1. 1

2. 2 SUBPART A: General Purpose and applicability

3. 3 Purpose and Applicability a. This part establishes administrative requirements for governing institutions of higher education, hospitals, nonprofit commercial organizations, state, local and Indian Tribal governments receiving; 1. (HHS) grants and agreements; 2. Sub-grants or other sub-wards awarded; and 3. Any sub-awards under such grants and agreements, awarded to carry out the entitlement programs Sec. 74.1, 92.1, 92.2 & 92.4

4. 4 Purpose and Applicability b. Nonprofit organizations that implement HHS programs for the States are also subject to state requirements. c. HHS shall not impose additional or inconsistent requirements.

5. 5 Definitions Accrued expenditures mean the charges incurred by the recipient during a given period; Advance means a payment made by Treasury check or other mechanism to a recipient either before outlays are made or through the use of predetermined schedules; Cash contributions means the recipient's cash outlay, including money contributed to the recipient by third parties. Closeout means the process by which the HHS determines that all administrative actions and required work have been completed. 74.2 & 92.3

6. 6 Definitions Contract means a procurement contract under an award or sub-award; Cost sharing or matching means that portion of project or program costs not borne by the Feds; Disallowed costs mean those charges to an award that the HHS awarding agency determines to be unallowable; Equipment means tangible nonexpendable personal property, having a useful life of more than one year and an acquisition cost of $5000 or more per unit;

7. 7 Definitions Funding period means the period of time when Federal funding is available for obligation by the recipient; Obligations means the amounts of orders placed, contracts and grants awarded, services received and similar transactions during a given period that requires payment by the recipient; Outlays or expenditures mean charges made to the project or program; Personal property means property of any kind except real property;

8. 8 Definitions Prior approval means written approval by an authorized HHS official evidencing prior consent; Program income means gross income earned by the recipient that is directly generated by a supported activity or earned as a result of the award; Real property means land, including land improvements and structures, but excludes movable machinery and equipment; Small awards means a grant or cooperative agreement not exceeding the simplified acquisition threshold (currently $100,000.00);

9. 9 Definitions Supplies means all personal property excluding equipment, intangible property, and debt instruments; Third party in-kind contributions means the value of non-cash contributions provided by non- Federal third parties; Unobligated balance means the portion of the funds that has not been obligated by the recipient; Unrecovered indirect cost means the difference between the amount awarded and the amount which could have been awarded under the recipient's approved negotiated rate;

10. 10 Effect on Other Issuances. This part supersedes all administrative requirements of: -codified program regulations; -program manuals; -handbooks; and -other non-regulatory materials which are inconsistent with the requirements of this part. 74.3 & 92.5

11. 11 Deviations a. HHS may apply more restrictive requirements to a class of awards or recipients when approved by the Office of Grants and Acquisition Management (OGAM); HHS may apply less restrictive requirements without approval by the OGAM when making small awards. b. Requests for deviations will be considered favorably whenever the deviation facilitates comprehensive or integrated service delivery, or multiple-source consolidate. 74.4 & 92.6

12. 12 Subawards Administrative requirements shall be applied by recipients to sub-recipients 74.5 & 92.4

13. 13 Pre-Award Requirements SUBPART B

14. 14 Purpose Prescribe Forms, Instructions and Other Pre- award Matters to Be Used in Applying for HHS Awards. 74.10 & 92.10

15. 15 Pre-Award Policies a. A grant of cooperative agreement shall be used only to accomplish a public purpose of support. b. HHS shall notify the public of funding priorities for discretionary grant programs. 74.11 & 92.11

16. 16 Forms for Applying for HHS Financial Assistance a. HHS awarding agencies shall comply with the applicable report clearance requirements; b. Applicants shall use the SF-424 series; c. Applicants shall submit the original and two copies of any applications; d. Doesn’t apply to applications for sub-awards. 74.12 & 92.10

17. 17 Debarment and Suspension This common rule restricts sub-awards and contracts with parties that are debarred, suspended or excluded from or ineligible for participation in Federal assistance programs or activities. 74.13 & 92.35

