Office of Management and Budget: Vol. 78 Thursday, No. 248 December 26, 2013

Vol.
78 Thursday,
No. 248 December 26, 2013
Part III
Office of Management and Budget

2 CFR Chapter I, Chapter II, Part 200, et al.
Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards; Final Rule
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78590 Federal Register / Vol. 78, No. 248 / Thursday, December 26, 2013 / Rules and Regulations
OFFICE OF MANAGEMENT AND affecting Federal awards to non-Federal collaboration with their non-Federal
BUDGET entities including state and local partners, in accordance with OMB
governments, Indian tribes, institutions guidance in M–13–17 ‘‘Next Steps in the
2 CFR Chapter I, and Chapter II, Parts of higher education, and nonprofit Evidence and Innovation Agenda’’. This
200, 215, 220, 225, and 230 organizations. Parts of it may also apply new guidance plays an important role in
to for-profit entities in limited fostering these and other innovative
Uniform Administrative Requirements, circumstances and to foreign entities as models and cost-effective approaches by
Cost Principles, and Audit described in this guidance and the including many provisions that
Requirements for Federal Awards Federal Acquisition Regulation. This strengthen requirements for internal
AGENCY: Executive Office of the guidance does not change or modify any controls while providing administrative
President, Office of Management and existing statute or guidance otherwise flexibility for non-Federal entities.
Budget (OMB). based on any existing statute. This These provisions include mechanisms
guidance does not supersede any such as ‘‘fixed amount awards’’ which
ACTION: Final guidance.
existing or future authority under law or rely more on performance than
SUMMARY: To deliver on the promise of by executive order or the Federal compliance requirements to ensure
a 21st-Century government that is more Acquisition Regulation. accountability, and allow Federal
efficient, effective and transparent, the DATES: Effective Date: This guidance is agencies some additional flexibility to
Office of Management and Budget effective December 26, 2013. waive some requirements (in addition to
(OMB) is streamlining the Federal Applicability Date: This guidance is the longstanding option to apply to
government’s guidance on applicable for Federal agencies OMB to waive requirements) that
Administrative Requirements, Cost December 26, 2013 and applicable for impede their capacity to achieve better
Principles, and Audit Requirements for non-Federal entities as described in this outcomes through Federal awards. This
Federal awards. These modifications are guidance. guidance will provide a backbone for
a key component of a larger Federal FOR FURTHER INFORMATION CONTACT: sound financial management as Federal
effort to more effectively focus Federal OMB will host an informational webcast agencies and their partners continue to
with the Council on Financial develop and advance innovative and
resources on improving performance
Assistance Reform and key effective practices.
and outcomes while ensuring the
stakeholders. Please visit www.cfo.gov/ This reform of OMB guidance will
financial integrity of taxpayer dollars in improve the integrity of the financial
partnership with non-Federal cofar for further information on the time
and date of the webcast and on the management and operation of Federal
stakeholders. This guidance provides a programs and strengthen accountability
governmentwide framework for grants Council on Financial Assistance
Reform. For general information, please for Federal dollars by improving
management which will be policies that protect against waste,
complemented by additional efforts to contact Victoria Collin or Gil Tran at the
OMB Office of Federal Financial fraud, and abuse. At the same time, this
strengthen program outcomes through reform will increase the impact and
innovative and effective use of grant- Management at (202) 395–3993.
accessibility of programs by minimizing
making models, performance metrics, SUPPLEMENTARY INFORMATION:
time spent complying with
and evaluation. This reform of OMB I. Objectives and Background unnecessarily burdensome
guidance will reduce administrative administrative requirements, and so re-
burden for non-Federal entities A. Objectives
orients recipients toward achieving
receiving Federal awards while The goal of this reform is to deliver program objectives. Through close and
reducing the risk of waste, fraud and on the President’s directives to (1) sustained collaboration with Federal
abuse. streamline our guidance for Federal and non-Federal partners, OMB has
This final guidance supersedes and awards to ease administrative burden developed ideas that will ensure that
streamlines requirements from OMB and (2) strengthen oversight over discretionary grants and cooperative
Circulars A–21, A–87, A–110, and A– Federal funds to reduce risks of waste, agreements are awarded based on merit;
122 (which have been placed in OMB fraud, and abuse. Streamlining existing that management increases focus on
guidances); Circulars A–89, A–102, and OMB guidance will increase the performance outcomes; that rules
A–133; and the guidance in Circular A– efficiency and effectiveness of Federal governing the allocation of Federal
50 on Single Audit Act follow-up. awards to ensure best use of the more funds are streamlined, and that the
Future reform efforts may eventually than $500 billion expended annually. Single Audit oversight tool is better
seek to incorporate the Cost Principles This reform builds on two years of focused to reduce waste, fraud, and
for Hospitals in Department of Health work by the Federal government and its abuse.
and Human Services regulations. Copies non-Federal partners: state, and local As set forth in Executive Order 13563
of the OMB Circulars that are governments, Indian tribes, institutions of January 18, 2011, on Improving
superseded by this guidance are of higher education, nonprofit Regulation and Regulatory Review (76
available on OMB’s Web site at http:// organizations, and the audit community FR 3821; January 21, 2011; http://
www.whitehouse.gov/omb/circulars_ to rethink and reform the rules that www.gpo.gov/fdsys/pkg/FR-2011-01-21/
default/. The final guidance govern our stewardship of Federal pdf/2011-1385.pdf), each Federal
consolidates the guidance previously dollars. The revised rules set standard agency must ‘‘tailor its regulations to
contained in the aforementioned requirements for financial management impose the least burden on society,
citations into a streamlined format that of Federal awards across the entire consistent with regulatory objectives,
aims to improve both the clarity and Federal government. taking into account, among other things,
accessibility. This final guidance is These reforms complement targeted and to the extent practicable, the costs
located in Title 2 of the Code of Federal efforts by OMB and a number of Federal of cumulative regulations.’’ To that end,
Regulations. agencies to reform overall approaches to it is important that Federal agencies
This final guidance does not broaden grant-making by implementing identify those ‘‘rules that may be
the scope of applicability from existing innovative, outcome-focused grant- outmoded, ineffective, insufficient, or
government-wide requirements, making designs and processes in excessively burdensome,’’ and ‘‘modify,
Federal Register / Vol. 78, No. 248 / Thursday, December 26, 2013 / Rules and Regulations 78591
streamline, expand, or repeal them in Federal and non-Federal financial to engaging in outreach efforts with both
accordance with what has been assistance community led by the Federal and non-Federal stakeholders,
learned.’’ This was reinforced in COFAR in response to the following two with respect to this reform and beyond.
Executive Order 13579 of July 11, 2011 Presidential Directives: OMB has adopted changes from the
on Regulation and Independent 1. February 28, 2011, Presidential NPG to the final guidance as
Regulatory Agencies (76 FR 41587; July Memorandum on Administrative recommended by the COFAR as
14, 2011; http://www.gpo.gov/fdsys/pkg/ Flexibility, Lower Costs, and Better described in the summary of major
FR-2011-07-14/pdf/2011-17953.pdf). Results for State, Local, and Tribal policy reforms (Part II) and the text of
As in other areas involving Federal Governments, (Daily Comp. Pres. Docs.; the final guidance (Part III). OMB will
requirements, this guidance follows http://www.gpo.gov/fdsys/pkg/DCPD- publish additional supporting materials
OMB’s commitment to making 201100123/pdf/DCPD-201100123.pdf). on the OMB Web site at http://
government more accountable to the This memorandum directs OMB to, with www.whitehouse.gov/omb/grants_docs.
American people while eliminating input from our partners and consistent
requirements that are unnecessary and with law, reduce unnecessary regulatory II. Major Policy Reforms
reforming those requirements that are and administrative burdens and redirect In the ANPG and NPG, OMB invited
overly burdensome. Eliminating resources to services that are essential to comments from the public on all issues
unnecessary requirements will allow achieving better outcomes at lower cost. addressed in those notices, and further
recipients of Federal awards to re-orient Specifically, the memorandum directs invited the public to make additional
efforts spent on compliance with OMB to ‘‘review and where appropriate reform suggestions. The goal of both
complex requirements towards revise guidance concerning cost previous notices was to provide the
achievement of programmatic principles, burden minimizations, and broadest possible collection of
objectives. In order to ensure that the audits for state, local, and tribal stakeholders in the grants community
public receives the most value, it is governments in order to eliminate, to with visibility on these ideas and the
essential that these programs function as the extent permitted by law, opportunity to participate in the
effectively and efficiently as possible, unnecessary, unduly burdensome, discussion.
and that there is a high level of duplicative, or low-priority In response to each notice, OMB
accountability to prevent waste, fraud, recordkeeping requirements and received more than 300 comments
and abuse. effectively tie such requirements to which were carefully considered in the
This reform streamlines the language achievement of outcomes.’’ development of this guidance. This
from eight existing OMB circulars into 2. Executive Order 13520 on Reducing section will discuss the policy reforms
one consolidated set of guidance in the Improper Payments (74 FR 62201; proposed in the NPG, the broad themes
code of Federal regulations. This November 25, 2009; http:// identified in the comments that were
consolidation is aimed at eliminating www.gpo.gov/fdsys/pkg/FR-2009-11-25/ received across stakeholders, and the
duplicative or almost duplicative pdf/E9-28493.pdf). Equally as essential resulting reforms that OMB is
language in order to clarify where policy to a 21st-Century government as implementing in this guidance. The vast
is substantively different across types of reducing burdensome requirements that majority of comments supported the
entities, and where it is not. As a result, promote inefficiency is strengthening idea of the consolidation itself and the
the guidance includes sections and parts accountability by ‘‘intensifying efforts to structure of the guidance. As a result,
of sections which are clearly delineated eliminate payment error, waste, fraud, this final guidance incorporates the
by the type of non-Federal entity to and abuse’’ in Federal programs, as proposed consolidation of eight
which they apply. For Federal agencies, required by EO 13520. Accordingly, previous sets of guidance into one.
auditors, and pass-through entities that Federal agencies must ‘‘more effectively Conforming changes made throughout
engage with multiple types of non- tailor their methodologies for the document support streamlining and
Federal entities in the course of identifying and measuring improper improve clarity of language; many of
managing grants, this consolidation is payments to those programs, or these were suggested by stakeholders
intended to clarify where policies are components of programs, where during the comment period and have
uniform or differ across non-Federal improper payments are most likely to been incorporated, but are not
entities, protecting variances in policy occur.’’ specifically discussed in this preamble.
where required by the unique nature of In response to the President’s
The objective of this reform is to
each type of non-Federal entity. This directives above, OMB worked with the
reduce both administrative burden and
clarification will make compliance less Council on Financial Assistance Reform
risk of waste, fraud and abuse.
burdensome for recipients and reduce (COFAR, more information available at
the number of audit findings that result cfo.gov/COFAR) to publish the February Reducing Administrative Burden and
more from unclear guidance than actual 28, 2012 Advance Notice of Proposed Waste, Fraud, and Abuse:
noncompliance. Section 200.101 Guidance (ANPG available at 1. Eliminating Duplicative and
Applicability outlines how each subpart www.regulations.gov under docket Conflicting Guidance: By combining
of the proposed guidance will apply number OMB–2012–0002) and the eight previously separate sets of OMB
across types of Federal awards. February 1, 2013 Notice of Proposed guidance into one, OMB has eliminated
Following the implementation of these Guidance (NPG available at numerous overlapping duplicative and
reforms, OMB will continue to monitor www.regulations.gov under docket conflicting provisions of guidance that
their effects to evaluate whether (and number OMB–2013–0001) in the were written separately over many
the extent to which) the reforms are Federal Register. Through the COFAR’s years. Beyond dealing with the
review of the comments received in administrative burden associated with
achieving their desired results, and will

consider making further modifications response to the ANPG and the NPG, it understanding such guidance, non-
as appropriate. has worked to formulate and further Federal entities have faced risks of more
develop reform ideas to create the 21st- restrictive oversight and audit findings
B. The Development of the Reform Century version of financial that stem from inappropriate
This proposal reflects input from management policy for Federal awards. applications of the guidance caused by
more than two years of work by the The COFAR continues to be committed overlapping requirements. Streamlining
the guidance into one document Accounting Standards is raised to align • Section 200.446 Idle Facilities and
improves consistency and eliminates of with the threshold in the Federal Idle Capacity allows for the costs of idle
many duplicative provisions Acquisition Regulations and the process facilities when they are necessary to
throughout. Further, as described in for Federal agency review of changes in meet fluctuations in workload, as they
§ 200.110 Effective Date, Federal accounting practices is streamlined to often are when developing shared
agencies will implement this guidance reduce risk of noncompliance. service arrangements.
in unison, which will provide non- • Section 200.430 Compensation— • Section 200.449 Interest allows
Federal entities with a predictable, Personal Services strengthens the non-Federal entities to be reimbursed
transparent, and governmentwide requirements for non-Federal entities to for financing costs associated with
consistent implementation schedule. maintain high standards for internal patents and computer software
Finally, this completes a long-standing controls over salaries and wages while capitalized in accordance with GAAP
goal of co-locating all related OMB allowing for additional flexibility in on or after January 1, 2016.
guidance into Title 2 of the Code of how non-Federal entities implement 4. Providing For Consistent and
Federal Regulations. processes to meet those standards. In Transparent Treatment of Costs: The
2. Focusing on Performance over addition, it provides for Federal final guidance updates policies on
Compliance for Accountability: The agencies to approve alternative methods direct and indirect cost to reduce
final guidance includes provisions that of accounting for salaries and wages administrative burden by providing
focus on performance over compliance based on achievement of performance more consistent and transparent
to provide accountability for Federal outcomes, including in approved treatment governmentwide.
funds. instances where funding from multiple • Section 200.306 Cost Sharing Or
• Section 200.102 Exceptions notes programs is blended to more efficiently Matching clarifies policies on voluntary
that on a case-by-case basis, in achieve a combined outcome. committed cost sharing to ensure that
accordance with OMB guidance in M– 3. Encouraging Efficient Use of such cost sharing is only solicited for
13–17, OMB will waive certain Information Technology and Shared research proposals when required by
compliance requirements and approve regulation and transparent in the notice
Services: The final guidance updates
new strategies for innovative program
provisions throughout to account for the of funding opportunity. It may never be
designs that improve cost-effectiveness
efficient use of electronic information, considered during the merit review.
and encourage effective collaboration
as well as the acquisition and use of the • Section 200.331 Requirements For
across programs to achieve outcomes.
information technology systems and Pass-Through Entities requires pass-
The models described in OMB
services that permeate an effective and through entities to provide an indirect
Memorandum 13–17 include tiered
modern operating environment. cost rate to subrecipients, which may be
evidence grants, Pay for Success and
other pay-for-performance approaches, • Section 200.94 Supplies clarifies the de minimis rate described above,
and Performance Partnerships allowing the threshold for defining personal thereby further reducing potential
braided and blended funding. The goals property as a supply, and also that barriers to receiving and effectively
for these models include encouraging a computing devices are subject to the implementing Federal financial
greater share of funding to support less burdensome administrative assistance.
approaches with strong evidence of requirements of supplies (as opposed to • Section 200.413 Direct Costs makes
effectiveness and building more equipment) if the acquisition cost is less consistent the guidance that
evaluation into grant-making so we keep than the lesser of the capitalization level administrative costs may be treated as
learning more about what works. In established by the non-Federal entity for direct costs when they meet certain
addition to these specific models, M– financial statement purposes or $5,000. conditions to demonstrate that they are
13–17 also encourages Federal agencies • Section 200.303 Internal Controls directly allocable to a Federal award.
to pursue other strategies to increase requires non-Federal entities to take • Section 200.414 Indirect (F&A)
cost-effectiveness in high-priority reasonable measures to safeguard Costs includes provisions that:
programs. protected personally identifiable • Provide a de minimis indirect cost
• Section 200.201 Use of Grant information as well as any information rate of 10% of MTDC to those non-
Agreements (Including Fixed Amount that the Federal awarding agency or Federal entities who have never had a
Awards), Cooperative Agreements, And pass-through entity designates as negotiated indirect cost rate, thereby
Contracts includes provisions for fixed sensitive. eliminating a potential administrative
amount awards that minimize • Section 200.318 General barrier to receiving and effectively
compliance requirements in favor of Procurement Standards paragraphs (d), implementing Federal financial
requirements to meet performance (e), and (f) require non-Federal entity’s assistance (sections 200.210 Information
milestones. procurement procedures to avoid Contained in a Federal award, 200.331
• Section 200.301 Performance duplicative purchases and encourage Requirements for Pass-through entities,
Measurement provides more robust non-Federal entities to enter into inter- and 200.510 Financial Statements all
guidance to Federal agencies to measure entity agreements for shared goods and require documentation of usage of this
performance in a way that will help the services. rate to allow for future evaluation of its
Federal awarding agency and other non- • In accordance with the May 2013 effectiveness);
Federal entities to improve program Executive Order on Making Open and • Require Federal agencies to accept
outcomes, share lessons learned, and Machine Readable the New Default for negotiated indirect cost rates unless an
spread the adoption of promising Government Information, Section exception is required by statute or
practices. The Federal awarding agency 200.335 Methods for Collection, regulation, or approved by a Federal
is required to provide recipients with Transmission and Storage of awarding agency head or delegate based
clear performance goals, indicators, and Information encourages non-Federal on publicly documented justification;
milestones. entities to, whenever practicable, • Allow for a one-time extension
• Section 200.419 Cost Accounting collect, transmit and store Federal without further negotiation of a
Standards and Disclosure Statement, the award-related information in open and federally approved negotiated indirect
threshold for IHEs to comply with Cost machine-readable formats. cost rate for a period of up to 4 years.
• Section 200.433 Contingency Performance all require Federal requiring certifications of senior non-
Provisions clarifies the circumstances awarding agencies to consistently use Federal entity officials, and providing
under which contingency costs may be OMB-approved standard information Federal agencies with strong remedies
included in Federal awards. collections in their management of to address non-compliance.
• Appendix III Indirect (F&A) Costs Federal awards. • Sections 200.112 Conflict of Interest
Identification and Assignment, and Rate • Section 200.210 Information and 200.113 Mandatory Disclosures
Determination for Institutions of Higher Contained In A Federal Award provides require non-Federal entities to disclose
Education (IHEs) includes provisions a standard set of data elements to be to Federal agencies any instances of
that extend to all IHEs the provisions provided in all Federal awards. As a conflict of interest or relevant violations
previously extended only to a few that result, non-Federal entities will receive of Federal criminal law.
allow for recovery of increased utility a consistent set of information for each • Sections 200.204 Federal Awarding
costs associated with research. Federal award they receive, which will Agency Review of Merit of Proposals
5. Limiting Allowable Costs to Make reduce the administrative burden and and 200.205 Federal Awarding Agency
Best Use of Federal Resources: The final costs associated with managing this Review of Risk Posed by Applicants
guidance strengthens language in information throughout the life of the combined with section 200.207 Specific
certain items of cost to appropriately Federal award. Conditions require Federal awarding
limit costs under Federal awards. • Section 200.305 Payment extends to agencies to evaluate the merit and risks
• Section 200.432 Conferences non-Federal entities previously covered associated with a potential Federal
clarifies allowable conference spending by OMB Circular A–102 the existing award and to impose specific conditions
and requires conference hosts/sponsors flexibility in OMB Circular A–110 to where necessary to mitigate potential
to exercise discretion and judgment in pay interest earned on Federal funds risks of waste, fraud, and abuse, before
ensuring that conference costs are annually to the Department of Health the money is spent.
appropriate, necessary and managed in and Human Services, rather than • Section 200.303 Internal Controls
a manner that minimizes costs to the ‘‘promptly’’ to each Federal awarding moves guidance that previously was
Federal award. agency. only discussed in audit requirements
• Section 200.437 Employee Health • Section 200.407 Prior Written (which are often only considered after
And Welfare Costs eliminates the Approval (Prior Approval) provides the funds have been spent) into the
existing allowance for ‘‘morale’’ cost. both Federal agencies and non-Federal administrative requirements to
• Section 200.464 Relocation Costs Of entities with a one-stop comprehensive encourage non-Federal entities to better
Employees limits the previously list of the circumstances under which structure their internal controls earlier
unlimited amount of time for which a non-Federal entities should seek prior in the process.
Federal award may be charged for the approval from the Federal awarding • Section 200.331 Requirements for
costs of an employee’s vacant home for agency. Pass-Through Entities provides a similar
up to six-months. 7. Encouraging Non-Federal Entities requirement for pass-through entities to
• Section 200.469 Student Activity to Have Family-Friendly Policies: consider risks associated with
Costs expands to all entities the Provisions in the final guidance provide subawards combined with flexibility to
limitation on student activity costs that flexibilities that better allow non- adjust their oversight framework based
previously applied only to IHEs. Federal entities to have policies that on that consideration of risk.
6. Setting Standard Business allow their employees to balance their • Subtitle VII Remedies for
Processes Using Data Definitions: The personal responsibilities while Noncompliance and Subtitle VIII
final guidance includes provisions that maintaining successful careers Closeout of Subpart D—Post Federal
set the stage for Federal agencies to contributing to Federal awards. Award Requirements respectively
manage Federal awards via standardized Specifically, these provisions allow for provide Federal agencies with clear
business process and use of consistently policies that ease dependent care costs tools to manage non-compliance and
defined data elements. This will reduce when attending conferences- an issue efficiently closeout Federal awards.
administrative burden on non-Federal that has been as one that prevents more • Section 200.400 Policy Guide
entities that must navigate the processes women from maintaining careers in expressly prohibits the non-Federal
of multiple Federal agencies as they science. entity from earning or keeping profit
manage information required to • Section 200.432 Conferences resulting from Federal financial
implement Federal awards. provides that, for hosts of conferences, assistance unless expressly authorized
• Subpart A—Acronyms and the costs of identifying (but not by the terms and conditions of the
Definitions provides standard providing) locally available child-care Federal award.
definitions of terms present not only resources are allowable. • Section 200.415 Required
throughout the document, but also • Section 200.474 Travel Costs Certifications strengthens non-Federal
throughout many approved Federal provides that temporary dependent care entity accountability by providing
information collections used to manage costs that result directly from travel to explicit and consistent language for
Federal awards. conferences and meet specified required certifications that includes
• Section 200.203 Notices Of Funding standards are allowable. awareness of potential penalties under
Opportunities provides a standard set of 8. Strengthening Oversight: The final the False Claims Act.
data elements to be provided in all guidance strengthens oversight over 9. Targeting Audit Requirements on
Federal notices of funding Federal awards by requiring Federal Risk of Waste, Fraud, and Abuse: The
opportunities. This will make such agencies and pass-through entities to final guidance right-sizes the footprint
notices easier for non-Federal entities to review the risk associated with a of oversight and Single Audit
compare and understand. potential recipient prior to making an requirements to strengthen oversight
• Sections 200.206 Standard award (including by making better use and focus audits where there is greatest
Application Requirements, 200.301 of available audit information where risk of waste, fraud, and abuse of
Performance Measurement, 200.327 appropriate), requiring disclosures taxpayer dollars. It improves
Financial Reporting, and 200.328 conflict of interest and relevant criminal transparency and accountability by
Monitoring And Reporting Program violations, expressly prohibiting profit, making single audit reports available to
the public online, and encourages Section A: Subparts A–E Reforms to Audit Clearinghouse within 30 days of
Federal agencies to take a more Administrative Requirements (The the change. As such, the COFAR did not
cooperative approach to audit resolution Common Rule Implementing Circular recommend a change to this definition.
in order to more conclusively resolve A–102); Circular A–110; and Circular
200.23 Contractor
underlying weaknesses in internal A–89
controls. This section discusses changes to the Some commenters suggested that the
• Section 200.501 Audit governmentwide common rule term ‘‘vendor’’ is more appropriate and,
Requirements raises the Single Audit implementing Circular A–102 on Grants in line with the Federal Acquisition
threshold from $500,000 in Federal and Cooperative Agreements with State Regulation, should be used throughout
awards per year to $750,000 in Federal and Local Governments; Circular A–110 the final guidance in place of the
awards per year. This reduces the audit on Uniform Administrative proposed ‘‘contractor’’. The COFAR
Requirements for Grants and Other considered this but determined that
burden for approximately 5,000 non-
Agreements with Institutions of Higher contractor is more accurate in the
Federal entities while maintaining
Education, Hospitals and Other Non- context of guidance on how to
Single Audit coverage over 99% of the
Profit Organizations (2 CFR part 215); distinguish between a contract and a
Federal dollars currently covered.
and Circular A–89 on Catalog of Federal grant. The COFAR believes that framing
• Section 200.512 Report Submission the distinction this way will better
Domestic Assistance. The following are
requires publication of Single Audit encourage Federal agencies to
major policy changes included in the
Reports online with safeguards for appropriately apply the guidance to
final guidance.
protected personally identifiable awards for financial assistance
information and an exception for Indian Subpart A—Acronyms and Definitions regardless of the term they currently use
tribes in order to reduce the Subpart A lists definitions and to describe those awards. The COFAR
administrative burden on non-Federal acronyms for key terms found recommended continued use of the term
entities associated with transmitting throughout the document. Because these ‘‘contractor’’ throughout. As used in this
these reports to all interested parties. terms, like the rest of the guidance, guidance, the term ‘‘contractor’’
• Section 200.513 Responsibilities originated in eight different sets of includes entities that, in other contexts,
requires Federal awarding agencies to guidance, there are many conforming may be referred to as ‘‘vendors’’.
designate a Senior Accountable Official changes made to harmonize the 200.54 Indian Tribe (or ‘‘Federally
who will be responsible for overseeing definitions with the terms that are used Recognized Indian Tribe’’)
effective use of the Single Audit tool throughout the guidance. Some
and implementing metrics to evaluate definitions reflect policy decisions as Existing guidance, including NPG,
audit follow-up. This section also follows: included Indian Tribes in the definition
encourages Federal awarding agencies of a state. With the streamlined merging
200.18 Cognizant Agency for Audit of the circulars and the inclusion of
to make effective use of cooperative and 200.73 Oversight Agency for Audit
audit resolution practices in order to some guidance that is clearly intended
reduce repeated audit findings. Commenters suggested that instead of only for either states or Indian Tribes,
defining the cognizant or oversight and in response to comments received,
• Section 200.518 Major Program agency for audit as the Federal awarding the COFAR found that this inclusion is
Determination focuses audits on the agency that provides the most direct no longer appropriate. As a result, the
areas with internal control deficiencies funding, it should be defined as the one COFAR recommended that Indian
that have been identified as material that provides the most total funding. Tribes, including Alaskan Natives, be
weaknesses. Future updates to the The suggestion that this would separately defined as they are under
Compliance Supplement will reflect this eliminate a potentially burdensome existing statute.
focus as well. process of changing cognizance to allow 200.94 Supplies
The specific reform ideas and the for situations where a non-Federal
responses to public comments received entity receives most of its funding The definition of supplies in existing
are outlined below in three main indirectly from one Federal agency, and guidance includes all tangible personal
categories: only a small portion from another property that fall below the prescribed
agency directly. threshold for equipment. Since, as
Section A: Subparts A–E: Reforms to The COFAR considered this, but technology improves, computing
Administrative Requirements (the noted that even where significant devices (inclusive of accessories)
governmentwide Common Rule portions of Federal funds are passed- increasingly fall below this threshold,
implementing Circular A–102; through to subrecipients, the Federal the proposed guidance made explicit
Circular A–110; and Circular A–89) agency retains a direct relationship only that when they do, they shall be treated
Section B: Subpart F: Reforms to Cost with a direct recipient, and relies on the consistently with all other items below
Principles (Circulars A–21, A–87, and pass-through entity to oversee the this level. Many commenters were
A–122) subaward. Further, the COFAR highly supportive of this clarification in
Section C: Subpart G: Reforms to Audit understands these instances to be the proposal and indicated that it would
Requirements (Circulars A–133 and relatively few, and in those cases where greatly help in minimizing
A–50 they have preferred to have a cognizant administrative burden. Other
or oversight relationship, they have not commenters recommended that because
In addition, conforming changes and found the process of negotiating a of the high value of the information on
those for linguistic clarity are shown in change to be burdensome. Contrary to computing devices and because of their
supporting materials provided on the comments reflecting a belief that the attractiveness to potential thieves, they
OMB Web site with this proposal current OMB policy requires any change should be subject to the more
(available at http:// to be made within 30 days, changes prescriptive oversight requirements of
www.whitehouse.gov/omb/grants_ have always been permissible at any equipment that falls above the
docs#final). time with notification to the Federal threshold.
The COFAR considered both views this language be included once in the Requirements be effective for non-
and determined that the sensitive beginning as applicable throughout. Federal entity fiscal years beginning on
information on computing devices or after the effective date of this
200.102 Exceptions
could more efficiently be protected guidance. An auditee that conducts a
through guidance specifically on Commenters suggested that this biennial audit and has a biennial period
internal controls for sensitive section should reflect a more active role beginning before the effective date of
information, rather than through for OMB as an arbiter of situations this guidance should apply the
prescriptive requirements for the where non-Federal entities encounter provisions of OMB Circular A–133. The
devices themselves. Further, the COFAR policies that deviate from this guidance requirements of Subpart F—Audit
considered that the prescriptive and do not appear to conform to the list Requirements apply to any biennial
requirements that are appropriately in of exceptions articulated. The COFAR periods beginning on or after the
place for equipment over the threshold considered this feedback, but effective date of this guidance. Federal
of $5,000 would create an determined that Federal agencies are agencies must submit draft
administrative burden the cost of which responsible for implementing their implementing regulations to OMB no
would outweigh any benefits achieved programs under authorities provided later than six months from the date of
by reducing the potential attractiveness specifically by statute, and are further publication of this guidance unless
of these devices to thieves. To guard responsible for responding to any different provisions are required by
against the costly burden that treating potential concerns from their particular statute or approved by OMB.
these devices as equipment would recipients. OMB, as the entity
responsible for promulgating the 200.112 Conflict of Interest
create, the COFAR recommended
retaining the definition of supplies as governmentwide guidance, is Commenters suggested that the
proposed. To protect the sensitive responsible for ensuring that the guidance is missing a broad general
information on these devices, the policies best meet the desired goals and statement requiring standards of
COFAR recommended new specific for providing assistance where it is conduct that mitigate potential conflicts
language on internal controls governing needed in interpreting the guidance. As of interest in the administration of
sensitive information (see section reflected in section 200.108 Inquiries,
Federal awards. The COFAR concurred,
200.303 Internal Controls). non-Federal entities should address
but noted that many Federal agencies
their specific concerns to the Federal
have specific policies on this that are
200.33 Equipment awarding agency, cognizant agency for
appropriately tailored to the specific
Commenters advocated for a higher indirect costs, or cognizant or oversight
nature of their programs. As a result, the
threshold for equipment than $5,000. agency for audit. OMB will periodically
COFAR recommended adding language
Comments suggested that particularly review the guidance for effectiveness
that requires Federal agencies to have
for large state governments with high and will provide assistance interpreting
policies on conflict of interest in Federal
amounts of Federal awards, and with the guidance upon request. In addition,
awards (in case there are any that do
state policies of higher capitalization new language in paragraph (d) notes
that on a case-by-case basis, in not) and requires non-Federal entities to
thresholds in place, a higher threshold, disclose in writing any potential
possibly in line with the non-Federal accordance with OMB guidance in M–
13–17, OMB will waive certain conflicts of interest (in accordance with
entity’s own capitalization threshold, applicable policies) to the Federal
would be more appropriate. The COFAR compliance requirements and approve
new strategies for innovative program awarding agency or pass-through entity.
considered and determined that even
though entities may view higher designs that improve cost-effectiveness 200.113 Mandatory Disclosures
thresholds as appropriate for their own and encourage effective collaboration
across programs to achieve outcomes. Commenters suggested that
purposes, maintaining the threshold at requirements in procurement
$5,000 is important to protect the assets 200.111 Effective Date regulations for non-Federal entities to
purchased with taxpayer dollars under Commenters requested that OMB and disclose in writing any violations of
Federal awards. The COFAR did not the COFAR orchestrate the Federal criminal law involving fraud,
recommend raising the threshold. implementation of the final guidance in bribery, or gratuity violations in Title 18
2. Subchapter B: General Provisions a manner that results in a smooth of the United States Code have been
transition for entities that are required effective measures to help prevent or
200.101 Applicability prosecute instances of waste, fraud, and
to comply. The COFAR considered
Some commenters suggested at a these requests as well as past abuse. These commenters recommended
minimum that this section in the implementations of OMB guidance and that a similar provision be added to this
proposal needed to be revised for recommended that Federal agencies guidance. The COFAR concurred with
clarity, and some proposed significant coordinate under OMB’s guidance to the recommendation.
changes to applicability of the guidance issue regulations or OMB-reviewed Commenters also suggested that
beyond what had been proposed. guidance in unison, which will be requiring two signatures on all
The COFAR reviewed these and effective one year from the publication certifications would be a similarly
recommended changes for clarity. The of this final guidance. As a result, upon effective measure to guard against
guidance maintains existing language implementation, this guidance will be waste, fraud, and abuse. The COFAR
stating that this guidance does not in effect for all Federal awards or considered this, but determined that
supersede any existing or future funding increments provided after the due to the extensive responsibility for
authority under law or by executive effective date. Non-Federal entities having expert knowledge of the non-
order or the Federal Acquisition wishing to implement entity-wide Federal entities’ cost accounting that is
Regulation. In various sections system changes to comply with the required in order to make the
throughout the guidance, commenters guidance after the effective date will not certifications as they are required now,
noted that it would be helpful to note be penalized for doing so. adding this requirement for an
a policy was ‘‘except as provided in The COFAR further recommended additional person would be a significant
statute’’. The COFAR recommended that that provisions of Subpart F—Audit source of administrative burden. The
COFAR did not recommend the Commenters did note that the policy associated with frequent applicants.
addition. change providing a minimum timeframe Evidence from comments suggests that
of 30-days for applications to be Federal agencies would likely design
3. Subpart C—Pre-Award Requirements
available was a helpful idea, but that the their risk-based framework to make best
Content in the NPG from Subchapters proposed timeframe was too short to be use as possible of existing resources
previously designated as C—Notice of of use. Federal agencies had previously such as Single Audit reports—which
Federal Awards and D—Terms and indicated that the 90-day timeframe aligns with comments indicating a
Conditions of Federal Awards was proposed in the ANPG was too long to preference for use of existing resources
reorganized to provide more be practicable given the constraints they from the non-Federal entity community.
streamlined guidance on information often operate under.
that is required to be provided to a non- The COFAR considered these The COFAR considered the comments
Federal entity upon receipt of a Federal perspectives and recommended the final and recommended the suggested
award. guidance require all funding changes. In addition, the COFAR
opportunities to be available for recommended that the final guidance
200.201 Use of Grant Agreements
application for at least 60 days, with an clarify that, as a baseline for their
(Including Fixed Amount Awards),
exception for Federal awarding agencies review, Federal awarding agencies are
Cooperative Agreements, and Contracts
to make a determination to have a less required by 31 U.S.C. 3321 and 41
In order to broaden a best practice than 60 day availability period but no U.S.C. 2313 to review information
within many Federal agencies’ existing funding opportunity should be available available through any OMB-designated
policy and to facilitate implementation for less than 30 days. The recommended repositories of governmentwide
of M–13–17, a recently published policy policy would assure a minimum eligibility qualification or financial
encouraging evidence-based programs, timeframe that is useful to applicants, integrity information, such as Federal
and drawing on existing policies and and while many Federal agencies would Awardee Performance and Integrity
practices from several Federal agencies, likely continue best practices of a longer
Information System (FAPIIS), Dun and
new language has been added to the application period, they would have the
final guidance to allow for ‘‘Fixed Bradstreet, or ‘‘Do Not Pay’’, and also to
exceptions that they require under
amount’’ awards that rely more on exigent circumstances. comply with suspension and debarment
performance than compliance for requirements at 2 CFR part 180.
accountability. (See also Section 200.204 Federal Awarding Agency
Review of Merit of Proposals 200.206 Standard Application
200.102 Exceptions and 200.430 Requirements
Compensation—Personal Services.) The proposed guidance required that
unless prohibited by Federal statute for As proposed in the NPG, the guidance
200.202 Requirement To Provide competitive grants and cooperative
Public Notice of Federal Financial includes the requirement that Federal
agreements, Federal awarding agencies awarding agencies may only use those
Assistance Programs must design and execute a merit review application information collections
Comments suggested that, in order to process for applications. This section approved by OMB under the Paperwork
facilitate auditor’s ability to ensure that left the design of the process to the Reduction Act of 1995 and OMB’s
programs are correctly evaluated during Federal awarding agencies in order to implementing regulation in 5 CFR part
audits, this section include the existing leave as much flexibility as possible to 1320. Comments were generally in favor
requirement for Federal agencies to incorporate the requirements of specific
of maintaining this longstanding
include in the Catalog of Federal programs.
Domestic Assistance whether or not the This reform was received positively in requirement and strengthening
particular program is subject to Single the proposal, with the comment that it enforcement. In addition, OMB and the
Audit Requirements in Subpart F. The should be separated out from the COFAR have been working closely with
COFAR recommended this change. The financial risk review discussed in the the Government Accountability and
COFAR further recommended that due following section. The COFAR Transparency Board to identify
to uncertain timing regarding the considered the feedback and opportunities for greater standardization
integration of the Catalog of Federal recommended the suggested change in of information collections
Domestic Assistance into the System for organization. governmentwide.
Award Management, the name be left Though this is not a policy change,
200.205 Federal Awarding Agency
unchanged instead of changed to the COFAR endorsed it as an indicator
Review of Risk Posed by Applicants
Catalog of Federal Financial Assistance of work by the COFAR and broader
as proposed. As proposed, the guidance provides
financial assistance community to
latitude for Federal awarding agencies
200.203 Notices of Funding further standardize governmentwide
to design this review as appropriate for
Opportunities the program. As noted in Section information collections. It is a further
As discussed in the ANPG and NPG, 200.101 Applicability, since nothing in indicator of OMB’s intent to authorize
the bulk of this section is not a policy this guidance can supersede the exceptions only on a limited basis.
change, but rather incorporates the requirements of Federal statute, 200.207 Specific Conditions
existing requirement for certain flexibilities such as those enshrined in
categories of information to be the Indian Self-Determination and This section of the final guidance was
published in announcements of public Education Assistance Act (ISDEAA) revised in response to comments
funding opportunities. See OMB would not be contravened by this received to include the list of examples
Memorandum M–04–01 of October 15, policy. Comments suggested that this of specific conditions from existing
2003 (http://www.whitehouse.gov/omb/ section be structured to require a guidance that may be applied to a
memoranda_fy04_m04-01), announcing ‘‘framework’’ for reviewing risk, rather Federal award.
the Federal Register notice that OMB than an award-by-award review, where
published at 68 FR 58146 (October 8, some programs have long histories and
2003). a strong understanding of the risks
4. Subpart D—Post-Award explicit a non-Federal entity’s inclusion of this language would be

Requirements responsibility for safeguarding protected administratively burdensome for non-
personally identifiable information (PII) Federal entities currently subject to A–
Subtitle I Standards for Financial and
and information designated as sensitive. 110. Responses indicated that it could
Program Management
This new language will result in be, and pointed to a few specific areas
200.301 Performance Measurement stronger policies for protecting this recommending refinement. The COFAR
information across Federal awards. recommended keeping the A–102
In this section, commenters expressed
concern about the longstanding 200.305 Payment language over the A–110 language
requirement to relate performance to because it considered this language to
Comments noted with concern that be better able to mitigate the risk of
financial information whenever the proposal included language from
practicable. This language was not a waste, fraud, and abuse. In response to
OMB Circular A–102 which required the comments received, the COFAR
change from existing policy, but in entities to remit interest payments due
response to concerns, the COFAR recommended the specific changes
to Federal agencies promptly across described as follows.
recommended clarifications that this multiple agencies. The final guidance
requirement will be met through use of reinstates and expands applicability of 200.318 General Procurement
governmentwide standard information existing language from OMB Circular A– Standards
collections, and notes that further 110 that instructs non-Federal entities to
requirements are as appropriate in Commenters were concerned about
remit interest earned on Federal awards possible administrative burden resulting
accordance with those collections. This annually to the Department of Health
means that, for the research community from the requirement in paragraph (b) to
and Human Services Payment maintain a contract administration
where there are standard information Management System. This will result in
collections for performance that, in system that ensures contractors perform
a much less burdensome annual in accordance with the terms,
accordance with the ‘‘where payment process.
practicable’’ aspect of the guidance, do conditions and specifications of their
In addition, this section has been contracts and delivery orders. The
not relate financial information to revised to more accurately reflect the
performance data, there will be no such COFAR considers this to be a
requirements in 31 U.S.C. chapter 65 requirement that already exists in OMB
requirement. and implementing Treasury Department Circular A–110, just perhaps not
200.302 Financial Management regulations in 31 CFR Part 205 Rules recognized due to different language.
And Procedures For Efficient Federal- The COFAR recommended clarifying
Some commenters suggested that to State Funds Transfers. All requirements
strengthen financial management, non- the language to require non-Federal
for payments to states are set forth in 31 entities to maintain ‘‘oversight’’ rather
Federal entities should be required to CFR Part 205. Accordingly, the payment
maintain separate bank accounts for than a ‘‘system’’ to eliminate potential
section now covers payments to states confusion over the standards of the
each Federal award. The COFAR in paragraph (a) and refers to the
considered this but determined that system and to conform more explicitly
Treasury requirements. Payment to existing guidance.
doing so would be excessively requirements for other non-Federal
administratively burdensome for non- Commenters recommended that the
entities are set forth in the rest of the
Federal entities, and is not necessary to conflict of interest language found in
section.
assure accountability as long as non- paragraph (c) of this section be
Federal entities have appropriate 200.306 Cost Sharing or Matching expanded to provide guidance on
records that meet the standards as Many comments were supportive of conflicts of interest for Federal awards
described in the guidance. The COFAR the proposed language stating that more broadly. The COFAR considered
recommended further edits to better voluntary committed cost sharing is not this, but found that many Federal
streamline this section of the guidance expected under Federal research agencies already have conflict of interest
on financial management that was proposals and is not to be used as a policies, and these are fairly specific
previously more scattered throughout factor in the review of applications or and vary by Federal agency. The COFAR
the guidance, such as incorporating proposals. Federal agencies recommended treating conflict of
documentation standards previously in recommended adding that such cost interest more broadly separately as
the audit requirements into this section. sharing may be considered when in described in section 200.112 Conflict of
accordance with regulation and Interest, and also recommended
200.303 Internal Controls expanding the conflict of interest
included in the notice of funding
In response to comments that opportunity. In addition, commenters guidance in this section to include
suggested that efforts to mitigate risks of suggested that the final guidance organizational conflict of interest. This
waste, fraud, and abuse would be incorporate existing guidance that only expansion will require non-Federal
strengthened by a more explicit mandatory cost sharing or cost sharing entities to have strong policies
reference to existing internal control specifically submitted in the project preventing organizational conflicts of
requirements issued by the Government budget shall be included in the interest which will be used to protect
Accountability Office (GAO) and the organized research base for computing the integrity of procurements under
Committee of Sponsoring Organizations indirect (F&A) costs for research Federal awards and subawards.
of the Treadway Commission (COSO), projects. The COFAR considered the Commenters were concerned that
the COFAR recommended including feedback and recommended the language in the NPG requiring a review
this new section of the guidance which of proposed procurement methods by
addition.
makes explicit non-Federal entity’s Federal awarding agencies would add
responsibilities with regard to effective Subtitle III Procurement Standards an unnecessary layer of administrative
internal controls. In response to Subtitle III Procurement Standards burden to the process. The COFAR
comments expressed regarding controls takes the majority of the language from concurred and recommended that the
over sensitive information, the COFAR OMB Circular A–102. In the NPG, OMB language be removed from the final
recommended adding language to make requested comments on whether the guidance.
Language in paragraphs (d), (e), and project. The COFAR considered the subrecipients significantly and result in
(f) is longstanding language which has language and recommended that with increased administrative burden. In
always encouraged state and local minor clarifications these methods, addition to re-ordering certain elements
governments subject to A–102 to avoid which include sole source procurements of the NPG language for clarity as some
duplicative purchases and to enter into with justification, be retained as they commenters suggested, the COFAR
common procurements to promote should be inclusive enough to account recommended the following further
efficient use of Federal awards. for such situations. modifications:
Comments recommended strengthening
200.322 Procurement of Recovered In paragraph (a), data elements that
the language in light of OMB’s 2012
Materials are required to be included in
Shared Services Strategy for Federal
agencies encouraging the use of ‘‘shared The COFAR also recommended subawards are aligned with those
services’’ for increased efficiency. The including language in paragraph (f) on required to be included by Federal
COFAR recommended strengthening the the procurement of recovered material awarding agencies in Federal awards in
language in line with comments to reiterate non-Federal entities’ section 200.210 Information Contained
received. Additional changes as noted obligations under section 6002 of the In A Federal Award.
below in the cost principles are further Solid Waste Disposal Act, as amended Comments on the proposed language
intended to facilitate these types of by the Resource Conservation and
requiring pass-through entities to
arrangements. Recovery Act.
include an indirect cost rate in the
Commenters were concerned that the Subtitle IV Performance and Financial subaward were highly positive, but
requirement in paragraph (i) requiring Monitoring and Reporting suggested that the de minimis rate as
the maintenance of records sufficient to
detail the history of performance would 200.328 Monitoring and Reporting outlined in section 200.414 Indirect
similarly create administrative burden. Program Performance (F&A) Costs should be higher.
The COFAR considered this Commenters were concerned that pass-
Some language in this section that
requirement to be an important one for through entities might decline to
had been included in the NPG aligning
documenting the integrity of the requirements with those in OMB negotiate, and this would make the de
transaction and recommended it be Circular A–11 were found by Federal minimis rate more likely a de facto rate
retained. agencies to be overly broad, and have for subrecipients. The COFAR
Commenters were concerned that instead been replaced by more narrow considered this feedback but
language in the NPG, which required language in section 200.102 Exceptions. determined that as an automatic rate
information concerning any protests of The more specific language is designed without any review of actual costs, the
a procurement to be provided to the to encourage evidence based program rate should remain at the conservative
Federal awarding agency, would create design. levels discussed in that section to
an unnecessary layer of administrative The final guidance also includes protect the Federal government against
burden to that process. The COFAR language from existing guidance that excessive over reimbursement.
concurred, and that language has been had been dropped from the NPG noting
removed from the section. Comments noted concern that as
that reporting should not be required stated the language broadened pass-
200.319 Competition more frequently than quarterly. In
through entity responsibility for
addition, similar language to that in
Commenters were concerned that monitoring subrecipients particularly
section 200.501 on Standards for
language this section, which prohibits with respect to audit follow-up. The
Performance and Financial Management
the use of geographic preference in notes that performance reports are COFAR recommended modifications to
solicitations, would put some non- subject to the Paperwork Reduction Act clarify that the required monitoring of
Federal entities in conflict with the requirements and should use OMB- subrecipients is limited to reviewing
requirements of state law in some cases approved governmentwide information any performance and financial reports
where state laws require such collections. that the pass-through entity has decided
preferences. The COFAR considered to require in order to meet their own
this, but ultimately determined that 200.329 Reporting on Real Property requirements under the terms and
such preferences could result in the The language in this section is based conditions of the Federal award,
non-Federal entity not making the most on the supplementary information following up, ensuring corrective action,
efficient possible use of the funds provided in the purpose section of the and issuing management decisions on
received under a Federal award, and so Final Notice of the Real Property Status weaknesses found through audits only
recommended the language remain Report (RPSR) form SF–429 available at when those findings pertain to Federal
unchanged. Where there is a conflict 75 FR 56540 published September 16, award funds provided to the
between state or tribal law and this 2010. subrecipient from the pass-through
guidance as implemented in regulation
Subtitle V Subrecipient Monitoring entity. This is consistent with existing
with respect to the administration of a
Federal award, this Federal guidance and Management requirements. Language is further
prevails. This section was proposed in the NPG modified to clarify that pass-through
as section 200.501, but the COFAR entities must only verify, rather than
200.320 Methods of Procurement To ensure, that a subrecipient has an audit
recommended it be reordered in the
Be Followed as required by Subpart F Audit
final guidance for a more logical flow of
Commenters were concerned that the Requirements. As a result of these
post-award requirements.
methods of procurement this section clarifications, the requirements for
might be overly proscriptive and might 200.331 Requirements for Pass- subrecipient monitoring are
prevent entities from making purchases Through Entities substantively unchanged from existing
from specific contractors where such Many commenters were concerned guidance.
purchases were necessary, especially for that this section could expand the
example, for the integrity of a research monitoring requirements for
Subtitle VI Record Retention and require modifications to programs. The 200.400 Policy Guide
Access COFAR recommended these additions. Commenters requested that the final
200.333 Retention Requirements for 200.343 Closeout guidance include language which was
Records previously included in OMB Circular
The proposal included expanded
A–21 to address the dual role of
The final guidance maintains and guidance on closeout, to help strengthen
students in research at IHEs. The
clarifies the existing requirement that Federal agencies policies for this
COFAR recommended that a slightly
records be retained for three years from process in line with OMB’s July 2012
updated version of the language be
the date of submission of the final Controller Alert. Commenters included.
expenditure report. The COFAR recommended this language be modified Other commenters suggested that to
considered alternative scenarios to extend the closeout period for an better mitigate the risks of waste, fraud,
proposed by commenters, and award from 180 days to the more and abuse, the final guidance include
recommended that the proposed realistic timeframe of one year, in language to make explicit that non-
language be retained. The COFAR noted addition to the clarifying language that Federal entities are not permitted to
that this length can be extended if non-Federal entities have 90 days from earn or keep any profit resulting from
required by statute or with an exception the end date of the period of Federal awards, unless expressly
from OMB, but that in most cases it is performance to submit all final reports, authorized by the applicable award
sufficient. and also to clarify that the one-year conditions. The COFAR recommended
200.335 Methods for Collection, period begins once final reports have the language be included.
Transmission and Storage of been received from the non-Federal
entity. The COFAR recommended the 200.401 Application
Information
addition. At the suggestion of commenters, the
In addition, in response to the May COFAR recommended this section
2013 Executive Order on Making Open 200.344 Post-Closeout Adjustments
and Continuing Responsibilities include additional language to clarify
and Machine Readable the New Default that when a non-Federal entity has a
for Government Information, as well as Commenters suggested that language Cost Accounting Standards (CAS)
to comments requesting that the be added to limit the period when covered contract subject to the
guidance in general be updated to Federal agencies may disallow costs to requirements of 48 CFR 995, those
reflect 21st century methods of within the three-year record retention requirements do not automatically
communicating, the COFAR period required under section 506 extend beyond the covered contract to
recommended a new paragraph be Record Retention and Access. The other awards, though the non-Federal
added. The new paragraph (c) adds COFAR recommended the addition. entity is required to maintain consistent
language on methods for the collection, application of cost accounting
transmission, and storage of 200.345 Collection Of Amounts Due
standards.
information, which combines language As with section 200.343 Post-Closeout
that had been previously scattered Adjustments and Continuing 200.407 Prior Written Approval (Prior
throughout the guidance to make clear Responsibilities, commenters Approval)
that electronic, open, machine readable recommended language to limit the In response to comments, the COFAR
information is preferable to paper, as collection period to within the three- recommended the title of this section be
long as there are appropriate and year record retention period required changed from ‘‘Advance
reasonable internal controls in place to under section 200.333 Retention Understanding’’ to more closely mirror
safeguard against any inappropriate Requirements for Records. The COFAR the language used in the guidance. In
alteration of records. noted that the Federal government has addition, a list of instances of sections
Subtitle VII Remedies for the right to collect amounts due at any that discuss conditions under which
Noncompliance point, and while recognizing that a prior approval is required is included to
determination of disallowance should ensure that these requirements are
200.338 Remedies for Noncompliance be made within the record retention transparent and to reduce burden by
Commenters suggested that this period, did not recommend the addition providing both Federal agencies and
section, which was titled ‘‘Termination in this section. non-Federal entities a complete listing
and Enforcement’’ in the NPG, should Section B: Subpart E and Appendices of where all these types of requirements
be expanded to more accurately III–VIII: Cost Principles. Reforms to may be found.
describe the actions that could be taken Cost Principles (Circulars A–21, A–87, 200.413 Direct Costs
under enforcement. The COFAR and A–122)
recommended this change. Paragraph (d) includes the language in
This section discusses proposed this section that was proposed as a
200.339 Termination changes to the OMB cost-principle change to clarify the circumstances
Commenters suggested that language circulars that have been placed at 2 CFR under which it is allowable to directly
should be added to allow for Federal Parts 220, 225, and 215 (Circulars A–21, charge administrative support Costs.
agency termination for cause, because Cost Principles for Educational This language was proposed in order to
situations often arise beyond the Federal Institutions; Circular A–87, Cost address an ongoing inconsistency in the
agency’s or non-Federal entity’s control Principles for State, Local and Indian definition of direct costs; which
which may require awards to be Tribal Governments; and Circular A– required administrative costs to be
terminated. This language would prove 122, Cost Principles for Non-Profit charged indirectly but otherwise
useful in situations like those Organizations). The COFAR considered provided that costs are direct when they
encountered during implementation of adding the hospital cost principles to may be specifically allocated to one
the Recovery Act or Sequestration, the guidance, but decided that doing so award; regardless of what activities they
where congressional mandates would require in depth further review support.
encouraged expedited performance, or that would be best done as part of a Many commenters were supportive of
changes to appropriated amounts separate process at a later date. the change with some concerns about
the way it was proposed. Some agencies, and that the conditions set by commenters responded favorably that
commenters were concerned that the OMB for these determinations are this would reduce a source of
conditions as originally articulated were stringent enough to ensure that they do administrative burden, but others were
not sufficiently clear for auditors to not occur without strong justification. concerned, stating that this disclosure
determine whether a directly charged The COFAR did not recommend the statement was a critical tool to
administrative cost was allowable or change. mitigating waste, fraud, and abuse and
not. Other commenters were concerned Language in paragraph (f) provides opposed its elimination. Since the most
that the requirement to have these costs that any non-Federal entity that has likely source of burden occurs when an
approved in the budget was more never had a negotiated indirect cost rate entity crosses the threshold for the first
restrictive than otherwise standard may use a de minimis rate of 10% of time, the COFAR recommended
rebudgeting practices and would unduly modified total direct costs. Commenters reinstating the requirement at the new
constrain implementation. The COFAR recommended that this rate should be threshold of $50 million to be consistent
considered the issue and recommended higher—either at 15% or 20% with current FAR requirements.
adding explicit language to clarify that respectively. They were concerned that The COFAR further noted that for
when these costs are allowable, they because for smaller organizations the most IHEs that have already passed the
must have the prior approval of the capacity to conduct full negotiations is threshold, the biggest source of burden
Federal awarding agency. Additional often out of reach, this rate will most associated with these requirements
language was added to allow for this likely be the de facto rate rather than the arises from uncertainty when awaiting
approval after the initial budget de minimis rate. The COFAR considered Federal agency approval for a submitted
approval in order to allow for flexibility the possibility of raising this rate, but change in a Disclosure Statement. In
in implementation. The clarified ultimately recommended that as an response, instead of requiring Federal
language addresses both sets of automatic de minimis rate without agency approval for changes, the
concerns; clarifying conditions for analysis of actual costs it should stay at COFAR recommended the final
allowability while providing additional a conservative level in order to guidance require only that non-Federal
flexibility in project management. minimize the possibility that the entities submit their changes six months
Federal government over reimburse for
200.414 Indirect (F&A) Costs in advance of implementing a change. If
these costs. Additional comments also
In response to a wide range of they receive no indication of an
suggested that to further reduce burden
feedback from diverse stakeholders, extension of the review period or of
for both recipients and the Federal
Section 615 Indirect Costs contained a concern from a Federal agency, they
government, this de minimis rate be
number of proposals for making indirect may proceed with the implementation
allowable for use indefinitely, and the
costs more transparent and consistent without further delay. The COFAR’s
COFAR concurred.
for non-Federal entities. These were recommended solution would thus
Language in paragraph (g) provides an
well received by most stakeholders who continue to require use a valuable tool
option for entities with an approved
submitted comments, and have mostly for mitigating risks of waste, fraud, and
federally negotiated indirect cost rate to
been retained as proposed, with some abuse while eliminating key sources of
apply for a one-time extension without
modifications. administrative burden and uncertainty
further negotiation subject to the
Language in paragraph (c) provides for non-Federal entities that can lead to
approval of the negotiating Federal
for the consistent application of unnecessary audit findings.
agency. Commenters responded
negotiated indirect cost rates, and positively to this option, though some Subtitle VI General Provisions for
articulates the conditions under which suggested that the extension period be Selected Items of Cost
a Federal awarding agency may use a longer, or that additional extensions be
different rate. These conditions include allowable. The COFAR considered Some commenters noted concern that
approval of the Federal awarding agency these, but found it important to the current item of cost for
head (as delegated per standard renegotiate after an initial 4-year ‘‘Communication costs’’ had been
delegations of authority) based on extension period to ensure that such deleted from the proposed guidance.
documented justification, the public rates continue to be based on actual The COFAR considered this, but
availability of established policies for costs. The COFAR recommended this considered communications costs to be
determinations to use other than provision remain as proposed. straightforward enough to be easily
negotiated rates, the inclusion of notice covered by the guidance in Subtitle II:
of such a decision in the announcement 200.415 Required Certifications Basic Considerations. The COFAR notes
of funding opportunity, as well as in Comments recommended that in that all items not specifically covered in
any pre-announcement outreach, and order to better mitigate risks of waste, the items of cost are subject to the
notification to OMB of the decision. fraud, and abuse, required certification guidance in Subtitle II Basic
Comments received regarding these language be strengthened to include Considerations, and that this section
proposals were mostly positive, and specific language acknowledging the should be read as a guiding framework
indicated that these provisions would statutory consequences of false for all specific discussions of cost in the
likely lead to greater consistency, and certifications. The COFAR concurred section that follow.
transparency in the application of with the recommendation. 200.421 Advertising and Public
indirect cost rates governmentwide.
200.419 Cost Accounting Standards Relations
Some commenters recommended that
for even greater consistency decisions and Disclosure Statement Commenters noted that it was
about the use of rates be subject to OMB The NPG proposed deleting the important that costs relating to
approval rather than Federal agency requirements that apply only to IHEs to advertising and public relations allow
approval. The COFAR considered this, comply with the Federal Acquisition for costs of advertising program
but ultimately recommends that Regulation (FAR) Cost Accounting outreach and other specific costs
responsibility for administering Federal Standards (CAS) and to file a Disclosure necessary to meet the requirements of
financial assistance programs continue Statement when their Federal awards the federal award. The COFAR
to rest with the Federal awarding total $25 million or more. Some recommended the addition.
200.422 Advisory Councils in section 200.305 Payment, which is policy in this section over others. They
Commenters were concerned that the also cross-referenced. The result is more also recommended deleting the rest of
proposed guidance disallowed streamlined language that articulates the the section allowing Federal agencies to
previously allowable costs for requirement more clearly. negotiate alternative arrangements when
documented advisory council costs that non-Federal entity policy is deemed
200.430 Compensation—Personal
inadequate. Commenters also
benefited a federal award. Services
recommended the deletion language
The COFAR reviewed the language The COFAR began review of these which provided special consideration in
and noted that the revised language is requirements under this reform effort determining allowability for any change
clarifying in nature and does not based on feedback that the existing in the non-Federal entity’s
substantively change the existing requirements had become extremely compensation policy because they
requirements, noting that these costs are administratively burdensome, and as found it redundant to other language
still allowable with prior approval from written, the guidance did not allow for describing the compensation for
the Federal awarding agency. The advances in technology, record keeping, personal services and the
COFAR did not recommend a change. and internal controls, which allow non- reasonableness with which these
200.425 Audit Services Federal entities to document these costs services need to be proven in order for
in increasingly efficient and compensation to be expected.
Commenters recommended that this sophisticated ways. In addition, the The COFAR concurred with the
section be clarified to include reference COFAR considered the long-term goal of recommended deletion of conflict of
to a non-Federal entity’s fiscal year in tying justification for salaries to the interest policy but did not
noting that when Federal awards total achievement of programmatic objectives recommended further changes on
less than $750,000 the non-Federal rather than measurement of effort special considerations which they found
entity is exempted from having a single (hours) expended. Though such to provide important provisions that
audit. The commenters wanted the performance-oriented reporting is not mitigate the risks of waste, fraud, and
addition of the fiscal year clause in currently possible across the diverse abuse.
order to be consistent with Subpart F. suite of Federal assistance programs, the Another comment recommended
The COFAR recommended the addition. advances noted above allow for deletion of language on allowable
Commenters noted concern for alternatives to the current requirements incentive compensation because the
language which stated that other audit that can provide an even higher commenter believed this provision has
costs were allowable if included in an standard of accountability without resulted in cost disallowances and is
approved cost allocation plan or an burdensome process requirements. The burdensome. The COFAR disagreed and
indirect cost proposal, or if it was COFAR received many comments on recommended that the section stay the
approved by the Federal awarding this proposed language indicating that way it was originally proposed.
agency as a direct cost to the Federal the changes had potential for positive Comments noted with concern that
award. impact but recommended modifications that nonprofit organizations are not
Upon further review, the COFAR to the proposed language. subject to the same rules as other types
notes that though this language allowing Comments suggested that language be of non-Federal entities. The COFAR
costs of other audits has been in place added to include more detail as to the considered that due to the unique facets
for years, it is not consistent with the general explanation of what of nonprofit organizations, these
Single Audit Act, and so recommended compensation for personal services is flexibilities are important, and
deleting it. Instead, the COFAR allowable. recommended that paragraph (g) stay
recommends language that allows the The COFAR considered the current the way it was originally proposed.
costs of a financial statement audit for level of detail to be sufficient, especially Commenters proposed major changes
a non-Federal entity that does not since any personal services not listed in to paragraph (h), which provides
currently have a Federal award when this section would be addressed in provisions specific to IHEs describing
included in the indirect cost pool as section 200.431 Compensation—Fringe conditions that require special
part of a cost allocation plan or indirect Benefits. consideration and possible limitations
cost proposal. These audits may be Commenters suggested that in determining allowable compensation
useful to the Federal agency negotiating compensation surveys providing data costs. They recommended re-
an indirect cost rate, and the COFAR representative of the labor market organization of the section for clarity
does not believe them to be in conflict involved were inferior to the other and an explicit recognition of
with the Single Audit Act. methods described in the NPG for Institutional Base Salary rate (a type of
The COFAR further recommends evaluating the reasonableness of policy most IHEs have well defined)
clarification that agreed-upon- compensation for personal services. instead of references to a more loosely
procedures are defined in section 2(A) Others commented that with regard to defined ‘‘base rate’’. The COFAR
of the GAGAS attestation standards, and the basis for salary rates, unless there is concurred and recommended most of
this section will be aligned with the prior approval by the Federal awarding the suggested changes.
types of compliance requirements in the agency, charges of a faculty member’s Many diverse stakeholders submitted
compliance supplement once updated. salary to a Federal award should not comments on paragraph (i) Standards
exceed the proportionate share of the for Documentation of Personnel
200.428 Collections of Improper Expenses (also known informally as
Payments institutional base salary for the period
during which the faculty member ‘‘time and effort reporting’’). Many
The COFAR recommends that the last agreed on the need for clearer standards
worked on the award.

