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8 601.5 Derivative classification.

Distinct from "original" classification is the determination that information is in substance the same as information currently classified, because of incorporating, paraphrasing, restating or generating in new form information that is already classified, and marking the newly developed material consistent with the marking of the source information. Persons who only reproduce, extract, or summarize classified information, or who only apply classification markings derived from source material or as directed by a classification guide, need not possess original classification authority.

(a) If a person who applies derivative classification markings believes that the paraphrasing, restating, or summarizing of classified information has changed the level of or removed the basis for classification, that person must consult for a determination an appropriate official of the originating agency or office of origin who has the authority to upgrade, downgrade, or declassify the information.

(b) The person who applies derivative classification markings shall observe and respect original classification decisions; and carry forward to any newly created documents any assigned authorized markings. The declassification date or event that provides the longest period of classification shall be used for documents classified on the basis of multiple sources. 8 601.6 Downgrading and declassification.

Executive Order 12356 prescribes a uniform system for classifying, declassifying, and safeguarding national security information.

(a) Information shall be declassified or downgraded as soon as national security considerations permit. The National Science Foundation shall coordinate their review of classified information with other agencies that have a direct interests in the subject matter. Information that continues to meet the classification requirements prescribed by Section 1.3 despite the passage of time will continue to be protected in accordance with Executive Order 12356.

(b) Foundation documents may be declassified or downgraded by the offi

cial who authorized the original classification, if that official is still serving in the same position; the originator's successor; & supervisory official of either; or officials delegated such authority in writing by the Director.

(c) The Director shall conduct internal systematic review programs for classified information originated by the Foundation contained in records determined by the Archivist to be permanently valuable but that have not been accessioned into the National Archives of the United States.

(d) The Archivist of the United States shall, in accordance with procedures and timeframes prescribed in the Information Security Oversight Office's directives implementing E.O. 12356, systematically review for declassification or downgrading, classified records accessioned into the Na. tional Archives of the United States. Such information shall be reviewed by the Archivist for declassification or downgrading in accordance with systematic review guidelines that shall be provided by the head of the agency that originated the information, or in the case of foreign government information, by the Director of Information Security Oversight Office in consultation with interested agency heads.

8 601.7 Mandatory declassification review.

(a) The Division of Administrative Services is hereby designated as the office to which members of the public or Departments may direct requests for mandatory review for declassification under this provision. In the case of documents originally classified by the Foundation, this office shall, in turn, assign the request to the appropriate office for action within 60 days. In each instance, receipt of the request will be acknowledged in writing immediately by the office that has been assigned action. A request for classification review must reasonably describe the document.

(b) Whenever a request is deficient in its description of the record sought, the requester should be asked to provide additional identifying information to the extent possible. Whenever a request does not reasonably describe

waived for persons who are engaged in historical research projects, or previously have occupied policymaking positions to which they were appointed by the President, provided they execute written agreements to safeguard the information and written consent to the Foundation's review of their notes and manuscripts solely for the purpose of determining that no classified information is disclosed. A precondition to any such access is the favorable completion of an appropriate investigative inquiry.

the information sought, the requester shall be notified that unless additional information is provided or the scope of the request is narrowed, no further action will be undertaken. Upon a determination that the requested materi. al no longer warrants classification, it shall be declassified and made promptly available to the requester, if not otherwise exempt from disclosure under 5 U.S.C. 552(b) (Freedom of Information Act) or other provision of law. If the information may not be released in whole or in part the requester shall be given a brief statement as to the reasons for denial, a notice of the right to appeal the determination of the Classification Review Committee, and a notice that such an appeal must be filed with the Foundation within 60 days in order to be considered.

(c) When the request relates to a document given derivative classification by the Foundation or originated by another agency, the request and the document will be forwarded to the originator of the source document, and the requestor notified of such referral.

(d) Employees presently cleared for access to classified information are encouraged to challenge classification in cases where there is reasonable cause to believe that information is classified unnecessarily, improperly, or for an inappropriate period of time. Such challenges should be brought to the attention of the Security Officer (Information) who will act thereon within 30 days, informing the challenger of actions taken. Requests for confidentiality will be honored.



Subpart A-General

Sec. 602.1 Purpose and scope of this part. 602.2 Scope of subpart. 602.3 Definitions. 602.4 Applicability. 602.5 Effect on other issuances. 602.6 Additions and exceptions.

Subpart B-Pre-Award Requirements 602.10 Forms for applying for grants. 602.11 State plans. 602.12 Special grant or subgrant conditions

for “high-risk" grantees.

Subpart C—Post-Award Requirements

FINANCIAL ADMINISTRATION 602.20 Standards for financial manage

ment systems. 602.21 Payment. 602.22 Allowable costs. 602.23 Period of availability of funds. 602.24 Matching or cost sharing. 602.25 Program income. 602.26 Non-Federal audit.

8 601.8 Access to classified materials.

