office of the secretary, commerce pt. 14 · pdf fileoffice of the secretary, commerce pt. 14...

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Office of the Secretary, Commerce Pt. 14

§ 13.10 Accommodation of intergovern-mental concerns.

(a) If a state process provides a stateprocess recommendation to the Depart-ment through its single point of con-tact, the Secretary either:

(1) Accepts the recommendation;(2) Reaches a mutually agreeable so-

lution with the state process; or(3) Provides the single point of con-

tact with a written explanation of thedecision in such form as the Secretaryin his or her discretion deems appro-priate. The Secretary may also supple-ment the written explanation by pro-viding the explanation to the singlepoint of contact by telephone, othertelecommunication, or other means.

(b) In any explanation under para-graph (a)(3) of this section, the Sec-retary informs the single point of con-tact that:

(1) The Department will not imple-ment its decision for at least ten daysafter the single point of contact re-ceives the explanation; or

(2) The Secretary has reviewed thedecision and determined that, becauseof unusual circumstances, the waitingperiod of at least ten days is not fea-sible.

(c) For purposes of computing thewaiting period under paragraph (b)(1)of this section, a single point of con-tact is presumed to have received writ-ten notification 5 days after the date ofmailing of such notification.

§ 13.11 Obligations in interstate situa-tions.

(a) The Secretary is responsible for:(1) Identifying proposed Federal fi-

nancial assistance and direct Federaldevelopment that have an impact oninterstate areas;

(2) Notifying appropriate officialsand entities in states which haveadopted a process and which select theDepartment’s program or activity.

(3) Making efforts to identify and no-tify the affected state, areawide, re-gional, and local officials and entitiesin those states that have not adopted aprocess under the Order or do not se-lect the Department’s program or ac-tivity;

(4) Responding pursuant to § 13.10 ofthis part if the Secretary receives arecommendation from a designated

areawide agency transmitted by a sin-gle point of contact, in cases in whichthe review, coordination, and commu-nication with the Department havebeen delegated.

(b) The Secretary uses the proceduresin § 13.10 if a state process provides astate process recommendation to theDepartment through a single point ofcontact.

PART 14—UNIFORM ADMINISTRA-TIVE REQUIREMENTS FOR GRANTSAND AGREEMENTS WITH INSTITU-TIONS OF HIGHER EDUCATION,HOSPITALS, OTHER NON-PROFIT,AND COMMERCIAL ORGANIZA-TIONS

Subpart A—General

Sec.14.1 Purpose.14.2 Definitions.14.3 Effect on other issuances.14.4 Deviations.14.5 Subawards.14.6 Availability of OMB circulars.

Subpart B—Pre-Award Requirements

14.10 Purpose.14.11 Pre-award policies.14.12 Forms for applying for Federal assist-

ance.14.13 Debarment and suspension.14.14 High risk special award conditions.14.15 Metric system of measurement.14.16 Resource Conservation and Recovery

Act (RCRA).14.17 Certifications and representations.14.18 Taxpayer identification number.

Subpart C—Post-Award Requirements

FINANCIAL AND PROGRAM MANAGEMENT

14.20 Purpose of financial and program man-agement.

14.21 Standards for financial managementsystems.

14.22 Payment.14.23 Cost sharing or matching.14.24 Program income.14.25 Revision of budget and program plans.14.26 Non-Federal audits.14.27 Allowable costs.14.28 Period of availability of funds.

PROPERTY STANDARDS

14.30 Purpose of property standards.14.31 Insurance coverage.14.32 Real property.14.33 Federally-owned and exempt property.

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15 CFR Subtitle A (1–1–02 Edition)§ 14.1

14.34 Equipment.14.35 Supplies and other expendable prop-

erty.14.36 Intangible property.14.37 Property trust relationship.

PROCUREMENT STANDARDS

14.40 Purpose of procurement standards.14.41 Recipient responsibilities.14.42 Codes of conduct.14.43 Competition.14.44 Procurement procedures.14.45 Cost and price analysis.14.46 Procurement records.14.47 Contract administration.14.48 Contract provisions.

REPORTS AND RECORDS

14.50 Purpose of reports and records.14.51 Monitoring and reporting program

performance.14.52 Financial reporting.14.53 Retention and access requirements for

records.

TERMINATION AND ENFORCEMENT

14.60 Purpose of termination and enforce-ment.

14.61 Termination.14.62 Enforcement.

Subpart D—After-the-Award Requirements

14.70 Purpose.14.71 Closeout procedures.14.72 Subsequent adjustments and con-

tinuing responsibilities.14.73 Collection of amounts due.

APPENDIX A TO PART 14—CONTRACT PROVI-SIONS

AUTHORITY: 5 U.S.C. 301; OMB Circular A–110 (64 FR 54926, October 8, 1999).

SOURCE: 63 FR 47156, Sept. 4, 1998, unlessotherwise noted.

EDITORIAL NOTE: Nomenclature changes topart 14 appear at 66 FR 49828, Oct. 1, 2001.

Subpart A—General

§ 14.1 Purpose.This part establishes uniform admin-

istrative requirements for Departmentof Commerce (DoC) grants and agree-ments awarded to institutions of high-er education, hospitals, other non-prof-it, and commercial organizations. TheGrants Officer shall incorporate thispart by reference into financial assist-ance awards made to organizations towhich it will be applied. The DoC shallnot impose additional or inconsistentrequirements, except as provided in

§§ 14.4, and 14.14 or unless specificallyrequired by Federal statute or execu-tive order. This part applies to grantsand agreements awarded to foreigngovernments, organizations under thejurisdiction of foreign governments,and international organizations unlessotherwise determined by the Grants Of-ficer after coordination with the appro-priate program officials. Uniform re-quirements for State, local, and tribalgovernments are in 15 CFR part 24,Uniform Administrative Requirementsfor Grants and Cooperative Agreementsto State and Local Governments. Non-profit organizations that implementFederal programs for the States arealso subject to State requirements.

§ 14.2 Definitions.(a) Accrued expenditures means the

charges incurred by the recipient dur-ing a given period requiring the provi-sion of funds for:

(1) Goods and other tangible propertyreceived;

(2) Services performed by employees,contractors, subrecipients, and otherpayees; and

(3) Other amounts becoming owedunder programs for which no currentservices or performance is required.

(b) Accrued income means the sum of:(1) Earnings during a given period

from services performed by the recipi-ent, and goods and other tangible prop-erty delivered to purchasers; and

(2) Amounts becoming owed to therecipient for which no current servicesor performance is required by the re-cipient.

(c) Acquisition cost of equipment meansthe net invoice price of the equipment,including the cost of modifications, at-tachments, accessories, or auxiliaryapparatus necessary to make the prop-erty usable for the purpose for which itwas acquired. Other charges, such asthe cost of installation, transportation,taxes, duty or protective in-transit in-surance, shall be included or excludedfrom the unit acquisition cost in ac-cordance with the recipient’s regularaccounting practices.

(d) Advance means a payment madeby electronic funds transfer, Treasurycheck, or other appropriate paymentmechanism to a recipient upon its re-quest either before outlays are made by


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Office of the Secretary, Commerce § 14.2

the recipient or through the use of pre-determined payment schedules.

(e) Assistant Secretary means the DoCChief Financial Officer and AssistantSecretary for Administration who hasbeen delegated by the Secretary ofCommerce the responsibility for devel-oping and implementing policies,standards, and procedures for the ad-ministration of financial assistanceprograms of the DoC.

(f) Award means financial assistancethat provides support or stimulation toaccomplish a public purpose. Awardsinclude grants and other agreements inthe form of money or property in lieuof money, by the Federal Governmentto an eligible recipient. The term doesnot include: technical assistance,which provides services instead ofmoney; other assistance in the form ofloans, loan guarantees, interest sub-sidies, or insurance; direct payments ofany kind to individuals; and, contractswhich are required to be entered intoand administered under procurementlaws and regulations.

(g) Cash contributions means the re-cipient’s cash outlay, including theoutlay of money contributed to the re-cipient by third parties.

(h) Closeout means the process bywhich the Grants Officer determinesthat all applicable administrative ac-tions and all required work of theaward have been completed by the re-cipient and the DoC.

(i) Contract means a procurementcontract under an award or subaward,and a procurement subcontract under arecipient’s or subrecipient’s contract.

(j) Cost sharing or matching meansthat portion of project or programcosts not borne by the Federal Govern-ment.

(k) Date of completion means the dateon which all work under an award iscompleted or the date on the awarddocument, or any supplement oramendment thereto, on which Federalsponsorship ends.

(l) Disallowed costs means thosecharges to an award that the GrantsOfficer determines to be unallowable,in accordance with the applicable Fed-eral cost principles or other terms andconditions contained in the award.

(m) DoC operating unit means an or-ganizational unit of the Department

that has the authority to fund finan-cial assistance awards.

(n) Equipment means tangible non-expendable personal property includingexempt property charged directly tothe award having a useful life of morethan one year and an acquisition costof $5000 or more per unit. However, con-sistent with recipient policy, lowerlimits may be established.

(o) Excess property means propertyunder the control of the DoC that, asdetermined by the Grants Officer aftercoordination with the authorized prop-erty official, is no longer required forDoC needs or the discharge of its re-sponsibilities.

(p) Exempt property means tangiblepersonal property acquired in whole orin part with Federal funds, where theDoC has statutory authority to vesttitle in the recipient without furtherobligation to the Federal Government.An example of exempt property author-ity is contained in the Federal Grantand Cooperative Agreement Act (31U.S.C. 6306), for property acquiredunder an award to conduct basic or ap-plied research by a non-profit institu-tion of higher education or non-profitorganization whose principal purpose isconducting scientific research.

(q) Federal awarding agency meansthe Federal agency that provides anaward to the recipient.

(r) Federal funds authorized means thetotal amount of Federal funds obli-gated by the Federal Government foruse by the recipient. This amount mayinclude any authorized carryover of un-obligated funds from prior funding pe-riods when permitted by agency regula-tions or agency implementing instruc-tions.

(s) Federal share of real property,equipment, or supplies means that per-centage of the property’s acquisitioncosts and any improvement expendi-tures paid with Federal funds.

(t) Funding period means the period oftime when Federal funding is availablefor obligation by the recipient.

(u) Grants Officer means the DoC offi-cial with the delegated authority toaward, amend, administer, closeout,suspend, and/or terminate grants andcooperative agreements and make re-lated determinations and findings.


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(v) Intangible property and debt instru-ments means, but is not limited to,trademarks, copyrights, patents andpatent applications and such propertyas loans, notes and other debt instru-ments, lease agreements, stock andother instruments of property owner-ship, whether considered tangible or in-tangible.

(w) Obligations means the amounts oforders placed, contracts and grantsawarded, services received and similartransactions during a given period thatrequire payment by the recipient dur-ing the same or a future period.

(x) Outlays or expenditures meanscharges made to the project or pro-gram. They may be reported on a cashor accrual basis. For reports preparedon a cash basis, outlays are the sum ofcash disbursements for direct chargesfor goods and services, the amount ofindirect expense charged, the value ofthird party in-kind contributions ap-plied and the amount of cash advancesand payments made to subrecipients.For reports prepared on an accrualbasis, outlays are the sum of cash dis-bursements for direct charges for goodsand services, the amount of indirect ex-pense incurred, the value of in-kindcontributions applied, and the net in-crease (or decrease) in the amountsowed by the recipient for goods andother property received, for servicesperformed by employees, contractors,subrecipients and other payees andother amounts becoming owed underprograms for which no current servicesor performance are required.

(y) Personal property means propertyof any kind except real property. Itmay be tangible, having physical exist-ence, or intangible, having no physicalexistence, such as copyrights, patents,or securities.

(z) Prior approval means written ap-proval by an authorized official evi-dencing prior consent.

(aa) Program income means gross in-come earned by the recipient that is di-rectly generated by a supported activ-ity or earned as a result of the award(see exclusions in § 14.24 (e) and (h)).Program income includes, but is notlimited to, income from fees for serv-ices performed, the use or rental of realor personal property acquired underfederally-funded projects, the sale of

commodities or items fabricated underan award, license fees and royalties onpatents and copyrights, and interest onloans made with award funds. Interestearned on advances of Federal funds isnot program income. Except as other-wise provided in DoC regulations or theterms and conditions of the award, pro-gram income does not include the re-ceipt of principal on loans, rebates,credits, discounts, etc., or interestearned on any of them.

(bb) Project costs means all allowablecosts, as set forth in the applicableFederal cost principles, incurred by arecipient and the value of the contribu-tions made by third parties in accom-plishing the objectives of the awardduring the project period.