sentence of this section, which The COFAR recommended additions of the internal controls around these
describes the collection of improper to support both proposals. charges. Many commenters also
payments when time elapses between Commenters recommended deleting requested additional flexibility in how
the collection of funds from entities and the specific reference to conflict of these standards could be implemented,
their expenditure, be deleted because it interest policies, noting that there is no while others recommended stricter
is redundant and duplicates what is said reason to highlight any one institutional uniformity in the provision of specific
certification language that would better fit a non-Federal entity’s needs. Also, written policies. The COFAR
prevent and facilitate prosecution of placing requirements at the internal recommended keeping this language as
fraud. Some commenters that allowance control objective level is consistent with proposed.
for costs based on estimates could result the requirements in section 200.303
200.432 Conferences
in a lack of sufficient documentation Internal Controls. Specifically, the
that the costs were in accordance with COFAR recommended stating explicitly The language from the proposed item
the work performed. that charges to Federal awards for of costs for External Meetings and
The COFAR agreed with the salaries and wages must be based on Conferences has been clarified to better
recommendations on the risks in this records that accurately reflect the work articulate the limits on the types of
area and the need for a strong system of performed. Further clarifications gatherings for which these costs are
internal controls to document describe the required controls in more allowable. In addition, the language
compliance. This final guidance detail. clarifies that the costs of identifying, but
requires non-Federal entities to comply The COFAR received positive not providing, locally available
with a stringent framework of internal feedback on proposed language that dependent care options for attendees are
control objectives and requirements. provided for Federal agencies to allowable. The result is that non-Federal
The guidance also requires that when approve alternative methods where entities have clear limits around
interim charges are based on budget proposals are submitted that are more conference spending which should limit
estimates, the non-Federal entity’s performance oriented or in instances of these costs appropriately.
system of internal controls must include approved blended funding and Further, without adding significant
processes to ensure necessary recommended it be retained. cost, the policy encourages family-
adjustments are made such that the final The combined result of these changes friendly practices that will better enable
amount charged to Federal awards is is that non-Federal entities have clear employees of non-Federal entities with
proper. high standards for maintaining a strong dependent care responsibilities to
The COFAR considered system of internal controls over their progress in their careers. This is an
recommendations from commenters to records to justify costs of salaries and outcome which was noted in comments
include specific certification language, wages, and also additional flexibility in as one that is essential for advancing the
but was concerned that requiring the processes they use to meet these careers of women in science,
specific language at this level would standards. This should allow them to be technology, engineering and math.
result in audit findings more likely to be more accountable for these costs at less Similar outcomes are supported by
based on incorrect documentation rather expense. reforms to 200.474 Travel Costs and
than uncovering weaknesses in internal 200.431 Compensation—Fringe
control or instances of fraud. Further, 200.431 Compensation—Fringe Benefits.
the COFAR notes that other Benefits
200.433 Contingency Provisions
certifications included by recipients in Commenters recommended
their applications and indirect cost rate eliminating a requirement for awarding Many commenters noted that this
agreements provide a layer of assurance agency pre-approval for insurance proposed section made positive and
that can be used in preventing and payments based on consistent entity helpful clarifications which enable a
prosecuting instances of fraud. policy for actual payments to or on better understanding of how
The COFAR believes this focus on behalf of employees or former contingency costs may be budgeted and
overall internal controls provides employees for unemployment charged. Some commenters
greater accountability as the non- compensation or workers’ recommended additional provisions for
Federal entity must ensure that the total compensation. The COFAR agreed and further clarity on the types of costs that
internal control system for documenting recommends removing the language. are allowable for contingencies, and
personal expenses provides proper Based on recommendations from recommended additional controls on
accountability and the auditor must test diverse comments, the COFAR how Federal agencies provide oversight
these internal controls as part of the recommended clarification of the over these funds as part of their Federal
Single Audit requirements in Subpart F. applicability of GAAP to entities using awards. In particular, commenters
While many non-Federal entities may accrual based accounting. The COFAR suggested adding a requirement to track
still find that existing procedures in also recommends that prior approval by funds that are spent as contingency
place such as personal activity reports the Federal awarding agency or funds throughout the non-Federal
and similar documentation are the best cognizant agency be given before an entity’s records.
method for them to meet the internal indirect cost is charged to the Federal The COFAR reviewed the language,
control requirements, this final award for abnormal or mass severance and concluded that it does provide
guidance does not specifically require pay. sufficient controls to Federal agencies to
them. The focus in this final guidance Federal agencies recommended that manage Federal awards. The COFAR
on overall internal controls mitigates the all severance in excess of normal noted that: (i) though a diversity of
risk that a non-Federal entity or their severance policy in accordance with techniques are available to establish
auditor will focus solely on prescribed institutional policy or other conditions contingency estimates, the estimates
procedures such as reports, for allowability discussed in the must be based on broadly-accepted cost
certifications, or certification time guidance should be unallowable, not estimating methodologies, (ii) budgeted
periods which alone may be ineffective just golden parachute packages. The amounts would be explicitly subject to
in assuring full accountability. COFAR recommended the proposed Federal agency approval at time of
While this approach may increase changes to prevent excessive severance award, (iii) funds would not be drawn
burden on non-Federal entities with payments. down unless in accordance with all the
weak internal controls, the COFAR Finally, many commenters other applicable provisions of this
believes overall it will reduce burden by commended the inclusion of family- guidance (such as Subtitle II Basic
providing non-Federal entities the related leave among the examples of Considerations), and (iv) actual costs
ability to implement the internal control types of leave that may be allowed incurred must be verifiable from the
systems and business processes that best according to the non-Federal entity’s non-Federal entity’s records. The
COFAR considered this last requirement recipients from recovering depreciation of a Federal award or are approved in
to be sufficient for tracking the use of on assets that might be purchased under advance by the Federal awarding
funds, as contingency funds should non-Federal awards, but nevertheless agency. The COFAR recommended the
most properly be charged not as used at least in part to support a Federal addition.
‘‘contingency funds’’ specifically, but award. This exclusion would discourage
200.444 General Costs of Government
according to the cost category into efficiencies to Federal awards that could
which they would naturally fall. The otherwise be gained through shared use Commenters suggested that to be
COFAR did not recommend any of these assets. The COFAR agreed and consistent with current policy this item
changes to the proposed language. recommended the proposed change. should include language that allows up
to 50% of the portion of salaries and
200.434 Contributions and Donations 200.437 Employee Health and Welfare wages for the chief executive and his or
Comments suggested that the value of Costs her staff supporting Federal awards for
a donated item, whether it is a good or Commenters suggested that allowing Indian Tribes and Councils of
a building, should not be charged to a costs to improve ‘‘morale’’ in this item Government to be allowable as indirect
Federal award as either a direct or as proposed would be difficult to costs without further justification. The
indirect cost. distinguish from the language in the COFAR recommended the addition.
The COFAR concurred and following item that disallows
recommended changes accordingly. The 200.445 Goods or Services for Personal
entertainment costs, potentially
COFAR also recommended clarifying Use
resulting in opportunities for waste,
that depreciation on donated assets is fraud, and abuse. Diverse stakeholders suggested
permitted in accordance with 200.436 The COFAR concurred and, to better additional types of costs that could be
Depreciation, as long as the donated mitigate these risks recommended explicitly discussed under this item.
property is not counted towards cost eliminating references to morale, The COFAR considered these but found
sharing or matching requirements. The limiting this item to those for Health them to be items either addressed
COFAR also recommended and Welfare as established in the non- elsewhere in the guidance or covered
consolidation of much this section with Federal entity’s documented policies. under Subpart II Basic Considerations.
section 200.306 Cost Sharing Or The COFAR did not recommend
200.438 Entertainment Costs changes to this section.
Matching.
Many diverse commenters noted the
200.435 Defense and Prosecution of potential for conflicting guidance 200.446 Idle Facilities and Idle
Criminal and Civil Proceedings, Claims, between this section as proposed and Capacity
Appeals and Patent Infringements the guidance under 200.437 Employee Commenters requested further
Commenters recommended that that Health And Welfare Costs, as well as clarification on the circumstances under
all costs related to defense of criminal, confusion about exceptions for which costs of idle facilities are
civil, or administrative proceedings entertainment under the terms and unallowable versus allowable. The
should be completely unallowable, conditions of the award. COFAR recommended changes for
regardless of disposition. In addition to the clarifications to clarification and to ensure sure that
The COFAR considered this but 200.437 Employee Health And Welfare these fluctuations are allocated properly
recommended keeping the language as it Costs, the COFAR recommended to all benefiting programs.
was originally proposed in order to clarifying that any exceptions require a Other commenters suggested that the
preserve a wrongly accused defendant’s programmatic purpose as well as one year time limit that the guidance
ability to charge the Federal award for written prior approval from the Federal provides on funding idle facilities may
legal costs related to charges or claims awarding agency. be arbitrary, and noted that often the
for which the defendant ultimately projects which require this flexibility
200.439 Equipment and Other Capital are multi-year projects, where a two
receives a favorable disposition.
Expenditures year horizon might be considered an
200.436 Depreciation Many diverse commenters noted extremely aggressive timeline.
Commenters suggested that allowable opportunity for clarification in this The COFAR considered that the exact
compensation for the use of their section. The COFAR recommended requirement is for a ‘‘reasonable period
buildings, capital improvements, addressing most of these either in of time, ordinarily not to exceed one
equipment, and software projects consolidated definitions in the year’’, which provides some flexibility
should be based on capitalization in definitions section or through on the timeline when needed, while still
accordance with GAAP instead of the appropriate consolidations with the setting expectations of limits. The
Government Accounting Standards language in Subpart D—Post Federal COFAR did not recommend changes to
Board Statement Number 51. Award Requirements, section Subtitle II this language.
The COFAR agreed and recommended Property Standards.
changing the language to reflect this 200.447 Insurance and
change. The COFAR also recommend 200.441 Fines, Penalties, Damages and Indemnification
adding clarification that an asset Other Settlements Commenters suggested that policy
donated to the non-Federal entity by a Commenters suggested that the list of allowing Federal agencies to choose
third party will have its fair market laws under which failure to comply whether to participate in losses not
value documented at the time of the could result in costs of fines and other covered by the recipient’s self-insurance
donation and shall be considered as the penalties should include Tribal law. reserves is inappropriate and
acquisition cost. Such assets may be The COFAR recommended the addition. burdensome to entities, and also
depreciated or claimed as matching but Commenters suggested that costs contradicts other provisions in the
not both. resulting from ‘‘alleged violations’’ and language.
Commenters noted that proposed not just ‘‘violations’’ should be The COFAR agreed and recommended
language on depreciating assets donated unallowable, except when they result that the sentence be deleted. The
by a third party would prevent directly from complying with the terms COFAR also recommended deleting
policy that the Federal government will organizations. The COFAR 200.461 Publication and Printing Costs
participate in actual losses of a self- recommended keeping the provision
insurance fund that are in excess of the that requires that the non-profit Commenters suggested that language
reserves, to protect the Federal organization had to have incurred the should be added to resolve a long-
government from inappropriate cost after September 29, 1995, in standing issue with charges necessary to
exposure to these types of costs. connection with acquisitions of capital publish research results, which
Commenters recommended that assets that occurred after the data. The typically occur after expiration, but are
language discussing fees paid to or on COFAR also recommended deleting any otherwise allowable costs of an award.
behalf of employees or former additional conditions for non-profit The COFAR concurred with the
employees for worker’s compensation, organizations that are duplicative of comments and recommended additional
unemployment compensation, be CAS. language to clarify that non-Federal
moved to the section on fringe benefits. Commenters suggested adding a entities may charge the Federal award
The COFAR recommended the language provision to ensure that interest before closeout for the costs of
be moved. attributable to a fully depreciated asset publication or sharing of research
is unallowable. The COFAR results if the costs are not incurred
200.448 Intellectual Property
recommended the addition. during the period of performance of the
One comment requested use of a more Federal award.
commonly understood phrase than 200.453 Materials and Supplies Costs,
‘‘searching the art’’, which is currently Including Costs Of Computing Devices 200.463 Recruiting Costs
used in the guidance. The COFAR recommended moving
The COFAR determined that this is a the definition of supplies to the Commenters suggested that since
term of art and is the appropriate phrase definition section, and feedback on that ‘‘special emoluments, fringe benefits,
for this guidance. The COFAR did not definition is discussed there. and salary allowances’’ that do not meet
recommend a change. the test of reasonableness or do not
200.454 Memberships, Subscriptions, conform with established practices of
200.449 Interest and Professional Activity Costs the entity would be unallowable
Commenters noted that they preferred Commenters noted that it was unclear regardless of where the personnel are
the organization of the language used in what was meant by ‘‘substantially currently employed; language should be
the A–21 circular, suggesting that this engaged in lobbying’’. The COFAR clarified accordingly with the deletion
section begin with the general principle recommended substituting ‘‘whose of ‘‘from other non-federal entities’’ after
that costs incurred for interest on principal purpose is lobbying’’ and the list of benefits that attract
borrowed capital, temporary use of adding a citation to section 200.450 professional personnel. Commenters
endowment funds, or the use of the non- Lobbying to clarify. also noted that modifications were
Federal entity’s own funds are needed to clarify that when relocation
unallowable, followed by exceptions. 200.455 Organization Costs costs incurred with the recruitment of a
The COFAR recommended the change Commenters recommended parity in new employee have been funded in
in organization. application of this item across types of whole or in part as a direct cost to the
Commenters responded positively to non-Federal entities. The COFAR federal award, and the newly hired
the more explicit inclusion of recommended making this section employee resigns for reasons within the
information technology in the definition applicable to all stakeholders. employee’s control within 12 months
of capital assets. They also after hire, the non-Federal entity will be
recommended that the date for the 200.456 Participant Support Costs
required to refund or credit only the
provision to take effect be based on a The proposed guidance included Federal share of such relocation costs to
non-Federal entity’s fiscal year rather language on participant support costs the Federal government. The COFAR
than a specific date. The COFAR that expands to all entities a provision concurred with the suggested change.
recommended moving this and all other which previously applied only to
Commenters suggested that this
definitions to the streamlined nonprofit entities, though moves the
section in its proposed form (and in
definitions section and concurred with definition of these costs to the definition
existing guidance) fails to account for
the adjustment to the effective date. section. The proposal received mostly
Some commenters suggested costs associated with obtaining critical
positive feedback from commenters. The
recipient’s limits for claims for federal foreign research skills and proposed
COFAR recommended keeping this
reimbursement of interest costs to the additional language and standards to
language and that treatment of
least expensive alternative and that remediate the problem. Commenters
participant support costs in the
criterion for the non-Federal entity to recommended that costs associated with
definition of modified total direct costs
make an equity contribution of at least visas when critical skills are needed for
and appendices on indirect cost rates be
25% of the purchase debt arrangements a specific award should be allowed. The
modified in accordance with this
over a million dollars be removed. Other COFAR concurred with the
guidance.
commenters suggested that these should recommended change.
remain in order to protect Federal 200.460 Proposal Costs
200.464 Relocation Costs of Employees
government interests. The COFAR did Many comments were supportive of
not recommend removing these the proposed language, though some Commenters suggested that the costs
provisions. were concerned that the language of the ownership of the vacant former
Commenters suggested that extra allowing for other than indirect home after the settlement or lease date
criteria for nonprofit organizations is treatment with prior Federal agency of the employees new permanent home
not appropriate and ask that all the approval could lead to inconsistencies. should only be paid for up to 6 months
conditions specifically for nonprofit The COFAR recommended deleting this to eliminate excessive charges to the
organizations be removed. The COFAR language to improve consistency and Federal government. The COFAR
recommended deleting all but one of allow proposal costs to be charged only concurred with the recommended
specific conditions for nonprofit as an indirect cost. change.
200.465 Rental Costs of Real Property 200.468 Specialized Service Facilities 200.472 Training and Education Costs
and Equipment Commenters suggested introducing Commenters indicated concern that
Commenters requested that an the concept of an ‘‘equipment the language allowing the costs of
exception for Indian tribes to the replacement fund’’. Their concern is training and education for employee
provisions that allow ‘‘less-than-arm’s- that when federally-funded equipment development is too open-ended and
length’’ transactions only up to the is being used, the depreciation charges recommended more restrictive language.
actual costs of ownership. They suggest on this equipment are not allowed to be The COFAR considered the
that this is a matter of tribal autonomy included in the rates charged to users of suggestion, but believes that the basic
and a way to better support tribal the equipment. Consequently, this considerations for allowability in
enterprises. The COFAR considered the restricts the ability of the non-Federal Subtitle II Basic Considerations provide
suggestion but determined that despite entity to recover funds that could be adequate restrictions that will
the unique government-to-government used to replace the equipment in the appropriately limit the risk of waste,
relationship with Indian tribes and the future. Allowing non-Federal entities to fraud, and abuse. The COFAR did not
importance of tribal autonomy, allowing establish an ‘‘equipment replacement recommend a change.
these transactions at higher than the fund’’ would help to ensure that 200.474 Travel Costs
costs of actual ownership would result institutions are in a position to fund
in undue increases in costs to the future equipment without having to rely Commenters suggested that the
Federal government. The COFAR did on equipment grants from research proposed language allowing temporary
not recommend the change. funding agencies. The COFAR dependent care costs was too open-
Commenters recommended that rental considered this suggestion, but was ended and could increase risks of waste,
costs under ‘‘sale and lease back’’ concerned that allowing such costs fraud, and abuse.
arrangements should only be allowable would inappropriately increase costs The COFAR concurred with the
up to the actual costs of ownership, and under Federal awards and reduce the concerns raised and modified the
not up to the amount that would be benefits intended to be achieved by the language to provide more specific
allowed had the entity continued to Federal award. The COFAR did not parameters for the conditions under
own the property. They also commented recommend the change. which these costs are allowable. The
that language explaining that for clarity Commenters suggested that examples result is language that provides, under
rental costs under ‘‘less-than-arm’s of costs of services provided by highly specific and limited circumstances, a
length’’ leases are allowable only up to complex or specialized facilities family-friendly policy that should allow
the amount as explained in paragraph operated by the entity are not needed. for individuals with dependent care
(2) need not include that the costs are The COFAR considered the responsibilities to better balance their
allowable up to the amount had the title suggestion and although generally responsibilities to both their families
to the property vested in the institution. throughout the guidance has declined to and the Federal award.
Commenters suggested that the include specific examples 200.475 Trustees
provisions of the General Accepted recommended that in this case the
Accounting Principles should determine examples be kept as an important way Commenters noted that this section
whether a lease is a capital lease or not. to illustrate the intent of the language. reverses existing language from OMB
Commenters also suggested that Circulars A–21 and A–122 where travel
200.469 Student Activity Costs and subsistence costs of trustees, or
language should be added prohibiting
the charge of home office space and Upon review of this section, the directors, are allowable under certain
utilities charged to a Federal award. COFAR recommended that though it conditions. They proposed that past
The COFAR recommended these primarily applies to IHEs, expanding policy from A–21 and A–122 be
proposed changes. this language to all entities would reinstated.
further mitigate risks of waste, fraud, The COFAR concurred and
200.466 Scholarships and Student Aid and abuse. recommended that the costs for the
Costs nonprofit community and institutions
Commenters suggested that this 200.471 Termination Costs be allowable, given those costs are also
section should reflect the dual role of Commenters suggested that the cross in line with section 200.474 Travel
students and that the language should reference to an exception for Costs.
make clear that voluntary committed reimbursement for a predetermined
amount under proposed Subpart D— Appendix III Indirect (F&A) Costs
cost sharing should not be used as a
Post Federal Award Requirements, Identification and Assignment, and Rate
factor in the review of applications.
The COFAR concurred with the Subtitle II Property Standards did not Determination for Institutions of Higher
recommended clarifications, but exist in the document and Education (IHEs), paragraph B.4.c.
recommended they be more recommended the cross-reference be Commenters noted that while many of
appropriately added in section 200.400 deleted. those who do not currently benefit from
Policy Guide, and section 200.306 Cost Commenters suggested that while the 1.3% utility cost adjustment
Sharing Or Matching, respectively. there is no substantive change in the currently allowed under A–21
proposed guidance from the existing appreciated the proposed new language,
200.467 Selling and Marketing Costs circulars, they are unsure why indirect they would further appreciate the
Commenters suggested that a cross- costs are being specifically cited with opportunity to suggest alternative
reference to section 200.460 Proposal regard to settlement expenses, and were indices to measure ‘‘effective square
Costs should be added to the existing concerned the citation could be footage’’.
cross reference to section 200.421 misinterpreted as somehow limiting the The COFAR considered this, but
Advertising and Public Relations as allowable indirect costs to only a determined that such open ended
allowable exceptions to the otherwise portion of termination costs. They adjustments to costs would result in
unallowable costs covered by this propose deleting the reference. increased risk of waste, fraud, and
section. The COFAR concurred with the The COFAR recommended making abuse. Further, some commenters
recommendation. both proposed deletions. expressed concern about the total costs
to Federal agencies that could result Section C: Subpart F Audit addition in order to reduce duplication
from these charges, particularly given Requirements (Circulars A–133 and A– by better leveraging existing audit
the lack of conclusive data available to 50) resources prior to initiating new
accurately project these costs. The This section discusses ideas for engagements.
COFAR concurred with the concern, changes that would be made to the audit 200.507 Program-Specific Audits
and so recommended that while these guidance that is contained in Circular
charges should be based on actual costs, Commenters suggested that rather
A–133 on Audits of States, Local than requiring auditors to contact
the amount recoverable should be Governments, and Non-Profit inspectors general for program specific
limited to an amount equal to 1.3% of Organizations and in Circular A–50 on audit guides, such guides should be
the IHE’s indirect cost rate until such Audit Follow-up. The following ideas listed in the annual compliance
time as OMB and Federal agencies can for reform were discussed in the ANPG. supplement. The COFAR recommended
better understand the cost implications 200.501 Audit Requirements the addition to reduce administrative
of full reimbursement of actual costs burden.
and the potential implication for OMB received many comments on the
Federal programs. appropriateness of the proposed 200.509 Auditor Selection
threshold for the single audit Comments recommended that peer
Appendix V State/Local Government requirement at $750,000, some of which reviews be added to the factors
and Indian Tribe-Wide Central Service recommended the threshold be raised to considered in selecting an auditor. The
Cost Allocation Plans a higher level, others ambivalent, and COFAR recommended the addition to
some recommended it be kept at its strengthen audit quality and ensure that
Under existing requirements, any current level of $500,000.
‘‘major local government’’ is required to audit resources are used most
The COFAR considered the comments effectively.
submit a Cost Allocation Plan to its and the implications that raising the
cognizant agency for indirect cost on an threshold to $750,000 would maintain 200.510 Financial Statements
annual basis in order to claim its central Single Audit oversight over 99.7% of Commenters suggested that the
services costs against Federal awards. the dollars that are currently subject to schedule of expenditures of Federal
The ‘‘major local governments’’ subject the requirement and 87.1% of the awards must include the total Federal
to this requirement, along with each entities that are currently subject to the awards expended as determined in
cognizant agency assignment, are listed requirement; eliminating the accordance with section 200.502 Basis
in the Federal Register notice dated requirement for approximately 5,000 out for Determining Federal Awards
January 6, 1986 (available at: http:// of the 37,500 entities that currently Expended, and also that for clusters of
www.whitehouse.gov/sites/default/files/ receive a Single Audit. The COFAR also programs, the schedule of expenditures
omb/assets/financial_pdf/fr-notice_cost noted that an increase of $250,000 is in of Federal awards should include the
_negotiation_010686.pdf). line with the previous adjustment to the cluster name and also include the
The proposed guidance set the threshold. Federal awarding agency name with the
definition of ‘‘major local government’’ The COFAR considered that raising list of programs within the cluster. The
the threshold would allow Federal COFAR recommended the addition to
at $100 million in order to more
agencies to focus their audit resolution facilitate a more efficient and effective
accurately reflect the updated universe
resources on the findings that put higher audit follow-up process.
of such governments which has changed
amounts of taxpayer dollars at risk, thus
since 1986, and also to provide a better mitigating overall risks of waste, 200.511 Audit Findings Follow-Up
threshold that will remain in place as fraud, and abuse across the government. Commenters recommended restoring
the sizes of individual local Further, the COFAR notes that existing language from OMB Circular A–
governments fluctuates over time. provisions throughout the guidance, 133 that lists the valid reasons for
Commenters inquired whether the new including pre-award review of risks, considering an audit finding as not
definition supersedes the 1986 listing. standards for financial and program warranting further action. The COFAR
The COFAR noted the new definition management, subrecipient monitoring recommended the addition.
of major local government does and management, and remedies for
noncompliance provide a strengthened 200.512 Report Submission
supersede the 1986 listing. The COFAR
recommended adding this notice to the level of oversight for non-Federal Commenters noted concern with the
list of supersessions in section 200.104 entities that would fall below the new proposed language in this section that
Rescission and Supersession. threshold. would make audit reports publicly
The COFAR recommended that the available on the internet. Despite the
In addition, the COFAR fact that the non-Federal entity is
threshold be kept at the proposed level
recommended a change to the guidance already required to make the Single
of $750,000.
on cognizant agencies. The policy Audit report available for public
would remain as it is for indirect cost 200.503 Relation to Other Audit inspection under the Single Audit Act,
rates, with cognizance being based on Requirements Indian Tribes were concerned that
direct Federal awards. However, for Commenters recommended that publishing them would expose sensitive
local governments’ central service cost language be added to this section to confidential business information that
allocation plans, the COFAR explicitly require Federal agencies or would be harmful to the tribes. The
recommended that cognizance is best pass-through entities to review the COFAR considered this feedback
governed by total Federal awards, in Federal Audit Clearinghouse for existing including feedback from the Department
order to avoid a situation where direct audits submitted by the entities, and to of the Interior, which noted that even if
funding for one program (for example in rely on those to the extent possible prior a single audit report for an Indian Tribe
housing) may result in a different to commencing an additional audit. were to be requested by a member of the
outcome of cognizance than would The COFAR concurred with the public under the Freedom of
otherwise be appropriate. suggestion and recommended the Information Act, the confidential
business information would be redacted and make substantive changes where the audit resolution process, these
under exemption 4 under the Act. needed. officials will be accountable for
To fully address this problem, the Commenters noted that the implementing that coordination and
COFAR would need to explore with the responsibility to coordinate a ensuring best results.
audit community whether auditing management decision for cross-cutting
standards could allow for financial findings is one that Federal agencies 200.514 Scope of Audit
statements that do not include this struggle to accomplish currently. The
Several commenters indicated
sensitive information in the first place. COFAR considered this and agreed, but
sections where they recommended
Since this solution is beyond the reach recommended the language remain as
an articulation of the best policy. The further references to Generally Accepted
of the COFAR at this time, the COFAR Government Auditing Standards
recommended adding an option to allow Single Audit resolution pilot project
currently under supervision of the (GAGAS). The COFAR considered these
Indian Tribes to opt out of having the but noted that language in this section
Federal Audit Clearinghouse publish COFAR is aimed at addressing some of
the difficulties currently found in states upfront that Single Audits shall
their reports. If an Indian tribe were to be conducted in accordance with
exercise this option, it would be implementation.
Commenters noted that the proposed GAGAS, and recommends that further
responsible for providing its audit
requirement to submit management repetition of this language throughout
report to any pass-through entities as
decisions to the Federal Audit the document be avoided as
appropriate.
Clearinghouse is one they concur with, unnecessary. The COFAR further
Commenters recommended additional
but find that significant work would recommended conforming changes to
language to make explicit that the
need to be done to coordinate the eliminate duplicative references
Federal Audit Clearinghouse is the
management decision process at a throughout the guidance.
repository of record and authoritative
governmentwide level before this could
source for single audit reports. Federal 200.515 Audit Reporting
feasibly be implemented. The COFAR
agencies, pass-through entities, and
concurred and struck the proposed Commenters recommended several
others interested should therefore obtain
language, as well as language that would minor technical edits throughout this
it by accessing the clearinghouse rather
allow other Federal agencies and pass- section to align with auditing standards
than requesting it directly from the non-
through entities to rely on cross-cutting which the COFAR recommended.
Federal entity. The COFAR agreed that
management decisions from Cognizant Commenters also recommended new
the proposed addition would likely or Oversight Agencies for Audit. The
reduce administrative burden and language to note that nothing in this
COFAR further notes that the Single
recommended the addition. section should preclude combining of
Audit resolution pilot project currently
Commenters also recommended that audit reporting required by this section
under supervision of the COFAR will
the section include language to allow for hopefully result in lessons learned and with reporting required by section
exceptions to reporting deadlines best practices that can facilitate the 200.512 Report Submission. The
particularly in cases of emergency. The implementation of this policy in the COFAR considered that such an
COFAR considered this, but noted that future. addition would be useful if future
such language would likely lead to an Commenters responded positively to advances in technology allow more
administratively burdensome process of new provisions that would strengthen consolidated reporting in the future, and
frequent requests and denials of the the audit-follow-up process including recommended the addition.
extension period. In cases of true the appointment of Senior Accountable
emergency, OMB and Federal agencies 200.516 Audit Findings
Officials, implementation of metrics,
together often issue pre-emptive and encouragement of cooperative audit Some commenters requested that the
extensions of the deadline. The COFAR resolution techniques. These revisions proposed threshold for questioned costs
did not recommend further changes to would effectively strengthen the follow- of $25,000 be lowered, even below the
the language. up process and reduce risk of repeated existing threshold to a level of zero.
Further comments noted possible findings of waste, fraud, and abuse. Other commenters asked that it be
confusion over the deadline for report Some commenters posed questions raised higher than $25,000, and
submission if it falls on a holiday. The about the role of the Senior Accountable recommended that the level be set on a
COFAR also recommended changes to Official for Audit and how it would sliding scale as a percentage of total
clarify that if the due date falls on a align with responsibilities of the Office dollars awarded per program.
Saturday, Sunday, or Federal legal of Inspectors General. Similar questions
holiday, the reporting package is due were posed about the role of the The COFAR considered these
the next business day. designated key single audit coordinator. recommendations, and noted that for
The COFAR considered these and purposes of accountability, types of
200.513 Responsibilities compliance requirements are reviewed
recommended clarifications that the
Commenters recommended that the Senior Accountable Official is intended with levels of materiality in mind. The
proposed language on quality control to be a policy official of the awarding questioned cost threshold serves in most
reviews be revised back to current OMB agency who can be responsible for cases to dramatically lower the level at
Circular A–133 for reviews that are risk overseeing agency management’s role in which a finding would otherwise be
based, which is more in line with audit resolution. The COFAR also considered material and be reported.
agency capacity for reviews. The recommended the key single audit The threshold is a valuable tool that
COFAR concurred with the coordinator be renamed the key provides assurance that questioned
recommendation. The COFAR further management single audit liaison, and costs above it will under no
recommended further language to notes that neither of these roles should circumstances go unreported regardless
require a governmentwide audit quality in any way impact existing of materiality. Based on these
project every six years similar to those responsibilities of Inspectors General, considerations, the COFAR
done in the past to take a meaningful but rather as the COFAR moves toward recommended that the proposed
look at audit quality governmentwide greater governmentwide coordination of threshold of $25,000 be accepted.
200.718 Major Program Determination Appendix XI Compliance Supplement PART 200—UNIFORM

The Government Accountability ADMINISTRATIVE REQUIREMENTS,
While most commenters were in favor COST PRINCIPLES, AND AUDIT
Office (GAO) commented that step 1 of of the proposed reduction of the number
the major program determination would REQUIREMENTS FOR FEDERAL
of types of compliance requirements in AWARDS
be more easily understood if presented
in a table. The COFAR concurred and the compliance supplement, many
voiced concern about the process that Subpart A—Acronyms and Definitions
recommended the new format for ease
of comprehension among readers. would implement such changes. Acronyms
Commenters noted the inconsistency Comments questioned whether Federal Sec.
of the single audit threshold at agencies adding back provisions under 200.0 Acronyms.
$750,000, the Type A/B program special tests and provisions would 200.1 Definitions.
result in increased administrative 200.2 Acquisition cost.
threshold at $500,000, and the threshold
200.3 Advance payment.
for an entity to have a Type A program burden and requested that such 200.4 Allocation.
at $1,000,000. Commenters suggested fundamental changes be subject to a 200.5 Audit finding.
that that the level of the threshold for public notice and comment period. 200.6 Auditee.
major programs needed to be raised Since the Compliance Supplement is 200.7 Auditor.
consistent with the threshold for the published as part of a separate process, 200.8 Budget.
Single Audit as a whole at $750,000 to no final changes are made at this time, 200.9 Central service cost allocation plan.
ensure consistent coverage. The COFAR 200.10 Catalog of Federal Domestic
but the COFAR recommended that any Assistance number.
recommended the modification that all future changes to the compliance 200.11 CFDA program title.
three thresholds be the same at $750.000 supplement be made based on available 200.12 Capital assets.
consistent with the single audit evidence on past findings and the 200.13 Capital expenditures.
threshold. 200.14 Claim.
Commenters also recommended potential impact of non-compliance for
each type of compliance requirement. 200.15 Class of Federal awards.
additional language to clarify the 200.16 Closeout.
criteria under the step 2 determination The COFAR further recommends that 200.17 Cluster of programs.
of Type A programs which are low-risk. further public outreach be conducted 200.18 Cognizant agency for audit.
The COFAR recommended the addition. prior to making any structural changes 200.19 Cognizant agency for indirect costs.
to the format of the compliance 200.20 Computing devices.
200.520 Criteria for a Low-Risk supplement to mitigate potential risks of 200.21 Compliance supplement.
Auditee an inadvertent increase in 200.22 Contract.
200.23 Contractor.
Members of the audit community and administrative burden. 200.24 Cooperative agreement.
states commented on the criteria for a 200.25 Cooperative audit resolution.
low-risk auditee that includes whether List of Subjects in 2 CFR Parts 200, 215,
200.26 Corrective action.
the financial statements were prepared 220, 225, and 230 200.27 Cost allocation plan.
in accordance with GAAP. Members of 200.28 Cost objective.
Accounting, Auditing, Colleges and
the audit community note that GAAP is 200.29 Cost sharing or matching.
the preferred method, and states note universities, State and local 200.30 Cross-cutting audit finding.
that state law sometimes provides for governments, Grant programs, Grants 200.31 Disallowed costs.
other methods of preparation. The administration, Hospitals, Indians, 200.32 Data Universal Numbering System
COFAR considered this and Nonprofit organizations, Reporting and (DUNS) number.
recordkeeping requirements. 200.33 Equipment.
recommended revised language to allow
200.34 Expenditures.
for exceptions where state law requires Norman Dong, 200.35 Federal agency.
otherwise. 200.36 Federal Audit Clearinghouse (FAC).
Deputy Controller.
200.521 Management Decision 200.37 Federal awarding agency.
For the reasons stated in the 200.38 Federal award.
Upon review of the structure of the 200.39 Federal award date.
proposed guidance, the COFAR preamble, under the Authority of the
200.40 Federal financial assistance.
recommended that this section be Chief Financial Officer Act of 1990 (31 200.41 Federal interest.
moved to the end of the document. U.S.C. 503), the Office of Management 200.42 Federal program.
Commenters suggested that auditees and Budget amends 2 CFR Chapters I 200.43 Federal share.
should be required to initiate corrective and II as set forth below: 200.44 Final cost objective.
action as rapidly as possible, and not 200.45 Fixed amount awards.
Chapter I—Office Of Management and 200.46 Foreign public entity.
wait until audit reports are submitted. Budget Governmentwide Guidance for 200.47 Foreign organization.
The COFAR recommended the addition. Grants and Agreements 200.48 General purpose equipment.
Commenters also noted that while they 200.49 Generally Accepted Accounting
supported the ultimate publication of ■ 1. Remove the subchapter headings Principles (GAAP).
management decisions through the for Subchapters A through G from 200.50 Generally Accepted Government
Federal audit clearinghouse, this is not Chapter I. Auditing Standards (GAGAS).
a change that they are prepared to 200.51 Grant agreement.
implement immediately. As a result, the Chapter II—Office of Management and 200.52 Hospital.
Budget Guidance 200.53 Improper payment.
COFAR recommended that this be
added to the current Single Audit 200.54 Indian tribe (or ‘‘federally
■ 2. The heading of chapter II is revised recognized Indian tribe’’).

Resolution Pilot currently underway to read as set forth above. 200.55 Institutions Of Higher Education
within the COFAR, and that based on (IHEs).
■ 3. Add part 200 to read as follows:
the results of the pilot, the COFAR work 200.56 Indirect (facilities & administrative)
with Federal agencies to begin costs.
implementation of publication of 200.57 Indirect cost rate proposal.
management decisions in 2016. 200.58 Information technology systems.
200.59 Intangible property. 200.206 Standard application requirements. 200.339 Termination.

