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the grant agreement, costs incident to used for the purposes and under the the generation of program income may conditions of the grant agreement. be deducted from gross income to de- (3) Cost sharing or matching. When autermine program income.
thorized, program income may be used (d) Governmental revenues. Taxes, spe to meet the cost sharing or matching cial assessments, levies, fines, and requirement of the grant agreement. other such revenues raised by a grantee The amount of the Federal grant award or subgrantee are not program income remains the same. unless the revenues are specifically (h) Income after the award period. identified in the grant agreement or There are no Federal requirements govFederal agency regulations as program erning the disposition of program inincome.
come earned after the end of the award (e) Royalties. Income from royalties period (i.e., until the ending date of the and license fees for copyrighted mate final financial report, see paragraph (a) rial, patents, and inventions developed of this section), unless the terms of the by a grantee or subgrantee is program
agreement or the Federal agency reguincome only if the revenues are specifi lations provide otherwise. cally identified in the grant agreement
[53 FR 8045, 8087, Mar. 11, 1988. Redesignated or Federal agency regulations as pro at 59 FR 53264, Oct. 21, 1994, as amended at 61 gram income. (See $ 600.234.)
FR 7165, 7166, Feb. 26, 1996) (f) Property. Proceeds from the sale of real property or equipment will be han
8 600.226 Non-Federal audit. dled in accordance with the require (a) Basic rule. Grantees and subments of SS 600.231 and 600.232.
grantees are responsible for obtaining (g) Use of program income. Program audits in accordance with the Single income shall be deducted from outlays Audit Act Amendments of 1996 (31 which may be both Federal and non- U.S.C. 7501-7507) and revised OMB CirFederal as described below, unless the cular A-133, “Audits of States, Local Federal agency regulations or the Governments, and Non-Profit Organigrant agreement specify another alter- Zations." The audits shall be made by native (or a combination of the alter an independent auditor in accordance natives). In specifying alternatives, the with generally accepted government Federal agency may distinguish be- auditing standards covering financial tween income earned by the grantee audits. and income earned by subgrantees and (b) Subgrantees. State or local governbetween the sources, kinds, or amounts ments, as those terms are defined for of income. When Federal agencies au- purposes of the Single Audit Act thorize the alternatives in paragraphs Amendments of 1996, that provide Fed(g) (2) and (3) of this section, program eral awards to a subgrantee, which exincome in excess of any limits stipu pends $300,000 or more (or other lated shall also be deducted from out amount as specified by OMB) in Fedlays.
eral awards in a fiscal year, shall: (1) Deduction. Ordinarily program in- (1) Determine whether State or local come shall be deducted from total al subgrantees have met the audit relowable costs to determine the net al- quirements of the Act and whether sublowable costs. Program income shall be grantees covered by OMB Circular Aused for current costs unless the Fed- 110“Uniform Administrative Requireeral agency authorizes otherwise. Pro- ments for Grants and Agreements with gram income which the grantee did not Institutions of Higher Education, Hosanticipate at the time of the award pitals, and Other Non-Profit Organizashall be used to reduce the Federal tions," have met the audit requireagency and grantee contributions rath ments of the Act. Commercial contracer than to increase the funds com tors (private for-profit and private and mitted to the project.
governmental organizations) providing (2) Addition. When authorized, pro goods and services to State and local gram income may be added to the governments are not required to have a funds committed to the grant agree- single audit performed. State and local ment by the Federal agency and the governments should use their own prograntee. The program income shall be cedures to ensure that the contractor
has complied with laws and regulations agency whenever any of the following affecting the expenditure of Federal changes is anticipated under a nonfunds;
construction award: (2) Determine whether the sub (i) Any revision which would result grantee spent Federal assistance funds in the need for additional funding. provided in accordance with applicable (ii) Unless waived by the awarding laws and regulations. This may be ac- agency, cumulative transfers among dicomplished by reviewing an audit of rect cost categories, or, if applicable, the subgrantee made in accordance among separately budgeted programs, with the Act, Circular A-110, or projects, functions, or activities which through other means (e.g., program re exceed or are expected to exceed ten views) if the subgrantee has not had percent of the current total approved such an audit;
budget, whenever the awarding agen(3) Ensure that appropriate correc- cy's share exceeds $100,000. tive action is taken within six months (iii) Transfer of funds allotted for after receipt of the audit report in in training allowances (i.e., from direct stance of noncompliance with Federal payments to trainees to other expense laws and regulations;
categories). (4) Consider whether subgrantee au- (2) Construction projects. Grantees and dits necessitate adjustment of the subgrantees shall obtain prior written grantee's own records; and
approyal for any budget revision which (5) Require each subgrantee to permit would result in the need for additional independent auditors to have access to funds. the records and financial statements. (3) Combined construction and non
(c) Auditor selection. In arranging for construction projects. When a grant or audit services, $ 600.236 shall be fol subgrant provides funding for both conlowed.
struction and nonconstruction activi(53 FR 8045, 8087, Mar. 11, 1988. Redesignated
ties, the grantee or subgrantee must at 59 FR 53264, Oct. 21, 1994, as amended at 61
obtain prior written approval from the FR 7166, Feb. 26, 1996; 62 FR 45939, 45940, Aug.