(cc) Project period means the periodestablished in the award document dur-ing which Federal sponsorship beginsand ends.

(dd) Property means, unless otherwisestated, real property, equipment, in-tangible property and debt instru-ments.

(ee) Real property means land, includ-ing land improvements, structures andappurtenances thereto, but excludesmovable machinery and equipment.

(ff) Recipient means an organizationreceiving financial assistance directlyfrom the DoC to carry out a project orprogram. The term includes public andprivate institutions of higher edu-cation, public and private hospitals,and other quasi-public and private non-profit organizations such as, but notlimited to, community action agencies,research institutes, educational asso-ciations, and health centers. The termmay include commercial organizations,foreign or international organizations(such as agencies of the United Na-tions) which are recipients, subrecipi-ents, or contractors or subcontractorsof recipients or subrecipients at thediscretion of the DoC. The term doesnot include government-owned con-tractor-operated facilities or researchcenters providing continued support formission-oriented, large-scale programsthat are government-owned or con-trolled, or are designated as federally-funded research and development cen-ters.

(gg) Research and development meansall research activities, both basic and


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applied, and all development activitiesthat are supported at universities, col-leges, other non-profit, and commercialinstitutions. ‘‘Research’’ is defined as asystematic study directed toward fullerscientific knowledge or understandingof the subject studied. ‘‘Development’’is the systematic use of knowledge andunderstanding gained from research di-rected toward the production of usefulmaterials, devices, systems, or meth-ods, including design and developmentof prototypes and processes. The termresearch also includes activities in-volving the training of individuals inresearch techniques where such activi-ties utilize the same facilities as otherresearch and development activitiesand where such activities are not in-cluded in the instruction function.

(hh) Small awards means a grant orcooperative agreement not exceedingthe simplified acquisition thresholdfixed at 41 U.S.C. 403(11) (currently$100,000).

(ii) Subaward means an award of fi-nancial assistance in the form ofmoney, or property in lieu of money,made under an award by a recipient toan eligible subrecipient or by a sub-recipient to a lower tier subrecipient.The term includes financial assistancewhen provided by any legal agreement,even if the agreement is called a con-tract, but does not include procure-ment of goods and services nor does itinclude any form of assistance which isexcluded from the definition of‘‘award’’ in paragraph (f) of this sec-tion.

(jj) Subrecipient means the legal enti-ty to which a subaward is made andwhich is accountable to the recipientfor the use of the funds provided. Theterm may include foreign or inter-national organizations (such as agen-cies of the United Nations) at the dis-cretion of the DoC.

(kk) Supplies means all personal prop-erty excluding equipment, intangibleproperty, and debt instruments as de-fined in this section, and inventions ofa contractor conceived or first actuallyreduced to practice in the performanceof work under a funding agreement(‘‘subject inventions’’), as defined in 37CFR part 401, ‘‘Rights to InventionsMade by Nonprofit Organizations andSmall Business Firms Under Govern-

ment Grants, Contracts, and Coopera-tive Agreements.’’

(ll) Suspension means an action takenby the Grants Officer after coordina-tion with the DoC operating unit thattemporarily withdraws Federal spon-sorship under an award, pending cor-rective action by the recipient or pend-ing a decision to terminate the awardby the Grants Officer. Suspension of anaward is a separate action from suspen-sion under DoC regulations at 15 CFRpart 26 implementing E.O.s 12549 and12689, ‘‘Debarment and Suspension.’’

(mm) Termination means the can-cellation by the Grants Officer of Fed-eral sponsorship, in whole or in part,under an agreement at any time priorto the date of completion.

(nn) Third party in-kind contributionsmeans the value of non-cash contribu-tions provided by non-Federal thirdparties. Third party in-kind contribu-tions may be in the form of real prop-erty, equipment, supplies and other ex-pendable property, and the value ofgoods and services directly benefitingand specifically identifiable to theproject or program.

(oo) Unliquidated obligations, for fi-nancial reports prepared on a cashbasis, means the amount of obligationsincurred by the recipient that have notbeen paid. For reports prepared on anaccrued expenditure basis, they rep-resent the amount of obligations in-curred by the recipient for which anoutlay has not been recorded.

(pp) Unobligated balance means theportion of the funds authorized by theDoC that has not been obligated by therecipient and is determined by deduct-ing the cumulative obligations fromthe cumulative funds authorized.

(qq) Unrecovered indirect cost meansthe difference between the amountawarded and the amount which couldhave been awarded under the recipi-ent’s approved negotiated indirect costrate.

(rr) Working capital advance means aprocedure whereby funds are advancedto the recipient to cover its estimateddisbursement needs for a given initialperiod.


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§ 14.3 Effect on other issuances.

For awards subject to this part, alladministrative requirements of codi-fied program regulations, programmanuals, handbooks and other non-regulatory materials which are incon-sistent with the requirements of thispart shall be superseded, except to theextent they are required by statute, orauthorized in accordance with the devi-ations provision in § 14.4.

§ 14.4 Deviations.

The Office of Management and Budg-et (OMB) may grant exceptions forclasses of grants or recipients subjectto the requirements of this part whenexceptions are not prohibited by stat-ute. However, in the interest of max-imum uniformity, exceptions from therequirements of this part shall be per-mitted only in unusual circumstances.The Assistant Secretary may applymore restrictive requirements to aclass of recipients when approved byOMB. The Assistant Secretary mayapply less restrictive requirementswhen awarding small awards, exceptfor those requirements which are stat-utory. Exceptions on a case-by-casebasis may also be made by the Assist-ant Secretary. An exception made on acase-by-case basis will apply to a singleaward.

§ 14.5 Subawards.

Unless sections of this part specifi-cally exclude subrecipients from cov-erage, the provisions of this part shallbe applied to subrecipients performingwork under awards if such subrecipi-ents are institutions of higher edu-cation, hospitals, other non-profit, orcommercial organizations. This partalso applies to subrecipients per-forming work under awards if the sub-recipients are foreign governments, or-ganizations under the jurisdiction offoreign governments, and internationalorganizations unless otherwise deter-mined by the Grants Officer. State andlocal government subrecipients aresubject to the provisions of regulationsimplementing the grants managementcommon rule, ‘‘Uniform Administra-tive Requirements for Grants and Co-operative Agreements to State andLocal Governments,’’ (15 CFR part 24).

§ 14.6 Availability of OMB circulars.OMB circulars cited in this part are

available from the Office of Manage-ment and Budget (OMB) by writing tothe Executive Office of the President,Publications Service, 725 17th Street,NW, Suite 200, Washington DC 20503.

Subpart B—Pre-AwardRequirements

§ 14.10 Purpose.Sections 14.11 through 14.18 prescribe

forms and instructions and other pre-award matters to be used in applyingfor Federal awards.

§ 14.11 Pre-award policies.(a) Use of grants and cooperative agree-

ments, and contracts. In each instance,the Grants Officer after coordinationwith the DoC operating unit shall de-cide on the appropriate award instru-ment (i.e., grant, cooperative agree-ment, or contract). The Federal Grantand Cooperative Agreement Act (31U.S.C. 6301–08) governs the use ofgrants, cooperative agreements andcontracts. A grant or cooperativeagreement shall be used only when theprincipal purpose of a transaction is toaccomplish a public purpose of supportor stimulation authorized by Federalstatute. The statutory criterion forchoosing between grants and coopera-tive agreements is that for the latter,‘‘substantial involvement is expectedbetween the executive agency and theState, local government, or other re-cipient when carrying out the activitycontemplated in the agreement.’’ Con-tracts shall be used when the principalpurpose is acquisition of property orservices for the direct benefit or use ofthe Federal Government.

(b) Public notice and priority setting.The DoC operating units shall notifythe public of their intended fundingpriorities for discretionary grant pro-grams, unless funding priorities are es-tablished by Federal statute. At a min-imum, public notices shall be publishedin the FEDERAL REGISTER.

§ 14.12 Forms for applying for Federalassistance.

(a) The DoC operating units shallcomply with the applicable report


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clearance requirements of 5 CFR part1320, ‘‘Controlling Paperwork Burdenson the Public,’’ with regard to allforms used by the DoC operating unitsin place of or as a supplement to theStandard Form 424 (SF–424) series.

(b) Applicants shall use the SF–424series or those forms and instructionsprescribed by the DoC.

(c) For Federal programs covered byE.O. 12372, ‘‘Intergovernmental Reviewof Federal Programs,’’ the applicantshall complete the appropriate sectionsof the SF–424 (Application for FederalAssistance) indicating whether the ap-plication was subject to review by theState Single Point of Contact (SPOC).The name and address of the SPOC fora particular State can be obtained fromthe DoC or the Catalog of Federal Do-mestic Assistance. The SPOC shall ad-vise the applicant whether the programfor which application is made has beenselected by that State for review.

(d) DoC operating units that do notuse the SF–424 form should indicatewhether the application is subject toreview by the State under E.O. 12372.

§ 14.13 Debarment and suspension.The DoC and recipients shall comply

with the nonprocurement debarmentand suspension common rule imple-menting E.O.s 12549 and 12689, ‘‘Debar-ment and Suspension,’’ which is imple-mented by DoC at 15 CFR part 26. Thiscommon rule restricts subawards andcontracts with certain parties that aredebarred, suspended or otherwise ex-cluded from or ineligible for participa-tion in Federal assistance programs oractivities.

§ 14.14 High risk special award condi-tions.

If an applicant or recipient: has a his-tory of poor performance, is not finan-cially stable, has a management sys-tem that does not meet the standardsprescribed in this part, has not con-formed to the terms and conditions ofa previous award, or is not otherwiseresponsible, the Grants Officer may im-pose additional requirements as need-ed, provided that such applicant or re-cipient is notified in writing as to: thenature of the additional requirements,the reason why the additional require-ments are being imposed, the nature of

the corrective action needed, the timeallowed for completing the correctiveactions, and the method for requestingreconsideration of the additional re-quirements imposed. Any special con-ditions shall be promptly removed oncethe conditions that prompted themhave been corrected.

§ 14.15 Metric system of measurement.

The Metric Conversion Act, asamended by the Omnibus Trade andCompetitiveness Act (15 U.S.C. 205) de-clares that the metric system is thepreferred measurement system for U.S.trade and commerce. The Act requireseach Federal agency to establish a dateor dates in consultation with the Sec-retary of Commerce, when the metricsystem of measurement will be used inthe agency’s procurements, grants, andother business-related activities. Met-ric implementation may take longerwhere the use of the system is initiallyimpractical or likely to cause signifi-cant inefficiencies in the accomplish-ment of federally-funded activities.The DoC shall follow the provisions ofE.O. 12770, ‘‘Metric Usage in FederalGovernment Programs.’’

§ 14.16 Resource Conservation and Re-covery Act (RCRA).

Under RCRA (Pub. L. 94–580, 42 U.S.C.6962), any State agency or agency of apolitical subdivision of a State which isusing appropriated Federal funds mustcomply with section 6002. Section 6002requires that preference be given inprocurement programs to the purchaseof specific products containing recy-cled materials identified in guidelinesdeveloped by the Environmental Pro-tection Agency (EPA) (40 CFR parts247–254). Accordingly, State and localinstitutions of higher education, hos-pitals, non-profit, and commercial or-ganizations that receive direct Federalawards or other Federal funds shallgive preference in their procurementprograms funded with Federal funds tothe purchase of recycled products pur-suant to the EPA guidelines.

§ 14.17 Certifications and representa-tions.

Unless prohibited by statute or codi-fied regulation, Grants Officers may


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allow recipients to submit certifi-cations and representations requiredby statute, executive order, or regula-tion on an annual basis, if the recipi-ents have ongoing and continuing rela-tionships with the agency. When au-thorized, annual certifications and rep-resentations shall be signed by respon-sible officials with the authority to en-sure recipients’ compliance with thepertinent requirements.

§ 14.18 Taxpayer identification num-ber.

In accordance with the provisions ofthe Debt Collection Improvement Actof 1996 (31 U.S.C. 7701), the taxpayeridentifying number will be requiredfrom applicants for grants and coopera-tive agreements funded by the DoC.This number may be used for purposesof collecting and reporting on any de-linquent amounts arising from awardsmade under this part.

Subpart C—Post-AwardRequirements

FINANCIAL AND PROGRAM MANAGEMENT

§ 14.20 Purpose of financial and pro-gram management.