18. 18 Special Award Conditions a. HHS may impose additional requirements as needed, if an applicant or recipient: ☺ Has a history of poor performance; ☺ Is not financially stable; ☺ Has a management system that does not meet the standards prescribed in this part; ☺ Has not conformed to the terms and conditions of a previous award; or ☺ Is not otherwise responsible. 74.14 & 92.12

19. 19 Special Award Conditions b. Special conditions or restrictions may include (In part 92): 1. Payment on a reimbursement basis; 2. Withholding authority to proceed to the next phase until receipt of evidence of acceptable performance; 3. Requiring additional, more detailed financial reports; 4. Additional project monitoring; 5. Requiring the grantee or sub-grantee to obtain technical or management assistance; or 6. Establishing additional prior approvals.

20. 20 Special Award Conditions c. When additional requirements are imposed, HHS must notify the recipient in writing as to the following: 1. The nature of the additional requirements; 2. The reason the additional requirements are being imposed; 3. The nature of the corrective actions needed; 4. The time allowed for completing the corrective actions; 5. The method for requesting reconsideration of the additional requirements imposed.

21. 21 Metric system of measurement (*)Declares that the metric system is the preferred measurement system for U.S. trade and commerce. (*) not included in Part 92 74.15

22. 22 Resource Conservation and Recovery Act (*)“preference to purchase of products containing recycled materials” (*) not included in Part 92 74.16

23. 23 Certifications and Representations Submit annually and signed by a responsible official. 74.17 & 92.10(b)

24. 24 Post-Award Requirements Financial and Program Management SUBPART C

25. 25 Purpose of Financial and Program Management This sections prescribe standards for: 1. Financial management systems, 2. Methods for making payments, 3. Rules for satisfying cost sharing and matching requirements, 4. Accounting for program income, 5. Budget revision approvals, 6. Making audits, 7. Determining allowability of cost, and 8. Establishing fund availability. 74.20 & 92.20 (a)

26. 26 Standards for financial management systems 1. Accurate, current and complete disclosure of the financial results of each program in accordance with the reporting requirements; 2. Records that identify the source and application of funds; 3. Effective control over and accountability for all funds, property, and other assets; 74.21 & 92.20(b)

27. 27 Standards for financial management systems 4. Comparison of outlays with budget amounts for each award; 5. Written procedures to minimize the time elapsing between the transfer of funds and the issuance of checks, or payments by other means; 6. Written procedures for determining the reasonableness, allocability and allowability of costs in accordance with the applicable cost principles; and

28. 28 Standards for financial management systems 7. Accounting records, that are supported by source documentation.

29. 29 Payment 1. Recipients will be paid in advance, if they maintain: - Written procedures that minimize the time between transfers and disbursement; and -Their financial management systems meets the standards for accountability. 74.22 & 92.21

30. 30 Payment 2. Cash advances to a recipient organization shall be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the recipient. The timing and amount of cash advances shall be as close as is administratively feasible to the actual disbursements by the recipient organization for direct program or project costs and any allowable indirect costs.

31. 31 Payment 1. Advance payment mechanisms include electronic funds transfer, with Treasury checks available on an exception basis 2. Reimbursement method will be used when the requirements for advancing can’t be met. 3. Working capital advances method of payment will be used, if recipients cannot meet the criteria for advances and reimbursement; and 4. Use Federal funds last.

32. 32 Payment HHS will withhold payments for charges made by recipients if; -A recipient has failed to comply with the project objectives; and -The recipient or sub-recipient is delinquent in a debt to the United States.

33. 33 Payment Standards governing the use of banks and other institutions as depositories of funds are as follows: -HHS will not require separate depository accounts; and -Advances shall be deposited and maintained in insured accounts whenever possible. Recipients are encouraged to use women- owned and minority-owned banks.

34. 34 Advances shall be maintained in an interest bearing accounts, unless one of the following conditions apply: 1. The recipient receives less than $120,000 funding; 2. The interest bearing account would not earn interest in excess of $250/$100 per year; 3. The depository requires a high minimum balance so high that it would not be feasible within the expected Federal and non-Federal cash resources.