awarding agency before making any 29, 1997]
fund or budget transfer from non
construction to construction or vice Changes, Property, and Subawards
(d) Programmatic changes. Grantees or $600.230 Changes.
subgrantees must obtain the prior ap(a) General. Grantees and subgrantees proval of the awarding agency whenare permitted to rebudget within the ever any of the following actions is anapproved direct cost budget to meet ticipated: unanticipated requirements and may (1) Any revision of the scope or objecmake limited program changes to the tives of the project (regardless of approved project. However, unless whether there is an associated budget waived by the awarding agency, certain revision requiring prior approval). types of post-award changes in budgets (2) Need to extend the period of availand projects shall require the prior ability of funds. written approval of the awarding agen (3) Changes in key persons in cases cy.
where specified in an application or a (b) Relation to cost principles. The ap grant award. In research projects, a plicable cost principles (see $600.222) change in the project director or princontain requirements for prior ap cipal investigator shall always require proval of certain types of costs. Except approval unless waived by the awardwhere waived, those requirements ing agency. apply to all grants and subgrants even (4) Under nonconstruction projects, if paragraphs (c) through (f) of this sec- contracting out, subgranting (if aution do not.
thorized by law) or otherwise obtaining (c) Budget changes (1) Nonconstruc- the services of a third party to perform tion projects. Except as stated in other activities which are central to the purregulations or an award document, poses of the award. This approval regrantees or subgrantees shall obtain quirement is in addition to the apthe prior approval of the awarding proval requirements of $600.236 but
does not apply to the procurement of equipment, supplies, and general support services.
(e) Additional prior approval requirements. The awarding agency may not require prior approval for any budget revision which is not described in paragraph (c) of this section.
(f) Requesting prior approval. (1) A request for prior approval of any budget revision will be in the same budget formal the grantee used in its application and shall be accompanied by a narrative justification for the proposed revision.
(2) A request for a prior approval under the applicable Federal cost principles (see 8600.222) may be made by letter.
(3) A request by a subgrantee for prior approval will be addressed in writing to the grantee. The grantee will promptly review such request and shall approve or disapprove the request in writing. A grantee will not approve any budget or project revision which is inconsistent with the purpose or terms and conditions of the Federal grant to the grantee. If the revision, requested by the subgrantee would result in a change to the grantee's approved project which requires Federal prior approval, the grantee will obtain the Federal agency's approval before approving the subgrantee's request.
The instructions will provide for one of the following alternatives:
(1) Retention of title. Retain title after compensating the awarding agency. The amount paid to the awarding agency will be computed by applying the awarding agency's percentage of participation in the cost of the original purchase to the fair market value of the property. However, in those situations where a grantee or subgrantee is disposing of real property acquired with grant funds and acquiring replacement real property under the same program, the net proceeds from the disposition may be used as an offset to the cost of the replacement property.
(2) Sale of property. Sell the property and compensate the awarding agency. The amount due to the awarding agency will be calculated by applying the awarding agency's percentage of participation in the cost of the original purchase to the proceeds of the sale after deduction of any actual and reasonable selling and fixing-up expenses. If the grant is still active, the net proceeds from sale may be offset against the original cost of the property. When a grantee or subgrantee is directed to sell property, sales procedures shall be followed that provide for competition to the extent practicable and result in the highest possible return.
(3) Transfer of title. Transfer title to the awarding agency or to a thirdparty designated/approved by the awarding agency. The grantee or subgrantee shall be paid an amount calculated by applying the grantee or subgrantee's percentage of participation in the purchase of the real property to the current fair market value of the property.
(53 FR 8045, 8087, Mar. 11, 1988. Redesignated at 59 FR 53264, Oct. 21, 1994, as amended at 61 FR 7166, Feb. 26, 1996)
$ 600.231 Real property.
(a) Title. Subject to the obligations and conditions set forth in this section, title to real property acquired under a grant or subgrant will vest upon acquisition in the grantee or subgrantee respectively.
(b) Use. Except as otherwise provided by Federal statutes, real property will be used for the originally authorized purposes as long as needed for that purposes, and the grantee or subgrantee shall not dispose of or encumber its title or other interests.
(c) Disposition. When real property is no longer needed for the originally authorized purpose, the grantee or subgrantee will request disposition in structions from the awarding agency.
$ 600.232 Equipment.
(a) Title. Subject to the obligations and conditions set forth in this section, title to equipment acquired under a grant or subgrant will vest upon acquisition in the grantee or subgrantee respectively.
(b) States. A State will use, manage, and dispose of equipment acquired under a grant by the State in accordance with State laws and procedures. Other grantees and subgrantees will follow paragraphs (c) through (e) of this section.
(c) Use. (1) Equipment shall be used by the grantee or subgrantee in the program or project for which it was acquired as long as needed, whether or not the project or program continues to be supported by Federal funds. When no longer needed for the original program or project, the equipment may be used in other activities currently or previously supported by a Federal agency.
