agencies, and a summary schedule showing the allocation of each service 
to the specific benefitted agencies. If any self-insurance funds or 
fringe benefits costs are treated as allocated (rather than billed) 
central services, documentation discussed in subsections 3.b. and c. 
must also be included.

                           3. Billed Services

    a. General. The information described in this section must be 
provided for all billed central services, including internal service 
funds, self-insurance funds, and fringe benefit funds.
    b. Internal service funds.
    (1) For each internal service fund or similar activity with an 
operating budget of $5 million or more, the plan must include: a brief 
description of each service; a balance sheet for each fund based on 
individual accounts contained in the governmental unit's accounting 
system; a revenue/expenses statement, with revenues broken out by 
source, e.g., regular billings, interest earned, etc.; a listing of all 
non-operating transfers (as defined by Generally Accepted Accounting 
Principles (GAAP)) into and out of the fund; a description of the 
procedures (methodology) used to charge the costs of each service to 
users, including how billing rates are determined; a schedule of current 
rates; and, a schedule comparing total revenues (including imputed 
revenues) generated by the service to the allowable costs of the 
service, as determined under this Part, with an explanation of how 
variances will be handled.
    (2) Revenues must consist of all revenues generated by the service, 
including unbilled and uncollected revenues. If some users were not 
billed for the services (or were not billed at the full rate for that 
class of users), a schedule showing the full imputed revenues associated 
with these users must be provided. Expenses must be broken out by object 
cost categories (e.g., salaries, supplies, etc.).
    c. Self-insurance funds. For each self-insurance fund, the plan must 
include: the fund balance sheet; a statement of revenue and expenses 
including a summary of billings and claims paid by agency; a listing of 
all non-operating transfers into and out of the fund; the type(s) of 
risk(s) covered by the fund (e.g., automobile liability, workers' 
compensation, etc.); an explanation of how the level of fund 
contributions are determined, including a copy of the current actuarial 
report (with the actuarial assumptions used) if the contributions are 
determined on an actuarial basis; and, a description of the procedures 
used to charge or allocate fund contributions to benefitted activities. 
Reserve levels in excess of claims (1) submitted and adjudicated but not 
paid, (2) submitted but not adjudicated, and (3) incurred but not 
submitted must be identified and explained.
    d. Fringe benefits. For fringe benefit costs, the plan must include: 
a listing of fringe benefits provided to covered employees, and the 
overall annual cost of each type of benefit; current fringe benefit 
policies; and procedures used to charge or allocate the costs of the 
benefits to benefitted activities. In addition, for pension and post-
retirement health insurance plans, the following information must be 
provided: the governmental unit's funding policies, e.g., legislative 
bills, trust agreements, or state-mandated contribution rules, if 
different from actuarially determined rates; the pension plan's costs 
accrued for the year; the amount funded, and date(s) of funding; a copy 
of the current actuarial report (including the actuarial assumptions); 
the plan trustee's report; and, a schedule from the activity showing the 
value of the interest cost associated with late funding.

                        4. Required Certification

    Each central service cost allocation plan will be accompanied by a 
certification in the following form:

                   CERTIFICATE OF COST ALLOCATION PLAN

    This is to certify that I have reviewed the cost allocation plan 
submitted herewith and to the best of my knowledge and belief:
    (1) All costs included in this proposal [identify date] to establish 
cost allocations or billings for [identify period covered by plan] are 
allowable in accordance with the requirements of this Part and the 
Federal award(s) to which they apply. Unallowable costs have been 
adjusted for in allocating costs as indicated in the cost allocation 
plan.
    (2) All costs included in this proposal are properly allocable to 
Federal awards on the basis of a beneficial or causal relationship 
between the expenses incurred and the Federal awards to which they are 
allocated in accordance with applicable requirements. Further, the same 
costs that have been treated as indirect costs have not been claimed as 
direct costs. Similar types of costs have been accounted for 
consistently.

I declare that the foregoing is true and correct.

 Governmental Unit:_____________________________________________________
 Signature:_____________________________________________________________
 Name of Official:______________________________________________________

[[Page 220]]

 Title:_________________________________________________________________
 Date of Execution:_____________________________________________________

          F. Negotiation and Approval of Central Service Plans

  1. Federal Cognizant Agency for Indirect Costs Assignments for Cost 
                               Negotiation

    In general, unless different arrangements are agreed to by the 
concerned Federal agencies, for central service cost allocation plans, 
the cognizant agency responsible for review and approval is the Federal 
agency with the largest dollar value of total Federal awards with a 
governmental unit. For indirect cost rates and departmental indirect 
cost allocation plans, the cognizant agency is the Federal agency with 
the largest dollar value of direct Federal awards with a governmental 
unit or component, as appropriate. Once designated as the cognizant 
agency for indirect costs, the Federal agency must remain so for a 
period of five years. In addition, the following Federal agencies 
continue to be responsible for the indicated governmental entities:
    Department of Health and Human Services--Public assistance and 
state-wide cost allocation plans for all states (including the District 
of Columbia and Puerto Rico), state and local hospitals, libraries and 
health districts.
    Department of the Interior--Indian tribal governments, territorial 
governments, and state and local park and recreational districts.
    Department of Labor--State and local labor departments.
    Department of Education--School districts and state and local 
education agencies.
    Department of Agriculture--State and local agriculture departments.
    Department of Transportation--State and local airport and port 
authorities and transit districts.
    Department of Commerce--State and local economic development 
districts.
    Department of Housing and Urban Development--State and local housing 
and development districts.
    Environmental Protection Agency--State and local water and sewer 
districts.

                                2. Review

    All proposed central service cost allocation plans that are required 
to be submitted will be reviewed, negotiated, and approved by the 
cognizant agency for indirect costs on a timely basis. The cognizant 
agency for indirect costs will review the proposal within six months of 
receipt of the proposal and either negotiate/approve the proposal or 
advise the governmental unit of the additional documentation needed to 
support/evaluate the proposed plan or the changes required to make the 
proposal acceptable. Once an agreement with the governmental unit has 
been reached, the agreement will be accepted and used by all Federal 
agencies, unless prohibited or limited by statute. Where a Federal 
awarding agency has reason to believe that special operating factors 
affecting its Federal awards necessitate special consideration, the 
funding agency will, prior to the time the plans are negotiated, notify 
the cognizant agency for indirect costs.

                              3. Agreement

    The results of each negotiation must be formalized in a written 
agreement between the cognizant agency for indirect costs and the 
governmental unit. This agreement will be subject to re-opening if the 
agreement is subsequently found to violate a statute or the information 
upon which the plan was negotiated is later found to be materially 
incomplete or inaccurate. The results of the negotiation must be made 
available to all Federal agencies for their use.

                             4. Adjustments

    Negotiated cost allocation plans based on a proposal later found to 
have included costs that: (a) are unallowable (i) as specified by law or 
regulation, (ii) as identified in subpart F, General Provisions for 
selected Items of Cost of this Part, or (iii) by the terms and 
conditions of Federal awards, or (b) are unallowable because they are 
clearly not allocable to Federal awards, must be adjusted, or a refund 
must be made at the option of the cognizant agency for indirect costs, 
including earned or imputed interest from the date of transfer and debt 
interest, if applicable, chargeable in accordance with applicable 
Federal cognizant agency for indirect costs regulations. Adjustments or 
cash refunds may include, at the option of the cognizant agency for 
indirect costs, earned or imputed interest from the date of expenditure 
and delinquent debt interest, if applicable, chargeable in accordance 
with applicable cognizant agency claims collection regulations. These 
adjustments or refunds are designed to correct the plans and do not 
constitute a reopening of the negotiation.

                            G. Other Policies

                  1. Billed Central Service Activities

    Each billed central service activity must separately account for all 
revenues (including imputed revenues) generated by the service, expenses 
incurred to furnish the service, and profit/loss.

                       2. Working Capital Reserves

    Internal service funds are dependent upon a reasonable level of 
working capital reserve to operate from one billing cycle to the next. 
Charges by an internal service activity to

[[Page 221]]

provide for the establishment and maintenance of a reasonable level of 
working capital reserve, in addition to the full recovery of costs, are 
allowable. A working capital reserve as part of retained earnings of up 
to 60 calendar days cash expenses for normal operating purposes is 
considered reasonable. A working capital reserve exceeding 60 calendar 
days may be approved by the cognizant agency for indirect costs in 
exceptional cases.

     3. Carry-Forward Adjustments of Allocated Central Service Costs

    Allocated central service costs are usually negotiated and approved 
for a future fiscal year on a ``fixed with carry-forward'' basis. Under 
this procedure, the fixed amounts for the future year covered by 
agreement are not subject to adjustment for that year. However, when the 
actual costs of the year involved become known, the differences between 
the fixed amounts previously approved and the actual costs will be 
carried forward and used as an adjustment to the fixed amounts 
established for a later year. This ``carry-forward'' procedure applies 
to all central services whose costs were fixed in the approved plan. 
However, a carry-forward adjustment is not permitted, for a central 
service activity that was not included in the approved plan, or for 
unallowable costs that must be reimbursed immediately.

                4. Adjustments of Billed Central Services

    Billing rates used to charge Federal awards must be based on the 
estimated costs of providing the services, including an estimate of the 
allocable central service costs. A comparison of the revenue generated 
by each billed service (including total revenues whether or not billed 
or collected) to the actual allowable costs of the service will be made 
at least annually, and an adjustment will be made for the difference 
between the revenue and the allowable costs. These adjustments will be 
made through one of the following adjustment methods: (a) a cash refund 
including earned or imputed interest from the date of transfer and debt 
interest, if applicable, chargeable in accordance with applicable 
Federal cognizant agency for indirect costs regulations to the Federal 
Government for the Federal share of the adjustment, (b) credits to the 
amounts charged to the individual programs, (c) adjustments to future 
billing rates, or (d) adjustments to allocated central service costs. 
Adjustments to allocated central services will not be permitted where 
the total amount of the adjustment for a particular service (Federal 
share and non-Federal) share exceeds $500,000. Adjustment methods may 
include, at the option of the cognizant agency, earned or imputed 
interest from the date of expenditure and delinquent debt interest, if 
applicable, chargeable in accordance with applicable cognizant agency 
claims collection regulations.

                          5. Records Retention

    All central service cost allocation plans and related documentation 
used as a basis for claiming costs under Federal awards must be retained 
for audit in accordance with the records retention requirements 
contained in Subpart D--Post Federal Award Requirements, of Part 200.

                               6. Appeals

    If a dispute arises in the negotiation of a plan between the 
cognizant agency for indirect costs and the governmental unit, the 
dispute must be resolved in accordance with the appeals procedures of 
the cognizant agency for indirect costs.

                            7. OMB Assistance

    To the extent that problems are encountered among the Federal 
agencies or governmental units in connection with the negotiation and 
approval process, OMB will lend assistance, as required, to resolve such 
problems in a timely manner.

[78 FR 78608, Dec. 26, 2013, as amended at 80 FR 54410, Sept. 10, 2015]



  Sec. Appendix VI to Part 200--Public Assistance Cost Allocation Plans

                               A. General

    Federally-financed programs administered by state public assistance 
agencies are funded predominately by the Department of Health and Human 
Services (HHS). In support of its stewardship requirements, HHS has 
published requirements for the development, documentation, submission, 
negotiation, and approval of public assistance cost allocation plans in 
Subpart E of 45 CFR Part 95. All administrative costs (direct and 
indirect) are normally charged to Federal awards by implementing the 
public assistance cost allocation plan. This Appendix extends these 
requirements to all Federal awarding agencies whose programs are 
administered by a state public assistance agency. Major federally-
financed programs typically administered by state public assistance 
agencies include: Temporary Aid to Needy Families (TANF), Medicaid, Food 
Stamps, Child Support Enforcement, Adoption Assistance and Foster Care, 
and Social Services Block Grant.

                             B. Definitions

    1. State public assistance agency means a state agency administering 
or supervising the administration of one or more public assistance 
programs operated by the state as identified in Subpart E of 45 CFR Part 
95.

[[Page 222]]

For the purpose of this Appendix, these programs include all programs 
administered by the state public assistance agency.
    2. State public assistance agency costs means all costs incurred by, 
or allocable to, the state public assistance agency, except expenditures 
for financial assistance, medical contractor payments, food stamps, and 
payments for services and goods provided directly to program recipients.

                                C. Policy

    State public assistance agencies will develop, document and 
implement, and the Federal Government will review, negotiate, and 
approve, public assistance cost allocation plans in accordance with 
Subpart E of 45 CFR Part 95. The plan will include all programs 
administered by the state public assistance agency. Where a letter of 
approval or disapproval is transmitted to a state public assistance 
agency in accordance with Subpart E, the letter will apply to all 
Federal agencies and programs. The remaining sections of this Appendix 
(except for the requirement for certification) summarize the provisions 
of Subpart E of 45 CFR Part 95.