No person may be given access to classified information unless that person has been determined to be trustworthy and unless access is essential to the accomplishment of lawful and authorized Government purposes. 8 601.9 Access by historical researchers

and former Presidential appointees. The requirement in $ 601.8 that access to classified information may be granted only as is essential to the accomplishment of lawful and authorized Government purposes may be

CHANGES, PROPERTY, AND SUBAWARDS 602.30 Changes. 602.31 Real property. 602.32 Equipment. 602.33 Supplies. 602.34 Copyrights. 602.35 Subawards to debarred and sus

pended parties. 602.36 Procurement. 602.37 Subgrants.


(1) Earnings during a given period ENFORCEMENT

from services performed by the grant602.40 Monitoring and reporting program

ee and goods and other tangible prop. performance

erty delivered to purchasers, and 602.41 Financial reporting.

(2) Amounts becoming owed to the 602.42 Retention and access requirements grantee for which no current services for records.

or performance is required by the 602.43 Enforcement.

grantee. 602.44 Termination for convenience.

Acquisition costof an item of purSubpart D-After-the-Grant Requirements

chased equipment means the net in.

voice unit price of the property includ. 602.50 Closeout.

ing the cost of modifications, attach602.51 Later disallowances and adjust ments, accessories, or auxiliary appaments.

ratus necessary to make the property 602.52 Collection of amounts due.

usable for the purpose for which it

was acquired. Other charges such as Subpart E-Entitlements (Reserved)

the cost of installation, transportation,

taxes, duty or protective in-transit in. AUTHORITY: 42 U.S.C. 1870(a).

surance, shall be included or excluded SOURCE: 53 FR 8080, 8087, Mar. 11, 1988,

from the unit acquisition cost in acunless otherwise noted.

cordance with the grantee's regular acEDITORIAL NOTE: For additional informa

counting practices. tion, see related documents published at 49

"Administrative" requirements FR 24958, June 18, 1984, 52 FR 20178, May mean those matters common to grants 29, 1987, and 53 FR 8028, March 11, 1988. in general, such as financial manage

ment, kinds and frequency of reports, Subpart A-General

and retention of records. These are

distinguished from "programmatic" 8 602.1 Purpose and scope of this part. requirements, which concern matters

that can be treated only on a program. This part establishes uniform administrative rules for Federal grants

by-program or grant-by-grant basis


such as kinds of activities that can be and cooperative agreements and subawards to State, local and Indian

supported by grants under a particular tribal governments.


Awarding agency" means (1) with 8 602.2 Scope of subpart.

respect to a grant, the Federal agency,

and (2) with respect to a subgrant, the This subpart contains general rules

party that awarded the subgrant. pertaining to this part and procedures

Cash contributions" means the for control of exceptions from this

grantee's cash outlay, including the part.

outlay of money contributed to the 8 602.3 Definitions.

grantee or subgrantee by other public

agencies and institutions, and private As used in this part:

organizations and individuals. When "Accrued expenditures" mean the authorized by Federal legislation, Fedcharges incurred by the grantee eral funds received from other assistduring a given period requiring the

ance agreements may be considered as provision of funds for:

grantee or subgrantee cash contribu. (1) Goods and other tangible proper tions. ty received;

Contract means (except as used in (2) Services performed by employ the definitions for grant” and “subees, contractors, subgrantees, subcon- grant in this section and except tractors, and other payees; and

where qualified by "Federal) a pro(3) Other amounts becoming owed curement contract under a grant or under programs for which no current subgrant, and means a procurement services or performance is required, subcontract under a contract. such as annuities, insurance claims, "Cost sharing of matchingmeans and other benefit payments.

the value of the third party in-kind "Accrued income" means the sum of: contributions and the portion of the

costs of a federally assisted project or program not borne by the Federal Government.

Cost-type contract” means a contract or subcontract under a grant in which the contractor or subcontractor is paid on the basis of the costs it incurs, with or without a fee.

Equipment" means tangible, nonexpendable, personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit. A grantee may use its own definition of equipment provided that such definition would at least include all equipment defined above.

Expenditure report” means: (1) For nonconstruction grants, the SF-269 “Financial Status Report” (or other equivalent report); (2) for construction grants, the SF-271 “Outlay Report and Request for Reimbursement” (or other equivalent report).

"Federally recognized Indian tribal government” means the governing body or a governmental agency of any Indian tribe, band, nation, or other organized group or community (including any Native village as defined in section 3 of the Alaska Native Claims Settlement Act, 85 Stat 688) certified by the Secretary of the Interior as eligible for the special programs and services provided by him through the Bureau of Indian Affairs.

“Government" means a State or local government or a federally recognized Indian tribal government.

Grant" means an award of financial assistance, including cooperative agreements, in the form of money, or property in lieu of money, by the Federal Government to an eligible grantee. The term does not include techni. cal assistance which provides services instead of money, or other assistance in the form of revenue sharing, loans, loan guarantees, interest subsidies, insurance, or direct appropriations. Also, the term does not include assistance, such as a fellowship or other lump sun award, which the grantee is not required to account for.