200.60 Intermediate cost objective. 200.207 Specific conditions. 200.340 Notification of termination
200.61 Internal controls. 200.208 Certifications and representations. requirement.
200.62 Internal control over compliance 200.209 Pre-award costs. 200.341 Opportunities to object, hearings
requirements for Federal awards. 200.210 Information contained in a Federal and appeals.
200.63 Loan. award. 200.342 Effects of suspension and
200.64 Local government. 200.211 Public access to Federal award termination.
200.65 Major program. information.
200.66 Management decision. Closeout
Subpart D—Post Federal Award
200.67 Micro-purchase. 200.343 Closeout.
200.68 Modified Total Direct Cost (MTDC). Requirements
Post-Closeout Adjustments and Continuing
200.69 Non-Federal entity. Standards for Financial and Program
Responsibilities
200.70 Nonprofit organization. Management
200.71 Obligations. 200.344 Post-closeout adjustments and
200.300 Statutory and national policy
200.72 Office of Management and Budget requirements. continuing responsibilities.
(OMB). 200.301 Performance measurement. Collection of Amounts Due
200.73 Oversight agency for audit. 200.302 Financial management.
200.74 Pass-through entity. 200.345 Collection of amounts due.
200.303 Internal controls.
200.75 Participant support costs. 200.304 Bonds. Subpart E—Cost Principles
200.76 Performance goal. 200.305 Payment.
200.77 Period of performance. General Provisions
200.306 Cost sharing or matching.
200.78 Personal property. 200.307 Program income. 200.400 Policy guide.
200.79 Personally Identifiable Information 200.308 Revision of budget and program 200.401 Application.
(PII). plans. Basic Considerations
200.80 Program income. 200.309 Period of performance.
200.81 Property. 200.402 Composition of costs.
Property Standards 200.403 Factors affecting allowability of
200.82 Protected Personally Identifiable
Information (Protected PII). 200.310 Insurance coverage. costs.
200.83 Project cost. 200.311 Real property. 200.404 Reasonable costs.
200.84 Questioned cost. 200.312 Federally-owned and exempt 200.405 Allocable costs.
200.85 Real property. property. 200.406 Applicable credits.
200.86 Recipient. 200.313 Equipment. 200.407 Prior written approval (prior
200.87 Research and Development (R&D). 200.314 Supplies. approval).
200.88 Simplified acquisition threshold. 200.315 Intangible property. 200.408 Limitation on allowance of costs.
200.89 Special purpose equipment. 200.316 Property trust relationship. 200.409 Special considerations.
200.90 State. Procurement Standards 200.410 Collection of unallowable costs.
200.91 Student Financial Aid (SFA). 200.317 Procurements by states. 200.411 Adjustment of previously
200.92 Subaward. 200.318 General procurement standards. negotiated indirect (F&A) cost rates
200.93 Subrecipient. 200.319 Competition. containing unallowable costs.
200.94 Supplies. 200.320 Methods of procurement to be
200.95 Termination. Direct and Indirect (F&A) Costs
followed.
200.96 Third-party in-kind contributions. 200.321 Contracting with small and 200.412 Classification of costs.
200.97 Unliquidated obligations. minority businesses, women’s business 200.413 Direct costs.
200.98 Unobligated balance. enterprises, and labor surplus area firms. 200.414 Indirect (F&A) costs.
200.99 Voluntary committed cost sharing. 200.322 Procurement of recovered 200.415 Required certifications.
Subpart B—General Provisions materials. Special Considerations for States, Local
200.323 Contract cost and price. Governments and Indian Tribes
200.100 Purpose. 200.324 Federal awarding agency or pass-
200.101 Applicability. 200.416 Cost allocation plans and indirect
through entity review.
200.102 Exceptions. cost proposals.
200.325 Bonding requirements.
200.103 Authorities. 200.326 Contract provisions. 200.417 Interagency service.
200.104 Supersession. Special Considerations for Institutions of
200.105 Effect on other issuances. Performance and Financial Monitoring and
Reporting Higher Education
200.106 Agency implementation.
200.107 OMB responsibilities. 200.327 Financial reporting. 200.418 Costs incurred by states and local
200.108 Inquiries. 200.328 Monitoring and reporting program governments.
200.109 Review date. performance. 200.419 Cost accounting standards and
200.110 Effective date. 200.329 Reporting on real property. disclosure statement.
200.111 English language. Subrecipient Monitoring and Management General Provisions for Selected Items of Cost
200.112 Conflict of interest.
200.113 Mandatory disclosures. 200.330 Subrecipient and contractor 200.420 Considerations for selected items of
determinations. cost.
Subpart C—Pre-Federal Award 200.331 Requirements for pass-through 200.421 Advertising and public relations.
Requirements and Contents of Federal entities. 200.422 Advisory councils.
Awards 200.332 Fixed amount subawards. 200.423 Alcoholic beverages.
200.200 Purpose. Record Retention and Access 200.424 Alumni/ae activities.
200.201 Use of grant agreements (including 200.425 Audit services.
200.333 Retention Requirements for
fixed amount awards), cooperative 200.426 Bad debts.
Records.
agreements, and contracts. 200.427 Bonding costs.
200.334 Requests for transfer of records.
200.202 Requirement to provide public 200.428 Collections of improper payments.
200.335 Methods for collection,

notice of Federal financial assistance transmission and storage of information. 200.429 Commencement and convocation
arograms. 200.336 Access to records. costs.
200.203 Notices of funding opportunities. 200.337 Restrictions on public access to 200.430 Compensation—personal services.
200.204 Federal awarding agency review of records. 200.431 Compensation—fringe benefits.
merit of proposals. 200.432 Conferences.
200.205 Federal awarding agency review of Remedies for Noncompliance 200.433 Contingency provisions.
risk posed by applicants. 200.338 Remedies for noncompliance. 200.434 Contributions and donations.
200.435 Defense and prosecution of Auditors FAPIIS Federal Awardee Performance and
criminal and civil proceedings, claims, 200.514 Scope of audit. Integrity Information System
appeals and patent infringements. 200.515 Audit reporting. FAR Federal Acquisition Regulation
200.436 Depreciation. 200.516 Audit findings. FFATA Federal Funding Accountability
200.437 Employee health and welfare costs. and Transparency Act of 2006 or
200.517 Audit documentation.
200.438 Entertainment costs. Transparency Act—Public Law 109–282,
200.518 Major program determination.
200.439 Equipment and other capital as amended by section 6202(a) of Public
200.519 Criteria for Federal program risk.
expenditures. Law 110–252 (31 U.S.C. 6101)
200.440 Exchange rates. 200.520 Criteria for a low-risk auditee.
FICA Federal Insurance Contributions Act
200.441 Fines, penalties, damages and other Management Decisions FOIA Freedom of Information Act
settlements. 200.521 Management decision. FR Federal Register
200.442 Fund raising and investment FTE Full-time equivalent
management costs. Appendix I to Part 200—Full Text of Notice
GAAP Generally Accepted Accounting
200.443 Gains and losses on disposition of of Funding Opportunity
Principles
depreciable assets. Appendix II to Part 200—Contract Provisions GAGAS Generally Accepted Government
200.444 General costs of government. for Non-Federal Entity Contracts Under Accounting Standards
200.445 Goods or services for personal use. Federal Awards GAO General Accounting Office
200.446 Idle facilities and idle capacity. GOCO Government owned, contractor
200.447 Insurance and indemnification. Appendix III to Part 200—Indirect (F&A) operated
200.448 Intellectual property. Costs Identification and Assignment, and GSA General Services Administration
200.449 Interest. Rate Determination for Institutions of Higher IBS Institutional Base Salary
200.450 Lobbying. Education (IHEs) IHE Institutions of Higher Education
200.451 Losses on other awards or IRC Internal Revenue Code
contracts. Appendix IV to Part 200—Indirect (F&A)
Costs Identification and Assignment, and ISDEAA Indian Self-Determination and
200.452 Maintenance and repair costs.
Rate Determination for Nonprofit Education and Assistance Act
200.453 Materials and supplies costs,
Organizations MTC Modified Total Cost
including costs of computing devices.
MTDC Modified Total Direct Cost
200.454 Memberships, subscriptions, and Appendix V to Part 200—State/Local
professional activity costs. OMB Office of Management and Budget
Government and Indian Tribe-Wide Central PII Personally Identifiable Information
200.455 Organization costs. Service Cost Allocation Plans
200.456 Participant support costs. PRHP Post-retirement Health Plans
200.457 Plant and security costs. Appendix VI to Part 200—Public Assistance PTE Pass-through Entity
200.458 Pre-award costs. Cost Allocation Plans REUI Relative Energy Usage Index
200.459 Professional service costs. SAM System for Award Management
200.460 Proposal costs. Appendix VII to Part 220—States and Local SFA Student Financial Aid
200.461 Publication and printing costs. Government and Indian Tribe Indirect Cost SNAP Supplemental Nutrition Assistance
200.462 Rearrangement and reconversion Proposals Program
costs. SPOC Single Point of Contact
Appendix VIII to Part 200—Nonprofit
200.463 Recruiting costs. TANF Temporary Assistance for Needy
Organizations Exempted From Subpart E—
200.464 Relocation costs of employees. Families
Cost Principles of Part 200
200.465 Rental costs of real property and TFM Treasury Financial Manual
equipment. Appendix IX to Part 200—Hospital Cost U.S.C. United States Code
200.466 Scholarships and student aid costs. Principles VAT Value Added Tax
200.467 Selling and marketing costs.
Appendix X to Part 200—Data Collection § 200.1 Definitions.
200.468 Specialized service facilities.
Form (Form SF–SAC)
200.469 Student activity costs. These are the definitions for terms
200.470 Taxes (including Value Added Appendix XI to Part 200—Compliance used in this Part. Different definitions
Tax). Supplement may be found in Federal statutes or
200.471 Termination costs. regulations that apply more specifically
200.472 Training and education costs. Authority: 31 U.S.C. 503
200.473 Transportation costs.
to particular programs or activities.
200.474 Travel costs. Subpart A—Acronyms and Definitions These definitions could be
200.475 Trustees. supplemented by additional
Acronyms instructional information provided in
Subpart F—Audit Requirements
governmentwide standard information
General § 200.0 Acronyms.
collections.
200.500 Purpose. ACRONYM TERM
§ 200.2 Acquisition cost.
Audits CAS Cost Accounting Standards Acquisition cost means the cost of the
200.501 Audit requirements. CFDA Catalog of Federal Domestic
200.502 Basis for determining Federal
asset including the cost to ready the
Assistance
awards expended. asset for its intended use. Acquisition
CFR Code of Federal Regulations
200.503 Relation to other audit CMIA Cash Management Improvement Act cost for equipment, for example, means
requirements. COG Councils Of Governments the net invoice price of the equipment,
200.504 Frequency of audits. COSO Committee of Sponsoring including the cost of any modifications,
200.505 Sanctions. Organizations of the Treadway attachments, accessories, or auxiliary
200.506 Audit costs. Commission apparatus necessary to make it usable
200.507 Program-specific audits. D&B Dun and Bradstreet for the purpose for which it is acquired.
Auditees DUNS Data Universal Numbering System Acquisition costs for software includes
EPA Environmental Protection Agency those development costs capitalized in
200.508 Auditee responsibilities.

ERISA Employee Retirement Income
200.509 Auditor selection. accordance with generally accepted
200.510 Financial statements. Security Act of 1974 (29 U.S.C. 1301–
1461) accounting principles (GAAP).
200.511 Audit findings follow-up. Ancillary charges, such as taxes, duty,
200.512 Report submission. EUI Energy Usage Index
F&A Facilities and Administration protective in transit insurance, freight,
Federal Agencies FAC Federal Audit Clearinghouse and installation may be included in or
200.513 Responsibilities. FAIN Federal Award Identification Number excluded from the acquisition cost in
accordance with the non-Federal § 200.10 Catalog of Federal Domestic § 200.16 Closeout.
entity’s regular accounting practices. Assistance (CFDA) number. Closeout means the process by which
CFDA number means the number the Federal awarding agency or pass-
§200.3 Advance payment.
assigned to a Federal program in the through entity determines that all
Advance payment means a payment CFDA. applicable administrative actions and
that a Federal awarding agency or pass- all required work of the Federal award
through entity makes by any appropriate § 200.11 CFDA program title. have been completed and takes actions
payment mechanism, including a CFDA program title means the title of as described in § 200.343 Closeout.
predetermined payment schedule, the program under which the Federal
before the non-Federal entity disburses award was funded in the CFDA. § 200.17 Cluster of programs.
the funds for program purposes. Cluster of programs means a grouping
§ 200.12 Capital assets. of closely related programs that share
§ 200.4 Allocation.
Capital assets means tangible or common compliance requirements. The
Allocation means the process of intangible assets used in operations types of clusters of programs are
assigning a cost, or a group of costs, to having a useful life of more than one research and development (R&D),
one or more cost objective(s), in year which are capitalized in student financial aid (SFA), and other
reasonable proportion to the benefit accordance with GAAP. Capital assets clusters. ‘‘Other clusters’’ are as defined
provided or other equitable relationship. include: by OMB in the compliance supplement
The process may entail assigning a or as designated by a state for Federal
(a) Land, buildings (facilities),
cost(s) directly to a final cost objective awards the state provides to its
equipment, and intellectual property
or through one or more intermediate subrecipients that meet the definition of
(including software) whether acquired
cost objectives. a cluster of programs. When designating
by purchase, construction, manufacture,
§ 200.5 Audit finding. lease-purchase, exchange, or through an ‘‘other cluster,’’ a state must identify
Audit finding means deficiencies capital leases; and the Federal awards included in the
which the auditor is required by (b) Additions, improvements, cluster and advise the subrecipients of
§ 200.516 Audit findings, paragraph (a) modifications, replacements, compliance requirements applicable to
to report in the schedule of findings and rearrangements, reinstallations, the cluster, consistent with § 200.331
questioned costs. renovations or alterations to capital Requirements for pass-through entities,
assets that materially increase their paragraph (a). A cluster of programs
§ 200.6 Auditee. value or useful life (not ordinary repairs must be considered as one program for
Auditee means any non-Federal entity and maintenance). determining major programs, as
that expends Federal awards which described in § 200.518 Major program
must be audited under Subpart F— § 200.13 Capital expenditures. determination, and, with the exception
Audit Requirements of this Part. Capital expenditures means of R&D as described in § 200.501 Audit
expenditures to acquire capital assets or requirements, paragraph (c), whether a
§ 200.7 Auditor. expenditures to make additions, program-specific audit may be elected.
Auditor means an auditor who is a improvements, modifications,
public accountant or a Federal, state or § 200.18 Cognizant agency for audit.
replacements, rearrangements,
local government audit organization, reinstallations, renovations, or Cognizant agency for audit means the
which meets the general standards alterations to capital assets that Federal agency designated to carry out
specified in generally accepted materially increase their value or useful the responsibilities described in
government auditing standards life. § 200.513 Responsibilities, paragraph
(GAGAS). The term auditor does not (a). The cognizant agency for audit is
include internal auditors of nonprofit § 200.14 Claim. not necessarily the same as the
organizations. Claim means, depending on the cognizant agency for indirect costs. A
context, either: list of cognizant agencies for audit may
§ 200.8 Budget. be found at the FAC Web site.
(a) A written demand or written
Budget means the financial plan for assertion by one of the parties to a
the project or program that the Federal § 200.19 Cognizant agency for indirect
Federal award seeking as a matter of costs.
awarding agency or pass-through entity right:
approves during the Federal award Cognizant agency for indirect costs
(1) The payment of money in a sum means the Federal agency responsible
process or in subsequent amendments to
certain; for reviewing, negotiating, and
the Federal award. It may include the
Federal and non-Federal share or only (2) The adjustment or interpretation of approving cost allocation plans or
the Federal share, as determined by the the terms and conditions of the Federal indirect cost proposals developed under
Federal awarding agency or pass- award; or this Part on behalf of all Federal
through entity. (3) Other relief arising under or agencies. The cognizant agency for
relating to a Federal award. indirect cost is not necessarily the same
§ 200.9 Central service cost allocation (b) A request for payment that is not as the cognizant agency for audit. For
plan. in dispute when submitted. assignments of cognizant agencies see
Central service cost allocation plan the following:
means the documentation identifying, § 200.15 Class of Federal awards. (a) For IHEs: Appendix III to Part
accumulating, and allocating or Class of Federal awards means a 200—Indirect (F&A) Costs Identification
developing billing rates based on the group of Federal awards either awarded and Assignment, and Rate
allowable costs of services provided by under a specific program or group of Determination for Institutions of Higher
a state, local government, or Indian tribe programs or to a specific type of non- Education (IHEs), paragraph C.10.
on a centralized basis to its departments Federal entity or group of non-Federal (b) For nonprofit organizations:
and agencies. The costs of these services entities to which specific provisions or Appendix IV to Part 200—Indirect
may be allocated or billed to users. exceptions may apply. (F&A) Costs Identification and
Assignment, and Rate Determination for (1) A cooperative research and service or project, a Federal award, or an
Nonprofit Organizations, paragraph C.1. development agreement as defined in 15 indirect (Facilities & Administrative
(c) For state and local governments: U.S.C. 3710a; or (F&A)) cost activity, as described in
Appendix V to Part 200—State/Local (2) An agreement that provides only: Subpart E—Cost Principles of this Part.
Government and Indian Tribe-Wide (i) Direct United States Government See also §§ 200.44 Final cost objective
Central Service Cost Allocation Plans, cash assistance to an individual; and 200.60 Intermediate cost objective.
paragraph F.1. (ii) A subsidy;
(iii) A loan; § 200.29 Cost sharing or matching.
§ 200.20 Computing devices. Cost sharing or matching means the
(iv) A loan guarantee; or
Computing devices means machines (v) Insurance. portion of project costs not paid by
used to acquire, store, analyze, process, Federal funds (unless otherwise
and publish data and other information § 200.25 Cooperative audit resolution. authorized by Federal statute). See also
electronically, including accessories (or Cooperative audit resolution means § 200.306 Cost sharing or matching.
‘‘peripherals’’) for printing, transmitting the use of audit follow-up techniques
and receiving, or storing electronic § 200.30 Cross-cutting audit finding.
which promote prompt corrective action
information. See also §§ 200.94 Supplies by improving communication, fostering Cross-cutting audit finding means an
and 200.58 Information technology collaboration, promoting trust, and audit finding where the same
systems. developing an understanding between underlying condition or issue affects
the Federal agency and the non-Federal Federal awards of more than one
§ 200.21 Compliance supplement. Federal awarding agency or pass-
entity. This approach is based upon:
Compliance supplement means through entity.
(a) A strong commitment by Federal
Appendix XI to Part 200—Compliance
agency and non-Federal entity § 200.31 Disallowed costs.
Supplement (previously known as the
leadership to program integrity; Disallowed costs means those charges
Circular A–133 Compliance
(b) Federal agencies strengthening to a Federal award that the Federal
Supplement).
partnerships and working cooperatively awarding agency or pass-through entity
§ 200.22 Contract. with non-Federal entities and their determines to be unallowable, in
Contract means a legal instrument by auditors; and non-Federal entities and accordance with the applicable Federal
which a non-Federal entity purchases their auditors working cooperatively statutes, regulations, or the terms and
property or services needed to carry out with Federal agencies; conditions of the Federal award.
the project or program under a Federal (c) A focus on current conditions and
award. The term as used in this Part corrective action going forward; § 200.32 Data Universal Numbering
does not include a legal instrument, (d) Federal agencies offering System (DUNS) number.
even if the non-Federal entity considers appropriate relief for past DUNS number means the nine-digit
it a contract, when the substance of the noncompliance when audits show number established and assigned by
transaction meets the definition of a prompt corrective action has occurred; Dun and Bradstreet, Inc. (D&B) to
Federal award or subaward (see § 200.92 and uniquely identify entities. A non-
Subaward). (e) Federal agency leadership sending Federal entity is required to have a
a clear message that continued failure to DUNS number in order to apply for,
§ 200.23 Contractor. correct conditions identified by audits receive, and report on a Federal award.
Contractor means an entity that which are likely to cause improper A DUNS number may be obtained from
receives a contract as defined in payments, fraud, waste, or abuse is D&B by telephone (currently 866–705–
§ 200.22 Contract. unacceptable and will result in 5711) or the Internet (currently at http://
sanctions. fedgov.dnb.com/webform).
§ 200.24 Cooperative agreement.
Cooperative agreement means a legal § 200.26 Corrective action. § 200.33 Equipment.
instrument of financial assistance Corrective action means action taken Equipment means tangible personal
between a Federal awarding agency or by the auditee that: property (including information
pass-through entity and a non-Federal (a) Corrects identified deficiencies; technology systems) having a useful life
entity that, consistent with 31 U.S.C. (b) Produces recommended of more than one year and a per-unit
6302–6305: improvements; or acquisition cost which equals or
(a) Is used to enter into a relationship (c) Demonstrates that audit findings exceeds the lesser of the capitalization
the principal purpose of which is to are either invalid or do not warrant level established by the non-Federal
transfer anything of value from the auditee action. entity for financial statement purposes,
Federal awarding agency or pass- or $5,000. See also §§ 200.12 Capital
through entity to the non-Federal entity § 200.27 Cost allocation plan. assets, 200.20 Computing devices,
to carry out a public purpose authorized Cost allocation plan means central 200.48 General purpose equipment,
by a law of the United States (see 31 service cost allocation plan or public 200.58 Information technology systems,
U.S.C. 6101(3)); and not to acquire assistance cost allocation plan. 200.89 Special purpose equipment, and
property or services for the Federal 200.94 Supplies.
government or pass-through entity’s § 200.28 Cost objective.
direct benefit or use; Cost objective means a program, § 200.34 Expenditures.
(b) Is distinguished from a grant in function, activity, award, organizational Expenditures means charges made by
that it provides for substantial subdivision, contract, or work unit for a non-Federal entity to a project or
involvement between the Federal which cost data are desired and for program for which a Federal award was
awarding agency or pass-through entity which provision is made to accumulate received.
and the non-Federal entity in carrying and measure the cost of processes, (a) The charges may be reported on a
out the activity contemplated by the products, jobs, capital projects, etc. A cash or accrual basis, as long as the
Federal award. cost objective may be a major function methodology is disclosed and is
(c) The term does not include: of the non-Federal entity, a particular consistently applied.
(b) For reports prepared on a cash awarding agency or indirectly from a (a) Federal share of total project costs;
basis, expenditures are the sum of: pass-through entity, as described in and
(1) Cash disbursements for direct § 200.101 Applicability. (b) Current fair market value of the
charges for property and services; (b) The instrument setting forth the property, improvements, or both, to the
(2) The amount of indirect expense terms and conditions. The instrument is extent the costs of acquiring or
charged; the grant agreement, cooperative improving the property were included
(3) The value of third-party in-kind agreement, other agreement for as project costs.
contributions applied; and assistance covered in paragraph (b) of
(4) The amount of cash advance § 200.42 Federal program.
§ 200.40 Federal financial assistance, or
payments and payments made to the cost-reimbursement contract Federal program means:
subrecipients. awarded under the Federal Acquisition (a) All Federal awards which are
(c) For reports prepared on an accrual Regulations. assigned a single number in the CFDA.
basis, expenditures are the sum of: (c) Federal award does not include (b) When no CFDA number is
(1) Cash disbursements for direct other contracts that a Federal agency assigned, all Federal awards to non-
charges for property and services; uses to buy goods or services from a Federal entities from the same agency
(2) The amount of indirect expense contractor or a contract to operate made for the same purpose should be
incurred; Federal government owned, contractor combined and considered one program.
(3) The value of third-party in-kind (c) Notwithstanding paragraphs (a)
operated facilities (GOCOs).
contributions applied; and (d) See also definitions of Federal and (b) of this definition, a cluster of
(4) The net increase or decrease in the financial assistance, grant agreement, programs. The types of clusters of
amounts owed by the non-Federal entity and cooperative agreement. programs are:
for: (1) Research and development (R&D);
(i) Goods and other property received; § 200.39 Federal award date. (2) Student financial aid (SFA); and
(ii) Services performed by employees, Federal award date means the date (3) ‘‘Other clusters,’’ as described in
contractors, subrecipients, and other when the Federal award is signed by the the definition of Cluster of Programs.
payees; and authorized official of the Federal § 200.43 Federal share.
(iii) Programs for which no current awarding agency.
services or performance are required Federal share means the portion of
such as annuities, insurance claims, or § 200.40 Federal financial assistance. the total project costs that are paid by
other benefit payments. Federal funds.
(a) For grants and cooperative
§ 200.35 Federal agency.
agreements, Federal financial assistance § 200.44 Final cost objective.
means assistance that non-Federal Final cost objective means a cost
Federal agency means an ‘‘agency’’ as entities receive or administer in the
defined at 5 U.S.C. 551(1) and further objective which has allocated to it both
form of: direct and indirect costs and, in the
clarified by 5 U.S.C. 552(f). (1) Grants; non-Federal entity’s accumulation
§ 200.36 Federal Audit Clearinghouse (2) Cooperative agreements; system, is one of the final accumulation
(FAC). (3) Non-cash contributions or points, such as a particular award,
FAC means the clearinghouse donations of property (including internal project, or other direct activity
designated by OMB as the repository of donated surplus property); of a non-Federal entity. See also
record where non-Federal entities are (4) Direct appropriations; §§ 200.28 Cost objective and 200.60
required to transmit the reporting (5) Food commodities; and Intermediate cost objective.
packages required by Subpart F—Audit (6) Other financial assistance (except
Requirements of this Part. The mailing assistance listed in paragraph (b) of this § 200.45 Fixed amount awards.
address of the FAC is Federal Audit section). Fixed amount awards means a type of
Clearinghouse, Bureau of the Census, (b) For Subpart F—Audit grant agreement under which the
1201 E. 10th Street, Jeffersonville, IN Requirements of this part, Federal Federal awarding agency or pass-
47132 and the web address is: http:// financial assistance also includes through entity provides a specific level
harvester.census.gov/sac/. Any future assistance that non-Federal entities of support without regard to actual costs
updates to the location of the FAC may receive or administer in the form of: incurred under the Federal award. This
be found at the OMB Web site. (1) Loans; type of Federal award reduces some of
(2) Loan Guarantees; the administrative burden and record-
§ 200.37 Federal awarding agency. (3) Interest subsidies; and keeping requirements for both the non-
Federal awarding agency means the (4) Insurance. Federal entity and Federal awarding
Federal agency that provides a Federal (c) Federal financial assistance does agency or pass-through entity.
award directly to a non-Federal entity. not include amounts received as Accountability is based primarily on
reimbursement for services rendered to performance and results. See §§ 200.201
§ 200.38 Federal award. individuals as described in § 200.502 Use of grant agreements (including fixed
Federal award has the meaning, Basis for determining Federal awards amount awards), cooperative
depending on the context, in either expended, paragraph (h) and (i) of this agreements, and contracts, paragraph (b)
paragraph (a) or (b) of this section: (a)(1) Part. and 200.332 Fixed amount subawards.
The Federal financial assistance that a
non-Federal entity receives directly § 200.41 Federal interest. § 200.46 Foreign public entity.
from a Federal awarding agency or Federal interest means, for purposes Foreign public entity means:
indirectly from a pass-through entity, as of § 200.329 Reporting on real property (a) A foreign government or foreign
described in § 200.101 Applicability; or or when used in connection with the governmental entity;
(2) The cost-reimbursement contract acquisition or improvement of real (b) A public international
under the Federal Acquisition property, equipment, or supplies under organization, which is an organization
Regulations that a non-Federal entity a Federal award, the dollar amount that entitled to enjoy privileges, exemptions,
receives directly from a Federal is the product of the: and immunities as an international
organization under the International United States, which are applicable to or community, including any Alaska
Organizations Immunities Act (22 financial audits. Native village or regional or village
U.S.C. 288–288f); corporation as defined in or established
§ 200.51 Grant agreement. pursuant to the Alaska Native Claims
(c) An entity owned (in whole or in
part) or controlled by a foreign Grant agreement means a legal Settlement Act (43 U.S.C. Chapter 33),
government; or instrument of financial assistance which is recognized as eligible for the
(d) Any other entity consisting wholly between a Federal awarding agency or special programs and services provided
or partially of one or more foreign pass-through entity and a non-Federal by the United States to Indians because
governments or foreign governmental entity that, consistent with 31 U.S.C. of their status as Indians (25 U.S.C.
entities. 6302, 6304: 450b(e)). See annually published Bureau
(a) Is used to enter into a relationship of Indian Affairs list of Indian Entities
§ 200.47 Foreign organization. the principal purpose of which is to Recognized and Eligible to Receive
Foreign organization means an entity transfer anything of value from the Services.
that is: Federal awarding agency or pass-
(a) A public or private organization through entity to the non-Federal entity § 200.55 Institutions of Higher Education
to carry out a public purpose authorized (IHEs).
located in a country other than the
United States and its territories that are by a law of the United States (see 31 IHE is defined at 20 U.S.C. 1001.
subject to the laws of the country in U.S.C. 6101(3)); and not to acquire § 200.56 Indirect (facilities &
which it is located, irrespective of the property or services for the Federal administrative (F&A)) costs.
citizenship of project staff or place of awarding agency or pass-through Indirect (F&A) costs means those costs
performance; entity’s direct benefit or use; incurred for a common or joint purpose
(b) A private nongovernmental (b) Is distinguished from a cooperative
benefitting more than one cost objective,
organization located in a country other agreement in that it does not provide for
and not readily assignable to the cost
than the United States that solicits and substantial involvement between the
objectives specifically benefitted,
receives cash contributions from the Federal awarding agency or pass-
without effort disproportionate to the
general public; through entity and the non-Federal
results achieved. To facilitate equitable
(c) A charitable organization located entity in carrying out the activity
distribution of indirect expenses to the
in a country other than the United contemplated by the Federal award.
(c) Does not include an agreement that cost objectives served, it may be
States that is nonprofit and tax exempt necessary to establish a number of pools
under the laws of its country of provides only:
(1) Direct United States Government of indirect (F&A) costs. Indirect (F&A)
domicile and operation, and is not a cost pools should be distributed to
cash assistance to an individual;
university, college, accredited degree- benefitted cost objectives on bases that
(2) A subsidy;
granting institution of education, private (3) A loan; will produce an equitable result in
foundation, hospital, organization (4) A loan guarantee; or consideration of relative benefits
engaged exclusively in research or (5) Insurance. derived.
scientific activities, church, synagogue,
mosque or other similar entities § 200.52 Hospital. § 200.57 Indirect cost rate proposal.
organized primarily for religious Hospital means a facility licensed as Indirect cost rate proposal means the
purposes; or a hospital under the law of any state or documentation prepared by a non-
(d) An organization located in a a facility operated as a hospital by the Federal entity to substantiate its request
country other than the United States not United States, a state, or a subdivision for the establishment of an indirect cost
recognized as a Foreign Public Entity. of a state. rate as described in Appendix III to Part
200—Indirect (F&A) Costs Identification
§ 200.48 General purpose equipment. § 200.53 Improper payment. and Assignment, and Rate
General purpose equipment means (a) Improper payment means any Determination for Institutions of Higher
equipment which is not limited to payment that should not have been Education (IHEs) through Appendix VII
research, medical, scientific or other made or that was made in an incorrect to Part 200—States and Local
technical activities. Examples include amount (including overpayments and Government and Indian Tribe Indirect
office equipment and furnishings, underpayments) under statutory, Cost Proposals of this Part.
modular offices, telephone networks, contractual, administrative, or other
information technology equipment and legally applicable requirements; and § 200.58 Information technology systems.
systems, air conditioning equipment, (b) Improper payment includes any Information technology systems
reproduction and printing equipment, payment to an ineligible party, any means computing devices, ancillary
and motor vehicles. See also Equipment payment for an ineligible good or equipment, software, firmware, and
and Special Purpose Equipment. service, any duplicate payment, any similar procedures, services (including
payment for a good or service not support services), and related resources.
§ 200.49 Generally Accepted Accounting received (except for such payments See also §§ 200.20 Computing devices
Principles (GAAP). where authorized by law), any payment and 200.33 Equipment.
GAAP has the meaning specified in that does not account for credit for
accounting standards issued by the § 200.59 Intangible property.
applicable discounts, and any payment
Government Accounting Standards where insufficient or lack of Intangible property means property
Board (GASB) and the Financial documentation prevents a reviewer from having no physical existence, such as
trademarks, copyrights, patents and
Accounting Standards Board (FASB). discerning whether a payment was

proper. patent applications and property, such
§ 200.50 Generally Accepted Government as loans, notes and other debt
Auditing Standards (GAGAS). § 200.54 Indian tribe (or ‘‘federally instruments, lease agreements, stock
GAGAS means generally accepted recognized Indian tribe’’). and other instruments of property
government auditing standards issued Indian tribe means any Indian tribe, ownership (whether the property is
by the Comptroller General of the band, nation, or other organized group tangible or intangible).
§ 200.60 Intermediate cost objective. made by another lender and financing agency or pass-through entity of the
Intermediate cost objective means a arrangements that defer payment for audit findings and corrective action
cost objective that is used to accumulate more than 90 days, including the sale of plan and the issuance of a written
indirect costs or service center costs that a Federal government asset on credit decision to the auditee as to what
are subsequently allocated to one or terms. The term does not include the corrective action is necessary.
more indirect cost pools or final cost acquisition of a federally guaranteed
loan in satisfaction of default claims or § 200.67 Micro-purchase.
objectives. See also § 200.28 Cost
objective and § 200.44 Final cost the price support loans of the Micro-purchase means a purchase of
objective. Commodity Credit Corporation. supplies or services using simplified
(b) The term ‘‘direct loan obligation’’ acquisition procedures, the aggregate
§ 200.61 Internal controls. means a binding agreement by a Federal amount of which does not exceed the
Internal controls means a process, awarding agency to make a direct loan micro-purchase threshold. Micro-
implemented by a non-Federal entity, when specified conditions are fulfilled purchase procedures comprise a subset
designed to provide reasonable by the borrower. of a non-Federal entity’s small purchase
assurance regarding the achievement of (c) The term ‘‘loan guarantee’’ means procedures. The non-Federal entity uses
objectives in the following categories: any Federal government guarantee, such procedures in order to expedite the
(a) Effectiveness and efficiency of insurance, or other pledge with respect completion of its lowest-dollar small
operations; to the payment of all or a part of the purchase transactions and minimize the
(b) Reliability of reporting for internal principal or interest on any debt associated administrative burden and
and external use; and obligation of a non-Federal borrower to cost. The micro-purchase threshold is
(c) Compliance with applicable laws a non-Federal lender, but does not set by the Federal Acquisition
and regulations. include the insurance of deposits, Regulation at 48 CFR Subpart 2.1
§ 200.62 Internal control over compliance
shares, or other withdrawable accounts (Definitions). It is $3,000 except as
requirements for Federal awards. in financial institutions. otherwise discussed in Subpart 2.1 of
(d) The term ‘‘loan guarantee that regulation, but this threshold is
Internal control over compliance
commitment’’ means a binding periodically adjusted for inflation.
requirements for Federal awards means
agreement by a Federal awarding agency
a process implemented by a non-Federal § 200.68 Modified Total Direct Cost
to make a loan guarantee when specified
entity designed to provide reasonable (MTDC).
conditions are fulfilled by the borrower,
assurance regarding the achievement of MTDC means all direct salaries and
the lender, or any other party to the
the following objectives for Federal wages, applicable fringe benefits,
guarantee agreement.
awards: materials and supplies, services, travel,
(a) Transactions are properly recorded § 200.64 Local government. and subawards and subcontracts up to
and accounted for, in order to: Local government means any unit of the first $25,000 of each subaward or
(1) Permit the preparation of reliable government within a state, including a: subcontract (regardless of the period of
financial statements and Federal (a) County; performance of the subawards and
reports; (b) Borough; subcontracts under the award). MTDC
(2) Maintain accountability over (c) Municipality; excludes equipment, capital
assets; and (d) City; expenditures, charges for patient care,
(3) Demonstrate compliance with (e) Town; rental costs, tuition remission,
Federal statutes, regulations, and the (f) Township; scholarships and fellowships,
terms and conditions of the Federal (g) Parish; participant support costs and the
award; (h) Local public authority, including portion of each subaward and
(b) Transactions are executed in any public housing agency under the subcontract in excess of $25,000. Other
compliance with: United States Housing Act of 1937; items may only be excluded when
(1) Federal statutes, regulations, and (i) Special district; necessary to avoid a serious inequity in
the terms and conditions of the Federal (j) School district; the distribution of indirect costs, and
award that could have a direct and (k) Intrastate district; with the approval of the cognizant
material effect on a Federal program; (l) Council of governments, whether agency for indirect costs.
and or not incorporated as a nonprofit
(2) Any other Federal statutes and corporation under state law; and § 200.69 Non-Federal entity.
regulations that are identified in the (m) Any other agency or Non-Federal entity means a state,
Compliance Supplement; and instrumentality of a multi-, regional, or local government, Indian tribe,
(c) Funds, property, and other assets intra-state or local government. institution of higher education (IHE), or
are safeguarded against loss from nonprofit organization that carries out a
unauthorized use or disposition. § 200.65 Major program.
Federal award as a recipient or
Major program means a Federal subrecipient.
§ 200.63 Loan. program determined by the auditor to be
Loan means a Federal loan or loan a major program in accordance with § 200.70 Nonprofit organization.
guarantee received or administered by a § 200.518 Major program determination
non-Federal entity, except as used in the Nonprofit organization means any
or a program identified as a major corporation, trust, association,
definition of § 200.80 Program income. program by a Federal awarding agency
(a) The term ‘‘direct loan’’ means a cooperative, or other organization, not
or pass-through entity in accordance including IHEs, that:

disbursement of funds by the Federal with § 200.503 Relation to other audit
government to a non-Federal borrower requirements, paragraph (e). (a) Is operated primarily for scientific,
under a contract that requires the educational, service, charitable, or
repayment of such funds with or § 200.66 Management decision. similar purposes in the public interest;
without interest. The term includes the Management decision means the (b) Is not organized primarily for
purchase of, or participation in, a loan evaluation by the Federal awarding profit; and
(c) Uses net proceeds to maintain, award. The Federal awarding agency or discounts, and interest earned on any of
improve, or expand the operations of pass-through entity must include start them.
the organization. and end dates of the period of See also § 200.407 Prior written
performance in the Federal award (see approval (prior approval). See also 35
§ 200.71 Obligations. §§ 200.210 Information contained in a U.S.C. 200–212 ‘‘Disposition of Rights
When used in connection with a non- Federal award paragraph (a)(5) and in Educational Awards’’ applies to
Federal entity’s utilization of funds 200.331 Requirements for pass-through inventions made under Federal awards.
under a Federal award, obligations entities, paragraph (a)(1)(iv)).
means orders placed for property and § 200.81 Property.
services, contracts and subawards made, § 200.78 Personal property.
and similar transactions during a given Property means real property or
Personal property means property personal property.
period that require payment by the non- other than real property. It may be
Federal entity during the same or a tangible, having physical existence, or § 200.82 Protected Personally Identifiable
future period. intangible. Information (Protected PII).
§ 200.72 Office of Management and Budget Protected PII means an individual’s
§ 200.79 Personally Identifiable
(OMB). Information (PII). first name or first initial and last name
OMB means the Executive Office of in combination with any one or more of
the President, Office of Management PII means information that can be types of information, including, but not
and Budget. used to distinguish or trace an limited to, social security number,
individual’s identity, either alone or passport number, credit card numbers,
§ 200.73 Oversight agency for audit. when combined with other personal or clearances, bank numbers, biometrics,
Oversight agency for audit means the identifying information that is linked or date and place of birth, mother’s maiden
Federal awarding agency that provides linkable to a specific individual. Some name, criminal, medical and financial
the predominant amount of funding information that is considered to be PII records, educational transcripts. This
directly to a non-Federal entity not is available in public sources such as does not include PII that is required by
assigned a cognizant agency for audit. telephone books, public Web sites, and law to be disclosed. (See also § 200.79
When there is no direct funding, the university listings. This type of Personally Identifiable Information
Federal awarding agency which is the information is considered to be Public (PII)).
predominant source of pass-through PII and includes, for example, first and
funding must assume the oversight last name, address, work telephone § 200.83 Project cost.
responsibilities. The duties of the number, email address, home telephone Project cost means total allowable
oversight agency for audit and the number, and general educational costs incurred under a Federal award
process for any reassignments are credentials. The definition of PII is not and all required cost sharing and
described in § 200.513 Responsibilities, anchored to any single category of voluntary committed cost sharing,
paragraph (b). information or technology. Rather, it including third-party contributions.
requires a case-by-case assessment of
§ 200.74 Pass-through entity. the specific risk that an individual can § 200.84 Questioned cost.
Pass-through entity means a non- be identified. Non-PII can become PII Questioned cost means a cost that is
Federal entity that provides a subaward whenever additional information is questioned by the auditor because of an
to a subrecipient to carry out part of a made publicly available, in any medium audit finding:
Federal program. and from any source, that, when
(a) Which resulted from a violation or
combined with other available
§ 200.75 Participant support costs. possible violation of a statute,
information, could be used to identify
Participant support costs means direct regulation, or the terms and conditions
an individual.
costs for items such as stipends or of a Federal award, including for funds
subsistence allowances, travel § 200.80 Program income. used to match Federal funds;
allowances, and registration fees paid to (b) Where the costs, at the time of the
Program income means gross income
or on behalf of participants or trainees audit, are not supported by adequate
earned by the non-Federal entity that is
(but not employees) in connection with documentation; or
directly generated by a supported
conferences, or training projects. (c) Where the costs incurred appear
activity or earned as a result of the
§ 200.76 Performance goal. Federal award during the period of unreasonable and do not reflect the
Performance goal means a target level performance. (See § 200.77 Period of actions a prudent person would take in
of performance expressed as a tangible, performance.) Program income includes the circumstances.
measurable objective, against which but is not limited to income from fees
§ 200.85 Real property.
actual achievement can be compared, for services performed, the use or rental
including a goal expressed as a or real or personal property acquired Real property means land, including
quantitative standard, value, or rate. In under Federal awards, the sale of land improvements, structures and
some instances (e.g., discretionary commodities or items fabricated under a appurtenances thereto, but excludes
research awards), this may be limited to Federal award, license fees and royalties moveable machinery and equipment.
the requirement to submit technical on patents and copyrights, and principal
§ 200.86 Recipient.
performance reports (to be evaluated in and interest on loans made with Federal
award funds. Interest earned on Recipient means a non-Federal entity
accordance with agency policy).

advances of Federal funds is not that receives a Federal award directly
§ 200.77 Period of performance. program income. Except as otherwise from a Federal awarding agency to carry
Period of performance means the time provided in Federal statutes, out an activity under a Federal program.
during which the non-Federal entity regulations, or the terms and conditions The term recipient does not include
may incur new obligations to carry out of the Federal award, program income subrecipients. See also § 200.69 Non-
the work authorized under the Federal does not include rebates, credits, Federal entity.
§ 200.87 Research and Development assistance, such as those authorized by § 200.97 Unliquidated obligations.
(R&D). Title IV of the Higher Education Act of Unliquidated obligations means, for
R&D means all research activities, 1965, as amended, (20 U.S.C. 1070– financial reports prepared on a cash
both basic and applied, and all 1099d), which are administered by the basis, obligations incurred by the non-
development activities that are U.S. Department of Education, and Federal entity that have not been paid
performed by non-Federal entities. The similar programs provided by other (liquidated). For reports prepared on an
term research also includes activities Federal agencies. It does not include accrual expenditure basis, these are
involving the training of individuals in Federal awards under programs that obligations incurred by the non-Federal
research techniques where such provide fellowships or similar Federal entity for which an expenditure has not
activities utilize the same facilities as awards to students on a competitive been recorded.
other research and development basis, or for specified studies or
§ 200.98 Unobligated balance.
activities and where such activities are research.
not included in the instruction function. Unobligated balance means the
‘‘Research’’ is defined as a systematic § 200.92 Subaward. amount of funds under a Federal award
study directed toward fuller scientific that the non-Federal entity has not
Subaward means an award provided
knowledge or understanding of the obligated. The amount is computed by
by a pass-through entity to a
subject studied. ‘‘Development’’ is the subtracting the cumulative amount of
subrecipient for the subrecipient to
systematic use of knowledge and the non-Federal entity’s unliquidated
carry out part of a Federal award
understanding gained from research obligations and expenditures of funds
received by the pass-through entity. It
directed toward the production of useful under the Federal award from the
does not include payments to a cumulative amount of the funds that the
materials, devices, systems, or methods, contractor or payments to an individual
including design and development of Federal awarding agency or pass-
that is a beneficiary of a Federal through entity authorized the non-
prototypes and processes. program. A subaward may be provided Federal entity to obligate.
through any form of legal agreement,
§ 200.88 Simplified acquisition threshold.
including an agreement that the pass- § 200.99 Voluntary committed cost
Simplified acquisition threshold through entity considers a contract. sharing.
means the dollar amount below which Voluntary committed cost sharing
a non-Federal entity may purchase § 200.93 Subrecipient. means cost sharing specifically pledged
property or services using small Subrecipient means a non-Federal on a voluntary basis in the proposal’s
purchase methods. Non-Federal entities entity that receives a subaward from a budget or the Federal award on the part
adopt small purchase procedures in pass-through entity to carry out part of of the non-Federal entity and that
order to expedite the purchase of items a Federal program; but does not include becomes a binding requirement of
costing less than the simplified an individual that is a beneficiary of Federal award.
acquisition threshold. The simplified such program. A subrecipient may also
acquisition threshold is set by the be a recipient of other Federal awards Subpart B—General Provisions
Federal Acquisition Regulation at 48 directly from a Federal awarding
CFR Subpart 2.1 (Definitions) and in § 200.100 Purpose.
agency. (a)(1) This Part establishes uniform
accordance with 41 U.S.C. 1908. As of
the publication of this Part, the § 200.94 Supplies. administrative requirements, cost
simplified acquisition threshold is principles, and audit requirements for
$150,000, but this threshold is Supplies means all tangible personal Federal awards to non-Federal entities,
periodically adjusted for inflation. (Also property other than those described in as described in § 200.101 Applicability.
see definition of § 200.67 Micro- § 200.33 Equipment. A computing Federal awarding agencies must not
purchase.) device is a supply if the acquisition cost impose additional or inconsistent
is less than the lesser of the requirements, except as provided in
§ 200.89 Special purpose equipment. capitalization level established by the §§ 200.102 Exceptions and 200.210
Special purpose equipment means non-Federal entity for financial Information contained in a Federal
equipment which is used only for statement purposes or $5,000, regardless award, or unless specifically required by
research, medical, scientific, or other of the length of its useful life. See also Federal statute, regulation, or Executive
technical activities. Examples of special §§ 200.20 Computing devices and Order.
purpose equipment include 200.33 Equipment. (2) This Part provides the basis for a
microscopes, x-ray machines, surgical systematic and periodic collection and
§ 200.95 Termination. uniform submission by Federal agencies
instruments, and spectrometers. See
also §§ 200.33 Equipment and 200.48 Termination means the ending of a of information on all Federal financial
General purpose equipment. Federal award, in whole or in part at assistance programs to the Office of
any time prior to the planned end of Management and Budget (OMB). It also
§ 200.90 State. period of performance. establishes Federal policies related to
State means any state of the United the delivery of this information to the
States, the District of Columbia, the § 200.96 Third-party in-kind contributions. public, including through the use of
Commonwealth of Puerto Rico, the Third-party in-kind contributions electronic media. It prescribes the
Virgin Islands, Guam, American Samoa, means the value of non-cash manner in which General Services
the Commonwealth of the Northern contributions (i.e., property or services) Administration (GSA), OMB, and
Federal agencies that administer Federal
Mariana Islands, and any agency or that—

instrumentality thereof exclusive of financial assistance programs are to
(a) Benefit a federally assisted project carry out their statutory responsibilities
local governments.
or program; and under the Federal Program Information
§ 200.91 Student Financial Aid (SFA). (b) Are contributed by non-Federal Act (31 U.S.C. 6101–6106).
SFA means Federal awards under third parties, without charge, to a non- (b) Administrative requirements.
those programs of general student Federal entity under a Federal award. Subparts B through D of this Part set
forth the uniform administrative Requirements of this Part is issued (b)(1) Applicability to different types
requirements for grant and cooperative pursuant to the Single Audit Act of Federal awards. The following table
agreements, including the requirements Amendments of 1996, (31 U.S.C. 7501– describes what portions of this Part
for Federal awarding agency 7507). It sets forth standards for apply to which types of Federal awards.
management of Federal grant programs obtaining consistency and uniformity The terms and conditions of Federal
before the Federal award has been among Federal agencies for the audit of awards (including this Part) flow down
made, and the requirements Federal non-Federal entities expending Federal to subawards to subrecipients unless a
awarding agencies may impose on non- awards. These provisions also provide particular section of this Part or the
Federal entities in the Federal award. the policies and procedures for Federal terms and conditions of the Federal
(c) Cost Principles. Subpart E—Cost awarding agencies and pass-through award specifically indicate otherwise.
Principles of this Part establishes entities when using the results of these This means that non-Federal entities
principles for determining the allowable audits. must comply with requirements in this
costs incurred by non-Federal entities (e) For OMB guidance to Federal Part regardless of whether the non-
under Federal awards. The principles awarding agencies on Challenges and Federal entity is a recipient or
are for the purpose of cost Prizes, please see M–10–11 Guidance on
determination and are not intended to subrecipient of a Federal award. Pass-
the Use of Challenges and Prizes to
identify the circumstances or dictate the through entities must comply with the
Promote Open Government, issued
extent of Federal government requirements described in Subpart D—
March 8, 2010, or its successor.
participation in the financing of a Post Federal Award Requirements of
particular program or project. The § 200.101 Applicability. this Part, §§ 200.330 Subrecipient and
principles are designed to provide that (a) General applicability to Federal contractor determinations through
Federal awards bear their fair share of agencies. The requirements established 200.332 Fixed amount Subawards, but
cost recognized under these principles in this Part apply to Federal agencies not any requirements in this Part
except where restricted or prohibited by that make Federal awards to non- directed towards Federal awarding
statute. Federal entities. These requirements are agencies unless the requirements of this
(d) Single Audit Requirements and applicable to all costs related to Federal Part or the terms and conditions of the
Audit Follow-up. Subpart F—Audit awards. Federal award indicate otherwise.
Are applicable to the following types of Fed- Are NOT applicable to the following types of
The following portions of the Part: eral Awards (except as noted in paragraphs Federal Awards:
(d) and (e) of this section):
This table must be read along with the other provisions of this section
Authority: 31 U.S.C. 503

