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OFFICE OF MANAGEMENT AND management community, the amended by the Digital Accountability BUDGET Administration established the Results- and Transparency Act (DATA Act). Oriented Accountability for Grants Finally, OMB is implementing 2 CFR Parts 25, 170, 183, and 200 Cross Agency Priority Goal (Grants CAP revisions to 2 CFR to clarify areas of Goal) in the President’s Management misinterpretation. The revisions are Guidance for Grants and Agreements Agenda on March 20, 2018 (available at: intended to reduce recipient burden by https://www.performance.gov/CAP/ improving consistent interpretation. ACTION: Final guidance. grants/). The Grants CAP Goal OMB consulted and collaborated with SUMMARY: The Office of Management recognizes that grants managers report agency representatives identified by the and Budget (OMB) is revising sections spending a disproportionate amount of Grants CAP Goal ESC to support the of OMB Guidance for Grants and time using antiquated processes to implementation of these revisions. OMB Agreements. This revision reflects the monitor compliance. Efficiencies could also solicited feedback from the broader foundational shift outlined in the be gained from modernization and Federal financial assistance community President’s Management Agenda (PMA) grants managers could instead shift their by publishing the proposed changes to to set the stage for enhanced result- time to analyze data to improve results. 2 CFR in the Federal Register for a sixty oriented accountability for grants. This To address this challenge, the Grants (60) day public comment period guidance is reflects the Administration’s CAP Goal Executive Steering Committee (https://www.federalregister.gov/d/2019- focus on improved stewardship and (ESC), which reports to the Chief 28524). OMB received 215 submissions ensuring that the American people are Financial Officer’s Council (CFOC), has with over 1,200 comments from the receiving value for funds spent on grant identified four strategies to work toward public, around 1,200 comments from programs. The revisions are limited in maximizing the value of grant funding Federal agencies, and around 100 scope to support implementation of the by developing a risk-based, data-driven comments from the Council of the President’s Management Agenda, framework that balances compliance Inspectors General on Integrity and Results-Oriented Accountability for requirements with demonstrating Efficiency (CIGIE) Grant Reform Grants Cross-Agency Priority Goal successful results for the American Workgroup for a total of over 2,500 (Grants CAP Goal) and other taxpayer. comments. OMB reconvened agency Administration priorities; 1. Strategy 1: Operationalize the Grants representatives to review the comments implementation of statutory Management Standards and make changes to the proposed requirements and alignment of these 2. Strategy 2: Establish a Robust revisions as appropriate. sections with other authoritative source Marketplace of Modern Solutions In summary and as discussed further requirements; and clarifications of 3. Strategy 3: Manage Risk in the sections below, OMB is revising existing requirements in particular areas 4. Strategy 4: Achieve Program Goals 2 CFR parts 25, 170, and 200. within these sections. and Objectives Additionally, OMB is adding part 183 to DATES: These revisions to the guidance The revisions to 2 CFR support these 2 CFR to implement Never Contract are effective November 12, 2020, except four strategies. In support of Strategies with the Enemy. The sections are for the amendments to §§ 200.216 and 1 and 2, OMB is implementing changes revised within the following scope. 200.340, which are effective on August throughout 2 CFR to modernize Comments received that were out of 13, 2020. reporting by recipients of Federal grants scope for the revision were not accepted FOR FURTHER INFORMATION CONTACT: by requiring Federal agencies to adopt by OMB. Nicole Waldeck or Gil Tran at the OMB standard data elements for the I. To support implementation of the Office of Federal Financial Management information recipients are required to President’s Management Agenda at [email protected] or 202– report (available at: https:// Results-Oriented Accountability for 395–3993. ussm.gsa.gov/fibf/). This adoption will Grants CAP Goal and other Administration priorities; SUPPLEMENTARY INFORMATION: enable technology solutions to better manage the data the recipients report to II. To meet statutory requirements and Background and Objectives the Federal government. These changes to align with other authoritative source In 2013, OMB partnered with the also support implementation of the requirements; and III. To clarify existing requirements. Council on Financial Assistance Reform Grants Reporting Efficiency and (COFAR) to revise and streamline Agreements Transparency Act of 2019 I. Support Implementation of the guidance to develop the Uniform (GREAT Act). OMB is also President’s Management Agenda and Administrative Requirements, Cost implementing revisions to strengthen Other Administration Priorities Principles, and Audit Requirements for the governmentwide approach to A. Emphasizing Stewardship and Federal Awards (Uniform Guidance) performance and risk, to support efforts Results-Oriented Accountability for located in title 2 of the Code of Federal under Strategies 3 and 4 by encouraging Grant Program Results Regulations (2 CFR part 200) (79 FR agencies to measure the recipient’s 78589; December 26, 2013). The intent performance in a way that will help The President’s Management Agenda, of this effort was to simultaneously Federal awarding agencies and non- Results-Oriented Accountability for reduce administrative burden and the Federal entities to improve program Grants CAP goal is working toward risk of waste, fraud, and abuse while goals and objectives, share lessons shifting the balance between delivering better performance on behalf learned, and spread the adoption of compliance and performance while of the American people. Implementation promising performance practices. reducing burden. Agencies are of the Uniform Guidance became OMB is also revising 2 CFR to encouraged to promote promising effective on December 26, 2014 (79 FR implement relevant statutory performance practices that support the 75867, December 19, 2014) and must be requirements. These revisions include achievement of program goals and reviewed every five years in accordance requirements from several National objectives. Many Federal agencies are with 2 CFR 200.109. Defense Authorization Acts (NDAAs) working together to innovate and Based on feedback and ongoing and the Federal Funding Accountability develop a risk-based approach that engagement with the grants and Transparency Act (FFATA), as incorporates performance to achieve

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results-oriented grants (where objectives, and intended results before changes support the Administration’s applicable). By shifting the focus to the specifying the goals and objectives of in priority to ensure a fair and transparent balance between performance and a solicitation. A well-designed program process for the selection of award compliance, agencies may have the has clear goals and objectives that recipients and supports efforts under opportunity to streamline burdensome facilitate the delivery of meaningful the President’s Management Agenda to compliance requirements for programs results, whether a new scientific ensure that Federal awards are designed that demonstrate results. To support this discovery, positive impact on citizen’s to achieve program goals and objectives. goal, OMB is publishing revisions in daily life, or improvement of the Changes to 2 CFR 200.206 Federal multiple sections of the guidance that Nation’s infrastructure. Well-designed awarding agency review of risk posed by together emphasize the importance of programs also represent a critical applicants allow Federal awarding focusing on performance to achieve component of an agency’s agencies to adjust requirements when a program results throughout the Federal implementation strategies and efforts risk-evaluation indicates that it may be award lifecycle. that contribute to and support the merited. Changes are included in 2 CFR The provisions that were revised to longer-term outcomes of an agency’s 200.211 Information contained in a improve the governmentwide approach strategic plan. OMB encourages Federal Federal award and 2 CFR 200.301 to performance and risk emphasize awarding agencies to reference the Performance measurement further stewardship and results-oriented grant ‘‘Managing for Results: The Performance emphasize existing requirements for making. Revisions to 2 CFR 200.102 Management Playbook for Federal requiring Federal awarding agencies to Exceptions encourages Federal Awarding Agencies’’ for promising provide recipients with clear awarding agencies to apply a risk-based, performance practices throughout the performance goals, indicators, targets, data-driven framework to alleviate Federal award lifecycle, including steps and baseline data. OMB is adding select compliance requirements for to develop a strong program plan and language to § 200.102 Exceptions to programs that demonstrate results. 2 design (www.performance.gov/CAP/ emphasize that Federal awarding CFR 200.202 Program planning and grants/). agencies are encouraged to request design highlights the importance of Program design elements may include exceptions to certain provisions of 2 developing a strong plan and design to a problem or needs statement, goals and CFR part 200 in support of innovative set the stage for demonstrating program objectives; a logic model depicting the program designs that apply a risk-based, results. 2 CFR 200.205 Federal awarding program’s structure; program activities; data-driven framework to alleviate agency review of merit proposals a theory or theories of change and the select compliance requirements and strengthens the merit review process evidence supporting them; performance hold recipients accountable for good which is linked to 2 CFR 200.301 and other indicators to measure program performance. OMB recognizes that Performance measurement requiring accomplishments and find ways to Federal financial assistance program Federal awarding agencies to measure improve, set priorities, and identify goals and their intended results will recipient performance, which is derived targets of opportunity. In addition, it differ by type of Federal program. For from program planning and design may include use or intended use of example, criminal justice grant (§ 200.202). Performance information independently available sources of data, programs may focus on specific goals focused on results must be made development and support of learning such as reducing crime, basic scientific available to recipients in the solicitation communities which may benefit from a research grant programs may focus on and in the award, which is reflected in shared understanding of promising expanding knowledge, and 2 CFR 200.211 Information contained in practices and collaboration on common infrastructure projects may fund a Federal award. Award recipients must challenges and opportunities, and a building or infrastructure projects. also be aware of termination provisions system to periodically review award Related to the above changes that aim in 2 CFR 200.340 Termination and selection criteria. to strengthen program planning and reinforced in 2 CFR 200.211 Information OMB is revising to 2 CFR 200.205 Federal award terms and conditions, contained in a Federal award, which are Federal awarding agency review of merit OMB is revising §§ 200.211 Information linked to performance goals of the proposals, 2 CFR 200.203 Requirement contained in a Federal award and program (§ 200.301). Revisions to 2 CFR to provide public notice of Federal 200.340 Termination to strengthen the 200.413 Direct costs were also made to financial assistance programs and ability of the Federal awarding agency include evaluation costs as an example § 200.204 Notices of funding to terminate Federal awards, to the of a direct cost, which demonstrates opportunities to strengthen merit greatest extent authorized by law, when program results. review, public notice of Federal the Federal award no longer effectuates Revisions to 2 CFR 200.202 Program financial assistance programs, and the the program goals or Federal awarding planning and design develops a new notices of funding opportunities to agency priorities. Federal awarding provision. This section formalizes a further the goals of results-oriented agencies must clearly and requirement that are already expected of grantmaking. These changes require unambiguously articulate the conditions Federal awarding agencies to develop a Federal awarding agencies to extend under which a Federal award may be strong program design by establishing their merit review process to terminated in their applicable program goals, objectives, and discretionary Federal awards, unless regulations and in the terms and indicators, to the extent permitted by prohibited by Federal statute, the conditions of Federal awards. The intent law, before the applications are Federal awarding agency must design of this change is to ensure that Federal solicited. The development of 2 CFR and execute a merit review process for awarding agencies prioritize ongoing 200.202 emphasizes the importance of applications. support to Federal awards that meet sound program design as an essential Additional language was included to program goals. For instance, following component of performance management articulate an explanation of the merit the issuance of a Federal award, if and program administration. Ideally, review process that Federal awarding additional evidence reveals that a program design takes place before an agencies are expected to follow. Further, specific award objective is ineffective at agency drafts related projects. This Federal awarding agencies are required achieving program goals, it may be in enables Federal agency leadership and to periodically review their Federal the government’s interest to terminate employees to codify program goals, award merit review process. These the Federal award. Further, additional

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evidence may cause the Federal language ‘‘or less restrictive 200.203 Requirement To Provide awarding agency to significantly requirements’’ with ‘‘adjust Public Notice of Federal Financial question the feasibility of the intended requirements’’ within the final Assistance Programs objective of the award, such that it may guidance. OMB strongly encourages be in the interest of the government to Federal awarding agencies to add or There were several comments terminate the Federal award. OMB is remove requirements by applying a risk- provided in response to the changes also eliminating the termination for based, data-driven framework to made to 2 CFR 200.203. One comment cause provision because this term is not alleviate select compliance inquired as to why no similar substantially different than the requirements and hold recipients requirements exist within the Uniform provision allowing Federal awarding accountable for good performance. One Guidance and is applicable to pass- agencies to terminate Federal awards commenter felt that the inclusion of the through entities within 2 CFR 200.332. when the recipient fails to comply with requirement for agencies to ‘‘apply more OMB notes that the Federal awarding the terms and conditions. restrictive terms and conditions when agency does not have a direct In addition, OMB is expanding the merited as indicated by a risk relationship with the subaward definition of fixed amount awards in evaluation’’ did not warrant an recipient; that is the role of the pass- § 200.1 to allow Federal awarding exception from OMB and thus did not through entity. Mandating application agencies to apply the provision to both belong in the exceptions section. OMB of this requirement would require grant agreements and cooperative concurred with the commenter and additional public comment as it would agreements. moved this language to 2 CFR 200.206 add burden to the process. Further, The revisions in 2 CFR 200.301 Federal awarding agency review of risk comments asked for OMB to develop emphasize that agencies are encouraged posed by applicants. guidance to help ensure that Federal to measure recipient performance to awarding agencies have the appropriate improve program goals and objectives, 200.202 Program Planning and Design controls in place with respect to their share lessons learned, and spread the Many commenters were supportive of processes for making awarding adoption of promising practices. While this new section and the other revisions decisions. OMB rejects this change for understanding that grant program goals related to results-based grant making. this iteration of 2 CFR as it would be a and their intended results will differ by Some commenters also thought the type of program, the Grants CAP Goal is significant change that would require an proposal could go further to better working to shift the culture of Federal opportunity for public comment based utilize federal grantees’ activities to grant making from a heavy focus on on the language and requirements build and disseminate evidence of what compliance to a balanced approach that imposed. Additionally, some works. One commenter expressed includes a focus on the degree to which commenters requested for language to concern that revisions to the grant programs achieve their goals and be added regarding how often updates performance sections would lead to the intended results. To provide clarity and are expected. OMB rejects these unintended consequence of making consistency among Federal awarding suggestions as the language references research look like a contract agreement. agencies, a revision to include program guidance provided by General Services OMB provided explicit language to state evaluation costs as an example of a Administration (GSA) in consultation direct cost under a Federal award has that performance measures for each with OMB. That is where the been included in 2 CFR 200.413 Direct program will be different. One requirement to update each Assistance costs. Please refer to OMB Circular A– commenter expressed concern that this Listing on an annual basis is specified, 11 for a definition on program new requirement would add burden. and it is not necessary to include this evaluation. Evaluation costs are allowed OMB respectfully disagrees, as this level of detail in 2 CFR 200.203. as a direct cost in existing guidance. requirement is not new and does not This language is intended to strengthen add burden. This section reflects 200.204 Notice of Funding this intent and ensure that agencies are activities that were previously implied Opportunities applying this consistently. within 2 CFR and not explicitly included in its own section. Commenters observed that the change Agencies are reminded that in terminology from ‘‘competitive’’ to evaluation costs are allowable costs OMB appreciates the commenters who challenged OMB to go even further ‘‘discretionary’’ appears to broaden the (either as direct or indirect), unless requirement of these notices to not just prohibited by statute or regulation. The with the proposal with regards to competitive announcements, but also work under the Grants CAP goal evidence-building. OMB looks forward sole source discretionary performance work group emphasizes to furthering this discussion with announcements. Some commenters evaluation as an important practice to stakeholder sessions in fall 2020 and suggested for the language to be changed understand the results achieved with will also consider these proposals in back to ‘‘competitive’’ and questioned Federal funding. future revisions of 2 CFR. This provision is designed to operate in the value of this revision. One 200.102 Exceptions tandem with evidence-related statutes commenter requested clarification as to OMB received several comments on (e.g., The Foundations for Evidence- whether or not this new requirement is this section asking for clarification on Based Policymaking Act of 2018, which intended to apply when the the proposed revisions. Some emphasizes collaboration and discretionary award is non-competitive. commenters also noted that the addition coordination to advance data and Another commenter suggested that it of the ‘‘or less restrictive requirements’’ evidence-building functions in the would be burdensome and inefficient to in 2 CFR 200.102(c) and 200.208 is Federal government) and related OMB require agencies to have notices of confusing, redundant and not needed implementation guidance (e.g., OMB funding opportunities for because Federal awarding agencies Memorandum M–19–23: Phase 1 noncompetitive awards. OMB already have the discretion to impose implementation of the Foundations for deliberated these comments and conditions on the recipient. OMB Evidence-Based Policymaking Act of subsequently decided to change this deliberated upon these comments and 2018. Learning Agendas, Personnel, and language to reflect discretionary awards ultimately agreed to replace the Planning Guidance). that are competed.

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200.205 Federal Awarding Agency 200.102(c) and 200.208. Some language to be written strongly and use Review of Merit Proposals commenters described this new the word ‘‘must’’ throughout, others Some of the comments received were language as confusing, redundant and preferred ‘‘should’’ and many suggested from Federal agencies who wanted to not needed because Federal awarding the use of these words should be know the purpose and the benefits agencies already have the discretion to consistent throughout this section. impose conditions on the recipient. One Some commenters also expressed the behind the proposed revisions to justify commenter applauded OMB’s decision need for OMB to include data quality the added burden. There were also to further emphasize the flexibilities within this section. OMB concurs with concerns about the efficiency of the afforded to Federal awarding agencies the comments that consistent use of awarding process if these changes are revise or remove certain requirements ‘‘must’’ and ‘‘may’’ should be used in made. Some commenters asked for based on a risk analysis. After this section. Some commenters also clarity on what a systematic review deliberation, OMB replaced this pointed out discrepancies between meant and what would classify as language with ‘‘the Federal awarding various performance sections and a few ‘‘effective.’’ OMB considered all agency may adjust requirements to a commenters pointed out that there are comments and made further revisions to class of Federal awards or non-Federal discrepancies between what is required specify that the merit review process entities when approved by OMB . . . .’’ in 2 CFR 200.211 and 200.301. In should be periodically reviewed as a response to commenters, OMB re-wrote point of clarity on the process review. 200.211 Information Contained in a this section for clarity and consistency. OMB disagrees with the commenters Federal Award that expressed these revisions will add Some comments asked for clarity on 200.340 Termination burden. The purpose of these revisions the revisions that were proposed. One There were several comments is to add clarity to the merit review clarifying question was the difference received in response to the revisions process which should already be between the data point for the ‘‘Total proposed to this section. The comments occurring and is not a new requirement. Approved Cost Sharing or Matching, can be group into the following discreet 200.206 Federal Awarding Agency where applicable’’ and ‘‘Total Amount categories: • Review of Risk Posed by Applicants of the Federal Award including Concern over arbitrary Federal approved Cost Sharing or Matching.’’ award termination; As stated in the above section These are two completely separate data • Adding or editing language for describing the comments received for points which call for the approved cost clarity; § 200.102, one commenter felt that the sharing or matching to be identified, • Concern over how Federal awarding inclusion of the requirement for and then the total amount of the Federal agencies will evaluate awards with long- agencies to ‘‘apply more restrictive award that is approved cost sharing or term outcomes; terms and conditions when merited as matching. OMB did not recommend that • Request further OMB guidance; and • indicated by a risk evaluation’’ did not these were removed. Further, in Not relevant. warrant an exception from OMB and response to various comments, the The largest number of commenters thus did not belong in the exceptions language in (a) was streamlined and expressed a concern that the proposed section. OMB concurred with the users are referred to the relevant language will provide Federal agencies commenter, moved this language to 2 performance sections for additional too much leverage to arbitrarily CFR 200.206 Federal awarding agency information. The data points previously terminate awards without sufficient review of risk posed by applicants, and proposed in paragraph (b) related to cause. Several commenters requested provided revisions to the language to performance were already captured in OMB reinstate the language, for cause, read ‘‘. . . adjust requirements when a paragraph (a), and thus removed from to address this issue. Some commenters risk-evaluation indicates that it may be (b). The proposed language for (e) was requested additional clarity and merited either pre-award or post- revised and moved to § 200.105(b) examples. OMB deliberated upon these award.’’ One commenter requested pass- within the guidance. Many comments requests and decided as written through entities to have access to enter received suggested revisions that would agencies are not able to terminate grants information into the FAPIIS system and make the language more prescriptive. arbitrarily and that it was not require a pass-through entity review as Title 2 CFR was written as guidance for appropriate to include examples in 2 part of the risk assessment process. a large array of users. If the language is CFR for this section. OMB made a OMB deliberated this comment and too prescriptive, it doesn’t provide technical correction to provide while it is an important topic for sufficient flexibility for use by the large additional clarity. Some commenters discussion, OMB feels the scope of this array of users. Additional technical expressed concerns over how Federal revision would be too substantial for corrections were made for clarity awarding agencies will evaluate awards finalization without receiving additional throughout this provision. Revisions with long-term outcomes. One example comments from the public. Thus, OMB were made to § 200.211(c)(1)(iv) to from the commenter was an respectfully declines this comment. clarify that if the underlying legal environmental program where the Some commenters requested for OMB to authority for a program changes, that performance will require years to include the requirement for Federal may be a reason why there would be no measure. The example from the awarding agencies to leverage future budget periods under an award. commenter should be determined in commercially available data coordination with the Federal awarding management tools. OMB declines this 200.301 Performance Measurement agency. OMB respectfully declines this comment and does not specify tools Some commenters were in support of comment. Title 2 CFR is intended to be required for use. the revisions to this section. Many written and used by a large array of commenters provided suggestions for stakeholders and thus the language is 200.208 Specific Conditions further revisions to the guidance. not intended to be prescriptive, as the As stated above in 2 CFR 200.102, Several commenters provided commenter has requested. Some some commenters were not supportive suggestions with regards to the use of commenters requested further OMB of the requirement of the language ‘‘or ‘‘should’’ and ‘‘must’’ throughout this guidance on this provision. OMB less restrictive requirements’’ in 2 CFR section. Some commenters wanted the appreciates the request for additional

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guidance and notes that guidance assists OMB with execution of the be used for non-Federal entities that beyond what has been provided in the requirements of the GREAT Act. have never received a negotiated proposed rule is out of scope for this In response to commenters’ requests indirect cost rate. The use of the de revision effort. Other comments for clarity on the performance sections minimis rate has reduced burden for provided were not relevant to the of the guidance, OMB moved the both the non-Federal entities and the revisions proposed and thus OMB has financial reporting requirement noted Federal agencies for preparing, rejected these comments. currently in 2 CFR 200.301 Performance reviewing, and negotiating indirect cost measurement to 2 CFR 200.328 rates. Since the publication of 2 CFR in 200.413 Direct Costs Financial reporting. 2013, both Federal agencies and non- Most comments received for this 2 200.329 Monitoring and Reporting Federal entities have advocated CFR 200.413 were in agreement of the Program Performance expansion of the de minimis rate for revisions. The remaining comments non-Federal entities that have Several commenters requested clarity were out of scope. Therefore, OMB did negotiated an indirect cost rate regarding the ‘‘OMB-designated not make changes to the revised previously, but for some circumstances, standards lead’’ and notes that this language. Some commenters requested the negotiated rates have expired. The terminology has been used throughout OMB include additional examples for expiration may be due to breaks in the guidance. As mentioned above, one clarity that the activities are direct costs Federal relationships and grant funding, commenter also suggested a technical such as planning and program or lack of resources for preparing an correction to reference the Grant coordination, data technology, analytics, indirect cost proposal. This change will Reporting Efficiency and Agreements staff training, data collection, storage, further reduce the administrative Transparency (GREAT) Act for clarity communication of evaluation and burden for non-Federal entities and on this designation. One commenter analytics, and more. OMB appreciates Federal agencies and shift more suggested that this provision should be the request to clarify additional resources toward accomplishing the tied together with the closeout provision examples as direct costs and would like program mission. with regards to the timeframe to to expand on this further in future Another revision adds language to 2 submission of reports. OMB concurred revisions of 2 CFR. OMB does not think CFR 200.414(f) to clarify that when a with this commenter and made it is appropriate to include specific non-Federal entity is using the de revisions accordingly. One commenter examples within the guidance because it minimis rate for its Federal grants, it is noted concern and confusion regarding could be unintentionally interpreted to not required to provide proof of costs the requirement that ‘‘costs must be be limited to only that list of items. that are covered under that rate. The 10 charged to the approved budget period However, as we think of ways to percent de minimis rate was designed to in which they were incurred.’’ The encourage promising performance reduce burden for small non-Federal commenter also suggested edits to practices, OMB would like to discuss entities and the requirement to clarify this requirement. OMB this further during stakeholder sessions document the actual indirect costs concurred with the commenter and in the fall 2020. would eliminate the benefits of using accepted the edits for incorporation into the de minimis rate. Lastly, for 200.328 Financial Reporting the package. transparency purposes, another revision There were some comments received Appendix I to Part 200—Full Text of the adds a new paragraph (h) to § 200.414 in response to the revisions made to this Notice of Funding Opportunity to require that negotiated agreements for indirect cost rates are collected and provision. One commenter requested A number of commenters suggested displayed on a public website. that the collection of information be no edits to this section. One commenter more frequently than semiannually to suggested including the term ‘‘outcome’’ 200.414 Indirect (F&A) Costs reduce burden. OMB declines this to indicate the end result and also 200.414(f) comment and notes that it was out of include terms for tracking and scope because there were no proposed determining if that end result is being or OMB received several comments that changes to the frequency of financial has been achieved. OMB agreed with were concerned with awarding a de reporting. One commenter requested this commenter and made the revisions minimis rate that is higher than a that OMB add language to discourage accordingly. Another commenter Negotiated Indirect Cost Rate Agreement pass-through entities from the practice suggested that OMB include the (NICRA). OMB concurs with the of requiring more frequent and more requirement for Federal awarding concerns regarding applying a higher de detailed financial reporting. After agencies to ensure SAM registration is minimis rate in cases where a NICRA discussion, OMB declines this comment current before making any advanced rate is lower than 10 percent. However, as it is out of scope for this revision but payments and/or issuing any the regulation states in paragraph (c)(1) will consider the comment for a future reimbursements. OMB disagrees with that Federal agencies must honor revision of 2 CFR. Several commenters this recommendation, as this negotiated rates. Additionally, some sought clarification on the use of the requirements is already stated in 2 CFR commenters expressed concern that term ‘‘OMB-designated standards lead.’’ 25.205. guidance will be misinterpreted to allow Pursuant to the Grant Reporting provisional rates to be considered as Efficiency and Agreements B. Expanded Use of the De Minimis Rate expired. OMB intends to include Transparency Act of 2019 (GREAT Act), The revision to 2 CFR 200.414(f) provisional rates and added clarifying the OMB Director is required to expands use of the de minimis rate of language to the section in response to designate a standard-setting agency (i.e., 10 percent of modified total direct costs these comments. Further, commenters the Executive department that (MTDC) to all non-Federal entities were concerned with a lack of required administers the greatest number of (except for those described in Appendix documentation. OMB concurs with programs under which Federal awards VII to Part 200—State and Local concerns that the language implies are issued in a calendar year). The Government and Indian Tribe Indirect source documents rather than the Executive department designated by Cost Proposals, paragraph D.1.b). indirect cost rate agreement and altered OMB as the standard-setting agency Currently, the de minimis rate can only the language accordingly. There were

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several comments that suggested that commenter’s suggestion and moved the ‘‘obligation’’ to either ‘‘financial the Modified Total Direct Cost (MTDC) requirement accordingly. obligation’’ or ‘‘responsibility’’ within be used as the base. However, this the guidance as appropriate, to ensure 200.105 Effect on Other Issuances suggestion is out of the scope of this alignment with DATA Act definitions. revision. Additionally, OMB would like There were several commenters in OMB is adding changes across the to note that Federal agencies must strong support of this new provision entirety of 2 CFR to ensure consistent accept the negotiated rate even if it is while other commenters expressed use of terms across parts 25, 170, 183, lower than the de minimis rate. concerns regarding the implementation. and 200 where possible, relying on 2 One commenter mentioned that CFR part 200 as the primary source. As 200.414(h) finalizing this proposal would cause reflected in the changes, there are OMB appreciated the many comments significant difficulties in effective instances where the terms within 2 CFR that supported the proposed implementation and effectively cannot be made consistent. For requirement to post NICRAs to a public overseeing programs. OMB appreciates example, the term ‘‘non-Federal entity’’ website. There were several comments the comments received. To address cannot be consistently defined across 2 that cited concerns over the sharing of concerns, the language was re-written to CFR: Parts 25 and 170 apply to Federal proprietary information through the better align with E.O. 13892 and provide awards to foreign organizations, foreign posting of NICRA information on a clarity. public entities, and for-profit organizations, while part 200 only public website. To address these D. Promoting Free Speech concerns, OMB clarified that the applies to these type of non-Federal Several provisions within 2 CFR are requirement is not for the entire rate entities when a Federal awarding revised to align with E.O. 13798 agreement and added language to agency elects for part 200 to apply. For ‘‘Promoting Free Speech and Religious specify the exact information that is definitions that are consistent across 2 Liberty’’ and E.O. 13864 ‘‘Improving requested be provided for a non-Federal CFR parts 25, 170, and 200, revisions Free Inquiry, Transparency, and entity; the indirect negotiated rate; have been made to parts 25 and 170 to Accountability at Colleges and distribution base; and the rate type. In refer definitions to part 200 as the Universities.’’ These sections include 2 addition, the Indian tribes or tribal authoritative source. CFR 200.300 Statutory and national organizations, as defined in the Indian The definitions ‘‘Catalog for Federal policy requirements, 200.303 Internal Domestic Assistance (CFDA) number’’ Self Determination, Education and controls, 200.339 Remedies for and ‘‘CFDA program title’’ have been Assistance Act, 25 U.S.C. 450b(1)) are noncompliance, and 200.341 replaced with the terms ‘‘Assistance excluded. Further, there were several Notification of termination requirement. Listings number’’ and ‘‘Assistance comments that inquired about the These E.O.s advise Federal awarding Listings program title’’ to reflect the applicability of this section. Lastly, agencies on the requirements of change in terminology. there were comments that inquired religious liberty laws, including those OMB is also revising several about who is responsible for making laws that apply to grants and provide a definitions for clarity. For example, the sure this information is publically policy for free inquiry at institutions term management decision is revised to posted. OMB recognizes this concern receiving Federal grants. The revision to emphasize that it is a written and notes that the responsibility of the 2 CFR underscores the importance of determination provided by a Federal Federal government will be compliance with the First Amendment. awarding agency or pass-through entity. communicated appropriately. To promote uniform application of 200.209 Certifications and C. Eliminate References to Non- standard data elements in future Representations, 200.300 Statutory Authoritative Guidance information collection requests, OMB is and National Policy Requirements, also revising 2 CFR 200.207 and 200.328 To support implementation of E.O. 200.303 Internal Controls, 200.339 to reflect that information collection 13892 of October 9, 2019 (Promoting the Remedies for Noncompliance, 200.341 requests must adhere to the standards Rule of Law Through Transparency and Notification of Termination available from the OMB-designated Fairness in Civil Administrative Requirement standards lead. This change further Enforcement and Adjudication) and to OMB received several comments in supports OMB Memorandum M–19–16 prohibit Federal awarding agencies from response to this policy proposal. Some Centralized Mission Support including references to non- commenters supported compliance with Capabilities for the Federal Government, authoritative guidance in the terms and the Constitution while other which requires that future shared conditions of Federal awards, OMB commenters questioned the need to service solutions must adhere to the proposed changes to § 200.105 Effect on include a reference to the Constitution. Federal Integrated Business Framework other issuances. The proposed change OMB appreciates all comments received standards (available at: https:// was intended to reduce recipient burden and after consideration has decided to ussm.gsa.gov/fibf/). and prevent Federal awarding agencies retain the proposed language within Further, OMB is revising 2 CFR part from imposing non-binding guidance as these sections. One comment suggested 200 to replace the term ‘‘standard form’’ award requirements for recipients that the removal of the word ‘‘statutory.’’ with ‘‘common form.’’ Some has not gone through appropriate public OMB concurred with this commenters submitted feedback with notice and comment. The proposed recommendation and made the change. concerns that the change in terminology revisions related to eliminating would allow agencies to create unique references to non-authoritative guidance E. Standardization of Terminology and forms with a lack of standardization. were included in 2 CFR 200.211(e) Implementation of Standard Data OMB did not make any changes to the Information contained in a Federal Elements final language based on these award. Some commenters suggested for OMB is standardizing terms across 2 comments. Existing forms widely this requirement to be moved within the CFR part 200 to support efforts under adopted by Federal awarding agencies guidance to 2 CFR 200.105(b) Effect on the Grants CAP Goal to standardize the that are regularly referred to as standard other issuances for clarity of the policy grants management business process forms are in fact common forms. For intent. OMB concurred with the and data. OMB is replacing the term instance, the SF–424 series, SF–425,

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and research performance progress Modification to Existing Definitions assessment and updated the definition report are all common forms/formats. Several commenters sought to clarify to make it easier to read, understand, OMB acknowledges that this is a existing definitions by providing and use. Another commenter significant change in how the technical corrections or clarification recommended the addition of mutual community refers to these forms and statements. aid or intergovernmental agreements to will ensure that any future guidance on In several cases, OMB agrees that the definition of contract. This change the adoption of standard data elements technical corrections are necessary. The was not considered because it would clarifies the use of common forms. More updates to these definitions are minor substantively alter the definition information regarding common forms and did not affect the intent of the term. without providing the public the and flexibility under the Paperwork In other cases, the recommendations opportunity to comment on the revision. Reduction Act is available at: https:// were either too substantive or did not Cooperative Agreement, Grant www.whitehouse.gov/omb/information- align with the intent of this update to Agreement regulatory-affairs/federal-collection- the regulation. OMB may consider these One commenter recommended information/. Finally, OMB is recommendations in future updates to 2 specifically explaining ‘‘transfer reformatting the definitions section of 2 CFR. CFR part 200, subpart A—Acronyms anything of value’’ in the definitions of and Definitions, by removing the section Formatting cooperative agreement and grant numbers to facilitate future additions to Several commenters disagreed with agreement. OMB opted to keep the this section. the removal of the numbering of the existing language because both definitions. The commenters were definitions cite 31 U.S.C. 6101(3), which Subpart A—Acronyms and Definitions concerned about the overall changes to provides the scope of the ‘‘transfer of anything of value.’’ A commenter New Defined Terms the numbering of 2 CFR part 200, which would add burden to updating the non- recommended further describing Several commenters sought to clarify Federal entities’ policies and substantial involvement in the existing parts within 2 CFR and grant procedures. definition of cooperative agreement. processes and procedures through the OMB appreciates these concerns, but This change was not considered because addition of several defined terms under does not believe that the removal of the the Federal awarding agency and the 200.1 Definitions. Examples of definition numbering will generate any recipient are given the discretion to recommended terms to include were significant additional burden on non- negotiate this relationship. Another formula grant, program beneficiary/ Federal entities, because these groups commenter stated that there was a recipient, procurement, administrative already should regularly review and conflict §§ 25.306 and 200.1 associated costs, for-profit organization, conflict of update their policies and procedures to with the transfer of land or property. interest, covered technology, ensure compliance with Federal, state, OMB disagrees as the two definitions architectural/engineering professional and local laws and regulations. This align and are also in alignment with the services, Federally-owned property, and revision is expected to limit future associated legislation. Through the demonstration. burden for non-Federal entities in the review of the definitions of cooperative event of new terms are added to this agreement and grant agreement, OMB In certain cases OMB agrees that and members of the working group additional terms may provide greater section of part 200, which would change the section’s numeration. clarified that the relationship was clarification to the regulation and the between the Federal awarding agency management of Federal financial Subpart A—Specific Definitions and a recipient or a pass-through entity assistance. OMB may consider the Compliance Supplement and a subrecipient. recommended definitions for the suggested terms in future updates to 2 A number of commenters Discretionary, Non-Discretionary Award CFR. In other cases, the terms are either recommended clarifying the definition Technical edits were made to the not used in 2 CFR or are only applicable of compliance supplement and offered definitions of discretionary award and to a small number of Federal awarding revised wording for the definition. OMB non-discretionary award to provide agencies. OMB declined these concurred and adapted the definition in clarity to the intended definitions. recommendation either due to scope, or consultation with members of the Federal Interest because they do not align with the interagency working group. One intent of this regulation. commenter recommended revising the Two commenters recommended definition to frame the compliance correcting the formula for determining Inserting Programmatic Instruction in supplement as the sole source of Federal interest, noting that reliance on Definitions information for auditors. OMB did not the Federal share of the total project include this recommendation because costs does not appropriately account for Several commenters recommended the compliance supplement is one of the the Federal interest in real property, inserting programmatic instruction for authoritative sources that auditors can equipment, or supplies. OMB agreed specific terms, which would provide use when auditing Federal programs. with this recommendation and amended more guidance for Federal agencies, Other sources include Federal awarding the definition to appropriately rely on non-Federal entities, auditors, or others. agency and program specific the percentage of Federal participation OMB considered these comments, but documents. in the total cost of the real property, determined that it was inappropriate to equipment, or supplies as part of the Contract include programmatic guidance in the formula. definition of terms for the regulation. One commenter noted that the The purpose of 2 CFR 200.1 Definitions definition of contract was confusing, Recipient is to provide meaning for specified while another recommended cross- One commenter recommended terms within the regulation; guidance referencing the Subrecipient and amending recipient be inclusive of and instruction is more appropriate Contractor Determinations subsection entities that are not necessarily non- other parts of 2 CFR. (§ 200.331). OMB agreed with this Federal entities such as for-profit and

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foreign entities as well as Federal approved budget period. The definition the simplified acquisition may be agencies. OMB agreed with this of budget period was edited to clarify determined. Minor technical edits were assessment and updated the definition that recipients are authorized to expend made to the definition for micro- appropriately. the current funds awarded, including purchase, based on comments, to clarify any funds carried forward or other that the cognizant agency for indirect Subsidiary revisions pursuant to 2 CFR 200.308. costs may approve a higher micro- One commenter recommended Further, recipients may only incur costs purchase threshold if requested by the replacing non-Federal entity with entity, during the first year budget period until non-Federal entity. while another recommended adding ‘‘or subsequent budget periods are funded controlled’’ after owned to be more F. Support for Domestic Preferences for based on the availability of Procurement inclusive of a diversity of organizations appropriations, satisfactory that may have subsidiaries. Several performance, and compliance with the As expressed in Executive Order (E.O) other commenters were confused by the terms and conditions of the award. The 13788 of April 18, 2017 (Buy American reference to the FAR or found it to be definition of renewal was edited to help and Hire American) and E.O. 13858 of redundant, recommending that it be clarify that a renewal award begins a January 21, 2019 (Executive Order on removed from the definition. OMB distinct period of performance that Strengthening Buy-American agreed with these recommended starts contiguous with, or closely Preferences for Infrastructure Projects), changes to the definition and following, the end of the expiring it is the policy of this Administration to incorporated them, as appropriate. award. This change also ensures maximize, consistent with law, the use of goods, products, and materials Period of Performance, Budget Period, consistent use of the term for purposes produced in the United States, in and Renewal of transparency reporting as required by FFATA. Federal procurements and through the OMB also revised the proposed terms and conditions of Federal definitions of period of performance, 200.403 Factors Affecting Allowability financial assistance awards. In support budget period, and renewal in 2 CFR of Costs of this policy, OMB is adding a new part 200, as there were a significant To maintain consistency within the section 2 CFR 200.322 Domestic number of comments from varying guidance regarding the definition of preferences for procurement, stakeholders indicating that the Budget Period, 2 CFR 200.403(h) has encouraging Federal award recipients, proposed revised definitions of period been added to clarify that costs must be to the extent permitted by law, to of performance, budget period, and incurred during the approved budget maximize use of goods, products, and renewal created more confusion than period and the Federal awarding agency materials produced in the United States clarity. In response, the final rule may waive prior written approval to when procuring goods and services revises the definitions for these terms to carry forward unobligated balances to under Federal awards. This Part will clarify how period of performance, subsequent budget periods. apply to procurements under a grant or budget period, and renewal cooperative agreement. operationally relate. Additionally, the Improper Payment, Questioned Costs final rule revises 2 CFR 200.309 to better 200.322 Domestic Preferences for Based on some confusion expressed Procurement describe how the period of performance in comments, the definition of improper is modified if there is an extension or payment was revised to accurately OMB appreciates the many comments termination of a current award. Some reflect how questioned costs, including were very supportive of this section. commenters expressed concern about costs questioned costs identified in Several comments suggested including the removal of pass-through entities’ audits, are not improper payments until language in Appendix II because the authority to allow pre-award costs to reviewed and confirmed as such. proposed new 2 CFR 200.322 includes subrecipients. It was not OMB’s the requirement that such term be intention to remove the pass-through Internal Controls flowed down to all contracts and entities’ authority to allow pre-award Based on some confusion expressed purchase orders. OMB accepts this costs to subrecipients. OMB recognizes in comments, minor modifications to change and has made the appropriate these concerns and added language to 2 the definition of internal controls were edits to the final language. Several CFR 200.458 for clarification in made to provide greater clarity on the comments asked for clarification response to commenters. Further, there internal controls requirements for non- regarding how preference is given. OMB were many comments that expressed Federal entities and Federal agencies. rejects this change as the language gives concern about removing 2 CFR 200.309 Federal awarding agencies the flexibility from the guidance due to burden with Oversight Agency for Audit to adjust their guidance accordingly. other entities that reference 2 CFR Several commenters expressed Further, another comment suggested to within their own rules and regulations. confusion with the revision to this exempt purchases below the micro- Including 2 CFR 200.309 in the final definition. Some commenters provided purchase threshold from requirements publication will eliminate that concern suggested edits for clarity. After in this section to reduce the burden on from commenters. deliberation and in response to the non-Federal entities. OMB rejects this The definition of period of commenters, OMB made further edits to suggestion as OMB does not agree with performance and renewal was revised to this definition for clarity. the assessment that an additional help clarify that the term period of burden is being placed. The language performance reflects the total estimated Simplified Acquisition Threshold, did not set a dollar threshold and time interval between the start of an Micro-Purchase instead states that domestic preference initial Federal award and the planned Multiple commenters were confused should be used as appropriate and to ‘‘to end date, and that the period of by the second paragraph proposed to be the maximum extent practicable.’’ One performance may include one or more added to the definition for simplified commenter suggested a reference to this budget periods, but the identification of acquisition threshold. Revisions were section should also be included in the period of performance does not made to this paragraph to alleviate Appendix II to Part 200—Contract commit funding beyond the currently confusion and accurately reflect how Provisions for Non-Federal Entity

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Contracts Under Federal Awards. OMB Acquisition Thresholds for Financial tribal laws and regulations; and Federal concurred with this commenter and Assistance (June 20, 2018) which is now law. In addition, procurements for made the revision accordingly. incorporated in 200.320. With the final goods and services that are directly procurement guidance now G. Changes to the Procurement charged to a Federal award must implemented, OMB Memorandum M– Standards to Better Target Areas of conform to the standards identified in Greater Risk and Conform to Statutory 18–18 is rescinded. this part.’’ OMB agreed with this Requirements 200.320 Methods of Procurement To clarifying revision and incorporated it within 2 CFR 200.318. To better target 2 CFR requirements Be Followed on areas of greater risk consistent with There were nearly 100 comments 200.319 Competition the intent of the Grants CAP Goal, and received relating to this section. Many One commenter expressed support for to align with legislation related to expressed confusion with the proposed the revisions to 2 CFR 200.319. Other procurement standards, OMB is revising revisions and provided the guidance to increase the micro- recommendations for clarity. In commenters provided suggested edits purchase threshold from $3,500 to response, the section was rewritten to for clarity. One commenter asked for $10,000, raising the simplified incorporate many of the suggestions clarity of the meaning ‘‘section’’ and acquisition threshold from $100,000 to from commenters. expressed the entire subpart D should $250,000, and allowing non-Federal The following revisions were made to be referenced. OMB declines this entities to request a micro-purchase 2 CFR 200.320: comment and notes that the term threshold higher than $10,000 based on • The procurement types were grouped ‘‘section’’ should not be interpreted to certain conditions. The NDAA 2017 into three categories: (1) Informal mean the entire subpart D and the increased the micro-purchase threshold (micro-purchase, small purchase); (2) proposed revisions to 2 CFR 200.319 from $3,500 to $10,000 for institutions formal (sealed bids, proposals) and (3) only adds a new reference to 2 CFR of higher education, or related or Non-Competitive (sole source) 200.320. This new language in no way affiliated nonprofit entities, nonprofit • The micro-purchase threshold was infers that the other procurement research organizations or independent raised from $3,500 to $10,000 provisions do not apply. One research institutes (41 U.S.C. 1908). • All non-Federal entities are now commenter expressed that it is unclear The NDAA 2017 also established an authorized to request a micro- what ‘‘required’’ under an award means. interim uniform process by which these purchase threshold higher than OMB notes that this language is used recipients can request, and Federal $10,000 based on certain conditions throughout the document as no such awarding agencies can approve requests that include a requirement to change was made. to apply, a higher micro-purchase maintain records for threshold up to threshold. Specifically, the NDAA 2017 H. Emphasis on Machine-Readable $50,000 and a formal approval Information Format allowed a threshold above $10,000, if process by the Federal government for approved by the head of the relevant threshold above $50,000; and OMB aims to clarify the methods for executive agency and consistent with • The simplified acquisition threshold collection, transmission, and storage of clean audit findings under chapter 75 of was raised from $150,000 to $250,000 data in 2 CFR 200.336 to further explain title 31, internal institutional risk and promote the collection of data in assessment, or State law. The NDAA for 200.321 Contracting With Small and machine-readable formats. A machine- FY 2018 (NDAA 2018) increased the Minority Businesses, Women’s Business readable format is a format that can be micro-purchase threshold to $10,000 for Enterprises, and Labor Surplus Area easily processed by a computer without all recipients and also increased the Firms human intervention while ensuring no simplified acquisition threshold from Several comments were made semantic meaning is lost (44 U.S.C. $100,000 to $250,000 for all recipients. regarding this section that were out of 3502(18)). The clarification reinforces The revisions to § 200.320 outline a scope for the current set of revisions. As the machine-readable requirements in permanent process by which non- such, no changes to the proposed the Foundations of Evidence-Based Federal entities may establish a micro- language will be made at this time. Policymaking Act of 2018 (Pub. L. 115– purchase level above the $10,000 435) and accompanying OMB guidance. threshold. 200.317 Procurements by States This requirement also reflects the need A proposal to increase the micro- One commenter suggested that 2 CFR to continually evaluate which formats purchase and simplified acquisition 200.317 should reference the (and structures) maximize accessibility thresholds in the Federal Acquisition procurement requirements in 2 CFR and usability for all stakeholders. Regulation (FAR) was published in the 200.322 Domestic preference for Machine-readable formats will also help Federal Register on October 2, 2019 (84 procurements, as it is applicable to all support the Leveraging Data as a FR 52420), FAR Case 2018–004. The non-Federal entities. OMB concurred Strategic Asset Cross-Agency Priority FAR Rules at 48 CFR part 2, subpart 2.1, with the commenter and made revisions Goal (CAP Goal #2) and efforts under were finalized on July 2, 2020 (85 FR accordingly. 40060, 85 FR 40064) with the effective the Grants CAP Goal to Build Shared IT date of August 31, 2020. In addition, the 200.318 General Procurement Infrastructure. Standards American Innovation and 200.336 Methods for Collection, Competitiveness Act of 2017 (AICA), One commenter expressed strong Transmission, and Storage of section 207(b) required that 2 CFR part support for the revisions proposed for Information 200 be revised to conform to the this provision. Most commenters requirements concerning the micro- provided suggested edits for clarity. One OMB received some comments on 2 purchase threshold. commenter provided suggested edits to CFR 200.336 requesting the inclusion of In response to these statutory changes, clarify that the ‘‘. . . non-Federal entity PDFs in the language. OMB declined OMB issued OMB Memorandum M–18– must use its own documented this suggestion since prescribing a 18, Implementing Statutory Changes to procurement procedures which must specific format in official guidance was the Micro-Purchase and the Simplified conform to applicable State, local, and deemed inappropriate.

