In the final rule, Treasury also
requires that broadband projects must
meet a standard of reliably delivering at
least 100 Mbps download speeds and
upload speeds, or in cases where it is
not practicable to do so, reliably
delivering at least 100 Mbps download
speed and between at least 20 Mbps and
100 Mbps upload speed while being
scalable to 100 Mbps upload and
download speeds. Treasury expects that
this threshold will yield long-term
benefits and allow networks to meet
both pandemic-related and future needs.
The Federal Communications
Commission (FCC) estimates that
currently a household with two to three
remote learners using the internet
simultaneously needs a connection
supporting 100 Mbps download
speeds.395 While a lower threshold may
have resulted in lower near-term costs
to build, it would have potentially
constrained future utility from the
infrastructure by producing
infrastructure that would more
quickly—potentially in the near-term—
become obsolete and no longer meet
household needs, potentially requiring
sooner replacement and generally
decreasing the return on investment. As
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Packet Pg. 224 Attachment: San Jacinto ARPA Infrastructure Funding Agreement (ARPA Agreement with Riverside County) 4444 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations such, projects meeting a lower threshold
could not be considered ‘‘necessary’’
investments in broadband
infrastructure, so Treasury has retained
the threshold from the interim final
rule.
Further, the final rule adds a
requirement that recipients address the
affordability needs of low-income
consumers in accessing broadband
networks funded by SLFRF, either by
requiring service providers that provide
service to households to either
participate in the FCC’s Affordable
Connectivity Program (ACP), or a broadbased affordability program with commensurate benefits. Treasury
believes that this requirement will
increase the number of customers that
are able to take advantage of broadband
infrastructure funded by SLFRF,
increasing the effectiveness of funds in
connecting households and businesses
to high-speed internet that is critical to
work, health, and education. There is a
potential that this requirement may
marginally increase project costs for
recipients and providers, but this
impact is uncertain, given the varying
business models and pricing structures
of broadband projects and providers.
Labor Standards
In this Supplementary Information for
the final rule, Treasury encourages
recipients to ensure that capital
expenditures to respond to the public
health and negative economic impacts
of the pandemic and water, sewer, and
broadband projects use strong labor
standards, including, for example,
project labor agreements and
community benefits agreements that
offer wages at or above the prevailing
rate and include local hire provisions.
Treasury believes that its
encouragement of labor standards
carries benefits because it will ensure
that workers have access to strong
employment opportunities associated
with infrastructure projects, which will
in turn aid the economic recovery.
Treasury believes that infrastructure
projects may also benefit from stronger
labor standards due to the potential of
these standards to ensure a stronger
skilled labor supply and minimize labor
disputes and workplace injuries, which
can result in costly disruptions to
projects. Treasury assesses that these
benefits will increase the economy and
efficiency of infrastructure projects
undertaken through SLFRF and will
outweigh the potential for a marginal
increase in labor costs.
Splitting Payments to Recipients
Treasury is required by statute to
deliver funds to local governments in
two payments separated by at least
twelve months, and the interim final
rule provided for split payments to a
majority of states as well. As discussed
above, splitting payments ensures that
recipients can adapt spending plans to
evolving economic conditions and that
at least some of the economic benefits
will be realized in 2022 or later.
However, consistent with authorities
granted to Treasury in the statute,
Treasury recognizes that a subset of
states with significant remaining
elevation in the unemployment rate
could face heightened additional near
term needs to aid unemployed workers
and stimulate the recovery. Therefore,
for a subset of state governments,
Treasury has provided funds in one
payment. Treasury believes that this
approach strikes an appropriate balance
between the general reasons to provide
funds in two payments and the
heightened additional near-term needs
in specific states. As discussed above,
Treasury set a threshold based on
historical analysis of unemployment
rates in recessions.
Reaching Underserved Communities
Finally, the final rule aims to promote
and streamline the provision of
assistance to individuals and
communities in greatest need,
particularly communities that have been
historically underserved and have
experienced disproportionate impacts of
the COVID–19 crisis. Targeting relief is
in line with Executive Order 13985,
‘‘Advancing Racial Equity and Support
for Underserved Communities Through
the Federal Government,’’ which laid
out an Administration-wide priority to
support ‘‘equity for all, including people
of color and others who have been
historically underserved, marginalized,
and adversely affected by persistent
poverty and inequality.’’ To this end,
the final rule enumerates a list of
services that may be provided using
SLFRF funds in disproportionately
impacted communities, including lowincome areas, to address the more severe impacts of the pandemic in these
communities; establishes the
characteristics of essential workers
eligible for premium pay and
encouragement to serve workers based
on financial need; provides that
recipients may use SLFRF funds to
restore state and local workforces,
where women and people of color are
disproportionately represented; and
requires that broadband infrastructure
projects participate in programs to
support affordability of broadband
service. Collectively, these provisions
will promote use of resources to
facilitate the provision of assistance to
individuals and communities with the
greatest need.
Analysis of Costs
This regulatory action will generate
administrative costs relative to a prestatutory baseline. This includes, chiefly, costs required to administer
SLFRF funds, oversee subrecipients and
beneficiaries, and file periodic reports
with Treasury. It also requires states to
allocate SLFRF funds to nonentitlement
units, which are smaller units of local
government that are statutorily required
to receive their funds through states.
Treasury expects that the administrative
burden associated with this program
will be moderate for a grant program of
its size. Treasury expects that many
recipients receive direct or indirect
funding from federal government
programs and that many have
familiarity with how to administer and
report on federal funds or grant funding
provided by other entities. In particular,
states, territories, and large localities
will have received funds from the
Coronavirus Relief Fund (CRF) and
Treasury expects them to rely heavily
on established processes developed
through that program or other prior
grant funding, mitigating burden on
these governments. Treasury has
enhanced the level of recipient
reporting as compared to the CRF,
incorporating feedback from the
Government Accountability Office and
others that additions would improve the
oversight of recipients’ use of funds. To
balance the oversight benefits with the
costs of added reporting burdens,
Treasury has incorporated other
mechanisms to mitigate burden. For
example, Treasury is ‘‘tiering’’ reporting
requirements so that recipients that
receive relatively lesser amounts of
SLFRF funds are required to submit less
frequent reports than recipients
receiving greater amounts of funds.
Treasury is noting administrative costs
as a generally allowable use of SLFRF
funds, which defrays administrative
expenses to recipients that may be
needed to comply with reporting
requirements. Treasury has also
provided options for recipients to use
eligibility thresholds they are already
familiar with during administration of
SLFRF funds, which will enable
recipients to avoid the costs of setting
up new programs and reporting
mechanisms to meet reporting and
compliance requirements. For example,
Treasury has permitted recipients to use
‘‘categorical eligibility’’ when delivering
assistance to particular groups, such as
impacted or disproportionately
impacted households.
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Packet Pg. 225 Attachment: San Jacinto ARPA Infrastructure Funding Agreement (ARPA Agreement with Riverside County) Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 4445 396See Coronavirus State and Local Fiscal
Recovery Funds, Frequently Asked Questions, 10.2,
as of July 19, 2021; https://home.treasury.gov/
system/files/136/SLFRPFAQ.pdf.
In making implementation choices,
Treasury has hosted numerous
consultations with a diverse range of
direct recipients—states, cities,
counties, and Tribal governments—
along with various communities across
the United States, including those that
are underserved. Furthermore, Treasury
has made clear in guidance that SLFRF
funds may be used to cover certain
expenses related to administering
programs established using SLFRF
funds.396
Executive Order 13132
Executive Order 13132 (entitled
Federalism) prohibits an agency from
publishing any rule that has federalism
implications if the rule either imposes
substantial, direct compliance costs on
state, local, and Tribal governments, and
is not required by statute, or preempts
state law, unless the agency meets the
consultation and funding requirements
of section 6 of the Executive Order. This
final rule does not have federalism
implications within the meaning of the
Executive Order and does not impose
substantial, direct compliance costs on
state, local, and Tribal governments or
preempt state law within the meaning of
the Executive Order. The compliance
costs are imposed on state, local, and
Tribal governments by sections 602 and
603 of the Social Security Act, as
enacted by the ARPA. Notwithstanding
the above, Treasury has engaged in
efforts to consult and work
cooperatively with affected state, local,
and Tribal government officials and
associations in the process of
developing the interim final rule and
this final rule. Pursuant to the
requirements set forth in section 8(a) of
Executive Order 13132, Treasury
certifies that it has complied with the
requirements of Executive Order 13132.
Administrative Procedure Act
The Administrative Procedure Act
(APA), 5 U.S.C. 551 et seq., generally
requires public notice and an
opportunity for comment before a rule
becomes effective. However, the APA
provides that the requirements of 5
U.S.C. 553 do not apply ‘‘to the extent
that there is involved . . . a matter
relating to agency . . . grants.’’ The
APA also provides an exception to
ordinary notice-and-comment
procedures ‘‘when the agency for good
cause finds (and incorporates the
finding and a brief statement of reasons
therefor in the rules issued) that notice
and public procedure thereon are
impracticable, unnecessary, or contrary
to the public interest.’’ 5 U.S.C.
553(b)(B). The interim final rule was
issued without prior notice and
comment procedures because it
implemented statutory conditions on
the eligible uses of SLFRF funds, and
addressed the payment of those funds,
the reporting on uses of funds, and
potential consequences of ineligible
uses to help address the economic and
public health emergency. See the
SUPPLEMENTARY INFORMATION section of
the May 17, 2021 interim final rule for
the applicability of the requirements of
5 U.S.C. 553. In addition, under the
exception discussed in that section for
matters relating to agency grants, the
requirements of 5 U.S.C. 553 also do not
apply to this final rule. After careful
consideration of the comments received,
this final rule adopts the May 17, 2021
interim final rule with the revisions
discussed in this SUPPLEMENTARY
INFORMATION.
Congressional Review Act
The Administrator of OIRA has
determined that this is a major rule for
purposes of Subtitle E of the Small
Business Regulatory Enforcement and
Fairness Act of 1996 (also known as the
Congressional Review Act or CRA) (5
U.S.C. 804(2) et seq.). Under the CRA,
a major rule generally may take effect no
earlier than 60 days after the rule is
published in the Federal Register. 5
U.S.C. 801(a)(3).
Paperwork Reduction Act
The information collections
associated with the SLFRF program
have been reviewed and approved by
OMB pursuant to the Paperwork
Reduction Act (44 U.S.C. Chapter 35)
(PRA) and assigned control number
1505–0271. Under the PRA, an agency
may not conduct or sponsor, and a
respondent is not required to respond
to, an information collection unless it
displays a valid OMB control number.
Estimates of hourly burden under this
program are set forth in the table below.
Reporting Number
respondents
Number
responses
per
respondent
Total
responses
Hours per
response
Total
burden
in hours
Cost to
respondents
($48.80 per
hour *)
Recipient Payment Form ...................................... 5,050 1 5,050 .25 (15 minutes) .... 1,262.5 $61,610 Acceptance of Award Terms ................................ 5,050 1 5,050 .25 (15 minutes) .... 1,262.5 61,610 Title VI Assurances .............................................. 5,050 1 5,050 .50 (30 minutes) .... 2,525 123,220 Tribal Employment Information Form ................... 584 1 584 .75 (45 minutes) .... 438 21,374 Request for Extension Form ................................ 96 1 96 1 ............................ 96 4,685 Annual Recovery Plan Performance Report ........ 430 1 430 100 ........................ 43,000 2,098,400 NEU Distribution Template ................................... 55 2 110 10 .......................... 1,100 53,680 Non-UGLG Distribution Template ........................ 55 2 110 5 ............................ 550 26,840 Transfer Forms ..................................................... 1,500 1 1,500 1 ............................ 1,500 73,200 Project and Expenditure Report ........................... 37,000 1 37,000 5 ............................ 185,000 9,028,000 Total .............................................................. 54,870 .................... 54,980 ............................... 236,735 11,552,619 * Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, Accountants and Auditors, on the internet at https:// www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm (visited March 28, 2020). Base wage of $33.89/hour increased by 44 percent to account for fully loaded employer cost of employee compensation (benefits, etc.) for a fully loaded wage rate of $48.80.
Regulatory Flexibility Analysis
The Regulatory Flexibility Act (RFA)
generally requires that when an agency
issues a proposed rule, or a final rule
pursuant to section 553(b) of the
Administrative Procedure Act or
another law, the agency must prepare a
regulatory flexibility analysis that meets
the requirements of the RFA and
publish such analysis in the Federal
Register. 5 U.S.C. 603, 604.
Rules that are exempt from notice and
comment under the APA or any other
law are also exempt from the RFA
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Packet Pg. 226 Attachment: San Jacinto ARPA Infrastructure Funding Agreement (ARPA Agreement with Riverside County) 4446 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations requirements, including the requirement
to conduct a regulatory flexibility
analysis, when among other things the
agency for good cause finds that notice
and public procedure are impracticable,
unnecessary, or contrary to the public
interest. Because this rule is exempt
from the notice and comment
requirements of the APA, Treasury is
not required to conduct a regulatory
flexibility analysis.
Rule Text
List of Subjects in 31 CFR Part 35
Executive compensation, State and
Local Governments, Tribal
Governments, Public health emergency.
For the reasons stated in the
preamble, the United States Department
of the Treasury amends 31 CFR part 35
as follows:
PART 35—PANDEMIC RELIEF
PROGRAMS
■ 1. Revise Subpart A to read as follows:
Subpart A—Coronavirus State and
Local Fiscal Recovery Funds
Sec.
35.1 Purpose.
35.2 Applicability.
35.3 Definitions.
35.4 Reservation of authority, reporting.
35.5 Use of funds.
35.6 Eligible uses.
35.7 Pensions.
35.8 Tax.
35.9. Compliance with applicable laws.
35.10. Recoupment.
35.11 Payments to States.
35.12. Distributions to nonentitlement units
of local government and units of general
local government.
Authority: 42 U.S.C. 802(f); 42 U.S.C.
803(f).
§ 35.1 Purpose.
This part implements section 9901 of
the American Rescue Plan Act (Subtitle
M of Title IX of Pub. L. 117–2), which
amends Title VI of the Social Security
Act (42 U.S.C. 801 et seq.) by adding
sections 602 and 603 to establish the
Coronavirus State Fiscal Recovery Fund
and Coronavirus Local Fiscal Recovery
Fund.
§ 35.2 Applicability.
This part applies to states, territories,
Tribal governments, metropolitan cities,
nonentitlement units of local
government, counties, and units of
general local government that accept a
payment or transfer of funds made
under section 602 or 603 of the Social
Security Act.
§ 35.3 Definitions.
Baseline means tax revenue of the
recipient for its fiscal year ending in
2019, adjusted for inflation in each
reporting year using the Bureau of
Economic Analysis’s Implicit Price
Deflator for the gross domestic product
of the United States.
Capital expenditures has the same
meaning given in 2 CFR 200.1.
County means a county, parish, or
other equivalent county division (as
defined by the Census Bureau).
Covered benefits include, but are not
limited to, the costs of all types of leave
(vacation, family-related, sick, military,
bereavement, sabbatical, jury duty),
employee insurance (health, life, dental,
vision), retirement (pensions, 401(k)),
unemployment benefit plans (Federal
and State), workers’ compensation
insurance, and Federal Insurance
Contributions Act taxes (which includes
Social Security and Medicare taxes).
Covered change means a change in
law, regulation, or administrative
interpretation that reduces any tax (by
providing for a reduction in a rate, a
rebate, a deduction, a credit, or
otherwise) or delays the imposition of
any tax or tax increase. A change in law
includes any final legislative or
regulatory action, a new or changed
administrative interpretation, and the
phase-in or taking effect of any statute
or rule if the phase-in or taking effect
was not prescribed prior to the start of
the covered period.
Covered period means, with respect to
a state or territory, the period that:
(1) Begins on March 3, 2021; and
(2) Ends on the last day of the fiscal
year of such State or territory in which
all funds received by the State or
territory from a payment made under
section 602 or 603 of the Social Security
Act have been expended or returned to,
or recovered by, the Secretary.
COVID–19 means the Coronavirus
Disease 2019.
COVID–19 public health emergency
means the period beginning on January
27, 2020 and lasting until the
termination of the national emergency
concerning the COVID–19 outbreak
declared pursuant to the National
Emergencies Act (50 U.S.C. 1601 et
seq.).
Deposit means an extraordinary
payment of an accrued, unfunded
liability. The term deposit does not refer
to routine contributions made by an
employer to pension funds as part of the
employer’s obligations related to
payroll, such as either a pension
contribution consisting of a normal cost
component related to current employees
or a component addressing the
amortization of unfunded liabilities
calculated by reference to the
employer’s payroll costs.
Eligible employer means an employer
of an eligible worker who performs
essential work.
Eligible workers means workers
needed to maintain continuity of
operations of essential critical
infrastructure sectors, including health
care; emergency response; sanitation,
disinfection, and cleaning work;
maintenance work; grocery stores,
restaurants, food production, and food
delivery; pharmacy; biomedical
research; behavioral health work;
medical testing and diagnostics; homeand community-based health care or assistance with activities of daily living;
family or childcare; social services
work; public health work; vital services
to Tribes; any work performed by an
employee of a State, local, or Tribal
government; educational work, school
nutrition work, and other work required
to operate a school facility; laundry
work; elections work; solid waste or
hazardous materials management,
response, and cleanup work; work
requiring physical interaction with
patients; dental care work;
transportation and warehousing; work at
hotel and commercial lodging facilities
that are used for COVID–19 mitigation
and containment; work in a mortuary;
and work in critical clinical research,
development, and testing necessary for
COVID–19 response.
(1) With respect to a recipient that is
a metropolitan city, nonentitlement unit
of local government, or county, workers
in any additional non-public sectors as
each chief executive officer of such
recipient may designate as critical to
protect the health and well-being of the
residents of their metropolitan city,
nonentitlement unit of local
government, or county; or
(2) With respect to a State, territory,
or Tribal government, workers in any
additional non-public sectors as each
Governor of a State or territory, or each
Tribal government, may designate as
critical to protect the health and wellbeing of the residents of their State, territory, or Tribal government.
Essential work means work that:
(1) Is not performed while
teleworking from a residence; and
(2) Involves:
(i) Regular in-person interactions with
patients, the public, or coworkers of the
individual that is performing the work;
or
(ii) Regular physical handling of items
that were handled by, or are to be
handled by patients, the public, or
coworkers of the individual that is
performing the work.
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Packet Pg. 227 Attachment: San Jacinto ARPA Infrastructure Funding Agreement (ARPA Agreement with Riverside County) Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 4447 Funds means, with respect to a
recipient, amounts provided to the
recipient pursuant to a payment made
under section 602(b) or 603(b) of the
Social Security Act or transferred to the
recipient pursuant to section 603(c)(4)
of the Social Security Act.
General revenue means money that is
received from tax revenue, current
charges, and miscellaneous general
revenue, excluding refunds and other
correcting transactions and proceeds
from issuance of debt or the sale of
investments, agency or private trust
transactions, and intergovernmental
transfers from the Federal Government,
including transfers made pursuant to
section 9901 of the American Rescue
Plan Act. General revenue also includes
revenue from liquor stores that are
owned and operated by state and local
governments. General revenue does not
include revenues from utilities, except
recipients may choose to include
revenue from utilities that are part of
their own government as general
revenue provided the recipient does so
consistently over the remainder of the
period of performance. Revenue from
Tribal business enterprises must be
included in general revenue.
Intergovernmental transfers means
money received from other
governments, including grants and
shared taxes.
Low-income household means a
household with:
(1) Income at or below 185 percent of
the Federal Poverty Guidelines for the
size of its household based on the
poverty guidelines published most
recently by the Department of Health
and Human Services; or
(2) Income at or below 40 percent of
the Area Median Income for its county
and size of household based on data
published most recently by the
Department of Housing and Urban
Development.
Micro-business means a small
business that has five or fewer
employees, one or more of whom owns
the small business.
Moderate-income household means a
household with:
(1) Income at or below 300 percent of
the Federal Poverty Guidelines for the
size of its household based on poverty
guidelines published most recently by
the Department of Health and Human
Services; or
(2) Income at or below 65 percent of
the Area Median Income for its county
and size of household based on data
published most recently by the
Department of Housing and Urban
Development.
Metropolitan city has the meaning
given that term in section 102(a)(4) of
the Housing and Community
Development Act of 1974 (42 U.S.C.
5302(a)(4)) and includes cities that
relinquish or defer their status as a
metropolitan city for purposes of
receiving allocations under section 106
of such Act (42 U.S.C. 5306) for fiscal
year 2021.
Net reduction in total spending is
measured as the State or territory’s total
spending for a given reporting year
excluding its spending of funds,
subtracted from its total spending for its
fiscal year ending in 2019, adjusted for
inflation using the Bureau of Economic
Analysis’s Implicit Price Deflator for the
gross domestic product of the United
States for that reporting year.
Nonentitlement unit of local
government means a ‘‘city,’’ as that term
is defined in section 102(a)(5) of the
Housing and Community Development
Act of 1974 (42 U.S.C. 5302(a)(5)), that
is not a metropolitan city.
Nonprofit means a nonprofit
organization that is exempt from Federal
income taxation and that is described in
section 501(c)(3) or 501(c)(19) of the
Internal Revenue Code.
Obligation means an order placed for
property and services and entering into
contracts, subawards, and similar
transactions that require payment.
Pension fund means a defined benefit
plan and does not include a defined
contribution plan.
Period of performance means the time
period described in § 35.5 during which
a recipient may obligate and expend
funds in accordance with sections
602(c)(1) and 603(c)(1) of the Social
Security Act and this subpart.
Premium pay means an amount of up
to $13 per hour that is paid to an
eligible worker, in addition to wages or
remuneration the eligible worker
otherwise receives, for all work
performed by the eligible worker during
the COVID–19 public health emergency.
Such amount may not exceed $25,000 in
total over the period of performance
with respect to any single eligible
worker. Premium pay may be awarded
to non-hourly and part-time eligible
workers performing essential work.
Premium pay will be considered to be
in addition to wages or remuneration
the eligible worker otherwise receives if,
as measured on an hourly rate, the
premium pay is:
(1) With regard to work that the
eligible worker previously performed,
pay and remuneration equal to the sum
of all wages and remuneration
previously received plus up to $13 per
hour with no reduction, substitution,
offset, or other diminishment of the
eligible worker’s previous, current, or
prospective wages or remuneration; or
(2) With regard to work that the
eligible worker continues to perform,
pay of up to $13 per hour that is in
addition to the eligible worker’s regular
rate of wages or remuneration, with no
reduction, substitution, offset, or other
diminishment of the worker’s current
and prospective wages or remuneration.
Qualified census tract has the same
meaning given in 26 U.S.C.
42(d)(5)(B)(ii)(I).
Recipient means a State, territory,
Tribal government, metropolitan city,
nonentitlement unit of local
government, county, or unit of general
local government that receives a
payment made under section 602(b) or
603(b) of the Social Security Act or
transfer pursuant to section 603(c)(4) of
the Social Security Act.
Reporting year means a single year or
partial year within the covered period,
aligned to the current fiscal year of the
State or territory during the covered
period.
Secretary means the Secretary of the
Treasury.
State means each of the 50 States and
the District of Columbia.
Small business means a business
concern or other organization that:
(1) Has no more than 500 employees
or, if applicable, the size standard in
number of employees established by the
Administrator of the Small Business
Administration for the industry in
which the business concern or
organization operates, and
(2) Is a small business concern as
defined in section 3 of the Small
Business Act (15 U.S.C. 632).
Tax revenue means revenue received
from a compulsory contribution that is
exacted by a government for public
purposes excluding refunds and
corrections and, for purposes of § 35.8,
intergovernmental transfers. Tax
revenue does not include payments for
a special privilege granted or service
rendered, employee or employer
assessments and contributions to
finance retirement and social insurance
trust systems, or special assessments to
pay for capital improvements.
Territory means the Commonwealth
of Puerto Rico, the United States Virgin
Islands, Guam, the Commonwealth of
the Northern Mariana Islands, or
American Samoa.
Title I eligible schools means schools
eligible to receive services under section
1113 of Title I, Part A of the Elementary
and Secondary Education Act of 1965,
as amended (20 U.S.C. 6313), including
schools served under section
1113(b)(1)(C) of that Act.
Tribal enterprise means a business
concern:
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Packet Pg. 228 Attachment: San Jacinto ARPA Infrastructure Funding Agreement (ARPA Agreement with Riverside County) 4448 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations (1) That is wholly owned by one or
more Tribal governments, or by a
corporation that is wholly owned by one
or more Tribal governments; or
(2) That is owned in part by one or
more Tribal governments, or by a
corporation that is wholly owned by one
or more Tribal governments, if all other
owners are either United States citizens
or small business concerns, as these
terms are used and consistent with the
definitions in 15 U.S.C. 657a(b)(2)(D).
Tribal government means the
recognized governing body of any
Indian or Alaska Native Tribe, band,
nation, pueblo, village, community,
component band, or component
reservation, individually identified
(including parenthetically) in the list
published on January 29, 2021, pursuant
to section 104 of the Federally
Recognized Indian Tribe List Act of
1994 (25 U.S.C. 5131).
Unemployment rate means the U–3
unemployment rate provided by the
Bureau of Labor Statistics as part of the
Local Area Unemployment Statistics
program, measured as total
unemployment as a percentage of the
civilian labor force.
Unemployment trust fund means an
unemployment trust fund established
under section 904 of the Social Security
Act (42 U.S.C. 1104).
Unit of general local government has
the meaning given to that term in
section 102(a)(1) of the Housing and
Community Development Act of 1974
(42 U.S.C. 5302(a)(1)).
§ 35.4 Reservation of authority, reporting.
(a) Reservation of authority. Nothing
in this part shall limit the authority of
the Secretary to take action to enforce
conditions or violations of law,
including actions necessary to prevent
evasions of this subpart.
(b) Extensions or accelerations of
timing. The Secretary may extend or
accelerate any deadline or compliance
date of this part, including reporting
requirements that implement this
subpart, if the Secretary determines that
such extension or acceleration is
appropriate. In determining whether an
extension or acceleration is appropriate,
the Secretary will consider the period of
time that would be extended or
accelerated and how the modified
timeline would facilitate compliance
with this subpart.
(c) Reporting and requests for other
information. During the period of
performance, recipients shall provide to
the Secretary periodic reports providing
detailed accounting of the uses of funds,
modifications to a State or Territory’s
tax revenue sources, and such other
information as the Secretary may
require for the administration of this
section. In addition to regular reporting
requirements, the Secretary may request
other additional information as may be
necessary or appropriate, including as
may be necessary to prevent evasions of
the requirements of this subpart. False
statements or claims made to the
Secretary may result in criminal, civil,
or administrative sanctions, including
fines, imprisonment, civil damages and
penalties, debarment from participating
in Federal awards or contracts, and/or
any other remedy available by law.
§ 35.5 Use of funds.
(a) In general. A recipient may only
use funds to cover costs incurred during
the period beginning March 3, 2021, and
ending December 31, 2024, for one or
more of the purposes enumerated in
sections 602(c)(1) and 603(c)(1) of the
Social Security Act, as applicable,
including those enumerated in § 35.6,
subject to the restrictions set forth in
sections 602(c)(2) and 603(c)(2) of the
Social Security Act, as applicable.
(b) Costs incurred. A cost shall be
considered to have been incurred for
purposes of paragraph (a) of this section
if the recipient has incurred an
obligation with respect to such cost by
December 31, 2024.
(c) Return of funds. A recipient must
return any funds not obligated by
December 31, 2024. A recipient must
also return funds obligated by December
31, 2024 but not expended by December
31, 2026.
§ 35.6 Eligible uses.
(a) In general. Subject to §§ 35.7 and
35.8, a recipient may use funds for one
or more of the purposes described in
paragraphs (b) through (f) of this
section.
(b) Responding to the public health
emergency or its negative economic
impacts. A recipient may use funds to
respond to the public health emergency
or its negative economic impacts if the
use meets the criteria provided in
paragraph (b)(1) of this section or is
enumerated in paragraph (b)(3) of this
section; provided that, in the case of a
use of funds for a capital expenditure
under paragraphs (b)(1) or (b)(3) of this
section, the use of funds must also meet
the criteria provided in paragraph (b)(4)
of this section. Treasury may also
articulate additional eligible programs,
services, or capital expenditures from
time to time that satisfy the eligibility
criteria of this paragraph (b), which
shall be eligible under this paragraph
(b).
(1) Identifying eligible responses to
the public health emergency or its
negative economic impacts. (i) A
program, service, or capital expenditure
is eligible under this paragraph (b)(1) if
a recipient identifies a harm or impact
to a beneficiary or class of beneficiaries
caused or exacerbated by the public
health emergency or its negative
economic impacts and the program,
service, or capital expenditure responds
to such harm.
(ii) A program, service, or capital
expenditure responds to a harm or
impact experienced by an identified
beneficiary or class of beneficiaries if it
is reasonably designed to benefit the
beneficiary or class of beneficiaries that
experienced the harm or impact and is
related and reasonably proportional to
the extent and type of harm or impact
experienced.
(2) Identified harms: Presumptions of
impacted and disproportionately
impacted beneficiaries. A recipient may
rely on the following presumptions to
identify beneficiaries presumptively
impacted or disproportionately
impacted by the public health
emergency or its negative economic
impacts for the purpose of providing a
response under paragraph (b)(1) or (b)(3)
of this section:
(i) Households or populations that
experienced unemployment;
experienced increased food or housing
insecurity; qualify for the Children’s
Health Insurance Program (42 U.S.C.
1397aa et seq.), Childcare Subsidies
through the Child Care and
Development Fund Program (42 U.S.C.
9857 et seq. and 42 U.S.C. 618), or
Medicaid (42 U.S.C. 1396 et seq.); if
funds are to be used for affordable
housing programs, qualify for the
National Housing Trust Fund (12 U.S.C.
4568) or the Home Investment
Partnerships Program (42 U.S.C. 12721
et seq.); if funds are to be used to
address impacts of lost instructional
time for students in kindergarten
through twelfth grade, any student who
did not have access to in-person
instruction for a significant period of
time; and low- and moderate-income
households and populations are
presumed to be impacted by the public
health emergency or its negative
economic impacts;
(ii) The general public is presumed to
be impacted by the public health
emergency for the purposes of providing
the uses set forth in subparagraphs
(b)(3)(i)(A) and (b)(3)(i)(C); and
(iii) The following households,
communities, small businesses, and
nonprofit organizations are presumed to
be disproportionately impacted by the
public health emergency or its negative
economic impacts:
(A) Households and populations
residing in a qualified census tract;
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3.A.5.a
Packet Pg. 229 Attachment: San Jacinto ARPA Infrastructure Funding Agreement (ARPA Agreement with Riverside County) Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 4449 households and populations receiving
services provided by Tribal
governments; households and
populations residing in the territories;
households and populations receiving
services provided by territorial
governments; low-income households
and populations; households that
qualify for Temporary Assistance for
Needy Families (42 U.S.C. 601 et seq.),
the Supplemental Nutrition Assistance
Program (7 U.S.C. 2011 et seq.), Free
and Reduced Price School Lunch and/
or Breakfast programs (42 U.S.C. 1751 et
seq. and 42 U.S.C. 1773), Medicare Part
D Low-income Subsidies (42 U.S.C.
1395w–114), Supplemental Security
Income (42 U.S.C. 1381 et seq.), Head
Start (42 U.S.C. 9831 et seq.), Early Head
Start (42 U.S.C. 9831 et seq.), the
Special Supplemental Nutrition
Program for Women, Infants, and
Children (42 U.S.C. 1786), Section 8
Vouchers (42 U.S.C. 1437f), the LowIncome Home Energy Assistance Program (42 U.S.C. 8621 et seq.), Pell
Grants (20 U.S.C. 1070a), and, if SLFRF
funds are to be used for services to
address educational disparities, Title I
eligible schools;
(B) Small businesses operating in a
qualified census tract, operated by
Tribal governments or on Tribal lands,
or operating in the territories; and
(C) Nonprofit organizations operating
in a qualified census tract, operated by
Tribal governments or on Tribal lands,
or operating in the territories.
(3) Enumerated eligible uses:
Responses presumed reasonably
proportional. A recipient may use funds
to respond to the public health
emergency or its negative economic
impacts on a beneficiary or class of
beneficiaries for one or more of the
following purposes unless such use is
grossly disproportionate to the harm
caused or exacerbated by the public
health emergency or its negative
economic impacts:
(i) Responding to the public health
impacts of the public health emergency
for purposes including:
(A) COVID–19 mitigation and
prevention in a manner that is
consistent with recommendations and
guidance from the Centers for Disease
Control and Prevention, including
vaccination programs and incentives;
testing programs; contact tracing;
isolation and quarantine; mitigation and
prevention practices in congregate
settings; acquisition and distribution of
medical equipment for prevention and
treatment of COVID–19, including
personal protective equipment; COVID–
19 prevention and treatment expenses
for public hospitals or health care
facilities, including temporary medical
facilities; establishing or enhancing
public health data systems; installation
and improvement of ventilation systems
in congregate settings, health facilities,
or other public facilities; and assistance
to small businesses, nonprofits, or
impacted industries to implement
mitigation measures;
(B) Medical expenses related to
testing and treating COVID–19 that are
provided in a manner consistent with
recommendations and guidance from
the Centers for Disease Control and
Prevention, including emergency
medical response expenses, treatment of
long-term symptoms or effects of
COVID–19, and costs to medical
providers or to individuals for testing or
treating COVID–19;
(C) Behavioral health care, including
prevention, treatment, emergency or
first-responder programs, harm
reduction, supports for long-term
recovery, and behavioral health
facilities and equipment; and
(D) Preventing and responding to
increased violence resulting from the
public health emergency, including
community violence intervention
programs, or responding to increased
gun violence resulting from the public
health emergency, including payroll and
covered benefits associated with
community policing strategies;
enforcement efforts to reduce gun
violence; and investing in technology
and equipment;
(ii) Responding to the negative
economic impacts of the public health
emergency for purposes including:
(A) Assistance to households and
individuals, including:
(1) Assistance for food; emergency
housing needs; burials, home repairs, or
weatherization; internet access or digital
literacy; cash assistance; and assistance
accessing public benefits;
(2) Paid sick, medical, or family leave
programs, or assistance to expand access
to health insurance;
(3) Childcare, early learning services,
home visiting, or assistance for child
welfare-involved families or foster
youth;
(4) Programs to address the impacts of
lost instructional time for students in
kindergarten through twelfth grade;
(5) Development, repair, and
operation of affordable housing and
services or programs to increase longterm housing security; (6) Financial services that facilitate
the delivery of Federal, State, or local
benefits for unbanked and underbanked
individuals;
(7) Benefits for the surviving family
members of individuals who have died
from COVID–19, including cash
assistance to surviving spouses or
dependents of individuals who died of
COVID–19;
(8) Assistance for individuals who
want and are available for work,
including those who are unemployed,
have looked for work sometime in the
past 12 months, who are employed part
time but who want and are available for
full-time work, or who are employed but
seeking a position with greater
opportunities for economic
advancement;
(9) Facilities and equipment related to
the provision of services to households
provided in subparagraphs
(b)(3)(ii)(A)(1)–(8);
(10) The following expenses related to
Unemployment Trust Funds:
(i) Contributions to a recipient
Unemployment Trust Fund and
repayment of principal amounts due on
advances received under Title XII of the
Social Security Act (42 U.S.C. 1321) up
to an amount equal to the difference
between the balance in the recipient’s
Unemployment Trust Fund as of
January 27, 2020 and the balance of
such account as of May 17, 2021 plus
the principal amount outstanding as of
May 17, 2021 on any advances received
under Title XII of the Social Security
Act between January 27, 2020 and May
17, 2021; provided that if a recipient
repays principal on Title XII advances
or makes a contribution to an
Unemployment Trust Fund after April
1, 2022, such recipient shall not reduce
average weekly benefit amounts or
maximum benefit entitlements prior to
December 31, 2024; and
(ii) Any interest due on such advances
received under Title XII of the Social
Security Act (42 U.S.C. 1321); and
(11) A program, service, capital
expenditure, or other assistance that is
provided to a disproportionately
impacted household, population, or
community, including:
(i) Services to address health
disparities of the disproportionately
impacted household, population, or
community;
(ii) Housing vouchers and relocation
assistance;
(iii) Investments in communities to
promote improved health outcomes and
public safety such as parks, recreation
facilities, and programs that increase
access to healthy foods;
(iv) Capital expenditures and other
services to address vacant or abandoned
properties;
(v) Services to address educational
disparities; and
(vi) Facilities and equipment related
to the provision of these services to the
disproportionately impacted household,
population, or community.
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3.A.5.a
Packet Pg. 230 Attachment: San Jacinto ARPA Infrastructure Funding Agreement (ARPA Agreement with Riverside County) 4450 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations (B) Assistance to small businesses,
including:
(1) Programs, services, or capital
expenditures that respond to the
negative economic impacts of the
COVID–19 public health emergency,
including loans or grants to mitigate
financial hardship such as declines in
revenues or impacts of periods of
business closure, or providing technical
assistance; and
(2) A program, service, capital
expenditure, or other assistance that
responds to disproportionately
impacted small businesses, including
rehabilitation of commercial properties;
storefront and fac¸ade improvements;
technical assistance, business
incubators, and grants for start-ups or
expansion costs for small businesses;
and programs or services to support
micro-businesses;
(C) Assistance to nonprofit
organizations including programs,
services, or capital expenditures,
including loans or grants to mitigate
financial hardship such as declines in
revenues or increased costs, or technical
assistance;
(D) Assistance to tourism, travel,
hospitality, and other impacted
industries for programs, services, or
capital expenditures, including support
for payroll costs and covered benefits
for employees, compensating returning
employees, support for operations and
maintenance of existing equipment and
facilities, and technical assistance; and
(E) Expenses to support public sector
capacity and workforce, including:
(1) Payroll and covered benefit
expenses for public safety, public
health, health care, human services, and
similar employees to the extent that the
employee’s time is spent mitigating or
responding to the COVID–19 public
health emergency;
(2) Payroll, covered benefit, and other
costs associated with programs or
services to support the public sector
workforce and with the recipient:
(i) Hiring or rehiring staff to fill
budgeted full-time equivalent positions
that existed on January 27, 2020 but that
were unfilled or eliminated as of March
3, 2021; or
(ii) Increasing the number of its
budgeted full-time equivalent
employees by up to the difference
between the number of its budgeted fulltime equivalent employees on January 27, 2020, multiplied by 1.075, and the
number of its budgeted full-time
equivalent employees on March 3, 2021,
provided that funds shall only be used
for additional budgeted full-time
equivalent employees above the
recipient’s number of budgeted full-time
equivalent employees as of March 3,
2021;
(3) Costs to improve the design and
execution of programs responding to the
COVID–19 pandemic and to administer
or improve the efficacy of programs
addressing the public health emergency
or its negative economic impacts; and
(4) Costs associated with addressing
administrative needs of recipient
governments that were caused or
exacerbated by the pandemic.
(4) Capital expenditures. A recipient,
other than a Tribal government, must
prepare a written justification for certain
capital expenditures according to Table
1 to paragraph (b)(4) of this section.
Such written justification must include
the following elements:
(i) Describe the harm or need to be
addressed;
(ii) Explain why a capital expenditure
is appropriate; and
(iii) Compare the proposed capital
expenditure to at least two alternative
capital expenditures and demonstrate
why the proposed capital expenditure is
superior.
TABLE 1 TO PARAGRAPH (b)(4)
If a project has total expected
capital expenditures of and the use is enumerated in (b)(3), then and the use is not enumerated in (b)(3), then Less than $1 million ........................ No Written Justification required ............................... No Written Justification required.
Greater than or equal to $1 million,
but less than $10 million.
Written Justification required but recipients are not
required to submit as part of regular reporting to
Treasury.
Written Justification required and recipients must
submit as part of regular reporting to Treasury.
$10 million or more ......................... Written Justification required and recipients must submit as part of regular reporting to Treasury.
(c) Providing premium pay to eligible
workers. A recipient may use funds to
provide premium pay to eligible
workers of the recipient who perform
essential work or to provide grants to
eligible employers that have eligible
workers who perform essential work,
provided that any premium pay or
grants provided under this paragraph (c)
must respond to eligible workers
performing essential work during the
COVID–19 public health emergency. A
recipient uses premium pay or grants
provided under this paragraph (c) to
respond to eligible workers performing
essential work during the COVID–19
public health emergency if:
(1) The eligible worker’s total wages
and remuneration, including the
premium pay, is less than or equal to
150 percent of the greater of such
eligible worker’s residing State’s or
county’s average annual wage for all
occupations as defined by the Bureau of
Labor Statistics’ Occupational
Employment and Wage Statistics;
(2) The eligible worker is not exempt
from the Fair Labor Standards Act
overtime provisions (29 U.S.C. 207); or
(3) The recipient has submitted to the
Secretary a written justification that
explains how providing premium pay to
the eligible worker is responsive to the
eligible worker performing essential
work during the COVID–19 public
health emergency (such as a description
of the eligible workers’ duties, health, or
financial risks faced due to COVID–19,
and why the recipient determined that
the premium pay was responsive
despite the worker’s higher income).
(d) Providing government services. A
recipient may use funds for the
provision of government services to the
extent of the reduction in the recipient’s
general revenue due to the public health
emergency, calculated according to this
paragraph (d). A recipient must make a
one-time election to calculate the
amount of the reduction in the
recipient’s general revenue due to the
public health emergency according to
either paragraph (d)(1) or (d)(2) of this
section:
(1) Standard allowance. The
reduction in the recipient’s general
revenue due to the public health
emergency over the period of
performance will be deemed to be ten
million dollars; or
(2) Formula. The reduction in the
recipient’s general revenue due to the
public health emergency over the period
of performance equals the sum of the
reduction in revenue, calculated as of
each date identified in paragraph
(d)(2)(i) of this section and according to
the formula in paragraph (d)(2)(ii) of
this section:
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3.A.5.a
Packet Pg. 231 Attachment: San Jacinto ARPA Infrastructure Funding Agreement (ARPA Agreement with Riverside County) Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 4451 (i) A recipient must make a one-time
election to calculate the reduction in its
general revenue using information as of
either:
(A) December 31, 2020, December 31,
2021, December 31, 2022, and December
31, 2023; or
(B) The last day of each of the
recipient’s fiscal years ending in 2020,
2021, 2022, and 2023.
(ii) A reduction in a recipient’s
general revenue for each date identified
in paragraph (d)(2)(i) of this section
equals:
Max {[Base Year Revenue * (1 + Growth
Adjustment)∧(nt/12)]¥Actual
General Revenue; 0}
Where:
(A) Base Year Revenue is the
recipient’s general revenue for the most
recent full fiscal year prior to the
COVID–19 public health emergency;
(B) Growth Adjustment is equal to the
greater of 5.2 percent (or 0.052) and the
recipient’s average annual revenue
growth over the three full fiscal years
prior to the COVID–19 public health
emergency;
(C) n equals the number of months
elapsed from the end of the base year to
the calculation date;
(D) Subscript t denotes the specific
calculation date; and
(E) Actual General Revenue is a
recipient’s actual general revenue
collected during the 12-month period
ending on each calculation date
identified in paragraph (d)(2)(i) of this
section, except:
(1) For purposes of all calculation
dates on or after April 1, 2022, in the
case of any change made after January
6, 2022 to any law, regulation, or
administrative interpretation that
reduces any tax (by providing for a
reduction in a rate, a rebate, a
deduction, a credit, or otherwise) or
delays the imposition of any tax or tax
increase and that the recipient assesses
has had the effect of decreasing the
amount of tax revenue collected during
the 12-month period ending on the
calculation date relative to the amount
of tax revenue that would have been
collected in the absence of such change,
the recipient must add to actual general
revenue the amount of such decrease in
tax revenue;
(2) For purposes of any calculation
date on or after April 1, 2022, in the
case of any change made after January
6, 2022 to any law, regulation, or
administrative interpretation that
increases any tax (by providing for an
increase in a rate, the reduction of a
rebate, a deduction, or a credit, or
otherwise) or accelerates the imposition
of any tax or tax increase and that the
recipient assesses has had the effect of
increasing the amount of tax revenue
collected during the 12-month period
ending on the calculation date relative
to the amount of tax revenue that would
have been collected in the absence of
such change, the recipient must subtract
from actual general revenue the amount
of such increase in tax revenue;
(3) If the recipient makes a one-time
election to adjust general revenue to
reflect tax changes made during the
period beginning on January 27, 2020
and ending on January 6, 2022, for
purposes of each calculation date
identified in paragraph (d)(2)(i) of this
section:
(i) In the case of any change made
during such prior period to any law,
regulation, or administrative
interpretation that reduces any tax (by
providing for a reduction in a rate, a
rebate, a deduction, a credit, or
otherwise) or delays the imposition of
any tax or tax increase and that the
recipient assesses has had the effect of
decreasing the amount of tax revenue
collected during the 12-month period
ending on the calculation date relative
to the amount of tax revenue that would
have been collected in the absence of
such change, the recipient must add to
actual general revenue the amount of
such decrease in tax revenue; and
(ii) In the case of any change made
during such prior period to any law,
regulation, or administrative
interpretation that increases any tax (by
providing for an increase in a rate, the
reduction of a rebate, a deduction, or a
credit, or otherwise) or accelerates the
imposition of any tax or tax increase
and that the recipient assesses has had
the effect of increasing the amount of
tax revenue collected during the 12-
month period ending on the calculation
date relative to the amount of tax
revenue that would have been collected
in the absence of such change, the
recipient must subtract from actual
general revenue the amount of such
increase in tax revenue; and
(4) With respect to any calculation
date during the period beginning on
January 6, 2022 and ending on March
31, 2022, if the recipient makes the
election in paragraph (d)(3) of this
section, the recipient must also make
the adjustments referenced in paragraph
(d)(3) of this section with respect to any
such changes in law, regulation, or
administrative interpretation during the
period beginning on January 6, 2022 and
ending on such calculation date.
(e) Making necessary investments in
water, sewer, and broadband
infrastructure. A recipient may use
funds to make the following
investments in water, sewer, and
broadband infrastructure.
(1) Water and sewer investments—(i)
Clean Water State Revolving Fund
projects. Projects or activities of the type
that meet the eligibility requirements of
section 603(c) of the Federal Water
Pollution Control Act (33 U.S.C.
1383(c));
(ii) Additional stormwater projects.
Projects to manage, reduce, treat, or
recapture stormwater or subsurface
drainage water regardless of whether
such projects would improve water
quality if such projects would otherwise
meet the eligibility requirements of
section 603(c)(5) of the Federal Water
Pollution Control Act (33 U.S.C.
1383(c)(5));
(iii) Drinking Water State Revolving
Fund projects. Projects or activities of
the type that meet the eligibility
requirements of section 1452 of the Safe
Drinking Water Act (42 U.S.C. 300j–12)
as implemented by the regulations
adopted by the Environmental
Protection Agency (EPA) under 40 CFR
35.3520, provided that:
(A) The recipient is not required to
comply with the limitation under 40
CFR 35.3520(c)(2) to acquisitions of
land from willing sellers or the
prohibition under 40 CFR 35.3520(e)(6)
on uses of funds for certain Tribal
projects; and
(B) In the case of lead service line
replacement projects, the recipient must
replace the full length of the service line
and may not replace only a partial
portion of the service line.
(iv) Additional lead remediation and
household water quality testing. Projects
or activities to address lead in drinking
water or provide household water
quality testing that are within the scope
of the programs the EPA is authorized
to establish under sections 1459A(b)(2),
1459B(b)(1), 1464(d)(2), and 1465 of the
Safe Drinking Water Act (42 U.S.C.
300j–19a(b)(2), 300j–19b(b)(1), 300j–
24(d)(2), and 300j–25), provided that:
(A) In the case of lead service line
replacement projects, the recipient must
replace the full length of the service line
and may not replace only a partial
portion of the service line; and
(B) In the case of projects within the
scope of the program the EPA is
authorized to establish under section
1459B(b)(1) of the Safe Drinking Water
Act, the recipient may determine the
income eligibility of homeowners
served by lead service line replacement
projects in its discretion.
(v) Drinking water projects to support
increased population. Projects of the
type that meet the eligibility
requirements of 40 CFR 35.3520 other
than the requirement of subparagraph
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3.A.5.a
Packet Pg. 232 Attachment: San Jacinto ARPA Infrastructure Funding Agreement (ARPA Agreement with Riverside County) 4452 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations (b)(1) of such regulation to address
present or prevent future violations of
health-based drinking water standards,
if the following conditions are met:
(A) The project is needed to support
increased population, with need
assessed as of the time the project is
undertaken;
(B) The project is designed to support
no more than a reasonable level of
projected increased need, whether due
to population growth or otherwise;
(C) The project is a cost-effective
means for achieving the desired level of
service; and
(D) The project is projected to
continue to provide an adequate level of
drinking water over its estimated useful
life.
(vi) Dams and reservoirs.
Rehabilitation of dams and reservoirs if
the following conditions are met:
(A) The project meets the
requirements of 40 CFR 35.3520 other
than the following requirements:
(1) The prohibition on the
rehabilitation of dams and reservoirs in
40 CFR 35.3520(e)(1) and (3); and
(2) The requirement in 40 CFR
35.3520(b)(1) that the project is needed
to address present or prevent future
violations of health-based drinking
water standards, provided that if the
dam or reservoir project does not meet
this requirement, the project must be
needed to support increased population,
with need assessed as of the time the
project is undertaken, and the project
must be projected to continue to provide
an adequate level of drinking water over
its estimated useful life;
(B) The primary purpose of the dam
or reservoir is for drinking water supply;
(C) The project is needed for the
provision of drinking water supply,
with need assessed as of the time the
project is initiated;
(D) The project is designed to support
no more than a reasonable level of
projected increased need, whether due
to population growth or otherwise; and
(E) The project is a cost-effective
means for achieving the desired level of
service.
(vii) Private wells. Rehabilitation of
private wells, testing initiatives to
identify contaminants in private wells,
and treatment activities and remediation
projects that address contamination in
private wells, if the project meets the
requirements of 40 CFR 35.3520 other
than the limitation to certain eligible
systems under 40 CFR 35.3520(a).
(2) Broadband investments—(i)
General. Broadband infrastructure if the
following conditions are met:
(A) The broadband infrastructure is
designed to provide service to
households and businesses with an
identified need, as determined by the
recipient, for such infrastructure;
(B) The broadband infrastructure is
designed to, upon completion:
(1) Reliably meet or exceed
symmetrical 100 Mbps download speed
and upload speeds; or
(2) In cases where it is not practicable,
because of the excessive cost of the
project or geography or topography of
the area to be served by the project, to
provide service reliably meeting or
exceeding symmetrical 100 Mbps
download speed and upload speeds:
(i) Reliably meet or exceed 100 Mbps
download speed and between at least 20
Mbps and 100 Mbps upload speed; and
(ii) Be scalable to a minimum of 100
Mbps download speed and 100 Mbps
upload speed; and
(C) The service provider for a
completed broadband infrastructure
investment project that provides service
to households is required, for as long as
the SLFRF-funded broadband
infrastructure is in use, by the recipient
to:
(1) Participate in the Federal
Communications Commission’s
Affordable Connectivity Program (ACP)
through the lifetime of the ACP; or
(2) Otherwise provide access to a
broad-based affordability program to
low-income consumers in the proposed
service area of the broadband
infrastructure that provides benefits to
households commensurate with those
provided under the ACP through the
lifetime of the ACP.
(ii) Cybersecurity infrastructure
investments. Cybersecurity
infrastructure investments that are
designed to improve the reliability and
resiliency of new and existing
broadband infrastructure. Such
investments may include the addition or
modernization of network security
hardware and software tools designed to
strengthen cybersecurity for the endusers of these networks. (f) Meeting the non-federal matching
requirements for Bureau of Reclamation
projects. A recipient may use funds to
meet the non-federal matching
requirements of any authorized Bureau
of Reclamation project.