Subpart A—Acronyms and Definitions ........ —All.
Subpart B—General Provisions, except for —All.
§§ § 200.111 English language, § 200.112
Conflict of interest, § 200.113.
Mandatory disclosures
§ 200.111 English language, § 200.112 Conflict —Grant agreements and cooperative agree- —Agreements for: loans, loan guarantees, in-
of interest, and § 200.113. ments. terest subsidies, and insurance.
Mandatory disclosures —Cost-reimbursement contracts awarded
under the Federal Acquisition Regulations
and cost-reimbursement subcontracts
under these contracts.
Subparts C–D, except for Subrecipient Moni- —Grant agreements and cooperative agree- —Agreements for: loans, loan guarantees, in-
toring and Management. ments. terest subsidies, and insurance.
—Cost-reimbursement contracts awarded
under the Federal Acquisition Regulations
and cost-reimbursement subcontracts
under these contracts.
Subpart D—Post Federal Award Requirements, —All.
Subrecipient Monitoring and Management.
Subpart E—Cost Principles ................................. —Grant agreements and cooperative agree- —Grant agreements and cooperative agree-
ments, except those providing food comments providing food commodities.
modities. —Fixed amount awards.
—Cost-reimbursement contracts awarded —Agreements for: loans, loan guarantees, in-
under the Federal Acquisition Regulations terest subsidies, insurance.
and cost-reimbursement subcontracts —Federal awards to hospitals (see Appendix
under these contracts in accordance with IX to Part 200—Hospital Cost Principles).
the FAR.
Subpart F—Audit Requirements ......................... —All.
(2) Federal award of cost- determinations through 200.332 Fixed (ii) Child Support Enforcement and
reimbursement contract under the FAR amount Subawards of Subpart D—Post Establishment of Paternity (title IV–D of
to a non-Federal entity. When a non- Federal Award Requirements of this the Social Security Act, 42 U.S.C. 651–
Federal entity is awarded a cost- Part, the requirements in Subpart C— 669b);
reimbursement contract, only Subpart Pre-Federal Award Requirements and (iii) Foster Care and Adoption
D—Post Federal Award Requirements of Contents of Federal Awards, Subpart Assistance (title IV–E of the Act, 42
this Part, §§ 200.330 Subrecipient and D—Post Federal Award Requirements of U.S.C. 670–679c);
contractor determinations through this Part, and Subpart E—Cost (iv) Aid to the Aged, Blind, and
200.332 Fixed amount Subawards (in Principles of this Part do not apply to Disabled (titles I, X, XIV, and XVI–
addition to any FAR related the following programs: AABD of the Act, as amended); and
requirements for subaward monitoring), (1) The block grant awards authorized
Subpart E—Cost Principles of this Part by the Omnibus Budget Reconciliation (v) Medical Assistance (Medicaid)
and Subpart F—Audit Requirements of Act of 1981 (including Community (title XIX of the Act, 42 U.S.C. 1396–
this Part are incorporated by reference Services; Preventive Health and Health 1396w–5) not including the State
into the contract. However, when the Services; Alcohol, Drug Abuse, and Medicaid Fraud Control program
Cost Accounting Standards (CAS) are Mental Health Services; Maternal and authorized by section 1903(a)(6)(B) of
applicable to the contract, they take Child Health Services; Social Services; the Social Security Act (42 U.S.C.
precedence over the requirements of Low-Income Home Energy Assistance; 1396b(a)(6)(B)).
this Part except for Subpart F—Audit States’ Program of Community (2) A Federal award for an
Requirements of this Part when they are Development Block Grant Awards for experimental, pilot, or demonstration
in conflict. In addition, costs that are Small Cities; and Elementary and project that is also supported by a
made unallowable under 10 U.S.C. Secondary Education other than Federal award listed in paragraph (e)(1)
2324(e) and 41 U.S.C. 4304(a) as programs administered by the Secretary of this section;
described in the FAR subpart 31.2 and of Education under title V, subtitle D, (3) Federal awards under subsection
subpart 31.603 are always unallowable. chapter 2, section 583—the Secretary’s 412(e) of the Immigration and
For requirements other than those discretionary award program) and both Nationality Act and subsection 501(a) of
covered in Subpart D—Post Federal the Alcohol and Drug Abuse Treatment the Refugee Education Assistance Act of
Award Requirements of this Part, and Rehabilitation Block Grant Award 1980 (Pub. L. 96–422, 94 Stat. 1809), for
§§ 200.330 Subrecipient and contractor (42 U.S.C. 300x–21 to 300x–35 and 42 cash assistance, medical assistance, and
determinations through 200.332 Fixed U.S.C. 300x–51 to 300x64) and the supplemental security income benefits
amount Subawards, Subpart E—Cost Mental Health Service for the Homeless to refugees and entrants and the
Principles of this Part and Subpart F— Block Grant Award (42 U.S.C. 300x to administrative costs of providing the
Audit Requirements of this Part, the 300x–9) under the Public Health assistance and benefits (8 U.S.C.
terms of the contract and the FAR apply. Services Act. 1522(e));
(3) With the exception of Subpart F— (2) Federal awards to local education (4) Entitlement awards under the
Audit Requirements of this Part, which agencies under 20 U.S.C. 7702–7703b, following programs of The National
is required by the Single Audit Act, in (portions of the Impact Aid program); School Lunch Act:
any circumstances where the provisions (3) Payments under the Department of
of Federal statutes or regulations differ (i) National School Lunch Program
Veterans Affairs’ State Home Per Diem
from the provisions of this Part, the (section 4 of the Act, 42 U.S.C. 1753),
Program (38 U.S.C. 1741); and
provision of the Federal statutes or (4) Federal awards authorized under (ii) Commodity Assistance (section 6
regulations govern. This includes, for the Child Care and Development Block of the Act, 42 U.S.C. 1755),
agreements with Indian tribes, the Grant Act of 1990, as amended: (iii) Special Meal Assistance (section
provisions of the Indian Self- (i) Child Care and Development Block 11 of the Act, 42 U.S.C. 1759a),
Determination and Education and Grant (42 U.S.C. 9858) (iv) Summer Food Service Program for
Assistance Act (ISDEAA), as amended, (ii) Child Care Mandatory and Children (section 13 of the Act, 42
25 U.S.C 450–458ddd–2. Matching Funds of the Child Care and U.S.C. 1761), and
(c) Federal agencies may apply Development Fund (42 U.S.C. 9858) (v) Child and Adult Care Food
subparts A through E of this Part to for- (e) Except for § 200.202 Requirement Program (section 17 of the Act, 42
profit entities, foreign public entities, or to provide public notice of Federal U.S.C. 1766).
foreign organizations, except where the financial assistance programs the
(5) Entitlement awards under the
Federal awarding agency determines guidance in Subpart C—Pre-Federal
following programs of The Child
that the application these subparts Award Requirements and Contents of
Nutrition Act of 1966:
would be inconsistent with the Federal Awards of this Part does not
international obligations of the United apply to the following programs: (i) Special Milk Program (section 3 of
States or the statute or regulations of a (1) Entitlement Federal awards to the Act, 42 U.S.C. 1772),
foreign government. carry out the following programs of the (ii) School Breakfast Program (section
(d) Except for § 200.202 Requirement Social Security Act: 4 of the Act, 42 U.S.C. 1773), and
to provide public notice of Federal (i) Temporary Assistance to Needy (iii) State Administrative Expenses
financial assistance programs and Families (title IV–A of the Social (section 7 of the Act, 42 U.S.C. section
§§ 200.330 Subrecipient and contractor Security Act, 42 U.S.C. 601–619); 1776).
(6) Entitlement awards for State across Federal programs. Proposals may (c) A–89, ‘‘Federal Domestic
Administrative Expenses under The draw on the innovative program designs Assistance Program Information’’;
Food and Nutrition Act of 2008 (section discussed in M–13–17 to expand or (d) A–102, ‘‘Grant Awards and
16 of the Act, 7 U.S.C. 2025). improve the use of effective practices in Cooperative Agreements with State and
(7) Non-discretionary Federal awards delivering Federal financial assistance Local Governments’’;
under the following non-entitlement while also encouraging innovation in (e) A–110, ‘‘Uniform Administrative
programs: service delivery. Proposals submitted to Requirements for Awards and Other
(i) Special Supplemental Nutrition OMB in accordance with M–13–17 may Agreements with Institutions of Higher
Program for Women, Infants and include requests to waive requirements Education, Hospitals, and Other
Children (section 17 of the Child other than those in Subpart F—Audit Nonprofit Organizations’’ (codified at 2
Nutrition Act of 1966) 42 U.S.C. section Requirements of this Part. CFR 215);
1786; (f) A–122, ‘‘Cost Principles for Non-
(ii) The Emergency Food Assistance § 200.103 Authorities. Profit Organizations’’ (2 CFR Part 230);
Programs (Emergency Food Assistance This Part is issued under the (g) A–133, ‘‘Audits of States, Local
Act of 1983) 7 U.S.C. section 7501 note; following authorities. Governments and Non-Profit
and (a) Subpart B—General Provisions of Organizations,’’; and
(iii) Commodity Supplemental Food this Part through Subpart D—Post (h) Those sections of A–50 related to
Program (section 5 of the Agriculture Federal Award Requirements of this audits performed under Subpart F—
and Consumer Protection Act of 1973) 7 Part are authorized under 31 U.S.C. 503 Audit Requirements of this Part.
U.S.C. section 612c note. (the Chief Financial Officers Act,
Functions of the Deputy Director for § 200.105 Effect on other issuances.
§ 200.102 Exceptions. Management), 31 U.S.C. 1111 For Federal awards subject to this
(a) With the exception of Subpart F— (Improving Economy and Efficiency of Part, all administrative requirements,
Audit Requirements of this Part, OMB the United States Government), 41 program manuals, handbooks and other
may allow exceptions for classes of U.S.C. 1101–1131 (the Office of Federal non-regulatory materials that are
Federal awards or non-Federal entities Procurement Policy Act), inconsistent with the requirements of
subject to the requirements of this Part Reorganization Plan No. 2 of 1970, and this Part must be superseded upon
when exceptions are not prohibited by Executive Order 11541 (‘‘Prescribing the implementation of this Part by the
statute. However, in the interest of Duties of the Office of Management and Federal agency, except to the extent
maximum uniformity, exceptions from Budget and the Domestic Policy Council they are required by statute or
the requirements of this Part will be in the Executive Office of the authorized in accordance with the
permitted only in unusual President’’), the Single Audit Act provisions in § 200.102 Exceptions.
circumstances. Exceptions for classes of Amendments of 1996, (31 U.S.C. 7501–
Federal awards or non-Federal entities 7507), as well as The Federal Program § 200.106 Agency implementation.
will be published on the OMB Web site Information Act (Public Law 95–220 The specific requirements and
at www.whitehouse.gov/omb. and Public Law 98–169, as amended, responsibilities of Federal agencies and
(b) Exceptions on a case-by-case basis codified at 31 U.S.C. 6101–6106). non-Federal entities are set forth in this
for individual non-Federal entities may (b) Subpart E—Cost Principles of this Part. Federal agencies making Federal
be authorized by the Federal awarding Part is authorized under the Budget and awards to non-Federal entities must
agency or cognizant agency for indirect Accounting Act of 1921, as amended; implement the language in the Subpart
costs except where otherwise required the Budget and Accounting Procedures C—Pre-Federal Award Requirements
by law or where OMB or other approval Act of 1950, as amended (31 U.S.C. and Contents of Federal Awards of this
is expressly required by this Part. No 1101–1125); the Chief Financial Officers Part through Subpart F—Audit
case-by-case exceptions may be granted Act of 1990 (31 U.S.C. 503–504); Requirements of this Part in codified
to the provisions of Subpart F—Audit Reorganization Plan No. 2 of 1970; and regulations unless different provisions
Requirements of this Part. Executive Order No. 11541, ‘‘Prescribing are required by Federal statute or are
(c) The Federal awarding agency may the Duties of the Office of Management approved by OMB.
apply more restrictive requirements to a and Budget and the Domestic Policy
class of Federal awards or non-Federal Council in the Executive Office of the § 200.107 OMB responsibilities.
entities when approved by OMB, President.’’ OMB will review Federal agency
required by Federal statutes or (c) Subpart F—Audit Requirements of regulations and implementation of this
regulations except for the requirements this Part is authorized under the Single Part, and will provide interpretations of
in Subpart F—Audit Requirements of Audit Act Amendments of 1996, (31 policy requirements and assistance to
this Part. A Federal awarding agency U.S.C. 7501–7507). ensure effective and efficient
may apply less restrictive requirements implementation. Any exceptions will be
when making fixed amount awards as § 200.104 Supersession. subject to approval by OMB. Exceptions
defined in Subpart A—Acronyms and As described in § 200.110 Effective/ will only be made in particular cases
Definitions of this Part, except for those applicability date, this Part supersedes where adequate justification is
requirements imposed by statute or in the following OMB guidance documents presented.
Subpart F—Audit Requirements of this and regulations under Title 2 of the
Part. Code of Federal Regulations: § 200.108 Inquiries.
(d) On a case-by-case basis, OMB will (a) A–21, ‘‘Cost Principles for Inquiries concerning this Part may be
approve new strategies for Federal Educational Institutions’’ (2 CFR Part directed to the Office of Federal
awards when proposed by the Federal 220); Financial Management Office of

awarding agency in accordance with (b) A–87, ‘‘Cost Principles for State, Management and Budget, in
OMB guidance (such as M–13–17) to Local and Indian Tribal Governments’’ Washington, DC. Non-Federal entities’
develop additional evidence relevant to (2 CFR Part 225) and also Federal inquiries should be addressed to the
addressing important policy challenges Register notice 51 FR 552 (January 6, Federal awarding agency, cognizant
or to promote cost-effectiveness in and 1986); agency for indirect costs, cognizant or
oversight agency for audit, or pass- § 200.113 Mandatory disclosures. governmental review of the actual costs
through entity as appropriate. The non-Federal entity or applicant incurred by the non-Federal entity in
for a Federal award must disclose, in a performance of the award. The Federal
§ 200.109 Review date. awarding agency or pass-through entity
timely manner, in writing to the Federal
OMB will review this Part at least awarding agency or pass-through entity may use fixed amount awards if the
every five years after December 26, all violations of Federal criminal law project scope is specific and if adequate
2013. involving fraud, bribery, or gratuity cost, historical, or unit pricing data is
violations potentially affecting the available to establish a fixed amount
§ 200.110 Effective/applicability date.
Federal award. Failure to make required award with assurance that the non-
(a) The standards set forth in this Part disclosures can result in any of the Federal entity will realize no increment
which affect administration of Federal remedies described in § 200.338 above actual cost. Some of the ways in
awards issued by Federal agencies Remedies for noncompliance, including which the Federal award may be paid
become effective once implemented by suspension or debarment. (See also 2 include, but are not limited to:
Federal agencies or when any future CFR Part 180 and 31 U.S.C. 3321). (i) In several partial payments, the
amendment to this Part becomes final. amount of each agreed upon in advance,
Federal agencies must implement the Subpart C—Pre-Federal Award and the ‘‘milestone’’ or event triggering
policies and procedures applicable to Requirements and Contents of Federal the payment also agreed upon in
Federal awards by promulgating a Awards advance, and set forth in the Federal
regulation to be effective by December award;
§ 200.200 Purpose.
26, 2014 unless different provisions are (ii) On a unit price basis, for a defined
required by statute or approved by (a) Sections 200.201 Use of grant unit or units, at a defined price or
OMB. agreements (including fixed amount prices, agreed to in advance of
(b) The standards set forth in Subpart awards), cooperative agreements, and performance of the Federal award and
F—Audit Requirements of this Part and contracts through 200.208 Certifications set forth in the Federal award; or,
any other standards which apply and representations. Prescribe (iii) In one payment at Federal award
directly to Federal agencies will be instructions and other pre-award completion.
effective December 26, 2013 and will matters to be used in the announcement (2) A fixed amount award cannot be
apply to audits of fiscal years beginning and application process. used in programs which require
(b) Use of §§ 200.203 Notices of mandatory cost sharing or match.
on or after December 26, 2014.
funding opportunities, 200.204 Federal (3) The non-Federal entity must
§ 200.111 English language. awarding agency review of merit of certify in writing to the Federal
(a) All Federal financial assistance proposals, 200.205 Federal awarding awarding agency or pass-through entity
announcements and Federal award agency review of risk posed by at the end of the Federal award that the
information must be in the English applicants, and 200.207 Specific project or activity was completed or the
language. Applications must be conditions, is required only for level of effort was expended. If the
submitted in the English language and competitive Federal awards, but may required level of activity or effort was
must be in the terms of U.S. dollars. If also be used by the Federal awarding not carried out, the amount of the
the Federal awarding agency receives agency for non-competitive awards Federal award must be adjusted.
applications in another currency, the where appropriate or where required by (4) Periodic reports may be
Federal awarding agency will evaluate Federal statute. established for each Federal award.
the application by converting the (5) Changes in principal investigator,
§ 200.201 Use of grant agreements
foreign currency to United States (including fixed amount awards),
project leader, project partner, or scope
currency using the date specified for cooperative agreements, and contracts. of effort must receive the prior written
receipt of the application. approval of the Federal awarding agency
(a) The Federal awarding agency or
or pass-through entity.
(b) Non-Federal entities may translate pass-through entity must decide on the
the Federal award and other documents appropriate instrument for the Federal § 200.202 Requirement to provide public
into another language. In the event of award (i.e., grant agreement, cooperative notice of Federal financial assistance
inconsistency between any terms and agreement, or contract) in accordance programs.
conditions of the Federal award and any with the Federal Grant and Cooperative (a) The Federal awarding agency must
translation into another language, the Agreement Act (31 U.S.C. 6301–08). notify the public of Federal programs in
English language meaning will control. (b) Fixed Amount Awards. In addition the Catalog of Federal Domestic
Where a significant portion of the non- to the options described in paragraph (a) Assistance (CFDA), maintained by the
Federal entity’s employees who are of this section, Federal awarding General Services Administration (GSA).
working on the Federal award are not agencies, or pass-through entities as (1) The CFDA, or any OMB-
fluent in English, the non-Federal entity permitted in § 200.332 Fixed amount designated replacement, is the single,
must provide the Federal award in subawards, may use fixed amount authoritative, governmentwide
English and the language(s) with which awards (see § 200.45 Fixed amount comprehensive source of Federal
employees are more familiar. awards) to which the following financial assistance program
conditions apply: information produced by the executive
§ 200.112 Conflict of interest. (1) Payments are based on meeting branch of the Federal government.
The Federal awarding agency must specific requirements of the Federal (2) The information that the Federal
establish conflict of interest policies for award. Accountability is based on awarding agency must submit to GSA
Federal awards. The non-Federal entity performance and results. The Federal for approval by OMB is listed in
must disclose in writing any potential award amount is negotiated using the paragraph (b) of this section. GSA must
conflict of interest to the Federal cost principles (or other pricing prescribe the format for the submission.
awarding agency or pass-through entity information) as a guide. Except in the (3) The Federal awarding agency may
in accordance with applicable Federal case of termination before completion of not award Federal financial assistance
awarding agency policy. the Federal award, there is no without assigning it to a program that
has been included in the CFDA as site for finding and applying for Federal § 200.205 Federal awarding agency
required in this section unless there are financial assistance, in a location review of risk posed by applicants. See
exigent circumstances requiring preceding the full text of the also 2 CFR Part 27.
otherwise, such as timing requirements announcement: (6) Federal Award Administration
imposed by statute. (1) Federal Awarding Agency Name; Information. See also § 200.210
(b) For each program that awards (2) Funding Opportunity Title; Information contained in a Federal
discretionary Federal awards, non- (3) Announcement Type (whether the award.
discretionary Federal awards, loans, funding opportunity is the initial
announcement of this funding § 200.204 Federal awarding agency review
insurance, or any other type of Federal of merit of proposals.
financial assistance, the Federal opportunity or a modification of a
previously announced opportunity); For competitive grants or cooperative
awarding agency must submit the
(4) Funding Opportunity Number agreements, unless prohibited by
following information to GSA:
(1) Program Description, Purpose, (required, if applicable). If the Federal Federal statute, the Federal awarding
Goals and Measurement. A brief awarding agency has assigned or will agency must design and execute a merit
assign a number to the funding review process for applications. This
summary of the statutory or regulatory
opportunity announcement, this process must be described or
requirements of the program and its
number must be provided; incorporated by reference in the
intended outcome. Where appropriate,
(5) Catalog of Federal Financial applicable funding opportunity (see
the Program Description, Purpose,
Assistance (CFDA) Number(s); Appendix I to this Part, Full text of the
Goals, and Measurement should align
(6) Key Dates. Key dates include due Funding Opportunity.) See also
with the strategic goals and objectives
dates for applications or Executive § 200.203 Notices of funding
within the Federal awarding agency’s
Order 12372 submissions, as well as for opportunities.
performance plan and should support
the Federal awarding agency’s any letters of intent or pre-applications. § 200.205 Federal awarding agency review
performance measurement, For any announcement issued before a of risk posed by applicants.
management, and reporting as required program’s application materials are (a) Prior to making a Federal award,
by Part 6 of OMB Circular A–11; available, key dates also include the the Federal awarding agency is required
(2) Identification of whether the date on which those materials will be by 31 U.S.C. 3321 and 41 U.S.C. 2313
program makes Federal awards on a released; and any other additional note to review information available
discretionary basis or the Federal information, as deemed applicable by through any OMB-designated
awards are prescribed by Federal the relevant Federal awarding agency. repositories of governmentwide
statute, such as in the case of formula (b) The Federal awarding agency must eligibility qualification or financial
grants. generally make all funding integrity information, such as Federal
(3) Projected total amount of funds opportunities available for application Awardee Performance and Integrity
available for the program. Estimates for at least 60 calendar days. The Information System (FAPIIS), Dun and
based on previous year funding are Federal awarding agency may make a Bradstreet, and ‘‘Do Not Pay’’. See also
acceptable if current appropriations are determination to have a less than 60 suspension and debarment requirements
not available at the time of the calendar day availability period but no at 2 CFR Part 180 as well as individual
submission; funding opportunity should be available Federal agency suspension and
(4) Anticipated Source of Available for less than 30 calendar days unless debarment regulations in title 2 of the
Funds: The statutory authority for exigent circumstances require as Code of Federal Regulations.
funding the program and, to the extent determined by the Federal awarding (b) In addition, for competitive grants
possible, agency, sub-agency, or, if agency head or delegate. or cooperative agreements, the Federal
known, the specific program unit that (c) Full Text of Funding awarding agency must have in place a
will issue the Federal awards, and Opportunities. The Federal awarding framework for evaluating the risks
associated funding identifier (e.g., agency must include the following posed by applicants before they receive
Treasury Account Symbol(s)); information in the full text of each Federal awards. This evaluation may
(5) General Eligibility Requirements: funding opportunity. For specific incorporate results of the evaluation of
The statutory, regulatory or other instructions on the content required in the applicant’s eligibility or the quality
eligibility factors or considerations that this section, refer to Appendix I to Part of its application. If the Federal
determine the applicant’s qualification 200—Full Text of Notice of Funding awarding agency determines that a
for Federal awards under the program Opportunity to this Part. Federal award will be made, special
(e.g., type of non-Federal entity); and (1) Full programmatic description of conditions that correspond to the degree
(6) Applicability of Single Audit the funding opportunity. of risk assessed may be applied to the
Requirements as required by Subpart (2) Federal award information, Federal award. Criteria to be evaluated
F—Audit Requirements of this Part. including sufficient information to help must be described in the announcement
an applicant make an informed decision of funding opportunity described in
§ 200.203 Notices of funding about whether to submit an application. § 200.203 Notices of funding
opportunities. (See also § 200.414 Indirect (F&A) costs, opportunities.
For competitive grants and paragraph (b)). (c) In evaluating risks posed by
cooperative agreements, the Federal (3) Specific eligibility information, applicants, the Federal awarding agency
awarding agency must announce including any factors or priorities that may use a risk-based approach and may
specific funding opportunities by affect an applicant’s or its application’s consider any items such as the
providing the following information in eligibility for selection.
following:
a public notice: (4) Application Preparation and (1) Financial stability;
(a) Summary Information in Notices Submission Information, including the (2) Quality of management systems
of Funding Opportunities. The Federal applicable submission dates and time. and ability to meet the management
awarding agency must display the (5) Application Review Information standards prescribed in this Part;
following information posted on the including the criteria and process to be (3) History of performance. The
OMB-designated governmentwide Web used to evaluate applications. See also applicant’s record in managing Federal
awards, if it is a prior recipient of award conditions may include items (2) Recipient’s DUNS number (see
Federal awards, including timeliness of such as the following: § 200.32 Data Universal Numbering
compliance with applicable reporting (1) Requiring payments as System (DUNS) number);
requirements, conformance to the terms reimbursements rather than advance (3) Unique Federal Award
and conditions of previous Federal payments; Identification Number (FAIN);
awards, and if applicable, the extent to (2) Withholding authority to proceed (4) Federal Award Date (see § 200.39
which any previously awarded amounts to the next phase until receipt of Federal award date);
will be expended prior to future awards; evidence of acceptable performance (5) Period of Performance Start and
(4) Reports and findings from audits within a given period of performance; End Date;
performed under Subpart F—Audit (3) Requiring additional, more (6) Amount of Federal Funds
Requirements of this Part or the reports detailed financial reports; Obligated by this action;
and findings of any other available (4) Requiring additional project (7) Total Amount of Federal Funds
audits; and monitoring; Obligated;
(5) Requiring the non-Federal entity to (8) Total Amount of the Federal
(5) The applicant’s ability to
obtain technical or management Award;
effectively implement statutory,
assistance; or (9) Budget Approved by the Federal
regulatory, or other requirements
(6) Establishing additional prior Awarding Agency;
imposed on non-Federal entities. (10) Total Approved Cost Sharing or
(d) In addition to this review, the approvals.
(b) The Federal awarding agency or Matching, where applicable;
Federal awarding agency must comply (11) Federal award project
with the guidelines on governmentwide pass-through entity must notify the
applicant or non-Federal entity as to: description, (to comply with statutory
suspension and debarment in 2 CFR requirements (e.g., FFATA));
Part 180, and must require non-Federal (1) The nature of the additional
requirements; (12) Name of Federal awarding agency
entities to comply with these and contact information for awarding
provisions. These provisions restrict (2) The reason why the additional
requirements are being imposed; official,
Federal awards, subawards and (13) CFDA Number and Name;
contracts with certain parties that are (3) The nature of the action needed to
(14) Identification of whether the
debarred, suspended or otherwise remove the additional requirement, if
award is R&D; and
excluded from or ineligible for applicable;
(15) Indirect cost rate for the Federal
participation in Federal programs or (4) The time allowed for completing
award (including if the de minimis rate
activities. the actions if applicable, and
is charged per § 200.414 Indirect (F&A)
(5) The method for requesting
costs).
§ 200.206 Standard application reconsideration of the additional (b) General Terms and Conditions
requirements. requirements imposed. (1) Federal awarding agencies must
(a) Paperwork clearances. The Federal (c) Any special conditions must be incorporate the following general terms
awarding agency may only use promptly removed once the conditions and conditions either in the Federal
application information collections that prompted them have been award or by reference, as applicable:
approved by OMB under the Paperwork corrected. (i) Administrative requirements
Reduction Act of 1995 and OMB’s § 200.208 Certifications and implemented by the Federal awarding
implementing regulations in 5 CFR Part representations. agency as specified in this Part.
1320, Controlling Paperwork Burdens (ii) National policy requirements.
Unless prohibited by Federal statutes
on the Public. Consistent with these These include statutory, executive
or regulations, each Federal awarding
requirements, OMB will authorize order, other Presidential directive, or
agency or pass-through entity is
additional information collections only regulatory requirements that apply by
authorized to require the non-Federal
on a limited basis. specific reference and are not program-
entity to submit certifications and
(b) If applicable, the Federal awarding representations required by Federal specific. See § 200.300 Statutory and
agency may inform applicants and statutes, or regulations on an annual national policy requirements.
recipients that they do not need to basis. Submission may be required more (2) The Federal award must include
provide certain information otherwise frequently if the non-Federal entity fails wording to incorporate, by reference,
required by the relevant information to meet a requirement of a Federal the applicable set of general terms and
collection. award. conditions. The reference must be to the
Web site at which the Federal awarding
§ 200.207 Specific conditions.
§ 200.209 Pre-award costs. agency maintains the general terms and
(a) Based on the criteria set forth in For requirements on costs incurred by conditions.
§ 200.205 Federal awarding agency the applicant prior to the start date of (3) If a non-Federal entity requests a
review of risk posed by applicants or the period of performance of the Federal copy of the full text of the general terms
when an applicant or recipient has a award, see § 200.458 Pre-award costs. and conditions, the Federal awarding
history of failure to comply with the agency must provide it.
general or specific terms and conditions § 200.210 Information contained in a (4) Wherever the general terms and
of a Federal award, or failure to meet Federal award. conditions are publicly available, the
expected performance goals as A Federal award must include the Federal awarding agency must maintain
described in § 200.210 Information following information: an archive of previous versions of the
contained in a Federal award, or is not (a) General Federal Award general terms and conditions, with
otherwise responsible, the Federal Information. The Federal awarding effective dates, for use by the non-
awarding agency or pass-through entity agency must include the following Federal entity, auditors, or others.
may impose additional specific award general Federal award information in (c) Federal Awarding Agency,
conditions as needed under the each Federal award: Program, or Federal Award Specific
procedure specified in paragraph (b) of (1) Recipient name (which must Terms and Conditions. The Federal
this section. These additional Federal match registered name in DUNS); awarding agency may include with each
Federal award any terms and conditions the Freedom of Information Act (5 U.S.C learned, and spread the adoption of
necessary to communicate requirements 552), or controlled unclassified promising practices. The Federal
that are in addition to the requirements information pursuant to Executive awarding agency should provide
outlined in the Federal awarding Order 13556. recipients with clear performance goals,
agency’s general terms and conditions. indicators, and milestones as described
Whenever practicable, these specific Subpart D—Post Federal Award in § 200.210 Information contained in a
terms and conditions also should be Requirements Standards for Financial Federal award. Performance reporting
shared on a public Web site and in and Program Management frequency and content should be
notices of funding opportunities (as established to not only allow the
§ 200.300 Statutory and national policy
outlined in § 200.203 Notices of funding requirements. Federal awarding agency to understand
opportunities) in addition to being the recipient progress but also to
included in a Federal award. See also (a) The Federal awarding agency must facilitate identification of promising
§ 200.206 Standard application manage and administer the Federal practices among recipients and build
requirements. award in a manner so as to ensure that the evidence upon which the Federal
(d) Federal Award Performance Goals. Federal funding is expended and awarding agency’s program and
The Federal awarding agency must associated programs are implemented in performance decisions are made.
include in the Federal award an full accordance with U.S. statutory and
indication of the timing and scope of public policy requirements: including, § 200.302 Financial management.
expected performance by the non- but not limited to, those protecting (a) Each state must expend and
Federal entity as related to the outcomes public welfare, the environment, and account for the Federal award in
intended to be achieved by the program. prohibiting discrimination. The Federal accordance with state laws and
In some instances (e.g., discretionary awarding agency must communicate to procedures for expending and
research awards), this may be limited to the non-Federal entity all relevant accounting for the state’s own funds. In
the requirement to submit technical public policy requirements, including addition, the state’s and the other non-
performance reports (to be evaluated in those in general appropriations Federal entity’s financial management
accordance with Federal awarding provisions, and incorporate them either systems, including records documenting
agency policy). Where appropriate, the directly or by reference in the terms and compliance with Federal statutes,
Federal award may include specific conditions of the Federal award. regulations, and the terms and
performance goals, indicators, (b) The non-Federal entity is conditions of the Federal award, must
milestones, or expected outcomes (such responsible for complying with all be sufficient to permit the preparation of
as outputs, or services performed or requirements of the Federal award. For reports required by general and
public impacts of any of these) with an all Federal awards, this includes the program-specific terms and conditions;
expected timeline for accomplishment. provisions of FFATA, which includes and the tracing of funds to a level of
Reporting requirements must be clearly requirements on executive expenditures adequate to establish that
articulated such that, where compensation, and also requirements such funds have been used according to
appropriate, performance during the implementing the Act for the non- the Federal statutes, regulations, and the
execution of the Federal award has a Federal entity at 2 CFR Part 25 Financial terms and conditions of the Federal
standard against which non-Federal Assistance Use of Universal Identifier award. See also § 200.450 Lobbying.
entity performance can be measured. and Central Contractor Registration and (b) The financial management system
The Federal awarding agency may 2 CFR Part 170 Reporting Subaward and of each non-Federal entity must provide
include program-specific requirements, Executive Compensation Information. for the following (see also §§ 200.333
as applicable. These requirements See also statutory requirements for Retention requirements for records,
should be aligned with agency strategic whistleblower protections at 10 U.S.C. 200.334 Requests for transfer of records,
goals, strategic objectives or 2409, 41 U.S.C. 4712, and 10 U.S.C. 200.335 Methods for collection,
performance goals that are relevant to 2324, 41 U.S.C. 4304 and 4310. transmission and storage of information,
the program. See also OMB Circular A– 200.336 Access to records, and 200.337
§ 200.301 Performance measurement. Restrictions on public access to
11, Preparation, Submission and The Federal awarding agency must
Execution of the Budget Part 6 for records):
require the recipient to use OMB- (1) Identification, in its accounts, of
definitions of strategic objectives and approved governmentwide standard all Federal awards received and
performance goals. information collections when providing
(e) Any other information required by expended and the Federal programs
financial and performance information. under which they were received.
the Federal awarding agency.
As appropriate and in accordance with Federal program and Federal award
§ 200.211 Public access to Federal award above mentioned information identification must include, as
information. collections, the Federal awarding applicable, the CFDA title and number,
(a) In accordance with statutory agency must require the recipient to Federal award identification number
requirements for Federal spending relate financial data to performance and year, name of the Federal agency,
transparency (e.g., FFATA), except as accomplishments of the Federal award. and name of the pass-through entity, if
noted in this section, for applicable Also, in accordance with above any.
Federal awards the Federal awarding mentioned governmentwide standard (2) Accurate, current, and complete
agency must announce all Federal information collections, and when disclosure of the financial results of
awards publicly and publish the applicable, recipients must also provide each Federal award or program in
required information on a publicly cost information to demonstrate cost accordance with the reporting
available OMB-designated effective practices (e.g., through unit requirements set forth in §§ 200.327
governmentwide Web site (at time of cost data). The recipient’s performance Financial reporting and 200.328
publication, www.USAspending.gov). should be measured in a way that will Monitoring and reporting program
(b) Nothing in this section may be help the Federal awarding agency and performance. If a Federal awarding
construed as requiring the publication other non-Federal entities to improve agency requires reporting on an accrual
of information otherwise exempt under program outcomes, share lessons basis from a recipient that maintains its
records on other than an accrual basis, (e) Take reasonable measures to transfer of funds and disbursement by
the recipient must not be required to safeguard protected personally the non-Federal entity, and financial
establish an accrual accounting system. identifiable information and other management systems that meet the
This recipient may develop accrual data information the Federal awarding standards for fund control and
for its reports on the basis of an analysis agency or pass-through entity designates accountability as established in this
of the documentation on hand. as sensitive or the non-Federal entity Part. Advance payments to a non-
Similarly, a pass-through entity must considers sensitive consistent with Federal entity must be limited to the
not require a subrecipient to establish applicable Federal, state and local laws minimum amounts needed and be timed
an accrual accounting system and must regarding privacy and obligations of to be in accordance with the actual,
allow the subrecipient to develop confidentiality. immediate cash requirements of the
accrual data for its reports on the basis non-Federal entity in carrying out the
of an analysis of the documentation on § 200.304 Bonds. purpose of the approved program or
hand. The Federal awarding agency may project. The timing and amount of
(3) Records that identify adequately include a provision on bonding, advance payments must be as close as
the source and application of funds for insurance, or both in the following is administratively feasible to the actual
federally-funded activities. These circumstances: disbursements by the non-Federal entity
records must contain information (a) Where the Federal government for direct program or project costs and
pertaining to Federal awards, guarantees or insures the repayment of the proportionate share of any allowable
authorizations, obligations, unobligated money borrowed by the recipient, the indirect costs. The non-Federal entity
balances, assets, expenditures, income Federal awarding agency, at its must make timely payment to
and interest and be supported by source discretion, may require adequate contractors in accordance with the
documentation. bonding and insurance if the bonding contract provisions.
(4) Effective control over, and and insurance requirements of the non- (2) Whenever possible, advance
accountability for, all funds, property, Federal entity are not deemed adequate payments must be consolidated to cover
and other assets. The non-Federal entity to protect the interest of the Federal anticipated cash needs for all Federal
must adequately safeguard all assets and government. awards made by the Federal awarding
(b) The Federal awarding agency may agency to the recipient.
assure that they are used solely for
require adequate fidelity bond coverage (i) Advance payment mechanisms
authorized purposes. See § 200.303
where the non-Federal entity lacks include, but are not limited to, Treasury
Internal controls.
sufficient coverage to protect the check and electronic funds transfer and
(5) Comparison of expenditures with should comply with applicable
Federal government’s interest.
budget amounts for each Federal award. (c) Where bonds are required in the guidance in 31 CFR Part 208.
(6) Written procedures to implement situations described above, the bonds (ii) Non-Federal entities must be
the requirements of § 200.305 Payment. must be obtained from companies authorized to submit requests for
(7) Written procedures for holding certificates of authority as advance payments and reimbursements
determining the allowability of costs in acceptable sureties, as prescribed in 31 at least monthly when electronic fund
accordance with Subpart E—Cost CFR Part 223, ‘‘Surety Companies Doing transfers are not used, and as often as
Principles of this Part and the terms and Business with the United States.’’ they like when electronic transfers are
conditions of the Federal award. used, in accordance with the provisions
§ 200.305 Payment. of the Electronic Fund Transfer Act (15
§ 200.303 Internal controls.
(a) For states, payments are governed U.S.C. 1601).
The non-Federal entity must: by Treasury-State CMIA agreements and (3) Reimbursement is the preferred
(a) Establish and maintain effective default procedures codified at 31 CFR method when the requirements in
internal control over the Federal award Part 205 ‘‘Rules and Procedures for paragraph (b) cannot be met, when the
that provides reasonable assurance that Efficient Federal-State Funds Transfers’’ Federal awarding agency sets a specific
the non-Federal entity is managing the and TFM 4A–2000 Overall Disbursing condition per § 200.207 Specific
Federal award in compliance with Rules for All Federal Agencies. conditions, or when the non-Federal
Federal statutes, regulations, and the (b) For non-Federal entities other than entity requests payment by
terms and conditions of the Federal states, payments methods must reimbursement. This method may be
award. These internal controls should minimize the time elapsing between the used on any Federal award for
be in compliance with guidance in transfer of funds from the United States construction, or if the major portion of
‘‘Standards for Internal Control in the Treasury or the pass-through entity and the construction project is accomplished
Federal Government’’ issued by the the disbursement by the non-Federal through private market financing or
Comptroller General of the United entity whether the payment is made by Federal loans, and the Federal award
States and the ‘‘Internal Control electronic funds transfer, or issuance or constitutes a minor portion of the
Integrated Framework’’, issued by the redemption of checks, warrants, or project. When the reimbursement
Committee of Sponsoring Organizations payment by other means. See also method is used, the Federal awarding
of the Treadway Commission (COSO). § 200.302 Financial management agency or pass-through entity must
(b) Comply with Federal statutes, paragraph (f). Except as noted elsewhere make payment within 30 calendar days
regulations, and the terms and in this Part, Federal agencies must after receipt of the billing, unless the
conditions of the Federal awards. require recipients to use only OMB- Federal awarding agency or pass-
(c) Evaluate and monitor the non- approved standard governmentwide through entity reasonably believes the
Federal entity’s compliance with information collection requests to request to be improper.
statute, regulations and the terms and request payment. (4) If the non-Federal entity cannot
conditions of Federal awards. (1) The non-Federal entity must be meet the criteria for advance payments
(d) Take prompt action when paid in advance, provided it maintains and the Federal awarding agency or
instances of noncompliance are or demonstrates the willingness to pass-through entity has determined that
identified including noncompliance maintain both written procedures that reimbursement is not feasible because
identified in audit findings. minimize the time elapsing between the the non-Federal entity lacks sufficient
working capital, the Federal awarding award, must be released to the non- it is both in accordance with Federal
agency or pass-through entity may Federal entity upon subsequent awarding agency regulations and
provide cash on a working capital compliance. When a Federal award is specified in a notice of funding
advance basis. Under this procedure, suspended, payment adjustments will opportunity. Criteria for considering
the Federal awarding agency or pass- be made in accordance with § 200.342 voluntary committed cost sharing and
through entity must advance cash Effects of suspension and termination. any other program policy factors that
payments to the non-Federal entity to (iv) A payment must not be made to may be used to determine who may
cover its estimated disbursement needs a non-Federal entity for amounts that receive a Federal award must be
for an initial period generally geared to are withheld by the non-Federal entity explicitly described in the notice of
the non-Federal entity’s disbursing from payment to contractors to assure funding opportunity. Furthermore, only
cycle. Thereafter, the Federal awarding satisfactory completion of work. A mandatory cost sharing or cost sharing
agency or pass-through entity must payment must be made when the non- specifically committed in the project
reimburse the non-Federal entity for its Federal entity actually disburses the budget must be included in the
actual cash disbursements. Use of the withheld funds to the contractors or to organized research base for computing
working capital advance method of escrow accounts established to assure the indirect (F&A) cost rate or reflected
payment requires that the pass-through satisfactory completion of work. in any allocation of indirect costs. See
entity provide timely advance payments (7) Standards governing the use of also §§ 200.414 Indirect (F&A) costs,
to any subrecipients in order to meet the banks and other institutions as 200.203 Notices of funding
subrecipient’s actual cash depositories of advance payments under opportunities, and Appendix I to Part
disbursements. The working capital Federal awards are as follows. 200—Full Text of Notice of Funding
advance method of payment must not be (i) The Federal awarding agency and Opportunity.
used by the pass-through entity if the pass-through entity must not require (b) For all Federal awards, any shared
reason for using this method is the separate depository accounts for funds costs or matching funds and all
unwillingness or inability of the pass- provided to a non-Federal entity or contributions, including cash and third
through entity to provide timely establish any eligibility requirements for party in-kind contributions, must be
advance payments to the subrecipient to depositories for funds provided to the accepted as part of the non-Federal
meet the subrecipient’s actual cash non-Federal entity. However, the non- entity’s cost sharing or matching when
disbursements. Federal entity must be able to account such contributions meet all of the
(5) Use of resources before requesting for the receipt, obligation and following criteria:
cash advance payments. To the extent expenditure of funds. (1) Are verifiable from the non-
available, the non-Federal entity must (ii) Advance payments of Federal Federal entity’s records;
disburse funds available from program funds must be deposited and (2) Are not included as contributions
income (including repayments to a maintained in insured accounts for any other Federal award;
revolving fund), rebates, refunds, whenever possible. (3) Are necessary and reasonable for
contract settlements, audit recoveries, (8) The non-Federal entity must accomplishment of project or program
and interest earned on such funds maintain advance payments of Federal objectives;
before requesting additional cash awards in interest-bearing accounts, (4) Are allowable under Subpart E—
payments. unless the following apply. Cost Principles of this Part;
(6) Unless otherwise required by (i) The non-Federal entity receives (5) Are not paid by the Federal
Federal statutes, payments for allowable less than $120,000 in Federal awards government under another Federal
costs by non-Federal entities must not per year. award, except where the Federal statute
be withheld at any time during the (ii) The best reasonably available authorizing a program specifically
period of performance unless the interest-bearing account would not be provides that Federal funds made
conditions of §§ 200.207 Specific expected to earn interest in excess of available for such program can be
conditions, Subpart D—Post Federal $500 per year on Federal cash balances. applied to matching or cost sharing
Award Requirements of this Part, (iii) The depository would require an requirements of other Federal programs;
200.338 Remedies for Noncompliance, average or minimum balance so high (6) Are provided for in the approved
or the following apply: that it would not be feasible within the budget when required by the Federal
(i) The non-Federal entity has failed expected Federal and non-Federal cash awarding agency; and
to comply with the project objectives, resources. (7) Conform to other provisions of this
Federal statutes, regulations, or the (iv) A foreign government or banking Part, as applicable.
terms and conditions of the Federal system prohibits or precludes interest (c) Unrecovered indirect costs,
award. bearing accounts. including indirect costs on cost sharing
(ii) The non-Federal entity is (9) Interest earned on Federal advance or matching may be included as part of
delinquent in a debt to the United States payments deposited in interest-bearing cost sharing or matching only with the
as defined in OMB Guidance A–129, accounts must be remitted annually to prior approval of the Federal awarding
‘‘Policies for Federal Credit Programs the Department of Health and Human agency. Unrecovered indirect cost
and Non-Tax Receivables.’’ Under such Services, Payment Management System, means the difference between the
conditions, the Federal awarding agency Rockville, MD 20852. Interest amounts amount charged to the Federal award
or pass-through entity may, upon up to $500 per year may be retained by and the amount which could have been
reasonable notice, inform the non- the non-Federal entity for to the Federal award under the non-
Federal entity that payments must not administrative expense. Federal entity’s approved negotiated
be made for obligations incurred after a indirect cost rate.
specified date until the conditions are § 200.306 Cost sharing or matching. (d) Values for non-Federal entity
corrected or the indebtedness to the (a) Under Federal research proposals, contributions of services and property
Federal government is liquidated. voluntary committed cost sharing is not must be established in accordance with
(iii) A payment withheld for failure to expected. It cannot be used as a factor § 200.434 Contributions and donations.
comply with Federal award conditions, during the merit review of applications If a Federal awarding agency authorizes
but without suspension of the Federal or proposals, but may be considered if the non-Federal entity to donate
buildings or land for construction/ for which title passes to the non-Federal regulations or the Federal award, costs
facilities acquisition projects or long- entity may differ according to the incidental to the generation of program
term use, the value of the donated purpose of the Federal award, if income may be deducted from gross
property for cost sharing or matching paragraph (h)(1) or (2) of this section income to determine program income,
must be the lesser of paragraphs (d)(1) applies. provided these costs have not been
or (2) of this section. (1) If the purpose of the Federal award charged to the Federal award.
(1) The value of the remaining life of is to assist the non-Federal entity in the (c) Governmental revenues. Taxes,
the property recorded in the non- acquisition of equipment, buildings or special assessments, levies, fines, and
Federal entity’s accounting records at land, the aggregate value of the donated other such revenues raised by a non-
the time of donation. property may be claimed as cost sharing Federal entity are not program income
(2) The current fair market value. or matching. unless the revenues are specifically
However, when there is sufficient (2) If the purpose of the Federal award identified in the Federal award or
justification, the Federal awarding is to support activities that require the Federal awarding agency regulations as
agency may approve the use of the use of equipment, buildings or land, program income.
current fair market value of the donated normally only depreciation charges for (d) Property. Proceeds from the sale of
property, even if it exceeds the value equipment and buildings may be made. real property or equipment are not
described in (1) above at the time of However, the fair market value of program income; such proceeds will be
donation. equipment or other capital assets and handled in accordance with the
(e) Volunteer services furnished by fair rental charges for land may be requirements of Subpart D—Post
third-party professional and technical allowed, provided that the Federal Federal Award Requirements of this
personnel, consultants, and other awarding agency has approved the Part, Property Standards §§ 200.311 Real
skilled and unskilled labor may be charges. See also § 200.420 property and 200.313 Equipment, or as
counted as cost sharing or matching if Considerations for selected items of specifically identified in Federal
the service is an integral and necessary cost. statutes, regulations, or the terms and
part of an approved project or program. (i) The value of donated property conditions of the Federal award.
Rates for third-party volunteer services must be determined in accordance with (e) Use of program income. If the
must be consistent with those paid for the usual accounting policies of the Federal awarding agency does not
similar work by the non-Federal entity. non-Federal entity, with the following specify in its regulations or the terms
In those instances in which the required qualifications: and conditions of the Federal award, or
skills are not found in the non-Federal (1) The value of donated land and give prior approval for how program
entity, rates must be consistent with buildings must not exceed its fair income is to be used, paragraph (e)(1) of
those paid for similar work in the labor market value at the time of donation to this section must apply. For Federal
market in which the non-Federal entity the non-Federal entity as established by awards made to IHEs and nonprofit
competes for the kind of services an independent appraiser (e.g., certified research institutions, if the Federal
involved. In either case, paid fringe real property appraiser or General awarding agency does not specify in its
benefits that are reasonable, necessary, Services Administration representative) regulations or the terms and conditions
allocable, and otherwise allowable may and certified by a responsible official of of the Federal award how program
be included in the valuation. the non-Federal entity as required by income is to be used, paragraph (e)(2) of
(f) When a third-party organization the Uniform Relocation Assistance and this section must apply. In specifying
furnishes the services of an employee, Real Property Acquisition Policies Act alternatives to paragraphs (e)(1) and (2)
these services must be valued at the of 1970, as amended, (42 U.S.C. 4601– of this section, the Federal awarding
employee’s regular rate of pay plus an 4655) (Uniform Act) except as provided agency may distinguish between income
amount of fringe benefits that is in the implementing regulations at 49 earned by the recipient and income
reasonable, necessary, allocable, and CFR Part 24. earned by subrecipients and between
otherwise allowable, and indirect costs (2) The value of donated equipment the sources, kinds, or amounts of
at either the third-party organization’s must not exceed the fair market value of income. When the Federal awarding
approved federally negotiated indirect equipment of the same age and agency authorizes the approaches in
cost rate or, a rate in accordance with condition at the time of donation. paragraphs (e)(2) and (3) of this section,
§ 200.414 Indirect (F&A) costs, (3) The value of donated space must program income in excess of any
paragraph (d), provided these services not exceed the fair rental value of amounts specified must also be
employ the same skill(s) for which the comparable space as established by an deducted from expenditures.
employee is normally paid. Where independent appraisal of comparable (1) Deduction. Ordinarily program
donated services are treated as indirect space and facilities in a privately-owned income must be deducted from total
costs, indirect cost rates will separate building in the same locality. allowable costs to determine the net
the value of the donated services so that (4) The value of loaned equipment allowable costs. Program income must
reimbursement for the donated services must not exceed its fair rental value. be used for current costs unless the
will not be made. (j) For third-party in-kind Federal awarding agency authorizes
(g) Donated property from third contributions, the fair market value of otherwise. Program income that the
parties may include such items as goods and services must be documented non-Federal entity did not anticipate at
equipment, office supplies, laboratory and to the extent feasible supported by the time of the Federal award must be
supplies, or workshop and classroom the same methods used internally by the used to reduce the Federal award and
supplies. Value assessed to donated non-Federal entity. non-Federal entity contributions rather
property included in the cost sharing or than to increase the funds committed to
matching share must not exceed the fair § 200.307 Program income. the project.
market value of the property at the time (a) General. Non-Federal entities are (2) Addition. With prior approval of
of the donation. encouraged to earn income to defray the Federal awarding agency, program
(h) The method used for determining program costs where appropriate. income may be added to the Federal
cost sharing or matching for third-party- (b) Cost of generating program award by the Federal agency and the
donated equipment, buildings and land income. If authorized by Federal non-Federal entity. The program income
must be used for the purposes and Determining Costs Applicable to (i) The terms and conditions of the
under the conditions of the Federal Research and Development under Federal award prohibit the extension.
award. Awards and Contracts with Hospitals,’’ (ii) The extension requires additional
(3) Cost sharing or matching. With or 48 CFR Part 31, ‘‘Contract Cost Federal funds.
prior approval of the Federal awarding Principles and Procedures,’’ as (iii) The extension involves any
agency, program income may be used to applicable. change in the approved objectives or
meet the cost sharing or matching (5) The transfer of funds budgeted for scope of the project.
requirement of the Federal award. The participant support costs as defined in (3) Carry forward unobligated
amount of the Federal award remains § 200.75 Participant support costs to balances to subsequent periods of
the same. other categories of expense. performance.
(f) Income after the period of (6) Unless described in the (4) For Federal awards that support
performance. There are no Federal application and funded in the approved research, unless the Federal awarding
requirements governing the disposition Federal awards, the subawarding, agency provides otherwise in the
of income earned after the end of the transferring or contracting out of any Federal award or in the Federal
period of performance for the Federal work under a Federal award. This awarding agency’s regulations, the prior
award, unless the Federal awarding provision does not apply to the approval requirements described in
agency regulations or the terms and acquisition of supplies, material, paragraph (d) are automatically waived
conditions of the Federal award provide equipment or general support services. (i.e., recipients need not obtain such
otherwise. The Federal awarding agency (7) Changes in the amount of prior approvals) unless one of the
may negotiate agreements with approved cost-sharing or matching conditions included in paragraph (d)(2)
recipients regarding appropriate uses of provided by the non-Federal entity. No applies.
income earned after the period of (e) The Federal awarding agency may,
other prior approval requirements for
performance as part of the grant at its option, restrict the transfer of
specific items may be imposed unless a
closeout process. See also § 200.343 funds among direct cost categories or
deviation has been approved by OMB.
Closeout. programs, functions and activities for
See also §§ 200.102 Exceptions and
Federal awards in which the Federal
§ 200.308 Revision of budget and program 200.407 Prior written approval (prior
share of the project exceeds the
plans. approval).
Simplified Acquisition Threshold and
(a) The approved budget for the (d) Except for requirements listed in
the cumulative amount of such transfers
Federal award summarizes the financial paragraph (c)(1) of this section, the
exceeds or is expected to exceed 10
aspects of the project or program as Federal awarding agency are authorized,
percent of the total budget as last
approved during the Federal award at their option, to waive prior written
approved by the Federal awarding
process. It may include either the approvals required by paragraph (c) this
agency. The Federal awarding agency
Federal and non-Federal share (see section. Such waivers may include
cannot permit a transfer that would
§ 200.43 Federal share) or only the authorizing recipients to do any one or
cause any Federal appropriation to be
Federal share, depending upon Federal more of the following:
used for purposes other than those
awarding agency requirements. It must (1) Incur project costs 90 calendar
consistent with the appropriation.
be related to performance for program days before the Federal awarding agency (f) All other changes to non-
evaluation purposes whenever makes the Federal award. Expenses construction budgets, except for the
appropriate. more than 90 calendar days pre-award changes described in paragraph (c) of
(b) Recipients are required to report require prior approval of the Federal this section, do not require prior
deviations from budget or project scope awarding agency. All costs incurred approval (see also § 200.407 Prior
or objective, and request prior approvals before the Federal awarding agency written approval (prior approval)).
from Federal awarding agencies for makes the Federal award are at the (g) For construction Federal awards,
budget and program plan revisions, in recipient’s risk (i.e., the Federal the recipient must request prior written
accordance with this section. awarding agency is under no obligation approval promptly from the Federal
(c) For non-construction Federal to reimburse such costs if for any reason awarding agency for budget revisions
awards, recipients must request prior the recipient does not receive a Federal whenever paragraph (g)(1), (2), or (3) of
approvals from Federal awarding award or if the Federal award is less this section applies.
agencies for one or more of the than anticipated and inadequate to (1) The revision results from changes
following program or budget-related cover such costs). See also § 200.458 in the scope or the objective of the
reasons: Pre-award costs. project or program.
(1) Change in the scope or the (2) Initiate a one-time extension of the (2) The need arises for additional
objective of the project or program (even period of performance by up to 12 Federal funds to complete the project.
if there is no associated budget revision months unless one or more of the (3) A revision is desired which
requiring prior written approval). conditions outlined in paragraphs involves specific costs for which prior
(2) Change in a key person specified (d)(2)(i) through (iii) of this section written approval requirements may be
in the application or the Federal award. apply. For one-time extensions, the imposed consistent with applicable
(3) The disengagement from the recipient must notify the Federal OMB cost principles listed in Subpart
project for more than three months, or awarding agency in writing with the E—Cost Principles of this Part.
a 25 percent reduction in time devoted supporting reasons and revised period (4) No other prior approval
to the project, by the approved project of performance at least 10 calendar days requirements for budget revisions may
director or principal investigator. before the end of the period of be imposed unless a deviation has been
(4) The inclusion, unless waived by performance specified in the Federal approved by OMB.
the Federal awarding agency, of costs award. This one-time extension may not (5) When a Federal awarding agency
that require prior approval in be exercised merely for the purpose of makes a Federal award that provides
accordance with Subpart E—Cost using unobligated balances. Extensions support for construction and non-
Principles of this Part or 45 CFR Part 74 require explicit prior Federal awarding construction work, the Federal awarding
Appendix E, ‘‘Principles for agency approval when: agency may require the recipient to
obtain prior approval from the Federal (1) Retain title after compensating the the Federal Technology Transfer Act (15
awarding agency before making any Federal awarding agency. The amount U.S.C. 3710 (i)) to donate research
fund or budget transfers between the paid to the Federal awarding agency equipment to educational and non-
two types of work supported. will be computed by applying the profit organizations in accordance with
(h) When requesting approval for Federal awarding agency’s percentage of Executive Order 12999, ‘‘Educational
budget revisions, the recipient must use participation in the cost of the original Technology: Ensuring Opportunity for
the same format for budget information purchase (and costs of any All Children in the Next Century.’’). The
that was used in the application, unless improvements) to the fair market value Federal awarding agency must issue
the Federal awarding agency indicates a of the property. However, in those appropriate instructions to the non-
letter of request suffices. situations where non-Federal entity is Federal entity.
(i) Within 30 calendar days from the disposing of real property acquired or (c) Exempt federally-owned property
date of receipt of the request for budget improved with a Federal award and means property acquired under a
revisions, the Federal awarding agency acquiring replacement real property Federal award the title based upon the
must review the request and notify the under the same Federal award, the net explicit terms and conditions of the
recipient whether the budget revisions proceeds from the disposition may be Federal award that indicate the Federal
have been approved. If the revision is used as an offset to the cost of the awarding agency has chosen to vest in
still under consideration at the end of replacement property. the non-Federal entity without further
30 calendar days, the Federal awarding (2) Sell the property and compensate obligation to the Federal government or
agency must inform the recipient in the Federal awarding agency. The under conditions the Federal agency
writing of the date when the recipient amount due to the Federal awarding considers appropriate. The Federal
may expect the decision. agency will be calculated by applying awarding agency may exercise this
the Federal awarding agency’s option when statutory authority exists.
§ 200.309 Period of performance. percentage of participation in the cost of Absent statutory authority and specific
A non-Federal entity may charge to the original purchase (and cost of any terms and conditions of the Federal
the Federal award only allowable costs improvements) to the proceeds of the award, title to exempt federally-owned
incurred during the period of sale after deduction of any actual and property acquired under the Federal
performance and any costs incurred reasonable selling and fixing-up award remains with the Federal
before the Federal awarding agency or expenses. If the Federal award has not government.
pass-through entity made the Federal been closed out, the net proceeds from
sale may be offset against the original § 200.313 Equipment.
award that were authorized by the
Federal awarding agency or pass- cost of the property. When non-Federal See also § 200.439 Equipment and
through entity. entity is directed to sell property, sales other capital expenditures.
procedures must be followed that (a) Title. Subject to the obligations
Property Standards provide for competition to the extent and conditions set forth in this section,
practicable and result in the highest title to equipment acquired under a
§ 200.310 Insurance coverage.
possible return. Federal award will vest upon
The non-Federal entity must, at a (3) Transfer title to the Federal acquisition in the non-Federal entity.
minimum, provide the equivalent awarding agency or to a third party Unless a statute specifically authorizes
insurance coverage for real property and designated/approved by the Federal the Federal agency to vest title in the
equipment acquired or improved with awarding agency. The non-Federal non-Federal entity without further
Federal funds as provided to property entity is entitled to be paid an amount obligation to the Federal government,
owned by the non-Federal entity. calculated by applying the non-Federal and the Federal agency elects to do so,
Federally-owned property need not be entity’s percentage of participation in the title must be a conditional title. Title
insured unless required by the terms the purchase of the real property (and must vest in the non-Federal entity
and conditions of the Federal award. cost of any improvements) to the current subject to the following conditions:
§ 200.311 Real property. fair market value of the property. (1) Use the equipment for the
authorized purposes of the project until
(a) Title. Subject to the obligations § 200.312 Federally-owned and exempt funding for the project ceases, or until
and conditions set forth in this section, property. the property is no longer needed for the
title to real property acquired or (a) Title to federally-owned property purposes of the project.
improved under a Federal award will remains vested in the Federal (2) Not encumber the property
vest upon acquisition in the non-Federal government. The non-Federal entity without approval of the Federal
entity. must submit annually an inventory awarding agency or pass-through entity.
(b) Use. Except as otherwise provided listing of federally-owned property in its (3) Use and dispose of the property in
by Federal statutes or by the Federal custody to the Federal awarding agency. accordance with paragraphs (b), (c) and
awarding agency, real property will be Upon completion of the Federal award (e) of this section.
used for the originally authorized or when the property is no longer (b) A state must use, manage and
purpose as long as needed for that needed, the non-Federal entity must dispose of equipment acquired under a
purpose, during which time the non- report the property to the Federal Federal award by the state in
Federal entity must not dispose of or awarding agency for further Federal accordance with state laws and
encumber its title or other interests. agency utilization. procedures. Other non-Federal entities
(c) Disposition. When real property is (b) If the Federal awarding agency has must follow paragraphs (c) through (e)
no longer needed for the originally no further need for the property, it must
of this section.
authorized purpose, the non-Federal declare the property excess and report it (c) Use.
entity must obtain disposition for disposal to the appropriate Federal (1) Equipment must be used by the
instructions from the Federal awarding disposal authority, unless the Federal non-Federal entity in the program or
agency or pass-through entity. The awarding agency has statutory authority project for which it was acquired as long
instructions must provide for one of the to dispose of the property by alternative as needed, whether or not the project or
following alternatives: methods (e.g., the authority provided by program continues to be supported by
the Federal award, and the non-Federal percentage of Federal participation in Federal Government or to an eligible
entity must not encumber the property the project costs for the Federal award third party provided that, in such cases,
without prior approval of the Federal under which the property was acquired, the non-Federal entity must be entitled
awarding agency. When no longer the location, use and condition of the to compensation for its attributable
needed for the original program or property, and any ultimate disposition percentage of the current fair market
project, the equipment may be used in data including the date of disposal and value of the property.
other activities supported by the Federal sale price of the property. (4) In cases where a non-Federal
awarding agency, in the following order (2) A physical inventory of the entity fails to take appropriate
of priority: property must be taken and the results disposition actions, the Federal
(i) Activities under a Federal award reconciled with the property records at awarding agency may direct the non-
from the Federal awarding agency least once every two years. Federal entity to take disposition
which funded the original program or (3) A control system must be actions.
project, then developed to ensure adequate
(ii) Activities under Federal awards safeguards to prevent loss, damage, or § 200.314 Supplies.
from other Federal awarding agencies. theft of the property. Any loss, damage, See also § 200.453 Materials and
This includes consolidated equipment or theft must be investigated. supplies costs, including costs of
for information technology systems. (4) Adequate maintenance procedures computing devices.
(2) During the time that equipment is must be developed to keep the property (a) Title to supplies will vest in the
used on the project or program for in good condition. non-Federal entity upon acquisition. If
which it was acquired, the non-Federal (5) If the non-Federal entity is there is a residual inventory of unused
entity must also make equipment authorized or required to sell the supplies exceeding $5,000 in total
available for use on other projects or property, proper sales procedures must aggregate value upon termination or
programs currently or previously be established to ensure the highest completion of the project or program
supported by the Federal government, possible return. and the supplies are not needed for any
provided that such use will not interfere (e) Disposition. When original or other Federal award, the non-Federal
with the work on the projects or replacement equipment acquired under entity must retain the supplies for use
program for which it was originally a Federal award is no longer needed for on other activities or sell them, but
acquired. First preference for other use the original project or program or for must, in either case, compensate the
must be given to other programs or other activities currently or previously Federal government for its share. The
projects supported by Federal awarding supported by a Federal awarding amount of compensation must be
agency that financed the equipment and agency, except as otherwise provided in computed in the same manner as for
second preference must be given to Federal statutes, regulations, or Federal equipment. See § 200.313 Equipment,
programs or projects under Federal awarding agency disposition paragraph (e)(2) for the calculation
awards from other Federal awarding instructions, the non-Federal entity methodology.
agencies. Use for non-federally-funded must request disposition instructions (b) As long as the Federal government
programs or projects is also permissible. from the Federal awarding agency if retains an interest in the supplies, the
User fees should be considered if required by the terms and conditions of non-Federal entity must not use
appropriate. the Federal award. Disposition of the supplies acquired under a Federal
(3) Notwithstanding the equipment will be made as follows, in award to provide services to other
encouragement in § 200.307 Program accordance with Federal awarding organizations for a fee that is less than
income to earn program income, the agency disposition instructions: private companies charge for equivalent
non-Federal entity must not use (1) Items of equipment with a current services, unless specifically authorized
equipment acquired with the Federal per unit fair market value of $5,000 or by Federal statute.
award to provide services for a fee that less may be retained, sold or otherwise
is less than private companies charge for disposed of with no further obligation to § 200.315 Intangible property.
equivalent services unless specifically the Federal awarding agency. (a) Title to intangible property (see
authorized by Federal statute for as long (2) Except as provided in § 200.312 § 200.59 Intangible property) acquired
as the Federal government retains an Federally-owned and exempt property, under a Federal award vests upon
interest in the equipment. paragraph (b), or if the Federal awarding acquisition in the non-Federal entity.
(4) When acquiring replacement agency fails to provide requested The non-Federal entity must use that
equipment, the non-Federal entity may disposition instructions within 120 property for the originally-authorized
use the equipment to be replaced as a days, items of equipment with a current purpose, and must not encumber the
trade-in or sell the property and use the per-unit fair-market value in excess of property without approval of the
proceeds to offset the cost of the $5,000 may be retained by the non- Federal awarding agency. When no
replacement property. Federal entity or sold. The Federal longer needed for the originally
(d) Management requirements. awarding agency is entitled to an authorized purpose, disposition of the
Procedures for managing equipment amount calculated by multiplying the intangible property must occur in
(including replacement equipment), current market value or proceeds from accordance with the provisions in
whether acquired in whole or in part sale by the Federal awarding agency’s § 200.313 Equipment paragraph (e).
under a Federal award, until disposition percentage of participation in the cost of (b) The non-Federal entity may
takes place will, as a minimum, meet the original purchase. If the equipment copyright any work that is subject to
the following requirements: is sold, the Federal awarding agency copyright and was developed, or for
(1) Property records must be may permit the non-Federal entity to which ownership was acquired, under a
maintained that include a description of deduct and retain from the Federal Federal award. The Federal awarding
the property, a serial number or other share $500 or ten percent of the agency reserves a royalty-free,
identification number, the source of proceeds, whichever is less, for its nonexclusive and irrevocable right to
funding for the property (including the selling and handling expenses. reproduce, publish, or otherwise use the
FAIN), who holds title, the acquisition (3) The non-Federal entity may work for Federal purposes, and to
date, and cost of the property, transfer title to the property to the authorize others to do so.
(c) The non-Federal entity is subject communications with colleagues. This governing the performance of its
to applicable regulations governing ‘‘recorded’’ material excludes physical employees engaged in the selection,
patents and inventions, including objects (e.g., laboratory samples). award and administration of contracts.
governmentwide regulations issued by Research data also do not include: No employee, officer, or agent must
the Department of Commerce at 37 CFR (i) Trade secrets, commercial participate in the selection, award, or
Part 401, ‘‘Rights to Inventions Made by information, materials necessary to be administration of a contract supported
Nonprofit Organizations and Small held confidential by a researcher until by a Federal award if he or she has a real
Business Firms Under Government they are published, or similar or apparent conflict of interest. Such a
Awards, Contracts and Cooperative information which is protected under conflict of interest would arise when the
Agreements.’’ law; and employee, officer, or agent, any member
(d) The Federal government has the (ii) Personnel and medical of his or her immediate family, his or
right to: information and similar information the her partner, or an organization which
(1) Obtain, reproduce, publish, or disclosure of which would constitute a employs or is about to employ any of
otherwise use the data produced under clearly unwarranted invasion of the parties indicated herein, has a
a Federal award; and personal privacy, such as information financial or other interest in or a
(2) Authorize others to receive, that could be used to identify a tangible personal benefit from a firm
reproduce, publish, or otherwise use particular person in a research study. considered for a contract. The officers,
such data for Federal purposes. employees, and agents of the non-
(e) Freedom of Information Act § 200.316 Property trust relationship.
Federal entity must neither solicit nor
(FOIA). Real property, equipment, and
accept gratuities, favors, or anything of
(1) In addition, in response to a intangible property, that are acquired or
monetary value from contractors or
Freedom of Information Act (FOIA) improved with a Federal award must be
parties to subcontracts. However, non-
request for research data relating to held in trust by the non-Federal entity
Federal entities may set standards for
published research findings produced as trustee for the beneficiaries of the
situations in which the financial interest
under a Federal award that were used project or program under which the
is not substantial or the gift is an
by the Federal government in property was acquired or improved. The
unsolicited item of nominal value. The
developing an agency action that has the Federal awarding agency may require
standards of conduct must provide for
force and effect of law, the Federal the non-Federal entity to record liens or
disciplinary actions to be applied for
awarding agency must request, and the other appropriate notices of record to
violations of such standards by officers,
non-Federal entity must provide, within indicate that personal or real property
employees, or agents of the non-Federal
a reasonable time, the research data so has been acquired or improved with a
entity.
that they can be made available to the Federal award and that use and
disposition conditions apply to the (2) If the non-Federal entity has a
public through the procedures
property. parent, affiliate, or subsidiary
established under the FOIA. If the
organization that is not a state, local
Federal awarding agency obtains the Procurement Standards government, or Indian tribe, the non-
research data solely in response to a
Federal entity must also maintain
FOIA request, the Federal awarding § 200.317 Procurements by states.
written standards of conduct covering
agency may charge the requester a When procuring property and services organizational conflicts of interest.
reasonable fee equaling the full under a Federal award, a state must Organizational conflicts of interest
incremental cost of obtaining the follow the same policies and procedures means that because of relationships
research data. This fee should reflect it uses for procurements from its non- with a parent company, affiliate, or
costs incurred by the Federal agency Federal funds. The state will comply subsidiary organization, the non-Federal
and the non-Federal entity. This fee is with § 200.322 Procurement of entity is unable or appears to be unable
in addition to any fees the Federal recovered materials and ensure that to be impartial in conducting a
awarding agency may assess under the every purchase order or other contract procurement action involving a related
FOIA (5 U.S.C. 552(a)(4)(A)). includes any clauses required by section
(2) Published research findings means organization.
§ 200.326 Contract provisions. All other
when: (d) The non-Federal entity’s
non-Federal entities, including
(i) Research findings are published in procedures must avoid acquisition of
subrecipients of a state, will follow
a peer-reviewed scientific or technical unnecessary or duplicative items.
§§ 200.318 General procurement
journal; or Consideration should be given to
standards through 200.326 Contract
(ii) A Federal agency publicly and consolidating or breaking out
provisions.
officially cites the research findings in procurements to obtain a more
support of an agency action that has the § 200.318 General procurement standards. economical purchase. Where
force and effect of law. ‘‘Used by the (a) The non-Federal entity must use appropriate, an analysis will be made of
Federal government in developing an its own documented procurement lease versus purchase alternatives, and
agency action that has the force and procedures which reflect applicable any other appropriate analysis to
effect of law’’ is defined as when an State and local laws and regulations, determine the most economical
agency publicly and officially cites the provided that the procurements conform approach.
research findings in support of an to applicable Federal law and the (e) To foster greater economy and
agency action that has the force and standards identified in this section. efficiency, and in accordance with
effect of law. (b) Non-Federal entities must efforts to promote cost-effective use of
(3) Research data means the recorded maintain oversight to ensure that shared services across the Federal
factual material commonly accepted in contractors perform in accordance with government, the non-Federal entity is
the scientific community as necessary to the terms, conditions, and specifications encouraged to enter into state and local
validate research findings, but not any of their contracts or purchase orders. intergovernmental agreements or inter-
of the following: preliminary analyses, (c)(1) The non-Federal entity must entity agreements where appropriate for
drafts of scientific papers, plans for maintain written standards of conduct procurement or use of common or
future research, peer reviews, or covering conflicts of interest and shared goods and services.
(f) The non-Federal entity is and claims. These standards do not requirements for the material, product,
encouraged to use Federal excess and relieve the non-Federal entity of any or service to be procured. Such
surplus property in lieu of purchasing contractual responsibilities under its description must not, in competitive
new equipment and property whenever contracts. The Federal awarding agency procurements, contain features which
such use is feasible and reduces project will not substitute its judgment for that unduly restrict competition. The
costs. of the non-Federal entity unless the description may include a statement of
(g) The non-Federal entity is matter is primarily a Federal concern. the qualitative nature of the material,
encouraged to use value engineering Violations of law will be referred to the product or service to be procured and,
clauses in contracts for construction local, state, or Federal authority having when necessary, must set forth those
projects of sufficient size to offer proper jurisdiction. minimum essential characteristics and
reasonable opportunities for cost standards to which it must conform if it
reductions. Value engineering is a § 200.319 Competition. is to satisfy its intended use. Detailed
systematic and creative analysis of each (a) All procurement transactions must product specifications should be
contract item or task to ensure that its be conducted in a manner providing full avoided if at all possible. When it is
essential function is provided at the and open competition consistent with impractical or uneconomical to make a
overall lower cost. the standards of this section. In order to clear and accurate description of the
(h) The non-Federal entity must ensure objective contractor performance technical requirements, a ‘‘brand name
award contracts only to responsible and eliminate unfair competitive or equivalent’’ description may be used
contractors possessing the ability to advantage, contractors that develop or as a means to define the performance or
perform successfully under the terms draft specifications, requirements, other salient requirements of
and conditions of a proposed statements of work, and invitations for procurement. The specific features of
procurement. Consideration will be bids or requests for proposals must be the named brand which must be met by
given to such matters as contractor excluded from competing for such offers must be clearly stated; and
integrity, compliance with public procurements. Some of the situations (2) Identify all requirements which
policy, record of past performance, and considered to be restrictive of the offerors must fulfill and all other
financial and technical resources. competition include but are not limited factors to be used in evaluating bids or
(i) The non-Federal entity must to: proposals.
maintain records sufficient to detail the (1) Placing unreasonable requirements
history of procurement. These records (d) The non-Federal entity must
on firms in order for them to qualify to
will include, but are not necessarily ensure that all prequalified lists of
do business;
limited to the following: rationale for (2) Requiring unnecessary experience persons, firms, or products which are
the method of procurement, selection of and excessive bonding; used in acquiring goods and services are
contract type, contractor selection or (3) Noncompetitive pricing practices current and include enough qualified
rejection, and the basis for the contract between firms or between affiliated sources to ensure maximum open and
price. companies; free competition. Also, the non-Federal
(j)(1) The non-Federal entity may use (4) Noncompetitive contracts to entity must not preclude potential
time and material type contracts only consultants that are on retainer bidders from qualifying during the
after a determination that no other contracts; solicitation period.
contract is suitable and if the contract (5) Organizational conflicts of interest; § 200.320 Methods of procurement to be
includes a ceiling price that the (6) Specifying only a ‘‘brand name’’ followed.
contractor exceeds at its own risk. Time product instead of allowing ‘‘an equal’’
product to be offered and describing the The non-Federal entity must use one
and material type contract means a
performance or other relevant of the following methods of
contract whose cost to a non-Federal
requirements of the procurement; and procurement.
entity is the sum of:
(i) The actual cost of materials; and (7) Any arbitrary action in the (a) Procurement by micro-purchases.
(ii) Direct labor hours charged at fixed procurement process. Procurement by micro-purchase is the
hourly rates that reflect wages, general (b) The non-Federal entity must acquisition of supplies or services, the
and administrative expenses, and profit. conduct procurements in a manner that aggregate dollar amount of which does
(2) Since this formula generates an prohibits the use of statutorily or not exceed $3,000 (or $2,000 in the case
open-ended contract price, a time-and- administratively imposed state or local of acquisitions for construction subject
materials contract provides no positive geographical preferences in the to the Davis-Bacon Act). To the extent
profit incentive to the contractor for cost evaluation of bids or proposals, except practicable, the non-Federal entity must
control or labor efficiency. Therefore, in those cases where applicable Federal distribute micro-purchases equitably
each contract must set a ceiling price statutes expressly mandate or encourage among qualified suppliers. Micro-
that the contractor exceeds at its own geographic preference. Nothing in this purchases may be awarded without
risk. Further, the non-Federal entity section preempts state licensing laws. soliciting competitive quotations if the
awarding such a contract must assert a When contracting for architectural and non-Federal entity considers the price to
high degree of oversight in order to engineering (A/E) services, geographic be reasonable.
obtain reasonable assurance that the location may be a selection criterion (b) Procurement by small purchase
contractor is using efficient methods provided its application leaves an procedures. Small purchase procedures
and effective cost controls. appropriate number of qualified firms, are those relatively simple and informal
(k) The non-Federal entity alone must given the nature and size of the project, procurement methods for securing
be responsible, in accordance with good to compete for the contract. services, supplies, or other property that
administrative practice and sound (c) The non-Federal entity must have do not cost more than the Simplified
business judgment, for the settlement of written procedures for procurement Acquisition Threshold. If small
all contractual and administrative issues transactions. These procedures must purchase procedures are used, price or
arising out of procurements. These ensure that all solicitations: rate quotations must be obtained from
issues include, but are not limited to, (1) Incorporate a clear and accurate an adequate number of qualified
source evaluation, protests, disputes, description of the technical sources.
(c) Procurement by sealed bids proposals must be considered to the or quantities to permit maximum
(formal advertising). Bids are publicly maximum extent practical; participation by small and minority
solicited and a firm fixed price contract (2) Proposals must be solicited from businesses, and women’s business
(lump sum or unit price) is awarded to an adequate number of qualified enterprises;
the responsible bidder whose bid, sources; (4) Establishing delivery schedules,
conforming with all the material terms (3) The non-Federal entity must have where the requirement permits, which
and conditions of the invitation for bids, a written method for conducting encourage participation by small and
is the lowest in price. The sealed bid technical evaluations of the proposals minority businesses, and women’s
method is the preferred method for received and for selecting recipients; business enterprises;
procuring construction, if the conditions (4) Contracts must be awarded to the (5) Using the services and assistance,
in paragraph (c)(1) of this section apply. responsible firm whose proposal is most as appropriate, of such organizations as
(1) In order for sealed bidding to be advantageous to the program, with price the Small Business Administration and
feasible, the following conditions and other factors considered; and the Minority Business Development
should be present: (5) The non-Federal entity may use Agency of the Department of Commerce;
(i) A complete, adequate, and realistic competitive proposal procedures for and
specification or purchase description is qualifications-based procurement of (6) Requiring the prime contractor, if
available; architectural/engineering (A/E) subcontracts are to be let, to take the
(ii) Two or more responsible bidders professional services whereby affirmative steps listed in paragraphs (1)
are willing and able to compete competitors’ qualifications are evaluated through (5) of this section.
effectively for the business; and and the most qualified competitor is
§ 200.322 Procurement of recovered
(iii) The procurement lends itself to a selected, subject to negotiation of fair
materials.
firm fixed price contract and the and reasonable compensation. The
method, where price is not used as a A non-Federal entity that is a state
selection of the successful bidder can be agency or agency of a political
made principally on the basis of price. selection factor, can only be used in
procurement of A/E professional subdivision of a state and its contractors
(2) If sealed bids are used, the must comply with section 6002 of the
following requirements apply: services. It cannot be used to purchase
other types of services though A/E firms Solid Waste Disposal Act, as amended
(i) The invitation for bids will be by the Resource Conservation and
publicly advertised and bids must be are a potential source to perform the
proposed effort. Recovery Act. The requirements of
solicited from an adequate number of Section 6002 include procuring only
known suppliers, providing them (f) Procurement by noncompetitive
proposals. Procurement by items designated in guidelines of the
sufficient response time prior to the date Environmental Protection Agency (EPA)
set for opening the bids; noncompetitive proposals is
procurement through solicitation of a at 40 CFR Part 247 that contain the
(ii) The invitation for bids, which will highest percentage of recovered
include any specifications and pertinent proposal from only one source and may
be used only when one or more of the materials practicable, consistent with
attachments, must define the items or maintaining a satisfactory level of
services in order for the bidder to following circumstances apply:
(1) The item is available only from a competition, where the purchase price
properly respond; of the item exceeds $10,000 or the value
(iii) All bids will be publicly opened single source;
(2) The public exigency or emergency of the quantity acquired by the
at the time and place prescribed in the preceding fiscal year exceeded $10,000;
invitation for bids; for the requirement will not permit a
delay resulting from competitive procuring solid waste management
(iv) A firm fixed price contract award services in a manner that maximizes
will be made in writing to the lowest solicitation;
(3) The Federal awarding agency or energy and resource recovery; and
responsive and responsible bidder. establishing an affirmative procurement
Where specified in bidding documents, pass-through entity expressly authorizes
noncompetitive proposals in response to program for procurement of recovered
factors such as discounts, transportation materials identified in the EPA
cost, and life cycle costs must be a written request from the non-Federal
entity; or guidelines.
considered in determining which bid is
lowest. Payment discounts will only be (4) After solicitation of a number of § 200.323 Contract cost and price.
used to determine the low bid when sources, competition is determined
(a) The non-Federal entity must
prior experience indicates that such inadequate.
perform a cost or price analysis in
discounts are usually taken advantage § 200.321 Contracting with small and connection with every procurement
of; and minority businesses, women’s business action in excess of the Simplified
(v) Any or all bids may be rejected if enterprises, and labor surplus area firms. Acquisition Threshold including
there is a sound documented reason. (a) The non-Federal entity must take contract modifications. The method and
(d) Procurement by competitive all necessary affirmative steps to assure degree of analysis is dependent on the
proposals. The technique of competitive that minority businesses, women’s facts surrounding the particular
proposals is normally conducted with business enterprises, and labor surplus procurement situation, but as a starting
more than one source submitting an area firms are used when possible. point, the non-Federal entity must make
offer, and either a fixed price or cost- (b) Affirmative steps must include: independent estimates before receiving
reimbursement type contract is (1) Placing qualified small and bids or proposals.
awarded. It is generally used when minority businesses and women’s (b) The non-Federal entity must
conditions are not appropriate for the business enterprises on solicitation lists; negotiate profit as a separate element of
use of sealed bids. If this method is (2) Assuring that small and minority the price for each contract in which
used, the following requirements apply: businesses, and women’s business there is no price competition and in all
(1) Requests for proposals must be enterprises are solicited whenever they cases where cost analysis is performed.
publicized and identify all evaluation are potential sources; To establish a fair and reasonable profit,
factors and their relative importance. (3) Dividing total requirements, when consideration must be given to the
Any response to publicized requests for economically feasible, into smaller tasks complexity of the work to be performed,
the risk borne by the contractor, the (5) A proposed contract modification (c) A payment bond on the part of the
contractor’s investment, the amount of changes the scope of a contract or contractor for 100 percent of the
subcontracting, the quality of its record increases the contract amount by more contract price. A ‘‘payment bond’’ is one
of past performance, and industry profit than the Simplified Acquisition executed in connection with a contract
rates in the surrounding geographical Threshold. to assure payment as required by law of
area for similar work. (c) The non-Federal entity is exempt all persons supplying labor and material
(c) Costs or prices based on estimated from the pre-procurement review in in the execution of the work provided
costs for contracts under the Federal paragraph (b) of this section if the for in the contract.
award are allowable only to the extent Federal awarding agency or pass-
through entity determines that its § 200.326 Contract provisions.
that costs incurred or cost estimates
included in negotiated prices would be procurement systems comply with the The non-Federal entity’s contracts
allowable for the non-Federal entity standards of this Part. must contain the applicable provisions
under Subpart E—Cost Principles of this (1) The non-Federal entity may described in Appendix II to Part 200—
Part. The non-Federal entity may request that its procurement system be Contract Provisions for non-Federal
reference its own cost principles that reviewed by the Federal awarding Entity Contracts Under Federal Awards.
comply with the Federal cost principles. agency or pass-through entity to Performance and Financial Monitoring
(d) The cost plus a percentage of cost determine whether its system meets and Reporting
and percentage of construction cost these standards in order for its system
methods of contracting must not be to be certified. Generally, these reviews § 200.327 Financial reporting.
used. must occur where there is continuous Unless otherwise approved by OMB,
high-dollar funding, and third party the Federal awarding agency may solicit
§ 200.324 Federal awarding agency or contracts are awarded on a regular basis; only the standard, OMB-approved
pass-through entity review. (2) The non-Federal entity may self- governmentwide data elements for
(a) The non-Federal entity must make certify its procurement system. Such collection of financial information (at
available, upon request of the Federal self-certification must not limit the time of publication the Federal
awarding agency or pass-through entity, Federal awarding agency’s right to Financial Report or such future
technical specifications on proposed survey the system. Under a self- collections as may be approved by OMB
procurements where the Federal certification procedure, the Federal and listed on the OMB Web site). This
awarding agency or pass-through entity awarding agency may rely on written information must be collected with the
believes such review is needed to assurances from the non-Federal entity frequency required by the terms and
ensure that the item or service specified that it is complying with these conditions of the Federal award, but no
is the one being proposed for standards. The non-Federal entity must less frequently than annually nor more
acquisition. This review generally will cite specific policies, procedures, frequently than quarterly except in
take place prior to the time the regulations, or standards as being in unusual circumstances, for example
specification is incorporated into a compliance with these requirements where more frequent reporting is
solicitation document. However, if the and have its system available for review. necessary for the effective monitoring of
non-Federal entity desires to have the the Federal award or could significantly
review accomplished after a solicitation § 200.325 Bonding requirements.
affect program outcomes, and preferably
has been developed, the Federal For construction or facility in coordination with performance
awarding agency or pass-through entity improvement contracts or subcontracts reporting.
may still review the specifications, with exceeding the Simplified Acquisition
such review usually limited to the Threshold, the Federal awarding agency 200.328 Monitoring and reporting program
technical aspects of the proposed or pass-through entity may accept the performance.
purchase. bonding policy and requirements of the (a) Monitoring by the non-Federal
(b) The non-Federal entity must make non-Federal entity provided that the entity. The non-Federal entity is
available upon request, for the Federal Federal awarding agency or pass- responsible for oversight of the
awarding agency or pass-through entity through entity has made a operations of the Federal award
pre-procurement review, procurement determination that the Federal interest supported activities. The non-Federal
documents, such as requests for is adequately protected. If such a entity must monitor its activities under
proposals or invitations for bids, or determination has not been made, the Federal awards to assure compliance
independent cost estimates, when: minimum requirements must be as with applicable Federal requirements
(1) The non-Federal entity’s follows: and performance expectations are being
procurement procedures or operation (a) A bid guarantee from each bidder achieved. Monitoring by the non-
fails to comply with the procurement equivalent to five percent of the bid Federal entity must cover each program,
standards in this Part; price. The ‘‘bid guarantee’’ must consist function or activity. See also § 200.331
(2) The procurement is expected to of a firm commitment such as a bid Requirements for pass-through entities.
exceed the Simplified Acquisition bond, certified check, or other (b) Non-construction performance
Threshold and is to be awarded without negotiable instrument accompanying a reports. The Federal awarding agency
competition or only one bid or offer is bid as assurance that the bidder will, must use standard, OMB-approved data
received in response to a solicitation; upon acceptance of the bid, execute elements for collection of performance
(3) The procurement, which is such contractual documents as may be information (including performance
expected to exceed the Simplified required within the time specified. progress reports, Research Performance
Acquisition Threshold, specifies a (b) A performance bond on the part of Progress Report, or such future
‘‘brand name’’ product; the contractor for 100 percent of the collections as may be approved by OMB
(4) The proposed contract is more contract price. A ‘‘performance bond’’ is and listed on the OMB Web site).
than the Simplified Acquisition one executed in connection with a (1) The non-Federal entity must
Threshold and is to be awarded to other contract to secure fulfillment of all the submit performance reports at the
than the apparent low bidder under a contractor’s obligations under such interval required by the Federal
sealed bid procurement; or contract. awarding agency or pass-through entity
to best inform improvements in program significant impact upon the supported guidance does not conflict with this
outcomes and productivity. Intervals activity. In such cases, the non-Federal section.
must be no less frequent than annually entity must inform the Federal awarding (a) Subrecipients. A subaward is for
nor more frequent than quarterly except agency or pass-through entity as soon as the purpose of carrying out a portion of
in unusual circumstances, for example the following types of conditions a Federal award and creates a Federal
where more frequent reporting is become known: assistance relationship with the
necessary for the effective monitoring of (1) Problems, delays, or adverse subrecipient. See § 200.92 Subaward.
the Federal award or could significantly conditions which will materially impair Characteristics which support the
affect program outcomes. Annual the ability to meet the objective of the classification of the non-Federal entity
reports must be due 90 calendar days Federal award. This disclosure must as a subrecipient include when the non-
after the reporting period; quarterly or include a statement of the action taken, Federal entity:
semiannual reports must be due 30 or contemplated, and any assistance (1) Determines who is eligible to
calendar days after the reporting period. needed to resolve the situation. receive what Federal assistance;
Alternatively, the Federal awarding (2) Favorable developments which (2) Has its performance measured in
agency or pass-through entity may enable meeting time schedules and relation to whether objectives of a
require annual reports before the objectives sooner or at less cost than Federal program were met;
anniversary dates of multiple year anticipated or producing more or (3) Has responsibility for
Federal awards. The final performance different beneficial results than programmatic decision making;
report will be due 90 calendar days after originally planned. (4) Is responsible for adherence to
the period of performance end date. If (e) The Federal awarding agency may applicable Federal program
a justified request is submitted by a non- make site visits as warranted by requirements specified in the Federal
Federal entity, the Federal agency may program needs. award; and
extend the due date for any performance (f) The Federal awarding agency may (5) In accordance with its agreement,
report. waive any performance report required uses the Federal funds to carry out a
(2) The non-Federal entity must by this Part if not needed. program for a public purpose specified
submit performance reports using OMB- § 200.329 Reporting on real property. in authorizing statute, as opposed to
approved governmentwide standard providing goods or services for the
The Federal awarding agency or pass-
information collections when providing benefit of the pass-through entity.
through entity must require a non-
performance information. As (b) Contractors. A contract is for the
Federal entity to submit reports at least
appropriate in accordance with above purpose of obtaining goods and services
annually on the status of real property
mentioned information collections, for the non-Federal entity’s own use and
in which the Federal government retains
these reports will contain, for each creates a procurement relationship with
an interest, unless the Federal interest
Federal award, brief information on the the contractor. See § 200.22 Contract.
in the real property extends 15 years or
following unless other collections are Characteristics indicative of a
longer. In those instances where the
approved by OMB: procurement relationship between the
(i) A comparison of actual Federal interest attached is for a period
of 15 years or more, the Federal non-Federal entity and a contractor are
accomplishments to the objectives of the when the non-Federal entity receiving
Federal award established for the awarding agency or pass-through entity,
at its option, may require the non- the Federal funds:
period. Where the accomplishments of (1) Provides the goods and services
the Federal award can be quantified, a Federal entity to report at various multi-
year frequencies (e.g., every two years or within normal business operations;
computation of the cost (for example, (2) Provides similar goods or services
related to units of accomplishment) may every three years, not to exceed a five-
to many different purchasers;
be required if that information will be year reporting period; or a Federal
(3) Normally operates in a competitive
useful. Where performance trend data awarding agency or pass-through entity
environment;
and analysis would be informative to may require annual reporting for the
(4) Provides goods or services that are
the Federal awarding agency program, first three years of a Federal award and
ancillary to the operation of the Federal
the Federal awarding agency should thereafter require reporting every five
program; and
include this as a performance reporting years). (5) Is not subject to compliance
requirement. Subrecipient Monitoring and requirements of the Federal program as
(ii) The reasons why established goals Management a result of the agreement, though similar
were not met, if appropriate. requirements may apply for other
(iii) Additional pertinent information § 200.330 Subrecipient and contractor reasons.
including, when appropriate, analysis determinations.
(c) Use of judgment in making
and explanation of cost overruns or high The non-Federal entity may determination. In determining whether
unit costs. concurrently receive Federal awards as an agreement between a pass-through
(c) Construction performance reports. a recipient, a subrecipient, and a entity and another non-Federal entity
For the most part, onsite technical contractor, depending on the substance casts the latter as a subrecipient or a
inspections and certified percentage of of its agreements with Federal awarding contractor, the substance of the
completion data are relied on heavily by agencies and pass-through entities. relationship is more important than the
Federal awarding agencies and pass- Therefore, a pass-through entity must form of the agreement. All of the
through entities to monitor progress make case-by-case determinations characteristics listed above may not be
under Federal awards and subawards whether each agreement it makes for the present in all cases, and the pass-
for construction. The Federal awarding disbursement of Federal program funds
through entity must use judgment in