Sections 14.21 through 14.28 prescribestandards for financial managementsystems, methods for making pay-ments and rules for: satisfying costsharing and matching requirements,accounting for program income, budgetrevision approvals, conducting audits,determining allowability of cost, andestablishing fund availability.

§ 14.21 Standards for financial man-agement systems.

(a) The Grants Officer shall requirerecipients to relate financial data toperformance data and develop unit costinformation whenever practical.

(b) Recipients’ financial managementsystems shall provide for the following:

(1) Accurate, current and completedisclosure of the financial results ofeach federally-sponsored project orprogram in accordance with the report-ing requirements set forth in § 14.52. Ifthe Grants Officer requires reportingon an accrual basis from a recipientthat maintains its records on otherthan an accrual basis, the recipient

shall not be required to establish an ac-crual accounting system. These recipi-ents may develop such accrual data forits reports on the basis of an analysisof the documentation on hand.

(2) Records that identify adequatelythe source and application of funds forfederally-sponsored activities. Theserecords shall contain information per-taining to Federal awards, authoriza-tions, obligations, unobligated bal-ances, assets, outlays, income and in-terest.

(3) Effective control over and ac-countability for all funds, property andother assets. Recipients shall ade-quately safeguard all such assets andassure they are used solely for author-ized purposes.

(4) Comparison of outlays with budg-et amounts for each award. Wheneverappropriate, financial informationshould be related to performance andunit cost data.

(5) Written procedures to minimizethe time elapsing between the transferof funds to the recipient from the U.S.Treasury and the issuance or redemp-tion of checks, warrants or paymentsby other means for program purposesby the recipient. To the extent that theprovisions of the Cash Management Im-provement Act (CMIA) (Pub. L. 101–453)govern, payment methods of Stateagencies, instrumentalities, and fiscalagents shall be consistent with CMIATreasury-State Agreements or theCMIA default procedures codified at 31CFR part 205, ‘‘Withdrawal of Cashfrom the Treasury for Advances underFederal Grant and Other Programs.’’

(6) Written procedures for deter-mining the reasonableness, allocabilityand allowability of costs in accordancewith the provisions of the applicableFederal cost principles and the termsand conditions of the award.

(7) Accounting records including costaccounting records that are supportedby source documentation.

(c) Where the DoC guarantees or in-sures the repayment of money bor-rowed by the recipient, the Grants Offi-cer may require adequate bonding andinsurance if the bonding and insurancerequirements of the recipient are notdeemed adequate to protect the inter-est of the Federal Government.


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(d) The Grants Officer may requireadequate fidelity bond coverage wherethe recipient lacks sufficient coverageto protect the Federal Government’sinterest.

(e) Where bonds are required in thesituations described above, the bondsshall be obtained from companies hold-ing certificates of authority as accept-able sureties, as prescribed in 31 CFRpart 223, ‘‘Surety Companies DoingBusiness with the United States.’’

§ 14.22 Payment.(a) Payment methods shall minimize

the time elapsing between the transferof funds from the United States Treas-ury and the issuance or redemption ofchecks, warrants, or payment by othermeans by the recipients. Paymentmethods of State agencies or instru-mentalities shall be consistent withTreasury-State CMIA agreements ordefault procedures codified at 31 CFRpart 205. Federal payments to recipi-ents shall be made by electronic fundstransfer in accordance with the DebtCollection Improvement Act of 1996,unless waived in accordance with theprovisions of this Act.

(b) Recipients are to be paid in ad-vance, provided they maintain or dem-onstrate the willingness to maintain:written procedures that minimize thetime elapsing between the transfer offunds and disbursement by the recipi-ent, and financial management sys-tems that meet the standards for fundcontrol and accountability as estab-lished in § 14.21. Advances of funds to arecipient organization shall be limitedto the minimum amounts needed andbe timed to be in accordance with theactual, immediate cash requirementsof the recipient organization in car-rying out the purpose of the approvedprogram or project. The timing andamount of advances of funds shall be asclose as is administratively feasible tothe actual disbursements by the recipi-ent organization for direct program orproject costs and the proportionateshare of any allowable indirect costs.

(c) Whenever possible, advances maybe consolidated to cover anticipatedcash needs for all awards made by theDoC operating unit to the recipient.

(1) Advance payment mechanisms in-clude, but are not limited to, electronic

funds transfer and Treasury checkwhen the electronic funds transfer re-quirement is waived.

(2) Advance payment mechanisms aresubject to 31 CFR part 205.

(3) Recipients may submit requestsfor advances and reimbursements on amonthly basis.

(d) Requests for advance paymentshall be submitted on SF–270, ‘‘Requestfor Advance or Reimbursement,’’ orother forms as may be authorized byOMB. This form is not to be used whenadvance payments are made to the re-cipient automatically through the useof a predetermined payment scheduleor if precluded by special DoC instruc-tions for electronic funds transfer.

(e) Reimbursement is the preferredmethod when the requirements in para-graph (b) of this section cannot be met.The Grants Officer may also use thismethod on any construction agree-ment, or if the major portion of theconstruction project is accomplishedthrough private market financing orFederal loans, and the Federal assist-ance constitutes a minor portion of theproject.

(1) When the reimbursement methodis used, the DoC shall make paymentwithin 30 days after receipt of the bill-ing, unless the billing is improper.

(2) Recipients are authorized to sub-mit request for reimbursement at leastmonthly when electronic funds trans-fers are not used.

(f) If a recipient cannot meet the cri-teria for advance payments and theGrants Officer after coordination withthe operating unit has determined thatreimbursement is not feasible becausethe recipient lacks sufficient workingcapital, the Grants Officer may author-ize payment on a working capital ad-vance basis. Under this procedure, theGrants Officer shall provide for advanc-ing funds to the recipient to cover itsestimated disbursement needs for aninitial period generally geared to theawardee’s disbursing cycle. Thereafter,payments shall be provided by reim-bursing the recipient for its actualcash disbursements. The working cap-ital advance method of payment shallnot be used for recipients unwilling orunable to provide timely advances totheir subrecipient to meet the sub-recipient’s actual cash disbursements.


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(g) To the extent available, recipi-ents shall disburse funds available fromrepayments to and interest earned on arevolving fund, program income, re-bates, refunds, contract settlements,audit recoveries and interest earned onsuch funds before requesting additionalpayments.

(h) Unless otherwise required by stat-ute, Grants Officers shall not withholdpayments for proper charges made byrecipients at any time during theproject period unless paragraph (h) (1)or (2) of this section apply.

(1) A recipient has failed to complywith the project objectives, the termsand conditions of the award, or Federalreporting requirements.

(2) The recipient or subrecipient isdelinquent in a debt to the UnitedStates as defined in OMB Circular A–129, ‘‘Managing Federal Credit Pro-grams.’’ Under such conditions, theGrants Officer may, upon reasonablenotice, inform the recipient that pay-ments shall not be made for obligationsincurred after a specified date until theconditions are corrected or the indebt-edness to the Federal Government isliquidated.

(i) Standards governing the use ofbanks and other institutions as deposi-tories of funds advanced under awardsare as follows.

(1) Except for situations described inparagraph (i)(2) of this section, the DoCshall not require separate depositoryaccounts for funds provided to a recipi-ent or establish any eligibility require-ments for depositories for funds pro-vided to a recipient. However, recipi-ents must be able to account for the re-ceipt, obligation and expenditure offunds.

(2) Advances of Federal funds shall bedeposited and maintained in insuredaccounts whenever possible.

(j) Consistent with the national goalof expanding the opportunities forwomen-owned and minority-ownedbusiness enterprises, recipients shall beencouraged to use women-owned andminority-owned banks (a bank which isowned at least 50 percent by women orminority group members).

(k) Recipients shall maintain ad-vances of Federal funds in interestbearing accounts, unless paragraph (k)(1), (2) or (3) of this section apply.

(1) The recipient receives less than$120,000 in Federal awards per year.

(2) The best reasonably available in-terest bearing account would not be ex-pected to earn interest in excess of $250per year on Federal cash balances.

(3) The depository would require anaverage or minimum balance so highthat it would not be feasible within theexpected Federal and non-Federal cashresources.

(l) For those entities where CMIAand its implementing regulations donot apply, interest earned on Federaladvances deposited in interest bearingaccounts shall be remitted annually toDepartment of Health and HumanServices, Payment Management Sys-tem, Rockville, MD 20852. Interestamounts up to $250 per year may be re-tained by the recipient for administra-tive expense. State universities andhospitals shall comply with CMIA, as itpertains to interest. If an entity sub-ject to CMIA uses its own funds to paypre-award costs for discretionaryawards without prior written approvalfrom the Grants Officer, it waives itsright to recover the interest underCMIA.

(m) Except as noted elsewhere in thispart, only the following forms shall beauthorized for the recipients in re-questing advances and reimburse-ments. Grants Officers shall not re-quire more than an original and twocopies of these forms.

(1) SF–270, Request for Advance orReimbursement. DoC has adopted theSF–270 as a standard form for all non-construction programs when predeter-mined advance methods are not used.The Grants Officer, however, maywaive the requirement to use the SF–270 for requesting funds under grantsand cooperative agreements. Grants Of-ficers have the option of using thisform for construction programs in lieuof the SF–271, ‘‘Outlay Report and Re-quest for Reimbursement for Construc-tion Programs.’’

(2) SF–271, Outlay Report and Re-quest for Reimbursement for Construc-tion Programs. DoC has adopted theSF–271 as the standard form to be usedfor requesting reimbursement for con-struction programs. However, theGrants Officer may substitute the SF–270 when the Grants Officer determines


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that the SF–270 provides adequate in-formation to meet Federal needs.

§ 14.23 Cost sharing or matching.(a) All contributions, including cash

and third party in-kind, shall be ac-cepted as part of the recipient’s costsharing or matching when such con-tributions meet all of the following cri-teria:

(1) Are verifiable from the recipient’srecords.

(2) Are not included as contributionsfor any other federally-assisted projector program.

(3) Are necessary and reasonable forproper and efficient accomplishment ofproject or program objectives.

(4) Are allowable under the applica-ble cost principles.

(5) Are not paid by the Federal Gov-ernment under another award, exceptwhere authorized by Federal statute tobe used for cost sharing or matching.

(6) Are provided for in the approvedbudget.

(7) Conform to other provisions ofthis part, as applicable.

(b) Unrecovered indirect costs may beincluded as part of cost sharing ormatching only with the prior approvalof the Grants Officer.

(c) Values for recipient contributionsof services and property shall be estab-lished in accordance with the applica-ble cost principles. If DoC authorizesrecipients to donate buildings or landfor construction/facilities acquisitionprojects or long-term use, the value ofthe donated property for cost sharingor matching shall be the lesser of para-graph (c) (1) or (2).

(1) The certified value of the remain-ing life of the property recorded in therecipient’s accounting records at thetime of donation.

(2) The current fair market value.However, when there is sufficient jus-tification, the Grants Officer may ap-prove the use of the current fair mar-ket value of the donated property, evenif it exceeds the certified value at thetime of donation to the project.

(d) Volunteer services furnished byprofessional and technical personnel,consultants, and other skilled and un-skilled labor may be counted as costsharing or matching if the service is anintegral and necessary part of an ap-

proved project or program. Rates forvolunteer services shall be consistentwith those paid for similar work in therecipient’s organization. In those in-stances in which the required skills arenot found in the recipient organization,rates shall be consistent with thosepaid for similar work in the labor mar-ket in which the recipient competes forthe kind of services involved. In eithercase, paid fringe benefits that are rea-sonable, allowable, and allocable maybe included in the valuation.

(e) When an employer other than therecipient furnishes the services of anemployee, these services shall be val-ued at the employee’s regular rate ofpay (plus an amount of fringe benefitsthat are reasonable, allowable, and al-locable, but exclusive of overheadcosts), provided these services are inthe same skill for which the employeeis normally paid.

(f) Donated supplies may includesuch items as expendable equipment,office supplies, laboratory supplies orworkshop and classroom supplies.Value assessed to donated supplies in-cluded in the cost sharing or matchingshare shall be reasonable and shall notexceed the fair market value of theproperty at the time of the donation.

(g) The method used for determiningcost sharing or matching for donatedequipment, buildings and land forwhich title passes to the recipient maydiffer according to the purpose of theaward, if paragraph (g) (1) or (2) of thissection applies.

(1) If the purpose of the award is toassist the recipient in the acquisitionof equipment, buildings or land, thetotal value of the donated propertymay be claimed as cost sharing ormatching.

(2) If the purpose of the award is tosupport activities that require the useof equipment, buildings or land, nor-mally only depreciation or use chargesfor equipment and buildings may bemade. However, the full value of equip-ment or other capital assets and fairrental charges for land may be allowed,provided that the Grants Officer hasapproved the charges.