§ 35.7 Pensions.
A recipient (other than a Tribal
government) may not use funds for
deposit into any pension fund.
§ 35.8 Tax.
(a) Restriction. A State or Territory
shall not use funds to either directly or
indirectly offset a reduction in the net
tax revenue of the State or Territory
resulting from a covered change during
the covered period.
(b) Violation. Treasury will consider a
State or Territory to have used funds to
offset a reduction in net tax revenue if,
during a reporting year:
(1) Covered change. The State or
Territory has made a covered change
that, either based on a reasonable
statistical methodology to isolate the
impact of the covered change in actual
revenue or based on projections that use
reasonable assumptions and do not
incorporate the effects of
macroeconomic growth to reduce or
increase the projected impact of the
covered change, the State or Territory
assesses has had or predicts to have the
effect of reducing tax revenue relative to
current law;
(2) Exceeds the de minimis threshold.
The aggregate amount of the measured
or predicted reductions in tax revenue
caused by covered changes identified
under paragraph (b)(1) of this section, in
the aggregate, exceeds 1 percent of the
State’s or Territory’s baseline;
(3) Reduction in net tax revenue. The
State or Territory reports a reduction in
net tax revenue, measured as the
difference between actual tax revenue
and the State’s or Territory’s baseline,
each measured as of the end of the
reporting year; and
(4) Consideration of other changes.
The aggregate amount of measured or
predicted reductions in tax revenue
caused by covered changes is greater
than the sum of the following, in each
case, as calculated for the reporting
year:
(i) The aggregate amount of the
expected increases in tax revenue
caused by one or more covered changes
that, either based on a reasonable
statistical methodology to isolate the
impact of the covered change in actual
revenue or based on projections that use
reasonable assumptions and do not
incorporate the effects of
macroeconomic growth to reduce or
increase the projected impact of the
covered change, the State or Territory
assesses has had or predicts to have the
effect of increasing tax revenue; and
(ii) Reductions in spending, up to the
amount of the State’s or Territory’s net
reduction in total spending, that are in:
(A) Departments, agencies, or
authorities in which the State or
Territory is not using funds; and
(B) Departments, agencies, or
authorities in which the State or
Territory is using funds, in an amount
equal to the value of the spending cuts
in those departments, agencies, or
authorities, minus funds used.
(c) Amount and revenue reduction
cap. If a State or Territory is considered
to be in violation pursuant to paragraph
(b) of this section, the amount used in
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Packet Pg. 233 Attachment: San Jacinto ARPA Infrastructure Funding Agreement (ARPA Agreement with Riverside County) Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 4453 violation of paragraph (a) of this section
is equal to the lesser of:
(1) The reduction in net tax revenue
of the State or Territory for the reporting
year, measured as the difference
between the State’s or Territory’s
baseline and its actual tax revenue, each
measured as of the end of the reporting
year; and,
(2) The aggregate amount of the
reductions in tax revenues caused by
covered changes identified in paragraph
(b)(1) of this section, minus the sum of
the amounts in identified in paragraphs
(b)(4)(i) and (ii) of this section.
§ 35.9 Compliance with applicable laws.
A recipient must comply with all
other applicable Federal statutes,
regulations, and executive orders, and a
recipient shall provide for compliance
with the American Rescue Plan Act, this
subpart, and any interpretive guidance
by other parties in any agreements it
enters into with other parties relating to
these funds.
§ 35.10 Recoupment.
(a) Identification of violations—(1) In
general. Any amount used in violation
of § 35.5, 35.6, or 35.7 may be identified
at any time prior to December 31, 2026.
(2) Annual reporting of amounts of
violations. On an annual basis, a
recipient that is a State or territory must
calculate and report any amounts used
in violation of § 35.8.
(b) Calculation of amounts subject to
recoupment—(1) In general. Except as
provided in paragraph (b)(2) of this
section, the Secretary will calculate any
amounts subject to recoupment
resulting from a violation of § 35.5, 35.6
or 35.7 as the amounts used in violation
of such restrictions.
(2) Violations of § 35.8. The Secretary
will calculate any amounts subject to
recoupment resulting from a violation of
§ 35.8, equal to the lesser of:
(i) The amount set forth in § 35.8(c);
and,
(ii) The amount of funds received by
such recipient.
(c) Initial notice. If the Secretary
calculates an amount subject to
recoupment under paragraph (b) of this
section, Treasury will provide the
recipient an initial written notice of the
amount subject to recoupment along
with an explanation of such amounts.
(d) Request for reconsideration.
Unless the Secretary extends or
accelerates the time period, within 60
calendar days of receipt of an initial
notice of recoupment provided under
paragraph (c) of this section, a recipient
may submit a written request to the
Secretary requesting reconsideration of
any amounts subject to recoupment
under paragraph (b) of this section. To
request reconsideration of any amounts
subject to recoupment, a recipient must
submit to the Secretary a written request
that includes:
(1) An explanation of why the
recipient believes all or some of the
amount should not be subject to
recoupment; and
(2) A discussion of supporting
reasons, along with any additional
information.
(e) Final amount subject to
recoupment. Unless the Secretary
extends or accelerates the time period,
within 60 calendar days of receipt of the
recipient’s request for reconsideration
provided pursuant to paragraph (d) of
this section or the expiration of the
period for requesting reconsideration
provided under paragraph (d), the
recipient will be notified of the
Secretary’s decision to affirm, withdraw,
or modify the notice of recoupment.
Such notification will include an
explanation of the decision, including
responses to the recipient’s supporting
reasons and consideration of additional
information provided. A recipient must
invoke and exhaust the procedures
available under this subpart prior to
seeking judicial review of a decision
under § 35.10.
(f) Repayment of funds. Unless the
Secretary extends or accelerates the time
period, a recipient shall repay to the
Secretary any amounts subject to
recoupment in accordance with
instructions provided by the Secretary:
(1) Within 120 calendar days of
receipt of the notice of recoupment
provided under paragraph (c) of this
section, in the case of a recipient that
does not submit a request for
reconsideration in accordance with the
requirements of paragraph (d) of this
section; or
(2) Within 120 calendar days of
receipt of the Secretary’s decision under
paragraph (e) of this section, in the case
of a recipient that submits a request for
reconsideration in accordance with the
requirements of paragraph (d) of this
section.
(g) Other remedial actions. Prior to
seeking recoupment or taking other
appropriate action pursuant to
paragraph (c), (d), (e), or (f) of this
section, the Secretary may notify the
recipient of potential violations and
provide the recipient an opportunity for
informal consultation and remediation.
§ 35.11 Payments to States.
(a) In general. With respect to any
State or Territory that has an
unemployment rate as of the date that
it submits an initial certification for
payment of funds pursuant to section
602(d)(1) of the Social Security Act that
is less than two percentage points above
its unemployment rate in February
2020, the Secretary will withhold 50
percent of the amount of funds allocated
under section 602(b) of the Social
Security Act to such State or territory
until at least May 10, 2022 and not more
than twelve months from the date such
initial certification is provided to the
Secretary.
(b) Payment of withheld amount. In
order to receive the amount withheld
under paragraph (a) of this section, the
State or Territory must submit to the
Secretary the following information:
(1) A certification, in the form
provided by the Secretary, that such
State or Territory requires the payment
to carry out the activities specified in
section 602(c) of the Social Security Act
and will use the payment in compliance
with section 602(c) of the Social
Security Act; and
(2) Any reports required to be filed by
that date pursuant to this part that have
not yet been filed.
§ 35.12 Distributions to nonentitlement
units of local government and units of
general local government.
(a) Nonentitlement units of local
government. Each State or Territory that
receives a payment from the Secretary
pursuant to section 603(b)(2)(B) of the
Social Security Act shall distribute the
amount of the payment to
nonentitlement units of local
government in such State or Territory in
accordance with the requirements set
forth in section 603(b)(2)(C) of the
Social Security Act and without
offsetting any debt owed by such
nonentitlement units of local
governments against such payments.
(b) Budget cap. A State or Territory
may not make a payment to a
nonentitlement unit of local government
pursuant to section 603(b)(2)(C) of the
Social Security Act and paragraph (a) of
this section in excess of the amount
equal to 75 percent of the most recent
budget for the nonentitlement unit of
local government as of January 27, 2020.
For purposes of this section 35.12, a
nonentitlement unit of local
government’s most recent budget shall
mean the nonentitlement unit of local
government’s total annual budget,
including both operating and capital
expenditure budgets, in effect as of
January 27, 2020. A State or Territory
shall permit a nonentitlement unit of
local government without a formal
budget as of January 27, 2020, to
provide a certification from an
authorized officer of the nonentitlement
unit of local government of its most
recent annual expenditures as of
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Packet Pg. 234 Attachment: San Jacinto ARPA Infrastructure Funding Agreement (ARPA Agreement with Riverside County) 4454 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations January 27, 2020, and a State or
Territory may rely on such certification
for purposes of complying with this
section 35.12.
(c) Units of general local government.
Each State or Territory that receives a
payment from the Secretary pursuant to
section 603(b)(3)(B)(ii) of the Social
Security Act, in the case of an amount
to be paid to a county that is not a unit
of general local government, shall
distribute the amount of the payment to
units of general local government within
such county in accordance with the
requirements set forth in section
603(b)(3)(B)(ii) of the Social Security
Act and without offsetting any debt
owed by such units of general local
government against such payments.
(d) Additional conditions. A State or
Territory may not place additional
conditions or requirements on
distributions to nonentitlement units of
local government or units of general
local government beyond those required
by section 603 of the Social Security Act
or this subpart.
Jacob Leibenluft,
Chief Recovery Officer.
[FR Doc. 2022–00292 Filed 1–26–22; 8:45 am]
BILLING CODE P
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Packet Pg. 235 Attachment: San Jacinto ARPA Infrastructure Funding Agreement (ARPA Agreement with Riverside County) 12 Attachment C – Uniform Administrative Requirements, Cost Principles, Federal Provisions and Audit Requirements for Federal Awards -2 CFR Part 200 et seq 2 CFR Part 200 attached hereto
3.A.5.a
Packet Pg. 236 Attachment: San Jacinto ARPA Infrastructure Funding Agreement (ARPA Agreement with Riverside County) 81 PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS Subpart A—Acronyms and Definitions
ACRONYMS
Sec.
200.0 Acronyms.
200.1 Definitions.
200.2 Acquisition cost.
200.3 Advance payment.
200.4 Allocation.
200.5 Audit finding.
200.6 Auditee.
200.7 Auditor.
200.8 Budget.
200.9 Central service cost allocation plan.
200.10 Catalog of Federal Domestic Assistance (CFDA) number. 200.11 CFDA program title.
200.12 Capital assets.
200.13 Capital expenditures.
200.14 Claim.
200.15 Class of Federal awards.
200.16 Closeout.
200.17 Cluster of programs.
200.18 Cognizant agency for audit.
200.19 Cognizant agency for indirect costs.
200.20 Computing devices.
200.21 Compliance supplement.
200.22 Contract.
200.23 Contractor.
200.24 Cooperative agreement.
200.25 Cooperative audit resolution.
200.26 Corrective action.
200.27 Cost allocation plan.
200.28 Cost objective.
200.29 Cost sharing or matching.
200.30 Cross-cutting audit finding.
200.31 [Reserved]
200.32 Data Universal Numbering System
(DUNS) number.
200.33 Equipment.
200.34 Expenditures.
200.35 Federal agency.
200.36 Federal Audit Clearinghouse (FAC).
200.37 Federal awarding agency.
200.38 Federal award.
200.39 Federal award date.
200.40 Federal financial assistance.
200.41 Federal interest.
200.42 Federal program.
200.43 Federal share.
200.44 Final cost objective.
200.45 Fixed amount awards.
200.46 Foreign public entity.
200.47 Foreign organization.
200.48 General purpose equipment.
200.49 Generally Accepted Accounting Principles (GAAP). 200.50 Generally Accepted Government Auditing Standards (GAGAS). 200.51 Grant agreement.
200.52 Hospital.
200.53 Improper payment.
200.54 Indian tribe (or ‘‘federally recognized
Indian tribe’’).
200.55 Institutions of Higher Education
(IHEs).
200.56 Indirect (facilities & administrative
(F&A)) costs.
200.57 Indirect cost rate proposal.
200.58 Information technology systems.
200.59 Intangible property.
200.60 Intermediate cost objective.
200.61 Internal controls.
200.62 Internal control over compliance requirements for Federal awards. 200.63 Loan.
200.64 Local government.
200.65 Major program.
200.66 Management decision.
200.67 Micro-purchase.
200.68 Modified Total Direct Cost (MTDC).
200.69 Non-Federal entity.
200.70 Nonprofit organization.
200.71 Obligations.
200.72 Office of Management and Budget
(OMB).
200.73 Oversight agency for audit.
200.74 Pass-through entity.
200.75 Participant support costs.
200.76 Performance goal.
200.77 Period of performance.
200.78 Personal property.
200.79 Personally Identifiable Information
(PII).
200.80 Program income.
200.81 Property.
200.82 Protected Personally Identifiable Information (Protected PII). 200.83 Project cost.
200.84 Questioned cost.
200.85 Real property.
200.86 Recipient.
200.87 Research and Development (R&D).
200.88 Simplified acquisition threshold.
200.89 Special purpose equipment.
200.90 State.
200.91 Student Financial Aid (SFA).
200.92 Subaward.
200.93 Subrecipient.
200.94 Supplies.
200.95 Termination.
200.96 Third-party in-kind contributions.
200.97 Unliquidated obligations.
200.98 Unobligated balance.
200.99 Voluntary committed cost sharing.
Subpart B—General Provisions
200.100 Purpose.
200.101 Applicability.
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Packet Pg. 237 Attachment: San Jacinto ARPA Infrastructure Funding Agreement (ARPA Agreement with Riverside County) 82 Pt. 200 2 CFR Ch. II (1–1–21 Edition)
200.102 Exceptions.
200.103 Authorities.
200.104 Supersession.
200.105 Effect on other issuances.
200.106 Agency implementation.
200.107 OMB responsibilities.
200.108 Inquiries.
200.109 Review date.
200.110 Effective/applicability date.
200.111 English language.
200.112 Conflict of interest.
200.113 Mandatory disclosures.
Subpart C—Pre-Federal Award Requirements and Contents of Federal Awards 200.200 Purpose.
200.201 Use of grant agreements (including
fixed amount awards), cooperative agreements, and contracts. 200.202 Program planning and design.
200.203 Requirement to provide public notice of Federal financial assistance programs. 200.204 Notices of funding opportunities.
200.205 Federal awarding agency review of
merit of proposals.
200.206 Federal awarding agency review of
risk posed by applicants.
200.207 Standard application requirements.
200.208 Specific conditions.
200.209 Certifications and representations.
200.210 Pre-award costs.
200.211 Information contained in a Federal
award.
200.212 Public access to Federal award information.
200.213 Reporting a determination that a
non-Federal entity is not qualified for a
Federal award.
200.214 Suspension and debarment.
200.215 Never contract with the enemy.
200.216 Prohibition on certain telecommunications and video surveillance services or equipment.
Subpart D—Post Federal Award
Requirements
200.300 Statutory and national policy requirements.
200.301 Performance measurement.
200.302 Financial management.
200.303 Internal controls.
200.304 Bonds.
200.305 Federal payment.
200.306 Cost sharing or matching.
200.307 Program income.
200.308 Revision of budget and program
plans.
200.309 Modifications to period of performance.
PROPERTY STANDARDS
200.310 Insurance coverage.
200.311 Real property.
200.312 Federally-owned and exempt property.
200.313 Equipment.
200.314 Supplies.
200.315 Intangible property.
200.316 Property trust relationship.
PROCUREMENT STANDARDS
200.317 Procurements by states.
200.318 General procurement standards.
200.319 Competition.
200.320 Methods of procurement to be followed.
200.321 Contracting with small and minority
businesses, women’s business enterprises,
and labor surplus area firms.
200.322 Domestic preferences for procurements.
200.323 Procurement of recovered materials.
200.324 Contract cost and price.
200.325 Federal awarding agency or passthrough entity review. 200.326 Bonding requirements.
200.327 Contract provisions.
PERFORMANCE AND FINANCIAL MONITORING
AND REPORTING
200.328 Financial reporting.
200.329 Monitoring and reporting program
performance.
200.330 Reporting on real property.
SUBRECIPIENT MONITORING AND MANAGEMENT
200.331 Subrecipient and contractor determinations.
200.332 Requirements for pass-through entities.
200.333 Fixed amount subawards.
RECORD RETENTION AND ACCESS
200.334 Retention requirements for records.
200.335 Requests for transfer of records.
200.336 Methods for collection, transmission, and storage of information. 200.337 Access to records.
200.338 Restrictions on public access to
records.
REMEDIES FOR NONCOMPLIANCE
200.339 Remedies for noncompliance.
200.340 Termination.
200.341 Notification of termination requirement.
200.342 Opportunities to object, hearings,
and appeals.
200.343 Effects of suspension and termination.
CLOSEOUT
200.344 Closeout.
POST-CLOSEOUT ADJUSTMENTS AND
CONTINUING RESPONSIBILITIES
200.345 Post-closeout adjustments and continuing responsibilities.
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Packet Pg. 238 Attachment: San Jacinto ARPA Infrastructure Funding Agreement (ARPA Agreement with Riverside County) 83 OMB Guidance Pt. 200
COLLECTION OF AMOUNTS DUE
200.346 Collection of amounts due.
Subpart E—Cost Principles
GENERAL PROVISIONS
200.400 Policy guide.
200.401 Application.
BASIC CONSIDERATIONS
200.402 Composition of costs.
200.403 Factors affecting allowability of
costs.
200.404 Reasonable costs.
200.405 Allocable costs.
200.406 Applicable credits.
200.407 Prior written approval (prior approval).
200.408 Limitation on allowance of costs.
200.409 Special considerations.
200.410 Collection of unallowable costs.
200.411 Adjustment of previously negotiated
indirect (F&A) cost rates containing unallowable costs.
DIRECT AND INDIRECT (F&A) COSTS
200.412 Classification of costs.
200.413 Direct costs.
200.414 Indirect (F&A) costs.
200.415 Required certifications.
SPECIAL CONSIDERATIONS FOR STATES, LOCAL
GOVERNMENTS AND INDIAN TRIBES
200.416 Cost allocation plans and indirect
cost proposals.
200.417 Interagency service.
SPECIAL CONSIDERATIONS FOR INSTITUTIONS OF
HIGHER EDUCATION
200.418 Costs incurred by states and local
governments.
200.419 Cost accounting standards and disclosure statement.
GENERAL PROVISIONS FOR SELECTED ITEMS OF
COST
200.420 Considerations for selected items of
cost.
200.421 Advertising and public relations.
200.422 Advisory councils.
200.423 Alcoholic beverages.
200.424 Alumni/ae activities.
200.425 Audit services.
200.426 Bad debts.
200.427 Bonding costs.
200.428 Collections of improper payments.
200.429 Commencement and convocation
costs.
200.430 Compensation—personal services.
200.431 Compensation—fringe benefits.
200.432 Conferences.
200.433 Contingency provisions.
200.434 Contributions and donations.
200.435 Defense and prosecution of criminal
and civil proceedings, claims, appeals
and patent infringements.
200.436 Depreciation.
200.437 Employee health and welfare costs.
200.438 Entertainment costs.
200.439 Equipment and other capital expenditures.
200.440 Exchange rates.
200.441 Fines, penalties, damages and other
settlements.
200.442 Fund raising and investment management costs.
200.443 Gains and losses on disposition of depreciable assets. 200.444 General costs of government.
200.445 Goods or services for personal use.
200.446 Idle facilities and idle capacity.
200.447 Insurance and indemnification.
200.448 Intellectual property.
200.449 Interest.
200.450 Lobbying.
200.451 Losses on other awards or contracts.
200.452 Maintenance and repair costs.
200.453 Materials and supplies costs, including costs of computing devices. 200.454 Memberships, subscriptions, and professional activity costs. 200.455 Organization costs.
200.456 Participant support costs.
200.457 Plant and security costs.
200.458 Pre-award costs.
200.459 Professional service costs.
200.460 Proposal costs.
200.461 Publication and printing costs.
200.462 Rearrangement and reconversion
costs.
200.463 Recruiting costs.
200.464 Relocation costs of employees.
200.465 Rental costs of real property and
equipment.
200.466 Scholarships and student aid costs.
200.467 Selling and marketing costs.
200.468 Specialized service facilities.
200.469 Student activity costs.
200.470 Taxes (including Value Added Tax).
200.471 Telecommunication costs and video
surveillance costs.
200.472 Termination costs.
200.473 Training and education costs.
200.474 Transportation costs.
200.475 Travel costs.
200.476 Trustees.
Subpart F—Audit Requirements
GENERAL
200.500 Purpose.
AUDITS
200.501 Audit requirements.
200.502 Basis for determining Federal
awards expended.
200.503 Relation to other audit requirements.
200.504 Frequency of audits.
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Packet Pg. 239 Attachment: San Jacinto ARPA Infrastructure Funding Agreement (ARPA Agreement with Riverside County) 84 § 200.0 2 CFR Ch. II (1–1–21 Edition)
200.505 Sanctions.
200.506 Audit costs.
200.507 Program-specific audits.
AUDITEES
200.508 Auditee responsibilities.
200.509 Auditor selection.
200.510 Financial statements.
200.511 Audit findings follow-up.
200.512 Report submission.
FEDERAL AGENCIES
200.513 Responsibilities.
AUDITORS
200.514 Scope of audit.
200.515 Audit reporting.
200.516 Audit findings.
200.517 Audit documentation.
200.518 Major program determination.
200.519 Criteria for Federal program risk.
200.520 Criteria for a low-risk auditee.
MANAGEMENT DECISIONS
200.521 Management decision.
APPENDIX I TO PART 200—FULL TEXT OF NOTICE OF FUNDING OPPORTUNITY APPENDIX II TO PART 200—CONTRACT PROVISIONS FOR NON-FEDERAL ENTITY CONTRACTS UNDER FEDERAL AWARDS APPENDIX III TO PART 200—INDIRECT (F&A)
COSTS IDENTIFICATION AND ASSIGNMENT,
AND RATE DETERMINATION FOR INSTITUTIONS OF HIGHER EDUCATION (IHES) APPENDIX IV TO PART 200—INDIRECT (F&A)
COSTS IDENTIFICATION AND ASSIGNMENT,
AND RATE DETERMINATION FOR NONPROFIT
ORGANIZATIONS
APPENDIX V TO PART 200— STATE/LOCAL GOVERNMENTWIDE CENTRAL SERVICE COST ALLOCATION PLANS APPENDIX VI TO PART 200—PUBLIC ASSISTANCE COST ALLOCATION PLANS APPENDIX VII TO PART 220—STATES AND
LOCAL GOVERNMENT AND INDIAN TRIBE INDIRECT COST PROPOSALS APPENDIX VIII TO PART 200—NONPROFIT ORGANIZATIONS EXEMPTED FROM SUBPART E OF PART 200
APPENDIX IX TO PART 200—HOSPITAL COST
PRINCIPLES
APPENDIX X TO PART 200—DATA COLLECTION
FORM (FORM SF–SAC)
APPENDIX XI TO PART 200—COMPLIANCE SUPPLEMENT
APPENDIX XII TO PART 200—AWARD TERM AND
CONDITION FOR RECIPIENT INTEGRITY AND
PERFORMANCE MATTERS
AUTHORITY: 31 U.S.C. 503
SOURCE: 78 FR 78608, Dec. 26, 2013, unless
otherwise noted.
Subpart A—Acronyms and
Definitions
ACRONYMS
§ 200.0 Acronyms.
ACRONYM TERM
CAS Cost Accounting Standards
CFR Code of Federal Regulations
CMIA Cash Management Improvement Act
COG Councils Of Governments
COSO Committee of Sponsoring Organizations of the Treadway Commission EPA Environmental Protection Agen
cy
ERISA Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1301–
1461)
EUI Energy Usage Index
F&A Facilities and Administration
FAC Federal Audit Clearinghouse
FAIN Federal Award Identification
Number
FAPIIS Federal Awardee Performance and Integrity Information System FAR Federal Acquisition Regulation
FFATA Federal Funding Accountability and Transparency Act of 2006 or Transparency Act—Public Law
109–282, as amended by section 6202(a)
of Public Law 110–252 (31 U.S.C. 6101)
FICA Federal Insurance Contributions Act
FOIA Freedom of Information Act
FR Federal Register
FTE Full-time equivalent
GAAP Generally Accepted Accounting Principles
GAGAS Generally Accepted Government Auditing Standards GAO Government Accountability Office
GOCO Government owned, contractor
operated
GSA General Services Administration
IBS Institutional Base Salary
IHE Institutions of Higher Education
IRC Internal Revenue Code
ISDEAA Indian Self-Determination
and Education and Assistance Act
MTC Modified Total Cost
MTDC Modified Total Direct Cost
NFE Non-Federal Entity
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OMB Office of Management and Budget
PII Personally Identifiable Information
PMS Payment Management System
PRHP Post-retirement Health Plans
PTE Pass-through Entity
REUI Relative Energy Usage Index
SAM System for Award Management
SFA Student Financial Aid
SNAP Supplemental Nutrition Assistance Program
SPOC Single Point of Contact
TANF Temporary Assistance for
Needy Families
TFM Treasury Financial Manual
U.S.C. United States Code
VAT Value Added Tax
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75880, Dec. 19, 2014; 80 FR 43308, July 22,
2015; 85 FR 49529, Aug. 13, 2020]
§ 200.1 Definitions.
These are the definitions for terms
used in this part. Different definitions
may be found in Federal statutes or
regulations that apply more specifically to particular programs or activities. These definitions could be supplemented by additional instructional information provided in governmentwide standard information collections. For
purposes of this part, the following
definitions apply:
Acquisition cost means the cost of the
asset including the cost to ready the
asset for its intended use. Acquisition
cost for equipment, for example, means
the net invoice price of the equipment,
including the cost of any modifications, attachments, accessories, or auxiliary apparatus necessary to make it usable for the purpose for which it is
acquired. Acquisition costs for software includes those development costs capitalized in accordance with generally accepted accounting principles (GAAP). Ancillary charges, such as
taxes, duty, protective in transit insurance, freight, and installation may be included in or excluded from the acquisition cost in accordance with the nonFederal entity’s regular accounting practices.
Advance payment means a payment
that a Federal awarding agency or
pass-through entity makes by any appropriate payment mechanism, including a predetermined payment schedule, before the non-Federal entity disburses
the funds for program purposes.
Allocation means the process of assigning a cost, or a group of costs, to one or more cost objective(s), in reasonable proportion to the benefit provided or other equitable relationship.
The process may entail assigning a
cost(s) directly to a final cost objective
or through one or more intermediate
cost objectives.
Assistance listings refers to the publicly available listing of Federal assistance programs managed and administered by the General Services Administration, formerly known as the Catalog of Federal Domestic Assistance
(CFDA).
Assistance listing number means a
unique number assigned to identify a
Federal Assistance Listings, formerly
known as the CFDA Number.
Assistance listing program title means
the title that corresponds to the Federal Assistance Listings Number, formerly known as the CFDA program title.
Audit finding means deficiencies
which the auditor is required by
§200.516(a) to report in the schedule of
findings and questioned costs.
Auditee means any non-Federal entity that expends Federal awards which must be audited under subpart F of
this part.
Auditor means an auditor who is a
public accountant or a Federal, State,
local government, or Indian tribe audit
organization, which meets the general
standards specified for external auditors in generally accepted government auditing standards (GAGAS). The term
auditor does not include internal auditors of nonprofit organizations.
Budget means the financial plan for
the Federal award that the Federal
awarding agency or pass-through entity approves during the Federal award process or in subsequent amendments
to the Federal award. It may include
the Federal and non-Federal share or
only the Federal share, as determined
by the Federal awarding agency or
pass-through entity.
Budget period means the time interval from the start date of a funded portion of an award to the end date of that funded portion during which recipients
are authorized to expend the funds
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awarded, including any funds carried
forward or other revisions pursuant to
§200.308.
Capital assets means:
(1) Tangible or intangible assets used
in operations having a useful life of
more than one year which are capitalized in accordance with GAAP. Capital assets include:
(i) Land, buildings (facilities), equipment, and intellectual property (including software) whether acquired by purchase, construction, manufacture,
exchange, or through a lease accounted
for as financed purchase under Government Accounting Standards Board (GASB) standards or a finance lease
under Financial Accounting Standards
Board (FASB) standards; and
(ii) Additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations or alterations to capital assets that materially increase their value or useful life (not ordinary repairs and maintenance).
(2) For purpose of this part, capital
assets do not include intangible rightto-use assets (per GASB) and right-touse operating lease assets (per FASB).
For example, assets capitalized that
recognize a lessee’s right to control the
use of property and/or equipment for a
period of time under a lease contract.
See also §200.465.
Capital expenditures means expenditures to acquire capital assets or expenditures to make additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations, or alterations to capital assets that materially increase their value or useful life.
Central service cost allocation plan
means the documentation identifying,
accumulating, and allocating or developing billing rates based on the allowable costs of services provided by a State or local government or Indian
tribe on a centralized basis to its departments and agencies. The costs of these services may be allocated or
billed to users.
Claim means, depending on the context, either:
(1) A written demand or written assertion by one of the parties to a Federal award seeking as a matter of right:
(i) The payment of money in a sum
certain;
(ii) The adjustment or interpretation
of the terms and conditions of the Federal award; or
(iii) Other relief arising under or relating to a Federal award. (2) A request for payment that is not
in dispute when submitted.
Class of Federal awards means a group
of Federal awards either awarded under
a specific program or group of programs or to a specific type of non-Federal entity or group of non-Federal entities to which specific provisions or exceptions may apply.
Closeout means the process by which
the Federal awarding agency or passthrough entity determines that all applicable administrative actions and all required work of the Federal award
have been completed and takes actions
as described in §200.344.
Cluster of programs means a grouping
of closely related programs that share
common compliance requirements. The
types of clusters of programs are research and development (R&D), student financial aid (SFA), and other clusters.
‘‘Other clusters’’ are as defined by OMB
in the compliance supplement or as
designated by a State for Federal
awards the State provides to its subrecipients that meet the definition of a cluster of programs. When designating
an ‘‘other cluster,’’ a State must identify the Federal awards included in the cluster and advise the subrecipients of
compliance requirements applicable to
the cluster, consistent with §200.332(a).
A cluster of programs must be considered as one program for determining major programs, as described in
§200.518, and, with the exception of
R&D as described in §200.501(c), whether a program-specific audit may be elected.
Cognizant agency for audit means the
Federal agency designated to carry out
the responsibilities described in
§200.513(a). The cognizant agency for
audit is not necessarily the same as the
cognizant agency for indirect costs. A
list of cognizant agencies for audit can
be found on the Federal Audit Clearinghouse (FAC) website.
Cognizant agency for indirect costs
means the Federal agency responsible
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for reviewing, negotiating, and approving cost allocation plans or indirect cost proposals developed under this
part on behalf of all Federal agencies.
The cognizant agency for indirect cost
is not necessarily the same as the cognizant agency for audit. For assignments of cognizant agencies see the following:
(1) For Institutions of Higher Education (IHEs): Appendix III to this part, paragraph C.11.
(2) For nonprofit organizations: Appendix IV to this part, paragraph C.2.a. (3) For State and local governments:
Appendix V to this part, paragraph F.1.
(4) For Indian tribes: Appendix VII to
this part, paragraph D.1.
Compliance supplement means an annually updated authoritative source for auditors that serves to identify existing important compliance requirements that the Federal Government expects to be considered as part of an
audit. Auditors use it to understand
the Federal program’s objectives, procedures, and compliance requirements, as well as audit objectives and suggested audit procedures for determining compliance with the relevant Federal program.
Computing devices means machines
used to acquire, store, analyze, process,
and publish data and other information
electronically, including accessories
(or ‘‘peripherals’’) for printing, transmitting and receiving, or storing electronic information. See also the definitions of supplies and information technology systems in this section.
Contract means, for the purpose of
Federal financial assistance, a legal instrument by which a recipient or subrecipient purchases property or services needed to carry out the project or program under a Federal award. For
additional information on subrecipient
and contractor determinations, see
§200.331. See also the definition of
subaward in this section.
Contractor means an entity that receives a contract as defined in this section.
Cooperative agreement means a legal
instrument of financial assistance between a Federal awarding agency and a recipient or a pass-through entity and
a subrecipient that, consistent with 31
U.S.C. 6302–6305:
(1) Is used to enter into a relationship the principal purpose of which is to transfer anything of value to carry
out a public purpose authorized by a
law of the United States (see 31 U.S.C.
6101(3)); and not to acquire property or
services for the Federal Government or
pass-through entity’s direct benefit or
use;
(2) Is distinguished from a grant in
that it provides for substantial involvement of the Federal awarding agency in carrying out the activity contemplated by the Federal award. (3) The term does not include:
(i) A cooperative research and development agreement as defined in 15 U.S.C. 3710a; or
(ii) An agreement that provides only:
(A) Direct United States Government
cash assistance to an individual;
(B) A subsidy;
(C) A loan;
(D) A loan guarantee; or
(E) Insurance.
Cooperative audit resolution means the
use of audit follow-up techniques which
promote prompt corrective action by
improving communication, fostering
collaboration, promoting trust, and developing an understanding between the Federal agency and the non-Federal entity. This approach is based upon:
(1) A strong commitment by Federal
agency and non-Federal entity leadership to program integrity; (2) Federal agencies strengthening
partnerships and working cooperatively with non-Federal entities and their auditors; and non-Federal entities and their auditors working cooperatively with Federal agencies; (3) A focus on current conditions and
corrective action going forward;
(4) Federal agencies offering appropriate relief for past noncompliance when audits show prompt corrective
action has occurred; and
(5) Federal agency leadership sending
a clear message that continued failure
to correct conditions identified by audits which are likely to cause improper payments, fraud, waste, or abuse is unacceptable and will result in sanctions.
Corrective action means action taken
by the auditee that:
(1) Corrects identified deficiencies;
(2) Produces recommended improvements; or
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(3) Demonstrates that audit findings
are either invalid or do not warrant
auditee action.
Cost allocation plan means central
service cost allocation plan or public
assistance cost allocation plan.
Cost objective means a program, function, activity, award, organizational subdivision, contract, or work unit for
which cost data are desired and for
which provision is made to accumulate
and measure the cost of processes,
products, jobs, capital projects, etc. A
cost objective may be a major function
of the non-Federal entity, a particular
service or project, a Federal award, or
an indirect (Facilities & Administrative (F&A)) cost activity, as described in subpart E of this part. See also the
definitions of final cost objective and intermediate cost objective in this section.
Cost sharing or matching means the
portion of project costs not paid by
Federal funds or contributions (unless
otherwise authorized by Federal statute). See also §200.306.
Cross-cutting audit finding means an
audit finding where the same underlying condition or issue affects all Federal awards (including Federal awards of more than one Federal awarding
agency or pass-through entity).
Disallowed costs means those charges
to a Federal award that the Federal
awarding agency or pass-through entity determines to be unallowable, in accordance with the applicable Federal statutes, regulations, or the terms and
conditions of the Federal award.
Discretionary award means an award
in which the Federal awarding agency,
in keeping with specific statutory authority that enables the agency to exercise judgment (‘‘discretion’’), selects the recipient and/or the amount of Federal funding awarded through a competitive process or based on merit of proposals. A discretionary award may
be selected on a non-competitive basis,
as appropriate.
Equipment means tangible personal
property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-Federal entity for financial statement purposes, or $5,000.
See also the definitions of capital assets, computing devices, general purpose equipment, information technology systems, special purpose equipment, and supplies in this section.
Expenditures means charges made by
a non-Federal entity to a project or
program for which a Federal award was
received.
(1) The charges may be reported on a
cash or accrual basis, as long as the
methodology is disclosed and is consistently applied.
(2) For reports prepared on a cash
basis, expenditures are the sum of:
(i) Cash disbursements for direct
charges for property and services;
(ii) The amount of indirect expense
charged;
(iii) The value of third-party in-kind
contributions applied; and
(iv) The amount of cash advance payments and payments made to subrecipients. (3) For reports prepared on an accrual basis, expenditures are the sum of:
(i) Cash disbursements for direct
charges for property and services;
(ii) The amount of indirect expense
incurred;
(iii) The value of third-party in-kind
contributions applied; and
(iv) The net increase or decrease in
the amounts owed by the non-Federal
entity for:
(A) Goods and other property received;
(B) Services performed by employees,
contractors, subrecipients, and other
payees; and
(C) Programs for which no current
services or performance are required
such as annuities, insurance claims, or
other benefit payments.
Federal agency means an ‘‘agency’’ as
defined at 5 U.S.C. 551(1) and further
clarified by 5 U.S.C. 552(f).
Federal Audit Clearinghouse (FAC)
means the clearinghouse designated by
OMB as the repository of record where
non-Federal entities are required to
transmit the information required by
subpart F of this part.
Federal award has the meaning, depending on the context, in either paragraph (1) or (2) of this definition:
(1)(i) The Federal financial assistance
that a recipient receives directly from
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a Federal awarding agency or indirectly from a pass-through entity, as described in §200.101; or
(ii) The cost-reimbursement contract
under the Federal Acquisition Regulations that a non-Federal entity receives directly from a Federal awarding agency or indirectly from a passthrough entity, as described in §200.101. (2) The instrument setting forth the
terms and conditions. The instrument
is the grant agreement, cooperative
agreement, other agreement for assistance covered in paragraph (2) of the definition of Federal financial assistance
in this section, or the cost-reimbursement contract awarded under the Federal Acquisition Regulations. (3) Federal award does not include
other contracts that a Federal agency
uses to buy goods or services from a
contractor or a contract to operate
Federal Government owned, contractor
operated facilities (GOCOs).
(4) See also definitions of Federal financial assistance, grant agreement, and cooperative agreement.
Federal award date means the date
when the Federal award is signed by
the authorized official of the Federal
awarding agency.
Federal financial assistance means
(1) Assistance that non-Federal entities receive or administer in the form of:
(i) Grants;
(ii) Cooperative agreements;
(iii) Non-cash contributions or donations of property (including donated surplus property);
(iv) Direct appropriations;
(v) Food commodities; and
(vi) Other financial assistance (except assistance listed in paragraph (2) of this definition).
(2) For §200.203 and subpart F of this
part, Federal financial assistance also includes assistance that non-Federal entities receive or administer in the form of:
(i) Loans;
(ii) Loan Guarantees;
(iii) Interest subsidies; and
(iv) Insurance.
(3) For §200.216, Federal financial assistance includes assistance that nonFederal entities receive or administer in the form of:
(i) Grants;
(ii) Cooperative agreements;
(iii) Loans; and
(iv) Loan Guarantees.
(4) Federal financial assistance does
not include amounts received as reimbursement for services rendered to individuals as described in §200.502(h) and (i).
Federal interest means, for purposes of
§200.330 or when used in connection
with the acquisition or improvement of
real property, equipment, or supplies
under a Federal award, the dollar
amount that is the product of the:
(1) The percentage of Federal participation in the total cost of the real property, equipment, or supplies; and
(2) Current fair market value of the
property, improvements, or both, to
the extent the costs of acquiring or improving the property were included as project costs.
Federal program means:
(1) All Federal awards which are assigned a single Assistance Listings Number.
(2) When no Assistance Listings
Number is assigned, all Federal awards
from the same agency made for the
same purpose must be combined and
considered one program.
(3) Notwithstanding paragraphs (1)
and (2) of this definition, a cluster of
programs. The types of clusters of programs are:
(i) Research and development (R&D);
(ii) Student financial aid (SFA); and
(iii) ‘‘Other clusters,’’ as described in
the definition of cluster of programs in
this section.
Federal share means the portion of
the Federal award costs that are paid
using Federal funds.
Final cost objective means a cost objective which has allocated to it both direct and indirect costs and, in the
non-Federal entity’s accumulation system, is one of the final accumulation points, such as a particular award, internal project, or other direct activity of a non-Federal entity. See also the
definitions of cost objective and intermediate cost objective in this section.
Financial obligations, when referencing a recipient’s or subrecipient’s use of funds under a Federal award,
means orders placed for property and
services, contracts and subawards
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made, and similar transactions that require payment.
Fixed amount awards means a type of
grant or cooperative agreement under
which the Federal awarding agency or
pass-through entity provides a specific
level of support without regard to actual costs incurred under the Federal award. This type of Federal award reduces some of the administrative burden and record-keeping requirements for both the non-Federal entity and
Federal awarding agency or passthrough entity. Accountability is based primarily on performance and results.
See §§200.102(c), 200.201(b), and 200.333.
Foreign organization means an entity
that is:
(1) A public or private organization
located in a country other than the
United States and its territories that is
subject to the laws of the country in
which it is located, irrespective of the
citizenship of project staff or place of
performance;
(2) A private nongovernmental organization located in a country other than the United States that solicits
and receives cash contributions from
the general public;
(3) A charitable organization located
in a country other than the United
States that is nonprofit and tax exempt under the laws of its country of domicile and operation, and is not a
university, college, accredited degreegranting institution of education, private foundation, hospital, organization engaged exclusively in research or scientific activities, church, synagogue, mosque or other similar entities organized primarily for religious purposes; or
(4) An organization located in a country other than the United States not recognized as a foreign public entity.
Foreign public entity means:
(1) A foreign government or foreign
governmental entity;
(2) A public international organization, which is an organization entitled to enjoy privileges, exemptions, and
immunities as an international organization under the International Organizations Immunities Act (22 U.S.C. 288– 288f);
(3) An entity owned (in whole or in
part) or controlled by a foreign government; or
(4) Any other entity consisting wholly or partially of one or more foreign governments or foreign governmental
entities.
General purpose equipment means
equipment which is not limited to research, medical, scientific or other technical activities. Examples include
office equipment and furnishings, modular offices, telephone networks, information technology equipment and systems, air conditioning equipment, reproduction and printing equipment, and motor vehicles. See also the definitions of equipment and special purpose equipment in this section.
Generally accepted accounting principles (GAAP) has the meaning specified in accounting standards issued by the
GASB and the FASB.
Generally accepted government auditing
standards (GAGAS), also known as the
Yellow Book, means generally accepted
government auditing standards issued
by the Comptroller General of the
United States, which are applicable to
financial audits.
Grant agreement means a legal instrument of financial assistance between a Federal awarding agency or passthrough entity and a non-Federal entity that, consistent with 31 U.S.C. 6302, 6304:
(1) Is used to enter into a relationship the principal purpose of which is to transfer anything of value to carry
out a public purpose authorized by a
law of the United States (see 31 U.S.C.
6101(3)); and not to acquire property or
services for the Federal awarding agency or pass-through entity’s direct benefit or use; (2) Is distinguished from a cooperative agreement in that it does not provide for substantial involvement of the Federal awarding agency in carrying
out the activity contemplated by the
Federal award.
(3) Does not include an agreement
that provides only:
(i) Direct United States Government
cash assistance to an individual;
(ii) A subsidy;
(iii) A loan;
(vi) A loan guarantee; or
(v) Insurance.
Highest level owner means the entity
that owns or controls an immediate
owner of the offeror, or that owns or
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controls one or more entities that control an immediate owner of the offeror.
No entity owns or exercises control of
the highest-level owner as defined in
the Federal Acquisition Regulations
(FAR) (48 CFR 52.204–17).
Hospital means a facility licensed as
a hospital under the law of any state or
a facility operated as a hospital by the
United States, a state, or a subdivision
of a state.
Improper payment means:
(1) Any payment that should not
have been made or that was made in an
incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. (i) Incorrect amounts are overpayments or underpayments that are made to eligible recipients (including inappropriate denials of payment or service, any payment that does not account for credit for applicable discounts, payments that are for an incorrect amount, and duplicate payments). An
improper payment also includes any
payment that was made to an ineligible recipient or for an ineligible good or service, or payments for goods or
services not received (except for such
payments authorized by law).
Note 1 to paragraph (1)(i) of this definition. Applicable discounts are only those discounts where it is both advantageous and within the agency’s control to claim them. (ii) When an agency’s review is unable to discern whether a payment was proper as a result of insufficient or
lack of documentation, this payment
should also be considered an improper
payment. When establishing documentation requirements for payments, agencies should ensure that all documentation requirements are necessary and should refrain from imposing additional burdensome documentation requirements. (iii) Interest or other fees that may
result from an underpayment by an
agency are not considered an improper
payment if the interest was paid correctly. These payments are generally separate transactions and may be necessary under certain statutory, contractual, administrative, or other legally applicable requirements. (iv) A ‘‘questioned cost’’ (as defined
in this section) should not be considered an improper payment until the transaction has been completely reviewed and is confirmed to be improper. (v) The term ‘‘payment’’ in this definition means any disbursement or transfer of Federal funds (including a
commitment for future payment, such
as cash, securities, loans, loan guarantees, and insurance subsidies) to any non-Federal person, non-Federal entity, or Federal employee, that is made by a Federal agency, a Federal contractor, a Federal grantee, or a governmental or other organization administering a Federal program or activity. (vi) The term ‘‘payment’’ includes
disbursements made pursuant to prime
contracts awarded under the Federal
Acquisition Regulation and Federal
awards subject to this part that are expended by recipients. (2) See definition of improper payment in OMB Circular A–123 appendix C, part I A (1) ‘‘What is an improper
payment?’’ Questioned costs, including
those identified in audits, are not an
improper payment until reviewed and
confirmed to be improper as defined in
OMB Circular A–123 appendix C.
Indian tribe means any Indian tribe,
band, nation, or other organized group
or community, including any Alaska
Native village or regional or village
corporation as defined in or established
pursuant to the Alaska Native Claims
Settlement Act (43 U.S.C. Chapter 33),
which is recognized as eligible for the
special programs and services provided
by the United States to Indians because of their status as Indians (25 U.S.C. 450b(e)). See annually published
Bureau of Indian Affairs list of Indian
Entities Recognized and Eligible to Receive Services.
Institutions of Higher Education (IHEs)
is defined at 20 U.S.C. 1001.
Indirect (facilities & administrative
(F&A)) costs means those costs incurred
for a common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved. To facilitate equitable distribution of indirect expenses to the
cost objectives served, it may be necessary to establish a number of pools of indirect (F&A) costs. Indirect (F&A)
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cost pools must be distributed to benefitted cost objectives on bases that will produce an equitable result in consideration of relative benefits derived.
Indirect cost rate proposal means the
documentation prepared by a non-Federal entity to substantiate its request for the establishment of an indirect
cost rate as described in appendices III
through VII and appendix IX to this
part.
Information technology systems means
computing devices, ancillary equipment, software, firmware, and similar procedures, services (including support
services), and related resources. See
also the definitions of computing devices
and equipment in this section.
Intangible property means property
having no physical existence, such as
trademarks, copyrights, patents and
patent applications and property, such
as loans, notes and other debt instruments, lease agreements, stock and other instruments of property ownership (whether the property is tangible or intangible).
Intermediate cost objective means a
cost objective that is used to accumulate indirect costs or service center costs that are subsequently allocated
to one or more indirect cost pools or
final cost objectives. See also the definitions of cost objective and final cost objective in this section.
Internal controls for non-Federal entities means:
(1) Processes designed and implemented by non-Federal entities to provide reasonable assurance regarding the achievement of objectives in the
following categories:
(i) Effectiveness and efficiency of operations;
(ii) Reliability of reporting for internal and external use; and (iii) Compliance with applicable laws
and regulations.
(2) Federal awarding agencies are required to follow internal control compliance requirements in OMB Circular No. A–123, Management’s Responsibility for Enterprise Risk Management and Internal Control.
Loan means a Federal loan or loan
guarantee received or administered by
a non-Federal entity, except as used in
the definition of program income in this
section.
(1) The term ‘‘direct loan’’ means a
disbursement of funds by the Federal
Government to a non-Federal borrower
under a contract that requires the repayment of such funds with or without interest. The term includes the purchase of, or participation in, a loan made by another lender and financing
arrangements that defer payment for
more than 90 days, including the sale of
a Federal Government asset on credit
terms. The term does not include the
acquisition of a federally guaranteed
loan in satisfaction of default claims or
the price support loans of the Commodity Credit Corporation. (2) The term ‘‘direct loan obligation’’
means a binding agreement by a Federal awarding agency to make a direct loan when specified conditions are fulfilled by the borrower. (3) The term ‘‘loan guarantee’’ means
any Federal Government guarantee, insurance, or other pledge with respect to the payment of all or a part of the
principal or interest on any debt obligation of a non-Federal borrower to a non-Federal lender, but does not include the insurance of deposits, shares, or other withdrawable accounts in financial institutions. (4) The term ‘‘loan guarantee commitment’’ means a binding agreement by a Federal awarding agency to make
a loan guarantee when specified conditions are fulfilled by the borrower, the lender, or any other party to the guarantee agreement.
Local government means any unit of
government within a state, including a:
(1) County;
(2) Borough;
(3) Municipality;
(4) City;
(5) Town;
(6) Township;
(7) Parish;
(8) Local public authority, including
any public housing agency under the
United States Housing Act of 1937;
(9) Special district;
(10) School district;
(11) Intrastate district;
(12) Council of governments, whether
or not incorporated as a nonprofit corporation under State law; and (13) Any other agency or instrumentality of a multi-, regional, or intraState or local government.
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Major program means a Federal program determined by the auditor to be a major program in accordance with
§200.518 or a program identified as a
major program by a Federal awarding
agency or pass-through entity in accordance with §200.503(e).
Management decision means the Federal awarding agency’s or pass-through entity’s written determination, provided to the auditee, of the adequacy of the auditee’s proposed corrective actions to address the findings, based on its evaluation of the audit findings and
proposed corrective actions.
Micro-purchase means a purchase of
supplies or services, the aggregate
amount of which does not exceed the
micro-purchase threshold. Micro-purchases comprise a subset of a non-Federal entity’s small purchases as defined in §200.320.
Micro-purchase threshold means the
dollar amount at or below which a nonFederal entity may purchase property or services using micro-purchase procedures (see §200.320). Generally, the micro-purchase threshold for procurement activities administered under Federal awards is not to exceed the
amount set by the FAR at 48 CFR part
2, subpart 2.1, unless a higher threshold
is requested by the non-Federal entity
and approved by the cognizant agency
for indirect costs.
Modified Total Direct Cost (MTDC)
means all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the
first $25,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships
and fellowships, participant support
costs and the portion of each subaward
in excess of $25,000. Other items may
only be excluded when necessary to
avoid a serious inequity in the distribution of indirect costs, and with the approval of the cognizant agency
for indirect costs.
Non-discretionary award means an
award made by the Federal awarding
agency to specific recipients in accordance with statutory, eligibility and compliance requirements, such that in
keeping with specific statutory authority the agency has no ability to exercise judgement (‘‘discretion’’). A nondiscretionary award amount could be determined specifically or by formula.
Non-Federal entity (NFE) means a
State, local government, Indian tribe,
Institution of Higher Education (IHE),
or nonprofit organization that carries
out a Federal award as a recipient or
subrecipient.
Nonprofit organization means any corporation, trust, association, cooperative, or other organization, not including IHEs, that:
(1) Is operated primarily for scientific, educational, service, charitable, or similar purposes in the public interest;
(2) Is not organized primarily for
profit; and
(3) Uses net proceeds to maintain,
improve, or expand the operations of
the organization.
Notice of funding opportunity means a
formal announcement of the availability of Federal funding through a financial assistance program from a Federal awarding agency. The notice of funding opportunity provides information on the award, who is eligible to apply, the evaluation criteria for selection of an awardee, required components of an application, and how to submit the application. The notice of
funding opportunity is any paper or
electronic issuance that an agency uses
to announce a funding opportunity,
whether it is called a ‘‘program announcement,’’ ‘‘notice of funding availability,’’ ‘‘broad agency announcement,’’ ‘‘research announcement,’’ ‘‘solicitation,’’ or some other term.