  D. Submission, Documentation, and Approval of Public Assistance Cost 
                            Allocation Plans

    1. State public assistance agencies are required to promptly submit 
amendments to the cost allocation plan to HHS for review and approval.
    2. Under the coordination process outlined in section E, Review of 
Implementation of Approved Plans, affected Federal agencies will review 
all new plans and plan amendments and provide comments, as appropriate, 
to HHS. The effective date of the plan or plan amendment will be the 
first day of the calendar quarter following the event that required the 
amendment, unless another date is specifically approved by HHS. HHS, as 
the cognizant agency for indirect costs acting on behalf of all affected 
Federal agencies, will, as necessary, conduct negotiations with the 
state public assistance agency and will inform the state agency of the 
action taken on the plan or plan amendment.

              E. Review of Implementation of Approved Plans

    1. Since public assistance cost allocation plans are of a narrative 
nature, the review during the plan approval process consists of 
evaluating the appropriateness of the proposed groupings of costs (cost 
centers) and the related allocation bases. As such, the Federal 
Government needs some assurance that the cost allocation plan has been 
implemented as approved. This is accomplished by reviews by the Federal 
awarding agencies, single audits, or audits conducted by the cognizant 
agency for indirect costs.
    2. Where inappropriate charges affecting more than one Federal 
awarding agency are identified, the cognizant HHS cost negotiation 
office will be advised and will take the lead in resolving the issue(s) 
as provided for in Subpart E of 45 CFR Part 95.
    3. If a dispute arises in the negotiation of a plan or from a 
disallowance involving two or more Federal awarding agencies, the 
dispute must be resolved in accordance with the appeals procedures set 
out in 45 CFR Part 16. Disputes involving only one Federal awarding 
agency will be resolved in accordance with the Federal awarding agency's 
appeal process.
    4. To the extent that problems are encountered among the Federal 
awarding agencies or governmental units in connection with the 
negotiation and approval process, the Office of Management and Budget 
will lend assistance, as required, to resolve such problems in a timely 
manner.

                          F. Unallowable Costs

    Claims developed under approved cost allocation plans will be based 
on allowable costs as identified in this Part. Where unallowable costs 
have been claimed and reimbursed, they will be refunded to the program 
that reimbursed the unallowable cost using one of the following methods: 
(a) a cash refund, (b) offset to a subsequent claim, or (c) credits to 
the amounts charged to individual Federal awards. Cash refunds, offsets, 
and credits may include at the option of the cognizant agency for 
indirect cost, earned or imputed interest from the date of expenditure 
and delinquent debt interest, if applicable, chargeable in accordance 
with applicable cognizant agency for indirect cost claims collection 
regulations.



 Sec. Appendix VII to Part 200--States and Local Government and Indian 
                      Tribe Indirect Cost Proposals

                               A. General

    1. Indirect costs are those that have been incurred for common or 
joint purposes. These costs benefit more than one cost objective and 
cannot be readily identified with a particular final cost objective 
without effort disproportionate to the results achieved. After direct 
costs have been determined and assigned directly to Federal awards and 
other activities as appropriate, indirect costs are those remaining to 
be allocated to benefitted cost objectives. A cost may not be allocated 
to a Federal award as an indirect cost if any other cost incurred for 
the same purpose, in like circumstances, has been assigned to a Federal 
award as a direct cost.
    2. Indirect costs include (a) the indirect costs originating in each 
department or agency of the governmental unit carrying

[[Page 223]]

out Federal awards and (b) the costs of central governmental services 
distributed through the central service cost allocation plan (as 
described in Appendix V to Part 200--State/Local Government and Indian 
Tribe-Wide Central Service Cost Allocation Plans) and not otherwise 
treated as direct costs.
    3. Indirect costs are normally charged to Federal awards by the use 
of an indirect cost rate. A separate indirect cost rate(s) is usually 
necessary for each department or agency of the governmental unit 
claiming indirect costs under Federal awards. Guidelines and 
illustrations of indirect cost proposals are provided in a brochure 
published by the Department of Health and Human Services entitled ``A 
Guide for States and Local Government Agencies: Cost Principles and 
Procedures for Establishing Cost Allocation Plans and Indirect Cost 
Rates for Grants and Contracts with the Federal Government.'' A copy of 
this brochure may be obtained from HHS Cost Allocation Services or at 
their Web site at https://rates.psc.gov.
    4. Because of the diverse characteristics and accounting practices 
of governmental units, the types of costs which may be classified as 
indirect costs cannot be specified in all situations. However, typical 
examples of indirect costs may include certain state/local-wide central 
service costs, general administration of the non-Federal entity 
accounting and personnel services performed within the non-Federal 
entity, depreciation on buildings and equipment, the costs of operating 
and maintaining facilities.
    5. This Appendix does not apply to state public assistance agencies. 
These agencies should refer instead to Appendix VI to Part 200--Public 
Assistance Cost Allocation Plans.

                             B. Definitions

    1. Base means the accumulated direct costs (normally either total 
direct salaries and wages or total direct costs exclusive of any 
extraordinary or distorting expenditures) used to distribute indirect 
costs to individual Federal awards. The direct cost base selected should 
result in each Federal award bearing a fair share of the indirect costs 
in reasonable relation to the benefits received from the costs.
    2. Base period for the allocation of indirect costs is the period in 
which such costs are incurred and accumulated for allocation to 
activities performed in that period. The base period normally should 
coincide with the governmental unit's fiscal year, but in any event, 
must be so selected as to avoid inequities in the allocation of costs.
    3. Cognizant agency for indirect costs means the Federal agency 
responsible for reviewing and approving the governmental unit's indirect 
cost rate(s) on the behalf of the Federal Government. The cognizant 
agency for indirect costs assignment is described in Appendix V, section 
F, Negotiation and Approval of Central Service Plans.
    4. Final rate means an indirect cost rate applicable to a specified 
past period which is based on the actual allowable costs of the period. 
A final audited rate is not subject to adjustment.
    5. Fixed rate means an indirect cost rate which has the same 
characteristics as a predetermined rate, except that the difference 
between the estimated costs and the actual, allowable costs of the 
period covered by the rate is carried forward as an adjustment to the 
rate computation of a subsequent period.
    6. Indirect cost pool is the accumulated costs that jointly benefit 
two or more programs or other cost objectives.
    7. Indirect cost rate is a device for determining in a reasonable 
manner the proportion of indirect costs each program should bear. It is 
the ratio (expressed as a percentage) of the indirect costs to a direct 
cost base.
    8. Indirect cost rate proposal means the documentation prepared by a 
governmental unit or subdivision thereof to substantiate its request for 
the establishment of an indirect cost rate.
    9. Predetermined rate means an indirect cost rate, applicable to a 
specified current or future period, usually the governmental unit's 
fiscal year. This rate is based on an estimate of the costs to be 
incurred during the period. Except under very unusual circumstances, a 
predetermined rate is not subject to adjustment. (Because of legal 
constraints, predetermined rates are not permitted for Federal 
contracts; they may, however, be used for grants or cooperative 
agreements.) Predetermined rates may not be used by governmental units 
that have not submitted and negotiated the rate with the cognizant 
agency for indirect costs. In view of the potential advantages offered 
by this procedure, negotiation of predetermined rates for indirect costs 
for a period of two to four years should be the norm in those situations 
where the cost experience and other pertinent facts available are deemed 
sufficient to enable the parties involved to reach an informed judgment 
as to the probable level of indirect costs during the ensuing accounting 
periods.
    10. Provisional rate means a temporary indirect cost rate applicable 
to a specified period which is used for funding, interim reimbursement, 
and reporting indirect costs on Federal awards pending the establishment 
of a ``final'' rate for that period.

C. Allocation of Indirect Costs and Determination of Indirect Cost Rates

                               1. General

    a. Where a governmental unit's department or agency has only one 
major function, or where all its major functions benefit from

[[Page 224]]

the indirect costs to approximately the same degree, the allocation of 
indirect costs and the computation of an indirect cost rate may be 
accomplished through simplified allocation procedures as described in 
subsection 2.
    b. Where a governmental unit's department or agency has several 
major functions which benefit from its indirect costs in varying 
degrees, the allocation of indirect costs may require the accumulation 
of such costs into separate cost groupings which then are allocated 
individually to benefitted functions by means of a base which best 
measures the relative degree of benefit. The indirect costs allocated to 
each function are then distributed to individual Federal awards and 
other activities included in that function by means of an indirect cost 
rate(s).
    c. Specific methods for allocating indirect costs and computing 
indirect cost rates along with the conditions under which each method 
should be used are described in subsections 2, 3 and 4.

                          2. Simplified Method

    a. Where a non-Federal entity's major functions benefit from its 
indirect costs to approximately the same degree, the allocation of 
indirect costs may be accomplished by (1) classifying the non-Federal 
entity's total costs for the base period as either direct or indirect, 
and (2) dividing the total allowable indirect costs (net of applicable 
credits) by an equitable distribution base. The result of this process 
is an indirect cost rate which is used to distribute indirect costs to 
individual Federal awards. The rate should be expressed as the 
percentage which the total amount of allowable indirect costs bears to 
the base selected. This method should also be used where a governmental 
unit's department or agency has only one major function encompassing a 
number of individual projects or activities, and may be used where the 
level of Federal awards to that department or agency is relatively 
small.
    b. Both the direct costs and the indirect costs must exclude capital 
expenditures and unallowable costs. However, unallowable costs must be 
included in the direct costs if they represent activities to which 
indirect costs are properly allocable.
    c. The distribution base may be (1) total direct costs (excluding 
capital expenditures and other distorting items, such as pass-through 
funds, subcontracts in excess of $25,000, participant support costs, 
etc.), (2) direct salaries and wages, or (3) another base which results 
in an equitable distribution.

                   3. Multiple Allocation Base Method

    a. Where a non-Federal entity's indirect costs benefit its major 
functions in varying degrees, such costs must be accumulated into 
separate cost groupings. Each grouping must then be allocated 
individually to benefitted functions by means of a base which best 
measures the relative benefits.
    b. The cost groupings should be established so as to permit the 
allocation of each grouping on the basis of benefits provided to the 
major functions. Each grouping should constitute a pool of expenses that 
are of like character in terms of the functions they benefit and in 
terms of the allocation base which best measures the relative benefits 
provided to each function. The number of separate groupings should be 
held within practical limits, taking into consideration the materiality 
of the amounts involved and the degree of precision needed.
    c. Actual conditions must be taken into account in selecting the 
base to be used in allocating the expenses in each grouping to 
benefitted functions. When an allocation can be made by assignment of a 
cost grouping directly to the function benefitted, the allocation must 
be made in that manner. When the expenses in a grouping are more general 
in nature, the allocation should be made through the use of a selected 
base which produces results that are equitable to both the Federal 
Government and the governmental unit. In general, any cost element or 
related factor associated with the governmental unit's activities is 
potentially adaptable for use as an allocation base provided that: (1) 
it can readily be expressed in terms of dollars or other quantitative 
measures (total direct costs, direct salaries and wages, staff hours 
applied, square feet used, hours of usage, number of documents 
processed, population served, and the like), and (2) it is common to the 
benefitted functions during the base period.
    d. Except where a special indirect cost rate(s) is required in 
accordance with paragraph (C)(4) of this Appendix, the separate 
groupings of indirect costs allocated to each major function must be 
aggregated and treated as a common pool for that function. The costs in 
the common pool must then be distributed to individual Federal awards 
included in that function by use of a single indirect cost rate.
    e. The distribution base used in computing the indirect cost rate 
for each function may be (1) total direct costs (excluding capital 
expenditures and other distorting items such as pass-through funds, 
subawards in excess of $25,000, participant support costs, etc.), (2) 
direct salaries and wages, or (3) another base which results in an 
equitable distribution. An indirect cost rate should be developed for 
each separate indirect cost pool developed. The rate in each case should 
be stated as the percentage relationship between the particular indirect 
cost pool and the distribution base identified with that pool.