(h) The value of donated propertyshall be determined in accordance with


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the usual accounting policies of the re-cipient, with the following qualifica-tions:

(1) The value of donated land andbuildings shall not exceed its fair mar-ket value at the time of donation tothe recipient as established by an inde-pendent appraiser (e.g., certified realproperty appraiser or General ServicesAdministration representative) andcertified by a responsible official of therecipient.

(2) The value of donated equipmentshall not exceed the fair market valueof equipment of the same age and con-dition at the time of donation.

(3) The value of donated space shallnot exceed the fair rental value of com-parable space as established by an inde-pendent appraisal of comparable spaceand facilities in a privately-ownedbuilding in the same locality.

(4) The value of loaned equipmentshall not exceed its fair rental value.

(5) The following requirements per-tain to the recipient’s supportingrecords for in-kind contributions fromthird parties:

(i) Volunteer services shall be docu-mented and, to the extent feasible, sup-ported by the same methods used bythe recipient for its own employees.

(ii) The basis for determining thevaluation for personal service, mate-rial, equipment, buildings and landshall be documented.

§ 14.24 Program income.

(a) The standards set forth in thissection shall apply in requiring recipi-ent organizations to account for pro-gram income related to projects fi-nanced in whole or in part with Federalfunds.

(b) Except as provided in paragraph(h) of this section, program incomeearned during the project period shallbe retained by the recipient and, in ac-cordance with DoC regulations or theterms and conditions of the award,shall be used in one or more of theways listed in the following:

(1) Added to funds committed to theproject by the DoC and recipient andused to further eligible project objec-tives.

(2) Used to finance the non-Federalshare of the project.

(3) Deducted from the total projectallowable cost in determining the netallowable costs on which the Federalshare of costs is based.

(c) When an agency authorizes thedisposition of program income as de-scribed in paragraph (b)(1) or (b)(2) ofthis section, program income in excessof any limits stipulated shall be used inaccordance with paragraph (b)(3) ofthis section.

(d) In the event that the DoC doesnot specify in its regulations or theterms and conditions of the award howprogram income is to be used, para-graph (b)(1) of this section shall applyautomatically to all projects or pro-grams.

(e) Unless DoC regulations or theterms and conditions of the award pro-vide otherwise, recipients shall have noobligation to the Federal Governmentregarding program income earned afterthe end of the project period.

(f) Costs incident to the generation ofprogram income may be deducted fromgross income to determine program in-come, provided these costs have notbeen charged to the award.

(g) Proceeds from the sale of propertyshall be handled in accordance with therequirements of the Property Stand-ards (See §§ 14.30 through 14.37).

(h) Unless DoC regulations or theterms and conditions of the award pro-vide otherwise, recipients shall have noobligation to the Federal Governmentwith respect to program income earnedfrom license fees and royalties forcopyrighted material, patents, patentapplications, trademarks, and inven-tions produced under an award. How-ever, Patent and Trademark Amend-ments (35 U.S.C. 18) apply to inventionsmade under an experimental, develop-mental, or research award.

§ 14.25 Revision of budget and pro-gram plans.

(a) The budget plan is the financialexpression of the project or program asapproved during the award process. Itmay include either the Federal andnon-Federal share, or only the Federalshare, depending upon DoC require-ments. It shall be related to perform-ance for program evaluation purposeswhenever appropriate.


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(b) Recipients are required to reportdeviations from budget and programplans, and request prior approvals forbudget and program plan revisions, inaccordance with this section.

(c) For nonconstruction awards, re-cipients shall request prior approvalsfrom the Grants Officer for one or moreof the following program or budget re-lated reasons. Approvals will be pro-vided in writing by the Grants Officer.

(1) Change in the scope or the objec-tive of the project or program (even ifthere is no associated budget revisionrequiring prior written approval).

(2) Change in a key person specifiedin the application or award document.

(3) The absence for more than threemonths, or a 25 percent reduction intime devoted to the project, by the ap-proved project director or principal in-vestigator.

(4) The need for additional Federalfunding.

(5) The transfer of amounts budgetedfor indirect costs to absorb increases indirect costs, or vice versa, if approvalis required by the DoC.

(6) The inclusion, unless waived bythe DoC, of costs that require prior ap-proval in accordance with OMB Cir-cular A–21, ‘‘Cost Principles for Edu-cational Institutions,’’ OMB CircularA–122, ‘‘Cost Principles for Non-ProfitOrganizations,’’ 45 CFR part 74 Appen-dix E, ‘‘Principles for DeterminingCosts Applicable to Research and De-velopment under Grants and Contractswith Hospitals,’’ or 48 CFR part 31,‘‘Contract Cost Principles and Proce-dures,’’ as applicable.

(7) The transfer of funds allotted fortraining allowances (direct payment totrainees) to other categories of ex-pense.

(8) Unless described in the applica-tion and funded in the approvedawards, the subaward, transfer or con-tracting out of any work under anaward. This provision does not apply tothe purchase of supplies, material,equipment or general support services.

(d) For nonconstruction awards, noother prior approval requirements forspecific items may be imposed unless adeviation has been approved by OMB.

(e) Except for requirements listed inparagraphs (c)(1) and (c)(4) of this sec-

tion, the Grants Officer may waivecost-related and administrative priorwritten approvals required by this partand OMB Circulars A–21 and A–122.Such waivers may include authorizingrecipients to do any one or more of thefollowing:

(1) Incur pre-award costs 90 calendardays prior to award or more than 90calendar days with the prior approvalof the Grants Officer after coordinationwith the DoC operating unit. All pre-award costs are incurred at the recipi-ent’s risk (i.e., the DoC is under no ob-ligation to reimburse such costs if forany reason the recipient does not re-ceive an award or if the award is lessthan anticipated and inadequate tocover such costs).

(2) Initiate a one-time extension ofthe expiration date of the award of upto 12 months unless one or more of thefollowing conditions apply. For one-time extensions, the recipient must no-tify the Grants Officer in writing withthe supporting reasons and revised ex-piration date at least 10 days before theexpiration date specified in the award.This one-time extension may not be ex-ercised merely for the purpose of usingunobligated balances.

(i) The terms and conditions of awardprohibit the extension.

(ii) The extension requires additionalFederal funds.

(iii) The extension involves anychange in the approved objectives orscope of the project.

(3) Carry forward unobligated bal-ances to subsequent funding periods.

(4) For awards that support research,unless the DoC provides otherwise inthe award or in the DoC regulations,the prior approval requirements de-scribed in paragraph (e) of this sectionare automatically waived (i.e., recipi-ents need not obtain such prior approv-als) unless one of the conditions in-cluded in paragraph (e)(2) of this sec-tion applies.

(f) The recipient may not transferfunds among direct cost categories orprograms, functions and activities forawards in which the Federal share of


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the project exceeds $100,000 and the cu-mulative amount of such transfers ex-ceeds or is expected to exceed 10 per-cent of the total Federal and non-Fed-eral funds authorized by the Grants Of-ficer. This does not prohibit the recipi-ent from requesting Grants Officer ap-proval for revisions to the budget. Notransfers are permitted that wouldcause any Federal appropriation orpart thereof to be used for purposesother than those consistent with theoriginal intent of the appropriation.

(g) All other changes to nonconstruc-tion budgets, except for the changes de-scribed in paragraph (j) of this section,do not require prior approval.

(h) For construction awards, recipi-ents shall request prior written ap-proval promptly from the Grants Offi-cer for budget revisions whenever para-graph (h) (1), (2) or (3) apply. Approvalswill be provided in writing by theGrants Officer.

(1) The revision results from changesin the scope or the objective of theproject or program.

(2) The need arises for additionalFederal funds to complete the project.

(3) A revision is desired which in-volves specific costs for which priorwritten approval requirements may beimposed consistent with applicableOMB cost principles listed in § 14.27.

(i) For construction awards, no otherprior approval requirements for spe-cific items may be imposed unless a de-viation has been approved by OMB.

(j) When the DoC makes an awardthat provides support for both con-struction and nonconstruction work,the Grants Officer may require the re-cipient to request prior approval fromthe Grants Officer before making anyfund or budget transfers between thetwo types of work supported. Approvalswill be provided in writing by theGrants Officer.

(k) For both construction and non-construction awards, the DoC shall re-quire recipients to notify the GrantsOfficer in writing promptly wheneverthe amount of Federal authorized fundsis expected to exceed the needs of therecipient for the project period bymore than $5000 or five percent of theFederal award, whichever is greater.This notification shall not be required

if an application for additional fundingis submitted for a continuation award.

(l) When requesting approval forbudget revisions, recipients shall usethe budget forms that were used in theapplication unless the Grants Officerindicates a letter of request suffices.

(m) Within 30 calendar days from thedate of receipt of the request for budg-et revisions, DoC shall review the re-quest and the Grants Officer shall no-tify the recipient in writing whetherthe budget revisions have been ap-proved. If the revision is still underconsideration at the end of 30 calendardays, the Grants Officer shall informthe recipient in writing of the datewhen the recipient may expect the de-cision.

63 FR 47156, Sept. 4, 1998, as amended at 66FR 49828, Oct. 1, 2001]

§ 14.26 Non-Federal audits.(a) Recipients and subrecipients that

are institutions of higher education orother non-profit organizations (includ-ing hospitals) shall be subject to theaudit requirements contained in theSingle Audit Act Amendments of 1996(31 U.S.C. 7501–7507) and revised OMBCircular A–133, ‘‘Audits of States,Local Governments, and Non-Profit Or-ganizations.’’

(b) State and local governments shallbe subject to the audit requirementscontained in the Single Audit ActAmendments of 1996 (31 U.S.C. 7501–7507) and revised OMB Circular A–133,‘‘Audits of States, Local Governments,and Non-Profit Organizations.’’

(c) For-profit hospitals not coveredby the audit provisions of revised OMBCircular A–133 shall be subject to theaudit requirements as stipulated in theaward document.

(d) Commercial and other organiza-tions not covered by paragraph (a), (b),or (c) of this section shall be subject tothe audit requirements as stipulated inthe award document or the prime re-cipient as stipulated in the sub-awarddocument.

§ 14.27 Allowable costs.For each kind of recipient, there is a

set of Federal principles for deter-mining allowable costs. Allowability ofcosts shall be determined in accord-ance with the cost principles applicable


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to the entity incurring the costs. Thus,allowability of costs incurred by State,local or federally-recognized Indiantribal governments is determined inaccordance with the provisions of OMBCircular A–87, ‘‘Cost Principles forState, Local and Indian Tribal Govern-ments.’’ The allowability of costs in-curred by non-profit organizations isdetermined in accordance with the pro-visions of OMB Circular A–122, ‘‘CostPrinciples for Non-Profit Organiza-tions.’’ The allowability of costs in-curred by institutions of higher edu-cation is determined in accordancewith the provisions of OMB Circular A–21, ‘‘Cost Principles for Educational In-stitutions.’’ The allowability of costsincurred by hospitals is determined inaccordance with the provisions of Ap-pendix E of 45 CFR part 74, ‘‘Principlesfor Determining Costs Applicable toResearch and Development UnderGrants and Contracts with Hospitals.’’The allowability of costs incurred bycommercial organizations and thosenon-profit organizations listed in At-tachment C to Circular A–122 is deter-mined in accordance with the provi-sions of the Federal Acquisition Regu-lation (FAR) at 48 CFR part 31.

§ 14.28 Period of availability of funds.

Where a funding period is specified, arecipient may charge to the grant onlyallowable costs resulting from obliga-tions incurred during the funding pe-riod and any pre-award costs author-ized by the Grants Officer.

PROPERTY STANDARDS

§ 14.30 Purpose of property standards.

Sections 14.31 through 14.37 set forthuniform standards governing manage-ment and disposition of property fur-nished by the Federal Governmentwhose cost was charged to a projectsupported by a Federal award. The DoCshall require recipients to observethese standards under awards and shallnot impose additional requirements,unless specifically required by Federalstatute. The recipient may use its ownproperty management standards andprocedures provided it observes theprovisions of §§ 14.31 through 14.37.

§ 14.31 Insurance coverage.

Recipients shall, at a minimum, pro-vide the equivalent insurance coveragefor real property and equipment ac-quired with Federal funds as providedto property owned by the recipient.Federally-owned property need not beinsured unless required by the termsand conditions of the award.

§ 14.32 Real property.