Office of Management and Budget
(OMB) means the Executive Office of
the President, Office of Management
and Budget.
Oversight agency for audit means the
Federal awarding agency that provides
the predominant amount of funding directly (direct funding) (as listed on the schedule of expenditures of Federal
awards, see §200.510(b)) to a non-Federal entity unless OMB designates a specific cognizant agency for audit.
When the direct funding represents less
than 25 percent of the total Federal expenditures (as direct and sub-awards) by the non-Federal entity, then the
Federal agency with the predominant
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amount of total funding is the designated cognizant agency for audit.
When there is no direct funding, the
Federal awarding agency which is the
predominant source of pass-through
funding must assume the oversight responsibilities. The duties of the oversight agency for audit and the process for any reassignments are described in
§200.513(b).
Participant support costs means direct
costs for items such as stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with conferences, or training projects.
Pass-through entity (PTE) means a
non-Federal entity that provides a
subaward to a subrecipient to carry out
part of a Federal program.
Performance goal means a target level
of performance expressed as a tangible,
measurable objective, against which
actual achievement can be compared,
including a goal expressed as a quantitative standard, value, or rate. In some instances (e.g., discretionary research awards), this may be limited to the requirement to submit technical
performance reports (to be evaluated in
accordance with agency policy).
Period of performance means the total
estimated time interval between the
start of an initial Federal award and
the planned end date, which may include one or more funded portions, or budget periods. Identification of the
period of performance in the Federal
award per §200.211(b)(5) does not commit the awarding agency to fund the award beyond the currently approved
budget period.
Personal property means property
other than real property. It may be
tangible, having physical existence, or
intangible.
Personally Identifiable Information
(PII) means information that can be
used to distinguish or trace an individual’s identity, either alone or when combined with other personal or identifying information that is linked or linkable to a specific individual. Some
information that is considered to be
PII is available in public sources such
as telephone books, public websites,
and university listings. This type of information is considered to be Public PII and includes, for example, first and
last name, address, work telephone
number, email address, home telephone
number, and general educational credentials. The definition of PII is not anchored to any single category of information or technology. Rather, it requires a case-by-case assessment of the specific risk that an individual can be
identified. Non-PII can become PII
whenever additional information is
made publicly available, in any medium and from any source, that, when combined with other available information, could be used to identify an individual.
Program income means gross income
earned by the non-Federal entity that
is directly generated by a supported activity or earned as a result of the Federal award during the period of performance except as provided in §200.307(f). (See the definition of period
of performance in this section.) Program
income includes but is not limited to
income from fees for services performed, the use or rental or real or personal property acquired under Federal awards, the sale of commodities or
items fabricated under a Federal
award, license fees and royalties on
patents and copyrights, and principal
and interest on loans made with Federal award funds. Interest earned on advances of Federal funds is not program income. Except as otherwise provided in Federal statutes, regulations, or the terms and conditions of the Federal award, program income does not include rebates, credits, discounts, and
interest earned on any of them. See
also §200.407. See also 35 U.S.C. 200–212
‘‘Disposition of Rights in Educational
Awards’’ applies to inventions made
under Federal awards.
Project cost means total allowable
costs incurred under a Federal award
and all required cost sharing and voluntary committed cost sharing, including third-party contributions.
Property means real property or personal property. See also the definitions of real property and personal property in
this section.
Protected Personally Identifiable Information (Protected PII) means an individual’s first name or first initial and last name in combination with any one or
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more of types of information, including, but not limited to, social security number, passport number, credit card
numbers, clearances, bank numbers,
biometrics, date and place of birth,
mother’s maiden name, criminal, medical and financial records, educational transcripts. This does not include PII
that is required by law to be disclosed.
See also the definition of Personally
Identifiable Information (PII) in this section.
Questioned cost means a cost that is
questioned by the auditor because of an
audit finding:
(1) Which resulted from a violation or
possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used
to match Federal funds;
(2) Where the costs, at the time of
the audit, are not supported by adequate documentation; or (3) Where the costs incurred appear
unreasonable and do not reflect the actions a prudent person would take in the circumstances.
(4) Questioned costs are not an improper payment until reviewed and confirmed to be improper as defined in
OMB Circular A–123 appendix C. (See
also the definition of Improper payment
in this section).
Real property means land, including
land improvements, structures and appurtenances thereto, but excludes moveable machinery and equipment.
Recipient means an entity, usually
but not limited to non-Federal entities
that receives a Federal award directly
from a Federal awarding agency. The
term recipient does not include subrecipients or individuals that are beneficiaries of the award.
Renewal award means an award made
subsequent to an expiring Federal
award for which the start date is contiguous with, or closely follows, the end of the expiring Federal award. A
renewal award’s start date will begin a
distinct period of performance.
Research and Development (R&D)
means all research activities, both
basic and applied, and all development
activities that are performed by nonFederal entities. The term research also includes activities involving the
training of individuals in research
techniques where such activities utilize
the same facilities as other research
and development activities and where
such activities are not included in the
instruction function. ‘‘Research’’ is defined as a systematic study directed toward fuller scientific knowledge or understanding of the subject studied. ‘‘Development’’ is the systematic use
of knowledge and understanding gained
from research directed toward the production of useful materials, devices, systems, or methods, including design
and development of prototypes and
processes.
Simplified acquisition threshold means
the dollar amount below which a nonFederal entity may purchase property or services using small purchase methods (see §200.320). Non-Federal entities adopt small purchase procedures in
order to expedite the purchase of items
at or below the simplified acquisition
threshold. The simplified acquisition
threshold for procurement activities
administered under Federal awards is
set by the FAR at 48 CFR part 2, subpart 2.1. The non-Federal entity is responsible for determining an appropriate simplified acquisition threshold based on internal controls, an evaluation of risk, and its documented procurement procedures. However, in no circumstances can this threshold exceed the dollar value established in the FAR (48 CFR part 2, subpart 2.1) for the
simplified acquisition threshold. Recipients should determine if local government laws on purchasing apply.
Special purpose equipment means
equipment which is used only for research, medical, scientific, or other technical activities. Examples of special purpose equipment include microscopes, x-ray machines, surgical instruments, and spectrometers. See also the definitions of equipment and general
purpose equipment in this section.
State means any state of the United
States, the District of Columbia, the
Commonwealth of Puerto Rico, U.S.
Virgin Islands, Guam, American
Samoa, the Commonwealth of the
Northern Mariana Islands, and any
agency or instrumentality thereof exclusive of local governments.
Student Financial Aid (SFA) means
Federal awards under those programs
of general student assistance, such as
those authorized by Title IV of the
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Higher Education Act of 1965, as
amended, (20 U.S.C. 1070–1099d), which
are administered by the U.S. Department of Education, and similar programs provided by other Federal agencies. It does not include Federal awards under programs that provide fellowships or similar Federal awards to students on a competitive basis, or for specified studies or research.
Subaward means an award provided
by a pass-through entity to a subrecipient for the subrecipient to carry out part of a Federal award received by
the pass-through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a Federal program. A subaward may be provided through any
form of legal agreement, including an
agreement that the pass-through entity considers a contract.
Subrecipient means an entity, usually
but not limited to non-Federal entities,
that receives a subaward from a passthrough entity to carry out part of a Federal award; but does not include an
individual that is a beneficiary of such
award. A subrecipient may also be a recipient of other Federal awards directly from a Federal awarding agency.
Subsidiary means an entity in which
more than 50 percent of the entity is
owned or controlled directly by a parent corporation or through another subsidiary of a parent corporation.
Supplies means all tangible personal
property other than those described in
the definition of equipment in this section. A computing device is a supply if the acquisition cost is less than the
lesser of the capitalization level established by the non-Federal entity for financial statement purposes or $5,000, regardless of the length of its useful
life. See also the definitions of computing devices and equipment in this section.
Telecommunications cost means the
cost of using communication and telephony technologies such as mobile phones, land lines, and internet.
Termination means the ending of a
Federal award, in whole or in part at
any time prior to the planned end of
period of performance. A lack of available funds is not a termination.
Third-party in-kind contributions
means the value of non-cash contributions (i.e., property or services) that— (1) Benefit a federally-assisted
project or program; and
(2) Are contributed by non-Federal
third parties, without charge, to a nonFederal entity under a Federal award.
Unliquidated financial obligations
means, for financial reports prepared
on a cash basis, financial obligations
incurred by the non-Federal entity
that have not been paid (liquidated).
For reports prepared on an accrual expenditure basis, these are financial obligations incurred by the non-Federal entity for which an expenditure has
not been recorded.
Unobligated balance means the
amount of funds under a Federal award
that the non-Federal entity has not obligated. The amount is computed by subtracting the cumulative amount of
the non-Federal entity’s unliquidated
financial obligations and expenditures
of funds under the Federal award from
the cumulative amount of the funds
that the Federal awarding agency or
pass-through entity authorized the
non-Federal entity to obligate.
Voluntary committed cost sharing
means cost sharing specifically pledged
on a voluntary basis in the proposal’s
budget on the part of the non-Federal
entity and that becomes a binding requirement of Federal award. See also §200.306.
[85 FR 49529, Aug. 13, 2020]
§ 200.2 Acquisition cost.
Acquisition cost means the cost of the
asset including the cost to ready the
asset for its intended use. Acquisition
cost for equipment, for example, means
the net invoice price of the equipment,
including the cost of any modifications, attachments, accessories, or auxiliary apparatus necessary to make it usable for the purpose for which it is
acquired. Acquisition costs for software includes those development costs capitalized in accordance with generally accepted accounting principles (GAAP). Ancillary charges, such as
taxes, duty, protective in transit insurance, freight, and installation may be included in or excluded from the acquisition cost in accordance with the nonVerDate Sep<11>2014 13:23 Jun 29, 2021 Jkt 253005 PO 00000 Frm 00108 Fmt 8010 Sfmt 8010 Y:\SGML\253005.XXX 253005
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Federal entity’s regular accounting
practices.
§ 200.3 Advance payment.
Advance payment means a payment
that a Federal awarding agency or
pass-through entity makes by any appropriate payment mechanism, including a predetermined payment schedule, before the non-Federal entity disburses
the funds for program purposes.
§ 200.4 Allocation.
Allocation means the process of assigning a cost, or a group of costs, to one or more cost objective(s), in reasonable proportion to the benefit provided or other equitable relationship.
The process may entail assigning a
cost(s) directly to a final cost objective
or through one or more intermediate
cost objectives.
§ 200.5 Audit finding.
Audit finding means deficiencies
which the auditor is required by
§200.516 Audit findings, paragraph (a)
to report in the schedule of findings
and questioned costs.
§ 200.6 Auditee.
Auditee means any non-Federal entity that expends Federal awards which must be audited under Subpart F—
Audit Requirements of this part.
§ 200.7 Auditor.
Auditor means an auditor who is a
public accountant or a Federal, state,
local government, or Indian tribe audit
organization, which meets the general
standards specified for external auditors in generally accepted government auditing standards (GAGAS). The term
auditor does not include internal auditors of nonprofit organizations. [79 FR 75880, Dec. 19, 2014]
§ 200.8 Budget.
Budget means the financial plan for
the project or program that the Federal awarding agency or pass-through entity approves during the Federal
award process or in subsequent amendments to the Federal award. It may include the Federal and non-Federal share or only the Federal share, as determined by the Federal awarding agency or pass-through entity.
§ 200.9 Central service cost allocation
plan.
Central service cost allocation plan
means the documentation identifying,
accumulating, and allocating or developing billing rates based on the allowable costs of services provided by a state, local government, or Indian tribe
on a centralized basis to its departments and agencies. The costs of these services may be allocated or billed to
users.
§ 200.10 Catalog of Federal Domestic
Assistance (CFDA) number.
CFDA number means the number assigned to a Federal program in the CFDA.
§ 200.11 CFDA program title.
CFDA program title means the title of
the program under which the Federal
award was funded in the CFDA.
§ 200.12 Capital assets.
Capital assets means tangible or intangible assets used in operations having a useful life of more than one year which are capitalized in accordance
with GAAP. Capital assets include:
(a) Land, buildings (facilities), equipment, and intellectual property (including software) whether acquired by purchase, construction, manufacture,
lease-purchase, exchange, or through
capital leases; and
(b) Additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations or alterations to capital assets that materially increase their value or useful life (not ordinary repairs and maintenance).
§ 200.13 Capital expenditures.
Capital expenditures means expenditures to acquire capital assets or expenditures to make additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations, or alterations to capital assets that materially increase their value or useful life.
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§ 200.14 Claim.
Claim means, depending on the context, either:
(a) A written demand or written assertion by one of the parties to a Federal award seeking as a matter of right:
(1) The payment of money in a sum
certain;
(2) The adjustment or interpretation
of the terms and conditions of the Federal award; or
(3) Other relief arising under or relating to a Federal award. (b) A request for payment that is not
in dispute when submitted.
§ 200.15 Class of Federal awards.
Class of Federal awards means a group
of Federal awards either awarded under
a specific program or group of programs or to a specific type of non-Federal entity or group of non-Federal entities to which specific provisions or exceptions may apply.
§ 200.16 Closeout.
Closeout means the process by which
the Federal awarding agency or passthrough entity determines that all applicable administrative actions and all required work of the Federal award
have been completed and takes actions
as described in §200.343 Closeout.
§ 200.17 Cluster of programs.
Cluster of programs means a grouping
of closely related programs that share
common compliance requirements. The
types of clusters of programs are research and development (R&D), student financial aid (SFA), and other clusters.
‘‘Other clusters’’ are as defined by OMB
in the compliance supplement or as
designated by a state for Federal
awards the state provides to its subrecipients that meet the definition of a cluster of programs. When designating
an ‘‘other cluster,’’ a state must identify the Federal awards included in the cluster and advise the subrecipients of
compliance requirements applicable to
the cluster, consistent with §200.331
Requirements for pass-through entities, paragraph (a). A cluster of programs must be considered as one program for determining major programs, as described in §200.518 Major program
determination, and, with the exception
of R&D as described in §200.501 Audit
requirements, paragraph (c), whether a
program-specific audit may be elected.
§ 200.18 Cognizant agency for audit.
Cognizant agency for audit means the
Federal agency designated to carry out
the responsibilities described in
§200.513 Responsibilities, paragraph (a).
The cognizant agency for audit is not
necessarily the same as the cognizant
agency for indirect costs. A list of cognizant agencies for audit may be found at the FAC Web site.
§ 200.19 Cognizant agency for indirect
costs.
Cognizant agency for indirect costs
means the Federal agency responsible
for reviewing, negotiating, and approving cost allocation plans or indirect cost proposals developed under this
part on behalf of all Federal agencies.
The cognizant agency for indirect cost
is not necessarily the same as the cognizant agency for audit. For assignments of cognizant agencies see the following:
(a) For IHEs: Appendix III to Part
200—Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Institutions of Higher Education (IHEs), paragraph C.11.
(b) For nonprofit organizations: Appendix IV to Part 200—Indirect (F&A) Costs Identification and Assignment,
and Rate Determination for Nonprofit
Organizations, paragraph C.2.a.
(c) For state and local governments:
Appendix V to Part 200—State/Local
Governmentwide Central Service Cost
Allocation Plans, paragraph F.1.
(d) For Indian tribes: Appendix VII to
Part 200—States and Local Government and Indian Tribe Indirect Cost Proposal, paragraph D.1.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75880, Dec. 19, 2014; 80 FR 54407, Sept. 10,
2015]
§ 200.20 Computing devices.
Computing devices means machines
used to acquire, store, analyze, process,
and publish data and other information
electronically, including accessories
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Supplies and 200.58 Information technology systems.
§ 200.21 Compliance supplement.
Compliance supplement means Appendix XI to Part 200—Compliance Supplement (previously known as the Circular A–133 Compliance Supplement). § 200.22 Contract.
Contract means a legal instrument by
which a non-Federal entity purchases
property or services needed to carry
out the project or program under a
Federal award. The term as used in
this part does not include a legal instrument, even if the non-Federal entity considers it a contract, when the substance of the transaction meets the
definition of a Federal award or
subaward (see §200.92 Subaward).
§ 200.23 Contractor.
Contractor means an entity that receives a contract as defined in §200.22 Contract.
§ 200.24 Cooperative agreement.
Cooperative agreement means a legal
instrument of financial assistance between a Federal awarding agency or pass-through entity and a non-Federal
entity that, consistent with 31 U.S.C.
6302–6305:
(a) Is used to enter into a relationship the principal purpose of which is to transfer anything of value from the
Federal awarding agency or passthrough entity to the non-Federal entity to carry out a public purpose authorized by a law of the United States (see 31 U.S.C. 6101(3)); and not to acquire property or services for the Federal Government or pass-through entity’s direct benefit or use; (b) Is distinguished from a grant in
that it provides for substantial involvement between the Federal awarding agency or pass-through entity and the
non-Federal entity in carrying out the
activity contemplated by the Federal
award.
(c) The term does not include:
(1) A cooperative research and development agreement as defined in 15 U.S.C. 3710a; or
(2) An agreement that provides only:
(i) Direct United States Government
cash assistance to an individual;
(ii) A subsidy;
(iii) A loan;
(iv) A loan guarantee; or
(v) Insurance.
§ 200.25 Cooperative audit resolution.
Cooperative audit resolution means the
use of audit follow-up techniques which
promote prompt corrective action by
improving communication, fostering
collaboration, promoting trust, and developing an understanding between the Federal agency and the non-Federal entity. This approach is based upon:
(a) A strong commitment by Federal
agency and non-Federal entity leadership to program integrity; (b) Federal agencies strengthening
partnerships and working cooperatively with non-Federal entities and their auditors; and non-Federal entities and their auditors working cooperatively with Federal agencies; (c) A focus on current conditions and
corrective action going forward;
(d) Federal agencies offering appropriate relief for past noncompliance when audits show prompt corrective
action has occurred; and
(e) Federal agency leadership sending
a clear message that continued failure
to correct conditions identified by audits which are likely to cause improper payments, fraud, waste, or abuse is unacceptable and will result in sanctions. § 200.26 Corrective action.
Corrective action means action taken
by the auditee that:
(a) Corrects identified deficiencies;
(b) Produces recommended improvements; or
(c) Demonstrates that audit findings
are either invalid or do not warrant
auditee action.
§ 200.27 Cost allocation plan.
Cost allocation plan means central
service cost allocation plan or public
assistance cost allocation plan.
§ 200.28 Cost objective.
Cost objective means a program, function, activity, award, organizational subdivision, contract, or work unit for
which cost data are desired and for
which provision is made to accumulate
and measure the cost of processes,
products, jobs, capital projects, etc. A
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§ 200.29 2 CFR Ch. II (1–1–21 Edition)
cost objective may be a major function
of the non-Federal entity, a particular
service or project, a Federal award, or
an indirect (Facilities & Administrative (F&A)) cost activity, as described in Subpart E—Cost Principles of this
Part. See also §§200.44 Final cost objective and 200.60 Intermediate cost objective. § 200.29 Cost sharing or matching.
Cost sharing or matching means the
portion of project costs not paid by
Federal funds (unless otherwise authorized by Federal statute). See also §200.306 Cost sharing or matching.
§ 200.30 Cross-cutting audit finding.
Cross-cutting audit finding means an
audit finding where the same underlying condition or issue affects Federal awards of more than one Federal
awarding agency or pass-through entity.
§ 200.31 Disallowed costs.
Disallowed costs means those charges
to a Federal award that the Federal
awarding agency or pass-through entity determines to be unallowable, in accordance with the applicable Federal statutes, regulations, or the terms and
conditions of the Federal award.
§ 200.32 [Reserved]
§ 200.33 Equipment.
Equipment means tangible personal
property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-Federal entity for financial statement purposes, or $5,000.
See also §§200.12 Capital assets, 200.20
Computing devices, 200.48 General purpose equipment, 200.58 Information technology systems, 200.89 Special purpose equipment, and 200.94 Supplies. § 200.34 Expenditures.
Expenditures means charges made by
a non-Federal entity to a project or
program for which a Federal award was
received.
(a) The charges may be reported on a
cash or accrual basis, as long as the
methodology is disclosed and is consistently applied.
(b) For reports prepared on a cash
basis, expenditures are the sum of:
(1) Cash disbursements for direct
charges for property and services;
(2) The amount of indirect expense
charged;
(3) The value of third-party in-kind
contributions applied; and
(4) The amount of cash advance payments and payments made to subrecipients. (c) For reports prepared on an accrual basis, expenditures are the sum of:
(1) Cash disbursements for direct
charges for property and services;
(2) The amount of indirect expense
incurred;
(3) The value of third-party in-kind
contributions applied; and
(4) The net increase or decrease in
the amounts owed by the non-Federal
entity for:
(i) Goods and other property received;
(ii) Services performed by employees,
contractors, subrecipients, and other
payees; and
(iii) Programs for which no current
services or performance are required
such as annuities, insurance claims, or
other benefit payments.
§ 200.35 Federal agency.
Federal agency means an ‘‘agency’’ as
defined at 5 U.S.C. 551(1) and further
clarified by 5 U.S.C. 552(f).
§ 200.36 Federal Audit Clearinghouse
(FAC).
FAC means the clearinghouse designated by OMB as the repository of record where non-Federal entities are
required to transmit the reporting
packages required by Subpart F—Audit
Requirements of this part. The mailing
address of the FAC is Federal Audit
Clearinghouse, Bureau of the Census,
1201 E. 10th Street, Jeffersonville, IN
47132 and the web address is: http://harvester.census.gov/sac/. Any future updates to the location of the FAC may be found at the OMB Web site.
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OMB Guidance § 200.42
§ 200.37 Federal awarding agency.
Federal awarding agency means the
Federal agency that provides a Federal
award directly to a non-Federal entity.
§ 200.38 Federal award.
Federal award has the meaning, depending on the context, in either paragraph (a) or (b) of this section:
(a)(1) The Federal financial assistance that a non-Federal entity receives directly from a Federal awarding agency or indirectly from a pass-through entity, as described in §200.101 Applicability; or
(2) The cost-reimbursement contract
under the Federal Acquisition Regulations that a non-Federal entity receives directly from a Federal awarding agency or indirectly from a passthrough entity, as described in §200.101 Applicability.
(b) The instrument setting forth the
terms and conditions. The instrument
is the grant agreement, cooperative
agreement, other agreement for assistance covered in paragraph (b) of §200.40 Federal financial assistance, or the
cost-reimbursement contract awarded
under the Federal Acquisition Regulations.
(c) Federal award does not include
other contracts that a Federal agency
uses to buy goods or services from a
contractor or a contract to operate
Federal Government owned, contractor
operated facilities (GOCOs).
(d) See also definitions of Federal financial assistance, grant agreement, and cooperative agreement.
§ 200.39 Federal award date.
Federal award date means the date
when the Federal award is signed by
the authorized official of the Federal
awarding agency.
§ 200.40 Federal financial assistance.
(a) Federal financial assistance means
assistance that non-Federal entities receive or administer in the form of:
(1) Grants;
(2) Cooperative agreements;
(3) Non-cash contributions or donations of property (including donated surplus property);
(4) Direct appropriations;
(5) Food commodities; and
(6) Other financial assistance (except
assistance listed in paragraph (b) of
this section).
(b) For §200.202 Requirement to provide public notice of Federal financial assistance programs and Subpart F—
Audit Requirements of this part, Federal financial assistance also includes assistance that non-Federal entities receive or administer in the form of:
(1) Loans;
(2) Loan Guarantees;
(3) Interest subsidies; and
(4) Insurance.
(c) Federal financial assistance does
not include amounts received as reimbursement for services rendered to individuals as described in §200.502 Basis for determining Federal awards expended, paragraph (h) and (i) of this part.
[78 FR 78608, Dec. 26, 2013, as amended at 80
FR 54407, Sept. 10, 2015]
§ 200.41 Federal interest.
Federal interest means, for purposes of
§200.329 Reporting on real property or
when used in connection with the acquisition or improvement of real property, equipment, or supplies under a Federal award, the dollar amount that
is the product of the:
(a) Federal share of total project
costs; and
(b) Current fair market value of the
property, improvements, or both, to
the extent the costs of acquiring or improving the property were included as project costs.
§ 200.42 Federal program.
Federal program means:
(a) All Federal awards which are assigned a single number in the CFDA. (b) When no CFDA number is assigned, all Federal awards to non-Federal entities from the same agency made for the same purpose must be
combined and considered one program.
(c) Notwithstanding paragraphs (a)
and (b) of this definition, a cluster of
programs. The types of clusters of programs are:
(1) Research and development (R&D);
(2) Student financial aid (SFA); and
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§ 200.43 2 CFR Ch. II (1–1–21 Edition)
(3) ‘‘Other clusters,’’ as described in
the definition of Cluster of Programs.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75880, Dec. 19, 2014]
§ 200.43 Federal share.
Federal share means the portion of
the total project costs that are paid by
Federal funds.
§ 200.44 Final cost objective.
Final cost objective means a cost objective which has allocated to it both direct and indirect costs and, in the
non-Federal entity’s accumulation system, is one of the final accumulation points, such as a particular award, internal project, or other direct activity of a non-Federal entity. See also
§§200.28 Cost objective and 200.60 Intermediate cost objective. § 200.45 Fixed amount awards.
Fixed amount awards means a type of
grant agreement under which the Federal awarding agency or pass-through entity provides a specific level of support without regard to actual costs incurred under the Federal award. This type of Federal award reduces some of
the administrative burden and recordkeeping requirements for both the nonFederal entity and Federal awarding agency or pass-through entity. Accountability is based primarily on performance and results. See §§200.201 Use of grant agreements (including fixed
amount awards), cooperative agreements, and contracts, paragraph (b) and 200.332 Fixed amount subawards.
§ 200.46 Foreign public entity.
Foreign public entity means:
(a) A foreign government or foreign
governmental entity;
(b) A public international organization, which is an organization entitled to enjoy privileges, exemptions, and
immunities as an international organization under the International Organizations Immunities Act (22 U.S.C. 288– 288f);
(c) An entity owned (in whole or in
part) or controlled by a foreign government; or
(d) Any other entity consisting wholly or partially of one or more foreign governments or foreign governmental
entities.
§ 200.47 Foreign organization.
Foreign organization means an entity
that is:
(a) A public or private organization
located in a country other than the
United States and its territories that is
subject to the laws of the country in
which it is located, irrespective of the
citizenship of project staff or place of
performance;
(b) A private nongovernmental organization located in a country other than the United States that solicits
and receives cash contributions from
the general public;
(c) A charitable organization located
in a country other than the United
States that is nonprofit and tax exempt under the laws of its country of domicile and operation, and is not a
university, college, accredited degreegranting institution of education, private foundation, hospital, organization engaged exclusively in research or scientific activities, church, synagogue, mosque or other similar entities organized primarily for religious purposes; or
(d) An organization located in a
country other than the United States
not recognized as a Foreign Public Entity.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75880, Dec. 19, 2014]
§ 200.48 General purpose equipment.
General purpose equipment means
equipment which is not limited to research, medical, scientific or other technical activities. Examples include
office equipment and furnishings, modular offices, telephone networks, information technology equipment and systems, air conditioning equipment, reproduction and printing equipment, and motor vehicles. See also Equipment and Special Purpose Equipment. § 200.49 Generally Accepted Accounting Principles (GAAP).
GAAP has the meaning specified in
accounting standards issued by the
Government Accounting Standards
Board (GASB) and the Financial Accounting Standards Board (FASB).
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§ 200.50 Generally Accepted Government Auditing Standards (GAGAS).
GAGAS, also known as the Yellow
Book, means generally accepted government auditing standards issued by the Comptroller General of the United
States, which are applicable to financial audits.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75880, Dec. 19, 2014]
§ 200.51 Grant agreement.
Grant agreement means a legal instrument of financial assistance between a Federal awarding agency or passthrough entity and a non-Federal entity that, consistent with 31 U.S.C. 6302, 6304:
(a) Is used to enter into a relationship the principal purpose of which is to transfer anything of value from the
Federal awarding agency or passthrough entity to the non-Federal entity to carry out a public purpose authorized by a law of the United States (see 31 U.S.C. 6101(3)); and not to acquire property or services for the Federal awarding agency or pass-through entity’s direct benefit or use;
(b) Is distinguished from a cooperative agreement in that it does not provide for substantial involvement between the Federal awarding agency or pass-through entity and the non-Federal entity in carrying out the activity contemplated by the Federal award.
(c) Does not include an agreement
that provides only:
(1) Direct United States Government
cash assistance to an individual;
(2) A subsidy;
(3) A loan;
(4) A loan guarantee; or
(5) Insurance.
§ 200.52 Hospital.
Hospital means a facility licensed as
a hospital under the law of any state or
a facility operated as a hospital by the
United States, a state, or a subdivision
of a state.
§ 200.53 Improper payment.
(a) Improper payment means any payment that should not have been made or that was made in an incorrect
amount (including overpayments and
underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any
payment to an ineligible party, any
payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation
prevents a reviewer from discerning
whether a payment was proper.
§ 200.54 Indian tribe (or ‘‘federally recognized Indian tribe’’).
Indian tribe means any Indian tribe,
band, nation, or other organized group
or community, including any Alaska
Native village or regional or village
corporation as defined in or established
pursuant to the Alaska Native Claims
Settlement Act (43 U.S.C. Chapter 33),
which is recognized as eligible for the
special programs and services provided
by the United States to Indians because of their status as Indians (25 U.S.C. 450b(e)). See annually published
Bureau of Indian Affairs list of Indian
Entities Recognized and Eligible to Receive Services.
§ 200.55 Institutions of Higher Education (IHEs).
IHE is defined at 20 U.S.C. 1001.
§ 200.56 Indirect (facilities & administrative (F&A)) costs.
Indirect (F&A) costs means those costs
incurred for a common or joint purpose
benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted,
without effort disproportionate to the
results achieved. To facilitate equitable distribution of indirect expenses to the cost objectives served, it may be
necessary to establish a number of
pools of indirect (F&A) costs. Indirect
(F&A) cost pools must be distributed to
benefitted cost objectives on bases that
will produce an equitable result in consideration of relative benefits derived. [78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75880, Dec. 19, 2014]
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§ 200.57 Indirect cost rate proposal.
Indirect cost rate proposal means the
documentation prepared by a non-Federal entity to substantiate its request for the establishment of an indirect
cost rate as described in Appendix III
to Part 200—Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Institutions of Higher Education (IHEs) through Appendix VII to Part 200—States and Local Government and Indian Tribe Indirect Cost Proposals of this part, and Appendix IX
to Part 200—Hospital Cost Principles.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75880, Dec. 19, 2014]
§ 200.58 Information technology systems.
Information technology systems means
computing devices, ancillary equipment, software, firmware, and similar procedures, services (including support
services), and related resources. See
also §§200.20 Computing devices and
200.33 Equipment.
§ 200.59 Intangible property.
Intangible property means property
having no physical existence, such as
trademarks, copyrights, patents and
patent applications and property, such
as loans, notes and other debt instruments, lease agreements, stock and other instruments of property ownership (whether the property is tangible or intangible).
§ 200.60 Intermediate cost objective.
Intermediate cost objective means a
cost objective that is used to accumulate indirect costs or service center costs that are subsequently allocated
to one or more indirect cost pools or
final cost objectives. See also §200.28
Cost objective and §200.44 Final cost
objective.
§ 200.61 Internal controls.
Internal controls means a process, implemented by a non-Federal entity, designed to provide reasonable assurance regarding the achievement of objectives in the following categories:
(a) Effectiveness and efficiency of operations;
(b) Reliability of reporting for internal and external use; and (c) Compliance with applicable laws
and regulations.
§ 200.62 Internal control over compliance requirements for Federal awards.
Internal control over compliance requirements for Federal awards means a process implemented by a non-Federal
entity designed to provide reasonable
assurance regarding the achievement
of the following objectives for Federal
awards:
(a) Transactions are properly recorded and accounted for, in order to:
(1) Permit the preparation of reliable
financial statements and Federal reports;
(2) Maintain accountability over assets; and
(3) Demonstrate compliance with
Federal statutes, regulations, and the
terms and conditions of the Federal
award;
(b) Transactions are executed in compliance with:
(1) Federal statutes, regulations, and
the terms and conditions of the Federal
award that could have a direct and material effect on a Federal program; and (2) Any other Federal statutes and
regulations that are identified in the
Compliance Supplement; and
(c) Funds, property, and other assets
are safeguarded against loss from unauthorized use or disposition. § 200.63 Loan.
Loan means a Federal loan or loan
guarantee received or administered by
a non-Federal entity, except as used in
the definition of §200.80 Program income.
(a) The term ‘‘direct loan’’ means a
disbursement of funds by the Federal
Government to a non-Federal borrower
under a contract that requires the repayment of such funds with or without interest. The term includes the purchase of, or participation in, a loan made by another lender and financing
arrangements that defer payment for
more than 90 days, including the sale of
a Federal Government asset on credit
terms. The term does not include the
acquisition of a federally guaranteed
loan in satisfaction of default claims or
the price support loans of the Commodity Credit Corporation.
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(b) The term ‘‘direct loan obligation’’
means a binding agreement by a Federal awarding agency to make a direct loan when specified conditions are fulfilled by the borrower. (c) The term ‘‘loan guarantee’’ means
any Federal Government guarantee, insurance, or other pledge with respect to the payment of all or a part of the
principal or interest on any debt obligation of a non-Federal borrower to a non-Federal lender, but does not include the insurance of deposits, shares, or other withdrawable accounts in financial institutions. (d) The term ‘‘loan guarantee commitment’’ means a binding agreement by a Federal awarding agency to make
a loan guarantee when specified conditions are fulfilled by the borrower, the lender, or any other party to the guarantee agreement. § 200.64 Local government.
Local government means any unit of
government within a state, including a:
(a) County;
(b) Borough;
(c) Municipality;
(d) City;
(e) Town;
(f) Township;
(g) Parish;
(h) Local public authority, including
any public housing agency under the
United States Housing Act of 1937;
(i) Special district;
(j) School district;
(k) Intrastate district;
(l) Council of governments, whether
or not incorporated as a nonprofit corporation under state law; and (m) Any other agency or instrumentality of a multi-, regional, or intrastate or local government. § 200.65 Major program.
Major program means a Federal program determined by the auditor to be a major program in accordance with
§200.518 Major program determination
or a program identified as a major program by a Federal awarding agency or pass-through entity in accordance with
§200.503 Relation to other audit requirements, paragraph (e). § 200.66 Management decision.
Management decision means the evaluation by the Federal awarding agency or pass-through entity of the audit
findings and corrective action plan and
the issuance of a written decision to
the auditee as to what corrective action is necessary. § 200.67 Micro-purchase.
Micro-purchase means a purchase of
supplies or services using simplified acquisition procedures, the aggregate amount of which does not exceed the
micro-purchase threshold. Micro-purchase procedures comprise a subset of a non-Federal entity’s small purchase
procedures. The non-Federal entity
uses such procedures in order to expedite the completion of its lowest-dollar small purchase transactions and minimize the associated administrative burden and cost. The micro-purchase
threshold is set by the Federal Acquisition Regulation at 48 CFR Subpart 2.1 (Definitions). It is $3,000 except as otherwise discussed in Subpart 2.1 of that regulation, but this threshold is periodically adjusted for inflation. § 200.68 Modified Total Direct Cost
(MTDC).
MTDC means all direct salaries and
wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward
(regardless of the period of performance of the subawards under the award). MTDC excludes equipment,
capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $25,000.
Other items may only be excluded
when necessary to avoid a serious inequity in the distribution of indirect costs, and with the approval of the cognizant agency for indirect costs. [79 FR 75880, Dec. 19, 2014]
§ 200.69 Non-Federal entity.
Non-Federal entity means a state,
local government, Indian tribe, institution of higher education (IHE), or nonprofit organization that carries out a Federal award as a recipient or subrecipient.
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§ 200.70 Nonprofit organization.
Nonprofit organization means any corporation, trust, association, cooperative, or other organization, not including IHEs, that:
(a) Is operated primarily for scientific, educational, service, charitable, or similar purposes in the public interest;
(b) Is not organized primarily for
profit; and
(c) Uses net proceeds to maintain,
improve, or expand the operations of
the organization.
§ 200.71 Obligations.
When used in connection with a nonFederal entity’s utilization of funds under a Federal award, obligations
means orders placed for property and
services, contracts and subawards
made, and similar transactions during
a given period that require payment by
the non-Federal entity during the same
or a future period.
§ 200.72 Office of Management and
Budget (OMB).
OMB means the Executive Office of
the President, Office of Management
and Budget.
§ 200.73 Oversight agency for audit.
Oversight agency for audit means the
Federal awarding agency that provides
the predominant amount of funding directly to a non-Federal entity not assigned a cognizant agency for audit.
When there is no direct funding, the
Federal awarding agency which is the
predominant source of pass-through
funding must assume the oversight responsibilities. The duties of the oversight agency for audit and the process for any reassignments are described in
§200.513 Responsibilities, paragraph (b).
§ 200.74 Pass-through entity.
Pass-through entity means a non-Federal entity that provides a subaward to a subrecipient to carry out part of a
Federal program.
§ 200.75 Participant support costs.
Participant support costs means direct
costs for items such as stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with conferences, or training projects. § 200.76 Performance goal.
Performance goal means a target level
of performance expressed as a tangible,
measurable objective, against which
actual achievement can be compared,
including a goal expressed as a quantitative standard, value, or rate. In some instances (e.g., discretionary research awards), this may be limited to the requirement to submit technical
performance reports (to be evaluated in
accordance with agency policy).
§ 200.77 Period of performance.
Period of performance means the time
during which the non-Federal entity
may incur new obligations to carry out
the work authorized under the Federal
award. The Federal awarding agency or
pass-through entity must include start
and end dates of the period of performance in the Federal award (see §§200.210 Information contained in a Federal
award paragraph (a)(5) and 200.331 Requirements for pass-through entities, paragraph (a)(1)(iv)).
§ 200.78 Personal property.
Personal property means property
other than real property. It may be
tangible, having physical existence, or
intangible.
§ 200.79 Personally Identifiable Information (PII).
PII means information that can be
used to distinguish or trace an individual’s identity, either alone or when combined with other personal or identifying information that is linked or linkable to a specific individual. Some
information that is considered to be
PII is available in public sources such
as telephone books, public Web sites,
and university listings. This type of information is considered to be Public PII and includes, for example, first and
last name, address, work telephone
number, email address, home telephone
number, and general educational credentials. The definition of PII is not anchored to any single category of information or technology. Rather, it requires a case-by-case assessment of the specific risk that an individual can be
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identified. Non-PII can become PII
whenever additional information is
made publicly available, in any medium and from any source, that, when combined with other available information, could be used to identify an individual. § 200.80 Program income.
Program income means gross income
earned by the non-Federal entity that
is directly generated by a supported activity or earned as a result of the Federal award during the period of performance except as provided in §200.307 paragraph (f). (See §200.77 Period of
performance.) Program income includes but is not limited to income from fees for services performed, the
use or rental or real or personal property acquired under Federal awards, the sale of commodities or items fabricated under a Federal award, license fees and royalties on patents and copyrights, and principal and interest on loans made with Federal award funds.
Interest earned on advances of Federal
funds is not program income. Except as
otherwise provided in Federal statutes,
regulations, or the terms and conditions of the Federal award, program income does not include rebates, credits, discounts, and interest earned on any
of them. See also §200.407 Prior written
approval (prior approval). See also 35
U.S.C. 200–212 ‘‘Disposition of Rights in
Educational Awards’’ applies to inventions made under Federal awards. [78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75880, Dec. 19, 2014]
§ 200.81 Property.
Property means real property or personal property.
§ 200.82 Protected Personally Identifiable Information (Protected PII).
Protected PII means an individual’s
first name or first initial and last name
in combination with any one or more
of types of information, including, but
not limited to, social security number,
passport number, credit card numbers,
clearances, bank numbers, biometrics,
date and place of birth, mother’s maiden name, criminal, medical and financial records, educational transcripts.
This does not include PII that is required by law to be disclosed. (See also §200.79 Personally Identifiable Information (PII)).
§ 200.83 Project cost.
Project cost means total allowable
costs incurred under a Federal award
and all required cost sharing and voluntary committed cost sharing, including third-party contributions. § 200.84 Questioned cost.
Questioned cost means a cost that is
questioned by the auditor because of an
audit finding:
(a) Which resulted from a violation
or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used
to match Federal funds;
(b) Where the costs, at the time of
the audit, are not supported by adequate documentation; or (c) Where the costs incurred appear
unreasonable and do not reflect the actions a prudent person would take in the circumstances.
§ 200.85 Real property.
Real property means land, including
land improvements, structures and appurtenances thereto, but excludes moveable machinery and equipment.
§ 200.86 Recipient.
Recipient means a non-Federal entity
that receives a Federal award directly
from a Federal awarding agency to
carry out an activity under a Federal
program. The term recipient does not
include subrecipients. See also §200.69
Non-Federal entity.
§ 200.87 Research and Development
(R&D).
R&D means all research activities,
both basic and applied, and all development activities that are performed by non-Federal entities. The term research also includes activities involving the training of individuals in research techniques where such activities utilize the same facilities as other research and development activities and where such activities are not included
in the instruction function.
‘‘Research’’ is defined as a systematic study directed toward fuller scientific knowledge or understanding of the subject studied. ‘‘Development’’ is
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the systematic use of knowledge and
understanding gained from research directed toward the production of useful materials, devices, systems, or methods, including design and development of prototypes and processes.
§ 200.88 Simplified acquisition threshold.
Simplified acquisition threshold means
the dollar amount below which a nonFederal entity may purchase property or services using small purchase methods. Non-Federal entities adopt small purchase procedures in order to expedite the purchase of items costing less than the simplified acquisition threshold. The simplified acquisition threshold is set by the Federal Acquisition Regulation at 48 CFR Subpart 2.1 (Definitions) and in accordance with 41 U.S.C. 1908. As of the publication of
this part, the simplified acquisition
threshold is $150,000, but this threshold
is periodically adjusted for inflation.
(Also see definition of §200.67 Micropurchase.)
§ 200.89 Special purpose equipment.
Special purpose equipment means
equipment which is used only for research, medical, scientific, or other technical activities. Examples of special purpose equipment include microscopes, x-ray machines, surgical instruments, and spectrometers. See also §§200.33 Equipment and 200.48 General
purpose equipment.
§ 200.90 State.
State means any state of the United
States, the District of Columbia, the
Commonwealth of Puerto Rico, U.S.
Virgin Islands, Guam, American
Samoa, the Commonwealth of the
Northern Mariana Islands, and any
agency or instrumentality thereof exclusive of local governments. [78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75880, Dec. 19, 2014]
§ 200.91 Student Financial Aid (SFA).
SFA means Federal awards under
those programs of general student assistance, such as those authorized by Title IV of the Higher Education Act of
1965, as amended, (20 U.S.C. 1070–1099d),
which are administered by the U.S. Department of Education, and similar programs provided by other Federal
agencies. It does not include Federal
awards under programs that provide
fellowships or similar Federal awards
to students on a competitive basis, or
for specified studies or research.
§ 200.92 Subaward.
Subaward means an award provided
by a pass-through entity to a subrecipient for the subrecipient to carry out part of a Federal award received by
the pass-through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a Federal program. A subaward may be provided through any
form of legal agreement, including an
agreement that the pass-through entity considers a contract. § 200.93 Subrecipient.
Subrecipient means a non-Federal entity that receives a subaward from a pass-through entity to carry out part
of a Federal program; but does not include an individual that is a beneficiary of such program. A subrecipient may also be a recipient of other Federal awards directly from a Federal awarding agency.
§ 200.94 Supplies.
Supplies means all tangible personal
property other than those described in
§200.33 Equipment. A computing device
is a supply if the acquisition cost is
less than the lesser of the capitalization level established by the non-Federal entity for financial statement purposes or $5,000, regardless of the length of its useful life. See also §§200.20 Computing devices and 200.33 Equipment. § 200.95 Termination.
Termination means the ending of a
Federal award, in whole or in part at
any time prior to the planned end of
period of performance.
§ 200.96 Third-party in-kind contributions.
Third-party in-kind contributions
means the value of non-cash contributions (i.e., property or services) that— (a) Benefit a federally assisted
project or program; and
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OMB Guidance § 200.100
(b) Are contributed by non-Federal
third parties, without charge, to a nonFederal entity under a Federal award. § 200.97 Unliquidated obligations.
Unliquidated obligations means, for financial reports prepared on a cash basis, obligations incurred by the nonFederal entity that have not been paid (liquidated). For reports prepared on an
accrual expenditure basis, these are obligations incurred by the non-Federal entity for which an expenditure has
not been recorded.
§ 200.98 Unobligated balance.
Unobligated balance means the
amount of funds under a Federal award
that the non-Federal entity has not obligated. The amount is computed by subtracting the cumulative amount of
the non-Federal entity’s unliquidated
obligations and expenditures of funds
under the Federal award from the cumulative amount of the funds that the Federal awarding agency or passthrough entity authorized the non-Federal entity to obligate. § 200.99 Voluntary committed cost
sharing.
Voluntary committed cost sharing
means cost sharing specifically pledged
on a voluntary basis in the proposal’s
budget or the Federal award on the
part of the non-Federal entity and that
becomes a binding requirement of Federal award.
Subpart B—General Provisions
§ 200.100 Purpose.
(a) Purpose. (1) This part establishes
uniform administrative requirements,
cost principles, and audit requirements
for Federal awards to non-Federal entities, as described in §200.101. Federal awarding agencies must not impose additional or inconsistent requirements, except as provided in §§200.102 and
200.211, or unless specifically required
by Federal statute, regulation, or Executive order.
(2) This part provides the basis for a
systematic and periodic collection and
uniform submission by Federal agencies of information on all Federal financial assistance programs to the Office of Management and Budget (OMB).
It also establishes Federal policies related to the delivery of this information to the public, including through the use of electronic media. It prescribes the manner in which General Services Administration (GSA), OMB,
and Federal agencies that administer
Federal financial assistance programs
are to carry out their statutory responsibilities under the Federal Program Information Act (31 U.S.C. 6101–6106).
(b) Administrative requirements. Subparts B through D of this part set forth the uniform administrative requirements for grant and cooperative agreements, including the requirements for Federal awarding agency management
of Federal grant programs before the
Federal award has been made, and the
requirements Federal awarding agencies may impose on non-Federal entities in the Federal award. (c) Cost principles. Subpart E of this
part establishes principles for determining the allowable costs incurred by non-Federal entities under Federal
awards. The principles are for the purpose of cost determination and are not intended to identify the circumstances
or dictate the extent of Federal Government participation in the financing of a particular program or project. The
principles are designed to provide that
Federal awards bear their fair share of
cost recognized under these principles
except where restricted or prohibited
by statute.
(d) Single Audit Requirements and
Audit Follow-up. Subpart F of this part
is issued pursuant to the Single Audit
Act Amendments of 1996, (31 U.S.C.
7501–7507). It sets forth standards for
obtaining consistency and uniformity
among Federal agencies for the audit
of non-Federal entities expending Federal awards. These provisions also provide the policies and procedures for Federal awarding agencies and passthrough entities when using the results of these audits.
(e) Guidance on challenges and prizes.
For OMB guidance to Federal awarding
agencies on challenges and prizes,
please see memo M–10–11 Guidance on
the Use of Challenges and Prizes to
Promote Open Government, issued
March 8, 2010, or its successor.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49536, Aug. 13, 2020]
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§ 200.101 2 CFR Ch. II (1–1–21 Edition)
§ 200.101 Applicability.
(a) General applicability to Federal
agencies. (1) The requirements established in this part apply to Federal agencies that make Federal awards to
non-Federal entities. These requirements are applicable to all costs related to Federal awards. (2) Federal awarding agencies may
apply subparts A through E of this part
to Federal agencies, for-profit entities,
foreign public entities, or foreign organizations, except where the Federal awarding agency determines that the
application of these subparts would be
inconsistent with the international responsibilities of the United States or the statutes or regulations of a foreign
government.
(b) Applicability to different types of
Federal awards. (1) Throughout this
part when the word ‘‘must’’ is used it
indicates a requirement. Whereas, use
of the word ‘‘should’’ or ‘‘may’’ indicates a best practice or recommended approach rather than a requirement
and permits discretion.
(2) The following table describes what
portions of this part apply to which
types of Federal awards. The terms and
conditions of Federal awards (including
this part) flow down to subawards to
subrecipients unless a particular section of this part or the terms and conditions of the Federal award specifically indicate otherwise. This means that non-Federal entities must comply
with requirements in this part regardless of whether the non-Federal entity is a recipient or subrecipient of a Federal award. Pass-through entities must comply with the requirements described in subpart D of this part, §§200.331 through 200.333, but not any
requirements in this part directed towards Federal awarding agencies unless the requirements of this part or the terms and conditions of the Federal
award indicate otherwise.
TABLE 1 TO PARAGRAPH (b)
The following portions of this Part
Are applicable to the following types of
Federal Awards and Fixed-Price Contracts and Subcontracts (except as noted in paragraphs (d) and (e) of this
section):
Are NOT applicable to the following
types of Federal Awards and Fixed-Price
Contracts and Subcontracts:
Subpart A—Acronyms and Definitions ...... —All.
Subpart B—General Provisions, except
for §§ 200.111 English Language,
200.112 Conflict of Interest, 200.113
Mandatory Disclosures.
—All.
§§ 200.111 English Language, 200.112
Conflict of Interest, 200.113 Mandatory
Disclosures.
—Grant Agreements and cooperative
agreements.
—Agreements for loans, loan guarantees, interest subsidies and insurance. —Procurement contracts awarded by
Federal Agencies under the Federal
Acquisition Regulation and subcontracts under those contracts.
Subparts C–D, except for §§ 200.203 Requirement to provide public notice of Federal financial assistance programs,
200.303 Internal controls, 200.331–333
Subrecipient Monitoring and Management.
—Grant Agreements and cooperative
agreements.
—Agreements for loans, loan guarantees, interest subsidies and insurance. —Procurement contracts awarded by
Federal Agencies under the Federal
Acquisition Regulation and subcontracts under those contracts. § 200.203 Requirement to provide public
notice of Federal financial assistance
programs.
—Grant Agreements and cooperative
agreements.
—Agreements for loans, loan guarantees, interest subsidies and insurance. —Procurement contracts awarded by
Federal Agencies under the Federal
Acquisition Regulation and subcontracts under those contracts. §§ 200.303 Internal controls, 200.331–333
Subrecipient Monitoring and Management.
—All.
Subpart E—Cost Principles ....................... —Grant Agreements and cooperative agreements, except those providing
food commodities.
—All procurement contracts under the
Federal Acquisition Regulations except those that are not negotiated. —Grant agreements and cooperative
agreements providing foods commodities.
—Fixed amount awards.
—Agreements for loans, loans guarantees, interest subsidies and insurance. —Federal awards to hospitals (see Appendix IX Hospital Cost Principles).
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OMB Guidance § 200.101
TABLE 1 TO PARAGRAPH (b)—Continued
The following portions of this Part
Are applicable to the following types of
Federal Awards and Fixed-Price Contracts and Subcontracts (except as noted in paragraphs (d) and (e) of this
section):
Are NOT applicable to the following
types of Federal Awards and Fixed-Price
Contracts and Subcontracts:
Subpart F—Audit Requirements ............... —Grant Agreements and cooperative agreements.
—Contracts and subcontracts, except for
fixed price contacts and subcontracts,
awarded under the Federal Acquisition
Regulation.
—Agreements for loans, loans guarantees, interest subsidies and insurance and other forms of Federal Financial
Assistance as defined by the Single
Audit Act Amendment of 1996.
—Fixed-price contracts and subcontracts
awarded under the Federal Acquisition
Regulation.
