"Percentage of completion method" refers to a system under which payments are made to the recipient for construction according to a schedule which relates the amount and timing of each payment primarily or solely to the actual percentage of completion of the construction work under the grant or contract rather than to the recipient's actual rate of disbursements.

"Reimbursement by Treasury check" is a payment made to a recipient with a Treasury check upon request for reimbursement from the recipient.

(20 U.S.C. 1232d; OMB Circular No. A-102, Attachment J.)

§ 100a.62 Payment methods for nonconstruction projects.

(a) Letters of credit will be used to pay recipients when all of the following conditions exist:

(1) there is or will be a continuing relationship between the recipient and the responsible Department finance office for at least a twelve-month period and the total amount of advances to be received from the finance office is $250,000 or more, as prescribed by Treasury Circular No. 1075;

(2) the recipient has established, or demonstrated to the Commissioner the willingness and ability to establish procedures that will minimize the time elapsing between the transfer of funds from the Treasury and their disbursement by the recipient; and

(3) the recipient's financial management system meets the standards for fund control and accountability prescribed in Subpart P of this part.

(b) Advances by Treasury check will be used, in accordance with the provisions of Treasury Circular No. 1075, when the recipient meets all of the requirements specified in paragraph (a) of this section except those in paragraph (a)(1) of this section.

(c) Reimbursement by Treasury check will be the preferred (although not mandatory) method when the recipient does not meet the requirements specified in either or both of paragraphs (a) (2) and (a) (3) of this section. This method may also be used when the major portion of the program is accomplished through private market financing or Federal loans, and the Federal assistance constitutes a minor portion of the program.

(d) Recipients will be authorized to submit no less often than monthly their requests for advances or reimbursements

when letters of credit or predetermined automatic Treasury check advances are not used.

(20 U.S.C. 1232d; OMB Circular No. A-102, Attachment J.)

§ 100a.63 Payment methods for construction projects.

(a) The percentage of completion method will not be used to pay for construction.

(b) Reimbursement by Treasury check shall be the preferred method when the recipient does not meet the requirements specified in § 100a.62(a) (2) and (3), and may be used for any other construction grant or contract except where the Commissioner has entered into an agreement with a recipient to use a letter of credit for all Federal assistance, including assistance for construction.

(c) When the reimbursement by Treasury check method is used, recipients will be authorized to submit no less often than monthly their requests for reimbursement.

(d) When the reimbursement by Treasury check method is not used, § 100a.62 (a) and (b) shall be applicable to the construction grant or contract. Implementing procedures under § 100a.62 (a) and (b) will be insofar as possible the same for construction grants and contracts as for nonconstruction grants and contracts awarded to the same recipient.

(20 U.S.C. 1243d; OMS Circular No. A-102, Attachment J.)

§ 100a.64 Withholding of payments.

Unless otherwise required by law, payments for proper charges, incurred by recipients will not be withheld unless the grant or contract is suspended pursuant to 100a.495 (c), or the recipient is indebted to the United States and collection of the indebtedness will not impair the accomplishment of the objectives of any grant or contract program sponsored by the United States. When a grant or contract is suspended, payment adjustments will be made in accordance with § 100a.495. When an indebtedness is to be collected, the Commissioner may, upon reasonable notice to the recipient, withhold from the recipient the right to receive payments under the grant or contract or require appropriate accounting adjustments to recorded cash balances for which the recipient is accountable to the Federal

(b) The principles to be used in determining the allowable costs of work performed by commercial organizations under cost-type contracts awarded to them are set forth in 41 CFR Subpart 1-15.2.

(20 U.S.C. 1221c(b)(1).)

Subpart H-Matching and Cost Sharing § 100a.90 Purpose and scope.

This subpart sets forth criteria and procedures for the allowability and evaluation of cash and in-kind contributions in satisfying matching or cost sharing requirements.

(OMB Circular No. A-102, Attachment F.) § 100a.91

Definitions.

"Cash contributions" means the recipient's cash outlay, including the outlay of money contributed to the recipient by third parties. Unless authorized by Federal legislation, outlays charged to other Federal grants or to Federal contracts may not be considered as recipient's cash contributions.

"In-kind contributions" represent the value of noncash contributions provided by the recipient or third parties. In-kind contributions may consist of charges for real property and nonexpendable personal property, and the value of goods and services directly benefiting and specifically identifiable to the federallysupported activity. Unless otherwise authorized by Federal legislation, charges for property purchased wholly with Federal funds, and charges based on the Federal share of the value of property purchased partly with Federal funds, may not be considered as the recipient's in-kind contributions.