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I. Changes to Closeout Provisions To proposed extension of deadlines for the funding and total funding were positive Reduce Recipient Burden and Support submission of reports. Due to the and thus OMB did not make changes to GONE Act Implementation significant amount of support for the the language for the final publication. Based on lessons learned from the changes, OMB is keeping the language We clarified that the determination for funding is based the federal award implementation of 2 CFR part 200 and published in the proposed version. expenditures as reported in the the Grants Oversight and New OMB also received comments to permit recipient’s Schedule of expenditures of Efficiency Act (GONE Act), OMB is pass-through entities to establish earlier Federal Awards (see § 200.510(b)). revising 2 CFR 200.344 Closeout to dates, in accordance with existing Commenters in response on the support timely closeout of awards, practice. OMB accepts this governmentwide project to determine improve the accuracy of final closeout recommendation. OMB also received the quality of single audits suggested a reporting, and reduce recipient burden. comments relating to final indirect cost delay on such project by a few years due The final language will increase the rates after the end of the period of the changes in the 2019 Compliance number of days for recipients to submit performance. OMB rejects these Supplement regarding the maximum of closeout reports and liquidate all suggestions, as a revised final Federal review for compliance areas. financial obligations from 90 days to financial report can be submitted after Commenters also suggested the use of 120 days. This change takes into closeout. Therefore, lengthening the current and on-going quality review consideration the challenges faced by deadline would not have an impact. performed by agencies on single audits pass-through entities with respect to OMB is making several small changes to substitute or complement the awards that contain a large number of based on received comments, such as governmentwide project. We agreed on subawards. These recipients must changing ‘‘non-Federal entity’’ to the suggested timing of the project and reconcile subawards and submit final ‘‘recipient’’ and adding ‘‘or an earlier have removed the specific date listed in reports to Federal awarding agencies date as agreed upon by the pass-through the proposal. OMB will work with the within the same 90 day period. entity and subrecipient.’’ agencies and the single audit Recognizing the need for pass-through 200.344(i) stakeholders to determine a future date entities to receive timely reports from OMB received several comments that for the project that is more optimal. subrecipients to report back to Federal recommended making the Federal OMB added language to address that awarding agencies, OMB will continue Awardee Performance and Integrity current quality control review work to require subrecipients to submit their Information System (FAPIIS) entries performed by the agencies can be reports to the pass-through entity within optional. The intent of the added leveraged for the governmentwide 90 days. The intent of this change is to regulation was to hold recipients project. support financial reconciliation, help accountable and share performance ease the burden associated with across Federal agencies, which II. Meeting Statutory Requirements and submitting reports for closeout, and promotes results-oriented grantmaking. Aligning 2 CFR With Other promote improved accuracy. However, Therefore, OMB is finalizing the Authoritative Source Requirements OMB recognizes that providing language that makes entry into FAPIIS A. Prohibition on Certain additional time may increase the mandatory. Further, it should be noted Telecommunication and Video likelihood that non-Federal entities will that entry into FAPIIS does not Surveillance Services or Equipment not submit their final closeout reports. constitute a termination, which OMB OMB revised 2 CFR to align with To mitigate this risk, OMB is requiring has clarified in the final language. Federal awarding agencies to report section 889 of the NDAA for FY 2019 when a non-Federal entity does not 200.345 Post-Closeout Adjustments (NDAA 2019). The NDAA 2019 submit final closeout reports as a failure and Continuing Responsibilities prohibits the head of an executive to comply with the terms and Some commenters expressed concerns agency from obligating or expending conditions of the award to the OMB- that the language proposed for this loan or grant funds to procure or obtain, designated integrity and performance provision was too open-ended and the extend or renew a contract to procure or system. Finally, OMB is publishing the period could extend beyond record obtain, or enter into a contract (or requirement of Federal awarding retention. OMB concurred with the extend or renew a contract) to procure agencies to make every effort to close commenters and made revisions to or obtain the equipment, services, or out Federal awards within one year after address these concerns. systems prohibited systems as identified the end of the period of performance in NDAA 2019. To implement this unless otherwise directed by J. Changes to Performing the requirement, OMB is adding a new authorizing statute. The language is Governmentwide Audit Quality Project section, 2 CFR 200.216 Prohibition on intended to promote timely closeout of Revisions to 2 CFR 200.513 include a certain telecommunication and video awards, assist with reconciling closeout change in the date for the requirement surveillance services or equipment, activities, and hold recipients for a governmentwide audit data quality which prohibit Federal award recipients accountable for submitting required project that must be performed once from using government funds to enter closeout reports. every 6 years beginning with audits into contracts (or extend or renew submitted in 2018. This date has been contracts) with entities that use covered 200.344 Closeout changed to 2021, given the significant telecommunications equipment or Many of the comments in response to changes to the 2019 Compliance services. This prohibition applies even revisions to 2 CFR 200.344 were in Supplement in support of the Grants if the contract is not intended to procure support of the proposed revisions. The CAP Goal. or obtain, any equipment, system, or two sections listed below received the service that uses covered highest volume of comments. 200.513 Responsibilities telecommunications equipment or Comments in response to the change services. As described in section 889 of 200.344(a) regarding the assignment of the the NDAA 2019, covered OMB is appreciative of the many cognizant agency for audit telecommunications equipment or commenters who supported the responsibilities based on the direct services includes:

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D Telecommunications equipment necessary for affected entities to to procurement as well as to grants and produced by Huawei Technologies transition from covered cooperative agreements. OMB Company or ZTE Corporation (or any communications equipment and coordinated with the procurement subsidiary or affiliate of such entities). services, to procure replacement community as appropriate before D For the purpose of public safety, equipment and services, and to ensure issuing this final guidance, including security of government facilities, that communications service to users the roles and responsibilities of the physical security surveillance of critical and customers is sustained. Further, covered combatant command and infrastructure, and other national OMB added a new 2 CFR 200.471 Federal awarding agencies. security purposes, video surveillance Telecommunication and video Part 183 Never Contract With the and telecommunications equipment surveillance costs to provide clarity that Enemy produced by Hytera Communications the telecommunications and video Corporation, Hangzhou Hikvision surveillance costs associated with 2 CFR Many of the comments focused on Digital Technology Company, or Dahua 200.216 are unallowable. A new aligning the regulation with the Technology Company (or any subsidiary definition for telecommunication and authorizing legislation and streamlining or affiliate of such entities). video surveillance costs, which is and using consistent terms in the D Telecommunications or video described in 2 CFR 200.471, has also regulatory language. OMB concurred surveillance services provided by such been added to 2 CFR for clarity. with these comments and made the entities or using such equipment. necessary changes to the language. OMB D Telecommunications or video B. Never Contract With the Enemy also agreed with several comments surveillance equipment or services To meet statutory requirements, OMB suggested the use of ‘‘recipient’’ rather produced or provided by an entity that is adding part 183 to 2 CFR to than ‘‘non-Federal entity.’’ In addition, the Secretary of Defense, in consultation implement Never Contract with the OMB revised part 183 to include a with the Director of the National Enemy, consistent with the fact that the reference to void covered grants or Intelligence or the Director of the law applies to only a small number of cooperative agreements, and updated Federal Bureau of Investigation, grants and cooperative agreements. specific parts of the legislative authority reasonably believes to be an entity Never Contract with the Enemy applies that were set to expire by aligning with owned or controlled by, or otherwise only to grants and cooperative recently passed legislation for the connected to, the government of a agreements that exceed $50,000, are extension of dates. covered foreign country. performed outside the United States, A couple commenters noted the including U.S. territories, to a person or 200.216 Prohibition on Certain potential burden associated with entity that is actively opposing United Telecommunication and Video checking SAM.gov on a monthly basis. States or coalition forces involved in a Surveillance Services or Equipment OMB concurred with these comments contingency operation in which and revised the language accordingly. Commenters expressed widespread members of the Armed Forces are concerns on the impact and actively engaged in hostilities. C. Requirement for the FAPIIS To implementation of the statutory To implement Never Contract with Include Information on a Non-Federal requirement. OMB sought to address the Enemy and to reflect current Entity’s Parent, Subsidiary, or Successor commenter concerns by re-writing this practice, OMB requires Federal Entities section to align closely with the law, awarding agencies to utilize the System To meet statutory requirements, OMB add a new definition for for Award Management (SAM) revised 2 CFR parts 25 and 200 to telecommunications and video Exclusions and the FAPIIS to ensure implement Sec. 852 of the NDAA for FY surveillance costs, and add a new compliance before awarding a grant or 2013 (NDAA 2013), which requires that section 2 CFR 200.471. The final cooperative agreement. Federal the FAPIIS include information on a language provides guidance describing awarding agencies are prohibited from non-Federal entity’s parent, subsidiary, the meaning of covered making awards to persons or entities or successor entities. OMB requires telecommunications as explained in the listed in SAM Exclusions (NDAA 2017) financial assistance applicants to statute. The language also aligns with pursuant to Never Contract with the provide information in SAM on their the requirements in the statute affecting Enemy and are required to list in FAPIIS immediate owner and highest-level the financial assistance community to any grant or cooperative agreement owner and subsidiaries, as well as on all include the prohibition of non-Federal terminated due to Never Contract with predecessors that have been awarded a entities from obligating or expending the Enemy as a Termination for Material Federal contract, grant, or cooperative loan or grant funds to (1) procure or Failure to Comply. The revisions also agreement within the last three years. In obtain, (2) extend or renew a contract to require agencies to insert terms and addition, OMB requires that prior to procure or obtain, or (3) enter into a conditions in grants and cooperative making a grant or cooperative contract (or extend or renew a contract) agreements regarding non-Federal agreement, agencies must consider all of to procure or obtain, equipment, entities’ responsibilities to ensure no the information in FAPIIS with regard to services, or systems that uses covered Federal award funds are provided an applicant’s immediate owner or telecommunications equipment or directly or indirectly to the enemy, to highest-level owner and predecessor, or services as a substantial or essential terminate subawards in violation of subsidiary, if applicable. These component of any system, or as a Never Contract with the Enemy, and to revisions are consistent with the Federal critical technology as part of any allow the Federal Government access to Acquisition Regulation (FAR) final rule system. records to ensure that no Federal award regarding this law published at 81 FR Federal awarding agencies are also funds are provided to the enemy. 11988 on March 7, 2016. required by the law to work with OMB The law allows Federal awarding to prioritize available funding and agencies to terminate, in whole or in Part 25 Universal Identifier and technical support to assist affected part any grant, cooperative agreement, System for Award Management businesses, institutions and or contract that provides funds to the OMB received a significant number of organizations. In addition, the funds enemy, as defined in the NDAA for FY comments concerning subrecipient must be prioritized as reasonably 2015 (NDAA 2015). This statute applies requirements and registration with the

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SAM database. These commenters Federal entities. OMB has revised the Listings information for display on expressed concern with requiring reporting thresholds to further align www.usaspending.gov. subrecipients to fully register with the financial assistance requirements with Part 25 Universal Identifier and SAM database. The commenters thought those of the Federal acquisition System for Award Management this requirement would be overly community. burdensome and was unnecessary. To increase transparency, OMB Some commenters expressed concern It was not OMB’s intention to require extended the applicability of Federal regarding the proposal to expand SAM subrecipients to fully register with the financial assistance in 2 CFR part 25 registration requirements to all type of SAM database. To address this concern, and 2 CFR part 170 beyond grants and Federal financial assistance as required OMB added a new ‘‘Subpart C-Recipient cooperative agreements so that it by FFATA. Specifically, commenters requirements of subrecipients’’ and a includes other types of financial requested clarity on who is considered note to the terms in appendix A to assistance that Federal agencies receive the applicant or recipient in cases when clearly state that subrecipients do not or administer such as loans, insurance, the intended recipient does not have a need to fully register with the SAM contributions, and direct direct relationship with the Federal database. appropriations. awarding agency. For instance, for Further, several commenters thought OMB also made changes throughout 2 certain loan and loan guarantee the addition of the requirement for CFR to make it clear that Federal programs, a third-party administers the subrecipients to register with the SAM agencies may receive Federal financial program on behalf of the Federal database, Federal agencies applying for assistance awards. This will increase awarding agency. One organization or receiving Federal awards register in transparency for Federal awards specifically expressed concern that these third-party administers may not the SAM database made sections of part received by Federal agencies. participate in loan guarantee programs, 25 confusing. The commenters thought To further align implementation of if they are required to register in SAM. that using the term ‘‘Federal agency’’ FFATA, as amended by DATA Act, OMB disagrees that it is overly could be misunderstood. Some between the Federal financial assistance burdensome for third-party commenters thought this was and acquisition communities, OMB particularly true with regard to section administrators to register in SAM, revises the Federal awarding agency and however, OMB agreed that it would be 100. pass-through entity reporting OMB agreed that the addition of the inappropriate to have the intended thresholds. For Federal awarding term ‘‘Federal agency’’ in part 25 made recipient who does not have a direct agencies, OMB revises 2 CFR part 170 the requirements in part 25 less clear. relationship with the Federal awarding to require agencies to report Federal OMB and the interagency work group agency to register in these instances. In awards that equal or exceed the micro- also thought that there was a need for response to these comments, OMB purchase threshold as set by the FAR at additional clarity on who the revised the definitions of applicant and 48 CFR part 2, subpart 2.1. Consistent requirements actually apply to and in recipient to clarify that SAM registration with the FAR threshold for subcontract what situation. As a result, OMB added requirements apply to those entities that reporting, OMB will raise the reporting definitions for ‘‘applicant’’ and receive Federal awards directly from a threshold for subawards that equal or ‘‘recipient’’ in part 25 and removed Federal awarding agency and that exceed $30,000. ‘‘non-Federal entity’’ and ‘‘Federal applicants and recipients also include agency’’ where appropriate throughout OMB proposed to revise 2 CFR part 25 those entities that administer Federal part 25. to allow agencies the flexibility to awards on behalf of Federal awarding exempt a foreign entity applying for or agencies. 25.200 Requirements for Notice of receiving an award for a project or Funding Opportunities, Regulations, program performed outside the United 25.110 Exceptions to This Part and Application Instructions States valued at less than $100,000. Some commenters supported raising Several commenters stated that their Currently, Federal awarding agencies the threshold for foreign organizations organizations do not have a higher level have the flexibility to exempt this or foreign public entities to $100,000 in owner or subsidiaries and they may not requirement for awards valued at less 2 CFR 25.110. Other commenters have predecessors. OMB recognizes that than $25,000. The exemption applies to expressed concerns that a thorough pre- not all entities will have the same cases where the Federal agency has award Federal review would not be organizational structure. The purpose of conducted a risk-based analysis and conducted for foreign entity recipients providing this information is for greater deems it impractical for the entity to under this higher threshold and it transparency in the awarding of Federal comply with the requirements(s). OMB would be a disservice to the American financial assistance. The regulatory proposed to make this revision after taxpayer to raise the threshold. OMB language requires that applicants and receiving feedback from the also received comments that requiring recipients must provide the information international community that requiring Federal awarding agencies to only grant ‘‘if applicable.’’ If the requested certain foreign entities to register in exemptions to foreign organizations or information is not applicable, an SAM introduces substantial burden foreign public entities on a case-by-case applicant or recipient would not be with no significant value for the Federal basis to be overly burdensome. required to report it. awarding agency. Federal awarding OMB does not think that requiring agencies will continue to remain Federal awarding agencies to determine D. Increase Transparency Through responsible for reporting these awards whether to grant exemptions to foreign FFATA, as Amended by the DATA Act for transparency purposes. organizations or foreign public entities OMB made several revisions to Finally, OMB will require Federal on a case-by-case basis is overly increase transparency regarding Federal awarding agencies to associate Federal burdensome. Considering the comments spending as required by FFATA, as Assistance Listings with the authorizing received, OMB decided to retain the amended by the DATA Act, which statute to make listings more consistent. current threshold of $25,000. mandates Federal agencies to report This supports implementation of the Based on feedback provided by Federal appropriations received or DATA Act which requires agencies to agencies and in light of the COVID–19 expended by Federal agencies and non- report award level Federal Assistance emergency and past emergency

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situations where this requirement has 170.200 Federal Awarding Agency Federal financial assistance and been waived, OMB added an exception Reporting acquisition communities. in § 25.110 allowing agencies to waive 170.305 Federal Award the requirement to register in SAM OMB received several comments when there are exigent circumstances suggesting that a reference to the Commenters had questions relating to definition for micro-purchase in § 200.1 that would prevent an applicant from how this definition differs from part be added to the end of the section. OMB registering prior to the submission of an 200. OMB would like to note that the concurred and made this change in the definition differs because this section is application. Federal awarding agencies final language. Further, OMB received discussing Federal awards in the are responsible for the determination on comments relating to the grammatical context of ‘‘direct’’ federal awards. whether there are exigent circumstances structuring of this section. After further Federal award in part 200 includes is that prevent an applicant from review, OMB retained the existing more expansive to include caveats registering in SAM and are no longer language. depending on which section it is required to request a waiver from OMB applied to, so the definition cannot be in these instances. 170.210 Requirements for Notices of Funding Opportunities, Regulations, the same. As such, the proposed Part 170 Reporting Subaward and and Application Instructions language remains. Executive Compensation Information 170.315 Executive OMB concurred with a comment that 170 Definitions suggested including the information on One comment suggested clarifying the requirements for Notice of Funding this definition as many recipients of Several commenters mentioned the Federal awards are state and local difference between the term non-Federal Opportunity found in 2 CFR 200.204 and appendix I to part 200. OMB made governments with elected officials. entity in part 170 and part 200 and the suggested changes to appendix I to OMB rejected this change as this is requested that part 170 reference part include these references. Further, already covered within the 200 for this definition. Related comments inquired if OMB has ‘‘Exceptions’’ to this section. Further, comments also were provided to the considered collecting the assurance one comment requested that this definitions of foreign organizations and from applicants when they register and definition be included in part 200. OMB foreign public entity. The definition of renew in beta.SAM.gov. OMB would aims to eliminate duplicative non-Federal entity in part 170 like to note that this is already part of definitions and thus respectfully intentionally includes foreign the requirements for award terms and declines this comment to also include organizations, foreign public entities, conditions, and the needed assurance the definition in part 200. and for-profit organizations, which is should go into the Compliance 170.320 Federal Financial Assistance not included in the definition of non- Supplement for auditors to check that Subject to the Transparency Act Federal entity in part 200. Part 200 only the assurance is received from the applies to these organization types recipient. Therefore, no changes related A commenter noted that the term when a Federal awarding agency to obtaining assurances were made to Federal financial assistance subject to chooses to apply the requirements in the language in this section. the Transparency Act is not defined in their adoption of part 200. Part 170 part 200. OMB concurred with this 170.220 Award Term applies to foreign and for-profit comment and made edits to the definition in § 170.320 to clarify that the organizations because of the Federal Several commenters referenced the term includes Federal financial Funding Accountability and thresholds discussed in part 25. OMB assistance as defined in part 200, with Transparency Act (Pub. L. 109–282, would like to point out that the some limited exceptions. hereafter cited as ‘‘Transparency Act’’) thresholds in part 25 are unrelated to requirements. Thus, the definition for the threshold in § 170.220. Additionally, 170.325 Subaward non-Federal entity in part 200 and part several comments suggested changes Commenters recommended deleting 170 will remain different. that were outside of the scope of this the definition for ‘‘Subaward’’ and revision. OMB concurred with a 170.110 Types of Entities to Which including a reference to the definition suggestion to remove a reference to the This Part Applies used in part 200 to reduce duplication. Recovery Act in appendix A. Further, a OMB concurred with this Several commenters requested comment suggested the deletion of the recommendation and made the clarification on the language insertion of ‘‘and Federal agency’’ in subsequent change. surrounding ‘‘non-Federal’’ and paragraph (a) of this section. OMB notes that some agencies can make awards to E. Aligning 2 CFR With Authoritative ‘‘Federal agencies.’’ OMB concurred Sources with these comments and made the other agencies, dependent on the corresponding changes to ensure clarity. authority. Therefore, it is necessary to OMB revises 2 CFR 200.431 to allow keep the language that was used in the states to conform with Generally Further, OMB also agreed with proposed version. One commenter Accepted Accounting Principles comments that suggested clarification to noted that raising the subaward (GAAP), specifically Governmental § 170.110(b) in relation to Title IV funds reporting threshold from $25,000 to Accounting Standards Board (GASB) and made the subsequent edits in the $30,000 is unlikely to result in greater Statement 68, and to continue to claim final language. efficiencies or ease administrative pension costs that are both actual and 170.115 Deviations requirements and recommended for the funded. OMB has made this revision threshold to be increased to at least because GASB issued Statement 68, OMB concurred with comments $75,000 or $100,000. OMB disagrees Accounting and Financial Reporting for asking to define ‘‘deviation’’ to with this commenter’s recommendation, Pensions which amends GASB differentiate between exceptions by as the purpose of this change was to Statement 27 and allows non-Federal removing ‘‘deviation’’ and adding further align implementation of FFATA, entities (NFE) to claim only estimated paragraph (c) to ‘‘Types of Exemptions.’’ as amended by DATA Act, between the pension costs in their financial

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statements. OMB’s revision will allow subrecipient’s auditors and cognizant B. Reducing Burden on Universities by non-Federal entities to continue to agency’s oversight for routine audit Clarifying Timing of the Disclosure claim pension costs that are both actual follow-up and management decisions. Statement and funded. These changes reduce the burden for OMB is adding language to the timing 200.431 Compensation PTEs by allowing a PTE to rely on the cognizant agency to address a of submission of the disclosure OMB appreciated the comments in subrecipient’s entity-wide issues. statement (DS–2), which is only support of the proposed changes. In required for institutions of higher response to several comments that asked 200.332 Requirements for Pass- education that meet certain thresholds for clarification, OMB is revising the Through Entities as defined in 48 CFR 9903.202–1(f). final language to require state and local This revision reduces burden while governments to be compliant with OMB received substantial feedback maintaining the requirement for GASB #68 for pension costs. OMB relating to the changes made in this institutions of higher education to would like to note that the cost section. The two main changes for this implement policies that are in associated with each fiscal year should section are related to the clarification of compliance with 2 CFR. be determined in accordance with the pass-through entities responsibilities GAAP. toward the establishment of the 200.419 Cost Accounting Standards The definition for ‘‘Improper subrecipient indirect cost rates and the and Disclosure Statement Payment’’ has been revised to refer to pass-through entities responsibilities for OMB received several comments in the authoritative source for clarity, OMB resolving the sub recipient’s audit response to 2 CFR 200.419 that focused Circular A–123—Management’s findings (§ 200.332(d)). on concerns with the legal instruments Responsibility for Internal Control in Although most commenters approved that were subject to this part. In Federal Agencies, Appendix C— of the proposed changes regarding the response to these concerns, the language Requirements for Payment Integrity pass-through entities responsibilities for was revised to provide clarification. Improvement. See above Section I for the subrecipient indirect cost rates, additional information on the changes some requested clarification on specific C. Response to Frequently Asked to ‘‘Improper Payment.’’ situations: Questions Related to the Prior Release Some commenters expressed that the of 2 CFR reference to OMB Circular A–123 for the • Where the subrecipient has a federally definition of ‘‘Improper Payment’’ approved indirect cost rate In July 2017, OMB developed and posted Frequently Asked Questions added confusion and suggested • where the subrecipient receives funds (FAQs) on the Chief Financial Officers retaining the original language. OMB from multiple pass-through entities Council website in response to considered this request and respectfully from which it may be already stakeholder requests for clarification on declined the comment in keeping with established an indirect cost rate with the practice to align the guidance with the first publication of 2 CFR (https:// one of the pass-through entity; or source documents, if possible. cfo.gov//wp-content/uploads/2017/08/ • where the subrecipient decides to use July2017-UniformGuidanceFrequently III. Clarifying Requirements Regarding the direct allocation method instead AskedQuestions.pdf). Due to the volume Areas of Misinterpretation of the use of indirect cost rate for cost of questions related to these topics, Following the publication of 2 CFR reimbursement. OMB is including revisions to clarify part 200, OMB received a substantial OMB provides clarifications in the final the following: The meaning of the words amount of questions from stakeholders ‘‘must’’ and ‘‘may’’ as they pertain to requesting clarifications about key language for all of the three situations above. requirements; applicability and aspects of the guidance. In other documentation requirements when a instances, it has come to OMB’s Most commenters supported the non-Federal entity elects to charge the attention that the interpretation of proposed changes to clarify the pass- de minimis indirect cost rate of MTDC; certain provisions was not consistent through entities responsibility in the PTE responsibilities related to indirect with the intent of 2 CFR part 200. In resolution of audit findings reported by cost rates and audits; and applicability response, OMB is publishing the subrecipients and the required of 2 CFR to FAR based contracts. These clarifications that are aimed at reducing management decision letters to address proposed revisions are intended to recipient administration burden and the audit findings. Some commenters improve clarity and reduce recipient ensuring consistent interpretation of questioned the use of the term burden by providing guidance on guidance. ‘‘systemic findings’’ to describe the implementing 2 CFR. A. Responsibilities of the Pass-Through findings that impact the whole The Words ‘‘must’’ and ‘‘may’’ as They Entity To Address Only a Subrecipient’s organization. This section has been Pertain to Requirements Audit Findings Related to Their revised to streamline and clarify the Subaward original intent of the revision which All commenters that provided To clarify requirements regarding limits the pass-through entity to review feedback on this section were in favor responsibility for audit findings, OMB and resolve the audit findings that are of incorporating the meaning of ‘‘must’’ revises 2 CFR 200.332 Requirements for specifically related to the subaward. and ‘‘may’’ within the guidance. One pass-through entities to clarify that pass- OMB replaced the term ‘‘systemic commenter suggested that the location through entities (PTE) are responsible findings’’ with ‘‘cross-cutting findings.’’ for this change within the guidance for addressing only a subrecipient’s OMB also added that written could be within its own section. After audit findings that are specifically confirmation by the subrecipients for consideration, OMB disagrees with the related to their subaward. For example, corrective actions on audit findings can commenter and has determined that this a PTE is not required to address all of be used as a means for follow-up and change should remain in the the subrecipient’s audit findings. In monitoring of the subrecipient’s applicability section of the guidance addition, the PTE may rely on the performance. under the stated sub title.

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De Minimis Indirect Cost Rate of MTDC agreements as direct recipients or need for the public to have an Applicability and Documentation subrecipients. This addition clarifies opportunity to provide input before See Section I (K) for additional that subparts A through E of 2 CFR part finalizing. All comments within these information on the comments received. 200 is applicable when determined by categories were not accepted by OMB. the Federal awarding agency. There will Changes From the Proposed Revisions PTE Responsibilities Related to Indirect be no change from the proposed version. Cost Rates and Audits Not Recommended E. Other Clarifications See Section III or additional Comments received for several information on the comments received. Parts 25 and 170 provisions within 2 CFR were reviewed, Many commenters expressed deliberated, and determined that no Applicability of 2 CFR to FAR Based changes were needed from the proposed Contracts concerns that parts 25 and 170 were confusing, inconsistent and needed to revisions. Some of these provisions Many commenters expressed be edited for clarity. In response to these within 2 CFR include the following: confusion regarding the changes to this comments, parts 25 and 170 have been • 200.201 Use of grant agreements section. The intent of the changes to this revised throughout with many technical (including fixed amount awards), section are to make clear that the FAR corrections to add clarity and cooperative agreements, and contracts applies to Federal contracts awarded to consistency. • 200.207 Standard application non-Federal entities, and that these requirements requirements supersede the 200.110 Effective/Applicability Date • 200.311 Real property requirements of 2 CFR part 200 in a A number of comments, particularly • 200.312 Federally-owned and Federal contract. Clarification was from Federal agencies, expressed exempt property requested from a commenter to confirm concern about the effective date for • 200.313 Equipment if an audit conducted for a Cost negotiated indirect cost rate agreements • 200.314 Supplies Accounting Standards (CAS) applicable (NICRAs) in paragraph (b). The intent of • 200.331 Subrecipient and contractor contract will take the place of a Single this section is to retain the existing determinations • Audit and how an entity with multiple NICRAs until they are renegotiated and 200.430 Compensation—personal grants and only one CAS-contract would incorporate the requirements from the services • meet the requirements of the Single revision to 2 CFR upon renegotiation. 400.458 Pre-award costs Audit Act. Non-Federal entities with a NIRCA are 200.402 Composition of Costs The language clarified in § 200.101(c) expected to work with their cognizant to state that for CAS covered contracts, agency for indirect costs as appropriate. Some commenters requested clarity the CAS requirements regarding audit OMB clarified the intent for 2 CFR and noted that the use of ‘‘approved would supersede the audit requirements 200.110(b). One Federal agency budget period’’ is specific to Federal in subpart F. In addition, in the case commenter stated that OMB should financial assistance when 2 CFR where an entity receives many grants specify if the applicability date is for the 200.402 would apply to both contracts and one CAS covered contracts, the entire guidance or for the revisions. and Federal financial assistance entity must comply to both the Single OMB accepted this comment and made awarded to non-Federal entities. Audits for its grants and the CAS audit revisions accordingly. Another commenter suggested that requirements for the CAS covered further clarification is needed for what contract. 200.200 Purpose ‘‘cost principle’’ and ‘‘budget period’’ All commenters provided mean. Based on the vast array of D. Applicability of Guidance to Federal recommendations to revise this section comments received and the revised Agencies to better align the terms ‘‘competitive’’ definitions for finalization, OMB OMB is making changes to 2 CFR and ‘‘non-competitive’’ with the new decided to remove the language 200.101 Applicability to clarify that terms ‘‘discretionary’’ and ‘‘non- proposed for 2 CFR 200.402. Federal awarding agencies may apply discretionary.’’ OMB concurs with the 200.449 Interest the requirements of 2 CFR part 200 to recommendation to revise this section to other Federal agencies, to the extent align with other changes within the One comment was received for this permitted by law. This change guidance. In response to commenters, provision. The commenter suggested recognizes that there are instances when OMB has removed 2 CFR 200.200(b) and that OMB provide a different example Federal awarding agencies or pass- made other technical corrections within 2 CFR 200.449 because lease through entities have the authority to accordingly. contracts that transfer ownership are issue Federal awards to Federal agencies essentially debt financing. The and in these instances, the provisions of 200.207 Standard Application commenter explains that the example is 2 CFR part 200 may be applied, as Requirements comparing debt financing to debt appropriate. This change is consistent OMB received one comment on this financing, which doesn’t work for the with how for-profit entities, foreign section that was out of scope for the intent. The commenter provided a public entities, or foreign organizations current set of revisions, and therefore suggested edit that would enable the are treated in the Uniform Guidance. the proposed language remains the example to remain and retain the same. original intent. OMB concurred with the 200.101 Applicability commenter and made the suggested edit Out of Scope Comments Several comments expressed concerns accordingly. as to whether or not it is appropriate to Many commenters submitted include awards to Federal agencies in comments that were either not part of 200.461 Publication and Printing Costs the scope of 2 CFR. It was determined the scope of the effort, were not relevant All commenters requested clarity and that it was appropriate to include to the revisions proposed, pertained to suggested revisions to this provision. Federal agencies in the scope of 2 CFR sections of the guidance that were not One commenter objected to specifying as some Federal agencies are authorized proposed to be revised, or would be a that costs must be charged to the last to receive grants or cooperative change too drastic that would warrant a budget period, citing that printing costs

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are historically charged at various stages economic impact on a substantial may exercise the flexibility provided in of the award. One commenter noted that number of such entities. There are some 2 CFR 25.110 to either exempt an these costs have historically been proposed revisions that may impose applicant or recipient from this allowable up until the closeout of the burden, however, there are more requirement or request an exception award. Edits were suggest to provide proposed revisions that reduce burden from OMB on a case-by-case for a class additional clarity in § 200.461(b)(3) to to small entities. When reviewing all the applicants or recipients, particularly in specify that The non-Federal entity may revisions, the burden that will be situations of national emergency such as charge the Federal award during reduced for recipients is much greater natural disasters and pandemics. closeout. OMB concurs with this than the burden imposed. As noted in the Paperwork Reduction suggested revision and made the change The revisions to 2 CFR are not Act section, as of July 1, 2020, there accordingly. applicable to Federal financial were 159,477 unique Federal financial assistance awards issued prior to the assistance registrants in the SAM. 200.507 Program-Specific Audits effective dates provided in the DATES According to data accessed from One comment was received for 2 CFR section of this Notice of Final Guidance, USASpending.gov, in FY 2018, 200.507. The commenter requested a including financial assistance awards approximately 2,952 small entities who clarification on the first phase to issued prior to those dates under the received awards for other types of indicate ‘‘in some cases’’ rather than ‘‘in Coronavirus Aid, Relief, and Economic financial assistance did not have a many cases’’ because Appendix VI of Support (CARES) Act of 2020 (Pub. L. unique entity identifier. Assuming that the 2019 Compliance Supplement only 116–136). OMB plans to consult with non-Federal entities with a unique shows two current program specific applicable agencies to provide entity identifier reported to audit guides. OMB concurred with the regulatory flexibility analyses in future USASpending.gov are already registered commenter and made the revision revisions to 2 CFR and its in SAM, this change will impact accordingly. The commenter provided a subcomponents. approximately 2,952 small entities second recommendation to remove the The applicability of Federal financial annually. SAM registration is estimated 2014 beginning date and instead include assistance in 2 CFR part 25 will be to take 2.5 hours per response, which the current reference to the Compliance expanded beyond grants and results in 7,380 burden hours annually. Supplement appendix. OMB also cooperative agreements to include other The guidance also provides concurs with this suggestion from the types of financial assistance such as consistency among definitions and commenter and made the revisions. loans and insurance. This revision terms and proposes several provisions ensures compliance with FFATA, as to increase transparency regarding 200.515 Audit Reporting amended by the DATA Act, and will Federal spending. These revisions are The comments submitted for 2 CFR impact small entities that voluntarily intended to reduce recipient burden and 200.515 provided suggestions for clarity. seek financial assistance. It will not will not have a significant economic One commenter suggested reviewing have a significant impact on a impact on a substantial number of small this subsection against what the Federal substantial number of U.S. small entities entities because they will affect Federal Audit Clearinghouse is collecting in Part as approximately 69,185 small entities awarding agencies; they do not include III: Information from the Schedule of who received awards for other types of any new requirements for non-Federal Findings and Questioned Costs, Item 2. financial assistance did not have a entities. Financial Statements, to ensure an unique entity identifier in FY 2019, The guidance introduces a new appropriate alignment between the while the Small Business provision to align with section 889 of regulation and the Form. Another Administration’s Office of Advocacy the NDAA 2019, prohibition on certain commenter inquired about the intent of reported 30.7 million U.S. small telecommunication and video the revisions to this provision. OMB businesses in that same calendar year. surveillance services or equipment. This considered and discussed all the Currently, 2 CFR part 25 requires all statutory requirement will introduce comments for clarity and made non-Federal entities that apply for burden to small entities that are revisions accordingly. grants and cooperative agreements to prohibited from obligating or expending register in the SAM. In alignment with grant or loan funds to procure or obtain, Executive Orders 12866 and 13563 FFATA, the guidance provides that all extend or renew a contract to procure or Executive Orders 12866 and 13563 entities that apply directly to a Federal obtain, or enter in a contract with, as direct agencies to assess all costs and program for financial assistance such as identified in the NDAA 2019. Since this benefits of available regulatory loans and insurance must register in is a new legal requirement, the burden alternatives and, if regulation is SAM, which requires the establishment estimate is difficult to calculate. It will necessary, to select regulatory of a unique entity identifier. Individuals impact all unique entities awarded approaches that maximize net benefits who receive Federal financial assistance Federal financial assistance, of which (including potential economic, as a natural person remain exempt from 69,185 are small entities. environmental, public health and safety this requirement. In practice, some The guidance implements a new effects, distributive impacts, and Federal awarding agencies already statute that requires applicants of equity). The revision of 2 CFR is not a require SAM registration for all types of Federal assistance to provide significant regulatory action under Federal financial assistance and the information on their owner, predecessor Executive Order 12866. change would make this practice and subsidiary, including the consistent among agencies. OMB Commercial and Government Entity Regulatory Flexibilities Act recognizes that this new requirement (CAGE) Code and name of all The Regulatory Flexibility Act 5 may be burdensome to small entities predecessors, if applicable. This will not U.S.C. 601, et seq., requires a regulatory and there may be instances where it is have a significant economic impact on flexibility analysis or a certification that appropriate for Federal awarding a substantial number of small entities the rule will not have a significant agencies to request an exception or because small entities typically do not economic impact on a substantial delay implementation of this have a complex corporate structure number of small entities. OMB expects requirement for their programs. In requiring them to report information on this guidance to have a significant response, Federal awarding agencies their owner, predecessor, and

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subsidiary. Further, the burden is registrants in SAM as a result of the Respondents: 172,084. minimal for a non-Federal entity to updates to the proposed guidance. Responses per respondent: 1. provide the name of its immediate OMB removed duplicate recipients Total annual responses: 172,084. owner and highest-level owner. based on recipient Data Universal Preparation hours per response: 0.1. The NDAA for FY2018 increased the Numbering System Number (DUNS) Total response Burden Hours: 17,208. micro-purchase threshold from $3,500 numbers, from Dun & Bradstreet (D&B). List of Subjects to $10,000 and increased the simplified At this time all Federal financial acquisition threshold from $100,000 to assistance recipients are required to 2 CFR Part 25 $250,000 for all recipients. OMB’s register for DUNS numbers. Administrative practice and revisions reduces burden and will not In FY 2019 there were 1,751 loan and procedure, Grant programs, Grants have a significant economic impact on 8,915 other Federal financial assistance administration, Loan programs. a substantial number of small entities recipients with unique DUNS numbers because it is likely to reduce burden for reported in USASpending.gov. 2 CFR Part 170 all non-Federal entities. Therefore, based on the number of Colleges and universities, Grant entities with unique DUNS numbers programs, Hospitals, International Paperwork Reduction Act that are registered in SAM (159,477), organizations, Loan programs, Reporting Consistent with the Regulatory plus entities that receive loans (122) or and recordkeeping requirements. Flexibility Act analysis discussion, the other Federal financial assistance 2 CFR Part 183 Paperwork Reduction Act (44 U.S.C. (8,915) reported in USASpending.gov chapter 35) applies. The guidance that may not be reflected in SAM, the Foreign aid, Grant programs, Grants contains information collection total number of entities that may be administration, International requirements and will impact the impacted by the proposed guidance organizations, Reporting and current Information Collection Requests associated Information Collection recordkeeping requirements. approved under OMB control number Requests under OMB control number 2 CFR Part 200 3090–0290 managed by GSA. 3090–0290 could be 172,084 registrants. Accordingly, GSA will submit a request Public reporting burden for Accounting, Colleges and universities, for approval to amend the existing Information Collection Requests under Grant programs, Grants administration, Information Collection Requests for OMB control number 3090–0290 is Hospitals, Indians, Nonprofit SAM registration requirements for managed by the GSA and estimated to organizations, Reporting and Federal financial assistance recipients. average 2.5 hours per response, recordkeeping requirements, State and local governments. Annual Reporting Burden including the time for reviewing instructions, searching existing data The estimated annual reporting Timothy F. Soltis, sources, gathering and maintaining the Deputy Controller. burden includes all possible entities for data needed, and completing and Federal financial assistance that may be reviewing the collection of information. For the reasons stated in the required to register in SAM. The The annual reporting burden is preamble, the Office of Management and estimated annual reporting burden also estimated as follows: Budget amends 2 CFR chapters I and II includes entities that receive Federal Respondents: 172,084. as set forth below: financial assistance reported in Responses per Respondent: 1. USASpending.gov and either may or Total annual responses: 172,084. PART 25—UNIVERSAL IDENTIFIER may not be required to register in SAM. Hours per Response: 2.5. AND SYSTEM FOR AWARD Previously, SAM only requires that Total response Burden Hours: MANAGEMENT applicants and recipients of Federal 430,210. ■ financial assistance in the form of grants The guidance also requires that 1. The authority citation for part 25 register in the system. However, registrants for Federal financial continues to read as follows: applicants and recipients are required to assistance provide information on their Authority: Pub. L. 109–282; 31 U.S.C. maintain accurate SAM registration at owner, predecessor, and subsidiary, 6102. all times during which they have an including the CAGE code and name of ■ 2. Amend § 25.100 by revising the active Federal award, an application, or all predecessors, if applicable. This introductory text and paragraph (a) to a plan under consideration by a Federal information is required to implement read as follows: awarding agency. Sec. 852 of the NDAA of FY 2013, The burden estimates are which requires that the FAPIIS include § 25.100 Purposes of this part. approximations based on the best information on a non-Federal entity’s This part provides guidance to available data. parent, subsidiary, or successor entities. Federal awarding agencies to establish: As of July 7, 2019, there were 159,477 Non-Federal entities are already (a) The unique entity identifier as a unique Federal financial assistance required to obtain a CAGE code for universal identifier for Federal financial registrants in SAM. However, not all purposes of SAM registration. It is assistance applicants, as well as registrants ultimately apply for, or anticipated that including this recipients and their direct subrecipients, receive, Federal financial assistance. information as part of SAM registration and; OMB aggregated SAM data with Federal or for a renewal should not result in * * * * * financial assistance recipient data from significant additional time. Public ■ 3. Revise § 25.105 to read as follows: USASpending.gov, excluding grants, to reporting burden for this collection of determine the anticipated number of information is estimated to average 0.1 § 25.105 Types of awards to which this additional Federal financial assistance hours per response. Based on the part applies. in SAM. OMB ran reports in burden estimates for the total number of This part applies to a Federal USASpending.gov to identify the SAM registrants indicated in the awarding agency’s grants, cooperative number of unique recipients of Federal previous section, the annual reporting agreements, loans, and other types of financial assistance other than grants to burden for this proposal is estimated as Federal financial assistance as defined isolate the total number of potential follows: in § 25.406.

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■ 4. Revise § 25.110 to read as follows: that there are exigent circumstances that Federal award to be made to the prohibit the applicant from receiving a consortium as the recipient, the § 25.110 Exceptions to this part. unique entity identifier and completing consortium must have a unique entity (a) General. Through a Federal SAM registration prior to receiving a identifier. If a consortium is eligible to awarding agency’s implementation of Federal award. In these instances, receive funding under a Federal the guidance in this part, this part Federal awarding agencies must require awarding agency program but the applies to all applicants and recipients the recipient to obtain a unique entity agency’s policy is to make the Federal of Federal awards, other than those identifier and complete SAM award to a lead entity for the exempted by statute or exempted in registration within 30 days of the consortium, the unique entity identifier paragraphs (b) and (c) of this section Federal award date. of the lead applicant will be used. that apply for or receive agency awards. (3) Federal awarding agencies’ use of (2) A notice of funding opportunity is (b) Exceptions for individuals. None generic unique entity identifier, as any paper or electronic issuance that an of the requirements in this part apply to described in paragraphs (c)(1) and (2) of agency uses to announce a funding an individual who applies for or this section, should be rare. Having a opportunity, whether it is called a receives Federal financial assistance as generic unique entity identifier limits a ‘‘program announcement,’’ ‘‘notice of a natural person (i.e., unrelated to any recipient’s ability to use funding availability,’’ ‘‘broad agency business or nonprofit organization he or Governmentwide systems that are announcement,’’ ‘‘research she may own or operate in his or her needed to comply with some reporting announcement,’’ ‘‘solicitation,’’ or some name). requirements. other term. (c) Other exceptions. (1) Under a (d) Class exceptions. OMB may allow (3) To remain registered in the SAM condition identified in paragraph (c)(2) exceptions for classes of Federal awards, database after the initial registration, the of this section, a Federal awarding applicants, and recipients subject to the applicant is required to review and agency may exempt an applicant or requirements of this part when update its information in the SAM recipient from an applicable exceptions are not prohibited by statute. database on an annual basis from the requirement to obtain a unique entity date of initial registration or subsequent identifier and register in the SAM, or § 25.115 [Removed] updates to ensure it is current, accurate both. ■ 5. Remove § 25.115. and complete. (i) In that case, the Federal awarding ■ 6. Revise § 25.200 to read as follows: ■ 7. Revise § 25.205 to read as follows: agency must use a generic unique entity identifier in data it reports to § 25.200 Requirements for notice of § 25.205 Effect of noncompliance with a USAspending.gov if reporting for a funding opportunities, regulations, and requirement to obtain a unique entity prime award to the recipient is required application instructions. identifier or register in the SAM. by the Federal Funding Accountability (a) Each Federal awarding agency that (a) A Federal awarding agency may and Transparency Act (Pub. L. 109–282, awards the types of Federal financial not make a Federal award or financial hereafter cited as ‘‘Transparency Act’’). assistance defined in § 25.406 must modification to an existing Federal (ii) Federal awarding agency use of a include the requirements described in award to an applicant or recipient until generic unique entity identifier should paragraph (b) of this section in each the entity has complied with the be used rarely for prime award reporting notice of funding opportunity, requirements described in § 25.200 to because it prevents prime awardees regulation, or other issuance containing provide a valid unique entity identifier from being able to fulfill the subaward instructions for applicants that is issued and maintain an active SAM registration or executive compensation reporting on or after August 13, 2020. with current information (other than required by the Transparency Act. (b) The notice of funding opportunity, any requirement that is not applicable (2) The conditions under which a regulation, or other issuance must because the entity is exempted under Federal awarding agency may exempt require each applicant that applies and § 25.110). an applicant or recipient are— does not have an exemption under (b) At the time a Federal awarding (i) For any applicant or recipient, if § 25.110 to: agency is ready to make a Federal the Federal awarding agency determines (1) Be registered in the SAM prior to award, if the intended recipient has not that it must protect information about submitting an application or plan; complied with an applicable the entity from disclosure if it is in the (2) Maintain an active SAM requirement to provide a unique entity national security or foreign policy registration with current information, identifier or maintain an active SAM interests of the United States, or to including information on a recipient’s registration with current information, avoid jeopardizing the personal safety of immediate and highest level owner and the Federal awarding agency: the applicant or recipient’s staff or subsidiaries, as well as on all (1) May determine that the applicant clients. predecessors that have been awarded a is not qualified to receive a Federal (ii) For a foreign organization or Federal contract or grant within the last award; and foreign public entity applying for or three years, if applicable, at all times (2) May use that determination as a receiving a Federal award or subaward during which it has an active Federal basis for making a Federal award to for a project or program performed award or an application or plan under another applicant. outside the United States valued at less consideration by a Federal awarding ■ 8. Revise § 25.210 to read as follows: than $25,000, if the Federal awarding agency; and agency deems it to be impractical for the (3) Provide its unique entity identifier § 25.210 Authority to modify agency entity to comply with the in each application or plan it submits to application forms or formats. requirement(s). This exemption must be the Federal awarding agency. To implement the policies in determined by the Federal awarding (c) For purposes of this policy: §§ 25.200 and 25.205, a Federal agency on a case-by-case basis while (1) The applicant meets the Federal awarding agency may add a unique utilizing a risk-based approach and does awarding agency’s eligibility criteria entity identifier field to information not apply if subawards are anticipated. and has the legal authority to apply and collections previously approved by (iii) For an applicant, if the Federal to receive the Federal award. For OMB, without having to obtain further awarding agency makes a determination example, if a consortium applies for a approval to add the field.

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■ 9. Revise § 25.215 to read as follows: 25.433 Indian Tribe (or ‘‘Federally § 25.410 System for Award Management recognized Indian Tribe’’). (SAM). § 25.215 Requirements for agency 25.440 Local government. System for Award Management (SAM) information systems. 25.443 Non-Federal entity. has the meaning given in paragraph C.1 Each Federal awarding agency that 25.445 Nonprofit organization. 25.447 Predecessor. of the award term in appendix A to this awards Federal financial assistance (as part. defined in § 25.406) must ensure that 25.450 State. 25.455 Subaward. systems processing information related § 25.415 Unique entity identifier. 25.460 Subrecipient. to the Federal awards, and other 25.462 Subsidiary. Unique entity identifier has the systems as appropriate, are able to 25.465 Successor. meaning given in paragraph C.2 of the accept and use the unique entity award term in appendix A to this part. identifier as the universal identifier for Subpart D—Definitions Federal financial assistance applicants § 25.425 For-profit organization. and recipients. § 25.400 Applicant. For-profit organization means a non- ■ 10. Revise § 25.220 to read as follows: Applicant, for the purposes of this Federal entity organized for profit. It part, means a non-Federal entity or includes, but is not limited to: § 25.220 Use of award term. Federal agency that applies for Federal (a) An ‘‘S corporation’’ incorporated (a) To accomplish the purposes awards. under Subchapter S of the Internal described in § 25.100, a Federal § 25.401 Federal Awarding Agency. Revenue Code; awarding agency must include in each (b) A corporation incorporated under Federal award (as defined in § 25.405) Federal Awarding Agency has the another authority; the award term in appendix A to this meaning given in 2 CFR 200.1. (c) A partnership; part. § 25.405 Federal Award. (d) A limited liability corporation or (b) A Federal awarding agency may Federal Award, for the purposes of partnership; and use different letters and numbers than this part, means an award of Federal (e) A sole proprietorship. those in appendix A to this part to financial assistance that a non-Federal designate the paragraphs of the Federal § 25.430 Foreign organization. entity or Federal agency received from Foreign organization has the meaning award term, if necessary, to conform the a Federal awarding agency. system of paragraph designations with given in 2 CFR 200.1. the one used in other terms and § 25.406 Federal financial assistance. § 25.431 Foreign public entity. conditions in the Federal awarding (a) Federal financial assistance, for Foreign public entity has the meaning agency’s Federal awards. the purposes of this part, means given in 2 CFR 200.1. ■ 11. Revise subpart C to read as assistance that entities received or follows: administer in the form of: § 25.432 Highest level owner. (1) Grant; Subpart C—Recipient Requirements of Highest level owner has the meaning (2) Cooperative agreements (which given in 2 CFR 200.1. Subrecipients does not include a cooperative research and development agreement pursuant to § 25.433 Indian Tribe (or ‘‘federally § 25.300 Requirement for recipients to recognized Indian Tribe’’). ensure subrecipients have a unique entity the Federal Technology Transfer Act of identifier. 1986, as amended (15 U.S.C. 3710a)); Indian Tribe (or ‘‘federally recognized (3) Loans; (a) A recipient may not make a Indian Tribe’’) has the meaning given in (4) Loan guarantees; 2 CFR 200.1. subaward to a subrecipient unless that (5) Subsidies; subrecipient has obtained and provided (6) Insurance; § 25.440 Local government. to the recipient a unique entity (7) Food commodities; Local government has the meaning identifier. Subrecipients are not (8) Direct appropriations; given in 2 CFR 200.1. required to complete full SAM (9) Assessed or voluntary registration to obtain a unique entity contributions; or § 25.443 Non-Federal entity. identifier. (10) Any other financial assistance Non-Federal entity, as it is used in (b) A recipient must notify any transaction that authorizes the non- this part, has the meaning given in potential subrecipients that the Federal entity’s expenditure of Federal paragraph C.3 of the award term in recipient cannot make a subaward funds. appendix A to this part. unless the subrecipient has obtained a (b) Federal financial assistance, for unique entity identifier as described in the purposes of this part, does not § 25.445 Nonprofit organization. paragraph (a) of this section. include: Non-Federal organization, has the ■ 12. Add subpart D to read as follows: (1) Technical assistance, which meaning given in 2 CFR 200.1. provides services in lieu of money; and Subpart D—Definitions (2) A transfer of title to federally § 25.447 Predecessor. Sec owned property provided in lieu of Predecessor means a non-Federal 25.400 Applicant. money, even if the award is called a entity that is replaced by a successor 25.401 Federal Awarding Agency. grant. and includes any predecessors of the 25.405 Federal Award. 25.406 Federal financial assistance. § 25.407 Recipient. predecessor. 25.407 Recipient. Recipient, for the purposes of this § 25.450 State. 25.410 System for Award Management part, means a non-Federal entity or (SAM). State has the meaning given in 2 CFR 25.415 Unique entity identifier. Federal agency that received a Federal 200.1. 25.425 For-profit organization. award. This term also includes a non- § 25.455 Subaward. 25.430 Foreign organization. Federal entity who administers Federal 25.431 Foreign public entity. financial assistance awards on behalf of Subaward has the meaning given in 2 25.432 Highest level owner. a Federal agency. CFR 200.1.