agency may require additional casts the party receiving the funds in the classifying each agreement as a
performance reports only when role of a subrecipient or a contractor. subaward or a procurement contract.
considered necessary. The Federal awarding agency may
(d) Significant developments. Events supply and require recipients to comply § 200.331 Requirements for pass-through
may occur between the scheduled with additional guidance to support entities.
performance reporting dates that have these determinations provided such All pass-through entities must:
(a) Ensure that every subaward is (in compliance with this Part), or a de (3) Issuing a management decision for
clearly identified to the subrecipient as minimis indirect cost rate as defined in audit findings pertaining to the Federal
a subaward and includes the following § 200.414 Indirect (F&A) costs, award provided to the subrecipient from
information at the time of the subaward paragraph (b) of this Part. the pass-through entity as required by
and if any of these data elements (5) A requirement that the § 200.521 Management decision.
change, include the changes in subrecipient permit the pass-through (e) Depending upon the pass-through
subsequent subaward modification. entity and auditors to have access to the entity’s assessment of risk posed by the
When some of this information is not subrecipient’s records and financial subrecipient (as described in paragraph
available, the pass-through entity must statements as necessary for the pass- (b) of this section), the following
provide the best information available to through entity to meet the requirements monitoring tools may be useful for the
describe the Federal award and of this section, §§ 200.300 Statutory and pass-through entity to ensure proper
subaward. Required information national policy requirements through accountability and compliance with
includes: 200.309 Period of performance, and program requirements and achievement
(1) Federal Award Identification. Subpart F—Audit Requirements of this of performance goals:
(i) Subrecipient name (which must Part; and (1) Providing subrecipients with
match registered name in DUNS); (6) Appropriate terms and conditions training and technical assistance on
(ii) Subrecipient’s DUNS number (see concerning closeout of the subaward. program-related matters; and
§ 200.32 Data Universal Numbering (b) Evaluate each subrecipient’s risk (2) Performing on-site reviews of the
System (DUNS) number); of noncompliance with Federal statutes, subrecipient’s program operations;
(iii) Federal Award Identification regulations, and the terms and (3) Arranging for agreed-upon-
Number (FAIN); conditions of the subaward for purposes procedures engagements as described in
(iv) Federal Award Date (see § 200.39 of determining the appropriate § 200.425 Audit services.
Federal award date); subrecipient monitoring described in (f) Verify that every subrecipient is
(v) Subaward Period of Performance paragraph (e) of this section, which may audited as required by Subpart F—
Start and End Date; include consideration of such factors as: Audit Requirements of this Part when it
(vi) Amount of Federal Funds (1) The subrecipient’s prior is expected that the subrecipient’s
Obligated by this action; experience with the same or similar Federal awards expended during the
(vii) Total Amount of Federal Funds subawards; respective fiscal year equaled or
Obligated to the subrecipient; (2) The results of previous audits exceeded the threshold set forth in
(viii) Total Amount of the Federal including whether or not the § 200.501 Audit requirements.
Award; subrecipient receives a Single Audit in (g) Consider whether the results of the
(ix) Federal award project description, accordance with Subpart F—Audit subrecipient’s audits, on-site reviews, or
as required to be responsive to the Requirements of this Part, and the other monitoring indicate conditions
Federal Funding Accountability and extent to which the same or similar that necessitate adjustments to the pass-
Transparency Act (FFATA); subaward has been audited as a major through entity’s own records.
(x) Name of Federal awarding agency, program; (h) Consider taking enforcement
pass-through entity, and contact (3) Whether the subrecipient has new action against noncompliant
information for awarding official, personnel or new or substantially subrecipients as described in § 200.338
(xi) CFDA Number and Name; the changed systems; and Remedies for noncompliance of this Part
pass-through entity must identify the (4) The extent and results of Federal and in program regulations.
dollar amount made available under awarding agency monitoring (e.g., if the
§ 200.332 Fixed amount subawards.
each Federal award and the CFDA subrecipient also receives Federal
number at time of disbursement; awards directly from a Federal awarding With prior written approval from the
(xii) Identification of whether the agency). Federal awarding agency, a pass-
award is R&D; and (c) Consider imposing specific through entity may provide subawards
(xiii) Indirect cost rate for the Federal subaward conditions upon a based on fixed amounts up to the
award (including if the de minimis rate subrecipient if appropriate as described Simplified Acquisition Threshold,
is charged per § 200.414 Indirect (F&A) in § 200.207 Specific conditions. provided that the subawards meet the
costs). (d) Monitor the activities of the requirements for fixed amount awards
(2) All requirements imposed by the subrecipient as necessary to ensure that in § 200.201 Use of grant agreements
pass-through entity on the subrecipient the subaward is used for authorized (including fixed amount awards),
so that the Federal award is used in purposes, in compliance with Federal cooperative agreements, and contracts.
accordance with Federal statutes, statutes, regulations, and the terms and Record Retention and Access
regulations and the terms and conditions of the subaward; and that
conditions of the Federal award. subaward performance goals are § 200.333 Retention requirements for
(3) Any additional requirements that achieved. Pass-through entity records.
the pass-through entity imposes on the monitoring of the subrecipient must Financial records, supporting
subrecipient in order for the pass- include: documents, statistical records, and all
through entity to meet its own (1) Reviewing financial and other non-Federal entity records
responsibility to the Federal awarding programmatic reports required by the pertinent to a Federal award must be
agency including identification of any pass-through entity. retained for a period of three years from
required financial and performance (2) Following-up and ensuring that the date of submission of the final
reports; the subrecipient takes timely and expenditure report or, for Federal
(4) An approved federally recognized appropriate action on all deficiencies awards that are renewed quarterly or
indirect cost rate negotiated between the pertaining to the Federal award annually, from the date of the
subrecipient and the Federal provided to the subrecipient from the submission of the quarterly or annual
government or, if no such rate exists, pass-through entity detected through financial report, respectively, as
either a rate negotiated between the audits, on-site reviews, and other reported to the Federal awarding agency
pass-through entity and the subrecipient means. or pass-through entity in the case of a
subrecipient. Federal awarding agencies § 200.334 Requests for transfer of records. of a crime is necessary, appropriate
and pass-through entities must not The Federal awarding agency must steps to protect this sensitive
impose any other record retention request transfer of certain records to its information must be taken by both the
requirements upon non-Federal entities. custody from the non-Federal entity non-Federal entity and the Federal
The only exceptions are the following: when it determines that the records awarding agency. Any such access,
(a) If any litigation, claim, or audit is possess long-term retention value. other than under a court order or
started before the expiration of the 3- However, in order to avoid duplicate subpoena pursuant to a bona fide
year period, the records must be recordkeeping, the Federal awarding confidential investigation, must be
retained until all litigation, claims, or agency may make arrangements for the approved by the head of the Federal
audit findings involving the records non-Federal entity to retain any records awarding agency or delegate.
have been resolved and final action that are continuously needed for joint (c) Expiration of right of access. The
taken. use. rights of access in this section are not
(b) When the non-Federal entity is limited to the required retention period
notified in writing by the Federal § 200.335 Methods for collection, but last as long as the records are
awarding agency, cognizant agency for transmission and storage of information. retained. Federal awarding agencies and
audit, oversight agency for audit, In accordance with the May 2013 pass-through entities must not impose
cognizant agency for indirect costs, or Executive Order on Making Open and any other access requirements upon
pass-through entity to extend the Machine Readable the New Default for non-Federal entities.
retention period. Government Information, the Federal
(c) Records for real property and awarding agency and the non-Federal § 200.337 Restrictions on public access to
equipment acquired with Federal funds entity should, whenever practicable, records
must be retained for 3 years after final collect, transmit, and store Federal No Federal awarding agency may
disposition. award-related information in open and place restrictions on the non-Federal
(d) When records are transferred to or machine readable formats rather than in entity that limit public access to the
maintained by the Federal awarding closed formats or on paper. The Federal records of the non-Federal entity
agency or pass-through entity, the 3-year awarding agency or pass-through entity pertinent to a Federal award, except for
retention requirement is not applicable must always provide or accept paper protected personally identifiable
to the non-Federal entity. versions of Federal award-related information (PII) or when the Federal
(e) Records for program income information to and from the non-Federal awarding agency can demonstrate that
transactions after the period of entity upon request. If paper copies are such records will be kept confidential
performance. In some cases recipients submitted, the Federal awarding agency and would have been exempted from
must report program income after the or pass-through entity must not require disclosure pursuant to the Freedom of
period of performance. Where there is more than an original and two copies. Information Act (5 U.S.C. 552) or
such a requirement, the retention period When original records are electronic controlled unclassified information
for the records pertaining to the earning and cannot be altered, there is no need pursuant to Executive Order 13556 if
of the program income starts from the to create and retain paper copies. When the records had belonged to the Federal
end of the non-Federal entity’s fiscal original records are paper, electronic awarding agency. The Freedom of
year in which the program income is versions may be substituted through the Information Act (5 U.S.C. 552) (FOIA)
earned. use of duplication or other forms of does not apply to those records that
(f) Indirect cost rate proposals and electronic media provided that they are remain under a non-Federal entity’s
cost allocations plans. This paragraph subject to periodic quality control control except as required under
applies to the following types of reviews, provide reasonable safeguards § 200.315 Intangible property. Unless
documents and their supporting against alteration, and remain readable. required by Federal, state, or local
records: indirect cost rate computations statute, non-Federal entities are not
or proposals, cost allocation plans, and § 200.336 Access to records. required to permit public access to their
any similar accounting computations of (a) Records of non-Federal entities. records. The non-Federal entity’s
the rate at which a particular group of The Federal awarding agency, records provided to a Federal agency
costs is chargeable (such as computer Inspectors General, the Comptroller generally will be subject to FOIA and
usage chargeback rates or composite General of the United States, and the applicable exemptions.
fringe benefit rates). pass-through entity, or any of their Remedies for Noncompliance
(1) If submitted for negotiation. If the authorized representatives, must have
proposal, plan, or other computation is the right of access to any documents, § 200.338 Remedies for noncompliance.
required to be submitted to the Federal papers, or other records of the non- If a non-Federal entity fails to comply
government (or to the pass-through Federal entity which are pertinent to the with Federal statutes, regulations or the
entity) to form the basis for negotiation Federal award, in order to make audits, terms and conditions of a Federal
of the rate, then the 3-year retention examinations, excerpts, and transcripts. award, the Federal awarding agency or
period for its supporting records starts The right also includes timely and pass-through entity may impose
from the date of such submission. reasonable access to the non-Federal additional conditions, as described in
(2) If not submitted for negotiation. If entity’s personnel for the purpose of § 200.207 Specific conditions. If the
the proposal, plan, or other computation interview and discussion related to such Federal awarding agency or pass-
is not required to be submitted to the documents. through entity determines that
Federal government (or to the pass- (b) Only under extraordinary and rare noncompliance cannot be remedied by
through entity) for negotiation purposes, circumstances would such access imposing additional conditions, the
then the 3-year retention period for the include review of the true name of Federal awarding agency or pass-
proposal, plan, or computation and its victims of a crime. Routine monitoring through entity may take one or more of
supporting records starts from the end cannot be considered extraordinary and the following actions, as appropriate in
of the fiscal year (or other accounting rare circumstances that would the circumstances:
period) covered by the proposal, plan, necessitate access to this information. (a) Temporarily withhold cash
or other computation. When access to the true name of victims payments pending correction of the
deficiency by the non-Federal entity or § 200.340 Notification of termination expired normally at the end of the
more severe enforcement action by the requirement. period of performance in which the
Federal awarding agency or pass- (a) The Federal agency or pass- termination takes effect.
through entity. through entity must provide to the non-
Closeout
(b) Disallow (that is, deny both use of Federal entity a notice of termination.
funds and any applicable matching (b) If the Federal award is terminated § 200.343 Closeout.
credit for) all or part of the cost of the for the non-Federal entity’s failure to The Federal agency or pass-through
activity or action not in compliance. comply with the Federal statutes, entity will close-out the Federal award
regulations, or terms and conditions of when it determines that all applicable
(c) Wholly or partly suspend or the Federal award, the notification must administrative actions and all required
terminate the Federal award. state that the termination decision may work of the Federal award have been
(d) Initiate suspension or debarment be considered in evaluating future completed by the non-Federal entity.
proceedings as authorized under 2 CFR applications received from the non- This section specifies the actions the
Part 180 and Federal awarding agency Federal entity. non-Federal entity and Federal
regulations (or in the case of a pass- (c) Upon termination of a Federal awarding agency or pass-through entity
through entity, recommend such a award, the Federal awarding agency must take to complete this process at the
proceeding be initiated by a Federal must provide the information required end of the period of performance.
awarding agency). under FFATA to the Federal Web site (a) The non-Federal entity must
(e) Withhold further Federal awards established to fulfill the requirements of submit, no later than 90 calendar days
for the project or program. FFATA, and update or notify any other after the end date of the period of
relevant governmentwide systems or performance, all financial, performance,
(f) Take other remedies that may be entities of any indications of poor and other reports as required by or the
legally available. performance as required by 41 U.S.C. terms and conditions of the Federal
§ 200.339 Termination 417b and 31 U.S.C. 3321 and award. The Federal awarding agency or
implementing guidance at 2 CFR Part pass-through entity may approve
(a) The Federal award may be 77. See also the requirements for extensions when requested by the non-
terminated in whole or in part as Suspension and Debarment at 2 CFR Federal entity.
follows: Part 180. (b) Unless the Federal awarding
(1) By the Federal awarding agency or agency or pass-through entity authorizes
§ 200.341 Opportunities to object, an extension, a non-Federal entity must
pass-through entity, if a non-Federal hearings and appeals.
entity fails to comply with the terms liquidate all obligations incurred under
and conditions of a Federal award; Upon taking any remedy for non- the Federal award not later than 90
compliance, the Federal awarding calendar days after the end date of the
(2) By the Federal awarding agency or agency must provide the non-Federal period of performance as specified in
pass-through entity for cause; entity an opportunity to object and the terms and conditions of the Federal
(3) By the Federal awarding agency or provide information and documentation award.
pass-through entity with the consent of challenging the suspension or (c) The Federal awarding agency or
the non-Federal entity, in which case termination action, in accordance with pass-through entity must make prompt
the two parties must agree upon the written processes and procedures payments to the non-Federal entity for
termination conditions, including the published by the Federal awarding allowable reimbursable costs under the
effective date and, in the case of partial agency. The Federal awarding agency or Federal award being closed out.
termination, the portion to be pass-through entity must comply with (d) The non-Federal entity must
terminated; or any requirements for hearings, appeals promptly refund any balances of
(4) By the non-Federal entity upon or other administrative proceedings unobligated cash that the Federal
sending to the Federal awarding agency which the non-Federal entity is entitled awarding agency or pass-through entity
or pass-through entity written under any statute or regulation paid in advance or paid and that is not
notification setting forth the reasons for applicable to the action involved. authorized to be retained by the non-
such termination, the effective date, Federal entity for use in other projects.
§ 200.342 Effects of suspension and See OMB Circular A–129 and see
and, in the case of partial termination, termination. § 200.345 Collection of amounts due for
the portion to be terminated. However, Costs to the non-Federal entity requirements regarding unreturned
if the Federal awarding agency or pass- resulting from obligations incurred by amounts that become delinquent debts.
through entity determines in the case of the non-Federal entity during a (e) Consistent with the terms and
partial termination that the reduced or suspension or after termination of a conditions of the Federal award, the
modified portion of the Federal award Federal award or subaward are not Federal awarding agency or pass-
or subaward will not accomplish the allowable unless the Federal awarding through entity must make a settlement
purposes for which the Federal award agency or pass-through entity expressly for any upward or downward
was made, the Federal awarding agency authorizes them in the notice of adjustments to the Federal share of costs
or pass-through entity may terminate suspension or termination or after closeout reports are received.
the Federal award in its entirety. subsequently. However, costs during (f) The non-Federal entity must
(b) When a Federal award is suspension or after termination are account for any real and personal
terminated or partially terminated, both allowable if: property acquired with Federal funds or
the Federal awarding agency or pass- (a) The costs result from obligations received from the Federal government
through entity and the non-Federal which were properly incurred by the in accordance with §§ 200.310
entity remain responsible for non-Federal entity before the effective Insurance coverage through 200.316
compliance with the requirements in date of suspension or termination, are Property trust relationship and 200.329
§§ 200.343 Closeout and 200.344 Post- not in anticipation of it; and Reporting on real property.
closeout adjustments and continuing (b) The costs would be allowable if (g) The Federal awarding agency or
responsibilities. the Federal award was not suspended or pass-through entity should complete all
closeout actions for Federal awards no (2) Withholding advance payments See § 200.56 Indirect (facilities &
later than one year after receipt and otherwise due to the non-Federal entity; administrative (F&A)) costs.
acceptance of all required final reports. or (f) For non-Federal entities that
(3) Other action permitted by Federal educate and engage students in
Post-Closeout Adjustments and research, the dual role of students as
statute.
Continuing Responsibilities both trainees and employees
(b) Except where otherwise provided
§ 200.344 Post-closeout adjustments and by statutes or regulations, the Federal contributing to the completion of
continuing responsibilities. awarding agency will charge interest on Federal awards for research must be
(a) The closeout of a Federal award an overdue debt in accordance with the recognized in the application of these
does not affect any of the following. Federal Claims Collection Standards (31 principles.
CFR Parts 900 through 999). The date (g) The non-Federal entity may not
(1) The right of the Federal awarding
from which interest is computed is not earn or keep any profit resulting from
agency or pass-through entity to
extended by litigation or the filing of Federal financial assistance, unless
disallow costs and recover funds on the
any form of appeal. expressly authorized by the terms and
basis of a later audit or other review.
conditions of the Federal award. See
The Federal awarding agency or pass- Subpart E—Cost Principles also § 200.307 Program income.
through entity must make any cost
disallowance determination and notify General Provisions § 200.401 Application.
the non-Federal entity within the record (a) General. These principles must be
retention period. § 200.400 Policy guide.
used in determining the allowable costs
(2) The obligation of the non-Federal The application of these cost of work performed by the non-Federal
entity to return any funds due as a result principles is based on the fundamental entity under Federal awards. These
of later refunds, corrections, or other premises that: principles also must be used by the non-
transactions including final indirect cost (a) The non-Federal entity is Federal entity as a guide in the pricing
rate adjustments. responsible for the efficient and of fixed-price contracts and subcontracts
(3) Audit requirements in Subpart F— effective administration of the Federal where costs are used in determining the
Audit Requirements of this Part. award through the application of sound appropriate price. The principles do not
(4) Property management and management practices. apply to:
disposition requirements in Subpart D— (b) The non-Federal entity assumes (1) Arrangements under which
Post Federal Award Requirements of responsibility for administering Federal Federal financing is in the form of loans,
this Part, §§ 200.310 Insurance Coverage funds in a manner consistent with scholarships, fellowships, traineeships,
through 200.316 Property trust underlying agreements, program or other fixed amounts based on such
relationship. objectives, and the terms and conditions items as education allowance or
of the Federal award. published tuition rates and fees.
(5) Records retention as required in
(c) The non-Federal entity, in (2) For IHEs, capitation awards, which
Subpart D—Post Federal Award
recognition of its own unique are awards based on case counts or
Requirements of this Part, §§ 200.333
combination of staff, facilities, and number of beneficiaries according to the
Retention requirements for records
experience, has the primary terms and conditions of the Federal
through 200.337 Restrictions on public
responsibility for employing whatever award.
access to records.
form of sound organization and (3) Fixed amount awards. See also
(b) After closeout of the Federal management techniques may be
award, a relationship created under the Subpart A—Acronyms and Definitions,
necessary in order to assure proper and §§ 200.45 Fixed amount awards and
Federal award may be modified or efficient administration of the Federal
ended in whole or in part with the 200.201 Use of grant agreements
award. (including fixed amount awards),
consent of the Federal awarding agency (d) The application of these cost
or pass-through entity and the non- cooperative agreements, and contracts.
principles should require no significant (4) Federal awards to hospitals (see
Federal entity, provided the changes in the internal accounting
responsibilities of the non-Federal Appendix IX to Part 200—Hospital Cost
policies and practices of the non- Principles).
entity referred to in paragraph (a) of this Federal entity. However, the accounting (5) Other awards under which the
section including those for property practices of the non-Federal entity must non-Federal entity is not required to
management as applicable, are be consistent with these cost principles account to the Federal government for
considered and provisions made for and support the accumulation of costs actual costs incurred.
continuing responsibilities of the non- as required by the principles, and must (b) Federal Contract. Where a Federal
Federal entity, as appropriate. provide for adequate documentation to contract awarded to a non-Federal entity
Collection of Amounts Due support costs charged to the Federal is subject to the Cost Accounting
award. Standards (CAS), it incorporates the
§ 200.345 Collection of amounts due. (e) In reviewing, negotiating and applicable CAS clauses, Standards, and
(a) Any funds paid to the non-Federal approving cost allocation plans or CAS administration requirements per
entity in excess of the amount to which indirect cost proposals, the cognizant the 48 CFR Chapter 99 and 48 CFR Part
the non-Federal entity is finally agency for indirect costs should 30 (FAR Part 30). CAS applies directly
determined to be entitled under the generally assure that the non-Federal to the CAS-covered contract and the
terms of the Federal award constitute a entity is applying these cost accounting Cost Accounting Standards at 48 CFR
debt to the Federal government. If not principles on a consistent basis during Parts 9904 or 9905 takes precedence
paid within 90 calendar days after their review and negotiation of indirect over the cost principles in this Subpart
demand, the Federal awarding agency cost proposals. Where wide variations E—Cost Principles of this Part with
may reduce the debt by: exist in the treatment of a given cost respect to the allocation of costs. When
(1) Making an administrative offset item by the non-Federal entity, the a contract with a non-Federal entity is
against other requests for reasonableness and equity of such subject to full CAS coverage, the
reimbursements; treatments should be fully considered. allowability of certain costs under the
cost principles will be affected by the circumstances has been allocated to the (2) Benefits both the Federal award
allocation provisions of the Cost Federal award as an indirect cost. and other work of the non-Federal entity
Accounting Standards (e.g., CAS 414— (e) Be determined in accordance with and can be distributed in proportions
48 CFR 9904.414, Cost of Money as an generally accepted accounting that may be approximated using
Element of the Cost of Facilities Capital, principles (GAAP), except, for state and reasonable methods; and
and CAS 417—48 CFR 9904.417, Cost of local governments and Indian tribes (3) Is necessary to the overall
Money as an Element of the Cost of only, as otherwise provided for in this operation of the non-Federal entity and
Capital Assets Under Construction), Part. is assignable in part to the Federal
apply rather the allowability provisions (f) Not be included as a cost or used award in accordance with the principles
of § 200.449 Interest. In complying with to meet cost sharing or matching in this subpart.
those requirements, the non-Federal requirements of any other federally- (b) All activities which benefit from
entity’s application of cost accounting financed program in either the current the non-Federal entity’s indirect (F&A)
practices for estimating, accumulating, or a prior period. See also § 200.306 cost, including unallowable activities
and reporting costs for other Federal Cost sharing or matching paragraph (b). and donated services by the non-Federal
awards and other cost objectives under (g) Be adequately documented. See entity or third parties, will receive an
the CAS-covered contract still must be also §§ 200.300 Statutory and national appropriate allocation of indirect costs.
consistent with its cost accounting policy requirements through 200.309 (c) Any cost allocable to a particular
practices for the CAS-covered contracts. Period of performance of this Part. Federal award under the principles
In all cases, only one set of accounting provided for in this Part may not be
§ 200.404 Reasonable costs.
records needs to be maintained for the charged to other Federal awards to
A cost is reasonable if, in its nature overcome fund deficiencies, to avoid
allocation of costs by the non-Federal and amount, it does not exceed that
entity. restrictions imposed by Federal statutes,
which would be incurred by a prudent regulations, or terms and conditions of
(c) Exemptions. Some nonprofit person under the circumstances
organizations, because of their size and the Federal awards, or for other reasons.
prevailing at the time the decision was However, this prohibition would not
nature of operations, can be considered made to incur the cost. The question of
to be similar to for-profit entities for preclude the non-Federal entity from
reasonableness is particularly important shifting costs that are allowable under
purpose of applicability of cost when the non-Federal entity is
principles. Such nonprofit organizations two or more Federal awards in
predominantly federally-funded. In accordance with existing Federal
must operate under Federal cost determining reasonableness of a given
principles applicable to for-profit statutes, regulations, or the terms and
cost, consideration must be given to: conditions of the Federal awards.
entities located at 48 CFR 31.2. A listing (a) Whether the cost is of a type (d) Direct cost allocation principles. If
of these organizations is contained in generally recognized as ordinary and a cost benefits two or more projects or
Appendix VIII to Part 200—Nonprofit necessary for the operation of the non-
activities in proportions that can be
Organizations Exempted From Subpart Federal entity or the proper and
determined without undue effort or
E—Cost Principles of this Part. Other efficient performance of the Federal
cost, the cost should be allocated to the
organizations, as approved by the award.
(b) The restraints or requirements projects based on the proportional
cognizant agency for indirect costs, may
imposed by such factors as: sound benefit. If a cost benefits two or more
be added from time to time.
business practices; arm’s-length projects or activities in proportions that
Basic Considerations cannot be determined because of the
bargaining; Federal, state and other laws
and regulations; and terms and interrelationship of the work involved,
§ 200.402 Composition of costs.
conditions of the Federal award. then, notwithstanding paragraph (c) of
Total cost. The total cost of a Federal this section, the costs may be allocated
(c) Market prices for comparable
award is the sum of the allowable direct or transferred to benefitted projects on
goods or services for the geographic
and allocable indirect costs less any any reasonable documented basis.
area.
applicable credits. (d) Whether the individuals Where the purchase of equipment or
§ 200.403 Factors affecting allowability of concerned acted with prudence in the other capital asset is specifically
costs. circumstances considering their authorized under a Federal award, the
responsibilities to the non-Federal costs are assignable to the Federal award
Except where otherwise authorized by
entity, its employees, where applicable regardless of the use that may be made
statute, costs must meet the following
its students or membership, the public of the equipment or other capital asset
general criteria in order to be allowable
at large, and the Federal government. involved when no longer needed for the
under Federal awards:
(e) Whether the non-Federal entity purpose for which it was originally
(a) Be necessary and reasonable for
significantly deviates from its required. See also §§ 200.310 Insurance
the performance of the Federal award
established practices and policies coverage through 200.316 Property trust
and be allocable thereto under these
regarding the incurrence of costs, which relationship and 200.439 Equipment
principles.
may unjustifiably increase the Federal and other capital expenditures.
(b) Conform to any limitations or award’s cost. (e) If the contract is subject to CAS,
exclusions set forth in these principles costs must be allocated to the contract
or in the Federal award as to types or § 200.405 Allocable costs. pursuant to the Cost Accounting
amount of cost items. (a) A cost is allocable to a particular Standards. To the extent that CAS is
(c) Be consistent with policies and Federal award or other cost objective if applicable, the allocation of costs in
procedures that apply uniformly to both the goods or services involved are
accordance with CAS takes precedence