[[Page 225]]

                     4. Special Indirect Cost Rates

    a. In some instances, a single indirect cost rate for all activities 
of a non-Federal entity or for each major function of the agency may not 
be appropriate. It may not take into account those different factors 
which may substantially affect the indirect costs applicable to a 
particular program or group of programs. The factors may include the 
physical location of the work, the level of administrative support 
required, the nature of the facilities or other resources employed, the 
organizational arrangements used, or any combination thereof. When a 
particular Federal award is carried out in an environment which appears 
to generate a significantly different level of indirect costs, 
provisions should be made for a separate indirect cost pool applicable 
to that Federal award. The separate indirect cost pool should be 
developed during the course of the regular allocation process, and the 
separate indirect cost rate resulting therefrom should be used, provided 
that: (1) The rate differs significantly from the rate which would have 
been developed under paragraphs (C)(2) and (C)(3) of this Appendix, and 
(2) the Federal award to which the rate would apply is material in 
amount.
    b. Where Federal statutes restrict the reimbursement of certain 
indirect costs, it may be necessary to develop a special rate for the 
affected Federal award. Where a ``restricted rate'' is required, the 
same procedure for developing a non-restricted rate will be used except 
for the additional step of the elimination from the indirect cost pool 
those costs for which the law prohibits reimbursement.

              D. Submission and Documentation of Proposals

              1. Submission of Indirect Cost Rate Proposals

    a. All departments or agencies of the governmental unit desiring to 
claim indirect costs under Federal awards must prepare an indirect cost 
rate proposal and related documentation to support those costs. The 
proposal and related documentation must be retained for audit in 
accordance with the records retention requirements contained in Sec.  
200.333 Retention Requirements for Records.
    b. A governmental department or agency unit that receives more than 
$35 million in direct Federal funding must submit its indirect cost rate 
proposal to its cognizant agency for indirect costs. Other governmental 
department or agency must develop an indirect cost proposal in 
accordance with the requirements of this Part and maintain the proposal 
and related supporting documentation for audit. These governmental 
departments or agencies are not required to submit their proposals 
unless they are specifically requested to do so by the cognizant agency 
for indirect costs. Where a non-Federal entity only receives funds as a 
subrecipient, the pass-through entity will be responsible for 
negotiating and/or monitoring the subrecipient's indirect costs.
    c. Each Indian tribal government desiring reimbursement of indirect 
costs must submit its indirect cost proposal to the Department of the 
Interior (its cognizant agency for indirect costs).
    d. Indirect cost proposals must be developed (and, when required, 
submitted) within six months after the close of the governmental unit's 
fiscal year, unless an exception is approved by the cognizant agency for 
indirect costs. If the proposed central service cost allocation plan for 
the same period has not been approved by that time, the indirect cost 
proposal may be prepared including an amount for central services that 
is based on the latest federally-approved central service cost 
allocation plan. The difference between these central service amounts 
and the amounts ultimately approved will be compensated for by an 
adjustment in a subsequent period.

                      2. Documentation of Proposals

    The following must be included with each indirect cost proposal:
    a. The rates proposed, including subsidiary work sheets and other 
relevant data, cross referenced and reconciled to the financial data 
noted in subsection b. Allocated central service costs will be supported 
by the summary table included in the approved central service cost 
allocation plan. This summary table is not required to be submitted with 
the indirect cost proposal if the central service cost allocation plan 
for the same fiscal year has been approved by the cognizant agency for 
indirect costs and is available to the funding agency.
    b. A copy of the financial data (financial statements, comprehensive 
annual financial report, executive budgets, accounting reports, etc.) 
upon which the rate is based. Adjustments resulting from the use of 
unaudited data will be recognized, where appropriate, by the Federal 
cognizant agency for indirect costs in a subsequent proposal.
    c. The approximate amount of direct base costs incurred under 
Federal awards. These costs should be broken out between salaries and 
wages and other direct costs.
    d. A chart showing the organizational structure of the agency during 
the period for which the proposal applies, along with a functional 
statement(s) noting the duties and/or responsibilities of all units that 
comprise the agency. (Once this is submitted, only revisions need be 
submitted with subsequent proposals.)

[[Page 226]]

                       3. Required certification.

    Each indirect cost rate proposal must be accompanied by a 
certification in the following form:

                      Certificate of Indirect Costs

    This is to certify that I have reviewed the indirect cost rate 
proposal submitted herewith and to the best of my knowledge and belief:
    (1) All costs included in this proposal [identify date] to establish 
billing or final indirect costs rates for [identify period covered by 
rate] are allowable in accordance with the requirements of the Federal 
award(s) to which they apply and the provisions of this Part. 
Unallowable costs have been adjusted for in allocating costs as 
indicated in the indirect cost proposal
    (2) All costs included in this proposal are properly allocable to 
Federal awards on the basis of a beneficial or causal relationship 
between the expenses incurred and the agreements to which they are 
allocated in accordance with applicable requirements. Further, the same 
costs that have been treated as indirect costs have not been claimed as 
direct costs. Similar types of costs have been accounted for 
consistently and the Federal Government will be notified of any 
accounting changes that would affect the predetermined rate.

I declare that the foregoing is true and correct.

 Governmental Unit:_____________________________________________________
 Signature:_____________________________________________________________
 Name of Official:______________________________________________________
 Title:_________________________________________________________________
 Date of Execution:_____________________________________________________

                  E. Negotiation and Approval of Rates.

    1. Indirect cost rates will be reviewed, negotiated, and approved by 
the cognizant agency on a timely basis. Once a rate has been agreed 
upon, it will be accepted and used by all Federal agencies unless 
prohibited or limited by statute. Where a Federal awarding agency has 
reason to believe that special operating factors affecting its Federal 
awards necessitate special indirect cost rates, the funding agency will, 
prior to the time the rates are negotiated, notify the cognizant agency 
for indirect costs.
    2. The use of predetermined rates, if allowed, is encouraged where 
the cognizant agency for indirect costs has reasonable assurance based 
on past experience and reliable projection of the non-Federal entity's 
costs, that the rate is not likely to exceed a rate based on actual 
costs. Long-term agreements utilizing predetermined rates extending over 
two or more years are encouraged, where appropriate.
    3. The results of each negotiation must be formalized in a written 
agreement between the cognizant agency for indirect costs and the 
governmental unit. This agreement will be subject to re-opening if the 
agreement is subsequently found to violate a statute, or the information 
upon which the plan was negotiated is later found to be materially 
incomplete or inaccurate. The agreed upon rates must be made available 
to all Federal agencies for their use.
    4. Refunds must be made if proposals are later found to have 
included costs that (a) are unallowable (i) as specified by law or 
regulation, (ii) as identified in Sec.  200.420 Considerations for 
selected items of cost, of this Part, or (iii) by the terms and 
conditions of Federal awards, or (b) are unallowable because they are 
clearly not allocable to Federal awards. These adjustments or refunds 
will be made regardless of the type of rate negotiated (predetermined, 
final, fixed, or provisional).

                            F. Other Policies

                         1. Fringe Benefit Rates

    If overall fringe benefit rates are not approved for the 
governmental unit as part of the central service cost allocation plan, 
these rates will be reviewed, negotiated and approved for individual 
recipient agencies during the indirect cost negotiation process. In 
these cases, a proposed fringe benefit rate computation should accompany 
the indirect cost proposal. If fringe benefit rates are not used at the 
recipient agency level (i.e., the agency specifically identifies fringe 
benefit costs to individual employees), the governmental unit should so 
advise the cognizant agency for indirect costs.

           2. Billed Services Provided by the Recipient Agency

    In some cases, governmental departments or agencies (components of 
the governmental unit) provide and bill for services similar to those 
covered by central service cost allocation plans (e.g., computer 
centers). Where this occurs, the governmental departments or agencies 
(components of the governmental unit)should be guided by the 
requirements in Appendix V relating to the development of billing rates 
and documentation requirements, and should advise the cognizant agency 
for indirect costs of any billed services. Reviews of these types of 
services (including reviews of costing/billing methodology, profits or 
losses, etc.) will be made on a case-by-case basis as warranted by the 
circumstances involved.

              3. Indirect Cost Allocations Not Using Rates

    In certain situations, governmental departments or agencies 
(components of the governmental unit), because of the nature of their 
Federal awards, may be required to develop a cost allocation plan that 
distributes

[[Page 227]]

indirect (and, in some cases, direct) costs to the specific funding 
sources. In these cases, a narrative cost allocation methodology should 
be developed, documented, maintained for audit, or submitted, as 
appropriate, to the cognizant agency for indirect costs for review, 
negotiation, and approval.

                               4. Appeals

    If a dispute arises in a negotiation of an indirect cost rate (or 
other rate) between the cognizant agency for indirect costs and the 
governmental unit, the dispute must be resolved in accordance with the 
appeals procedures of the cognizant agency for indirect costs.

        5. Collection of Unallowable Costs and Erroneous Payments

    Costs specifically identified as unallowable and charged to Federal 
awards either directly or indirectly will be refunded (including 
interest chargeable in accordance with applicable Federal cognizant 
agency for indirect costs regulations).

                            6. OMB Assistance

    To the extent that problems are encountered among the Federal 
agencies or governmental units in connection with the negotiation and 
approval process, OMB will lend assistance, as required, to resolve such 
problems in a timely manner.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75889, Dec. 19, 2014]



 Sec. Appendix VIII to Part 200--Nonprofit Organizations Exempted From 
                 Subpart E--Cost Principles of Part 200

1. Advance Technology Institute (ATI), Charleston, South Carolina
2. Aerospace Corporation, El Segundo, California
3. American Institutes of Research (AIR), Washington, DC
4. Argonne National Laboratory, Chicago, Illinois
5. Atomic Casualty Commission, Washington, DC
6. Battelle Memorial Institute, Headquartered in Columbus, Ohio
7. Brookhaven National Laboratory, Upton, New York
8. Charles Stark Draper Laboratory, Incorporated, Cambridge, 
Massachusetts
9. CNA Corporation (CNAC), Alexandria, Virginia
10. Environmental Institute of Michigan, Ann Arbor, Michigan
11. Georgia Institute of Technology/Georgia Tech Applied Research 
Corporation/Georgia Tech Research Institute, Atlanta, Georgia
12. Hanford Environmental Health Foundation, Richland, Washington
13. IIT Research Institute, Chicago, Illinois
14. Institute of Gas Technology, Chicago, Illinois
15. Institute for Defense Analysis, Alexandria, Virginia
16. LMI, McLean, Virginia
17. Mitre Corporation, Bedford, Massachusetts
18. Noblis, Inc., Falls Church, Virginia
19. National Radiological Astronomy Observatory, Green Bank, West 
Virginia
20. National Renewable Energy Laboratory, Golden, Colorado
21. Oak Ridge Associated Universities, Oak Ridge, Tennessee
22. Rand Corporation, Santa Monica, California
23. Research Triangle Institute, Research Triangle Park, North Carolina
24. Riverside Research Institute, New York, New York
25. South Carolina Research Authority (SCRA), Charleston, South Carolina
26. Southern Research Institute, Birmingham, Alabama
27. Southwest Research Institute, San Antonio, Texas
28. SRI International, Menlo Park, California
29. Syracuse Research Corporation, Syracuse, New York
30. Universities Research Association, Incorporated (National 
Acceleration Lab), Argonne, Illinois
31. Urban Institute, Washington DC
32. Non-profit insurance companies, such as Blue Cross and Blue Shield 
Organizations
33. Other non-profit organizations as negotiated with Federal awarding 
agencies



         Sec. Appendix IX to Part 200--Hospital Cost Principles

    Based on initial feedback, OMB proposes to establish a review 
process to consider existing hospital cost determine how best to update 
and align them with this Part. Until such time as revised guidance is 
proposed and implemented for hospitals, the existing principles located 
at 45 CFR Part 75 Appendix E, entitled ``Principles for Determining Cost 
Applicable to Research and Development Under Grants and Contracts with 
Hospitals,'' remain in effect.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75889, Dec. 19, 2014]



     Sec. Appendix X to Part 200--Data Collection Form (Form SF-SAC)

    The Data Collection Form SF-SAC is available on the FAC Web site.

[[Page 228]]



           Sec. Appendix XI to Part 200--Compliance Supplement

    The compliance supplement is available on the OMB Web site: (e.g. 
for 2013 here http://www.whitehouse.gov/omb/circulars/)



 Sec. Appendix XII to Part 200--Award Term and Condition for Recipient 
                    Integrity and Performance Matters

 A. Reporting of Matters Related to Recipient Integrity and Performance

                    1. General Reporting Requirement

    If the total value of your currently active grants, cooperative 
agreements, and procurement contracts from all Federal awarding agencies 
exceeds $10,000,000 for any period of time during the period of 
performance of this Federal award, then you as the recipient during that 
period of time must maintain the currency of information reported to the 
System for Award Management (SAM) that is made available in the 
designated integrity and performance system (currently the Federal 
Awardee Performance and Integrity Information System (FAPIIS)) about 
civil, criminal, or administrative proceedings described in paragraph 2 
of this award term and condition. This is a statutory requirement under 
section 872 of Public Law 110-417, as amended (41 U.S.C. 2313). As 
required by section 3010 of Public Law 111-212, all information posted 
in the designated integrity and performance system on or after April 15, 
2011, except past performance reviews required for Federal procurement 
contracts, will be publicly available.