The DoC award shall prescribe re-quirements for recipients concerningthe use and disposition of real propertyacquired in whole or in part underawards. Unless otherwise provided bystatute, such requirements, at a min-imum, shall contain the following:

(a) Title to real property shall vest inthe recipient subject to the conditionthat the recipient shall use the realproperty for the authorized purpose ofthe project as long as it is needed, pro-vided that, in lieu of title, with the ap-proval of the Grants Officer, the recipi-ent may hold a leasehold or other in-terest in the property appropriate tothe project purpose. The recipient shallnot dispose of or encumber the prop-erty or any interest therein withoutapproval of the Grants Officer.

(b) The recipient shall obtain writtenapproval by the Grants Officer for theuse of real property in other federally-sponsored projects when the recipientdetermines that the property is nolonger needed for the purpose of theoriginal project. Use in other projectsshall be limited to those under feder-ally-sponsored projects (i.e., awards) orprograms that have purposes con-sistent with those authorized for sup-port by the DoC.

(c) When the real property is nolonger needed as provided in para-graphs (a) and (b) of this section, therecipient shall request disposition in-structions from the DoC or its suc-cessor Federal awarding agency. Theresponsible Federal agency shall ob-serve one or more of the following dis-position instructions:

(1) The recipient may be permitted toretain title without further obligationto the Federal Government after itcompensates the Federal Governmentfor that percentage of the current fair


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market value of the property attrib-utable to the Federal participation inthe project.

(2) The recipient may be directed tosell the property under guidelines pro-vided by the Grants Officer and pay theFederal Government for that percent-age of the current fair market value ofthe property attributable to the Fed-eral participation in the project (afterdeducting actual and reasonable sellingand fix-up expenses, if any, from thesales proceeds). When the recipient isauthorized or required to sell the prop-erty, proper sales procedures shall beestablished that provide for competi-tion to the extent practicable and re-sult in the highest possible return.

(3) The recipient may be directed totransfer title to the property to theFederal Government or to an eligiblethird party provided that, in suchcases, the recipient shall be entitled tocompensation for its attributable per-centage of the current fair marketvalue of the property.

§ 14.33 Federally-owned and exemptproperty.

(a) Federally-owned property. (1) Titleto federally-owned property remainsvested in the Federal Government. Re-cipients shall submit annually an in-ventory listing of federally-ownedproperty in their custody to the DoCoperating unit. Upon completion of theaward or when the property is nolonger needed, the recipient shall re-port the property to the DoC operatingunit for further Federal agency utiliza-tion.

(2) If the DoC operating unit has nofurther need for the property, it shallbe declared excess and reported to theGeneral Services Administration, un-less the DoC has statutory authority todispose of the property by alternativemethods (e.g., the authority providedby the Federal Technology TransferAct (15 U.S.C. 3710(I)) to donate re-search equipment to educational andnon-profit organizations in accordancewith E.O. 12821, ‘‘Improving Mathe-matics and Science Education in Sup-port of the National EducationGoals.’’) Appropriate instructions shallbe issued to the recipient by the GrantsOfficer.

(b) Exempt property. When statutoryauthority exists, the DoC has the op-tion to vest title to property acquiredwith Federal funds in the recipientwithout further obligation to the Fed-eral Government and under conditionsthe DoC considers appropriate. Suchproperty is ‘‘exempt property.’’ Shouldthe DoC not establish conditions, titleto exempt property upon acquisitionshall vest in the recipient without fur-ther obligation to the Federal Govern-ment.

§ 14.34 Equipment.(a) Title to equipment acquired by a

recipient with Federal funds shall vestin the recipient, subject to conditionsof this section.

(b) The recipient shall not use equip-ment acquired with Federal funds toprovide services to non-Federal outsideorganizations for a fee that is less thanprivate companies charge for equiva-lent services, unless specifically au-thorized by Federal statute, for as longas the Federal Government retains aninterest in the equipment.

(c) The recipient shall use the equip-ment in the project or program forwhich it was acquired as long as need-ed, whether or not the project or pro-gram continues to be supported by Fed-eral funds and shall not encumber theproperty without approval of the DoC.When no longer needed for the originalproject or program, the recipient shalluse the equipment in connection withits other federally-sponsored activities,in the following order of priority:

(1) Activities sponsored by the DoCoperating unit which funded the origi-nal project;

(2) Activities sponsored by other DoCoperating units; then

(3) Activities sponsored by other Fed-eral awarding agencies.

(d) During the time that equipmentis used on the project or program forwhich it was acquired, the recipientshall make it available for use on otherprojects or programs if such other usewill not interfere with the work on theproject or program for which the equip-ment was originally acquired. Firstpreference for such other use shall begiven to other projects or programssponsored by the DoC operating unitthat financed the equipment; second


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preference shall be given to projects orprograms sponsored by other DoC oper-ating units, and third preference shallbe given to projects or programs spon-sored by other Federal awarding agen-cies. If the equipment is owned by theFederal Government, use on other ac-tivities not sponsored by the FederalGovernment shall be permissible if au-thorized by the Grants Officer after co-ordination with the DoC operatingunit. User charges shall be treated asprogram income.

(e) When acquiring replacementequipment, the recipient may use theequipment to be replaced as trade-in orsell the equipment and use the pro-ceeds to offset the costs of the replace-ment equipment subject to the ap-proval of the Grants Officer after co-ordination with the DoC operatingunit.

(f) The recipient’s property manage-ment standards for equipment acquiredwith Federal funds and federally-ownedequipment shall include all of the fol-lowing:

(1) Equipment records shall be main-tained accurately and shall include thefollowing information:

(i) A description of the equipment.(ii) Manufacturer’s serial number,

model number, Federal stock number,national stock number, or other identi-fication number.

(iii) Source of the equipment, includ-ing the award number.

(iv) Whether title vests in the recipi-ent or the Federal Government.

(v) Acquisition date (or date re-ceived, if the equipment was furnishedby the Federal Government) and cost.

(vi) Information from which one cancalculate the percentage of Federalparticipation in the cost of the equip-ment (not applicable to equipment fur-nished by the Federal Government).

(vii) Location and condition of theequipment and the date the informa-tion was reported.

(viii) Unit acquisition cost.(ix) Ultimate disposition data, in-

cluding date of disposal and sales priceor the method used to determine cur-rent fair market value where a recipi-ent compensates the DoC for its share.

(2) Equipment owned by the FederalGovernment shall be identified to indi-cate Federal ownership.

(3) A physical inventory of equipmentshall be taken and the results rec-onciled with the equipment records atleast once every two years. Any dif-ferences between quantities deter-mined by the physical inspection andthose shown in the accounting recordsshall be investigated to determine thecauses of the difference. The recipientshall, in connection with the inven-tory, verify the existence, current uti-lization, and continued need for theequipment.

(4) A control system shall be in effectto insure adequate safeguards to pre-vent loss, damage, or theft of theequipment. Any loss, damage, or theftof equipment shall be investigated andfully documented; if the equipment wasowned by the Federal Government, therecipient shall promptly notify theGrants Officer.

(5) Adequate maintenance proceduresshall be implemented to keep theequipment in good condition.

(6) Where the recipient is authorizedor required to sell the equipment, prop-er sales procedures shall be establishedwhich provide for competition to theextent practicable and result in thehighest possible return.

(g) When the recipient no longerneeds the equipment, the equipmentmay be used for other activities in ac-cordance with the following standards.Equipment with a current per-unit fairmarket value of less than $5000 may beretained, sold, or otherwise disposed ofwith no further obligation to theawarding agency. For equipment witha current per unit fair market value of$5000 or more, the recipient may retainthe equipment for other uses providedthat compensation is made to the DoCoperating unit or its successor. Theamount of compensation shall be com-puted by applying the percentage ofFederal participation in the cost of theoriginal project or program to the cur-rent fair market value of the equip-ment. If the recipient has no need forthe equipment, the recipient shall re-quest disposition instructions from theGrants Officer. The Grants Officer shalldetermine whether the equipment canbe used to meet the agency’s require-ments. If no requirement exists withinthat agency, the availability of theequipment shall be reported to the


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General Services Administration bythe Grants Officer to determine wheth-er a requirement for the equipment ex-ists in other Federal agencies. TheGrants Officer shall issue instructionsto the recipient no later than 120 cal-endar days after the recipient’s requestand the following procedures shall gov-ern:

(1) If so instructed or if dispositioninstructions are not issued within 120calendar days after the recipient’s re-quest, the recipient shall sell theequipment and reimburse the DoC anamount computed by applying to thesales proceeds the percentage of Fed-eral participation in the cost of theoriginal project or program. However,the recipient shall be permitted to de-duct and retain from the Federal share$500 or ten percent of the proceeds,whichever is less, for the recipient’sselling and handling expenses.

(2) If the recipient is instructed toship the equipment elsewhere, the re-cipient shall be reimbursed by the Fed-eral Government by an amount whichis computed by applying the percent-age of the recipient’s participation inthe cost of the original project or pro-gram to the current fair market valueof the equipment, plus any reasonableshipping or interim storage costs in-curred.

(3) If the recipient is instructed tootherwise dispose of the equipment, therecipient shall be reimbursed by theDoC for such costs incurred in its dis-position.

(h) The DoC reserves the right totransfer the title to the Federal Gov-ernment or to a third party named bythe Federal Government when suchthird party is otherwise eligible underexisting statutes. Such transfer shallbe subject to the following standards:

(1) The equipment shall be appro-priately identified in the award or oth-erwise made known to the recipient inwriting.

(2) The Grants Officer shall issue dis-position instructions within 120 cal-endar days after receipt of a final in-ventory. The final inventory shall listall equipment acquired with grantfunds and federally-owned equipment.If the Grants Officer fails to issue writ-ten disposition instructions within the120 calendar day period, the recipient

shall apply the standards of this sec-tion, as appropriate.

(3) When the DoC exercises its rightto take title, the equipment shall besubject to the provisions for federally-owned equipment.

§ 14.35 Supplies and other expendableproperty.

(a) Title to supplies and other ex-pendable property shall vest in the re-cipient upon acquisition. If there is aresidual inventory of supplies exceed-ing $5000 in total aggregate value upontermination or completion of theproject or program and the supplies arenot needed for any other federally-sponsored project or program, the re-cipient shall retain the supplies for useon non-Federal sponsored activities orsell them, but shall, in either case,compensate the Federal Governmentfor its share. The amount of compensa-tion shall be computed in the samemanner as for equipment.

(b) The recipient shall not use sup-plies acquired with Federal funds toprovide services to non-Federal outsideorganizations for a fee that is less thanprivate companies charge for equiva-lent services, unless specifically au-thorized by Federal statute as long asthe Federal Government retains an in-terest in the supplies.

§ 14.36 Intangible property.(a) The recipient may copyright any

work that is subject to copyright andwas developed, or for which ownershipwas purchased, under an award. TheDoC reserves a royalty-free, nonexclu-sive and irrevocable right to reproduce,publish, or otherwise use the work forFederal purposes, and to authorize oth-ers to do so.

(b) Recipients are subject to applica-ble regulations governing patents andinventions, including government-wideregulations issued by the DoC at 37CFR part 401, ‘‘Rights to InventionsMade by Nonprofit Organizations andSmall Business Firms Under Govern-ment Grants, Contracts and Coopera-tive Agreements.’’

(c) The Federal Government has theright to:

(1) Obtain, reproduce, publish or oth-erwise use the data first producedunder an award; and


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(2) Authorize others to receive, repro-duce, publish, or otherwise use suchdata for Federal purposes.

(d)(1) In addition, in response to aFreedom of Information Act (FOIA) re-quest for research data relating to pub-lished research findings produced underan award that were used by the FederalGovernment in developing an agencyaction that has the force and effect oflaw, the DoC shall request, and the re-cipient shall provide, within a reason-able time, the research data so thatthey can be made available to the pub-lic through the procedures establishedunder the FOIA. If the DoC obtains theresearch data solely in response to aFOIA request, the agency may chargethe requester a reasonable fee equalingthe full incremental cost of obtainingthe research data. This fee should re-flect costs incurred by the agency, therecipient, and applicable subrecipients.This fee is in addition to any fees theagency may assess under the FOIA (5U.S.C. 552(a)(4)(A)).

