of such loans, plus accrued interest thereon.

(2) An area shall be determined to have a substantial shortage of nurses if the number of registered nurse hours of service per patient day in the public or other nonprofit hospital serving such area is lower than the median number of registered nurse hours of service per patient day for all public or other nonprofit hospitals of its category in all States. For purposes of this paragraph, all public or other nonprofit hospitals in all States shall be grouped by the Secretary according to the following categories:

(i) Short-term general and allied special hospitals,

(ii) Psychiatric hospitals,
(iii) Tuberculosis hospitals,

(iv) Chronic and convalescent hospitals, and

(v) All other hospitals.

(3) For purposes of this paragraph, a year of service in a public or other nonprofit hospital means any 12-month period of continuous service (1) after the date the person begins service in such hospital if the area primarily served by the hospital is at that time designated as an area in which there is a substantial shortage of nurses, or (ii) after the date as of which the area is designated an area with a substantial shortage of nurses if the area was so designated subsequent to the date that such person began service in the hospital: Provided, That, when an area's designation is changed, after a borrower would otherwise be eligible for cancellation of a portion of his loan by serving in the hospital in such area, so that such area no longer has a substantial shortage of nurses, such change in designation shall not affect the eligibility of such borrower to have a portion of his loan canceled for any year in which he continues to serve as a nurse in the hospital in such area.

(4) The determination of whether a borrower is entitled to have a portion of his loan canceled in accordance with this paragraph shall be made by the institution to whose fund such loan is payable, upon receipt and evaluation of an application for cancellation from such borrower.

(5) All determinations of the Secretary pursuant to this paragraph shall be made on the basis of the latest reliable statistical data available to him.

§ 57.315 Records, reports, inspection.

(a) Records and reports. Each Federal Capital Contribution and Federal Capital Loan shall be subject to the condition that the school shall maintain such records, and file with the Secretary such reports relating to its Nursing Student Loan Fund or Funds, as the Secretary may find necessary to carry out the purposes of the Act and the regulations. Where any school has both a fund established with Federal Capital Contributions and a fund established with Federal Capital Loans, records shall be kept separately for each fund. All records shall be retained until such time as agreed upon with the Secretary that there is no further need for retention.

(b) Inspection and audit. Any application for a Federal Capital Contribution or a Federal Capital Loan shall constitute the consent of the applicant school to inspection and fiscal audit, by persons designated by the Secretary, of the fiscal and other records of the applicant school which relate to such contribution or loan.

Whenever the Secretary finds that a participating school has failed in a material respect to comply with the Act or the regulations of this subpart he may, on reasonable notice to the school, withhold further payments of Federal Capital Contributions or Federal Capital Loans, and take such other action, including the termination of any agreement, as he finds appropriate to carry out the purposes of the Act and regulations. In such case no further expenditures shall be made from the Nursing Student Loan Fund or Funds involved until the Secretary determines that there is no longer any such failure of compliance. Subpart E-Grants for Construction of Nurse Training Facilities

AUTHORITY: The provisions of this Subpart E issued under sec. 215, 58 Stat. 690, as amended; 42 U.S.C. 216.

SOURCE: The provisions of this Subpart E appear at 37 F.R. 20548, Sept. 30, 1972, unless otherwise noted.

§ 57.401 Applicability.

The regulations of this subpart are applicable to the award of grants under section 801 of the Public Health Service Act (42 U.S.C. 296) for construction grants to expand and improve nurse training facilities.

(a) All terms not defined herein shall have the same meaning as given them in section 843 of the Act.

(b) "Act" means title VIII of the Public Health Service Act.

(c) "Secretary" means the Secretary of Health, Education, and Welfare and any other officer or employee of the Department of Health, Education, and Welfare to whom the authority involved has been delegated.

(d) "Construction grant" and "grant” mean a grant of funds for the construction of an approved project as authorized under Part A of the Act and in accordance with these regulations.

(e) "Project" means all or so much of the teaching facilities including necessary equipment, with respect to which a grant is requested under Part A of the Act.

(f) "New school" means a school which, at the time of filing an application for a construction grant under this subpart has not graduated a class because of an insufficient period of operation.