               2. Proceedings About Which You Must Report

    Submit the information required about each proceeding that:
    a. Is in connection with the award or performance of a grant, 
cooperative agreement, or procurement contract from the Federal 
Government;
    b. Reached its final disposition during the most recent five year 
period; and
    c. Is one of the following:
    (1) A criminal proceeding that resulted in a conviction, as defined 
in paragraph 5 of this award term and condition;
    (2) A civil proceeding that resulted in a finding of fault and 
liability and payment of a monetary fine, penalty, reimbursement, 
restitution, or damages of $5,000 or more;
    (3) An administrative proceeding, as defined in paragraph 5. of this 
award term and condition, that resulted in a finding of fault and 
liability and your payment of either a monetary fine or penalty of 
$5,000 or more or reimbursement, restitution, or damages in excess of 
$100,000; or
    (4) Any other criminal, civil, or administrative proceeding if:
    (i) It could have led to an outcome described in paragraph 2.c.(1), 
(2), or (3) of this award term and condition;
    (ii) It had a different disposition arrived at by consent or 
compromise with an acknowledgment of fault on your part; and
    (iii) The requirement in this award term and condition to disclose 
information about the proceeding does not conflict with applicable laws 
and regulations.

                         3. Reporting Procedures

    Enter in the SAM Entity Management area the information that SAM 
requires about each proceeding described in paragraph 2 of this award 
term and condition. You do not need to submit the information a second 
time under assistance awards that you received if you already provided 
the information through SAM because you were required to do so under 
Federal procurement contracts that you were awarded.

                         4. Reporting Frequency

    During any period of time when you are subject to the requirement in 
paragraph 1 of this award term and condition, you must report 
proceedings information through SAM for the most recent five year 
period, either to report new information about any proceeding(s) that 
you have not reported previously or affirm that there is no new 
information to report. Recipients that have Federal contract, grant, and 
cooperative agreement awards with a cumulative total value greater than 
$10,000,000 must disclose semiannually any information about the 
criminal, civil, and administrative proceedings.

                             5. Definitions

    For purposes of this award term and condition:
    a. Administrative proceeding means a non-judicial process that is 
adjudicatory in nature in order to make a determination of fault or 
liability (e.g., Securities and Exchange Commission Administrative 
proceedings, Civilian Board of Contract Appeals proceedings, and Armed 
Services Board of Contract Appeals proceedings). This includes 
proceedings at the Federal and State level but only in connection with 
performance of a Federal contract or grant. It does not include audits, 
site visits, corrective plans, or inspection of deliverables.
    b. Conviction, for purposes of this award term and condition, means 
a judgment or conviction of a criminal offense by any court of competent 
jurisdiction, whether entered upon a verdict or a plea, and includes a 
conviction entered upon a plea of nolo contendere.

[[Page 229]]

    c. Total value of currently active grants, cooperative agreements, 
and procurement contracts includes--
    (1) Only the Federal share of the funding under any Federal award 
with a recipient cost share or match; and
    (2) The value of all expected funding increments under a Federal 
award and options, even if not yet exercised.
    B. [Reserved]

[80 FR 43310, July 22, 2015]

                        PARTS 201	299 [RESERVED]

[[Page 231]]

    Subtitle B--Federal Agency Regulations for Grants and Agreements

[[Page 233]]



          CHAPTER III--DEPARTMENT OF HEALTH AND HUMAN SERVICES




  --------------------------------------------------------------------
Part                                                                Page
300              Uniform administrative requirements, cost 
                    principles, and audit requirements for 
                    Federal awards..........................         235
301-375

[Reserved]

376             Nonprocurement debarment and suspension.....         235
382             Requirements for drug-free workplace 
                    (financial assistance)..................         237
383-399

[Reserved]

[[Page 235]]



PART 300_UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT 
REQUIREMENTS FOR FEDERAL AWARDS--Table of Contents



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

    Source: 79 FR 75889, Dec. 19, 2014, unless otherwise noted.



Sec.  300.1  Adoption of 2 CFR Part 200.

    Under the authority listed above, the Department of Health and Human 
Services adopts the Office of Management and Budget (OMB) Guidance in 2 
CFR part 200, and has codified the text, with HHS-specific amendments in 
45 CFR part 75. Thus, this part gives regulatory effect to the OMB 
guidance and supplements the guidance as needed for the Department.

                        PARTS 301	375 [RESERVED]



PART 376_NONPROCUREMENT DEBARMENT AND SUSPENSION--Table of Contents



Sec.
376.10 What does this part do?
376.20 Does this part apply to me?
376.30 What policies and procedures must I follow?

                            Subpart A_General

376.137 Who in the Department of Health and Human Services (HHS) may 
          grant an exception to let an excluded person participate in a 
          covered transaction?
376.147 Does an exclusion from participation in Federal health care 
          programs under Title XI of the Social Security Act affect a 
          person's eligibility to participate in nonprocurement and 
          procurement transactions?

                     Subpart B_Covered Transactions

376.220 What contracts and subcontracts, in addition to those listed in 
          2 CFR 180.220, are covered transactions?

    Subpart C_Responsibilities of Participants Regarding Transactions

376.332 What methods must I use to pass requirements down to 
          participants at lower tiers with whom I intend to do business?
376.370 What are the obligations of Medicare carriers and 
          intermediaries?

    Subpart D_Responsibilities of Federal Agency Officials Regarding 
                              Transactions

376.437 What method do I use to communicate to a participant the 
          requirements described in the OMB guidance at 2 CFR 180.435?

Subpart E--Excluded Parties List System [Reserved]

Subpart F--General Principles Relating to Suspension and Debarment Actions 
[Reserved]

Subpart G--Suspension [Reserved]

Subpart H--Debarment [Reserved]

                          Subpart I_Definitions

376.935 Disqualified (HHS supplement to government-wide definition at 2 
          CFR 180.935).
376.995 Principal (HHS supplement to government-wide definition at 2 CFR 
          180.995).

Subpart J [Reserved]

    Authority: 5 U.S.C. 301; 31 U.S.C. 6101 (note); E.O. 12689 (3 CFR, 
1989 Comp., p. 235); E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O. 11738 
(3 CFR, 1973 Comp., p. 799).

    Source: 72 FR 9234, Mar. 1, 2007, unless otherwise noted.



Sec.  376.10  What does this part do?

    This part adopts the Office of Management and Budget (OMB) guidance 
in subparts A through I of 2 CFR part 180, as supplemented by this part, 
as the Department of Health and Human Services (HHS or Department) 
policies and procedures for nonprocurement debarment and suspension. HHS 
thereby gives regulatory effect to the OMB guidance as supplemented by 
this part. This part satisfies the requirements in 2 CFR 180.20, section 
3 of Executive Order 12549, ``Debarment and Suspension'' (3 CFR 1986 
Comp., p. 189), Executive Order 12689, ``Debarment and Suspension'' (3 
CFR 1989 Comp., p. 235) and 31 U.S.C. 6101 note (Section 2455, Pub. L. 
103-355, 108 Stat. 3327).



Sec.  376.20  Does this part apply to me?

    This part and, through this part, pertinent portions of the OMB 
guidance in subparts A through I of 2 CFR part 180

[[Page 236]]

(see table at 2 CFR 180.100(b)), apply to you if you are a--
    (a) Participant or principal in a ``covered transaction'' under 
subpart B of 2 CFR part 180, as supplemented by this part, and the 
definition of nonprocurement transaction'' at 2 CFR 180.970.
    (b) Respondent in HHS suspension or debarment action;
    (c) HHS debarment or suspension official;
    (d) HHS grants officer, agreements officer, or other HHS official 
authorized to enter into any type of nonprocurement transaction that is 
a covered transaction.



Sec.  376.30  What policies and procedures must I follow?

    The policies and procedures that you must follow are the policies 
and procedures specified in each applicable section of the OMB guidance 
in subparts A through I of 2 CFR part 180, including the corresponding 
section that HHS published in 2 CFR part 376 identified by the same 
section number. The contracts under a nonprocurement transaction, that 
are covered transactions, for example, are specified by section 220 of 
the OMB guidance (i.e., 2 CFR 180.220) as supplemented by section 220 in 
this part (i.e., 2 CFR 376.220). For any section of OMB guidance in 
subparts A through I of 2 CFR part 180 that has no corresponding section 
in this part, HHS policies and procedures are those in the OMB guidance 
at 2 CFR part 180.



                            Subpart A_General



Sec.  376.137  Who in the Department of Health and Human Services (HHS) 
may grant an exception to let an excluded person participate in a 
covered transaction?

    The HHS Debarring/Suspension Official has the authority to grant an 
exception to let an excluded person participate in a covered transaction 
as provided at 2 CFR 180.135.



Sec.  376.147  Does an exclusion from participation in Federal health 
care programs under Title XI of the Social Security Act affect a 
person's eligibility to participate in nonprocurement and procurement 
transactions?

    Any individual or entity excluded from participation in Medicare, 
Medicaid, and other Federal health care programs under Title XI of the 
Social Security Act, 42 U.S.C. 1320a-7, 1320a-7a, 1320c-5, or 1395ccc, 
and implementing regulation at 42 CFR part 1001, will be subject to the 
prohibitions against participating in covered transactions, as set forth 
in this part and part 180, and is prohibited from participating in all 
Federal Government procurement programs and nonprocurement programs. For 
example, if an individual or entity is excluded by the HHS Office of the 
Inspector General from participation in Medicare, Medicaid, and/or other 
Federal health care programs, in accordance with 42 U.S.C. 1320a-7, then 
that individual or entity is prohibited from participating in all 
Federal Government procurement and nonprocurement programs (42 CFR part 
1001).



                     Subpart B_Covered Transactions



Sec.  376.220  What contracts and subcontracts, in addition to those l
isted in 2 CFR 180.220, are covered transactions?

    In addition to the contracts covered under 2 CFR 180.220(b), this 
part also applies to all lower tiers of subcontracts under covered 
nonprocurement transactions, as permitted under the OMB guidance at 2 
CFR 180.220(c). (See optional lower tier coverage in the diagram in the 
appendix to 2 CFR part 180.)



    Subpart C_Responsibilities of Participants Regarding Transactions



Sec.  376.332  What methods must I use to pass requirements down to 
participants at lower tiers with whom I intend to do business?

    To communicate the requirements to lower-tier participants, you must 
include a term or condition in the lower-

[[Page 237]]

tier transaction requiring the lower-tier participant's compliance with 
2 CFR part 180, as supplemented by this subpart.



Sec.  376.370  What are the obligations of Medicare carriers 
and intermediaries?

    Because Medicare carriers, intermediaries and other Medicare 
contractors undertake responsibilities on behalf of the Medicare program 
(Title XVIII of the Social Security Act), these entities assume the same 
obligations and responsibilities as the HHS Medicare officials 
responsible for the Medicare Program with respect to actions under 2 CFR 
part 376. This would include the requirement for these entities to check 
the Excluded Parties List System (EPLS) and take necessary steps to 
effect this part.



    Subpart D_Responsibilities of Federal Agency Officials Regarding 
                              Transactions



Sec.  376.437  What method do I use to communicate to a participant the 
requirements described in the OMB guidance at 2 CFR 180.435?

    To communicate to a participant the requirements described in 2 CFR 
180.435, you must include a term or condition in the transaction that 
requires the participant's compliance with subpart C of 2 CFR part 180, 
as supplemented by subpart C of this part, and require the participant 
to include a similar term or condition in lower-tier covered 
transactions.

Subpart E--Excluded Parties List System [Reserved]

Subpart F--General Principles Relating to Suspension and Debarment Actions 
[Reserved]

Subpart G--Suspension [Reserved]

Subpart H--Debarment [Reserved]



                          Subpart I_Definitions



Sec.  376.935  Disqualified. (HHS supplement to government-wide 
definition at 2 CFR 180.935).

    Disqualified means persons prohibited from participating in 
specified federal procurement and nonprocurement transactions pursuant 
to the statutes listed in 2 CFR 180.935, and pursuant to Title XI of the 
Social Security Act (42 U.S.C. 1320a-7, 1320a-7a, 1320c-5, and 1395ccc) 
as enforced by the HHS Office of the Inspector General.



Sec.  376.995  Principal (HHS supplement to government-wide definition
at 2 CFR 180.995).

    Principal means individuals, in addition to those listed at 2 CFR 
180.995, who participate in HHS covered transactions including:
    (a) Providers of federally required audit services; and
    (b) Researchers.

Subpart J [Reserved]



PART 382_REQUIREMENTS FOR DRUG-FREE WORKPLACE (FINANCIAL ASSISTANCE)--Table of Contents



Sec.
382.10 What does this part do?
382.20 Does this part apply to me?
382.30 What policies and procedures must I follow?

