from the U.S. Treasury and the disbursement by the grantee. When advances are made by a letter-of-credit method, the grantee shall make drawdowns as close as possible to the time of making disbursements. See Exhibit F of this Handbook.

(f) Procedures for determining the reasonableness, allowability and allocability of costs in accordance with the provisions of § 1260.405 and the terms of the grant or cooperative agreement. (g) Accounting records that are supported by source documentation.

(h) Examinations in the form of audits or internal audits. Such audits shall be made by qualified individuals who are sufficiently independent of those authorizing the expenditure of NASA funds to produce unbiased opinions, conclusions or judgments. They shall meet the independence criteria along the lines of Chapter 3, Part 3 of the U.S. General Accounting Office publication, "Standards for Audit of Government Organizations, Programs, Activities and Functions." These examinations are intended to ascertain the effectiveness of the financial management systems and internal procedures that have been established to meet the terms and conditions of the agreements. It is not intended that each agreement awarded to the grantee be examined. Generally, examinations should be conducted on an organization-wide basis to test the fiscal integrity of financial transactions, as well as compliance with the terms and conditions of the NASA grants and other agreements. Such tests would include an appropriate sampling NASA agreements. Examinations will be conducted with reasonable frequency, on a continuing basis or at scheduled intervals, usually annually, but not less frequently than every 2 years. The frequency of these examinations shall depend upon the nature, size and the complexity of the activity. These examinations do not relieve the cognizant Federal audit agency of its audit responsibilities, but may affect the frequency and scope of such audits.

of

(i) A systematic method to assure timely and appropriate resolution of audit findings and recommendations.

§ 1260.512 Procurement standards.

As prescribed by Office of Management and Budget Circular A-110, the grantee's procurement practices shall be subject to the following standards:

(a) The grantee shall maintain a code of standards of conduct that shall govern the performance of its officers, employees or agents engaged in the awarding and administration of contracts using NASA funds. No employee, officer or agent shall participate in the selection, award or administration of a contract in which NASA funds are used, where, to his or her knowledge, there exists a financial interest on the part of (1) that person, (2) that person's immediate family or partners, or (3) any organization in which that person or an immediate family member or partner has a financial interest or with whom he or she is negotiating or has any arrangement concerning prospective employment. The grantee's officers, employees or agents shall neither solicit nor accept gratuities, favors or anything of monetary value from contractors or potential contractors. Such standards shall provide for disciplinary actions to be applied for violation of such standards by the recipients' officers, employees or agents.

transactions (b) All procurement shall be conducted in a manner to provide, to the maximum extent practical, open and free competition. The grantee should be alert to organizational conflicts of interest or noncompetitive practices among contractors that may restrict or eliminate competition or otherwise restrain trade. In order to ensure objective contractor performance and eliminate unfair competitive advantage, contractors that develop or draft specifications, requirements, statements of work, invitations for bids or requests for proposals should be excluded from competing for such procurements except when the grantor agency gives approval to a grantee's request to waive this requirement for a particular procurement. Awards shall be made to the bidder/offeror whose bid/offer is responsive to the solicitation and is most advantageous to the grantee, price and other factors considered. Solicitations shall clearly

set forth all requirements that the bidder/offeror must fulfill in order for the bid/offer to be evaluated by the grantee. Any and all bids/offers may be rejected when it is in the grantee's interest to do so.

(c) The grantee shall establish procurement procedures that provide for, at a minimum, the following procedural requirements:

(1) Proposed procurement actions shall follow a procedure to assure the avoidance of 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.

(2) Solicitations for goods and services shall be based upon a clear and accurate description of the technical requirements for the material, product or service to be procured. Such a description shall not, in competitive procurements, contain features which unduly restrict competition. "Brand name or equal" descriptions 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 bidders/offerors shall be clearly specified.

(3) Positive efforts shall be made by the grantee to utilize small and disadvantaged business sources of supplies and services. Such efforts should allow these sources the maximum feasible opportunity to compete for contracts utilizing NASA funds.

(4) The types of procuring instruments used, e.g., fixed-price contracts, cost reimbursable contracts, purchase orders, incentive contracts, shall be determined by the grantee but must be appropriate for the particular procurement and for promoting the best interest of the program involved. The "cost-plus-a-percentage-of-cost"

method of contracting shall not be used.

(5) Contracts shall be made only with responsible contractors who possess the potential ability to perform successfully under the terms and conditions of a proposed procurement. Consideration shall be given to such matters as contractor integrity, record of past performance, financial and

technical resources and accessibility to other necessary resources.

(6) Some form of price or cost analysis should be made in connection with every procurement action. Price analysis may be accomplished in various ways, including the comparison of price quotations submitted, market prices and similar indicia, together with discounts. Cost analysis is the review and evaluation of each element of cost to determine reasonableness, allocability and allowability.