(c) Federal award of cost-reimbursement
contract under the FAR to a non-Federal
entity. When a non-Federal entity is
awarded a cost-reimbursement contract, only subpart D, §§200.331 through 200.333, and subparts E and F of this
part are incorporated by reference into
the contract, but the requirements of
subparts D, E, and F are supplementary
to the FAR and the contract. When the
Cost Accounting Standards (CAS) are
applicable to the contract, they take
precedence over the requirements of
this part, including subpart F of this
part, which are supplementary to the
CAS requirements. In addition, costs
that are made unallowable under 10
U.S.C. 2324(e) and 41 U.S.C. 4304(a) as
described in the FAR 48 CFR part 31,
subpart 31.2, and 48 CFR 31.603 are always unallowable. For requirements other than those covered in subpart D,
§§200.331 through 200.333, and subparts
E and F of this part, the terms of the
contract and the FAR apply. Note that
when a non-Federal entity is awarded a
FAR contract, the FAR applies, and
the terms and conditions of the contract shall prevail over the requirements of this part. (d) Governing provisions. With the exception of subpart F of this part, which is required by the Single Audit Act, in
any circumstances where the provisions of Federal statutes or regulations differ from the provisions of this part,
the provision of the Federal statutes or
regulations govern. This includes, for
agreements with Indian tribes, the provisions of the Indian Self-Determination and Education and Assistance Act (ISDEAA), as amended, 25 U.S.C 450–
458ddd–2.
(e) Program applicability. Except for
§§200.203 and 200.331 through 200.333, the
requirements in subparts C, D, and E of
this part do not apply to the following
programs:
(1) The block grant awards authorized by the Omnibus Budget Reconciliation Act of 1981 (including Community Services), except to the extent that
subpart E of this part apply to subrecipients of Community Services Block Grant funds pursuant to 42
U.S.C. 9916(a)(1)(B);
(2) Federal awards to local education
agencies under 20 U.S.C. 7702–7703b,
(portions of the Impact Aid program);
(3) Payments under the Department
of Veterans Affairs’ State Home Per
Diem Program (38 U.S.C. 1741); and
(4) Federal awards authorized under
the Child Care and Development Block
Grant Act of 1990, as amended:
(i) Child Care and Development Block
Grant (42 U.S.C. 9858).
(ii) Child Care Mandatory and Matching Funds of the Child Care and Development Fund (42 U.S.C. 9858). (f) Additional program applicability.
Except for §200.203, the guidance in
subpart C of this part does not apply to
the following programs:
(1) Entitlement Federal awards to
carry out the following programs of the
Social Security Act:
(i) Temporary Assistance for Needy
Families (title IV–A of the Social Security Act, 42 U.S.C. 601–619); (ii) Child Support Enforcement and
Establishment of Paternity (title IV–D
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§ 200.102 2 CFR Ch. II (1–1–21 Edition)
of the Social Security Act, 42 U.S.C.
651–669b);
(iii) Foster Care and Adoption Assistance (title IV–E of the Act, 42 U.S.C. 670–679c);
(iv) Aid to the Aged, Blind, and Disabled (titles I, X, XIV, and XVI–AABD of the Act, as amended);
(v) Medical Assistance (Medicaid)
(title XIX of the Act, 42 U.S.C. 1396–
1396w–5) not including the State Medicaid Fraud Control program authorized by section 1903(a)(6)(B) of the Social Security Act (42 U.S.C. 1396b(a)(6)(B)); and
(vi) Children’s Health Insurance Program (title XXI of the Act, 42 U.S.C. 1397aa–1397mm).
(2) A Federal award for an experimental, pilot, or demonstration project that is also supported by a Federal
award listed in paragraph (f)(1) of this
section.
(3) Federal awards under subsection
412(e) of the Immigration and Nationality Act and subsection 501(a) of the Refugee Education Assistance Act of
1980 (Pub. L. 96–422, 94 Stat. 1809), for
cash assistance, medical assistance,
and supplemental security income benefits to refugees and entrants and the administrative costs of providing the
assistance and benefits (8 U.S.C.
1522(e)).
(4) Entitlement awards under the following programs of The National School Lunch Act:
(i) National School Lunch Program
(section 4 of the Act, 42 U.S.C. 1753);
(ii) Commodity Assistance (section 6
of the Act, 42 U.S.C. 1755);
(iii) Special Meal Assistance (section
11 of the Act, 42 U.S.C. 1759a);
(iv) Summer Food Service Program
for Children (section 13 of the Act, 42
U.S.C. 1761); and
(v) Child and Adult Care Food Program (section 17 of the Act, 42 U.S.C. 1766).
(5) Entitlement awards under the following programs of The Child Nutrition Act of 1966:
(i) Special Milk Program (section 3 of
the Act, 42 U.S.C. 1772);
(ii) School Breakfast Program (section 4 of the Act, 42 U.S.C. 1773); and (iii) State Administrative Expenses
(section 7 of the Act, 42 U.S.C. 1776).
(6) Entitlement awards for State Administrative Expenses under The Food and Nutrition Act of 2008 (section 16 of
the Act, 7 U.S.C. 2025).
(7) Non-discretionary Federal awards
under the following non-entitlement
programs:
(i) Special Supplemental Nutrition
Program for Women, Infants and Children (section 17 of the Child Nutrition Act of 1966) 42 U.S.C. 1786;
(ii) The Emergency Food Assistance
Programs (Emergency Food Assistance
Act of 1983) 7 U.S.C. 7501 note; and
(iii) Commodity Supplemental Food
Program (section 5 of the Agriculture
and Consumer Protection Act of 1973) 7
U.S.C. 612c note.
[85 FR 49536, Aug. 13, 2020]
§ 200.102 Exceptions.
(a) With the exception of subpart F of
this part, OMB may allow exceptions
for classes of Federal awards or nonFederal entities subject to the requirements of this part when exceptions are not prohibited by statute. In the interest of maximum uniformity, exceptions from the requirements of this part will
be permitted as described in this section.
(b) Exceptions on a case-by-case basis
for individual non-Federal entities may
be authorized by the Federal awarding
agency or cognizant agency for indirect
costs, except where otherwise required
by law or where OMB or other approval
is expressly required by this part.
(c) The Federal awarding agency may
apply adjust requirements to a class of
Federal awards or non-Federal entities
when approved by OMB, or when required by Federal statutes or regulations, except for the requirements in subpart F of this part. A Federal
awarding agency may apply less restrictive requirements when making fixed amount awards as defined in subpart A of this part, except for those requirements imposed by statute or in subpart F of this part.
(d) Federal awarding agencies may
request exceptions in support of innovative program designs that apply a risk-based, data-driven framework to
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OMB Guidance § 200.106
alleviate select compliance requirements and hold recipients accountable for good performance. See also §200.206.
[85 FR 49538, Aug. 13, 2020]
§ 200.103 Authorities.
This part is issued under the following authorities.
(a) Subparts B through D of this part
are authorized under 31 U.S.C. 503 (the
Chief Financial Officers Act, Functions
of the Deputy Director for Management), 41 U.S.C. 1101–1131 (the Office of Federal Procurement Policy Act), Reorganization Plan No. 2 of 1970, and Executive Order 11541 (‘‘Prescribing the Duties of the Office of Management
and Budget and the Domestic Policy
Council in the Executive Office of the
President’’), the Single Audit Act
Amendments of 1996, (31 U.S.C. 7501–
7507), as well as The Federal Program
Information Act (Pub. L. 95–220 and
Pub. L. 98–169, as amended, codified at
31 U.S.C. 6101–6106).
(b) Subpart E of this part is authorized under the Budget and Accounting Act of 1921, as amended; the Budget
and Accounting Procedures Act of 1950,
as amended (31 U.S.C. 1101–1125); the
Chief Financial Officers Act of 1990 (31
U.S.C. 503–504); Reorganization Plan
No. 2 of 1970; and Executive Order 11541,
‘‘Prescribing the Duties of the Office of
Management and Budget and the Domestic Policy Council in the Executive Office of the President.’’
(c) Subpart F of this part is authorized under the Single Audit Act Amendments of 1996, (31 U.S.C. 7501–
7507).
[85 FR 49538, Aug. 13, 2020]
§ 200.104 Supersession.
As described in §200.110, this part supersedes the following OMB guidance documents and regulations under title
2 of the Code of Federal Regulations:
(a) A–21, ‘‘Cost Principles for Educational Institutions’’ (2 CFR part 220); (b) A–87, ‘‘Cost Principles for State,
Local and Indian Tribal Governments’’
(2 CFR part 225) and also FEDERAL REGISTER notice 51 FR 552 (January 6, 1986); (c) A–89, ‘‘Federal Domestic Assistance Program Information’’; (d) A–102, ‘‘Grant Awards and Cooperative Agreements with State and Local Governments’’;
(e) A–110, ‘‘Uniform Administrative
Requirements for Awards and Other
Agreements with Institutions of Higher
Education, Hospitals, and Other Nonprofit Organizations’’ (codified at 2 CFR 215);
(f) A–122, ‘‘Cost Principles for NonProfit Organizations’’ (2 CFR part 230); (g) A–133, ‘‘Audits of States, Local
Governments and Non-Profit Organizations’’; and
(h) Those sections of A–50 related to
audits performed under subpart F of
this part.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75882, Dec. 19, 2014; 85 FR 49538, Aug. 13,
2020]
§ 200.105 Effect on other issuances.
(a) Superseding inconsistent requirements. For Federal awards subject to this part, all administrative requirements, program manuals, handbooks and other non-regulatory materials
that are inconsistent with the requirements of this part must be superseded upon implementation of this part by
the Federal agency, except to the extent they are required by statute or authorized in accordance with the provisions in §200.102. (b) Imposition of requirements on recipients. Agencies may impose legally binding requirements on recipients
only through the notice and public
comment process through an approved
agency process, including as authorized
by this part, other statutes or regulations, or as incorporated into the terms of a Federal award.
[85 FR 49538, Aug. 13, 2020]
§ 200.106 Agency implementation.
The specific requirements and responsibilities of Federal agencies and non-Federal entities are set forth in
this part. Federal agencies making
Federal awards to non-Federal entities
must implement the language in subparts C through F of this part in codified regulations unless different provisions are required by Federal statute or are approved by OMB.
[85 FR 49538, Aug. 13, 2020]
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§ 200.107 2 CFR Ch. II (1–1–21 Edition)
§ 200.107 OMB responsibilities.
OMB will review Federal agency regulations and implementation of this part, and will provide interpretations
of policy requirements and assistance
to ensure effective and efficient implementation. Any exceptions will be subject to approval by OMB. Exceptions will only be made in particular cases
where adequate justification is presented.
§ 200.108 Inquiries.
Inquiries concerning this part may be
directed to the Office of Federal Financial Management Office of Management and Budget, in Washington, DC.
Non-Federal entities’ inquiries should
be addressed to the Federal awarding
agency, cognizant agency for indirect
costs, cognizant or oversight agency
for audit, or pass-through entity as appropriate.
§ 200.109 Review date.
OMB will review this part at least
every five years after December 26,
2013.
§ 200.110 Effective/applicability date.
(a) The standards set forth in this
part that affect the administration of
Federal awards issued by Federal
awarding agencies become effective
once implemented by Federal awarding
agencies or when any future amendment to this part becomes final. (b) Existing negotiated indirect cost
rates (as of the publication date of the
revisions to the guidance) will remain
in place until they expire. The effective
date of changes to indirect cost rates
must be based upon the date that a
newly re-negotiated rate goes into effect for a specific non-Federal entity’s fiscal year. Therefore, for indirect cost
rates and cost allocation plans, the revised Uniform Guidance (as of the publication date for revisions to the guidance) become effective in generating proposals and negotiating a new rate
(when the rate is re-negotiated).
[85 FR 49538, Aug. 13, 2020]
§ 200.111 English language.
(a) All Federal financial assistance
announcements and Federal award information must be in the English language. Applications must be submitted in the English language and must be in
the terms of U.S. dollars. If the Federal
awarding agency receives applications
in another currency, the Federal
awarding agency will evaluate the application by converting the foreign currency to United States currency using the date specified for receipt of the application.
(b) Non-Federal entities may translate the Federal award and other documents into another language. In the event of inconsistency between any
terms and conditions of the Federal
award and any translation into another
language, the English language meaning will control. Where a significant portion of the non-Federal entity’s employees who are working on the Federal award are not fluent in English, the non-Federal entity must provide
the Federal award in English and the
language(s) with which employees are
more familiar.
§ 200.112 Conflict of interest.
The Federal awarding agency must
establish conflict of interest policies
for Federal awards. The non-Federal
entity must disclose in writing any potential conflict of interest to the Federal awarding agency or pass-through entity in accordance with applicable
Federal awarding agency policy.
§ 200.113 Mandatory disclosures.
The non-Federal entity or applicant
for a Federal award must disclose, in a
timely manner, in writing to the Federal awarding agency or pass-through entity all violations of Federal criminal law involving fraud, bribery, or gratuity violations potentially affecting the Federal award. Non-Federal entities that have received a Federal award including the term and condition outlined in appendix XII to this part are required to report certain
civil, criminal, or administrative proceedings to SAM (currently FAPIIS).
Failure to make required disclosures
can result in any of the remedies described in §200.339. (See also 2 CFR part 180, 31 U.S.C. 3321, and 41 U.S.C. 2313.)
[85 FR 49539, Aug. 13, 2020]
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OMB Guidance § 200.202
Subpart C—Pre-Federal Award
Requirements and Contents of
Federal Awards
SOURCE: 85 FR 49539, Aug. 13, 2020, unless
otherwise noted.
§ 200.200 Purpose.
Sections 200.201 through 200.216 prescribe instructions and other pre-award matters to be used by Federal awarding
agencies in the program planning, announcement, application and award processes.
§ 200.201 Use of grant agreements (including fixed amount awards), cooperative agreements, and contracts. (a) Federal award instrument. The Federal awarding agency or pass-through entity must decide on the appropriate
instrument for the Federal award (i.e.,
grant agreement, cooperative agreement, or contract) in accordance with the Federal Grant and Cooperative
Agreement Act (31 U.S.C. 6301–08).
(b) Fixed amount awards. In addition
to the options described in paragraph
(a) of this section, Federal awarding
agencies, or pass-through entities as
permitted in §200.333, may use fixed
amount awards (see Fixed amount
awards in §200.1) to which the following
conditions apply:
(1) The Federal award amount is negotiated using the cost principles (or other pricing information) as a guide.
The Federal awarding agency or passthrough entity may use fixed amount awards if the project scope has measurable goals and objectives and if adequate cost, historical, or unit pricing data is available to establish a fixed
amount award based on a reasonable
estimate of actual cost. Payments are
based on meeting specific requirements
of the Federal award. Accountability is
based on performance and results. Except in the case of termination before completion of the Federal award, there
is no governmental review of the actual costs incurred by the non-Federal entity in performance of the award.
Some of the ways in which the Federal
award may be paid include, but are not
limited to:
(i) In several partial payments, the
amount of each agreed upon in advance, and the ‘‘milestone’’ or event triggering the payment also agreed
upon in advance, and set forth in the
Federal award;
(ii) On a unit price basis, for a defined unit or units, at a defined price or prices, agreed to in advance of performance of the Federal award and set forth in the Federal award; or,
(iii) In one payment at Federal award
completion.
(2) A fixed amount award cannot be
used in programs which require mandatory cost sharing or match. (3) The non-Federal entity must certify in writing to the Federal awarding agency or pass-through entity at the
end of the Federal award that the
project or activity was completed or
the level of effort was expended. If the
required level of activity or effort was
not carried out, the amount of the Federal award must be adjusted. (4) Periodic reports may be established for each Federal award. (5) Changes in principal investigator,
project leader, project partner, or scope
of effort must receive the prior written
approval of the Federal awarding agency or pass-through entity. § 200.202 Program planning and design.
The Federal awarding agency must
design a program and create an Assistance Listing before announcing the Notice of Funding Opportunity. The program must be designed with clear goals and objectives that facilitate the delivery of meaningful results consistent with the Federal authorizing legislation of the program. Program performance shall be measured based on the goals and objectives developed during
program planning and design. See
§200.301 for more information on performance measurement. Performance measures may differ depending on the
type of program. The program must
align with the strategic goals and objectives within the Federal awarding agency’s performance plan and should
support the Federal awarding agency’s
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§ 200.203 2 CFR Ch. II (1–1–21 Edition)
Budget). The program must also be designed to align with the Program Management Improvement Accountability Act (Pub. L. 114–264).
§ 200.203 Requirement to provide public notice of Federal financial assistance programs. (a) The Federal awarding agency
must notify the public of Federal programs in the Federal Assistance Listings maintained by the General Services Administration (GSA). (1) The Federal Assistance Listings is
the single, authoritative, governmentwide comprehensive source of Federal financial assistance program information produced by the executive branch of the Federal Government.
(2) The information that the Federal
awarding agency must submit to GSA
for approval by OMB is listed in paragraph (b) of this section. GSA must prescribe the format for the submission
in coordination with OMB.
(3) The Federal awarding agency may
not award Federal financial assistance
without assigning it to a program that
has been included in the Federal Assistance Listings as required in this section unless there are exigent circumstances requiring otherwise, such as timing requirements imposed by
statute.
(b) For each program that awards
discretionary Federal awards, non-discretionary Federal awards, loans, insurance, or any other type of Federal financial assistance, the Federal
awarding agency must, to the extent
practicable, create, update, and manage Assistance Listings entries based on the authorizing statute for the program and comply with additional guidance provided by GSA in consultation with OMB to ensure consistent, accurate information is available to prospective applicants. Accordingly, Federal awarding agencies must submit the following information to GSA:
(1) Program Description, Purpose,
Goals, and Measurement. A brief summary of the statutory or regulatory requirements of the program and its intended outcome. Where appropriate, the Program Description, Purpose,
Goals, and Measurement should align
with the strategic goals and objectives
within the Federal awarding agency’s
performance plan and should support
the Federal awarding agency’s performance measurement, management, and reporting as required by Part 6 of
OMB Circular A–11;
(2) Identification. Identification of
whether the program makes Federal
awards on a discretionary basis or the
Federal awards are prescribed by Federal statute, such as in the case of formula grants. (3) Projected total amount of funds
available for the program. Estimates
based on previous year funding are acceptable if current appropriations are not available at the time of the submission;
(4) Anticipated source of available
funds. The statutory authority for
funding the program and, to the extent
possible, agency, sub-agency, or, if
known, the specific program unit that
will issue the Federal awards, and associated funding identifier (e.g., Treasury Account Symbol(s));
(5) General eligibility requirements. The
statutory, regulatory or other eligibility factors or considerations that determine the applicant’s qualification for Federal awards under the program
(e.g., type of non-Federal entity); and
(6) Applicability of Single Audit Requirements. Applicability of Single Audit Requirements as required by
subpart F of this part.
§ 200.204 Notices of funding opportunities.
For discretionary grants and cooperative agreements that are competed, the Federal awarding agency must announce specific funding opportunities by providing the following information
in a public notice:
(a) Summary information in notices of
funding opportunities. The Federal
awarding agency must display the following information posted on the OMBdesignated governmentwide website for funding and applying for Federal financial assistance, in a location preceding the full text of the announcement:
(1) Federal Awarding Agency Name;
(2) Funding Opportunity Title;
(3) Announcement Type (whether the
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OMB Guidance § 200.206
(4) Funding Opportunity Number (required, if applicable). If the Federal awarding agency has assigned or will
assign a number to the funding opportunity announcement, this number must be provided;
(5) Assistance Listings Number(s);
(6) Key Dates. Key dates include due
dates for applications or Executive
Order 12372 submissions, as well as for
any letters of intent or pre-applications. For any announcement issued before a program’s application materials are available, key dates also include the date on which those materials will be released; and any other additional information, as deemed applicable by the relevant Federal awarding agency.
(b) Availability period. The Federal
awarding agency must generally make
all funding opportunities available for
application for at least 60 calendar
days. The Federal awarding agency
may make a determination to have a
less than 60 calendar day availability
period but no funding opportunity
should be available for less than 30 calendar days unless exigent circumstances require as determined by the Federal awarding agency head or
delegate.
(c) Full text of funding opportunities.
The Federal awarding agency must include the following information in the full text of each funding opportunity.
For specific instructions on the content required in this section, refer to appendix I to this part.
(1) Full programmatic description of
the funding opportunity.
(2) Federal award information, including sufficient information to help an applicant make an informed decision about whether to submit an application. (See also §200.414(c)(4)). (3) Specific eligibility information,
including any factors or priorities that
affect an applicant’s or its application’s eligibility for selection. (4) Application Preparation and Submission Information, including the applicable submission dates and time. (5) Application Review Information
including the criteria and process to be
used to evaluate applications. See also
§§200.205 and 200.206.
(6) Federal Award Administration Information. See also §200.211. (7) Applicable terms and conditions
for resulting awards, including any exceptions from these standard terms. § 200.205 Federal awarding agency review of merit of proposals.
For discretionary Federal awards,
unless prohibited by Federal statute,
the Federal awarding agency must design and execute a merit review process for applications, with the objective of
selecting recipients most likely to be
successful in delivering results based
on the program objectives outlined in
section §200.202. A merit review is an
objective process of evaluating Federal
award applications in accordance with
written standards set forth by the Federal awarding agency. This process must be described or incorporated by
reference in the applicable funding opportunity (see appendix I to this part.).
See also §200.204. The Federal awarding
agency must also periodically review
its merit review process.
§ 200.206 Federal awarding agency review of risk posed by applicants. (a) Review of OMB-designated repositories of governmentwide data. (1) Prior to making a Federal award, the Federal awarding agency is required by the Improper Payments Elimination and
Recovery Improvement Act of 2012, 31
U.S.C. 3321 note, and 41 U.S.C. 2313 to
review information available through
any OMB-designated repositories of
governmentwide eligibility qualification or financial integrity information as appropriate. See also suspension and
debarment requirements at 2 CFR part
180 as well as individual Federal agency
suspension and debarment regulations
in title 2 of the Code of Federal Regulations.
(2) In accordance 41 U.S.C. 2313, the
Federal awarding agency is required to
review the non-public segment of the
OMB-designated integrity and performance system accessible through SAM (currently the Federal Awardee Performance and Integrity Information System (FAPIIS)) prior to making a
Federal award where the Federal share
is expected to exceed the simplified acquisition threshold, defined in 41 U.S.C. 134, over the period of performance. As
required by Public Law 112–239, National Defense Authorization Act for VerDate Sep<11>2014 13:23 Jun 29, 2021 Jkt 253005 PO 00000 Frm 00129 Fmt 8010 Sfmt 8010 Y:\SGML\253005.XXX 253005
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§ 200.207 2 CFR Ch. II (1–1–21 Edition)
Fiscal Year 2013, prior to making a
Federal award, the Federal awarding
agency must consider all of the information available through FAPIIS with regard to the applicant and any immediate highest level owner, predecessor (i.e.; a non-Federal entity that is replaced by a successor), or subsidiary, identified for that applicant in FAPIIS,
if applicable. At a minimum, the information in the system for a prior Federal award recipient must demonstrate a satisfactory record of executing programs or activities under Federal grants, cooperative agreements, or procurement awards; and integrity and business ethics. The Federal awarding
agency may make a Federal award to a
recipient who does not fully meet these
standards, if it is determined that the
information is not relevant to the current Federal award under consideration or there are specific conditions that
can appropriately mitigate the effects
of the non-Federal entity’s risk in accordance with §200.208. (b) Risk evaluation. (1) The Federal
awarding agency must have in place a
framework for evaluating the risks
posed by applicants before they receive
Federal awards. This evaluation may
incorporate results of the evaluation of
the applicant’s eligibility or the quality of its application. If the Federal awarding agency determines that a
Federal award will be made, special
conditions that correspond to the degree of risk assessed may be applied to the Federal award. Criteria to be evaluated must be described in the announcement of funding opportunity described in §200.204. (2) In evaluating risks posed by applicants, the Federal awarding agency may use a risk-based approach and
may consider any items such as the following:
(i) Financial stability. Financial stability;
(ii) Management systems and standards. Quality of management systems and ability to meet the management
standards prescribed in this part;
(iii) History of performance. The applicant’s record in managing Federal awards, if it is a prior recipient of Federal awards, including timeliness of compliance with applicable reporting
requirements, conformance to the
terms and conditions of previous Federal awards, and if applicable, the extent to which any previously awarded amounts will be expended prior to future awards;
(iv) Audit reports and findings. Reports and findings from audits performed under subpart F of this part or the reports and findings of any other
available audits; and
(v) Ability to effectively implement requirements. The applicant’s ability to effectively implement statutory, regulatory, or other requirements imposed on non-Federal entities.
(c) Risk-based requirements adjustment.
The Federal awarding agency may adjust requirements when a risk-evaluation indicates that it may be merited either pre-award or post-award.
(d) Suspension and debarment compliance. (1) The Federal awarding agency must comply with the guidelines on
governmentwide suspension and debarment in 2 CFR part 180, and must require non-Federal entities to comply with these provisions. These provisions
restrict Federal awards, subawards and
contracts with certain parties that are
debarred, suspended or otherwise excluded from or ineligible for participation in Federal programs or activities. § 200.207 Standard application requirements.
(a) Paperwork clearances. The Federal
awarding agency may only use application information collections approved by OMB under the Paperwork Reduction Act of 1995 and OMB’s implementing regulations in 5 CFR part 1320 and in alignment with OMB-approved,
governmentwide data elements available from the OMB-designated standards lead. Consistent with these requirements, OMB will authorize additional information collections only on a limited basis.
(b) Information collection. If applicable, the Federal awarding agency may inform applicants and recipients that
they do not need to provide certain information otherwise required by the relevant information collection.
§ 200.208 Specific conditions.
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OMB Guidance § 200.211
Federal award conditions are consistent with the program design reflected in §200.202 and include clear performance expectations of recipients
as required in §200.301.
(b) The Federal awarding agency or
pass-through entity may adjust specific Federal award conditions as needed, in accordance with this section, based on an analysis of the following
factors:
(1) Based on the criteria set forth in
§200.206;
(2) The applicant or recipient’s history of compliance with the general or specific terms and conditions of a Federal award;
(3) The applicant or recipient’s ability to meet expected performance goals as described in §200.211; or
(4) A responsibility determination of
an applicant or recipient.
(c) Additional Federal award conditions may include items such as the following:
(1) Requiring payments as reimbursements rather than advance payments; (2) Withholding authority to proceed
to the next phase until receipt of evidence of acceptable performance within a given performance period;
(3) Requiring additional, more detailed financial reports; (4) Requiring additional project monitoring;
(5) Requiring the non-Federal entity
to obtain technical or management assistance; or
(6) Establishing additional prior approvals.
(d) If the Federal awarding agency or
pass-through entity is imposing additional requirements, they must notify the applicant or non-Federal entity as
to:
(1) The nature of the additional requirements;
(2) The reason why the additional requirements are being imposed; (3) The nature of the action needed to
remove the additional requirement, if
applicable;
(4) The time allowed for completing
the actions if applicable; and
(5) The method for requesting reconsideration of the additional requirements imposed. (e) Any additional requirements must
be promptly removed once the conditions that prompted them have been satisfied.
§ 200.209 Certifications and representations.
Unless prohibited by the U.S. Constitution, Federal statutes or regulations, each Federal awarding agency or pass-through entity is authorized to require the non-Federal entity to submit certifications and representations required by Federal statutes, or regulations on an annual basis. Submission may be required more frequently if the
non-Federal entity fails to meet a requirement of a Federal award. § 200.210 Pre-award costs.
For requirements on costs incurred
by the applicant prior to the start date
of the period of performance of the
Federal award, see §200.458.
§ 200.211 Information contained in a
Federal award.
A Federal award must include the
following information:
(a) Federal award performance goals.
Performance goals, indicators, targets,
and baseline data must be included in
the Federal award, where applicable.
The Federal awarding agency must
also specify how performance will be
assessed in the terms and conditions of
the Federal award, including the timing and scope of expected performance.
See §§200.202 and 200.301 for more information on Federal award performance goals.
(b) General Federal award information.
The Federal awarding agency must include the following general Federal award information in each Federal
award:
(1) Recipient name (which must
match the name associated with its
unique entity identifier as defined at 2
CFR 25.315);
(2) Recipient’s unique entity identifier;
(3) Unique Federal Award Identification Number (FAIN); (4) Federal Award Date (see Federal
award date in §200.201);
(5) Period of Performance Start and
End Date;
(6) Budget Period Start and End
Date;
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§ 200.212 2 CFR Ch. II (1–1–21 Edition)
(7) Amount of Federal Funds Obligated by this action;
(8) Total Amount of Federal Funds
Obligated;
(9) Total Approved Cost Sharing or
Matching, where applicable;
(10) Total Amount of the Federal
Award including approved Cost Sharing
or Matching;
(11) Budget Approved by the Federal
Awarding Agency;
(11) Federal award description, (to
comply with statutory requirements
(e.g., FFATA));
(12) Name of Federal awarding agency and contact information for awarding official, (13) Assistance Listings Number and
Title;
(14) Identification of whether the
award is R&D; and
(15) Indirect cost rate for the Federal
award (including if the de minimis rate
is charged per §200.414).
(c) General terms and conditions. (1)
Federal awarding agencies must incorporate the following general terms and conditions either in the Federal award
or by reference, as applicable:
(i) Administrative requirements. Administrative requirements implemented by the Federal awarding agency as specified in this part. (ii) National policy requirements. These
include statutory, executive order,
other Presidential directive, or regulatory requirements that apply by specific reference and are not programspecific. See §200.300 Statutory and national policy requirements. (iii) Recipient integrity and performance matters. If the total Federal share of the Federal award may include more
than $500,000 over the period of performance, the Federal awarding agency must include the term and condition
available in appendix XII of this part.
See also §200.113.
(iv) Future budget periods. If it is anticipated that the period of performance will include multiple budget periods, the Federal awarding agency must indicate that subsequent budget periods are subject to the availability of funds, program authority, satisfactory
performance, and compliance with the
terms and conditions of the Federal
award.
(v) Termination provisions. Federal
awarding agencies must make recipients aware, in a clear and unambiguous manner, of the termination provisions
in §200.340, including the applicable
termination provisions in the Federal
awarding agency’s regulations or in
each Federal award.
(2) The Federal award must incorporate, by reference, all general terms and conditions of the award, which
must be maintained on the agency’s
website.
(3) If a non-Federal entity requests a
copy of the full text of the general
terms and conditions, the Federal
awarding agency must provide it.
(4) Wherever the general terms and
conditions are publicly available, the
Federal awarding agency must maintain an archive of previous versions of the general terms and conditions, with
effective dates, for use by the non-Federal entity, auditors, or others. (d) Federal awarding agency, program,
or Federal award specific terms and conditions. The Federal awarding agency must include with each Federal award
any terms and conditions necessary to
communicate requirements that are in
addition to the requirements outlined
in the Federal awarding agency’s general terms and conditions. See also §200.208. Whenever practicable, these
specific terms and conditions also
should be shared on the agency’s
website and in notices of funding opportunities (as outlined in §200.204) in addition to being included in a Federal
award. See also §200.207.
(e) Federal awarding agency requirements. Any other information required by the Federal awarding agency.
§ 200.212 Public access to Federal
award information.
(a) In accordance with statutory requirements for Federal spending transparency (e.g., FFATA), except as noted in this section, for applicable Federal
awards the Federal awarding agency
must announce all Federal awards publicly and publish the required information on a publicly available OMB-designated governmentwide website. (b) All information posted in the designated integrity and performance system accessible through SAM (currently FAPIIS) on or after April 15, 2011 will
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be publicly available after a waiting
period of 14 calendar days, except for:
(1) Past performance reviews required
by Federal Government contractors in
accordance with the Federal Acquisition Regulation (FAR) 48 CFR part 42, subpart 42.15;
(2) Information that was entered
prior to April 15, 2011; or
(3) Information that is withdrawn
during the 14-calendar day waiting period by the Federal Government official. (c) Nothing in this section may be
construed as requiring the publication
of information otherwise exempt under
the Freedom of Information Act (5
U.S.C 552), or controlled unclassified
information pursuant to Executive
Order 13556.
§ 200.213 Reporting a determination
that a non-Federal entity is not
qualified for a Federal award.
(a) If a Federal awarding agency does
not make a Federal award to a nonFederal entity because the official determines that the non-Federal entity does not meet either or both of the
minimum qualification standards as
described in §200.206(a)(2), the Federal
awarding agency must report that determination to the designated integrity and performance system accessible through SAM (currently FAPIIS), only
if all of the following apply:
(1) The only basis for the determination described in this paragraph (a) is the non-Federal entity’s prior record of
executing programs or activities under
Federal awards or its record of integrity and business ethics, as described in §200.206(a)(2) (i.e., the entity was determined to be qualified based on all factors other than those two standards); and
(2) The total Federal share of the
Federal award that otherwise would be
made to the non-Federal entity is expected to exceed the simplified acquisition threshold over the period of performance. (b) The Federal awarding agency is
not required to report a determination
that a non-Federal entity is not qualified for a Federal award if they make the Federal award to the non-Federal
entity and include specific award terms
and conditions, as described in §200.208.
(c) If a Federal awarding agency reports a determination that a non-Federal entity is not qualified for a Federal award, as described in paragraph (a) of this section, the Federal awarding agency also must notify the nonFederal entity that— (1) The determination was made and
reported to the designated integrity
and performance system accessible
through SAM, and include with the notification an explanation of the basis for the determination;
(2) The information will be kept in
the system for a period of five years
from the date of the determination, as
required by section 872 of Public Law
110–417, as amended (41 U.S.C. 2313),
then archived;
(3) Each Federal awarding agency
that considers making a Federal award
to the non-Federal entity during that
five year period must consider that information in judging whether the nonFederal entity is qualified to receive the Federal award when the total Federal share of the Federal award is expected to include an amount of Federal funding in excess of the simplified acquisition threshold over the period of performance;
(4) The non-Federal entity may go to
the awardee integrity and performance
portal accessible through SAM (currently the Contractor Performance Assessment Reporting System (CPARS)) and comment on any information the
system contains about the non-Federal
entity itself; and
(5) Federal awarding agencies will
consider that non-Federal entity’s
comments in determining whether the
non-Federal entity is qualified for a future Federal award. (d) If a Federal awarding agency enters information into the designated integrity and performance system accessible through SAM about a determination that a non-Federal entity is not qualified for a Federal award and
subsequently:
(1) Learns that any of that information is erroneous, the Federal awarding agency must correct the information in
the system within three business days;
and
(2) Obtains an update to that information that could be helpful to other Federal awarding agencies, the Federal
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§ 200.214 2 CFR Ch. II (1–1–21 Edition)
awarding agency is strongly encouraged to amend the information in the system to incorporate the update in a
timely way.
(e) Federal awarding agencies must
not post any information that will be
made publicly available in the nonpublic segment of designated integrity and performance system that is covered by a disclosure exemption under the Freedom of Information Act. If the
recipient asserts within seven calendar
days to the Federal awarding agency
that posted the information that some
or all of the information made publicly
available is covered by a disclosure exemption under the Freedom of Information Act, the Federal awarding agency that posted the information
must remove the posting within seven
calendar days of receiving the assertion. Prior to reposting the releasable information, the Federal awarding
agency must resolve the issue in accordance with the agency’s Freedom of Information Act procedures.
§ 200.214 Suspension and debarment.
Non-Federal entities are subject to
the non-procurement debarment and
suspension regulations implementing
Executive Orders 12549 and 12689, 2 CFR
part 180. The regulations in 2 CFR part
180 restrict awards, subawards, and
contracts with certain parties that are
debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities.
§ 200.215 Never contract with the
enemy.
Federal awarding agencies and recipients are subject to the regulations implementing Never Contract with the
Enemy in 2 CFR part 183. The regulations in 2 CFR part 183 affect covered contracts, grants and cooperative
agreements that are expected to exceed
$50,000 within the period of performance, are performed outside the United States and its territories, and are in
support of a contingency operation in
which members of the Armed Forces
are actively engaged in hostilities.
§ 200.216 Prohibition on certain telecommunications and video surveillance services or equipment. (a) Recipients and subrecipients are
prohibited from obligating or expending loan or grant funds to:
(1) Procure or obtain;
(2) Extend or renew a contract to procure or obtain; or (3) Enter into a contract (or extend
or renew a contract) to procure or obtain equipment, services, or systems that uses covered telecommunications
equipment or services as a substantial
or essential component of any system,
or as critical technology as part of any
system. As described in Public Law
115–232, section 889, covered telecommunications equipment is telecommunications equipment produced by Huawei Technologies Company or
ZTE Corporation (or any subsidiary or
affiliate of such entities).
(i) For the purpose of public safety,
security of government facilities, physical security surveillance of critical infrastructure, and other national security purposes, video surveillance and telecommunications equipment produced by Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, or Dahua Technology Company (or any subsidiary or affiliate of such entities).
(ii) Telecommunications or video surveillance services provided by such entities or using such equipment. (iii) Telecommunications or video
surveillance equipment or services produced or provided by an entity that the Secretary of Defense, in consultation
with the Director of the National Intelligence or the Director of the Federal Bureau of Investigation, reasonably believes to be an entity owned or controlled by, or otherwise connected to, the government of a covered foreign
country.
(b) In implementing the prohibition
under Public Law 115–232, section 889,
subsection (f), paragraph (1), heads of
executive agencies administering loan,
grant, or subsidy programs shall
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services, to procure replacement equipment and services, and to ensure that communications service to users and
customers is sustained.
(c) See Public Law 115–232, section 889
for additional information.
(d) See also §200.471.
Subpart D—Post Federal Award
Requirements
SOURCE: 85 FR 49543, Aug. 13, 2020, unless
otherwise noted.
§ 200.300 Statutory and national policy
requirements.
(a) The Federal awarding agency
must manage and administer the Federal award in a manner so as to ensure that Federal funding is expended and
associated programs are implemented
in full accordance with the U.S. Constitution, Federal Law, and public policy requirements: Including, but not limited to, those protecting free
speech, religious liberty, public welfare, the environment, and prohibiting discrimination. The Federal awarding
agency must communicate to the nonFederal entity all relevant public policy requirements, including those in general appropriations provisions, and
incorporate them either directly or by
reference in the terms and conditions
of the Federal award.
(b) The non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing
the Act for the non-Federal entity at 2
CFR parts 25 and 170. See also statutory requirements for whistleblower protections at 10 U.S.C. 2409, 41 U.S.C.
4712, and 10 U.S.C. 2324, 41 U.S.C. 4304
and 4310.
§ 200.301 Performance measurement.
(a) The Federal awarding agency
must measure the recipient’s performance to show achievement of program goals and objectives, share lessons
learned, improve program outcomes,
and foster adoption of promising practices. Program goals and objectives should be derived from program planning and design. See §200.202 for more information. Where appropriate, the
Federal award may include specific
program goals, indicators, targets,
baseline data, data collection, or expected outcomes (such as outputs, or services performance or public impacts
of any of these) with an expected
timeline for accomplishment. Where
applicable, this should also include any
performance measures or independent
sources of data that may be used to
measure progress. The Federal awarding agency will determine how performance progress is measured, which may differ by program. Performance
measurement progress must be both
measured and reported. See §200.329 for
more information on monitoring program performance. The Federal awarding agency may include program-specific requirements, as applicable. These requirements must be aligned, to the
extent permitted by law, with the Federal awarding agency strategic goals, strategic objectives or performance
goals that are relevant to the program.
See also OMB Circular A–11, Preparation, Submission, and Execution of the Budget Part 6.
(b) The Federal awarding agency
should provide recipients with clear
performance goals, indicators, targets,
and baseline data as described in
§200.211. Performance reporting frequency and content should be established to not only allow the Federal awarding agency to understand the recipient progress but also to facilitate identification of promising practices
among recipients and build the evidence upon which the Federal awarding agency’s program and performance decisions are made. See §200.328 for more information on reporting program performance.
(c) This provision is designed to operate in tandem with evidence-related statutes (e.g.; The Foundations for Evidence-Based Policymaking Act of 2018, which emphasizes collaboration and coordination to advance data and evidence-building functions in the Federal government). The Federal awarding
agency should also specify any requirements of award recipients’ participation in a federally funded evaluation, and any evaluation activities required
to be conducted by the Federal award.
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§ 200.302 2 CFR Ch. II (1–1–21 Edition)
§ 200.302 Financial management.
(a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the
state’s own funds. In addition, the
state’s and the other non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient
to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing
of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal
statutes, regulations, and the terms
and conditions of the Federal award.
See also §200.450.
(b) The financial management system of each non-Federal entity must provide for the following (see also
§§200.334, 200.335, 200.336, and 200.337):
(1) Identification, in its accounts, of
all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and
name of the pass-through entity, if
any.
(2) Accurate, current, and complete
disclosure of the financial results of
each Federal award or program in accordance with the reporting requirements set forth in §§200.328 and 200.329.
If a Federal awarding agency requires
reporting on an accrual basis from a recipient that maintains its records on other than an accrual basis, the recipient must not be required to establish an accrual accounting system. This recipient may develop accrual data for its reports on the basis of an analysis
of the documentation on hand. Similarly, a pass-through entity must not require a subrecipient to establish an
accrual accounting system and must
allow the subrecipient to develop accrual data for its reports on the basis of an analysis of the documentation on
hand.
(3) Records that identify adequately
the source and application of funds for
federally-funded activities. These
records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported
by source documentation.
(4) Effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for
authorized purposes. See §200.303.
(5) Comparison of expenditures with
budget amounts for each Federal
award.
(6) Written procedures to implement
the requirements of §200.305.
(7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the
Federal award.
§ 200.303 Internal controls.
The non-Federal entity must:
(a) Establish and maintain effective
internal control over the Federal
award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ‘‘Standards for Internal
Control in the Federal Government’’
issued by the Comptroller General of
the United States or the ‘‘Internal Control Integrated Framework’’, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
(b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal
awards.
(c) Evaluate and monitor the nonFederal entity’s compliance with statutes, regulations and the terms and conditions of Federal awards.
(d) Take prompt action when instances of noncompliance are identified including noncompliance identified in
audit findings.
(e) Take reasonable measures to safeguard protected personally identifiable information and other information the
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through entity designates as sensitive
or the non-Federal entity considers
sensitive consistent with applicable
Federal, State, local, and tribal laws
regarding privacy and responsibility
over confidentiality.
§ 200.304 Bonds.
The Federal awarding agency may include a provision on bonding, insurance, or both in the following circumstances:
(a) Where the Federal Government
guarantees or insures the repayment of
money borrowed by the recipient, the
Federal awarding agency, at its discretion, may require adequate bonding and insurance if the bonding and insurance requirements of the non-Federal entity are not deemed adequate to protect the interest of the Federal Government. (b) The Federal awarding agency may
require adequate fidelity bond coverage
where the non-Federal entity lacks sufficient coverage to protect the Federal Government’s interest.
(c) Where bonds are required in the
situations described above, the bonds
must be obtained from companies holding certificates of authority as acceptable sureties, as prescribed in 31 CFR part 223.
§ 200.305 Federal payment.
(a) For states, payments are governed by Treasury-State Cash Management Improvement Act (CMIA) agreements and default procedures codified at 31 CFR part 205 and Treasury Financial Manual (TFM) 4A–2000, ‘‘Overall Disbursing Rules for All Federal Agencies’’.
(b) For non-Federal entities other
than states, payments methods must
minimize the time elapsing between
the transfer of funds from the United
States Treasury or the pass-through
entity and the disbursement by the
non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of
checks, warrants, or payment by other
means. See also §200.302(b)(6). Except
as noted elsewhere in this part, Federal
agencies must require recipients to use
only OMB-approved, governmentwide
information collection requests to request payment.
(1) The non-Federal entity must be
paid in advance, provided it maintains
or demonstrates the willingness to
maintain both written procedures that
minimize the time elapsing between
the transfer of funds and disbursement
by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part.
Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in
accordance with the actual, immediate
cash requirements of the non-Federal
entity in carrying out the purpose of
the approved program or project. The
timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and
the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to
contractors in accordance with the
contract provisions.
(2) Whenever possible, advance payments must be consolidated to cover anticipated cash needs for all Federal
awards made by the Federal awarding
agency to the recipient.
(i) Advance payment mechanisms include, but are not limited to, Treasury check and electronic funds transfer and
must comply with applicable guidance
in 31 CFR part 208.
(ii) Non-Federal entities must be authorized to submit requests for advance payments and reimbursements at least
monthly when electronic fund transfers
are not used, and as often as they like
when electronic transfers are used, in
accordance with the provisions of the
Electronic Fund Transfer Act (15
U.S.C. 1693–1693r).
(3) Reimbursement is the preferred
method when the requirements in this
paragraph (b) cannot be met, when the
Federal awarding agency sets a specific
condition per §200.208, or when the nonFederal entity requests payment by reimbursement. This method may be used on any Federal award for construction, or if the major portion of the construction project is accomplished
through private market financing or
Federal loans, and the Federal award
constitutes a minor portion of the
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project. When the reimbursement
method is used, the Federal awarding
agency or pass-through entity must
make payment within 30 calendar days
after receipt of the billing, unless the
Federal awarding agency or passthrough entity reasonably believes the request to be improper.
(4) If the non-Federal entity cannot
meet the criteria for advance payments
and the Federal awarding agency or
pass-through entity has determined
that reimbursement is not feasible because the non-Federal entity lacks sufficient working capital, the Federal awarding agency or pass-through entity may provide cash on a working capital advance basis. Under this procedure, the Federal awarding agency or pass-through entity must advance cash
payments to the non-Federal entity to
cover its estimated disbursement needs
for an initial period generally geared
to the non-Federal entity’s disbursing
cycle. Thereafter, the Federal awarding agency or pass-through entity must reimburse the non-Federal entity for
its actual cash disbursements. Use of
the working capital advance method of
payment requires that the passthrough entity provide timely advance payments to any subrecipients in order
to meet the subrecipient’s actual cash
disbursements. The working capital advance method of payment must not be used by the pass-through entity if the
reason for using this method is the unwillingness or inability of the passthrough entity to provide timely advance payments to the subrecipient to meet the subrecipient’s actual cash disbursements.
(5) To the extent available, the nonFederal entity must disburse funds available from program income (including repayments to a revolving fund), rebates, refunds, contract settlements, audit recoveries, and interest earned on such funds before requesting
additional cash payments.
(6) Unless otherwise required by Federal statutes, payments for allowable costs by non-Federal entities must not
be withheld at any time during the period of performance unless the conditions of §200.208, subpart D of this part, including §200.339, or one or more of
the following applies:
(i) The non-Federal entity has failed
to comply with the project objectives,
Federal statutes, regulations, or the
terms and conditions of the Federal
award.
(ii) The non-Federal entity is delinquent in a debt to the United States as defined in OMB Circular A–129, ‘‘Policies for Federal Credit Programs and Non-Tax Receivables.’’ Under such conditions, the Federal awarding agency or pass-through entity may, upon reasonable notice, inform the non-Federal entity that payments must not be
made for financial obligations incurred
after a specified date until the conditions are corrected or the indebtedness to the Federal Government is liquidated.
(iii) A payment withheld for failure
to comply with Federal award conditions, but without suspension of the Federal award, must be released to the
non-Federal entity upon subsequent
compliance. When a Federal award is
suspended, payment adjustments will
be made in accordance with §200.343.
(iv) A payment must not be made to
a non-Federal entity for amounts that
are withheld by the non-Federal entity
from payment to contractors to assure
satisfactory completion of work. A
payment must be made when the nonFederal entity actually disburses the withheld funds to the contractors or to
escrow accounts established to assure
satisfactory completion of work.
(7) Standards governing the use of
banks and other institutions as depositories of advance payments under Federal awards are as follows. (i) The Federal awarding agency and
pass-through entity must not require
separate depository accounts for funds
provided to a non-Federal entity or establish any eligibility requirements for depositories for funds provided to the
non-Federal entity. However, the nonFederal entity must be able to account for funds received, obligated, and expended.
(ii) Advance payments of Federal
funds must be deposited and maintained in insured accounts whenever possible.
(8) The non-Federal entity must
maintain advance payments of Federal
awards in interest-bearing accounts,
unless the following apply:
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(i) The non-Federal entity receives
less than $250,000 in Federal awards per
year.
(ii) The best reasonably available interest-bearing account would not be expected to earn interest in excess of $500 per year on Federal cash balances.
(iii) The depository would require an
average or minimum balance so high
that it would not be feasible within the
expected Federal and non-Federal cash
resources.
(iv) A foreign government or banking
system prohibits or precludes interestbearing accounts. (9) Interest earned amounts up to $500
per year may be retained by the nonFederal entity for administrative expense. Any additional interest earned on Federal advance payments deposited
in interest-bearing accounts must be
remitted annually to the Department
of Health and Human Services Payment Management System (PMS) through an electronic medium using either Automated Clearing House (ACH) network or a Fedwire Funds Service
payment.
(i) For returning interest on Federal
awards paid through PMS, the refund
should:
(A) Provide an explanation stating
that the refund is for interest;
(B) List the PMS Payee Account
Number(s) (PANs);
(C) List the Federal award number(s)
for which the interest was earned; and
(D) Make returns payable to: Department of Health and Human Services. (ii) For returning interest on Federal
awards not paid through PMS, the refund should:
(A) Provide an explanation stating
that the refund is for interest;
(B) Include the name of the awarding
agency;
(C) List the Federal award number(s)
for which the interest was earned; and
(D) Make returns payable to: Department of Health and Human Services. (10) Funds, principal, and excess cash
returns must be directed to the original Federal agency payment system.
The non-Federal entity should review
instructions from the original Federal
agency payment system. Returns
should include the following information:
(i) Payee Account Number (PAN), if
the payment originated from PMS, or
Agency information to indicate whom
to credit the funding if the payment
originated from ASAP, NSF, or another Federal agency payment system. (ii) PMS document number and subaccount(s), if the payment originated from PMS, or relevant account numbers if the payment originated from another Federal agency payment system. (iii) The reason for the return (e.g.,
excess cash, funds not spent, interest,
part interest part other, etc.)
(11) When returning funds or interest
to PMS you must include the following
as applicable:
(i) For ACH Returns:
Routing Number: 051036706
Account number: 303000
Bank Name and Location: Credit Gateway—ACH Receiver St. Paul, MN (ii) For Fedwire Returns 1:
Routing Number: 021030004
Account number: 75010501
Bank Name and Location: Federal Reserve Bank Treas NYC/Funds Transfer Division New York, NY 1Please note that the organization
initiating payment is likely to incur a
charge from their Financial Institution
for this type of payment.
(iii) For International ACH Returns:
Beneficiary Account: Federal Reserve
Bank of New York/ITS (FRBNY/ITS)
Bank: Citibank N.A. (New York)
Swift Code: CITIUS33
Account Number: 36838868
Bank Address: 388 Greenwich Street,
New York, NY 10013 USA
Payment Details (Line 70): Agency Locator Code (ALC): 75010501 Name (abbreviated when possible) and
ALC Agency POC
(iv) For recipients that do not have
electronic remittance capability,
please make check 2 payable to: ‘‘The
Department of Health and Human
Services.’’
Mail Check to Treasury approved
lockbox:
HHS Program Support Center, P.O.
Box 530231, Atlanta, GA 30353–0231
2Please allow 4–6 weeks for processing of a payment by check to be applied to the appropriate PMS account.
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§ 200.306 2 CFR Ch. II (1–1–21 Edition)
(v) Questions can be directed to PMS
at 877–614–5533 or
[email protected].
§ 200.306 Cost sharing or matching.
(a) Under Federal research proposals,
voluntary committed cost sharing is
not expected. It cannot be used as a
factor during the merit review of applications or proposals, but may be considered if it is both in accordance with Federal awarding agency regulations
and specified in a notice of funding opportunity. Criteria for considering voluntary committed cost sharing and any other program policy factors that
may be used to determine who may receive a Federal award must be explicitly described in the notice of funding opportunity. See also §§200.414 and
200.204 and appendix I to this part.