(g) "Completion of construction" means that date on which the Secretary determines on the basis of certification by the grantee that the project is completed: Provided, however, In the event the applicant occupies the project prior to the date of such certification, the Secretary shall be immediately notified of such occupancy, and "completion of construction" shall be deemed to have occurred with respect to the project as of the date of such occupancy.

(h) "Equipment" includes those items which are necessary for functioning of the facility or portion thereof with respect to which the grant is made, but does not include items of current operating expense or consumed in use such as glassware, chemicals, food, fuel, drugs, paper, printed forms, books, pamphlets, periodicals, and disposable housekeeping items.

(i) "Council" means the National Advisory Council on Nurse Training (established by section 841(a) of the Act). § 57.403

Eligibility.

In order to be eligible for a grant under this subpart, an applicant shall:

(a) Meet the requirements of section 802 of the Act;

(b) Be located in a State;

(c) Be accredited as provided in section 843 (f) of the Act; and

(d) In the case of an application with respect to interim facilities, provide assurance satisfactory to the Secretary that such facilities are designed to provide teaching space on a short term (less than 10 years) basis while facilities of a more permanent nature are being planned and constructed.

(e) Provide its assessment of the environmental impact of the project as called for by section 102(2) (c) of the National Environmental Policy Act of 1969 (42 U.S.C. 433 (2) (c)).

(f) Furnish its evaluation of the project site in accordance with the terms and provisions of Executive Order 11296, 31 F.R. 10663 (August 10, 1966) relating to the evaluation of flood hazards in locating federally owned or financed facilities.

Priority in approving applications for construction grants shall be determined in accordance with the provisions of section 802(c) of the Act, and the following: (a) The availability of training opportunities for students; (b) the relative effectiveness of the project in carrying out the purposes of Part A of the Act at the least relative cost to the Government; and (c) the relative ability of the applicant to make efficient and productive use of the facility constructed, consistent with the intent of Part A of the Act.

§ 57.405

Percentage of participation ; amount of construction grant.

(a) Percentages of maximum participation. (1) The amount of any construction grant under Part A of the Act and pursuant to this subpart may not exceed 67 percent of the necessary cost of construction of a project as determined by the Secretary, except: (i) In the case of (a) a project with respect to a new school; (b) a project constituting new facilities, which will result in a major expansion of training capacity at an existing school; (c) all or so much of a project constituting a major remodeling or renovation of an existing facility which is required by a school to meet an increase in student enrollment; or (d) where the Secretary determines that unusual circumstances require a larger percent of participation in order to carry out the intent of Part A of the Act, the amount of grant made therefor may not

exceed 75 percent of the necessary cost of construction.

(2) For purposes of subparagraph (1) of this paragraph: (i) A major expansion of training capacity at an existing school shall be construed to mean that the full-time first-year enrollment at such school, upon completion, will exceed by not less than 40 students or 40 percent, whichever is greater, the highest full-time first-year enrollment at such school for any of the 5 full school years preceding the year in which the application for a construction grant is made: Provided however, That where the Secretary determines with regard to a particular school that the increased enrollment specified hereinabove cannot be achieved until the second or third full school year after completion of construction the Secretary may deem the requirements for a major expansion of training capacity as being met for each of the first or second full school years, respectively, after completion of construction if the increased first-year enrollment will equal such amount in excess of 5 percent or five students, whichever is greater, as the Secretary may specify; (ii) a major remodeling or renovation of a facility shall include only that portion of remodeling or renovation which is necessary to meet an increase in student enrollment, which increase shall be construed to mean that, during the first full school year after completion of construction and for each of the 9 school years thereafter the firstyear enrollment will exceed the highest first-year enrollment at such school for any of the 5 full school years preceding the year in which the application is made by not less than the mandatory increase as provided for under section 806 (e) (1) (A) of the Act; (iii) the Secretary may determine that unusual circumstances exist (a) where a school is located in a geographical area of the United States with a critical shortage of nursing personnel (as determined by the Secretary with the advice of Council); (b) where the project is found to be vital in preventing the curtailment of enrollment at a school; or, (c) other relevant factors consistent with this subpart and the purposes of part A of the Act. The Secretary shall make his determination with respect to unusual circumstances on the basis of such additional information and assurances as he deems necessary to make such a determination.