Grantee" means the government to which a grant is awarded and which is accountable for the use of the funds provided. The grantee is the entire legal entity even if only a particular

component of the entity is designated in the grant award document.

"Local government" means a county, municipality, city, town, township, local public authority (including any public and Indian housing agency under the United States Housing Act of 1937) school district, special district, intrastate district, council of governments (whether or not incorporated as a nonprofit corporation under state law), any other regional or interstate government entity, or any agency or instrumentality of a local government.

Obligations" means the amounts of orders placed, contracts and subgrants awarded, goods and services received, and similar transactions during a given period that will require payment by the grantee during the same or a future period.

OMB” means the United States Office of Management and Budget.

"Outlays" (expenditures) mean charges made to the project or program. They may be reported on a cash or accrual basis. For reports prepared on a cash basis, outlays are the sum of actual cash disbursement for direct charges for goods and services, the amount of indirect expense incurred, the value of in-kind contributions applied, and the amount of cash advances and payments made to contractors and subgrantees. For reports prepared on an accrued expenditure basis, outlays are the sum of actual cash disbursements, the amount of indirect expense incurred, the value of inkind contributions applied, and the new increase (or decrease) in the amounts owed by the grantee for goods and other property received, for services performed by employees, contractors, subgrantees, subcontractors, and other payees, and other amounts becoming owed under programs for which no current services or performance are required, such as annuities, insurance claims, and other benefit payments.

Percentage of completion methodrefers to a system under which payments are made for construction work according to the percentage of completion of the work, rather than to the grantee's cost incurred.

Prior approval” means documentation evidencing consent prior to incurring specific cost.

Real property" means land, includ Termination" means permanent ing land improvements, structures and withdrawal of the authority to obliappurtenances thereto, excluding mov gate previously-awarded grant funds able machinery and equipment.

before that authority would otherwise "Share", when referring to the expire. It also means the voluntary reawarding agency's portion of real linquishment of that authority by the property, equipment or supplies, grantee or subgrantee. “Termination" means the same percentage as the does not include: (1) Withdrawal of awarding agency's portion of the ac funds awarded on the basis of the quiring party's total costs under the

grantee's underestimate of the unobli. grant to which the acquisition costs

gated balance in a prior period; (2) under the grant to which the acquisi

Withdrawal of the unobligated bal. tion cost of the property was charged.

ance as of the expiration of a grant; Only costs are to be counted-not the

(3) Refusal to extend a grant or award value of third-party in-kind contribu

additional funds, to make a competing tions. “State" means any of the several

or noncompeting continuation, renewStates of the United States, the Dis

al, extension, or supplemental award; trict of Columbia, the Commonwealth

or (4) voiding of a grant upon determiof Puerto Rico, any territory or pos

nation that the award was obtained session of the United States, or any

fraudulently, or was otherwise illegal agency or instrumentality of a State

or invalid from inception. exclusive of local governments. The Terms of a grant or subgrant” mean term does not include any public and

all requirements of the grant or subIndian housing agency under United grant, whether in statute, regulations, States Housing Act of 1937.

or the award document. Subgrant" means an award of fi Third party in-kind contributions" nancial assistance in the form of mean property or services which benemoney, or property in lieu of money, fit a federally assisted project or promade under a grant by a grantee to an gram and which are contributed by eligible subgrantee. The term includes non-Federal third parties without financial assistance when provided by charge to the grantee, or a cost-type contractual legal agreement, but does contractor under the grant agreement. not include procurement purchases, Unliquidated obligations" for renor does it include any form of assist

ports prepared on a cash basis mean ance which is excluded from the defi.

the amount of obligations incurred by nition of “grant" in this part.

the grantee that has not been paid. "Subgrantee” means the government

For reports prepared on an accrued or other legal entity to which a sub

expenditure basis, they represent the grant is awarded and which is account

amount of obligations incurred by the able to the grantee for the use of the

grantee for which an outlay has not funds provided.

been recorded. “Supplies” means all tangible personal property other than "equip

Unobligated balance” means the ment as defined in this part.

portion of the funds authorized by the "Suspension" means depending on

Federal agency that has not been oblithe context, either (1) temporary

gated by the grantee and is deterwithdrawal of the authority to obli

mined by deducting the cumulative obgate grant funds pending corrective

ligations from the cumulative funds action by the grantee or subgrantee or

authorized. a decision to terminate the grant, or (2) an action taken by a suspending of

8 602.4 Applicability. ficial in accordance with agency regu (a) General. Subparts A through D lations implementing E.O. 12549 to im. of this part apply to all grants and mediately exclude a person from par subgrants to governments, except ticipating in grant transactions for a where inconsistent with Federal statperiod, pending completion of an in utes or with regulations authorized in vestigation and such legal or debar accordance with the exception proviment proceedings as may ensue.

sion of $ 602.6, or:

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