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quisition costs under the grant to obligated balance as of the expiration which the acquisition cost of the prop- of a grant; (3) refusal to extend a grant erty was charged. Only costs are to be or award additional funds, to make a counted—not the value of third-party competing or noncompeting continuin-kind contributions.
ation, renewal, extension, or suppleState means any of the several States mental award; or (4) voiding of a grant of the United States, the District of upon determination that the award was Columbia, the Commonwealth of Puer- obtained fraudulently, or was otherto Rico, any territory or possession of wise illegal or invalid from inception. the United States, or any agency or in Terms of a grant or subgrant mean all strumentality of a State exclusive of requirements of the grant or subgrant, local governments. The term does not whether in statute, regulations, or the include any public and Indian housing award document. agency under United States Housing Third party in-kind contributions mean Act of 1937.
property or services which benefit a Subgrant means an award of financial federally assisted project or program assistance in the form of money, or and which are contributed by non-Fedproperty in lieu of money, made under eral third parties without charge to the & grant by a grantee to an eligible grantee, or a cost-type contractor subgrantee. The term includes finan under the grant agreement. cial assistance when provided by con Unliquidated obligations for reports tractual legal agreement, but does not prepared on a cash basis mean the include procurement purchases, nor amount of obligations incurred by the does it include any form of assistance grantee that has not been paid. For rewhich is excluded from the definition ports prepared on an accrued expendiof grant in this part.
ture basis, they represent the amount Subgrantee means the government or of obligations incurred by the grantee other legal entity to which a subgrant for which an outlay has not been reis awarded and which is accountable to corded. the grantee for the use of the funds Unobligated balance means the porprovided.
tion of the funds authorized by the Supplies means all tangible personal Federal agency that has not been obliproperty other than equipment as de gated by the grantee and is determined fined in this part.
by deducting the cumulative obligaSuspension means depending on the tions from the cumulative funds aucontext, either (1) temporary with thorized drawal of the authority to obligate grant funds pending corrective action
$ 1157.4 Applicability. by the grantee or subgrantee or a deci- (a) General. Subparts A through D of sion to terminate the grant, or (2) an this part apply to all grants and action taken by a suspending official in subgrants to governments, except accordance with agency regulations where inconsistent with Federal statimplementing E.O. 12549 to imme- utes or with regulations authorized in diately exclude a person from partici- accordance with the exception provipating in grant transactions for a pe- sion of $1157.6, or: riod, pending completion of an inves- (1) Grants and subgrants to State and tigation and such legal or debarment local institutions of higher education proceedings as may ensue.
or State and local hospitals. Termination means permanent with (2) The block grants authorized by drawal of the authority to obligate pre- the Omnibus Budget Reconciliation viously-awarded grant funds before Act of 1981 (Community Services; Prethat authority would otherwise expire. ventive Health and Health Services; AlIt also means the voluntary relinquish- cohol, Drug Abuse, and Mental Health ment of that authority by the grantee Services; Maternal and Child Health or subgrantee. Termination does not in- Services; Social Services; Low-Income clude: (1) Withdrawal of funds awarded Home Energy Assistance; States' Proon the basis of the grantee's underesti- gram of Community Development mate of the unobligated balance in a Block Grants for Small Cities; and Eleprior period; (2) withdrawal of the un- mentary and Secondary Education other than programs administered by supported by a grant listed in parathe Secretary of Education under Title graph (a)(3) of this section; V, Subtitle D, Chapter 2, Section 583 (8) Grant funds awarded under subthe Secretary's discretionary grant section 412(e) of the Immigration and program) and Titles I-III of the Job Nationality Act (8 U.S.C. 1522(e)) and Training Partnership Act of 1982 and subsection 501(a) of the Refugee Eduunder the Public Health Services Act cation Assistance Act of 1980 (Pub. L. (Section 1921), Alcohol and Drug Abuse 96-422, 94 Stat. 1809), for cash assistTreatment and Rehabilitation Block ance, medical assistance, and suppleGrant and Part C of Title V, Mental mental security income benefits to refHealth Service for the Homeless Block ugees and entrants and the administraGrant).