(a) Executive Order 11246. Each construction contract is subject to the condition that the applicant shall comply with the requirements of Executive Order 11246, 30 F.R. 12319 (Sept. 24, 1965), as amended, relating to nondiscrimination in construction contract employment, and the applicable rules, regulations, and procedures prescribed pursuant thereto.

(b) Civil Rights Act of 1964. Attention is called to the requirements of title VI of the Civil Rights Act of 1964 (78 Stat. 252, 42 U.S.C. 2000d et seq.) which provides that no person in the United States shall, on the grounds of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance. A regulation implementing such title VI, applicable to grants for construction of nurse training facilities, has been issued by the Secretary with the approval of the President (45 CFR Part 80).

(c) Discrimination on the basis of sex prohibited. Attention is called to the requirements of section 845 of the Act and to 45 CFR Part 83 which together provide that the Secretary may not make a grant, loan guarantee, or interest subsidy payment under the Act to, or for the benefit of any school of nursing or any other entity unless the application for the grant, loan guarantee, interest subsidy payment contains satisfactory to the Secretary that the school or entity will not discriminate on the basis of sex in the admission of individuals to its training programs.

assurances

§ 57.407 Terms and conditions.

In addition to any other requirements imposed by law or determined by the Secretary to be reasonably necessary with respect to particular projects to fulfill the purpose of the grant, each construction grant shall be subject to the condition that the applicant shall fur

nish and comply with the following as

surances:

(a) Title. That applicant has a fee simple or such other estate or interest in the site, including necessary easements and rights-of-way, sufficient to assure for a period not less than 20 years (or in the case of interim facilities for the period constituting the estimated useful life of such facilities) undisturbed use and possession for the purpose of the construction and operation of the facility.

(b) Competitive bids. (1) That the approval of the Secretary shall be obtained before the project is advertised or placed on the market for bidding and that such approval shall include a determination by the Secretary that the final plans and specifications conform to the minimum standards of construction and equipment as set forth in Appendix A of these regulations. (2) That, except as otherwise provided by State or local law, all contracting for construction (including the purchase and installation of built-in equipment) shall, except as provided in subparagraph (3) of this paragraph, be on a lump sum fixed-price basis, and contracts will be awarded on the basis of competitive bidding obtained by public advertising with award of the contract to the lowest responsive and responsible bidder. The provision for exceptions based on State or local law shall not be invoked to give local contractors or suppliers a percentage preference over nonlocal contractors bidding for the same contract. Such practices are precluded by this paragraph. (3) A substitute bidding procedure of selective solicitation with response from three or more bidders may be used if: (i) The applicant requests and justifies the use of the procedure; (ii) the procedure is consistent with State and local laws; and (iii) the Secretary determines that it is necessary to limit bidding to contractors of proven competence due to the complexity or specialty of the project, or that the time element is of primary consideration. When this bidding procedure is used, the applicant shall establish reasonable bid prequalification standards for contractors. The applicant shall then accept and consider bids from any contractor who requests permission to bid and who is determined by the applicant to meet these prequalification standards. Adequate time (normally 30 days) shall be allowed for contractors to prepare bids and award of construction contracts

shall be made to the lowest qualified and responsible bidder whose bid is considered fully responsive to the bid invitation.

(c) Approval of estimated cost. That applicant will enter into no construction contract or contracts, with respect to the project or any portion thereof, where the costs exceed estimates in the application for such work, without the prior approval of the Secretary.

(d) Relocation assistance. That, in the case of a public applicant with an approved project which involves the displacement of persons or businesses on or after January 2, 1971, whose real property has or will be taken, the applicant shall comply with the provisions of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (Public Law 91-646) and the applicable regulations issued thereunder; (45 CFR Part 15, as added by 36 F.R. 18838) (Sept. 22, 1971).

(e) Costs in excess of approved costs. The applicant will finance all costs in excess of the estimated costs approved in the application and submit to the Secretary for prior approval any changes that substantially alter the scope of the educational program, or of the work, functions, utilities, or safety of the facility.

