Subpart 731.7-Contracts With Nonprofit Organizations

731.770

OMB Circular A-122, Cost Principles for Nonprofit Organizations; AID implementation.

(a) Paragraph 6 of the transmittal letter for OMB Circular A-122 specifies that "Agencies shall designate a liaison official to serve as the agency representative on matters relating to the implementation of this Circular." The Director, Office of Procurement, has been so designated. The Overhead and Special Cost and Contract CloseOut Branch, Office of Procurement (OCC) provides staff assistance to the Director concerning OMB Circular A122. OSC is also responsible for obtaining cognizance under the criteria in the transmittal letter for OMB Circular A-122; for liaison with other cognizant agencies; for authorizing exclusion of OMB Circular A-122 coverage for a particular nonprofit organization pursuant to paragraph 5 of the OMB Circular A-122 transmittal letter; and for advice and assistance in applying OMB Circular A-122 cost principles.

(b) Paragraph 4b of the OMB Circular A-122 transmittal letter contains a definition of "prior approval" as follows:

Prior approval means securing the awarding agency's permission in advance to incur costs for those items that are designated as requiring prior approval by OMB Circular A 122. Generally, this permission will be in writing. Where an item of cost requiring prior approval is specified in the budget of an award, approval of the budget constitute approval of that cost.

Consequently, an award containing a budget constitutes prior approval of the direct cost item in the budget, unless otherwise annotated. Accordingly, award budgets should be appropriately annotated substantially as follows:

Inclusion of any cost in the line item budget of this award does not obviate the requirement for prior approval of cost items designated as requiring prior approval by OMB Circular A 122. or

In accordance with the requirements to OMB Circular No A 122. approval is grant ed to incur costs for (name specific item or items) which are included in the budget of this award.

[49 FR 13250, Apr. 3, 1984, as amended at 50 FR 50302, Dec. 10, 1985; 51 FR 20651, June 6, 19861

731.771 Bid and proposal costs.

Pending the establishment of Government-wide principles in Attachment B of OMB Circular A-122, AID will treat bid and proposal costs as follows:

(a) Bid and proposal costs are the costs of preparing bids, proposals, and applications for potential activities such as Government and non-Government grants, contracts and other agreements, including the development of scientific, cost, and other data needed to support such bids, proposals, and applications. Except as provided in (b) below, bid and proposal costs of the current accounting period of both successful and unsuccessful bids and proposals normally should be treated as indirect costs for allocation to all current activities, and no bid and proposal costs of past accounting periods will be allocable to the current period. However, if the organization's established practice is to treat bid and proposal costs by some other method, the results obtained may be accepted only if found to be reasonable and equitable.

(b) Bid and proposal costs incurred by the organization to obtain unrestricted funds are to be treated as fund raising and allocated an appropriate share of indirect costs under the conditions described in paragraph B.3 of Attachment A to OMB Circular A-122.

731.772 Compensation for personal serv. ices.

(a) It is AID policy to require prior approval by the contracting officer before reimbursing a contractor for employees compensation which exceeds the FS 1 rate, as set forth in the payment schedule of the Uniform State/AID/USIA Regulations. The contracting officer's approval will be obtained as specified in 731 205 6.

(b) For policies on compensation of third country national or cooperating country national contractor employ. ees, see 722 170

(c) Overseas Recruitment Incentive. (The term "employee", as used in this

paragraph, means an employee who is a U.S. citizen or resident alien.) (1) Contractor employees serving overseas under a contract, who do not qualify for a U.S. tax exemption for overseas income provided under section 911 of the U.S. Internal Revenue Code (26 U.S.C. 911), are eligible to receive a salary supplement (overseas recruitment incentive). The overseas recruitment incentive (ORI) shall not exceed a maximum of ten percent of the base salary per individual for the period of eligible services. This supplement, if offered by the contractor, shall be paid at the end of an employee's tour of duty overseas. The contractor shall require the employee to furnish a certification of the employee's non-eligibility for section 911 exclusion. Any questions of eligibility shall be settled by the Contracting Officer.