(7) Procurement records and files for purchases in excess of $10,000 shall include the following:

(i) Basis for contractor selection;

(ii) Justification for lack of competition when competitive bids or offers are not obtained; and

(iii) Basis for award, cost or price.

(8) A system for contract administration shall be maintained to ensure contractor conformance with terms, conditions and specifications of the contract, and to ensure adequate and timely follow-up of all purchases.

(d) The grantee shall include, in addition to provisions to define a sound and complete agreement, the following provisions in all contracts. These provisions shall also be applied to subcontracts.

(1) Contracts in excess of $10,000 shall contain contractual provisions or conditions that will allow for administrative, contractual or legal remedies in instances in which contractors violate or breach contract terms, and provide for such remedial actions as may be appropriate.

(2) All contracts in excess of $10,000 shall contain suitable provisions for termination by the grantee including the manner by which termination will be effected and the basis for settlement. In addition, such contracts shall describe conditions under which the contract may be terminated for default as well as conditions where the contract may be terminated because of circumstances beyond the control of the contractor.

(3) All contracts awarded by grantees and their contractors or subgrantees having a value of more than $10,000 shall contain a provision requiring compliance with Executive Order 11246 entitled "Equal Employ

ment Opportunity," as amended by Executive Order 11375 and as supplemented in Department of Labor regulations (41 CFR Part 60).

(4) All negotiated contracts (except those of $10,000 or less) awarded by grantees shall include a provision to the effect that the grantee, NASA, the Comptroller General of the United States, or any of their duly authorized representatives, shall have access to any books, documents, papers and records of the contractor which are directly pertinent to the specific project, for the purpose of making audits, examinations, excerpts and transcriptions.

§ 1260.513 Suspension and termination procedures.

(a) Policy. When a university grant or cooperative agreement is terminated at other than its planned end date, the result can be a significant disruption in the university educational activities. NASA has established excellent relationships with hundreds of universities, including a credibility for responsibly understanding and handling the problems experienced by educational institutions. This has resulted in the retention of highly qualified investigators on NASA work and participation of the most able graduate students. To maintain that credibility, suspension and termination of grants or cooperative agreements prior to the planned completion date must be reserved for those few exceptional situations which cannot be handled any other way.

(b) Suspension. When a grantee has failed to comply with the terms of a grant or cooperative agreement, NASA may, on reasonable notice to the grantee, temporarily suspend the grant or cooperative agreement, withhold further payments, and prohibit the grantee from incurring additional obligations of funds, pending corrective action by the grantee or a decision by NASA to terminate in accordance with paragraph (c) or (d) of this section. NASA will allow all necessary and proper costs that the grantee could not reasonably avoid during the period of suspension provided that they meet the provisions of the cost principles set forth in § 1260.405.

(c) Termination for cause. NASA reserves the right to terminate any grant or cooperative agreements in whole or in part at any time before the date of completion, whenever it is determined that the grantee has failed to comply with the conditions of the instrument. NASA shall promptly notify the grantee in writing of the determination, the reasons for the termination, and the effective date. Payments made to the grantee or recoveries by NASA under grants or cooperative agreements terminated for cause shall be in accordance with the legal rights and liabilities of the parties.

(d) Termination for convenience. NASA or the grantee may terminate grants or cooperative agreements in whole or in part when both parties agree that the continuation of the project would not produce beneficial results commensurate with the further expenditure of funds. The two parties shall agree upon the termination conditions, including the effective date and, in the case of partial terminations, the portion to be terminated. The grantee shall not incur new obligations for the terminated portion after the effective date, and shall cancel as many outstanding obligations as possible. NASA shall allow full credit to the grantee for NASA's share of the noncancellable obligations, properly incurred by the grantee prior to termination.

(e) University grants and cooperative agreements. Before suspending or terminating any grant or cooperative agreement with a university as set forth in paragraphs (b) through (d) of this section, the matter shall be coordinated within NASA as prescribed in NMI 8340.1, “Actions Leading to Decisions to Terminate University Grants and Contracts for the Convenience of the Government”

§ 1260.514 Closeout procedures.

The closeout of a grant or cooperative agreement is the process by which NASA determines that all applicable administrative actions and all required work under the instrument has been completed by the grantee and NASA. Closeout procedures include the following:

(a) Upon request, NASA shall make prompt payments to a grantee for allowable reimbursable costs under the grant or cooperative agreement being closed out.

(b) The grantee shall immediately refund any balance of unobligated (unencumbered) cash that NASA has advanced or paid.

(c) NASA shall obtain from the grantee within 90 calendar days after the date of completion of the grant or cooperative agreement, all financial, performance, and other reports required as the condition of the instrument. NASA may authorize additional time for this purpose when requested by the grantee.

(d) The grantee shall account for any property acquired with Federal funds, or received from the Government in accordance with the provisions of § 1260.408.