federally-financed and other activities of chargeable or assignable to that Federal over the allocation provisions in this
the non-Federal entity. award or cost objective in accordance Part.
(d) Be accorded consistent treatment. with relative benefits received. This
A cost may not be assigned to a Federal standard is met if the cost: § 200.406 Applicable credits.
award as a direct cost if any other cost (1) Is incurred specifically for the (a) Applicable credits refer to those
incurred for the same purpose in like Federal award; receipts or reduction-of-expenditure-
type transactions that offset or reduce (h) § 200.431 Compensation—fringe awarding agency, cognizant agency for
expense items allocable to the Federal benefits; indirect costs, or pass-through entity,
award as direct or indirect (F&A) costs. (i) § 200.438 Entertainment costs; either as direct or indirect costs, must be
Examples of such transactions are: (j) § 200.439 Equipment and other refunded (including interest) to the
purchase discounts, rebates or capital expenditures; Federal government in accordance with
allowances, recoveries or indemnities (k) § 200.440 Exchange rates; instructions from the Federal agency
on losses, insurance refunds or rebates, (l) § 200.441 Fines, penalties, damages that determined the costs are
and adjustments of overpayments or and other settlements; unallowable unless Federal statute or
erroneous charges. To the extent that (m) § 200.442 Fund raising and regulation directs otherwise. See also
such credits accruing to or received by investment management costs; Subpart D—Post Federal Award
the non-Federal entity relate to (n) § 200.445 Goods or services for Requirements of this Part, §§ 200.300
allowable costs, they must be credited to personal use; Statutory and national policy
the Federal award either as a cost (o) § 200.447 Insurance and requirements through 200.309 Period of
reduction or cash refund, as indemnification; performance.
(p) § 200.454 Memberships,
appropriate.
subscriptions, and professional activity § 200.411 Adjustment of previously
(b) In some instances, the amounts
costs, paragraph (c); negotiated indirect (F&A) cost rates
received from the Federal government to (q) § 200.455 Organization costs; containing unallowable costs.
finance activities or service operations (r) § 200.456 Participant support costs; (a) Negotiated indirect (F&A) cost
of the non-Federal entity should be (s) § 200.458 Pre-award costs; rates based on a proposal later found to
treated as applicable credits. (t) § 200.462 Rearrangement and have included costs that:
Specifically, the concept of netting such reconversion costs; (1) Are unallowable as specified by
credit items (including any amounts (u) § 200.467 Selling and marketing Federal statutes, regulations or the terms
used to meet cost sharing or matching costs; and and conditions of a Federal award; or
requirements) should be recognized in (v) § 200.474 Travel costs. (2) Are unallowable because they are
determining the rates or amounts to be not allocable to the Federal award(s),
charged to the Federal award. (See § 200.408 Limitation on allowance of
costs. must be adjusted, or a refund must be
§§ 200.436 Depreciation and 200.468 made, in accordance with the
Specialized service facilities, for areas of The Federal award may be subject to
statutory requirements that limit the requirements of this section. These
potential application in the matter of adjustments or refunds are designed to
Federal financing of activities.) allowability of costs. When the
maximum amount allowable under a correct the proposals used to establish
§ 200.407 Prior written approval (prior limitation is less than the total amount the rates and do not constitute a
approval). determined in accordance with the reopening of the rate negotiation. The
Under any given Federal award, the principles in this Part, the amount not adjustments or refunds will be made
reasonableness and allocability of recoverable under the Federal award regardless of the type of rate negotiated
certain items of costs may be difficult to may not be charged to the Federal (predetermined, final, fixed, or
determine. In order to avoid subsequent award. provisional).
(b) For rates covering a future fiscal
disallowance or dispute based on
§ 200.409 Special considerations. year of the non-Federal entity, the
unreasonableness or nonallocability, the
In addition to the basic considerations unallowable costs will be removed from
non-Federal entity may seek the prior
regarding the allowability of costs the indirect (F&A) cost pools and the
written approval of the cognizant
highlighted in this subtitle, other rates appropriately adjusted.
agency for indirect costs or the Federal
subtitles in this Part describe special (c) For rates covering a past period,
awarding agency in advance of the
considerations and requirements the Federal share of the unallowable
incurrence of special or unusual costs.
applicable to states, local governments, costs will be computed for each year
Prior written approval should include
Indian tribes, and IHEs. In addition, involved and a cash refund (including
the timeframe or scope of the agreement.
certain provisions among the items of interest chargeable in accordance with
The absence of prior written approval
cost in this subpart, are only applicable applicable regulations) will be made to
on any element of cost will not, in itself,
to certain types of non-Federal entities, the Federal government. If cash refunds
affect the reasonableness or allocability
as specified in the following sections: are made for past periods covered by
of that element, unless prior approval is
(a) Direct and Indirect (F&A) Costs provisional or fixed rates, appropriate
specifically required for allowability as
(§§ 200.412 Classification of costs adjustments will be made when the
described under certain circumstances
through 200.415 Required certifications) rates are finalized to avoid duplicate
in the following sections of this Part:
of this subpart; recovery of the unallowable costs by the
(a) § 200.201 Use of grant agreements Federal government.
(including fixed amount awards), (b) Special Considerations for States,
Local Governments and Indian Tribes (d) For rates covering the current
cooperative agreements, and contracts, period, either a rate adjustment or a
paragraph (b)(5); (§§ 200.416 Cost allocation plans and
indirect cost proposals and 200.417 refund, as described in paragraphs (b)
(b) § 200.306 Cost sharing or and (c) of this section, must be required
matching; Interagency service) of this subpart; and
(c) Special Considerations for by the cognizant agency for indirect
(c) § 200.307 Program income; costs. The choice of method must be at
Institutions of Higher Education
(d) § 200.308 Revision of budget and (§§ 200.418 Costs incurred by states and the discretion of the cognizant agency
program plans; for indirect costs, based on its judgment
local governments and 200.419 Cost

(e) § 200.332 Fixed amount accounting standards and disclosure as to which method would be most
subawards; statement) of this subpart. practical.
(f) § 200.413 Direct costs, paragraph (e) The amount or proportion of
(c); § 200.410 Collection of unallowable costs. unallowable costs included in each
(g) § 200.430 Compensation—personal Payments made for costs determined year’s rate will be assumed to be the
services, paragraph (h); to be unallowable by either the Federal same as the amount or proportion of
unallowable costs included in the base approval of the Federal awarding nonprofit organizations, indirect (F&A)
year proposal used to establish the rate. agency; and costs must be classified within two
(4) The costs are not also recovered as broad categories: ‘‘Facilities’’ and
Direct and Indirect (F&A) Costs
indirect costs. ‘‘Administration.’’ ‘‘Facilities’’ is
§ 200.412 Classification of costs. (d) Minor items. Any direct cost of defined as depreciation on buildings,
There is no universal rule for minor amount may be treated as an equipment and capital improvement,
classifying certain costs as either direct indirect (F&A) cost for reasons of interest on debt associated with certain
or indirect (F&A) under every practicality where such accounting buildings, equipment and capital
accounting system. A cost may be direct treatment for that item of cost is improvements, and operations and
with respect to some specific service or consistently applied to all Federal and maintenance expenses.
function, but indirect with respect to the non-Federal cost objectives. ‘‘Administration’’ is defined as general
Federal award or other final cost (e) The costs of certain activities are administration and general expenses
objective. Therefore, it is essential that not allowable as charges to Federal such as the director’s office, accounting,
each item of cost incurred for the same awards. However, even though these personnel and all other types of
purpose be treated consistently in like costs are unallowable for purposes of expenditures not listed specifically
circumstances either as a direct or an computing charges to Federal awards, under one of the subcategories of
indirect (F&A) cost in order to avoid they nonetheless must be treated as ‘‘Facilities’’ (including cross allocations
possible double-charging of Federal direct costs for purposes of determining from other pools, where applicable). For
awards. Guidelines for determining indirect (F&A) cost rates and be nonprofit organizations, library
direct and indirect (F&A) costs charged allocated their equitable share of the expenses are included in the
to Federal awards are provided in this non-Federal entity’s indirect costs if ‘‘Administration’’ category; for
subpart. they represent activities which: institutions of higher education, they
(1) Include the salaries of personnel, are included in the ‘‘Facilities’’
§ 200.413 Direct costs. (2) Occupy space, and category. Major IHEs are defined as
(a) General. Direct costs are those (3) Benefit from the non-Federal those required to use the Standard
costs that can be identified specifically entity’s indirect (F&A) costs. Format for Submission as noted in
with a particular final cost objective, (f) For nonprofit organizations, the Appendix III to Part 200—Indirect
such as a Federal award, or other costs of activities performed by the non- (F&A) Costs Identification and
internally or externally funded activity, Federal entity primarily as a service to Assignment, and Rate Determination for
or that can be directly assigned to such members, clients, or the general public Institutions of Higher Education (IHEs)
activities relatively easily with a high when significant and necessary to the paragraph C. 11. Major nonprofit
degree of accuracy. Costs incurred for non-Federal entity’s mission must be organizations are those which receive
the same purpose in like circumstances treated as direct costs whether or not more than $10 million dollars in direct
must be treated consistently as either allowable, and be allocated an equitable Federal funding.
direct or indirect (F&A) costs. See also share of indirect (F&A) costs. Some (b) Diversity of nonprofit
§ 200.405 Allocable costs. examples of these types of activities organizations. Because of the diverse
(b) Application to Federal awards. include: characteristics and accounting practices
Identification with the Federal award (1) Maintenance of membership rolls, of nonprofit organizations, it is not
rather than the nature of the goods and subscriptions, publications, and related possible to specify the types of cost
services involved is the determining functions. See also § 200.454 which may be classified as indirect
factor in distinguishing direct from Memberships, subscriptions, and (F&A) cost in all situations.
indirect (F&A) costs of Federal awards. professional activity costs. Identification with a Federal award
Typical costs charged directly to a (2) Providing services and information rather than the nature of the goods and
Federal award are the compensation of to members, legislative or services involved is the determining
employees who work on that award, administrative bodies, or the public. See factor in distinguishing direct from
their related fringe benefit costs, the also §§ 200.454 Memberships, indirect (F&A) costs of Federal awards.
costs of materials and other items of subscriptions, and professional activity However, typical examples of indirect
expense incurred for the Federal award. costs and 200.450 Lobbying. (F&A) cost for many nonprofit
If directly related to a specific award, (3) Promotion, lobbying, and other organizations may include depreciation
certain costs that otherwise would be forms of public relations. See also on buildings and equipment, the costs
treated as indirect costs may also §§ 200.421 Advertising and public of operating and maintaining facilities,
include extraordinary utility relations and 200.450 Lobbying. and general administration and general
consumption, the cost of materials (4) Conferences except those held to expenses, such as the salaries and
supplied from stock or services conduct the general administration of expenses of executive officers,
rendered by specialized facilities or the non-Federal entity. See also personnel administration, and
other institutional service operations. § 200.432 Conferences. accounting.
(c) The salaries of administrative and (5) Maintenance, protection, and (c) Federal Agency Acceptance of
clerical staff should normally be treated investment of special funds not used in Negotiated Indirect Cost Rates. (See also
as indirect (F&A) costs. Direct charging operation of the non-Federal entity. § 200.306 Cost sharing or matching.)
of these costs may be appropriate only (6) Administration of group benefits (1) The negotiated rates must be
if all of the following conditions are on behalf of members or clients, accepted by all Federal awarding
met: including life and hospital insurance, agencies. A Federal awarding agency
may use a rate different from the
(1) Administrative or clerical services annuity or retirement plans, and