(2) The following definitions applyfor purposes of this paragraph (d):

(i) Research data is defined as the re-corded factual material commonly ac-cepted in the scientific community asnecessary to validate research findings,but not any of the following: prelimi-nary analyses, drafts of scientific pa-pers, plans for future research, peer re-views, or communications with col-leagues. This ‘‘recorded’’ material ex-cludes physical objects (e.g., laboratorysamples). Research data also do not in-clude:

(A) Trade secrets, commercial infor-mation, materials necessary to be heldconfidential by a researcher until theyare published, or similar informationwhich is protected under law; and

(B) Personnel and medical informa-tion and similar information the dis-closure of which would constitute aclearly unwarranted invasion of per-sonal privacy, such as information thatcould be used to identify a particularperson in a research study.

(ii) Published is defined as eitherwhen:

(A) Research findings are publishedin a peer-reviewed scientific or tech-nical journal; or

(B) A Federal agency publicly and of-ficially cites the research findings in

support of an agency action that hasthe force and effect of law.

(iii) Used by the Federal Government indeveloping an agency action that has theforce and effect of law is defined as whenan agency publicly and officially citesthe research findings in support of anagency action that has the force andeffect of law.

(e) Title to intangible property anddebt instruments acquired under anaward or subaward vests upon acquisi-tion in the recipient. The recipientshall use that property for the origi-nally-authorized purpose, and the re-cipient shall not encumber the prop-erty without written approval from theGrants Officer. When no longer neededfor the originally authorized purpose,disposition of the intangible propertyshall occur in accordance with the pro-visions of § 14.34(g).

[63 FR 47156, Sept. 4, 1998, as amended at 65FR 14407, 14409, Mar. 16, 2000]

§ 14.37 Property trust relationship.Real property, equipment, intangible

property and debt instruments that areacquired or improved with Federalfunds shall be held in trust by the re-cipient as trustee for the beneficiariesof the project or program under whichthe property was acquired or improved.The Grants Officer may require recipi-ents to record liens or other appro-priate notices of record to indicatethat personal or real property has beenacquired or improved with Federalfunds and that use and disposition con-ditions apply to the property.

PROCUREMENT STANDARDS

§ 14.40 Purpose of procurement stand-ards.

Sections 14.41 through 14.48 set forthstandards for use by recipients in es-tablishing procedures for the procure-ment of supplies and other expendableproperty, equipment, real property andother services with Federal funds.These standards are furnished to en-sure that such materials and servicesare obtained in an effective mannerand in compliance with the provisionsof applicable Federal statutes and ex-ecutive orders. No additional procure-ment standards or requirements shallbe imposed by the DoC upon recipients,


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unless specifically required by Federalstatute or executive order or approvedby OMB.

§ 14.41 Recipient responsibilities.The standards contained in this sec-

tion do not relieve the recipient of thecontractual responsibilities arisingunder its contract(s). The recipient isthe responsible authority, without re-course to the DoC, regarding the settle-ment and satisfaction of all contrac-tual and administrative issues arisingout of procurements entered into insupport of an award or other agree-ment. This includes disputes, claims,protests of award, source evaluation orother matters of a contractual nature.Matters concerning violation of statuteare to be referred to such Federal,State or local authority as may haveproper jurisdiction.

§ 14.42 Codes of conduct.The recipient shall maintain written

standards of conduct governing theperformance of its employees engagedin the award and administration ofcontracts. No employee, officer, oragent shall participate in the selection,award, or administration of a contractsupported by Federal funds if a real orapparent conflict of interest would beinvolved. Such a conflict would arisewhen the employee, officer, or agent,any member of his or her immediatefamily, his or her partner, or an orga-nization which employs or is about toemploy any of the parties indicatedherein, has a financial or other interestin the firm selected for an award. Theofficers, employees, and agents of therecipient shall neither solicit nor ac-cept gratuities, favors, or anything ofmonetary value from contractors, orparties to subagreements. However, re-cipients may set standards for situa-tions in which the financial interest isnot substantial or the gift is an unso-licited item of nominal value. Thestandards of conduct shall provide fordisciplinary actions to be applied forviolations of such standards by offi-cers, employees, or agents of the re-cipient.

§ 14.43 Competition.All procurement transactions shall

be conducted in a manner to provide,

to the maximum extent practical, openand free competition. The recipientshall be alert to organizational con-flicts of interest as well as noncompeti-tive practices among contractors thatmay restrict or eliminate competitionor otherwise restrain trade. In order toensure objective contractor perform-ance and eliminate unfair competitiveadvantage, contractors that develop ordraft specifications, requirements,statements of work, invitations forbids and/or requests for proposals shallbe excluded from competing for suchprocurements. Awards shall be made tothe bidder or offeror whose bid or offeris responsive to the solicitation and ismost advantageous to the recipient,price, quality and other factors consid-ered. Solicitations shall clearly setforth all requirements that the bidderor offeror shall fulfill in order for thebid or offer to be evaluated by the re-cipient. Any and all bids or offers maybe rejected when it is in the recipient’sinterest to do so.

§ 14.44 Procurement procedures.(a) All recipients shall establish writ-

ten procurement procedures. Theseprocedures shall provide for, at a min-imum, that:

(1) Recipients avoid purchasing un-necessary items;

(2) Where appropriate, an analysis ismade of lease and purchase alter-natives to determine which would bethe most economical and practical pro-curement for the Federal Government;and

(3) Solicitations for goods and serv-ices provide for all of the following:

(i) A clear and accurate descriptionof the technical requirements for thematerial, product or service to be pro-cured. In competitive procurements,such a description shall not containfeatures which unduly restrict com-petition.

(ii) Requirements which the bidder/offeror must fulfill and all other fac-tors to be used in evaluating bids orproposals.

(iii) A description, whenever prac-ticable, of technical requirements interms of functions to be performed orperformance required, including therange of acceptable characteristics orminimum acceptable standards.


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(iv) The specific features of ‘‘brandname or equal’’ descriptions that bid-ders are required to meet when suchitems are included in the solicitation.

(v) The acceptance, to the extentpracticable and economically feasible,of products and services dimensioned inthe metric system of measurement.

(vi) Preference, to the extent prac-ticable and economically feasible, forproducts and services that conservenatural resources and protect the envi-ronment and are energy efficient.

(b) Positive efforts shall be made byrecipients to utilize small businesses,minority-owned firms, and women’sbusiness enterprises, whenever pos-sible. Recipients of Federal awardsshall take all of the following steps tofurther this goal:

(1) Ensure that small businesses, mi-nority-owned firms, and women’s busi-ness enterprises are used to the fullestextent practicable.

(2) Make information on forthcomingopportunities available and arrangetime frames for purchases and con-tracts to encourage and facilitate par-ticipation by small businesses, minor-ity-owned firms, and women’s businessenterprises.

(3) Consider in the contract processwhether firms competing for largercontracts intend to subcontract withsmall businesses, minority-ownedfirms, and women’s business enter-prises.

(4) Encourage contracting with con-sortiums of small businesses, minority-owned firms and women’s business en-terprises when a contract is too largefor one of these firms to handle individ-ually.

(5) Use the services and assistance, asappropriate, of such organizations asthe Small Business Administration andthe DoC’s Minority Business Develop-ment Agency in the solicitation andutilization of small businesses, minor-ity-owned firms and women’s businessenterprises.

(c) The type of procuring instrumentsused (e.g., fixed price contracts, costreimbursable contracts, purchase or-ders, and incentive contracts) shall bedetermined by the recipient but shallbe appropriate for the particular pro-curement and for promoting the bestinterest of the program or project in-

volved. The ‘‘cost-plus-a-percentage-of-cost’’ or ‘‘percentage of constructioncost’’ methods of contracting shall notbe used.

(d) Contracts shall be made only withresponsible contractors who possessthe potential ability to perform suc-cessfully under the terms and condi-tions of the proposed procurement.Consideration shall be given to suchmatters as contractor integrity, recordof past performance, financial andtechnical resources or accessibility toother necessary resources. In certaincircumstances, contracts with certainparties are restricted by agencies’ im-plementation of E.O.s 12549 and 12689,‘‘Debarment and Suspension,’’ as im-plemented by DoC regulations at 15CFR part 26.

(e) Recipients shall, on request, makeavailable for the Grants Officer, pre-award review and procurement docu-ments, such as request for proposals orinvitations for bids, independent costestimates, etc., when any of the fol-lowing conditions apply:

(1) A recipient’s procurement proce-dures or operation fails to comply withthe procurement standards in this part.

(2) The procurement is expected toexceed the simplified acquisitionthreshold fixed at 41 U.S.C. 403 (11)(currently $100,000) and is to be award-ed without competition or only one bidor offer is received in response to a so-licitation.

(3) The procurement, which is ex-pected to exceed the simplified acquisi-tion threshold, specifies a ‘‘brandname’’ product.

(4) The proposed award over the sim-plified acquisition threshold is to beawarded to other than the apparentlow bidder under a sealed bid procure-ment.

(5) A proposed contract modificationchanges the scope of a contract or in-creases the contract amount by morethan the amount of the simplified ac-quisition threshold.

§ 14.45 Cost and price analysis.Some form of cost or price analysis

shall be made and documented in theprocurement files in connection withevery procurement action. Price anal-ysis may be accomplished in variousways, including the comparison of


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price quotations submitted, marketprices and similar indicia, togetherwith discounts. Cost analysis is the re-view and evaluation of each element ofcost to determine reasonableness,allocability and allowability.

§ 14.46 Procurement records.

Procurement records and files forpurchases in excess of the simplifiedacquisition threshold shall include thefollowing at a minimum:

(a) Basis for contractor selection;(b) Justification for lack of competi-

tion when competitive bids or offersare not obtained; and

(c) Basis for award cost or price.

§ 14.47 Contract administration.

A system for contract administrationshall be maintained to ensure con-tractor conformance with the terms,conditions and specifications of thecontract and to ensure adequate andtimely follow up of all purchases. Re-cipients shall evaluate contractor per-formance and document, as appro-priate, whether contractors have metthe terms, conditions and specifica-tions of the contract.

§ 14.48 Contract provisions.

The recipient shall include, in addi-tion to provisions to define a sound andcomplete agreement, the following pro-visions in all contracts. The followingprovisions shall also be applied to sub-contracts:

(a) Contracts in excess of the sim-plified acquisition threshold shall con-tain contractual provisions or condi-tions that allow for administrative,contractual, or legal remedies in in-stances in which a contractor violatesor breaches the contract terms, andprovide for such remedial actions asmay be appropriate.

(b) All contracts in excess of the sim-plified acquisition threshold shall con-tain suitable provisions for termi-nation by the recipient, including themanner by which termination shall beeffected and the basis for settlement.In addition, such contracts shall de-scribe conditions under which the con-tract may be terminated for default aswell as conditions where the contractmay be terminated because of cir-

cumstances beyond the control of thecontractor.

(c) Except as otherwise required bystatute, an award that requires thecontracting (or subcontracting) forconstruction or facility improvementsshall provide for the recipient to followits own requirements relating to bidguarantees, performance bonds, andpayment bonds unless the constructioncontract or subcontract exceeds$100,000. For those contracts or sub-contracts exceeding $100,000, the DoCmay accept the bonding policy and re-quirements of the recipient, providedthe Grants Officer has made a deter-mination that the Federal Govern-ment’s interest is adequately pro-tected. If such a determination has notbeen made, the minimum requirementsshall be as follows:

(1) A bid guarantee from each bidderequivalent to five percent of the bidprice. The ‘‘bid guarantee’’ shall con-sist of a firm commitment such as abid bond, certified check, or other ne-gotiable instrument accompanying abid as assurance that the bidder shall,upon acceptance of his bid, executesuch contractual documents as may berequired within the time specified.

(2) A performance bond on the part ofthe contractor for 100 percent of thecontract price. A ‘‘performance bond’’is one executed in connection with acontract to secure fulfillment of all thecontractor’s obligations under suchcontract.

(3) A payment bond on the part of thecontractor for 100 percent of the con-tract price. A ‘‘payment bond’’ is oneexecuted in connection with a contractto assure payment as required by stat-ute of all persons supplying labor andmaterial in the execution of the workprovided for in the contract.

(4) Where bonds are required in thesituations described in this part, thebonds shall be obtained from compa-nies holding certificates of authorityas acceptable sureties pursuant to 31CFR part 223, ‘‘Surety CompaniesDoing Business with the UnitedStates.’’

(d) All negotiated contracts (exceptthose for less than the simplified ac-quisition threshold) awarded by recipi-ents shall include a provision to the ef-fect that the recipient, the DoC, the


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Comptroller General of the UnitedStates, or any of their duly authorizedrepresentatives, shall have access toany books, documents, papers andrecords of the contractor which are di-rectly pertinent to a specific programfor the purpose of making audits, ex-aminations, excerpts and tran-scriptions.