(b) For all Federal awards, any
shared costs or matching funds and all
contributions, including cash and
third-party in-kind contributions,
must be accepted as part of the nonFederal entity’s cost sharing or matching when such contributions meet all of the following criteria:
(1) Are verifiable from the non-Federal entity’s records; (2) Are not included as contributions
for any other Federal award;
(3) Are necessary and reasonable for
accomplishment of project or program
objectives;
(4) Are allowable under subpart E of
this part;
(5) Are not paid by the Federal Government under another Federal award, except where the Federal statute authorizing a program specifically provides that Federal funds made available for such program can be applied to matching or cost sharing requirements
of other Federal programs;
(6) Are provided for in the approved
budget when required by the Federal
awarding agency; and
(7) Conform to other provisions of
this part, as applicable.
(c) Unrecovered indirect costs, including indirect costs on cost sharing or matching may be included as part of
cost sharing or matching only with the
prior approval of the Federal awarding
agency. Unrecovered indirect cost
means the difference between the
amount charged to the Federal award
and the amount which could have been
charged to the Federal award under the
non-Federal entity’s approved negotiated indirect cost rate. (d) Values for non-Federal entity
contributions of services and property
must be established in accordance with
the cost principles in subpart E of this
part. If a Federal awarding agency authorizes the non-Federal entity to donate buildings or land for construction/ facilities acquisition projects or longterm use, the value of the donated property for cost sharing or matching
must be the lesser of paragraph (d)(1)
or (2) of this section.
(1) The value of the remaining life of
the property recorded in the non-Federal entity’s accounting records at the time of donation.
(2) The current fair market value.
However, when there is sufficient justification, the Federal awarding agency may approve the use of the current fair market value of the donated property, even if it exceeds the value described in paragraph (d)(1) of this section at the time of donation. (e) Volunteer services furnished by
third-party professional and technical
personnel, consultants, and other
skilled and unskilled labor may be
counted as cost sharing or matching if
the service is an integral and necessary
part of an approved project or program.
Rates for third-party volunteer services must be consistent with those paid for similar work by the non-Federal entity. In those instances in which the required skills are not found in the
non-Federal entity, rates must be consistent with those paid for similar work in the labor market in which the
non-Federal entity competes for the
kind of services involved. In either
case, paid fringe benefits that are reasonable, necessary, allocable, and otherwise allowable may be included in the valuation.
(f) When a third-party organization
furnishes the services of an employee,
these services must be valued at the
employee’s regular rate of pay plus an
amount of fringe benefits that is reasonable, necessary, allocable, and otherwise allowable, and indirect costs at either the third-party organization’s
approved federally-negotiated indirect
cost rate or, a rate in accordance with
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§200.414(d) provided these services employ the same skill(s) for which the employee is normally paid. Where donated services are treated as indirect costs, indirect cost rates will separate
the value of the donated services so
that reimbursement for the donated
services will not be made.
(g) Donated property from third parties may include such items as equipment, office supplies, laboratory supplies, or workshop and classroom supplies. Value assessed to donated property included in the cost sharing or matching share must not exceed the
fair market value of the property at
the time of the donation.
(h) The method used for determining
cost sharing or matching for thirdparty-donated equipment, buildings and land for which title passes to the
non-Federal entity may differ according to the purpose of the Federal award, if paragraph (h)(1) or (2) of this
section applies.
(1) If the purpose of the Federal
award is to assist the non-Federal entity in the acquisition of equipment, buildings or land, the aggregate value
of the donated property may be
claimed as cost sharing or matching.
(2) If the purpose of the Federal
award is to support activities that require the use of equipment, buildings or land, normally only depreciation
charges for equipment and buildings
may be made. However, the fair market
value of equipment or other capital assets and fair rental charges for land may be allowed, provided that the Federal awarding agency has approved the charges. See also §200.420.
(i) The value of donated property
must be determined in accordance with
the usual accounting policies of the
non-Federal entity, with the following
qualifications:
(1) The value of donated land and
buildings must not exceed its fair market value at the time of donation to the non-Federal entity as established
by an independent appraiser (e.g., certified real property appraiser or General Services Administration representative) and certified by a responsible official of the non-Federal entity as required by the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970, as amended, (42 U.S.C. 4601–4655) (Uniform Act) except as provided in the implementing regulations at 49 CFR part 24, ‘‘Uniform Relocation Assistance And Real Property Acquisition For Federal And
Federally-Assisted Programs’’.
(2) The value of donated equipment
must not exceed the fair market value
of equipment of the same age and condition at the time of donation. (3) The value of donated space must
not exceed the fair rental value of comparable space as established by an independent appraisal of comparable space and facilities in a privately-owned
building in the same locality.
(4) The value of loaned equipment
must not exceed its fair rental value.
(j) For third-party in-kind contributions, the fair market value of goods and services must be documented and
to the extent feasible supported by the
same methods used internally by the
non-Federal entity.
(k) For IHEs, see also OMB memorandum M–01–06, dated January 5, 2001, Clarification of OMB A–21 Treatment
of Voluntary Uncommitted Cost Sharing and Tuition Remission Costs. § 200.307 Program income.
(a) General. Non-Federal entities are
encouraged to earn income to defray
program costs where appropriate.
(b) Cost of generating program income.
If authorized by Federal regulations or
the Federal award, costs incidental to
the generation of program income may
be deducted from gross income to determine program income, provided these costs have not been charged to
the Federal award.
(c) Governmental revenues. Taxes, special assessments, levies, fines, and other such revenues raised by a nonFederal entity are not program income unless the revenues are specifically
identified in the Federal award or Federal awarding agency regulations as program income.
(d) Property. Proceeds from the sale
of real property, equipment, or supplies
are not program income; such proceeds
will be handled in accordance with the
requirements of the Property Standards §§200.311, 200.313, and 200.314, or as specifically identified in Federal statutes, regulations, or the terms and conditions of the Federal award.
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(e) Use of program income. If the Federal awarding agency does not specify in its regulations or the terms and conditions of the Federal award, or give prior approval for how program income
is to be used, paragraph (e)(1) of this
section must apply. For Federal awards
made to IHEs and nonprofit research
institutions, if the Federal awarding
agency does not specify in its regulations or the terms and conditions of the Federal award how program income
is to be used, paragraph (e)(2) of this
section must apply. In specifying alternatives to paragraphs (e)(1) and (2) of this section, the Federal awarding
agency may distinguish between income earned by the recipient and income earned by subrecipients and between the sources, kinds, or amounts of income. When the Federal awarding
agency authorizes the approaches in
paragraphs (e)(2) and (3) of this section,
program income in excess of any
amounts specified must also be deducted from expenditures. (1) Deduction. Ordinarily program income must be deducted from total allowable costs to determine the net allowable costs. Program income must be used for current costs unless the Federal awarding agency authorizes otherwise. Program income that the nonFederal entity did not anticipate at the time of the Federal award must be used
to reduce the Federal award and nonFederal entity contributions rather than to increase the funds committed
to the project.
(2) Addition. With prior approval of
the Federal awarding agency (except
for IHEs and nonprofit research institutions, as described in this paragraph (e)) program income may be added to
the Federal award by the Federal agency and the non-Federal entity. The program income must be used for the purposes and under the conditions of the Federal award.
(3) Cost sharing or matching. With
prior approval of the Federal awarding
agency, program income may be used
to meet the cost sharing or matching
requirement of the Federal award. The
amount of the Federal award remains
the same.
(f) Income after the period of performance. There are no Federal requirements governing the disposition of income earned after the end of the period of performance for the Federal award,
unless the Federal awarding agency
regulations or the terms and conditions of the Federal award provide otherwise. The Federal awarding agency may negotiate agreements with recipients regarding appropriate uses of income earned after the period of performance as part of the grant closeout process. See also §200.344.
(g) License fees and royalties. Unless
the Federal statute, regulations, or
terms and conditions for the Federal
award provide otherwise, the non-Federal entity is not accountable to the Federal awarding agency with respect
to program income earned from license
fees and royalties for copyrighted material, patents, patent applications, trademarks, and inventions made
under a Federal award to which 37 CFR
part 401 is applicable.
§ 200.308 Revision of budget and program plans.
(a) The approved budget for the Federal award summarizes the financial aspects of the project or program as approved during the Federal award process. It may include either the Federal and non-Federal share (see definition
for Federal share in §200.1) or only the
Federal share, depending upon Federal
awarding agency requirements. The
budget and program plans include considerations for performance and program evaluation purposes whenever required in accordance with the terms and conditions of the award.
(b) Recipients are required to report
deviations from budget or project scope
or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in
accordance with this section.
(c) For non-construction Federal
awards, recipients must request prior
approvals from Federal awarding agencies for the following program or budget-related reasons:
(1) Change in the scope or the objective of the project or program (even if there is no associated budget revision
requiring prior written approval).
(2) Change in a key person specified
in the application or the Federal
award.
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(3) The disengagement from the
project for more than three months, or
a 25 percent reduction in time devoted
to the project, by the approved project
director or principal investigator.
(4) The inclusion, unless waived by
the Federal awarding agency, of costs
that require prior approval in accordance with subpart E of this part as applicable. (5) The transfer of funds budgeted for
participant support costs to other categories of expense. (6) Unless described in the application and funded in the approved Federal awards, the subawarding, transferring or contracting out of any work under a Federal award, including fixed
amount subawards as described in
§200.333. This provision does not apply
to the acquisition of supplies, material,
equipment or general support services.
(7) Changes in the approved costsharing or matching provided by the non-Federal entity.
(8) The need arises for additional
Federal funds to complete the project.
(d) No other prior approval requirements for specific items may be imposed unless an exception has been approved by OMB. See also §§200.102 and 200.407.
(e) Except for requirements listed in
paragraphs (c)(1) through (8) of this
section, the Federal awarding agency is
authorized, at its option, to waive
other cost-related and administrative
prior written approvals contained in
subparts D and E of this part. Such
waivers may include authorizing recipients to do any one or more of the following:
(1) Incur project costs 90 calendar
days before the Federal awarding agency makes the Federal award. Expenses more than 90 calendar days pre-award
require prior approval of the Federal
awarding agency. All costs incurred before the Federal awarding agency makes the Federal award are at the recipient’s risk (i.e., the Federal awarding agency is not required to reimburse such costs if for any reason the recipient does not receive a Federal award or if the Federal award is less than anticipated and inadequate to cover such costs). See also §200.458.
(2) Initiate a one-time extension of
the period of performance by up to 12
months unless one or more of the conditions outlined in paragraphs (e)(2)(i) through (iii) of this section apply. For
one-time extensions, the recipient
must notify the Federal awarding
agency in writing with the supporting
reasons and revised period of performance at least 10 calendar days before the end of the period of performance
specified in the Federal award. This
one-time extension must not be exercised merely for the purpose of using unobligated balances. Extensions require explicit prior Federal awarding agency approval when:
(i) The terms and conditions of the
Federal award prohibit the extension.
(ii) The extension requires additional
Federal funds.
(iii) The extension involves any
change in the approved objectives or
scope of the project.
(3) Carry forward unobligated balances to subsequent budget periods. (4) For Federal awards that support
research, unless the Federal awarding
agency provides otherwise in the Federal award or in the Federal awarding agency’s regulations, the prior approval requirements described in this paragraph (e) are automatically waived
(i.e., recipients need not obtain such
prior approvals) unless one of the conditions included in paragraph (e)(2) of this section applies.
(f) The Federal awarding agency
may, at its option, restrict the transfer
of funds among direct cost categories
or programs, functions and activities
for Federal awards in which the Federal share of the project exceeds the simplified acquisition threshold and
the cumulative amount of such transfers exceeds or is expected to exceed 10 percent of the total budget as last approved by the Federal awarding agency. The Federal awarding agency cannot permit a transfer that would cause any Federal appropriation to be used
for purposes other than those consistent with the appropriation. (g) All other changes to non-construction budgets, except for the changes described in paragraph (c) of
this section, do not require prior approval (see also §200.407).
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§ 200.309 2 CFR Ch. II (1–1–21 Edition)
(h) For construction Federal awards,
the recipient must request prior written approval promptly from the Federal awarding agency for budget revisions whenever paragraph (h)(1), (2), or (3) of this section applies:
(1) The revision results from changes
in the scope or the objective of the
project or program.
(2) The need arises for additional
Federal funds to complete the project.
(3) A revision is desired which involves specific costs for which prior written approval requirements may be
imposed consistent with applicable
OMB cost principles listed in subpart
E.
(4) No other prior approval requirements for budget revisions may be imposed unless an exception has been approved by OMB. (5) When a Federal awarding agency
makes a Federal award that provides
support for construction and non-construction work, the Federal awarding agency may require the recipient to obtain prior approval from the Federal awarding agency before making any
fund or budget transfers between the
two types of work supported.
(i) When requesting approval for
budget revisions, the recipient must
use the same format for budget information that was used in the application, unless the Federal awarding agency indicates a letter of request suffices. (j) Within 30 calendar days from the
date of receipt of the request for budget revisions, the Federal awarding agency must review the request and
notify the recipient whether the budget
revisions have been approved. If the revision is still under consideration at the end of 30 calendar days, the Federal
awarding agency must inform the recipient in writing of the date when the recipient may expect the decision.
§ 200.309 Modifications to Period of
Performance.
If a Federal awarding agency or passthrough entity approves an extension, or if a recipient extends under
§200.308(e)(2), the Period of Performance will be amended to end at the completion of the extension. If a termination occurs, the Period of Performance will be amended to end upon the effective date of termination. If a renewal award is issued, a distinct Period of Performance will begin.
PROPERTY STANDARDS
§ 200.310 Insurance coverage.
The non-Federal entity must, at a
minimum, provide the equivalent insurance coverage for real property and equipment acquired or improved with
Federal funds as provided to property
owned by the non-Federal entity. Federally-owned property need not be insured unless required by the terms and conditions of the Federal award.
§ 200.311 Real property.
(a) Title. Subject to the requirements
and conditions set forth in this section,
title to real property acquired or improved under a Federal award will vest upon acquisition in the non-Federal entity.
(b) Use. Except as otherwise provided
by Federal statutes or by the Federal
awarding agency, real property will be
used for the originally authorized purpose as long as needed for that purpose, during which time the non-Federal entity must not dispose of or encumber its title or other interests.
(c) Disposition. When real property is
no longer needed for the originally authorized purpose, the non-Federal entity must obtain disposition instructions from the Federal awarding agency or
pass-through entity. The instructions
must provide for one of the following
alternatives:
(1) Retain title after compensating
the Federal awarding agency. The
amount paid to the Federal awarding
agency will be computed by applying
the Federal awarding agency’s percentage of participation in the cost of the original purchase (and costs of any improvements) to the fair market value of the property. However, in those situations where the non-Federal entity is disposing of real property acquired or
improved with a Federal award and acquiring replacement real property under the same Federal award, the net
proceeds from the disposition may be
used as an offset to the cost of the replacement property. (2) Sell the property and compensate
the Federal awarding agency. The
amount due to the Federal awarding
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agency will be calculated by applying
the Federal awarding agency’s percentage of participation in the cost of the original purchase (and cost of any improvements) to the proceeds of the sale after deduction of any actual and reasonable selling and fixing-up expenses.
If the Federal award has not been
closed out, the net proceeds from sale
may be offset against the original cost
of the property. When the non-Federal
entity is directed to sell property, sales
procedures must be followed that provide for competition to the extent practicable and result in the highest
possible return.
(3) Transfer title to the Federal
awarding agency or to a third party
designated/approved by the Federal
awarding agency. The non-Federal entity is entitled to be paid an amount calculated by applying the non-Federal
entity’s percentage of participation in
the purchase of the real property (and
cost of any improvements) to the current fair market value of the property. § 200.312 Federally-owned and exempt
property.
(a) Title to federally-owned property
remains vested in the Federal Government. The non-Federal entity must submit annually an inventory listing of
federally-owned property in its custody
to the Federal awarding agency. Upon
completion of the Federal award or
when the property is no longer needed,
the non-Federal entity must report the
property to the Federal awarding agency for further Federal agency utilization. (b) If the Federal awarding agency
has no further need for the property, it
must declare the property excess and
report it for disposal to the appropriate
Federal disposal authority, unless the
Federal awarding agency has statutory
authority to dispose of the property by
alternative methods (e.g., the authority provided by the Federal Technology Transfer Act (15 U.S.C. 3710 (i)) to donate research equipment to educational and nonprofit organizations in accordance with Executive Order 12999,
‘‘Educational Technology: Ensuring
Opportunity for All Children in the
Next Century.’’). The Federal awarding
agency must issue appropriate instructions to the non-Federal entity. (c) Exempt property means property
acquired under a Federal award where
the Federal awarding agency has chosen to vest title to the property to the non-Federal entity without further responsibility to the Federal Government, based upon the explicit terms and conditions of the Federal award.
The Federal awarding agency may exercise this option when statutory authority exists. Absent statutory authority and specific terms and conditions of the Federal award, title to exempt property acquired under the Federal award remains with the Federal Government.
§ 200.313 Equipment.
See also §200.439.
(a) Title. Subject to the requirements
and conditions set forth in this section,
title to equipment acquired under a
Federal award will vest upon acquisition in the non-Federal entity. Unless a statute specifically authorizes the
Federal agency to vest title in the nonFederal entity without further responsibility to the Federal Government, and the Federal agency elects to do so,
the title must be a conditional title.
Title must vest in the non-Federal entity subject to the following conditions:
(1) Use the equipment for the authorized purposes of the project during the period of performance, or until the
property is no longer needed for the
purposes of the project.
(2) Not encumber the property without approval of the Federal awarding agency or pass-through entity.
(3) Use and dispose of the property in
accordance with paragraphs (b), (c),
and (e) of this section.
(b) General. A state must use, manage
and dispose of equipment acquired
under a Federal award by the state in
accordance with state laws and procedures. Other non-Federal entities must follow paragraphs (c) through (e) of
this section.
(c) Use. (1) Equipment must be used
by the non-Federal entity in the program or project for which it was acquired as long as needed, whether or not the project or program continues
to be supported by the Federal award,
and the non-Federal entity must not
encumber the property without prior
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§ 200.313 2 CFR Ch. II (1–1–21 Edition)
approval of the Federal awarding agency. The Federal awarding agency may require the submission of the applicable common form for equipment. When no longer needed for the original program or project, the equipment may be used in other activities supported by
the Federal awarding agency, in the
following order of priority:
(i) Activities under a Federal award
from the Federal awarding agency
which funded the original program or
project, then
(ii) Activities under Federal awards
from other Federal awarding agencies.
This includes consolidated equipment
for information technology systems.
(2) During the time that equipment is
used on the project or program for
which it was acquired, the non-Federal
entity must also make equipment
available for use on other projects or
programs currently or previously supported by the Federal Government, provided that such use will not interfere with the work on the projects or program for which it was originally acquired. First preference for other use must be given to other programs or
projects supported by Federal awarding
agency that financed the equipment
and second preference must be given to
programs or projects under Federal
awards from other Federal awarding
agencies. Use for non-federally-funded
programs or projects is also permissible. User fees should be considered if appropriate.
(3) Notwithstanding the encouragement in §200.307 to earn program income, the non-Federal entity must not use equipment acquired with the Federal award to provide services for a fee that is less than private companies
charge for equivalent services unless
specifically authorized by Federal statute for as long as the Federal Government retains an interest in the equipment. (4) When acquiring replacement
equipment, the non-Federal entity may
use the equipment to be replaced as a
trade-in or sell the property and use
the proceeds to offset the cost of the
replacement property.
(d) Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a
Federal award, until disposition takes
place will, as a minimum, meet the following requirements:
(1) Property records must be maintained that include a description of the property, a serial number or other
identification number, the source of
funding for the property (including the
FAIN), who holds title, the acquisition
date, and cost of the property, percentage of Federal participation in the project costs for the Federal award
under which the property was acquired,
the location, use and condition of the
property, and any ultimate disposition
data including the date of disposal and
sale price of the property.
(2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years.
(3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the
property. Any loss, damage, or theft
must be investigated.
(4) Adequate maintenance procedures
must be developed to keep the property
in good condition.
(5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return.
(e) Disposition. When original or replacement equipment acquired under a Federal award is no longer needed for
the original project or program or for
other activities currently or previously
supported by a Federal awarding agency, except as otherwise provided in Federal statutes, regulations, or Federal awarding agency disposition instructions, the non-Federal entity must request disposition instructions
from the Federal awarding agency if
required by the terms and conditions of
the Federal award. Disposition of the
equipment will be made as follows, in
accordance with Federal awarding
agency disposition instructions:
(1) Items of equipment with a current
per unit fair market value of $5,000 or
less may be retained, sold or otherwise
disposed of with no further responsibility to the Federal awarding agency. (2) Except as provided in §200.312(b),
or if the Federal awarding agency fails
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to provide requested disposition instructions within 120 days, items of equipment with a current per-unit fair
market value in excess of $5,000 may be
retained by the non-Federal entity or
sold. The Federal awarding agency is
entitled to an amount calculated by
multiplying the current market value
or proceeds from sale by the Federal
awarding agency’s percentage of participation in the cost of the original purchase. If the equipment is sold, the
Federal awarding agency may permit
the non-Federal entity to deduct and
retain from the Federal share $500 or
ten percent of the proceeds, whichever
is less, for its selling and handling expenses.
(3) The non-Federal entity may
transfer title to the property to the
Federal Government or to an eligible
third party provided that, in such
cases, the non-Federal entity must be
entitled to compensation for its attributable percentage of the current fair market value of the property.
(4) In cases where a non-Federal entity fails to take appropriate disposition actions, the Federal awarding agency
may direct the non-Federal entity to
take disposition actions.
§ 200.314 Supplies.
See also §200.453.
(a) Title to supplies will vest in the
non-Federal entity upon acquisition. If
there is a residual inventory of unused
supplies exceeding $5,000 in total aggregate value upon termination or completion of the project or program and the supplies are not needed for any
other Federal award, the non-Federal
entity must retain the supplies for use
on other activities or sell them, but
must, in either case, compensate the
Federal Government for its share. The
amount of compensation must be computed in the same manner as for equipment. See §200.313 (e)(2) for the calculation methodology. (b) As long as the Federal Government retains an interest in the supplies, the non-Federal entity must not use supplies acquired under a Federal
award to provide services to other organizations for a fee that is less than private companies charge for equivalent services, unless specifically authorized by Federal statute. § 200.315 Intangible property.
(a) Title to intangible property (see
definition for Intangible property in
§200.1) acquired under a Federal award
vests upon acquisition in the non-Federal entity. The non-Federal entity must use that property for the originally-authorized purpose, and must not encumber the property without approval of the Federal awarding agency.
When no longer needed for the originally authorized purpose, disposition of the intangible property must occur in
accordance with the provisions in
§200.313(e).
(b) The non-Federal entity may copyright any work that is subject to copyright and was developed, or for which ownership was acquired, under a Federal award. The Federal awarding agency reserves a royalty-free, nonexclusive and irrevocable right to reproduce, publish, or otherwise use the work for
Federal purposes, and to authorize others to do so.
(c) The non-Federal entity is subject
to applicable regulations governing
patents and inventions, including governmentwide regulations issued by the Department of Commerce at 37 CFR
part 401, ‘‘Rights to Inventions Made
by Nonprofit Organizations and Small
Business Firms Under Government
Awards, Contracts and Cooperative
Agreements.’’
(d) The Federal Government has the
right to:
(1) Obtain, reproduce, publish, or otherwise use the data produced under a Federal award; and
(2) Authorize others to receive, reproduce, publish, or otherwise use such data for Federal purposes.
(e)(1) In response to a Freedom of Information Act (FOIA) request for research data relating to published research findings produced under a Federal award that were used by the Federal Government in developing an agency action that has the force and
effect of law, the Federal awarding
agency must request, and the non-Federal entity must provide, within a reasonable time, the research data so that they can be made available to the public through the procedures established under the FOIA. If the Federal awarding agency obtains the research data solely in response to a FOIA request,
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the Federal awarding agency may
charge the requester a reasonable fee
equaling the full incremental cost of
obtaining the research data. This fee
should reflect costs incurred by the
Federal agency and the non-Federal entity. This fee is in addition to any fees the Federal awarding agency may assess under the FOIA (5 U.S.C. 552(a)(4)(A)).
(2) Published research findings means
when:
(i) Research findings are published in
a peer-reviewed scientific or technical
journal; or
(ii) A Federal agency publicly and officially cites the research findings in support of an agency action that has
the force and effect of law. ‘‘Used by
the Federal Government in developing
an agency action that has the force and
effect of law’’ is defined as when an
agency publicly and officially cites the
research findings in support of an agency action that has the force and effect of law.
(3) Research data means the recorded
factual material commonly accepted in
the scientific community as necessary
to validate research findings, but not
any of the following: Preliminary analyses, drafts of scientific papers, plans for future research, peer reviews, or
communications with colleagues. This
‘‘recorded’’ material excludes physical
objects (e.g., laboratory samples). Research data also do not include:
(i) Trade secrets, commercial information, materials necessary to be held confidential by a researcher until they
are published, or similar information
which is protected under law; and
(ii) Personnel and medical information and similar information the disclosure of which would constitute a clearly unwarranted invasion of personal privacy, such as information that could be used to identify a particular
person in a research study.
§ 200.316 Property trust relationship.
Real property, equipment, and intangible property, that are acquired or improved with a Federal award must be held in trust by the non-Federal entity
as trustee for the beneficiaries of the
project or program under which the
property was acquired or improved.
The Federal awarding agency may require the non-Federal entity to record liens or other appropriate notices of
record to indicate that personal or real
property has been acquired or improved
with a Federal award and that use and
disposition conditions apply to the
property.
Procurement Standards
§ 200.317 Procurements by states.
When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds. The State will
comply with §§200.321, 200.322, and
200.323 and ensure that every purchase
order or other contract includes any
clauses required by §200.327. All other
non-Federal entities, including subrecipients of a State, must follow the procurement standards in §§200.318
through 200.327.
§ 200.318 General procurement standards.
(a) The non-Federal entity must have
and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the
standards of this section, for the acquisition of property or services required under a Federal award or subaward.
The non-Federal entity’s documented
procurement procedures must conform
to the procurement standards identified in §§200.317 through 200.327. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of
their contracts or purchase orders.
(c)(1) The non-Federal entity must
maintain written standards of conduct
covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or
apparent conflict of interest. Such a
conflict of interest would arise when
the employee, officer, or agent, any
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member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a
firm considered for a contract. The officers, employees, and agents of the non-Federal entity may neither solicit
nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. However, non-Federal entities may set standards for situations in which the
financial interest is not substantial or
the gift is an unsolicited item of nominal value. The standards of conduct must provide for disciplinary actions
to be applied for violations of such
standards by officers, employees, or
agents of the non-Federal entity.
(2) If the non-Federal entity has a
parent, affiliate, or subsidiary organization that is not a State, local government, or Indian tribe, the non-Federal entity must also maintain written
standards of conduct covering organizational conflicts of interest. Organizational conflicts of interest means that because of relationships with a parent
company, affiliate, or subsidiary organization, the non-Federal entity is unable or appears to be unable to be impartial in conducting a procurement action involving a related organization.
(d) The non-Federal entity’s procedures must avoid acquisition of unnecessary or duplicative items. Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase.
Where appropriate, an analysis will be
made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach.
(e) To foster greater economy and efficiency, and in accordance with efforts to promote cost-effective use of shared
services across the Federal Government, the non-Federal entity is encouraged to enter into state and local intergovernmental agreements or inter-entity agreements where appropriate for procurement or use of common or
shared goods and services. Competition
requirements will be met with applied
to documented procurement actions
using strategic sourcing, shared services, and other similar procurement arrangements. (f) The non-Federal entity is encouraged to use Federal excess and surplus property in lieu of purchasing new
equipment and property whenever such
use is feasible and reduces project
costs.
(g) The non-Federal entity is encouraged to use value engineering clauses in contracts for construction projects
of sufficient size to offer reasonable opportunities for cost reductions. Value engineering is a systematic and creative analysis of each contract item or task to ensure that its essential function is provided at the overall lower cost.
(h) The non-Federal entity must
award contracts only to responsible
contractors possessing the ability to
perform successfully under the terms
and conditions of a proposed procurement. Consideration will be given to such matters as contractor integrity,
compliance with public policy, record
of past performance, and financial and
technical resources. See also §200.214.
(i) The non-Federal entity must
maintain records sufficient to detail
the history of procurement. These
records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor
selection or rejection, and the basis for
the contract price.
(j)(1) The non-Federal entity may use
a time-and-materials type contract
only after a determination that no
other contract is suitable and if the
contract includes a ceiling price that
the contractor exceeds at its own risk.
Time-and-materials type contract
means a contract whose cost to a nonFederal entity is the sum of:
(i) The actual cost of materials; and
(ii) Direct labor hours charged at
fixed hourly rates that reflect wages,
general and administrative expenses,
and profit.
(2) Since this formula generates an
open-ended contract price, a time-andmaterials contract provides no positive profit incentive to the contractor for
cost control or labor efficiency. Therefore, each contract must set a ceiling price that the contractor exceeds at its
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own risk. Further, the non-Federal entity awarding such a contract must assert a high degree of oversight in order to obtain reasonable assurance that
the contractor is using efficient methods and effective cost controls. (k) The non-Federal entity alone
must be responsible, in accordance
with good administrative practice and
sound business judgment, for the settlement of all contractual and administrative issues arising out of procurements. These issues include, but are not limited to, source evaluation, protests, disputes, and claims. These standards do not relieve the non-Federal entity of any contractual responsibilities under its contracts. The Federal awarding agency will not substitute its judgment for that of the non-Federal entity unless the matter is
primarily a Federal concern. Violations of law will be referred to the local, state, or Federal authority having proper jurisdiction. § 200.319 Competition.
(a) All procurement transactions for
the acquisition of property or services
required under a Federal award must
be conducted in a manner providing
full and open competition consistent
with the standards of this section and
§200.320.
(b) In order to ensure objective contractor performance and eliminate unfair competitive advantage, contractors that develop or draft specifications, requirements, statements of work, or invitations for bids or requests for proposals must be excluded from competing for such procurements.
Some of the situations considered to be
restrictive of competition include but
are not limited to:
(1) Placing unreasonable requirements on firms in order for them to qualify to do business;
(2) Requiring unnecessary experience
and excessive bonding;
(3) Noncompetitive pricing practices
between firms or between affiliated
companies;
(4) Noncompetitive contracts to consultants that are on retainer contracts; (5) Organizational conflicts of interest;
(6) Specifying only a ‘‘brand name’’
product instead of allowing ‘‘an equal’’
product to be offered and describing
the performance or other relevant requirements of the procurement; and (7) Any arbitrary action in the procurement process.
(c) The non-Federal entity must conduct procurements in a manner that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences in the
evaluation of bids or proposals, except
in those cases where applicable Federal
statutes expressly mandate or encourage geographic preference. Nothing in this section preempts state licensing
laws. When contracting for architectural and engineering (A/E) services, geographic location may be a selection
criterion provided its application
leaves an appropriate number of qualified firms, given the nature and size of the project, to compete for the contract.
(d) The non-Federal entity must have
written procedures for procurement
transactions. These procedures must
ensure that all solicitations:
(1) Incorporate a clear and accurate
description of the technical requirements for the material, product, or service to be procured. Such description must not, in competitive procurements, contain features which unduly restrict competition. The description
may include a statement of the qualitative nature of the material, product or service to be procured and, when
necessary, must set forth those minimum essential characteristics and standards to which it must conform if
it is to satisfy its intended use. Detailed product specifications should be avoided if at all possible. When it is
impractical or uneconomical to make a
clear and accurate description of the
technical requirements, a ‘‘brand name
or equivalent’’ description may be used
as a means to define the performance
or other salient requirements of procurement. The specific features of the named brand which must be met by offers must be clearly stated; and (2) Identify all requirements which
the offerors must fulfill and all other
factors to be used in evaluating bids or
proposals.
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in acquiring goods and services are current and include enough qualified sources to ensure maximum open and
free competition. Also, the non-Federal
entity must not preclude potential bidders from qualifying during the solicitation period. (f) Noncompetitive procurements can
only be awarded in accordance with
§200.320(c).
§ 200.320 Methods of procurement to
be followed.
The non-Federal entity must have
and use documented procurement procedures, consistent with the standards of this section and §§200.317, 200.318,
and 200.319 for any of the following
methods of procurement used for the
acquisition of property or services required under a Federal award or subaward. (a) Informal procurement methods.
When the value of the procurement for
property or services under a Federal
award does not exceed the simplified acquisition threshold (SAT), as defined in §200.1, or a lower threshold established
by a non-Federal entity, formal procurement methods are not required.
The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and
minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include:
(1) Micro-purchases—(i) Distribution.
The acquisition of supplies or services,
the aggregate dollar amount of which
does not exceed the micro-purchase
threshold (See the definition of micropurchase in §200.1). To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers.
(ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity
considers the price to be reasonable
based on research, experience, purchase
history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases
if procedures are documented and approved by the non-Federal entity. (iii) Micro-purchase thresholds. The
non-Federal entity is responsible for
determining and documenting an appropriate micro-purchase threshold based on internal controls, an evaluation of risk, and its documented procurement procedures. The micro-purchase threshold used by the non-Federal entity must be authorized or not prohibited under State, local, or tribal
laws or regulations. Non-Federal entities may establish a threshold higher than the Federal threshold established
in the Federal Acquisition Regulations
(FAR) in accordance with paragraphs
(a)(1)(iv) and (v) of this section.
(iv) Non-Federal entity increase to the
micro-purchase threshold up to $50,000.
Non-Federal entities may establish a
threshold higher than the micro-purchase threshold identified in the FAR in accordance with the requirements of
this section. The non-Federal entity
may self-certify a threshold up to
$50,000 on an annual basis and must
maintain documentation to be made
available to the Federal awarding
agency and auditors in accordance with
§200.334. The self-certification must include a justification, clear identification of the threshold, and supporting documentation of any of the following:
(A) A qualification as a low-risk
auditee, in accordance with the criteria
in §200.520 for the most recent audit;
(B) An annual internal institutional
risk assessment to identify, mitigate,
and manage financial risks; or,
(C) For public institutions, a higher
threshold consistent with State law.
(v) Non-Federal entity increase to the
micro-purchase threshold over $50,000.
Micro-purchase thresholds higher than
$50,000 must be approved by the cognizant agency for indirect costs. The non-federal entity must submit a request with the requirements included in paragraph (a)(1)(iv) of this section.
The increased threshold is valid until
there is a change in status in which the
justification was approved.
(2) Small purchases—(i) Small purchase
procedures. The acquisition of property
or services, the aggregate dollar
amount of which is higher than the
micro-purchase threshold but does not
exceed the simplified acquisition
threshold. If small purchase procedures
are used, price or rate quotations must
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§ 200.320 2 CFR Ch. II (1–1–21 Edition)
be obtained from an adequate number
of qualified sources as determined appropriate by the non-Federal entity. (ii) Simplified acquisition thresholds.
The non-Federal entity is responsible
for determining an appropriate simplified acquisition threshold based on internal controls, an evaluation of risk
and its documented procurement procedures which must not exceed the threshold established in the FAR.
When applicable, a lower simplified acquisition threshold used by the nonFederal entity must be authorized or not prohibited under State, local, or
tribal laws or regulations.
(b) Formal procurement methods. When
the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a
non-Federal entity, formal procurement methods are required. Formal procurement methods require following
documented procedures. Formal procurement methods also require public advertising unless a non-competitive
procurement can be used in accordance
with §200.319 or paragraph (c) of this
section. The following formal methods
of procurement are used for procurement of property or services above the simplified acquisition threshold or a
value below the simplified acquisition
threshold the non-Federal entity determines to be appropriate:
(1) Sealed bids. A procurement method
in which bids are publicly solicited and
a firm fixed-price contract (lump sum
or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions
of the invitation for bids, is the lowest
in price. The sealed bids method is the
preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be
feasible, the following conditions
should be present:
(A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders
are willing and able to compete effectively for the business; and (C) The procurement lends itself to a
firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price.
(ii) If sealed bids are used, the following requirements apply:
(A) Bids must be solicited from an
adequate number of qualified sources,
providing them sufficient response
time prior to the date set for opening
the bids, for local, and tribal governments, the invitation for bids must be publicly advertised;
(B) The invitation for bids, which
will include any specifications and pertinent attachments, must define the items or services in order for the bidder
to properly respond;
(C) All bids will be opened at the
time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened
publicly;
(D) A firm fixed price contract award
will be made in writing to the lowest
responsive and responsible bidder.
Where specified in bidding documents,
factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid
is lowest. Payment discounts will only
be used to determine the low bid when
prior experience indicates that such
discounts are usually taken advantage
of; and
(E) Any or all bids may be rejected if
there is a sound documented reason.
(2) Proposals. A procurement method
in which either a fixed price or cost-reimbursement type contract is awarded.
Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements:
(i) Requests for proposals must be
publicized and identify all evaluation
factors and their relative importance.
Proposals must be solicited from an
adequate number of qualified offerors.
Any response to publicized requests for
proposals must be considered to the
maximum extent practical;
(ii) The non-Federal entity must
have a written method for conducting
technical evaluations of the proposals
received and making selections;
(iii) Contracts must be awarded to
the responsible offeror whose proposal
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(iv) The non-Federal entity may use
competitive proposal procedures for
qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror’s qualifications are evaluated and the most qualified offeror is selected, subject to
negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only
be used in procurement of A/E professional services. It cannot be used to purchase other types of services though
A/E firms that are a potential source to
perform the proposed effort.
(c) Noncompetitive procurement. There
are specific circumstances in which
noncompetitive procurement can be
used. Noncompetitive procurement can
only be awarded if one or more of the
following circumstances apply:
(1) The acquisition of property or
services, the aggregate dollar amount
of which does not exceed the micropurchase threshold (see paragraph (a)(1) of this section);
(2) The item is available only from a
single source;
(3) The public exigency or emergency
for the requirement will not permit a
delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or
pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the
non-Federal entity; or
(5) After solicitation of a number of
sources, competition is determined inadequate.
§ 200.321 Contracting with small and
minority businesses, women’s business enterprises, and labor surplus area firms.
(a) The non-Federal entity must take
all necessary affirmative steps to assure that minority businesses, women’s business enterprises, and labor surplus
area firms are used when possible.
(b) Affirmative steps must include:
(1) Placing qualified small and minority businesses and women’s business enterprises on solicitation lists;
(2) Assuring that small and minority
businesses, and women’s business enterprises are solicited whenever they are potential sources;
(3) Dividing total requirements, when
economically feasible, into smaller
tasks or quantities to permit maximum participation by small and minority businesses, and women’s business enterprises; (4) Establishing delivery schedules,
where the requirement permits, which
encourage participation by small and
minority businesses, and women’s business enterprises; (5) Using the services and assistance,
as appropriate, of such organizations as
the Small Business Administration and
the Minority Business Development
Agency of the Department of Commerce; and
(6) Requiring the prime contractor, if
subcontracts are to be let, to take the
affirmative steps listed in paragraphs
(b)(1) through (5) of this section.
§ 200.322 Domestic preferences for procurements.
(a) As appropriate and to the extent
consistent with law, the non-Federal
entity should, to the greatest extent
practicable under a Federal award, provide a preference for the purchase, acquisition, or use of goods, products, or materials produced in the United
States (including but not limited to
iron, aluminum, steel, cement, and
other manufactured products). The requirements of this section must be included in all subawards including all contracts and purchase orders for work
or products under this award.
(b) For purposes of this section:
(1) ‘‘Produced in the United States’’
means, for iron and steel products, that
all manufacturing processes, from the
initial melting stage through the application of coatings, occurred in the United States.
(2) ‘‘Manufactured products’’ means
items and construction materials composed in whole or in part of non-ferrous metals such as aluminum; plastics and
polymer-based products such as polyvinyl chloride pipe; aggregates such as concrete; glass, including optical fiber;
and lumber.
§ 200.323 Procurement of recovered
materials.
A non-Federal entity that is a state
agency or agency of a political subdivision of a state and its contractors must comply with section 6002 of the Solid
Waste Disposal Act, as amended by the
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§ 200.324 2 CFR Ch. II (1–1–21 Edition)
Resource Conservation and Recovery
Act. The requirements of Section 6002
include procuring only items designated in guidelines of the Environmental Protection Agency (EPA) at 40 CFR part 247 that contain the highest
percentage of recovered materials practicable, consistent with maintaining a satisfactory level of competition,
where the purchase price of the item
exceeds $10,000 or the value of the
quantity acquired during the preceding
fiscal year exceeded $10,000; procuring
solid waste management services in a
manner that maximizes energy and resource recovery; and establishing an affirmative procurement program for procurement of recovered materials
identified in the EPA guidelines.
§ 200.324 Contract cost and price.
(a) The non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition
Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the
non-Federal entity must make independent estimates before receiving bids or proposals.
(b) The non-Federal entity must negotiate profit as a separate element of the price for each contract in which
there is no price competition and in all
cases where cost analysis is performed.
To establish a fair and reasonable profit, consideration must be given to the complexity of the work to be performed, the risk borne by the contractor, the contractor’s investment, the amount of subcontracting, the
quality of its record of past performance, and industry profit rates in the surrounding geographical area for
similar work.
(c) Costs or prices based on estimated
costs for contracts under the Federal
award are allowable only to the extent
that costs incurred or cost estimates
included in negotiated prices would be
allowable for the non-Federal entity
under subpart E of this part. The nonFederal entity may reference its own cost principles that comply with the
Federal cost principles.
(d) The cost plus a percentage of cost
and percentage of construction cost
methods of contracting must not be
used.
§ 200.325 Federal awarding agency or
pass-through entity review.
(a) The non-Federal entity must
make available, upon request of the
Federal awarding agency or passthrough entity, technical specifications on proposed procurements where the Federal awarding agency or passthrough entity believes such review is needed to ensure that the item or service specified is the one being proposed for acquisition. This review generally
will take place prior to the time the
specification is incorporated into a solicitation document. However, if the non-Federal entity desires to have the
review accomplished after a solicitation has been developed, the Federal awarding agency or pass-through entity may still review the specifications, with such review usually limited to the
technical aspects of the proposed purchase.
(b) The non-Federal entity must
make available upon request, for the
Federal awarding agency or passthrough entity pre-procurement review, procurement documents, such as requests for proposals or invitations
for bids, or independent cost estimates,
when:
(1) The non-Federal entity’s procurement procedures or operation fails to comply with the procurement standards in this part;
(2) The procurement is expected to
exceed the Simplified Acquisition
Threshold and is to be awarded without
competition or only one bid or offer is
received in response to a solicitation;
(3) The procurement, which is expected to exceed the Simplified Acquisition Threshold, specifies a ‘‘brand name’’ product;
(4) The proposed contract is more
than the Simplified Acquisition
Threshold and is to be awarded to
other than the apparent low bidder
under a sealed bid procurement; or
(5) A proposed contract modification
changes the scope of a contract or increases the contract amount by more than the Simplified Acquisition
Threshold.
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(c) The non-Federal entity is exempt
from the pre-procurement review in
paragraph (b) of this section if the Federal awarding agency or pass-through entity determines that its procurement
systems comply with the standards of
this part.
(1) The non-Federal entity may request that its procurement system be reviewed by the Federal awarding
agency or pass-through entity to determine whether its system meets these standards in order for its system to be
certified. Generally, these reviews
must occur where there is continuous
high-dollar funding, and third-party
contracts are awarded on a regular
basis;
(2) The non-Federal entity may selfcertify its procurement system. Such self-certification must not limit the
Federal awarding agency’s right to survey the system. Under a self-certification procedure, the Federal awarding agency may rely on written assurances
from the non-Federal entity that it is
complying with these standards. The
non-Federal entity must cite specific
policies, procedures, regulations, or
standards as being in compliance with
these requirements and have its system
available for review.
§ 200.326 Bonding requirements.
For construction or facility improvement contracts or subcontracts exceeding the Simplified Acquisition Threshold, the Federal awarding agency or pass-through entity may accept the
bonding policy and requirements of the
non-Federal entity provided that the
Federal awarding agency or passthrough entity has made a determination that the Federal interest is adequately protected. If such a determination has not been made, the minimum requirements must be as follows:
(a) A bid guarantee from each bidder
equivalent to five percent of the bid
price. The ‘‘bid guarantee’’ must consist of a firm commitment such as a bid bond, certified check, or other negotiable instrument accompanying a bid as assurance that the bidder will,
upon acceptance of the bid, execute
such contractual documents as may be
required within the time specified.
(b) A performance bond on the part of
the contractor for 100 percent of the
contract price. A ‘‘performance bond’’
is one executed in connection with a
contract to secure fulfillment of all the
contractor’s requirements under such
contract.
(c) A payment bond on the part of the
contractor for 100 percent of the contract price. A ‘‘payment bond’’ is one executed in connection with a contract
to assure payment as required by law
of all persons supplying labor and material in the execution of the work provided for in the contract. § 200.327 Contract provisions.
The non-Federal entity’s contracts
must contain the applicable provisions
described in appendix II to this part.
PERFORMANCE AND FINANCIAL
MONITORING AND REPORTING
§ 200.328 Financial reporting.
Unless otherwise approved by OMB,
the Federal awarding agency must solicit only the OMB-approved governmentwide data elements for collection of financial information (at time of
publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required
by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than
quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the
effective monitoring of the Federal
award or could significantly affect program outcomes, and preferably in coordination with performance reporting.
The Federal awarding agency must use
OMB-approved common information
collections, as applicable, when providing financial and performance reporting information. § 200.329 Monitoring and reporting
program performance.
(a) Monitoring by the non-Federal entity. The non-Federal entity is responsible for oversight of the operations of the Federal award supported activities.
The non-Federal entity must monitor
its activities under Federal awards to
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assure compliance with applicable Federal requirements and performance expectations are being achieved. Monitoring by the non-Federal entity must cover each program, function or activity. See also §200.332. (b) Reporting program performance.
The Federal awarding agency must use
OMB-approved common information
collections, as applicable, when providing financial and performance reporting information. As appropriate and in accordance with above mentioned information collections, the Federal awarding agency must require
the recipient to relate financial data
and accomplishments to performance
goals and objectives of the Federal
award. Also, in accordance with above
mentioned common information collections, and when required by the terms and conditions of the Federal award,
recipients must provide cost information to demonstrate cost effective practices (e.g., through unit cost data).
In some instances (e.g., discretionary
research awards), this will be limited
to the requirement to submit technical
performance reports (to be evaluated in
accordance with Federal awarding
agency policy). Reporting requirements must be clearly articulated such that, where appropriate, performance
during the execution of the Federal
award has a standard against which
non-Federal entity performance can be
measured.
(c) Non-construction performance reports. The Federal awarding agency must use standard, governmentwide
OMB-approved data elements for collection of performance information including performance progress reports, Research Performance Progress Reports.
(1) The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best
inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor
more frequent than quarterly except in
unusual circumstances, for example
where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes. Reports submitted annually by the nonFederal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period.
Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Alternatively, the Federal awarding agency or pass-through entity may require annual reports before the anniversary dates of multiple year Federal awards. The final performance report
submitted by the non-Federal entity
and/or pass-through entity must be due
no later than 120 calendar days after
the period of performance end date. A
subrecipient must submit to the passthrough entity, no later than 90 calendar days after the period of performance end date, all final performance reports as required by the terms and conditions of the Federal award. See also §200.344. If a justified request is submitted by a non-Federal entity, the Federal agency may extend the due
date for any performance report.
(2) As appropriate in accordance with
above mentioned performance reporting, these reports will contain, for each Federal award, brief information on
the following unless other data elements are approved by OMB in the agency information collection request:
(i) A comparison of actual accomplishments to the objectives of the Federal award established for the period. Where the accomplishments of the Federal award can be quantified, a
computation of the cost (for example,
related to units of accomplishment)
may be required if that information
will be useful. Where performance
trend data and analysis would be informative to the Federal awarding agency program, the Federal awarding
agency should include this as a performance reporting requirement. (ii) The reasons why established
goals were not met, if appropriate.
(iii) Additional pertinent information
including, when appropriate, analysis
and explanation of cost overruns or
high unit costs.
(d) Construction performance reports.
For the most part, onsite technical inspections and certified percentage of completion data are relied on heavily
by Federal awarding agencies and passthrough entities to monitor progress under Federal awards and subawards
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for construction. The Federal awarding
agency may require additional performance reports only when considered necessary.
(e) Significant developments. Events
may occur between the scheduled performance reporting dates that have significant impact upon the supported activity. In such cases, the non-Federal entity must inform the Federal awarding agency or pass-through entity as soon as the following types of conditions become known:
(1) Problems, delays, or adverse conditions which will materially impair the ability to meet the objective of the
Federal award. This disclosure must include a statement of the action taken, or contemplated, and any assistance
needed to resolve the situation.
(2) Favorable developments which enable meeting time schedules and objectives sooner or at less cost than anticipated or producing more or different beneficial results than originally
planned.
(f) Site visits. The Federal awarding
agency may make site visits as warranted by program needs. (g) Performance report requirement
waiver. The Federal awarding agency
may waive any performance report required by this part if not needed. § 200.330 Reporting on real property.
The Federal awarding agency or passthrough entity must require a non-Federal entity to submit reports at least annually on the status of real property
in which the Federal Government retains an interest, unless the Federal interest in the real property extends 15 years or longer. In those instances
where the Federal interest attached is
for a period of 15 years or more, the
Federal awarding agency or passthrough entity, at its option, may require the non-Federal entity to report at various multi-year frequencies (e.g.,
every two years or every three years,
not to exceed a five-year reporting period; or a Federal awarding agency or pass-through entity may require annual reporting for the first three years of a Federal award and thereafter require reporting every five years).
SUBRECIPIENT MONITORING AND
MANAGEMENT
§ 200.331 Subrecipient and contractor
determinations.
The non-Federal entity may concurrently receive Federal awards as a recipient, a subrecipient, and a contractor, depending on the substance of its agreements with Federal awarding
agencies and pass-through entities.
Therefore, a pass-through entity must
make case-by-case determinations
whether each agreement it makes for
the disbursement of Federal program
funds casts the party receiving the
funds in the role of a subrecipient or a
contractor. The Federal awarding
agency may supply and require recipients to comply with additional guidance to support these determinations provided such guidance does not conflict with this section. (a) Subrecipients. A subaward is for
the purpose of carrying out a portion of
a Federal award and creates a Federal
assistance relationship with the subrecipient. See definition for Subaward in §200.1 of this part. Characteristics
which support the classification of the
non-Federal entity as a subrecipient
include when the non-Federal entity:
(1) Determines who is eligible to receive what Federal assistance; (2) Has its performance measured in
relation to whether objectives of a Federal program were met; (3) Has responsibility for programmatic decision-making; (4) Is responsible for adherence to applicable Federal program requirements specified in the Federal award; and
(5) In accordance with its agreement,
uses the Federal funds to carry out a
program for a public purpose specified
in authorizing statute, as opposed to
providing goods or services for the benefit of the pass-through entity. (b) Contractors. A contract is for the
purpose of obtaining goods and services
for the non-Federal entity’s own use
and creates a procurement relationship
with the contractor. See the definition
of contract in §200.1 of this part. Characteristics indicative of a procurement relationship between the non-Federal
entity and a contractor are when the
contractor:
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(1) Provides the goods and services
within normal business operations;
(2) Provides similar goods or services
to many different purchasers;
(3) Normally operates in a competitive environment;
(4) Provides goods or services that
are ancillary to the operation of the
Federal program; and
(5) Is not subject to compliance requirements of the Federal program as a result of the agreement, though similar
requirements may apply for other reasons.