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§ 25.460 Subrecipient. which a recipient must provide exempted by law or excepted in Subrecipient has the meaning given in information required for the conduct of accordance with paragraphs (b) and (c) 2 CR 200.1. business as a recipient. Additional of this section, that— information about registration (1) Apply for or receive Federal § 25.462 Subsidiary. procedures may be found at the SAM awards; or Subsidiary has the meaning given in internet site (currently at https:// (2) Receive subawards under Federal 2 CFR 200.1. www.sam.gov). awards. 2. Unique Entity Identifier means the (b) Exceptions. (1) None of the § 25.465 Successor. identifier assigned by SAM to uniquely requirements in this part apply to an Successor means a non-Federal entity identify business entities. individual who applies for or receives a that has replaced a predecessor by 3. Entity includes non-Federal entities Federal award as a natural person (i.e., acquiring the assets and carrying out the as defined at 2 CFR 200.1 and also unrelated to any business or nonprofit affairs of the predecessor under a new includes all of the following, for organization he or she may own or name (often through acquisition or purposes of this part: operate in his or her name). merger). The term ‘‘successor’’ does not a. A foreign organization; (2) None of the requirements include new offices or divisions of the b. A foreign public entity; regarding reporting names and total same company or a company that only c. A domestic for-profit organization; compensation of a non-Federal entity’s changes its name. and five most highly compensated ■ 13. Revise appendix A to part 25 to d. A domestic or foreign for-profit executives apply unless in the non- read as follows: organization; and Federal entity’s preceding fiscal year, it d. A Federal agency. received— Appendix A to Part 25—Award Term 4. Subaward has the meaning given in (i) 80 percent or more of its annual I. System for Award Management and 2 CFR 200.1. gross revenue in Federal procurement Universal Identifier Requirements 5. Subrecipient has the meaning given contracts (and subcontracts) and Federal financial assistance awards subject to A. Requirement for System for Award in 2 CFR 200.1. the Transparency Act, as defined at Management PART 170—REPORTING SUBAWARD § 170.320 (and subawards); and Unless you are exempted from this AND EXECUTIVE COMPENSATION (ii) $25,000,000 or more in annual requirement under 2 CFR 25.110, you as INFORMATION gross revenue from Federal procurement the recipient must maintain current contracts (and subcontracts) and Federal information in the SAM. This includes ■ 14. The authority citation for part 170 financial assistance awards subject to information on your immediate and continues to read as follows: the Transparency Act, as defined at highest level owner and subsidiaries, as Authority: Pub. L. 109–282; 31 U.S.C. § 170.320; and well as on all of your predecessors that 6102. (3) The public does not have access to have been awarded a Federal contract or ■ 15. Revise § 170.100 read as follows: information about the compensation of Federal financial assistance within the senior executives, unless otherwise last three years, if applicable, until you § 170.100 Purposes of this part. publicly available, through periodic submit the final financial report This part provides guidance to reports filed under section 13(a) or 15(d) required under this Federal award or Federal awarding agencies on reporting of the Securities Exchange Act of 1934 receive the final payment, whichever is Federal awards to establish (15 U.S.C. 78m(a), 78o(d)) or section later. This requires that you review and requirements for recipients’ reporting of 6104 of the Internal Revenue Code of update the information at least annually information on subawards and 1986. after the initial registration, and more executive total compensation, as (c) Exceptions for classes of Federal frequently if required by changes in required by the Federal Funding awards or recipients. OMB may allow your information or another Federal Accountability and Transparency Act of exceptions for classes of Federal awards award term. 2006 (Pub. L. 109–282), as amended by or recipients subject to the requirements section 6202 of Public Law 110–252, of this part when exceptions are not B. Requirement for Unique Entity hereafter referred to as ‘‘the prohibited by statute. Identifier Transparency Act’’. § 170.115 [Removed] If you are authorized to make ■ 16. Revise § 170.105 to read as subawards under this Federal award, follows: ■ 18. Remove § 170.115. you: ■ 19. Revise § 170.200 to read as 1. Must notify potential subrecipients § 170.105 Types of awards to which this follows: that no entity (see definition in part applies. paragraph C of this award term) may This part applies to Federal awarding § 170.200 Federal awarding agency receive a subaward from you until the agency’s grants, cooperative agreements, reporting requirements. entity has provided its Unique Entity loans, and other forms of Federal (a) Federal awarding agencies are Identifier to you. financial assistance subject to the required to publicly report Federal 2. May not make a subaward to an Transparency Act, as defined in awards that equal or exceed the micro- entity unless the entity has provided its § 170.320. purchase threshold and publish the Unique Entity Identifier to you. ■ 17. Revise § 170.110 to read as required information on a public-facing, Subrecipients are not required to obtain follows: OMB-designated, governmentwide an active SAM registration, but must website and follow OMB guidance to obtain a Unique Entity Identifier. § 170.110 Exceptions to which this part support Transparency Act applies. implementation. C. Definitions (a) General. Through a Federal (b) Federal awarding agencies that For purposes of this term: awarding agency’s implementation of obtain post-award data on subaward 1. System for Award Management the guidance in this part, this part obligations outside of this policy should (SAM) means the Federal repository into applies to recipients, other than those take the necessary steps to ensure that

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their recipients are not required, due to § 170.301 Federal awarding agency. Appendix A to Part 170—Award Term the combination of agency-specific and Federal awarding agency has the I. Reporting Subawards and Executive Transparency Act reporting meaning given in 2 CFR 200.1. Compensation requirements, to submit the same or ■ 24. Revise § 170.305 to read as a. Reporting of first-tier subawards. similar data multiple times during a follows: given reporting period. Applicability. Unless you are exempt as provided in paragraph d. of this ■ 20. Add § 170.210 to read as follows: § 170.305 Federal award. Federal award, for the purposes of award term, you must report each action § 170.210 Requirements for notices of this part, means an award of Federal that equals or exceeds $30,000 in funding opportunities, regulations, and financial assistance that a recipient Federal funds for a subaward to a non- application instructions. receives directly from a Federal Federal entity or Federal agency (see (a) Each Federal awarding agency that awarding agency. definitions in paragraph e. of this award term). makes awards of Federal financial ■ 25. Add § 170.307 to read as follows: assistance subject to the Transparency 2. Where and when to report. Act must include the requirements § 170.307 Foreign organization. i. The non-Federal entity or Federal described in paragraph (b) of this Foreign organization has the meaning agency must report each obligating section in each notice of funding given in 2 CFR 200.1. action described in paragraph a.1. of this award term to http://www.fsrs.gov. opportunity, regulation, or other ■ 26. Add § 170.308 to read as follows: issuance containing instructions for ii. For subaward information, report applicants under which Federal awards § 170.308 Foreign public entity. no later than the end of the month may be made that are subject to Foreign public entity has the meaning following the month in which the Transparency Act reporting given in 2 CFR 200.1. obligation was made. (For example, if the obligation was made on November requirements, and is issued on or after ■ 27. Revise § 170.310 to read as 7, 2010, the obligation must be reported the effective date of this part. follows: (b) The notice of funding opportunity, by no later than December 31, 2010.) regulation, or other issuance must § 170.310 Non-Federal entity. 3. What to report. You must report the require each non-Federal entity that Non-Federal entity has the meaning information about each obligating action applies for Federal financial assistance given in 2 CFR 200.1 and also includes that the submission instructions posted and that does not have an exception all of the following, for the purposes of at http://www.fsrs.gov specify. b. Reporting total compensation of under § 170.110(b) to have the necessary this part: processes and systems in place to (a) A foreign organization; recipient executives for non-Federal comply with the reporting requirements (b) A foreign public entity; and entities. 1. Applicability and what to report. should they receive Federal funding. (c) A domestic or foreign for-profit You must report total compensation for organization. ■ 21. Revise § 170.220 to read as each of your five most highly ■ follows: 28. Amend § 170.320 by correctly compensated executives for the designating the paragraph (b) that § 170.220 Award term. preceding completed fiscal year, if— follows paragraph (j) as paragraph (k) i. The total Federal funding (a) To accomplish the purposes and by revising paragraphs (k) authorized to date under this Federal described in § 170.100, a Federal introductory text and (k)(2) to read as award equals or exceeds $30,000 as awarding agency must include the follows: defined in 2 CFR 170.320; award term in appendix A to this part ii. in the preceding fiscal year, you in each Federal award to a recipient § 170.320 Federal financial assistance subject to the Transparency Act. received— under which the total funding is (A) 80 percent or more of your annual anticipated to equal or exceed $30,000 * * * * * (k) Federal financial assistance subject gross revenues from Federal in Federal funding. procurement contracts (and (b) A Federal awarding agency, to the Transparency Act, does not include— subcontracts) and Federal financial consistent with paragraph (a) of this assistance subject to the Transparency section, is not required to include the * * * * * Act, as defined at 2 CFR 170.320 (and award term in appendix A to this part (2) A transfer of title to federally- subawards), and if it determines that there is no owned property provided in lieu of (B) $25,000,000 or more in annual possibility that the total amount of money, even if the award is called a gross revenues from Federal Federal funding under the Federal grant; procurement contracts (and award will equal or exceed $30,000. * * * * * subcontracts) and Federal financial However, the Federal awarding agency ■ 29. Add § 170.322 to read as follows: assistance subject to the Transparency must subsequently modify the award to Act, as defined at 2 CFR 170.320 (and add the award term if changes in § 170.322 Recipient. subawards); and, circumstances increase the total Federal Recipient, for the purposes of this iii. The public does not have access to funding under the award is anticipated part, means a non-Federal entity or information about the compensation of to equal or exceed $30,000 during the Federal agency that received a Federal the executives through periodic reports period of performance. award. filed under section 13(a) or 15(d) of the ■ 22. Revise § 170.300 to read as ■ 30. Revise § 170.325 to read as Securities Exchange Act of 1934 (15 follows: follows: U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986. (To § 170.300 Federal agency. § 170.325 Subaward. determine if the public has access to the Federal agency means a Federal Subaward has the meaning given in 2 compensation information, see the U.S. agency as defined at 5 U.S.C. 551(1) and CFR 200.1. Security and Exchange Commission further clarified by 5 U.S.C. 552(f). ■ 31. Revise appendix A to part 170 to total compensation filings at http:// ■ 23. Add § 170.301 to read as follows: read as follows: www.sec.gov/answers/execomp.htm.)

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2. Where and when to report. You ii. The total compensation of the five § 183.5 Purpose of this part. must report executive total most highly compensated executives of This part provides guidance to compensation described in paragraph any subrecipient. Federal awarding agencies on the b.1. of this award term: e. Definitions. For purposes of this implementation of the Never Contract i. As part of your registration profile award term: with the Enemy requirements applicable at https://www.sam.gov. 1. Federal Agency means a Federal to certain grants and cooperative ii. By the end of the month following agency as defined at 5 U.S.C. 551(1) and agreements, as specified in subtitle E, the month in which this award is made, further clarified by 5 U.S.C. 552(f). title VIII of the National Defense and annually thereafter. 2. Non-Federal entity means all of the Authorization Act (NDAA) for Fiscal c. Reporting of Total Compensation of following, as defined in 2 CFR part 25: Year (FY) 2015 (Pub. L. 113–291), as Subrecipient Executives. i. A Governmental organization, amended by Sec. 822 of the National 1. Applicability and what to report. which is a State, local government, or Defense Authorization Act for Fiscal Unless you are exempt as provided in Indian tribe; Year 2020 (Pub. L. 116–92). paragraph d. of this award term, for each ii. A foreign public entity; first-tier non-Federal entity subrecipient iii. A domestic or foreign nonprofit § 183.10 Applicability. under this award, you shall report the organization; and, (a) This part applies only to grants names and total compensation of each iv. A domestic or foreign for-profit and cooperative agreements that are of the subrecipient’s five most highly organization expected to exceed $50,000 and that are compensated executives for the 3. Executive means officers, managing performed outside the United States, subrecipient’s preceding completed partners, or any other employees in including U.S. territories, and that are in fiscal year, if— management positions. support of a contingency operation in i. in the subrecipient’s preceding 4. Subaward: which members of the Armed Forces are fiscal year, the subrecipient received— i. This term means a legal instrument actively engaged in hostilities. It does (A) 80 percent or more of its annual to provide support for the performance not apply to the authorized intelligence gross revenues from Federal of any portion of the substantive project or law enforcement activities of the procurement contracts (and or program for which you received this Federal Government. subcontracts) and Federal financial award and that you as the recipient (b) All elements of this part are assistance subject to the Transparency award to an eligible subrecipient. applicable until the date of expiration as Act, as defined at 2 CFR 170.320 (and ii. The term does not include your provided in law. subawards) and, procurement of property and services needed to carry out the project or § 183.15 Responsibilities of Federal (B) $25,000,000 or more in annual awarding agencies. gross revenues from Federal program (for further explanation, see 2 procurement contracts (and CFR 200.331). (a) Prior to making an award for a subcontracts), and Federal financial iii. A subaward may be provided covered grant or cooperative agreement assistance subject to the Transparency through any legal agreement, including (see also § 183.35), the Federal awarding Act (and subawards); and an agreement that you or a subrecipient agency must check the current list of ii. The public does not have access to considers a contract. prohibited or restricted persons or information about the compensation of 5. Subrecipient means a non-Federal entities in the System Award the executives through periodic reports entity or Federal agency that: Management (SAM) Exclusions. filed under section 13(a) or 15(d) of the i. Receives a subaward from you (the (b) The Federal awarding agency may Securities Exchange Act of 1934 (15 recipient) under this award; and include the award term provided in U.S.C. 78m(a), 78o(d)) or section 6104 of ii. Is accountable to you for the use of appendix A of this part in all covered the Internal Revenue Code of 1986. (To the Federal funds provided by the grant and cooperative agreement awards determine if the public has access to the subaward. in accordance with Never Contract with compensation information, see the U.S. 6. Total compensation means the cash the Enemy. Security and Exchange Commission and noncash dollar value earned by the (c) A Federal awarding agency may total compensation filings at http:// executive during the recipient’s or become aware of a person or entity that: www.sec.gov/answers/execomp.htm.) subrecipient’s preceding fiscal year and (1) Provides funds, including goods 2. Where and when to report. You includes the following (for more and services, received under a covered must report subrecipient executive total information see 17 CFR 229.402(c)(2)). grant or cooperative agreement of an compensation described in paragraph ■ 31a. Add part 183 to read as follows: executive agency directly or indirectly c.1. of this award term: to covered persons or entities; or PART 183—NEVER CONTRACT WITH i. To the recipient. (2) Fails to exercise due diligence to THE ENEMY ii. By the end of the month following ensure that none of the funds, including the month during which you make the Sec. goods and services, received under a subaward. For example, if a subaward is 183.5 Purpose of this part. covered grant or cooperative agreement obligated on any date during the month 183.10 Applicability. of an executive agency are provided of October of a given year (i.e., between 183.15 Responsibilities of Federal awarding directly or indirectly to covered persons October 1 and 31), you must report any agencies. or entities. required compensation information of 183.20 Reporting responsibilities of Federal (d) When a Federal awarding agency the subrecipient by November 30 of that awarding agencies. becomes aware of such a person or 183.25 Responsibilities of recipients. year. 183.30 Access to records. entity, it may do any of the following d. Exemptions. 183.35 Definitions. actions: If, in the previous tax year, you had (1) Restrict the future award of all gross income, from all sources, under APPENDIX A TO PART 183—CLAUSES Federal contracts, grants, and $300,000, you are exempt from the FOR AWARD AGREEMENTS cooperative agreements to the person or requirements to report: entity based upon concerns that Federal i. Subawards, and Authority: Pub. L. 113–291. awards to the entity would provide

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grant funds directly or indirectly to a (d) Each report referenced in cooperative agreement may have been covered person or entity. paragraph (c)(1) of this section shall provided directly or indirectly to a (2) Terminate any contract, grant, or include: covered person or entity. cooperative agreement to a covered (1) The executive agency taking such person or entity upon becoming aware action. § 183.35 Definitions. that the recipient has failed to exercise (2) An explanation of the basis for the Terms used in this part are defined as due diligence to ensure that none of the action taken. follows: award funds are provided directly or (3) The value of the terminated or Contingency operation, as defined in indirectly to a covered person or entity. voided grant or cooperative agreement. 10 U.S.C. 101a, means a military (3) Void in whole or in part any grant, (4) The value of all grants and operation that— cooperative agreement or contracts of cooperative agreements of the executive (1) Is designated by the Secretary of the executive agency concerned upon a agency with the person or entity Defense as an operation in which written determination by the head of concerned at the time the grant or members of the armed forces are or may contracting activity or other appropriate cooperative agreement was terminated become involved in military actions, official that the grant or cooperative or voided. operations, or hostilities against an agreement provides funds directly or (e) Each report referenced in enemy of the United States or against an indirectly to a covered person or entity. paragraph (c)(2) of this section shall opposing military force; or (e) The Federal awarding agency must include: (2) Results in the call or order to, or notify recipients in writing regarding its (1) The executive agency concerned. retention on, active duty of members of decision to restrict all future awards (2) An explanation of the basis for not the uniformed services under 10 U.S.C. and/or to terminate or void a grant or taking the action. 688, 12301a, 12302, 12304, 12304a, cooperative agreement. The agency must (f) For each instance in which an 12305, 12406 of 10 U.S.C. chapter 15, 14 also notify the recipient in writing about executive agency exercised the U.S.C. 712 or any other provision of law the recipient’s right to request an additional authority to examine during a war or during a national administrative review (using the recipient and lower tier entity (e.g., emergency declared by the President or agency’s procedures) of the restriction, subrecipient or contractor) records, the Congress. termination, or void of the grant or agency must report in writing to the Covered combatant command means cooperative agreement within 30 days of head of the executive agency concerned the following: receiving notification. (or the designee of such head) and the (1) The United States Africa commander of the covered combatant Command. § 183.20 Reporting responsibilities of command concerned (or specific (2) The United States Central Federal awarding agencies. deputies) the following: Command. (a) If a Federal awarding agency (1) An explanation of the basis for the (3) The United States European restricts all future awards to a covered action taken; and Command. person or entity, it must enter (2) A summary of the results of any (4) The United States Pacific information on the ineligible person or examination of records. Command. entity into SAM Exclusions as a (5) The United States Southern prohibited or restricted source pursuant § 183.25 Responsibilities of recipients. Command. to Subtitle E, Title VIII of the NDAA for (a) Recipients of covered grants or (6) The United States Transportation FY 2015 (Pub. L. 113–291). cooperative agreements must fulfill the Command. (b) When a Federal awarding agency requirements outlined in the award term Covered grant or cooperative terminates or voids a grant or provided in appendix A to this part. agreement means a grant or cooperative cooperative agreement due to Never (b) Recipients must also flow down agreement, as defined in 2 CFR 200.1 Contract with the Enemy, it must report the provisions in award terms covered with an estimated value in excess of the termination as a Termination for in appendix A to this part to all $50,000 that is performed outside the Material Failure to Comply in the Office contracts and subawards under the United States, including its possessions of Management and Budget (OMB)- award. and territories, in support of a designated integrity and performance contingency operation in which system accessible through SAM § 183.30 Access to records. members of the Armed Forces are (currently the Federal Awardee In addition to any other existing actively engaged in hostilities. Except Performance and Integrity Information examination-of-records authority, the for U.S. Department of Defense grants System (FAPIIS)). Federal Government is authorized to and cooperative agreements that were (c) The Federal awarding agency shall examine any records of the recipient awarded on or before December 19, document and report to the head of the and its subawards, to the extent 2017, that will be performed in the executive agency concerned (or the necessary, to ensure that funds, United States Central Command, where designee of such head) and the including supplies and services, the estimated value is in excess of commander of the covered combatant received under a covered grant or $100,000. command concerned (or specific cooperative agreement (see § 183.35) are Covered person or entity means a deputies): not provided directly or indirectly to a person or entity that is actively (1) Any action to restrict all future covered person or entity in accordance opposing United States or coalition awards or to terminate or void an award with Never Contract with the Enemy. forces involved in a contingency with a covered person or entity. The Federal awarding agency may only operation in which members of the (2) Any decision not to restrict all exercise this authority upon a written Armed Forces are actively engaged in future awards, terminate, or void an determination by the Federal awarding hostilities. award along with the agency’s reasoning agency that relies on a finding by the for not taking one of these actions after commander of a covered combatant Appendix A to Part 183—Award Terms the agency became aware that a person command that there is reason to believe for Never Contract With the Enemy or entity is a prohibited or restricted that funds, including supplies and Federal awarding agencies may source. services, received under the grant or include the following award terms in all

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awards for covered grants and agreement are not provided, directly or those development costs capitalized in cooperative agreements in accordance indirectly, to a person or entity that is accordance with generally accepted with Never Contract with the Enemy: actively opposing United States or accounting principles (GAAP). coalition forces involved in a Ancillary charges, such as taxes, duty, Term 1 contingency operation in which protective in transit insurance, freight, Prohibition on Providing Funds to the members of the Armed Forces are and installation may be included in or Enemy actively engaged in hostilities, except excluded from the acquisition cost in (a) The recipient must— for awards awarded by the Department accordance with the non-Federal (1) Exercise due diligence to ensure of Defense on or before Dec 19, 2017 entity’s regular accounting practices. that none of the funds, including that will be performed in the United Advance payment means a payment supplies and services, received under States Central Command that a Federal awarding agency or pass- this grant or cooperative agreement are (USCENTCOM) theater of operations. through entity makes by any appropriate provided directly or indirectly (b) The substance of this clause, payment mechanism, including a (including through subawards or including this paragraph (b), is required predetermined payment schedule, contracts) to a person or entity who is to be included in subawards or contracts before the non-Federal entity disburses actively opposing the United States or under this grant or cooperative the funds for program purposes. coalition forces involved in a agreement that have an estimated value Allocation means the process of contingency operation in which over $50,000 and will be performed assigning a cost, or a group of costs, to members of the Armed Forces are outside the United States, including its one or more cost objective(s), in actively engaged in hostilities, which outlying areas. reasonable proportion to the benefit must be completed through 2 CFR (End of term) provided or other equitable relationship. 180.300 prior to issuing a subaward or The process may entail assigning a contract and; PART 200—UNIFORM cost(s) directly to a final cost objective (2) Terminate or void in whole or in ADMINISTRATIVE REQUIREMENTS, or through one or more intermediate part any subaward or contract with a COST PRINCIPLES, AND AUDIT cost objectives. person or entity listed in SAM as a REQUIREMENTS FOR FEDERAL Assistance listings refers to the prohibited or restricted source pursuant AWARDS publicly available listing of Federal to subtitle E of Title VIII of the NDAA assistance programs managed and for FY 2015, unless the Federal ■ 32. The authority citation for part 200 administered by the General Services awarding agency provides written continues to read as follows: Administration, formerly known as the approval to continue the subaward or Authority: 31 U.S.C. 503 Catalog of Federal Domestic Assistance contract. (CFDA). (b) The recipient may include the ■ 33. Amend § 200.0 by removing the Assistance listing number means a substance of this clause, including acronym CFDA, revising the acronym unique number assigned to identify a paragraph (a) of this clause, in MTDC, adding in alphabetical order the Federal Assistance Listings, formerly subawards under this grant or acronym NFE, and revising the acronym known as the CFDA Number. cooperative agreement that have an SAM to read as follows: Assistance listing program title means the title that corresponds to the Federal estimated value over $50,000 and will § 200.0 Acronyms. be performed outside the United States, Assistance Listings Number, formerly * * * * * including its outlying areas. known as the CFDA program title. MTDC Modified Total Direct Cost (c) The Federal awarding agency has Audit finding means deficiencies NFE Non-Federal Entity the authority to terminate or void this which the auditor is required by grant or cooperative agreement, in * * * * * § 200.516(a) to report in the schedule of whole or in part, if the Federal awarding SAM System for Award Management findings and questioned costs. agency becomes aware that the recipient * * * * * Auditee means any non-Federal entity failed to exercise due diligence as ■ 34. Revise § 200.1 to read as follows: that expends Federal awards which required by paragraph (a) of this clause must be audited under subpart F of this § 200.1 Definitions. or if the Federal awarding agency part. becomes aware that any funds received These are the definitions for terms Auditor means an auditor who is a under this grant or cooperative used in this part. Different definitions public accountant or a Federal, State, agreement have been provided directly may be found in Federal statutes or local government, or Indian tribe audit or indirectly to a person or entity who regulations that apply more specifically organization, which meets the general is actively opposing coalition forces to particular programs or activities. standards specified for external auditors involved in a contingency operation in These definitions could be in generally accepted government which members of the Armed Forces are supplemented by additional auditing standards (GAGAS). The term actively engaged in hostilities. instructional information provided in auditor does not include internal governmentwide standard information auditors of nonprofit organizations. (End of term) collections. For purposes of this part, Budget means the financial plan for Term 2 the following definitions apply: the Federal award that the Federal Acquisition cost means the cost of the awarding agency or pass-through entity Additional Access to Recipient Records asset including the cost to ready the approves during the Federal award (a) In addition to any other existing asset for its intended use. Acquisition process or in subsequent amendments to examination-of-records authority, the cost for equipment, for example, means the Federal award. It may include the Federal Government is authorized to the net invoice price of the equipment, Federal and non-Federal share or only examine any records of the recipient including the cost of any modifications, the Federal share, as determined by the and its subawards or contracts to the attachments, accessories, or auxiliary Federal awarding agency or pass- extent necessary to ensure that funds, apparatus necessary to make it usable through entity. including supplies and services, for the purpose for which it is acquired. Budget period means the time interval available under this grant or cooperative Acquisition costs for software includes from the start date of a funded portion

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of an award to the end date of that (iii) Other relief arising under or (3) For State and local governments: funded portion during which recipients relating to a Federal award. Appendix V to this part, paragraph F.1. are authorized to expend the funds (2) A request for payment that is not (4) For Indian tribes: Appendix VII to awarded, including any funds carried in dispute when submitted. this part, paragraph D.1. forward or other revisions pursuant to Class of Federal awards means a Compliance supplement means an § 200.308. group of Federal awards either awarded annually updated authoritative source Capital assets means: under a specific program or group of for auditors that serves to identify (1) Tangible or intangible assets used programs or to a specific type of non- existing important compliance in operations having a useful life of Federal entity or group of non-Federal requirements that the Federal more than one year which are entities to which specific provisions or Government expects to be considered as capitalized in accordance with GAAP. exceptions may apply. part of an audit. Auditors use it to Capital assets include: Closeout means the process by which understand the Federal program’s (i) Land, buildings (facilities), the Federal awarding agency or pass- objectives, procedures, and compliance equipment, and intellectual property through entity determines that all requirements, as well as audit objectives (including software) whether acquired applicable administrative actions and and suggested audit procedures for by purchase, construction, manufacture, all required work of the Federal award determining compliance with the exchange, or through a lease accounted have been completed and takes actions relevant Federal program. for as financed purchase under as described in § 200.344. Computing devices means machines Government Accounting Standards Cluster of programs means a grouping used to acquire, store, analyze, process, Board (GASB) standards or a finance of closely related programs that share and publish data and other information lease under Financial Accounting common compliance requirements. The electronically, including accessories (or Standards Board (FASB) standards; and types of clusters of programs are ‘‘peripherals’’) for printing, transmitting (ii) Additions, improvements, research and development (R&D), and receiving, or storing electronic modifications, replacements, student financial aid (SFA), and other information. See also the definitions of rearrangements, reinstallations, clusters. ‘‘Other clusters’’ are as defined supplies and information technology renovations or alterations to capital by OMB in the compliance supplement systems in this section. assets that materially increase their or as designated by a State for Federal Contract means, for the purpose of value or useful life (not ordinary repairs awards the State provides to its Federal financial assistance, a legal and maintenance). subrecipients that meet the definition of instrument by which a recipient or (2) For purpose of this part, capital a cluster of programs. When designating subrecipient purchases property or assets do not include intangible right-to- an ‘‘other cluster,’’ a State must identify services needed to carry out the project use assets (per GASB) and right-to-use the Federal awards included in the or program under a Federal award. For operating lease assets (per FASB). For cluster and advise the subrecipients of additional information on subrecipient example, assets capitalized that compliance requirements applicable to and contractor determinations, see recognize a lessee’s right to control the the cluster, consistent with § 200.332(a). § 200.331. See also the definition of use of property and/or equipment for a A cluster of programs must be subaward in this section. period of time under a lease contract. considered as one program for Contractor means an entity that See also § 200.465. determining major programs, as receives a contract as defined in this Capital expenditures means described in § 200.518, and, with the section. Cooperative agreement means a legal expenditures to acquire capital assets or exception of R&D as described in instrument of financial assistance expenditures to make additions, § 200.501(c), whether a program-specific between a Federal awarding agency and improvements, modifications, audit may be elected. a recipient or a pass-through entity and replacements, rearrangements, Cognizant agency for audit means the a subrecipient that, consistent with 31 reinstallations, renovations, or Federal agency designated to carry out U.S.C. 6302–6305: alterations to capital assets that the responsibilities described in (1) Is used to enter into a relationship materially increase their value or useful § 200.513(a). The cognizant agency for the principal purpose of which is to life. audit is not necessarily the same as the transfer anything of value to carry out a cognizant agency for indirect costs. A Central service cost allocation plan public purpose authorized by a law of list of cognizant agencies for audit can means the documentation identifying, the United States (see 31 U.S.C. be found on the Federal Audit accumulating, and allocating or 6101(3)); and not to acquire property or Clearinghouse (FAC) website. developing billing rates based on the services for the Federal Government or allowable costs of services provided by Cognizant agency for indirect costs pass-through entity’s direct benefit or a State or local government or Indian means the Federal agency responsible use; tribe on a centralized basis to its for reviewing, negotiating, and (2) Is distinguished from a grant in departments and agencies. The costs of approving cost allocation plans or that it provides for substantial these services may be allocated or billed indirect cost proposals developed under involvement of the Federal awarding to users. this part on behalf of all Federal agency in carrying out the activity Claim means, depending on the agencies. The cognizant agency for contemplated by the Federal award. context, either: indirect cost is not necessarily the same (3) The term does not include: (1) A written demand or written as the cognizant agency for audit. For (i) A cooperative research and assertion by one of the parties to a assignments of cognizant agencies see development agreement as defined in 15 Federal award seeking as a matter of the following: U.S.C. 3710a; or right: (1) For Institutions of Higher (ii) An agreement that provides only: (i) The payment of money in a sum Education (IHEs): Appendix III to this (A) Direct United States Government certain; part, paragraph C.11. cash assistance to an individual; (ii) The adjustment or interpretation (2) For nonprofit organizations: (B) A subsidy; of the terms and conditions of the Appendix IV to this part, paragraph (C) A loan; Federal award; or C.2.a. (D) A loan guarantee; or

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(E) Insurance. awarding agency or pass-through such as annuities, insurance claims, or Cooperative audit resolution means entity). other benefit payments. the use of audit follow-up techniques Disallowed costs means those charges Federal agency means an ‘‘agency’’ as which promote prompt corrective action to a Federal award that the Federal defined at 5 U.S.C. 551(1) and further by improving communication, fostering awarding agency or pass-through entity clarified by 5 U.S.C. 552(f). collaboration, promoting trust, and determines to be unallowable, in Federal Audit Clearinghouse (FAC) developing an understanding between accordance with the applicable Federal means the clearinghouse designated by the Federal agency and the non-Federal statutes, regulations, or the terms and OMB as the repository of record where entity. This approach is based upon: conditions of the Federal award. non-Federal entities are required to (1) A strong commitment by Federal Discretionary award means an award transmit the information required by agency and non-Federal entity in which the Federal awarding agency, subpart F of this part. leadership to program integrity; in keeping with specific statutory Federal award has the meaning, (2) Federal agencies strengthening authority that enables the agency to depending on the context, in either partnerships and working cooperatively exercise judgment (‘‘discretion’’), selects paragraph (1) or (2) of this definition: with non-Federal entities and their the recipient and/or the amount of (1)(i) The Federal financial assistance auditors; and non-Federal entities and Federal funding awarded through a that a recipient receives directly from a their auditors working cooperatively competitive process or based on merit of Federal awarding agency or indirectly with Federal agencies; proposals. A discretionary award may from a pass-through entity, as described (3) A focus on current conditions and be selected on a non-competitive basis, in § 200.101; or corrective action going forward; as appropriate. (ii) The cost-reimbursement contract (4) Federal agencies offering Equipment means tangible personal under the Federal Acquisition appropriate relief for past property (including information Regulations that a non-Federal entity noncompliance when audits show technology systems) having a useful life receives directly from a Federal prompt corrective action has occurred; of more than one year and a per-unit awarding agency or indirectly from a and acquisition cost which equals or pass-through entity, as described in (5) Federal agency leadership sending exceeds the lesser of the capitalization § 200.101. a clear message that continued failure to level established by the non-Federal (2) The instrument setting forth the correct conditions identified by audits entity for financial statement purposes, terms and conditions. The instrument is which are likely to cause improper or $5,000. See also the definitions of the grant agreement, cooperative payments, fraud, waste, or abuse is capital assets, computing devices, agreement, other agreement for unacceptable and will result in general purpose equipment, information assistance covered in paragraph (2) of sanctions. technology systems, special purpose the definition of Federal financial Corrective action means action taken equipment, and supplies in this section. assistance in this section, or the cost- by the auditee that: Expenditures means charges made by reimbursement contract awarded under (1) Corrects identified deficiencies; a non-Federal entity to a project or the Federal Acquisition Regulations. (2) Produces recommended program for which a Federal award was (3) Federal award does not include improvements; or received. other contracts that a Federal agency (3) Demonstrates that audit findings (1) The charges may be reported on a uses to buy goods or services from a are either invalid or do not warrant cash or accrual basis, as long as the contractor or a contract to operate methodology is disclosed and is auditee action. Federal Government owned, contractor consistently applied. Cost allocation plan means central operated facilities (GOCOs). (2) For reports prepared on a cash service cost allocation plan or public (4) See also definitions of Federal assistance cost allocation plan. basis, expenditures are the sum of: (i) Cash disbursements for direct financial assistance, grant agreement, Cost objective means a program, and cooperative agreement. function, activity, award, organizational charges for property and services; (ii) The amount of indirect expense Federal award date means the date subdivision, contract, or work unit for when the Federal award is signed by the which cost data are desired and for charged; (iii) The value of third-party in-kind authorized official of the Federal which provision is made to accumulate awarding agency. and measure the cost of processes, contributions applied; and (iv) The amount of cash advance Federal financial assistance means products, jobs, capital projects, etc. A payments and payments made to (1) Assistance that non-Federal cost objective may be a major function subrecipients. entities receive or administer in the of the non-Federal entity, a particular (3) For reports prepared on an accrual form of: service or project, a Federal award, or an basis, expenditures are the sum of: (i) Grants; indirect (Facilities & Administrative (i) Cash disbursements for direct (ii) Cooperative agreements; (F&A)) cost activity, as described in charges for property and services; (iii) Non-cash contributions or subpart E of this part. See also the (ii) The amount of indirect expense donations of property (including definitions of final cost objective and incurred; donated surplus property); intermediate cost objective in this (iii) The value of third-party in-kind (iv) Direct appropriations; section. contributions applied; and (v) Food commodities; and Cost sharing or matching means the (iv) The net increase or decrease in (vi) Other financial assistance (except portion of project costs not paid by the amounts owed by the non-Federal assistance listed in paragraph (2) of this Federal funds or contributions (unless entity for: definition). otherwise authorized by Federal (A) Goods and other property (2) For § 200.203 and subpart F of this statute). See also § 200.306. received; part, Federal financial assistance also Cross-cutting audit finding means an (B) Services performed by employees, includes assistance that non-Federal audit finding where the same contractors, subrecipients, and other entities receive or administer in the underlying condition or issue affects all payees; and form of: Federal awards (including Federal (C) Programs for which no current (i) Loans; awards of more than one Federal services or performance are required (ii) Loan Guarantees;

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(iii) Interest subsidies; and which the Federal awarding agency or definitions of equipment and special (iv) Insurance. pass-through entity provides a specific purpose equipment in this section. (3) For § 200.216, Federal financial level of support without regard to actual Generally accepted accounting assistance includes assistance that non- costs incurred under the Federal award. principles (GAAP) has the meaning Federal entities receive or administer in This type of Federal award reduces specified in accounting standards issued the form of: some of the administrative burden and by the GASB and the FASB. (i) Grants; record-keeping requirements for both Generally accepted government (ii) Cooperative agreements; the non-Federal entity and Federal auditing standards (GAGAS), also (iii) Loans; and awarding agency or pass-through entity. known as the Yellow Book, means (iv) Loan Guarantees. generally accepted government auditing (4) Federal financial assistance does Accountability is based primarily on standards issued by the Comptroller not include amounts received as performance and results. See General of the United States, which are reimbursement for services rendered to §§ 200.102(c), 200.201(b), and 200.333. Foreign organization means an entity applicable to financial audits. individuals as described in § 200.502(h) that is: Grant agreement means a legal and (i). (1) A public or private organization instrument of financial assistance Federal interest means, for purposes of § 200.330 or when used in connection located in a country other than the between a Federal awarding agency or with the acquisition or improvement of United States and its territories that is pass-through entity and a non-Federal real property, equipment, or supplies subject to the laws of the country in entity that, consistent with 31 U.S.C. under a Federal award, the dollar which it is located, irrespective of the 6302, 6304: (1) Is used to enter into a relationship amount that is the product of the: citizenship of project staff or place of (1) The percentage of Federal performance; the principal purpose of which is to participation in the total cost of the real (2) A private nongovernmental transfer anything of value to carry out a property, equipment, or supplies; and organization located in a country other public purpose authorized by a law of (2) Current fair market value of the than the United States that solicits and the United States (see 31 U.S.C. property, improvements, or both, to the receives cash contributions from the 6101(3)); and not to acquire property or extent the costs of acquiring or general public; services for the Federal awarding agency improving the property were included (3) A charitable organization located or pass-through entity’s direct benefit or as project costs. in a country other than the United use; Federal program means: States that is nonprofit and tax exempt (2) Is distinguished from a cooperative (1) All Federal awards which are under the laws of its country of agreement in that it does not provide for assigned a single Assistance Listings domicile and operation, and is not a substantial involvement of the Federal Number. university, college, accredited degree- awarding agency in carrying out the (2) When no Assistance Listings granting institution of education, private activity contemplated by the Federal Number is assigned, all Federal awards foundation, hospital, organization award. from the same agency made for the same engaged exclusively in research or (3) Does not include an agreement purpose must be combined and scientific activities, church, synagogue, that provides only: considered one program. mosque or other similar entities (i) Direct United States Government (3) Notwithstanding paragraphs (1) organized primarily for religious cash assistance to an individual; and (2) of this definition, a cluster of purposes; or (ii) A subsidy; programs. The types of clusters of (4) An organization located in a (iii) A loan; programs are: country other than the United States not (vi) A loan guarantee; or (i) Research and development (R&D); recognized as a foreign public entity. (v) Insurance. (ii) Student financial aid (SFA); and Foreign public entity means: Highest level owner means the entity (iii) ‘‘Other clusters,’’ as described in (1) A foreign government or foreign that owns or controls an immediate the definition of cluster of programs in governmental entity; owner of the offeror, or that owns or this section. (2) A public international controls one or more entities that Federal share means the portion of organization, which is an organization control an immediate owner of the the Federal award costs that are paid entitled to enjoy privileges, exemptions, offeror. No entity owns or exercises using Federal funds. and immunities as an international control of the highest-level owner as Final cost objective means a cost organization under the International defined in the Federal Acquisition objective which has allocated to it both Organizations Immunities Act (22 Regulations (FAR) (48 CFR 52.204–17). direct and indirect costs and, in the U.S.C. 288–288f); Hospital means a facility licensed as non-Federal entity’s accumulation (3) An entity owned (in whole or in a hospital under the law of any state or system, is one of the final accumulation part) or controlled by a foreign a facility operated as a hospital by the points, such as a particular award, government; or United States, a state, or a subdivision internal project, or other direct activity (4) Any other entity consisting wholly of a state. of a non-Federal entity. See also the or partially of one or more foreign Improper payment means: definitions of cost objective and governments or foreign governmental (1) Any payment that should not have intermediate cost objective in this entities. been made or that was made in an section. General purpose equipment means incorrect amount under statutory, Financial obligations, when equipment which is not limited to contractual, administrative, or other referencing a recipient’s or research, medical, scientific or other legally applicable requirements. subrecipient’s use of funds under a technical activities. Examples include (i) Incorrect amounts are Federal award, means orders placed for office equipment and furnishings, overpayments or underpayments that property and services, contracts and modular offices, telephone networks, are made to eligible recipients subawards made, and similar information technology equipment and (including inappropriate denials of transactions that require payment. systems, air conditioning equipment, payment or service, any payment that Fixed amount awards means a type of reproduction and printing equipment, does not account for credit for grant or cooperative agreement under and motor vehicles. See also the applicable discounts, payments that are

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for an incorrect amount, and duplicate or community, including any Alaska the achievement of objectives in the payments). An improper payment also Native village or regional or village following categories: includes any payment that was made to corporation as defined in or established (i) Effectiveness and efficiency of an ineligible recipient or for an pursuant to the Alaska Native Claims operations; ineligible good or service, or payments Settlement Act (43 U.S.C. Chapter 33), (ii) Reliability of reporting for internal for goods or services not received which is recognized as eligible for the and external use; and (except for such payments authorized by special programs and services provided (iii) Compliance with applicable laws law). by the United States to Indians because and regulations. Note 1 to paragraph (1)(i) of this of their status as Indians (25 U.S.C. (2) Federal awarding agencies are definition. Applicable discounts are 450b(e)). See annually published Bureau required to follow internal control only those discounts where it is both of Indian Affairs list of Indian Entities compliance requirements in OMB advantageous and within the agency’s Recognized and Eligible to Receive Circular No. A–123, Management’s control to claim them. Services. Responsibility for Enterprise Risk (ii) When an agency’s review is Institutions of Higher Education Management and Internal Control. unable to discern whether a payment (IHEs) is defined at 20 U.S.C. 1001. Loan means a Federal loan or loan was proper as a result of insufficient or Indirect (facilities & administrative guarantee received or administered by a lack of documentation, this payment (F&A)) costs means those costs incurred non-Federal entity, except as used in the should also be considered an improper for a common or joint purpose definition of program income in this payment. When establishing benefitting more than one cost objective, section. documentation requirements for and not readily assignable to the cost (1) The term ‘‘direct loan’’ means a payments, agencies should ensure that objectives specifically benefitted, disbursement of funds by the Federal all documentation requirements are without effort disproportionate to the Government to a non-Federal borrower necessary and should refrain from results achieved. To facilitate equitable under a contract that requires the imposing additional burdensome distribution of indirect expenses to the repayment of such funds with or documentation requirements. cost objectives served, it may be without interest. The term includes the (iii) Interest or other fees that may necessary to establish a number of pools purchase of, or participation in, a loan result from an underpayment by an of indirect (F&A) costs. Indirect (F&A) made by another lender and financing agency are not considered an improper cost pools must be distributed to arrangements that defer payment for payment if the interest was paid benefitted cost objectives on bases that more than 90 days, including the sale of correctly. These payments are generally will produce an equitable result in a Federal Government asset on credit separate transactions and may be consideration of relative benefits terms. The term does not include the necessary under certain statutory, derived. acquisition of a federally guaranteed contractual, administrative, or other Indirect cost rate proposal means the loan in satisfaction of default claims or legally applicable requirements. the price support loans of the (iv) A ‘‘questioned cost’’ (as defined documentation prepared by a non- Federal entity to substantiate its request Commodity Credit Corporation. in this section) should not be (2) The term ‘‘direct loan obligation’’ considered an improper payment until for the establishment of an indirect cost rate as described in appendices III means a binding agreement by a Federal the transaction has been completely awarding agency to make a direct loan reviewed and is confirmed to be through VII and appendix IX to this part. when specified conditions are fulfilled improper. by the borrower. Information technology systems (v) The term ‘‘payment’’ in this (3) The term ‘‘loan guarantee’’ means means computing devices, ancillary definition means any disbursement or any Federal Government guarantee, equipment, software, firmware, and transfer of Federal funds (including a insurance, or other pledge with respect similar procedures, services (including commitment for future payment, such as to the payment of all or a part of the support services), and related resources. cash, securities, loans, loan guarantees, principal or interest on any debt See also the definitions of computing and insurance subsidies) to any non- obligation of a non-Federal borrower to devices and equipment in this section. Federal person, non-Federal entity, or a non-Federal lender, but does not Intangible property means property Federal employee, that is made by a include the insurance of deposits, having no physical existence, such as Federal agency, a Federal contractor, a shares, or other withdrawable accounts trademarks, copyrights, patents and Federal grantee, or a governmental or in financial institutions. other organization administering a patent applications and property, such (4) The term ‘‘loan guarantee Federal program or activity. as loans, notes and other debt commitment’’ means a binding (vi) The term ‘‘payment’’ includes instruments, lease agreements, stock agreement by a Federal awarding agency disbursements made pursuant to prime and other instruments of property to make a loan guarantee when specified contracts awarded under the Federal ownership (whether the property is conditions are fulfilled by the borrower, Acquisition Regulation and Federal tangible or intangible). the lender, or any other party to the awards subject to this part that are Intermediate cost objective means a guarantee agreement. expended by recipients. cost objective that is used to accumulate Local government means any unit of (2) See definition of improper indirect costs or service center costs that government within a state, including a: payment in OMB Circular A–123 are subsequently allocated to one or (1) County; appendix C, part I A (1) ‘‘What is an more indirect cost pools or final cost (2) Borough; improper payment?’’ Questioned costs, objectives. See also the definitions of (3) Municipality; including those identified in audits, are cost objective and final cost objective in (4) City; not an improper payment until this section. (5) Town; reviewed and confirmed to be improper Internal controls for non-Federal (6) Township; as defined in OMB Circular A–123 entities means: (7) Parish; appendix C. (1) Processes designed and (8) Local public authority, including Indian tribe means any Indian tribe, implemented by non-Federal entities to any public housing agency under the band, nation, or other organized group provide reasonable assurance regarding United States Housing Act of 1937;

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(9) Special district; exercise judgement (‘‘discretion’’). A Participant support costs means direct (10) School district; non-discretionary award amount could costs for items such as stipends or (11) Intrastate district; be determined specifically or by subsistence allowances, travel (12) Council of governments, whether formula. allowances, and registration fees paid to or not incorporated as a nonprofit Non-Federal entity (NFE) means a or on behalf of participants or trainees corporation under State law; and State, local government, Indian tribe, (but not employees) in connection with (13) Any other agency or Institution of Higher Education (IHE), or conferences, or training projects. instrumentality of a multi-, regional, or nonprofit organization that carries out a Pass-through entity (PTE) means a intra-State or local government. Federal award as a recipient or non-Federal entity that provides a Major program means a Federal subrecipient. subaward to a subrecipient to carry out program determined by the auditor to be Nonprofit organization means any part of a Federal program. a major program in accordance with corporation, trust, association, Performance goal means a target level § 200.518 or a program identified as a cooperative, or other organization, not of performance expressed as a tangible, major program by a Federal awarding including IHEs, that: measurable objective, against which agency or pass-through entity in (1) Is operated primarily for scientific, actual achievement can be compared, accordance with § 200.503(e). educational, service, charitable, or including a goal expressed as a Management decision means the similar purposes in the public interest; quantitative standard, value, or rate. In Federal awarding agency’s or pass- (2) Is not organized primarily for some instances (e.g., discretionary through entity’s written determination, profit; and research awards), this may be limited to provided to the auditee, of the adequacy (3) Uses net proceeds to maintain, the requirement to submit technical of the auditee’s proposed corrective improve, or expand the operations of performance reports (to be evaluated in actions to address the findings, based on the organization. accordance with agency policy). its evaluation of the audit findings and Notice of funding opportunity means Period of performance means the total proposed corrective actions. a formal announcement of the estimated time interval between the Micro-purchase means a purchase of availability of Federal funding through start of an initial Federal award and the supplies or services, the aggregate a financial assistance program from a planned end date, which may include amount of which does not exceed the Federal awarding agency. The notice of one or more funded portions, or budget micro-purchase threshold. Micro- funding opportunity provides periods. Identification of the period of purchases comprise a subset of a non- information on the award, who is performance in the Federal award per Federal entity’s small purchases as eligible to apply, the evaluation criteria § 200.211(b)(5) does not commit the defined in § 200.320. for selection of an awardee, required awarding agency to fund the award Micro-purchase threshold means the components of an application, and how beyond the currently approved budget dollar amount at or below which a non- to submit the application. The notice of period. Federal entity may purchase property or funding opportunity is any paper or Personal property means property services using micro-purchase electronic issuance that an agency uses other than real property. It may be procedures (see § 200.320). Generally, to announce a funding opportunity, tangible, having physical existence, or the micro-purchase threshold for whether it is called a ‘‘program intangible. procurement activities administered announcement,’’ ‘‘notice of funding Personally Identifiable Information under Federal awards is not to exceed availability,’’ ‘‘broad agency (PII) means information that can be used the amount set by the FAR at 48 CFR announcement,’’ ‘‘research to distinguish or trace an individual’s part 2, subpart 2.1, unless a higher announcement,’’ ‘‘solicitation,’’ or some identity, either alone or when combined threshold is requested by the non- other term. with other personal or identifying Federal entity and approved by the Office of Management and Budget information that is linked or linkable to cognizant agency for indirect costs. (OMB) means the Executive Office of the a specific individual. Some information Modified Total Direct Cost (MTDC) President, Office of Management and that is considered to be PII is available means all direct salaries and wages, Budget. in public sources such as telephone applicable fringe benefits, materials and Oversight agency for audit means the books, public websites, and university supplies, services, travel, and up to the Federal awarding agency that provides listings. This type of information is first $25,000 of each subaward the predominant amount of funding considered to be Public PII and (regardless of the period of performance directly (direct funding) (as listed on the includes, for example, first and last of the subawards under the award). schedule of expenditures of Federal name, address, work telephone number, MTDC excludes equipment, capital awards, see § 200.510(b)) to a non- email address, home telephone number, expenditures, charges for patient care, Federal entity unless OMB designates a and general educational credentials. The rental costs, tuition remission, specific cognizant agency for audit. definition of PII is not anchored to any scholarships and fellowships, When the direct funding represents less single category of information or participant support costs and the than 25 percent of the total Federal technology. Rather, it requires a case-by- portion of each subaward in excess of expenditures (as direct and sub-awards) case assessment of the specific risk that $25,000. Other items may only be by the non-Federal entity, then the an individual can be identified. Non-PII excluded when necessary to avoid a Federal agency with the predominant can become PII whenever additional serious inequity in the distribution of amount of total funding is the information is made publicly available, indirect costs, and with the approval of designated cognizant agency for audit. in any medium and from any source, the cognizant agency for indirect costs. When there is no direct funding, the that, when combined with other Non-discretionary award means an Federal awarding agency which is the available information, could be used to award made by the Federal awarding predominant source of pass-through identify an individual. agency to specific recipients in funding must assume the oversight Program income means gross income accordance with statutory, eligibility responsibilities. The duties of the earned by the non-Federal entity that is and compliance requirements, such that oversight agency for audit and the directly generated by a supported in keeping with specific statutory process for any reassignments are activity or earned as a result of the authority the agency has no ability to described in § 200.513(b). Federal award during the period of

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performance except as provided in also the definition of Improper payment research, medical, scientific, or other § 200.307(f). (See the definition of in this section). technical activities. Examples of special period of performance in this section.) Real property means land, including purpose equipment include Program income includes but is not land improvements, structures and microscopes, x-ray machines, surgical limited to income from fees for services appurtenances thereto, but excludes instruments, and spectrometers. See performed, the use or rental or real or moveable machinery and equipment. also the definitions of equipment and personal property acquired under Recipient means an entity, usually but general purpose equipment in this Federal awards, the sale of commodities not limited to non-Federal entities that section. or items fabricated under a Federal receives a Federal award directly from State means any state of the United award, license fees and royalties on a Federal awarding agency. The term States, the District of Columbia, the patents and copyrights, and principal recipient does not include subrecipients Commonwealth of Puerto Rico, U.S. and interest on loans made with Federal or individuals that are beneficiaries of Virgin Islands, Guam, American Samoa, award funds. Interest earned on the award. the Commonwealth of the Northern advances of Federal funds is not Renewal award means an award made Mariana Islands, and any agency or program income. Except as otherwise subsequent to an expiring Federal award instrumentality thereof exclusive of provided in Federal statutes, for which the start date is contiguous local governments. regulations, or the terms and conditions with, or closely follows, the end of the Student Financial Aid (SFA) means expiring Federal award. A renewal of the Federal award, program income Federal awards under those programs of award’s start date will begin a distinct does not include rebates, credits, general student assistance, such as those discounts, and interest earned on any of period of performance. Research and Development (R&D) authorized by Title IV of the Higher them. See also § 200.407. See also 35 means all research activities, both basic Education Act of 1965, as amended, (20 U.S.C. 200–212 ‘‘Disposition of Rights and applied, and all development U.S.C. 1070–1099d), which are in Educational Awards’’ applies to activities that are performed by non- administered by the U.S. Department of inventions made under Federal awards. Federal entities. The term research also Education, and similar programs Project cost means total allowable includes activities involving the training provided by other Federal agencies. It costs incurred under a Federal award of individuals in research techniques does not include Federal awards under and all required cost sharing and where such activities utilize the same programs that provide fellowships or voluntary committed cost sharing, facilities as other research and similar Federal awards to students on a including third-party contributions. development activities and where such competitive basis, or for specified Property means real property or activities are not included in the studies or research. personal property. See also the instruction function. ‘‘Research’’ is Subaward means an award provided definitions of real property and personal defined as a systematic study directed by a pass-through entity to a property in this section. toward fuller scientific knowledge or subrecipient for the subrecipient to Protected Personally Identifiable understanding of the subject studied. carry out part of a Federal award Information (Protected PII) means an ‘‘Development’’ is the systematic use of received by the pass-through entity. It individual’s first name or first initial knowledge and understanding gained does not include payments to a and last name in combination with any from research directed toward the contractor or payments to an individual one or more of types of information, production of useful materials, devices, that is a beneficiary of a Federal including, but not limited to, social systems, or methods, including design program. A subaward may be provided security number, passport number, and development of prototypes and through any form of legal agreement, credit card numbers, clearances, bank processes. including an agreement that the pass- numbers, biometrics, date and place of Simplified acquisition threshold through entity considers a contract. birth, mother’s maiden name, criminal, means the dollar amount below which Subrecipient means an entity, usually medical and financial records, a non-Federal entity may purchase but not limited to non-Federal entities, educational transcripts. This does not property or services using small that receives a subaward from a pass- include PII that is required by law to be purchase methods (see § 200.320). Non- through entity to carry out part of a disclosed. See also the definition of Federal entities adopt small purchase Federal award; but does not include an Personally Identifiable Information (PII) procedures in order to expedite the individual that is a beneficiary of such in this section. purchase of items at or below the award. A subrecipient may also be a Questioned cost means a cost that is simplified acquisition threshold. The recipient of other Federal awards questioned by the auditor because of an simplified acquisition threshold for directly from a Federal awarding audit finding: procurement activities administered agency. (1) Which resulted from a violation or under Federal awards is set by the FAR Subsidiary means an entity in which possible violation of a statute, at 48 CFR part 2, subpart 2.1. The non- more than 50 percent of the entity is regulation, or the terms and conditions Federal entity is responsible for owned or controlled directly by a parent of a Federal award, including for funds determining an appropriate simplified corporation or through another used to match Federal funds; acquisition threshold based on internal subsidiary of a parent corporation. (2) Where the costs, at the time of the controls, an evaluation of risk, and its Supplies means all tangible personal audit, are not supported by adequate documented procurement procedures. property other than those described in documentation; or However, in no circumstances can this the definition of equipment in this (3) Where the costs incurred appear threshold exceed the dollar value section. A computing device is a supply unreasonable and do not reflect the established in the FAR (48 CFR part 2, if the acquisition cost is less than the actions a prudent person would take in subpart 2.1) for the simplified lesser of the capitalization level the circumstances. acquisition threshold. Recipients should established by the non-Federal entity for (4) Questioned costs are not an determine if local government laws on financial statement purposes or $5,000, improper payment until reviewed and purchasing apply. regardless of the length of its useful life. confirmed to be improper as defined in Special purpose equipment means See also the definitions of computing OMB Circular A–123 appendix C. (See equipment which is used only for devices and equipment in this section.

