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CONTRACT COST PRINCIPLES AND PROCEDURES

15-712 Costs Allowable With Approval of Grantor Agency.

15-712.1 Automatic Data Processing. The cost of data processing services to grant programs is allowable. This cost may include rental of equipment or depreciation on grantee-owned equipment. The acquisition of equipment, whether by outright purchase, rental-purchase agreement or other method of purchase, is allowable only when specific prior approval of the grantor Federal agency is provided under the selected item for capital expenditures.

15–712.2 Building Space and Related Facilities. The cost of space in privately or publicly owned buildings used for the benefit of the grant program is allowable subject to the conditions stated below. The total cost of space, whether in a privately or publicly owned building, may not exceed the rental cost of comparable space and facilities in a privately owned building in the same locality. The cost of space procured for grant program usage may not be charged to the program for periods of nonoccupancy, without authorization of the grantor Federal agency.

(a) Rental Cost. The rental cost of space in a privately owned building is allowable.

(b) Maintenance and Operation. The cost of utilities, insurance, security, janitorial services, elevator service, upkeep of grounds, normal repairs and alterations and the like, are allowable to the extent they are not otherwise included in rental or other charges for space.

(c) Rearrangements and Alterations. Cost incurred for rearrangement and alteration of facilities required specifically for the grant program or those that materially increase the value of useful life of the facilities (15–712.3) are allowable when specifically approved by the grantor agency.

(d) Depreciation and Use Allowances on Publicly Owned Buildings. These costs are allowable as provided in 15-711.11.

(e) Occupancy of Space under Rental-Purchase or a Lease with Option-toPurchase Agreement. The cost of space procured under such arrangements is allowable when specifically approved by the Federal grantor agency.

15–712.3 Capital Expenditures. The cost of facilities, equipment, other capital assets, and repairs which materially increase the value or useful life of capital assets is allowable when such procurement is specifically approved by the Federal grantor agency. When assets acquired with Federal grant funds are (a) sold, (b) no longer available for use in a federally sponsored program, or (c) used for purposes not authorized by the grantor agency, the Federal grantor agency's equity in the asset will be refunded in the same proportion as Federal participation in its cost. In case any assets are traded on new items, only the net cost of the newly acquired assets is allowable.

15-712.4 Insurance and Indemnification.

(a) Costs of insurance required, or approved and maintained pursuant to the grant agreement, are allowable.

(b) Costs of other insurance in connection with the general conduct of activities are allowable subject to the following limitations:

(1) Types and extent and cost of coverage will be in accordance with general State or local government policy and sound business practice.

(2) Costs of insurance or of contributions to any reserve covering the risk of loss of, or damage to, Federal Government property are unallowable except to

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CONTRACT COST PRINCIPLES AND PROCEDURES

the extent that the grantor agency has specifically required or approved such costs.

(c) Contributions to a reserve for a self-insurance program approved by the Federal grantor agency are allowable to the extent that the type of coverage, extent of coverage, and the rates and premiums would have been allowed had insurance been purchased to cover the risks.

(d) Actual losses which could have been covered by permissible insurance (through an approved self-insurance program or otherwise) are unallowable unless expressly provided for in the grant agreement. However, costs incurred because of losses not covered under nominal deductible insurance coverage provided in keeping with sound management practice, and minor losses not covered by insurance, such as spoilage, breakage, and disappearance of small hand tools which occur in the ordinary course of operations, are allowable.

(e) Indemnification includes securing the grantee against liabilities to third persons and other losses not compensated by insurance or otherwise. The Government is obligated to indemnify the grantee only to the extent expressly provided for in the grant agreement, except as provided in (d) above.

15–712.5 Management Studies. The cost of management studies to improve the effectiveness and efficiency of grant management for on-going programs is allowable except that the cost of studies performed by agencies other than the grantee department or outside consultants is allowable only when authorized by the Federal grantor agency.