Subpart A [Reserved]

      Subpart B_Requirements for Recipients Other Than Individuals

382.225 Whom in HHS does a recipient other than an individual notify 
          about a criminal drug conviction?

        Subpart C_Requirements for Recipients Who Are Individuals

382.300 Whom in HHS does a recipient who is an individual notify about a 
          criminal drug conviction?

         Subpart D_Responsibilities of Agency Awarding Officials

382.400 What method do I use as an agency awarding official to obtain a 
          recipient's agreement to comply with the OMB guidance?

[[Page 238]]

           Subpart E_Violations of This Part and Consequences

382.500 Who in HHS determines that a recipient other than an individual 
          violated the requirements of this part?
382.505 Who in HHS determines that a recipient who is an individual 
          violated the requirements of this part?

Subpart F [Reserved]

    Authority: 41 U.S.C. 701-707.

    Source: 74 FR 58190, Nov. 12, 2009, unless otherwise noted.



Sec.  382.10  What does this part do?

    This part requires that the award and administration of HHS grants 
and cooperative agreements comply with Office of Management and Budget 
(OMB) guidance implementing the portion of the Drug-Free Workplace Act 
of 1988 (41 U.S.C. 701-707, as amended, hereafter referred to as ``the 
Act'') that applies to grants. It thereby--
    (a) Gives regulatory effect to the OMB guidance (Subparts A through 
F of 2 CFR part 182) for the HHS grants and cooperative agreements; and
    (b) Establishes HHS policies and procedures for compliance with the 
Act that are the same as those of other Federal agencies, in conformance 
with the requirement in 41 U.S.C. 705 for Governmentwide implementing 
regulations.



Sec.  382.20  Does this part apply to me?

    This part and, through this part, pertinent portions of the OMB 
guidance in subparts A through F of 2 CFR part 182 (see table at 2 CFR 
182.115(b)) apply to you if you are a--
    (a) Recipient of an HHS grant or cooperative agreement; or
    (b) HHS awarding official.



Sec.  382.30  What policies and procedures must I follow?

    (a) General. You must follow the policies and procedures specified 
in applicable sections of the OMB guidance in subparts A through F of 2 
CFR part 182, as implemented by this part.
    (b) Specific sections of OMB guidance that this part supplements. In 
implementing the OMB guidance in 2 CFR part 182, this part supplements 
four sections of the guidance, as shown in the following table. For each 
of those sections, you must follow the policies and procedures in the 
OMB guidance, as supplemented by this part.

----------------------------------------------------------------------------------------------------------------
                                         Section in this part
       Section of OMB guidance            where supplemented           What the supplementation clarifies
----------------------------------------------------------------------------------------------------------------
(1) 2 CFR 182.225(a).................  Sec.   382.225.........  Whom in HHS a recipient other than an individual
                                                                 must notify if an employee is convicted for a
                                                                 violation of a criminal drug statute in the
                                                                 workplace.
(2) 2 CFR 182.300(b).................  Sec.   382.300.........  Whom in HHS a recipient who is an individual
                                                                 must notify if he or she is convicted of a
                                                                 criminal drug offense resulting from a
                                                                 violation occurring during the conduct of any
                                                                 award activity.
(3) 2 CFR 182.500....................  Sec.   382.500.........  Who in HHS is authorized to determine that a
                                                                 recipient other than an individual is in
                                                                 violation of the requirements of 2 CFR part
                                                                 182, as implemented by this part.
(4) 2 CFR 182.505....................  Sec.   382.505.........  Who in HHS is authorized to determine that a
                                                                 recipient who is an individual is in violation
                                                                 of the requirements of 2 CFR part 182, as
                                                                 implemented by this part.
----------------------------------------------------------------------------------------------------------------

    (c) Sections of the OMB guidance that this part does not supplement. 
For any section of OMB guidance in subparts A through F of 2 CFR part 
182 that is not listed in paragraph (b) of this section, HHS policies 
and procedures are the same as those in the OMB guidance.

Subpart A [Reserved]



      Subpart B_Requirements for Recipients Other Than Individuals



Sec.  382.225  Whom in HHS does a recipient other than an individual 
notify about a criminal drug conviction?

    A recipient other than an individual that is required under 2 CFR 
182.225(a) to notify Federal agencies about an employee's conviction for 
a criminal drug offense must notify each HHS office from which it 
currently has an award.

[[Page 239]]



        Subpart C_Requirements for Recipients Who Are Individuals



Sec.  382.300  Whom in HHS does a recipient who is an individual notify 
about a criminal drug conviction?

    A recipient who is an individual and is required under 2 CFR 
182.300(b) to notify Federal agencies about a conviction for a criminal 
drug offense must notify each HHS office from which it currently has an 
award.



         Subpart D_Responsibilities of Agency Awarding Officials



Sec.  382.400  What method do I use as an agency awarding official to obtain 
a recipient's agreement to comply with the OMB guidance?

    To obtain a recipient's agreement to comply with applicable 
requirements in the OMB guidance at 2 CFR part 182, you must include the 
following term or condition in the award:
    Drug-free workplace. You as the recipient must comply with drug-free 
workplace requirements in Subpart B (or Subpart C, if the recipient is 
an individual) of part 382, which adopts the Governmentwide 
implementation (2 CFR part 182) of sec. 5152-5158 of the Drug-Free 
Workplace Act of 1988 (Pub. L. 100-690, Title V, Subtitle D; 41 U.S.C. 
701-707).



           Subpart E_Violations of This Part and Consequences



Sec.  382.500  Who in HHS determines that a recipient other than an 
individual violated the requirements of this part?

    The agency head is the official authorized to make the determination 
under 2 CFR 182.500.



Sec.  382.505  Who in HHS determines that a recipient who is an
individual violated the requirements of this part?

    The agency head is the official authorized to make the determination 
under 2 CFR 182.505.

Subpart F [Reserved]

                        PARTS 383	399 [RESERVED]

[[Page 241]]



                  CHAPTER IV--DEPARTMENT OF AGRICULTURE




  --------------------------------------------------------------------
Part                                                                Page
400             Uniform administrative requirements, cost 
                    principles, and audit requirements for 
                    federal awards..........................         243
401-414

[Reserved]

415             General program administrative regulations..         243
416             General program administrative regulations 
                    for grants and cooperative agreements to 
                    state and local governments.............         248
417             Nonprocurement debarment and suspension.....         249
418             New restrictions on lobbying................         255
421             Requirements for drug-free workplace 
                    (financial assistance)..................         267
422             research institutions conducting USDA-funded 
                    extramural research; research 
                    misconducts.............................         268
423-499

[Reserved]

[[Page 243]]



PART 400_UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT 
REQUIREMENTS FOR FEDERAL AWARDS--Table of Contents



Sec.
400.1 What does this part do?
400.2 Conflict of interest.

    Authority: 31 U.S.C. 503.

    Source: 79 FR 75982, Dec. 19, 2014, unless otherwise noted.



Sec.  400.1  What does this part do?

    This part adopts the OMB guidance in subparts A through F of 2 CFR 
part 200, as supplemented by this part, as USDA policies and procedures 
for uniform administrative requirements, cost principles, and audit 
requirements for Federal awards. It thereby gives regulatory effect for 
the USDA to the OMB guidance, as supplemented by this part.



Sec.  400.2  Conflict of interest.

    (a) Each USDA awarding agency must establish conflict of interest 
policies for its Federal awards.
    (b) Non-Federal entities must disclose in writing any potential 
conflicts of interest to the USDA awarding agency or pass-through 
entity.
    (1) The non-Federal entity must maintain written standards of 
conduct covering conflicts of interest and governing the performance of 
its employees in the selection, award and administration of Federal 
awards. No employee, officer or agent may participate in the selection, 
award, or administration of a Federal award if he or she has a real or 
apparent conflict of interest. Such a conflict of interest would arise 
when the employee, officer, or agent, any member of his or her immediate 
family, his or her partner, or an organization which employs or is about 
to employ any of the parties indicated herein, has a financial or other 
interest in or a tangible personal benefit from a non-Federal entity 
considered for a Federal award. The non-Federal entity may set standards 
for situations in which the financial interest is not substantial or the 
gift is an unsolicited item of nominal value. The standards of conduct 
must provide for disciplinary actions to be applied for violations of 
such standards by officers, employees, or agents of the non-Federal 
entity.
    (2) If the non-Federal entity has a parent, affiliate, or subsidiary 
organization that is not a state, local government, or Indian tribe, the 
non-Federal entity must also maintain written standards of conduct 
covering organizational conflicts of interest. Organizational conflicts 
of interest means that because of the relationships with a parent 
company, affiliate, or subsidiary organization, is unable or appears to 
be unable to be impartial in conducting a Federal award action involving 
a related organization.

                        PARTS 401	414 [RESERVED]



PART 415_GENERAL PROGRAM ADMINISTRATIVE REGULATIONS--Table of Contents



              Subpart A_Application for Federal Assistance

Sec.
415.1 Competition in the awarding of discretionary grants and 
          cooperative agreements.

                         Subpart B_Miscellaneous

415.2 Acknowledgement of Support on Publications and Audiovisuals.

Subpart C_Intergovernmental Review of Department of Agriculture Programs 
                             and Activities

415.3 Purpose.
415.4 Definitions.
415.5 Applicability.
415.6 Secretary's general responsibilities.
415.7 Federal interagency coordination.
415.8 State selection of programs and activities.
415.9 Communication with State and local elected officials.
415.10 State comments on proposed Federal financial assistance and 
          direct Federal development.
415.11 Processing comments.
415.12 Accommodation of intergovernmental concerns.
415.13 Interstate situations.
415.14 Simplification, consolidation, or substitution of State plans.
415.15 Waivers.

    Authority: 5 U.S.C. 301.

    Source: 79 FR 75982, Dec. 19, 2014, unless otherwise noted.

[[Page 244]]



              Subpart A_Application for Federal Assistance



Sec.  415.1  Competition in the awarding of discretionary grants and 
cooperative agreements.

    (a) Standards for competition. Except as provided in paragraph (d) 
of this section, awarding agencies shall enter into discretionary grants 
and cooperative agreements only after competition. An awarding agency's 
competitive award process shall adhere to the following standards:
    (1) Potential applicants must be invited to submit proposals through 
publications such as the Federal Register, OMB-designated governmentwide 
Web site as described in 2 CFR 200.203, professional trade journals, 
agency or program handbooks, the Catalog of Federal Domestic Assistance, 
or any other appropriate means of solicitation. In so doing, awarding 
agencies should consider the broadest dissemination of project 
solicitations in order to reach the highest number of potential 
applicants.
    (2) Proposals are to be evaluated objectively by independent 
reviewers in accordance with written criteria set forth by the awarding 
agency. Reviewers should make written comments, as appropriate, on each 
application. Independent reviewers may be from the private sector, 
another agency, or within the awarding agency, as long as they do not 
include anyone who has approval authority for the applications being 
reviewed or anyone who might appear to have a conflict of interest in 
the role of reviewer of applications. A conflict of interest might arise 
when the reviewer or the reviewer's immediate family members have been 
associated with the applicant or applicant organization within the past 
two years as an owner, partner, officer, director, employee, or 
consultant; has any financial interest in the applicant or applicant 
organization; or is negotiating for, or has any arrangement, concerning 
prospective employment.
    (3) An unsolicited application, which is not unique and innovative, 
shall be competed under the project solicitation it comes closest to 
fitting. Awarding agency officials will determine the solicitation under 
which the application is to be evaluated. When the awarding agency 
official decides that the unsolicited application does not fall under a 
recent, current, or planned solicitation, a noncompetitive award may be 
made, if appropriate to do so under the criteria of this section. 
Otherwise, the application should be returned to the applicant.
    (b) Project solicitations. A project solicitation by the awarding 
agency shall include or reference the following, as appropriate:
    (1) A description of the eligible activities which the awarding 
agency proposes to support and the program priorities;
    (2) Eligible applicants;
    (3) The dates and amounts of funds expected to be available for 
awards;
    (4) Evaluation criteria and weights, if appropriate, assigned to 
each;
    (5) Methods for evaluating and ranking applications;
    (6) Name and address where proposals should be mailed or emailed and 
submission deadline(s);
    (7) Any required forms and how to obtain them;
    (8) Applicable cost principles and administrative requirements;
    (9) Type of funding instrument intended to be used (grant or 
cooperative agreement); and
    (10) The Catalog of Federal Domestic Assistance number and title.
    (c) Approval of applications. The final decision to award is at the 
discretion of the awarding/approving official in each agency. The 
awarding/approving official shall consider the ranking, comments, and 
recommendations from the independent review group, and any other 
pertinent information before deciding which applications to approve and 
their order of approval. Any appeals by applicants regarding the award 
decision shall be handled by the awarding agency using existing agency 
appeal procedures or good administrative practice and sound business 
judgment.
    (d) Exceptions. The awarding/approving official may make a 
determination in writing that competition is not deemed appropriate for 
a particular transaction. Such determination shall be limited to 
transactions where it can

[[Page 245]]

be adequately justified that a noncompetitive award is in the best 
interest of the Government and necessary to the accomplishment of the 
goals of the program. Reasons for considering noncompetitive awards may 
include, but are not necessarily limited to, the following:
    (1) Nonmonetary awards of property or services;
    (2) Awards of less than $75,000;
    (3) Awards to fund continuing work already started under a previous 
award;
    (4) Awards which cannot be delayed due to an emergency or a 
substantial danger to health or safety;
    (5) Awards when it is impracticable to secure competition; or
    (6) Awards to fund unique and innovative unsolicited applications.