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Telecommunications cost means the § 200.100 Purpose. § 200.101 Applicability. cost of using communication and (a) Purpose. (1) This part establishes (a) General applicability to Federal telephony technologies such as mobile uniform administrative requirements, agencies. (1) The requirements phones, land lines, and internet. cost principles, and audit requirements established in this part apply to Federal Termination means the ending of a for Federal awards to non-Federal agencies that make Federal awards to Federal award, in whole or in part at entities, as described in § 200.101. non-Federal entities. These any time prior to the planned end of Federal awarding agencies must not requirements are applicable to all costs period of performance. A lack of impose additional or inconsistent related to Federal awards. available funds is not a termination. requirements, except as provided in Third-party in-kind contributions §§ 200.102 and 200.211, or unless (2) Federal awarding agencies may means the value of non-cash specifically required by Federal statute, apply subparts A through E of this part contributions (i.e., property or services) regulation, or Executive order. to Federal agencies, for-profit entities, foreign public entities, or foreign that— * * * * * organizations, except where the Federal (1) Benefit a federally-assisted project (c) Cost principles. Subpart E of this awarding agency determines that the or program; and part establishes principles for application of these subparts would be (2) Are contributed by non-Federal determining the allowable costs inconsistent with the international third parties, without charge, to a non- incurred by non-Federal entities under responsibilities of the United States or Federal entity under a Federal award. Federal awards. The principles are for the statutes or regulations of a foreign Unliquidated financial obligations the purpose of cost determination and government. means, for financial reports prepared on are not intended to identify the a cash basis, financial obligations circumstances or dictate the extent of (b) Applicability to different types of incurred by the non-Federal entity that Federal Government participation in the Federal awards. (1) Throughout this part have not been paid (liquidated). For financing of a particular program or when the word ‘‘must’’ is used it reports prepared on an accrual project. The principles are designed to indicates a requirement. Whereas, use of expenditure basis, these are financial provide that Federal awards bear their the word ‘‘should’’ or ‘‘may’’ indicates obligations incurred by the non-Federal fair share of cost recognized under these a best practice or recommended entity for which an expenditure has not principles except where restricted or approach rather than a requirement and been recorded. prohibited by statute. permits discretion. Unobligated balance means the (d) Single Audit Requirements and (2) The following table describes what amount of funds under a Federal award Audit Follow-up. Subpart F of this part portions of this part apply to which that the non-Federal entity has not is issued pursuant to the Single Audit types of Federal awards. The terms and obligated. The amount is computed by Act Amendments of 1996, (31 U.S.C. conditions of Federal awards (including subtracting the cumulative amount of 7501–7507). It sets forth standards for this part) flow down to subawards to the non-Federal entity’s unliquidated obtaining consistency and uniformity subrecipients unless a particular section financial obligations and expenditures among Federal agencies for the audit of of this part or the terms and conditions of funds under the Federal award from non-Federal entities expending Federal of the Federal award specifically the cumulative amount of the funds that awards. These provisions also provide indicate otherwise. This means that the Federal awarding agency or pass- the policies and procedures for Federal non-Federal entities must comply with through entity authorized the non- awarding agencies and pass-through requirements in this part regardless of Federal entity to obligate. entities when using the results of these whether the non-Federal entity is a Voluntary committed cost sharing audits. recipient or subrecipient of a Federal means cost sharing specifically pledged (e) Guidance on challenges and award. Pass-through entities must on a voluntary basis in the proposal’s prizes. For OMB guidance to Federal comply with the requirements described budget on the part of the non-Federal awarding agencies on challenges and in subpart D of this part, §§ 200.331 entity and that becomes a binding prizes, please see memo M–10–11 through 200.333, but not any requirement of Federal award. See also Guidance on the Use of Challenges and requirements in this part directed § 200.306. Prizes to Promote Open Government, towards Federal awarding agencies ■ 35. Amend § 200.100 by revising issued March 8, 2010, or its successor. unless the requirements of this part or paragraphs (a)(1), (c), (d), and (e) to read ■ 36. Revise § 200.101 to read as the terms and conditions of the Federal as follows: follows: award indicate otherwise.

TABLE 1 TO PARAGRAPH (b)

Are applicable to the following types of Fed- eral Awards and Fixed-Price Contracts and Are NOT applicable to the following types of The following portions of this Part Subcontracts (except as noted in paragraphs Federal Awards and Fixed-Price Contracts (d) and (e) of this section): and Subcontracts:

Subpart A—Acronyms and Definitions ...... —All. Subpart B—General Provisions, except for —All. §§ 200.111 English Language, 200.112 Con- flict of Interest, 200.113 Mandatory Disclo- sures. §§ 200.111 English Language, 200.112 Conflict —Grant Agreements and cooperative agree- —Agreements for loans, loan guarantees, in- of Interest, 200.113 Mandatory Disclosures. ments. terest subsidies and insurance. —Procurement contracts awarded by Federal Agencies under the Federal Acquisition Regulation and subcontracts under those contracts.

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TABLE 1 TO PARAGRAPH (b)—Continued

Are applicable to the following types of Fed- eral Awards and Fixed-Price Contracts and Are NOT applicable to the following types of The following portions of this Part Subcontracts (except as noted in paragraphs Federal Awards and Fixed-Price Contracts (d) and (e) of this section): and Subcontracts:

Subparts C–D, except for §§ 200.203 Require- —Grant Agreements and cooperative agree- —Agreements for loans, loan guarantees, in- ment to provide public notice of Federal fi- ments. terest subsidies and insurance. nancial assistance programs, 200.303 Inter- —Procurement contracts awarded by Federal nal controls, 200.331–333 Subrecipient Moni- Agencies under the Federal Acquisition toring and Management. Regulation and subcontracts under those contracts. § 200.203 Requirement to provide public notice —Grant Agreements and cooperative agree- —Procurement contracts awarded by Federal of Federal financial assistance programs. ments. Agencies under the Federal Acquisition —Agreements for loans, loan guarantees, in- Regulation and subcontracts under those terest subsidies and insurance. contracts. §§ 200.303 Internal controls, 200.331–333 Sub- —All. recipient Monitoring and Management. Subpart E—Cost Principles ...... —Grant Agreements and cooperative agree- —Grant agreements and cooperative agree- ments, except those providing food com- ments providing foods commodities. modities. —Fixed amount awards. —All procurement contracts under the Federal —Agreements for loans, loans guarantees, in- Acquisition Regulations except those that terest subsidies and insurance. are not negotiated. —Federal awards to hospitals (see Appendix IX Hospital Cost Principles). Subpart F—Audit Requirements ...... —Grant Agreements and cooperative agree- —Fixed-price contracts and subcontracts ments. awarded under the Federal Acquisition —Contracts and subcontracts, except for fixed Regulation. price contacts and subcontracts, awarded under the Federal Acquisition Regulation. —Agreements for loans, loans guarantees, in- terest subsidies and insurance and other forms of Federal Financial Assistance as defined by the Single Audit Act Amendment of 1996.

(c) Federal award of cost- which is required by the Single Audit (i) Child Care and Development Block reimbursement contract under the FAR Act, in any circumstances where the Grant (42 U.S.C. 9858). to a non-Federal entity. When a non- provisions of Federal statutes or (ii) Child Care Mandatory and Federal entity is awarded a cost- regulations differ from the provisions of Matching Funds of the Child Care and reimbursement contract, only subpart D, this part, the provision of the Federal Development Fund (42 U.S.C. 9858). §§ 200.331 through 200.333, and statutes or regulations govern. This (f) Additional program applicability. subparts E and F of this part are includes, for agreements with Indian Except for § 200.203, the guidance in incorporated by reference into the tribes, the provisions of the Indian Self- subpart C of this part does not apply to contract, but the requirements of Determination and Education and the following programs: subparts D, E, and F are supplementary Assistance Act (ISDEAA), as amended, (1) Entitlement Federal awards to to the FAR and the contract. When the 25 U.S.C 450–458ddd–2. carry out the following programs of the Cost Accounting Standards (CAS) are (e) Program applicability. Except for Social Security Act: applicable to the contract, they take §§ 200.203 and 200.331 through precedence over the requirements of 200.333, the requirements in subparts C, (i) Temporary Assistance for Needy this part, including subpart F of this D, and E of this part do not apply to the Families (title IV–A of the Social part, which are supplementary to the following programs: Security Act, 42 U.S.C. 601–619); CAS requirements. In addition, costs (1) The block grant awards authorized (ii) Child Support Enforcement and that are made unallowable under 10 by the Omnibus Budget Reconciliation Establishment of Paternity (title IV–D of U.S.C. 2324(e) and 41 U.S.C. 4304(a) as Act of 1981 (including Community the Social Security Act, 42 U.S.C. 651– described in the FAR 48 CFR part 31, Services), except to the extent that 669b); subpart 31.2, and 48 CFR 31.603 are subpart E of this part apply to (iii) Foster Care and Adoption always unallowable. For requirements subrecipients of Community Services Assistance (title IV–E of the Act, 42 other than those covered in subpart D, Block Grant funds pursuant to 42 U.S.C. U.S.C. 670–679c); §§ 200.331 through 200.333, and 9916(a)(1)(B); (iv) Aid to the Aged, Blind, and subparts E and F of this part, the terms (2) Federal awards to local education Disabled (titles I, X, XIV, and XVI– of the contract and the FAR apply. Note agencies under 20 U.S.C. 7702–7703b, AABD of the Act, as amended); that when a non-Federal entity is (portions of the Impact Aid program); (v) Medical Assistance (Medicaid) awarded a FAR contract, the FAR (3) Payments under the Department of (title XIX of the Act, 42 U.S.C. 1396– applies, and the terms and conditions of Veterans Affairs’ State Home Per Diem 1396w–5) not including the State the contract shall prevail over the Program (38 U.S.C. 1741); and Medicaid Fraud Control program requirements of this part. (4) Federal awards authorized under authorized by section 1903(a)(6)(B) of (d) Governing provisions. With the the Child Care and Development Block the Social Security Act (42 U.S.C. exception of subpart F of this part, Grant Act of 1990, as amended: 1396b(a)(6)(B)); and

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(vi) Children’s Health Insurance this part when exceptions are not (c) Subpart F of this part is authorized Program (title XXI of the Act, 42 U.S.C. prohibited by statute. In the interest of under the Single Audit Act 1397aa–1397mm). maximum uniformity, exceptions from Amendments of 1996, (31 U.S.C. 7501– (2) A Federal award for an the requirements of this part will be 7507). experimental, pilot, or demonstration permitted as described in this section. ■ 39. Amend § 200.104 by revising the project that is also supported by a (b) Exceptions on a case-by-case basis introductory text and paragraphs (g) and Federal award listed in paragraph (f)(1) for individual non-Federal entities may (h) to read as follows: of this section. be authorized by the Federal awarding (3) Federal awards under subsection agency or cognizant agency for indirect § 200.104 Supersession. 412(e) of the Immigration and costs, except where otherwise required As described in § 200.110, this part Nationality Act and subsection 501(a) of by law or where OMB or other approval supersedes the following OMB guidance the Refugee Education Assistance Act of is expressly required by this part. documents and regulations under title 2 1980 (Pub. L. 96–422, 94 Stat. 1809), for (c) The Federal awarding agency may of the Code of Federal Regulations: cash assistance, medical assistance, and apply adjust requirements to a class of * * * * * supplemental security income benefits Federal awards or non-Federal entities (g) A–133, ‘‘Audits of States, Local to refugees and entrants and the when approved by OMB, or when Governments and Non-Profit administrative costs of providing the required by Federal statutes or Organizations’’; and assistance and benefits (8 U.S.C. regulations, except for the requirements (h) Those sections of A–50 related to 1522(e)). in subpart F of this part. A Federal audits performed under subpart F of this (4) Entitlement awards under the awarding agency may apply less part. following programs of The National restrictive requirements when making ■ School Lunch Act: 40. Revise § 200.105 to read as fixed amount awards as defined in follows: (i) National School Lunch Program subpart A of this part, except for those (section 4 of the Act, 42 U.S.C. 1753); requirements imposed by statute or in § 200.105 Effect on other issuances. (ii) Commodity Assistance (section 6 subpart F of this part. (a) Superseding inconsistent of the Act, 42 U.S.C. 1755); (d) Federal awarding agencies may requirements. For Federal awards (iii) Special Meal Assistance (section request exceptions in support of subject to this part, all administrative 11 of the Act, 42 U.S.C. 1759a); innovative program designs that apply a requirements, program manuals, (iv) Summer Food Service Program for risk-based, data-driven framework to handbooks and other non-regulatory Children (section 13 of the Act, 42 alleviate select compliance materials that are inconsistent with the U.S.C. 1761); and requirements and hold recipients (v) Child and Adult Care Food requirements of this part must be accountable for good performance. See superseded upon implementation of this Program (section 17 of the Act, 42 also § 200.206. U.S.C. 1766). part by the Federal agency, except to the (5) Entitlement awards under the ■ 38. Revise § 200.103 to read as extent they are required by statute or following programs of The Child follows: authorized in accordance with the provisions in § 200.102. Nutrition Act of 1966: § 200.103 Authorities. (i) Special Milk Program (section 3 of (b) Imposition of requirements on the Act, 42 U.S.C. 1772); This part is issued under the recipients. Agencies may impose legally (ii) School Breakfast Program (section following authorities. binding requirements on recipients only 4 of the Act, 42 U.S.C. 1773); and (a) Subparts B through D of this part through the notice and public comment (iii) State Administrative Expenses are authorized under 31 U.S.C. 503 (the process through an approved agency (section 7 of the Act, 42 U.S.C. 1776). Chief Financial Officers Act, Functions process, including as authorized by this (6) Entitlement awards for State of the Deputy Director for Management), part, other statutes or regulations, or as Administrative Expenses under The 41 U.S.C. 1101–1131 (the Office of incorporated into the terms of a Federal Food and Nutrition Act of 2008 (section Federal Procurement Policy Act), award. 16 of the Act, 7 U.S.C. 2025). Reorganization Plan No. 2 of 1970, and ■ 41. Revise § 200.106 to read as (7) Non-discretionary Federal awards Executive Order 11541 (‘‘Prescribing the follows: under the following non-entitlement Duties of the Office of Management and programs: Budget and the Domestic Policy Council § 200.106 Agency implementation. (i) Special Supplemental Nutrition in the Executive Office of the The specific requirements and Program for Women, Infants and President’’), the Single Audit Act responsibilities of Federal agencies and Children (section 17 of the Child Amendments of 1996, (31 U.S.C. 7501– non-Federal entities are set forth in this Nutrition Act of 1966) 42 U.S.C. 1786; 7507), as well as The Federal Program part. Federal agencies making Federal (ii) The Emergency Food Assistance Information Act (Pub. L. 95–220 and awards to non-Federal entities must Programs (Emergency Food Assistance Pub. L. 98–169, as amended, codified at implement the language in subparts C Act of 1983) 7 U.S.C. 7501 note; and 31 U.S.C. 6101–6106). through F of this part in codified (iii) Commodity Supplemental Food (b) Subpart E of this part is authorized regulations unless different provisions Program (section 5 of the Agriculture under the Budget and Accounting Act of are required by Federal statute or are and Consumer Protection Act of 1973) 7 1921, as amended; the Budget and approved by OMB. U.S.C. 612c note. Accounting Procedures Act of 1950, as ■ 42. Revise § 200.110 to read as ■ 37. Revise § 200.102 to read as amended (31 U.S.C. 1101–1125); the follows: follows: Chief Financial Officers Act of 1990 (31 U.S.C. 503–504); Reorganization Plan § 200.110 Effective/applicability date. § 200.102 Exceptions. No. 2 of 1970; and Executive Order (a) The standards set forth in this part (a) With the exception of subpart F of 11541, ‘‘Prescribing the Duties of the that affect the administration of Federal this part, OMB may allow exceptions for Office of Management and Budget and awards issued by Federal awarding classes of Federal awards or non-Federal the Domestic Policy Council in the agencies become effective once entities subject to the requirements of Executive Office of the President.’’ implemented by Federal awarding

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agencies or when any future amendment 200.214 Suspension and debarment. (iii) In one payment at Federal award to this part becomes final. 200.215 Never contract with the enemy. completion. (b) Existing negotiated indirect cost 200.216 Prohibition on certain (2) A fixed amount award cannot be rates (as of the publication date of the telecommunications and video used in programs which require surveillance services or equipment. revisions to the guidance) will remain in mandatory cost sharing or match. place until they expire. The effective Subpart C—Pre-Federal Award (3) The non-Federal entity must date of changes to indirect cost rates Requirements and Contents of Federal certify in writing to the Federal must be based upon the date that a Awards awarding agency or pass-through entity newly re-negotiated rate goes into effect at the end of the Federal award that the for a specific non-Federal entity’s fiscal § 200.200 Purpose. project or activity was completed or the year. Therefore, for indirect cost rates Sections 200.201 through 200.216 level of effort was expended. If the and cost allocation plans, the revised prescribe instructions and other pre- required level of activity or effort was Uniform Guidance (as of the publication award matters to be used by Federal not carried out, the amount of the date for revisions to the guidance) awarding agencies in the program Federal award must be adjusted. become effective in generating proposals planning, announcement, application (4) Periodic reports may be and negotiating a new rate (when the and award processes. established for each Federal award. rate is re-negotiated). (5) Changes in principal investigator, § 200.201 Use of grant agreements ■ 43. Revise § 200.113 to read as project leader, project partner, or scope (including fixed amount awards), of effort must receive the prior written follows: cooperative agreements, and contracts. approval of the Federal awarding agency § 200.113 Mandatory disclosures. (a) Federal award instrument. The or pass-through entity. Federal awarding agency or pass- The non-Federal entity or applicant through entity must decide on the § 200.202 Program planning and design. for a Federal award must disclose, in a appropriate instrument for the Federal timely manner, in writing to the Federal The Federal awarding agency must award (i.e., grant agreement, cooperative awarding agency or pass-through entity design a program and create an agreement, or contract) in accordance all violations of Federal criminal law Assistance Listing before announcing with the Federal Grant and Cooperative involving fraud, bribery, or gratuity the Notice of Funding Opportunity. The Agreement Act (31 U.S.C. 6301–08). program must be designed with clear violations potentially affecting the (b) Fixed amount awards. In addition Federal award. Non-Federal entities that goals and objectives that facilitate the to the options described in paragraph (a) delivery of meaningful results have received a Federal award including of this section, Federal awarding the term and condition outlined in consistent with the Federal authorizing agencies, or pass-through entities as legislation of the program. Program appendix XII to this part are required to permitted in § 200.333, may use fixed report certain civil, criminal, or performance shall be measured based on amount awards (see Fixed amount the goals and objectives developed administrative proceedings to SAM awards in § 200.1) to which the (currently FAPIIS). Failure to make during program planning and design. following conditions apply: See § 200.301 for more information on required disclosures can result in any of (1) The Federal award amount is the remedies described in § 200.339. performance measurement. Performance negotiated using the cost principles (or measures may differ depending on the (See also 2 CFR part 180, 31 U.S.C. other pricing information) as a guide. 3321, and 41 U.S.C. 2313.) type of program. The program must The Federal awarding agency or pass- align with the strategic goals and ■ 44. Revise subpart C to read as through entity may use fixed amount objectives within the Federal awarding follows: awards if the project scope has agency’s performance plan and should measurable goals and objectives and if Subpart C—Pre-Federal Award support the Federal awarding agency’s adequate cost, historical, or unit pricing performance measurement, Requirements and Contents of Federal data is available to establish a fixed Awards management, and reporting as required amount award based on a reasonable by Part 6 of OMB Circular A–11 Sec. estimate of actual cost. Payments are (Preparation, Submission, and 200.200 Purpose. based on meeting specific requirements Execution of the Budget). The program 200.201 Use of grant agreements (including of the Federal award. Accountability is must also be designed to align with the fixed amount awards), cooperative based on performance and results. Program Management Improvement agreements, and contracts. Except in the case of termination before Accountability Act (Pub. L. 114–264). 200.202 Program planning and design. completion of the Federal award, there 200.203 Requirement to provide public is no governmental review of the actual § 200.203 Requirement to provide public notice of Federal financial assistance costs incurred by the non-Federal entity notice of Federal financial assistance programs. programs. 200.204 Notices of funding opportunities. in performance of the award. Some of 200.205 Federal awarding agency review of the ways in which the Federal award (a) The Federal awarding agency must merit of proposals. may be paid include, but are not limited notify the public of Federal programs in 200.206 Federal awarding agency review of to: the Federal Assistance Listings risk posed by applicants. (i) In several partial payments, the maintained by the General Services 200.207 Standard application requirements. amount of each agreed upon in advance, Administration (GSA). 200.208 Specific conditions. and the ‘‘milestone’’ or event triggering (1) The Federal Assistance Listings is 200.209 Certifications and representations. the payment also agreed upon in the single, authoritative, 200.210 Pre-award costs. advance, and set forth in the Federal governmentwide comprehensive source 200.211 Information contained in a Federal of Federal financial assistance program award. award; 200.212 Public access to Federal award (ii) On a unit price basis, for a defined information produced by the executive information. unit or units, at a defined price or branch of the Federal Government. 200.213 Reporting a determination that a prices, agreed to in advance of (2) The information that the Federal non-Federal entity is not qualified for a performance of the Federal award and awarding agency must submit to GSA Federal award. set forth in the Federal award; or, for approval by OMB is listed in

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paragraph (b) of this section. GSA must (6) Applicability of Single Audit (2) Federal award information, prescribe the format for the submission Requirements. Applicability of Single including sufficient information to help in coordination with OMB. Audit Requirements as required by an applicant make an informed decision (3) The Federal awarding agency may subpart F of this part. about whether to submit an application. not award Federal financial assistance (See also § 200.414(c)(4)). without assigning it to a program that § 200.204 Notices of funding (3) Specific eligibility information, opportunities. has been included in the Federal including any factors or priorities that Assistance Listings as required in this For discretionary grants and affect an applicant’s or its application’s section unless there are exigent cooperative agreements that are eligibility for selection. circumstances requiring otherwise, such competed, the Federal awarding agency (4) Application Preparation and as timing requirements imposed by must announce specific funding Submission Information, including the statute. opportunities by providing the applicable submission dates and time. (b) For each program that awards following information in a public (5) Application Review Information discretionary Federal awards, non- notice: including the criteria and process to be (a) Summary information in notices of discretionary Federal awards, loans, used to evaluate applications. See also funding opportunities. The Federal insurance, or any other type of Federal §§ 200.205 and 200.206. awarding agency must display the financial assistance, the Federal (6) Federal Award Administration following information posted on the awarding agency must, to the extent Information. See also § 200.211. OMB-designated governmentwide practicable, create, update, and manage (7) Applicable terms and conditions website for funding and applying for Assistance Listings entries based on the for resulting awards, including any Federal financial assistance, in a authorizing statute for the program and exceptions from these standard terms. location preceding the full text of the comply with additional guidance announcement: § 200.205 Federal awarding agency review provided by GSA in consultation with (1) Federal Awarding Agency Name; of merit of proposals. OMB to ensure consistent, accurate (2) Funding Opportunity Title; For discretionary Federal awards, information is available to prospective (3) Announcement Type (whether the unless prohibited by Federal statute, the applicants. Accordingly, Federal funding opportunity is the initial Federal awarding agency must design awarding agencies must submit the announcement of this funding and execute a merit review process for following information to GSA: opportunity or a modification of a applications, with the objective of (1) Program Description, Purpose, previously announced opportunity); selecting recipients most likely to be Goals, and Measurement. A brief (4) Funding Opportunity Number successful in delivering results based on summary of the statutory or regulatory (required, if applicable). If the Federal the program objectives outlined in requirements of the program and its awarding agency has assigned or will section § 200.202. A merit review is an intended outcome. Where appropriate, assign a number to the funding objective process of evaluating Federal the Program Description, Purpose, opportunity announcement, this award applications in accordance with Goals, and Measurement should align number must be provided; written standards set forth by the with the strategic goals and objectives (5) Assistance Listings Number(s); Federal awarding agency. This process within the Federal awarding agency’s (6) Key Dates. Key dates include due must be described or incorporated by performance plan and should support dates for applications or Executive reference in the applicable funding the Federal awarding agency’s Order 12372 submissions, as well as for opportunity (see appendix I to this performance measurement, any letters of intent or pre-applications. part.). See also § 200.204. The Federal management, and reporting as required For any announcement issued before a awarding agency must also periodically by Part 6 of OMB Circular A–11; program’s application materials are review its merit review process. (2) Identification. Identification of available, key dates also include the whether the program makes Federal date on which those materials will be § 200.206 Federal awarding agency review awards on a discretionary basis or the released; and any other additional of risk posed by applicants. Federal awards are prescribed by information, as deemed applicable by (a) Review of OMB-designated Federal statute, such as in the case of the relevant Federal awarding agency. repositories of governmentwide data. (1) formula grants. (b) Availability period. The Federal Prior to making a Federal award, the (3) Projected total amount of funds awarding agency must generally make Federal awarding agency is required by available for the program. Estimates all funding opportunities available for the Improper Payments Elimination and based on previous year funding are application for at least 60 calendar days. Recovery Improvement Act of 2012, 31 acceptable if current appropriations are The Federal awarding agency may make U.S.C. 3321 note, and 41 U.S.C. 2313 to not available at the time of the a determination to have a less than 60 review information available through submission; calendar day availability period but no any OMB-designated repositories of (4) Anticipated source of available funding opportunity should be available governmentwide eligibility qualification funds. The statutory authority for for less than 30 calendar days unless or financial integrity information as funding the program and, to the extent exigent circumstances require as appropriate. See also suspension and possible, agency, sub-agency, or, if determined by the Federal awarding debarment requirements at 2 CFR part known, the specific program unit that agency head or delegate. 180 as well as individual Federal agency will issue the Federal awards, and (c) Full text of funding opportunities. suspension and debarment regulations associated funding identifier (e.g., The Federal awarding agency must in title 2 of the Code of Federal Treasury Account Symbol(s)); include the following information in the Regulations. (5) General eligibility requirements. full text of each funding opportunity. (2) In accordance 41 U.S.C. 2313, the The statutory, regulatory or other For specific instructions on the content Federal awarding agency is required to eligibility factors or considerations that required in this section, refer to review the non-public segment of the determine the applicant’s qualification appendix I to this part. OMB-designated integrity and for Federal awards under the program (1) Full programmatic description of performance system accessible through (e.g., type of non-Federal entity); and the funding opportunity. SAM (currently the Federal Awardee

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Performance and Integrity Information and conditions of previous Federal (2) The applicant or recipient’s System (FAPIIS)) prior to making a awards, and if applicable, the extent to history of compliance with the general Federal award where the Federal share which any previously awarded amounts or specific terms and conditions of a is expected to exceed the simplified will be expended prior to future awards; Federal award; acquisition threshold, defined in 41 (iv) Audit reports and findings. (3) The applicant or recipient’s ability U.S.C. 134, over the period of Reports and findings from audits to meet expected performance goals as performance. As required by Public Law performed under subpart F of this part described in § 200.211; or 112–239, National Defense or the reports and findings of any other (4) A responsibility determination of Authorization Act for Fiscal Year 2013, available audits; and an applicant or recipient. prior to making a Federal award, the (v) Ability to effectively implement (c) Additional Federal award Federal awarding agency must consider requirements. The applicant’s ability to conditions may include items such as all of the information available through effectively implement statutory, the following: FAPIIS with regard to the applicant and regulatory, or other requirements (1) Requiring payments as any immediate highest level owner, imposed on non-Federal entities. reimbursements rather than advance predecessor (i.e.; a non-Federal entity (c) Risk-based requirements payments; that is replaced by a successor), or adjustment. The Federal awarding (2) Withholding authority to proceed subsidiary, identified for that applicant agency may adjust requirements when a to the next phase until receipt of in FAPIIS, if applicable. At a minimum, risk-evaluation indicates that it may be evidence of acceptable performance the information in the system for a prior merited either pre-award or post-award. within a given performance period; Federal award recipient must (d) Suspension and debarment (3) Requiring additional, more demonstrate a satisfactory record of compliance. (1) The Federal awarding detailed financial reports; executing programs or activities under agency must comply with the guidelines (4) Requiring additional project Federal grants, cooperative agreements, on governmentwide suspension and monitoring; or procurement awards; and integrity debarment in 2 CFR part 180, and must (5) Requiring the non-Federal entity to and business ethics. The Federal require non-Federal entities to comply obtain technical or management awarding agency may make a Federal with these provisions. These provisions assistance; or award to a recipient who does not fully restrict Federal awards, subawards and (6) Establishing additional prior meet these standards, if it is determined contracts with certain parties that are approvals. (d) If the Federal awarding agency or that the information is not relevant to debarred, suspended or otherwise pass-through entity is imposing the current Federal award under excluded from or ineligible for consideration or there are specific participation in Federal programs or additional requirements, they must conditions that can appropriately activities. notify the applicant or non-Federal mitigate the effects of the non-Federal entity as to: § 200.207 Standard application (1) The nature of the additional entity’s risk in accordance with requirements. requirements; § 200.208. (a) Paperwork clearances. The Federal (2) The reason why the additional (b) Risk evaluation. (1) The Federal awarding agency may only use requirements are being imposed; awarding agency must have in place a application information collections (3) The nature of the action needed to framework for evaluating the risks approved by OMB under the Paperwork remove the additional requirement, if posed by applicants before they receive Reduction Act of 1995 and OMB’s applicable; Federal awards. This evaluation may implementing regulations in 5 CFR part (4) The time allowed for completing incorporate results of the evaluation of 1320 and in alignment with OMB- the actions if applicable; and the applicant’s eligibility or the quality approved, governmentwide data (5) The method for requesting of its application. If the Federal elements available from the OMB- reconsideration of the additional awarding agency determines that a designated standards lead. Consistent requirements imposed. Federal award will be made, special with these requirements, OMB will (e) Any additional requirements must conditions that correspond to the degree authorize additional information be promptly removed once the of risk assessed may be applied to the collections only on a limited basis. conditions that prompted them have Federal award. Criteria to be evaluated (b) Information collection. If been satisfied. must be described in the announcement applicable, the Federal awarding agency of funding opportunity described in may inform applicants and recipients § 200.209 Certifications and § 200.204. that they do not need to provide certain representations. (2) In evaluating risks posed by information otherwise required by the Unless prohibited by the U.S. applicants, the Federal awarding agency relevant information collection. Constitution, Federal statutes or may use a risk-based approach and may regulations, each Federal awarding consider any items such as the § 200.208 Specific conditions. agency or pass-through entity is following: (a) Federal awarding agencies are authorized to require the non-Federal (i) Financial stability. Financial responsible for ensuring that specific entity to submit certifications and stability; Federal award conditions are consistent representations required by Federal (ii) Management systems and with the program design reflected in statutes, or regulations on an annual standards. Quality of management § 200.202 and include clear performance basis. Submission may be required more systems and ability to meet the expectations of recipients as required in frequently if the non-Federal entity fails management standards prescribed in § 200.301. to meet a requirement of a Federal this part; (b) The Federal awarding agency or award. (iii) History of performance. The pass-through entity may adjust specific applicant’s record in managing Federal Federal award conditions as needed, in § 200.210 Pre-award costs. awards, if it is a prior recipient of accordance with this section, based on For requirements on costs incurred by Federal awards, including timeliness of an analysis of the following factors: the applicant prior to the start date of compliance with applicable reporting (1) Based on the criteria set forth in the period of performance of the Federal requirements, conformance to the terms § 200.206; award, see § 200.458.

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§ 200.211 Information contained in a order, other Presidential directive, or § 200.212 Public access to Federal award Federal award. regulatory requirements that apply by information. A Federal award must include the specific reference and are not program- (a) In accordance with statutory following information: specific. See § 200.300 Statutory and requirements for Federal spending (a) Federal award performance goals. national policy requirements. transparency (e.g., FFATA), except as Performance goals, indicators, targets, (iii) Recipient integrity and noted in this section, for applicable and baseline data must be included in performance matters. If the total Federal Federal awards the Federal awarding the Federal award, where applicable. share of the Federal award may include agency must announce all Federal The Federal awarding agency must also more than $500,000 over the period of awards publicly and publish the specify how performance will be performance, the Federal awarding required information on a publicly assessed in the terms and conditions of agency must include the term and available OMB-designated the Federal award, including the timing condition available in appendix XII of governmentwide website. and scope of expected performance. See this part. See also § 200.113. (b) All information posted in the §§ 200.202 and 200.301 for more (iv) Future budget periods. If it is designated integrity and performance information on Federal award anticipated that the period of system accessible through SAM performance goals. performance will include multiple (currently FAPIIS) on or after April 15, (b) General Federal award budget periods, the Federal awarding 2011 will be publicly available after a information. The Federal awarding agency must indicate that subsequent waiting period of 14 calendar days, agency must include the following budget periods are subject to the except for: general Federal award information in availability of funds, program authority, (1) Past performance reviews required each Federal award: satisfactory performance, and by Federal Government contractors in (1) Recipient name (which must compliance with the terms and accordance with the Federal Acquisition match the name associated with its conditions of the Federal award. Regulation (FAR) 48 CFR part 42, unique entity identifier as defined at 2 (v) Termination provisions. Federal subpart 42.15; CFR 25.315); awarding agencies must make recipients (2) Information that was entered prior (2) Recipient’s unique entity aware, in a clear and unambiguous to April 15, 2011; or identifier; manner, of the termination provisions in (3) Unique Federal Award (3) Information that is withdrawn § 200.340, including the applicable during the 14-calendar day waiting Identification Number (FAIN); termination provisions in the Federal (4) Federal Award Date (see Federal period by the Federal Government awarding agency’s regulations or in each official. award date in § 200.201); Federal award. (5) Period of Performance Start and (c) Nothing in this section may be (2) The Federal award must construed as requiring the publication End Date; incorporate, by reference, all general (6) Budget Period Start and End Date; of information otherwise exempt under terms and conditions of the award, (7) Amount of Federal Funds the Freedom of Information Act (5 U.S.C which must be maintained on the Obligated by this action; 552), or controlled unclassified (8) Total Amount of Federal Funds agency’s website. information pursuant to Executive Obligated; (3) If a non-Federal entity requests a Order 13556. (9) Total Approved Cost Sharing or copy of the full text of the general terms § 200.213 Reporting a determination that a Matching, where applicable; and conditions, the Federal awarding agency must provide it. non-Federal entity is not qualified for a (10) Total Amount of the Federal Federal award. Award including approved Cost Sharing (4) Wherever the general terms and or Matching; conditions are publicly available, the (a) If a Federal awarding agency does (11) Budget Approved by the Federal Federal awarding agency must maintain not make a Federal award to a non- Awarding Agency; an archive of previous versions of the Federal entity because the official (11) Federal award description, (to general terms and conditions, with determines that the non-Federal entity comply with statutory requirements effective dates, for use by the non- does not meet either or both of the (e.g., FFATA)); Federal entity, auditors, or others. minimum qualification standards as (12) Name of Federal awarding agency (d) Federal awarding agency, described in § 200.206(a)(2), the Federal and contact information for awarding program, or Federal award specific awarding agency must report that official, terms and conditions. The Federal determination to the designated (13) Assistance Listings Number and awarding agency must include with integrity and performance system Title; each Federal award any terms and accessible through SAM (currently (14) Identification of whether the conditions necessary to communicate FAPIIS), only if all of the following award is R&D; and requirements that are in addition to the apply: (15) Indirect cost rate for the Federal requirements outlined in the Federal (1) The only basis for the award (including if the de minimis rate awarding agency’s general terms and determination described in this is charged per § 200.414). conditions. See also § 200.208. paragraph (a) is the non-Federal entity’s (c) General terms and conditions. (1) Whenever practicable, these specific prior record of executing programs or Federal awarding agencies must terms and conditions also should be activities under Federal awards or its incorporate the following general terms shared on the agency’s website and in record of integrity and business ethics, and conditions either in the Federal notices of funding opportunities (as as described in § 200.206(a)(2) (i.e., the award or by reference, as applicable: outlined in § 200.204) in addition to entity was determined to be qualified (i) Administrative requirements. being included in a Federal award. See based on all factors other than those two Administrative requirements also § 200.207. standards); and implemented by the Federal awarding (e) Federal awarding agency (2) The total Federal share of the agency as specified in this part. requirements. Any other information Federal award that otherwise would be (ii) National policy requirements. required by the Federal awarding made to the non-Federal entity is These include statutory, executive agency. expected to exceed the simplified

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acquisition threshold over the period of the system to incorporate the update in as critical technology as part of any performance. a timely way. system. As described in Public Law (b) The Federal awarding agency is (e) Federal awarding agencies must 115–232, section 889, covered not required to report a determination not post any information that will be telecommunications equipment is that a non-Federal entity is not qualified made publicly available in the non- telecommunications equipment for a Federal award if they make the public segment of designated integrity produced by Huawei Technologies Federal award to the non-Federal entity and performance system that is covered Company or ZTE Corporation (or any and include specific award terms and by a disclosure exemption under the subsidiary or affiliate of such entities). conditions, as described in § 200.208. Freedom of Information Act. If the (i) For the purpose of public safety, (c) If a Federal awarding agency recipient asserts within seven calendar security of government facilities, reports a determination that a non- days to the Federal awarding agency physical security surveillance of critical Federal entity is not qualified for a that posted the information that some or infrastructure, and other national Federal award, as described in all of the information made publicly security purposes, video surveillance paragraph (a) of this section, the Federal available is covered by a disclosure and telecommunications equipment awarding agency also must notify the exemption under the Freedom of produced by Hytera Communications non-Federal entity that— Information Act, the Federal awarding Corporation, Hangzhou Hikvision (1) The determination was made and agency that posted the information must Digital Technology Company, or Dahua reported to the designated integrity and remove the posting within seven Technology Company (or any subsidiary performance system accessible through calendar days of receiving the assertion. or affiliate of such entities). SAM, and include with the notification Prior to reposting the releasable (ii) Telecommunications or video an explanation of the basis for the information, the Federal awarding surveillance services provided by such determination; agency must resolve the issue in entities or using such equipment. (2) The information will be kept in the accordance with the agency’s Freedom (iii) Telecommunications or video system for a period of five years from of Information Act procedures. surveillance equipment or services the date of the determination, as produced or provided by an entity that required by section 872 of Public Law § 200.214 Suspension and debarment. the Secretary of Defense, in consultation 110–417, as amended (41 U.S.C. 2313), Non-Federal entities are subject to the with the Director of the National then archived; non-procurement debarment and Intelligence or the Director of the (3) Each Federal awarding agency that suspension regulations implementing Federal Bureau of Investigation, considers making a Federal award to the Executive Orders 12549 and 12689, 2 reasonably believes to be an entity non-Federal entity during that five year CFR part 180. The regulations in 2 CFR owned or controlled by, or otherwise period must consider that information part 180 restrict awards, subawards, and connected to, the government of a in judging whether the non-Federal contracts with certain parties that are covered foreign country. entity is qualified to receive the Federal debarred, suspended, or otherwise (b) In implementing the prohibition award when the total Federal share of excluded from or ineligible for under Public Law 115–232, section 889, the Federal award is expected to include participation in Federal assistance subsection (f), paragraph (1), heads of an amount of Federal funding in excess programs or activities. executive agencies administering loan, of the simplified acquisition threshold grant, or subsidy programs shall over the period of performance; § 200.215 Never contract with the enemy. prioritize available funding and (4) The non-Federal entity may go to Federal awarding agencies and technical support to assist affected the awardee integrity and performance recipients are subject to the regulations businesses, institutions and portal accessible through SAM implementing Never Contract with the organizations as is reasonably necessary (currently the Contractor Performance Enemy in 2 CFR part 183. The for those affected entities to transition Assessment Reporting System (CPARS)) regulations in 2 CFR part 183 affect from covered communications and comment on any information the covered contracts, grants and equipment and services, to procure system contains about the non-Federal cooperative agreements that are replacement equipment and services, entity itself; and expected to exceed $50,000 within the and to ensure that communications (5) Federal awarding agencies will period of performance, are performed service to users and customers is consider that non-Federal entity’s outside the United States and its sustained. comments in determining whether the territories, and are in support of a (c) See Public Law 115–232, section non-Federal entity is qualified for a contingency operation in which 889 for additional information. future Federal award. members of the Armed Forces are (d) See also § 200.471. (d) If a Federal awarding agency actively engaged in hostilities. ■ 45. Revise subpart D to read as enters information into the designated follows: integrity and performance system § 200.216 Prohibition on certain accessible through SAM about a telecommunications and video surveillance services or equipment. Subpart D—Post Federal Award determination that a non-Federal entity Requirements is not qualified for a Federal award and (a) Recipients and subrecipients are subsequently: prohibited from obligating or expending Sec. (1) Learns that any of that information loan or grant funds to: 200.300 Statutory and national policy is erroneous, the Federal awarding (1) Procure or obtain; requirements. agency must correct the information in (2) Extend or renew a contract to 200.301 Performance measurement. the system within three business days; procure or obtain; or 200.302 Financial management. and (3) Enter into a contract (or extend or 200.303 Internal controls. 200.304 Bonds. (2) Obtains an update to that renew a contract) to procure or obtain 200.305 Federal payment. information that could be helpful to equipment, services, or systems that 200.306 Cost sharing or matching. other Federal awarding agencies, the uses covered telecommunications 200.307 Program income. Federal awarding agency is strongly equipment or services as a substantial or 200.308 Revision of budget and program encouraged to amend the information in essential component of any system, or plans.

