Sec. 1405.22 Payment methods for nonconstruc tion grants. 1405.23 Payment methods for construction grants. 1405.24 Withholding of payments. 1405.25 Requesting advances and reim bursements. Subpart C-Cost Principles 1405.30 Scope of subpart. 1405.31 Grants to State or local governments. 1405.32 Grants to institutions of higher education. 1405.33 Grants to hospitals. 1405.34 Grants to other nonprofit organizations. 1405.35 Cost-type contracts. AUTHORITY: Section 405 of the General Education Provisions Act, as added by section 301(a)(2) of Pub. L. 92-318, 86 Stat. 328 (20 U.S.C. 1221e), unless otherwise noted. SOURCE: 39 FR 39001, Nov. 4, 1974, unless otherwise noted. Subpart A-General Provisions § 1405.1 Amount of award. Federal assistance shall be provided only to meet allowable costs incurred by the award recipient in carrying out the approved project in accordance with section 405 of the Act and the regulations of this subchapter. (31 U.S.C. 628) § 1405.2 Limitations on costs. The amount of the award shall be set forth in the grant award document. The total cost to the Government will not exceed the amount set forth in the grant award document or any modification thereof approved by the Director which meets the requirements of applicable statutes and regulations. The Government shall not be obligated to reimburse the grantee for costs incurred in excess of such amount unless and until the Director has notified the grantee in writing that such amount has been increased and has specified such increased amount, which meets the requirements of applicable statutes and regulations, in a revised grant award document pursuant to § 1403.13 of this subchapter. Such revised amount shall thereupon constitute the revised total costs of the performance of the grant. (31 U.S.C. 200) § 1405.4 Budget revisions. (a) As used in this paragraph: (1) "Construction" means solely or primarily for construction. (2) "Nonconstruction" means not solely or primarily for construction. (OMB Circular No. A-102, Exhibit M-3, 5) (b) For nonconstruction grants, grantees shall request prior approval promptly from the Director for proposed budget revisions whenever one or more of the following conditions prevail: (1) The revision results from approved changes in the scope or the objective of the project; (2) The revision indicates the need for additional Federal funding; (3) The revisions involve the transfer of amounts budgeted for indirect costs to absorb increases in direct costs; or (4) The revisions pertain to the addition of items requiring prior approval in accordance with the provisions of Subpart C of Part 1405 of this subchapter. (5) The revisions pertain to items specifically disallowed as a condition of the grant. (OMB Circular No. A-102, Attachment K, 1-2) (c) Budget revisions for nonconstruction grants, other than those revisions set forth in paragraph (b) of this section, do not require approval by the Director. Budget revisions which do not require such approval include (1) the use of grantee funds in furtherance of project objectives over and above the grantee minimum share (if any) included in the approved budget and (2) the transfer of amounts budgeted for direct costs to absorb authorized increases in indirect costs. (d) For construction grants, grantees shall request prior approval promptly from the Director for budget revisions whenever: (1) The revision results from changes in the scope or objective of the project; or funds (2) The revision increases the budgeted amounts of Federal needed to complete the project. (OMB Circular No. A-102, Attachment K, 2) (e) (1) For both construction and nonconstruction grants, grantees shall notify the Director promptly whenever the amount of Federal authorized funds is expected to exceed the needs of the recipient by more than $5,000 or five percent (5%) of the Federal grant, whichever is greater. (2) The notification required in paragraph (e)(1) of this section will not be required when applications for additional funding are submitted for continuing grants and those applications include the grantee's estimate of what the unobligated balance of Federallyauthorized funds will be at the end of the current period. (f) When requesting approval for budget revisions, grantees shall use the budget forms which were used in the application. However, grantees may request by letter the approval required by paragraph (b)(4) of this section. (OMB Circular No. A-102, Attachment K, 2) (g) Within 30 days from the date of receipt of the request for budget revisions, the Director will review the request and notify the grantee as to whether or not the budget revisions have been approved. If the revision is still under consideration at the end of such 30-day period, the Director will inform the recipient in writing as to when the grantee may expect the Director's decision. (OMB Circular No. A-102, Attachment K, 3) § 1405.5 Review and direction of the research effort. (a) Deviations from the project of a grantee in methodology, approach, or other aspects of the project that would expedite achievement of the project's research objectives are permitted without the necessity for an approved amendment to the notification of grant award, except with regard to changes described under paragraph (b) of this section. (b) Prior amendment to the notification of grant award by the Director, in accordance with § 1403.13, is required for changes in the methodology, approach, or other aspects of the project for changes (1) in methodology, approach, or other aspects which are stated in the application or in the notification of grant award under § 1403.11(c) as a specific objective of the grant; (2) where the notification of grant award has contained detailed objectives or goals specified by the Institute and has provided for close control by the Institute over the