(2) This supplement will not be paid in an amount which would cause the employee's salary to exceed the maximum payable annual or daily rate for a Foreign Service Officer Class FS-1 in effect at the time the base salary was earned. The FS-1 rate is set forth in the payment schedule of the Uniform State/AID/USIA Regulations, as from time to time amended. Any exception to the FS-1 limitation must be approved by the Contracting Officer.

(3) In the event that an employee subsequently receives a section 911 exclusion for any part of the base salary upon which this supplement has been paid, such supplement or appropriate portion thereof shall be reimbursed by the contractor to AID with interest. The interest shall be calculated at the average U.S. Treasury rate in effect for the period that the contractor or his employee had the funds. Neither the contractor's nor the subcontractor's inability to collect refunds from eligible employees shall be used as a basis to excuse subsequent refunds by the contractor to AID.

(d) The workweek for the contractor's overseas employees should take into consideration local practices and, in collaboration with the Mission Director, shall be established to coincide with the workweek for those employ ees of the AID Mission and/or the cooperating country.

732.401 Statutory authority.

(a) Sections 635(b) of the Foreign Assistance Act and Executive Order 11223, May 12, 1955, 30 FR 6635, permit the making of advance payments with respect to functions authorized by the Foreign Assistance Act. Advance payments may also be made under section 305 of the Property Act, which provides authority, not otherwise available to AID, to take a paramount lien.

(b) The Act of August 28, 1968, Pub. L. 85-804 does not apply to AID. [49 FR 13252, Apr. 3, 1984]

732.403 Applicability.

References to nonprofit contracts with nonprofit educational or research institutions for experimental, research and development work include non

732.406-70-2 Circumstances for use of an LOC.

The LOC shall be used under the following circumstances:

(a) The contracting officer has determined that an advance payment is necessary and appropriate in accordance with this subpart, the guidance provided in Subpart 32.4 of the FAR, and Chapter 15E of AID Handbook 1, Supplement B;

(b) The agency has, or expects to have, a continuing relationship of at least one year with the recipient organization, and the annual amount required for advance financing will be at least $120,000;

(c) The Office of Financial Manage ment, Program Accounting and Fi nance Division (M/FM/PAFD) agrees that the LOC payment method is appropriate; and

(d) The recipient organization's financial institution has entered into an agreement with the U.S. Treasury on the use of the LOC.

732.406-70-3 Establishing an LOC.

(a) An LOC is established by M/FM/ PAFD under rules and procedures issued by the Treasury Department. While the contract will provide for the use of an LOC when it is justified under 732.406 70 2, the LOC is a separate agreement between the contrac tor and M/FM/PAFD, acting on behalf of the AID Controller. The terms and conditions of the LOC are established by the LOC.

(b) An LOC is established upon the request of the contracting officer, with the consent of M/FM/PAFD. The request to M/FM/PAFD must be made in writing as early in the negotiation cycle as possible, and must include the following information:

(1) The name and address of the contractor, and the name, address, and telephone number of the contractor's representative for matters concerning establishment of the LOC.

(2) The name and address of the contractor's financial institution.

(3) The contracting officer's justification for an advance payment.

(4) The estimated total amount of the contract, and estimated frequency and amount of drawdowns against the LOC.

(5) A copy of the contractor's proposal.

(6) A copy of the PIO/T.

(7) Any other information specified by M/FM/PAFD.

(8) Any special conditions or restrictions to be addressed in the LOC such as subadvances, special approval for subadvances, etc.

(c) M/FM/PAFD will respond to the contracting officer's request within 5 working days of receipt by either:

(1) Concurring in the request (either

as received, or with suggested

changes).

(2) Requesting additional information.

(3) Rejecting the request for specified reasons.

(d) Rejection by M/FM/PAFD may be appealed to the head of the contracting activity (HCA) and the AID Controller for a final decision.

(e) If an LOC is to be used:

(1) The contracting officer will:

(i) Prepare the appropriate findings, determination, and authorization for advance payment for signature by the HCA or his/her authorized designee.