tive costs of providing the assistance (3) Entitlement grants to carry out and benefits; the following programs of the Social
(9) Grants to local education agencies Security Act:
under 20 U.S.C. 236 through 241-1(a), (i) Aid to Needy Families with De and 242 through 244 (portions of the Impendent Children (Title IV-A of the pact Aid program), except for 20 U.S.C. Act, not including the Work Incentive 238(d)(2)(c) and 240(f) (Entitlement InProgram (WIN) authorized by section
crease for Handicapped Children); and 402(a)19(G); HHS grants for WIN are
(10) Payments under the Veterans subject to this part);
Administration's State Home Per Diem (ii) Child Support Enforcement and Program (38 U.S.C. 641(a)). Establishment of Paternity (Title IV-D
(b) Entitlement programs. Entitlement of the Act);
programs enumerated above in (iii) Foster Care and Adoption Assist
$1157.4(a) (3) through (8) are subject to ance (Title IV-E of the Act);
Subpart E. (iv) Aid to the Aged, Blind, and Dis
81157.5 Effect on other issuances. abled (Titles I, X, XIV, and XVI-AABD of the Act); and
All other grants administration pro(v) Medical Assistance (Medicaid)
visions of codified program regula(Title XIX of the Act) not including the
tions, program manuals, handbooks State Medicaid Fraud Control program
and other nonregulatory materials authorized by section 1903(a)(6)(B).
which are inconsistent with this part (4) Entitlement grants under the fol
are superseded, except to the extent lowing programs of The National
they are required by statute, or auSchool Lunch Act:
thorized in accordance with the excep(i) School Lunch (section 4 of the tion provision in $1157.6. Act), (ii) Commodity Assistance (section 6
ne 81157.6 Additions and exceptions. of the Act),
(a) For classes of grants and grantees (iii) Special Meal Assistance (section
subject to this part, Federal agencies 11 of the Act),
may not impose additional administra(iv) Summer Food Service for Chil tive requirements except in codified dren (section 13 of the Act), and
regulations published in the FEDERAL (v) Child Care Food Program (section
REGISTER. 17 of the Act).
(b) Exceptions for classes of grants or (5) Entitlement grants under the fol
grantees may be authorized only by lowing programs of The Child Nutri- OMB. tion Act of 1966:
(c) Exceptions on a case-by-case basis (i) Special Milk (section 3 of the Act). and for subgrantees may be authorized and
by the affected Federal agencies. (ii) School Breakfast (section 4 of the Act).
Subpart B-Pre-Award (6) Entitlement grants for State Ad
Requirements ministrative expenses under The Food Stamp Act of 1977 (section 16 of the $1157.10 Forms for applying for Act).
grants. (7) A grant for an experimental, pilot, (a) Scope. (1) This section prescribes or demonstration project that is also forms and instructions to be used by
governmental organizations (except hospitals and institutions of higher education operated by a government) in applying for grants. This section is not applicable, however, to formula grant programs which do not require applicants to apply for funds on project basis.
(2) This section applies only to applications to Federal agencies for grants, and is not required to be applied by grantees in dealing with applicants for subgrants. However, grantees are encouraged to avoid more detailed or burdensome application requirements for subgrants.
(b) Authorized forms and instructions for governmental organizations. (1) In ap plying for grants, applicants shall only use standard application forms or those prescribed by the granting agency with
the approval of OMB under the Paper* work Reduction Act of 1980.
(2) Applicants are not required to submit more than the original and two copies of preapplications or applications.
(3) Applicants must follow all applicable instructions that bear OMB clearance numbers. Federal agencies
may specify and describe the programs, si functions, or activities that will be
used to plan, budget, and evaluate the Ś work under a grant. Other supple
mentary instructions may be issued only with the approval of OMB to the extent required under the Paperwork Reduction Act of 1980. For any standard form, except the SF-424 facesheet, Federal agencies may shade out or instruct the applicant to disregard any line item that is not needed.
(4) When a grantee applies for additional funding (such as a continuation or supplemental award) or amends a previously submitted application, only the affected pages need be submitted. Previously submitted pages with information that is still current need not be resubmitted.
plans. This section contains additional provisions for plans that are subject to regulations implementing the Executive order.