(c) Use of judgment in making determination. In determining whether an agreement between a pass-through entity and another non-Federal entity casts the latter as a subrecipient or a
contractor, the substance of the relationship is more important than the form of the agreement. All of the characteristics listed above may not be present in all cases, and the passthrough entity must use judgment in classifying each agreement as a
subaward or a procurement contract.
§ 200.332 Requirements for passthrough entities.
All pass-through entities must:
(a) Ensure that every subaward is
clearly identified to the subrecipient as
a subaward and includes the following
information at the time of the
subaward and if any of these data elements change, include the changes in subsequent subaward modification.
When some of this information is not
available, the pass-through entity
must provide the best information
available to describe the Federal award
and subaward. Required information
includes:
(1) Federal award identification.
(i) Subrecipient name (which must
match the name associated with its
unique entity identifier);
(ii) Subrecipient’s unique entity
identifier;
(iii) Federal Award Identification
Number (FAIN);
(iv) Federal Award Date (see the definition of Federal award date in §200.1 of this part) of award to the recipient by
the Federal agency;
(v) Subaward Period of Performance
Start and End Date;
(vi) Subaward Budget Period Start
and End Date;
(vii) Amount of Federal Funds Obligated by this action by the passthrough entity to the subrecipient; (viii) Total Amount of Federal Funds
Obligated to the subrecipient by the
pass-through entity including the current financial obligation; (ix) Total Amount of the Federal
Award committed to the subrecipient
by the pass-through entity;
(x) Federal award project description,
as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA);
(xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the
Pass-through entity;
(xii) Assistance Listings number and
Title; the pass-through entity must
identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of
disbursement;
(xiii) Identification of whether the
award is R&D; and
(xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per §200.414.
(2) All requirements imposed by the
pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award;
(3) Any additional requirements that
the pass-through entity imposes on the
subrecipient in order for the passthrough entity to meet its own responsibility to the Federal awarding agency including identification of any required
financial and performance reports;
(4)(i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists,
the pass-through entity must determine the appropriate rate in collaboration with the subrecipient, which is either:
(A) The negotiated indirect cost rate
between the pass-through entity and
the subrecipient; which can be based on
a prior negotiated rate between a different PTE and the same subrecipient.
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not required to collect information justifying this rate, but may elect to do so;
(B) The de minimis indirect cost
rate.
(ii) The pass-through entity must not
require use of a de minimis indirect
cost rate if the subrecipient has a Federally approved rate. Subrecipients can elect to use the cost allocation method
to account for indirect costs in accordance with §200.405(d). (5) A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient’s records and financial
statements as necessary for the passthrough entity to meet the requirements of this part; and (6) Appropriate terms and conditions
concerning closeout of the subaward.
(b) Evaluate each subrecipient’s risk
of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes
of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as:
(1) The subrecipient’s prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F of this part, and the extent to which the same or
similar subaward has been audited as a
major program;
(3) Whether the subrecipient has new
personnel or new or substantially
changed systems; and
(4) The extent and results of Federal
awarding agency monitoring (e.g., if
the subrecipient also receives Federal
awards directly from a Federal awarding agency).
(c) Consider imposing specific
subaward conditions upon a subrecipient if appropriate as described in §200.208.
(d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized
purposes, in compliance with Federal
statutes, regulations, and the terms
and conditions of the subaward; and
that subaward performance goals are
achieved. Pass-through entity monitoring of the subrecipient must include:
(1) Reviewing financial and performance reports required by the passthrough entity. (2) Following-up and ensuring that
the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the passthrough entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward.
(3) Issuing a management decision for
applicable audit findings pertaining
only to the Federal award provided to
the subrecipient from the pass-through
entity as required by §200.521.
(4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving cross-cutting findings. If a subrecipient has a current Single Audit report posted in
the Federal Audit Clearinghouse and
has not otherwise been excluded from
receipt of Federal funding (e.g., has
been debarred or suspended), the passthrough entity may rely on the subrecipient’s cognizant audit agency or cognizant oversight agency to perform
audit follow-up and make management
decisions related to cross-cutting findings in accordance with section §300.513(a)(3)(vii). Such reliance does
not eliminate the responsibility of the
pass-through entity to issue subawards
that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring,
and to monitor the status of the findings that are specifically related to the subaward.
(e) Depending upon the pass-through
entity’s assessment of risk posed by
the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the
pass-through entity to ensure proper
accountability and compliance with
program requirements and achievement of performance goals:
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§ 200.333 2 CFR Ch. II (1–1–21 Edition)
(1) Providing subrecipients with
training and technical assistance on
program-related matters; and
(2) Performing on-site reviews of the
subrecipient’s program operations;
(3) Arranging for agreed-upon-procedures engagements as described in §200.425.
(f) Verify that every subrecipient is
audited as required by Subpart F of
this part when it is expected that the
subrecipient’s Federal awards expended
during the respective fiscal year
equaled or exceeded the threshold set
forth in §200.501.
(g) Consider whether the results of
the subrecipient’s audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records.
(h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 of this part and in program regulations.
§ 200.333 Fixed amount subawards.
With prior written approval from the
Federal awarding agency, a passthrough entity may provide subawards based on fixed amounts up to the Simplified Acquisition Threshold, provided that the subawards meet the requirements for fixed amount awards in §200.201.
RECORD RETENTION AND ACCESS
§ 200.334 Retention requirements for
records.
Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or passthrough entity in the case of a subrecipient. Federal awarding agencies and pass-through entities must not impose any other record retention requirements upon non-Federal entities.
The only exceptions are the following:
(a) If any litigation, claim, or audit
is started before the expiration of the
3-year period, the records must be retained until all litigation, claims, or audit findings involving the records
have been resolved and final action
taken.
(b) When the non-Federal entity is
notified in writing by the Federal
awarding agency, cognizant agency for
audit, oversight agency for audit, cognizant agency for indirect costs, or pass-through entity to extend the retention period.
(c) Records for real property and
equipment acquired with Federal funds
must be retained for 3 years after final
disposition.
(d) When records are transferred to or
maintained by the Federal awarding
agency or pass-through entity, the 3-
year retention requirement is not applicable to the non-Federal entity. (e) Records for program income
transactions after the period of performance. In some cases recipients must report program income after the
period of performance. Where there is
such a requirement, the retention period for the records pertaining to the earning of the program income starts
from the end of the non-Federal entity’s fiscal year in which the program income is earned.
(f) Indirect cost rate proposals and
cost allocations plans. This paragraph
applies to the following types of documents and their supporting records: Indirect cost rate computations or proposals, cost allocation plans, and any similar accounting computations of
the rate at which a particular group of
costs is chargeable (such as computer
usage chargeback rates or composite
fringe benefit rates).
(1) If submitted for negotiation. If the
proposal, plan, or other computation is
required to be submitted to the Federal
Government (or to the pass-through
entity) to form the basis for negotiation of the rate, then the 3-year retention period for its supporting records starts from the date of such submission.
(2) If not submitted for negotiation. If
the proposal, plan, or other computation is not required to be submitted to the Federal Government (or to the
pass-through entity) for negotiation
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purposes, then the 3-year retention period for the proposal, plan, or computation and its supporting records starts from the end of the fiscal year (or
other accounting period) covered by
the proposal, plan, or other computation.
§ 200.335 Requests for transfer of
records.
The Federal awarding agency must
request transfer of certain records to
its custody from the non-Federal entity when it determines that the records possess long-term retention value.
However, in order to avoid duplicate
recordkeeping, the Federal awarding
agency may make arrangements for
the non-Federal entity to retain any
records that are continuously needed
for joint use.
§ 200.336 Methods for collection, transmission, and storage of information.
The Federal awarding agency and the
non-Federal entity should, whenever
practicable, collect, transmit, and
store Federal award-related information in open and machine-readable formats rather than in closed formats or on paper in accordance with applicable
legislative requirements. A machinereadable format is a format in a standard computer language (not English text) that can be read automatically by
a web browser or computer system. The
Federal awarding agency or passthrough entity must always provide or accept paper versions of Federal awardrelated information to and from the non-Federal entity upon request. If
paper copies are submitted, the Federal
awarding agency or pass-through entity must not require more than an original and two copies. When original
records are electronic and cannot be altered, there is no need to create and retain paper copies. When original records are paper, electronic versions
may be substituted through the use of
duplication or other forms of electronic media provided that they are subject to periodic quality control reviews, provide reasonable safeguards against alteration, and remain readable.
§ 200.337 Access to records.
(a) Records of non-Federal entities. The
Federal awarding agency, Inspectors
General, the Comptroller General of
the United States, and the passthrough entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity’s personnel for the purpose of interview and discussion related to
such documents.
(b) Extraordinary and rare circumstances. Only under extraordinary and rare circumstances would such access include review of the true name of victims of a crime. Routine monitoring
cannot be considered extraordinary and
rare circumstances that would necessitate access to this information. When access to the true name of victims of a
crime is necessary, appropriate steps to
protect this sensitive information must
be taken by both the non-Federal entity and the Federal awarding agency.
Any such access, other than under a
court order or subpoena pursuant to a
bona fide confidential investigation,
must be approved by the head of the
Federal awarding agency or delegate.
(c) Expiration of right of access. The
rights of access in this section are not
limited to the required retention period but last as long as the records are retained. Federal awarding agencies
and pass-through entities must not impose any other access requirements upon non-Federal entities.
§ 200.338 Restrictions on public access
to records.
No Federal awarding agency may
place restrictions on the non-Federal
entity that limit public access to the
records of the non-Federal entity pertinent to a Federal award, except for protected personally identifiable information (PII) or when the Federal awarding agency can demonstrate that
such records will be kept confidential
and would have been exempted from
disclosure pursuant to the Freedom of
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§ 200.339 2 CFR Ch. II (1–1–21 Edition)
Information Act (5 U.S.C. 552) or controlled unclassified information pursuant to Executive Order 13556 if the records had belonged to the Federal
awarding agency. The Freedom of Information Act (5 U.S.C. 552) (FOIA) does not apply to those records that remain under a non-Federal entity’s control except as required under §200.315.
Unless required by Federal, state,
local, and tribal statute, non-Federal
entities are not required to permit public access to their records. The nonFederal entity’s records provided to a Federal agency generally will be subject to FOIA and applicable exemptions.
REMEDIES FOR NONCOMPLIANCE
§ 200.339 Remedies for noncompliance.
If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and
conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208. If the Federal awarding agency or passthrough entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances:
(a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the
Federal awarding agency or passthrough entity.
(b) Disallow (that is, deny both use of
funds and any applicable matching
credit for) all or part of the cost of the
activity or action not in compliance.
(c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment
proceedings as authorized under 2 CFR
part 180 and Federal awarding agency
regulations (or in the case of a passthrough entity, recommend such a proceeding be initiated by a Federal awarding agency).
(e) Withhold further Federal awards
for the project or program.
(f) Take other remedies that may be
legally available.
§ 200.340 Termination.
(a) The Federal award may be terminated in whole or in part as follows:
(1) By the Federal awarding agency
or pass-through entity, if a non-Federal entity fails to comply with the terms and conditions of a Federal
award;
(2) By the Federal awarding agency
or pass-through entity, to the greatest
extent authorized by law, if an award
no longer effectuates the program
goals or agency priorities;
(3) By the Federal awarding agency
or pass-through entity with the consent of the non-Federal entity, in which case the two parties must agree
upon the termination conditions, including the effective date and, in the case of partial termination, the portion
to be terminated;
(4) By the non-Federal entity upon
sending to the Federal awarding agency or pass-through entity written notification setting forth the reasons for such termination, the effective date,
and, in the case of partial termination,
the portion to be terminated. However,
if the Federal awarding agency or passthrough entity determines in the case of partial termination that the reduced
or modified portion of the Federal
award or subaward will not accomplish
the purposes for which the Federal
award was made, the Federal awarding
agency or pass-through entity may terminate the Federal award in its entirety; or (5) By the Federal awarding agency
or pass-through entity pursuant to termination provisions included in the Federal award.
(b) A Federal awarding agency should
clearly and unambiguously specify termination provisions applicable to each Federal award, in applicable regulations or in the award, consistent with this section.
(c) When a Federal awarding agency
terminates a Federal award prior to
the end of the period of performance
due to the non-Federal entity’s material failure to comply with the Federal award terms and conditions, the Federal awarding agency must report the termination to the OMB-designated integrity and performance system accessible through SAM (currently FAPIIS).
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OMB Guidance § 200.341
(1) The information required under
paragraph (c) of this section is not to
be reported to designated integrity and
performance system until the non-Federal entity either— (i) Has exhausted its opportunities to
object or challenge the decision, see
§200.342; or
(ii) Has not, within 30 calendar days
after being notified of the termination,
informed the Federal awarding agency
that it intends to appeal the Federal
awarding agency’s decision to terminate.
(2) If a Federal awarding agency,
after entering information into the
designated integrity and performance
system about a termination, subsequently:
(i) Learns that any of that information is erroneous, the Federal awarding agency must correct the information in
the system within three business days;
(ii) Obtains an update to that information that could be helpful to other Federal awarding agencies, the Federal
awarding agency is strongly encouraged to amend the information in the system to incorporate the update in a
timely way.
(3) Federal awarding agencies, must
not post any information that will be
made publicly available in the nonpublic segment of designated integrity and performance system that is covered by a disclosure exemption under the Freedom of Information Act. If the
non-Federal entity asserts within
seven calendar days to the Federal
awarding agency who posted the information, that some of the information made publicly available is covered by a
disclosure exemption under the Freedom of Information Act, the Federal awarding agency who posted the information must remove the posting within seven calendar days of receiving the assertion. Prior to reposting the releasable information, the Federal agency must resolve the issue in accordance
with the agency’s Freedom of Information Act procedures. (d) When a Federal award is terminated or partially terminated, both the Federal awarding agency or passthrough entity and the non-Federal entity remain responsible for compliance with the requirements in §§200.344 and
200.345.
§ 200.341 Notification of termination
requirement.
(a) The Federal agency or passthrough entity must provide to the non-Federal entity a notice of termination.
(b) If the Federal award is terminated
for the non-Federal entity’s material
failure to comply with the U.S. Constitution, Federal statutes, regulations, or terms and conditions of the Federal award, the notification must
state that—
(1) The termination decision will be
reported to the OMB-designated integrity and performance system accessible through SAM (currently FAPIIS);
(2) The information will be available
in the OMB-designated integrity and
performance system for a period of five
years from the date of the termination,
then archived;
(3) Federal awarding agencies that
consider making a Federal award to
the non-Federal entity during that five
year period must consider that information in judging whether the nonFederal entity is qualified to receive the Federal award, when the Federal
share of the Federal award is expected
to exceed the simplified acquisition
threshold over the period of performance;
(4) The non-Federal entity may comment on any information the OMB-designated integrity and performance system contains about the non-Federal entity for future consideration by Federal awarding agencies. The non-Federal entity may submit comments to the awardee integrity and performance
portal accessible through SAM (currently (CPARS).
(5) Federal awarding agencies will
consider non-Federal entity comments
when determining whether the nonFederal entity is qualified for a future Federal award.
(c) Upon termination of a Federal
award, the Federal awarding agency
must provide the information required
under FFATA to the Federal website
established to fulfill the requirements
of FFATA, and update or notify any
other relevant governmentwide systems or entities of any indications of poor performance as required by 41
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§ 200.342 2 CFR Ch. II (1–1–21 Edition)
(forthcoming at time of publication).
See also the requirements for Suspension and Debarment at 2 CFR part 180. § 200.342 Opportunities to object, hearings, and appeals.
Upon taking any remedy for noncompliance, the Federal awarding agency must provide the non-Federal
entity an opportunity to object and
provide information and documentation challenging the suspension or termination action, in accordance with written processes and procedures published by the Federal awarding agency.
The Federal awarding agency or passthrough entity must comply with any requirements for hearings, appeals or
other administrative proceedings to
which the non-Federal entity is entitled under any statute or regulation applicable to the action involved.
§ 200.343 Effects of suspension and termination.
Costs to the non-Federal entity resulting from financial obligations incurred by the non-Federal entity during a suspension or after termination of a Federal award or subaward are not
allowable unless the Federal awarding
agency or pass-through entity expressly authorizes them in the notice of suspension or termination or subsequently. However, costs during suspension or after termination are allowable if:
(a) The costs result from financial
obligations which were properly incurred by the non-Federal entity before the effective date of suspension or termination, are not in anticipation of it; and
(b) The costs would be allowable if
the Federal award was not suspended
or expired normally at the end of the
period of performance in which the termination takes effect.
CLOSEOUT
§ 200.344 Closeout.
The Federal awarding agency or passthrough entity will close out the Federal award when it determines that all applicable administrative actions and
all required work of the Federal award
have been completed by the non-Federal entity. If the non-Federal entity fails to complete the requirements, the
Federal awarding agency or passthrough entity will proceed to close out the Federal award with the information available. This section specifies the actions the non-Federal entity and
Federal awarding agency or passthrough entity must take to complete this process at the end of the period of
performance.
(a) The recipient must submit, no
later than 120 calendar days after the
end date of the period of performance,
all financial, performance, and other
reports as required by the terms and
conditions of the Federal award. A subrecipient must submit to the passthrough entity, no later than 90 calendar days (or an earlier date as agreed upon by the pass-through entity and
subrecipient) after the end date of the
period of performance, all financial,
performance, and other reports as required by the terms and conditions of the Federal award. The Federal awarding agency or pass-through entity may approve extensions when requested and
justified by the non-Federal entity, as
applicable.
(b) Unless the Federal awarding agency or pass-through entity authorizes an extension, a non-Federal entity must
liquidate all financial obligations incurred under the Federal award no later than 120 calendar days after the
end date of the period of performance
as specified in the terms and conditions
of the Federal award.
(c) The Federal awarding agency or
pass-through entity must make prompt
payments to the non-Federal entity for
costs meeting the requirements in Subpart E of this part under the Federal award being closed out.
(d) The non-Federal entity must
promptly refund any balances of unobligated cash that the Federal awarding agency or pass-through entity paid in
advance or paid and that are not authorized to be retained by the non-Federal entity for use in other projects.
See OMB Circular A–129 and see
§200.346, for requirements regarding
unreturned amounts that become delinquent debts.
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through entity must make a settlement for any upward or downward adjustments to the Federal share of costs after closeout reports are received.
(f) The non-Federal entity must account for any real and personal property acquired with Federal funds or received from the Federal Government in accordance with §§200.310 through
200.316 and 200.330.
(g) When a recipient or subrecipient
completes all closeout requirements,
the Federal awarding agency or passthrough entity must promptly complete all closeout actions for Federal awards. The Federal awarding agency
must make every effort to complete
closeout actions no later than one year
after the end of the period of performance unless otherwise directed by authorizing statutes. Closeout actions include Federal awarding agency actions in the grants management and payment systems.
(h) If the non-Federal entity does not
submit all reports in accordance with
this section and the terms and conditions of the Federal Award, the Federal awarding agency must proceed to close
out with the information available
within one year of the period of performance end date. (i) If the non-Federal entity does not
submit all reports in accordance with
this section within one year of the period of performance end date, the Federal awarding agency must report the non-Federal entity’s material failure
to comply with the terms and conditions of the award with the OMB-designated integrity and performance system (currently FAPIIS). Federal awarding agencies may also pursue
other enforcement actions per §200.339.
POST-CLOSEOUT ADJUSTMENTS AND
CONTINUING RESPONSIBILITIES
§ 200.345 Post-closeout adjustments
and continuing responsibilities.
(a) The closeout of a Federal award
does not affect any of the following:
(1) The right of the Federal awarding
agency or pass-through entity to disallow costs and recover funds on the basis of a later audit or other review.
The Federal awarding agency or passthrough entity must make any cost disallowance determination and notify
the non-Federal entity within the
record retention period.
(2) The requirement for the non-Federal entity to return any funds due as a result of later refunds, corrections, or
other transactions including final indirect cost rate adjustments. (3) The ability of the Federal awarding agency to make financial adjustments to a previously closed award such as resolving indirect cost payments and making final payments. (4) Audit requirements in subpart F
of this part.
(5) Property management and disposition requirements in §§200.310 through 200.316 of this subpart.
(6) Records retention as required in
§§200.334 through 200.337 of this subpart.
(b) After closeout of the Federal
award, a relationship created under the
Federal award may be modified or
ended in whole or in part with the consent of the Federal awarding agency or pass-through entity and the non-Federal entity, provided the responsibilities of the non-Federal entity referred to in paragraph (a) of this section, including those for property management as applicable, are considered and provisions made for continuing responsibilities of the non-Federal entity, as appropriate.
COLLECTION OF AMOUNTS DUE
§ 200.346 Collection of amounts due.
(a) Any funds paid to the non-Federal
entity in excess of the amount to
which the non-Federal entity is finally
determined to be entitled under the
terms of the Federal award constitute
a debt to the Federal Government. If
not paid within 90 calendar days after
demand, the Federal awarding agency
may reduce the debt by:
(1) Making an administrative offset
against other requests for reimbursements;
(2) Withholding advance payments
otherwise due to the non-Federal entity; or
(3) Other action permitted by Federal
statute.
(b) Except where otherwise provided
by statutes or regulations, the Federal
awarding agency will charge interest
on an overdue debt in accordance with
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§ 200.400 2 CFR Ch. II (1–1–21 Edition)
the Federal Claims Collection Standards (31 CFR parts 900 through 999). The date from which interest is computed
is not extended by litigation or the filing of any form of appeal.
Subpart E—Cost Principles
GENERAL PROVISIONS
§ 200.400 Policy guide.
The application of these cost principles is based on the fundamental premises that:
(a) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (b) The non-Federal entity assumes
responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award.
(c) The non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has
the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper
and efficient administration of the
Federal award.
(d) The application of these cost principles should require no significant changes in the internal accounting
policies and practices of the non-Federal entity. However, the accounting practices of the non-Federal entity
must be consistent with these cost
principles and support the accumulation of costs as required by the principles, and must provide for adequate documentation to support costs
charged to the Federal award.
(e) In reviewing, negotiating and approving cost allocation plans or indirect cost proposals, the cognizant agency for indirect costs should generally assure that the non-Federal entity is
applying these cost accounting principles on a consistent basis during their review and negotiation of indirect
cost proposals. Where wide variations
exist in the treatment of a given cost
item by the non-Federal entity, the
reasonableness and equity of such
treatments should be fully considered.
See the definition of indirect (facilities &
administrative (F&A)) costs in §200.1 of
this part.
(f) For non-Federal entities that educate and engage students in research, the dual role of students as both trainees and employees (including pre- and post-doctoral staff) contributing to the
completion of Federal awards for research must be recognized in the application of these principles. (g) The non-Federal entity may not
earn or keep any profit resulting from
Federal financial assistance, unless explicitly authorized by the terms and conditions of the Federal award. See
also §200.307.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75885, Dec. 19, 2014; 85 FR 49561, Aug. 13,
2020]
§ 200.401 Application.
(a) General. These principles must be
used in determining the allowable costs
of work performed by the non-Federal
entity under Federal awards. These
principles also must be used by the
non-Federal entity as a guide in the
pricing of fixed-price contracts and
subcontracts where costs are used in
determining the appropriate price. The
principles do not apply to:
(1) Arrangements under which Federal financing is in the form of loans, scholarships, fellowships, traineeships,
or other fixed amounts based on such
items as education allowance or published tuition rates and fees. (2) For IHEs, capitation awards,
which are awards based on case counts
or number of beneficiaries according to
the terms and conditions of the Federal
award.
(3) Fixed amount awards. See also
§200.1 Definitions and 200.201.
(4) Federal awards to hospitals (see
appendix IX to this part).
(5) Other awards under which the
non-Federal entity is not required to
account to the Federal Government for
actual costs incurred.
(b) Federal contract. Where a Federal
contract awarded to a non-Federal entity is subject to the Cost Accounting Standards (CAS), it incorporates the
applicable CAS clauses, Standards, and
CAS administration requirements per
the 48 CFR Chapter 99 and 48 CFR part
30 (FAR Part 30). CAS applies directly
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to the CAS-covered contract and the
Cost Accounting Standards at 48 CFR
parts 9904 or 9905 takes precedence over
the cost principles in this subpart E
with respect to the allocation of costs.
When a contract with a non-Federal
entity is subject to full CAS coverage,
the allowability of certain costs under
the cost principles will be affected by
the allocation provisions of the Cost
Accounting Standards (e.g., CAS 414—
48 CFR 9904.414, Cost of Money as an
Element of the Cost of Facilities Capital, and CAS 417—48 CFR 9904.417, Cost of Money as an Element of the Cost of
Capital Assets Under Construction),
apply rather the allowability provisions of §200.449. In complying with those requirements, the non-Federal
entity’s application of cost accounting
practices for estimating, accumulating, and reporting costs for other Federal awards and other cost objectives under the CAS-covered contract still must be consistent with its cost
accounting practices for the CAS-covered contracts. In all cases, only one set of accounting records needs to be
maintained for the allocation of costs
by the non-Federal entity.
(c) Exemptions. Some nonprofit organizations, because of their size and nature of operations, can be considered to be similar to for-profit entities for purpose of applicability of cost principles.
Such nonprofit organizations must operate under Federal cost principles applicable to for-profit entities located at 48 CFR 31.2. A listing of these organizations is contained in appendix VIII to this part. Other organizations, as approved by the cognizant agency for indirect costs, may be added from time to time.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49562, Aug. 13, 2020]
BASIC CONSIDERATIONS
§ 200.402 Composition of costs.
Total cost. The total cost of a Federal
award is the sum of the allowable direct and allocable indirect costs less any applicable credits.
§ 200.403 Factors affecting allowability
of costs.
Except where otherwise authorized
by statute, costs must meet the following general criteria in order to be allowable under Federal awards:
(a) Be necessary and reasonable for
the performance of the Federal award
and be allocable thereto under these
principles.
(b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or
amount of cost items.
(c) Be consistent with policies and
procedures that apply uniformly to
both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment.
A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in
like circumstances has been allocated
to the Federal award as an indirect
cost.
(e) Be determined in accordance with
generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes
only, as otherwise provided for in this
part.
(f) Not be included as a cost or used
to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also §200.306(b).
(g) Be adequately documented. See
also §§200.300 through 200.309 of this
part.
(h) Cost must be incurred during the
approved budget period. The Federal
awarding agency is authorized, at its
discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods
pursuant to §200.308(e)(3).
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49562, Aug. 13, 2020]
§ 200.404 Reasonable costs.
A cost is reasonable if, in its nature
and amount, it does not exceed that
which would be incurred by a prudent
person under the circumstances prevailing at the time the decision was made to incur the cost. The question of
reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to:
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§ 200.405 2 CFR Ch. II (1–1–21 Edition)
(a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the nonFederal entity or the proper and efficient performance of the Federal award.
(b) The restraints or requirements
imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and
terms and conditions of the Federal
award.
(c) Market prices for comparable
goods or services for the geographic
area.
(d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government.
(e) Whether the non-Federal entity
significantly deviates from its established practices and policies regarding the incurrence of costs, which may
unjustifiably increase the Federal
award’s cost.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75885, Dec. 19, 2014]
§ 200.405 Allocable costs.
(a) A cost is allocable to a particular
Federal award or other cost objective if
the goods or services involved are
chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received.
This standard is met if the cost:
(1) Is incurred specifically for the
Federal award;
(2) Benefits both the Federal award
and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods; and
(3) Is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award
in accordance with the principles in
this subpart.
(b) All activities which benefit from
the non-Federal entity’s indirect (F&A)
cost, including unallowable activities
and donated services by the non-Federal entity or third parties, will receive an appropriate allocation of indirect
costs.
(c) Any cost allocable to a particular
Federal award under the principles provided for in this part may not be charged to other Federal awards to
overcome fund deficiencies, to avoid restrictions imposed by Federal statutes, regulations, or terms and conditions of
the Federal awards, or for other reasons. However, this prohibition would not preclude the non-Federal entity
from shifting costs that are allowable
under two or more Federal awards in
accordance with existing Federal statutes, regulations, or the terms and conditions of the Federal awards. (d) Direct cost allocation principles:
If a cost benefits two or more projects
or activities in proportions that can be
determined without undue effort or
cost, the cost must be allocated to the
projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions
that cannot be determined because of
the interrelationship of the work involved, then, notwithstanding paragraph (c) of this section, the costs may be allocated or transferred to benefitted projects on any reasonable documented basis. Where the purchase of equipment or other capital asset is specifically authorized under a Federal award, the costs are assignable to the
Federal award regardless of the use
that may be made of the equipment or
other capital asset involved when no
longer needed for the purpose for which
it was originally required. See also
§§200.310 through 200.316 and 200.439.
(e) If the contract is subject to CAS,
costs must be allocated to the contract
pursuant to the Cost Accounting
Standards. To the extent that CAS is
applicable, the allocation of costs in
accordance with CAS takes precedence
over the allocation provisions in this
part.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75885, Dec. 19, 2014; 85 FR 49562, Aug. 13,
2020]
§ 200.406 Applicable credits.
(a) Applicable credits refer to those
receipts or reduction-of-expendituretype transactions that offset or reduce expense items allocable to the Federal
award as direct or indirect (F&A) costs.
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OMB Guidance § 200.409
recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the nonFederal entity relate to allowable costs, they must be credited to the
Federal award either as a cost reduction or cash refund, as appropriate. (b) In some instances, the amounts
received from the Federal Government
to finance activities or service operations of the non-Federal entity should be treated as applicable credits. Specifically, the concept of netting such credit items (including any amounts
used to meet cost sharing or matching
requirements) must be recognized in
determining the rates or amounts to be
charged to the Federal award. (See
§§200.436 and 200.468, for areas of potential application in the matter of Federal financing of activities.) [78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75885, Dec. 19, 2014; 85 FR 49562, Aug. 13,
2020]
§ 200.407 Prior written approval (prior
approval).
Under any given Federal award, the
reasonableness and allocability of certain items of costs may be difficult to determine. In order to avoid subsequent disallowance or dispute based on unreasonableness or nonallocability,
the non-Federal entity may seek the
prior written approval of the cognizant
agency for indirect costs or the Federal
awarding agency in advance of the incurrence of special or unusual costs.
Prior written approval should include
the timeframe or scope of the agreement. The absence of prior written approval on any element of cost will not, in itself, affect the reasonableness or
allocability of that element, unless
prior approval is specifically required
for allowability as described under certain circumstances in the following sections of this part:
(a) §200.201 Use of grant agreements
(including fixed amount awards), cooperative agreements, and contracts, paragraph (b)(5);
(b) §200.306 Cost sharing or matching;
(c) §200.307 Program income;
(d) §200.308 Revision of budget and
program plans;
(e) §200.311 Real property;
(f) §200.313 Equipment;
(g) §200.333 Fixed amount subawards;
(h) §200.413 Direct costs, paragraph
(c);
(i) §200.430 Compensation—personal
services, paragraph (h);
(j) §200.431 Compensation—fringe benefits;
(k) §200.438 Entertainment costs;
(l) §200.439 Equipment and other capital expenditures; (m) §200.440 Exchange rates;
(n) §200.441 Fines, penalties, damages
and other settlements;
(o) §200.442 Fund raising and investment management costs; (p) §200.445 Goods or services for personal use;
(q) §200.447 Insurance and indemnification;
(r) §200.454 Memberships, subscriptions, and professional activity costs, paragraph (c);
(s) §200.455 Organization costs;
(t) §200.456 Participant support costs;
(u) §200.458 Pre-award costs;
(v) §200.462 Rearrangement and reconversion costs;
(w) §200.467 Selling and marketing
costs;
(x) §200.470 Taxes (including Value
Added Tax); and
(y) §200.475 Travel costs.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75885, Dec. 19, 2014; 85 FR 49562, Aug. 13,
2020]
§ 200.408 Limitation on allowance of
costs.
The Federal award may be subject to
statutory requirements that limit the
allowability of costs. When the maximum amount allowable under a limitation is less than the total amount determined in accordance with the principles in this part, the amount not recoverable under the Federal award may not be charged to the Federal award.
§ 200.409 Special considerations.
In addition to the basic considerations regarding the allowability of costs highlighted in this subtitle, other
subtitles in this part describe special
considerations and requirements applicable to states, local governments, Indian tribes, and IHEs. In addition, certain provisions among the items of cost in this subpart are only applicable to
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§ 200.410 2 CFR Ch. II (1–1–21 Edition)
certain types of non-Federal entities,
as specified in the following sections:
(a) Direct and Indirect (F&A) Costs
(§§200.412–200.415) of this subpart;
(b) Special Considerations for States,
Local Governments and Indian Tribes
(§§200.416 and 200.417) of this subpart;
and
(c) Special Considerations for Institutions of Higher Education (§§200.418 and 200.419) of this subpart.
[85 FR 49562, Aug. 13, 2020]
§ 200.410 Collection of unallowable
costs.
Payments made for costs determined
to be unallowable by either the Federal
awarding agency, cognizant agency for
indirect costs, or pass-through entity,
either as direct or indirect costs, must
be refunded (including interest) to the
Federal Government in accordance
with instructions from the Federal
agency that determined the costs are
unallowable unless Federal statute or
regulation directs otherwise. See also
§§200.300 through 200.309 in subpart D of
this part.
[85 FR 49562, Aug. 13, 2020]
§ 200.411 Adjustment of previously negotiated indirect (F&A) cost rates containing unallowable costs.
(a) Negotiated indirect (F&A) cost
rates based on a proposal later found to
have included costs that:
(1) Are unallowable as specified by
Federal statutes, regulations or the
terms and conditions of a Federal
award; or
(2) Are unallowable because they are
not allocable to the Federal award(s),
must be adjusted, or a refund must be
made, in accordance with the requirements of this section. These adjustments or refunds are designed to correct the proposals used to establish the rates and do not constitute a reopening
of the rate negotiation. The adjustments or refunds will be made regardless of the type of rate negotiated (predetermined, final, fixed, or provisional). (b) For rates covering a future fiscal
year of the non-Federal entity, the unallowable costs will be removed from the indirect (F&A) cost pools and the
rates appropriately adjusted.
(c) For rates covering a past period,
the Federal share of the unallowable
costs will be computed for each year
involved and a cash refund (including
interest chargeable in accordance with
applicable regulations) will be made to
the Federal Government. If cash refunds are made for past periods covered by provisional or fixed rates, appropriate adjustments will be made when the rates are finalized to avoid duplicate recovery of the unallowable costs by the Federal Government.
(d) For rates covering the current period, either a rate adjustment or a refund, as described in paragraphs (b) and (c) of this section, must be required by
the cognizant agency for indirect costs.
The choice of method must be at the
discretion of the cognizant agency for
indirect costs, based on its judgment as
to which method would be most practical.
(e) The amount or proportion of unallowable costs included in each year’s rate will be assumed to be the same as
the amount or proportion of unallowable costs included in the base year proposal used to establish the rate.
DIRECT AND INDIRECT (F&A) COSTS
§ 200.412 Classification of costs.
There is no universal rule for
classifying certain costs as either direct or indirect (F&A) under every accounting system. A cost may be direct with respect to some specific service or
function, but indirect with respect to
the Federal award or other final cost
objective. Therefore, it is essential
that each item of cost incurred for the
same purpose be treated consistently
in like circumstances either as a direct
or an indirect (F&A) cost in order to
avoid possible double-charging of Federal awards. Guidelines for determining direct and indirect (F&A) costs charged
to Federal awards are provided in this
subpart.
§ 200.413 Direct costs.
(a) General. Direct costs are those
costs that can be identified specifically
with a particular final cost objective,
such as a Federal award, or other internally or externally funded activity, or that can be directly assigned to such
activities relatively easily with a high
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OMB Guidance § 200.414
degree of accuracy. Costs incurred for
the same purpose in like circumstances
must be treated consistently as either
direct or indirect (F&A) costs. See also
§200.405.
(b) Application to Federal awards.
Identification with the Federal award
rather than the nature of the goods and
services involved is the determining
factor in distinguishing direct from indirect (F&A) costs of Federal awards.
Typical costs charged directly to a
Federal award are the compensation of
employees who work on that award,
their related fringe benefit costs, the
costs of materials and other items of
expense incurred for the Federal award.
If directly related to a specific award,
certain costs that otherwise would be
treated as indirect costs may also be
considered direct costs. Examples include extraordinary utility consumption, the cost of materials supplied from stock or services rendered by specialized facilities, program evaluation costs, or other institutional service operations.
(c) The salaries of administrative and
clerical staff should normally be treated as indirect (F&A) costs. Direct charging of these costs may be appropriate only if all of the following conditions are met:
(1) Administrative or clerical services are integral to a project or activity; (2) Individuals involved can be specifically identified with the project or activity;
(3) Such costs are explicitly included
in the budget or have the prior written
approval of the Federal awarding agency; and
(4) The costs are not also recovered
as indirect costs.
(d) Minor items. Any direct cost of
minor amount may be treated as an indirect (F&A) cost for reasons of practicality where such accounting treatment for that item of cost is consistently applied to all Federal and nonFederal cost objectives. (e) The costs of certain activities are
not allowable as charges to Federal
awards. However, even though these
costs are unallowable for purposes of
computing charges to Federal awards,
they nonetheless must be treated as direct costs for purposes of determining indirect (F&A) cost rates and be allocated their equitable share of the nonFederal entity’s indirect costs if they represent activities which:
(1) Include the salaries of personnel,
(2) Occupy space, and
(3) Benefit from the non-Federal entity’s indirect (F&A) costs. (f) For nonprofit organizations, the
costs of activities performed by the
non-Federal entity primarily as a service to members, clients, or the general public when significant and necessary
to the non-Federal entity’s mission
must be treated as direct costs whether
or not allowable, and be allocated an
equitable share of indirect (F&A) costs.
Some examples of these types of activities include:
(1) Maintenance of membership rolls,
subscriptions, publications, and related
functions. See also §200.454.
(2) Providing services and information to members, legislative or administrative bodies, or the public. See also §§200.454 and 200.450.
(3) Promotion, lobbying, and other
forms of public relations. See also
§§200.421 and 200.450.
(4) Conferences except those held to
conduct the general administration of
the non-Federal entity. See also
§200.432.
(5) Maintenance, protection, and investment of special funds not used in operation of the non-Federal entity.
See also §200.442.
(6) Administration of group benefits
on behalf of members or clients, including life and hospital insurance, annuity or retirement plans, and financial aid. See also §200.431. [78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75885, Dec. 19, 2014; 85 FR 49562, Aug. 13,
2020]
§ 200.414 Indirect (F&A) costs.
(a) Facilities and administration classification. For major Institutions of Higher Education (IHE) and major nonprofit organizations, indirect (F&A) costs must be classified within two
broad categories: ‘‘Facilities’’ and
‘‘Administration.’’ ‘‘Facilities’’ is defined as depreciation on buildings, equipment and capital improvement,
interest on debt associated with certain buildings, equipment and capital improvements, and operations and
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§ 200.414 2 CFR Ch. II (1–1–21 Edition)
maintenance expenses. ‘‘Administration’’ is defined as general administration and general expenses such as the director’s office, accounting, personnel
and all other types of expenditures not
listed specifically under one of the subcategories of ‘‘Facilities’’ (including cross allocations from other pools,
where applicable). For nonprofit organizations, library expenses are included in the ‘‘Administration’’ category; for
IHEs, they are included in the ‘‘Facilities’’ category. Major IHEs are defined as those required to use the Standard
Format for Submission as noted in appendix III to this part, and Rate Determination for Institutions of Higher Education paragraph C. 11. Major nonprofit organizations are those which receive more than $10 million dollars in direct Federal funding.
(b) Diversity of nonprofit organizations.
Because of the diverse characteristics
and accounting practices of nonprofit
organizations, it is not possible to
specify the types of cost which may be
classified as indirect (F&A) cost in all
situations. Identification with a Federal award rather than the nature of the goods and services involved is the
determining factor in distinguishing
direct from indirect (F&A) costs of
Federal awards. However, typical examples of indirect (F&A) cost for many nonprofit organizations may include
depreciation on buildings and equipment, the costs of operating and maintaining facilities, and general administration and general expenses, such as the salaries and expenses of executive
officers, personnel administration, and
accounting.
(c) Federal Agency Acceptance of Negotiated Indirect Cost Rates. (See also §200.306.)
(1) The negotiated rates must be accepted by all Federal awarding agencies. A Federal awarding agency may use a rate different from the negotiated
rate for a class of Federal awards or a
single Federal award only when required by Federal statute or regulation, or when approved by a Federal awarding agency head or delegate
based on documented justification as
described in paragraph (c)(3) of this
section.
(2) The Federal awarding agency head
or delegate must notify OMB of any approved deviations. (3) The Federal awarding agency
must implement, and make publicly
available, the policies, procedures and
general decision-making criteria that
their programs will follow to seek and
justify deviations from negotiated
rates.
(4) As required under §200.204, the
Federal awarding agency must include
in the notice of funding opportunity
the policies relating to indirect cost
rate reimbursement, matching, or cost
share as approved under paragraph
(e)(1) of this section. As appropriate,
the Federal agency should incorporate
discussion of these policies into Federal awarding agency outreach activities with non-Federal entities prior to the posting of a notice of funding opportunity.
(d) Pass-through entities are subject
to the requirements in §200.332(a)(4).
(e) Requirements for development
and submission of indirect (F&A) cost
rate proposals and cost allocation
plans are contained in Appendices III–
VII and Appendix IX as follows:
(1) Appendix III to Part 200—Indirect
(F&A) Costs Identification and Assignment, and Rate Determination for Institutions of Higher Education (IHEs); (2) Appendix IV to Part 200—Indirect
(F&A) Costs Identification and Assignment, and Rate Determination for Nonprofit Organizations; (3) Appendix V to Part 200—State/
Local Governmentwide Central Service
Cost Allocation Plans;
(4) Appendix VI to Part 200—Public
Assistance Cost Allocation Plans;
(5) Appendix VII to Part 200—States
and Local Government and Indian
Tribe Indirect Cost Proposals; and
(6) Appendix IX to Part 200—Hospital
Cost Principles.
(f) In addition to the procedures outlined in the appendices in paragraph (e) of this section, any non-Federal entity
that does not have a current negotiated (including provisional) rate, except for those non-Federal entities described in appendix VII to this part, paragraph D.1.b, may elect to charge a
de minimis rate of 10% of modified
total direct costs (MTDC) which may
be used indefinitely. No documentation
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OMB Guidance § 200.415
is required to justify the 10% de minimis indirect cost rate. As described in §200.403, costs must be consistently
charged as either indirect or direct
costs, but may not be double charged
or inconsistently charged as both. If
chosen, this methodology once elected
must be used consistently for all Federal awards until such time as a nonFederal entity chooses to negotiate for a rate, which the non-Federal entity
may apply to do at any time.
(g) Any non-Federal entity that has a
current federally-negotiated indirect
cost rate may apply for a one-time extension of the rates in that agreement for a period of up to four years. This
extension will be subject to the review
and approval of the cognizant agency
for indirect costs. If an extension is
granted the non-Federal entity may
not request a rate review until the extension period ends. At the end of the 4-year extension, the non-Federal entity must re-apply to negotiate a rate.
Subsequent one-time extensions (up to
four years) are permitted if a renegotiation is completed between each extension request. (h) The federally negotiated indirect
rate, distribution base, and rate type
for a non-Federal entity (except for the
Indian tribes or tribal organizations, as
defined in the Indian Self Determination, Education and Assistance Act, 25 U.S.C. 450b(1)) must be available publicly on an OMB-designated Federal website.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014; 85 FR 49563, Aug. 13,
2020]
§ 200.415 Required certifications.
Required certifications include:
(a) To assure that expenditures are
proper and in accordance with the
terms and conditions of the Federal
award and approved project budgets,
the annual and final fiscal reports or
vouchers requesting payment under the
agreements must include a certification, signed by an official who is authorized to legally bind the non-Federal entity, which reads as follows: ‘‘By signing this report, I certify to the best
of my knowledge and belief that the report is true, complete, and accurate, and the expenditures, disbursements
and cash receipts are for the purposes
and objectives set forth in the terms
and conditions of the Federal award. I
am aware that any false, fictitious, or
fraudulent information, or the omission of any material fact, may subject me to criminal, civil or administrative
penalties for fraud, false statements,
false claims or otherwise. (U.S. Code
Title 18, Section 1001 and Title 31, Sections 3729–3730 and 3801–3812).’’ (b) Certification of cost allocation
plan or indirect (F&A) cost rate proposal. Each cost allocation plan or indirect (F&A) cost rate proposal must comply with the following:
(1) A proposal to establish a cost allocation plan or an indirect (F&A) cost rate, whether submitted to a Federal
cognizant agency for indirect costs or
maintained on file by the non-Federal
entity, must be certified by the nonFederal entity using the Certificate of Cost Allocation Plan or Certificate of
Indirect Costs as set forth in appendices III through VII, and IX of this part. The certificate must be signed on
behalf of the non-Federal entity by an
individual at a level no lower than vice
president or chief financial officer of
the non-Federal entity that submits
the proposal.
(2) Unless the non-Federal entity has
elected the option under §200.414(f), the
Federal Government may either disallow all indirect (F&A) costs or unilaterally establish such a plan or rate when the non-Federal entity fails to
submit a certified proposal for establishing such a plan or rate in accordance with the requirements. Such a plan or rate may be based upon audited
historical data or such other data that
have been furnished to the cognizant
agency for indirect costs and for which
it can be demonstrated that all unallowable costs have been excluded.
When a cost allocation plan or indirect
cost rate is unilaterally established by
the Federal Government because the
non-Federal entity failed to submit a
certified proposal, the plan or rate established will be set to ensure that potentially unallowable costs will not be reimbursed.
(c) Certifications by nonprofit organizations as appropriate that they did not meet the definition of a major nonprofit organization as defined in §200.414(a).
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§ 200.416 2 CFR Ch. II (1–1–21 Edition)
(d) See also §200.450 for another required certification. [78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014; 85 FR 49563, Aug. 13,
2020]
SPECIAL CONSIDERATIONS FOR STATES,
LOCAL GOVERNMENTS AND INDIAN
TRIBES
§ 200.416 Cost allocation plans and indirect cost proposals. (a) For states, local governments and
Indian tribes, certain services, such as
motor pools, computer centers, purchasing, accounting, etc., are provided to operating agencies on a centralized
basis. Since Federal awards are performed within the individual operating agencies, there needs to be a process
whereby these central service costs can
be identified and assigned to benefitted
activities on a reasonable and consistent basis. The central service cost allocation plan provides that process.
(b) Individual operating agencies
(governmental department or agency),
normally charge Federal awards for indirect costs through an indirect cost rate. A separate indirect cost rate(s)
proposal for each operating agency is
usually necessary to claim indirect
costs under Federal awards. Indirect
costs include:
(1) The indirect costs originating in
each department or agency of the governmental unit carrying out Federal awards and
(2) The costs of central governmental
services distributed through the central service cost allocation plan and not otherwise treated as direct costs.
(c) The requirements for development
and submission of cost allocation plans
(for central service costs and public assistance programs) and indirect cost rate proposals are contained in appendices IV, V and VI to this part. § 200.417 Interagency service.
The cost of services provided by one
agency to another within the governmental unit may include allowable direct costs of the service plus a prorated share of indirect costs. A standard indirect cost allowance equal to ten percent of the direct salary and
wage cost of providing the service (excluding overtime, shift premiums, and fringe benefits) may be used in lieu of
determining the actual indirect costs
of the service. These services do not include centralized services included in central service cost allocation plans as
described in Appendix V to Part 200.
[85 FR 49564, Aug. 13, 2020]
SPECIAL CONSIDERATIONS FOR
INSTITUTIONS OF HIGHER EDUCATION
§ 200.418 Costs incurred by states and
local governments.
Costs incurred or paid by a state or
local government on behalf of its IHEs
for fringe benefit programs, such as
pension costs and FICA and any other
costs specifically incurred on behalf of,
and in direct benefit to, the IHEs, are
allowable costs of such IHEs whether
or not these costs are recorded in the
accounting records of the institutions,
subject to the following:
(a) The costs meet the requirements
of §200.402–411 of this subpart;
(b) The costs are properly supported
by approved cost allocation plans in accordance with applicable Federal cost accounting principles in this part; and
(c) The costs are not otherwise borne
directly or indirectly by the Federal
Government.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49564, Aug. 13, 2020]
§ 200.419 Cost accounting standards
and disclosure statement.
(a) An IHE that receive an aggregate
total $50 million or more in Federal
awards and instruments subject to this
subpart (as specified in §200.101) in its
most recently completed fiscal year
must comply with the Cost Accounting
Standards Board’s cost accounting
standards located at 48 CFR 9905.501,
9905.502, 9905.505, and 9905.506. CAS-covered contracts and subcontracts awarded to the IHEs are subject to the broader range of CAS requirements at 48 CFR 9900 through 9999 and 48 CFR part
30 (FAR Part 30).
(b) Disclosure statement. An IHE that
receives an aggregate total $50 million
or more in Federal awards and instruments subject to this subpart (as specified in §200.101) during its most recently completed fiscal year must disclose their cost accounting practices by filing a Disclosure Statement (DS–
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OMB Guidance § 200.419
2), which is reproduced in Appendix III
to Part 200. With the approval of the
cognizant agency for indirect costs, an
IHE may meet the DS–2 submission by
submitting the DS–2 for each business
unit that received $50 million or more
in Federal awards and instruments.
(1) The DS–2 must be submitted to
the cognizant agency for indirect costs
with a copy to the IHE’s cognizant
agency for audit. The initial DS–2 and
revisions to the DS–2 must be submitted in coordination with the IHE’s indirect (F&A) rate proposal, unless an
earlier submission is requested by the
cognizant agency for indirect costs.
IHEs with CAS-covered contracts or
subcontracts meeting the dollar
threshold in 48 CFR 9903.202–1(f) must
submit their initial DS–2 or revisions
no later than prior to the award of a
CAS-covered contract or subcontract.
(2) An IHE must maintain an accurate DS–2 and comply with disclosed cost accounting practices. An IHE
must file amendments to the DS–2 to
the cognizant agency for indirect costs
in advance of a disclosed practice being
changed to comply with a new or modified standard, or when a practice is changed for other reasons. An IHE may
proceed with implementing the change
after it has notified the Federal cognizant agency for indirect costs. If the change represents a variation from 2
CFR part 200, the change may require
approval by the Federal cognizant
agency for indirect costs, in accordance
with §200.102(b). Amendments of a DS–
2 may be submitted at any time. Resubmission of a complete, updated DS– 2 is discouraged except when there are
extensive changes to disclosed practices.
(3) Cost and funding adjustments. Cost
adjustments must be made by the cognizant agency for indirect costs if an IHE fails to comply with the cost policies in this part or fails to consistently follow its established or disclosed cost
accounting practices when estimating,
accumulating or reporting the costs of
Federal awards, and the aggregate cost
impact on Federal awards is material.
The cost adjustment must normally be
made on an aggregate basis for all affected Federal awards through an adjustment of the IHE’s future F&A costs rates or other means considered appropriate by the cognizant agency for indirect costs. Under the terms of CAS covered contracts, adjustments in the amount of funding provided may also
be required when the estimated proposal costs were not determined in accordance with established cost accounting practices. (4) Overpayments. Excess amounts
paid in the aggregate by the Federal
Government under Federal awards due
to a noncompliant cost accounting
practice used to estimate, accumulate,
or report costs must be credited or refunded, as deemed appropriate by the cognizant agency for indirect costs. Interest applicable to the excess amounts paid in the aggregate during the period
of noncompliance must also be determined and collected in accordance with applicable Federal agency regulations.
(5) Compliant cost accounting practice
changes. Changes from one compliant
cost accounting practice to another
compliant practice that are approved
by the cognizant agency for indirect
costs may require cost adjustments if
the change has a material effect on
Federal awards and the changes are
deemed appropriate by the cognizant
agency for indirect costs.