are integral to a project or activity; financial aid. See also § 200.431 negotiated rate for a class of Federal
(2) Individuals involved can be Compensation—fringe benefits. awards or a single Federal award only
specifically identified with the project when required by Federal statute or
or activity; § 200.414 Indirect (F&A) costs. regulation, or when approved by a
(3) Such costs are explicitly included (a) Facilities and Administration Federal awarding agency head or
in the budget or have the prior written Classification. For major IHEs and major delegate based on documented
justification as described in paragraph such time as a non-Federal entity all indirect (F&A) costs or unilaterally
(c)(3) of this section. chooses to negotiate for a rate, which establish such a plan or rate when the
(2) The Federal awarding agency head the non-Federal entity may apply to do non-Federal entity fails to submit a
or delegate must notify OMB of any at any time. certified proposal for establishing such
approved deviations. (g) Any non-Federal entity that has a a plan or rate in accordance with the
(3) The Federal awarding agency must federally negotiated indirect cost rate requirements. Such a plan or rate may
implement, and make publicly may apply for a one-time extension of be based upon audited historical data or
available, the policies, procedures and a current negotiated indirect cost rates such other data that have been
general decision making criteria that for a period of up to four years. This furnished to the cognizant agency for
their programs will follow to seek and extension will be subject to the review indirect costs and for which it can be
justify deviations from negotiated rates. and approval of the cognizant agency for demonstrated that all unallowable costs
(4) As required under § 200.203 indirect costs. If an extension is granted have been excluded. When a cost
Notices of funding opportunities, the the non-Federal entity may not request allocation plan or indirect cost rate is
Federal awarding agency must include a rate review until the extension period unilaterally established by the Federal
in the notice of funding opportunity the ends. At the end of the 4-year extension, government because the non-Federal
policies relating to indirect cost rate the non-Federal entity must re-apply to entity failed to submit a certified
reimbursement, matching, or cost share negotiate a rate. proposal, the plan or rate established
as approved under paragraph (e)(1) of will be set to ensure that potentially
this section. As appropriate, the Federal § 200.415 Required certifications.
unallowable costs will not be
agency should incorporate discussion of Required certifications include:
(a) To assure that expenditures are reimbursed.
these policies into Federal awarding (c) Certifications by non-profit
agency outreach activities with non- proper and in accordance with the terms
and conditions of the Federal award and organizations as appropriate that they
Federal entities prior to the posting of did not meet the definition of a major
a notice of funding opportunity. approved project budgets, the annual
and final fiscal reports or vouchers corporation as defined in § 200.414
(d) Pass-through entities are subject to Indirect (F&A) costs, paragraph (a).
the requirements in § 200.331 requesting payment under the
agreements must include a certification, (d) See also § 200.450 Lobbying for
Requirements for pass-through entities, another required certification.
paragraph (a)(4). signed by an official who is authorized
(e) Requirements for development and to legally bind the non-Federal entity, Special Considerations for States, Local
submission of indirect (F&A) cost rate which reads as follows: ‘‘By signing this Governments and Indian Tribes
proposals and cost allocation plans are report, I certify to the best of my
knowledge and belief that the report is § 200.416 Cost allocation plans and
contained in Appendices III–VII as indirect cost proposals.
follows: true, complete, and accurate, and the
(1) Appendix III to Part 200—Indirect expenditures, disbursements and cash (a) For states, local governments and
(F&A) Costs Identification and receipts are for the purposes and Indian tribes, certain services, such as
Assignment, and Rate Determination for objectives set forth in the terms and motor pools, computer centers,
(2) Appendix IV to Part 200—Indirect conditions of the Federal award. I am purchasing, accounting, etc., are
(F&A) Costs Identification and aware that any false, fictitious, or provided to operating agencies on a
Assignment, and Rate Determination for fraudulent information, or the omission centralized basis. Since Federal awards
Nonprofit Organizations; of any material fact, may subject me to are performed within the individual
(3) Appendix V to Part 200—State/ criminal, civil or administrative operating agencies, there needs to be a
Local Government and Indian Tribe- penalties for fraud, false statements, process whereby these central service
Wide Central Service Cost Allocation false claims or otherwise. (U.S. Code costs can be identified and assigned to
Plans; Title 18, Section 1001 and Title 31, benefitted activities on a reasonable and
(4) Appendix VI to Part 200—Public Sections 3729–3730 and 3801–3812).’’ consistent basis. The central service cost
Assistance Cost Allocation Plans; and (b) Certification of cost allocation plan allocation plan provides that process.
(5) Appendix VII to Part 200—States or indirect (F&A) cost rate proposal. (b) Individual operating agencies
and Local Government and Indian Tribe Each cost allocation plan or indirect (governmental department or agency),
Indirect Cost Proposals. (F&A) cost rate proposal must comply normally charge Federal awards for
(f) In addition to the procedures with the following: indirect costs through an indirect cost
outlined in the appendices in paragraph (1) A proposal to establish a cost rate. A separate indirect cost rate(s)
(e) of this section, any non-Federal allocation plan or an indirect (F&A) cost proposal for each operating agency is
entity that has never received a rate, whether submitted to a Federal usually necessary to claim indirect costs
negotiated indirect cost rate, except for cognizant agency for indirect costs or under Federal awards. Indirect costs
those non-Federal entities described in maintained on file by the non-Federal include:
Appendix VII to Part 200—States and entity, must be certified by the non- (1) The indirect costs originating in
Local Government and Indian Tribe Federal entity using the Certificate of each department or agency of the
Indirect Cost Proposals, paragraph Cost Allocation Plan or Certificate of governmental unit carrying out Federal
(d)(1)(B) may elect to charge a de Indirect Costs as set forth in Appendices awards and (2) The costs of central
minimis rate of) 10% of modified total III through VII. The certificate must be governmental services distributed
direct costs (MTDC) which may be used signed on behalf of the non-Federal through the central service cost
indefinitely. As described in § 200.403 entity by an individual at a level no allocation plan and not otherwise
Factors affecting allowability of costs, lower than vice president or chief treated as direct costs.
costs must be consistently charged as financial officer of the non-Federal (c) The requirements for development
either indirect or direct costs, but may entity that submits the proposal. and submission of cost allocation plans
not be double charged or inconsistently (2) Unless the non-Federal entity has (for central service costs and public
charged as both. If chosen, this elected the option under § 200.414 assistance programs) and indirect cost
methodology once elected must be used Indirect (F&A) costs, paragraph (f), the rate proposals are contained in
consistently for all Federal awards until Federal government may either disallow Appendices IV, V and VI to this part.
§ 200.417 Interagency service. a Disclosure Statement (DS–2), which is Interest applicable to the excess
The cost of services provided by one reproduced in Appendix III to Part amounts paid in the aggregate during
agency to another within the 200—Indirect (F&A) Costs Identification the period of noncompliance must also
governmental unit may include and Assignment, and Rate be determined and collected in
allowable direct costs of the service plus Determination for Institutions of Higher accordance with applicable Federal
a pro-rated share of indirect costs. A Education (IHEs). With the approval of agency regulations.
standard indirect cost allowance equal the cognizant agency for indirect costs, (5) Compliant cost accounting
to ten percent of the direct salary and an IHE may meet the DS–2 submission practice changes. Changes from one
wage cost of providing the service by submitting the DS–2 for each compliant cost accounting practice to
(excluding overtime, shift premiums, business unit that received $50 million another compliant practice that are
and fringe benefits) may be used in lieu or more in Federal awards. approved by the cognizant agency for
of determining the actual indirect costs (1) The DS–2 must be submitted to the indirect costs may require cost
of the service. These services do not cognizant agency for indirect costs with adjustments if the change has a material
include centralized services included in a copy to the IHE’s cognizant agency for effect on Federal awards and the
central service cost allocation plans as audit. changes are deemed appropriate by the
described in Appendix V to Part 200— (2) An IHE is responsible for cognizant agency for indirect costs.
State/Local Government and Indian maintaining an accurate DS–2 and (6) Responsibilities. The cognizant
Tribe- Wide Central Service Cost complying with disclosed cost agency for indirect cost must:
Allocation Plans. accounting practices. An IHE must file (i) Determine cost adjustments for all
amendments to the DS–2 to the Federal awards in the aggregate on
Special Considerations For Institutions cognizant agency for indirect costs six
Of Higher Education behalf of the Federal Government.
months in advance of a disclosed Actions of the cognizant agency for
§ 200.418 Costs incurred by states and practices being changed to comply with indirect cost in making cost adjustment
local government a new or modified standard, or when determinations must be coordinated
Costs incurred or paid by a state or practices are changed for other reasons. with all affected Federal awarding
local government on behalf of its IHEs An IHE may proceed with implementing agencies to the extent necessary.
for fringe benefit programs, such as the change only if it has not been (ii) Prescribe guidelines and establish
pension costs and FICA and any other notified by the Federal cognizant agency internal procedures to promptly
costs specifically incurred on behalf of, for indirect costs that either a longer determine on behalf of the Federal
and in direct benefit to, the IHEs, are period will be needed for review or Government that a DS–2 adequately
allowable costs of such IHEs whether or there are concerns with the potential discloses the IHE’s cost accounting
not these costs are recorded in the change within the six months period. practices and that the disclosed
accounting records of the institutions, Amendments of a DS–2 may be
practices are compliant with applicable
subject to the following: submitted at any time. Resubmission of
CAS and the requirements of this Part.
(a) The costs meet the requirements of a complete, updated DS–2 is
(iii) Distribute to all affected Federal
§§ 200.402 Composition of costs through discouraged except when there are
awarding agencies any DS–2
200.411 Adjustment of previously extensive changes to disclosed
determination of adequacy or
negotiated indirect (F&A) cost rates practices.
(3) Cost and funding adjustments. noncompliance.
containing unallowable costs, of this
subpart; Cost adjustments must be made by the General Provisions for Selected Items of
(b) The costs are properly supported cognizant agency for indirect costs if an Cost
by approved cost allocation plans in IHE fails to comply with the cost
policies in this Part or fails to § 200.420 Considerations for selected
accordance with applicable Federal cost items of cost.
accounting principles in this Part; and consistently follow its established or
disclosed cost accounting practices This section provides principles to be
(c) The costs are not otherwise borne
when estimating, accumulating or applied in establishing the allowability
directly or indirectly by the Federal
reporting the costs of Federal awards, of certain items involved in determining
government.
and the aggregate cost impact on Federal cost, in addition to the requirements of
§ 200.419 Cost accounting standards and awards is material. The cost adjustment Subtitle II. Basic Considerations of this
disclosure statement. must normally be made on an aggregate subpart. These principles apply whether
(a) An IHE that receives aggregate basis for all affected Federal awards or not a particular item of cost is
Federal awards totaling $50 million or through an adjustment of the IHE’s properly treated as direct cost or
more in Federal awards subject to this future F&A costs rates or other means indirect (F&A) cost. Failure to mention
Part in its most recently completed considered appropriate by the cognizant a particular item of cost is not intended
fiscal year must comply with the Cost agency for indirect costs. Under the to imply that it is either allowable or
Accounting Standards Board’s cost terms of CAS covered contracts, unallowable; rather, determination as to
accounting standards located at 48 CFR adjustments in the amount of funding allowability in each case should be
9905.501, 9905.502, 9905.505, and provided may also be required when the based on the treatment provided for
9905.506. CAS-covered contracts estimated proposal costs were not similar or related items of cost, and
awarded to the IHEs are subject to the determined in accordance with based on the principles described in
CAS requirements at 48 CFR 9900 established cost accounting practices. §§ 200.402 Composition of costs through
through 9999 and 48 CFR Part 30 (FAR (4) Overpayments. Excess amounts 200.411 Adjustment of previously
Part 30). paid in the aggregate by the Federal negotiated indirect (F&A) cost rates
(b) Disclosure statement. An IHE that government under Federal awards due containing unallowable costs. In case of
receives aggregate Federal awards to a noncompliant cost accounting a discrepancy between the provisions of
totaling $50 million or more subject to practice used to estimate, accumulate, a specific Federal award and the
this Part during its most recently or report costs must be credited or provisions below, the Federal award
completed fiscal year must disclose refunded, as deemed appropriate by the governs. Criteria outlined in § 200.403
their cost accounting practices by filing cognizant agency for indirect costs. Factors affecting allowability of costs
must be applied in determining (ii) Costs of meeting rooms, Subrecipient and contractor
allowability. See also § 200.102 hospitality suites, and other special determinations through 200.332 Fixed
Exceptions. facilities used in conjunction with Amount Subawards) who are exempted
shows and other special events; and from the requirements of the Single
§ 200.421 Advertising and public relations.
(iii) Salaries and wages of employees Audit Act and Subpart F—Audit
(a) The term advertising costs means engaged in setting up and displaying Requirements of this Part. This cost is
the costs of advertising media and exhibits, making demonstrations, and allowable only if the agreed-upon-
corollary administrative costs. providing briefings; procedures engagements are:
Advertising media include magazines, (3) Costs of promotional items and (1) Conducted in accordance with
newspapers, radio and television, direct memorabilia, including models, gifts, GAGAS attestation standards;
mail, exhibits, electronic or computer and souvenirs; (2) Paid for and arranged by the pass-
transmittals, and the like. (4) Costs of advertising and public through entity; and
(b) The only allowable advertising (3) Limited in scope to one or more
relations designed solely to promote the
costs are those which are solely for: of the following types of compliance
non-Federal entity.
(1) The recruitment of personnel requirements: activities allowed or
required by the non-Federal entity for § 200.422 Advisory councils. unallowed; allowable costs/cost
performance of a Federal award (See Costs incurred by advisory councils or principles; eligibility; and reporting.
also § 200.463 Recruiting costs); committees are unallowable unless
(2) The procurement of goods and § 200.426 Bad debts.
authorized by statute, the Federal
services for the performance of a Federal Bad debts (debts which have been
awarding agency or as an indirect cost
award; determined to be uncollectable),
(3) The disposal of scrap or surplus where allocable to Federal awards. See
§ 200.444 General costs of government, including losses (whether actual or
materials acquired in the performance of estimated) arising from uncollectable
a Federal award except when non- applicable to states, local governments
and Indian tribes. accounts and other claims, are
Federal entities are reimbursed for unallowable. Related collection costs,
disposal costs at a predetermined § 200.423 Alcoholic beverages. and related legal costs, arising from
amount; or Costs of alcoholic beverages are such debts after they have been
(4) Program outreach and other determined to be uncollectable are also
unallowable.
specific purposes necessary to meet the unallowable. See also § 200.428
requirements of the Federal award. § 200.424 Alumni/ae activities. Collections of improper payments.
(c) The term ‘‘public relations’’ Costs incurred by IHEs for, or in
includes community relations and support of, alumni/ae activities are § 200.427 Bonding costs.
means those activities dedicated to unallowable. (a) Bonding costs arise when the
maintaining the image of the non- Federal awarding agency requires
Federal entity or maintaining or § 200.425 Audit services. assurance against financial loss to itself
promoting understanding and favorable (a) A reasonably proportionate share or others by reason of the act or default
relations with the community or public of the costs of audits required by, and of the non-Federal entity. They arise
at large or any segment of the public. performed in accordance with, the also in instances where the non-Federal
(d) The only allowable public Single Audit Act Amendments of 1996 entity requires similar assurance,
relations costs are: (31 U.S.C. 7501–7507), as implemented including: bonds as bid, performance,
(1) Costs specifically required by the by requirements of this Part, are payment, advance payment,
Federal award; allowable. However, the following audit infringement, and fidelity bonds for
(2) Costs of communicating with the
costs are unallowable: employees and officials.
public and press pertaining to specific (b) Costs of bonding required
(1) Any costs when audits required by
activities or accomplishments which pursuant to the terms and conditions of
result from performance of the Federal the Single Audit Act and Subpart F—
Audit Requirements of this Part have the Federal award are allowable.
award (these costs are considered (c) Costs of bonding required by the
necessary as part of the outreach effort not been conducted or have been
conducted but not in accordance non-Federal entity in the general
for the Federal award); or conduct of its operations are allowable
(3) Costs of conducting general liaison therewith; and
(2) Any costs of auditing a non- as an indirect cost to the extent that
with news media and government
Federal entity that is exempted from such bonding is in accordance with
public relations officers, to the extent
having an audit conducted under the sound business practice and the rates
that such activities are limited to
Single Audit Act and Subpart F—Audit and premiums are reasonable under the
communication and liaison necessary to
Requirements of this Part because its circumstances.
keep the public informed on matters of
public concern, such as notices of expenditures under Federal awards are § 200.428 Collections of improper
funding opportunities, financial matters, less than $750,000 during the non- payments.
etc. Federal entity’s fiscal year. The costs incurred by a non-Federal
(e) Unallowable advertising and (b) The costs of a financial statement entity to recover improper payments are
public relations costs include the audit of a non-Federal entity that does allowable as either direct or indirect
following: not currently have a Federal award may costs, as appropriate. Amounts collected
(1) All advertising and public be included in the indirect cost pool for may be used by the non-Federal entity
relations costs other than as specified in a cost allocation plan or indirect cost in accordance with cash management
proposal.
paragraphs (b) and (d) of this section; standards set forth in § 200.305
(2) Costs of meetings, conventions, (c) Pass-through entities may charge Payment.
convocations, or other events related to Federal awards for the cost of agreed-
other activities of the entity (see also upon-procedures engagements to § 200.429 Commencement and
§ 200.432 Conferences), including: monitor subrecipients (in accordance convocation costs.
(i) Costs of displays, demonstrations, with Subpart D—Post Federal Award For IHEs, costs incurred for
and exhibits; Requirements of this Part, §§ 200.330 commencements and convocations are
unallowable, except as provided for in non-organizational activities undertaken services rendered rather than a
Appendix III to Part 200—Indirect for extra outside pay, the Federal distribution of earnings in excess of
(F&A) Costs Identification and government may require that the effort costs. This may include director’s and
Assignment, and Rate Determination for of professional staff working on Federal executive committee member’s fees,
Institutions of Higher Education (IHEs), awards be allocated between: incentive awards, allowances for off-site
paragraph (B)(9) Student Administration (1) Non-Federal entity activities, and pay, incentive pay, location allowances,
and Services, as student activity costs. (2) Non-organizational professional hardship pay, and cost-of-living
activities. If the Federal awarding differentials.
§ 200.430 Compensation—personal agency considers the extent of non- (h) Institutions of higher education
services. organizational professional effort (IHEs).
(a) General. Compensation for excessive or inconsistent with the (1) Certain conditions require special
personal services includes all conflicts-of-interest terms and consideration and possible limitations
remuneration, paid currently or conditions of the Federal award, in determining allowable personnel
accrued, for services of employees appropriate arrangements governing compensation costs under Federal
rendered during the period of compensation will be negotiated on a awards. Among such conditions are the
performance under the Federal award, case-by-case basis. following:
including but not necessarily limited to (d) Unallowable costs.
(1) Costs which are unallowable (i) Allowable activities. Charges to
wages and salaries. Compensation for
under other sections of these principles Federal awards may include reasonable
personal services may also include
must not be allowable under this section amounts for activities contributing and
fringe benefits which are addressed in
solely on the basis that they constitute directly related to work under an
§ 200.431 Compensation—fringe
personnel compensation. agreement, such as delivering special
benefits. Costs of compensation are
(2) The allowable compensation for lectures about specific aspects of the
allowable to the extent that they satisfy
certain employees is subject to a ceiling ongoing activity, writing reports and
the specific requirements of this Part,
in accordance with statute. For the articles, developing and maintaining
and that the total compensation for
amount of the ceiling for cost- protocols (human, animals, etc.),
individual employees:
(1) Is reasonable for the services reimbursement contracts, the covered managing substances/chemicals,
rendered and conforms to the compensation subject to the ceiling, the managing and securing project-specific
established written policy of the non- covered employees, and other relevant data, coordinating research subjects,
Federal entity consistently applied to provisions, see 10 U.S.C. 2324(e)(1)(P), participating in appropriate seminars,
both Federal and non-Federal activities; and 41 U.S.C. 1127 and 4304(a)(16). For consulting with colleagues and graduate
(2) Follows an appointment made in other types of Federal awards, other students, and attending meetings and
accordance with a non-Federal entity’s statutory ceilings may apply. conferences.
laws and/or rules or written policies (e) Special considerations. Special (ii) Incidental activities. Incidental
and meets the requirements of Federal considerations in determining activities for which supplemental
statute, where applicable; and allowability of compensation will be compensation is allowable under
(3) Is determined and supported as given to any change in a non-Federal written institutional policy (at a rate not
provided in paragraph (i) of this section, entity’s compensation policy resulting to exceed institutional base salary) need
Standards for Documentation of in a substantial increase in its not be included in the records described
Personnel Expenses, when applicable. employees’ level of compensation in paragraph (h)(9) of this section to
(b) Reasonableness. Compensation for (particularly when the change was directly charge payments of incidental
employees engaged in work on Federal concurrent with an increase in the ratio activities, such activities must either be
awards will be considered reasonable to of Federal awards to other activities) or specifically provided for in the Federal
the extent that it is consistent with that any change in the treatment of award budget or receive prior written
paid for similar work in other activities allowability of specific types of approval by the Federal awarding
of the non-Federal entity. In cases where compensation due to changes in Federal agency.
the kinds of employees required for policy. (2) Salary basis. Charges for work
Federal awards are not found in the (f) Incentive compensation. Incentive performed on Federal awards by faculty
other activities of the non-Federal compensation to employees based on members during the academic year are
entity, compensation will be considered cost reduction, or efficient performance, allowable at the IBS rate. Except as
reasonable to the extent that it is suggestion awards, safety awards, etc., is noted in paragraph (h)(1)(ii) of this
comparable to that paid for similar work allowable to the extent that the overall section, in no event will charges to
in the labor market in which the non- compensation is determined to be Federal awards, irrespective of the basis
Federal entity competes for the kind of reasonable and such costs are paid or of computation, exceed the
employees involved. accrued pursuant to an agreement proportionate share of the IBS for that
(c) Professional activities outside the entered into in good faith between the period. This principle applies to all
non-Federal entity. Unless an non-Federal entity and the employees members of faculty at an institution. IBS
arrangement is specifically authorized before the services were rendered, or is defined as the annual compensation
by a Federal awarding agency, a non- pursuant to an established plan paid by an IHE for an individual’s
Federal entity must follow its written followed by the non-Federal entity so appointment, whether that individual’s
non-Federal entity-wide policies and consistently as to imply, in effect, an time is spent on research, instruction,
practices concerning the permissible agreement to make such payment. administration, or other activities. IBS
extent of professional services that can (g) Nonprofit organizations. For excludes any income that an individual
be provided outside the non-Federal compensation to members of nonprofit earns outside of duties performed for
entity for non-organizational organizations, trustees, directors, the IHE. Unless there is prior approval
compensation. Where such non-Federal associates, officers, or the immediate by the Federal awarding agency, charges
entity-wide written policies do not exist families thereof, determination should of a faculty member’s salary to a Federal
or do not adequately define the be made that such compensation is award must not exceed the
permissible extent of consulting or other reasonable for the actual personal proportionate share of the IBS for the
period during which the faculty member members for teaching assignments the employee works on more than one
worked on the award. during such periods. Federal award; a Federal award and
(3) Intra-Institution of Higher (6) Part-time faculty. Charges for work non-Federal award; an indirect cost
Education (IHE) consulting. Intra-IHE performed on Federal awards by faculty activity and a direct cost activity; two or
consulting by faculty is assumed to be members having only part-time more indirect activities which are
undertaken as an IHE obligation appointments will be determined at a allocated using different allocation
requiring no compensation in addition rate not in excess of that regularly paid bases; or an unallowable activity and a
to IBS. However, in unusual cases for part-time assignments. direct or indirect cost activity.
where consultation is across (7) Sabbatical leave costs. Rules for (viii) Budget estimates (i.e., estimates
departmental lines or involves a sabbatical leave are as follow: determined before the services are
separate or remote operation, and the (i) Costs of leaves of absence by performed) alone do not qualify as
work performed by the faculty member employees for performance of graduate support for charges to Federal awards,
is in addition to his or her regular work or sabbatical study, travel, or but may be used for interim accounting
responsibilities, any charges for such research are allowable provided the IHE purposes, provided that:
work representing additional has a uniform written policy on (A) The system for establishing the
compensation above IBS are allowable sabbatical leave for persons engaged in estimates produces reasonable
provided that such consulting instruction and persons engaged in approximations of the activity actually
arrangements are specifically provided research. Such costs will be allocated on performed;
for in the Federal award or approved in an equitable basis among all related (B) Significant changes in the
writing by the Federal awarding agency. activities of the IHE. corresponding work activity (as defined
(4) Extra Service Pay normally (ii) Where sabbatical leave is included by the non-Federal entity’s written
represents overload compensation, in fringe benefits for which a cost is policies) are identified and entered into
subject to institutional compensation determined for assessment as a direct the records in a timely manner. Short
policies for services above and beyond charge, the aggregate amount of such term (such as one or two months)
IBS. Where extra service pay is a result assessments applicable to all work of fluctuation between workload categories
of Intra-IHE consulting, it is subject to the institution during the base period need not be considered as long as the
the same requirements of paragraph (b) must be reasonable in relation to the distribution of salaries and wages is
above. It is allowable if all of the IHE’s actual experience under its reasonable over the longer term; and
following conditions are met: sabbatical leave policy. (C) The non-Federal entity’s system of
(i) The non-Federal entity establishes (8) Salary rates for non-faculty internal controls includes processes to
consistent written policies which apply members. Non-faculty full-time review after-the-fact interim charges
uniformly to all faculty members, not professional personnel may also earn made to a Federal awards based on
just those working on Federal awards. ‘‘extra service pay’’ in accordance with budget estimates. All necessary
(ii) The non-Federal entity establishes the non-Federal entity’s written policy adjustment must be made such that the
a consistent written definition of work and consistent with paragraph (h)(1)(i) final amount charged to the Federal
covered by IBS which is specific enough of this section. award is accurate, allowable, and
to determine conclusively when work (i) Standards for Documentation of properly allocated.
beyond that level has occurred. This Personnel Expenses (ix) Because practices vary as to the
may be described in appointment letters (1) Charges to Federal awards for activity constituting a full workload (for
or other documentations. salaries and wages must be based on IHEs, IBS), records may reflect
(iii) The supplementation amount records that accurately reflect the work categories of activities expressed as a
paid is commensurate with the IBS rate performed. These records must: percentage distribution of total
of pay and the amount of additional (i) Be supported by a system of activities.
work performed. See paragraph (h)(2) of internal control which provides (x) It is recognized that teaching,
this section. reasonable assurance that the charges research, service, and administration are
(iv) The salaries, as supplemented, are accurate, allowable, and properly often inextricably intermingled in an
fall within the salary structure and pay allocated; academic setting. When recording
ranges established by and documented (ii) Be incorporated into the official salaries and wages charged to Federal
in writing or otherwise applicable to the records of the non-Federal entity; awards for IHEs, a precise assessment of
non-Federal entity. (iii) Reasonably reflect the total factors that contribute to costs is
(v) The total salaries charged to activity for which the employee is therefore not always feasible, nor is it
Federal awards including extra service compensated by the non-Federal entity, expected.
pay are subject to the Standards of not exceeding 100% of compensated (2) For records which meet the
Documentation as described in activities (for IHE, this per the IHE’s standards required in paragraph (i)(1) of
paragraph (i) of this section. definition of IBS); this section, the non-Federal entity will
(5) Periods outside the academic year. (iv) Encompass both federally assisted not be required to provide additional
(i) Except as specified for teaching and all other activities compensated by support or documentation for the work
activity in paragraph (h)(5)(ii) of this the non-Federal entity on an integrated performed, other than that referenced in
section, charges for work performed by basis, but may include the use of paragraph (i)(3) of this section.
faculty members on Federal awards subsidiary records as defined in the (3) In accordance with Department of
during periods not included in the base non-Federal entity’s written policy; Labor regulations implementing the Fair
salary period will be at a rate not in (v) Comply with the established Labor Standards Act (FLSA) (29 CFR
excess of the IBS. accounting policies and practices of the Part 516), charges for the salaries and
(ii) Charges for teaching activities non-Federal entity (See paragraph wages of nonexempt employees, in
performed by faculty members on (h)(1)(ii) above for treatment of addition to the supporting
Federal awards during periods not incidental work for IHEs.); and documentation described in this
included in IBS period will be based on (vii) Support the distribution of the section, must also be supported by
the normal written policy of the IHE employee’s salary or wages among records indicating the total number of
governing compensation to faculty specific activities or cost objectives if hours worked each day.
(4) Salaries and wages of employees their combined use based on when the leave is earned. When a non-
used in meeting cost sharing or performance-oriented metrics, provided Federal entity uses the accrual basis of
matching requirements on Federal that such plans are approved in advance accounting, allowable leave costs are the
awards must be supported in the same by all involved Federal awarding lesser of the amount accrued or funded.
manner as salaries and wages claimed agencies. In these instances, the non- (c) The cost of fringe benefits in the
for reimbursement from Federal awards. Federal entity must submit a request for form of employer contributions or
(5) For states, local governments and waiver of the requirements based on expenses for social security; employee
Indian tribes, substitute processes or documentation that describes the life, health, unemployment, and
systems for allocating salaries and method of charging costs, relates the worker’s compensation insurance
wages to Federal awards may be used in charging of costs to the specific activity (except as indicated in § 200.447
place of or in addition to the records that is applicable to all fund sources, Insurance and indemnification);
described in paragraph (1) if approved and is based on quantifiable measures of pension plan costs (see paragraph (i) of
by the cognizant agency for indirect the activity in relation to time charged. this section); and other similar benefits
cost. Such systems may include, but are (8) For a non-Federal entity where the are allowable, provided such benefits
not limited to, random moment records do not meet the standards are granted under established written
sampling, ‘‘rolling’’ time studies, case described in this section, the Federal policies. Such benefits, must be
counts, or other quantifiable measures government may require personnel allocated to Federal awards and all
of work performed. activity reports, including prescribed other activities in a manner consistent
(i) Substitute systems which use certifications, or equivalent with the pattern of benefits attributable
sampling methods (primarily for documentation that support the records to the individuals or group(s) of
Temporary Assistance for Needy as required in this section. employees whose salaries and wages are
Families (TANF), the Supplemental chargeable to such Federal awards and
Nutrition Assistance Program (SNAP), § 200.431 Compensation—fringe benefits. other activities, and charged as direct or
Medicaid, and other public assistance (a) Fringe benefits are allowances and indirect costs in accordance with the
programs) must meet acceptable services provided by employers to their non-Federal entity’s accounting
statistical sampling standards including: employees as compensation in addition practices.
(A) The sampling universe must to regular salaries and wages. Fringe (d) Fringe benefits may be assigned to
include all of the employees whose benefits include, but are not limited to, cost objectives by identifying specific
salaries and wages are to be allocated the costs of leave (vacation, family- benefits to specific individual
based on sample results except as related, sick or military), employee employees or by allocating on the basis
provided in paragraph (i)(5)(iii) of this insurance, pensions, and of entity-wide salaries and wages of the
section; unemployment benefit plans. Except as employees receiving the benefits. When
(B) The entire time period involved provided elsewhere in these principles, the allocation method is used, separate
must be covered by the sample; and the costs of fringe benefits are allowable allocations must be made to selective
(C) The results must be statistically provided that the benefits are reasonable groupings of employees, unless the non-
valid and applied to the period being and are required by law, non-Federal Federal entity demonstrates that costs in
sampled. entity-employee agreement, or an relationship to salaries and wages do
(ii) Allocating charges for the sampled established policy of the non-Federal not differ significantly for different
employees’ supervisors, clerical and entity. groups of employees.
support staffs, based on the results of (b) Leave. The cost of fringe benefits (e) Insurance. See also § 200.447
the sampled employees, will be in the form of regular compensation Insurance and indemnification,
acceptable. paid to employees during periods of paragraphs (d)(1) and (2).
(iii) Less than full compliance with authorized absences from the job, such (1) Provisions for a reserve under a
the statistical sampling standards noted as for annual leave, family-related leave, self-insurance program for
in subsection (5)(i) may be accepted by sick leave, holidays, court leave, unemployment compensation or
the cognizant agency for indirect costs military leave, administrative leave, and workers’ compensation are allowable to
if it concludes that the amounts to be other similar benefits, are allowable if the extent that the provisions represent
allocated to Federal awards will be all of the following criteria are met: reasonable estimates of the liabilities for
minimal, or if it concludes that the (1) They are provided under such compensation, and the types of
system proposed by the non-Federal established written leave policies; coverage, extent of coverage, and rates
entity will result in lower costs to (2) The costs are equitably allocated to and premiums would have been
Federal awards than a system which all related activities, including Federal allowable had insurance been
complies with the standards. awards; and, purchased to cover the risks. However,
(6) Cognizant agencies for indirect (3) The accounting basis (cash or provisions for self-insured liabilities
costs are encouraged to approve accrual) selected for costing each type of which do not become payable for more
alternative proposals based on outcomes leave is consistently followed by the than one year after the provision is
and milestones for program performance non-Federal entity or specified grouping made must not exceed the present value
where these are clearly documented. of employees. of the liability.
Where approved by the Federal (i) When a non-Federal entity uses the (2) Costs of insurance on the lives of
cognizant agency for indirect costs, cash basis of accounting, the cost of trustees, officers, or other employees
these plans are acceptable as an leave is recognized in the period that holding positions of similar
alternative to the requirements of the leave is taken and paid for. responsibility are allowable only to the
paragraph (i)(1) of this section. Payments for unused leave when an extent that the insurance represents
(7) For Federal awards of similar employee retires or terminates additional compensation. The costs of
purpose activity or instances of employment are allowable as indirect such insurance when the non-Federal
approved blended funding, a non- costs in the year of payment. entity is named as beneficiary are
Federal entity may submit performance (ii) The accrual basis may be only unallowable.
plans that incorporate funds from used for those types of leave for which (3) Actual claims paid to or on behalf
multiple Federal awards and account for a liability as defined by GAAP exists of employees or former employees for
workers’ compensation, unemployment period (or a later period agreed to by the entity’s contributions to the PRHP fund.
compensation, severance pay, and cognizant agency for indirect costs) are Adjustments may be made by cash
similar employee benefits (e.g., post- allowable in the year funded. The refund, reduction in current year’s
retirement health benefits), are cognizant agency for indirect costs may PRHP costs, or other equitable
allowable in the year of payment agree to an extension of the six month procedures to compensate the Federal
provided that the non-Federal entity period if an appropriate adjustment is government for the time value of
follows a consistent costing policy and made to compensate for the timing of Federal reimbursements in excess of
they are allocated as indirect costs. 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 entity the non-Federal entity’s contribution to actuarially determined amount for a
that relates to personal use by the pension fund. Adjustments may be fiscal year may be used as the Federal
employees (including transportation to made by cash refund or other equitable government’s contribution in a future
and from work) is unallowable as fringe procedures to compensate the Federal period.
benefit or indirect (F&A) costs government for the time value of (4) When a non-Federal entity
regardless of whether the cost is Federal reimbursements in excess of converts to an acceptable actuarial cost
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) For entities using accrual based method, the unfunded liability at the
(i) An insurer or other benefit
accounting, the cost assigned to each time of conversion is allowable if
provider as current year costs or
fiscal year is determined in accordance amortized over a period of years in
premiums, or
with GAAP. accordance with GAAP.
(4) The costs assigned to a given fiscal (v) The Federal government must (ii) An insurer or trustee to maintain
year are funded for all plan participants receive an equitable share of any a trust fund or reserve for the sole
within six months after the end of that previously allowed pension costs purpose of providing post-retirement
year. However, increases to normal and (including earnings thereon) which benefits to retirees and other
past service pension costs caused by a revert or inure to the non-Federal entity beneficiaries.
delay in funding the actuarial liability in the form of a refund, withdrawal, or (6) The Federal government must
beyond 30 calendar days after each other credit. receive an equitable share of any
quarter of the year to which such costs (h) Post-Retirement Health. Post- amounts of previously allowed post-
are assignable are unallowable. Non- retirement health plans (PRHP) refers to retirement benefit costs (including
Federal entity may elect to follow the costs of health insurance or health earnings thereon) which revert or inure
‘‘Cost Accounting Standard for services not included in a pension plan to the entity in the form of a refund,
Composition and Measurement of covered by paragraph (g) of this section withdrawal, or other credit.
Pension Costs’’ (48 CFR 9904.412). for retirees and their spouses, (i) Severance Pay.
(5) Pension plan termination dependents, and survivors. PRHP costs (1) Severance pay, also commonly
insurance premiums paid pursuant to may be computed using a pay-as-you-go referred to as dismissal wages, is a
the Employee Retirement Income method or an acceptable actuarial cost payment in addition to regular salaries
Security Act (ERISA) of 1974 (29 U.S.C. method in accordance with established and wages, by non-Federal entities to
1301–1461) are allowable. Late payment written policies of the non-Federal workers whose employment is being
charges on such premiums are entity. terminated. Costs of severance pay are
unallowable. Excise taxes on (1) For PRHP financed on a pay-as- allowable only to the extent that in each
accumulated funding deficiencies and you-go method, allowable costs will be case, it is required by (a) law, (b)
other penalties imposed under ERISA limited to those representing actual employer-employee agreement, (c)
are unallowable. payments to retirees or their established policy that constitutes, in
(6) Pension plan costs may be beneficiaries. effect, an implied agreement on the non-
computed using a pay-as-you-go method (2) PRHP costs calculated using an Federal entity’s part, or (d)
or an acceptable actuarial cost method actuarial cost method recognized by circumstances of the particular
in accordance with established written GAAP are allowable if they are funded employment.
policies of the non-Federal entity. for that year within six months after the (2) Costs of severance payments are
(i) For pension plans financed on a end of that year. Costs funded after the divided into two categories as follows:
pay-as-you-go method, allowable costs six month period (or a later period (i) Actual normal turnover severance
will be limited to those representing agreed to by the cognizant agency) are payments must be allocated to all
actual payments to retirees or their allowable in the year funded. The activities; or, where the non-Federal
beneficiaries. Federal cognizant agency for indirect entity provides for a reserve for normal
(ii) Pension costs calculated using an costs may agree to an extension of the severances, such method will be
actuarial cost-based method recognized six month period if an appropriate acceptable if the charge to current
by GAAP are allowable for a given fiscal adjustment is made to compensate for operations is reasonable in light of
year if they are funded for that year the timing of the charges to the Federal payments actually made for normal
within six months after the end of that government and related Federal severances over a representative past
year. Costs funded after the six month reimbursements and the non-Federal period, and if amounts charged are
allocated to all activities of the non- works. See § 200.466 Scholarships and precise outcome of which is
Federal entity. student aid costs, for treatment of indeterminable at the time of estimate,
(ii) Measurement of costs of abnormal tuition remission provided to students. and that experience shows will likely
or mass severance pay by means of an (k) For IHEs whose costs are paid by result, in aggregate, in additional costs
accrual will not achieve equity to both state or local governments, fringe benefit for the approved activity or project.
parties. Thus, accruals for this purpose programs (such as pension costs and Amounts for major project scope
are not allowable. However, the Federal FICA) and any other benefits costs changes, unforeseen risks, or
government recognizes its obligation to specifically incurred on behalf of, and extraordinary events may not be
participate, to the extent of its fair share, in direct benefit to, the non-Federal included.
in any specific payment. Prior approval entity, are allowable costs of such non- (b) It is permissible for contingency
by the Federal awarding agency or Federal entities whether or not these amounts other than those excluded in
cognizant agency for indirect cost, as costs are recorded in the accounting paragraph (b)(1) of this section to be
appropriate, is required. records of the non-Federal entities, explicitly included in budget estimates,
(3) Costs incurred in certain severance subject to the following: to the extent they are necessary to
pay packages which are in an amount in (1) The costs meet the requirements of improve the precision of those
excess of the normal severance pay paid Basic Considerations in §§ 200.402 estimates. Amounts must be estimated
by the non-Federal entity to an Composition of costs through 200.411 using broadly-accepted cost estimating
employee upon termination of Adjustment of previously negotiated methodologies, specified in the budget
employment and are paid to the indirect (F&A) cost rates containing documentation of the Federal award,
employee contingent upon a change in unallowable costs of this subpart; and accepted by the Federal awarding
management control over, or ownership (2) The costs are properly supported agency. As such, contingency amounts
of, the non-Federal entity’s assets, are by approved cost allocation plans in are to be included in the Federal award.
unallowable. accordance with applicable Federal cost In order for actual costs incurred to be
(4) Severance payments to foreign accounting principles; and allowable, they must comply with the
nationals employed by the non-Federal (3) The costs are not otherwise borne cost principles and other requirements
entity outside the United States, to the directly or indirectly by the Federal in this Part (see also §§ 200.300
extent that the amount exceeds the government. Statutory and national policy
customary or prevailing practices for the requirements through 200.309 Period of
non-Federal entity in the United States, § 200.432 Conferences.
performance of Subpart D of this Part
are unallowable, unless they are A conference is defined as a meeting, and 200.403 Factors affecting
necessary for the performance of Federal retreat, seminar, symposium, workshop allowability of costs); be necessary and
programs and approved by the Federal or event whose primary purpose is the reasonable for proper and efficient
awarding agency. dissemination of technical information accomplishment of project or program
(5) Severance payments to foreign beyond the non-Federal entity and is objectives, and be verifiable from the
nationals employed by the non-Federal necessary and reasonable for successful non-Federal entity’s records.
entity outside the United States due to performance under the Federal award. (c) Payments made by the Federal
the termination of the foreign national Allowable conference costs paid by the awarding agency to the non-Federal
as a result of the closing of, or non-Federal entity as a sponsor or host entity’s ‘‘contingency reserve’’ or any
curtailment of activities by, the non- of the conference may include rental of similar payment made for events the
Federal entity in that country, are facilities, speakers’ fees, costs of meals occurrence of which cannot be foretold
unallowable, unless they are necessary and refreshments, local transportation, with certainty as to the time or
for the performance of Federal programs and other items incidental to such intensity, or with an assurance of their
and approved by the Federal awarding conferences unless further restricted by happening, are unallowable, except as
agency. the terms and conditions of the Federal noted in §§ 200.431 Compensation—
(j)(1) For IHEs only. Fringe benefits in award. As needed, the costs of fringe benefits regarding self-insurance,
the form of tuition or remission of identifying, but not providing, locally pensions, severance and post-retirement
tuition for individual employees are available dependent-care resources are health costs and 200.447 Insurance and
allowable, provided such benefits are allowable. Conference hosts/sponsors indemnification.
granted in accordance with established must exercise discretion and judgment
non-Federal entity policies, and are in ensuring that conference costs are § 200.434 Contributions and donations.
distributed to all non-Federal entity appropriate, necessary and managed in (a) Costs of contributions and
activities on an equitable basis. Tuition a manner that minimizes costs to the donations, including cash, property, and
benefits for family members other than Federal award. The Federal awarding services, from the non-Federal entity to
the employee are unallowable. agency may authorize exceptions where other entities, are unallowable.
(2) Fringe benefits in the form of appropriate for programs including (b) The value of services and property
tuition or remission of tuition for Indian tribes, children, and the elderly. donated to the non-Federal entity may
individual employees not employed by See also §§ 200.438 Entertainment costs, not be charged to the Federal award
IHEs are limited to the tax-free amount 200.456 Participant support costs, either as a direct or indirect (F&A) cost.
allowed per section 127 of the Internal 200.474 Travel costs, and 200.475 The value of donated services and
Revenue Code as amended. Trustees. property may be used to meet cost
(3) IHEs may offer employees tuition sharing or matching requirements (see
waivers or tuition reductions for § 200.433 Contingency provisions. § 200.306 Cost sharing or matching).
undergraduate education under IRC (a) Contingency is that part of a Depreciation on donated assets is
Section 117(d) as amended, provided budget estimate of future costs (typically permitted in accordance with § 200.436
that the benefit does not discriminate in of large construction projects, IT Depreciation, as long as the donated
favor of highly compensated employees. systems, or other items as approved by property is not counted towards cost
Federal reimbursement of tuition or the Federal awarding agency) which is sharing or matching requirements.
remission of tuition is also limited to associated with possible events or (c) Services donated or volunteered to
the institution for which the employee conditions arising from causes the the non-Federal entity may be furnished
to a non-Federal entity by professional costs, indirect cost rates will separate determination of non-Federal entity
and technical personnel, consultants, the value of the donations so that liability.
and other skilled and unskilled labor. reimbursement will not be made. (C) In the case of any civil or
The value of these services is not administrative proceeding, the
allowable either as a direct or indirect § 200.435 Defense and prosecution of
disallowance of costs or the imposition
criminal and civil proceedings, claims,
cost. However, the value of donated appeals and patent infringements. of a monetary penalty, or an order
services may be used to meet cost issued by the Federal awarding agency
sharing or matching requirements in (a) Definitions for the purposes of this head or delegate to the non-Federal
accordance with the provisions of section. entity to take corrective action under 10
(1) Conviction means a judgment or
§ 200.306 Cost sharing or matching. U.S.C. 2409 or 41 U.S.C. 4712.
(d) To the extent feasible, services conviction of a criminal offense by any
(D) A final decision by an appropriate
donated to the non-Federal entity will court of competent jurisdiction, whether
Federal official to debar or suspend the
be supported by the same methods used entered upon verdict or a plea,
non-Federal entity, to rescind or void a
to support the allocability of regular including a conviction due to a plea of
Federal award, or to terminate a Federal
personnel services. nolo contendere.
award for default by reason of a
(e) The following provisions apply to (2) Costs include the services of in-
violation or failure to comply with a
nonprofit organizations. The value of house or private counsel, accountants,
statute, regulation, or the terms and
services donated to the nonprofit consultants, or others engaged to assist
conditions of the Federal award.
organization utilized in the performance the non-Federal entity before, during,
(E) A disposition by consent or
of a direct cost activity must be and after commencement of a judicial or
compromise, if the action could have
considered in the determination of the administrative proceeding, that bear a
resulted in any of the dispositions
non-Federal entity’s indirect cost rate(s) direct relationship to the proceeding.
(3) Fraud means: described in paragraphs (b)(1)(ii)(A)
and, accordingly, must be allocated a through (D) of this section.
proportionate share of applicable (i) Acts of fraud or corruption or
attempts to defraud the Federal (2) If more than one proceeding
indirect costs when the following involves the same alleged misconduct,
circumstances exist: government or to corrupt its agents,
(ii) Acts that constitute a cause for the costs of all such proceedings are
(1) The aggregate value of the services unallowable if any results in one of the
is material; debarment or suspension (as specified
in agency regulations), and dispositions shown in paragraph (b) of
(2) The services are supported by a this section.
significant amount of the indirect costs (iii) Acts which violate the False
Claims Act (31 U.S.C. 3729–3732) or the (c) If a proceeding referred to in
incurred by the non-Federal entity; paragraph (b) of this section is
(i) In those instances where there is Anti-kickback Act (41 U.S.C. 1320a–
7b(b)). commenced by the Federal government
no basis for determining the fair market
(4) Penalty does not include and is resolved by consent or
value of the services rendered, the non-
restitution, reimbursement, or compromise pursuant to an agreement
Federal entity and the cognizant agency
compensatory damages. by the non-Federal entity and the
for indirect costs must negotiate an
(5) Proceeding includes an Federal government, then the costs
appropriate allocation of indirect cost to
investigation. incurred may be allowed to the extent
the services.
(ii) Where donated services directly (b) Costs. specifically provided in such agreement.
benefit a project supported by the (1) Except as otherwise described (d) If a proceeding referred to in
Federal award, the indirect costs herein, costs incurred in connection paragraph (b) of this section is
allocated to the services will be with any criminal, civil or commenced by a state, local or foreign
considered as a part of the total costs of administrative proceeding (including government, the authorized Federal
the project. Such indirect costs may be filing of a false certification) official may allow the costs incurred if
reimbursed under the Federal award or commenced by the Federal government, such authorized official determines that
used to meet cost sharing or matching a state, local government, or foreign the costs were incurred as a result of:
requirements. government, or joined by the Federal (1) A specific term or condition of the
(f) Fair market value of donated government (including a proceeding Federal award, or
services must be computed as described under the False Claims Act), against the (2) Specific written direction of an
in § 200.306 Cost sharing or matching. non-Federal entity, (or commenced by authorized official of the Federal
(g) Personal Property and Use of third parties or a current or former awarding agency.
Space. employee of the non-Federal entity who (e) Costs incurred in connection with
(1) Donated personal property and use submits a whistleblower complaint of proceedings described in paragraph (b)
of space may be furnished to a non- reprisal in accordance with 10 U.S.C. of this section, which are not made
Federal entity. The value of the personal 2409 or 41 U.S.C. 4712), are not unallowable by that subsection, may be
property and space is not reimbursable allowable if the proceeding: allowed but only to the extent that:
either as a direct or indirect cost. (i) Relates to a violation of, or failure (1) The costs are reasonable and
(2) The value of the donations may be to comply with, a Federal, state, local or necessary in relation to the
used to meet cost sharing or matching foreign statute, regulation or the terms administration of the Federal award and
share requirements under the conditions and conditions of the Federal award, by activities required to deal with the
described in §§ 200.300 Statutory and the non-Federal entity (including its proceeding and the underlying cause of
national policy requirements through agents and employees); and action;
200.309 Period of performance of (ii) Results in any of the following (2) Payment of the reasonable,
Subpart D of this Part. The value of the dispositions: necessary, allocable and otherwise
donations must be determined in (A) In a criminal proceeding, a allowable costs incurred is not
accordance with §§ 200.300 Statutory conviction. prohibited by any other provision(s) of
and national policy requirements (B) In a civil or administrative the Federal award;
through 200.309 Period of performance. proceeding involving an allegation of (3) The costs are not recovered from
Where donations are treated as indirect fraud or similar misconduct, a the Federal Government or a third party,
either directly as a result of the (b) The allocation for depreciation components of a building: building shell
proceeding or otherwise; and, must be made in accordance with (including construction and design
(4) An authorized Federal official Appendices IV through VIII. costs), building services systems (e.g.,
must determine the percentage of costs (c) Depreciation is computed applying elevators, HVAC, plumbing system and
allowed considering the complexity of the following rules. The computation of heating and air-conditioning system)
litigation, generally accepted principles depreciation must be based on the and fixed equipment (e.g., sterilizers,
governing the award of legal fees in civil acquisition cost of the assets involved. casework, fume hoods, cold rooms and
actions involving the United States, and For an asset donated to the non-Federal glassware/washers). In exceptional
such other factors as may be entity by a third party, its fair market cases, a cognizant agency may authorize
appropriate. Such percentage must not value at the time of the donation must a non-Federal entity to use more than
exceed 80 percent. However, if an be considered as the acquisition cost. these three groupings. When a non-
agreement reached under paragraph (c) Such assets may be depreciated or Federal entity elects to depreciate its
of this section has explicitly considered claimed as matching but not both. For buildings by its components, the same
this 80 percent limitation and permitted this purpose, the acquisition cost will depreciation methods must be used for
a higher percentage, then the full exclude: indirect (F&A) purposes and financial
(1) The cost of land; statements purposes, as described in
amount of costs resulting from that (2) Any portion of the cost of
agreement are allowable. paragraphs (d)(1) and (2) of this section.
buildings and equipment borne by or (4) No depreciation may be allowed
(f) Costs incurred by the non-Federal donated by the Federal government, on any assets that have outlived their
entity in connection with the defense of irrespective of where title was originally depreciable lives.
suits brought by its employees or ex- vested or where it is presently located; (5) Where the depreciation method is
employees under section 2 of the Major (3) Any portion of the cost of introduced to replace the use allowance
Fraud Act of 1988 (18 U.S.C. 1031), buildings and equipment contributed by method, depreciation must be computed
including the cost of all relief necessary or for the non-Federal entity, or where as if the asset had been depreciated over
to make such employee whole, where law or agreement prohibits recovery; its entire life (i.e., from the date the
the non-Federal entity was found liable and asset was acquired and ready for use to
or settled, are unallowable. (4) Any asset acquired solely for the the date of disposal or withdrawal from
(g) Costs of prosecution of claims performance of a non-Federal award. service). The total amount of use
against the Federal government, (d) When computing depreciation allowance and depreciation for an asset
including appeals of final Federal charges, the following must be observed: (including imputed depreciation
agency decisions, are unallowable. (1) The period of useful service or
applicable to periods prior to the
useful life established in each case for
(h) Costs of legal, accounting, and conversion from the use allowance
usable capital assets must take into
consultant services, and related costs, method as well as depreciation after the
consideration such factors as type of
incurred in connection with patent conversion) may not exceed the total
construction, nature of the equipment,
infringement litigation, are unallowable acquisition cost of the asset.
technological developments in the (e) Charges for depreciation must be
unless otherwise provided for in the particular area, historical data, and the
Federal award. supported by adequate property records,
renewal and replacement policies and physical inventories must be taken
(i) Costs which may be unallowable followed for the individual items or
under this section, including directly at least once every two years to ensure
classes of assets involved. that the assets exist and are usable,
associated costs, must be segregated and (2) The depreciation method used to
accounted for separately. During the used, and needed. Statistical sampling
charge the cost of an asset (or group of
pendency of any proceeding covered by techniques may be used in taking these
assets) to accounting periods must
paragraphs (b) and (f) of this section, the inventories. In addition, adequate
reflect the pattern of consumption of the
Federal government must generally depreciation records showing the
asset during its useful life. In the
withhold payment of such costs. amount of depreciation taken each
absence of clear evidence indicating that
However, if in its best interests, the period must also be maintained.
the expected consumption of the asset
Federal government may provide for will be significantly greater in the early § 200.437 Employee health and welfare
conditional payment upon provision of portions than in the later portions of its costs.
adequate security, or other adequate useful life, the straight-line method (a) Costs incurred in accordance with
assurance, and agreement to repay all must be presumed to be the appropriate the non-Federal entity’s documented
unallowable costs, plus interest, if the method. Depreciation methods once policies for the improvement of working
costs are subsequently determined to be used may not be changed unless conditions, employer-employee
unallowable. approved in advance by the cognizant relations, employee health, and
agency. The depreciation methods used employee performance are allowable.
§ 200.436 Depreciation.
to calculate the depreciation amounts (b) Such costs will be equitably
(a) Depreciation is the method for for indirect (F&A) rate purposes must be apportioned to all activities of the non-
allocating the cost of fixed assets to the same methods used by the non- Federal entity. Income generated from
periods benefitting from asset use. The Federal entity for its financial any of these activities will be credited
non-Federal entity may be compensated statements. to the cost thereof unless such income
for the use of its buildings, capital (3) The entire building, including the has been irrevocably sent to employee
improvements, equipment, and software shell and all components, may be welfare organizations.
projects capitalized in accordance with treated as a single asset and depreciated (c) Losses resulting from operating
GAAP, provided that they are used, over a single useful life. A building may food services are allowable only if the
needed in the non-Federal entity’s also be divided into multiple non-Federal entity’s objective is to
activities, and properly allocated to components. Each component item may operate such services on a break-even
Federal awards. Such compensation then be depreciated over its estimated basis. Losses sustained because of
must be made by computing useful life. The building components operating objectives other than the
depreciation. must be grouped into three general above are allowable only:
(1) Where the non-Federal entity can negotiated with the Federal cognizant (c) Costs related to the physical
demonstrate unusual circumstances; agency for indirect cost. custody and control of monies and
and (6) Cost of equipment disposal. If the securities are allowable.
(2) With the approval of the cognizant non-Federal entity is instructed by the (d) Both allowable and unallowable
agency for indirect costs. Federal awarding agency to otherwise fund raising and investment activities
dispose of or transfer the equipment the must be allocated as an appropriate
§ 200.438 Entertainment costs. costs of such disposal or transfer are share of indirect costs under the
Costs of entertainment, including allowable. conditions described in § 200.413 Direct
amusement, diversion, and social costs.
activities and any associated costs are § 200.440 Exchange rates.
unallowable, except where specific (a) Cost increases for fluctuations in § 200.443 Gains and losses on disposition
costs that might otherwise be exchange rates are allowable costs of depreciable assets.
considered entertainment have a subject to the availability of funding, (a) Gains and losses on the sale,
programmatic purpose and are and prior approval by the Federal retirement, or other disposition of
authorized either in the approved awarding agency. The Federal awarding depreciable property must be included
budget for the Federal award or with agency must however ensure that in the year in which they occur as
prior written approval of the Federal adequate funds are available to cover credits or charges to the asset cost
awarding agency. currency fluctuations in order to avoid grouping(s) in which the property was
a violation of the Anti-Deficiency Act. included. The amount of the gain or loss
§ 200.439 Equipment and other capital (b) The non-Federal entity is required to be included as a credit or charge to
expenditures. to make reviews of local currency gains the appropriate asset cost grouping(s) is
(a) See §§ 200.13 Capital to determine the need for additional the difference between the amount
expenditures, 200.33 Equipment, 200.89 federal funding before the expiration realized on the property and the
Special purpose equipment, 200.48 date of the Federal award. Subsequent undepreciated basis of the property.
General purpose equipment, 200.2 adjustments for currency increases may (b) Gains and losses from the
Acquisition cost, and 200.12 Capital be allowable only when the non-Federal disposition of depreciable property
assets. entity provides the Federal awarding must not be recognized as a separate
(b) The following rules of allowability agency with adequate source credit or charge under the following
must apply to equipment and other documentation from a commonly used conditions:
capital expenditures: source in effect at the time the expense (1) The gain or loss is processed
(1) Capital expenditures for general was made, and to the extent that through a depreciation account and is
purpose equipment, buildings, and land sufficient Federal funds are available. reflected in the depreciation allowable
are unallowable as direct charges, under §§ 200.436 Depreciation and
§ 200.441 Fines, penalties, damages and 200.439 Equipment and other capital
except with the prior written approval other settlements.
of the Federal awarding agency or pass- expenditures.
through entity. Costs resulting from non-Federal (2) The property is given in exchange
(2) Capital expenditures for special entity violations of, alleged violations as part of the purchase price of a similar
purpose equipment are allowable as of, or failure to comply with, Federal, item and the gain or loss is taken into
direct costs, provided that items with a state, tribal, local or foreign laws and account in determining the depreciation
regulations are unallowable, except cost basis of the new item.
unit cost of $5,000 or more have the
when incurred as a result of compliance (3) A loss results from the failure to
prior written approval of the Federal
with specific provisions of the Federal maintain permissible insurance, except
awarding agency or pass-through entity.
award, or with prior written approval of as otherwise provided in § 46*200.447
(3) Capital expenditures for
the Federal awarding agency. See also Insurance and indemnification.
improvements to land, buildings, or
§ 200.435 Defense and prosecution of (4) Compensation for the use of the
equipment which materially increase
criminal and civil proceedings, claims, property was provided through use
their value or useful life are unallowable
appeals and patent infringements. allowances in lieu of depreciation.
as a direct cost except with the prior (5) Gains and losses arising from mass
written approval of the Federal § 200.442 Fund raising and investment or extraordinary sales, retirements, or
awarding agency, or pass-through entity. management costs.
other dispositions must be considered
See § 200.436 Depreciation, for rules on (a) Costs of organized fund raising, on a case-by-case basis.
the allowability of depreciation on including financial campaigns, (c) Gains or losses of any nature
buildings, capital improvements, and endowment drives, solicitation of gifts arising from the sale or exchange of
equipment. See also § 200.465 Rental and bequests, and similar expenses property other than the property
costs of real property and equipment. incurred to raise capital or obtain covered in paragraph (a) of this section,
(4) When approved as a direct charge contributions are unallowable. Fund e.g., land, must be excluded in
pursuant to paragraphs (b)(1) through raising costs for the purposes of meeting computing Federal award costs.
(3) of this section, capital expenditures the Federal program objectives are (d) When assets acquired with Federal
will be charged in the period in which allowable with prior written approval funds, in part or wholly, are disposed
the expenditure is incurred, or as from the Federal awarding agency. of, the distribution of the proceeds must
otherwise determined appropriate and Proposal costs are covered in § 200.460 be made in accordance with §§ 200.310
negotiated with the Federal awarding Proposal costs. Insurance Coverage through 200.316
agency. (b) Costs of investment counsel and Property trust relationship.
(5) The unamortized portion of any staff and similar expenses incurred to
equipment written off as a result of a enhance income from investments are § 200.444 General costs of government.
change in capitalization levels may be unallowable except when associated (a) For states, local governments, and
recovered by continuing to claim the with investments covering pension, self- Indian Tribes, the general costs of
otherwise allowable depreciation on the insurance, or other funds which include government are unallowable (except as
equipment, or by amortizing the amount Federal participation allowed by this provided in § 200.474 Travel costs).
to be written off over a period of years Part. Unallowable costs include:
(1) Salaries and expenses of the Office (2) Idle facilities means completely § 200.447 Insurance and indemnification.
of the Governor of a state or the chief unused facilities that are excess to the (a) Costs of insurance required or
executive of a local government or the non-Federal entity’s current needs. approved and maintained, pursuant to
chief executive of an Indian tribe; (3) Idle capacity means the unused the Federal award, are allowable.
(2) Salaries and other expenses of a capacity of partially used facilities. It is (b) Costs of other insurance in
state legislature, tribal council, or the difference between: connection with the general conduct of
similar local governmental body, such (i) That which a facility could achieve activities are allowable subject to the
as a county supervisor, city council, under 100 percent operating time on a following limitations:
school board, etc., whether incurred for one-shift basis less operating (1) Types and extent and cost of
purposes of legislation or executive interruptions resulting from time lost for coverage are in accordance with the
direction; repairs, setups, unsatisfactory materials, non-Federal entity’s policy and sound
(3) Costs of the judicial branch of a and other normal delays and; business practice.
(ii) The extent to which the facility (2) Costs of insurance or of
government;
was actually used to meet demands contributions to any reserve covering
(4) Costs of prosecutorial activities the risk of loss of, or damage to, Federal
unless treated as a direct cost to a during the accounting period. A multi-
shift basis should be used if it can be government property are unallowable
specific program if authorized by statute except to the extent that the Federal
or regulation (however, this does not shown that this amount of usage would
normally be expected for the type of awarding agency has specifically
preclude the allowability of other legal required or approved such costs.
activities of the Attorney General as facility involved.
(3) Costs allowed for business
described in § 200.435 Defense and (4) Cost of idle facilities or idle
interruption or other similar insurance
prosecution of criminal and civil capacity means costs such as
must exclude coverage of management
proceedings, claims, appeals and patent maintenance, repair, housing, rent, and
fees.
infringements); and other related costs, e.g., insurance, (4) Costs of insurance on the lives of
(5) Costs of other general types of interest, and depreciation. These costs trustees, officers, or other employees
government services normally provided could include the costs of idle public holding positions of similar
to the general public, such as fire and safety emergency facilities, responsibilities are allowable only to the
police, unless provided for as a direct telecommunications, or information extent that the insurance represents
cost under a program statute or technology system capacity that is built additional compensation (see § 200.431
regulation. to withstand major fluctuations in load, Compensation—fringe benefits). The
(b) For Indian tribes and Councils Of e.g., consolidated data centers. cost of such insurance when the non-
Governments (COGs) (see § 200.64 Local (b) The costs of idle facilities are Federal entity is identified as the
government), the portion of salaries and unallowable except to the extent that: beneficiary is unallowable.
expenses directly attributable to (1) They are necessary to meet (5) Insurance against defects. Costs of
managing and operating Federal workload requirements which may insurance with respect to any costs
programs by the chief executive and his fluctuate and are allocated appropriately incurred to correct defects in the non-
or her staff is allowable. Up to 50% of to all benefiting programs; or Federal entity’s materials or
these costs can be included in the (2) Although not necessary to meet workmanship are unallowable.
indirect cost calculation without fluctuations in workload, they were (6) Medical liability (malpractice)
documentation. necessary when acquired and are now insurance. Medical liability insurance is
idle because of changes in program an allowable cost of Federal research
§ 200.445 Goods or services for personal requirements, efforts to achieve more programs only to the extent that the
use. economical operations, reorganization, Federal research programs involve
(a) Costs of goods or services for termination, or other causes which human subjects or training of
personal use of the non-Federal entity’s could not have been reasonably participants in research techniques.
employees are unallowable regardless of foreseen. Under the exception stated in Medical liability insurance costs must
whether the cost is reported as taxable this subsection, costs of idle facilities be treated as a direct cost and must be
income to the employees. are allowable for a reasonable period of assigned to individual projects based on
(b) Costs of housing (e.g., time, ordinarily not to exceed one year, the manner in which the insurer
depreciation, maintenance, utilities, depending on the initiative taken to use, allocates the risk to the population
furnishings, rent), housing allowances lease, or dispose of such facilities. covered by the insurance.
and personal living expenses are only (c) The costs of idle capacity are (c) Actual losses which could have
allowable as direct costs regardless of normal costs of doing business and are been covered by permissible insurance
whether reported as taxable income to a factor in the normal fluctuations of (through a self-insurance program or
the employees. In addition, to be usage or indirect cost rates from period otherwise) are unallowable, unless
allowable direct costs must be approved to period. Such costs are allowable, expressly provided for in the Federal
in advance by a Federal awarding provided that the capacity is reasonably award. However, costs incurred because
agency. anticipated to be necessary to carry out of losses not covered under nominal
the purpose of the Federal award or was deductible insurance coverage provided
§ 200.446 Idle facilities and idle capacity. originally reasonable and is not subject in keeping with sound management
(a) As used in this section the to reduction or elimination by use on practice, and minor losses not covered
following terms have the meanings set other Federal awards, subletting, by insurance, such as spoilage,
forth in this section: renting, or sale, in accordance with breakage, and disappearance of small
(1) Facilities means land and sound business, economic, or security hand tools, which occur in the ordinary
buildings or any portion thereof, practices. Widespread idle capacity course of operations, are allowable.
equipment individually or collectively, throughout an entire facility or among a (d) Contributions to a reserve for
or any other tangible capital asset, group of assets having substantially the certain self-insurance programs
wherever located, and whether owned same function may be considered idle including workers’ compensation,
or leased by the non-Federal entity. facilities. unemployment compensation, and
severance pay are allowable subject to (e) Insurance refunds must be credited (iv) The patent or copyright is
the following provisions: against insurance costs in the year the expired.
(1) The type of coverage and the refund is received. (2) Special care should be exercised in
extent of coverage and the rates and (f) Indemnification includes securing determining reasonableness where the
premiums would have been allowed the non-Federal entity against liabilities royalties may have been arrived at as a
had insurance (including reinsurance) to third persons and other losses not result of less-than-arm’s-length
been purchased to cover the risks. compensated by insurance or otherwise. bargaining, such as:
However, provision for known or The Federal government is obligated to (i) Royalties paid to persons,
reasonably estimated self-insured indemnify the non-Federal entity only including corporations, affiliated with
liabilities, which do not become payable to the extent expressly provided for in the non-Federal entity.
for more than one year after the the Federal award, except as provided (ii) Royalties paid to unaffiliated
provision is made, must not exceed the in paragraph (c) of this section. parties, including corporations, under
discounted present value of the liability. an agreement entered into in
The rate used for discounting the § 200.448 Intellectual property. contemplation that a Federal award
liability must be determined by giving (a) Patent costs. would be made.
consideration to such factors as the non- (1) The following costs related to (iii) Royalties paid under an
Federal entity’s settlement rate for those securing patents and copyrights are agreement entered into after a Federal
liabilities and its investment rate of allowable: award is made to a non-Federal entity.
return. (i) Costs of preparing disclosures, (3) In any case involving a patent or
(2) Earnings or investment income on reports, and other documents required copyright formerly owned by the non-
reserves must be credited to those by the Federal award, and of searching Federal entity, the amount of royalty
reserves. the art to the extent necessary to make allowed should not exceed the cost
(3)(i) Contributions to reserves must such disclosures; which would have been allowed had the
be based on sound actuarial principles (ii) Costs of preparing documents and non-Federal entity retained title thereto.
using historical experience and any other patent costs in connection
reasonable assumptions. Reserve levels with the filing and prosecution of a § 200.449 Interest.
must be analyzed and updated at least United States patent application where (a) General. Costs incurred for interest
biennially for each major risk being title or royalty-free license is required on borrowed capital, temporary use of
insured and take into account any by the Federal government to be endowment funds, or the use of the non-
reinsurance, coinsurance, etc. Reserve conveyed to the Federal government; Federal entity’s own funds, however
levels related to employee-related and represented, are unallowable. Financing
coverages will normally be limited to (iii) General counseling services costs (including interest) to acquire,
the value of claims: relating to patent and copyright matters, construct, or replace capital assets are
(A) Submitted and adjudicated but such as advice on patent and copyright allowable, subject to the conditions in
not paid; laws, regulations, clauses, and employee this section.
(B) Submitted but not adjudicated; intellectual property agreements (See (b)(1) Capital assets is defined as
and also § 200.459 Professional service noted in § 200.12 Capital assets. An
(C) Incurred but not submitted. costs). asset cost includes (as applicable)
(ii) Reserve levels in excess of the (2) The following costs related to acquisition costs, construction costs,
amounts based on the above must be securing patents and copyrights are and other costs capitalized in
identified and justified in the cost unallowable: accordance with GAAP.
allocation plan or indirect cost rate (i) Costs of preparing disclosures, (2) For non-Federal entity fiscal years
proposal. reports, and other documents, and of beginning on or after January 1, 2016,
(4) Accounting records, actuarial searching the art to make disclosures intangible assets include patents and
studies, and cost allocations (or billings) not required by the Federal award; computer software. For software
must recognize any significant (ii) Costs in connection with filing development projects, only interest
differences due to types of insured risk and prosecuting any foreign patent attributable to the portion of the project
and losses generated by the various application, or any United States patent costs capitalized in accordance with
insured activities or agencies of the non- application, where the Federal award GAAP is allowable.
Federal entity. If individual does not require conveying title or a (c) Conditions for all non-Federal
departments or agencies of the non- royalty-free license to the Federal entities.
Federal entity experience significantly government. (1) The non-Federal entity uses the
different levels of claims for a particular (b) Royalties and other costs for use of capital assets in support of Federal
risk, those differences are to be patents and copyrights. awards;
recognized by the use of separate (1) Royalties on a patent or copyright (2) The allowable asset costs to
allocations or other techniques resulting or amortization of the cost of acquiring acquire facilities and equipment are
in an equitable allocation. by purchase a copyright, patent, or limited to a fair market value available
(5) Whenever funds are transferred rights thereto, necessary for the proper to the non-Federal entity from an
from a self-insurance reserve to other performance of the Federal award are unrelated (arm’s length) third party.
accounts (e.g., general fund or allowable unless: (3) The non-Federal entity obtains the
unrestricted account), refunds must be (i) The Federal government already financing via an arm’s-length
made to the Federal government for its has a license or the right to free use of transaction (that is, a transaction with
share of funds transferred, including the patent or copyright. an unrelated third party); or claims
earned or imputed interest from the date (ii) The patent or copyright has been reimbursement of actual interest cost at
of transfer and debt interest, if adjudicated to be invalid, or has been a rate available via such a transaction.
applicable, chargeable in accordance administratively determined to be (4) The non-Federal entity limits
with applicable Federal cognizant invalid. claims for Federal reimbursement of
agency for indirect cost, claims (iii) The patent or copyright is interest costs to the least expensive
collection regulations. considered to be unenforceable. alternative. For example, a capital lease
may be determined less costly than costs to be allowable, the non-Federal (b) Executive lobbying costs. Costs
purchasing through debt financing, in entity must have incurred the interest incurred in attempting to improperly
which case reimbursement must be costs for buildings after October 1, 1980, influence either directly or indirectly,
limited to the amount of interest or for land and equipment after an employee or officer of the executive
determined if leasing had been used. September 1, 1995. branch of the Federal government to
(5) The non-Federal entity expenses (1) The requirement to offset interest give consideration or to act regarding a
or capitalizes allowable interest cost in earned on borrowed funds against Federal award or a regulatory matter are
accordance with GAAP. current allowable interest cost unallowable. Improper influence means
(6) Earnings generated by the (paragraph (c)(5), above) also applies to any influence that induces or tends to
investment of borrowed funds pending earnings on debt service reserve funds. induce a Federal employee or officer to
their disbursement for the asset costs are (2) The non-Federal entity will give consideration or to act regarding a
used to offset the current period’s negotiate the amount of allowable Federal award or regulatory matter on
allowable interest cost, whether that interest cost related to the acquisition of any basis other than the merits of the
cost is expensed or capitalized. Earnings facilities with asset costs of $1 million matter.
subject to being reported to the Federal or more, as outlined in paragraph (c)(7) (c) In addition to the above, the
Internal Revenue Service under of this section. For this purpose, a non- following restrictions are applicable to
arbitrage requirements are excludable. Federal entity must consider only cash nonprofit organizations and IHEs:
(7) The following conditions must inflows and outflows attributable to that (1) Costs associated with the
apply to debt arrangements over $1 portion of the real property used for following activities are unallowable:
million to purchase or construct Federal awards. (i) Attempts to influence the outcomes
facilities, unless the non-Federal entity (e) Additional conditions for IHEs. of any Federal, state, or local election,
makes an initial equity contribution to For costs to be allowable, the IHE must referendum, initiative, or similar
the purchase of 25 percent or more. For have incurred the interest costs after procedure, through in-kind or cash
this purpose, ‘‘initial equity September 23, 1982, in connection with contributions, endorsements, publicity,
contribution’’ means the amount or acquisitions of capital assets that or similar activity;
value of contributions made by the non- occurred after that date. (ii) Establishing, administering,
Federal entity for the acquisition of (f) Additional condition for nonprofit contributing to, or paying the expenses
facilities prior to occupancy. organizations. For costs to be allowable, of a political party, campaign, political
(i) The non-Federal entity must the nonprofit organization incurred the action committee, or other organization
reduce claims for reimbursement of interest costs after September 29, 1995, established for the purpose of
interest cost by an amount equal to in connection with acquisitions of influencing the outcomes of elections in
imputed interest earnings on excess capital assets that occurred after that the United States;
cash flow attributable to the portion of date. (iii) Any attempt to influence:
the facility used for Federal awards. (g) The interest allowability (A)The introduction of Federal or
(ii) The non-Federal entity must provisions of this section do not apply state legislation;
impute interest on excess cash flow as to a nonprofit organization subject to (B) The enactment or modification of
follows: ‘‘full coverage’’ under the Cost any pending Federal or state legislation
(A) Annually, the non-Federal entity Accounting Standards (CAS), as defined through communication with any
must prepare a cumulative (from the at 48 CFR 9903.201–2(a). The non- member or employee of the Congress or
inception of the project) report of Federal entity’s Federal awards are state legislature (including efforts to
monthly cash inflows and outflows, instead subject to CAS 414 (48 CFR influence state or local officials to
regardless of the funding source. For 9904.414), ‘‘Cost of Money as an engage in similar lobbying activity);
this purpose, inflows consist of Federal Element of the Cost of Facilities (C) The enactment or modification of
reimbursement for depreciation, Capital’’, and CAS 417 (48 CFR any pending Federal or state legislation
amortization of capitalized construction 9904.417), ‘‘Cost of Money as an by preparing, distributing, or using
interest, and annual interest cost. Element of the Cost of Capital Assets publicity or propaganda, or by urging
Outflows consist of initial equity Under Construction’’. members of the general public, or any
contributions, debt principal payments segment thereof, to contribute to or
§ 200.450 Lobbying. participate in any mass demonstration,
(less the pro-rata share attributable to
the cost of land), and interest payments. (a) The cost of certain influencing march, rally, fund raising drive,
(B) To compute monthly cash inflows activities associated with obtaining lobbying campaign or letter writing or
and outflows, the non-Federal entity grants, contracts, cooperative telephone campaign; or
must divide the annual amounts agreements, or loans is an unallowable (D) Any government official or
determined in step (i) by the number of cost. Lobbying with respect to certain employee in connection with a decision
months in the year (usually 12) that the grants, contracts, cooperative to sign or veto enrolled legislation;
building is in service. agreements, and loans is governed by (iv) Legislative liaison activities,
(C) For any month in which relevant statutes, including among including attendance at legislative
cumulative cash inflows exceed others, the provisions of 31 U.S.C. 1352, sessions or committee hearings,
cumulative outflows, interest must be as well as the common rule, ‘‘New gathering information regarding
calculated on the excess inflows for that Restrictions on Lobbying’’ published at legislation, and analyzing the effect of
month and be treated as a reduction to 55 FR 6736 (February 26, 1990), legislation, when such activities are
allowable interest cost. The rate of including definitions, and the Office of carried on in support of or in knowing
Management and Budget preparation for an effort to engage in
interest to be used must be the three-

month Treasury bill closing rate as of ‘‘Governmentwide Guidance for New unallowable lobbying.
the last business day of that month. Restrictions on Lobbying’’ and notices (2) The following activities are
(8) Interest attributable to a fully published at 54 FR 52306 (December 20, excepted from the coverage of paragraph
depreciated asset is unallowable. 1989), 55 FR 24540 (June 15, 1990), 57 (c)(1) of this section:
(d) Additional conditions for states, FR 1772 (January 15, 1992), and 61 FR (i) Technical and factual presentations
local governments and Indian tribes. For 1412 (January 19, 1996). on topics directly related to the
performance of a grant, contract, or (See also § 200.415 Required § 200.452 Maintenance and repair costs.
other agreement (through hearing certifications.) Costs incurred for utilities, insurance,
testimony, statements, or letters to the (vii)(A) Time logs, calendars, or security, necessary maintenance,
Congress or a state legislature, or similar records are not required to be janitorial services, repair, or upkeep of
subdivision, member, or cognizant staff created for purposes of complying with buildings and equipment (including
member thereof), in response to a the record keeping requirements in Federal property unless otherwise
documented request (including a § 200.302 Financial management with provided for) which neither add to the
Congressional Record notice requesting respect to lobbying costs during any permanent value of the property nor
testimony or statements for the record at particular calendar month when: appreciably prolong its intended life,
a regularly scheduled hearing) made by (1) The employee engages in lobbying but keep it in an efficient operating
the non-Federal entity’s member of (as defined in paragraphs (c)(1) and condition, are allowable. Costs incurred
congress, legislative body or a (c)(2) of this section) 25 percent or less for improvements which add to the
subdivision, or a cognizant staff member of the employee’s compensated hours of permanent value of the buildings and
thereof, provided such information is employment during that calendar equipment or appreciably prolong their
readily obtainable and can be readily month; and intended life must be treated as capital
put in deliverable form, and further (2) Within the preceding five-year expenditures (see § 200.439 Equipment
provided that costs under this section period, the non-Federal entity has not and other capital expenditures). These
for travel, lodging or meals are materially misstated allowable or costs are only allowable to the extent
unallowable unless incurred to offer unallowable costs of any nature, not paid through rental or other
testimony at a regularly scheduled including legislative lobbying costs. agreements.
Congressional hearing pursuant to a
(B) When conditions in paragraph § 200.453 Materials and supplies costs,
written request for such presentation
(c)(2)(vii)(A)(1) and (2) of this section including costs of computing devices.
made by the Chairman or Ranking
are met, non-Federal entities are not (a) Costs incurred for materials,
Minority Member of the Committee or
required to establish records to support supplies, and fabricated parts necessary
Subcommittee conducting such
the allowability of claimed costs in to carry out a Federal award are
hearings;
(ii) Any lobbying made unallowable addition to records already required or allowable.
by paragraph (c)(1)(iii) of this section to maintained. Also, when conditions in (b) Purchased materials and supplies
influence state legislation in order to paragraphs (c)(2)(vii)(A)(1) and (2) of must be charged at their actual prices,
directly reduce the cost, or to avoid this section are met, the absence of time net of applicable credits. Withdrawals
material impairment of the non-Federal logs, calendars, or similar records will from general stores or stockrooms
entity’s authority to perform the grant, not serve as a basis for disallowing costs should be charged at their actual net
contract, or other agreement; or by contesting estimates of lobbying time cost under any recognized method of
(iii) Any activity specifically spent by employees during a calendar pricing inventory withdrawals,
authorized by statute to be undertaken month. consistently applied. Incoming
with funds from the Federal award. (viii) The Federal awarding agency transportation charges are a proper part
(iv) Any activity excepted from the must establish procedures for resolving of materials and supplies costs.
definitions of ‘‘lobbying’’ or in advance, in consultation with OMB, (c) Materials and supplies used for the
‘‘influencing legislation’’ by the Internal any significant questions or performance of a Federal award may be
Revenue Code provisions that require disagreements concerning the charged as direct costs. In the specific
nonprofit organizations to limit their interpretation or application of this case of computing devices, charging as
participation in direct and ‘‘grass roots’’ section. Any such advance resolutions direct costs is allowable for devices that
lobbying activities in order to retain must be binding in any subsequent are essential and allocable, but not
their charitable deduction status and settlements, audits, or investigations solely dedicated, to the performance of
avoid punitive excise taxes, I.R.C. with respect to that grant or contract for a Federal award.
§§ 501(c)(3), 501(h), 4911(a), including: purposes of interpretation of this Part, (d) Where federally-donated or
(A) Nonpartisan analysis, study, or provided, however, that this must not be furnished materials are used in
research reports; construed to prevent a contractor or performing the Federal award, such
(B) Examinations and discussions of non-Federal entity from contesting the materials will be used without charge.
broad social, economic, and similar lawfulness of such a determination.
problems; and § 200.454 Memberships, subscriptions,
(C) Information provided upon § 200.451 Losses on other awards or and professional activity costs.
contracts.
request by a legislator for technical (a) Costs of the non-Federal entity’s
advice and assistance, as defined by Any excess of costs over income membership in business, technical, and
I.R.C. § 4911(d)(2) and 26 CFR 56.4911– under any other award or contract of professional organizations are
2(c)(1)–(c)(3). any nature is unallowable. This allowable.
(v) When a non-Federal entity seeks includes, but is not limited to, the non- (b) Costs of the non-Federal entity’s
reimbursement for indirect (F&A) costs, Federal entity’s contributed portion by subscriptions to business, professional,
total lobbying costs must be separately reason of cost-sharing agreements or any and technical periodicals are allowable.
identified in the indirect (F&A) cost rate under-recoveries through negotiation of (c) Costs of membership in any civic
proposal, and thereafter treated as other flat amounts for indirect (F&A) costs. or community organization are
unallowable activity costs in accordance Also, any excess of costs over allowable with prior approval by the
with the procedures of § 200.413 Direct authorized funding levels transferred Federal awarding agency or pass-
costs. from any award or contract to another through entity.

