into a contractual arrangement, the type of contract and identity of the contractor shall be furnished as well as information concerning its cost, term and the basis for selection of the contractor;

(2) Contains a detailed budget, together with procedures for adequate fiscal control, fund accounting and auditing, to assure proper disbursement for funds paid to the State under the Act; and

(3) Indicates the specific responsibilities assigned to each participating institution in the State, including a statement of the method by which the participating institutions were selected for their respective responsibilities.

(b) The designated agency shall provide information that it—

(1) Has invited all qualified institutions in the State to submit proposals for providing technical services under the Act. The invitations shall be publicly announced and issued in writing to institutions in the State that have been qualified under § 700.10.

(2) It has coordinated its programs with other States (when regional cooperation is planned) and with other publicly supported activities within the State and the extent and manner in which such coordination has been carried out by identifying such programs and activities and indicating how any duplication of other technical services programs in the State has been avoided.

(c) No annual technical services program shall be accepted for review and approval of the Director unless the Governor of the State or his designee certifies that the designated agency has―

(1) Invited all qualified institutions in the State to submit proposals for providing technical services under the Act;

(2) Coordinated its programs with other States (when regional cooperation is planned) and with other publicly supported activities within the State, as appropriate;

(3) Established adequate ethical standards and rules to insure that no officer or employee of the State, the designated agency or any participating institution shall receive compensation for technical services he performs, for which funds are provided under the Act, from sources other than his employer, and that no such officer or employee shall otherwise maintain any private interest in conflict with his public responsibility.

Each designated agency will furnish for certification in this regard a copy of the ethical standards and rules which are established to avoid any conflict of interest in connection with the administration of any plan or program receiving Federal financial assistance under the Act. Such rules shall clearly set forth the standards and procedures which officers, employees and consultants can follow to avoid any conflict of interest:

(4) Determined that matching funds will be available from State or other nonFederal sources. In addition, each designated agency shall furnish a statement to the Director showing the basis for the determination by identifying such sources. The sources of matching funds shall be those defined in § 700.2(g) and shall meet the requirements of § 700.8(i);

(5) Determined that such technical services program does not provide a service which on the date of such certification is economically and readily available in such State from private technical services, professional consultants, or private institutions. Each designated agency shall furnish a statement to the Director showing the basis for such determination;

(6) Planned no services specially related to a particular firm or company, public work or other capital project except insofar as the services are of general concern to the industry and commerce of the community, State or region. If the designated agency has planned services which are specially related to a particular firm or company, public work or other capital project, a statement shall be furnished by the designated agency to the Director describing such services and the basis for the determination that such services are of general concern to the industry and commerce of the community, State or region; and

(7) Provided for making public all reports prepared in the course of furnishing technical services supported under the Act or for making them available at cost to any person on request. Each designated agency shall furnish the Director a copy of the fee schedules for such reports or a statement showing the steps that have been taken to make such reports public.

§ 700.7 Advisory council.

(a) Appointment. Each designated agency shall appoint a public advisory council (representing broad community interests) pursuant to the requirements

of section 9 of the Act and shall furnish to the Director the following information:

(1) Names of the members of the council, their occupations, and organizational affiliations (members shall not directly participate in the planning, administration, or substantive conduct of the State technical services program);

(2) The qualifications of each of the members appointed to the council; and (3) A statement as to how such appointments give a balanced representation from relevant segments of society within the State or region, which may include such segments as business, labor, education, local government, consumers, scientists, engineers, or other professional groups.

The above information will be forwarded immediately as to each new member appointed.

(b) Review of annual program. The advisory council shall review each annual technical services program, evaluate its relation to the purposes of the Act, and report its findings, which may include appropriate recommendations, to the designated agency.

(c) Reports. A copy of each report submitted by each advisory council to the designated agency shall be sent to the Governor or his designee. The Governor or his designee shall then submit a copy of this report with such comment as is deemed appropriate to the Director with the submittal of the annual technical services program. § 700.8

Criteria for approval of State plans and programs.