(b) Requirements. A State need meet only Federal administrative or programmatic requirements for a plan that are in statutes or codified regulations.
(c) Assurances. In each plan the State will include an assurance that the State shall comply with all applicable Federal statutes and regulations in effect with respect to the periods for which it receives grant funding. For this assurance and other assurances required in the plan, the State may:
(1) Cite by number the statutory or regulatory provisions requiring the assurances and affirm that it gives the assurances required by those provisions,
(2) Repeat the assurance language in the statutes or regulations, or
(3) Develop its own language to the extent permitted by law.
(d) Amendments. A State will amend a plan whenever necessary to reflect: (1) New or revised Federal statutes or regulations or (2) a material change in any State law, organization, policy, or State agency operation. The State will obtain approval for the amendment and its effective date but need submit for approval only the amended portions of the plan. 81157.12 Special grant or subgrant
conditions for "high-risk" grantees. (a) A grantee or subgrantee may be considered “high risk" if an awarding agency determines that a grantee or subgrantee:
(1) Has a history of unsatisfactory performance, or
(2) Is not financially stable, or
(3) Has a management system which does not meet the management standards set forth in this part, or
(4) Has not conformed to terms and conditions of previous awards, or
(5) Is otherwise not responsible; and if the awarding agency determines that an award will be made, special conditions and/or restrictions shall correspond to the high risk condition and shall be included in the award.
(b) Special conditions or restrictions may include:
$1157.11 State plans.
(a) Scope. The statutes for some programs require States to submit plans before receiving grants. Under regulations implementing Executive Order 12372, "Intergovernmental Review of Federal Programs,” States are allowed to simplify, consolidate and substitute
(1) Payment on a reimbursement activities must be made in accordance basis;
with the financial reporting require(2) Withholding authority to proceed ments of the grant or subgrant. to the next phase until receipt of evi (2) Accounting records. Grantees and dence of acceptable performance within subgrantees must maintain records a given funding period;
which adequately identify the source (3) Requiring additional, more de and application of funds provided for fitailed financial reports;
nancially-assisted activities. These (4) Additional project monitoring; records must contain information per
(5) Requiring the grante or taining to grant or subgrant awards subgrantee to obtain technical or man and authorizations, obligations, unobliagement assistance; or
gated balances, assets, liabilities, out(6) Establishing additional prior ap lays or expenditures, and income. provals.
(3) Internal control. Effective control (c) If an awarding agency decides to and accountability must be maintained impose such conditions, the awarding for all grant and subgrant cash, real official will notify the grantee or and personal property, and other assubgrantee as early as possible, in writ sets. Grantees and subgrantees must ing, of:
adequately safeguard all such property (1) The nature of the special condi and must assure that it is used solely tions/restrictions;
for authorized purposes. (2) The reason(s) for imposing them; (4) Budget control. Actual expendi
(3) The corrective actions which must tures or outlays must be compared be taken before they will be removed with budgeted amounts for each grant and the time allowed for completing or subgrant. Financial information the corrective actions and
must be related to performance or pro(4) The method of requesting recon ductivity data, including the developsideration of the conditions/restric ment of unit cost information whentions imposed.
ever appropriate or specifically re
quired in the grant or subgrant agreeSubpart C-Post-Award
ment. If unit cost data are required, esRequirements
timates based on available documenta
tion will be accepted whenever posFINANCIAL ADMINISTRATION
(5) Allowable cost. Applicable OMB 81157.20 Standards for financial man
cost principles, agency program regulaagement systems.