                         Subpart B_Miscellaneous



Sec.  415.2  Acknowledgement of USDA Support on Publications and
Audiovisuals.

    (a) Definitions. (1) ``Audiovisual'' means a product containing 
visual imagery or sound or both. Examples of audiovisuals are motion 
pictures, live or prerecorded radio or television programs, slide shows, 
filmstrips, audio recordings, and multimedia presentations.
    (2) ``Production of an audiovisual'' means any of the steps that 
lead to a finished audiovisual, including design, layout, script-
writing, filming, editing, fabrication, sound recording or taping. The 
term does not include the placing of captions for the hearing impaired 
on films or videotapes not originally produced for use with the hearing 
impaired.
    (3) ``Publication'' means a published book, periodical, pamphlet, 
brochure, flier, or similar item. It does not include any audiovisuals.
    (b) Publications. Recipients shall have an acknowledgement of USDA 
awarding agency support placed on any publications written or published 
with grant support and, if feasible, on any publication reporting the 
results of, or describing, a grant-supported activity.
    (c) Audiovisuals. Recipients shall have an acknowledgement of USDA 
awarding agency support placed on any audiovisual which is produced with 
grant support and which has a direct production cost to the recipient of 
over $5,000. Unless the other provisions of the grant award make it 
apply, this requirement does not apply to:
    (1) Audiovisuals produced as research instruments or for documenting 
experimentation or findings and not intended for presentation or 
distribution to the general public.
    (2) [Reserved]
    (d) Waivers. USDA awarding agencies may waive any requirement of 
this section.



Subpart C_Intergovernmental Review of Department of Agriculture Programs 
                             and Activities



Sec.  415.3  Purpose.

    (a) The regulations in this part implement Executive Order 12372, 
``Intergovernmental Review of Federal Programs'', issued July 14, 1982, 
and amended on April 8, 1983. These regulations also implement 
applicable provisions of section 401 of the Intergovernmental 
Cooperation Act of 1968 and section 204 of the Demonstration Cities and 
Metropolitan Development Act of 1966.
    (b) These regulations are intended to foster an intergovernmental 
partnership and a strengthened Federalism by relying on State processes 
and on State, areawide, regional and local coordination for review of 
proposed Federal financial assistance and direct Federal development.
    (c) The regulations are intended to aid the internal management of 
the Department, and are not intended to create any right or benefit 
enforceable at law by a party against the Department or its officers.



Sec.  415.4  Definitions.

    As used in this part, the following definitions apply:
    Department means the U.S. Department of Agriculture.
    Order means Executive Order 12372, issued July 14, 1982, and amended 
April 8, 1983, and titled Intergovernmental Review of Federal Programs.

[[Page 246]]

    Secretary means the Secretary of the U.S. Department of Agriculture 
or an official or employee of the Department acting for the Secretary 
under a delegation of authority.
    State means any of the 50 states, the District of Columbia, the 
Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana 
Islands, Guam, American Samoa, and the U.S. Virgin Islands.



Sec.  415.5  Applicability.

    The Secretary publishes in the Federal Register a list of the 
Department's programs and activities that are subject to these 
regulations and identifies which of these are subject to the 
requirements of section 204 of the Demonstration Cities and Metropolitan 
Development Act.



Sec.  415.6  Secretary's general responsibilities.

    (a) The Secretary provides opportunities for consultation by elected 
officials of those State and local governments that would provide the 
non-Federal funds for, or that would be directly affected by, proposed 
Federal financial assistance from, or direct Federal development by, the 
Department.
    (b) If a State adopts a process under the Order to review and 
coordinate proposed Federal financial assistance and direct Federal 
development, the Secretary, to the extent permitted by law:
    (1) Uses the State process to determine official views of State and 
local elected officials;
    (2) Communicates with State and local elected officials as early in 
a program planning cycle as is reasonably feasible to explain specific 
plans and actions;
    (3) Makes efforts to accommodate State and local elected officials' 
concerns with proposed Federal financial assistance and direct Federal 
development that are communicated through the State process;
    (4) Allows the States to simplify and consolidate existing Federally 
required State plan submissions;
    (5) Where State planning and budgeting systems are sufficient and 
where permitted by law, encourages the substitution of State plans for 
Federally required State plans;
    (6) Seeks the coordination of views of affected State and local 
elected officials in one State with those of another State when proposed 
Federal financial assistance or direct Federal development has an impact 
on interstate metropolitan urban centers or other interstate areas; and
    (7) Supports State and local governments by discouraging the 
reauthorization or creation of any planning organization which is 
Federally-funded, which has a limited purpose, and which is not 
adequately representative of, or accountable to, State or local elected 
officials.



Sec.  415.7  Federal interagency coordination.

    The Secretary, to the extent practicable, consults with and seeks 
advice from all other substantially affected Federal departments and 
agencies in an effort to assure full coordination between such agencies 
and the Department regarding programs and activities covered under these 
regulations.



Sec.  415.8  State selection of programs and activities.

    (a) A State may select any program or activity published in the 
Federal Register in accordance with Sec.  415.5 for intergovernmental 
review under these regulations. Each State, before selecting programs 
and activities, shall consult with local elected officials.
    (b) Each State that adopts a process shall notify the secretary of 
the Department's programs and activities selected for that process.
    (c) A State may notify the Secretary of changes in its selections at 
any time. For each change, the State shall submit to the Secretary an 
assurance that the State has consulted with elected local officials 
regarding the change. The Department may establish deadlines by which 
States are required to inform the Secretary of changes in their program 
selections.
    (d) The Secretary uses a State's process as soon as feasible, 
depending on individual programs and activities, after the Secretary is 
notified of its selections.

[[Page 247]]



Sec.  415.9  Communication with State and local elected officials.

    (a) The Secretary provides notice to directly affected State, 
areawide, regional, and local entities in a State of proposed Federal 
financial assistance or direct Federal development if:
    (1) The State has not adopted a process under the Order; or
    (2) The assistance or development involves a program or an activity 
that is not covered under the State process.
    (b) This notice may be made by publication in the Federal Register 
or other appropriate means, which the Department in its discretion deems 
appropriate.
    (c) In order to facilitate communication with State and local 
officials the Secretary has established an office within the Department 
to receive all communications pertinent to this Order. All 
communications should be sent to the Office of the Chief Financial 
Officer, Room 143-W, 1400 Independence Avenue SW., Washington, DC 20250, 
Attention: E.O. 12372.



Sec.  415.10  State comments on proposed Federal financial assistance 
and direct Federal development.

    (a) Except in unusual circumstances, the Secretary gives State 
processes or directly affected State, areawide, regional, and local 
officials and entities:
    (1) At least 30 days from the date established by the Secretary to 
comment on proposed Federal financial assistance in the form of 
noncompeting continuation awards; and
    (2) At least 60 days from the date established by the Secretary to 
comment on proposed direct Federal development or Federal financial 
assistance other than noncompeting continuation awards.
    (b) This section also applies to comments in cases in which the 
review, coordination and communication with the Department have been 
delegated.
    (c) Applicants for programs and activities subject to section 204 of 
the Demonstration Cities and Metropolitan Development Act shall allow 
areawide agencies a 60-day opportunity for review and comment.



Sec.  415.11  Processing comments.

    (a) The Secretary follows the procedures in Sec.  415.12 if:
    (1) A State office or official is designated to act as a single 
point of contact between a State process and all Federal agencies; and
    (2) That office or official transmits a State process recommendation 
for a program selected under Sec.  415.8.
    (b)(1) The single point of contact is not obligated to transmit 
comments from State, areawide, regional or local officials and entities 
where there is no State process recommendation.
    (2) If a State process recommendation is transmitted by a single 
point of contact, all comments from State, areawide, regional and local 
officials and entities that differ from it must also be transmitted.
    (c) If a State has not established a process, or is unable to submit 
a State process recommendation, State, areawide, regional and local 
officials and entities may submit comments either to the applicant or to 
the Department.
    (d) If a program or activity is not selected by a State process, 
State, areawide, regional and local officials and entities may submit 
comments either to the applicant or to the Department. In addition, if a 
State process recommendation for a non-selected program or activity is 
transmitted to the Department by the single point of contact, the 
Secretary follows the procedures of Sec.  415.12.
    (e) The Secretary considers comments which do not constitute a State 
process recommendation submitted under these regulations and for which 
the Secretary is not required to apply the procedures of Sec.  415.12, 
when such comments are provided by a single point of contact by the 
applicant, or directly to the Department by a commenting party.



Sec.  415.12  Accommodation of intergovernmental concerns.

    (a) If a State process provides a State process recommendation to 
the Department through its single point of contact, the Secretary 
either--
    (1) Accepts the recommendations;
    (2) Reaches a mutually agreeable solution with the State process; or

[[Page 248]]

    (3) Provides the single point of contact with a written explanation 
of the decision, as the Secretary in his or her discretion deems 
appropriate. The Secretary may also supplement the written explanation 
by also providing the explanation to the single point of contact by 
telephone, other telecommunication, or other means.
    (b) In any explanation under paragraph (a)(3) of this section, the 
Secretary informs the single point of contact that:
    (1) The Department will not implement its decision for at least ten 
days after the single point of contact receives the explanation; or
    (2) The Secretary has reviewed the decision and determined that, 
because of unusual circumstances, the waiting period of at least ten 
days is not feasible.
    (c) For purposes of computing the waiting period under paragraph 
(b)(1) of this section, a single point of contact is presumed to have 
received written notification five days after the date of mailing of 
such notification.



Sec.  415.13  Interstate situations.

    (a) The Secretary is responsible for:
    (1) Identifying proposed Federal financial assistance and direct 
Federal development that have an impact on interstate areas;
    (2) Notifying appropriate officials in States which have adopted a 
process and which selected the Department's program or activity;
    (3) Making efforts to identify and notify the affected State, 
areawide, regional and local officials and entities in those States that 
have not adopted a process under the Order or do not select the 
Department's program or activity; and
    (4) Responding, pursuant to Sec.  415.12, if the Secretary receives 
a recommendation from a designated areawide agency transmitted by a 
single point of contact, in cases in which the review, coordination, and 
communication with the Department have been delegated.
    (b) The Secretary uses the procedures in Sec.  415.12 if a State 
process provides a State process recommendation to the Department 
through a single point of contact.



Sec.  415.14  Simplification, consolidation, or substitution of State plans.

    (a) As used in this section:
    (1) Simplify means that a State may develop its own format, choose 
its own submission date, and select the planning period for a State 
plan.
    (2) Consolidate means that a State may meet statutory and regulatory 
requirements by combining two or more plans into one document and that 
the State can select the format, submission date, and the planning 
period for the consolidated plan.
    (3) Substitute means that a State may use a plan or other document 
that it has developed for its own purposes to meet Federal requirements.
    (b) If not inconsistent with law, a State may decide to try to 
simplify, consolidate, or substitute Federally required State plans 
without prior approval by the Secretary.
    (c) The Secretary reviews each State plan a State has simplified, 
consolidated or substituted and accepts the plan only if its contents 
meet Federal requirements.



Sec.  415.15  Waivers.

    In an emergency, the Secretary may waive any provision in Subpart 
C--Intergovernmental Review of Department of Agriculture Programs and 
Activities, 2 CFR 415.3 to 415.14.



PART 416_GENERAL PROGRAM ADMINISTRATIVE REGULATIONS FOR GRANTS AND 
COOPERATIVE AGREEMENTS TO STATE AND LOCAL GOVERNMENTS--Table of Contents



    Authority: 5 U.S.C. 301.

    Source: 79 FR 75985, Dec. 19, 2014, unless otherwise noted.



Sec.  416.1  Special Procurement Provisions.