15–712.6 Preagreement Costs. Costs incurred prior to the effective date of the grant or contract, whether or not they would have been allowable thereunder if incurred after such date, are allowable when specifically provided for in the grant agreement.

15–712.7 Professional Services. Cost of professional services rendered by individuals or organizations not a part of the grantee department is allowable subject to such prior authorization as may be required by the Federal grantor agency.

15–712.8 Proposal Costs. Costs of preparing proposals on potential Federal Government grant agreements are allowable when specifically provided for in the grant agreement.

15-713 Unallowable Costs.

15–713.1 Bad Debts. Any losses arising from uncollectible accounts and other claims, and related costs, are unallowable.

15-713.2 Contingencies. Contributions to a contingency reserve or any similar provision for unforeseen events are unallowable.

15-713.3 Contributions and Donations. Unallowable.

15-713.4 Entertainment. Costs of amusements, social activities, and incidental costs relating thereto, such as meals, beverages, lodgings, rentals, transportation, and gratuities, are unallowable.

15-713.5 Fines and Penalties. Costs resulting from violations of, or failure to comply with Federal, State and local laws and regulations are unallowable.

15-713.6 Governor's Expenses. The salaries and expenses of the Office of the Governor of a State or the chief executive of a political subdivision are considered a cost of general State or local government and are unallowable.

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CONTRACT COST PRINCIPLES AND PROCEDURES

15-713.7 Interest and Other Financial Costs. Interest on borrowings (however represented), bond discounts, cost of financing and refinancing operations, and legal and professional fees paid in connection therewith, are unallowable except when authorized by Federal legislation.

15-713.8 Legislative Expenses. Salaries and other expenses of the State legislature or similar local governmental bodies such as county supervisors, city councils, school boards, etc., whether incurred for purposes of legislation or executive direction, are unallowable.

15-713.9 Underrecovery of Costs Under Grant Agreements. Any excess of cost over the Federal contribution under one grant agreement is unallowable under other grant agreements.

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Chap.

I

II

Federal Communications Commission (Parts 0-199)
Office of Science and Technology Policy and National Security

Council (Parts 200-299)

Title 48—(Reserved)

Title 49-Transportation

I

II

III

SUBTITLE A-Office of the Secretary of Transportation (Parts

0-99)
SUBTITLE B-Other Regulations Relating to Transportation
Research and Special Programs Administration, Department of

Transportation (Parts 100-199)
Federal Railroad Administration, Department of Transporta-

tion (Parts 200-299)
Federal Highway Administration, Department of Transporta-

tion (Parts 300-399) Coast Guard, Department of Transportation (Parts 400-499) National Highway Traffic Safety Administration, Department

of Transportation (Parts 500-599)
Urban Mass Transportation Administration, Department of

Transportation (Parts 600-699)
National Transportation Safety Board (Parts 800-899)
United States Railway Association (Parts 900-999)
Interstate Commerce Commission (Parts 1000-1399)

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V

VI

VIII IX x

Title 50—Wildlife and Fisheries

I

II

III

IV

United States Fish and Wildlife Service, Department of the In

terior (Parts 0-199) National Marine Fisheries Service, National Oceanic and At

mospheric Administration, Department of Commerce (Parts

200-299) International Regulatory Agencies (Fishing and Whaling)

(Parts 300-399) Joint Regulations (United States Fish and Wildlife Service, De

partment of the Interior and National Marine Fisheries Serv-
ice, National Oceanic and Atmospheric Administration, De-
partment of Commerce); Endangered Species Committee

Regulations (Parts 400-499)
Marine Mammal Commission (Parts 500-599)
Fishery Conservation and Management, National Oceanic and

Atmospheric Administration, Department of Commerce

(Parts 600-699)
Endangered Species Scientific Authority (Parts 800-899)

V

VI

VIII

CFR Index

List of CFR Titles, Chapters, Subchapters, and Parts
Parallel Tables of Statutory Authorities and Rules
Acts Requiring Publication in the Federal Register

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