(f) Completion responsibility. That applicant will construct the project, or cause it to be constructed, to final completion in accordance with the grant application and approved plans and specifications.

(g) Records and accounts. That applicant will maintain adequate and separate accounting and fiscal records and accounts for all funds provided from any source to pay the cost of the project, and permit audit of such records and accounts at any reasonable time. All records will be retained for 3 years after the close of the fiscal year in which the construction is completed. Such records may be destroyed at the end of such 3-year period if the applicant has been notified of the completion of the Federal audit by such time. If the applicant has not been so notified by the end of such 3-year period, such records will be retained (1) for 5 years after the close of the fiscal year in which the construction is completed or (2) until the grantee is notified of the completion of the Federal audit, whichever is earlier. In all cases where audit questions have arisen before the expiration of such 5-year period,

records shall be retained until resolution of all such questions.

(h) Progress reports. That applicant will furnish progress reports and such other information as the Secretary may require.

(i) Construction supervision. That applicant will provide and maintain competent and adequate architectural or engineering supervision and inspection at the construction site to insure that the completed work conforms with the plans and specifications.

(j) Non-Federal share. That sufficient funds will be available to meet the nonFederal share of the cost of constructing the facility.

(k) Funds for operation. That sufficient funds will be available after construction is completed for effective use of the facility for the purposes for which it is being constructed.

(1) Authorized uses. That the facility shall be used for the purposes for which the application has been made; that is, the nursing program (s) have exclusive use of administrative, faculty and supporting space, and priority on teaching space and equipment is allocated in accordance with the application.

(m) Prohibition against religious use. That no portion of the facility constructed with funds under Part A of the Act will be used for sectarian instruction or as a place for religious worship for so long as such facility has substantial value.

(n) Expansion of training capacity. That in the case of any application (including an application with respect to advanced training) to expand the training capacity of an existing school, the first-year enrollment at such school during the first full year after the completion of the construction and for each of the 9 school years thereafter shall exceed the highest first-year enrollment at such school for any of the 5 full years preceding the year in which the application is made by at least 5 percent of such highest first-year enrollment, or by five students, whichever is greater. This increase shall be in addition to any increase assured pursuant to section 806 (e) (1) (A) of the Act: Provided, however, That if such school is not required to meet in the fiscal year in which the application is made the enrollment increase prescribed under section 806 (e) (1) (A) because of limitations of physical facilities available to the school for training, the Secretary may, after consultation

with the Council, waive all or any portion of such requirements provided for, in this subsection if the application contains or is supported by reasonable assurances satisfactory to the Secretary that the number of first-year students enrolled at such school during the first full school year after the completion of such project and for each of the next 9 school years thereafter will be not less than the number of first-year students that such school would be required to enroll for a grant under section 806 (e) (1) (A) of the Act (without regard to paragraph (2) thereof) for a grant under section 806.

(0) New school construction. That in the case of a project for the construction of a new school, (1) the first-year enrollment at such school during the third full school year after completion of construction and for each of the seven school years thereafter shall be that number which is set forth in the application as the projected total first-year enrollment of the school, and which is determined by the Secretary to be adequate in relation to the amount of the grant, taking into consideration the most effective use of the total amount of Federal funds available, the amount of Federal funds requested by the applicant, the nature and quality of training to be provided in the facility, and other relevant factors; and (2) the first-year enrollment at such school during the first full school year after completion of construction shall be at least one-third of the number determined pursuant to subparagraph (1) of this paragraph.

(p) Wage rate standards. That any laborer or mechanic employed by any contractor or subcontractor in the performance of work on the construction of the facility shall be paid wages at rates not less than those prevailing on similar construction in the locality as determined under the Davis-Bacon Act (40 U.S.C. 276 et seq.) and shall receive compensation at a rate not less than one and one-half times his basic rate of pay for all hours worked in any workweek in excess of 8 hours in any calendar day.

(q) Clearinghouse review. That the applicant has at the earliest feasible time, notified the planning and development clearinghouse of the State and the region, if there is one, or of the metropolitan area in which the project is to be located, of its intent to apply for a grant under this subpart and of the nature of the project for which assistance has been