direction, specifications, methods, or schedules of the research; or (3) in the stated objectives of the research effort and the phenomenon or phenomena under study. (OMB Circular No. A-101) § 1405.7 Federal obligation. The issuance of a grant award document will be regarded as an obligation of the Federal Government in the amount of the award. (31 U.S.C. 200) § 1405.8 Payments. (a) Payment methods and adjustments. Payments pursuant to grants may be made in installments, and in advance or by way of reimbursement pursuant to Subpart B of this part, with necessary adjustments on account of overpayments or underpayments, as the Director may determine. (b) Violations. A payment under any such grant for expenditures which fail to meet the requirements of any of the provisions of applicable Federal statutes, regulations, or the approved project application (including any terms and conditions applicable thereto) may be taken into account in the determination of any such overpayments and any adjustments relating thereto. or overpayments, resulting from Federal or State administrative reviews and audits or otherwise. Such adjustments shall be set forth in any financial reports required to be filed with the Director. § 1405.9 Duration of project. (a) The amount of the grant award shall remain available for obligation by the grantee during the period specified in the grant award or until otherwise suspended or terminated. Such period may be extended by revision of the grant with or without additional funds pursuant to paragraph (b) of this section where otherwise permitted by law. (b) When it is determined that special or unusual circumstances will delay the completion of the project beyond the period for obligation, the grantee must in writing request the Director to extend such period and must indicate the reasons therefor. If he/she deems it appropriate, the Director may extend the project period in accordance with law. § 1405.10 Obligation by grantee. Obligations will be considered to have been incurred by a grantee on the basis of documentary evidence of binding commitments for the acquisition of goods or property or for the performance of work, except that funds for personal services, for services performed by public utilities, for travel, and for the rental of facilities, shall be considered to have been obligated as of the time such services were rendered, such travel was performed, and such rented facilities were used, respectively. § 1405.11 Cash depositories. (a) Physical separation and eligibility. Except as provided in paragraph (b) of this section: (1) Physical segregation of cash depositories for Federal funds which are provided to a grantee is not required; and (2) There will be no eligibility requirements for cash depositories in which Federal funds are deposited by grantees. (b) Checks-paid basis letter of credit. A separate bank account shall be used when payments under letter of credit are made on a "checks-paid" basis in accordance with agreements entered into by a grantee, the Federal Government, and the banking institutions involved. A checks-paid basis letter of credit is one under which funds are not drawn from the Treasury until the grantee's checks have been presented to its bank for payment. (c) Minority-owned banks. Consistent with the national goal of expanding opportunities for minority business enterprises, grantees are encouraged to use minority-owned banks. (OMB Circular No. A-102, Attachment A) Subpart B-Grant Payment Requirements § 1405.20 Scope of subpart. This subpart sets forth the methods of making grant payments to grantees. These methods will minimize the time elapsing between the disbursement by a grantee and the transfer of funds from the United States Treasury to the grantee, whether such disbursement occurs prior to or subsequent to the transfer of funds. (OMB Circular No. A-102, Attachment J) § 1405.21 Definitions. As used in this subpart: 'Advance by Treasury check" is a payment made by a Treasury check to a grantee upon its request or through the use of predetermined payment schedules before payments are made by the grantee. "Letter of credit" is an instrument certified by an authorized official of the Federal Government which authorizes a grantee to draw funds when needed from the Treasury, through a Federal Reserve Bank and the grantee's commercial bank, in accordance with the provisions of Treasury Circular No. 1075. "Percentage of completion method” refers to a system under which payments are made to the recipient of a construction grant according to а schedule which relates the amount and timing of each payment primarily or solely to the actual percentage of completion of the construction work under the grant rather than to the grantee's actual rate of disbursements. "Reimbursement by Treasury check” is a payment made to a grantee with a Treasury check upon request for reimbursement from the grantee. (OMB Circular No. A-102, Attachment J) § 1405.22 Payment methods for nonconstruction grants. (a) Letters of credit will be used to pay grantees when all of the following conditions exist: (1) There is or will be a continuing relationship between the grantee and the responsible Department finance office for at least a twelve-month period and the total amount of advances to be received from the finance office is $250,000 or more, as prescribed by Treasury Circular No. 1075; and (2) The grantee has established, or demonstrated to the Director the willingness and ability to establish procedures that will minimize the time elapsing between the transfer of funds from the Treasury and their disbursement by the grantee; and (3) The grantee's financial management system meets the standards for fund control and accountability prescribed in Part 1417 of this subchapter. (b) Advances by Treasury check will be used, in accordance with the