(6) Responsibilities. The cognizant
agency for indirect cost must:
(i) Determine cost adjustments for
all Federal awards in the aggregate on
behalf of the Federal Government. Actions of the cognizant agency for indirect cost in making cost adjustment determinations must be coordinated
with all affected Federal awarding
agencies to the extent necessary.
(ii) Prescribe guidelines and establish
internal procedures to promptly determine on behalf of the Federal Government that a DS–2 adequately discloses the IHE’s cost accounting practices
and that the disclosed practices are
compliant with applicable CAS and the
requirements of this part.
(iii) Distribute to all affected Federal
awarding agencies any DS–2 determination of adequacy or noncompliance. [78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014; 85 FR 49564, Aug. 13,
2020]
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§ 200.420 2 CFR Ch. II (1–1–21 Edition)
GENERAL PROVISIONS FOR SELECTED
ITEMS OF COST
§ 200.420 Considerations for selected
items of cost.
This section provides principles to be
applied in establishing the allowability
of certain items involved in determining cost, in addition to the requirements of Subtitle II of this subpart.
These principles apply whether or not a
particular item of cost is properly
treated as direct cost or indirect (F&A)
cost. Failure to mention a particular
item of cost is not intended to imply
that it is either allowable or unallowable; rather, determination as to allowability in each case should be based on the treatment provided for similar or
related items of cost, and based on the
principles described in §§200.402
through 200.411. In case of a discrepancy between the provisions of a specific Federal award and the provisions below, the Federal award governs. Criteria outlined in §200.403 must be applied in determining allowability. See also §200.102.
[85 FR 49564, Aug. 13, 2020]
§ 200.421 Advertising and public relations.
(a) The term advertising costs means
the costs of advertising media and corollary administrative costs. Advertising media include magazines, newspapers, radio and television, direct mail, exhibits, electronic or computer
transmittals, and the like.
(b) The only allowable advertising
costs are those which are solely for:
(1) The recruitment of personnel required by the non-Federal entity for performance of a Federal award (See
also §200.463);
(2) The procurement of goods and
services for the performance of a Federal award;
(3) The disposal of scrap or surplus
materials acquired in the performance
of a Federal award except when nonFederal entities are reimbursed for disposal costs at a predetermined amount; or
(4) Program outreach and other specific purposes necessary to meet the requirements of the Federal award. (c) The term ‘‘public relations’’ includes community relations and means those activities dedicated to maintaining the image of the non-Federal entity or maintaining or promoting understanding and favorable relations with the community or public at large or
any segment of the public.
(d) The only allowable public relations costs are:
(1) Costs specifically required by the
Federal award;
(2) Costs of communicating with the
public and press pertaining to specific
activities or accomplishments which
result from performance of the Federal
award (these costs are considered necessary as part of the outreach effort for the Federal award); or
(3) Costs of conducting general liaison with news media and government public relations officers, to the extent
that such activities are limited to communication and liaison necessary to keep the public informed on matters of
public concern, such as notices of funding opportunities, financial matters, etc.
(e) Unallowable advertising and public relations costs include the following:
(1) All advertising and public relations costs other than as specified in paragraphs (b) and (d) of this section;
(2) Costs of meetings, conventions,
convocations, or other events related
to other activities of the entity (see
also §200.432), including:
(i) Costs of displays, demonstrations,
and exhibits;
(ii) Costs of meeting rooms, hospitality suites, and other special facilities used in conjunction with shows and other special events; and
(iii) Salaries and wages of employees
engaged in setting up and displaying
exhibits, making demonstrations, and
providing briefings;
(3) Costs of promotional items and
memorabilia, including models, gifts,
and souvenirs;
(4) Costs of advertising and public relations designed solely to promote the non-Federal entity.
[78 FR 76808, Dec. 26, 2013, as amended at 85
FR 49564, Aug. 13, 2020]
§ 200.422 Advisory councils.
Costs incurred by advisory councils
or committees are unallowable unless
authorized by statute, the Federal
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OMB Guidance § 200.428
awarding agency or as an indirect cost
where allocable to Federal awards. See
§200.444, applicable to States, local governments, and Indian tribes. [85 FR 49564, Aug. 13, 2020]
§ 200.423 Alcoholic beverages.
Costs of alcoholic beverages are unallowable.
§ 200.424 Alumni/ae activities.
Costs incurred by IHEs for, or in support of, alumni/ae activities are unallowable. § 200.425 Audit services.
(a) A reasonably proportionate share
of the costs of audits required by, and
performed in accordance with, the Single Audit Act Amendments of 1996 (31 U.S.C. 7501–7507), as implemented by requirements of this part, are allowable.
However, the following audit costs are
unallowable:
(1) Any costs when audits required by
the Single Audit Act and subpart F of
this part have not been conducted or
have been conducted but not in accordance therewith; and (2) Any costs of auditing a non-Federal entity that is exempted from having an audit conducted under the Single Audit Act and subpart F of this part because its expenditures under
Federal awards are less than $750,000
during the non-Federal entity’s fiscal
year.
(b) The costs of a financial statement
audit of a non-Federal entity that does
not currently have a Federal award
may be included in the indirect cost
pool for a cost allocation plan or indirect cost proposal. (c) Pass-through entities may charge
Federal awards for the cost of agreedupon-procedures engagements to monitor subrecipients (in accordance with subpart D, §§200.331–333) who are exempted from the requirements of the Single Audit Act and subpart F of this
part. This cost is allowable only if the
agreed-upon-procedures engagements
are:
(1) Conducted in accordance with
GAGAS attestation standards;
(2) Paid for and arranged by the passthrough entity; and (3) Limited in scope to one or more of
the following types of compliance requirements: activities allowed or unallowed; allowable costs/cost principles; eligibility; and reporting. [78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49564, Aug. 13, 2020]
§ 200.426 Bad debts.
Bad debts (debts which have been determined to be uncollectable), including losses (whether actual or estimated) arising from uncollectable accounts and other claims, are unallowable. Related collection costs, and related legal costs, arising from such debts after they have been determined
to be uncollectable are also unallowable. See also §200.428. [85 FR 49565, Aug. 13, 2020]
§ 200.427 Bonding costs.
(a) Bonding costs arise when the Federal awarding agency requires assurance against financial loss to itself or others by reason of the act or default
of the non-Federal entity. They arise
also in instances where the non-Federal entity requires similar assurance, including: bonds as bid, performance,
payment, advance payment, infringement, and fidelity bonds for employees and officials.
(b) Costs of bonding required pursuant to the terms and conditions of the Federal award are allowable.
(c) Costs of bonding required by the
non-Federal entity in the general conduct of its operations are allowable as an indirect cost to the extent that such
bonding is in accordance with sound
business practice and the rates and premiums are reasonable under the circumstances. § 200.428 Collections of improper payments.
The costs incurred by a non-Federal
entity to recover improper payments
are allowable as either direct or indirect costs, as appropriate. Amounts collected may be used by the non-Federal entity in accordance with cash management standards set forth in
§200.305.
[85 FR 49565, Aug. 13, 2020]
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§ 200.429 2 CFR Ch. II (1–1–21 Edition)
§ 200.429 Commencement and convocation costs.
For IHEs, costs incurred for commencements and convocations are unallowable, except as provided for in (B)(9) Student Administration and
Services, in appendix III to this part,
as activity costs.
[85 FR 49565, Aug. 13, 2020]
§ 200.430 Compensation—personal
services.
(a) General. Compensation for personal services includes all remuneration, paid currently or accrued, for services of employees rendered during
the period of performance under the
Federal award, including but not necessarily limited to wages and salaries.
Compensation for personal services
may also include fringe benefits which
are addressed in §200.431. Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees:
(1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities;
(2) Follows an appointment made in
accordance with a non-Federal entity’s
laws and/or rules or written policies
and meets the requirements of Federal
statute, where applicable; and
(3) Is determined and supported as
provided in paragraph (i) of this section, when applicable. (b) Reasonableness. Compensation for
employees engaged in work on Federal
awards will be considered reasonable to
the extent that it is consistent with
that paid for similar work in other activities of the non-Federal entity. In cases where the kinds of employees required for Federal awards are not found in the other activities of the non-Federal entity, compensation will be considered reasonable to the extent that it is comparable to that paid for similar
work in the labor market in which the
non-Federal entity competes for the
kind of employees involved.
(c) Professional activities outside the
non-Federal entity. Unless an arrangement is specifically authorized by a Federal awarding agency, a non-Federal entity must follow its written nonFederal entity-wide policies and practices concerning the permissible extent of professional services that can be provided outside the non-Federal entity for non-organizational compensation.
Where such non-Federal entity-wide
written policies do not exist or do not
adequately define the permissible extent of consulting or other non-organizational activities undertaken for extra outside pay, the Federal Government may require that the effort of professional staff working on Federal
awards be allocated between:
(1) Non-Federal entity activities, and
(2) Non-organizational professional
activities. If the Federal awarding
agency considers the extent of non-organizational professional effort excessive or inconsistent with the conflictsof-interest terms and conditions of the Federal award, appropriate arrangements governing compensation will be negotiated on a case-by-case basis.
(d) Unallowable costs. (1) Costs which
are unallowable under other sections of
these principles must not be allowable
under this section solely on the basis
that they constitute personnel compensation.
(2) The allowable compensation for
certain employees is subject to a ceiling in accordance with statute. For the amount of the ceiling for cost-reimbursement contracts, the covered compensation subject to the ceiling, the covered employees, and other relevant
provisions, see 10 U.S.C. 2324(e)(1)(P),
and 41 U.S.C. 1127 and 4304(a)(16). For
other types of Federal awards, other
statutory ceilings may apply.
(e) Special considerations. Special considerations in determining allowability of compensation will be given to any
change in a non-Federal entity’s compensation policy resulting in a substantial increase in its employees’ level of compensation (particularly when the
change was concurrent with an increase in the ratio of Federal awards to other activities) or any change in the
treatment of allowability of specific
types of compensation due to changes
in Federal policy.
(f) Incentive compensation. Incentive
compensation to employees based on
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OMB Guidance § 200.430
cost reduction, or efficient performance, suggestion awards, safety awards, etc., is allowable to the extent that the
overall compensation is determined to
be reasonable and such costs are paid
or accrued pursuant to an agreement
entered into in good faith between the
non-Federal entity and the employees
before the services were rendered, or
pursuant to an established plan followed by the non-Federal entity so consistently as to imply, in effect, an
agreement to make such payment.
(g) Nonprofit organizations. For compensation to members of nonprofit organizations, trustees, directors, associates, officers, or the immediate families thereof, determination must be made that such compensation is reasonable for the actual personal services rendered rather than a distribution of
earnings in excess of costs. This may
include director’s and executive committee member’s fees, incentive awards, allowances for off-site pay, incentive pay, location allowances, hardship pay, and cost-of-living differentials. (h) Institutions of Higher Education
(IHEs). (1) Certain conditions require
special consideration and possible limitations in determining allowable personnel compensation costs under Federal awards. Among such conditions are the following:
(i) Allowable activities. Charges to
Federal awards may include reasonable
amounts for activities contributing
and directly related to work under an
agreement, such as delivering special
lectures about specific aspects of the
ongoing activity, writing reports and
articles, developing and maintaining
protocols (human, animals, etc.), managing substances/chemicals, managing and securing project-specific data, coordinating research subjects, participating in appropriate seminars, consulting with colleagues and graduate students, and attending meetings and
conferences.
(ii) Incidental activities. Incidental
activities for which supplemental compensation is allowable under written institutional policy (at a rate not to
exceed institutional base salary) need
not be included in the records described
in paragraph (i) of this section to directly charge payments of incidental activities, such activities must either
be specifically provided for in the Federal award budget or receive prior written approval by the Federal awarding agency.
(2) Salary basis. Charges for work performed on Federal awards by faculty members during the academic year are
allowable at the IBS rate. Except as
noted in paragraph (h)(1)(ii) of this section, in no event will charges to Federal awards, irrespective of the basis of computation, exceed the proportionate
share of the IBS for that period. This
principle applies to all members of faculty at an institution. IBS is defined as the annual compensation paid by an
IHE for an individual’s appointment,
whether that individual’s time is spent
on research, instruction, administration, or other activities. IBS excludes any income that an individual earns
outside of duties performed for the
IHE. Unless there is prior approval by
the Federal awarding agency, charges
of a faculty member’s salary to a Federal award must not exceed the proportionate share of the IBS for the period during which the faculty member
worked on the award.
(3) Intra-Institution of Higher Education (IHE) consulting. Intra-IHE consulting by faculty should be undertaken as an IHE responsibility requiring no compensation in addition to IBS. However, in unusual cases where
consultation is across departmental
lines or involves a separate or remote
operation, and the work performed by
the faculty member is in addition to
his or her regular responsibilities, any
charges for such work representing additional compensation above IBS are allowable provided that such consulting arrangements are specifically provided for in the Federal award or
approved in writing by the Federal
awarding agency.
(4) Extra Service Pay normally represents overload compensation, subject to institutional compensation policies
for services above and beyond IBS.
Where extra service pay is a result of
Intra-IHE consulting, it is subject to
the same requirements of paragraph (b)
above. It is allowable if all of the following conditions are met:
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§ 200.430 2 CFR Ch. II (1–1–21 Edition)
apply uniformly to all faculty members, not just those working on Federal awards.
(ii) The non-Federal entity establishes a consistent written definition of work covered by IBS which is specific
enough to determine conclusively when
work beyond that level has occurred.
This may be described in appointment
letters or other documentations.
(iii) The supplementation amount
paid is commensurate with the IBS
rate of pay and the amount of additional work performed. See paragraph (h)(2) of this section.
(iv) The salaries, as supplemented,
fall within the salary structure and
pay ranges established by and documented in writing or otherwise applicable to the non-Federal entity. (v) The total salaries charged to Federal awards including extra service pay are subject to the Standards of Documentation as described in paragraph (i) of this section.
(5) Periods outside the academic year.
(i) Except as specified for teaching activity in paragraph (h)(5)(ii) of this section, charges for work performed by faculty members on Federal awards
during periods not included in the base
salary period will be at a rate not in
excess of the IBS.
(ii) Charges for teaching activities
performed by faculty members on Federal awards during periods not included in IBS period will be based on the normal written policy of the IHE governing compensation to faculty members for teaching assignments during such periods.
(6) Part-time faculty. Charges for work
performed on Federal awards by faculty members having only part-time appointments will be determined at a
rate not in excess of that regularly
paid for part-time assignments.
(7) Sabbatical leave costs. Rules for
sabbatical leave are as follow:
(i) Costs of leaves of absence by employees for performance of graduate work or sabbatical study, travel, or research are allowable provided the IHE has a uniform written policy on sabbatical leave for persons engaged in instruction and persons engaged in research. Such costs will be allocated on an equitable basis among all related
activities of the IHE.
(ii) Where sabbatical leave is included in fringe benefits for which a cost is determined for assessment as a
direct charge, the aggregate amount of
such assessments applicable to all
work of the institution during the base
period must be reasonable in relation
to the IHE’s actual experience under
its sabbatical leave policy.
(8) Salary rates for non-faculty members. Non-faculty full-time professional personnel may also earn ‘‘extra service
pay’’ in accordance with the non-Federal entity’s written policy and consistent with paragraph (h)(1)(i) of this section.
(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be
based on records that accurately reflect the work performed. These records must:
(i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official
records of the non-Federal entity;
(iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE’s definition of IBS); (iv) Encompass federally-assisted and
all other activities compensated by the
non-Federal entity on an integrated
basis, but may include the use of subsidiary records as defined in the nonFederal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity (See paragraph
(h)(1)(ii) above for treatment of incidental work for IHEs.); and (vi) [Reserved]
(vii) Support the distribution of the
employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and nonFederal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct
or indirect cost activity.
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OMB Guidance § 200.430
are performed) alone do not qualify as
support for charges to Federal awards,
but may be used for interim accounting
purposes, provided that:
(A) The system for establishing the
estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short term
(such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system
of internal controls includes processes
to review after-the-fact interim
charges made to a Federal award based
on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal
award is accurate, allowable, and properly allocated.
(ix) Because practices vary as to the
activity constituting a full workload
(for IHEs, IBS), records may reflect
categories of activities expressed as a
percentage distribution of total activities.
(x) It is recognized that teaching, research, service, and administration are often inextricably intermingled in an
academic setting. When recording salaries and wages charged to Federal awards for IHEs, a precise assessment
of factors that contribute to costs is
therefore not always feasible, nor is it
expected.
(2) For records which meet the standards required in paragraph (i)(1) of this section, the non-Federal entity will not
be required to provide additional support or documentation for the work performed, other than that referenced
in paragraph (i)(3) of this section.
(3) In accordance with Department of
Labor regulations implementing the
Fair Labor Standards Act (FLSA) (29
CFR part 516), charges for the salaries
and wages of nonexempt employees, in
addition to the supporting documentation described in this section, must also be supported by records indicating
the total number of hours worked each
day.
(4) Salaries and wages of employees
used in meeting cost sharing or matching requirements on Federal awards must be supported in the same manner
as salaries and wages claimed for reimbursement from Federal awards. (5) For states, local governments and
Indian tribes, substitute processes or
systems for allocating salaries and
wages to Federal awards may be used
in place of or in addition to the records
described in paragraph (1) if approved
by the cognizant agency for indirect
cost. Such systems may include, but
are not limited to, random moment
sampling, ‘‘rolling’’ time studies, case
counts, or other quantifiable measures
of work performed.
(i) Substitute systems which use
sampling methods (primarily for Temporary Assistance for Needy Families (TANF), the Supplemental Nutrition
Assistance Program (SNAP), Medicaid,
and other public assistance programs)
must meet acceptable statistical sampling standards including:
(A) The sampling universe must include all of the employees whose salaries and wages are to be allocated based on sample results except as provided in paragraph (i)(5)(iii) of this section; (B) The entire time period involved
must be covered by the sample; and
(C) The results must be statistically
valid and applied to the period being
sampled.
(ii) Allocating charges for the sampled employees’ supervisors, clerical and support staffs, based on the results
of the sampled employees, will be acceptable.
(iii) Less than full compliance with
the statistical sampling standards
noted in subsection (5)(i) may be accepted by the cognizant agency for indirect costs if it concludes that the amounts to be allocated to Federal
awards will be minimal, or if it concludes that the system proposed by the non-Federal entity will result in lower
costs to Federal awards than a system
which complies with the standards.
(6) Cognizant agencies for indirect
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cognizant agency for indirect costs,
these plans are acceptable as an alternative to the requirements of paragraph (i)(1) of this section. (7) For Federal awards of similar purpose activity or instances of approved blended funding, a non-Federal entity
may submit performance plans that incorporate funds from multiple Federal awards and account for their combined
use based on performance-oriented
metrics, provided that such plans are
approved in advance by all involved
Federal awarding agencies. In these instances, the non-Federal entity must submit a request for waiver of the requirements based on documentation that describes the method of charging
costs, relates the charging of costs to
the specific activity that is applicable
to all fund sources, and is based on
quantifiable measures of the activity
in relation to time charged.
(8) For a non-Federal entity where
the records do not meet the standards
described in this section, the Federal
Government may require personnel activity reports, including prescribed certifications, or equivalent documentation that support the records as required in this section. [78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014; 85 FR 49565, Aug. 13,
2020]
§ 200.431 Compensation—fringe benefits.
(a) General. Fringe benefits are allowances and services provided by employers to their employees as compensation in addition to regular salaries and
wages. Fringe benefits include, but are
not limited to, the costs of leave (vacation, family-related, sick or military), employee insurance, pensions, and unemployment benefit plans. Except as provided elsewhere in these principles,
the costs of fringe benefits are allowable provided that the benefits are reasonable and are required by law, nonFederal entity-employee agreement, or an established policy of the non-Federal entity.
(b) Leave. The cost of fringe benefits
in the form of regular compensation
paid to employees during periods of authorized absences from the job, such as for annual leave, family-related leave,
sick leave, holidays, court leave, military leave, administrative leave, and other similar benefits, are allowable if
all of the following criteria are met:
(1) They are provided under established written leave policies; (2) The costs are equitably allocated
to all related activities, including Federal awards; and, (3) The accounting basis (cash or accrual) selected for costing each type of leave is consistently followed by the
non-Federal entity or specified grouping of employees. (i) When a non-Federal entity uses
the cash basis of accounting, the cost
of leave is recognized in the period that
the leave is taken and paid for. Payments for unused leave when an employee retires or terminates employment are allowable in the year of payment. (ii) The accrual basis may be only
used for those types of leave for which
a liability as defined by GAAP exists
when the leave is earned. When a nonFederal entity uses the accrual basis of accounting, allowable leave costs are
the lesser of the amount accrued or
funded.
(c) Fringe benefits. The cost of fringe
benefits in the form of employer contributions or expenses for social security; employee life, health, unemployment, and worker’s compensation insurance (except as indicated in §200.447); pension plan costs (see paragraph (i) of this section); and other similar benefits are allowable, provided
such benefits are granted under established written policies. Such benefits, must be allocated to Federal awards
and all other activities in a manner
consistent with the pattern of benefits
attributable to the individuals or
group(s) of employees whose salaries
and wages are chargeable to such Federal awards and other activities, and charged as direct or indirect costs in
accordance with the non-Federal entity’s accounting practices. (d) Cost objectives. Fringe benefits
may be assigned to cost objectives by
identifying specific benefits to specific
individual employees or by allocating
on the basis of entity-wide salaries and
wages of the employees receiving the
benefits. When the allocation method
is used, separate allocations must be
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made to selective groupings of employees, unless the non-Federal entity demonstrates that costs in relationship to salaries and wages do not differ significantly for different groups of employees. (e) Insurance. See also §200.447(d)(1)
and (2).
(1) Provisions for a reserve under a
self-insurance program for unemployment compensation or workers’ compensation are allowable to the extent that the provisions represent reasonable estimates of the liabilities for such compensation, and the types of
coverage, extent of coverage, and rates
and premiums would have been allowable had insurance been purchased to cover the risks. However, provisions for
self-insured liabilities which do not become payable for more than one year after the provision is made must not
exceed the present value of the liability.
(2) Costs of insurance on the lives of
trustees, officers, or other employees
holding positions of similar responsibility are allowable only to the extent that the insurance represents additional compensation. The costs of such insurance when the non-Federal entity
is named as beneficiary are unallowable.
(3) Actual claims paid to or on behalf
of employees or former employees for
workers’ compensation, unemployment
compensation, severance pay, and similar employee benefits (e.g., post-retirement health benefits), are allowable in the year of payment provided that the
non-Federal entity follows a consistent
costing policy.
(f) Automobiles. That portion of automobile costs furnished by the non-Federal entity that relates to personal use by employees (including transportation
to and from work) is unallowable as
fringe benefit or indirect (F&A) costs
regardless of whether the cost is reported as taxable income to the employees. (g) Pension plan costs. Pension plan
costs which are incurred in accordance
with the established policies of the
non-Federal entity are allowable, provided that:
(1) Such policies meet the test of reasonableness.
(2) The methods of cost allocation are
not discriminatory.
(3) Except for State and Local Governments, the cost assigned to each fiscal year should be determined in accordance with GAAP. (4) The costs assigned to a given fiscal year are funded for all plan participants within six months after the end of that year. However, increases to normal and past service pension costs caused by a delay in funding the actuarial liability beyond 30 calendar days after each quarter of the year to which
such costs are assignable are unallowable. Non-Federal entity may elect to follow the ‘‘Cost Accounting Standard
for Composition and Measurement of
Pension Costs’’ (48 CFR 9904.412).
(5) Pension plan termination insurance premiums paid pursuant to the Employee Retirement Income Security
Act (ERISA) of 1974 (29 U.S.C. 1301–1461)
are allowable. Late payment charges
on such premiums are unallowable. Excise taxes on accumulated funding deficiencies and other penalties imposed under ERISA are unallowable.
(6) Pension plan costs may be computed using a pay-as-you-go method or an acceptable actuarial cost method in
accordance with established written
policies of the non-Federal entity.
(i) For pension plans financed on a
pay-as-you-go method, allowable costs
will be limited to those representing
actual payments to retirees or their
beneficiaries.
(ii) Pension costs calculated using an
actuarial cost-based method recognized
by GAAP are allowable for a given fiscal year if they are funded for that year within six months after the end of
that year. Costs funded after the sixmonth period (or a later period agreed to by the cognizant agency for indirect
costs) are allowable in the year funded.
The cognizant agency for indirect costs
may agree to an extension of the sixmonth period if an appropriate adjustment is made to compensate for the timing of the charges to the Federal
Government and related Federal reimbursement and the non-Federal entity’s contribution to the pension fund.
Adjustments may be made by cash refund or other equitable procedures to compensate the Federal Government
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§ 200.431 2 CFR Ch. II (1–1–21 Edition)
for the time value of Federal reimbursements in excess of contributions to the pension fund.
(iii) Amounts funded by the non-Federal entity in excess of the actuarially determined amount for a fiscal year
may be used as the non-Federal entity’s contribution in future periods. (iv) When a non-Federal entity converts to an acceptable actuarial cost method, as defined by GAAP, and funds
pension costs in accordance with this
method, the unfunded liability at the
time of conversion is allowable if amortized over a period of years in accordance with GAAP. (v) The Federal Government must receive an equitable share of any previously allowed pension costs (including earnings thereon) which revert or inure to the non-Federal entity in the
form of a refund, withdrawal, or other
credit.
(h) Post-retirement health. Post-retirement health plans (PRHP) refers to costs of health insurance or health
services not included in a pension plan
covered by paragraph (g) of this section
for retirees and their spouses, dependents, and survivors. PRHP costs may be computed using a pay-as-you-go
method or an acceptable actuarial cost
method in accordance with established
written policies of the non-Federal entity.
(1) For PRHP financed on a pay-asyou-go method, allowable costs will be limited to those representing actual
payments to retirees or their beneficiaries.
(2) PRHP costs calculated using an
actuarial cost method recognized by
GAAP are allowable if they are funded
for that year within six months after
the end of that year. Costs funded after
the six-month period (or a later period
agreed to by the cognizant agency) are
allowable in the year funded. The Federal cognizant agency for indirect costs may agree to an extension of the sixmonth period if an appropriate adjustment is made to compensate for the timing of the charges to the Federal
Government and related Federal reimbursements and the non-Federal entity’s contributions to the PRHP fund.
Adjustments may be made by cash refund, reduction in current year’s PRHP costs, or other equitable procedures to
compensate the Federal Government
for the time value of Federal reimbursements in excess of contributions to the PRHP fund.
(3) Amounts funded in excess of the
actuarially determined amount for a
fiscal year may be used as the non-Federal entity contribution in a future period. (4) When a non-Federal entity converts to an acceptable actuarial cost method and funds PRHP costs in accordance with this method, the initial unfunded liability attributable to prior
years is allowable if amortized over a
period of years in accordance with
GAAP, or, if no such GAAP period exists, over a period negotiated with the cognizant agency for indirect costs.
(5) To be allowable in the current
year, the PRHP costs must be paid either to:
(i) An insurer or other benefit provider as current year costs or premiums, or (ii) An insurer or trustee to maintain
a trust fund or reserve for the sole purpose of providing post-retirement benefits to retirees and other beneficiaries. (6) The Federal Government must receive an equitable share of any amounts of previously allowed post-retirement benefit costs (including earnings thereon) which revert or inure to the non-Federal entity in the form of a
refund, withdrawal, or other credit.
(i) Severance pay. (1) Severance pay,
also commonly referred to as dismissal
wages, is a payment in addition to regular salaries and wages, by non-Federal entities to workers whose employment
is being terminated. Costs of severance
pay are allowable only to the extent
that in each case, it is required by
(i) Law;
(ii) Employer-employee agreement;
(iii) Established policy that constitutes, in effect, an implied agreement on the non-Federal entity’s part; or
(iv) Circumstances of the particular
employment.
(2) Costs of severance payments are
divided into two categories as follows:
(i) Actual normal turnover severance
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OMB Guidance § 200.432
severances, such method will be acceptable if the charge to current operations is reasonable in light of payments actually made for normal severances over a representative past
period, and if amounts charged are allocated to all activities of the non-Federal entity. (ii) Measurement of costs of abnormal or mass severance pay by means of an accrual will not achieve equity to
both parties. Thus, accruals for this
purpose are not allowable. However,
the Federal Government recognizes its
responsibility to participate, to the extent of its fair share, in any specific payment. Prior approval by the Federal awarding agency or cognizant agency for indirect cost, as appropriate, is required. (3) Costs incurred in certain severance pay packages which are in an amount in excess of the normal severance pay paid by the non-Federal entity to an employee upon termination of employment and are paid to the employee contingent upon a change in management control over, or ownership of, the non-Federal entity’s assets, are unallowable.
(4) Severance payments to foreign nationals employed by the non-Federal entity outside the United States, to
the extent that the amount exceeds the
customary or prevailing practices for
the non-Federal entity in the United
States, are unallowable, unless they
are necessary for the performance of
Federal programs and approved by the
Federal awarding agency.
(5) Severance payments to foreign nationals employed by the non-Federal entity outside the United States due to
the termination of the foreign national
as a result of the closing of, or curtailment of activities by, the non-Federal entity in that country, are unallowable, unless they are necessary for the performance of Federal programs and
approved by the Federal awarding
agency.
(j) For IHEs only. (1) Fringe benefits
in the form of undergraduate and graduate tuition or remission of tuition for individual employees are allowable,
provided such benefits are granted in
accordance with established non-Federal entity policies, and are distributed to all non-Federal entity activities on
an equitable basis. Tuition benefits for
family members other than the employee are unallowable. (2) Fringe benefits in the form of tuition or remission of tuition for individual employees not employed by IHEs are limited to the tax-free
amount allowed per section 127 of the
Internal Revenue Code as amended.
(3) IHEs may offer employees tuition
waivers or tuition reductions, provided
that the benefit does not discriminate
in favor of highly compensated employees. Employees can exercise these benefits at other institutions according to institutional policy. See §200.466, for
treatment of tuition remission provided to students.
(k) Fringe benefit programs and other
benefit costs. For IHEs whose costs are
paid by state or local governments,
fringe benefit programs (such as pension costs and FICA) and any other benefits costs specifically incurred on
behalf of, and in direct benefit to, the
non-Federal entity, are allowable costs
of such non-Federal entities whether or
not these costs are recorded in the accounting records of the non-Federal entities, subject to the following:
(1) The costs meet the requirements
of Basic Considerations in §§200.402
through 200.411;
(2) The costs are properly supported
by approved cost allocation plans in accordance with applicable Federal cost accounting principles; and
(3) The costs are not otherwise borne
directly or indirectly by the Federal
Government.
[85 FR 49565, Aug. 13, 2020]
§ 200.432 Conferences.
A conference is defined as a meeting,
retreat, seminar, symposium, workshop or event whose primary purpose is the dissemination of technical information beyond the non-Federal entity and is necessary and reasonable for
successful performance under the Federal award. Allowable conference costs paid by the non-Federal entity as a
sponsor or host of the conference may
include rental of facilities, speakers’
fees, costs of meals and refreshments,
local transportation, and other items
incidental to such conferences unless
further restricted by the terms and
conditions of the Federal award. As
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§ 200.433 2 CFR Ch. II (1–1–21 Edition)
needed, the costs of identifying, but
not providing, locally available dependent-care resources are allowable. Conference hosts/sponsors must exercise discretion and judgment in ensuring
that conference costs are appropriate,
necessary and managed in a manner
that minimizes costs to the Federal
award. The Federal awarding agency
may authorize exceptions where appropriate for programs including Indian tribes, children, and the elderly. See
also §§200.438, 200.456, and 200.475.
[85 FR 49567, Aug. 13, 2020]
§ 200.433 Contingency provisions.
(a) Contingency is that part of a
budget estimate of future costs (typically of large construction projects, IT systems, or other items as approved by
the Federal awarding agency) which is
associated with possible events or conditions arising from causes the precise outcome of which is indeterminable at
the time of estimate, and that experience shows will likely result, in aggregate, in additional costs for the approved activity or project. Amounts for major project scope changes, unforeseen risks, or extraordinary events may not be included.
(b) It is permissible for contingency
amounts other than those excluded in
paragraph (a) of this section to be explicitly included in budget estimates, to the extent they are necessary to improve the precision of those estimates.
Amounts must be estimated using
broadly-accepted cost estimating
methodologies, specified in the budget
documentation of the Federal award,
and accepted by the Federal awarding
agency. As such, contingency amounts
are to be included in the Federal
award. In order for actual costs incurred to be allowable, they must comply with the cost principles and other requirements in this part (see also
§§200.300 and 200.403 of this part); be
necessary and reasonable for proper
and efficient accomplishment of
project or program objectives, and be
verifiable from the non-Federal entity’s records.
(c) Payments made by the Federal
awarding agency to the non-Federal
entity’s ‘‘contingency reserve’’ or any
similar payment made for events the
occurrence of which cannot be foretold
with certainty as to the time or intensity, or with an assurance of their happening, are unallowable, except as noted in §§200.431 and 200.447.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014; 85 FR 49567, Aug. 13,
2020]
§ 200.434 Contributions and donations.
(a) Costs of contributions and donations, including cash, property, and services, from the non-Federal entity
to other entities, are unallowable.
(b) It is permissible for contingency
amounts other than those excluded in
paragraph (a) of this section to be explicitly included in budget estimates, to the extent they are necessary to improve the precision of those estimates.
Amounts must be estimated using
broadly-accepted cost estimating
methodologies, specified in the budget
documentation of the Federal award,
and accepted by the Federal awarding
agency. As such, contingency amounts
are to be included in the Federal
award. In order for actual costs incurred to be allowable, they must comply with the cost principles and other requirements in this part (see also
§§200.300 and 200.403 of this part); be
necessary and reasonable for proper
and efficient accomplishment of
project or program objectives, and be
verifiable from the non-Federal entity’s records.
(c) Payments made by the Federal
awarding agency to the non-Federal
entity’s ‘‘contingency reserve’’ or any
similar payment made for events the
occurrence of which cannot be foretold
with certainty as to the time or intensity, or with an assurance of their happening, are unallowable, except as noted in §§200.431 and 200.447.
(d) To the extent feasible, services
donated to the non-Federal entity will
be supported by the same methods used
to support the allocability of regular
personnel services.
(e) The following provisions apply to
nonprofit organizations. The value of
services donated to the nonprofit organization utilized in the performance of a direct cost activity must be considered in the determination of the nonFederal entity’s indirect cost rate(s) and, accordingly, must be allocated a
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OMB Guidance § 200.435
proportionate share of applicable indirect costs when the following circumstances exist:
(1) The aggregate value of the services is material;
(2) The services are supported by a
significant amount of the indirect
costs incurred by the non-Federal entity;
(i) In those instances where there is
no basis for determining the fair market value of the services rendered, the non-Federal entity and the cognizant
agency for indirect costs must negotiate an appropriate allocation of indirect cost to the services. (ii) Where donated services directly
benefit a project supported by the Federal award, the indirect costs allocated to the services will be considered as a
part of the total costs of the project.
Such indirect costs may be reimbursed
under the Federal award or used to
meet cost sharing or matching requirements.
(f) Fair market value of donated
services must be computed as described
in §200.306.
(g) Personal Property and Use of
Space.
(1) Donated personal property and
use of space may be furnished to a nonFederal entity. The value of the personal property and space may not be charged to the Federal award either as
a direct or indirect cost.
(2) The value of the donations may be
used to meet cost sharing or matching
share requirements under the conditions described in §200.300 of this part.
The value of the donations must be determined in accordance with §200.300.
Where donations are treated as indirect
costs, indirect cost rates will separate
the value of the donations so that reimbursement will not be made. [78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014; 85 FR 49567, Aug. 13,
2020]
§ 200.435 Defense and prosecution of
criminal and civil proceedings,
claims, appeals and patent infringements.
(a) Definitions for the purposes of this
section. (1) Conviction means a judgment
or conviction of a criminal offense by
any court of competent jurisdiction,
whether entered upon verdict or a plea,
including a conviction due to a plea of
nolo contendere.
(2) Costs include the services of inhouse or private counsel, accountants, consultants, or others engaged to assist the non-Federal entity before, during, and after commencement of a judicial or administrative proceeding, that bear a direct relationship to the proceeding.
(3) Fraud means:
(i) Acts of fraud or corruption or attempts to defraud the Federal Government or to corrupt its agents, (ii) Acts that constitute a cause for
debarment or suspension (as specified
in agency regulations), and
(iii) Acts which violate the False
Claims Act (31 U.S.C. 3729–3732) or the
Anti-kickback Act (41 U.S.C. 1320a–
7b(b)).
(4) Penalty does not include restitution, reimbursement, or compensatory damages.
(5) Proceeding includes an investigation.
(b) Costs. (1) Except as otherwise described herein, costs incurred in connection with any criminal, civil or administrative proceeding (including filing of a false certification) commenced by the Federal Government, a state,
local government, or foreign government, or joined by the Federal Government (including a proceeding under the False Claims Act), against the nonFederal entity, (or commenced by third parties or a current or former employee of the non-Federal entity who submits a whistleblower complaint of
reprisal in accordance with 10 U.S.C.
2409 or 41 U.S.C. 4712), are not allowable
if the proceeding:
(i) Relates to a violation of, or failure
to comply with, a Federal, state, local
or foreign statute, regulation or the
terms and conditions of the Federal
award, by the non-Federal entity (including its agents and employees); and (ii) Results in any of the following
dispositions:
(A) In a criminal proceeding, a conviction.
(B) In a civil or administrative proceeding involving an allegation of fraud or similar misconduct, a determination of non-Federal entity liability.
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§ 200.435 2 CFR Ch. II (1–1–21 Edition)
(C) In the case of any civil or administrative proceeding, the disallowance of costs or the imposition of a monetary penalty, or an order issued by the Federal awarding agency head or delegate to the non-Federal entity to take corrective action under 10 U.S.C. 2409
or 41 U.S.C. 4712.
(D) A final decision by an appropriate
Federal official to debar or suspend the
non-Federal entity, to rescind or void a
Federal award, or to terminate a Federal award by reason of a violation or failure to comply with a statute, regulation, or the terms and conditions of the Federal award.
(E) A disposition by consent or compromise, if the action could have resulted in any of the dispositions described in paragraphs (b)(1)(ii)(A) through (D) of this section.
(2) If more than one proceeding involves the same alleged misconduct, the costs of all such proceedings are
unallowable if any results in one of the
dispositions shown in paragraph (b) of
this section.
(c) If a proceeding referred to in paragraph (b) of this section is commenced by the Federal Government and is resolved by consent or compromise pursuant to an agreement by the non-Federal entity and the Federal Government, then the costs incurred may be allowed to the extent specifically provided in such agreement. (d) If a proceeding referred to in paragraph (b) of this section is commenced by a state, local or foreign government,
the authorized Federal official may
allow the costs incurred if such authorized official determines that the costs were incurred as a result of:
(1) A specific term or condition of the
Federal award, or
(2) Specific written direction of an
authorized official of the Federal
awarding agency.
(e) Costs incurred in connection with
proceedings described in paragraph (b)
of this section, which are not made unallowable by that subsection, may be allowed but only to the extent that:
(1) The costs are reasonable and necessary in relation to the administration of the Federal award and activities required to deal with the proceeding and the underlying cause of action; (2) Payment of the reasonable, necessary, allocable and otherwise allowable costs incurred is not prohibited by any other provision(s) of the Federal
award;
(3) The costs are not recovered from
the Federal Government or a third
party, either directly as a result of the
proceeding or otherwise; and,
(4) An authorized Federal official
must determine the percentage of costs
allowed considering the complexity of
litigation, generally accepted principles governing the award of legal fees in civil actions involving the United
States, and such other factors as may
be appropriate. Such percentage must
not exceed 80 percent. However, if an
agreement reached under paragraph (c)
of this section has explicitly considered this 80 percent limitation and permitted a higher percentage, then the full amount of costs resulting from
that agreement are allowable.
(f) Costs incurred by the non-Federal
entity in connection with the defense
of suits brought by its employees or exemployees under section 2 of the Major Fraud Act of 1988 (18 U.S.C. 1031), including the cost of all relief necessary to make such employee whole, where
the non-Federal entity was found liable
or settled, are unallowable.
(g) Costs of prosecution of claims
against the Federal Government, including appeals of final Federal agency decisions, are unallowable.
(h) Costs of legal, accounting, and
consultant services, and related costs,
incurred in connection with patent infringement litigation, are unallowable unless otherwise provided for in the
Federal award.
(i) Costs which may be unallowable
under this section, including directly
associated costs, must be segregated
and accounted for separately. During
the pendency of any proceeding covered
by paragraphs (b) and (f) of this section, the Federal Government must generally withhold payment of such
costs. However, if in its best interests,
the Federal Government may provide
for conditional payment upon provision
of adequate security, or other adequate
assurance, and agreement to repay all
unallowable costs, plus interest, if the
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costs are subsequently determined to
be unallowable.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014]
§ 200.436 Depreciation.
(a) Depreciation is the method for allocating the cost of fixed assets to periods benefitting from asset use. The non-Federal entity may be compensated for the use of its buildings, capital improvements, equipment, and
software projects capitalized in accordance with GAAP, provided that they are used, needed in the non-Federal entity’s activities, and properly allocated to Federal awards. Such compensation
must be made by computing depreciation.
(b) The allocation for depreciation
must be made in accordance with Appendices III through IX. (c) Depreciation is computed applying the following rules. The computation of depreciation must be based on the acquisition cost of the assets involved. For an asset donated to the non-Federal entity by a third party, its
fair market value at the time of the donation must be considered as the acquisition cost. Such assets may be depreciated or claimed as matching but not both. For the computation of depreciation, the acquisition cost will exclude:
(1) The cost of land;
(2) Any portion of the cost of buildings and equipment borne by or donated by the Federal Government, irrespective of where title was originally vested or where it is presently located;
(3) Any portion of the cost of buildings and equipment contributed by or for the non-Federal entity that are already claimed as matching or where law or agreement prohibits recovery;
(4) Any asset acquired solely for the
performance of a non-Federal award;
and
(d) When computing depreciation
charges, the following must be observed:
(1) The period of useful service or
useful life established in each case for
usable capital assets must take into
consideration such factors as type of
construction, nature of the equipment,
technological developments in the particular area, historical data, and the renewal and replacement policies followed for the individual items or classes of assets involved. (2) The depreciation method used to
charge the cost of an asset (or group of
assets) to accounting periods must reflect the pattern of consumption of the asset during its useful life. In the absence of clear evidence indicating that the expected consumption of the asset
will be significantly greater in the
early portions than in the later portions of its useful life, the straight-line method must be presumed to be the appropriate method. Depreciation methods once used may not be changed unless approved in advance by the cognizant agency. The depreciation methods used to calculate the depreciation amounts for indirect (F&A) rate purposes must be the same methods used by the non-Federal entity for its financial statements. (3) The entire building, including the
shell and all components, may be treated as a single asset and depreciated over a single useful life. A building
may also be divided into multiple components. Each component item may then be depreciated over its estimated
useful life. The building components
must be grouped into three general
components of a building: building
shell (including construction and design costs), building services systems (e.g., elevators, HVAC, plumbing system and heating and air-conditioning system) and fixed equipment (e.g.,
sterilizers, casework, fume hoods, cold
rooms and glassware/washers). In exceptional cases, a cognizant agency may authorize a non-Federal entity to
use more than these three groupings.
When a non-Federal entity elects to depreciate its buildings by its components, the same depreciation methods must be used for indirect (F&A) purposes and financial statements purposes, as described in paragraphs (d)(1) and (2) of this section.
(4) No depreciation may be allowed
on any assets that have outlived their
depreciable lives.
(5) Where the depreciation method is
introduced to replace the use allowance method, depreciation must be computed as if the asset had been depreciated over its entire life (i.e., from the date the asset was acquired and
ready for use to the date of disposal or
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§ 200.437 2 CFR Ch. II (1–1–21 Edition)
withdrawal from service). The total
amount of use allowance and depreciation for an asset (including imputed depreciation applicable to periods prior to the conversion from the use allowance method as well as depreciation after the conversion) may not exceed
the total acquisition cost of the asset.
(e) Charges for depreciation must be
supported by adequate property
records, and physical inventories must
be taken at least once every two years
to ensure that the assets exist and are
usable, used, and needed. Statistical
sampling techniques may be used in
taking these inventories. In addition,
adequate depreciation records showing
the amount of depreciation must be
maintained.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014; 85 FR 49568, Aug. 13,
2020]
§ 200.437 Employee health and welfare
costs.
(a) Costs incurred in accordance with
the non-Federal entity’s documented
policies for the improvement of working conditions, employer-employee relations, employee health, and employee performance are allowable.
(b) Such costs will be equitably apportioned to all activities of the nonFederal entity. Income generated from any of these activities will be credited
to the cost thereof unless such income
has been irrevocably sent to employee
welfare organizations.
(c) Losses resulting from operating
food services are allowable only if the
non-Federal entity’s objective is to operate such services on a break-even basis. Losses sustained because of operating objectives other than the above are allowable only:
(1) Where the non-Federal entity can
demonstrate unusual circumstances;
and
(2) With the approval of the cognizant agency for indirect costs. § 200.438 Entertainment costs.
Costs of entertainment, including
amusement, diversion, and social activities and any associated costs are unallowable, except where specific
costs that might otherwise be considered entertainment have a programmatic purpose and are authorized either in the approved budget for the
Federal award or with prior written approval of the Federal awarding agency. § 200.439 Equipment and other capital
expenditures.
(a) See §200.1 for the definitions of
capital expenditures, equipment, special
purpose equipment, general purpose
equipment, acquisition cost, and capital
assets.
(b) The following rules of allowability must apply to equipment and other capital expenditures:
(1) Capital expenditures for general
purpose equipment, buildings, and land
are unallowable as direct charges, except with the prior written approval of the Federal awarding agency or passthrough entity.
(2) Capital expenditures for special
purpose equipment are allowable as direct costs, provided that items with a unit cost of $5,000 or more have the
prior written approval of the Federal
awarding agency or pass-through entity.
(3) Capital expenditures for improvements to land, buildings, or equipment which materially increase their value
or useful life are unallowable as a direct cost except with the prior written approval of the Federal awarding agency, or pass-through entity. See §200.436, for rules on the allowability of depreciation on buildings, capital improvements, and equipment. See also §200.465.
(4) When approved as a direct charge
pursuant to paragraphs (b)(1) through
(3) of this section, capital expenditures
will be charged in the period in which
the expenditure is incurred, or as otherwise determined appropriate and negotiated with the Federal awarding agency.
(5) The unamortized portion of any
equipment written off as a result of a
change in capitalization levels may be
recovered by continuing to claim the
otherwise allowable depreciation on
the equipment, or by amortizing the
amount to be written off over a period
of years negotiated with the Federal
cognizant agency for indirect cost.
(6) Cost of equipment disposal. If the
non-Federal entity is instructed by the
Federal awarding agency to otherwise
dispose of or transfer the equipment
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OMB Guidance § 200.443
the costs of such disposal or transfer
are allowable.
(7) Equipment and other capital expenditures are unallowable as indirect costs. See §200.436.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014; 85 FR 49568, Aug. 13,
2020]
§ 200.440 Exchange rates.
(a) Cost increases for fluctuations in
exchange rates are allowable costs subject to the availability of funding.
Prior approval of exchange rate fluctuations is required only when the change results in the need for additional Federal funding, or the increased costs result in the need to significantly reduce the scope of the project. The Federal awarding agency
must however ensure that adequate
funds are available to cover currency
fluctuations in order to avoid a violation of the Anti-Deficiency Act. (b) The non-Federal entity is required to make reviews of local currency gains to determine the need for additional federal funding before the
expiration date of the Federal award.
Subsequent adjustments for currency
increases may be allowable only when
the non-Federal entity provides the
Federal awarding agency with adequate source documentation from a commonly used source in effect at the
time the expense was made, and to the
extent that sufficient Federal funds are
available.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014]
§ 200.441 Fines, penalties, damages
and other settlements.
Costs resulting from non-Federal entity violations of, alleged violations of, or failure to comply with, Federal,
state, tribal, local or foreign laws and
regulations are unallowable, except
when incurred as a result of compliance with specific provisions of the Federal award, or with prior written
approval of the Federal awarding agency. See also §200.435. [85 FR 49568, Aug. 13, 2020]
§ 200.442 Fund raising and investment
management costs.
(a) Costs of organized fund raising,
including financial campaigns, endowment drives, solicitation of gifts and bequests, and similar expenses incurred
to raise capital or obtain contributions
are unallowable. Fund raising costs for
the purposes of meeting the Federal
program objectives are allowable with
prior written approval from the Federal awarding agency. Proposal costs are covered in §200.460.
(b) Costs of investment counsel and
staff and similar expenses incurred to
enhance income from investments are
unallowable except when associated
with investments covering pension,
self-insurance, or other funds which include Federal participation allowed by this part.
(c) Costs related to the physical custody and control of monies and securities are allowable. (d) Both allowable and unallowable
fund-raising and investment activities
must be allocated as an appropriate
share of indirect costs under the conditions described in §200.413. [85 FR 49568, Aug. 13, 2020]
§ 200.443 Gains and losses on disposition of depreciable assets. (a) Gains and losses on the sale, retirement, or other disposition of depreciable property must be included in the year in which they occur as credits or
charges to the asset cost grouping(s) in
which the property was included. The
amount of the gain or loss to be included as a credit or charge to the appropriate asset cost grouping(s) is the difference between the amount realized
on the property and the undepreciated
basis of the property.
(b) Gains and losses from the disposition of depreciable property must not be recognized as a separate credit or
charge under the following conditions:
(1) The gain or loss is processed
through a depreciation account and is
reflected in the depreciation allowable
under §§200.436 and 200.439.
(2) The property is given in exchange
as part of the purchase price of a similar item and the gain or loss is taken into account in determining the depreciation cost basis of the new item.
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§ 200.444 2 CFR Ch. II (1–1–21 Edition)
(3) A loss results from the failure to
maintain permissible insurance, except
as otherwise provided in §200.447.
(4) Compensation for the use of the
property was provided through use allowances in lieu of depreciation. (5) Gains and losses arising from
mass or extraordinary sales, retirements, or other dispositions must be considered on a case-by-case basis.
(c) Gains or losses of any nature arising from the sale or exchange of property other than the property covered in paragraph (a) of this section, e.g., land,
must be excluded in computing Federal
award costs.
(d) When assets acquired with Federal funds, in part or wholly, are disposed of, the distribution of the proceeds must be made in accordance with §§200.310 through 200.316 of this part.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014; 85 FR 49568, Aug. 13,
2020]
§ 200.444 General costs of government.
(a) For states, local governments,
and Indian Tribes, the general costs of
government are unallowable (except as
provided in §200.475). Unallowable costs
include:
(1) Salaries and expenses of the Office
of the Governor of a state or the chief
executive of a local government or the
chief executive of an Indian tribe;
(2) Salaries and other expenses of a
state legislature, tribal council, or
similar local governmental body, such
as a county supervisor, city council,
school board, etc., whether incurred for
purposes of legislation or executive direction;
(3) Costs of the judicial branch of a
government;
(4) Costs of prosecutorial activities
unless treated as a direct cost to a specific program if authorized by statute or regulation (however, this does not
preclude the allowability of other legal
activities of the Attorney General as
described in §200.435); and
(5) Costs of other general types of
government services normally provided
to the general public, such as fire and
police, unless provided for as a direct
cost under a program statute or regulation.
(b) For Indian tribes and Councils of
Governments (COGs) (see definition for
Local government in §200.1 of this part),
up to 50% of salaries and expenses directly attributable to managing and operating Federal programs by the
chief executive and his or her staff can
be included in the indirect cost calculation without documentation. [78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014; 85 FR 49568, Aug. 13,
2020]
§ 200.445 Goods or services for personal use.