tions, and the terms of grant and (a) A State must expand and account subgrant agreements will be followed for grant funds in accordance with in determining the reasonableness, alState laws and procedures for expend- lowability, and allocability of costs. ing and accounting for its own funds. (6) Source documentation. Accounting Fiscal control and accounting proce- records must be supported by such dures of the State, as well as its source documentation as cancelled subgrantees and cost-type contractors, checks, paid bills, payrolls, time and must be sufficient to
attendance records, contract and (1) Permit preparation of reports re- subgrant award documents, etc. quired by this part and the statutes au (7) Cash management. Procedures for thorizing the grant, and
minimizing the time elapsing between (2) Permit the tracing of funds to a the transfer of funds from the U.S. level of expenditures adequate to es- Treasury and disbursement by grantees tablish that such funds have not been and subgrantees must be followed used in violation of the restrictions whenever advance payment procedures and prohibitions of applicable statutes. are used. Grantees must establish rea
(b) The financial management sys- sonable procedures to ensure the retems of other grantees and subgrantees ceipt of reports on subgrantees' cash must meet the following standards: balances and cash disbursements in
(1) Financial reporting. Accurate, cur sufficient time to enable them to prerent, and complete disclosure of the fi pare complete and accurate cash transnancial results of financially assisted actions reports to the awarding agen
cy. When advances are made by letter- graph (c) of this section, and the Fedof-credit or electronic transfer of funds eral agency has determined that reimmethods, the grantee must make bursement is not feasible because the drawdowns as close as possible to the grantee lacks sufficient working captime of making disbursements. Grant ital, the awarding agency may provide ees must monitor cash drawdowns by cash or a working capital advance their subgrantees to assure that they basis. Under this procedure the awardconform substantially to the same ing agency shall advance cash to the standards of timing and amount as grantee to cover its estimated disapply to advances to the grantees. bursement needs for an initial period
(c) An awarding agency may review generally geared to the grantee's disthe adequacy of the financial manage- bursing cycle. Thereafter, the awarding ment system of any applicant for fi agency shall reimburse the grantee for nancial assistance as part of a its actual cash disbursements. The preaward review or at any time subse- working capital advance method of quent to award.
payment shall not be used by grantees
or subgrantees if the reason for using 81157.21 Payment.
such method is the unwillingness or in(a) Scope. This section prescribes the ability of the grantee to provide timely basic standard and the methods under advances to the subgrantee to meet the which a Federal agency will make pay- subgrantee's actual cash disbursements to grantees, and grantees will ments. make payments to subgrantees and (f) Effect of program income, refunds, contractors.
and audit recoveries on payment. (1) (b) Basic standard. Methods and pro Grantees and subgrantees shall discedures for payment shall minimize burse repayments to and interest the time elapsing between the transfer earned on a revolving fund before reof funds and disbursement by the questing additional cash payments for grantee or subgrantee, in accordance the same activity. with Treasury regulations at 31 CFR (2) Except as provided in paragraph part 205.
(f)(1) of this section, grantees and (c) Advances. Grantees and subgrantees shall disburse program insubgrantees shall be paid in advance, come, rebates, refunds, contract settleprovided they maintain or demonstrate ments, audit recoveries and interest the willingness and ability to maintain earned on such funds before requesting procedures to minimize the time elaps- additional cash payments. ing between the transfer of the funds (8) Withholding payments. (1) Unless and their disbursement by the grantee otherwise required by Federal statute, or subgrantee.
awarding agencies shall not withhold (d) Reimbursement. Reimbursement payments for proper charges incurred shall be the preferred method when the by grantees or subgrantees unlessrequirements in paragraph (C) of this (1) The grantee or subgrantee has section are not met. Grantees and failed to comply with grant award consubgrantees may also be paid by reim ditions or bursement for any construction grant. (ii) The grantee or subgrantee is inExcept as otherwise specified in regula- debted to the United States. tion, Federal agencies shall not use the (2) Cash withheld for failure to compercentage of completion method to ply with grant award condition, but pay construction grants. The grantee without suspension of the grant, shall or subgrantee may use that method to be released to the grantee upon subsepay its construction contractor, and if quent compliance. When a grant is susit does, the awarding agency's pay- pended, payment adjustments will be ments to the grantee or subgrantee made in accordance with $1157.43(c). will be based on the grantee's or (3) A Federal agency shall not make subgrantee's actual rate of disburse payment to grantees for amounts that ment.
are withheld by grantees or (e) Working capital advances. If a subgrantees from payment to contracgrantee cannot meet the criteria for tors to assure satisfactory completion advance payments described in para- of work. Payments shall be made by