provisions of Treasury Circular No. 1075, when the grantee meets all of the requirements specified in paragraph (a) of this section except those in paragraph (a)(1) of this section. (c) Reimbursement by Treasury check will be the preferred (although not mandatory) method when the grantee does not meet the requirements specified in either or both of paragraphs (a)(2) and (a)(3) of this section. This method may also be used when the major portion of the program is accomplished through private market financing or Federal loans, and the Federal grant assistance constitutes a minor portion of the program. (d) Grantees will be authorized to submit no less often than monthly their requests for advances or reimbursements when letters of credit or predetermined automatic Treasury check advances are not used. § 1405.23 Payment methods for construction grants. (a) The percentage of completion method will not be used to pay for construction. (b) Reimbursement by Treasury check shall be the preferred method when the grantee does not meet the requirements specified in § 1405.22(a)(2) and (3), and may be used for any other construction grant except where the Department has entered into an agreement with a grantee to use a letter of credit for all Department grants, including construction grants. (c) When the reimbursement by Treasury check method is used, grantees will be authorized to submit no less often than monthly their requests for reimbursement. (d) When the reimbursement by Treasury check method is not used, § 1405.22(a) and (b) shall be applicable to the construction grant. Implementing procedures under § 1405.22(a) and (b) shall be insofar as possible the same for construction grants as for nonconstruction grants awarded to the same grantee. (OMB Circular No. A-102, Attachment J) § 1405.24 Withholding of payments. Unless otherwise required by law, payments for proper charges incurred by grantees will not be withheld unless the grant is suspended pursuant to § 1424.8(c) or the grantee is indebted to the United States and collection of the indebtedness will not impair the accomplishment of the objectives of any grant or contrací program sponsored by the United States. When a grant is suspended, payment adjustments will be made in accordance with § 1424.8. When an indebtedness is to be collected, the Director, may, upon reasonable notice to the grantee, withhold from the grantee the right to receive payments under the grant or require appropriate accounting adjustments to recorded cash balances for which the grantee is accountable to the Federal Government, in order to liquidate the indebtedness. (OMB Circular No. A-102, Attachment J) § 1405.25 Requesting advances or reim bursements. Part 1419 of this subchapter sets forth the procedures and forms for requesting advances or reimbursements. (OMB Circular No. A-102, Attachment J) Subpart C-Cost Principles § 1405.30 Scope of subpart. This subpart establishes the principles to be used (except to the extent inconsistent with an applicable Federal statute or regulation) in determining costs applicable to grants awarded by the Director and to cost-type contracts under such grants. (OMB Circular Nos. A-21, A-87) § 1405.31 Grants to State or local govern ments. The principles to be used in determining the allowable costs of activities conducted or administered by State and local governments are set forth in Appendix C to Part 74 of this title. (OMB Circular No. A-87) § 1405.32 Grants to institutions of higher education. (a) Research and development. The principles for determining the allowable costs of research and development work performed by institutions of higher education are set forth in Part I of Appendix D to Part 74 of this title. (k) Training and other educational services. The principles for determining the allowable costs of training and other educational services provided by institutions of higher education are set forth in Part II of Appendix D to Part 74 of this title. (c) Other activities. Appendix D to Part 74 of this title shall be used as a guide for determining the allowable costs of other activities conducted by institutions of higher education. (OMB Circular No. A-21) § 1405.33 Grants to hospitals. (a) Research and development. The principles for determining the allowable costs of research and development work performed by hospitals are set forth in Appendix E to Part 74 of this title. (b) Other activities. Appendix E to Part 74 of this title shall be used as a guide for determining the allowable costs of other activities conducted by hospitals. § 1405.34 Grants to other nonprofit organizations. (a) Nonconstruction. The principles for determining the allowable costs of nonconstruction activities conducted by nonprofit organizations other than institutions of higher education, hospitals, States, and local governments are set forth in Appendix F to Part 74 of this title. (b) Construction. Appendix F to Part 74 of this title shall be used as a guide for determining the allowable costs of construction by nonprofit organizations (other than institutions of higher education, hospitals, States, and local governments). § 1405.35 Cost-type contracts. (a) It should be noted that the cost principles applicable to a cost-type contractor under a grant will not necessarily be the same as those applicable to the grantee. For example, where a State government awards a cost-type contract to an institution of higher education, Appendix D to Part 74 of this title would apply to the costs incurred by the institution of higher education, even though Appendix C to Part 74 of this title would apply to the costs incurred by the State. (b) The principles to be used in determining the allowable costs of work performed by commercial organizations under cost-type contracts awarded to them are set forth in 41 CFR Subpart 1-15.2. |