(e) All contracts, including smallpurchases, awarded by recipients andtheir contractors shall contain the pro-curement provisions of Appendix A tothis part, as applicable.

REPORTS AND RECORDS

§ 14.50 Purpose of reports and records.Sections 14.51 through 14.53 set forth

the procedures for monitoring and re-porting on the recipient’s financial andprogram performance and the nec-essary standard reporting forms. Theyalso set forth record retention require-ments.

§ 14.51 Monitoring and reporting pro-gram performance.

(a) Recipients are responsible formanaging and monitoring each project,program, subaward, function or activ-ity supported by the award. Recipientsshall monitor subawards to ensure sub-recipients have met the audit require-ments as delineated in § 14.26.

(b) The Grants Officer after coordina-tion with the DoC operating unit shallprescribe the frequency with which theperformance reports shall be sub-mitted. Except as provided in para-graph (f) of this section, performancereports shall not be required more fre-quently than quarterly or, less fre-quently than annually. Annual reportsshall be due 90 calendar days after thegrant year; quarterly or semi-annualreports shall be due 30 days after thereporting period. The Grants Officermay require annual reports before theanniversary dates of multiple yearawards in lieu of these requirements.The final performance reports are due90 calendar days after the expiration ortermination of the award.

(c) If inappropriate, a final technicalor performance report shall not be re-quired after completion of the project.

(d) When required, performance re-ports shall generally contain, for each

award, brief information on each of thefollowing:

(1) A comparison of actual accom-plishments with the goals and objec-tives established for the period, thefindings of the investigator, or both.Whenever appropriate and the outputof programs or projects can be readilyquantified, such quantitative datashould be related to cost data for com-putation of unit costs.

(2) Reasons why established goalswere not met, if appropriate.

(3) Other pertinent information in-cluding, when appropriate, analysisand explanation of cost overruns orhigh unit costs.

(e) Recipients shall not be required tosubmit more than the original and twocopies of performance reports.

(f) Recipients shall immediately no-tify the DoC operating unit of develop-ments that have a significant impacton the award-supported activities.Also, notification shall be given in thecase of problems, delays, or adverseconditions which materially impair theability to meet the objectives of theaward. This notification shall include astatement of the action taken or con-templated, and any assistance neededto resolve the situation.

(g) The DoC may make site visits, asneeded.

(h) Federal awarding agencies shallcomply with clearance requirements of5 CFR part 1320 when requesting per-formance data from recipients.

§ 14.52 Financial reporting.

(a) The following forms or such otherforms as may be approved by OMB areauthorized for obtaining financial in-formation from recipients:

(1) SF–269 or SF–269A, Financial Sta-tus Report.

(i) Each DoC award shall require re-cipients to use the SF–269 or SF–269Ato report the status of funds for allnonconstruction projects or programs.The DoC, however, has the option ofnot requiring the SF–269 or SF–269Awhen the SF–270, Request for Advanceor Reimbursement, or SF–272, Reportof Federal Cash Transactions, is deter-mined to provide adequate informationto meet its needs, except that a finalSF–269 or SF–269A shall be required at


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the completion of the project when theSF–270 is used only for advances.

(ii) The DoC shall prescribe whetherthe report shall be on a cash or accrualbasis. If the DoC requires accrual infor-mation and the recipient’s accountingrecords are not normally kept on theaccrual basis, the recipient shall not berequired to convert its accounting sys-tem, but shall develop such accrual in-formation through best estimatesbased on an analysis of the documenta-tion on hand.

(iii) The DoC shall determine the fre-quency of the Financial Status Reportfor each project or program, consid-ering the size and complexity of theparticular project or program. How-ever, the report shall not be requiredmore frequently than quarterly or lessfrequently than annually. A final re-port shall be required at the comple-tion of the agreement.

(iv) The DoC shall require recipientsto submit the SF–269 or SF–269A (anoriginal and no more than two copies)no later than 30 days after the end ofeach specified reporting period forquarterly and semi-annual reports, and90 calendar days for annual and finalreports. Extensions of reporting duedates may be approved by the GrantsOfficer upon request of the recipient.

(2) SF–272, Report of Federal CashTransactions.

(i) When funds are advanced to re-cipients the DoC shall require each re-cipient to submit the SF–272 and, whennecessary, its continuation sheet, SF–272a. The DoC shall use this report tomonitor funds advanced to recipientsand to obtain disbursement informa-tion for each agreement with the re-cipients.

(ii) The DoC may require forecasts ofFederal funds requirements in the ‘‘Re-marks’’ section of the report.

(iii) When practical and deemed nec-essary, the DoC may require recipientsto report in the ‘‘Remarks’’ section theamount of advances received in excessof three days. Recipients shall provideshort narrative explanations of actionstaken to reduce the excess balances.

(iv) Recipients shall be required tosubmit not more than the original andtwo copies of the SF–272 15 calendardays following the end of each quarter.The Grants Officer may require a

monthly report from those recipientsreceiving advances totaling $1 millionor more per year.

(v) The Grants Officer may waive therequirement for submission of the SF–272 for any one of the following rea-sons:

(A) When monthly advances do notexceed $25,000 per recipient, providedthat such advances are monitoredthrough other forms contained in thissection;

(B) If, in the Grants Officer’s opinion,the recipient’s accounting controls areadequate to minimize excessive Fed-eral advances; or

(C) When the electronic paymentmechanisms provide adequate data.

(b) When the DoC needs additional in-formation or more frequent reports,the following shall be observed:

(1) When additional information isneeded to comply with legislative re-quirements, the Grants Officer shallissue instructions to require recipientsto submit such information under the‘‘Remarks’’ section of the reports.

(2) When the DoC determines that arecipient’s accounting system does notmeet the standards in § 14.21, additionalpertinent information to further mon-itor awards may be obtained upon writ-ten notice to the recipient until suchtime as the system is brought up tostandard. The DoC, in obtaining thisinformation, shall comply with reportclearance requirements of 5 CFR part1320.

(3) Grants Officers are encouraged toshade out any line item on any reportif not necessary.

(4) The DoC may accept the identicalinformation from the recipients in ma-chine readable format or computerprintouts or electronic outputs in lieuof prescribed formats.

(5) The DoC may provide computer orelectronic outputs to recipients whensuch expedites or contributes to the ac-curacy of reporting.

§ 14.53 Retention and access require-ments for records.

(a) This section sets forth require-ments for record retention and accessto records for awards to recipients. TheDoC shall not impose any other recordretention or access requirements uponrecipients.


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(b) Financial records, supporting doc-uments, statistical records, and allother records pertinent to an awardshall be retained for a period of threeyears from the date of submission ofthe final expenditure report or, forawards that are renewed quarterly orannually, from the date of the submis-sion of the quarterly or annual finan-cial report, as authorized by the DoC.The only exceptions are the following:

(1) If any litigation, claim, or audit isstarted before the expiration of the 3-year period, the records shall be re-tained until all litigation, claims oraudit findings involving the recordshave been resolved and final actiontaken.

(2) Records for real property andequipment acquired with Federal fundsshall be retained for 3 years after finaldisposition.

(3) When records are transferred to ormaintained by the DoC, the 3-year re-tention requirement is not applicableto the recipient.

(4) Indirect cost rate proposals, costallocations plans, etc. as specified inparagraph (g) of this section.

(c) Copies of original records may besubstituted for the original records ifauthorized by the DoC.

(d) The Grants Officer after coordina-tion with the DoC operating unit shallrequest transfer of certain records toits custody from recipients when it de-termines that the records possess longterm retention value. However, inorder to avoid duplicate recordkeeping,a DoC operating unit or Grants Officermay make arrangements for recipientsto retain any records that are continu-ously needed for joint use.

(e) The DoC, the Inspector General,Comptroller General of the UnitedStates, or any of their duly authorizedrepresentatives, have the right of time-ly and unrestricted access to anybooks, documents, papers, or otherrecords of recipients that are pertinentto the awards, in order to make audits,examinations, excerpts, transcripts andcopies of such documents. This rightalso includes timely and reasonable ac-cess to a recipient’s personnel for thepurpose of interview and discussion re-lated to such documents. The rights ofaccess in this paragraph are not lim-

ited to the required retention period,but shall last as long as records are re-tained.

(f) Unless required by statute, no DoCoperating unit shall place restrictionson recipients that limit public accessto the records of recipients that arepertinent to an award, except when theDoC operating unit can demonstratethat such records shall be kept con-fidential and would have been exempt-ed from disclosure pursuant to theFreedom of Information Act (5 U.S.C.552) if the records had belonged to theDoC operating unit.

(g) Paragraphs (g)(1) and (g)(2) of thissection apply to the following types ofdocuments, and their supportingrecords: indirect cost rate computa-tions or proposals, cost allocationplans, and any similar accounting com-putations of the rate at which a par-ticular group of costs is chargeable(such as computer usage chargebackrates or composite fringe benefitrates).

(1) If the recipient submits to theFederal awarding agency responsiblefor negotiating the recipient’s indirectcost rate or the subrecipient submitsto the recipient the proposal, plan, orother computation to form the basisfor negotiation of the rate, then the 3-year retention period for its supportingrecords starts on the date of such sub-mission.

(2) If the recipient is not required tosubmit to the cognizant Federal award-ing agency or the subrecipient is notrequired to submit to the recipient theproposal, plan, or other computationfor negotiation purposes, then the 3-year retention period for the proposal,plan, or other computation and its sup-porting records starts at the end of thefiscal year (or other accounting period)covered by the proposal, plan, or othercomputation.

TERMINATION AND ENFORCEMENT

§ 14.60 Purpose of termination and en-forcement.

Sections 14.61 and 14.62 set forth uni-form suspension, termination and en-forcement procedures.


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§ 14.61 Termination.(a) Awards may be terminated in

whole or in part only if paragraph(a)(1), (2) or (3) apply.

(1) By the Grants Officer, if a recipi-ent materially fails to comply with theterms and conditions of an award.

(2) By the Grants Officer with theconsent of the recipient, in which casethe two parties shall agree upon thetermination conditions, including theeffective date and, in the case of par-tial termination, the portion to be ter-minated.

(3) By the recipient upon sending tothe Grants Officer written notificationsetting forth the reasons for such ter-mination, the effective date, and, inthe case of partial termination, theportion to be terminated. However, ifthe Grants Officer determines in thecase of partial termination that the re-duced or modified portion of the grantwill not accomplish the purposes forwhich the grant was made, it may ter-minate the grant in its entirety undereither paragraph (a)(1) or (2).

(b) If costs are allowed under anaward, the responsibilities of the re-cipient referred to in § 14.71(a), includ-ing those for property management asapplicable, shall be considered in thetermination of the award, and provi-sion shall be made for continuing re-sponsibilities of the recipient after ter-mination, as appropriate.

§ 14.62 Enforcement.(a) Remedies for noncompliance. If a re-

cipient materially fails to comply withthe terms and conditions of an award,whether stated in a Federal statute,regulation, assurance, application, ornotice of award, the Grants Officermay, in addition to imposing any ofthe special conditions outlined in§ 14.14, take one or more of the fol-lowing actions, as appropriate in thecircumstances:

(1) Temporarily withhold paymentsof funds pending correction of the defi-ciency by the recipient or more severeenforcement action by the Grants Offi-cer after coordination with the DoC op-erating unit.

(2) Disallow (that is, deny both use offunds and any applicable matchingcredit for) all or part of the cost of theactivity or action not in compliance.

(3) Wholly or partly suspend or ter-minate the current award.

(4) Withhold further awards for theproject or program.

(5) Take other remedies that may belegally available.

(b) Hearings and appeals. In taking anenforcement action, the awardingagency shall provide the recipient anopportunity for hearing, appeal, orother administrative proceeding towhich the recipient is entitled underany statute or regulation applicable tothe action involved.

(c) Effects of suspension and termi-nation. Costs of a recipient resultingfrom obligations incurred by the re-cipient during a suspension or aftertermination of an award are not allow-able unless the awarding agency ex-pressly authorizes them in the noticeof suspension or termination or subse-quently. Other recipient costs duringsuspension or after termination whichare necessary and not reasonablyavoidable are allowable if paragraphs(c) (1) and (2) of this section apply.

(1) The costs result from obligationswhich were properly incurred by the re-cipient before the effective date of sus-pension or termination, are not in an-ticipation of it, and in the case of a ter-mination, are noncancellable.

(2) The costs would be allowable ifthe award were not suspended or ex-pired normally at the end of the fund-ing period in which the terminationtakes effect.