35. 35 Payment Part 74 grantees may retained up to $250 per year in interest for administrative expense. Part 92 grantees may retained up to $100 per year in interest for administrative expense

36. 36 Cost sharing or matching All cost sharing or matching contributions, including cash and third party in-kind, shall meet all of the following criteria: Are verifiable from the recipient's records; Are not included as contributions for any other federally-assisted project or program; Are necessary and reasonable for proper and efficient accomplishment of project or program objectives; Are allowable under the applicable cost principles; 74.23 & 92.24

37. 37 Cost sharing or matching Are not paid by the Federal Government under another award, except where authorized by Federal statute to be used for cost sharing or matching; Are provided for in the approved budget; and Conform to other provisions of this part, as applicable. 74.23 & 92.24

38. 38 Cost sharing or matching Un-recovered indirect costs may be included as part of cost sharing or matching. Values for recipient contributions of services and property shall be established in accordance with the applicable cost principles. If the HHS awarding agency authorizes recipients to donate buildings or land for construction/facilities acquisition projects or long- term use, the value of the donated property for cost sharing or matching shall be the lesser of: 74.23 & 92.24

39. 39 Cost sharing or matching The certified value of the remaining life of the property recorded in the recipient's accounting records at the time of donation; or The current fair market value. HHS awarding agency may approve the use of the current fair market value of the donated property. 74.23 & 92.24

40. 40 Cost sharing or matching Volunteer services furnished by professional and technical personnel, consultants, and other skilled and unskilled labor may be counted as cost sharing or matching if the service is an integral and necessary part of an approved project or program. Rates for volunteer services shall be consistent with those paid for similar work in the recipient's organization. 74.23 & 92.24

41. 41 Cost sharing or matching In those instances in which the required skills are not found in the recipient's organization, rates shall be consistent with those paid for similar work in the labor market Fringe benefits consistent with those paid that are reasonable, allowable, and allocable may be included in the valuation. 74.23 & 92.24

42. 42 Cost sharing or matching When an employer other than the recipient furnishes the services of an employee, these services shall be valued at the employee's regular rate of pay (plus an amount of fringe benefits that are reasonable, allowable, and allocable), provided these services are in the same skill for which the employee is normally paid. Donated supplies may include such items as expendable property, office supplies, laboratory supplies or workshop and classroom supplies. Value assessed to donated supplies shall be reasonable and shall not exceed the fair market value of the property at the time of the donation. 74.23 & 92.24

43. 43 Cost sharing or matching Donated equipment, buildings and land for which title passes to the recipient may differ according to the purpose of the award: If the purpose of the award is to assist the recipient in the acquisition of equipment, buildings or land, the total value of the donated property may be claimed as cost sharing or matching. If the purpose of the award is to support activities that require the use of equipment, buildings or land, normally only depreciation or use charges for equipment and buildings may be made. The full value of equipment or other capital assets and fair rental charges for land may be allowed, with approval. 74.23 & 92.24

44. 44 Cost sharing or matching The value of donated property shall be determined in accordance with the usual accounting policies of the recipient, with the following qualifications. The value of donated land and buildings shall not exceed its fair market value at the time of donation to the recipient as established by an independent appraiser (e.g., certified real property appraiser or General Services Administration representative) and certified by a responsible official of the recipient. The value of donated equipment shall not exceed the fair market value of equipment of the same age and condition at the time of donation. 74.23 & 92.24

45. 45 Cost sharing or matching The value of donated space shall not exceed the fair rental value of comparable space as established by an independent appraisal of comparable space and facilities in a privately- owned building in the same locality. The value of loaned equipment shall not exceed its fair rental value. 74.23 & 92.24

46. 46 Cost sharing or matching The following requirements pertain to the recipient's supporting records for in-kind contributions from third parties. Volunteer services shall be documented and, to the extent feasible, supported by the same methods used by the recipient for its own employees, including time records. The basis for determining the valuation for personal service, material, equipment, buildings and land shall be documented. 74.23 & 92.24

47. 47 Program Income 1. Program income shall be retained by the recipient in accordance with the the award, It shall be used in one or more of the following ways: A. Added to funds committed - required approval B. Finance the non-Federal share – requires approval; and C. Deducted from project costs – automatic 2. No obligation to the Feds for program income earned after end of the project period; 3. Costs incident to generation of program income can be deducted unless costs charged to award. 74.24 & 92.25

48. 48 Program Income 4. Proceeds from the sale of property shall be handled according to the Property Standards. 5. Unless the terms and conditions for the award provide otherwise, recipients shall have no obligation to HHS with respect to program income earned from license fees, copyrighted material, patents, patent applications, trademarks, and inventions.