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200.309 Modifications to Period of Subpart D—Post Federal Award requirements must be aligned, to the Performance. Requirements extent permitted by law, with the Property Standards Federal awarding agency strategic goals, § 200.300 Statutory and national policy strategic objectives or performance goals 200.310 Insurance coverage. requirements. that are relevant to the program. See 200.311 Real property. (a) The Federal awarding agency must also OMB Circular A–11, Preparation, 200.312 Federally-owned and exempt manage and administer the Federal property. Submission, and Execution of the award in a manner so as to ensure that Budget Part 6. 200.313 Equipment. Federal funding is expended and 200.314 Supplies. (b) The Federal awarding agency associated programs are implemented in 200.315 Intangible property. should provide recipients with clear 200.316 Property trust relationship. full accordance with the U.S. performance goals, indicators, targets, Constitution, Federal Law, and public and baseline data as described in Procurement Standards policy requirements: Including, but not § 200.211. Performance reporting 200.317 Procurements by states. limited to, those protecting free speech, frequency and content should be 200.318 General procurement standards. religious liberty, public welfare, the established to not only allow the 200.319 Competition. environment, and prohibiting Federal awarding agency to understand 200.320 Methods of procurement to be discrimination. The Federal awarding the recipient progress but also to followed. agency must communicate to the non- facilitate identification of promising 200.321 Contracting with small and Federal entity all relevant public policy practices among recipients and build minority businesses, women’s business requirements, including those in general the evidence upon which the Federal enterprises, and labor surplus area firms. appropriations provisions, and awarding agency’s program and 200.322 Domestic preferences for incorporate them either directly or by procurements. performance decisions are made. See 200.323 Procurement of recovered reference in the terms and conditions of § 200.328 for more information on materials. the Federal award. reporting program performance. 200.324 Contract cost and price. (b) The non-Federal entity is (c) This provision is designed to 200.325 Federal awarding agency or pass- responsible for complying with all operate in tandem with evidence-related through entity review. requirements of the Federal award. For statutes (e.g.; The Foundations for 200.326 Bonding requirements. all Federal awards, this includes the Evidence-Based Policymaking Act of 200.327 Contract provisions. provisions of FFATA, which includes 2018, which emphasizes collaboration requirements on executive Performance and Financial Monitoring and and coordination to advance data and Reporting compensation, and also requirements evidence-building functions in the implementing the Act for the non- Federal government). The Federal 200.328 Financial reporting. Federal entity at 2 CFR parts 25 and awarding agency should also specify 200.329 Monitoring and reporting program 170. See also statutory requirements for performance. any requirements of award recipients’ 200. 330 Reporting on real property. whistleblower protections at 10 U.S.C. participation in a federally funded 2409, 41 U.S.C. 4712, and 10 U.S.C. evaluation, and any evaluation activities Subrecipient Monitoring and Management 2324, 41 U.S.C. 4304 and 4310. required to be conducted by the Federal 200.331 Subrecipient and contractor § 200.301 Performance measurement. award. determinations. 200.332 Requirements for pass-through (a) The Federal awarding agency must § 200.302 Financial management. entities. measure the recipient’s performance to (a) Each state must expend and 200.333 Fixed amount subawards. show achievement of program goals and account for the Federal award in objectives, share lessons learned, Record Retention and Access accordance with state laws and improve program outcomes, and foster procedures for expending and 200.334 Retention requirements for records. adoption of promising practices. accounting for the state’s own funds. In 200.335 Requests for transfer of records. Program goals and objectives should be 200.336 Methods for collection, addition, the state’s and the other non- derived from program planning and transmission, and storage of information. Federal entity’s financial management 200.337 Access to records. design. See § 200.202 for more systems, including records documenting 200.338 Restrictions on public access to information. Where appropriate, the compliance with Federal statutes, records. Federal award may include specific regulations, and the terms and program goals, indicators, targets, conditions of the Federal award, must Remedies for Noncompliance baseline data, data collection, or be sufficient to permit the preparation of 200.339 Remedies for noncompliance. expected outcomes (such as outputs, or reports required by general and 200.340 Termination. services performance or public impacts program-specific terms and conditions; 200.341 Notification of termination of any of these) with an expected and the tracing of funds to a level of requirement. timeline for accomplishment. Where 200.342 Opportunities to object, hearings, expenditures adequate to establish that applicable, this should also include any and appeals. such funds have been used according to 200.343 Effects of suspension and performance measures or independent the Federal statutes, regulations, and the termination. sources of data that may be used to terms and conditions of the Federal measure progress. The Federal awarding award. See also § 200.450. Closeout agency will determine how performance (b) The financial management system 200.344 Closeout. progress is measured, which may differ of each non-Federal entity must provide Post-Closeout Adjustments and Continuing by program. Performance measurement for the following (see also §§ 200.334, Responsibilities progress must be both measured and 200.335, 200.336, and 200.337): reported. See § 200.329 for more (1) Identification, in its accounts, of 200.345 Post-closeout adjustments and continuing responsibilities. information on monitoring program all Federal awards received and performance. The Federal awarding expended and the Federal programs Collection of Amounts Due agency may include program-specific under which they were received. 200.346 Collection of amounts due. requirements, as applicable. These Federal program and Federal award

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identification must include, as Committee of Sponsoring Organizations redemption of checks, warrants, or applicable, the Assistance Listings title of the Treadway Commission (COSO). payment by other means. See also and number, Federal award (b) Comply with the U.S. § 200.302(b)(6). Except as noted identification number and year, name of Constitution, Federal statutes, elsewhere in this part, Federal agencies the Federal agency, and name of the regulations, and the terms and must require recipients to use only pass-through entity, if any. conditions of the Federal awards. OMB-approved, governmentwide (2) Accurate, current, and complete (c) Evaluate and monitor the non- information collection requests to disclosure of the financial results of Federal entity’s compliance with request payment. each Federal award or program in statutes, regulations and the terms and (1) The non-Federal entity must be accordance with the reporting conditions of Federal awards. paid in advance, provided it maintains requirements set forth in §§ 200.328 and (d) Take prompt action when or demonstrates the willingness to 200.329. If a Federal awarding agency instances of noncompliance are maintain both written procedures that requires reporting on an accrual basis identified including noncompliance minimize the time elapsing between the from a recipient that maintains its identified in audit findings. transfer of funds and disbursement by records on other than an accrual basis, (e) Take reasonable measures to the non-Federal entity, and financial the recipient must not be required to safeguard protected personally management systems that meet the establish an accrual accounting system. identifiable information and other standards for fund control and This recipient may develop accrual data information the Federal awarding accountability as established in this for its reports on the basis of an analysis agency or pass-through entity designates part. Advance payments to a non- of the documentation on hand. as sensitive or the non-Federal entity Federal entity must be limited to the Similarly, a pass-through entity must considers sensitive consistent with minimum amounts needed and be timed not require a subrecipient to establish applicable Federal, State, local, and to be in accordance with the actual, an accrual accounting system and must tribal laws regarding privacy and immediate cash requirements of the allow the subrecipient to develop responsibility over confidentiality. non-Federal entity in carrying out the purpose of the approved program or accrual data for its reports on the basis § 200.304 Bonds. of an analysis of the documentation on project. The timing and amount of hand. The Federal awarding agency may advance payments must be as close as include a provision on bonding, (3) Records that identify adequately is administratively feasible to the actual insurance, or both in the following the source and application of funds for disbursements by the non-Federal entity circumstances: for direct program or project costs and federally-funded activities. These (a) Where the Federal Government the proportionate share of any allowable records must contain information guarantees or insures the repayment of indirect costs. The non-Federal entity pertaining to Federal awards, money borrowed by the recipient, the must make timely payment to authorizations, financial obligations, Federal awarding agency, at its contractors in accordance with the unobligated balances, assets, discretion, may require adequate contract provisions. expenditures, income and interest and bonding and insurance if the bonding (2) Whenever possible, advance be supported by source documentation. and insurance requirements of the non- payments must be consolidated to cover (4) Effective control over, and Federal entity are not deemed adequate anticipated cash needs for all Federal accountability for, all funds, property, to protect the interest of the Federal awards made by the Federal awarding and other assets. The non-Federal entity Government. agency to the recipient. must adequately safeguard all assets and (b) The Federal awarding agency may (i) Advance payment mechanisms assure that they are used solely for require adequate fidelity bond coverage include, but are not limited to, Treasury authorized purposes. See § 200.303. where the non-Federal entity lacks check and electronic funds transfer and (5) Comparison of expenditures with sufficient coverage to protect the must comply with applicable guidance budget amounts for each Federal award. Federal Government’s interest. in 31 CFR part 208. (6) Written procedures to implement (c) Where bonds are required in the (ii) Non-Federal entities must be the requirements of § 200.305. situations described above, the bonds authorized to submit requests for (7) Written procedures for must be obtained from companies advance payments and reimbursements determining the allowability of costs in holding certificates of authority as at least monthly when electronic fund accordance with subpart E of this part acceptable sureties, as prescribed in 31 transfers are not used, and as often as and the terms and conditions of the CFR part 223. they like when electronic transfers are Federal award. used, in accordance with the provisions § 200.305 Federal payment. of the Electronic Fund Transfer Act (15 § 200.303 Internal controls. (a) For states, payments are governed U.S.C. 1693–1693r). The non-Federal entity must: by Treasury-State Cash Management (3) Reimbursement is the preferred (a) Establish and maintain effective Improvement Act (CMIA) agreements method when the requirements in this internal control over the Federal award and default procedures codified at 31 paragraph (b) cannot be met, when the that provides reasonable assurance that CFR part 205 and Treasury Financial Federal awarding agency sets a specific the non-Federal entity is managing the Manual (TFM) 4A–2000, ‘‘Overall condition per § 200.208, or when the Federal award in compliance with Disbursing Rules for All Federal non-Federal entity requests payment by Federal statutes, regulations, and the Agencies’’. reimbursement. This method may be terms and conditions of the Federal (b) For non-Federal entities other than used on any Federal award for award. These internal controls should states, payments methods must construction, or if the major portion of be in compliance with guidance in minimize the time elapsing between the the construction project is accomplished ‘‘Standards for Internal Control in the transfer of funds from the United States through private market financing or Federal Government’’ issued by the Treasury or the pass-through entity and Federal loans, and the Federal award Comptroller General of the United the disbursement by the non-Federal constitutes a minor portion of the States or the ‘‘Internal Control entity whether the payment is made by project. When the reimbursement Integrated Framework’’, issued by the electronic funds transfer, or issuance or method is used, the Federal awarding

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agency or pass-through entity must Federal entity that payments must not Management System (PMS) through an make payment within 30 calendar days be made for financial obligations electronic medium using either after receipt of the billing, unless the incurred after a specified date until the Automated Clearing House (ACH) Federal awarding agency or pass- conditions are corrected or the network or a Fedwire Funds Service through entity reasonably believes the indebtedness to the Federal Government payment. request to be improper. is liquidated. (i) For returning interest on Federal (4) If the non-Federal entity cannot (iii) A payment withheld for failure to awards paid through PMS, the refund meet the criteria for advance payments comply with Federal award conditions, should: and the Federal awarding agency or but without suspension of the Federal (A) Provide an explanation stating pass-through entity has determined that award, must be released to the non- that the refund is for interest; reimbursement is not feasible because Federal entity upon subsequent (B) List the PMS Payee Account the non-Federal entity lacks sufficient compliance. When a Federal award is Number(s) (PANs); working capital, the Federal awarding suspended, payment adjustments will (C) List the Federal award number(s) agency or pass-through entity may be made in accordance with § 200.343. for which the interest was earned; and provide cash on a working capital (iv) A payment must not be made to (D) Make returns payable to: advance basis. Under this procedure, a non-Federal entity for amounts that Department of Health and Human the Federal awarding agency or pass- are withheld by the non-Federal entity Services. through entity must advance cash from payment to contractors to assure (ii) For returning interest on Federal payments to the non-Federal entity to satisfactory completion of work. A awards not paid through PMS, the cover its estimated disbursement needs payment must be made when the non- refund should: for an initial period generally geared to Federal entity actually disburses the (A) Provide an explanation stating the non-Federal entity’s disbursing withheld funds to the contractors or to that the refund is for interest; cycle. Thereafter, the Federal awarding escrow accounts established to assure (B) Include the name of the awarding agency or pass-through entity must satisfactory completion of work. agency; reimburse the non-Federal entity for its (7) Standards governing the use of (C) List the Federal award number(s) actual cash disbursements. Use of the banks and other institutions as for which the interest was earned; and working capital advance method of depositories of advance payments under (D) Make returns payable to: payment requires that the pass-through Federal awards are as follows. Department of Health and Human entity provide timely advance payments (i) The Federal awarding agency and Services. to any subrecipients in order to meet the pass-through entity must not require (10) Funds, principal, and excess cash subrecipient’s actual cash separate depository accounts for funds returns must be directed to the original disbursements. The working capital provided to a non-Federal entity or Federal agency payment system. The advance method of payment must not be establish any eligibility requirements for non-Federal entity should review used by the pass-through entity if the depositories for funds provided to the instructions from the original Federal reason for using this method is the non-Federal entity. However, the non- agency payment system. Returns should unwillingness or inability of the pass- Federal entity must be able to account include the following information: through entity to provide timely for funds received, obligated, and (i) Payee Account Number (PAN), if advance payments to the subrecipient to expended. the payment originated from PMS, or meet the subrecipient’s actual cash (ii) Advance payments of Federal Agency information to indicate whom to disbursements. funds must be deposited and credit the funding if the payment (5) To the extent available, the non- maintained in insured accounts originated from ASAP, NSF, or another Federal entity must disburse funds whenever possible. Federal agency payment system. available from program income (8) The non-Federal entity must (ii) PMS document number and (including repayments to a revolving maintain advance payments of Federal subaccount(s), if the payment originated fund), rebates, refunds, contract awards in interest-bearing accounts, from PMS, or relevant account numbers settlements, audit recoveries, and unless the following apply: if the payment originated from another interest earned on such funds before (i) The non-Federal entity receives Federal agency payment system. requesting additional cash payments. less than $250,000 in Federal awards (iii) The reason for the return (e.g., (6) Unless otherwise required by per year. excess cash, funds not spent, interest, Federal statutes, payments for allowable (ii) The best reasonably available part interest part other, etc.) costs by non-Federal entities must not interest-bearing account would not be (11) When returning funds or interest be withheld at any time during the expected to earn interest in excess of to PMS you must include the following period of performance unless the $500 per year on Federal cash balances. as applicable: conditions of § 200.208, subpart D of (iii) The depository would require an (i) For ACH Returns: this part, including § 200.339, or one or average or minimum balance so high Routing Number: 051036706 more of the following applies: that it would not be feasible within the Account number: 303000 (i) The non-Federal entity has failed expected Federal and non-Federal cash Bank Name and Location: Credit to comply with the project objectives, resources. Gateway—ACH Receiver St. Paul, MN (iv) A foreign government or banking Federal statutes, regulations, or the 1 terms and conditions of the Federal system prohibits or precludes interest- (ii) For Fedwire Returns : award. bearing accounts. Routing Number: 021030004 (ii) The non-Federal entity is (9) Interest earned amounts up to Account number: 75010501 delinquent in a debt to the United States $500 per year may be retained by the Bank Name and Location: Federal as defined in OMB Circular A–129, non-Federal entity for administrative Reserve Bank Treas NYC/Funds ‘‘Policies for Federal Credit Programs expense. Any additional interest earned Transfer Division New York, NY and Non-Tax Receivables.’’ Under such on Federal advance payments deposited 1 Please note that the organization conditions, the Federal awarding agency in interest-bearing accounts must be initiating payment is likely to incur a or pass-through entity may, upon remitted annually to the Department of charge from their Financial Institution reasonable notice, inform the non- Health and Human Services Payment for this type of payment.

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(iii) For International ACH Returns: available for such program can be reasonable, necessary, allocable, and Beneficiary Account: Federal Reserve applied to matching or cost sharing otherwise allowable, and indirect costs Bank of New York/ITS (FRBNY/ITS) requirements of other Federal programs; at either the third-party organization’s Bank: Citibank N.A. (New York) (6) Are provided for in the approved approved federally-negotiated indirect Swift Code: CITIUS33 budget when required by the Federal cost rate or, a rate in accordance with Account Number: 36838868 awarding agency; and § 200.414(d) provided these services Bank Address: 388 Greenwich Street, (7) Conform to other provisions of this employ the same skill(s) for which the New York, NY 10013 USA part, as applicable. employee is normally paid. Where Payment Details (Line 70): Agency (c) Unrecovered indirect costs, donated services are treated as indirect Locator Code (ALC): 75010501 including indirect costs on cost sharing costs, indirect cost rates will separate Name (abbreviated when possible) and or matching may be included as part of the value of the donated services so that ALC Agency POC cost sharing or matching only with the reimbursement for the donated services prior approval of the Federal awarding (iv) For recipients that do not have will not be made. agency. Unrecovered indirect cost electronic remittance capability, please (g) Donated property from third means the difference between the make check 2 payable to: ‘‘The parties may include such items as amount charged to the Federal award Department of Health and Human equipment, office supplies, laboratory and the amount which could have been Services.’’ supplies, or workshop and classroom charged to the Federal award under the supplies. Value assessed to donated Mail Check to Treasury approved non-Federal entity’s approved lockbox: property included in the cost sharing or negotiated indirect cost rate. matching share must not exceed the fair HHS Program Support Center, P.O. Box (d) Values for non-Federal entity market value of the property at the time 530231, Atlanta, GA 30353–0231 contributions of services and property of the donation. 2 Please allow 4–6 weeks for must be established in accordance with processing of a payment by check to be the cost principles in subpart E of this (h) The method used for determining applied to the appropriate PMS account. part. If a Federal awarding agency cost sharing or matching for third-party- donated equipment, buildings and land (v) Questions can be directed to PMS authorizes the non-Federal entity to for which title passes to the non-Federal at 877–614–5533 or PMSSupport@ donate buildings or land for entity may differ according to the psc.hhs.gov. construction/facilities acquisition projects or long-term use, the value of purpose of the Federal award, if § 200.306 Cost sharing or matching. the donated property for cost sharing or paragraph (h)(1) or (2) of this section (a) Under Federal research proposals, matching must be the lesser of applies. voluntary committed cost sharing is not paragraph (d)(1) or (2) of this section. (1) If the purpose of the Federal award expected. It cannot be used as a factor (1) The value of the remaining life of is to assist the non-Federal entity in the during the merit review of applications the property recorded in the non- acquisition of equipment, buildings or or proposals, but may be considered if Federal entity’s accounting records at land, the aggregate value of the donated it is both in accordance with Federal the time of donation. property may be claimed as cost sharing awarding agency regulations and (2) The current fair market value. or matching. specified in a notice of funding However, when there is sufficient (2) If the purpose of the Federal award opportunity. Criteria for considering justification, the Federal awarding is to support activities that require the voluntary committed cost sharing and agency may approve the use of the use of equipment, buildings or land, any other program policy factors that current fair market value of the donated normally only depreciation charges for may be used to determine who may property, even if it exceeds the value equipment and buildings may be made. receive a Federal award must be described in paragraph (d)(1) of this However, the fair market value of explicitly described in the notice of section at the time of donation. equipment or other capital assets and funding opportunity. See also (e) Volunteer services furnished by fair rental charges for land may be §§ 200.414 and 200.204 and appendix I third-party professional and technical allowed, provided that the Federal to this part. personnel, consultants, and other awarding agency has approved the (b) For all Federal awards, any shared skilled and unskilled labor may be charges. See also § 200.420. costs or matching funds and all counted as cost sharing or matching if (i) The value of donated property contributions, including cash and third- the service is an integral and necessary must be determined in accordance with party in-kind contributions, must be part of an approved project or program. the usual accounting policies of the accepted as part of the non-Federal Rates for third-party volunteer services non-Federal entity, with the following entity’s cost sharing or matching when must be consistent with those paid for qualifications: such contributions meet all of the similar work by the non-Federal entity. (1) The value of donated land and following criteria: In those instances in which the required buildings must not exceed its fair (1) Are verifiable from the non- skills are not found in the non-Federal market value at the time of donation to Federal entity’s records; entity, rates must be consistent with the non-Federal entity as established by (2) Are not included as contributions those paid for similar work in the labor an independent appraiser (e.g., certified for any other Federal award; market in which the non-Federal entity real property appraiser or General (3) Are necessary and reasonable for competes for the kind of services Services Administration representative) accomplishment of project or program involved. In either case, paid fringe and certified by a responsible official of objectives; benefits that are reasonable, necessary, the non-Federal entity as required by (4) Are allowable under subpart E of allocable, and otherwise allowable may the Uniform Relocation Assistance and this part; be included in the valuation. Real Property Acquisition Policies Act (5) Are not paid by the Federal (f) When a third-party organization of 1970, as amended, (42 U.S.C. 4601– Government under another Federal furnishes the services of an employee, 4655) (Uniform Act) except as provided award, except where the Federal statute these services must be valued at the in the implementing regulations at 49 authorizing a program specifically employee’s regular rate of pay plus an CFR part 24, ‘‘Uniform Relocation provides that Federal funds made amount of fringe benefits that is Assistance And Real Property

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Acquisition For Federal And Federally- this section must apply. In specifying § 200.308 Revision of budget and program Assisted Programs’’. alternatives to paragraphs (e)(1) and (2) plans. (2) The value of donated equipment of this section, the Federal awarding (a) The approved budget for the must not exceed the fair market value of agency may distinguish between income Federal award summarizes the financial equipment of the same age and earned by the recipient and income aspects of the project or program as condition at the time of donation. earned by subrecipients and between approved during the Federal award (3) The value of donated space must the sources, kinds, or amounts of process. It may include either the not exceed the fair rental value of income. When the Federal awarding Federal and non-Federal share (see comparable space as established by an agency authorizes the approaches in definition for Federal share in § 200.1) independent appraisal of comparable paragraphs (e)(2) and (3) of this section, or only the Federal share, depending space and facilities in a privately-owned program income in excess of any upon Federal awarding agency building in the same locality. amounts specified must also be requirements. The budget and program (4) The value of loaned equipment deducted from expenditures. plans include considerations for must not exceed its fair rental value. (1) Deduction. Ordinarily program performance and program evaluation (j) For third-party in-kind income must be deducted from total purposes whenever required in contributions, the fair market value of allowable costs to determine the net accordance with the terms and goods and services must be documented allowable costs. Program income must conditions of the award. and to the extent feasible supported by be used for current costs unless the (b) Recipients are required to report the same methods used internally by the Federal awarding agency authorizes deviations from budget or project scope non-Federal entity. otherwise. Program income that the or objective, and request prior approvals (k) For IHEs, see also OMB non-Federal entity did not anticipate at from Federal awarding agencies for memorandum M–01–06, dated January the time of the Federal award must be budget and program plan revisions, in 5, 2001, Clarification of OMB A–21 used to reduce the Federal award and accordance with this section. Treatment of Voluntary Uncommitted non-Federal entity contributions rather (c) For non-construction Federal Cost Sharing and Tuition Remission than to increase the funds committed to awards, recipients must request prior Costs. the project. approvals from Federal awarding (2) Addition. With prior approval of agencies for the following program or § 200.307 Program income. the Federal awarding agency (except for budget-related reasons: (a) General. Non-Federal entities are IHEs and nonprofit research (1) Change in the scope or the encouraged to earn income to defray institutions, as described in this objective of the project or program (even program costs where appropriate. paragraph (e)) program income may be if there is no associated budget revision (b) Cost of generating program added to the Federal award by the requiring prior written approval). income. If authorized by Federal Federal agency and the non-Federal (2) Change in a key person specified regulations or the Federal award, costs entity. The program income must be in the application or the Federal award. incidental to the generation of program used for the purposes and under the (3) The disengagement from the income may be deducted from gross conditions of the Federal award. project for more than three months, or income to determine program income, (3) Cost sharing or matching. With a 25 percent reduction in time devoted provided these costs have not been prior approval of the Federal awarding to the project, by the approved project charged to the Federal award. agency, program income may be used to director or principal investigator. (c) Governmental revenues. Taxes, meet the cost sharing or matching (4) The inclusion, unless waived by special assessments, levies, fines, and requirement of the Federal award. The the Federal awarding agency, of costs other such revenues raised by a non- amount of the Federal award remains that require prior approval in Federal entity are not program income the same. accordance with subpart E of this part unless the revenues are specifically (f) Income after the period of as applicable. identified in the Federal award or performance. There are no Federal (5) The transfer of funds budgeted for Federal awarding agency regulations as requirements governing the disposition participant support costs to other program income. of income earned after the end of the categories of expense. (d) Property. Proceeds from the sale of period of performance for the Federal (6) Unless described in the real property, equipment, or supplies award, unless the Federal awarding application and funded in the approved are not program income; such proceeds agency regulations or the terms and Federal awards, the subawarding, will be handled in accordance with the conditions of the Federal award provide transferring or contracting out of any requirements of the Property Standards otherwise. The Federal awarding agency work under a Federal award, including §§ 200.311, 200.313, and 200.314, or as may negotiate agreements with fixed amount subawards as described in specifically identified in Federal recipients regarding appropriate uses of § 200.333. This provision does not apply statutes, regulations, or the terms and income earned after the period of to the acquisition of supplies, material, conditions of the Federal award. performance as part of the grant equipment or general support services. (e) Use of program income. If the closeout process. See also § 200.344. (7) Changes in the approved cost- Federal awarding agency does not (g) License fees and royalties. Unless sharing or matching provided by the specify in its regulations or the terms the Federal statute, regulations, or terms non-Federal entity. and conditions of the Federal award, or and conditions for the Federal award (8) The need arises for additional give prior approval for how program provide otherwise, the non-Federal Federal funds to complete the project. income is to be used, paragraph (e)(1) of entity is not accountable to the Federal (d) No other prior approval this section must apply. For Federal awarding agency with respect to requirements for specific items may be awards made to IHEs and nonprofit program income earned from license imposed unless an exception has been research institutions, if the Federal fees and royalties for copyrighted approved by OMB. See also §§ 200.102 awarding agency does not specify in its material, patents, patent applications, and 200.407. regulations or the terms and conditions trademarks, and inventions made under (e) Except for requirements listed in of the Federal award how program a Federal award to which 37 CFR part paragraphs (c)(1) through (8) of this income is to be used, paragraph (e)(2) of 401 is applicable. section, the Federal awarding agency is

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authorized, at its option, to waive other agency. The Federal awarding agency If a renewal award is issued, a distinct cost-related and administrative prior cannot permit a transfer that would Period of Performance will begin. written approvals contained in subparts cause any Federal appropriation to be Property Standards D and E of this part. Such waivers may used for purposes other than those include authorizing recipients to do any consistent with the appropriation. § 200.310 Insurance coverage. one or more of the following: (g) All other changes to non- The non-Federal entity must, at a (1) Incur project costs 90 calendar construction budgets, except for the minimum, provide the equivalent days before the Federal awarding agency changes described in paragraph (c) of insurance coverage for real property and makes the Federal award. Expenses this section, do not require prior equipment acquired or improved with more than 90 calendar days pre-award approval (see also § 200.407). Federal funds as provided to property require prior approval of the Federal (h) For construction Federal awards, owned by the non-Federal entity. awarding agency. All costs incurred the recipient must request prior written Federally-owned property need not be before the Federal awarding agency approval promptly from the Federal insured unless required by the terms makes the Federal award are at the awarding agency for budget revisions and conditions of the Federal award. recipient’s risk (i.e., the Federal whenever paragraph (h)(1), (2), or (3) of awarding agency is not required to this section applies: § 200.311 Real property. reimburse such costs if for any reason (1) The revision results from changes (a) Title. Subject to the requirements the recipient does not receive a Federal in the scope or the objective of the and conditions set forth in this section, award or if the Federal award is less project or program. title to real property acquired or than anticipated and inadequate to (2) The need arises for additional improved under a Federal award will cover such costs). See also § 200.458. Federal funds to complete the project. vest upon acquisition in the non-Federal (2) Initiate a one-time extension of the entity. period of performance by up to 12 (3) A revision is desired which (b) Use. Except as otherwise provided months unless one or more of the involves specific costs for which prior by Federal statutes or by the Federal conditions outlined in paragraphs written approval requirements may be awarding agency, real property will be (e)(2)(i) through (iii) of this section imposed consistent with applicable used for the originally authorized apply. For one-time extensions, the OMB cost principles listed in subpart E. purpose as long as needed for that recipient must notify the Federal (4) No other prior approval purpose, during which time the non- awarding agency in writing with the requirements for budget revisions may Federal entity must not dispose of or supporting reasons and revised period be imposed unless an exception has encumber its title or other interests. of performance at least 10 calendar days been approved by OMB. (c) Disposition. When real property is before the end of the period of (5) When a Federal awarding agency no longer needed for the originally performance specified in the Federal makes a Federal award that provides authorized purpose, the non-Federal award. This one-time extension must support for construction and non- entity must obtain disposition not be exercised merely for the purpose construction work, the Federal awarding instructions from the Federal awarding of using unobligated balances. agency may require the recipient to agency or pass-through entity. The Extensions require explicit prior Federal obtain prior approval from the Federal instructions must provide for one of the awarding agency approval when: awarding agency before making any following alternatives: (i) The terms and conditions of the fund or budget transfers between the (1) Retain title after compensating the Federal award prohibit the extension. two types of work supported. Federal awarding agency. The amount (ii) The extension requires additional (i) When requesting approval for paid to the Federal awarding agency Federal funds. budget revisions, the recipient must use will be computed by applying the (iii) The extension involves any the same format for budget information Federal awarding agency’s percentage of change in the approved objectives or that was used in the application, unless participation in the cost of the original scope of the project. the Federal awarding agency indicates a purchase (and costs of any (3) Carry forward unobligated letter of request suffices. improvements) to the fair market value balances to subsequent budget periods. (j) Within 30 calendar days from the of the property. However, in those (4) For Federal awards that support date of receipt of the request for budget situations where the non-Federal entity research, unless the Federal awarding revisions, the Federal awarding agency is disposing of real property acquired or agency provides otherwise in the must review the request and notify the improved with a Federal award and Federal award or in the Federal recipient whether the budget revisions acquiring replacement real property awarding agency’s regulations, the prior have been approved. If the revision is under the same Federal award, the net approval requirements described in this still under consideration at the end of proceeds from the disposition may be paragraph (e) are automatically waived 30 calendar days, the Federal awarding used as an offset to the cost of the (i.e., recipients need not obtain such agency must inform the recipient in replacement property. prior approvals) unless one of the writing of the date when the recipient (2) Sell the property and compensate conditions included in paragraph (e)(2) may expect the decision. the Federal awarding agency. The of this section applies. amount due to the Federal awarding (f) The Federal awarding agency may, § 200.309 Modifications to Period of agency will be calculated by applying at its option, restrict the transfer of Performance. the Federal awarding agency’s funds among direct cost categories or If a Federal awarding agency or pass- percentage of participation in the cost of programs, functions and activities for through entity approves an extension, or the original purchase (and cost of any Federal awards in which the Federal if a recipient extends under improvements) to the proceeds of the share of the project exceeds the § 200.308(e)(2), the Period of sale after deduction of any actual and simplified acquisition threshold and the Performance will be amended to end at reasonable selling and fixing-up cumulative amount of such transfers the completion of the extension. If a expenses. If the Federal award has not exceeds or is expected to exceed 10 termination occurs, the Period of been closed out, the net proceeds from percent of the total budget as last Performance will be amended to end sale may be offset against the original approved by the Federal awarding upon the effective date of termination. cost of the property. When the non-

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Federal entity is directed to sell title to equipment acquired under a second preference must be given to property, sales procedures must be Federal award will vest upon programs or projects under Federal followed that provide for competition to acquisition in the non-Federal entity. awards from other Federal awarding the extent practicable and result in the Unless a statute specifically authorizes agencies. Use for non-federally-funded highest possible return. the Federal agency to vest title in the programs or projects is also permissible. (3) Transfer title to the Federal non-Federal entity without further User fees should be considered if awarding agency or to a third party responsibility to the Federal appropriate. designated/approved by the Federal Government, and the Federal agency (3) Notwithstanding the awarding agency. The non-Federal elects to do so, the title must be a encouragement in § 200.307 to earn entity is entitled to be paid an amount conditional title. Title must vest in the program income, the non-Federal entity calculated by applying the non-Federal non-Federal entity subject to the must not use equipment acquired with entity’s percentage of participation in following conditions: the Federal award to provide services the purchase of the real property (and (1) Use the equipment for the for a fee that is less than private cost of any improvements) to the current authorized purposes of the project companies charge for equivalent fair market value of the property. during the period of performance, or services unless specifically authorized until the property is no longer needed by Federal statute for as long as the § 200.312 Federally-owned and exempt for the purposes of the project. Federal Government retains an interest property. (2) Not encumber the property in the equipment. (a) Title to federally-owned property without approval of the Federal (4) When acquiring replacement remains vested in the Federal awarding agency or pass-through entity. equipment, the non-Federal entity may Government. The non-Federal entity (3) Use and dispose of the property in use the equipment to be replaced as a must submit annually an inventory accordance with paragraphs (b), (c), and trade-in or sell the property and use the listing of federally-owned property in its (e) of this section. proceeds to offset the cost of the custody to the Federal awarding agency. (b) General. A state must use, manage replacement property. Upon completion of the Federal award and dispose of equipment acquired (d) Management requirements. or when the property is no longer under a Federal award by the state in Procedures for managing equipment needed, the non-Federal entity must accordance with state laws and (including replacement equipment), report the property to the Federal procedures. Other non-Federal entities whether acquired in whole or in part awarding agency for further Federal must follow paragraphs (c) through (e) under a Federal award, until disposition agency utilization. of this section. takes place will, as a minimum, meet (b) If the Federal awarding agency has (c) Use. (1) Equipment must be used the following requirements: no further need for the property, it must by the non-Federal entity in the program (1) Property records must be declare the property excess and report it or project for which it was acquired as maintained that include a description of for disposal to the appropriate Federal long as needed, whether or not the the property, a serial number or other disposal authority, unless the Federal project or program continues to be identification number, the source of awarding agency has statutory authority supported by the Federal award, and the funding for the property (including the to dispose of the property by alternative non-Federal entity must not encumber FAIN), who holds title, the acquisition methods (e.g., the authority provided by the property without prior approval of date, and cost of the property, the Federal Technology Transfer Act (15 the Federal awarding agency. The percentage of Federal participation in U.S.C. 3710 (i)) to donate research Federal awarding agency may require the project costs for the Federal award equipment to educational and nonprofit the submission of the applicable under which the property was acquired, organizations in accordance with common form for equipment. When no the location, use and condition of the Executive Order 12999, ‘‘Educational longer needed for the original program property, and any ultimate disposition Technology: Ensuring Opportunity for or project, the equipment may be used data including the date of disposal and All Children in the Next Century.’’). The in other activities supported by the sale price of the property. Federal awarding agency must issue Federal awarding agency, in the (2) A physical inventory of the appropriate instructions to the non- following order of priority: property must be taken and the results Federal entity. (i) Activities under a Federal award reconciled with the property records at (c) Exempt property means property from the Federal awarding agency least once every two years. acquired under a Federal award where which funded the original program or (3) A control system must be the Federal awarding agency has chosen project, then developed to ensure adequate to vest title to the property to the non- (ii) Activities under Federal awards safeguards to prevent loss, damage, or Federal entity without further from other Federal awarding agencies. theft of the property. Any loss, damage, responsibility to the Federal This includes consolidated equipment or theft must be investigated. Government, based upon the explicit for information technology systems. (4) Adequate maintenance procedures terms and conditions of the Federal (2) During the time that equipment is must be developed to keep the property award. The Federal awarding agency used on the project or program for in good condition. may exercise this option when statutory which it was acquired, the non-Federal (5) If the non-Federal entity is authority exists. Absent statutory entity must also make equipment authorized or required to sell the authority and specific terms and available for use on other projects or property, proper sales procedures must conditions of the Federal award, title to programs currently or previously be established to ensure the highest exempt property acquired under the supported by the Federal Government, possible return. Federal award remains with the Federal provided that such use will not interfere (e) Disposition. When original or Government. with the work on the projects or replacement equipment acquired under program for which it was originally a Federal award is no longer needed for § 200.313 Equipment. acquired. First preference for other use the original project or program or for See also § 200.439. must be given to other programs or other activities currently or previously (a) Title. Subject to the requirements projects supported by Federal awarding supported by a Federal awarding and conditions set forth in this section, agency that financed the equipment and agency, except as otherwise provided in

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Federal statutes, regulations, or Federal (b) As long as the Federal Government FOIA request, the Federal awarding awarding agency disposition retains an interest in the supplies, the agency may charge the requester a instructions, the non-Federal entity non-Federal entity must not use reasonable fee equaling the full must request disposition instructions supplies acquired under a Federal incremental cost of obtaining the from the Federal awarding agency if award to provide services to other research data. This fee should reflect required by the terms and conditions of organizations for a fee that is less than costs incurred by the Federal agency the Federal award. Disposition of the private companies charge for equivalent and the non-Federal entity. This fee is equipment will be made as follows, in services, unless specifically authorized in addition to any fees the Federal accordance with Federal awarding by Federal statute. awarding agency may assess under the agency disposition instructions: FOIA (5 U.S.C. 552(a)(4)(A)). § 200.315 Intangible property. (1) Items of equipment with a current (2) Published research findings means (a) Title to intangible property (see per unit fair market value of $5,000 or when: less may be retained, sold or otherwise definition for Intangible property in disposed of with no further § 200.1) acquired under a Federal award (i) Research findings are published in responsibility to the Federal awarding vests upon acquisition in the non- a peer-reviewed scientific or technical agency. Federal entity. The non-Federal entity journal; or (2) Except as provided in § 200.312(b), must use that property for the (ii) A Federal agency publicly and or if the Federal awarding agency fails originally-authorized purpose, and must officially cites the research findings in to provide requested disposition not encumber the property without support of an agency action that has the instructions within 120 days, items of approval of the Federal awarding force and effect of law. ‘‘Used by the equipment with a current per-unit fair agency. When no longer needed for the Federal Government in developing an market value in excess of $5,000 may be originally authorized purpose, agency action that has the force and retained by the non-Federal entity or disposition of the intangible property effect of law’’ is defined as when an sold. The Federal awarding agency is must occur in accordance with the agency publicly and officially cites the entitled to an amount calculated by provisions in § 200.313(e). research findings in support of an multiplying the current market value or (b) The non-Federal entity may agency action that has the force and proceeds from sale by the Federal copyright any work that is subject to effect of law. awarding agency’s percentage of copyright and was developed, or for (3) Research data means the recorded participation in the cost of the original which ownership was acquired, under a factual material commonly accepted in purchase. If the equipment is sold, the Federal award. The Federal awarding the scientific community as necessary to Federal awarding agency may permit agency reserves a royalty-free, validate research findings, but not any the non-Federal entity to deduct and nonexclusive and irrevocable right to of the following: Preliminary analyses, retain from the Federal share $500 or reproduce, publish, or otherwise use the drafts of scientific papers, plans for ten percent of the proceeds, whichever work for Federal purposes, and to future research, peer reviews, or is less, for its selling and handling authorize others to do so. communications with colleagues. This expenses. (c) The non-Federal entity is subject ‘‘recorded’’ material excludes physical (3) The non-Federal entity may to applicable regulations governing objects (e.g., laboratory samples). transfer title to the property to the patents and inventions, including Research data also do not include: governmentwide regulations issued by Federal Government or to an eligible (i) Trade secrets, commercial the Department of Commerce at 37 CFR third party provided that, in such cases, information, materials necessary to be part 401, ‘‘Rights to Inventions Made by the non-Federal entity must be entitled held confidential by a researcher until Nonprofit Organizations and Small to compensation for its attributable they are published, or similar Business Firms Under Government percentage of the current fair market information which is protected under Awards, Contracts and Cooperative value of the property. law; and (4) In cases where a non-Federal Agreements.’’ entity fails to take appropriate (d) The Federal Government has the (ii) Personnel and medical disposition actions, the Federal right to: information and similar information the awarding agency may direct the non- (1) Obtain, reproduce, publish, or disclosure of which would constitute a Federal entity to take disposition otherwise use the data produced under clearly unwarranted invasion of actions. a Federal award; and personal privacy, such as information (2) Authorize others to receive, that could be used to identify a § 200.314 Supplies. reproduce, publish, or otherwise use particular person in a research study. See also § 200.453. such data for Federal purposes. (a) Title to supplies will vest in the (e)(1) In response to a Freedom of § 200.316 Property trust relationship. non-Federal entity upon acquisition. If Information Act (FOIA) request for Real property, equipment, and there is a residual inventory of unused research data relating to published intangible property, that are acquired or supplies exceeding $5,000 in total research findings produced under a improved with a Federal award must be aggregate value upon termination or Federal award that were used by the held in trust by the non-Federal entity completion of the project or program Federal Government in developing an as trustee for the beneficiaries of the and the supplies are not needed for any agency action that has the force and project or program under which the other Federal award, the non-Federal effect of law, the Federal awarding property was acquired or improved. The entity must retain the supplies for use agency must request, and the non- Federal awarding agency may require on other activities or sell them, but Federal entity must provide, within a the non-Federal entity to record liens or must, in either case, compensate the reasonable time, the research data so other appropriate notices of record to Federal Government for its share. The that they can be made available to the indicate that personal or real property amount of compensation must be public through the procedures has been acquired or improved with a computed in the same manner as for established under the FOIA. If the Federal award and that use and equipment. See § 200.313 (e)(2) for the Federal awarding agency obtains the disposition conditions apply to the calculation methodology. research data solely in response to a property.

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Procurement Standards (2) If the non-Federal entity has a (i) The non-Federal entity must parent, affiliate, or subsidiary maintain records sufficient to detail the § 200.317 Procurements by states. organization that is not a State, local history of procurement. These records When procuring property and services government, or Indian tribe, the non- will include, but are not necessarily under a Federal award, a State must Federal entity must also maintain limited to, the following: Rationale for follow the same policies and procedures written standards of conduct covering the method of procurement, selection of it uses for procurements from its non- organizational conflicts of interest. contract type, contractor selection or Federal funds. The State will comply Organizational conflicts of interest rejection, and the basis for the contract with §§ 200.321, 200.322, and 200.323 means that because of relationships price. and ensure that every purchase order or with a parent company, affiliate, or (j)(1) The non-Federal entity may use other contract includes any clauses subsidiary organization, the non-Federal a time-and-materials type contract only required by § 200.327. All other non- entity is unable or appears to be unable after a determination that no other Federal entities, including subrecipients to be impartial in conducting a contract is suitable and if the contract of a State, must follow the procurement procurement action involving a related includes a ceiling price that the standards in §§ 200.318 through organization. contractor exceeds at its own risk. Time- 200.327. (d) The non-Federal entity’s and-materials type contract means a procedures must avoid acquisition of § 200.318 General procurement standards. contract whose cost to a non-Federal unnecessary or duplicative items. entity is the sum of: (a) The non-Federal entity must have Consideration should be given to (i) The actual cost of materials; and and use documented procurement consolidating or breaking out (ii) Direct labor hours charged at fixed procedures, consistent with State, local, procurements to obtain a more hourly rates that reflect wages, general and tribal laws and regulations and the economical purchase. Where and administrative expenses, and profit. standards of this section, for the appropriate, an analysis will be made of (2) Since this formula generates an acquisition of property or services lease versus purchase alternatives, and open-ended contract price, a time-and- required under a Federal award or any other appropriate analysis to materials contract provides no positive subaward. The non-Federal entity’s determine the most economical profit incentive to the contractor for cost documented procurement procedures approach. control or labor efficiency. Therefore, must conform to the procurement (e) To foster greater economy and each contract must set a ceiling price standards identified in §§ 200.317 efficiency, and in accordance with that the contractor exceeds at its own through 200.327. efforts to promote cost-effective use of risk. Further, the non-Federal entity (b) Non-Federal entities must shared services across the Federal awarding such a contract must assert a maintain oversight to ensure that Government, the non-Federal entity is high degree of oversight in order to contractors perform in accordance with encouraged to enter into state and local obtain reasonable assurance that the the terms, conditions, and specifications intergovernmental agreements or inter- contractor is using efficient methods of their contracts or purchase orders. entity agreements where appropriate for and effective cost controls. (c)(1) The non-Federal entity must procurement or use of common or (k) The non-Federal entity alone must maintain written standards of conduct shared goods and services. Competition be responsible, in accordance with good covering conflicts of interest and requirements will be met with applied administrative practice and sound governing the actions of its employees to documented procurement actions business judgment, for the settlement of engaged in the selection, award and using strategic sourcing, shared services, all contractual and administrative issues administration of contracts. No and other similar procurement arising out of procurements. These employee, officer, or agent may arrangements. issues include, but are not limited to, participate in the selection, award, or (f) The non-Federal entity is source evaluation, protests, disputes, administration of a contract supported encouraged to use Federal excess and and claims. These standards do not by a Federal award if he or she has a real surplus property in lieu of purchasing relieve the non-Federal entity of any or apparent conflict of interest. Such a new equipment and property whenever contractual responsibilities under its conflict of interest would arise when the such use is feasible and reduces project contracts. The Federal awarding agency employee, officer, or agent, any member costs. will not substitute its judgment for that of his or her immediate family, his or (g) The non-Federal entity is of the non-Federal entity unless the her partner, or an organization which encouraged to use value engineering matter is primarily a Federal concern. employs or is about to employ any of clauses in contracts for construction Violations of law will be referred to the the parties indicated herein, has a projects of sufficient size to offer local, state, or Federal authority having financial or other interest in or a reasonable opportunities for cost proper jurisdiction. tangible personal benefit from a firm reductions. Value engineering is a considered for a contract. The officers, systematic and creative analysis of each § 200.319 Competition. employees, and agents of the non- contract item or task to ensure that its (a) All procurement transactions for Federal entity may neither solicit nor essential function is provided at the the acquisition of property or services accept gratuities, favors, or anything of overall lower cost. required under a Federal award must be monetary value from contractors or (h) The non-Federal entity must conducted in a manner providing full parties to subcontracts. However, non- award contracts only to responsible and open competition consistent with Federal entities may set standards for contractors possessing the ability to the standards of this section and situations in which the financial interest perform successfully under the terms § 200.320. is not substantial or the gift is an and conditions of a proposed (b) In order to ensure objective unsolicited item of nominal value. The procurement. Consideration will be contractor performance and eliminate standards of conduct must provide for given to such matters as contractor unfair competitive advantage, disciplinary actions to be applied for integrity, compliance with public contractors that develop or draft violations of such standards by officers, policy, record of past performance, and specifications, requirements, statements employees, or agents of the non-Federal financial and technical resources. See of work, or invitations for bids or entity. also § 200.214. requests for proposals must be excluded

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from competing for such procurements. (2) Identify all requirements which appropriate micro-purchase threshold Some of the situations considered to be the offerors must fulfill and all other based on internal controls, an restrictive of competition include but factors to be used in evaluating bids or evaluation of risk, and its documented are not limited to: proposals. procurement procedures. The micro- (1) Placing unreasonable requirements (e) The non-Federal entity must purchase threshold used by the non- on firms in order for them to qualify to ensure that all prequalified lists of Federal entity must be authorized or not do business; persons, firms, or products which are prohibited under State, local, or tribal (2) Requiring unnecessary experience used in acquiring goods and services are laws or regulations. Non-Federal entities and excessive bonding; current and include enough qualified may establish a threshold higher than (3) Noncompetitive pricing practices sources to ensure maximum open and the Federal threshold established in the between firms or between affiliated free competition. Also, the non-Federal Federal Acquisition Regulations (FAR) companies; entity must not preclude potential in accordance with paragraphs (a)(1)(iv) (4) Noncompetitive contracts to bidders from qualifying during the and (v) of this section. consultants that are on retainer solicitation period. (iv) Non-Federal entity increase to the contracts; (f) Noncompetitive procurements can micro-purchase threshold up to $50,000. (5) Organizational conflicts of interest; only be awarded in accordance with Non-Federal entities may establish a (6) Specifying only a ‘‘brand name’’ § 200.320(c). threshold higher than the micro- product instead of allowing ‘‘an equal’’ purchase threshold identified in the product to be offered and describing the § 200.320 Methods of procurement to be FAR in accordance with the performance or other relevant followed. requirements of this section. The non- requirements of the procurement; and The non-Federal entity must have and Federal entity may self-certify a (7) Any arbitrary action in the use documented procurement threshold up to $50,000 on an annual procurement process. procedures, consistent with the basis and must maintain documentation (c) The non-Federal entity must standards of this section and §§ 200.317, to be made available to the Federal conduct procurements in a manner that 200.318, and 200.319 for any of the awarding agency and auditors in prohibits the use of statutorily or following methods of procurement used accordance with § 200.334. The self- administratively imposed state, local, or for the acquisition of property or certification must include a tribal geographical preferences in the services required under a Federal award justification, clear identification of the evaluation of bids or proposals, except or sub-award. threshold, and supporting in those cases where applicable Federal (a) Informal procurement methods. documentation of any of the following: statutes expressly mandate or encourage When the value of the procurement for (A) A qualification as a low-risk geographic preference. Nothing in this property or services under a Federal auditee, in accordance with the criteria section preempts state licensing laws. award does not exceed the simplified in § 200.520 for the most recent audit; When contracting for architectural and acquisition threshold (SAT), as defined (B) An annual internal institutional engineering (A/E) services, geographic in § 200.1, or a lower threshold risk assessment to identify, mitigate, location may be a selection criterion established by a non-Federal entity, and manage financial risks; or, provided its application leaves an formal procurement methods are not (C) For public institutions, a higher appropriate number of qualified firms, required. The non-Federal entity may threshold consistent with State law. given the nature and size of the project, use informal procurement methods to (v) Non-Federal entity increase to the to compete for the contract. expedite the completion of its micro-purchase threshold over $50,000. (d) The non-Federal entity must have transactions and minimize the Micro-purchase thresholds higher than written procedures for procurement associated administrative burden and $50,000 must be approved by the transactions. These procedures must cost. The informal methods used for cognizant agency for indirect costs. The ensure that all solicitations: procurement of property or services at non-federal entity must submit a request (1) Incorporate a clear and accurate or below the SAT include: with the requirements included in description of the technical (1) Micro-purchases—(i) Distribution. paragraph (a)(1)(iv) of this section. The requirements for the material, product, The acquisition of supplies or services, increased threshold is valid until there or service to be procured. Such the aggregate dollar amount of which is a change in status in which the description must not, in competitive does not exceed the micro-purchase justification was approved. procurements, contain features which threshold (See the definition of micro- (2) Small purchases—(i) Small unduly restrict competition. The purchase in § 200.1). To the maximum purchase procedures. The acquisition of description may include a statement of extent practicable, the non-Federal property or services, the aggregate dollar the qualitative nature of the material, entity should distribute micro- amount of which is higher than the product or service to be procured and, purchases equitably among qualified micro-purchase threshold but does not when necessary, must set forth those suppliers. exceed the simplified acquisition minimum essential characteristics and (ii) Micro-purchase awards. Micro- threshold. If small purchase procedures standards to which it must conform if it purchases may be awarded without are used, price or rate quotations must is to satisfy its intended use. Detailed soliciting competitive price or rate be obtained from an adequate number of product specifications should be quotations if the non-Federal entity qualified sources as determined avoided if at all possible. When it is considers the price to be reasonable appropriate by the non-Federal entity. impractical or uneconomical to make a based on research, experience, purchase (ii) Simplified acquisition thresholds. clear and accurate description of the history or other information and The non-Federal entity is responsible technical requirements, a ‘‘brand name documents it files accordingly. Purchase for determining an appropriate or equivalent’’ description may be used cards can be used for micro-purchases if simplified acquisition threshold based as a means to define the performance or procedures are documented and on internal controls, an evaluation of other salient requirements of approved by the non-Federal entity. risk and its documented procurement procurement. The specific features of (iii) Micro-purchase thresholds. The procedures which must not exceed the the named brand which must be met by non-Federal entity is responsible for threshold established in the FAR. When offers must be clearly stated; and determining and documenting an applicable, a lower simplified