No annual technical services program submitted by a designated agency of a State or by an interstate agency shall be approved by the Director unless such program is accompanied by the information called for by § 700.6(b) and other information sufficient, in the judgment of the Director, to insure that the annual program

(a) Provides coherence in the planning and program activities;

(b) Contains a method for evaluating the results of the annual program;

(c) Provides professional competence of a full-time staff of the participating institutions;

(d) Does not duplicate any other publicly-financed technical services activity or program readily available to the State;

(e) Identifies all proposed contractors and subcontractors including in

formation as to the type of contract (i.e., fixed price, cost-plus-a-fixed-fee, etc.) term, cost and the basis for the selection of the contractors and subcontractors;

(f) Provides for adequate experience and competence in the management of State or interstate programs;

(g) Contains efficient and effective plans and procedures to utilize existing State and Federal sources for collecting and disseminating technical information;

(h) Considers whether interstate plans and procedures are desirable for a more effective operation of its technical services program and, if so, provides plans looking toward an interstate agreement under section 7 of the Act; and

(i) Provides necessary matching funds as defined in § 700.2(g) and for the receipt and expenditure of any special user charges or fees under the following guidelines:

(1) The receipt ana expenditure of any special user charges or fees shall be reviewed specifically by the advisory council;

(2) The State, the designated agency or the participating institutions shall be responsible for making available the necessary matching funds;

(3) User fees in excess of those required to match Federal funds must be expended to carry out the objectives of an approved technical services program and the Director shall be informed prior to such expenditure.

(4) Excess user fees also may be used as part of matching funds for technical services programs in fiscal years subsequent to those in which the excess fees were generated; and

(5) The Director may review any fees or user charges as to their reasonableness. § 700.9 Criteria for approval of special merit programs.

No payment shall be made to any designated agency, participating institution or qualified institution, in support of a program under section 10 (c) of the act, unless the Director approves the program and determines that the program is of national, regional or special significance and is not included in any State or interstate program, taking into account the following guidelines and information which shall be furnished with the request:

(a) A description of the proposed program, a detailed budget, the particular

goals being sought under such program consistent with the specific purposes of section 10 (c) of the act, and why the program is of national or regional significance or is needed in addition to the State or any interstate program.

(b) An explanation of why such program would not be included in the annual State or interstate technical services program approved by the Director under section 6 of the act.

(c) Information as to whether such institution previously has submitted the program to the designated agency of the State or States for possible inclusion in the State or interstate program and, if previously submitted and rejected, any reasons given for such action by the designated agency.

(d) Any proposal seeking support as a program under section 10 (c) of the Act shall, as nearly as practicable, meet the requirements of section 4(b) of the Act and §700.8 except that proposed special merit programs are not required to be reviewed by advisory councils within the State or regions.

§ 700.10

"Qualified institution".

(a) Any institution of higher learning with a program leading to a baccalaureate degree in science, engineering, or business administration which is accredited by a nationally recognized accrediting agency or association listed by the Commissioner of Education for the purpose under section 2(c) of the Act (see appendix A to this part) shall be deemed to be a qualified institution of higher learning for the purposes of the Act and the regulations in this part. An institution of higher learning awarding a baccalaureate degree in science shall not be deemed to be a qualified institution (even though accredited as set forth above) unless its science program is reasonably related to business, industry, or commerce within the State or region as determined by the designated agency subject to approval or, on appeal, final decision by the Director.

(b) Any institution of higher learning awarding a baccalaureate degree in science, engineering, or business administration for which there is no accrediting agency or association listed by the Commissioner of Education under paragraph (a) of this section may make application to the Director for the special qualification of such program. Such a request, a copy of which shall be sent to the appropriate designated agency, shall

be accompanied by such information as the Director may require. If the Director determines that such institution would otherwise be deemed to be a qualified institution he shall submit the matter to the Commissioner of Education for determination under the provisions of section 2(c) of the Act. The Director shall advise the institution concerned and the appropriate designated agency of the determination of the Commissioner of Education.