"Matching or cost sharing" represents, in general, that portion of project costs not borne by the Federal Government.

"Project costs" means the sum of (a) the allowable costs incurred by the reciplent and (b) the allowable in-kind contributions made by third parties. (OMB Circular No. A-102, Attachment F.) § 100a.92 Allowability.

(a) Matching or cost sharing may consist of:

(1) Charges incurred by the recipient as project costs. Not all charges require cash outlays during the grant period by the recipient; examples are depreciation and use allowances for buildings and equipment.

(2) Project costs financed with cash contributed or donated to the recipient by third parties.

(3) Project costs represented by inkind contributions made by non-Federal third parties. Where in-kind contributions are made by the Federal Government, they may be included in the recipient's matching or cost sharing only if Federal legislation authorizes such inclusion.

(b) All contributions whether cash or in-kind (including in-kind contributions from third parties) shall be accepted as part of the recipient's matching or cost sharing when such contributions:

(1) Are identifiable from the recipient's records,

(2) Are not included as contributions for any other federally assisted program, or any Federal contract,

(3) Are necessary and reasonable for proper and efficient accomplishment of project objectives,

(4) If made by the recipient, are types of costs which are allowable under the applicable cost principles specified in Subpart G of this part,

(5) Are not borne by the Federal Government directly or indirectly under any Federal grant or contract (unless the other grant or contract may, under authority of law, be used for matching or cost sharing), and

(6) Conform to other applicable provisions of this subpart.

(OMB Circular No. A-102, Attachment F.)
§ 100a.93 Valuation of in-kind contri-
butions from third parties.

(a) Valuation of volunteer services.(1) General. Volunteer services may be furnished by professional and technical personnel, consultants, and other skilled and unskilled labor. Volunteered service may be counted as matching or cost sharing if it is an integral and necessary part of an approved program.

(2) Rates for volunteer services. Rates for volunteers should be consistent with those regular rates paid for similar work in other activities of the recipient. In cases where the kinds of skills required for the federally assisted activities are not found in the other activities of the recipient, rates used should be consistent with those paid for similar work in the labor market in which the recipient competes for the kind of services involved.

(3) Volunteers employed by other organizations. When an employer other than the recipient furnishes the services

of an employee, these services shall be valued at the employee's regular rate of pay (exclusive of fringe benefits and overhead cost) provided these services are in the same skill for which the employee is normally paid.

(b) Valuation of donated real or tangible personal property or use thereof.(1) Donation of title. If the donor transfers title to the property, the amount to be allowed as matching or cost sharing shall be determined as if the recipient had purchased the property and had paid the fair market value of the property at the time of transfer.

(2) Donation of use. If only use of the property is donated, and the donor retains title, the amount to be allowed as matching or cost sharing shall be determined as if the recipient had rented the property and had paid the property's fair rental value.

(3) Appraisal. The Commissioner may require that the value of real property be established by an independent appraiser (1.e., a private realty firm or a General Services Administration representative) and certified by the responsible official of the recipient as a precondition to allowability for matching or cost sharing purposes.

(c) Valuation of other in-kind contributions by third parties. Other necessary in-kind contributions made by third parties specifically for and in direct benefit to the project may be accepted as matching or cost sharing: Provided, That they are adequately supported and permissible under the law. Such charges must be reasonable and properly justifiable.

(OMB Circular No. A-102, Attachment F.) § 100a.94 Supporting records for inkind contributions from third parties. The following requirements pertain to the recipient's supporting records for inkind contributions from third parties:

(a) The extent of volunteer services must be supported by the same methods used by the recipient for its employees.

(b) The basis for determining the charges for personal services, material, equipment, buildings and land must be documented.

(OMB Circular No. A-102, Attachment F.) Subpart I-Procurement Standards Scope of subpart.

§ 100a.100

This subpart provides standards for use by recipients in establishing procedures for the procurement of supplies,

equipment, construction, and other services whose cost is borne in whole or in part as a direct charge by the Federal Government. These standards are furnished to insure that such materials and services are obtained in an effective manner and in compliance with the provisions of applicable Federal law and Executive Orders.

(OMB Circular No. A-102, Attachment O.) § 100a.101 General.

(a) Recipients may use their own procurement policies provided that procurements whose cost is borne in whole or in part as a direct charge by the Federal Government adhere to the standards set forth in this subpart.