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acquisition threshold used by the non- (D) A firm fixed price contract award (3) The public exigency or emergency Federal entity must be authorized or not will be made in writing to the lowest for the requirement will not permit a prohibited under State, local, or tribal responsive and responsible bidder. delay resulting from publicizing a laws or regulations. Where specified in bidding documents, competitive solicitation; (b) Formal procurement methods. factors such as discounts, transportation (4) The Federal awarding agency or When the value of the procurement for cost, and life cycle costs must be pass-through entity expressly authorizes property or services under a Federal considered in determining which bid is a noncompetitive procurement in financial assistance award exceeds the lowest. Payment discounts will only be response to a written request from the SAT, or a lower threshold established used to determine the low bid when non-Federal entity; or by a non-Federal entity, formal prior experience indicates that such (5) After solicitation of a number of procurement methods are required. discounts are usually taken advantage sources, competition is determined Formal procurement methods require of; and inadequate. following documented procedures. (E) Any or all bids may be rejected if § 200.321 Contracting with small and Formal procurement methods also there is a sound documented reason. minority businesses, women’s business require public advertising unless a non- (2) Proposals. A procurement method enterprises, and labor surplus area firms. competitive procurement can be used in in which either a fixed price or cost- (a) The non-Federal entity must take accordance with § 200.319 or paragraph reimbursement type contract is all necessary affirmative steps to assure (c) of this section. The following formal awarded. Proposals are generally used that minority businesses, women’s methods of procurement are used for when conditions are not appropriate for business enterprises, and labor surplus procurement of property or services the use of sealed bids. They are awarded area firms are used when possible. above the simplified acquisition in accordance with the following (b) Affirmative steps must include: threshold or a value below the requirements: (1) Placing qualified small and simplified acquisition threshold the (i) Requests for proposals must be minority businesses and women’s non-Federal entity determines to be publicized and identify all evaluation business enterprises on solicitation lists; appropriate: factors and their relative importance. (2) Assuring that small and minority (1) Sealed bids. A procurement Proposals must be solicited from an businesses, and women’s business method in which bids are publicly adequate number of qualified offerors. enterprises are solicited whenever they solicited and a firm fixed-price contract Any response to publicized requests for are potential sources; (lump sum or unit price) is awarded to proposals must be considered to the (3) Dividing total requirements, when the responsible bidder whose bid, maximum extent practical; economically feasible, into smaller tasks conforming with all the material terms (ii) The non-Federal entity must have or quantities to permit maximum and conditions of the invitation for bids, a written method for conducting participation by small and minority is the lowest in price. The sealed bids technical evaluations of the proposals businesses, and women’s business method is the preferred method for received and making selections; enterprises; procuring construction, if the (iii) Contracts must be awarded to the (4) Establishing delivery schedules, conditions. responsible offeror whose proposal is where the requirement permits, which (i) In order for sealed bidding to be most advantageous to the non-Federal encourage participation by small and feasible, the following conditions entity, with price and other factors minority businesses, and women’s should be present: considered; and business enterprises; (A) A complete, adequate, and (iv) The non-Federal entity may use (5) Using the services and assistance, realistic specification or purchase competitive proposal procedures for as appropriate, of such organizations as description is available; qualifications-based procurement of the Small Business Administration and (B) Two or more responsible bidders architectural/engineering (A/E) the Minority Business Development are willing and able to compete professional services whereby offeror’s Agency of the Department of Commerce; effectively for the business; and qualifications are evaluated and the and (C) The procurement lends itself to a most qualified offeror is selected, (6) Requiring the prime contractor, if firm fixed price contract and the subject to negotiation of fair and subcontracts are to be let, to take the selection of the successful bidder can be reasonable compensation. The method, affirmative steps listed in paragraphs made principally on the basis of price. where price is not used as a selection (b)(1) through (5) of this section. (ii) If sealed bids are used, the factor, can only be used in procurement § 200.322 Domestic preferences for following requirements apply: of A/E professional services. It cannot procurements. (A) Bids must be solicited from an be used to purchase other types of (a) As appropriate and to the extent adequate number of qualified sources, services though A/E firms that are a consistent with law, the non-Federal providing them sufficient response time potential source to perform the entity should, to the greatest extent prior to the date set for opening the proposed effort. practicable under a Federal award, bids, for local, and tribal governments, (c) Noncompetitive procurement. provide a preference for the purchase, the invitation for bids must be publicly There are specific circumstances in acquisition, or use of goods, products, or advertised; which noncompetitive procurement can materials produced in the United States (B) The invitation for bids, which will be used. Noncompetitive procurement (including but not limited to iron, include any specifications and pertinent can only be awarded if one or more of aluminum, steel, cement, and other attachments, must define the items or the following circumstances apply: manufactured products). The services in order for the bidder to (1) The acquisition of property or requirements of this section must be properly respond; services, the aggregate dollar amount of included in all subawards including all (C) All bids will be opened at the time which does not exceed the micro- contracts and purchase orders for work and place prescribed in the invitation purchase threshold (see paragraph (a)(1) or products under this award. for bids, and for local and tribal of this section); (b) For purposes of this section: governments, the bids must be opened (2) The item is available only from a (1) ‘‘Produced in the United States’’ publicly; single source; means, for iron and steel products, that

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all manufacturing processes, from the (c) Costs or prices based on estimated (c) The non-Federal entity is exempt initial melting stage through the costs for contracts under the Federal from the pre-procurement review in application of coatings, occurred in the award are allowable only to the extent paragraph (b) of this section if the United States. that costs incurred or cost estimates Federal awarding agency or pass- (2) ‘‘Manufactured products’’ means included in negotiated prices would be through entity determines that its items and construction materials allowable for the non-Federal entity procurement systems comply with the composed in whole or in part of non- under subpart E of this part. The non- standards of this part. ferrous metals such as aluminum; Federal entity may reference its own (1) The non-Federal entity may plastics and polymer-based products cost principles that comply with the request that its procurement system be such as polyvinyl chloride pipe; Federal cost principles. reviewed by the Federal awarding aggregates such as concrete; glass, (d) The cost plus a percentage of cost agency or pass-through entity to including optical fiber; and lumber. and percentage of construction cost determine whether its system meets methods of contracting must not be these standards in order for its system § 200.323 Procurement of recovered used. to be certified. Generally, these reviews materials. must occur where there is continuous A non-Federal entity that is a state § 200.325 Federal awarding agency or high-dollar funding, and third-party pass-through entity review. agency or agency of a political contracts are awarded on a regular basis; subdivision of a state and its contractors (a) The non-Federal entity must make (2) The non-Federal entity may self- must comply with section 6002 of the available, upon request of the Federal certify its procurement system. Such Solid Waste Disposal Act, as amended awarding agency or pass-through entity, self-certification must not limit the by the Resource Conservation and technical specifications on proposed Federal awarding agency’s right to Recovery Act. The requirements of procurements where the Federal survey the system. Under a self- Section 6002 include procuring only awarding agency or pass-through entity certification procedure, the Federal items designated in guidelines of the believes such review is needed to awarding agency may rely on written Environmental Protection Agency (EPA) ensure that the item or service specified assurances from the non-Federal entity at 40 CFR part 247 that contain the is the one being proposed for that it is complying with these highest percentage of recovered acquisition. This review generally will standards. The non-Federal entity must materials practicable, consistent with take place prior to the time the cite specific policies, procedures, maintaining a satisfactory level of specification is incorporated into a regulations, or standards as being in competition, where the purchase price solicitation document. However, if the compliance with these requirements of the item exceeds $10,000 or the value non-Federal entity desires to have the and have its system available for review. review accomplished after a solicitation of the quantity acquired during the § 200.326 Bonding requirements. preceding fiscal year exceeded $10,000; has been developed, the Federal awarding agency or pass-through entity For construction or facility procuring solid waste management improvement contracts or subcontracts services in a manner that maximizes may still review the specifications, with such review usually limited to the exceeding the Simplified Acquisition energy and resource recovery; and Threshold, the Federal awarding agency establishing an affirmative procurement technical aspects of the proposed purchase. or pass-through entity may accept the program for procurement of recovered bonding policy and requirements of the (b) The non-Federal entity must make materials identified in the EPA non-Federal entity provided that the available upon request, for the Federal guidelines. Federal awarding agency or pass- awarding agency or pass-through entity through entity has made a § 200.324 Contract cost and price. pre-procurement review, procurement determination that the Federal interest documents, such as requests for (a) The non-Federal entity must is adequately protected. If such a proposals or invitations for bids, or perform a cost or price analysis in determination has not been made, the independent cost estimates, when: connection with every procurement minimum requirements must be as (1) The non-Federal entity’s action in excess of the Simplified follows: Acquisition Threshold including procurement procedures or operation (a) A bid guarantee from each bidder contract modifications. The method and fails to comply with the procurement equivalent to five percent of the bid degree of analysis is dependent on the standards in this part; price. The ‘‘bid guarantee’’ must consist facts surrounding the particular (2) The procurement is expected to of a firm commitment such as a bid procurement situation, but as a starting exceed the Simplified Acquisition bond, certified check, or other point, the non-Federal entity must make Threshold and is to be awarded without negotiable instrument accompanying a independent estimates before receiving competition or only one bid or offer is bid as assurance that the bidder will, bids or proposals. received in response to a solicitation; upon acceptance of the bid, execute (b) The non-Federal entity must (3) The procurement, which is such contractual documents as may be negotiate profit as a separate element of expected to exceed the Simplified required within the time specified. the price for each contract in which Acquisition Threshold, specifies a (b) A performance bond on the part of there is no price competition and in all ‘‘brand name’’ product; the contractor for 100 percent of the cases where cost analysis is performed. (4) The proposed contract is more contract price. A ‘‘performance bond’’ is To establish a fair and reasonable profit, than the Simplified Acquisition one executed in connection with a consideration must be given to the Threshold and is to be awarded to other contract to secure fulfillment of all the complexity of the work to be performed, than the apparent low bidder under a contractor’s requirements under such the risk borne by the contractor, the sealed bid procurement; or contract. contractor’s investment, the amount of (5) A proposed contract modification (c) A payment bond on the part of the subcontracting, the quality of its record changes the scope of a contract or contractor for 100 percent of the of past performance, and industry profit increases the contract amount by more contract price. A ‘‘payment bond’’ is one rates in the surrounding geographical than the Simplified Acquisition executed in connection with a contract area for similar work. Threshold. to assure payment as required by law of

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all persons supplying labor and material award, recipients must provide cost (i) A comparison of actual in the execution of the work provided information to demonstrate cost accomplishments to the objectives of the for in the contract. effective practices (e.g., through unit Federal award established for the cost data). In some instances (e.g., period. Where the accomplishments of § 200.327 Contract provisions. discretionary research awards), this will the Federal award can be quantified, a The non-Federal entity’s contracts be limited to the requirement to submit computation of the cost (for example, must contain the applicable provisions technical performance reports (to be related to units of accomplishment) may described in appendix II to this part. evaluated in accordance with Federal be required if that information will be Performance and Financial Monitoring awarding agency policy). Reporting useful. Where performance trend data and Reporting requirements must be clearly articulated and analysis would be informative to such that, where appropriate, the Federal awarding agency program, § 200.328 Financial reporting. performance during the execution of the the Federal awarding agency should Unless otherwise approved by OMB, Federal award has a standard against include this as a performance reporting the Federal awarding agency must which non-Federal entity performance requirement. solicit only the OMB-approved can be measured. (ii) The reasons why established goals governmentwide data elements for (c) Non-construction performance were not met, if appropriate. collection of financial information (at reports. The Federal awarding agency (iii) Additional pertinent information time of publication the Federal must use standard, governmentwide including, when appropriate, analysis Financial Report or such future, OMB- OMB-approved data elements for and explanation of cost overruns or high approved, governmentwide data collection of performance information unit costs. elements available from the OMB- including performance progress reports, (d) Construction performance reports. designated standards lead. This Research Performance Progress Reports. For the most part, onsite technical information must be collected with the (1) The non-Federal entity must inspections and certified percentage of frequency required by the terms and submit performance reports at the completion data are relied on heavily by conditions of the Federal award, but no interval required by the Federal Federal awarding agencies and pass- less frequently than annually nor more awarding agency or pass-through entity through entities to monitor progress frequently than quarterly except in to best inform improvements in program under Federal awards and subawards unusual circumstances, for example outcomes and productivity. Intervals for construction. The Federal awarding where more frequent reporting is must be no less frequent than annually agency may require additional necessary for the effective monitoring of nor more frequent than quarterly except performance reports only when the Federal award or could significantly in unusual circumstances, for example considered necessary. affect program outcomes, and preferably where more frequent reporting is (e) Significant developments. Events in coordination with performance necessary for the effective monitoring of may occur between the scheduled reporting. The Federal awarding agency the Federal award or could significantly performance reporting dates that have must use OMB-approved common affect program outcomes. Reports significant impact upon the supported information collections, as applicable, submitted annually by the non-Federal activity. In such cases, the non-Federal when providing financial and entity and/or pass-through entity must entity must inform the Federal awarding performance reporting information. be due no later than 90 calendar days agency or pass-through entity as soon as the following types of conditions § 200.329 Monitoring and reporting after the reporting period. Reports become known: program performance. submitted quarterly or semiannually (1) Problems, delays, or adverse must be due no later than 30 calendar (a) Monitoring by the non-Federal conditions which will materially impair days after the reporting period. entity. The non-Federal entity is the ability to meet the objective of the Alternatively, the Federal awarding responsible for oversight of the Federal award. This disclosure must agency or pass-through entity may operations of the Federal award include a statement of the action taken, require annual reports before the supported activities. The non-Federal or contemplated, and any assistance anniversary dates of multiple year entity must monitor its activities under needed to resolve the situation. Federal awards to assure compliance Federal awards. The final performance (2) Favorable developments which with applicable Federal requirements report submitted by the non-Federal enable meeting time schedules and and performance expectations are being entity and/or pass-through entity must objectives sooner or at less cost than achieved. Monitoring by the non- be due no later than 120 calendar days anticipated or producing more or Federal entity must cover each program, after the period of performance end different beneficial results than function or activity. See also § 200.332. date. A subrecipient must submit to the originally planned. (b) Reporting program performance. pass-through entity, no later than 90 (f) Site visits. The Federal awarding The Federal awarding agency must use calendar days after the period of agency may make site visits as OMB-approved common information performance end date, all final warranted by program needs. collections, as applicable, when performance reports as required by the (g) Performance report requirement providing financial and performance terms and conditions of the Federal waiver. The Federal awarding agency reporting information. As appropriate award. See also § 200.344. If a justified may waive any performance report and in accordance with above request is submitted by a non-Federal required by this part if not needed. mentioned information collections, the entity, the Federal agency may extend Federal awarding agency must require the due date for any performance report. § 200. 330 Reporting on real property. the recipient to relate financial data and (2) As appropriate in accordance with The Federal awarding agency or pass- accomplishments to performance goals above mentioned performance through entity must require a non- and objectives of the Federal award. reporting, these reports will contain, for Federal entity to submit reports at least Also, in accordance with above each Federal award, brief information annually on the status of real property mentioned common information on the following unless other data in which the Federal Government collections, and when required by the elements are approved by OMB in the retains an interest, unless the Federal terms and conditions of the Federal agency information collection request: interest in the real property extends 15

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years or longer. In those instances where the contractor. See the definition of (viii) Total Amount of Federal Funds the Federal interest attached is for a contract in § 200.1 of this part. Obligated to the subrecipient by the period of 15 years or more, the Federal Characteristics indicative of a pass-through entity including the awarding agency or pass-through entity, procurement relationship between the current financial obligation; at its option, may require the non- non-Federal entity and a contractor are (ix) Total Amount of the Federal Federal entity to report at various multi- when the contractor: Award committed to the subrecipient by year frequencies (e.g., every two years or (1) Provides the goods and services the pass-through entity; every three years, not to exceed a five- within normal business operations; (x) Federal award project description, year reporting period; or a Federal (2) Provides similar goods or services as required to be responsive to the awarding agency or pass-through entity to many different purchasers; Federal Funding Accountability and may require annual reporting for the (3) Normally operates in a competitive Transparency Act (FFATA); first three years of a Federal award and environment; (xi) Name of Federal awarding agency, thereafter require reporting every five (4) Provides goods or services that are pass-through entity, and contact years). ancillary to the operation of the Federal information for awarding official of the program; and Pass-through entity; Subrecipient Monitoring and (5) Is not subject to compliance (xii) Assistance Listings number and Management requirements of the Federal program as Title; the pass-through entity must § 200.331 Subrecipient and contractor a result of the agreement, though similar identify the dollar amount made determinations. requirements may apply for other available under each Federal award and the Assistance Listings Number at time The non-Federal entity may reasons. of disbursement; concurrently receive Federal awards as (c) Use of judgment in making (xiii) Identification of whether the a recipient, a subrecipient, and a determination. In determining whether an agreement between a pass-through award is R&D; and contractor, depending on the substance (xiv) Indirect cost rate for the Federal of its agreements with Federal awarding entity and another non-Federal entity casts the latter as a subrecipient or a award (including if the de minimis rate agencies and pass-through entities. is charged) per § 200.414. Therefore, a pass-through entity must contractor, the substance of the relationship is more important than the (2) All requirements imposed by the make case-by-case determinations pass-through entity on the subrecipient whether each agreement it makes for the form of the agreement. All of the characteristics listed above may not be so that the Federal award is used in disbursement of Federal program funds accordance with Federal statutes, casts the party receiving the funds in the present in all cases, and the pass- through entity must use judgment in regulations and the terms and role of a subrecipient or a contractor. conditions of the Federal award; The Federal awarding agency may classifying each agreement as a subaward or a procurement contract. (3) Any additional requirements that supply and require recipients to comply the pass-through entity imposes on the with additional guidance to support § 200.332 Requirements for pass-through subrecipient in order for the pass- these determinations provided such entities. through entity to meet its own guidance does not conflict with this All pass-through entities must: responsibility to the Federal awarding section. (a) Ensure that every subaward is agency including identification of any (a) Subrecipients. A subaward is for clearly identified to the subrecipient as required financial and performance the purpose of carrying out a portion of a subaward and includes the following reports; a Federal award and creates a Federal information at the time of the subaward (4)(i) An approved federally assistance relationship with the and if any of these data elements recognized indirect cost rate negotiated subrecipient. See definition for change, include the changes in between the subrecipient and the Subaward in § 200.1 of this part. subsequent subaward modification. Federal Government. If no approved rate Characteristics which support the When some of this information is not exists, the pass-through entity must classification of the non-Federal entity available, the pass-through entity must determine the appropriate rate in as a subrecipient include when the non- provide the best information available to collaboration with the subrecipient, Federal entity: describe the Federal award and which is either: (1) Determines who is eligible to subaward. Required information (A) The negotiated indirect cost rate receive what Federal assistance; includes: between the pass-through entity and the (2) Has its performance measured in (1) Federal award identification. subrecipient; which can be based on a relation to whether objectives of a (i) Subrecipient name (which must prior negotiated rate between a different Federal program were met; match the name associated with its PTE and the same subrecipient. If basing (3) Has responsibility for unique entity identifier); the rate on a previously negotiated rate, programmatic decision-making; (ii) Subrecipient’s unique entity the pass-through entity is not required (4) Is responsible for adherence to identifier; to collect information justifying this applicable Federal program (iii) Federal Award Identification rate, but may elect to do so; requirements specified in the Federal Number (FAIN); (B) The de minimis indirect cost rate. award; and (iv) Federal Award Date (see the (ii) The pass-through entity must not (5) In accordance with its agreement, definition of Federal award date in require use of a de minimis indirect cost uses the Federal funds to carry out a § 200.1 of this part) of award to the rate if the subrecipient has a Federally program for a public purpose specified recipient by the Federal agency; approved rate. Subrecipients can elect in authorizing statute, as opposed to (v) Subaward Period of Performance to use the cost allocation method to providing goods or services for the Start and End Date; account for indirect costs in accordance benefit of the pass-through entity. (vi) Subaward Budget Period Start and with § 200.405(d). (b) Contractors. A contract is for the End Date; (5) A requirement that the purpose of obtaining goods and services (vii) Amount of Federal Funds subrecipient permit the pass-through for the non-Federal entity’s own use and Obligated by this action by the pass- entity and auditors to have access to the creates a procurement relationship with through entity to the subrecipient; subrecipient’s records and financial

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statements as necessary for the pass- not responsible for resolving cross- Record Retention and Access through entity to meet the requirements cutting findings. If a subrecipient has a of this part; and current Single Audit report posted in § 200.334 Retention requirements for records. (6) Appropriate terms and conditions the Federal Audit Clearinghouse and concerning closeout of the subaward. has not otherwise been excluded from Financial records, supporting documents, statistical records, and all (b) Evaluate each subrecipient’s risk receipt of Federal funding (e.g., has been other non-Federal entity records of noncompliance with Federal statutes, debarred or suspended), the pass- pertinent to a Federal award must be regulations, and the terms and through entity may rely on the retained for a period of three years from conditions of the subaward for purposes subrecipient’s cognizant audit agency or the date of submission of the final of determining the appropriate cognizant oversight agency to perform subrecipient monitoring described in expenditure report or, for Federal audit follow-up and make management awards that are renewed quarterly or paragraphs (d) and (e) of this section, decisions related to cross-cutting which may include consideration of annually, from the date of the findings in accordance with section submission of the quarterly or annual such factors as: § 300.513(a)(3)(vii). Such reliance does (1) The subrecipient’s prior financial report, respectively, as not eliminate the responsibility of the experience with the same or similar reported to the Federal awarding agency pass-through entity to issue subawards subawards; or pass-through entity in the case of a (2) The results of previous audits that conform to agency and award- subrecipient. Federal awarding agencies including whether or not the specific requirements, to manage risk and pass-through entities must not subrecipient receives a Single Audit in through ongoing subaward monitoring, impose any other record retention accordance with Subpart F of this part, and to monitor the status of the findings requirements upon non-Federal entities. and the extent to which the same or that are specifically related to the The only exceptions are the following: similar subaward has been audited as a subaward. (a) If any litigation, claim, or audit is major program; (e) Depending upon the pass-through started before the expiration of the 3- (3) Whether the subrecipient has new entity’s assessment of risk posed by the year period, the records must be personnel or new or substantially subrecipient (as described in paragraph retained until all litigation, claims, or changed systems; and (b) of this section), the following audit findings involving the records (4) The extent and results of Federal monitoring tools may be useful for the have been resolved and final action awarding agency monitoring (e.g., if the pass-through entity to ensure proper taken. subrecipient also receives Federal accountability and compliance with (b) When the non-Federal entity is awards directly from a Federal awarding program requirements and achievement notified in writing by the Federal agency). of performance goals: awarding agency, cognizant agency for (c) Consider imposing specific audit, oversight agency for audit, subaward conditions upon a (1) Providing subrecipients with cognizant agency for indirect costs, or subrecipient if appropriate as described training and technical assistance on pass-through entity to extend the in § 200.208. program-related matters; and retention period. (d) Monitor the activities of the (2) Performing on-site reviews of the (c) Records for real property and subrecipient as necessary to ensure that subrecipient’s program operations; equipment acquired with Federal funds the subaward is used for authorized (3) Arranging for agreed-upon- must be retained for 3 years after final purposes, in compliance with Federal procedures engagements as described in disposition. statutes, regulations, and the terms and § 200.425. (d) When records are transferred to or conditions of the subaward; and that maintained by the Federal awarding subaward performance goals are (f) Verify that every subrecipient is agency or pass-through entity, the 3-year achieved. Pass-through entity audited as required by Subpart F of this retention requirement is not applicable monitoring of the subrecipient must part when it is expected that the to the non-Federal entity. include: subrecipient’s Federal awards expended (e) Records for program income (1) Reviewing financial and during the respective fiscal year equaled transactions after the period of performance reports required by the or exceeded the threshold set forth in performance. In some cases recipients pass-through entity. § 200.501. must report program income after the (2) Following-up and ensuring that (g) Consider whether the results of the period of performance. Where there is the subrecipient takes timely and subrecipient’s audits, on-site reviews, or such a requirement, the retention period appropriate action on all deficiencies other monitoring indicate conditions for the records pertaining to the earning pertaining to the Federal award that necessitate adjustments to the pass- of the program income starts from the provided to the subrecipient from the through entity’s own records. end of the non-Federal entity’s fiscal pass-through entity detected through year in which the program income is audits, on-site reviews, and written (h) Consider taking enforcement earned. confirmation from the subrecipient, action against noncompliant (f) Indirect cost rate proposals and highlighting the status of actions subrecipients as described in § 200.339 cost allocations plans. This paragraph planned or taken to address Single of this part and in program regulations. applies to the following types of Audit findings related to the particular § 200.333 Fixed amount subawards. documents and their supporting subaward. records: Indirect cost rate computations (3) Issuing a management decision for With prior written approval from the or proposals, cost allocation plans, and applicable audit findings pertaining Federal awarding agency, a pass- any similar accounting computations of only to the Federal award provided to through entity may provide subawards the rate at which a particular group of the subrecipient from the pass-through based on fixed amounts up to the costs is chargeable (such as computer entity as required by § 200.521. Simplified Acquisition Threshold, usage chargeback rates or composite (4) The pass-through entity is provided that the subawards meet the fringe benefit rates). responsible for resolving audit findings requirements for fixed amount awards (1) If submitted for negotiation. If the specifically related to the subaward and in § 200.201. proposal, plan, or other computation is

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required to be submitted to the Federal General of the United States, and the will be subject to FOIA and applicable Government (or to the pass-through pass-through entity, or any of their exemptions. entity) to form the basis for negotiation authorized representatives, must have Remedies for Noncompliance of the rate, then the 3-year retention the right of access to any documents, period for its supporting records starts papers, or other records of the non- § 200.339 Remedies for noncompliance. from the date of such submission. Federal entity which are pertinent to the If a non-Federal entity fails to comply (2) If not submitted for negotiation. If Federal award, in order to make audits, with the U.S. Constitution, Federal the proposal, plan, or other computation examinations, excerpts, and transcripts. statutes, regulations or the terms and is not required to be submitted to the The right also includes timely and conditions of a Federal award, the Federal Government (or to the pass- reasonable access to the non-Federal Federal awarding agency or pass- through entity) for negotiation purposes, entity’s personnel for the purpose of through entity may impose additional then the 3-year retention period for the interview and discussion related to such conditions, as described in § 200.208. If proposal, plan, or computation and its documents. the Federal awarding agency or pass- supporting records starts from the end (b) Extraordinary and rare through entity determines that of the fiscal year (or other accounting circumstances. Only under noncompliance cannot be remedied by period) covered by the proposal, plan, extraordinary and rare circumstances imposing additional conditions, the or other computation. would such access include review of the Federal awarding agency or pass- true name of victims of a crime. Routine through entity may take one or more of § 200.335 Requests for transfer of records. monitoring cannot be considered the following actions, as appropriate in The Federal awarding agency must extraordinary and rare circumstances the circumstances: request transfer of certain records to its that would necessitate access to this (a) Temporarily withhold cash custody from the non-Federal entity information. When access to the true payments pending correction of the when it determines that the records name of victims of a crime is necessary, deficiency by the non-Federal entity or possess long-term retention value. appropriate steps to protect this more severe enforcement action by the However, in order to avoid duplicate sensitive information must be taken by Federal awarding agency or pass- both the non-Federal entity and the recordkeeping, the Federal awarding through entity. agency may make arrangements for the Federal awarding agency. Any such (b) Disallow (that is, deny both use of non-Federal entity to retain any records access, other than under a court order or funds and any applicable matching that are continuously needed for joint subpoena pursuant to a bona fide credit for) all or part of the cost of the use. confidential investigation, must be activity or action not in compliance. approved by the head of the Federal (c) Wholly or partly suspend or § 200.336 Methods for collection, awarding agency or delegate. transmission, and storage of information. terminate the Federal award. (c) Expiration of right of access. The (d) Initiate suspension or debarment The Federal awarding agency and the rights of access in this section are not proceedings as authorized under 2 CFR non-Federal entity should, whenever limited to the required retention period part 180 and Federal awarding agency practicable, collect, transmit, and store but last as long as the records are regulations (or in the case of a pass- Federal award-related information in retained. Federal awarding agencies and through entity, recommend such a open and machine-readable formats pass-through entities must not impose proceeding be initiated by a Federal rather than in closed formats or on any other access requirements upon awarding agency). paper in accordance with applicable non-Federal entities. (e) Withhold further Federal awards legislative requirements. A machine- for the project or program. readable format is a format in a standard § 200.338 Restrictions on public access to records. (f) Take other remedies that may be computer language (not English text) legally available. that can be read automatically by a web No Federal awarding agency may browser or computer system. The place restrictions on the non-Federal § 200.340 Termination. Federal awarding agency or pass- entity that limit public access to the (a) The Federal award may be through entity must always provide or records of the non-Federal entity terminated in whole or in part as accept paper versions of Federal award- pertinent to a Federal award, except for follows: related information to and from the non- protected personally identifiable (1) By the Federal awarding agency or Federal entity upon request. If paper information (PII) or when the Federal pass-through entity, if a non-Federal copies are submitted, the Federal awarding agency can demonstrate that entity fails to comply with the terms awarding agency or pass-through entity such records will be kept confidential and conditions of a Federal award; must not require more than an original and would have been exempted from (2) By the Federal awarding agency or and two copies. When original records disclosure pursuant to the Freedom of pass-through entity, to the greatest are electronic and cannot be altered, Information Act (5 U.S.C. 552) or extent authorized by law, if an award no there is no need to create and retain controlled unclassified information longer effectuates the program goals or paper copies. When original records are pursuant to Executive Order 13556 if agency priorities; paper, electronic versions may be the records had belonged to the Federal (3) By the Federal awarding agency or substituted through the use of awarding agency. The Freedom of pass-through entity with the consent of duplication or other forms of electronic Information Act (5 U.S.C. 552) (FOIA) the non-Federal entity, in which case media provided that they are subject to does not apply to those records that the two parties must agree upon the periodic quality control reviews, remain under a non-Federal entity’s termination conditions, including the provide reasonable safeguards against control except as required under effective date and, in the case of partial alteration, and remain readable. § 200.315. Unless required by Federal, termination, the portion to be state, local, and tribal statute, non- terminated; § 200.337 Access to records. Federal entities are not required to (4) By the non-Federal entity upon (a) Records of non-Federal entities. permit public access to their records. sending to the Federal awarding agency The Federal awarding agency, The non-Federal entity’s records or pass-through entity written Inspectors General, the Comptroller provided to a Federal agency generally notification setting forth the reasons for

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such termination, the effective date, calendar days to the Federal awarding (c) Upon termination of a Federal and, in the case of partial termination, agency who posted the information, that award, the Federal awarding agency the portion to be terminated. However, some of the information made publicly must provide the information required if the Federal awarding agency or pass- available is covered by a disclosure under FFATA to the Federal website through entity determines in the case of exemption under the Freedom of established to fulfill the requirements of partial termination that the reduced or Information Act, the Federal awarding FFATA, and update or notify any other modified portion of the Federal award agency who posted the information relevant governmentwide systems or or subaward will not accomplish the must remove the posting within seven entities of any indications of poor purposes for which the Federal award calendar days of receiving the assertion. performance as required by 41 U.S.C. was made, the Federal awarding agency Prior to reposting the releasable 417b and 31 U.S.C. 3321 and or pass-through entity may terminate information, the Federal agency must implementing guidance at 2 CFR part 77 the Federal award in its entirety; or resolve the issue in accordance with the (forthcoming at time of publication). See (5) By the Federal awarding agency or agency’s Freedom of Information Act also the requirements for Suspension pass-through entity pursuant to procedures. and Debarment at 2 CFR part 180. termination provisions included in the (d) When a Federal award is Federal award. terminated or partially terminated, both § 200.342 Opportunities to object, hearings, and appeals. (b) A Federal awarding agency should the Federal awarding agency or pass- clearly and unambiguously specify through entity and the non-Federal Upon taking any remedy for non- termination provisions applicable to entity remain responsible for compliance, the Federal awarding each Federal award, in applicable compliance with the requirements in agency must provide the non-Federal regulations or in the award, consistent §§ 200.344 and 200.345. entity an opportunity to object and with this section. provide information and documentation (c) When a Federal awarding agency § 200.341 Notification of termination challenging the suspension or terminates a Federal award prior to the requirement. termination action, in accordance with end of the period of performance due to (a) The Federal agency or pass- written processes and procedures the non-Federal entity’s material failure through entity must provide to the non- published by the Federal awarding to comply with the Federal award terms Federal entity a notice of termination. agency. The Federal awarding agency or and conditions, the Federal awarding (b) If the Federal award is terminated pass-through entity must comply with agency must report the termination to for the non-Federal entity’s material any requirements for hearings, appeals the OMB-designated integrity and failure to comply with the U.S. or other administrative proceedings to performance system accessible through Constitution, Federal statutes, which the non-Federal entity is entitled SAM (currently FAPIIS). regulations, or terms and conditions of under any statute or regulation (1) The information required under the Federal award, the notification must applicable to the action involved. paragraph (c) of this section is not to be state that— (1) The termination decision will be § 200.343 Effects of suspension and reported to designated integrity and termination. performance system until the non- reported to the OMB-designated Costs to the non-Federal entity Federal entity either— integrity and performance system (i) Has exhausted its opportunities to accessible through SAM (currently resulting from financial obligations object or challenge the decision, see FAPIIS); incurred by the non-Federal entity § 200.342; or (2) The information will be available during a suspension or after termination (ii) Has not, within 30 calendar days in the OMB-designated integrity and of a Federal award or subaward are not after being notified of the termination, performance system for a period of five allowable unless the Federal awarding informed the Federal awarding agency years from the date of the termination, agency or pass-through entity expressly that it intends to appeal the Federal then archived; authorizes them in the notice of awarding agency’s decision to (3) Federal awarding agencies that suspension or termination or terminate. consider making a Federal award to the subsequently. However, costs during (2) If a Federal awarding agency, after non-Federal entity during that five year suspension or after termination are entering information into the designated period must consider that information allowable if: integrity and performance system about in judging whether the non-Federal (a) The costs result from financial a termination, subsequently: entity is qualified to receive the Federal obligations which were properly (i) Learns that any of that information award, when the Federal share of the incurred by the non-Federal entity is erroneous, the Federal awarding Federal award is expected to exceed the before the effective date of suspension agency must correct the information in simplified acquisition threshold over or termination, are not in anticipation of the system within three business days; the period of performance; it; and (ii) Obtains an update to that (4) The non-Federal entity may (b) The costs would be allowable if information that could be helpful to comment on any information the OMB- the Federal award was not suspended or other Federal awarding agencies, the designated integrity and performance expired normally at the end of the Federal awarding agency is strongly system contains about the non-Federal period of performance in which the encouraged to amend the information in entity for future consideration by termination takes effect. the system to incorporate the update in Federal awarding agencies. The non- Closeout a timely way. Federal entity may submit comments to (3) Federal awarding agencies, must the awardee integrity and performance § 200.344 Closeout. not post any information that will be portal accessible through SAM The Federal awarding agency or pass- made publicly available in the non- (currently (CPARS). through entity will close out the Federal public segment of designated integrity (5) Federal awarding agencies will award when it determines that all and performance system that is covered consider non-Federal entity comments applicable administrative actions and by a disclosure exemption under the when determining whether the non- all required work of the Federal award Freedom of Information Act. If the non- Federal entity is qualified for a future have been completed by the non-Federal Federal entity asserts within seven Federal award. entity. If the non-Federal entity fails to

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complete the requirements, the Federal Federal awarding agency or pass- Federal award may be modified or awarding agency or pass-through entity through entity must promptly complete ended in whole or in part with the will proceed to close out the Federal all closeout actions for Federal awards. consent of the Federal awarding agency award with the information available. The Federal awarding agency must or pass-through entity and the non- This section specifies the actions the make every effort to complete closeout Federal entity, provided the non-Federal entity and Federal actions no later than one year after the responsibilities of the non-Federal awarding agency or pass-through entity end of the period of performance unless entity referred to in paragraph (a) of this must take to complete this process at the otherwise directed by authorizing section, including those for property end of the period of performance. statutes. Closeout actions include management as applicable, are (a) The recipient must submit, no later Federal awarding agency actions in the considered and provisions made for than 120 calendar days after the end grants management and payment continuing responsibilities of the non- date of the period of performance, all systems. Federal entity, as appropriate. financial, performance, and other (h) If the non-Federal entity does not Collection of Amounts Due reports as required by the terms and submit all reports in accordance with conditions of the Federal award. A this section and the terms and § 200.346 Collection of amounts due. subrecipient must submit to the pass- conditions of the Federal Award, the (a) Any funds paid to the non-Federal through entity, no later than 90 calendar Federal awarding agency must proceed entity in excess of the amount to which days (or an earlier date as agreed upon to close out with the information the non-Federal entity is finally by the pass-through entity and available within one year of the period determined to be entitled under the subrecipient) after the end date of the of performance end date. terms of the Federal award constitute a period of performance, all financial, (i) If the non-Federal entity does not debt to the Federal Government. If not performance, and other reports as submit all reports in accordance with paid within 90 calendar days after required by the terms and conditions of this section within one year of the demand, the Federal awarding agency the Federal award. The Federal period of performance end date, the may reduce the debt by: awarding agency or pass-through entity Federal awarding agency must report (1) Making an administrative offset may approve extensions when requested the non-Federal entity’s material failure against other requests for and justified by the non-Federal entity, to comply with the terms and reimbursements; as applicable. conditions of the award with the OMB- (2) Withholding advance payments (b) Unless the Federal awarding designated integrity and performance otherwise due to the non-Federal entity; agency or pass-through entity authorizes system (currently FAPIIS). Federal or an extension, a non-Federal entity must awarding agencies may also pursue (3) Other action permitted by Federal liquidate all financial obligations other enforcement actions per § 200.339. statute. incurred under the Federal award no (b) Except where otherwise provided later than 120 calendar days after the Post-Closeout Adjustments and by statutes or regulations, the Federal end date of the period of performance as Continuing Responsibilities awarding agency will charge interest on specified in the terms and conditions of § 200.345 Post-closeout adjustments and an overdue debt in accordance with the the Federal award. continuing responsibilities. Federal Claims Collection Standards (31 (c) The Federal awarding agency or (a) The closeout of a Federal award CFR parts 900 through 999). The date pass-through entity must make prompt from which interest is computed is not payments to the non-Federal entity for does not affect any of the following: (1) The right of the Federal awarding extended by litigation or the filing of costs meeting the requirements in any form of appeal. Subpart E of this part under the Federal agency or pass-through entity to award being closed out. disallow costs and recover funds on the Subpart E—Cost Principles (d) The non-Federal entity must basis of a later audit or other review. promptly refund any balances of The Federal awarding agency or pass- ■ 46. Amend § 200.400 by revising unobligated cash that the Federal through entity must make any cost paragraph (e) and (g) to read as follows: awarding agency or pass-through entity disallowance determination and notify § 200.400 Policy guide. paid in advance or paid and that are not the non-Federal entity within the record authorized to be retained by the non- retention period. * * * * * Federal entity for use in other projects. (2) The requirement for the non- (e) In reviewing, negotiating and See OMB Circular A–129 and see Federal entity to return any funds due approving cost allocation plans or § 200.346, for requirements regarding as a result of later refunds, corrections, indirect cost proposals, the cognizant unreturned amounts that become or other transactions including final agency for indirect costs should delinquent debts. indirect cost rate adjustments. generally assure that the non-Federal (e) Consistent with the terms and (3) The ability of the Federal awarding entity is applying these cost accounting conditions of the Federal award, the agency to make financial adjustments to principles on a consistent basis during Federal awarding agency or pass- a previously closed award such as their review and negotiation of indirect through entity must make a settlement resolving indirect cost payments and cost proposals. Where wide variations for any upward or downward making final payments. exist in the treatment of a given cost adjustments to the Federal share of costs (4) Audit requirements in subpart F of item by the non-Federal entity, the after closeout reports are received. this part. reasonableness and equity of such (f) The non-Federal entity must (5) Property management and treatments should be fully considered. account for any real and personal disposition requirements in §§ 200.310 See the definition of indirect (facilities property acquired with Federal funds or through 200.316 of this subpart. & administrative (F&A)) costs in § 200.1 received from the Federal Government (6) Records retention as required in of this part. in accordance with §§ 200.310 through §§ 200.334 through 200.337 of this * * * * * 200.316 and 200.330. subpart. (g) The non-Federal entity may not (g) When a recipient or subrecipient (b) After closeout of the Federal earn or keep any profit resulting from completes all closeout requirements, the award, a relationship created under the Federal financial assistance, unless

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explicitly authorized by the terms and ■ 48. Amend § 200.403 by revising potential application in the matter of conditions of the Federal award. See paragraphs (f) and (g) and adding Federal financing of activities.) also § 200.307. paragraph (h) to read as follows: ■ 51. Amend § 200.407 by revising ■ 47. Amend § 200.401 by revising § 200.403 Factors affecting allowability of paragraphs (g) and (y) to read as follows: paragraphs (a)(3) and (4), (b), and (c) to costs. § 200.407 Prior written approval (prior read as follows: * * * * * approval). (f) Not be included as a cost or used § 200.401 Application. * * * * * to meet cost sharing or matching (g) § 200.333 Fixed amount (a) * * * requirements of any other federally- subawards; financed program in either the current (3) Fixed amount awards. See also * * * * * § 200.1 Definitions and 200.201. or a prior period. See also § 200.306(b). (g) Be adequately documented. See (y) § 200.475 Travel costs. (4) Federal awards to hospitals (see also §§ 200.300 through 200.309 of this ■ 52. Revise § 200.409 to read as appendix IX to this part). part. follows: (h) Cost must be incurred during the * * * * * § 200.409 Special considerations. approved budget period. The Federal (b) Federal contract. Where a Federal awarding agency is authorized, at its In addition to the basic considerations contract awarded to a non-Federal entity discretion, to waive prior written regarding the allowability of costs is subject to the Cost Accounting approvals to carry forward unobligated highlighted in this subtitle, other Standards (CAS), it incorporates the balances to subsequent budget periods subtitles in this part describe special applicable CAS clauses, Standards, and pursuant to § 200.308(e)(3). considerations and requirements CAS administration requirements per ■ applicable to states, local governments, the 48 CFR Chapter 99 and 48 CFR part 49. Amend § 200.405 by revising paragraph (d) to read as follows: Indian tribes, and IHEs. In addition, 30 (FAR Part 30). CAS applies directly certain provisions among the items of to the CAS-covered contract and the § 200.405 Allocable costs. cost in this subpart are only applicable Cost Accounting Standards at 48 CFR * * * * * to certain types of non-Federal entities, parts 9904 or 9905 takes precedence (d) Direct cost allocation principles: If as specified in the following sections: over the cost principles in this subpart a cost benefits two or more projects or (a) Direct and Indirect (F&A) Costs E with respect to the allocation of costs. activities in proportions that can be (§§ 200.412–200.415) of this subpart; When a contract with a non-Federal determined without undue effort or (b) Special Considerations for States, entity is subject to full CAS coverage, cost, the cost must be allocated to the Local Governments and Indian Tribes the allowability of certain costs under projects based on the proportional (§§ 200.416 and 200.417) of this subpart; the cost principles will be affected by benefit. If a cost benefits two or more and the allocation provisions of the Cost projects or activities in proportions that (c) Special Considerations for Accounting Standards (e.g., CAS 414— cannot be determined because of the Institutions of Higher Education 48 CFR 9904.414, Cost of Money as an interrelationship of the work involved, (§§ 200.418 and 200.419) of this subpart. Element of the Cost of Facilities Capital, then, notwithstanding paragraph (c) of ■ 53. Revise § 200.410 to read as and CAS 417—48 CFR 9904.417, Cost of this section, the costs may be allocated follows: Money as an Element of the Cost of or transferred to benefitted projects on Capital Assets Under Construction), any reasonable documented basis. § 200.410 Collection of unallowable costs. apply rather the allowability provisions Where the purchase of equipment or Payments made for costs determined of § 200.449. In complying with those other capital asset is specifically to be unallowable by either the Federal requirements, the non-Federal entity’s authorized under a Federal award, the awarding agency, cognizant agency for application of cost accounting practices costs are assignable to the Federal award indirect costs, or pass-through entity, for estimating, accumulating, and regardless of the use that may be made either as direct or indirect costs, must be reporting costs for other Federal awards of the equipment or other capital asset refunded (including interest) to the and other cost objectives under the involved when no longer needed for the Federal Government in accordance with CAS-covered contract still must be purpose for which it was originally instructions from the Federal agency consistent with its cost accounting required. See also §§ 200.310 through that determined the costs are practices for the CAS-covered contracts. 200.316 and 200.439. unallowable unless Federal statute or In all cases, only one set of accounting * * * * * regulation directs otherwise. See also records needs to be maintained for the ■ 50. Amend § 200.406 by revising §§ 200.300 through 200.309 in subpart D allocation of costs by the non-Federal of this part. entity. paragraph (b) to read as follows: ■ 54. Amend § 200.413 by revising (c) Exemptions. Some nonprofit § 200.406 Applicable credits. paragraphs (a), (b), and (f) to read as organizations, because of their size and * * * * * follows: nature of operations, can be considered (b) In some instances, the amounts to be similar to for-profit entities for received from the Federal Government § 200.413 Direct costs. purpose of applicability of cost to finance activities or service (a) General. Direct costs are those principles. Such nonprofit organizations operations of the non-Federal entity costs that can be identified specifically must operate under Federal cost should be treated as applicable credits. with a particular final cost objective, principles applicable to for-profit Specifically, the concept of netting such such as a Federal award, or other entities located at 48 CFR 31.2. A listing credit items (including any amounts internally or externally funded activity, of these organizations is contained in used to meet cost sharing or matching or that can be directly assigned to such appendix VIII to this part. Other requirements) must be recognized in activities relatively easily with a high organizations, as approved by the determining the rates or amounts to be degree of accuracy. Costs incurred for cognizant agency for indirect costs, may charged to the Federal award. (See the same purpose in like circumstances be added from time to time. §§ 200.436 and 200.468, for areas of must be treated consistently as either