(d) Relationship to debarment and sus-pension. The enforcement remediesidentified in this section, includingsuspension and termination, do notpreclude a recipient from being subjectto debarment and suspension underE.O.s 12549 and 12689 and the DoC im-plementing regulations (see § 14.13) at15 CFR part 26.

Subpart D—After-the-AwardRequirements

§ 14.70 Purpose.

Sections 14.71 through 14.73 containcloseout procedures and other proce-dures for subsequent disallowances andadjustments.


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§ 14.71 Closeout procedures.

(a) Recipients shall submit, within 90calendar days after the date of comple-tion of the award, all financial, per-formance, and other reports as requiredby the terms and conditions of theaward. The Grants Officer may approveextensions when requested by the re-cipient.

(b) Unless the Grants Officer author-izes an extension, a recipient shall liq-uidate all obligations incurred underthe award not later than 90 calendardays after the funding period or thedate of completion as specified in theterms and conditions of the award or inagency implementing instructions.

(c) The Grants Officer shall authorizeand the DoC shall make prompt pay-ments to a recipient for allowable re-imbursable costs under the award beingclosed out.

(d) The recipient shall promptly re-fund any balances of unobligated fundsthat the DoC has advanced or paid andthat is not authorized to be retained bythe recipient for use in other projects.OMB Circular A–129 governsunreturned amounts that become de-linquent debts.

(e) When authorized by the terms andconditions of the award, the Grants Of-ficer shall make a settlement for anyupward or downward adjustments tothe Federal share of costs after close-out reports are received.

(f) The recipient shall account forany real and personal property ac-quired with Federal funds or receivedfrom the Federal Government in ac-cordance with §§ 14.31 through 14.37.

(g) In the event a final audit has notbeen performed prior to the closeout ofan award, the DoC shall retain theright to recover an appropriate amountafter fully considering the rec-ommendations on disallowed costs re-sulting from the final audit.

§ 14.72 Subsequent adjustments andcontinuing responsibilities.

(a) The closeout of an award does notaffect any of the following:

(1) The right of the DoC to disallowcosts and recover funds on the basis ofa later audit or other review.

(2) The obligation of the recipient toreturn any funds due as a result of

later refunds, corrections, or othertransactions.

(3) Audit requirements in § 14.26.(4) Property management require-

ments in §§ 14.31 through 14.37.(5) Records retention as required in

§ 14.53.(b) After closeout of an award, a rela-

tionship created under an award maybe modified or ended in whole or inpart with the consent of the DoC andthe recipient, provided the responsibil-ities of the recipient referred to in§ 14.73(a), including those for propertymanagement as applicable, are consid-ered and provisions made for con-tinuing responsibilities of the recipi-ent, as appropriate.

§ 14.73 Collection of amounts due.(a) Any funds paid to a recipient in

excess of the amount to which the re-cipient is finally determined to be enti-tled under the terms and conditions ofthe award constitute a debt to the Fed-eral Government. If not paid within areasonable period after the demand forpayment, the Grants Officer may re-duce the debt by:

(1) Making an administrative offsetagainst other requests for reimburse-ments;

(2) Withholding advance paymentsotherwise due to the recipient; or

(3) Taking other action permitted bystatute.

(b) Except as otherwise provided bylaw, the DoC shall charge interest onan overdue debt in accordance with 4CFR Chapter II, ‘‘Federal Claims Col-lection Standards.’’

APPENDIX A TO PART 14—CONTRACTPROVISIONS

All contracts, awarded by a recipient in-cluding small purchases, shall contain thefollowing provisions as applicable:

1. Equal Employment Opportunity—All con-tracts shall contain a provision requiringcompliance with E.O. 11246, ‘‘Equal Employ-ment Opportunity,’’ as amended by E.O.11375, ‘‘Amending Executive Order 11246 Re-lating to Equal Employment Opportunity,’’and as supplemented by regulations at 41CFR part 60, ‘‘Office of Federal ContractCompliance Programs, Equal EmploymentOpportunity, Department of Labor.’’

2. Copeland ‘‘Anti-Kickback’’ Act (18 U.S.C.874 and 40 U.S.C. 276c)—All contracts and sub-grants in excess of $2000 for construction or


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repair awarded by recipients and subrecipi-ents shall include a provision for compliancewith the Copeland ‘‘Anti-Kickback’’ Act (18U.S.C. 874), as supplemented by Departmentof Labor regulations (29 CFR part 3, ‘‘Con-tractors and Subcontractors on Public Build-ing or Public Work Financed in Whole or inPart by Loans or Grants from the UnitedStates’’). The Act provides that each con-tractor or subrecipient shall be prohibitedfrom inducing, by any means, any personemployed in the construction, completion, orrepair of public work, to give up any part ofthe compensation to which he is otherwiseentitled. The recipient shall report all sus-pected or reported violations to the DoC op-erating unit.

3. Davis-Bacon Act, as amended (40 U.S.C.276a to a–7)—When required by Federal pro-gram legislation, all construction contractsawarded by the recipients and subrecipientsof more than $2000 shall include a provisionfor compliance with the Davis-Bacon Act (40U.S.C. 276a to a–7) and as supplemented byDepartment of Labor regulations (29 CFRpart 5, ‘‘Labor Standards Provisions Applica-ble to Contracts Governing Federally Fi-nanced and Assisted Construction’’). Underthis Act, contractors shall be required to paywages to laborers and mechanics at a ratenot less than the minimum wages specifiedin a wage determination made by the Sec-retary of Labor. In addition, contractorsshall be required to pay wages not less thanonce a week. The recipient shall place a copyof the current prevailing wage determinationissued by the Department of Labor in eachsolicitation and the award of a contract shallbe conditioned upon the acceptance of thewage determination. The recipient shall re-port all suspected or reported violations tothe DoC operating unit.

4. Contract Work Hours and Safety StandardsAct (40 U.S.C. 327–333)—Where applicable, allcontracts awarded by recipients exceeding$100,000 for construction contracts and forother contracts that involve the employmentof mechanics or laborers shall include a pro-vision for compliance with Sections 102 and107 of the Contract Work Hours and SafetyStandards Act (40 U.S.C. 327–333), as supple-mented by Department of Labor regulations(29 CFR Part 5). Under Section 102 of the Act,each contractor shall be required to computethe wages of every mechanic and laborer onthe basis of a standard work week of 40hours. Work in excess of the standard workweek is permissible provided that the workeris compensated at a rate of not less than 11⁄2times the basic rate of pay for all hoursworked in excess of 40 hours in the workweek. Section 107 of the Act is applicable toconstruction work and provides that no la-borer or mechanic shall be required to workin surroundings or under working conditionswhich are unsanitary, hazardous or dan-

gerous. These requirements do not apply tothe purchases of supplies or materials or ar-ticles ordinarily available on the open mar-ket, or contracts for transportation or trans-mission of intelligence.

5. Rights to Inventions Made Under a Con-tract or Agreement—Contracts or agreementsfor the performance of experimental, devel-opmental, or research work shall provide forthe rights of the Federal Government andthe recipient in any resulting invention inaccordance with 37 CFR part 401, ‘‘Rights toInventions Made by Nonprofit Organizationsand Small Business Firms Under Govern-ment Grants, Contracts and CooperativeAgreements,’’ and any implementing regula-tions issued by the awarding agency.

6. Clean Air Act (42 U.S.C. 7401 et seq.) andthe Federal Water Pollution Control Act (33U.S.C. 1251 et seq.), as amended—Contractsand subgrants of amounts in excess of$100,000 shall contain a provision that re-quires the recipient to agree to comply withall applicable standards, orders or regula-tions issued pursuant to the Clean Air Act(42 U.S.C. 7401 et seq.) and the Federal WaterPollution Control Act as amended (33 U.S.C.1251 et seq.). Violations shall be reported tothe DoC operating unit and the Regional Of-fice of the Environmental Protection Agency(EPA).

7. Byrd Anti-Lobbying Amendment (31 U.S.C.1352)—Contractors who apply or bid for anaward exceeding $100,000 shall file the re-quired certification. Each tier certifies tothe tier above that it will not and has notused Federal appropriated funds to pay anyperson or organization for influencing or at-tempting to influence an officer or employeeof any agency, a member of Congress, officeror employee of Congress, or an employee of amember of Congress in connection with ob-taining any Federal contract, grant or anyother award covered by 31 U.S.C. 1352. Eachtier shall also disclose any lobbying withnon-Federal funds that takes place in con-nection with obtaining any Federal award.Such disclosures are forwarded from tier totier up to the recipient.

8. Debarment and Suspension (E.O.s 12549and 12689)—No contract shall be made to par-ties listed on the General Services Adminis-tration’s List of Parties Excluded from Fed-eral Procurement or Nonprocurement Pro-grams in accordance with E.O.s 12549 and12689, ‘‘Debarment and Suspension’’ as imple-mented by DoC regulations at 15 CFR part26. This list contains the names of partiesdebarred, suspended, or otherwise excludedby agencies, and contractors declared ineli-gible under statutory or regulatory author-ity other than E.O. 12549. Contractors with


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awards that exceed the simplified acquisi-tion threshold shall provide the required cer-tification regarding its exclusion status andthat of its principal employees.

[63 FR 47156, Sept. 4, 1998, as amended at 66FR 49828, Oct. 1, 2001]

PART 15—LEGAL PROCEEDINGS

Subpart A—Service of Process

Sec.15.1 Scope and purpose.15.2 Definitions.15.3 Acceptance of service of process.

Subpart B—Testimony by Employees andthe Production of Documents in LegalProceedings

15.11 Scope.15.12 Definitions.15.13 Demands for testimony or production

of documents: Department policy.15.14 Demand for testimony or production

of documents: Department procedures.15.15 Procedures when a Department em-

ployee receives a subpoena.15.16 Legal proceedings between private

litigants: Expert or opinion testimony.15.17 Demands or requests in legal pro-

ceedings for records protected by con-fidentiality statutes.

15.18 Testimony of Department employeesin proceedings involving the UnitedStates.

Subpart C—Involuntary Child and SpousalSupport Allotments of NOAA Corps Officers

15.21 Purpose.15.22 Applicability and scope.15.23 Definitions.15.24 Policy.15.25 Procedures.

Subpart D—Statement of Policy and Proce-dures Regarding Indemnification ofDepartment of Commerce Employees

15.31 Policy.15.32 Procedures for the handling of law-

suits against Department employeesarising within the scope of their office oremployment.

AUTHORITY: 5 U.S.C. 301; 15 U.S.C. 1501, 1512,1513, 1515 and 1518; Reorganization Plan No. 5of 1950; 3 CFR, 1949–1953 Comp., p. 1004; 44U.S.C. 3101; subpart C is issued under 37U.S.C. 101, 706; 15 U.S.C. 1673; 42 U.S.C. 665.

EDITORIAL NOTE: Nomenclature changes topart 15 appear at 62 FR 19669, Apr. 23, 1997.

Subpart A—Service of Process

SOURCE: 53 FR 41318, Oct. 21, 1988, unlessotherwise noted. Redesignated at 62 FR 19669,Apr. 23, 1997.

§ 15.1 Scope and purpose.(a) This subpart sets forth the proce-

dures to be followed when a summonsor complaint is served on the Depart-ment, a component, or the Secretary ora Department employee in his or herofficial capacity.

(b) This subpart is intended to ensurethe orderly execution of the affairs ofthe Department and not to impede anylegal proceeding.

(c) This subpart does not apply tosubpoenas. The procedures to be fol-lowed with respect to subpoenas are setout in subpart B.

(d) This subpart does not apply toservice of process made on a Depart-ment employee personally on mattersnot related to official business of theDepartment or to the official respon-sibilities of the Department employee.

[53 FR 41318, Oct. 21, 1988. Redesignated andamended at 62 FR 19669, 19670, Apr. 23, 1997]

§ 15.2 Definitions.For the purpose of this subpart:(a) General Counsel means the Gen-

eral Counsel of the United States De-partment of Commerce or other De-partment employee to whom the Gen-eral Counsel has delegated authority toact under this subpart, or the chieflegal officer (or designee) of the De-partment of Commerce component con-cerned.

(b) Component means Office of theSecretary or an operating unit of theDepartment as defined in DepartmentOrganization Order 1–1.

(c) Department means the Departmentof Commerce.

(d) Department employee means anyofficer or employee of the Department,including commissioned officers of theNational Oceanic and Atmospheric Ad-ministration.

(e) Legal proceeding means a pro-ceeding before a tribunal constitutedby law, including a court, an adminis-trative body or commission, or an ad-ministrative law judge or hearing offi-cer.