(c) Any private, nonprofit institution, any private or State nonaccredited institution of higher learning, or any private or State 2-year college, shall be deemed to be a qualified institution for the purpose of the Act and the regulations in this part if the appropriate designated agency determines upon a full and complete showing, subject to approval, or an appeal, a final decision by the Director that such institution

(1) Has demonstrable competence and significant experience in the collection, dissemination, and translation of technology to business, commerce, or industry;

(2) Has management with adequate qualifications and experience;

(3) Employs a full-time professional staff which is qualified to undertake technical services programs, as evidenced by adequate education, training and experience;

(4) Has a sound and stable financial structure and provides sound fiscal management to avoid dominance or control by any part of business or group of businesses to insure broad participation; and

(5) Maintains efficient and modern plant facilities including equipment necessary to provide technical services under the Act.

(d) Any State agency shall be deemed to be a qualified institution for the purpose of the Act and the regulations in this part if the appropriate designated agency has determined upon a full and complete showing, subject to approval by the Director, that such agency

(1) Has full-time personnel with demonstrable competence and significant experience in the collection, dissemination, and translation of technology to business, commerce, or industry;

(2) Has management with such qualifications and experience as to indicate its ability to achieve the objectives of the Act;

(3) Has a full-time staff which is qualified to undertake a technical services program as evidenced by adequate education, training, and experience; and

(4) Furnishes evidence that it can acquire or obtain the use of such efficient and modern plant facilities, including such equipment as may be necessary to provide technical services under the Act.

(e) Any institution which has applied for a special merit program may request a determination of its qualifications under the foregoing criteria directly from the Director. Such determination shall be final, and notice shall be given to the other appropriate designated agencies.

(f) Nothing contained in the regulations in this part shall preclude any institution of higher learning whether accredited or nonaccredited; 2-year colleges; or nonprofit institutions from being eligible to participate in the State technical services program by a contract which is a part of the annual State program as approved by the Director. § 700.11

trols.

Recordkeeping and fiscal con

(a) Every request for Federal financial assistance under the Act shall contain a detailed budget, together with a description of the procedures which have been established for adequate fiscal control, fund accounting and auditing to assure proper disbursement for funds paid.

(b) Each recipient of a grant under the Act shall keep records containing the following information for each grant: (1) The amount of each grant received;

(2) A detailed breakdown showing the disposition of each grant;

(3) The total cost of the related approved program;

(4) The amount and nature of the cost of the program supplied by non-Federal sources, including identification of such other sources; and

(5) Such other records as may be prescribed by the Director, including reports from time to time as required under § 700.20.

(c) The designated agency and participating institution or qualified institution in case of a special merit program shall establish and maintain a separate grant account reflecting all receipts, obligations, and disbursements of funds granted under the State Technical Services Act. In addition, it must maintain and make available for audit purposes supporting fiscal records and documenta

tion (e.g., vouchers, payrolls, invoices, contracts) as evidence of grant expenditures. Such documentation shall be retained for a minimum period of 3 years after the end of the grant period or until an audit has been conducted by a representative of the Secretary of Commerce and any questions arising therefrom are resolved.

(d) The designated agency, participating institutions, and qualified institutions in case of a special merit program shall also maintain, for fiscal reporting and for such audits as the Director deems necessary, supporting documentation of expenditures of matching funds made by it or by other agencies, participating institutions, and qualified institutions in an amount equal to at least the grant expenditures. Such documentation will be as prescribed by the Director and shall as a minimum include:

(1) The name of each employee of the designated agency or any other participating institution or qualified institution in a special merit program whose salary in whole or in part is claimed for matching purposes, together with an identification of the agency in which such person is employed, the total salary paid to such person during the grant period, the amount of the salary cost claimed for matching, and a certification from the head of the agency or participating institution in which employed as to the percentage of the person's time which was devoted to the planning and related activities approved in the State application or special merit program.

(2) A copy of all travel vouchers, purchase invoices, and contracts claimed as matching expenditures.