(e) In the event a final audit has not been performed prior to the closeout of the grant or cooperative agreement, NASA shall retain the right to recover an appropriate amount after fully considering the recommendations on disallowed costs resulting from the final audit.

to provide essential procurement records and statistics through a single, uniform reporting program as a basis for required recurring and special reports to the President, the Congress, the Department of Labor, the Office of Emergency Preparedness, the General Accounting Office, the Small Business Administration, and other Federal agencies. The preparation and utilization of NASA Form 507 has been made an integral part of the agencywide system for the recording and reporting of financial and contractual status (FACS). Complete instructions covering the operation of this system are contained in the NASA Financial Management Manual.

§ 1260.602 Committee on academic science and engineering (CASE) reports.

NASA Form 1356, "Committee on Academic Science and Engineering (C.A.S.E.) Report on College and University Projects" is either submitted with funded procurement requests pursuant to NASA Management Instruction 5101.12, "Policy and Procedures Concerning Procurement," or in the case of certain non-funded actions, initiated by the procuring office. All NASA Forms 1356 will be completed, checked and promptly forwarded to the University Affairs Office, NASA Headquarters (Code LU-16), in accordance with the instructions on the form.

§ 1260.605 Status and final reports.

(a) Five copies of a brief, informal, Semiannual Status Report including a concise statement of the research accomplished during the report period shall be submitted.

(b) Upon completion of the research, the grantee shall submit five copies of a final technical report which summarizes the results of the entire project. Citation of publications resulting from the research, or abstracts thereof, may serve as all or part of this final report. Research results not intended for publication in technical journals must be in the format prescribed for NASA Technical Notes. In addition, the grantee will report to NASA whether or not any inventions required to be reported under the grant or cooperative agreement have been made in the performance of work thereunder.

(c) A properly certified final fiscal report is required for each grant and cooperative agreement. Report forms for this purpose are forwarded to the business office of the grantee institution, together with the copy of the instrument; additional forms may be requested. Two copies of the final fiscal report should be forwarded to NASA after work under the grant or cooperative agreement has been completed.

APPENDIX-LISTING EXHIBITS AND

ATTACHMENTS

Exhibit A-Assurance of Compliance-Civil Rights Act (NASA Form 1206).

Exhibit B-Research Grant Award (NASA Form 1463).

Exhibit C-Cooperative Agreement (NASA Form 1562).

Exhibit D-NASA Provisions for Research Grants and Cooperative Agreements (NASA Form 1463A).

Exhibit E-Step Funding Illustration. Exhibit F-Instructions to Recipient Organizations for Acquiring Advance Payments.

Exhibit G-Patent Rights (Small Business Firm or Nonprofit Organization). Attachment 1-Authorized Signature Card for Payment Vouchers on Letter of Credit (Standard Form 1194).

Attachment 2-Letter of Credit (Standard Form 1193).

Attachment 3-Payment Voucher on Letter of Credit (Sample) (TFS 5401). Attachment 4-Federal Cash Transactions Report (Standard Form 272).

Attachment 5-Federal Cash Transactions Report (Continuation) (Standard Form 272-A).

The preceding list of forms and instructions may be obtained by the Grantee from the Procurement Officer of the following NASA Offices:

Ames Research Center, National Aeronautics and Space Administration, Moffett Field, CA 94035

Goddard Space Flight Center, National Aeronautics and Space Administration, Greenbelt, MD 20771

John F. Kennedy Space Center, National Aeronautics and Space Administration, Kennedy Space Center, FL 32899 Langley Research Center, National Aeronautics and Space Administration, Hampton, VA 23665

Lewis Research Center, National Aeronautics and Space Administration, Cleveland, OH 44135

Lyndon B. Johnson Space Center, National Aeronautics and Space Administration, Houston, TX 77058

George C. Marshall Space Flight Center, National Aeronautics and Space Administration, Huntsville, AL 35812

National Space Technology Laboratories, National Aeronautics and Space Administration, NSTL Station, MS 39529 Headquarters Contracts and Grants Division, National Aeronautics and Space Administration, Washington, DC 20546

EXHIBIT G-PATENT RIGHTS (SMALL BUSINESS FIRM OR NONPROFIT ORGANIZATION) (JULY 1981)

(a) Definitions.

(1) "Invention" means any invention or discovery which is or may be patentable or otherwise protectable under Title 35 of the United States Code.

(2) "Subject Invention" means any invention of the Grantee conceived or first actually reduced to practice in the performance of work under this grant.

(3) "Practical Application" means to manufacture in the case of a composition or product, to practice in the case of a process or method, or to operate in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are to the extent permitted by law or Government regulations available to the public on reasonable terms.

(4) "Made" when used in relation to any invention means the conception or first actual reduction to practice of such invention.