(b) The standards contained in this subpart do not relieve the recipient of the responsibilities arising under its contracts. The recipient is the responsible authority regarding the settlement and satisfaction of all contractual and administrative issues arising out of procurements entered into in support of a grant or contract. This includes but is not limited to: Disputes, claims, protests of award, source evaluation, or other matters of a contractual nature. Matters concerning violation of law are to be referred to such local, State, or Federal authority as may have proper jurisdiction.

(OMB Circular No. A-102, Attachment O.) § 100a.102 Code of conduct.

The recipient shall maintain a code or standard of conduct which shall govern the performance of its officers, employees, or agents in contracting with and expending Federal funds. The reciplent's officers, employees or agents shall neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or potential contractors. To the extent permissible under State or local law, rules or regulations, or if the recipient is not a State or local government to the extent that the recipient determines that it has the legal and practical capacity for enforcement, such standards shall provide for appropriate penalties, sanctions, or other disciplinary actions to be applied for violations of such standards either by the recipients' officers, employees, or agents, or by contractors of their agents. (OMB Circular No. A-102, Attachment O.) § 100a.103 Free competition.

All procurement transactions of the recipient, regardless of whether nego

tiated or advertised and without regard to dollar value, shall be conducted in a manner so as to provide maximum open and free competition. The recipient should be alert to organizational conflicts of interest or noncompetitive practices among contractors which may restrict or eliminate competition or otherwise restrain trade.

(OMB Circular No. A-102, Attachment O.) § 100a.104 Procedural requirements.

The recipient shall establish procurement procedures which provide for, as a minimum, the following:

(a) Proposed procurement actions shall be reviewed by appropriate officials of the recipient to avoid purchasing unnecessary or duplicative items. Where appropriate, an analysis shall be made of lease and purchase alternatives to determine which would be the most economical, practical procurement.

(b) Invitations for bids or requests for proposals shall be based upon a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description shall not, in competitive procurements, contain features which unduly restrict competition. "Brand name or equal" description may be used as a means to define the performance or other salient requirements of a procurement, and when so used, the specific features of the named brand which must be met by offerors should be clearly specified.

(c) Positive efforts shall be made by the recipient to utilize small business and minority-owned business sources of supplies and services. Such efforts should allow these sources the maximum feasible opportunity to compete for contracts to be performed under Federal grants or contracts.

(d) The type of procuring instruments used (ie., fixed-price contracts, cost reimbursable contracts, purchase orders, incentive contracts, etc.), shall be appropriate for the particular procurement and for promoting the purposes of the project or program involved. The "costplus-a-percentage-of-cost" method of contracting shall not be used.

(e) If the recipient is a State or local government, formal advertising, with adequate purchase description, sealed bids, and public openings shall be the required method of procurement unless negotiation pursuant to § 100a.105 is necessary to accomplish sound procurement. However, procurements of $2,500 or less

90-004-76-3

need not be so advertised unless otherwise required by State or local law or regulations. When formal advertising is employed by the State or local government:

(1) The awards shall be made to the responsible bidder whose bid is responsive to the invitation and is most advantageous to the State or local government, price and other factors considered. Factors such as discounts, transportation costs, and taxes may be considered in determining the lowest bid.

(2) Invitations for bids shall clearly set forth all requirements which the bidder must fulfill in order for his bid to be evaluated by the State or local government.

(3) Any or all bids may be rejected when it is in the State or local government's interest to do so, and such rejections are in accordance with applicable State or local law, rules, and regulations. (OMB Circular No. A-102, Attachment O.) § 100a.105 Negotiated procurements by State or local governments.

(a) Procurements may be negotiated by State or local government recipients if it is not practicable or feasible to use formal advertising. Generally, procurements may be negotiated if one or more of the following conditions prevail:

(1) The public exigency will not permit the delay incident to advertising;

(2) The material or service to be procured is available from only one person or firm; all contemplated sole source procurements where the aggregate expenditure is expected to exceed $5,000 shall be referred to the Commissioner for prior approval;

(3) The aggregate amount involved does not exceed $2,500;

(4) The contract is for personal or professional services, or for any service to be rendered by a university, college, or other educational institution;

(5) The material or services are to be procured and used outside the limits of the United States and its possessions;

(6) No acceptable bids have been received after formal advertising;

(7) The purchases are for highly perishable materials or medical supplies, for material or services where the prices are established by law, for technical items or equipment requiring standardization and interchangeability of parts with existing equipment, for experimental, developmental or research work, for supplies purchased for authorized resale, and 23