49. 49 Revision of Budget and Program Plans Prior approval required for: 1. Change in scope or objective 2. Change key person specified in application or award (project director) 3. Three-month absence or 25% reduction in time of approved project director 4. Additional Federal funding 5. Items in cost principles requiring prior approval 74.25 & 92.30

50. 50 Revision of Budget and Program Plans 6. Transfer of funds allotted for training allowances; 7. Subcontracting out of any work under an award (does not apply to supplies, equipment, general support, etc.) 8. Transfers that are expected to exceed 25percent of the budget, if HHS share exceeds $250,000.00.

51. 51 Revision of Budget and Program Plans 9. Incur pre-award costs up to 90 calendar days prior to award, requires prior approval. 10. Initiate a one-time extension of the expiration date of the award of up to 12 months; and 11. Carry forward unobligated balances to subsequent funding periods 12. Notify Federal Government when funds expected to exceed needs by $5,000 or 5% of Federal award.

52. 52 Revision of Budget and Program Plans Federal agency respond in 30 days or notify when to expect decision When requesting approval for budget changes, recipients shall make their requests in writing. All approvals granted shall not be valid unless they are in writing; and No other prior approval may be imposed unless a deviation has been approved.

53. 53 Non-Federal Audits Single Audit Act of 1996 A-133 - States, Local Governments, NPOs and For-profits 74.26 & 92.26

54. 54 Allowable Costs A-87 - State and Local Governments A-122 - NPOs A-21 - Colleges and Universities 48 CFR part 31- For Profits 74.27 & 92.22

55. 55 Period of Availability of Funds A recipient may charge only allowable costs resulting from obligations incurred during the funding period; and Any pre-award costs authorized by the HHS awarding agency 74.28 & 92.23

56. 56 Property Standards

57. 57 Purpose of property standards Set forth standards governing the management and disposition of property; or whose cost was charged to an HHS award. 74.30 & 92.31

58. 58 Insurance coverage (*)Recipients shall, provide the equivalent insurance coverage for real property and equipment acquired with HHS funds as provided to property owned by the recipient. (*) not included in Part 92 74.31, 92.20(b)(3) & 92.32(d)

59. 59 Real property Title vests in recipient Not encumber Feds without prior approval Prior approval to use in other Federal projects; and Disposition requirements. 74.32 & 92.31

60. 60 Federally-owned and exempt property Title vests in Feds Submit annual inventory Report to Feds when no longer needed 74.33 & 92.32(f)

61. 61 Equipment Title vests in recipient: The recipient shall not use equipment acquired with HHS funds to provide services to non- Federal organizations for a fee that is less than private companies charge for equivalent services. Use in project as long as needed Use in other Federal projects with approval Available on other projects if not interfere; user charges as program income 74.34 & 92.32

62. 62 Equipment Trade in or sell and apply to replacement equipment with prior approval Property management standards: Equipment records 1. Description 2. Serial, model, etc. number 3. Source, including award number 4. Title vesting 5. Acquisition date

63. 63 Equipment 6. Federal percentage 7. Location and condition 8. Unit acquisition cost 9. Ultimate disposition data Physical inventory reconciled with equipment records once every two years. Control system to prevent loss, damage or theft Adequate maintenance procedures Proper sales procedures

64. 64 Equipment Disposition - FMV over $5,000 recipients must: Compensate Feds and use in other projects Sell with approval from feds, feds issue instructions within (120 days) including: Reimburse Feds Keep $500 or 10% which ever is less

65. 65 Supplies and other expendable property Title vests in recipient Residual inventory at termination of $5,000 or more - reimburse Feds 74.35 7 92.33