    (a) In order to ensure objective contractor performance and 
eliminate unfair competitive advantage, a prospective contractor that 
develops or drafts specifications, requirements, statements of work, 
invitations for bids, request for proposals, contract term and 
conditions or other documents for use

[[Page 249]]

by a State in conducting a procurement under the USDA entitlement 
programs specified in 2 CFR 200.101(e)(4) through (6) shall be excluded 
from competing for such procurements. Such prospective contractors are 
ineligible for contract awards resulting from such procurements 
regardless of the procurement method used. However, prospective 
contractors may provide States with specification information related to 
a State procurement under the USDA entitlement programs specified in 2 
CFR 200.101(e)(4) through (6) and still compete for the procurement if 
the State, and not the prospective contractor, develops or drafts the 
specifications, requirements, statements of work, invitations for bid, 
and/or requests for proposals used to conduct the procurement.
    (b) Procurements by States under USDA entitlement programs specified 
in 2 CFR 200.101(e)(4) through (6) shall be conducted in a manner that 
prohibits the use of statutorily or administratively imposed in-State or 
local geographic preferences except as provided for in 2 CFR 200.319(b).



PART 417_NONPROCUREMENT DEBARMENT AND SUSPENSION--Table of Contents



Sec.
417.10 What does this part do?
417.20 Does this part apply to me?
417.30 What policies and procedures must I follow?

                            Subpart A_General

417.137 Who in the USDA may grant an exception to let an excluded person 
          participate in a covered transaction?

                     Subpart B_Covered Transactions

417.210 Which nonprocurement transactions are covered transactions?
417.215 Which nonprocurement transactions, in addition to those listed 
          in 2 CFR 180.215, are not covered transactions?
417.220 Are any procurement contracts included as covered transactions?
417.221 How would the exclusions from coverage for the USDA's foreign 
          assistance programs apply?
417.222 How would the exclusions from coverage for the USDA's export 
          credit guarantee and direct credit programs apply?

    Subpart C_Responsibilities of Participants Regarding Transactions

417.332 What methods must I use to pass down requirements to 
          participants in lower-tier covered transactions with whom I 
          intend to do business?

   Subpart D_Responsibilities of Department of Agriculture Officials 
                         Regarding Transactions

417.437 What method do I use to communicate to a participant the 
          requirements described in the OMB guidance at 2 CFR 180.435?

Subparts E-F [Reserved]

                          Subpart G_Suspension

417.755 When will I know whether the USDA suspension is continued or 
          terminated?

                           Subpart H_Debarment

417.800 What are the USDA causes for debarment?
417.865 How long may my debarment last?
417.870 When do I know if the USDA debarring official debars me?

                          Subpart I_Definitions

417.930 Debarring official (USDA supplement to governmentwide definition 
          at 2 CFR 180.930).
417.1010 Suspending official (USDA supplement to governmentwide 
          definition at 2 CFR 180.1010).

Subpart J [Reserved]

    Authority: 5 U.S.C. 301; Pub. L. 101-576, 104 Stat. 2838; Sec. 2455, 
Pub. L. 103-355, 108 Stat. 3327 (31 U.S.C. 6101 note); 7 U.S.C. 2209j; 
E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O. 12698 (3 CFR, Comp., p. 
235); 7 CFR 2.28.

    Source: 75 FR 29185, May 25, 2010, unless otherwise noted.



Sec.  417.10  What does this part do?

    This part adopts the OMB guidance in subparts A through I of 2 CFR 
part 180, as supplemented by this part, as the USDA policies and 
procedures for nonprocurement debarment and suspension. It thereby gives 
regulatory effect for the USDA to the OMB guidance, as supplemented by 
this part. This part satisfies the requirements in section 3 of 
Executive Order 12549, ``Debarment and Suspension'' (3 CFR 1986 Comp., 
p. 189), Executive Order 12689, ``Debarment and Suspension'' (3

[[Page 250]]

CFR 1989 Comp., p. 235) and 31 U.S.C. 6101 note (Section 2455, Pub. L. 
103-355, 108 Stat. 3327).



Sec.  417.20  Does this part apply to me?

    Through this part, pertinent portions of the OMB guidance in 
subparts A through I of 2 CFR part 180 (see table at 2 CFR 180.100(b)) 
apply to you if you are a:
    (a) Participant or principal in a ``covered transaction'' (see 
subpart B of 2 CFR part 180 and the definition of ``nonprocurement 
transaction'' at 2 CFR 180.970, as supplemented by Sec. Sec.  417.215 
and 417.220 of this part);
    (b) Respondent in a USDA debarment and suspension action;
    (c) USDA debarment or suspension official; or
    (d) USDA grants officer, agreements officer, or other official 
authorized to enter into any type of nonprocurement transaction that is 
a covered transaction.



Sec.  417.30  What policies and procedures must I follow?

    The USDA policies and procedures that you must follow are the 
policies and procedures specified in this regulation and each applicable 
section of the OMB guidance in subparts A through I of 2 CFR part 180, 
as that section is supplemented by the section in this part with the 
same section number. The contracts that are covered transactions, for 
example, are specified by section 220 of the OMB guidance (i.e., 2 CFR 
180.220) as supplemented by section 220 in this part (i.e., Sec.  
417.220). For any section of OMB guidance in subparts A through I of 2 
CFR part 180 that has no corresponding section in this part, USDA 
policies and procedures are those in the OMB guidance.



                            Subpart A_General



Sec.  417.137  Who in the USDA may grant an exception to let an excluded 
person participate in a covered transaction?

    Within the USDA, a debarring official may grant an exception to let 
an excluded person participate in a covered transaction as provided 
under 2 CFR 180.135.



                     Subpart B_Covered Transactions



Sec.  417.210  Which nonprocurement transactions are covered transactions?

    All nonprocurement transactions, as defined in Sec.  417.970, are 
covered transactions unless listed in Sec.  417.215.



Sec.  417.215  Which nonprocurement transactions, in addition to those
listed in 2 CFR 180.215, are not covered transactions?

    (a) Transactions not covered. In addition to the nonprocurement 
transactions listed in 2 CFR 180.215, the following nonprocurement 
transactions are not covered transactions:
    (1) An entitlement or mandatory award required by a statute, 
including a lower tier entitlement or mandatory award that is required 
by a statute.
    (2) The export or substitution of Federal timber governed by the 
Forest Resources Conservation and Shortage Relief Act of 1990, 16 U.S.C. 
620 et seq. (The ``Export Act''), which prevents a debarred person from 
entering into any contract for the purchase of unprocessed timber from 
Federal lands. See 16 U.S.C. 620d(d)(1)(A).
    (3) The receipt of licenses, permits, certificates, and 
indemnification under regulatory programs conducted in the interest of 
public health and safety, and animal and plant health and safety.
    (4) The receipt of official grading and inspection services, animal 
damage control services, public health and safety inspection services, 
and animal and plant health and safety inspection services.
    (5) If the person is a State or local government, the provision of 
official grading and inspection services, animal damage control 
services, animal and plant health and safety inspection services.
    (6) The receipt of licenses, permits, or certificates under 
regulatory programs conducted in the interest of ensuring fair trade 
practices.
    (7) Permits, licenses, exchanges and other acquisitions of real 
property, rights of way, and easements under natural resource management 
programs.

[[Page 251]]

    (8) Any transaction to be implemented outside the United States that 
is below the primary tier covered transaction in a USDA foreign 
assistance program.
    (9) Any transaction to be implemented outside the United States that 
is below the primary tier covered transaction in a USDA export credit 
guarantee program or direct credit program.
    (b) Limited requirement to check EPLS. Notwithstanding the fact that 
transactions to be implemented outside the United States that are below 
the primary tier covered transaction in a USDA foreign assistance 
program, export credit guarantee program or direct credit program are 
not covered transactions, pursuant to paragraphs (a)(8) and (9) of this 
section, primary tier participants under these programs must check the 
EPLS prior to entering into any transaction with a person at the first 
lower tier and shall not enter into such a transaction if the person is 
excluded or disqualified under the EPLS.
    (c) Exception. A cause for suspension or debarment under Sec.  
180.700 or Sec.  180.800 of this title (as supplemented by Sec.  
417.800) may be based on the actions of a person with respect to a 
procurement or nonprocurement transaction under a USDA program even if 
such transaction has been excluded from covered transaction status by 
this section or Sec.  417.220.



Sec.  417.220  Are any procurement contracts included as covered 
transactions?

    (a) Covered transactions under this part:
    (1) Do not include any procurement contracts awarded directly by a 
Federal agency; but
    (2) Do include some procurement contracts awarded by non-Federal 
participants in nonprocurement covered transactions (see appendix to 
this part).
    (b) Specifically, a contract for goods or services is a covered 
transaction if any of the following applies:
    (1) The contract is awarded by a participant in a nonprocurement 
transaction that is covered under Sec.  417.210, and the amount of the 
contract is expected to equal or exceed $25,000.
    (2) The contract requires the consent of a USDA official. In that 
case, the contract, regardless of the amount, always is a covered 
transaction, and it does not matter who awarded it. For example, it 
could be a subcontract awarded by a contractor at a tier below a 
nonprocurement transaction, as shown in the appendix to this part.
    (3) The contract is for federally-required audit services.
    (c) Any procurement contract to be implemented outside the United 
States that is below the primary tier covered transaction in a USDA 
foreign assistance program is not a covered transaction, notwithstanding 
the provisions in paragraphs (a) and (b) of this section.
    (d) Any procurement contract to be implemented outside the United 
States that is below the primary tier covered transaction in a USDA 
export credit guarantee program or direct credit program is not a 
covered transaction, notwithstanding the provisions in paragraphs (a) 
and (b) of this section.
    (e) Notwithstanding the fact that procurement contracts to be 
implemented outside the United States that are below the primary tier 
covered transaction in a USDA foreign assistance program, export credit 
guarantee program or direct credit program are not covered transactions, 
pursuant to paragraphs (c) and (d) of this section, primary tier 
participants under these programs must check the EPLS prior to entering 
into any procurement contract that is expected to equal or exceed 
$25,000 with a person at the first lower tier and shall not enter into 
such a procurement contract if the person is excluded or disqualified 
under the EPLS.



Sec.  417.221  How would the exclusions from coverage for the USDA's 
foreign assistance programs apply?

    The primary tier covered transaction would be the food aid grant 
agreement entered into between USDA and a program participant, such as a 
U.S. private voluntary organization. USDA would have to check the EPLS 
before entering into the food aid grant agreement to ensure that the 
U.S. private voluntary organization that would be

[[Page 252]]

the primary tier participant is not excluded or disqualified. A 
transaction at the first lower tier might be a subrecipient agreement 
between the U.S. private voluntary organization and a foreign 
subrecipient of the commodities that were provided under the food aid 
grant agreement. Pursuant to Sec.  417.215(a)(8), this nonprocurement 
transaction would not be a covered transaction. In addition, a 
transaction at the first lower tier might be a procurement contract 
entered into between the U.S. private voluntary organization and a 
foreign entity to provide supplies or services that are expected to 
equal or exceed $25,000 in value and that are needed by such 
organization to implement activities under the food aid grant agreement. 
Pursuant to Sec.  417.220(c), this procurement contract would not be a 
covered transaction. However, pursuant to Sec. Sec.  417.215(b) and 
417.220(e), the U.S. private voluntary organization would be prohibited 
from entering into, at the first lower tier, an agreement with a 
subrecipient or a procurement contract that is expected to equal or 
exceed $25,000 with an entity that appears on the EPLS as excluded or 
disqualified.



Sec.  417.222  How would the exclusions from coverage for USDA's export 
credit guarantee and direct credit programs apply?