(a) Costs of goods or services for personal use of the non-Federal entity’s employees are unallowable regardless
of whether the cost is reported as taxable income to the employees. (b) Costs of housing (e.g., depreciation, maintenance, utilities, furnishings, rent), housing allowances and personal living expenses are only allowable as direct costs regardless of whether reported as taxable income to
the employees. In addition, to be allowable direct costs must be approved in advance by a Federal awarding agency.
§ 200.446 Idle facilities and idle capacity.
(a) As used in this section the following terms have the meanings set forth in this section:
(1) Facilities means land and buildings or any portion thereof, equipment individually or collectively, or any
other tangible capital asset, wherever
located, and whether owned or leased
by the non-Federal entity.
(2) Idle facilities means completely
unused facilities that are excess to the
non-Federal entity’s current needs.
(3) Idle capacity means the unused
capacity of partially used facilities. It
is the difference between:
(i) That which a facility could
achieve under 100 percent operating
time on a one-shift basis less operating
interruptions resulting from time lost
for repairs, setups, unsatisfactory materials, and other normal delays and; (ii) The extent to which the facility
was actually used to meet demands
during the accounting period. A multishift basis should be used if it can be shown that this amount of usage would
normally be expected for the type of facility involved.
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OMB Guidance § 200.447
(4) Cost of idle facilities or idle capacity means costs such as maintenance, repair, housing, rent, and other related costs, e.g., insurance, interest,
and depreciation. These costs could include the costs of idle public safety emergency facilities, telecommunications, or information technology system capacity that is built to withstand major fluctuations in load, e.g., consolidated data centers. (b) The costs of idle facilities are unallowable except to the extent that:
(1) They are necessary to meet workload requirements which may fluctuate and are allocated appropriately to all
benefiting programs; or
(2) Although not necessary to meet
fluctuations in workload, they were
necessary when acquired and are now
idle because of changes in program requirements, efforts to achieve more economical operations, reorganization, termination, or other causes which
could not have been reasonably foreseen. Under the exception stated in this subsection, costs of idle facilities
are allowable for a reasonable period of
time, ordinarily not to exceed one
year, depending on the initiative taken
to use, lease, or dispose of such facilities.
(c) The costs of idle capacity are normal costs of doing business and are a factor in the normal fluctuations of
usage or indirect cost rates from period
to period. Such costs are allowable,
provided that the capacity is reasonably anticipated to be necessary to carry out the purpose of the Federal
award or was originally reasonable and
is not subject to reduction or elimination by use on other Federal awards, subletting, renting, or sale, in accordance with sound business, economic, or security practices. Widespread idle capacity throughout an entire facility or among a group of assets having substantially the same function may be considered idle facilities.
§ 200.447 Insurance and indemnification.
(a) Costs of insurance required or approved and maintained, pursuant to the Federal award, are allowable.
(b) Costs of other insurance in connection with the general conduct of activities are allowable subject to the following limitations:
(1) Types and extent and cost of coverage are in accordance with the nonFederal entity’s policy and sound business practice. (2) Costs of insurance or of contributions to any reserve covering the risk of loss of, or damage to, Federal Government property are unallowable except to the extent that the Federal awarding agency has specifically required or approved such costs. (3) Costs allowed for business interruption or other similar insurance must exclude coverage of management
fees.
(4) Costs of insurance on the lives of
trustees, officers, or other employees
holding positions of similar responsibilities are allowable only to the extent that the insurance represents additional compensation (see §200.431).
The cost of such insurance when the
non-Federal entity is identified as the
beneficiary is unallowable.
(5) Insurance against defects. Costs of
insurance with respect to any costs incurred to correct defects in the nonFederal entity’s materials or workmanship are unallowable. (6) Medical liability (malpractice) insurance. Medical liability insurance is an allowable cost of Federal research
programs only to the extent that the
Federal research programs involve
human subjects or training of participants in research techniques. Medical liability insurance costs must be treated as a direct cost and must be assigned to individual projects based on the manner in which the insurer allocates the risk to the population covered by the insurance. (c) Actual losses which could have
been covered by permissible insurance
(through a self-insurance program or
otherwise) are unallowable, unless expressly provided for in the Federal award. However, costs incurred because
of losses not covered under nominal deductible insurance coverage provided in keeping with sound management
practice, and minor losses not covered
by insurance, such as spoilage, breakage, and disappearance of small hand tools, which occur in the ordinary
course of operations, are allowable.
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§ 200.448 2 CFR Ch. II (1–1–21 Edition)
(d) Contributions to a reserve for certain self-insurance programs including workers’ compensation, unemployment
compensation, and severance pay are
allowable subject to the following provisions:
(1) The type of coverage and the extent of coverage and the rates and premiums would have been allowed had insurance (including reinsurance) been purchased to cover the risks. However,
provision for known or reasonably estimated self-insured liabilities, which do not become payable for more than one
year after the provision is made, must
not exceed the discounted present
value of the liability. The rate used for
discounting the liability must be determined by giving consideration to such factors as the non-Federal entity’s settlement rate for those liabilities and its investment rate of return.
(2) Earnings or investment income on
reserves must be credited to those reserves.
(3)(i) Contributions to reserves must
be based on sound actuarial principles
using historical experience and reasonable assumptions. Reserve levels must be analyzed and updated at least biennially for each major risk being insured and take into account any reinsurance, coinsurance, etc. Reserve levels related to employee-related coverages will normally be limited to the value of claims:
(A) Submitted and adjudicated but
not paid;
(B) Submitted but not adjudicated;
and
(C) Incurred but not submitted.
(ii) Reserve levels in excess of the
amounts based on the above must be
identified and justified in the cost allocation plan or indirect cost rate proposal. (4) Accounting records, actuarial
studies, and cost allocations (or billings) must recognize any significant differences due to types of insured risk
and losses generated by the various insured activities or agencies of the nonFederal entity. If individual departments or agencies of the non-Federal entity experience significantly different levels of claims for a particular risk, those differences are to be recognized by the use of separate allocations or other techniques resulting in an equitable allocation. (5) Whenever funds are transferred
from a self-insurance reserve to other
accounts (e.g., general fund or unrestricted account), refunds must be made to the Federal Government for
its share of funds transferred, including
earned or imputed interest from the
date of transfer and debt interest, if applicable, chargeable in accordance with applicable Federal cognizant agency
for indirect cost, claims collection regulations.
(e) Insurance refunds must be credited against insurance costs in the year the refund is received.
(f) Indemnification includes securing
the non-Federal entity against liabilities to third persons and other losses not compensated by insurance or otherwise. The Federal Government is obligated to indemnify the non-Federal entity only to the extent expressly provided for in the Federal award, except as provided in paragraph (c) of this section.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49568, Aug. 13, 2020]
§ 200.448 Intellectual property.
(a) Patent costs. (1) The following
costs related to securing patents and
copyrights are allowable:
(i) Costs of preparing disclosures, reports, and other documents required by the Federal award, and of searching the
art to the extent necessary to make
such disclosures;
(ii) Costs of preparing documents and
any other patent costs in connection
with the filing and prosecution of a
United States patent application where
title or royalty-free license is required
by the Federal Government to be conveyed to the Federal Government; and (iii) General counseling services relating to patent and copyright matters, such as advice on patent and copyright
laws, regulations, clauses, and employee intellectual property agreements (See also §200.459). (2) The following costs related to securing patents and copyrights are unallowable:
(i) Costs of preparing disclosures, reports, and other documents, and of searching the art to make disclosures
not required by the Federal award;
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OMB Guidance § 200.449
(ii) Costs in connection with filing
and prosecuting any foreign patent application, or any United States patent application, where the Federal award
does not require conveying title or a
royalty-free license to the Federal
Government.
(b) Royalties and other costs for use of
patents and copyrights. (1) Royalties on
a patent or copyright or amortization
of the cost of acquiring by purchase a
copyright, patent, or rights thereto,
necessary for the proper performance
of the Federal award are allowable unless:
(i) The Federal Government already
has a license or the right to free use of
the patent or copyright.
(ii) The patent or copyright has been
adjudicated to be invalid, or has been
administratively determined to be invalid.
(iii) The patent or copyright is considered to be unenforceable. (iv) The patent or copyright is expired.
(2) Special care should be exercised in
determining reasonableness where the
royalties may have been arrived at as a
result of less-than-arm’s-length bargaining, such as:
(i) Royalties paid to persons, including corporations, affiliated with the non-Federal entity.
(ii) Royalties paid to unaffiliated
parties, including corporations, under
an agreement entered into in contemplation that a Federal award would be made.
(iii) Royalties paid under an agreement entered into after a Federal award is made to a non-Federal entity.
(3) In any case involving a patent or
copyright formerly owned by the nonFederal entity, the amount of royalty allowed must not exceed the cost which
would have been allowed had the nonFederal entity retained title thereto. [78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014; 85 FR 49569, Aug. 13,
2020]
§ 200.449 Interest.
(a) General. Costs incurred for interest on borrowed capital, temporary use of endowment funds, or the use of the
non-Federal entity’s own funds, however represented, are unallowable. Financing costs (including interest) to acquire, construct, or replace capital
assets are allowable, subject to the
conditions in this section.
(b) Capital assets. (1) Capital assets is
defined as noted in §200.1 of this part.
An asset cost includes (as applicable)
acquisition costs, construction costs,
and other costs capitalized in accordance with GAAP.
(2) For non-Federal entity fiscal
years beginning on or after January 1,
2016, intangible assets include patents
and computer software. For software
development projects, only interest attributable to the portion of the project costs capitalized in accordance with
GAAP is allowable.
(c) Conditions for all non-Federal entities. (1) The non-Federal entity uses the capital assets in support of Federal
awards;
(2) The allowable asset costs to acquire facilities and equipment are limited to a fair market value available to the non-Federal entity from an unrelated (arm’s length) third party. (3) The non-Federal entity obtains
the financing via an arm’s-length
transaction (that is, a transaction with
an unrelated third party); or claims reimbursement of actual interest cost at a rate available via such a transaction.
(4) The non-Federal entity limits
claims for Federal reimbursement of
interest costs to the least expensive alternative. For example, a lease contract that transfers ownership by the end of the contract may be determined
less costly than purchasing through
other types of debt financing, in which
case reimbursement must be limited to
the amount of interest determined if
leasing had been used.
(5) The non-Federal entity expenses
or capitalizes allowable interest cost in
accordance with GAAP.
(6) Earnings generated by the investment of borrowed funds pending their disbursement for the asset costs are
used to offset the current period’s allowable interest cost, whether that cost is expensed or capitalized. Earnings subject to being reported to the Federal Internal Revenue Service
under arbitrage requirements are excludable.
(7) The following conditions must
apply to debt arrangements over $1
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§ 200.450 2 CFR Ch. II (1–1–21 Edition)
million to purchase or construct facilities, unless the non-Federal entity makes an initial equity contribution to
the purchase of 25 percent or more. For
this purpose, ‘‘initial equity contribution’’ means the amount or value of contributions made by the non-Federal
entity for the acquisition of facilities
prior to occupancy.
(i) The non-Federal entity must reduce claims for reimbursement of interest cost by an amount equal to imputed interest earnings on excess cash flow attributable to the portion of the
facility used for Federal awards.
(ii) The non-Federal entity must impute interest on excess cash flow as follows:
(A) Annually, the non-Federal entity
must prepare a cumulative (from the
inception of the project) report of
monthly cash inflows and outflows, regardless of the funding source. For this purpose, inflows consist of Federal reimbursement for depreciation, amortization of capitalized construction interest, and annual interest cost. Outflows consist of initial equity contributions, debt principal payments (less the pro-rata share attributable to the cost
of land), and interest payments.
(B) To compute monthly cash inflows
and outflows, the non-Federal entity
must divide the annual amounts determined in step (i) by the number of months in the year (usually 12) that
the building is in service.
(C) For any month in which cumulative cash inflows exceed cumulative outflows, interest must be calculated
on the excess inflows for that month
and be treated as a reduction to allowable interest cost. The rate of interest to be used must be the three-month
Treasury bill closing rate as of the last
business day of that month.
(8) Interest attributable to a fully depreciated asset is unallowable. (d) Additional conditions for states,
local governments and Indian tribes.
For costs to be allowable, the non-Federal entity must have incurred the interest costs for buildings after October 1, 1980, or for land and equipment after
September 1, 1995.
(1) The requirement to offset interest
earned on borrowed funds against current allowable interest cost (paragraph (c)(5), above) also applies to earnings
on debt service reserve funds.
(2) The non-Federal entity will negotiate the amount of allowable interest cost related to the acquisition of facilities with asset costs of $1 million or more, as outlined in paragraph (c)(7) of
this section. For this purpose, a nonFederal entity must consider only cash inflows and outflows attributable to
that portion of the real property used
for Federal awards.
(e) Additional conditions for IHEs.
For costs to be allowable, the IHE
must have incurred the interest costs
after July 1, 1982, in connection with
acquisitions of capital assets that occurred after that date. (f) Additional condition for nonprofit
organizations. For costs to be allowable, the nonprofit organization incurred the interest costs after September 29, 1995, in connection with acquisitions of capital assets that occurred after that date. (g) The interest allowability provisions of this section do not apply to a nonprofit organization subject to ‘‘full
coverage’’ under the Cost Accounting
Standards (CAS), as defined at 48 CFR
9903.201–2(a). The non-Federal entity’s
Federal awards are instead subject to
CAS 414 (48 CFR 9904.414), ‘‘Cost of
Money as an Element of the Cost of Facilities Capital’’, and CAS 417 (48 CFR 9904.417), ‘‘Cost of Money as an Element
of the Cost of Capital Assets Under
Construction’’.
[78 FR 78608, Dec. 26, 2013, as amended at 80
FR 54409, Sept. 10, 2015; 85 FR 49569, Aug. 13,
2020]
§ 200.450 Lobbying.
(a) The cost of certain influencing activities associated with obtaining grants, contracts, or cooperative agreements, or loans is an unallowable cost.
Lobbying with respect to certain
grants, contracts, cooperative agreements, and loans is governed by relevant statutes, including among others, the provisions of 31 U.S.C. 1352, as well as the common rule, ‘‘New Restrictions on Lobbying’’ published on February 26, 1990, including definitions,
and the Office of Management and
Budget ‘‘Governmentwide Guidance for
New Restrictions on Lobbying’’ and notices published on December 20, 1989, VerDate Sep<11>2014 13:23 Jun 29, 2021 Jkt 253005 PO 00000 Frm 00196 Fmt 8010 Sfmt 8010 Y:\SGML\253005.XXX 253005
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OMB Guidance § 200.450
June 15, 1990, January 15, 1992, and January 19, 1996. (b) Executive lobbying costs. Costs incurred in attempting to improperly influence either directly or indirectly, an employee or officer of the executive
branch of the Federal Government to
give consideration or to act regarding a
Federal award or a regulatory matter
are unallowable. Improper influence
means any influence that induces or
tends to induce a Federal employee or
officer to give consideration or to act
regarding a Federal award or regulatory matter on any basis other than the merits of the matter.
(c) In addition to the above, the following restrictions are applicable to nonprofit organizations and IHEs:
(1) Costs associated with the following activities are unallowable:
(i) Attempts to influence the outcomes of any Federal, state, or local election, referendum, initiative, or
similar procedure, through in-kind or
cash contributions, endorsements, publicity, or similar activity; (ii) Establishing, administering, contributing to, or paying the expenses of a political party, campaign, political
action committee, or other organization established for the purpose of influencing the outcomes of elections in the United States;
(iii) Any attempt to influence:
(A) The introduction of Federal or
state legislation;
(B) The enactment or modification of
any pending Federal or state legislation through communication with any member or employee of the Congress or
state legislature (including efforts to
influence state or local officials to engage in similar lobbying activity); (C) The enactment or modification of
any pending Federal or state legislation by preparing, distributing, or using publicity or propaganda, or by
urging members of the general public,
or any segment thereof, to contribute
to or participate in any mass demonstration, march, rally, fund raising drive, lobbying campaign or letter
writing or telephone campaign; or
(D) Any government official or employee in connection with a decision to sign or veto enrolled legislation;
(iv) Legislative liaison activities, including attendance at legislative sessions or committee hearings, gathering information regarding legislation, and
analyzing the effect of legislation,
when such activities are carried on in
support of or in knowing preparation
for an effort to engage in unallowable
lobbying.
(2) The following activities are excepted from the coverage of paragraph (c)(1) of this section:
(i) Technical and factual presentations on topics directly related to the performance of a grant, contract,
or other agreement (through hearing
testimony, statements, or letters to
the Congress or a state legislature, or
subdivision, member, or cognizant staff
member thereof), in response to a documented request (including a Congressional Record notice requesting testimony or statements for the record at a regularly scheduled hearing) made by
the non-Federal entity’s member of
congress, legislative body or a subdivision, or a cognizant staff member thereof, provided such information is
readily obtainable and can be readily
put in deliverable form, and further
provided that costs under this section
for travel, lodging or meals are unallowable unless incurred to offer testimony at a regularly scheduled Congressional hearing pursuant to a written request for such presentation made by
the Chairman or Ranking Minority
Member of the Committee or Subcommittee conducting such hearings; (ii) Any lobbying made unallowable
by paragraph (c)(1)(iii) of this section
to influence state legislation in order
to directly reduce the cost, or to avoid
material impairment of the non-Federal entity’s authority to perform the grant, contract, or other agreement; or
(iii) Any activity specifically authorized by statute to be undertaken with funds from the Federal award.
(iv) Any activity excepted from the
definitions of ‘‘lobbying’’ or ‘‘influencing legislation’’ by the Internal Revenue Code provisions that require
nonprofit organizations to limit their
participation in direct and ‘‘grass
roots’’ lobbying activities in order to
retain their charitable deduction status and avoid punitive excise taxes, I.R.C. §§501(c)(3), 501(h), 4911(a), including:
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§ 200.451 2 CFR Ch. II (1–1–21 Edition)
(A) Nonpartisan analysis, study, or
research reports;
(B) Examinations and discussions of
broad social, economic, and similar
problems; and
(C) Information provided upon request by a legislator for technical advice and assistance, as defined by I.R.C. §4911(d)(2) and 26 CFR 56.4911–2(c)(1)–
(c)(3).
(v) When a non-Federal entity seeks
reimbursement for indirect (F&A)
costs, total lobbying costs must be separately identified in the indirect (F&A) cost rate proposal, and thereafter
treated as other unallowable activity
costs in accordance with the procedures of §200.413.
(vi) The non-Federal entity must submit as part of its annual indirect (F&A) cost rate proposal a certification
that the requirements and standards of
this section have been complied with.
(See also §200.415.)
(vii)(A) Time logs, calendars, or similar records are not required to be created for purposes of complying with the record keeping requirements in
§200.302 with respect to lobbying costs
during any particular calendar month
when:
(1) The employee engages in lobbying
(as defined in paragraphs (c)(1) and
(c)(2) of this section) 25 percent or less
of the employee’s compensated hours of
employment during that calendar
month; and
(2) Within the preceding five-year period, the non-Federal entity has not materially misstated allowable or unallowable costs of any nature, including legislative lobbying costs. (B) When conditions in paragraph
(c)(2)(vii)(A)(1) and (2) of this section
are met, non-Federal entities are not
required to establish records to support
the allowability of claimed costs in addition to records already required or maintained. Also, when conditions in
paragraphs (c)(2)(vii)(A)(1) and (2) of
this section are met, the absence of
time logs, calendars, or similar records
will not serve as a basis for disallowing
costs by contesting estimates of lobbying time spent by employees during a calendar month.
(viii) The Federal awarding agency
must establish procedures for resolving
in advance, in consultation with OMB,
any significant questions or disagreements concerning the interpretation or application of this section. Any such
advance resolutions must be binding in
any subsequent settlements, audits, or
investigations with respect to that
grant or contract for purposes of interpretation of this part, provided, however, that this must not be construed to prevent a contractor or non-Federal
entity from contesting the lawfulness
of such a determination.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49569, Aug. 13, 2020]
§ 200.451 Losses on other awards or
contracts.
Any excess of costs over income
under any other award or contract of
any nature is unallowable. This includes, but is not limited to, the nonFederal entity’s contributed portion by reason of cost-sharing agreements or
any under-recoveries through negotiation of flat amounts for indirect (F&A) costs. Also, any excess of costs over authorized funding levels transferred from any award or contract to another
award or contract is unallowable. All
losses are not allowable indirect (F&A)
costs and are required to be included in
the appropriate indirect cost rate base
for allocation of indirect costs.
§ 200.452 Maintenance and repair
costs.
Costs incurred for utilities, insurance, security, necessary maintenance, janitorial services, repair, or upkeep of
buildings and equipment (including
Federal property unless otherwise provided for) which neither add to the permanent value of the property nor appreciably prolong its intended life, but keep it in an efficient operating condition, are allowable. Costs incurred for improvements which add to the permanent value of the buildings and equipment or appreciably prolong their intended life must be treated as capital expenditures (see §200.439). These costs
are only allowable to the extent not
paid through rental or other agreements.
[85 FR 49569, Aug. 13, 2020]
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OMB Guidance § 200.458
§ 200.453 Materials and supplies costs,
including costs of computing devices.
(a) Costs incurred for materials, supplies, and fabricated parts necessary to carry out a Federal award are allowable.
(b) Purchased materials and supplies
must be charged at their actual prices,
net of applicable credits. Withdrawals
from general stores or stockrooms
must be charged at their actual net
cost under any recognized method of
pricing inventory withdrawals, consistently applied. Incoming transportation charges are a proper part of materials
and supplies costs.
(c) Materials and supplies used for
the performance of a Federal award
may be charged as direct costs. In the
specific case of computing devices,
charging as direct costs is allowable for
devices that are essential and allocable, but not solely dedicated, to the performance of a Federal award.
(d) Where federally-donated or furnished materials are used in performing the Federal award, such materials will be used without charge. [78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014]
§ 200.454 Memberships, subscriptions,
and professional activity costs.
(a) Costs of the non-Federal entity’s
membership in business, technical, and
professional organizations are allowable.
(b) Costs of the non-Federal entity’s
subscriptions to business, professional,
and technical periodicals are allowable.
(c) Costs of membership in any civic
or community organization are allowable with prior approval by the Federal awarding agency or pass-through entity.
(d) Costs of membership in any country club or social or dining club or organization are unallowable. (e) Costs of membership in organizations whose primary purpose is lobbying are unallowable. See also §200.450.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49569, Aug. 13, 2020]
§ 200.455 Organization costs.
Costs such as incorporation fees, brokers’ fees, fees to promoters, organizers or management consultants, attorneys,
accountants, or investment counselor,
whether or not employees of the nonFederal entity in connection with establishment or reorganization of an organization, are unallowable except with prior approval of the Federal
awarding agency.
§ 200.456 Participant support costs.
Participant support costs as defined
in §200.1 are allowable with the prior
approval of the Federal awarding agency.
[85 FR 49569, Aug. 13, 2020]
§ 200.457 Plant and security costs.
Necessary and reasonable expenses
incurred for protection and security of
facilities, personnel, and work products
are allowable. Such costs include, but
are not limited to, wages and uniforms
of personnel engaged in security activities; equipment; barriers; protective (non-military) gear, devices, and equipment; contractual security services; and consultants. Capital expenditures
for plant security purposes are subject
to §200.439.
[85 FR 49569, Aug. 13, 2020]
§ 200.458 Pre-award costs.
Pre-award costs are those incurred
prior to the effective date of the Federal award or subaward directly pursuant to the negotiation and in anticipation of the Federal award where such costs are necessary for efficient and
timely performance of the scope of
work. Such costs are allowable only to
the extent that they would have been
allowable if incurred after the date of
the Federal award and only with the
written approval of the Federal awarding agency. If charged to the award, these costs must be charged to the initial budget period of the award, unless otherwise specified by the Federal
awarding agency or pass-through entity.
[85 FR 49569, Aug. 13, 2020]
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§ 200.459 2 CFR Ch. II (1–1–21 Edition)
§ 200.459 Professional service costs.
(a) Costs of professional and consultant services rendered by persons who are members of a particular profession
or possess a special skill, and who are
not officers or employees of the nonFederal entity, are allowable, subject to paragraphs (b) and (c) of this section
when reasonable in relation to the
services rendered and when not contingent upon recovery of the costs from the Federal Government. In addition,
legal and related services are limited
under §200.435.
(b) In determining the allowability of
costs in a particular case, no single factor or any special combination of factors is necessarily determinative. However, the following factors are relevant:
(1) The nature and scope of the service rendered in relation to the service required.
(2) The necessity of contracting for
the service, considering the non-Federal entity’s capability in the particular area. (3) The past pattern of such costs,
particularly in the years prior to Federal awards.
(4) The impact of Federal awards on
the non-Federal entity’s business (i.e.,
what new problems have arisen).
(5) Whether the proportion of Federal
work to the non-Federal entity’s total
business is such as to influence the
non-Federal entity in favor of incurring the cost, particularly where the services rendered are not of a continuing nature and have little relationship to work under Federal awards. (6) Whether the service can be performed more economically by direct employment rather than contracting.
(7) The qualifications of the individual or concern rendering the service and the customary fees charged, especially on non-federally funded activities. (8) Adequacy of the contractual
agreement for the service (e.g., description of the service, estimate of time required, rate of compensation, and termination provisions). (c) In addition to the factors in paragraph (b) of this section, to be allowable, retainer fees must be supported by evidence of bona fide services available or rendered. [78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49569, Aug. 13, 2020]
§ 200.460 Proposal costs.
Proposal costs are the costs of preparing bids, proposals, or applications on potential Federal and non-Federal
awards or projects, including the development of data necessary to support the non-Federal entity’s bids or proposals. Proposal costs of the current accounting period of both successful
and unsuccessful bids and proposals
normally should be treated as indirect
(F&A) costs and allocated currently to
all activities of the non-Federal entity.
No proposal costs of past accounting
periods will be allocable to the current
period.
§ 200.461 Publication and printing
costs.
(a) Publication costs for electronic
and print media, including distribution, promotion, and general handling are allowable. If these costs are not
identifiable with a particular cost objective, they should be allocated as indirect costs to all benefiting activities of the non-Federal entity.
(b) Page charges for professional
journal publications are allowable
where:
(1) The publications report work supported by the Federal Government; and (2) The charges are levied impartially
on all items published by the journal,
whether or not under a Federal award.
(3) The non-Federal entity may
charge the Federal award during closeout for the costs of publication or sharing of research results if the costs are not incurred during the period of performance of the Federal award. If charged to the award, these costs must
be charged to the final budget period of
the award, unless otherwise specified
by the Federal awarding agency.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49569, Aug. 13, 2020]
§ 200.462 Rearrangement and reconversion costs.
(a) Costs incurred for ordinary and
normal rearrangement and alteration
of facilities are allowable as indirect
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OMB Guidance § 200.464
costs. Special arrangements and alterations costs incurred specifically for a Federal award are allowable as a direct
cost with the prior approval of the Federal awarding agency or pass-through entity.
(b) Costs incurred in the restoration
or rehabilitation of the non-Federal entity’s facilities to approximately the same condition existing immediately
prior to commencement of Federal
awards, less costs related to normal
wear and tear, are allowable.
§ 200.463 Recruiting costs.
(a) Subject to paragraphs (b) and (c)
of this section, and provided that the
size of the staff recruited and maintained is in keeping with workload requirements, costs of ‘‘help wanted’’ advertising, operating costs of an employment office necessary to secure and maintain an adequate staff, costs
of operating an aptitude and educational testing program, travel costs of employees while engaged in recruiting personnel, travel costs of applicants for interviews for prospective employment, and relocation costs incurred incident to recruitment of new employees, are allowable to the extent
that such costs are incurred pursuant
to the non-Federal entity’s standard
recruitment program. Where the nonFederal entity uses employment agencies, costs not in excess of standard commercial rates for such services are
allowable.
(b) Special emoluments, fringe benefits, and salary allowances incurred to attract professional personnel that do
not meet the test of reasonableness or
do not conform with the established
practices of the non-Federal entity, are
unallowable.
(c) Where relocation costs incurred
incident to recruitment of a new employee have been funded in whole or in part to a Federal award, and the newly
hired employee resigns for reasons
within the employee’s control within 12
months after hire, the non-Federal entity will be required to refund or credit the Federal share of such relocation
costs to the Federal Government. See
also §200.464.
(d) Short-term, travel visa costs (as
opposed to longer-term, immigration
visas) are generally allowable expenses
that may be proposed as a direct cost.
Since short-term visas are issued for a
specific period and purpose, they can be
clearly identified as directly connected
to work performed on a Federal award.
For these costs to be directly charged
to a Federal award, they must:
(1) Be critical and necessary for the
conduct of the project;
(2) Be allowable under the applicable
cost principles;
(3) Be consistent with the non-Federal entity’s cost accounting practices and non-Federal entity policy; and
(4) Meet the definition of ‘‘direct
cost’’ as described in the applicable
cost principles.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014; 85 FR 49569, Aug. 13,
2020]
§ 200.464 Relocation costs of employees.
(a) Relocation costs are costs incident to the permanent change of duty assignment (for an indefinite period or
for a stated period of not less than 12
months) of an existing employee or
upon recruitment of a new employee.
Relocation costs are allowable, subject
to the limitations described in paragraphs (b), (c), and (d) of this section, provided that:
(1) The move is for the benefit of the
employer.
(2) Reimbursement to the employee
is in accordance with an established
written policy consistently followed by
the employer.
(3) The reimbursement does not exceed the employee’s actual (or reasonably estimated) expenses. (b) Allowable relocation costs for
current employees are limited to the
following:
(1) The costs of transportation of the
employee, members of his or her immediate family and his household, and personal effects to the new location.
(2) The costs of finding a new home,
such as advance trips by employees and
spouses to locate living quarters and
temporary lodging during the transition period, up to maximum period of 30 calendar days.
(3) Closing costs, such as brokerage,
legal, and appraisal fees, incident to
the disposition of the employee’s
former home. These costs, together
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§ 200.465 2 CFR Ch. II (1–1–21 Edition)
with those described in (4), are limited
to 8 per cent of the sales price of the
employee’s former home.
(4) The continuing costs of ownership
(for up to six months) of the vacant
former home after the settlement or
lease date of the employee’s new permanent home, such as maintenance of buildings and grounds (exclusive of fixing-up expenses), utilities, taxes, and property insurance.
(5) Other necessary and reasonable
expenses normally incident to relocation, such as the costs of canceling an unexpired lease, transportation of personal property, and purchasing insurance against loss of or damages to personal property. The cost of canceling an unexpired lease is limited to three
times the monthly rental.
(c) Allowable relocation costs for new
employees are limited to those described in paragraphs (b)(1) and (2) of this section. When relocation costs incurred incident to the recruitment of new employees have been charged to a
Federal award and the employee resigns for reasons within the employee’s control within 12 months after hire,
the non-Federal entity must refund or
credit the Federal Government for its
share of the cost. If dependents are not
permitted at the location for any reason and the costs do not include costs of transporting household goods, the
costs of travel to an overseas location
must be considered travel costs in accordance with §200.474 Travel costs, and not this relocations costs of employees (See also §200.464). (d) The following costs related to relocation are unallowable:
(1) Fees and other costs associated
with acquiring a new home.
(2) A loss on the sale of a former
home.
(3) Continuing mortgage principal
and interest payments on a home being
sold.
(4) Income taxes paid by an employee
related to reimbursed relocation costs.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014; 85 FR 49570, Aug. 13,
2020]
§ 200.465 Rental costs of real property
and equipment.
(a) Subject to the limitations described in paragraphs (b) through (d) of this section, rental costs are allowable
to the extent that the rates are reasonable in light of such factors as: rental costs of comparable property, if any;
market conditions in the area; alternatives available; and the type, life expectancy, condition, and value of the property leased. Rental arrangements
should be reviewed periodically to determine if circumstances have changed and other options are available.
(b) Rental costs under ‘‘sale and lease
back’’ arrangements are allowable only
up to the amount that would be allowed had the non-Federal entity continued to own the property. This amount would include expenses such as
depreciation, maintenance, taxes, and
insurance.
(c) Rental costs under ‘‘less-thanarm’s-length’’ leases are allowable only up to the amount (as explained in paragraph (b) of this section). For this purpose, a less-than-arm’s-length lease is one under which one party to the lease
agreement is able to control or substantially influence the actions of the other. Such leases include, but are not
limited to those between:
(1) Divisions of the non-Federal entity;
(2) The non-Federal entity under
common control through common officers, directors, or members; and (3) The non-Federal entity and a director, trustee, officer, or key employee of the non-Federal entity or an immediate family member, either directly or through corporations, trusts, or similar arrangements in which they
hold a controlling interest. For example, the non-Federal entity may establish a separate corporation for the sole purpose of owning property and leasing
it back to the non-Federal entity.
(4) Family members include one
party with any of the following relationships to another party:
(i) Spouse, and parents thereof;
(ii) Children, and spouses thereof;
(iii) Parents, and spouses thereof;
(iv) Siblings, and spouses thereof;
(v) Grandparents and grandchildren,
and spouses thereof;
(vi) Domestic partner and parents
thereof, including domestic partners of
any individual in 2 through 5 of this
definition; and
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OMB Guidance § 200.466
(vii) Any individual related by blood
or affinity whose close association with
the employee is the equivalent of a
family relationship.
(5) Rental costs under leases which
are required to be treated as capital
leases under GAAP are allowable only
up to the amount (as explained in paragraph (b) of this section) that would be allowed had the non-Federal entity
purchased the property on the date the
lease agreement was executed. The provisions of GAAP must be used to determine whether a lease is a capital lease.
Interest costs related to capital leases
are allowable to the extent they meet
the criteria in §200.449 Interest. Unallowable costs include amounts paid for profit, management fees, and taxes
that would not have been incurred had
the non-Federal entity purchased the
property.
(6) The rental of any property owned
by any individuals or entities affiliated
with the non-Federal entity, to include
commercial or residential real estate,
for purposes such as the home office
workspace is unallowable.
(d) Rental costs under leases which
are required to be accounted for as a financed purchase under GASB standards or a finance lease under FASB standards under GAAP are allowable
only up to the amount (as explained in
paragraph (b) of this section) that
would be allowed had the non-Federal
entity purchased the property on the
date the lease agreement was executed.
Interest costs related to these leases
are allowable to the extent they meet
the criteria in §200.449. Unallowable
costs include amounts paid for profit,
management fees, and taxes that would
not have been incurred had the nonFederal entity purchased the property. (e) Rental or lease payments are allowable under lease contracts where the non-Federal entity is required to
recognize an intangible right-to-use
lease asset (per GASB) or right of use
operating lease asset (per FASB) for
purposes of financial reporting in accordance with GAAP. (f) The rental of any property owned
by any individuals or entities affiliated
with the non-Federal entity, to include
commercial or residential real estate,
for purposes such as the home office
workspace is unallowable.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49569, Aug. 13, 2020]
§ 200.466 Scholarships and student aid
costs.
(a) Costs of scholarships, fellowships,
and other programs of student aid at
IHEs are allowable only when the purpose of the Federal award is to provide training to selected participants and
the charge is approved by the Federal
awarding agency. However, tuition remission and other forms of compensation paid as, or in lieu of, wages to students performing necessary work are allowable provided that:
(1) The individual is conducting activities necessary to the Federal award;
(2) Tuition remission and other support are provided in accordance with established policy of the IHE and consistently provided in a like manner to students in return for similar activities
conducted under Federal awards as
well as other activities; and
(3) During the academic period, the
student is enrolled in an advanced degree program at a non-Federal entity or affiliated institution and the activities of the student in relation to the Federal award are related to the degree
program;
(4) The tuition or other payments are
reasonable compensation for the work
performed and are conditioned explicitly upon the performance of necessary work; and
(5) It is the IHE’s practice to similarly compensate students under Federal awards as well as other activities. (b) Charges for tuition remission and
other forms of compensation paid to
students as, or in lieu of, salaries and
wages must be subject to the reporting
requirements in §200.430, and must be
treated as direct or indirect cost in accordance with the actual work being performed. Tuition remission may be
charged on an average rate basis. See
also §200.431.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49569, Aug. 13, 2020]
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§ 200.467 2 CFR Ch. II (1–1–21 Edition)
§ 200.467 Selling and marketing costs.
Costs of selling and marketing any
products or services of the non-Federal
entity (unless allowed under §200.421)
are unallowable, except as direct costs,
with prior approval by the Federal
awarding agency when necessary for
the performance of the Federal award.
[85 FR 49570, Aug. 13, 2020]
§ 200.468 Specialized service facilities.
(a) The costs of services provided by
highly complex or specialized facilities
operated by the non-Federal entity,
such as computing facilities, wind tunnels, and reactors are allowable, provided the charges for the services meet the conditions of either paragraph (b)
or (c) of this section, and, in addition,
take into account any items of income
or Federal financing that qualify as applicable credits under §200.406. (b) The costs of such services, when
material, must be charged directly to
applicable awards based on actual
usage of the services on the basis of a
schedule of rates or established methodology that:
(1) Does not discriminate between activities under Federal awards and other activities of the non-Federal entity, including usage by the non-Federal entity for internal purposes, and (2) Is designed to recover only the aggregate costs of the services. The costs of each service must consist normally
of both its direct costs and its allocable
share of all indirect (F&A) costs. Rates
must be adjusted at least biennially,
and must take into consideration over/
under-applied costs of the previous period(s).
(c) Where the costs incurred for a
service are not material, they may be
allocated as indirect (F&A) costs.
(d) Under some extraordinary circumstances, where it is in the best interest of the Federal Government and the non-Federal entity to establish alternative costing arrangements, such arrangements may be worked out with
the Federal cognizant agency for indirect costs.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49569, Aug. 13, 2020]
§ 200.469 Student activity costs.
Costs incurred for intramural activities, student publications, student clubs, and other student activities, are
unallowable, unless specifically provided for in the Federal award. § 200.470 Taxes (including Value
Added Tax).
(a) For states, local governments and
Indian tribes:
(1) Taxes that a governmental unit is
legally required to pay are allowable,
except for self-assessed taxes that disproportionately affect Federal programs or changes in tax policies that disproportionately affect Federal programs.
(2) Gasoline taxes, motor vehicle
fees, and other taxes that are in effect
user fees for benefits provided to the
Federal Government are allowable.
(3) This provision does not restrict
the authority of the Federal awarding
agency to identify taxes where Federal
participation is inappropriate. Where
the identification of the amount of unallowable taxes would require an inordinate amount of effort, the cognizant agency for indirect costs may accept a
reasonable approximation thereof.
(b) For nonprofit organizations and
IHEs:
(1) In general, taxes which the nonFederal entity is required to pay and which are paid or accrued in accordance with GAAP, and payments made to local governments in lieu of taxes
which are commensurate with the local
government services received are allowable, except for:
(i) Taxes from which exemptions are
available to the non-Federal entity directly or which are available to the non-Federal entity based on an exemption afforded the Federal Government and, in the latter case, when the Federal awarding agency makes available the necessary exemption certificates,
(ii) Special assessments on land
which represent capital improvements,
and
(iii) Federal income taxes.
(2) Any refund of taxes, and any payment to the non-Federal entity of interest thereon, which were allowed as Federal award costs, will be credited
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OMB Guidance § 200.472
Government. However, any interest actually paid or credited to an non-Federal entity incident to a refund of tax, interest, and penalty will be paid or
credited to the Federal Government
only to the extent that such interest
accrued over the period during which
the non-Federal entity has been reimbursed by the Federal Government for the taxes, interest, and penalties.
(c) Value Added Tax (VAT) Foreign
taxes charged for the purchase of goods
or services that a non-Federal entity is
legally required to pay in country is an
allowable expense under Federal
awards. Foreign tax refunds or applicable credits under Federal awards refer to receipts, or reduction of expenditures, which operate to offset or reduce expense items that are allocable to
Federal awards as direct or indirect
costs. To the extent that such credits
accrued or received by the non-Federal
entity relate to allowable cost, these
costs must be credited to the Federal
awarding agency either as costs or cash
refunds. If the costs are credited back
to the Federal award, the non-Federal
entity may reduce the Federal share of
costs by the amount of the foreign tax
reimbursement, or where Federal
award has not expired, use the foreign
government tax refund for approved activities under the Federal award with prior approval of the Federal awarding
agency.
§ 200.471 Telecommunication costs and
video surveillance costs.
(a) Costs incurred for telecommunications and video surveillance services or equipment such as phones, internet,
video surveillance, cloud servers are allowable except for the following circumstances:
(b) Obligating or expending covered
telecommunications and video surveillance services or equipment or services as described in §200.216 to:
(1) Procure or obtain, extend or
renew a contract to procure or obtain;
(2) Enter into a contract (or extend
or renew a contract) to procure; or
(3) Obtain the equipment, services, or
systems.
[85 FR 49570, Aug. 13, 2020]
§ 200.472 Termination costs.
Termination of a Federal award generally gives rise to the incurrence of costs, or the need for special treatment
of costs, which would not have arisen
had the Federal award not been terminated. Cost principles covering these items are set forth in this section.
They are to be used in conjunction
with the other provisions of this part
in termination situations.
(a) The cost of items reasonably usable on the non-Federal entity’s other work must not be allowable unless the
non-Federal entity submits evidence
that it would not retain such items at
cost without sustaining a loss. In deciding whether such items are reasonably usable on other work of the nonFederal entity, the Federal awarding agency should consider the non-Federal
entity’s plans and orders for current
and scheduled activity. Contemporaneous purchases of common items by the non-Federal entity must be regarded as evidence that such items are reasonably usable on the non-Federal
entity’s other work. Any acceptance of
common items as allocable to the terminated portion of the Federal award must be limited to the extent that the
quantities of such items on hand, in
transit, and on order are in excess of
the reasonable quantitative requirements of other work. (b) If in a particular case, despite all
reasonable efforts by the non-Federal
entity, certain costs cannot be discontinued immediately after the effective date of termination, such costs are
generally allowable within the limitations set forth in this part, except that any such costs continuing after termination due to the negligent or willful failure of the non-Federal entity to discontinue such costs must be unallowable. (c) Loss of useful value of special
tooling, machinery, and equipment is
generally allowable if:
(1) Such special tooling, special machinery, or equipment is not reasonably capable of use in the other work of the non-Federal entity,
(2) The interest of the Federal Government is protected by transfer of title or by other means deemed appropriate by the Federal awarding agency (see also §200.313 (d)), and
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§ 200.473 2 CFR Ch. II (1–1–21 Edition)
(3) The loss of useful value for any
one terminated Federal award is limited to that portion of the acquisition cost which bears the same ratio to the
total acquisition cost as the terminated portion of the Federal award bears to the entire terminated Federal
award and other Federal awards for
which the special tooling, machinery,
or equipment was acquired.
(d) Rental costs under unexpired
leases are generally allowable where
clearly shown to have been reasonably
necessary for the performance of the
terminated Federal award less the residual value of such leases, if:
(1) The amount of such rental
claimed does not exceed the reasonable
use value of the property leased for the
period of the Federal award and such
further period as may be reasonable,
and
(2) The non-Federal entity makes all
reasonable efforts to terminate, assign,
settle, or otherwise reduce the cost of
such lease. There also may be included
the cost of alterations of such leased
property, provided such alterations
were necessary for the performance of
the Federal award, and of reasonable
restoration required by the provisions
of the lease.
(e) Settlement expenses including the
following are generally allowable:
(1) Accounting, legal, clerical, and
similar costs reasonably necessary for:
(i) The preparation and presentation
to the Federal awarding agency of settlement claims and supporting data with respect to the terminated portion
of the Federal award, unless the termination is for cause (see subpart D, including §§200.339–200.343); and (ii) The termination and settlement
of subawards.
(2) Reasonable costs for the storage,
transportation, protection, and disposition of property provided by the Federal Government or acquired or produced for the Federal award. (f) Claims under subawards, including
the allocable portion of claims which
are common to the Federal award and
to other work of the non-Federal entity, are generally allowable. An appropriate share of the non-Federal entity’s indirect costs may be allocated to the
amount of settlements with contractors and/or subrecipients, provided that the amount allocated is otherwise consistent with the basic guidelines contained in §200.414. The indirect costs so allocated must exclude the same and
similar costs claimed directly or indirectly as settlement expenses. [78 FR 78608, Dec. 26, 2013. Redesignated and
amended at 85 FR 49570, Aug. 13, 2020]
§ 200.473 Training and education costs.
The cost of training and education
provided for employee development is
allowable.
[78 FR 78608, Dec. 26, 2013. Redesignated at 85
FR 49570, Aug. 13, 2020]
§ 200.474 Transportation costs.
Costs incurred for freight, express,
cartage, postage, and other transportation services relating either to goods purchased, in process, or delivered, are
allowable. When such costs can readily
be identified with the items involved,
they may be charged directly as transportation costs or added to the cost of such items. Where identification with
the materials received cannot readily
be made, inbound transportation cost
may be charged to the appropriate indirect (F&A) cost accounts if the nonFederal entity follows a consistent, equitable procedure in this respect. Outbound freight, if reimbursable under the terms and conditions of the Federal
award, should be treated as a direct
cost.
[78 FR 78608, Dec. 26, 2013. Redesignated at 85
FR 49570, Aug. 13, 2020]
§ 200.475 Travel costs.
(a) General. Travel costs are the expenses for transportation, lodging, subsistence, and related items incurred by employees who are in travel status on
official business of the non-Federal entity. Such costs may be charged on an actual cost basis, on a per diem or
mileage basis in lieu of actual costs incurred, or on a combination of the two, provided the method used is applied to
an entire trip and not to selected days
of the trip, and results in charges consistent with those normally allowed in like circumstances in the non-Federal
entity’s non-federally-funded activities
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OMB Guidance § 200.500
policies. Notwithstanding the provisions of §200.444, travel costs of officials covered by that section are allowable with the prior written approval of the Federal awarding agency or passthrough entity when they are specifically related to the Federal award. (b) Lodging and subsistence. Costs incurred by employees and officers for travel, including costs of lodging, other
subsistence, and incidental expenses,
must be considered reasonable and otherwise allowable only to the extent such costs do not exceed charges normally allowed by the non-Federal entity in its regular operations as the result of the non-Federal entity’s written travel policy. In addition, if these costs
are charged directly to the Federal
award documentation must justify
that:
(1) Participation of the individual is
necessary to the Federal award; and
(2) The costs are reasonable and consistent with non-Federal entity’s established travel policy. (c)(1) Temporary dependent care
costs (as dependent is defined in 26
U.S.C. 152) above and beyond regular
dependent care that directly results
from travel to conferences is allowable
provided that:
(i) The costs are a direct result of the
individual’s travel for the Federal
award;
(ii) The costs are consistent with the
non-Federal entity’s documented travel policy for all entity travel; and (iii) Are only temporary during the
travel period.
(2) Travel costs for dependents are
unallowable, except for travel of duration of six months or more with prior approval of the Federal awarding agency. See also §200.432. (d) In the absence of an acceptable,
written non-Federal entity policy regarding travel costs, the rates and amounts established under 5 U.S.C.
5701–11, (‘‘Travel and Subsistence Expenses; Mileage Allowances’’), or by the Administrator of General Services,
or by the President (or his or her designee) pursuant to any provisions of such subchapter must apply to travel
under Federal awards (48 CFR 31.205–
46(a)).
(e) Commercial air travel. (1) Airfare
costs in excess of the basic least expensive unrestricted accommodations class offered by commercial airlines
are unallowable except when such accommodations would:
(i) Require circuitous routing;
(ii) Require travel during unreasonable hours;
(iii) Excessively prolong travel;
(iv) Result in additional costs that
would offset the transportation savings; or
(v) Offer accommodations not reasonably adequate for the traveler’s medical needs. The non-Federal entity must justify and document these conditions on a case-by-case basis in order for the use of first-class or businessclass airfare to be allowable in such cases.
(2) Unless a pattern of avoidance is
detected, the Federal Government will
generally not question a non-Federal
entity’s determinations that customary standard airfare or other discount airfare is unavailable for specific trips if the non-Federal entity can
demonstrate that such airfare was not
available in the specific case.
(f) Air travel by other than commercial
carrier. Costs of travel by non-Federal
entity-owned, -leased, or -chartered
aircraft include the cost of lease, charter, operation (including personnel costs), maintenance, depreciation, insurance, and other related costs. The portion of such costs that exceeds the
cost of airfare as provided for in paragraph (d) of this section, is unallowable. [78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014. Redesignated and
amended at 85 FR 49570, Aug. 13, 2020]
§ 200.476 Trustees.
Travel and subsistence costs of trustees (or directors) at IHEs and nonprofit organizations are allowable. See also
§200.475.
[85 FR 49571, Aug. 13, 2020]
Subpart F—Audit Requirements
GENERAL
§ 200.500 Purpose.
This part sets forth standards for obtaining consistency and uniformity among Federal agencies for the audit
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§ 200.501 2 CFR Ch. II (1–1–21 Edition)
of non-Federal entities expending Federal awards.
AUDITS
§ 200.501 Audit requirements.
(a) Audit required. A non-Federal entity that expends $750,000 or more during the non-Federal entity’s fiscal year in
Federal awards must have a single or
program-specific audit conducted for
that year in accordance with the provisions of this part. (b) Single audit. A non-Federal entity
that expends $750,000 or more during
the non-Federal entity’s fiscal year in
Federal awards must have a single
audit conducted in accordance with
§200.514 except when it elects to have a
program-specific audit conducted in accordance with paragraph (c) of this section. (c) Program-specific audit election.
When an auditee expends Federal
awards under only one Federal program (excluding R&D) and the Federal program’s statutes, regulations, or the
terms and conditions of the Federal
award do not require a financial statement audit of the auditee, the auditee may elect to have a program-specific
audit conducted in accordance with
§200.507. A program-specific audit may
not be elected for R&D unless all of the
Federal awards expended were received
from the same Federal agency, or the
same Federal agency and the same
pass-through entity, and that Federal
agency, or pass-through entity in the
case of a subrecipient, approves in advance a program-specific audit. (d) Exemption when Federal awards expended are less than $750,000. A non-Federal entity that expends less than $750,000 during the non-Federal entity’s
fiscal year in Federal awards is exempt
from Federal audit requirements for
that year, except as noted in §200.503,
but records must be available for review or audit by appropriate officials of the Federal agency, pass-through entity, and Government Accountability Office (GAO).
(e) Federally Funded Research and Development Centers (FFRDC). Management of an auditee that owns or operates a FFRDC may elect to treat the FFRDC as a separate entity for purposes of this part.
(f) Subrecipients and contractors. An
auditee may simultaneously be a recipient, a subrecipient, and a contractor. Federal awards expended as a recipient or a subrecipient are subject
to audit under this part. The payments
received for goods or services provided
as a contractor are not Federal awards.
Section §200.331 sets forth the considerations in determining whether payments constitute a Federal award or a payment for goods or services provided
as a contractor.
(g) Compliance responsibility for contractors. In most cases, the auditee’s compliance responsibility for contractors is only to ensure that the procurement, receipt, and payment for goods and services comply with Federal statutes, regulations, and the terms and conditions of Federal awards. Federal
award compliance requirements normally do not pass through to contractors. However, the auditee is responsible for ensuring compliance for procurement transactions which are structured such that the contractor is responsible for program compliance or the contractor’s records must be reviewed to determine program compliance. Also, when these procurement transactions relate to a major program, the scope of the audit must include determining whether these transactions are in compliance with Federal statutes, regulations, and the terms
and conditions of Federal awards.
(h) For-profit subrecipient. Since this
part does not apply to for-profit subrecipients, the pass-through entity is responsible for establishing requirements, as necessary, to ensure compliance by for-profit subrecipients. The agreement with the for-profit subrecipient must describe applicable compliance requirements and the forprofit subrecipient’s compliance responsibility. Methods to ensure compliance for Federal awards made to forprofit subrecipients may include preaward audits, monitoring during the agreement, and post-award audits. See
also §200.332.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014; 85 FR 49571, Aug. 13,
2020]
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