66. 66 Procurement Standards

67. 67 Purpose of procurement standards. This section set forth standards for establishing procedures for the procurement of supplies and other expendable property, equipment, real property and other services with Federal funds. These standards are established to ensure materials and services are obtained in an effective manner and in compliance with applicable Federal statutes and executive orders. 74.40 & 92.36

68. 68 Recipient responsibilities The standards do not relieve the recipients of the contractual responsibilities arising under its contract's. The recipient is the responsible without recourse to HHS, regarding the settlement and satisfaction of all contractual and administrative issues arising out of procurements, including disputes, claims, protests, source evaluation or other matters of a contractual nature. 74.41 & 92.36

69. 69 Codes of conduct The recipient shall maintain written standards of conduct governing the performance of its employees engaged in the award and administration of contracts. No employee, officer, or agent shall participate in the selection, award, or administration of a contract supported by Federal funds if a real or apparent conflict of interest would be involved. 74.42 & 92.36

70. 70 Codes of conduct Such a conflict would arise when the employee, officer, or agent, or any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in the firm selected for an award. 74.42 & 92.36

71. 71 Codes of conduct The officers, employees, and agents of the recipient shall neither solicit nor accept gratuities, favors, or anything of monetary value from contractors, or parties to sub- agreements. However, recipients may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value. The standards of conduct shall provide for disciplinary actions to be applied for violations of such standards by officers, employers, or agents of the recipients.

72. 72 Competition All procurement transactions shall be conducted in a manner to provide, to the maximum extent practical, open and free competition. The recipient shall be alert to organizational conflicts of interest as well as noncompetitive practices among contractors that may restrict or eliminate competition or otherwise restrain trade. 74.43 & 92.36

73. 73 Competition In order to ensure objective contractor performance and eliminate unfair competitive advantage, contractors that develop or draft grant applications, or contract specifications, requirements, statements of work, invitations for bids and/or requests for proposals shall be excluded from competing for such procurements. 74.43 & 92.36

74. 74 Competition Awards shall be made to the bidder or offeror whose responds to the solicitation and is most advantageous to the recipient, price, quality and other factors considered. Solicitations shall clearly set forth all requirements that the bidder or offeror shall fulfill in order for the bid or offer to be evaluated. Any and all bids or offers may be rejected when it is in the recipient's interest to do so.

75. 75 Procurement procedures All recipients shall establish written procurement procedures. The procedures shall provide for: Recipients avoid purchasing unnecessary items; Where appropriate, an analysis is made of lease and purchase alternatives to determine which would be the most economical and practical procurement; 74.44 & 92.36

76. 76 Procurement procedures Solicitations for goods and services provide for the following: A clear and accurate description of the technical requirements for the material, product or service to be procured. The description shall not contain features which restrict competition. Requirements the bidder/offeror must fulfill and all other factors to be used in evaluating bids or proposals.

77. 77 Procurement procedures A description, whenever practicable, of technical requirements, including the range of acceptable characteristics or minimum acceptable standards. The specific features of "brand name or equal" descriptions that bidders are required to meet. The acceptance, to the extent practicable and economically feasible, of products and services dimensioned in the metric system of measurement. Preference, to the extent practicable and economically feasible, for products and services that conserve natural resources and protect the environment and are energy efficient.

78. 78 Procurement procedures Positive efforts to utilize small businesses, minority- owned firms, and women's business enterprises, whenever possible. Recipients shall take all of the following steps. Ensure that small businesses, minority-owned firms, and women's business enterprises are used to the fullest extent practicable. Make information available and arrange time frames for purchases and contracts to encourage and facilitate participation by small businesses, minority-owned firms, and women's business enterprises.

79. 79 Procurement procedures Consider in the contract process whether firms competing for larger contracts intend to subcontract. Encourage contracting with consortiums of small businesses, minority-owned firms and women's business enterprises.

80. 80 Procurement procedures Use the services and assistance, such as the Small Business Administration and the Department of Commerce's Minority Business Development Agency in the solicitation and utilization of small businesses, minority-owned firms and women's business enterprises.