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direct or indirect (F&A) costs. See also nonprofit organizations, indirect (F&A) required to justify the 10% de minimis § 200.405. costs must be classified within two indirect cost rate. As described in (b) Application to Federal awards. broad categories: ‘‘Facilities’’ and § 200.403, costs must be consistently Identification with the Federal award ‘‘Administration.’’ ‘‘Facilities’’ is charged as either indirect or direct costs, rather than the nature of the goods and defined as depreciation on buildings, but may not be double charged or services involved is the determining equipment and capital improvement, inconsistently charged as both. If factor in distinguishing direct from interest on debt associated with certain chosen, this methodology once elected indirect (F&A) costs of Federal awards. buildings, equipment and capital must be used consistently for all Federal Typical costs charged directly to a improvements, and operations and awards until such time as a non-Federal Federal award are the compensation of maintenance expenses. entity chooses to negotiate for a rate, employees who work on that award, ‘‘Administration’’ is defined as general which the non-Federal entity may apply their related fringe benefit costs, the administration and general expenses to do at any time. costs of materials and other items of such as the director’s office, accounting, (g) Any non-Federal entity that has a expense incurred for the Federal award. personnel and all other types of current federally-negotiated indirect If directly related to a specific award, expenditures not listed specifically cost rate may apply for a one-time certain costs that otherwise would be under one of the subcategories of extension of the rates in that agreement treated as indirect costs may also be ‘‘Facilities’’ (including cross allocations for a period of up to four years. This considered direct costs. Examples from other pools, where applicable). For extension will be subject to the review include extraordinary utility nonprofit organizations, library and approval of the cognizant agency for consumption, the cost of materials expenses are included in the indirect costs. If an extension is granted supplied from stock or services ‘‘Administration’’ category; for IHEs, the non-Federal entity may not request rendered by specialized facilities, they are included in the ‘‘Facilities’’ a rate review until the extension period program evaluation costs, or other category. Major IHEs are defined as ends. At the end of the 4-year extension, institutional service operations. those required to use the Standard the non-Federal entity must re-apply to negotiate a rate. Subsequent one-time * * * * * Format for Submission as noted in extensions (up to four years) are (f) For nonprofit organizations, the appendix III to this part, and Rate permitted if a renegotiation is costs of activities performed by the non- Determination for Institutions of Higher completed between each extension Federal entity primarily as a service to Education paragraph C. 11. Major nonprofit organizations are those which request. members, clients, or the general public (h) The federally negotiated indirect when significant and necessary to the receive more than $10 million dollars in direct Federal funding. rate, distribution base, and rate type for non-Federal entity’s mission must be a non-Federal entity (except for the treated as direct costs whether or not * * * * * Indian tribes or tribal organizations, as allowable, and be allocated an equitable (c) Federal Agency Acceptance of defined in the Indian Self share of indirect (F&A) costs. Some Negotiated Indirect Cost Rates. (See also Determination, Education and examples of these types of activities § 200.306.) Assistance Act, 25 U.S.C. 450b(1)) must include: * * * * * be available publicly on an OMB- (1) Maintenance of membership rolls, (3) The Federal awarding agency must designated Federal website. subscriptions, publications, and related implement, and make publicly ■ 56. Amend § 200.415 by revising functions. See also § 200.454. available, the policies, procedures and paragraphs (b)(1) and (2), (c), and (d) to (2) Providing services and information general decision-making criteria that read as follows: to members, legislative or their programs will follow to seek and administrative bodies, or the public. See justify deviations from negotiated rates. § 200.415 Required certifications. also §§ 200.454 and 200.450. (4) As required under § 200.204, the * * * * * (3) Promotion, lobbying, and other Federal awarding agency must include (b) * * * forms of public relations. See also in the notice of funding opportunity the (1) A proposal to establish a cost §§ 200.421 and 200.450. policies relating to indirect cost rate allocation plan or an indirect (F&A) cost (4) Conferences except those held to reimbursement, matching, or cost share rate, whether submitted to a Federal conduct the general administration of as approved under paragraph (e)(1) of cognizant agency for indirect costs or the non-Federal entity. See also this section. As appropriate, the Federal maintained on file by the non-Federal § 200.432. agency should incorporate discussion of entity, must be certified by the non- (5) Maintenance, protection, and these policies into Federal awarding Federal entity using the Certificate of investment of special funds not used in agency outreach activities with non- Cost Allocation Plan or Certificate of operation of the non-Federal entity. See Federal entities prior to the posting of Indirect Costs as set forth in appendices also § 200.442. a notice of funding opportunity. III through VII, and IX of this part. The (6) Administration of group benefits (d) Pass-through entities are subject to certificate must be signed on behalf of on behalf of members or clients, the requirements in § 200.332(a)(4). the non-Federal entity by an individual including life and hospital insurance, * * * * * at a level no lower than vice president annuity or retirement plans, and (f) In addition to the procedures or chief financial officer of the non- financial aid. See also § 200.431. outlined in the appendices in paragraph Federal entity that submits the proposal. ■ 55. Amend § 200.414 by revising (e) of this section, any non-Federal (2) Unless the non-Federal entity has paragraphs (a), (c) introductory text, entity that does not have a current elected the option under § 200.414(f), (c)(3) and (4), (d), (f), and (g) and adding negotiated (including provisional) rate, the Federal Government may either paragraph (h) to read as follows: except for those non-Federal entities disallow all indirect (F&A) costs or described in appendix VII to this part, unilaterally establish such a plan or rate § 200.414 Indirect (F&A) costs. paragraph D.1.b, may elect to charge a when the non-Federal entity fails to (a) Facilities and administration de minimis rate of 10% of modified submit a certified proposal for classification. For major Institutions of total direct costs (MTDC) which may be establishing such a plan or rate in Higher Education (IHE) and major used indefinitely. No documentation is accordance with the requirements. Such

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a plan or rate may be based upon (b) Disclosure statement. An IHE that unallowable; rather, determination as to audited historical data or such other receives an aggregate total $50 million allowability in each case should be data that have been furnished to the or more in Federal awards and based on the treatment provided for cognizant agency for indirect costs and instruments subject to this subpart (as similar or related items of cost, and for which it can be demonstrated that all specified in § 200.101) during its most based on the principles described in unallowable costs have been excluded. recently completed fiscal year must §§ 200.402 through 200.411. In case of a When a cost allocation plan or indirect disclose their cost accounting practices discrepancy between the provisions of a cost rate is unilaterally established by by filing a Disclosure Statement (DS–2), specific Federal award and the the Federal Government because the which is reproduced in Appendix III to provisions below, the Federal award non-Federal entity failed to submit a Part 200. With the approval of the governs. Criteria outlined in § 200.403 certified proposal, the plan or rate cognizant agency for indirect costs, an must be applied in determining established will be set to ensure that IHE may meet the DS–2 submission by allowability. See also § 200.102. potentially unallowable costs will not submitting the DS–2 for each business ■ 61. Amend § 200.421 by revising be reimbursed. unit that received $50 million or more paragraphs (b)(1) and (e)(2) to read as (c) Certifications by nonprofit in Federal awards and instruments. follows: organizations as appropriate that they (1) The DS–2 must be submitted to the did not meet the definition of a major cognizant agency for indirect costs with § 200.421 Advertising and public relations. nonprofit organization as defined in a copy to the IHE’s cognizant agency for * * * * * § 200.414(a). audit. The initial DS–2 and revisions to (b) * * * (d) See also § 200.450 for another the DS–2 must be submitted in (1) The recruitment of personnel required certification. coordination with the IHE’s indirect required by the non-Federal entity for ■ 57. Revise § 200.417 to read as (F&A) rate proposal, unless an earlier performance of a Federal award (See follows: submission is requested by the also § 200.463); cognizant agency for indirect costs. IHEs § 200.417 Interagency service. * * * * * with CAS-covered contracts or (e) * * * The cost of services provided by one subcontracts meeting the dollar (2) Costs of meetings, conventions, agency to another within the threshold in 48 CFR 9903.202–1(f) must convocations, or other events related to governmental unit may include submit their initial DS–2 or revisions no other activities of the entity (see also allowable direct costs of the service plus later than prior to the award of a CAS- § 200.432), including: a pro-rated share of indirect costs. A covered contract or subcontract. standard indirect cost allowance equal (2) An IHE must maintain an accurate * * * * * to ten percent of the direct salary and DS–2 and comply with disclosed cost ■ 62. Revise § 200.422 to read as wage cost of providing the service accounting practices. An IHE must file follows: (excluding overtime, shift premiums, amendments to the DS–2 to the § 200.422 Advisory councils. and fringe benefits) may be used in lieu cognizant agency for indirect costs in of determining the actual indirect costs advance of a disclosed practice being Costs incurred by advisory councils or of the service. These services do not changed to comply with a new or committees are unallowable unless include centralized services included in modified standard, or when a practice is authorized by statute, the Federal central service cost allocation plans as changed for other reasons. An IHE may awarding agency or as an indirect cost described in Appendix V to Part 200. proceed with implementing the change where allocable to Federal awards. See ■ after it has notified the Federal § 200.444, applicable to States, local 58. Amend § 200.418 by revising governments, and Indian tribes. paragraph (a) to read as follows: cognizant agency for indirect costs. If the change represents a variation from 2 ■ 63. Amend § 200.425 by revising § 200.418 Costs incurred by states and CFR part 200, the change may require paragraphs (a)(1) and (2) and (c) local governments. approval by the Federal cognizant introductory text to read as follows: * * * * * agency for indirect costs, in accordance § 200.425 Audit services. (a) The costs meet the requirements of with § 200.102(b). Amendments of a § 200.402–411 of this subpart; DS–2 may be submitted at any time. * * * * * * * * * * Resubmission of a complete, updated (a) * * * (1) Any costs when audits required by ■ 59. Amend § 200.419 by revising DS–2 is discouraged except when there the Single Audit Act and subpart F of paragraphs (a), (b) introductory text, and are extensive changes to disclosed this part have not been conducted or (b)(1) and (2) to read as follows: practices. have been conducted but not in * * * * * accordance therewith; and § 200.419 Cost accounting standards and ■ disclosure statement. 60. Revise § 200.420 to read as (2) Any costs of auditing a non- follows: (a) An IHE that receive an aggregate Federal entity that is exempted from total $50 million or more in Federal § 200.420 Considerations for selected having an audit conducted under the awards and instruments subject to this items of cost. Single Audit Act and subpart F of this subpart (as specified in § 200.101) in its This section provides principles to be part because its expenditures under most recently completed fiscal year applied in establishing the allowability Federal awards are less than $750,000 must comply with the Cost Accounting of certain items involved in determining during the non-Federal entity’s fiscal Standards Board’s cost accounting cost, in addition to the requirements of year. standards located at 48 CFR 9905.501, Subtitle II of this subpart. These * * * * * 9905.502, 9905.505, and 9905.506. CAS- principles apply whether or not a (c) Pass-through entities may charge covered contracts and subcontracts particular item of cost is properly Federal awards for the cost of agreed- awarded to the IHEs are subject to the treated as direct cost or indirect (F&A) upon-procedures engagements to broader range of CAS requirements at 48 cost. Failure to mention a particular monitor subrecipients (in accordance CFR 9900 through 9999 and 48 CFR part item of cost is not intended to imply with subpart D, §§ 200.331–333) who 30 (FAR Part 30). that it is either allowable or are exempted from the requirements of

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the Single Audit Act and subpart F of (3) Is determined and supported as sick leave, holidays, court leave, this part. This cost is allowable only if provided in paragraph (i) of this section, military leave, administrative leave, and the agreed-upon-procedures when applicable. other similar benefits, are allowable if engagements are: * * * * * all of the following criteria are met: * * * * * (h) Institutions of Higher Education (1) They are provided under established written leave policies; ■ (IHEs). *** 64. Revise § 200.426 to read as (3) Intra-Institution of Higher (2) The costs are equitably allocated to follows: Education (IHE) consulting. Intra-IHE all related activities, including Federal awards; and, § 200.426 Bad debts. consulting by faculty should be undertaken as an IHE responsibility (3) The accounting basis (cash or Bad debts (debts which have been requiring no compensation in addition accrual) selected for costing each type of determined to be uncollectable), to IBS. However, in unusual cases leave is consistently followed by the including losses (whether actual or where consultation is across non-Federal entity or specified grouping estimated) arising from uncollectable departmental lines or involves a of employees. accounts and other claims, are separate or remote operation, and the (i) When a non-Federal entity uses the unallowable. Related collection costs, work performed by the faculty member cash basis of accounting, the cost of and related legal costs, arising from is in addition to his or her regular leave is recognized in the period that such debts after they have been responsibilities, any charges for such the leave is taken and paid for. determined to be uncollectable are also work representing additional Payments for unused leave when an unallowable. See also § 200.428. compensation above IBS are allowable employee retires or terminates employment are allowable in the year of ■ 65. Revise § 200.428 to read as provided that such consulting arrangements are specifically provided payment. follows: (ii) The accrual basis may be only for in the Federal award or approved in used for those types of leave for which § 200.428 Collections of improper writing by the Federal awarding agency. payments. a liability as defined by GAAP exists * * * * * when the leave is earned. When a non- The costs incurred by a non-Federal (iv) Encompass federally-assisted and Federal entity uses the accrual basis of entity to recover improper payments are all other activities compensated by the accounting, allowable leave costs are the allowable as either direct or indirect non-Federal entity on an integrated lesser of the amount accrued or funded. costs, as appropriate. Amounts collected basis, but may include the use of (c) Fringe benefits. The cost of fringe may be used by the non-Federal entity subsidiary records as defined in the benefits in the form of employer in accordance with cash management non-Federal entity’s written policy; contributions or expenses for social standards set forth in § 200.305. * * * * * security; employee life, health, ■ 66. Revise § 200.429 to read as (viii) * * * unemployment, and worker’s follows: (C) The non-Federal entity’s system of compensation insurance (except as internal controls includes processes to indicated in § 200.447); pension plan § 200.429 Commencement and review after-the-fact interim charges costs (see paragraph (i) of this section); convocation costs. made to a Federal award based on and other similar benefits are allowable, For IHEs, costs incurred for budget estimates. All necessary provided such benefits are granted commencements and convocations are adjustment must be made such that the under established written policies. Such unallowable, except as provided for in final amount charged to the Federal benefits, must be allocated to Federal (B)(9) Student Administration and award is accurate, allowable, and awards and all other activities in a Services, in appendix III to this part, as properly allocated. manner consistent with the pattern of activity costs. * * * * * benefits attributable to the individuals ■ 68. Revise § 200.431 to read as or group(s) of employees whose salaries ■ 67. Amend § 200.430 by revising follows: and wages are chargeable to such paragraphs (a) introductory text and Federal awards and other activities, and (a)(3), the paragraph (h) subject heading, § 200.431 Compensation—fringe benefits. charged as direct or indirect costs in and paragraphs (h)(3), (h)(8)(iv), and (a) General. Fringe benefits are accordance with the non-Federal (h)(8)(viii)(C) to read as follows: allowances and services provided by entity’s accounting practices. § 200.430 Compensation—personal employers to their employees as (d) Cost objectives. Fringe benefits services. compensation in addition to regular may be assigned to cost objectives by salaries and wages. Fringe benefits identifying specific benefits to specific (a) General. Compensation for include, but are not limited to, the costs individual employees or by allocating personal services includes all of leave (vacation, family-related, sick or on the basis of entity-wide salaries and remuneration, paid currently or military), employee insurance, wages of the employees receiving the accrued, for services of employees pensions, and unemployment benefit benefits. When the allocation method is rendered during the period of plans. Except as provided elsewhere in used, separate allocations must be made performance under the Federal award, these principles, the costs of fringe to selective groupings of employees, including but not necessarily limited to benefits are allowable provided that the unless the non-Federal entity wages and salaries. Compensation for benefits are reasonable and are required demonstrates that costs in relationship personal services may also include by law, non-Federal entity-employee to salaries and wages do not differ fringe benefits which are addressed in agreement, or an established policy of significantly for different groups of § 200.431. Costs of compensation are the non-Federal entity. employees. allowable to the extent that they satisfy (b) Leave. The cost of fringe benefits (e) Insurance. See also § 200.447(d)(1) the specific requirements of this part, in the form of regular compensation and (2). and that the total compensation for paid to employees during periods of (1) Provisions for a reserve under a individual employees: authorized absences from the job, such self-insurance program for * * * * * as for annual leave, family-related leave, unemployment compensation or

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workers’ compensation are allowable to Security Act (ERISA) of 1974 (29 U.S.C. method in accordance with established the extent that the provisions represent 1301–1461) are allowable. Late payment written policies of the non-Federal reasonable estimates of the liabilities for charges on such premiums are entity. such compensation, and the types of unallowable. Excise taxes on (1) For PRHP financed on a pay-as- coverage, extent of coverage, and rates accumulated funding deficiencies and you-go method, allowable costs will be and premiums would have been other penalties imposed under ERISA limited to those representing actual allowable had insurance been are unallowable. payments to retirees or their purchased to cover the risks. However, (6) Pension plan costs may be beneficiaries. provisions for self-insured liabilities computed using a pay-as-you-go method (2) PRHP costs calculated using an which do not become payable for more or an acceptable actuarial cost method actuarial cost method recognized by than one year after the provision is in accordance with established written GAAP are allowable if they are funded made must not exceed the present value policies of the non-Federal entity. for that year within six months after the of the liability. (i) For pension plans financed on a end of that year. Costs funded after the (2) Costs of insurance on the lives of pay-as-you-go method, allowable costs six-month period (or a later period trustees, officers, or other employees will be limited to those representing agreed to by the cognizant agency) are holding positions of similar actual payments to retirees or their allowable in the year funded. The responsibility are allowable only to the beneficiaries. Federal cognizant agency for indirect extent that the insurance represents (ii) Pension costs calculated using an costs may agree to an extension of the additional compensation. The costs of actuarial cost-based method recognized six-month period if an appropriate such insurance when the non-Federal by GAAP are allowable for a given fiscal adjustment is made to compensate for entity is named as beneficiary are year if they are funded for that year the timing of the charges to the Federal unallowable. within six months after the end of that Government and related Federal (3) Actual claims paid to or on behalf year. Costs funded after the six-month reimbursements and the non-Federal of employees or former employees for period (or a later period agreed to by the entity’s contributions to the PRHP fund. workers’ compensation, unemployment cognizant agency for indirect costs) are Adjustments may be made by cash compensation, severance pay, and allowable in the year funded. The refund, reduction in current year’s similar employee benefits (e.g., post- cognizant agency for indirect costs may PRHP costs, or other equitable retirement health benefits), are agree to an extension of the six-month procedures to compensate the Federal allowable in the year of payment period if an appropriate adjustment is Government for the time value of provided that the non-Federal entity made to compensate for the timing of Federal reimbursements in excess of follows a consistent costing policy. the charges to the Federal Government contributions to the PRHP fund. (f) Automobiles. That portion of and related Federal reimbursement and (3) Amounts funded in excess of the automobile costs furnished by the non- the non-Federal entity’s contribution to actuarially determined amount for a Federal entity that relates to personal the pension fund. Adjustments may be fiscal year may be used as the non- use by employees (including made by cash refund or other equitable Federal entity contribution in a future transportation to and from work) is procedures to compensate the Federal period. unallowable as fringe benefit or indirect Government for the time value of (4) When a non-Federal entity (F&A) costs regardless of whether the Federal reimbursements in excess of converts to an acceptable actuarial cost cost is reported as taxable income to the contributions to the pension fund. method and funds PRHP costs in employees. (iii) Amounts funded by the non- accordance with this method, the initial (g) Pension plan costs. Pension plan Federal entity in excess of the unfunded liability attributable to prior costs which are incurred in accordance actuarially determined amount for a years is allowable if amortized over a with the established policies of the non- fiscal year may be used as the non- period of years in accordance with Federal entity are allowable, provided Federal entity’s contribution in future GAAP, or, if no such GAAP period that: periods. exists, over a period negotiated with the (1) Such policies meet the test of (iv) When a non-Federal entity cognizant agency for indirect costs. reasonableness. converts to an acceptable actuarial cost (5) To be allowable in the current (2) The methods of cost allocation are method, as defined by GAAP, and funds year, the PRHP costs must be paid either not discriminatory. pension costs in accordance with this to: (3) Except for State and Local method, the unfunded liability at the (i) An insurer or other benefit Governments, the cost assigned to each time of conversion is allowable if provider as current year costs or fiscal year should be determined in amortized over a period of years in premiums, or accordance with GAAP. accordance with GAAP. (ii) An insurer or trustee to maintain (4) The costs assigned to a given fiscal (v) The Federal Government must a trust fund or reserve for the sole year are funded for all plan participants receive an equitable share of any purpose of providing post-retirement within six months after the end of that previously allowed pension costs benefits to retirees and other year. However, increases to normal and (including earnings thereon) which beneficiaries. past service pension costs caused by a revert or inure to the non-Federal entity (6) The Federal Government must delay in funding the actuarial liability in the form of a refund, withdrawal, or receive an equitable share of any beyond 30 calendar days after each other credit. amounts of previously allowed post- quarter of the year to which such costs (h) Post-retirement health. Post- retirement benefit costs (including are assignable are unallowable. Non- retirement health plans (PRHP) refers to earnings thereon) which revert or inure Federal entity may elect to follow the costs of health insurance or health to the non-Federal entity in the form of ‘‘Cost Accounting Standard for services not included in a pension plan a refund, withdrawal, or other credit. Composition and Measurement of covered by paragraph (g) of this section (i) Severance pay. (1) Severance pay, Pension Costs’’ (48 CFR 9904.412). for retirees and their spouses, also commonly referred to as dismissal (5) Pension plan termination dependents, and survivors. PRHP costs wages, is a payment in addition to insurance premiums paid pursuant to may be computed using a pay-as-you-go regular salaries and wages, by non- the Employee Retirement Income method or an acceptable actuarial cost Federal entities to workers whose

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employment is being terminated. Costs (j) For IHEs only. (1) Fringe benefits in available dependent-care resources are of severance pay are allowable only to the form of undergraduate and graduate allowable. Conference hosts/sponsors the extent that in each case, it is tuition or remission of tuition for must exercise discretion and judgment required by individual employees are allowable, in ensuring that conference costs are (i) Law; provided such benefits are granted in appropriate, necessary and managed in (ii) Employer-employee agreement; accordance with established non- a manner that minimizes costs to the (iii) Established policy that Federal entity policies, and are Federal award. The Federal awarding constitutes, in effect, an implied distributed to all non-Federal entity agency may authorize exceptions where agreement on the non-Federal entity’s activities on an equitable basis. Tuition appropriate for programs including part; or benefits for family members other than Indian tribes, children, and the elderly. (iv) Circumstances of the particular the employee are unallowable. See also §§ 200.438, 200.456, and employment. (2) Fringe benefits in the form of 200.475. (2) Costs of severance payments are tuition or remission of tuition for ■ 70. Amend § 200.433 by revising divided into two categories as follows: individual employees not employed by paragraphs (b) and (c) to read as follows: (i) Actual normal turnover severance IHEs are limited to the tax-free amount § 200.433 Contingency provisions. payments must be allocated to all allowed per section 127 of the Internal activities; or, where the non-Federal Revenue Code as amended. * * * * * entity provides for a reserve for normal (3) IHEs may offer employees tuition (b) It is permissible for contingency severances, such method will be waivers or tuition reductions, provided amounts other than those excluded in paragraph (a) of this section to be acceptable if the charge to current that the benefit does not discriminate in explicitly included in budget estimates, operations is reasonable in light of favor of highly compensated employees. to the extent they are necessary to payments actually made for normal Employees can exercise these benefits at improve the precision of those severances over a representative past other institutions according to estimates. Amounts must be estimated period, and if amounts charged are institutional policy. See § 200.466, for using broadly-accepted cost estimating allocated to all activities of the non- treatment of tuition remission provided methodologies, specified in the budget Federal entity. to students. (k) Fringe benefit programs and other documentation of the Federal award, (ii) Measurement of costs of abnormal benefit costs. For IHEs whose costs are and accepted by the Federal awarding or mass severance pay by means of an paid by state or local governments, agency. As such, contingency amounts accrual will not achieve equity to both fringe benefit programs (such as pension are to be included in the Federal award. parties. Thus, accruals for this purpose costs and FICA) and any other benefits In order for actual costs incurred to be are not allowable. However, the Federal costs specifically incurred on behalf of, allowable, they must comply with the Government recognizes its and in direct benefit to, the non-Federal cost principles and other requirements responsibility to participate, to the entity, are allowable costs of such non- in this part (see also §§ 200.300 and extent of its fair share, in any specific Federal entities whether or not these 200.403 of this part); be necessary and payment. Prior approval by the Federal costs are recorded in the accounting reasonable for proper and efficient awarding agency or cognizant agency for records of the non-Federal entities, accomplishment of project or program indirect cost, as appropriate, is required. subject to the following: objectives, and be verifiable from the (3) Costs incurred in certain severance (1) The costs meet the requirements of non-Federal entity’s records. pay packages which are in an amount in Basic Considerations in §§ 200.402 (c) Payments made by the Federal excess of the normal severance pay paid through 200.411; awarding agency to the non-Federal by the non-Federal entity to an (2) The costs are properly supported entity’s ‘‘contingency reserve’’ or any employee upon termination of by approved cost allocation plans in similar payment made for events the employment and are paid to the accordance with applicable Federal cost occurrence of which cannot be foretold employee contingent upon a change in accounting principles; and with certainty as to the time or management control over, or ownership (3) The costs are not otherwise borne intensity, or with an assurance of their of, the non-Federal entity’s assets, are directly or indirectly by the Federal happening, are unallowable, except as unallowable. Government. noted in §§ 200.431 and 200.447. (4) Severance payments to foreign ■ 69. Revise § 200.432 to read as ■ 71. Amend § 200.434 by revising nationals employed by the non-Federal follows: paragraphs (b), (c), (f), and (g)(2) to read entity outside the United States, to the as follows: extent that the amount exceeds the § 200.432 Conferences. customary or prevailing practices for the A conference is defined as a meeting, § 200.434 Contributions and donations. non-Federal entity in the United States, retreat, seminar, symposium, workshop * * * * * are unallowable, unless they are or event whose primary purpose is the (b) The value of services and property necessary for the performance of Federal dissemination of technical information donated to the non-Federal entity may programs and approved by the Federal beyond the non-Federal entity and is not be charged to the Federal award awarding agency. necessary and reasonable for successful either as a direct or indirect (F&A) cost. (5) Severance payments to foreign performance under the Federal award. The value of donated services and nationals employed by the non-Federal Allowable conference costs paid by the property may be used to meet cost entity outside the United States due to non-Federal entity as a sponsor or host sharing or matching requirements (see the termination of the foreign national of the conference may include rental of § 200.306). Depreciation on donated as a result of the closing of, or facilities, speakers’ fees, costs of meals assets is permitted in accordance with curtailment of activities by, the non- and refreshments, local transportation, § 200.436, as long as the donated Federal entity in that country, are and other items incidental to such property is not counted towards cost unallowable, unless they are necessary conferences unless further restricted by sharing or matching requirements. for the performance of Federal programs the terms and conditions of the Federal (c) Services donated or volunteered to and approved by the Federal awarding award. As needed, the costs of the non-Federal entity may be furnished agency. identifying, but not providing, locally to a non-Federal entity by professional

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and technical personnel, consultants, § 200.439 Equipment and other capital must be allocated as an appropriate and other skilled and unskilled labor. expenditures. share of indirect costs under the The value of these services may not be (a) See § 200.1 for the definitions of conditions described in § 200.413. charged to the Federal award either as capital expenditures, equipment, ■ 76. Amend § 200.443 by revising a direct or indirect cost. However, the special purpose equipment, general paragraphs (b)(1) and (3) and (d) to read value of donated services may be used purpose equipment, acquisition cost, as follows: to meet cost sharing or matching and capital assets. requirements in accordance with the * * * * * § 200.443 Gains and losses on disposition of depreciable assets. provisions of § 200.306. (b) * * * * * * * * (3) Capital expenditures for * * * * * (f) Fair market value of donated improvements to land, buildings, or (b) * * * services must be computed as described equipment which materially increase (1) The gain or loss is processed in § 200.306. their value or useful life are unallowable through a depreciation account and is * * * * * as a direct cost except with the prior reflected in the depreciation allowable (g) * * * written approval of the Federal under §§ 200.436 and 200.439. (2) The value of the donations may be awarding agency, or pass-through entity. * * * * * used to meet cost sharing or matching See § 200.436, for rules on the (3) A loss results from the failure to share requirements under the conditions allowability of depreciation on maintain permissible insurance, except described in § 200.300 of this part. The buildings, capital improvements, and as otherwise provided in § 200.447. value of the donations must be equipment. See also § 200.465. * * * * * determined in accordance with * * * * * (d) When assets acquired with Federal § 200.300. Where donations are treated (7) Equipment and other capital funds, in part or wholly, are disposed as indirect costs, indirect cost rates will expenditures are unallowable as of, the distribution of the proceeds must separate the value of the donations so indirect costs. See § 200.436. be made in accordance with §§ 200.310 that reimbursement will not be made. ■ 74. Revise § 200.441 to read as through 200.316 of this part. ■ 72. Amend § 200.436 by revising follows: ■ 77. Amend § 200.444 by revising paragraphs (c) introductory text, (c)(3) § 200.441 Fines, penalties, damages and paragraphs (a) introductory text, (a)(4), and (4), and (e) to read as follows: other settlements. and (b) to read as follows: § 200.436 Depreciation. Costs resulting from non-Federal § 200.444 General costs of government. * * * * * entity violations of, alleged violations (a) For states, local governments, and (c) Depreciation is computed applying of, or failure to comply with, Federal, Indian Tribes, the general costs of the following rules. The computation of state, tribal, local or foreign laws and government are unallowable (except as depreciation must be based on the regulations are unallowable, except provided in § 200.475). Unallowable acquisition cost of the assets involved. when incurred as a result of compliance costs include: with specific provisions of the Federal For an asset donated to the non-Federal * * * * * award, or with prior written approval of entity by a third party, its fair market (4) Costs of prosecutorial activities the Federal awarding agency. See also value at the time of the donation must unless treated as a direct cost to a § 200.435. be considered as the acquisition cost. specific program if authorized by statute ■ Such assets may be depreciated or 75. Revise § 200.442 to read as or regulation (however, this does not claimed as matching but not both. For follows: preclude the allowability of other legal the computation of depreciation, the activities of the Attorney General as acquisition cost will exclude: § 200.442 Fund raising and investment management costs. described in § 200.435); and * * * * * (a) Costs of organized fund raising, * * * * * (3) Any portion of the cost of including financial campaigns, (b) For Indian tribes and Councils of buildings and equipment contributed by endowment drives, solicitation of gifts Governments (COGs) (see definition for or for the non-Federal entity that are and bequests, and similar expenses Local government in § 200.1 of this already claimed as matching or where incurred to raise capital or obtain part), up to 50% of salaries and law or agreement prohibits recovery; contributions are unallowable. Fund expenses directly attributable to (4) Any asset acquired solely for the raising costs for the purposes of meeting managing and operating Federal performance of a non-Federal award; the Federal program objectives are programs by the chief executive and his and allowable with prior written approval or her staff can be included in the * * * * * from the Federal awarding agency. indirect cost calculation without (e) Charges for depreciation must be Proposal costs are covered in § 200.460. documentation. supported by adequate property records, (b) Costs of investment counsel and ■ 78. Amend § 200.447 by revising and physical inventories must be taken staff and similar expenses incurred to paragraph (a)(4) to read as follows: at least once every two years to ensure enhance income from investments are that the assets exist and are usable, unallowable except when associated § 200.447 Insurance and indemnification. used, and needed. Statistical sampling with investments covering pension, self- (a) * * * techniques may be used in taking these insurance, or other funds which include (4) Costs of insurance on the lives of inventories. In addition, adequate Federal participation allowed by this trustees, officers, or other employees depreciation records showing the part. holding positions of similar amount of depreciation must be (c) Costs related to the physical responsibilities are allowable only to the maintained. custody and control of monies and extent that the insurance represents ■ 73. Amend § 200.439 by revising securities are allowable. additional compensation (see paragraphs (a) and (b)(3) and (7) to read (d) Both allowable and unallowable § 200.431). The cost of such insurance as follows: fund-raising and investment activities when the non-Federal entity is

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identified as the beneficiary is (c) * * * facilities, personnel, and work products unallowable. (2) * * * are allowable. Such costs include, but * * * * * (v) When a non-Federal entity seeks are not limited to, wages and uniforms reimbursement for indirect (F&A) costs, ■ 79. Amend § 200.448 by revising of personnel engaged in security total lobbying costs must be separately paragraph (a)(1)(iii) to read as follows: activities; equipment; barriers; identified in the indirect (F&A) cost rate protective (non-military) gear, devices, § 200.448 Intellectual property. proposal, and thereafter treated as other and equipment; contractual security (a) * * * unallowable activity costs in accordance services; and consultants. Capital (1) * * * with the procedures of § 200.413. expenditures for plant security purposes (iii) General counseling services (vi) The non-Federal entity must are subject to § 200.439. submit as part of its annual indirect relating to patent and copyright matters, ■ 86. Revise § 200.458 to read as (F&A) cost rate proposal a certification such as advice on patent and copyright follows: laws, regulations, clauses, and employee that the requirements and standards of intellectual property agreements (See this section have been complied with. § 200.458 Pre-award costs. also § 200.459). (See also § 200.415.) Pre-award costs are those incurred (vii)(A) Time logs, calendars, or * * * * * prior to the effective date of the Federal similar records are not required to be ■ 80. Amend § 200.449 by revising award or subaward directly pursuant to created for purposes of complying with paragraphs (b)(1) and (c)(4) to read as the negotiation and in anticipation of the record keeping requirements in follows: the Federal award where such costs are § 200.302 with respect to lobbying costs necessary for efficient and timely during any particular calendar month § 200.449 Interest. performance of the scope of work. Such when: * * * * * costs are allowable only to the extent (b) Capital assets. (1) Capital assets is * * * * * that they would have been allowable if defined as noted in § 200.1 of this part. ■ 82. Revise § 200.452 to read as incurred after the date of the Federal An asset cost includes (as applicable) follows: award and only with the written acquisition costs, construction costs, § 200.452 Maintenance and repair costs. approval of the Federal awarding and other costs capitalized in agency. If charged to the award, these Costs incurred for utilities, insurance, accordance with GAAP. costs must be charged to the initial security, necessary maintenance, * * * * * budget period of the award, unless janitorial services, repair, or upkeep of (c) * * * otherwise specified by the Federal buildings and equipment (including (4) The non-Federal entity limits awarding agency or pass-through entity. claims for Federal reimbursement of Federal property unless otherwise ■ 87. Amend § 200.459 by revising interest costs to the least expensive provided for) which neither add to the paragraph (a) to read as follows: alternative. For example, a lease permanent value of the property nor contract that transfers ownership by the appreciably prolong its intended life, § 200.459 Professional service costs. but keep it in an efficient operating end of the contract may be determined (a) Costs of professional and less costly than purchasing through condition, are allowable. Costs incurred for improvements which add to the consultant services rendered by persons other types of debt financing, in which who are members of a particular case reimbursement must be limited to permanent value of the buildings and equipment or appreciably prolong their profession or possess a special skill, and the amount of interest determined if who are not officers or employees of the leasing had been used. intended life must be treated as capital expenditures (see § 200.439). These non-Federal entity, are allowable, * * * * * subject to paragraphs (b) and (c) of this ■ costs are only allowable to the extent 81. Amend § 200.450 by revising not paid through rental or other section when reasonable in relation to paragraphs (a), (c)(2)(v) and (vi), agreements. the services rendered and when not (c)(2)(vii)(A) introductory text to read as contingent upon recovery of the costs ■ 83. Amend § 200.454 by revising follows: from the Federal Government. In paragraph (e) to read as follows: addition, legal and related services are § 200.450 Lobbying. § 200.454 Memberships, subscriptions, limited under § 200.435. (a) The cost of certain influencing and professional activity costs. activities associated with obtaining * * * * * grants, contracts, or cooperative * * * * * ■ 88. Amend § 200.461 by revising (e) Costs of membership in agreements, or loans is an unallowable paragraph (b)(3) to read as follows: organizations whose primary purpose is cost. Lobbying with respect to certain lobbying are unallowable. See also § 200.461 Publication and printing costs. grants, contracts, cooperative § 200.450. agreements, and loans is governed by * * * * * ■ relevant statutes, including among 84. Revise § 200.456 to read as (b) * * * others, the provisions of 31 U.S.C. 1352, follows: (3) The non-Federal entity may charge as well as the common rule, ‘‘New § 200.456 Participant support costs. the Federal award during closeout for Restrictions on Lobbying’’ published on Participant support costs as defined in the costs of publication or sharing of February 26, 1990, including § 200.1 are allowable with the prior research results if the costs are not definitions, and the Office of approval of the Federal awarding incurred during the period of Management and Budget agency. performance of the Federal award. If ‘‘Governmentwide Guidance for New charged to the award, these costs must ■ 85. Revise § 200.457 to read as Restrictions on Lobbying’’ and notices be charged to the final budget period of follows: published on December 20, 1989, June the award, unless otherwise specified by 15, 1990, January 15, 1992, and January § 200.457 Plant and security costs. the Federal awarding agency. 19, 1996. Necessary and reasonable expenses ■ 89. Amend § 200.463 by revising * * * * * incurred for protection and security of paragraph (c) to read as follows:

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§ 200.463 Recruiting costs. lease asset (per GASB) or right of use §§ 200.471 through 200.475 [Redesignated * * * * * operating lease asset (per FASB) for as §§ 200.472 through 200.476] (c) Where relocation costs incurred purposes of financial reporting in ■ 95. Redesignate §§ 200.471 through incident to recruitment of a new accordance with GAAP. 200.475 as §§ 200.472 through 200.476. employee have been funded in whole or (f) The rental of any property owned ■ 96. Add new § 200.471 to read as in part to a Federal award, and the by any individuals or entities affiliated follows: newly hired employee resigns for with the non-Federal entity, to include reasons within the employee’s control commercial or residential real estate, for § 200.471 Telecommunication costs and within 12 months after hire, the non- purposes such as the home office video surveillance costs Federal entity will be required to refund workspace is unallowable. (a) Costs incurred for or credit the Federal share of such telecommunications and video relocation costs to the Federal ■ 92. Amend § 200.466 by revising paragraph (b) to read as follows: surveillance services or equipment such Government. See also § 200.464. as phones, internet, video surveillance, * * * * * § 200.466 Scholarships and student aid cloud servers are allowable except for ■ 90. Amend § 200.464 by revising costs. the following circumstances: paragraph (c) to read as follows: * * * * * (b) Obligating or expending covered telecommunications and video § 200.464 Relocation costs of employees. (b) Charges for tuition remission and other forms of compensation paid to surveillance services or equipment or * * * * * services as described in § 200.216 to: (c) Allowable relocation costs for new students as, or in lieu of, salaries and wages must be subject to the reporting (1) Procure or obtain, extend or renew employees are limited to those a contract to procure or obtain; described in paragraphs (b)(1) and (2) of requirements in § 200.430, and must be (2) Enter into a contract (or extend or this section. When relocation costs treated as direct or indirect cost in renew a contract) to procure; or incurred incident to the recruitment of accordance with the actual work being new employees have been charged to a performed. Tuition remission may be (3) Obtain the equipment, services, or Federal award and the employee resigns charged on an average rate basis. See systems. for reasons within the employee’s also § 200.431. ■ 97. Amend newly redesignated control within 12 months after hire, the ■ 93. Revise § 200.467 to read as § 200.472 by revising paragraphs (c)(2), non-Federal entity must refund or credit follows: (e)(1)(i), and (f) to read as follows: the Federal Government for its share of § 200.472 Termination costs. the cost. If dependents are not permitted § 200.467 Selling and marketing costs. * * * * * at the location for any reason and the Costs of selling and marketing any (c) * * * costs do not include costs of products or services of the non-Federal transporting household goods, the costs entity (unless allowed under § 200.421) (2) The interest of the Federal of travel to an overseas location must be are unallowable, except as direct costs, Government is protected by transfer of considered travel costs in accordance with prior approval by the Federal title or by other means deemed with § 200.474 Travel costs, and not this awarding agency when necessary for the appropriate by the Federal awarding relocations costs of employees (See also performance of the Federal award. agency (see also § 200.313 (d)), and § 200.464). * * * * * ■ * * * * * 94. Amend § 200.468 by revising (e) * * * paragraph (a) and (b)(2) to read as ■ 91. Amend § 200.465 by adding (1) * * * follows: paragraphs (d) through (f) to read as (i) The preparation and presentation follows: § 200.468 Specialized service facilities. to the Federal awarding agency of settlement claims and supporting data § 200.465 Rental costs of real property and (a) The costs of services provided by with respect to the terminated portion of equipment. highly complex or specialized facilities the Federal award, unless the * * * * * operated by the non-Federal entity, such termination is for cause (see subpart D, (d) Rental costs under leases which as computing facilities, wind tunnels, including §§ 200.339–200.343); and are required to be accounted for as a and reactors are allowable, provided the financed purchase under GASB charges for the services meet the * * * * * standards or a finance lease under FASB conditions of either paragraph (b) or (c) (f) Claims under subawards, including standards under GAAP are allowable of this section, and, in addition, take the allocable portion of claims which only up to the amount (as explained in into account any items of income or are common to the Federal award and paragraph (b) of this section) that would Federal financing that qualify as to other work of the non-Federal entity, be allowed had the non-Federal entity applicable credits under § 200.406. are generally allowable. An appropriate share of the non-Federal entity’s purchased the property on the date the * * * * * indirect costs may be allocated to the lease agreement was executed. Interest (b) * * * costs related to these leases are amount of settlements with contractors allowable to the extent they meet the (2) Is designed to recover only the and/or subrecipients, provided that the criteria in § 200.449. Unallowable costs aggregate costs of the services. The costs amount allocated is otherwise include amounts paid for profit, of each service must consist normally of consistent with the basic guidelines management fees, and taxes that would both its direct costs and its allocable contained in § 200.414. The indirect not have been incurred had the non- share of all indirect (F&A) costs. Rates costs so allocated must exclude the Federal entity purchased the property. must be adjusted at least biennially, and same and similar costs claimed directly (e) Rental or lease payments are must take into consideration over/ or indirectly as settlement expenses. allowable under lease contracts where under-applied costs of the previous ■ 98. Amend newly redesignated the non-Federal entity is required to period(s). § 200.475 by revising paragraphs (a) and recognize an intangible right-to-use * * * * * (c)(2) to read as follows:

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§ 200.475 Travel costs. specific audit conducted in accordance 180 calendar days prior to the end of the (a) General. Travel costs are the with § 200.507. A program-specific fiscal year to be audited. The auditee, expenses for transportation, lodging, audit may not be elected for R&D unless after consultation with its auditor, subsistence, and related items incurred all of the Federal awards expended were should promptly respond to such a by employees who are in travel status received from the same Federal agency, request by informing the Federal on official business of the non-Federal or the same Federal agency and the awarding agency whether the program entity. Such costs may be charged on an same pass-through entity, and that would otherwise be audited as a major actual cost basis, on a per diem or Federal agency, or pass-through entity program using the risk-based audit mileage basis in lieu of actual costs in the case of a subrecipient, approves approach described in § 200.518 and, if incurred, or on a combination of the in advance a program-specific audit. not, the estimated incremental cost. The two, provided the method used is (d) Exemption when Federal awards Federal awarding agency must then applied to an entire trip and not to expended are less than $750,000. A promptly confirm to the auditee selected days of the trip, and results in non-Federal entity that expends less whether it wants the program audited as charges consistent with those normally than $750,000 during the non-Federal a major program. If the program is to be allowed in like circumstances in the entity’s fiscal year in Federal awards is audited as a major program based upon non-Federal entity’s non-federally- exempt from Federal audit requirements this Federal awarding agency request, funded activities and in accordance for that year, except as noted in and the Federal awarding agency agrees with non-Federal entity’s written travel § 200.503, but records must be available to pay the full incremental costs, then reimbursement policies. for review or audit by appropriate the auditee must have the program Notwithstanding the provisions of officials of the Federal agency, pass- audited as a major program. A pass- § 200.444, travel costs of officials through entity, and Government through entity may use the provisions of covered by that section are allowable Accountability Office (GAO). this paragraph for a subrecipient. with the prior written approval of the * * * * * ■ 102. Revise § 200.505 to read as Federal awarding agency or pass- (f) Subrecipients and contractors. An follows: through entity when they are auditee may simultaneously be a specifically related to the Federal recipient, a subrecipient, and a § 200.505 Sanctions. award. contractor. Federal awards expended as In cases of continued inability or * * * * * a recipient or a subrecipient are subject unwillingness to have an audit (c) * * * to audit under this part. The payments conducted in accordance with this part, (2) Travel costs for dependents are received for goods or services provided Federal agencies and pass-through unallowable, except for travel of as a contractor are not Federal awards. entities must take appropriate action as duration of six months or more with Section § 200.331 sets forth the provided in § 200.339. prior approval of the Federal awarding considerations in determining whether ■ 103. Revise § 200.506 to read as agency. See also § 200.432. payments constitute a Federal award or follows: * * * * * a payment for goods or services § 200.506 Audit costs. ■ 99. Revise newly redesignated provided as a contractor. § 200.476 to read as follows: * * * * * See § 200.425. (h) For-profit subrecipient. Since this ■ 104. Amend § 200.507 by revising § 200.476 Trustees. part does not apply to for-profit paragraphs (a), (b)(2), (b)(3)(ii) through Travel and subsistence costs of subrecipients, the pass-through entity is (v), (b)(4)(iv), (c)(2) and (3), and (d)(8) to trustees (or directors) at IHEs and responsible for establishing read as follows: nonprofit organizations are allowable. requirements, as necessary, to ensure § 200.507 Program-specific audits. See also § 200.475. compliance by for-profit subrecipients. The agreement with the for-profit (a) Program-specific audit guide Subpart F—Audit Requirements subrecipient must describe applicable available. In some cases, a program- specific audit guide will be available to ■ 100. Amend § 200.501 by revising compliance requirements and the for- profit subrecipient’s compliance provide specific guidance to the auditor paragraphs (b), (c), (d), (f), and (h) to with respect to internal controls, read as follows: responsibility. Methods to ensure compliance for Federal awards made to compliance requirements, suggested § 200.501 Audit requirements. for-profit subrecipients may include audit procedures, and audit reporting * * * * * pre-award audits, monitoring during the requirements. A listing of current (b) Single audit. A non-Federal entity agreement, and post-award audits. See program-specific audit guides can be that expends $750,000 or more during also § 200.332. found in the compliance supplement, Part 8, Appendix VI, Program-Specific the non-Federal entity’s fiscal year in ■ 101. Amend § 200.503 by revising Audit Guides, which includes a website Federal awards must have a single audit paragraph (e) to read as follows: conducted in accordance with § 200.514 where a copy of the guide can be except when it elects to have a program- § 200.503 Relation to other audit obtained. When a current program- specific audit conducted in accordance requirements. specific audit guide is available, the with paragraph (c) of this section. * * * * * auditor must follow GAGAS and the (c) Program-specific audit election. (e) Request for a program to be guide when performing a program- When an auditee expends Federal audited as a major program. A Federal specific audit. awards under only one Federal program awarding agency may request that an * * * * * (excluding R&D) and the Federal auditee have a particular Federal (b) * * * program’s statutes, regulations, or the program audited as a major program in (2) The auditee must prepare the terms and conditions of the Federal lieu of the Federal awarding agency financial statement(s) for the Federal award do not require a financial conducting or arranging for the program that includes, at a minimum, a statement audit of the auditee, the additional audits. To allow for planning, schedule of expenditures of Federal auditee may elect to have a program- such requests should be made at least awards for the program and notes that

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describe the significant accounting reporting package must be electronically reflect its financial position, results of policies used in preparing the schedule, submitted to the FAC. operations or changes in net assets, and, a summary schedule of prior audit (d) * * * where appropriate, cash flows for the findings consistent with the (8) 200.521 Management decision; fiscal year audited. The financial requirements of § 200.511(b), and a and statements must be for the same corrective action plan consistent with * * * * * organizational unit and fiscal year that the requirements of § 200.511(c). ■ 105. Amend § 200.508 by revising is chosen to meet the requirements of (3) * * * paragraphs (a), (b), and (c) to read as this part. However, non-Federal entity- (ii) Obtain an understanding of follows: wide financial statements may also internal controls and perform tests of include departments, agencies, and internal controls over the Federal § 200.508 Auditee responsibilities. other organizational units that have program consistent with the * * * * * separate audits in accordance with requirements of § 200.514(c) for a major (a) Procure or otherwise arrange for § 200.514(a) and prepare separate program; the audit required by this part in financial statements. (iii) Perform procedures to determine accordance with § 200.509, and ensure (b) Schedule of expenditures of whether the auditee has complied with it is properly performed and submitted Federal awards. The auditee must also Federal statutes, regulations, and the when due in accordance with § 200.512. prepare a schedule of expenditures of terms and conditions of Federal awards (b) Prepare appropriate financial Federal awards for the period covered that could have a direct and material statements, including the schedule of by the auditee’s financial statements effect on the Federal program consistent expenditures of Federal awards in which must include the total Federal with the requirements of § 200.514(d) accordance with § 200.510. awards expended as determined in (c) Promptly follow up and take for a major program; accordance with § 200.502. While not corrective action on audit findings, (iv) Follow up on prior audit findings, required, the auditee may choose to including preparation of a summary provide information requested by perform procedures to assess the schedule of prior audit findings and a reasonableness of the summary Federal awarding agencies and pass- corrective action plan in accordance through entities to make the schedule schedule of prior audit findings with § 200.511(b) and (c), respectively. prepared by the auditee in accordance easier to use. For example, when a with the requirements of § 200.511, and * * * * * Federal program has multiple Federal report, as a current year audit finding, ■ 106. Amend § 200.509 by revising award years, the auditee may list the when the auditor concludes that the paragraph (a) to read as follows: amount of Federal awards expended for summary schedule of prior audit § 200.509 Auditor selection. each Federal award year separately. At a minimum, the schedule must: findings materially misrepresents the (a) Auditor procurement. In procuring status of any prior audit finding; and audit services, the auditee must follow * * * * * (v) Report any audit findings the procurement standards prescribed (3) Provide total Federal awards consistent with the requirements of by the Procurement Standards in expended for each individual Federal § 200.516. §§ 200.317 through 200.326 of subpart D program and the Assistance Listings (4) * * * of this part or the FAR (48 CFR part 42), Number or other identifying number (iv) A schedule of findings and as applicable. When procuring audit when the Assistance Listings questioned costs for the Federal services, the objective is to obtain high- information is not available. For a program that includes a summary of the quality audits. In requesting proposals cluster of programs also provide the auditor’s results relative to the Federal for audit services, the objectives and total for the cluster. program in a format consistent with scope of the audit must be made clear * * * * * § 200.515(d)(1) and findings and and the non-Federal entity must request (5) For loan or loan guarantee questioned costs consistent with the a copy of the audit organization’s peer programs described in § 200.502(b), requirements of § 200.515(d)(3). review report which the auditor is identify in the notes to the schedule the (c) * * * required to provide under GAGAS. balances outstanding at the end of the (2) When a program-specific audit Factors to be considered in evaluating audit period. This is in addition to guide is available, the auditee must each proposal for audit services include including the total Federal awards electronically submit to the FAC the the responsiveness to the request for expended for loan or loan guarantee data collection form prepared in proposal, relevant experience, programs in the schedule. accordance with § 200.512(b), as availability of staff with professional (6) Include notes that describe that applicable to a program-specific audit, qualifications and technical abilities, significant accounting policies used in and the reporting required by the the results of peer and external quality preparing the schedule, and note program-specific audit guide. control reviews, and price. Whenever whether or not the auditee elected to (3) When a program-specific audit possible, the auditee must make positive use the 10% de minimis cost rate as guide is not available, the reporting efforts to utilize small businesses, covered in § 200.414. package for a program-specific audit minority-owned firms, and women’s ■ 108. Amend § 200.511 by revising must consist of the financial business enterprises, in procuring audit paragraphs (a) and (c) to read as follows: statement(s) of the Federal program, a services as stated in § 200.321, or the summary schedule of prior audit FAR (48 CFR part 42), as applicable. § 200.511 Audit findings follow-up. findings, and a corrective action plan as * * * * * (a) General. The auditee is responsible described in paragraph (b)(2) of this ■ 107. Amend § 200.510 by revising for follow-up and corrective action on section, and the auditor’s report(s) paragraphs (a), (b) introductory text, and all audit findings. As part of this described in paragraph (b)(4) of this (b)(3), (5), and (6) to read as follows: responsibility, the auditee must prepare section. The data collection form a summary schedule of prior audit prepared in accordance with § 200.510 Financial statements. findings. The auditee must also prepare § 200.512(b), as applicable to a program- (a) Financial statements. The auditee a corrective action plan for current year specific audit, and one copy of this must prepare financial statements that audit findings. The summary schedule