(2) The grantee or subgrantee shall also make equipment available for use on other projects or programs currently or previously supported by the Federal Government, providing such use will not interfere with the work on the projects or program for which it was originally acquired. First preference for other use shall be given to other programs or projects supported by the awarding agency. User fees should be considered if appropriate.
(3) Notwithstanding the encouragement in $ 600.225(a) to earn program income, the grantee or subgrantee must not use equipment acquired with grant funds to provide services for a fee to compete unfairly with private companies that provide equivalent services, unless specifically permitted or contemplated by Federal statute.
(4) When acquiring replacement equipment, the grantee or subgrantee may use the equipment to be replaced as a trade-in or sell the property and use the proceeds to offset the cost of the replacement property, subject to the approval of the awarding agency.
(d) Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part with grant lunds, 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 property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the cost of the property, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property.
(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 shall be investigated.
(4) Adequate maintenance procedures must be developed to keep the property in good condition.
(5) If the grantee or subgrantee is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return.
(e) Disposition. When original or replacement equipment acquired under a grant or subgrant is no longer needed for the original project or program or for other activities currently or previously supported by a Federal agency, disposition of the equipment will be made as follows:
(1) Items of equipment with a current per-unit fair market value of less than $5,000 may be retained, sold or otherwise disposed of with no further obligation to the awarding agency.
(2) Items of equipment with a current per unit fair market value in excess of $5,000 may be retained or sold and the awarding agency shall have a right to an amount calculated by multiplying the current market value or proceeds from sale by the awarding agency's share of the equipment.
(3) In cases where a grantee or subgrantee fails to take appropriate disposition actions, the awarding agency may direct the grantee or subgrantee to take excess and disposition actions.
(f) Federal equipment. In the event a grantee or subgrantee is provided federally-owned equipment:
(1) Title will remain vested in the Federal Government.
(2) Grantees or subgrantees will manage the equipment in accordance with Federal agency rules and procedures, and submit an annual inventory listing.
(3) When the equipment is no longer needed, the grantee or subgrantee will request disposition instructions from the Federal agency.
(g) Right to transfer title. The Federal awarding agency may reserve the right $600.235 Subawards to debarred and
suspended parties. Grantees and subgrantees must not make any award or permit any award (subgrant or contract) at any tier to any party which is debarred or suspended or is otherwise excluded from or ineligible for participation in Federal assistance programs under Executive Order 12549, "Debarment and Suspension."
to transfer title to the Federal Government or a third party named by the awarding agency when such a third party is otherwise eligible under existing statutes. Such transfers shall be subject to the following standards:
(1) The property shall be identified in the grant or otherwise made known to the grantee in writing.
(2) The Federal awarding agency shall issue disposition instructions within 120 calendar days after the end of the Federal support of the project for which it was acquired. If the Federal awarding agency fails to issue disposition instructions within the 120 calendar-day period the grantee shall follow $ 600.232(e).
(3) When title to equipment is transferred, the grantee shall be paid an amount calculated by applying the percentage of participation in the purchase to the current fair market value of the property. [53 FR 8045, 8087, Mar. 11, 1988. Redesignated at 59 FR 53264, Oct. 21, 1994, as amended at 61 FR 7166, Feb. 26, 1996)
$ 600.233 Supplies.
(a) Title. Title to supplies acquired under a grant or subgrant will vest, upon acquisition, in the grantee or subgrantee respectively.
(b) Disposition. If there is a residual inventory of unused supplies exceeding $5,000 in total aggregate fair market value upon termination or completion of the award, and if the supplies are not needed for any other federally sponsored programs or projects, the grantee or subgrantee shall compensate the awarding agency for its share.
$ 600.236 Procurement.
(a) States. When procuring property and services under a grant, a State will follow the same policies and procedures it uses for procurements from its nonFederal funds. The State will ensure that every purchase order or other contract includes any clauses required by Federal statutes and executive orders and their implementing regulations. Other grantees and subgrantees will follow paragraphs (b) through (i) in this section.
(b) Procurement standards. (1) Grantees and subgrantees will use their own procurement procedures which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this section.
(2) Grantees and subgrantees will maintain a contract administration system which ensures that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.
(3) Grantees and subgrantees will maintain a written code of standards of conduct governing the performance of their employees engaged in the award and administration of contracts. No employee, officer or agent of the grantee or subgrantee shall participate in selection, or in the award or administration of a contract supported by Federal funds if a conflict of interest, real or apparent, would be involved. Such a conflict would arise when:
(i) The employee, officer or agent,
(ii) Any member of his immediate family,
(iii) His or her partner, or
(iv) An organization which employs, or is about to employ, any of the above, has a financial or other interest in the firm selected for award. The
8 600.234 Copyrights.
The Federal awarding agency reserves a royalty-free, nonexclusive, and irrevocable license to reproduce, publish or otherwise use, and to authorize others to use, for Federal Government purposes:
(a) The copyright in any work developed under a grant, subgrant, or contract under a grant or subgrant; and
(b) Any rights of copyright to which a grantee, subgrantee or a contractor purchases ownership with grant sup port.