81. 81 Procurement procedures The type of procuring instruments used (e.g., fixed price contracts, cost reimbursable contracts, purchase orders, and incentive contracts shall be appropriate for the particular procurement and for promoting the best interest of the program or project involved. The "cost-plus-a-percentage-of-cost" or "percentage of construction cost" methods of contracting shall not be used.

82. 82 Procurement procedures Contracts shall be made only with contractors who possess the potential ability to perform successfully. Consideration shall be given to such matters as contractor integrity, record of past performance, financial and technical resources or accessibility to other necessary resources. In certain circumstances, contracts with certain parties are restricted by agencies' (Debarment and Suspension.“)

83. 83 Procurement procedures Recipients shall, make available to HHS pre- award review and procurement documents, such as requests for proposals or invitations for bids, independent cost estimates, etc., when any of the following conditions apply. A recipient's procurement procedures or operation fails to comply with the procurement standards.

84. 84 Procurement procedures The procurement is expected to exceed the simplified acquisition threshold (currently $100,000) and is to be awarded without competition or only one bid or offer is received in response to a solicitation. The procurement, which is expected to exceed the small purchase threshold, specifies a "brand name" product. The proposed award over the simplified acquisition threshold is to be awarded to other than the apparent low bidder under a sealed bid procurement. A proposed contract modification changes the scope of a contract or increases the contract amount by more than the amount of the simplified acquisition threshold

85. 85 Cost and Price Analysis Some form for every procurement - made and document: Price analysis - comparison of prices; ie quotations, market prices and similar indicia, together with discounts ; and Cost analysis - review and evaluation of elements of cost for reasonableness, allocability and allowability. 74.45 & 92.36

86. 86 Procurement Records Excess of small purchase ($100,000) threshold Basis for selection Justification if lack of competition; and Basis for award cost or price 74.46 & 92.36

87. 87 Contract Administration System shall be maintained to include: Contractor conformance Adequate and timely follow-up; and Evaluate contractor performance 74.47 & 92.36

88. 88 Contract Provisions Provisions to define a sound and complete agreement; Excess of small purchase threshold: Remedies in instances in which a contractor violates or breaches the contract terms Termination of contract; and Recipient to follow its own requirements relating to bid guarantees 74.48 & 92.36

89. 89 HHS shall have access to records construction or facility improvements contracts exceeding simplified acquisition threshold shall at a minimum contain: 1. A bid guarantee of five percent of the bid price; 2. A performance bond of 100 percent of the contract price; 3. A payment bond of 100 percent of the contract price; 4. Bonds from companies holding certificates of authority;

90. 90 5. Feds shall have access to any books, documents, papers and records of the contractor; and 6. All contracts, including small purchases shall contain the procurement provisions of appendix A.

91. 91 Reports and Records

92. 92 Purpose of Reports and Records. Set forth the procedures for monitoring and reporting financial and program performance and the necessary standard reporting forms. 74.50 & 92.40

93. 93 Monitoring and Reporting Program Performance 1. Recipients are responsible for managing and monitoring each project, program, subaward, function or activity supported by the award; 2. Recipients shall monitor subawards to ensure that subrecipients have met the audit requirements; 3. HHS will prescribe the frequency with which the performance reports shall be submitted; and 4. Feds may make site visits as needed. 74.51& 92.40

94. 94 Financial Reporting Financial Status (SF-269), HHS awarding agency will determine the frequency; and Report of Federal Cash Transactions (SF- 272) HHS awarding agency will determine the frequency 74.52 & 92.41

95. 95 Retention and Access Requirements for Records Three years from final expenditure report (or annual report for renewal awards); Litigation, claim or audit - retain until resolved after three years; Real property and equipment - three years after final disposition; When records are maintained or transferred to the feds the 3 year retention requirement isn’t applicable; Copies may be substituted for the original records if authorized by the HHS awarding agency. 74.53 & 92.42

96. 96 Retention and Access Requirements for Records Access to records and personnel for interview and discussion as long as records retained; Feds not restrict public access, unless required by statute; and Indirect cost rate proposals, cost allocation plans, etc. - three years from date of submission or three years from end of period if not submitted