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of prior audit findings and the that says that the auditee complied with (2) To provide for continuity of corrective action plan must include the the requirements of this part, the data cognizance, the determination of the reference numbers the auditor assigns to were prepared in accordance with this predominant amount of direct funding audit findings under § 200.516(c). Since part (and the instructions accompanying must be based upon direct Federal the summary schedule may include the form), the reporting package does awards expended in the non-Federal audit findings from multiple years, it not include protected personally entity’s fiscal years ending in 2019, and must include the fiscal year in which identifiable information, the every fifth year thereafter. the finding initially occurred. The information included in its entirety is (3) * * * corrective action plan and summary accurate and complete, and that the (ii) Obtain or conduct quality control schedule of prior audit findings must FAC is authorized to make the reporting reviews on selected audits made by non- include findings relating to the financial package and the form publicly available Federal auditors, and provide the results statements which are required to be on a website. to other interested organizations. reported in accordance with GAGAS. * * * * * Cooperate and provide support to the * * * * * (c) * * * Federal agency designated by OMB to lead a governmentwide project to (c) Corrective action plan. At the (1) Financial statements and schedule determine the quality of single audits by completion of the audit, the auditee of expenditures of Federal awards providing a reliable estimate of the must prepare, in a document separate discussed in § 200.510(a) and (b), extent that single audits conform to from the auditor’s findings described in respectively; § 200.516, a corrective action plan to applicable requirements, standards, and (2) Summary schedule of prior audit procedures; and to make address each audit finding included in findings discussed in § 200.511(b); the current year auditor’s reports. The recommendations to address noted (3) Auditor’s report(s) discussed in audit quality issues, including corrective action plan must provide the § 200.515; and name(s) of the contact person(s) recommendations for any changes to (4) Corrective action plan discussed in applicable requirements, standards and responsible for corrective action, the § 200.511(c). corrective action planned, and the procedures indicated by the results of anticipated completion date. If the * * * * * the project. The governmentwide project auditee does not agree with the audit (g) FAC responsibilities. The FAC can rely on the current and on-going findings or believes corrective action is must make available the reporting quality control review work performed not required, then the corrective action packages received in accordance with by the agencies, State auditors, and plan must include an explanation and paragraph (c) of this section and professional audit associations. This specific reasons. § 200.507(c) to the public, except for governmentwide audit quality project Indian tribes exercising the option in must be performed once every 6 years ■ 109. Amend § 200.512 by revising (b)(2) of this section, and maintain a (or at such other interval as determined paragraphs (b) introductory text, (b)(1), data base of completed audits, provide by OMB), and the results must be (c)(1) through (4), and (g) to read as appropriate information to Federal public. follows: agencies, and follow up with known * * * * * § 200.512 Report submission. auditees that have not submitted the (vii) Coordinate a management * * * * * required data collection forms and decision for cross-cutting audit findings (b) Data collection. The FAC is the reporting packages. (see in § 200.1 of this part) that affect the repository of record for subpart F of this * * * * * Federal programs of more than one part reporting packages and the data ■ 110. Amend § 200.513 by revising agency when requested by any Federal collection form. All Federal agencies, paragraphs (a)(1) and (2), (a)(3)(ii) and awarding agency whose awards are pass-through entities and others (vii), (b) introductory text, (c) included in the audit finding of the interested in a reporting package and introductory text, and (c)(3)(i) and (iii) auditee. data collection form must obtain it by to read as follows: * * * * * accessing the FAC. (b) Oversight agency for audit (1) The auditee must submit required § 200.513 Responsibilities. responsibilities. An auditee who does data elements described in Appendix X (a)(1) Cognizant agency for audit not have a designated cognizant agency to Part 200, which state whether the responsibilities. A non-Federal entity for audit will be under the general audit was completed in accordance with expending more than $50 million a year oversight of the Federal agency this part and provides information about in Federal awards must have a determined in accordance with § 200.1 the auditee, its Federal programs, and cognizant agency for audit. The oversight agency for audit. A Federal the results of the audit. The data must designated cognizant agency for audit agency with oversight for an auditee include information available from the must be the Federal awarding agency may reassign oversight to another audit required by this part that is that provides the predominant amount Federal agency that agrees to be the necessary for Federal agencies to use the of funding directly (direct funding) (as oversight agency for audit. Within 30 audit to ensure integrity for Federal listed on the Schedule of expenditures calendar days after any reassignment, programs. The data elements and format of Federal awards, see § 200.510(b)) to a both the old and the new oversight must be approved by OMB, available non-Federal entity unless OMB agency for audit must provide notice of from the FAC, and include collections designates a specific cognizant agency the change to the FAC, the auditee, and, of information from the reporting for audit. When the direct funding if known, the auditor. The oversight package described in paragraph (c) of represents less than 25 percent of the agency for audit: this section. A senior level total expenditures (as direct and * * * * * representative of the auditee (e.g., state subawards) by the non-Federal entity, (c) Federal awarding agency controller, director of finance, chief then the Federal agency with the responsibilities. The Federal awarding executive officer, or chief financial predominant amount of total funding is agency must perform the following for officer) must sign a statement to be the designated cognizant agency for the Federal awards it makes (See also included as part of the data collection audit. the requirements of § 200.211):

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(3) * * * decide whether the schedule of (1) Federal program and specific (i) Issue a management decision as expenditures of Federal awards is stated Federal award identification including prescribed in § 200.521; fairly in all material respects in relation the Assistance Listings title and * * * * * to the auditee’s financial statements as number, Federal award identification (iii) Use cooperative audit resolution a whole. number and year, name of Federal mechanisms (see the definition of * * * * * agency, and name of the applicable cooperative audit resolution in § 200.1 (d) * * * pass-through entity. When information, of this part) to improve Federal program (1) * * * such as the Assistance Listings title and outcomes through better audit (vi) A statement as to whether the number or Federal award identification resolution, follow-up, and corrective audit disclosed any audit findings that number, is not available, the auditor action; and the auditor is required to report under must provide the best information available to describe the Federal award. * * * * * § 200.516(a); (vii) An identification of major * * * * * ■ 111. Amend § 200.514 by revising programs by listing each individual (6) Identification of questioned costs paragraphs (d)(4), (e), and (f) to read as major program; however, in the case of and how they were computed. Known follows: a cluster of programs, only the cluster questioned costs must be identified by § 200.514 Scope of audit. name as shown on the Schedule of applicable Assistance Listings * * * * * Expenditures of Federal Awards is number(s) and applicable Federal award (d) * * * required; identification number(s). (4) When internal control over some (viii) The dollar threshold used to * * * * * or all of the compliance requirements distinguish between Type A and Type B (c) Reference numbers. Each audit for a major program are likely to be programs, as described in finding in the schedule of findings and ineffective in preventing or detecting § 200.518(b)(1) or (3) when a questioned costs must include a noncompliance, the planning and recalculation of the Type A threshold is reference number in the format meeting performing of testing described in required for large loan or loan the requirements of the data collection paragraph (c)(3) of this section are not guarantees; and form submission required by required for those compliance (ix) A statement as to whether the § 200.512(b) to allow for easy requirements. However, the auditor auditee qualified as a low-risk auditee referencing of the audit findings during must report a significant deficiency or under § 200.520. follow-up. material weakness in accordance with * * * * * ■ 114. Amend § 200.518 by revising § 200.516, assess the related control risk (3) Findings and questioned costs for paragraphs (b)(3) and (4), (c)(1) at the Federal awards which must include introductory text, (c)(1)(i) and (ii), (d)(1), (e) Audit follow-up. The auditor must audit findings as defined in and (f) to read as follows: § 200.516(a). follow-up on prior audit findings, § 200.518 Major program determination. perform procedures to assess the * * * * * reasonableness of the summary (e) Nothing in this part precludes * * * * * (b) * * * combining of the audit reporting schedule of prior audit findings (3) The inclusion of large loan and prepared by the auditee in accordance required by this section with the loan guarantees (loans) must not result with § 200.511(b), and report, as a reporting required by § 200.512(b) when in the exclusion of other programs as current year audit finding, when the allowed by GAGAS and appendix X to Type A programs. When a Federal auditor concludes that the summary this part. program providing loans exceeds four schedule of prior audit findings ■ 113. Amend § 200.516 by revising times the largest non-loan program it is materially misrepresents the status of paragraphs (a)(1) and (7), (b)(1) and (6), considered a large loan program, and any prior audit finding. The auditor and (c) to read as follows: the auditor must consider this Federal must perform audit follow-up § 200.516 Audit findings. program as a Type A program and procedures regardless of whether a prior exclude its values in determining other audit finding relates to a major program (a) * * * Type A programs. This recalculation of (1) Significant deficiencies and in the current year. the Type A program is performed after (f) Data collection form. As required material weaknesses in internal control removing the total of all large loan in § 200.512(b)(3), the auditor must over major programs and significant programs. For the purposes of this complete and sign specified sections of instances of abuse relating to major paragraph a program is only considered the data collection form. programs. The auditor’s determination to be a Federal program providing loans ■ 112. Amend § 200.515 by revising of whether a deficiency in internal if the value of Federal awards expended paragraphs (a), (d)(1)(vi) through (ix), control is a significant deficiency or a for loans within the program comprises (d)(3), and (e) to read as follows: material weakness for the purpose of fifty percent or more of the total Federal reporting an audit finding is in relation awards expended for the program. A § 200.515 Audit reporting. to a type of compliance requirement for cluster of programs is treated as one * * * * * a major program identified in the program and the value of Federal (a) Financial statements. The auditor Compliance Supplement. awards expended under a loan program must determine and provide an opinion * * * * * is determined as described in § 200.502. (or disclaimer of opinion) whether the (7) Instances where the results of (4) For biennial audits permitted financial statements of the auditee are audit follow-up procedures disclosed under § 200.504, the determination of presented fairly in all materials respects that the summary schedule of prior Type A and Type B programs must be in accordance with generally accepted audit findings prepared by the auditee based upon the Federal awards accounting principles (or a special in accordance with § 200.511(b) expended during the two-year period. purpose framework such as cash, materially misrepresents the status of (c) * * * modified cash, or regulatory as required any prior audit finding. (1) The auditor must identify Type A by state law). The auditor must also (b) * * * programs which are low-risk. In making

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this determination, the auditor must ■ 115. Amend § 200.519 by revising (c) Pass-through entity. As provided consider whether the requirements in paragraph (d)(1) to read as follows: in § 200.332(d), the pass-through entity § 200.519(c), the results of audit follow- must be responsible for issuing a up, or any changes in personnel or § 200.519 Criteria for Federal program risk. management decision for audit findings systems affecting the program indicate * * * * * that relate to Federal awards it makes to significantly increased risk and (d) * * * subrecipients. (1) The nature of a Federal program preclude the program from being low * * * * * may indicate risk. Consideration should risk. For a Type A program to be (e) Reference numbers. Management be given to the complexity of the considered low-risk, it must have been decisions must include the reference program and the extent to which the audited as a major program in at least numbers the auditor assigned to each Federal program contracts for goods and one of the two most recent audit periods audit finding in accordance with services. For example, Federal programs (in the most recent audit period in the § 200.516(c). that disburse funds through third-party case of a biennial audit), and, in the ■ contracts or have eligibility criteria may 118. Amend appendix I to part 200 by most recent audit period, the program be of higher risk. Federal programs revising sections A, B, C paragraph 2, D must have not had: primarily involving staff payroll costs paragraphs 3 through 5, E paragraph 3 (i) Internal control deficiencies which may have high risk for noncompliance introductory text, E paragraph 3.iii, and were identified as material weaknesses with requirements of § 200.430, but F paragraphs 1 and 3 to read as follows: in the auditor’s report on internal otherwise be at low risk. Appendix I to Part 200—Full Text of control for major programs as required * * * * * Notice of Funding Opportunity under § 200.515(c); ■ 116. Amend § 200.520 by revising the (ii) A modified opinion on the * * * * * introductory text and paragraphs (a) and program in the auditor’s report on major (e)(1) and (2) to read as follows: A. Program Description—Required programs as required under This section contains the full program § 200.515(c); or § 200.520 Criteria for a low-risk auditee. description of the funding opportunity. * * * * * An auditee that meets all of the It may be as long as needed to (d) * * * following conditions for each of the adequately communicate to potential (1) The auditor must identify Type B preceding two audit periods must applicants the areas in which funding programs which are high-risk using qualify as a low-risk auditee and be may be provided. It describes the professional judgment and the criteria eligible for reduced audit coverage in Federal awarding agency’s funding in § 200.519. However, the auditor is not accordance with § 200.518. priorities or the technical or focus areas required to identify more high-risk Type (a) Single audits were performed on in which the Federal awarding agency B programs than at least one fourth the an annual basis in accordance with the intends to provide assistance. As number of low-risk Type A programs provisions of this Subpart, including appropriate, it may include any program identified as low-risk under Step 2 submitting the data collection form and history (e.g., whether this is a new (paragraph (c) of this section). Except for the reporting package to the FAC within program or a new or changed area of known material weakness in internal the timeframe specified in § 200.512. A program emphasis). This section must control or compliance problems as non-Federal entity that has biennial include program goals and objectives, a discussed in § 200.519(b)(1) and (2) and audits does not qualify as a low-risk reference to the relevant Assistance (c)(1), a single criterion in risk would auditee. Listings, a description of how the award seldom cause a Type B program to be * * * * * will contribute to the achievement of considered high-risk. When identifying (e) * * * the program’s goals and objectives, and which Type B programs to risk assess, (1) Internal control deficiencies that the expected performance goals, the auditor is encouraged to use an were identified as material weaknesses indicators, targets, baseline data, data approach which provides an in the auditor’s report on internal collection, and other outcomes such opportunity for different high-risk Type control for major programs as required Federal awarding agency expects to B programs to be audited as major over under § 200.515(c); achieve, and may include examples of (2) A modified opinion on a major a period of time. successful projects that have been program in the auditor’s report on major * * * * * funded previously. This section also programs as required under may include other information the (f) Percentage of coverage rule. If the § 200.515(c); or Federal awarding agency deems auditee meets the criteria in § 200.520, * * * * * necessary, and must at a minimum the auditor need only audit the major ■ 117. Amend § 200.521 by revising include citations for authorizing statutes programs identified in Step 4 paragraph (b), (c), and (e) to read as and regulations for the funding (paragraphs (e)(1) and (2) of this section) follows: opportunity. and such additional Federal programs with Federal awards expended that, in § 200.521 Management decision. B. Federal Award Information— aggregate, all major programs * * * * * Required encompass at least 20 percent (0.20) of (b) Federal agency. As provided in This section provides sufficient total Federal awards expended. § 200.513(a)(3)(vii), the cognizant information to help an applicant make Otherwise, the auditor must audit the agency for audit must be responsible for an informed decision about whether to major programs identified in Step 4 coordinating a management decision for submit a proposal. Relevant information (paragraphs (e)(1) and (2) of this section) audit findings that affect the programs could include the total amount of and such additional Federal programs of more than one Federal agency. As funding that the Federal awarding with Federal awards expended that, in provided in § 200.513(c)(3)(i), a Federal agency expects to award through the aggregate, all major programs awarding agency is responsible for announcement; the expected encompass at least 40 percent (0.40) of issuing a management decision for performance indicators, targets, baseline total Federal awards expended. findings that relate to Federal awards it data, and data collection; the * * * * * makes to non-Federal entities. anticipated number of Federal awards;

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the expected amounts of individual approved by the Federal awarding greater than the simplified acquisition Federal awards (which may be a range); agency under 2 CFR 25.110(d)) is threshold on any Federal award under the amount of funding per Federal required to: (i) Be registered in SAM a notice of funding opportunity may award, on average, experienced in before submitting its application; (ii) include, over the period of performance, previous years; and the anticipated start Provide a valid unique entity identifier this section must also inform applicants: dates and periods of performance for in its application; and (iii) Continue to * * * * * new Federal awards. This section also maintain an active SAM registration iii. That the Federal awarding agency should address whether applications for with current information at all times will consider any comments by the renewal or supplementation of existing during which it has an active Federal applicant, in addition to the other projects are eligible to compete with award or an application or plan under information in the designated integrity applications for new Federal awards. consideration by a Federal awarding and performance system, in making a This section also must indicate the agency. It also must state that the judgment about the applicant’s integrity, type(s) of assistance instrument (e.g., Federal awarding agency may not make business ethics, and record of grant, cooperative agreement) that may a Federal award to an applicant until performance under Federal awards be awarded if applications are the applicant has complied with all when completing the review of risk successful. If cooperative agreements applicable unique entity identifier and posed by applicants as described in may be awarded, this section either SAM requirements and, if an applicant § 200.206. should describe the ‘‘substantial has not fully complied with the involvement’’ that the Federal awarding requirements by the time the Federal * * * * * agency expects to have or should awarding agency is ready to make a F. Federal Award Administration reference where the potential applicant Federal award, the Federal awarding Information can find that information (e.g., in the agency may determine that the funding opportunity description in applicant is not qualified to receive a 1. Federal Award Notices—Required. Section A. or Federal award Federal award and use that This section must address what a administration information in Section determination as a basis for making a successful applicant can expect to D. If procurement contracts also may be Federal award to another applicant. receive following selection. If the awarded, this must be stated. 4. Submission Dates and Times— Federal awarding agency’s practice is to Required. Announcements must provide a separate notice stating that an C. Eligibility Information identify due dates and times for all application has been selected before it * * * * * submissions. This includes not only the actually makes the Federal award, this 2. Cost Sharing or Matching— full applications but also any section would be the place to indicate Required. Announcements must state preliminary submissions (e.g., letters of that the letter is not an authorization to whether there is required cost sharing, intent, white papers, or pre- begin performance (to the extent that it matching, or cost participation without applications). It also includes any other allows charging to Federal awards of which an application would be submissions of information before pre-award costs at the non-Federal ineligible (if cost sharing is not required, Federal award that are separate from the entity’s own risk). This section should the announcement must explicitly say full application. If the funding indicate that the notice of Federal award so). Required cost sharing may be a opportunity is a general announcement signed by the grants officer (or certain percentage or amount, or may be that is open for a period of time with no equivalent) is the authorizing document, in the form of contributions of specified specific due dates for applications, this and whether it is provided through items or activities (e.g., provision of section should say so. Note that the postal mail or by electronic means and equipment). It is important that the information on dates that is included in to whom. It also may address the timing, announcement be clear about any this section also must appear with other form, and content of notifications to restrictions on the types of cost (e.g., in- overview information in a location unsuccessful applicants. See also kind contributions) that are acceptable preceding the full text of the § 200.211. as cost sharing. Cost sharing as an announcement (see § 200.204 of this * * * * * eligibility criterion includes part). requirements based in statute or 5. Intergovernmental Review— 3. Reporting—Required. This section regulation, as described in § 200.306 of Required, if applicable. If the funding must include general information about this Part. This section should refer to opportunity is subject to Executive the type (e.g., financial or performance), the appropriate portion(s) of section D. Order 12372, ‘‘Intergovernmental frequency, and means of submission stating any pre-award requirements for Review of Federal Programs,’’ the notice (paper or electronic) of post-Federal submission of letters or other must say so and applicants must contact award reporting requirements. Highlight documentation to verify commitments their state’s Single Point of Contact any special reporting requirements for to meet cost-sharing requirements if a (SPOC) to find out about and comply Federal awards under this funding Federal award is made. with the state’s process under Executive opportunity that differ (e.g., by report * * * * * Order 12372, it may be useful to inform type, frequency, form/format, or potential applicants that the names and circumstances for use) from what the D. Application and Submission addresses of the SPOCs are listed in the Federal awarding agency’s Federal Information Office of Management and Budget’s awards usually require. Federal * * * * * website. awarding agencies must also describe in 3. Unique entity identifier and System * * * * * this section all relevant requirements for Award Management (SAM)— such as those at 2 CFR 180.335 and Required. This paragraph must state E. Application Review Information 180.350. clearly that each applicant (unless the * * * * * If the Federal share of any Federal applicant is an individual or Federal 3. For any Federal award under a award may include more than $500,000 awarding agency that is excepted from notice of funding opportunity, if the over the period of performance, this those requirements under 2 CFR Federal awarding agency anticipates section must inform potential applicants 25.110(b) or (c), or has an exception that the total Federal share will be about the post award reporting

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requirements reflected in appendix XII 1. Major Functions of an Institution student services costs. Instead, to this part. * * * * * subsection B.4.c, may be used in the * * * * * d. Other institutional activities means recovery of utility costs. e. * * * ■ 119. Amend appendix II to part 200 by all activities of an institution except for (1) Indirect (F&A) costs are the broad revising paragraphs (A) and (J) and instruction, departmental research, categories of costs discussed in Section adding paragraphs (K) and (L) to read as organized research, and other sponsored B.1. follows: activities, as defined in this section; indirect (F&A) cost activities identified * * * * * Appendix II to Part 200—Contract in this Appendix paragraph B, B. Identification and Assignment of Provisions for Non-Federal Entity Identification and assignment of Indirect (F&A) Costs Contracts Under Federal Awards indirect (F&A) costs; and specialized * * * * * services facilities described in § 200.468 1. Definition of Facilities and (A) Contracts for more than the of this part. Administration simplified acquisition threshold, which * * * * * See § 200.414 which provides the is the inflation adjusted amount 2. Criteria for Distribution basis for these indirect cost determined by the Civilian Agency requirements. Acquisition Council and the Defense * * * * * Acquisition Regulations Council b. Need for cost groupings. The 2. Depreciation (Councils) as authorized by 41 U.S.C. overall objective of the indirect (F&A) a. The expenses under this heading 1908, must address administrative, cost allocation process is to distribute are the portion of the costs of the contractual, or legal remedies in the indirect (F&A) costs described in institution’s buildings, capital instances where contractors violate or Section B, Identification and assignment improvements to land and buildings, breach contract terms, and provide for of indirect (F&A) costs, to the major and equipment which are computed in such sanctions and penalties as functions of the institution in accordance with § 200.436. appropriate. proportions reasonably consistent with b. In the absence of the alternatives the nature and extent of their use of the * * * * * provided for in Section A.2.d, the institution’s resources. In order to (J) See § 200.323. expenses included in this category must achieve this objective, it may be be allocated in the following manner: (K) See § 200.216. necessary to provide for selective (L) See § 200.322. distribution by establishing separate 3. Interest ■ 120. Amend appendix III to part 200: groupings of cost within one or more of Interest on debt associated with ■ a. Under section A by revising the the indirect (F&A) cost categories certain buildings, equipment and capital introductory text and paragraphs 1.d referred to in subsection B.1. In general, improvements, as defined in § 200.449, introductory text, 2.b, 2.d(4) the cost groupings established within a must be classified as an expenditure introductory text, 2.d.(4)(b), 2.d.(5), and category should constitute, in each case, under the category Facilities. These 2.e.(1); and a pool of those items of expense that are costs must be allocated in the same ■ b. Under section B by revising considered to be of like nature in terms manner as the depreciation on the paragraphs 1, 2.a and b introductory of their relative contribution to (or buildings, equipment and capital text, 3, 4.c.(2)(ii)B, 5.a, 6.a.(2)(a), 6.b.(1), degree of remoteness from) the improvements to which the interest 8.a., and 9.a; particular cost objectives to which relates. ■ distribution is appropriate. Cost c. Under section C by revising 4. Operation and Maintenance Expenses paragraphs 1.a.(1) and (3), 2., 7, 8.a., groupings should be established 9.a., 11.a. introductory text, 11.a.(1), considering the general guides provided * * * * * 11.a.(2)b; in subsection c of this section. Each c. * * * ■ d. By revising section E; such pool or cost grouping should then (2) * * * be distributed individually to the ■ e. Under section F by revising (ii) * * * related cost objectives, using the paragraph 2.c. B. In July 2012, values for these two distribution base or method most The revisions read as follows: indices (taken respectively from the appropriate in light of the guidelines set Lawrence Berkeley Laboratory ‘‘Labs for Appendix III to Part 200—Indirect forth in subsection d of this section. the 21st Century’’ benchmarking tool (F&A) Costs Identification and * * * * * and the US Department of Energy Assignment, and Rate Determination d. * * * ‘‘Buildings Energy Databook’’ and were for Institutions of Higher Education (4) If a cost analysis study is not 310 kBtu/sq ft-yr. and 155 kBtu/sq ft-yr., (IHEs) performed, or if the study does not so that the adjustment ratio is 2.0 by this result in an equitable distribution of the A. General methodology. To retain currency, OMB costs, the distribution must be made in will adjust the EUI numbers from time This appendix provides criteria for accordance with the appropriate base to time (no more often than annually identifying and computing indirect (or cited in Section B, unless one of the nor less often than every 5 years), using indirect (F&A)) rates at IHEs following conditions is met: reliable and publicly disclosed data. (institutions). Indirect (F&A) costs are * * * * * Current values of both the EUIs and the those that are incurred for common or (b) The institution qualifies for, and REUI will be posted on the OMB joint objectives and therefore cannot be elects to use, the simplified method for website. identified readily and specifically with computing indirect (F&A) cost rates 5. General Administration and General a particular sponsored project, an described in Section D. instructional activity, or any other (5) Notwithstanding subsection (3), Expenses institutional activity. See subsection B.1 effective July 1, 1998, a cost analysis or a. The expenses under this heading for a discussion of the components of base other than that in Section B must are those that have been incurred for the indirect (F&A) costs. not be used to distribute utility or general executive and administrative

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offices of educational institutions and For example, salaries of technical staff, C. Determination and Application of other expenses of a general character laboratory supplies (e.g., chemicals), Indirect (F&A) Cost Rate or Rates which do not relate solely to any major telephone toll charges, animals, animal 1. Indirect (F&A) Cost Pools function of the institution; i.e., solely to care costs, computer costs, travel costs, (1) instruction, (2) organized research, and specialized shop costs must be a. (1) Subject to subsection b, the (3) other sponsored activities, or (4) treated as direct costs wherever separate categories of indirect (F&A) other institutional activities. The identifiable to a particular cost costs allocated to each major function of general administration and general objective. Direct charging of these costs the institution as prescribed in Section expense category should also include its may be accomplished through specific B, must be aggregated and treated as a allocable share of fringe benefit costs, identification of individual costs to common pool for that function. The amount in each pool must be divided by operation and maintenance expense, benefitting cost objectives, or through the distribution base described in depreciation, and interest costs. recharge centers or specialized service Examples of general administration and subsection 2 to arrive at a single indirect facilities, as appropriate under the general expenses include: Those (F&A) cost rate for each function. circumstances. See §§ 200.413(c) and expenses incurred by administrative 200.468. * * * * * offices that serve the entire university (3) Each institution’s indirect (F&A) system of which the institution is a part; * * * * * cost rate process must be appropriately central offices of the institution such as 8. Library Expenses designed to ensure that Federal the President’s or Chancellor’s office, sponsors do not in any way subsidize the offices for institution-wide financial a. The expenses under this heading the indirect (F&A) costs of other management, business services, budget are those that have been incurred for the sponsors, specifically activities and planning, personnel management, operation of the library, including the sponsored by industry and foreign and safety and risk management; the cost of books and library materials governments. Accordingly, each office of the General Counsel; and the purchased for the library, less any items allocation method used to identify and operations of the central administrative of library income that qualify as allocate the indirect (F&A) cost pools, as management information systems. applicable credits under § 200.406. The described in Sections A.2 and B.2 General administration and general library expense category should also through B.9, must contain the full expenses must not include expenses include the fringe benefits applicable to amount of the institution’s modified incurred within non-university-wide the salaries and wages included therein, total costs or other appropriate units of deans’ offices, academic departments, an appropriate share of general measurement used to make the organized research units, or similar computations. In addition, the final rate administration and general expense, organizational units. (See subsection 6.) distribution base (as defined in operation and maintenance expense, * * * * * subsection 2) for each major function and depreciation. Costs incurred in the (organized research, instruction, etc., as 6. Departmental Administration purchases of rare books (museum-type described in Section A.1 functions of an Expenses books) with no value to Federal awards institution) must contain all the a. * * * should not be allocated to them. programs or activities which utilize the (2) * * * * * * * * indirect (F&A) costs allocated to that (a) Salaries and fringe benefits major function. At the time an indirect 9. Student Administration and Services attributable to the administrative work (F&A) cost proposal is submitted to a (including bid and proposal a. The expenses under this heading cognizant agency for indirect costs, each preparation) of faculty (including are those that have been incurred for the institution must describe the process it department heads) and other administration of student affairs and for uses to ensure that Federal funds are not professional personnel conducting services to students, including expenses used to subsidize industry and foreign research and/or instruction, must be of such activities as deans of students, government funded programs. allowed at a rate of 3.6 percent of admissions, registrar, counseling and modified total direct costs. This 2. The Distribution Basis category does not include professional placement services, student advisers, Indirect (F&A) costs must be business or professional administrative student health and infirmary services, distributed to applicable Federal awards officers. This allowance must be added catalogs, and commencements and and other benefitting activities within to the computation of the indirect (F&A) convocations. The salaries of members each major function (see section A.1) on cost rate for major functions in Section of the academic staff whose the basis of modified total direct costs C; the expenses covered by the responsibilities to the institution require (MTDC), consisting of all salaries and allowance must be excluded from the administrative work that benefits wages, fringe benefits, materials and departmental administration cost pool. sponsored projects may also be included supplies, services, travel, and up to the No documentation is required to to the extent that the portion charged to first $25,000 of each subaward support this allowance. student administration is determined in (regardless of the period covered by the * * * * * accordance with subpart E of this Part. subaward). MTDC is defined in § 200.1. b. The following guidelines apply to This expense category also includes the For this purpose, an indirect (F&A) cost the determination of departmental fringe benefit costs applicable to the rate should be determined for each of administrative costs as direct or indirect salaries and wages included therein, an the separate indirect (F&A) cost pools (F&A) costs. appropriate share of general developed pursuant to subsection 1. The (1) In developing the departmental administration and general expenses, rate in each case should be stated as the administration cost pool, special care operation and maintenance, interest percentage which the amount of the should be exercised to ensure that costs expense, and depreciation. particular indirect (F&A) cost pool is of the modified total direct costs identified incurred for the same purpose in like * * * * * circumstances are treated consistently with such pool. as either direct or indirect (F&A) costs. * * * * *

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7. Fixed Rates for the Life of the ‘‘Administration’’ portion of indirect c. Certificate. The certificate required Sponsored Agreement (F&A) costs. The allowance could be by this section must be in the following a. Except as provided in paragraph either 24% of modified total direct costs form: or a percentage equal to 95% of the most (c)(1) of § 200.414, Federal agencies Certificate of Indirect (F&A) Costs must use the negotiated rates in effect at recently negotiated fixed or This is to certify that to the best of my the time of the initial award throughout predetermined rate for the cost pools knowledge and belief: the life of the Federal award. Award included under ‘‘Administration’’ as defined in Section B.1, whichever is (1) I have reviewed the indirect (F&A) levels for Federal awards may not be cost proposal submitted herewith; adjusted in future years as a result of less. Under this alternative, no cost proposal need be prepared for the (2) All costs included in this proposal changes in negotiated rates. ‘‘Negotiated [identify date] to establish billing or rates’’ per the rate agreement include ‘‘Administration’’ portion of the indirect (F&A) cost rate nor is further final indirect (F&A) costs rate for final, fixed, and predetermined rates [identify period covered by rate] are and exclude provisional rates. ‘‘Life’’ for identification or documentation of these costs required (see subsection c). Where allowable in accordance with the the purpose of this subsection means requirements of the Federal each competitive segment of a project. A a negotiated indirect (F&A) cost agreement includes this alternative, an agreement(s) to which they apply and competitive segment is a period of years with the cost principles applicable to approved by the Federal awarding institution must make no further charges for the expenditure categories those agreements. agency at the time of the Federal award. (3) This proposal does not include If negotiated rate agreements do not described in Section B.5, Section B.6, Section B.7, and Section B.9. any costs which are unallowable under extend through the life of the Federal subpart E of this part such as (without * * * * * award at the time of the initial award, limitation): Public relations costs, then the negotiated rate for the last year 11. Negotiation and Approval of Indirect contributions and donations, of the Federal award must be extended (F&A) Rate entertainment costs, fines and penalties, through the end of the life of the Federal lobbying costs, and defense of fraud award. a. Cognizant agency for indirect costs is defined in Subpart A. proceedings; and b. Except as provided in § 200.414, (4) All costs included in this proposal (1) Cost negotiation cognizance is when an educational institution does are properly allocable to Federal assigned to the Department of Health not have a negotiated rate with the agreements on the basis of a beneficial and Human Services (HHS) or the Federal Government at the time of an or causal relationship between the Department of Defense’s Office of Naval award (because the educational expenses incurred and the agreements Research (DOD), normally depending on institution is a new recipient or the to which they are allocated in which of the two agencies (HHS or parties cannot reach agreement on a accordance with applicable DOD) provides more funds directly to rate), the provisional rate used at the requirements. the educational institution for the most time of the award must be adjusted once I declare that the foregoing is true and recent three years. Information on a rate is negotiated and approved by the correct. cognizant agency for indirect costs. funding must be derived from relevant data gathered by the National Science Institution of Higher Education: lllllllllllll 8. Limitation on Reimbursement of Foundation. In cases where neither HHS Signature: llllllllll Administrative Costs nor DOD provides Federal funding Name of Official: lllllllllllllll a. Notwithstanding the provisions of directly to an educational institution, Title: llllllllll subsection C.1.a, the administrative the cognizant agency for indirect costs Date of Execution: costs charged to Federal awards assignment must default to HHS. ■ 121. Amend appendix IV to part 200: awarded or amended (including Notwithstanding the method for ■ a. By revising section A; continuation and renewal awards) with cognizance determination described in ■ b. Under section B by revising effective dates beginning on or after the this section, other arrangements for paragraphs 2.b through e, 3.b(1), (2), and start of the institution’s first fiscal year cognizance of a particular educational (4), 3.c.(4), 3.f and g, and 4.b and c; which begins on or after October 1, institution may also be based in part on ■ c. Under section C by revising 1991, must be limited to 26% of the types of research performed at the paragraphs 2.a through c; and modified total direct costs (as defined in educational institution and must be ■ d. Under section D by revising (D)(1), subsection 2) for the total of General decided based on mutual agreement and under the center heading Administration and General Expenses, between HHS and DOD. Where a non- ‘‘Certificate of Indirect (F&A) Costs’’, Departmental Administration, Federal entity only receives funds as a paragraphs (2) and (3). Sponsored Projects Administration, and subrecipient, see § 200.332. The revisions read as follows: Student Administration and Services (2) * * * Appendix IV to Part 200—Indirect (including their allocable share of b. Acceptance of rates. See § 200.414. (F&A) Costs Identification and depreciation, interest costs, operation * * * * * Assignment, and Rate Determination and maintenance expenses, and fringe for Nonprofit Organizations benefits costs, as provided by Section B, E. Documentation Requirements and all other types of expenditures not The standard format for A. General listed specifically under one of the documentation requirements for 1. Indirect costs are those that have subcategories of facilities in Section B. indirect (indirect (F&A)) rate proposals been incurred for common or joint * * * * * for claiming costs under the regular objectives and cannot be readily method is available on the OMB identified with a particular final cost 9. Alternative Method for website. objective. Direct cost of minor amounts Administrative Costs may be treated as indirect costs under a. Notwithstanding the provisions of F. Certification the conditions described in subsection C.1.a, an institution may * * * * * § 200.413(d). After direct costs have elect to claim a fixed allowance for the 2. * * * been determined and assigned directly

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to awards or other work as appropriate, (2) Interest. Interest on debt associated the basis of MTDC (see definition in indirect costs are those remaining to be with certain buildings, equipment and § 200.1). allocated to benefitting cost objectives. capital improvements are computed in g. Individual Rate Components. An A cost may not be allocated to a Federal accordance with § 200.449. indirect cost rate must be determined award as an indirect cost if any other * * * * * for each separate indirect cost pool developed. The rate in each case must cost incurred for the same purpose, in (4) General administration and be stated as the percentage which the like circumstances, has been assigned to general expenses. The expenses under amount of the particular indirect cost a Federal award as a direct cost. this heading are those that have been pool is of the distribution base 2. ‘‘Major nonprofit organizations’’ are incurred for the overall general identified with that pool. Each indirect defined in paragraph (a) of § 200.414. executive and administrative offices of cost rate negotiation or determination See indirect cost rate reporting the organization and other expenses of agreement must include development of requirements in sections B.2.e and B.3.g a general nature which do not relate of this Appendix. the rate for each indirect cost pool as solely to any major function of the well as the overall indirect cost rate. B. Allocation of Indirect Costs and organization. This category must also The indirect cost pools must be Determination of Indirect Cost Rates include its allocable share of fringe classified within two broad categories: benefit costs, operation and * * * * * ‘‘Facilities’’ and ‘‘Administration,’’ as maintenance expense, depreciation, and described in § 200.414(a). 2. Simplified Allocation Method interest costs. Examples of this category include central offices, such as the 4. Direct Allocation Method * * * * * director’s office, the office of finance, * * * * * b. Both the direct costs and the business services, budget and planning, indirect costs must exclude capital b. This method is acceptable, personnel, safety and risk management, provided each joint cost is prorated expenditures and unallowable costs. general counsel, management However, unallowable costs which using a base which accurately measures information systems, and library costs. the benefits provided to each Federal represent activities must be included in award or other activity. The bases must the direct costs under the conditions In developing this cost pool, special be established in accordance with described in § 200.413(e). care should be exercised to ensure that costs incurred for the same purpose in reasonable criteria and be supported by c. The distribution base may be total like circumstances are treated current data. This method is compatible direct costs (excluding capital consistently as either direct or indirect with the Standards of Accounting and expenditures and other distorting items, costs. For example, salaries of technical Financial Reporting for Voluntary such as subawards for $25,000 or more), staff, project supplies, project Health and Welfare Organizations direct salaries and wages, or other base publication, telephone toll charges, issued jointly by the National Health which results in an equitable computer costs, travel costs, and Council, Inc., the National Assembly of distribution. The distribution base must specialized services costs must be Voluntary Health and Social Welfare exclude participant support costs as treated as direct costs wherever Organizations, and the United Way of defined in § 200.1. identifiable to a particular program. The America. d. Except where a special rate(s) is salaries and wages of administrative and c. Under this method, indirect costs required in accordance with section B.5 pooled clerical staff should normally be consist exclusively of general of this Appendix, the indirect cost rate treated as indirect costs. Direct charging administration and general expenses. In developed under the above principles is of these costs may be appropriate as all other respects, the organization’s applicable to all Federal awards of the described in § 200.413. Items such as indirect cost rates must be computed in organization. If a special rate(s) is office supplies, postage, local telephone the same manner as that described in required, appropriate modifications costs, periodicals and memberships section B.2 of this Appendix. must be made in order to develop the should normally be treated as indirect * * * * * special rate(s). costs. e. For an organization that receives C. Negotiation and Approval of Indirect (c) * * * more than $10 million in direct Federal Cost Rates (4) General administration and funding in a fiscal year, a breakout of * * * * * the indirect cost component into two general expenses. General broad categories, Facilities and administration and general expenses 2. Negotiation and Approval of Rates Administration as defined in paragraph must be allocated to benefitting a. Unless different arrangements are (a) of § 200.414, is required. The rate in functions based on modified total costs agreed to by the Federal agencies each case must be stated as the (MTC). The MTC is the modified total concerned, the Federal agency with the percentage which the amount of the direct costs (MTDC), as described in largest dollar value of Federal awards particular indirect cost category (i.e., § 200.1, plus the allocated indirect cost directly funded to an organization will Facilities or Administration) is of the proportion. The expenses included in be designated as the cognizant agency distribution base identified with that this category could be grouped first for indirect costs for the negotiation and category. according to major functions of the approval of the indirect cost rates and, organization to which they render where necessary, other rates such as 3. Multiple Allocation Base Method services or provide benefits. The fringe benefit and computer charge-out * * * * * aggregate expenses of each group must rates. Once an agency is assigned (b) * * * then be allocated to benefitting cognizance for a particular nonprofit (1) Depreciation. The expenses under functions based on MTC. organization, the assignment will not be this heading are the portion of the costs * * * * * changed unless there is a shift in the of the organization’s buildings, capital f. Distribution basis. Indirect costs dollar volume of the Federal awards improvements to land and buildings, must be distributed to applicable directly funded to the organization for at and equipment which are computed in Federal awards and other benefitting least three years. All concerned Federal accordance with § 200.436. activities within each major function on agencies must be given the opportunity

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to participate in the negotiation process lobbying costs, and defense of fraud operating transfers (as defined by but, after a rate has been agreed upon, proceedings; and GAAP) into and out of the fund; a it will be accepted by all Federal * * * * * description of the procedures agencies. When a Federal agency has ■ 122. Amend appendix V to part 200 (methodology) used to charge the costs reason to believe that special operating by revising: of each service to users, including how factors affecting its Federal awards ■ a. Section A, paragraph 2; billing rates are determined; a schedule necessitate special indirect cost rates in ■ b. Section B, paragraph 4; of current rates; and, a schedule accordance with section B.5 of this ■ c. Section C comparing total revenues (including Appendix, it will, prior to the time the ■ d. Section E, paragraph 3.b.(1); and imputed revenues) generated by the rates are negotiated, notify the cognizant ■ e. Section G, paragraph 5. service to the allowable costs of the agency for indirect costs. (See also The revisions read as follows: service, as determined under this part, § 200.414.) If the nonprofit does not with an explanation of how variances receive any funding from any Federal Appendix V to Part 200—State/Local will be handled. Governmentwide Central Service Cost agency, the pass-through entity is * * * * * responsible for the negotiation of the Allocation Plans G. Other Polices indirect cost rates in accordance with A. General § 200.332(a)(4). * * * * * b. Except as otherwise provided in * * * * * 2. Guidelines and illustrations of § 200.414(f), a nonprofit organization 5. Records Retention central service cost allocation plans are which has not previously established an provided in a brochure published by the All central service cost allocation indirect cost rate with a Federal agency Department of Health and Human plans and related documentation used must submit its initial indirect cost Services entitled ‘‘A Guide for State, as a basis for claiming costs under proposal immediately after the Local and Indian Tribal Governments: Federal awards must be retained for organization is advised that a Federal Cost Principles and Procedures for audit in accordance with the records award will be made and, in no event, Developing Cost Allocation Plans and retention requirements contained in later than three months after the Indirect Cost Rates for Agreements with subpart D of this part. effective date of the Federal award. the Federal Government.’’ A copy of this * * * * * c. Unless approved by the cognizant brochure may be obtained from the HHS agency for indirect costs in accordance ■ 123. Amend appendix VI to part 200 Cost Allocation Services or at their with § 200.414(g), organizations that by revising paragraph 2 in section D to website. have previously established indirect read as follows: cost rates must submit a new indirect B. Definitions Appendix VI to Part 200—Public cost proposal to the cognizant agency * * * * * Assistance Cost Allocation Plans for indirect costs within six months 4. Cognizant agency for indirect costs * * * * * after the close of each fiscal year. is defined in § 200.1. The determination * * * * * of cognizant agency for indirect costs for D. Submission, Documentation, and Approval of Public Assistance Cost D. Certification of Indirect (F&A) Costs states and local governments is described in section F.1. Allocation Plans (1) Required Certification. No * * * * * * * * * * proposal to establish indirect (F&A) cost rates must be acceptable unless such C. Scope of the Central Service Cost 2. Under the coordination process costs have been certified by the Allocation Plans outlined in section E, affected Federal agencies will review all new plans and nonprofit organization using the The central service cost allocation Certificate of Indirect (F&A) Costs set plan amendments and provide plan will include all central service comments, as appropriate, to HHS. The forth in section j. of this appendix. The costs that will be claimed (either as a certificate must be signed on behalf of effective date of the plan or plan billed or an allocated cost) under amendment will be the first day of the the organization by an individual at a Federal awards and will be documented level no lower than vice president or calendar quarter following the event as described in section E. omitted from that required the amendment, unless chief financial officer for the the plan will not be reimbursed. organization. another date is specifically approved by HHS. HHS, as the cognizant agency for * * * * * E. Documentation Requirements for Submitted Plans indirect costs acting on behalf of all Certificate of Indirect (F&A) Costs affected Federal agencies, will, as * * * * * necessary, conduct negotiations with * * * * * the state public assistance agency and (2) All costs included in this proposal 3. Billed Services will inform the state agency of the [identify date] to establish billing or * * * * * action taken on the plan or plan final indirect (F&A) costs rate for b. * * * amendment. [identify period covered by rate] are (1) For each internal service fund or allowable in accordance with the similar activity with an operating * * * * * requirements of the Federal awards to budget of $5 million or more, the plan ■ 124. Amend appendix VII to part 200 which they apply and with subpart E of must include: A brief description of by revising: this part. each service; a balance sheet for each ■ a. Section A, paragraphs 2, 3, 4, and (3) This proposal does not include fund based on individual accounts 5; any costs which are unallowable under contained in the governmental unit’s ■ b. Section B, paragraph 3; subpart E of this part such as (without accounting system; a revenue/expenses ■ limitation): Public relations costs, statement, with revenues broken out by c. Section D, paragraph 1a.; and contributions and donations, source, e.g., regular billings, interest ■ d. Section E, paragraph 4. entertainment costs, fines and penalties, earned, etc.; a listing of all non- The revisions read as follows:

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Appendix VII to Part 200—States and entity, depreciation on buildings and adjustments or refunds will be made Local Government and Indian Tribe equipment, the costs of operating and regardless of the type of rate negotiated Indirect Cost Proposals maintaining facilities. (predetermined, final, fixed, or 5. This Appendix does not apply to provisional). A. General state public assistance agencies. These * * * * * * * * * * agencies should refer instead to ■ 125. Amend appendix VIII to part 200 2. Indirect costs include (a) the Appendix VI to this part. indirect costs originating in each by revising the heading and paragraphs department or agency of the B. Definitions 32 and 33 to read as follows: governmental unit carrying out Federal * * * * * Appendix VIII to Part 200—Nonprofit awards and (b) the costs of central 3. Cognizant agency for indirect costs Organizations Exempted From Subpart governmental services distributed means the Federal agency responsible E of Part 200 through the central service cost for reviewing and approving the allocation plan (as described in governmental unit’s indirect cost rate(s) * * * * * Appendix V to this part) and not on the behalf of the Federal 32. Nonprofit insurance companies, otherwise treated as direct costs. Government. The cognizant agency for such as Blue Cross and Blue Shield 3. Indirect costs are normally charged indirect costs assignment is described in Organizations to Federal awards by the use of an Appendix V, section F. 33. Other nonprofit organizations as negotiated with Federal awarding indirect cost rate. A separate indirect * * * * * cost rate(s) is usually necessary for each agencies department or agency of the D. Submission and Documentation of ■ 126. Appendix XI to part 200 is governmental unit claiming indirect Proposals revised to read as follows: costs under Federal awards. Guidelines 1. Submission of Indirect Cost Rate and illustrations of indirect cost Appendix XI to Part 200—Compliance Proposals proposals are provided in a brochure Supplement published by the Department of Health a. All departments or agencies of the The compliance supplement is and Human Services entitled ‘‘A Guide governmental unit desiring to claim available on the OMB website. indirect costs under Federal awards for States and Local Government ■ 127. Amend appendix XII to part 200 must prepare an indirect cost rate Agencies: Cost Principles and by revising section A, paragraph 2.b to proposal and related documentation to Procedures for Establishing Cost read as follows: Allocation Plans and Indirect Cost Rates support those costs. The proposal and for Grants and Contracts with the related documentation must be retained Appendix XII to Part 200—Award Federal Government.’’ A copy of this for audit in accordance with the records Term and Condition for Recipient brochure may be obtained from HHS retention requirements contained in Integrity and Performance Matters § 200.334. Cost Allocation Services or at their A. Reporting of Matters Related to website. * * * * * Recipient Integrity and Performance 4. Because of the diverse characteristics and accounting practices E. Negotiation and Approval of Rates * * * * * of governmental units, the types of costs * * * * * 2. Proceedings About Which You Must which may be classified as indirect 4. Refunds must be made if proposals Report costs cannot be specified in all are later found to have included costs situations. However, typical examples of that (a) are unallowable (i) as specified * * * * * indirect costs may include certain state/ by law or regulation, (ii) as identified in b. Reached its final disposition during local-wide central service costs, general § 200.420, or (iii) by the terms and the most recent five-year period; and administration of the non-Federal entity conditions of Federal awards, or (b) are * * * * * accounting and personnel services unallowable because they are clearly not [FR Doc. 2020–17468 Filed 8–11–20; 8:45 am] performed within the non-Federal allocable to Federal awards. These BILLING CODE 3110–01–P

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