(D) Transmit a signed copy of the findings, determination and authorization to M/FM/PAFD, together with a signed copy of the contract authorizing the LOC (see 732 406 70-4).

(1) Include the LOC material provided by M FM PAFD, under 732 40670 3(x2)(v), in the official contract file.

(2) M. FM PAFD will:

ing, considering, and determining as fully and finally as might the Administrator, appeals by contractors from decisions on disputed questions taken pursuant to the provisions of contracts requiring the determination of such appeals by the Administrator or his/ her duly authorized representative or Board.

(b) In acting under this designation, the ASBCA will follow such rules and procedures as are or may be prescribed for the conduct of Defense Department contract appeal cases, except for the rules entitled "Forwarding of Appeals" (Rule 3) and "Duties of the Contracting Officer" (Rule 4), which subjects will be governed by procedures to be promulgated by the General Counsel of AID with approval of the Chairman of the ASBCA.

(c) The General Counsel of AID will assure representation of the interests of the Government in proceedings before the ASBCA.

(d) All officers and employees of AID will cooperate with the ASBCA and Government counsel in the processing of appeals so as to assure their speedy and just determination.

(e) This designation will apply to appeals which have not been docketed by the AID Board of Contract Appeals before November 1, 1965, and, to such extent and in such manner as may be agreed upon by the General Counsel of AID and the Chairman of the ASBCA to appeals docketed before that date.

(f) The General Counsel of AID will assure that all matters docketed by the AID Board of Contract Appeals before November 1, 1965, are transferred or brought to completion, that no appeals will subsequently be docketed by that Board, that upon completion of its business the records and files of the Board will be transferred to the Executive Secretary of AID. The General Counsel will thereupon dissolve the Board.

733.7002 Special procedures regarding contract disputes appeals promulgated pursuant to Paragraph 2 of the Administrator's Designation.

(a) The following rules will apply, in lieu of Rules 3 and 4(a) of the ASBCA,

to contract dispute appeals to the Administrator of the AID or his/her authorized representative which are docketed with that Board.

(b) Rule 3 (AID). Forwarding of Appeals. When a notice of appeal in any form has been received by the contracting officer, he/she shall endorse thereon the date of mailing (or date or receipt, if otherwise conveyed) and within 10 days shall forward said notice of appeal to the Board with a copy to the AID General Counsel in Washington, D.C. Following receipt by the Board of the original notice of an appeal (whether through the contracting officer or otherwise), the contractor, the contracting officer, and the AID General Counsel will be promptly advised of its receipt, and the contractor will be furnished a copy of these rules.

(c) Rule 4 (AID). Preparation, Contents, Organization, Forwarding, and Status of Appeal File (Supersedes Rule 4. "Duties of Contracting Officer" of the ASBCA rules in effect on Septem

ber 30, 1965).

(d) Duties of Contracting Officer. Within 30 days of receipt of an appeal, or advice that an appeal has been filed, the contracting officer shall as semble and transmit to the AID General Counsel in Washington, D.C., two copies of all documents pertinent to the appeal, including:

(2) The contract, including specifications and pertinent amendments. plans and drawings;

(3) All correspondence between the parties pertinent to the appeal, including the letter or letters of claim in response to which the decision was issued;

(4) All transcripts of any testimony taken during the course of proceed ings, and affidavits or statements of any witnesses on the matter in dispute made prior to the filing of the notice of appeal with the Board; and

(5) Any additional information considered pertinent.

(e) The General Counsel will compile the appeal file from such documents, which file must contain the items enumerated in (d) (1) through (5) above and will promptly, and in any event within 65 days after the appeal is docketed by the Board. transmit the appeal file to the Board. The General Counsel will notify the appellant when he/she has compiled the appeal file, will provide him her with a list of its contents, and will afford him/her an opportunity to examine the complete file at the office of the Board and, if the General Counsel deems it appropriate, at any overseas location, for the purpose of satis fying himself/herself as to the contents, and furnishings or suggesting any additional documentation deemed pertinent to the appeal. After receipt of the foregoing file, as it may be augBoard will promptly advise the parties.