(3) An identification of any space, facilities, supplies, or equipment contributed to and used in carrying out activities approved in the application, together with the cost of such contributed items which is reasonably attributable to such use. Such costs should preferably be computed in terms of equivalent costs of rental.

(e) Audits will be made as deemed necessary by the Director. Each recipient so audited will receive a copy of the audit findings. § 700.12

Correspondence, communications, requests for information, and inspection of records.

(a) All correspondence, inquiries, and communications concerning the operation and administration of the Act, in

cluding the submission of certifications, plans, programs, reports, information, and documents, which the Act and the regulations in this part require to be furnished to the Secretary, shall be addressed to the Director, Office of State Technical Services, Department of Commerce, Washington, D.C. 20230.

(b) The Director will supply to any person, on request, a current index of all materials which are required to be published in the FEDERAL REGISTER Or made available for public inspection and copying by the Office of State Technical Services under the provisions of 5 U.S.C. 552 (a) (1) and (a) (2).

(c) All materials which are required to be made available for public inspection and copying by the Office of State Technical Services under the provisions of 5 U.S.C. 552(a) (2) are available for such inspection and copying in the Central Reference and Records Inspection Facility of the Department of Commerce, Room 2122, Main Commerce Building, 14th Street between Pennsylvania Avenue and Constitution Avenue NW., Washington, D.C. 20230.

(d) Instructions for persons desiring, under the provisions of 5 U.S.C. 552(a) (3), to inspect records not available to the public as part of the regular public information services of the Office of State Technical Services, are contained in Part 4 of this title, and are also available from the Central Reference and Records Inspection Facility of the Department of Commerce, at the address shown in paragraph (c) of this section.

(Sec. 12, 79 Stat. 683; 15 U.S.C. 1362, Department of Commerce Order 7-A, 30 F.R. 15042, and Department of Commerce Order 64, 32 F.R. 9734) [32 F.R. 10720, July 21, 1967]

(a) Grounds. Any plan or program receiving Federal financial assistance under the provisions of the Act or the regulations in this part may be terminated by the Director, in accordance with the procedures set forth below, if he finds that any of the following conditions exist:

(1) The designated agency, participating or qualified institution, or those with whom such agency or institution has contracted or subcontracted, is not complying with the provisions of the Act, with the regulations in this part, or with the annual technical services plan or program or the special merit

program previously approved by the Director; or

(2) Any funds paid to the designated agency, participating or qualified institution under the provisions of the Act or the regulations in this part have been lost, misapplied, or otherwise diverted from or improperly used or expended for other than the purposes for which they were paid or furnished.

(b) Notice. If any of the conditions described in paragraph (a) of this section are deemed by the Director to exist and if such conditions cannot be corrected or eliminated by informal means, he shall, prior to taking action to terminate any program, furnish written notice to the agency or institution he considers to be in violation of the provisions of the Act or of the regulations in this part. Such notice shall

(1) Specify those provisions of the Act or regulations thereunder which have been violated;

(2) State the basis for the belief that such violations have occurred; and

(3) Offer the agency or institution an opportunity to provide the Director with a written answer to the statements in the notice. Such answer shall be furnished to the Director within 30 days of the receipt of his notice and shall provide a full and complete explanation together with substantiating documentation, if appropriate, of the violations described in the notice. A 30-day extension of time to answer the notice may be granted if the agency or institution requests such extension prior to the end of the original 30-day period and if such request, in the judgment of the Director, is based on good and sufficient reason.

(c) Hearings. In the event that the designated agency or institution receiving the notice provided under paragraph (b) of this section does not respond thereto within the time period provided thereunder, or if the written response to the notice does not, in the judgment of the Director, indicate that the conditions leading to the issuance of the notice have been corrected or eliminated and describe the steps taken to preclude a repetition of such conditions, the Director shall extend to the agency or institution an opportunity for a hearing on the matter. The offer of the hearing shall afford the agency or institution the right to be represented by counsel and shall set a date not less than 30 days from the time the offer of the hearing is received. The hearing shall take place