    (a) Export credit guarantee program. In the case of the export 
credit guarantee program, the primary tier covered transaction would be 
the guarantee issued by the USDA to a U.S. exporter. The U.S. exporter 
usually assigns the guarantee to a U.S. financial institution, and this 
would create another primary tier covered transaction between USDA and 
the U.S. financial institution. USDA would have to check the EPLS before 
issuing a guarantee or accepting a guarantee assignment to ensure that 
the U.S. exporter or financial institution that would be the primary 
tier participant is not excluded or disqualified. A transaction at the 
first lower tier under the export credit guarantee program might be a 
payment obligation of a foreign bank to the U.S. exporter to pay on 
behalf of the importer for the exported U.S. commodities that are 
covered by the guarantee. Similarly, a transaction at the first lower 
tier might be a payment obligation of a foreign bank under an 
instrument, such as a loan agreement or letter of credit, to the U.S. 
financial institution assigned the guarantee, which has paid the 
exporter for the exported U.S. commodities and, in so doing, issued a 
loan to the foreign bank, which the foreign bank is obligated to repay 
on deferred payment terms. Pursuant to Sec.  417.215(a)(9), these 
nonprocurement transactions would not be covered transactions. In 
addition, a transaction at the first lower tier under the export credit 
guarantee program might be a procurement contract (i.e., a contract for 
the purchase and sale of goods) that is expected to equal or exceed 
$25,000 entered into between the U.S. exporter and the foreign importer 
for the U.S. commodities, the payment for which is covered by the 
guarantee. Pursuant to Sec.  417.220(d), this procurement contract would 
not be a covered transaction. However, pursuant to Sec. Sec.  417.215(b) 
and 417.220(e), the U.S. exporter or U.S. financial institution would be 
prohibited from entering into, at the first lower tier, an agreement 
with an importer (or intervening purchaser) or foreign bank or a 
procurement contract that is expected to equal or exceed $25,000 with an 
entity that appears on the EPLS as excluded or disqualified.
    (b) Direct credit program. In the case of the direct credit program, 
the primary tier covered transaction would be the financing agreement 
between the USDA and the U.S. exporter. USDA purchases the exporter's 
account receivable in a particular transaction pursuant to the financing 
agreement. On occasion, such transaction may contemplate a payment 
obligation of a U.S. or foreign bank to make the required payments. USDA 
would have to check the EPLS before entering into a financing agreement 
or accepting such a payor to ensure that the U.S. exporter or the bank, 
if any, that would be the primary tier participant is not excluded or 
disqualified. A transaction at the first lower tier might be a payment 
obligation of the importer to pay the exporter for the exported U.S. 
commodities that are covered by the financing agreement. Pursuant to

[[Page 253]]

Sec.  417.215(a)(9), this nonprocurement transaction would not be a 
covered transaction. In addition, a transaction at the first lower tier 
might be a procurement contract that is expected to equal or exceed 
$25,000 entered into between the U.S. exporter and the foreign importer 
for the U.S. commodities, the payment for which is covered by the 
financing agreement. Pursuant to Sec.  417.220(d), this procurement 
contract would not be a covered transaction. However, pursuant to 
Sec. Sec.  417.215(b) and 417.220(e), the U.S. exporter would be 
prohibited from entering into, at the first lower tier, an agreement 
with an importer (or intervening purchaser) or bank, or a procurement 
contract that is expected to equal or exceed $25,000 with an entity that 
appears on the EPLS as excluded or disqualified.



    Subpart C_Responsibilities of Participants Regarding Transactions



Sec.  417.332  What methods must I use to pass down requirements to 
participants in lower tier covered transactions with whom I intend 
to do business?

    You as a participant must include a term or condition in lower tier 
covered transactions requiring lower tier participants to comply with 
subpart C of the OMB guidance in 2 CFR part 180, as supplemented by 
subpart C of this part.



   Subpart D_Responsibilities of Department of Agriculture Officials 
                         Regarding Transactions



Sec.  417.437  What method do I use to communicate to a participant the 
requirements described in the OMB guidance at 2 CFR 180.435?

    To communicate to a participant the requirements described in 2 CFR 
180.435, you must include a term or condition in the transaction that 
requires the participant's compliance with subpart C of 2 CFR part 180, 
as supplemented by subpart C of this part, and requires the participant 
to include a similar term or condition in lower tier covered 
transactions.

Subparts E-F [Reserved]



                          Subpart G_Suspension



Sec.  417.755  When will I know whether the USDA suspension is 
continued or terminated?

    The suspending official must make a written decision whether to 
continue, modify, or terminate your suspension within 45 days of closing 
the official record. The official record closes upon the suspending 
official's receipt of final submissions, information and findings of 
fact, if any. The suspending official may extend that period for good 
cause. However, the record will remain open for the full 30 days, as 
called for in Sec.  180.725, even when you make a submission before the 
30 days expire.



                           Subpart H_Debarment



Sec.  417.800  What are the USDA causes for debarment?

    A Federal agency may debar a person for--
    (a) Conviction of or civil judgment for--
    (1) Commission of fraud or a criminal offense in connection with 
obtaining, attempting to obtain, or performing a public or private 
agreement or transaction;
    (2) Violation of Federal or State antitrust statutes, including 
those proscribing price fixing between competitors, allocation of 
customers between competitors, and bid rigging;
    (3) Commission of embezzlement, theft, forgery, bribery, 
falsification or destruction of records, making false statements, tax 
evasion, receiving stolen property, making false claims, or obstruction 
of justice; or
    (4) Commission of any other offense indicating a lack of business 
integrity or business honesty that seriously and directly affects your 
present responsibility;
    (b) Violation of the terms of a public agreement or transaction so 
serious as to affect the integrity of an agency program, such as--
    (1) A willful failure to perform in accordance with the terms of one 
or more public agreements or transactions;
    (2) A history of failure to perform or of unsatisfactory performance 
of one or more public agreements or transactions; or

[[Page 254]]

    (3) A willful violation of a statutory or regulatory provision or 
requirement applicable to a public agreement or transaction;
    (c) Any of the following causes:
    (1) A nonprocurement debarment by any Federal agency taken before 
March 1, 1989, or a procurement debarment by any Federal agency taken 
pursuant to 48 CFR part 9, subpart 9.4, before August 25, 1995;
    (2) Knowingly doing business with an ineligible person, except as 
permitted under Sec.  180.135;
    (3) Failure to pay a single substantial debt, or a number of 
outstanding debts (including disallowed costs and overpayments, but not 
including sums owed the Federal Government under the Internal Revenue 
Code) owed to any Federal agency or instrumentality, provided the debt 
is uncontested by the debtor or, if contested, provided that the 
debtor's legal and administrative remedies have been exhausted;
    (4) Violation of a material provision of a voluntary exclusion 
agreement entered into under Sec.  180.640 or of any settlement of a 
debarment or suspension action; or
    (5) Violation of the provisions of the Drug-Free Workplace Act of 
1988 (41 U.S.C. 701); or
    (d) Any other cause of so serious or compelling a nature that it 
affects your present responsibility.



Sec.  417.865  How long may my debarment last?

    (a) If the debarring official decides to debar you, your period of 
debarment will be based on the seriousness of the cause(s) upon which 
your debarment is based. Generally, debarment should not exceed 3 years. 
However, if circumstances warrant, the debarring official may impose a 
longer period of debarment.
    (b) In determining the period of debarment, the debarring official 
may consider the factors in 2 CFR 180.860. If a suspension has preceded 
your debarment, the debarring official must consider the time you were 
suspended.
    (c) If the debarment is for a violation of the provisions of the 
Drug-Free Workplace Act of 1988, your period of debarment may not exceed 
5 years.
    (d) The Secretary shall permanently debar from participation in USDA 
programs any individual, organization, corporation, or other entity 
convicted of a felony for knowingly defrauding the United States in 
connection with any program administered by USDA.
    (1) Reduction. If the Secretary considers it appropriate s/he may 
reduce a debarment under this subsection to a period of not less than 10 
years.
    (2) Exemption. A debarment under this subsection shall not apply 
with regard to participation in USDA domestic food assistance programs. 
For purposes of this paragraph, participation in a domestic food 
assistance program does not include acting as an authorized retail food 
store in the Supplemental Nutrition Assistance Program (SNAP), the 
Special Supplemental Nutrition Assistance Program for Women, Infants, 
and Children (WIC), or as a nonbeneficiary entity in any of the domestic 
food assistance programs. The programs include:
    (i) Special Nutrition Assistance Program, 7 U.S.C. 2011, et seq.;
    (ii) Food Distribution Program on Indian Reservations, 7 U.S.C. 
2013(b);
    (iii) National School Lunch Program, 42 U.S.C. 1751, et seq.;
    (iv) Summer Food Service Program for Children, 42 U.S.C. 1761; Child 
and Adult Care Food Program, 42 U.S.C. 1766;
    (v) Special Milk Program for Children, 42 U.S.C. 1772; School 
Breakfast Program, 42 U.S.C. 1773;
    (vi) Special Supplemental Nutrition Program for Women, Infants, and 
Children, 42 U.S.C. 1786;
    (vii) Commodity Supplemental Food Program, 42 U.S.C. 612c note;
    (viii) WIC Farmers Market Nutrition Program, 42 U.S.C. 1786;
    (ix) Senior Farmers' Market Nutrition Program, 7 U.S.C. 3007; and
    (x) Emergency Food Assistance Program, 7 U.S.C. 7501, et. seq.



Sec.  417.870  When do I know if the USDA debarring official debars me?

    (a) The debarring official must make a written decision whether to 
debar within 45 days of closing the official record. The official record 
closes upon the debarring official's receipt of final submissions, 
information and findings

[[Page 255]]

of fact, if any. The debarring official may extend that period for good 
cause. However, the record will remain open for the full 30 days, as 
called for in Sec.  180.820, even when you make a submission before the 
30 days expire.
    (b) The debarring official sends you written notice, pursuant to 
Sec.  180.615, that the official decided, either:
    (1) Not to debar you; or
    (2) To debar you. In this event, the notice:
    (i) Refers to the Notice of Proposed Debarment;
    (ii) Specifies the reasons for your debarment;
    (iii) States the period of your debarment, including the effective 
dates; and
    (iv) Advises you that your debarment is effective for covered 
transactions and contracts that are subject to the Federal Acquisition 
Regulation (48 CFR chapter 1), throughout the Executive Branch of the 
Federal Government unless an agency head or an authorized designee 
grants an exception.



                          Subpart I_Definitions



Sec.  417.930  Debarring official (USDA supplement to governmentwide 
definition at 2 CFR 180.930).

    (a) Debarring official means an agency official who is authorized to 
impose debarment. The debarring official is either:
    (1) The agency head; or
    (2) An official designated by the agency head.
    (b) The head of an organizational unit within USDA (e.g., 
Administrator, Food and Nutrition Service), who has been delegated 
authority in 7 CFR part 2 to carry out a covered transaction, is 
delegated authority to act as the debarring official in connection with 
such transaction. This authority to act as a debarring official may not 
be redelegated below the head of the organizational unit, except that, 
in the case of the Forest Service, the Chief may redelegate the 
authority to act as a debarring official to the Deputy Chief for the 
National Forest System or an Associate Deputy Chief for the National 
Forest System.



Sec.  417.1010  Suspending official (USDA supplement to 
governmentwide definition at 2 CFR 180.1010).

    (a) Suspending official means an agency official who is authorized 
to impose suspension. The suspending official is either:
    (1) The agency head; or
    (2) An official designated by the agency head.
    (b) The head of an organizational unit within USDA (e.g., 
Administrator, Food and Nutrition Service), who has been delegated 
authority in 7 CFR part 2 of this title to carry out a covered 
transaction, is delegated authority to act as the suspending official in 
connection with such transaction. This authority to act as a suspending 
official may not be redelegated below the head of the organizational 
unit, except that, in the case of the Forest Service, the Chief may 
redelegate the authority to act as a suspending official to the Deputy 
Chief for the National Forest System or an Associate Deputy Chief for 
the National Forest System.

Subpart J [Reserved]



PART 418_NEW RESTRICTIONS ON LOBBYING--Table of Contents



                            Subpart A_General

Sec.
418.100 Conditions on use of funds.
418.105 Definitions.
418.110 Certification and disclosure.

                  Subpart B_Activities by Own Employees

418.200 Agency and legislative liaison.
418.205 Professional and technical services.
418.210 Reporting.

            Subpart C_Activities by Other Than Own Employees

418.300 Professional and technical services.

                   Subpart D_Penalties and Enforcement

418.400 Penalties.
418.405 Penalty procedures.
418.410 Enforcement.

                          Subpart E_Exemptions

418.500 Secretary of Defense.

[[Page 256]]

                        Subpart F_Agency Reports

418.600 Semi-annual compilation.
418.605 Inspector General report.

Appendix A to Part 418--Certification Regarding Lobbying
Appendix B to Part 418--Disclosure Form to Report Lobbying

    Authority: 31 U.S.C. 1352; 5 U.S.C. 301.

    Source: 79 FR 75985, Dec. 19, 2014, unless otherwise noted.



                            Subpart A_General



Sec.  418.100  Conditions on use of funds.

    (a) No appropriated funds may be expended by the recipient of a 
Federal contract, grant, loan, or cooperative agreement to pay any 
person for influencing or attempting to influence an officer or employee 
of any agency, a Member of Congress, an officer or employee of Congress, 
or an employee of a Member of Congress in connection with any of the 
following covered Federal actions: the awarding of any Federal contract, 
the making of any Federal grant, the making of any Federal loan, the 
entering into of any cooperative agreement, and the extension, 
continuation, renewal, amendment, or modification of any Federal 
contract, grant, loan, or cooperative agreement.
    (b) Each person who requests or receives from an agency a Federal 
contract, grant, loan, or cooperative agreement shall file with that 
agency a certification, set forth in Appendix A, that the person has not 
made, and will not