(vi) The non-Federal entity must award or contract is unallowable. All (d) Costs of membership in any
submit as part of its annual indirect losses are not allowable indirect (F&A) country club or social or dining club or
(F&A) cost rate proposal a certification costs and are required to be included in organization are unallowable.
that the requirements and standards of the appropriate indirect cost rate base (e) Costs of membership in
this section have been complied with. for allocation of indirect costs. organizations whose primary purpose is
lobbying are unallowable. See also factors is necessarily determinative. (b) Page charges for professional
§ 200.450 Lobbying. However, the following factors are journal publications are allowable
relevant: where:
§ 200.455 Organization costs. (1) The publications report work
(1) The nature and scope of the
Costs such as incorporation fees, service rendered in relation to the supported by the Federal government;
brokers’ fees, fees to promoters, service required. and
organizers or management consultants, (2) The necessity of contracting for the (2) The charges are levied impartially
attorneys, accountants, or investment on all items published by the journal,
service, considering the non-Federal
counselor, whether or not employees of whether or not under a Federal award.
entity’s capability in the particular area.
the non-Federal entity in connection (3) The non-Federal entity may charge
(3) The past pattern of such costs,
with establishment or reorganization of the Federal award before closeout for
an organization, are unallowable except particularly in the years prior to Federal
awards. the costs of publication or sharing of
with prior approval of the Federal research results if the costs are not
awarding agency. (4) The impact of Federal awards on
the non-Federal entity’s business (i.e., incurred during the period of
§ 200.456 Participant support costs. what new problems have arisen). performance of the Federal award.
Participant support costs as defined in (5) Whether the proportion of Federal § 200.462 Rearrangement and
§ 200.75 Participant support costs are work to the non-Federal entity’s total reconversion costs.
allowable with the prior approval of the business is such as to influence the non- (a) Costs incurred for ordinary and
Federal awarding agency. Federal entity in favor of incurring the normal rearrangement and alteration of
cost, particularly where the services facilities are allowable as indirect costs.
§ 200.457 Plant and security costs.
rendered are not of a continuing nature Special arrangements and alterations
Necessary and reasonable expenses and have little relationship to work
incurred for routine and security to costs incurred specifically for a Federal
under Federal awards. award are allowable as a direct cost with
protect facilities, personnel, and work (6) Whether the service can be
products are allowable. Such costs the prior approval of the Federal
performed more economically by direct awarding agency or pass-through entity.
include, but are not limited to, wages employment rather than contracting.
and uniforms of personnel engaged in (b) Costs incurred in the restoration or
(7) The qualifications of the rehabilitation of the non-Federal entity’s
security activities; equipment; barriers;
individual or concern rendering the facilities to approximately the same
protective (non-military) gear, devices,
service and the customary fees charged, condition existing immediately prior to
and equipment; contractual security
especially on non-federally funded commencement of Federal awards, less
services; and consultants. Capital
activities. costs related to normal wear and tear,
expenditures for plant security purposes
are subject to § 200.439 Equipment and (8) Adequacy of the contractual are allowable.
other capital expenditures. agreement for the service (e.g.,
description of the service, estimate of § 200.463 Recruiting costs.
§ 200.458 Pre-award costs. time required, rate of compensation, and (a) Subject to paragraphs (b) and (c) of
Pre-award costs are those incurred termination provisions). this section, and provided that the size
prior to the effective date of the Federal (c) In addition to the factors in of the staff recruited and maintained is
award directly pursuant to the paragraph (b) of this section, to be in keeping with workload requirements,
negotiation and in anticipation of the allowable, retainer fees must be costs of ‘‘help wanted’’ advertising,
Federal award where such costs are supported by evidence of bona fide operating costs of an employment office
necessary for efficient and timely services available or rendered. necessary to secure and maintain an
performance of the scope of work. Such adequate staff, costs of operating an
§ 200.460 Proposal costs. aptitude and educational testing
costs are allowable only to the extent
that they would have been allowable if Proposal costs are the costs of program, travel costs of employees
incurred after the date of the Federal preparing bids, proposals, or while engaged in recruiting personnel,
award and only with the written applications on potential Federal and travel costs of applicants for interviews
approval of the Federal awarding non-Federal awards or projects, for prospective employment, and
agency. including the development of data relocation costs incurred incident to
necessary to support the non-Federal recruitment of new employees, are
§ 200.459 Professional service costs. entity’s bids or proposals. Proposal costs allowable to the extent that such costs
(a) Costs of professional and of the current accounting period of both are incurred pursuant to the non-
consultant services rendered by persons successful and unsuccessful bids and Federal entity’s standard recruitment
who are members of a particular proposals normally should be treated as program. Where the non-Federal entity
profession or possess a special skill, and indirect (F&A) costs and allocated uses employment agencies, costs not in
who are not officers or employees of the currently to all activities of the non- excess of standard commercial rates for
non-Federal entity, are allowable, Federal entity. No proposal costs of past such services are allowable.
subject to paragraphs (b) and (c) when accounting periods will be allocable to (b) Special emoluments, fringe
reasonable in relation to the services the current period. benefits, and salary allowances incurred
rendered and when not contingent upon to attract professional personnel that do
recovery of the costs from the Federal § 200.461 Publication and printing costs. not meet the test of reasonableness or do
government. In addition, legal and (a) Publication costs for electronic and not conform with the established
related services are limited under print media, including distribution, practices of the non-Federal entity, are
§ 200.435 Defense and prosecution of promotion, and general handling are unallowable.
criminal and civil proceedings, claims, allowable. If these costs are not (c) Where relocation costs incurred
appeals and patent infringements. identifiable with a particular cost incident to recruitment of a new
(b) In determining the allowability of objective, they should be allocated as employee have been funded in whole or
costs in a particular case, no single indirect costs to all benefiting activities in part as a direct cost to a Federal
factor or any special combination of of the non-Federal entity. award, and the newly hired employee
resigns for reasons within the former home after the settlement or (c) Rental costs under ‘‘less-than-
employee’s control within 12 months lease date of the employee’s new arm’s-length’’ leases are allowable only
after hire, the non-Federal entity will be permanent home, such as maintenance up to the amount (as explained in
required to refund or credit the Federal of buildings and grounds (exclusive of paragraph (b) of this section). For this
share of such relocation costs to the fixing-up expenses), utilities, taxes, and purpose, a less-than-arm’s-length lease
Federal government. See also § 200.464 property insurance. is one under which one party to the
Relocation costs of employees. (5) Other necessary and reasonable lease agreement is able to control or
(d) Short-term, travel visa costs (as expenses normally incident to substantially influence the actions of the
opposed to longer-term, immigration relocation, such as the costs of canceling other. Such leases include, but are not
visas) are generally allowable expenses an unexpired lease, transportation of limited to those between:
that may be proposed as a direct cost. personal property, and purchasing (1) Divisions of the non-Federal
Since short-term visas are issued for a insurance against loss of or damages to entity;
specific period and purpose, they can be personal property. The cost of canceling (2) The non-Federal entity under
clearly identified as directly connected an unexpired lease is limited to three common control through common
to work performed on a Federal award. times the monthly rental. officers, directors, or members; and
For these costs to be directly charged to (c) Allowable relocation costs for new (3) The non-Federal entity and a
a Federal award, they must: employees are limited to those
(1) Be critical and necessary for the director, trustee, officer, or key
described in paragraphs (b)(1) and (2) of employee of the non-Federal entity or
conduct of the project; this section. When relocation costs
(2) Be allowable under the applicable an immediate family member, either
incurred incident to the recruitment of directly or through corporations, trusts,
cost principles; new employees have been allowed
(3) Be consistent with the non-Federal or similar arrangements in which they
either as a direct or indirect cost and the hold a controlling interest. For example,
entity’s cost accounting practices and employee resigns for reasons within the
non-Federal entity policy; and the non-Federal entity may establish a
employee’s control within 12 months separate corporation for the sole
(4) Meet the definition of ‘‘direct cost’’
after hire, the non-Federal entity must purpose of owning property and leasing
as described in the applicable cost
refund or credit the Federal government it back to the non-Federal entity.
principles.
for its share of the cost. However, the
(4) Family members include one party
§ 200.464 Relocation costs of employees. costs of travel to an overseas location
with any of the following relationships
(a) Relocation costs are costs incident must be considered travel costs in
to another party:
to the permanent change of duty accordance with § 200.474 Travel costs,
and not this § 200.464 Relocation costs (i) Spouse, and parents thereof;
assignment (for an indefinite period or
of employees, for the purpose of this (ii) Children, and spouses thereof;
for a stated period of not less than 12
months) of an existing employee or paragraph if dependents are not (iii) Parents, and spouses thereof;
upon recruitment of a new employee. permitted at the location for any reason (iv) Siblings, and spouses thereof;
Relocation costs are allowable, subject and the costs do not include costs of (v) Grandparents and grandchildren,
to the limitations described in transporting household goods. and spouses thereof;
paragraphs (b), (c), and (d) of this (d) The following costs related to (vi) Domestic partner and parents
section, provided that: relocation are unallowable: thereof, including domestic partners of
(1) The move is for the benefit of the (1) Fees and other costs associated any individual in 2 through 5 of this
employer. with acquiring a new home. definition; and
(2) Reimbursement to the employee is (2) A loss on the sale of a former (vii) Any individual related by blood
in accordance with an established home. or affinity whose close association with
written policy consistently followed by (3) Continuing mortgage principal and the employee is the equivalent of a
the employer. interest payments on a home being sold. family relationship.
(3) The reimbursement does not (4) Income taxes paid by an employee
(5) Rental costs under leases which
exceed the employee’s actual (or related to reimbursed relocation costs.
are required to be treated as capital
reasonably estimated) expenses. leases under GAAP are allowable only
§ 200.465 Rental costs of real property and
(b) Allowable relocation costs for
equipment. up to the amount (as explained in
current employees are limited to the
(a) Subject to the limitations paragraph (b) of this section) that would
following:
(1) The costs of transportation of the described in paragraphs (b) through (d) be allowed had the non-Federal entity
employee, members of his or her of this section, rental costs are allowable purchased the property on the date the
immediate family and his household, to the extent that the rates are lease agreement was executed. The
and personal effects to the new location. reasonable in light of such factors as: provisions of GAAP must be used to
(2) The costs of finding a new home, rental costs of comparable property, if determine whether a lease is a capital
such as advance trips by employees and any; market conditions in the area; lease. Interest costs related to capital
spouses to locate living quarters and alternatives available; and the type, life leases are allowable to the extent they
temporary lodging during the transition expectancy, condition, and value of the meet the criteria in § 200.449 Interest.
period, up to maximum period of 30 property leased. Rental arrangements Unallowable costs include amounts
calendar days. should be reviewed periodically to paid for profit, management fees, and
(3) Closing costs, such as brokerage, determine if circumstances have taxes that would not have been incurred
legal, and appraisal fees, incident to the changed and other options are available. had the non-Federal entity purchased
disposition of the employee’s former (b) Rental costs under ‘‘sale and lease the property.
home. These costs, together with those back’’ arrangements are allowable only (6) The rental of any property owned
described in (4), are limited to 8 per up to the amount that would be allowed by any individuals or entities affiliated
cent of the sales price of the employee’s had the non-Federal entity continued to with the non-Federal entity, to include
former home. own the property. This amount would commercial or residential real estate, for
(4) The continuing costs of ownership include expenses such as depreciation, purposes such as the home office
(for up to six months) of the vacant maintenance, taxes, and insurance. workspace is unallowable.
§ 200.466 Scholarships and student aid into account any items of income or which are paid or accrued in accordance
costs. Federal financing that qualify as with GAAP, and payments made to
(a) Costs of scholarships, fellowships, applicable credits under § 200.406 local governments in lieu of taxes which
and other programs of student aid at Applicable credits. are commensurate with the local
IHEs are allowable only when the (b) The costs of such services, when government services received are
purpose of the Federal award is to material, must be charged directly to allowable, except for:
provide training to selected participants applicable awards based on actual usage (i) Taxes from which exemptions are
and the charge is approved by the of the services on the basis of a schedule available to the non-Federal entity
Federal awarding agency. However, of rates or established methodology that: directly or which are available to the
tuition remission and other forms of (1) Does not discriminate between non-Federal entity based on an
compensation paid as, or in lieu of, activities under Federal awards and exemption afforded the Federal
wages to students performing necessary other activities of the non-Federal government and, in the latter case, when
work are allowable provided that: entity, including usage by the non- the Federal awarding agency makes
(1) The individual is conducting Federal entity for internal purposes, and available the necessary exemption
activities necessary to the Federal (2) Is designed to recover only the certificates,
award; aggregate costs of the services. The costs (ii) Special assessments on land
(2) Tuition remission and other of each service must consist normally of which represent capital improvements,
support are provided in accordance both its direct costs and its allocable and
with established policy of the IHE and share of all indirect (F&A) costs. Rates (iii) Federal income taxes.
consistently provided in a like manner must be adjusted at least biennially, and (2) Any refund of taxes, and any
to students in return for similar must take into consideration over/under payment to the non-Federal entity of
activities conducted under Federal applied costs of the previous period(s). interest thereon, which were allowed as
awards as well as other activities; and (c) Where the costs incurred for a Federal award costs, will be credited
(3) During the academic period, the service are not material, they may be either as a cost reduction or cash refund,
student is enrolled in an advanced allocated as indirect (F&A) costs. as appropriate, to the Federal
degree program at a non-Federal entity (d) Under some extraordinary government. However, any interest
or affiliated institution and the activities circumstances, where it is in the best actually paid or credited to an non-
of the student in relation to the Federal interest of the Federal government and Federal entity incident to a refund of
award are related to the degree program; the non-Federal entity to establish tax, interest, and penalty will be paid or
(4) The tuition or other payments are alternative costing arrangements, such credited to the Federal government only
reasonable compensation for the work arrangements may be worked out with to the extent that such interest accrued
performed and are conditioned the Federal cognizant agency for over the period during which the non-
explicitly upon the performance of indirect costs. Federal entity has been reimbursed by
necessary work; and § 200.469 Student activity costs. the Federal government for the taxes,
(5) It is the IHE’s practice to similarly interest, and penalties.
Costs incurred for intramural
compensate students under Federal (c) Value Added Tax (VAT) Foreign
activities, student publications, student
awards as well as other activities. taxes charged for the purchase of goods
clubs, and other student activities, are
(b) Charges for tuition remission and or services that a non-Federal entity is
unallowable, unless specifically
other forms of compensation paid to legally required to pay in country is an
provided for in the Federal award.
students as, or in lieu of, salaries and allowable expense under Federal
wages must be subject to the reporting § 200.470 Taxes (including Value Added awards. Foreign tax refunds or
requirements in § 200.430 Tax). applicable credits under Federal awards
Compensation—personal services, and (a) For states, local governments and refer to receipts, or reduction of
must be treated as direct or indirect cost Indian tribes: expenditures, which operate to offset or
in accordance with the actual work (1) Taxes that a governmental unit is reduce expense items that are allocable
being performed. Tuition remission may legally required to pay are allowable, to Federal awards as direct or indirect
be charged on an average rate basis. See except for self-assessed taxes that costs. To the extent that such credits
also § 200.431 Compensation—fringe disproportionately affect Federal accrued or received by the non-Federal
benefits. programs or changes in tax policies that entity relate to allowable cost, these
disproportionately affect Federal costs must be credited to the Federal
§ 200.467 Selling and marketing costs. programs. awarding agency either as costs or cash
Costs of selling and marketing any (2) Gasoline taxes, motor vehicle fees, refunds. If the costs are credited back to
products or services of the non-Federal and other taxes that are in effect user the Federal award, the non-Federal
entity (unless allowed under § 200.421 fees for benefits provided to the Federal entity may reduce the Federal share of
Advertising and public relations.) are government are allowable. costs by the amount of the foreign tax
unallowable, except as direct costs, with (3) This provision does not restrict the reimbursement, or where Federal award
prior approval by the Federal awarding authority of the Federal awarding has not expired, use the foreign
agency when necessary for the agency to identify taxes where Federal government tax refund for approved
performance of the Federal award. participation is inappropriate. Where activities under the Federal award with
the identification of the amount of prior approval of the Federal awarding
§ 200.468 Specialized service facilities. unallowable taxes would require an agency.
(a) The costs of services provided by inordinate amount of effort, the
highly complex or specialized facilities § 200.471 Termination costs.
cognizant agency for indirect costs may

operated by the non-Federal entity, such accept a reasonable approximation Termination of a Federal award
as computing facilities, wind tunnels, thereof. generally gives rise to the incurrence of
and reactors are allowable, provided the (b) For nonprofit organizations and costs, or the need for special treatment
charges for the services meet the IHEs: of costs, which would not have arisen
conditions of either paragraphs (b) or (c) (1) In general, taxes which the non- had the Federal award not been
of this section, and, in addition, take Federal entity is required to pay and terminated. Cost principles covering
these items are set forth in this section. (1) The amount of such rental claimed received cannot readily be made,
They are to be used in conjunction with does not exceed the reasonable use inbound transportation cost may be
the other provisions of this Part in value of the property leased for the charged to the appropriate indirect
termination situations. period of the Federal award and such (F&A) cost accounts if the non-Federal
(a) The cost of items reasonably further period as may be reasonable, and entity follows a consistent, equitable
usable on the non-Federal entity’s other (2) The non-Federal entity makes all procedure in this respect. Outbound
work must not be allowable unless the reasonable efforts to terminate, assign, freight, if reimbursable under the terms
non-Federal entity submits evidence settle, or otherwise reduce the cost of and conditions of the Federal award,
that it would not retain such items at such lease. There also may be included should be treated as a direct cost.
cost without sustaining a loss. In the cost of alterations of such leased
deciding whether such items are property, provided such alterations § 200.474 Travel costs.
reasonably usable on other work of the were necessary for the performance of (a) General. Travel costs are the
non-Federal entity, the Federal the Federal award, and of reasonable expenses for transportation, lodging,
awarding agency should consider the restoration required by the provisions of subsistence, and related items incurred
non-Federal entity’s plans and orders the lease. by employees who are in travel status
for current and scheduled activity. (e) Settlement expenses including the on official business of the non-Federal
Contemporaneous purchases of common following are generally allowable: entity. Such costs may be charged on an
items by the non-Federal entity must be (1) Accounting, legal, clerical, and actual cost basis, on a per diem or
regarded as evidence that such items are similar costs reasonably necessary for: mileage basis in lieu of actual costs
reasonably usable on the non-Federal (i) The preparation and presentation incurred, or on a combination of the
entity’s other work. Any acceptance of to the Federal awarding agency of two, provided the method used is
common items as allocable to the settlement claims and supporting data applied to an entire trip and not to
terminated portion of the Federal award with respect to the terminated portion of selected days of the trip, and results in
must be limited to the extent that the the Federal award, unless the charges consistent with those normally
quantities of such items on hand, in termination is for cause (see Subpart allowed in like circumstances in the
transit, and on order are in excess of the D—Post Federal Award Requirements of non-Federal entity’s non-federally-
reasonable quantitative requirements of this Part, §§ 200.338 Remedies for funded activities and in accordance
other work. Noncompliance through 200.342 Effects with non-Federal entity’s written travel
(b) If in a particular case, despite all of Suspension and termination); and reimbursement policies.
reasonable efforts by the non-Federal (ii) The termination and settlement of Notwithstanding the provisions of
entity, certain costs cannot be subawards. § 200.444 General costs of government,
discontinued immediately after the (2) Reasonable costs for the storage, travel costs of officials covered by that
effective date of termination, such costs transportation, protection, and section are allowable with the prior
are generally allowable within the disposition of property provided by the written approval of the Federal
limitations set forth in this Part, except Federal government or acquired or awarding agency or pass-through entity
that any such costs continuing after produced for the Federal award. when they are specifically related to the
termination due to the negligent or (f) Claims under subawards, including Federal award.
willful failure of the non-Federal entity the allocable portion of claims which (b) Lodging and subsistence. Costs
to discontinue such costs must be are common to the Federal award and incurred by employees and officers for
unallowable. to other work of the non-Federal entity, travel, including costs of lodging, other
(c) Loss of useful value of special are generally allowable. An appropriate subsistence, and incidental expenses,
tooling, machinery, and equipment is share of the non-Federal entity’s must be considered reasonable and
generally allowable if: indirect costs may be allocated to the otherwise allowable only to the extent
(1) Such special tooling, special amount of settlements with contractors such costs do not exceed charges
machinery, or equipment is not and/or subrecipients, provided that the normally allowed by the non-Federal
reasonably capable of use in the other amount allocated is otherwise entity in its regular operations as the
work of the non-Federal entity, consistent with the basic guidelines result of the non-Federal entity’s written
(2) The interest of the Federal contained in § 200.414 Indirect (F&A) travel policy. In addition, if these costs
government is protected by transfer of costs. The indirect costs so allocated are charged directly to the Federal
title or by other means deemed must exclude the same and similar costs award documentation must justify that:
appropriate by the Federal awarding claimed directly or indirectly as (1) Participation of the individual is
agency (see also § 200.313 Equipment, settlement expenses. necessary to the Federal award; and
paragraph (d), and (2) The costs are reasonable and
(3) The loss of useful value for any § 200.472 Training and education costs. consistent with non-Federal entity’s
one terminated Federal award is limited The cost of training and education established travel policy.
to that portion of the acquisition cost provided for employee development is (c)(1) Temporary dependent care costs
which bears the same ratio to the total allowable. (as dependent is defined in 26 U.S.C.
acquisition cost as the terminated 152) above and beyond regular
portion of the Federal award bears to the § 200.473 Transportation costs. dependent care that directly results
entire terminated Federal award and Costs incurred for freight, express, from travel to conferences is allowable
other Federal awards for which the cartage, postage, and other provided that:
special tooling, machinery, or transportation services relating either to (i) The costs are a direct result of the
equipment was acquired. goods purchased, in process, or
individual’s travel for the Federal

(d) Rental costs under unexpired delivered, are allowable. When such award;
leases are generally allowable where costs can readily be identified with the (ii) The costs are consistent with the
clearly shown to have been reasonably items involved, they may be charged non-Federal entity’s documented travel
necessary for the performance of the directly as transportation costs or added policy for all entity travel; and
terminated Federal award less the to the cost of such items. Where (iii) Are only temporary during the
residual value of such leases, if: identification with the materials travel period.
(2) Travel costs for dependents are Subpart F—Audit Requirements (f) Subrecipients and Contractors. An
unallowable, except for travel of auditee may simultaneously be a
duration of six months or more with General recipient, a subrecipient, and a
prior approval of the Federal awarding § 200.500 Purpose. contractor. Federal awards expended as
agency. See also § 200.432 Conferences. This Part sets forth standards for a recipient or a subrecipient are subject
(3) In the absence of an acceptable, obtaining consistency and uniformity to audit under this Part. The payments
written non-Federal entity policy among Federal agencies for the audit of received for goods or services provided
regarding travel costs, the rates and non-Federal entities expending Federal as a contractor are not Federal awards.
amounts established under 5 U.S.C. awards. Section § 200.330 Subrecipient and
5701–11, (‘‘Travel and Subsistence contractor determinations should be
Audits considered in determining whether
Expenses; Mileage Allowances’’), or by
the Administrator of General Services, payments constitute a Federal award or
§ 200.501 Audit requirements.
or by the President (or his or her a payment for goods or services
(a) Audit required. A non-Federal provided as a contractor.
designee) pursuant to any provisions of entity that expends $750,000 or more (g) Compliance responsibility for
such subchapter must apply to travel during the non-Federal entity’s fiscal contractors. In most cases, the auditee’s
under Federal awards (48 CFR 31.205– year in Federal awards must have a compliance responsibility for
46(a)). single or program-specific audit contractors is only to ensure that the
(d) Commercial air travel. conducted for that year in accordance procurement, receipt, and payment for
(1) Airfare costs in excess of the basic with the provisions of this Part. goods and services comply with Federal
(b) Single audit. A non-Federal entity statutes, regulations, and the terms and
least expensive unrestricted
that expends $750,000 or more during conditions of Federal awards. Federal
accommodations class offered by
the non-Federal entity’s fiscal year in award compliance requirements
commercial airlines are unallowable
Federal awards must have a single audit normally do not pass through to
except when such accommodations
conducted in accordance with § 200.514 contractors. However, the auditee is
would:
Scope of audit except when it elects to responsible for ensuring compliance for
(i) Require circuitous routing; have a program-specific audit procurement transactions which are
(ii) Require travel during conducted in accordance with structured such that the contractor is
unreasonable hours; paragraph (c) of this section. responsible for program compliance or
(c) Program-specific audit election. the contractor’s records must be
(iii) Excessively prolong travel;
When an auditee expends Federal reviewed to determine program
(iv) Result in additional costs that awards under only one Federal program compliance. Also, when these
would offset the transportation savings; (excluding R&D) and the Federal procurement transactions relate to a
or program’s statutes, regulations, or the major program, the scope of the audit
(v) Offer accommodations not terms and conditions of the Federal must include determining whether these
reasonably adequate for the traveler’s award do not require a financial transactions are in compliance with
medical needs. The non-Federal entity statement audit of the auditee, the Federal statutes, regulations, and the
must justify and document these auditee may elect to have a program- terms and conditions of Federal awards.
conditions on a case-by-case basis in specific audit conducted in accordance (h) For-profit subrecipient. Since this
order for the use of first-class or with § 200.507 Program-specific audits. Part does not apply to for-profit
business-class airfare to be allowable in A program-specific audit may not be subrecipients, the pass-through entity is
such cases. elected for R&D unless all of the Federal responsible for establishing
(2) Unless a pattern of avoidance is awards expended were received from requirements, as necessary, to ensure
detected, the Federal government will the same Federal agency, or the same compliance by for-profit subrecipients.
generally not question a non-Federal Federal agency and the same pass- The agreement with the for-profit
entity’s determinations that customary through entity, and that Federal agency, subrecipient should describe applicable
standard airfare or other discount airfare or pass-through entity in the case of a compliance requirements and the for-
is unavailable for specific trips if the subrecipient, approves in advance a profit subrecipient’s compliance
non-Federal entity can demonstrate that program-specific audit. responsibility. Methods to ensure
(d) Exemption when Federal awards compliance for Federal awards made to
such airfare was not available in the
expended are less than $750,000. A non- for-profit subrecipients may include
specific case.
Federal entity that expends less than pre-award audits, monitoring during the
(e) Air travel by other than $750,000 during the non-Federal agreement, and post-award audits. See
commercial carrier. Costs of travel by entity’s fiscal year in Federal awards is also § 200.331 Requirements for pass-
non-Federal entity-owned, -leased, or exempt from Federal audit requirements through entities.
-chartered aircraft include the cost of for that year, except as noted in
lease, charter, operation (including § 200.503 Relation to other audit § 200.502 Basis for determining Federal
personnel costs), maintenance, requirements, but records must be awards expended.
depreciation, insurance, and other available for review or audit by (a) Determining Federal awards
related costs. The portion of such costs appropriate officials of the Federal expended. The determination of when a
that exceeds the cost of airfare as agency, pass-through entity, and Federal award is expended should be
provided for in paragraph (d) of this Government Accountability Office based on when the activity related to the
section, is unallowable. (GAO). Federal award occurs. Generally, the
(e) Federally Funded Research and activity pertains to events that require
§ 200.475 Trustees.
Development Centers (FFRDC). the non-Federal entity to comply with
Travel and subsistence costs of Management of an auditee that owns or Federal statutes, regulations, and the
trustees (or directors) at IHEs and operates a FFRDC may elect to treat the terms and conditions of Federal awards,
nonprofit organizations are allowable. FFRDC as a separate entity for purposes such as: expenditure/expense
See also § 200.474 Travel costs. of this Part. transactions associated with awards
including grants, cost-reimbursement property, or donated surplus property, (c) The provisions of this Part do not
contracts under the FAR, compacts with must be valued at fair market value at limit the authority of Federal agencies to
Indian Tribes, cooperative agreements, the time of receipt or the assessed value conduct, or arrange for the conduct of,
and direct appropriations; the provided by the Federal agency. audits and evaluations of Federal
disbursement of funds to subrecipients; (h) Medicare. Medicare payments to a awards, nor limit the authority of any
the use of loan proceeds under loan and non-Federal entity for providing patient Federal agency Inspector General or
loan guarantee programs; the receipt of care services to Medicare-eligible other Federal official. For example,
property; the receipt of surplus individuals are not considered Federal requirements that may be applicable
property; the receipt or use of program awards expended under this Part. under the FAR or CAS and the terms
income; the distribution or use of food (i) Medicaid. Medicaid payments to a and conditions of a cost-reimbursement
commodities; the disbursement of subrecipient for providing patient care contract may include additional
amounts entitling the non-Federal entity services to Medicaid-eligible applicable audits to be conducted or
to an interest subsidy; and the period individuals are not considered Federal arranged for by Federal agencies.
when insurance is in force. awards expended under this Part unless (d) Federal agency to pay for
(b) Loan and loan guarantees (loans). a state requires the funds to be treated additional audits. A Federal agency that
Since the Federal government is at risk as Federal awards expended because conducts or arranges for additional
for loans until the debt is repaid, the reimbursement is on a cost- audits must, consistent with other
following guidelines must be used to reimbursement basis. applicable Federal statutes and
calculate the value of Federal awards (j) Certain loans provided by the regulations, arrange for funding the full
expended under loan programs, except National Credit Union Administration. cost of such additional audits.
as noted in paragraphs (c) and (d) of this For purposes of this Part, loans made (e) Request for a program to be
section: from the National Credit Union Share audited as a major program. A Federal
(1) Value of new loans made or Insurance Fund and the Central awarding agency may request that an
received during the audit period; plus Liquidity Facility that are funded by auditee have a particular Federal
(2) Beginning of the audit period contributions from insured non-Federal program audited as a major program in
balance of loans from previous years for entities are not considered Federal lieu of the Federal awarding agency
which the Federal government imposes awards expended. conducting or arranging for the
continuing compliance requirements; additional audits. To allow for planning,
§ 200.503 Relation to other audit such requests should be made at least
plus
requirements.
(3) Any interest subsidy, cash, or 180 calendar days prior to the end of the
administrative cost allowance received. (a) An audit conducted in accordance fiscal year to be audited. The auditee,
(c) Loan and loan guarantees (loans) at with this Part must be in lieu of any after consultation with its auditor,
IHEs. When loans are made to students financial audit of Federal awards which should promptly respond to such a
of an IHE but the IHE does not make the a non-Federal entity is required to request by informing the Federal
loans, then only the value of loans made undergo under any other Federal statute awarding agency whether the program
during the audit period must be or regulation. To the extent that such would otherwise be audited as a major
considered Federal awards expended in audit provides a Federal agency with program using the risk-based audit
that audit period. The balance of loans the information it requires to carry out approach described in § 200.518 Major
for previous audit periods is not its responsibilities under Federal statute program determination and, if not, the
included as Federal awards expended or regulation, a Federal agency must estimated incremental cost. The Federal
because the lender accounts for the rely upon and use that information. awarding agency must then promptly
prior balances. (b) Notwithstanding subsection (a), a confirm to the auditee whether it wants
(d) Prior loan and loan guarantees Federal agency, Inspectors General, or the program audited as a major program.
(loans). Loans, the proceeds of which GAO may conduct or arrange for If the program is to be audited as a
were received and expended in prior additional audits which are necessary to major program based upon this Federal
years, are not considered Federal carry out its responsibilities under awarding agency request, and the
awards expended under this Part when Federal statute or regulation. The Federal awarding agency agrees to pay
the Federal statutes, regulations, and the provisions of this Part do not authorize the full incremental costs, then the
terms and conditions of Federal awards any non-Federal entity to constrain, in auditee must have the program audited
pertaining to such loans impose no any manner, such Federal agency from as a major program. A pass-through
continuing compliance requirements carrying out or arranging for such entity may use the provisions of this
other than to repay the loans. additional audits, except that the paragraph for a subrecipient.
(e) Endowment funds. The cumulative Federal agency must plan such audits to
balance of Federal awards for not be duplicative of other audits of § 200.504 Frequency of audits.
endowment funds that are federally Federal awards. Prior to commencing Except for the provisions for biennial
restricted are considered Federal awards such an audit, the Federal agency or audits provided in paragraphs (a) and
expended in each audit period in which pass-through entity must review the (b) of this section, audits required by
the funds are still restricted. FAC for recent audits submitted by the this Part must be performed annually.
(f) Free rent. Free rent received by non-Federal entity, and to the extent Any biennial audit must cover both
itself is not considered a Federal award such audits meet a Federal agency or years within the biennial period.
expended under this Part. However, free pass-through entity’s needs, the Federal (a) A state, local government, or
rent received as part of a Federal award agency or pass-through entity must rely Indian tribe that is required by
to carry out a Federal program must be upon and use such audits. Any constitution or statute, in effect on
included in determining Federal awards additional audits must be planned and January 1, 1987, to undergo its audits
expended and subject to audit under performed in such a way as to build less frequently than annually, is
this Part. upon work performed, including the permitted to undergo its audits pursuant
(g) Valuing non-cash assistance. audit documentation, sampling, and to this Part biennially. This requirement
Federal non-cash assistance, such as testing already performed, by other must still be in effect for the biennial
free rent, food commodities, donated auditors. period.
(b) Any nonprofit organization that requirements of § 200.514 Scope of after receipt of the auditor’s report(s), or
had biennial audits for all biennial audit, paragraph (c) for a major program; nine months after the end of the audit
periods ending between July 1, 1992, (iii) Perform procedures to determine period, unless a different period is
and January 1, 1995, is permitted to whether the auditee has complied with specified in a program-specific audit
undergo its audits pursuant to this Part Federal statutes, regulations, and the guide. Unless restricted by Federal law
biennially. terms and conditions of Federal awards or regulation, the auditee must make
that could have a direct and material report copies available for public
§ 200.505 Sanctions. effect on the Federal program consistent inspection. Auditees and auditors must
In cases of continued inability or with the requirements of § 200.514 ensure that their respective parts of the
unwillingness to have an audit Scope of audit, paragraph (d) for a major reporting package do not include
conducted in accordance with this Part, program; protected personally identifiable
Federal agencies and pass-through (iv) Follow up on prior audit findings, information.
entities must take appropriate action as perform procedures to assess the (2) When a program-specific audit
provided in § 200.338 Remedies for reasonableness of the summary guide is available, the auditee must
noncompliance. schedule of prior audit findings electronically submit to the FAC the
prepared by the auditee in accordance data collection form prepared in
§ 200.506 Audit costs.
with the requirements of § 200.511 accordance with § 200.512 Report
See § 200.425 Audit services. Audit findings follow-up, and report, as submission, paragraph (b), as applicable
§ 200.507 Program-specific audits. a current year audit finding, when the to a program-specific audit, and the
auditor concludes that the summary reporting required by the program-
(a) Program-specific audit guide
schedule of prior audit findings specific audit guide.
available. In many cases, a program-
materially misrepresents the status of (3) When a program-specific audit
specific audit guide will be available to
any prior audit finding; and guide is not available, the reporting
provide specific guidance to the auditor (v) Report any audit findings
with respect to internal controls, package for a program-specific audit
consistent with the requirements of must consist of the financial
compliance requirements, suggested § 200.516 Audit findings.
audit procedures, and audit reporting statement(s) of the Federal program, a
(4) The auditor’s report(s) may be in summary schedule of prior audit
requirements. A listing of current the form of either combined or separate
program-specific audit guides can be findings, and a corrective action plan as
reports and may be organized differently described in paragraph (b)(2) of this
found in the compliance supplement from the manner presented in this
beginning with the 2014 supplement section, and the auditor’s report(s)
section. The auditor’s report(s) must described in paragraph (b)(4) of this
including Federal awarding agency state that the audit was conducted in
contact information and a Web site section. The data collection form
accordance with this Part and include prepared in accordance with § 200.512
where a copy of the guide can be the following:
obtained. When a current program- Report submission, paragraph (b), as
(i) An opinion (or disclaimer of applicable to a program-specific audit,
specific audit guide is available, the opinion) as to whether the financial
auditor must follow GAGAS and the and one copy of this reporting package
statement(s) of the Federal program is must be electronically submitted to the
guide when performing a program- presented fairly in all material respects
specific audit. FAC.
in accordance with the stated (d) Other sections of this Part may
(b) Program-specific audit guide not accounting policies;
available. apply. Program-specific audits are
(ii) A report on internal control subject to:
(1) When a program-specific audit related to the Federal program, which
guide is not available, the auditee and (1) 200.500 Purpose through 200.503
must describe the scope of testing of Relation to other audit requirements,
auditor must have basically the same internal control and the results of the
responsibilities for the Federal program paragraph (d);
tests; (2) 200.504 Frequency of audits
as they would have for an audit of a (iii) A report on compliance which
major program in a single audit. through 200.506 Audit costs;
includes an opinion (or disclaimer of
(2) The auditee must prepare the (3) 200.508 Auditee responsibilities
opinion) as to whether the auditee
financial statement(s) for the Federal through 200.509 Auditor selection;
complied with laws, regulations, and
program that includes, at a minimum, a (4) 200.511 Audit findings follow-up;
the terms and conditions of Federal
schedule of expenditures of Federal (5) 200.512 Report submission,
awards which could have a direct and
awards for the program and notes that paragraphs (e) through (h);
material effect on the Federal program;
describe the significant accounting (6) 200.513 Responsibilities;
and
policies used in preparing the schedule, (7) 200.516 Audit findings through
(iv) A schedule of findings and
a summary schedule of prior audit 200.517 Audit documentation;
questioned costs for the Federal
findings consistent with the (8) 200.521 Management decision,
program that includes a summary of the
requirements of § 200.511 Audit and
auditor’s results relative to the Federal
findings follow-up, paragraph (b), and a (9) Other referenced provisions of this
program in a format consistent with
corrective action plan consistent with Part unless contrary to the provisions of
§ 200.515 Audit reporting, paragraph
the requirements of § 200.511 Audit this section, a program-specific audit
(d)(1) and findings and questioned costs
findings follow-up, paragraph (c). guide, or program statutes and
consistent with the requirements of
(3) The auditor must: regulations.
§ 200.515 Audit reporting, paragraph
(i) Perform an audit of the financial
(d)(3). Auditees
statement(s) for the Federal program in (c) Report submission for program-
accordance with GAGAS; specific audits. § 200.508 Auditee responsibilities.
(ii) Obtain an understanding of (1) The audit must be completed and The auditee must:
internal controls and perform tests of the reporting required by paragraph (a) Procure or otherwise arrange for
internal controls over the Federal (c)(2) or (c)(3) of this section submitted the audit required by this Part in
program consistent with the within the earlier of 30 calendar days accordance with § 200.509 Auditor
selection, and ensure it is properly in the preparation of the indirect cost program and the CFDA number or other
performed and submitted when due in proposal or cost allocation plan and any identifying number when the CFDA
accordance with § 200.512 Report subsequent years in which the resulting information is not available. For a
submission. indirect cost agreement or cost cluster of programs also provide the
(b) Prepare appropriate financial allocation plan is used to recover costs. total for the cluster.
statements, including the schedule of (c) Use of Federal auditors. Federal (4) Include the total amount provided
expenditures of Federal awards in auditors may perform all or part of the to subrecipients from each Federal
accordance with § 200.510 Financial work required under this Part if they program.
statements. comply fully with the requirements of (5) For loan or loan guarantee
(c) Promptly follow up and take this Part. programs described in § 200.502 Basis
corrective action on audit findings, for determining Federal awards
including preparation of a summary § 200.510 Financial statements.
(a) Financial statements. The auditee expended, paragraph (b), identify in the
schedule of prior audit findings and a notes to the schedule the balances
corrective action plan in accordance must prepare financial statements that
reflect its financial position, results of outstanding at the end of the audit
with § 200.511 Audit findings follow- period. This is in addition to including
up, paragraph (b) and § 200.511 Audit operations or changes in net assets, and,
where appropriate, cash flows for the the total Federal awards expended for
findings follow-up, paragraph (c), loan or loan guarantee programs in the
respectively. fiscal year audited. The financial
statements must be for the same schedule.
(d) Provide the auditor with access to
personnel, accounts, books, records, organizational unit and fiscal year that (6) Include notes that describe that
supporting documentation, and other is chosen to meet the requirements of significant accounting policies used in
information as needed for the auditor to this Part. However, non-Federal entity- preparing the schedule, and note
perform the audit required by this Part. wide financial statements may also whether or not the non-Federal entity
include departments, agencies, and elected to use the 10% de minimis cost
§ 200.509 Auditor selection. other organizational units that have rate as covered in § 200.414 Indirect
(a) Auditor procurement. In procuring separate audits in accordance with (F&A) costs.
audit services, the auditee must follow § 200.514 Scope of audit, paragraph (a) § 200.511 Audit findings follow-up.
the procurement standards prescribed and prepare separate financial
by the Procurement Standards in statements. (a) General. The auditee is responsible
§§ 200.317 Procurement by states (b) Schedule of expenditures of for follow-up and corrective action on
through 20.326 Contract provisions of Federal awards. The auditee must also all audit findings. As part of this
Subpart D- Post Federal Award prepare a schedule of expenditures of responsibility, the auditee must prepare
Requirements of this Part or the FAR (48 Federal awards for the period covered a summary schedule of prior audit
CFR Part 42), as applicable. When by the auditee’s financial statements findings. The auditee must also prepare
procuring audit services, the objective is which must include the total Federal a corrective action plan for current year
to obtain high-quality audits. In awards expended as determined in audit findings. The summary schedule
requesting proposals for audit services, accordance with § 200.502 Basis for of prior audit findings and the
the objectives and scope of the audit determining Federal awards expended. corrective action plan must include the
must be made clear and the non-Federal While not required, the auditee may reference numbers the auditor assigns to
entity must request a copy of the audit choose to provide information requested audit findings under § 200.516 Audit
organization’s peer review report which by Federal awarding agencies and pass- findings, paragraph (c). Since the
the auditor is required to provide under through entities to make the schedule summary schedule may include audit
GAGAS. Factors to be considered in easier to use. For example, when a findings from multiple years, it must
evaluating each proposal for audit Federal program has multiple Federal include the fiscal year in which the
services include the responsiveness to award years, the auditee may list the finding initially occurred. The
the request for proposal, relevant amount of Federal awards expended for corrective action plan and summary
experience, availability of staff with each Federal award year separately. At schedule of prior audit findings must
professional qualifications and technical a minimum, the schedule must: include findings relating to the financial
abilities, the results of peer and external (1) List individual Federal programs statements which are required to be
quality control reviews, and price. by Federal agency. For a cluster of reported in accordance with GAGAS.
Whenever possible, the auditee must programs, provide the cluster name, list (b) Summary schedule of prior audit
make positive efforts to utilize small individual Federal programs within the findings. The summary schedule of
businesses, minority-owned firms, and cluster of programs, and provide the prior audit findings must report the
women’s business enterprises, in applicable Federal agency name. For status of all audit findings included in
procuring audit services as stated in R&D, total Federal awards expended the prior audit’s schedule of findings
§ 200.321 Contracting with small and must be shown either by individual and questioned costs. The summary
minority businesses, women’s business Federal award or by Federal agency and schedule must also include audit
enterprises, and labor surplus area major subdivision within the Federal findings reported in the prior audit’s
firms, or the FAR (48 CFR Part 42), as agency. For example, the National summary schedule of prior audit
applicable. Institutes of Health is a major findings except audit findings listed as
(b) Restriction on auditor preparing subdivision in the Department of Health corrected in accordance with paragraph
indirect cost proposals. An auditor who and Human Services. (b)(1) of this section, or no longer valid
prepares the indirect cost proposal or (2) For Federal awards received as a or not warranting further action in
cost allocation plan may not also be subrecipient, the name of the pass- accordance with paragraph (b)(3) of this
selected to perform the audit required through entity and identifying number section.
by this Part when the indirect costs assigned by the pass-through entity (1) When audit findings were fully
recovered by the auditee during the must be included. corrected, the summary schedule need
prior year exceeded $1 million. This (3) Provide total Federal awards only list the audit findings and state that
restriction applies to the base year used expended for each individual Federal corrective action was taken.
(2) When audit findings were not (b) Data Collection. The FAC is the paragraph (c) of this section, the auditor
corrected or were only partially repository of record for Subpart F— must complete the applicable data
corrected, the summary schedule must Audit Requirements of this Part elements of the data collection form.
describe the reasons for the finding’s reporting packages and the data The auditor must sign a statement to be
recurrence and planned corrective collection form. All Federal agencies, included as part of the data collection
action, and any partial corrective action pass-through entities and others form that indicates, at a minimum, the
taken. When corrective action taken is interested in a reporting package and source of the information included in
significantly different from corrective data collection form must obtain it by the form, the auditor’s responsibility for
action previously reported in a accessing the FAC. the information, that the form is not a
corrective action plan or in the Federal (1) The auditee must submit required substitute for the reporting package
agency’s or pass-through entity’s data elements described in Appendix X described in paragraph (c) of this
management decision, the summary to Part 200—Data Collection Form section, and that the content of the form
schedule must provide an explanation. (Form SF–SAC), which state whether is limited to the collection of
(3) When the auditee believes the the audit was completed in accordance information prescribed by OMB.
audit findings are no longer valid or do with this Part and provides information (c) Reporting package. The reporting
not warrant further action, the reasons about the auditee, its Federal programs, package must include the:
for this position must be described in and the results of the audit. The data
(1) Financial statements and schedule
the summary schedule. A valid reason must include information available from
of expenditures of Federal awards
for considering an audit finding as not the audit required by this Part that is
discussed in § 200.510 Financial
warranting further action is that all of necessary for Federal agencies to use the
statements, paragraphs (a) and (b),
the following have occurred: audit to ensure integrity for Federal
respectively;
(i) Two years have passed since the programs. The data elements and format
must be approved by OMB, available (2) Summary schedule of prior audit
audit report in which the finding
from the FAC, and include collections findings discussed in § 200.511 Audit
occurred was submitted to the FAC;
(ii) The Federal agency or pass- of information from the reporting findings follow-up, paragraph (b);
through entity is not currently following package described in paragraph (c) of (3) Auditor’s report(s) discussed in
up with the auditee on the audit this section. A senior level § 200.515 Audit reporting; and
finding; and representative of the auditee (e.g., state (4) Corrective action plan discussed in
(iii) A management decision was not controller, director of finance, chief § 200.511 Audit findings follow-up,
issued. executive officer, or chief financial paragraph (c).
(c) Corrective action plan. At the officer) must sign a statement to be (d) Submission to FAC. The auditee
completion of the audit, the auditee included as part of the data collection must electronically submit to the FAC
must prepare, in a document separate that says that the auditee complied with the data collection form described in
from the auditor’s findings described in the requirements of this Part, the data paragraph (b) of this section and the
§ 200.516 Audit findings, a corrective were prepared in accordance with this reporting package described in
action plan to address each audit Part (and the instructions accompanying paragraph (c) of this section.
finding included in the current year the form), the reporting package does (e) Requests for management letters
auditor’s reports. The corrective action not include protected personally issued by the auditor. In response to
plan must provide the name(s) of the identifiable information, the requests by a Federal agency or pass-
contact person(s) responsible for information included in its entirety is through entity, auditees must submit a
corrective action, the corrective action accurate and complete, and that the copy of any management letters issued
planned, and the anticipated FAC is authorized to make the reporting by the auditor.
completion date. If the auditee does not package and the form publicly available (f) Report retention requirements.
agree with the audit findings or believes on a Web site.
Auditees must keep one copy of the data
corrective action is not required, then (2) Exception for Indian Tribes. An
collection form described in paragraph
the corrective action plan must include auditee that is an Indian tribe may opt
not to authorize the FAC to make the (b) of this section and one copy of the
an explanation and specific reasons. reporting package described in
reporting package publicly available on
§ 200.512 Report submission. a Web site, by excluding the paragraph (c) of this section on file for
(a) General. (1) The audit must be authorization for the FAC publication in three years from the date of submission
completed and the data collection form the statement described in paragraph to the FAC.
described in paragraph (b) of this (b)(1) of this section. If this option is (g) FAC responsibilities. The FAC
section and reporting package described exercised, the auditee becomes must make available the reporting
in paragraph (c) of this section must be responsible for submitting the reporting packages received in accordance with
submitted within the earlier of 30 package directly to any pass-through paragraph (c) of this section and
calendar days after receipt of the entities through which it has received a § 200.507 Program-specific audits,
auditor’s report(s), or nine months after Federal award and to pass-through paragraph (c) to the public, except for
the end of the audit period. If the due entities for which the summary Indian tribes exercising the option in
date falls on a Saturday, Sunday, or schedule of prior audit findings (b)(2) of this section, and maintain a
Federal holiday, the reporting package reported the status of any findings data base of completed audits, provide
is due the next business day. related to Federal awards that the pass- appropriate information to Federal
(2) Unless restricted by Federal through entity provided. Unless agencies, and follow up with known
statutes or regulations, the auditee must restricted by Federal statute or auditees that have not submitted the
make copies available for public regulation, if the auditee opts not to required data collection forms and
inspection. Auditees and auditors must authorize publication, it must make reporting packages.
ensure that their respective parts of the copies of the reporting package available (h) Electronic filing. Nothing in this
reporting package do not include for public inspection. Part must preclude electronic
protected personally identifiable (3) Using the information included in submissions to the FAC in such manner
information. the reporting package described in as may be approved by OMB.
Federal Agencies (iv) Advise the community of (2) May assume all or some of the
independent auditors of any noteworthy responsibilities normally performed by
§ 200.513 Responsibilities. or important factual trends related to the a cognizant agency for audit.
(a)(1) Cognizant agency for audit quality of audits stemming from quality (c) Federal awarding agency
responsibilities. A non-Federal entity control reviews. Significant problems or responsibilities. The Federal awarding
expending more than $50 million a year quality issues consistently identified agency must perform the following for
in Federal awards must have a through quality control reviews of audit the Federal awards it makes (See also
cognizant agency for audit. The reports must be referred to appropriate the requirements of § 200.210
designated cognizant agency for audit state licensing agencies and professional Information contained in a Federal
must be the Federal awarding agency bodies. award):
that provides the predominant amount (v) Advise the auditor, Federal (1) Ensure that audits are completed
of direct funding to a non-Federal entity awarding agencies, and, where and reports are received in a timely
unless OMB designates a specific appropriate, the auditee of any manner and in accordance with the
cognizant agency for audit. deficiencies found in the audits when requirements of this Part.
(2) To provide for continuity of the deficiencies require corrective (2) Provide technical advice and
cognizance, the determination of the action by the auditor. When advised of counsel to auditees and auditors as
predominant amount of direct funding deficiencies, the auditee must work requested.
must be based upon direct Federal with the auditor to take corrective (3) Follow-up on audit findings to
awards expended in the non-Federal action. If corrective action is not taken, ensure that the recipient takes
entity’s fiscal years ending in 2009, the cognizant agency for audit must appropriate and timely corrective
2014, 2019 and every fifth year notify the auditor, the auditee, and action. As part of audit follow-up, the
thereafter. For example, audit applicable Federal awarding agencies Federal awarding agency must:
cognizance for periods ending in 2011 and pass-through entities of the facts (i) Issue a management decision as
through 2015 will be determined based and make recommendations for follow- prescribed in § 200.521 Management
on Federal awards expended in 2009. up action. Major inadequacies or decision;
(3) Notwithstanding the manner in repetitive substandard performance by (ii) Monitor the recipient taking
which audit cognizance is determined, auditors must be referred to appropriate appropriate and timely corrective
a Federal awarding agency with state licensing agencies and professional action;
cognizance for an auditee may reassign bodies for disciplinary action. (iii) Use cooperative audit resolution
cognizance to another Federal awarding (vi) Coordinate, to the extent mechanisms (see § 200.25 Cooperative
agency that provides substantial funding practical, audits or reviews made by or audit resolution) to improve Federal
and agrees to be the cognizant agency for Federal agencies that are in addition program outcomes through better audit
for audit. Within 30 calendar days after to the audits made pursuant to this Part, resolution, follow-up, and corrective
any reassignment, both the old and the so that the additional audits or reviews action; and
new cognizant agency for audit must build upon rather than duplicate audits (iv) Develop a baseline, metrics, and
provide notice of the change to the FAC, performed in accordance with this Part. targets to track, over time, the
the auditee, and, if known, the auditor. (vii) Coordinate a management effectiveness of the Federal agency’s
The cognizant agency for audit must: decision for cross-cutting audit findings process to follow-up on audit findings
(i) Provide technical audit advice and (as defined in § 200.30 Cross-cutting and on the effectiveness of Single
liaison assistance to auditees and audit finding) that affect the Federal Audits in improving non-Federal entity
auditors. programs of more than one agency when accountability and their use by Federal
(ii) Obtain or conduct quality control requested by any Federal awarding awarding agencies in making award
reviews on selected audits made by non- agency whose awards are included in decisions.
Federal auditors, and provide the results the audit finding of the auditee. (4) Provide OMB annual updates to
to other interested organizations. (viii) Coordinate the audit work and the compliance supplement and work
Cooperate and provide support to the reporting responsibilities among with OMB to ensure that the compliance
Federal agency designated by OMB to auditors to achieve the most cost- supplement focuses the auditor to test
lead a governmentwide project to effective audit. the compliance requirements most
determine the quality of single audits by (ix) Provide advice to auditees as to likely to cause improper payments,
providing a statistically reliable estimate how to handle changes in fiscal years. fraud, waste, abuse or generate audit
of the extent that single audits conform (b) Oversight agency for audit finding for which the Federal awarding
to applicable requirements, standards, responsibilities. An auditee who does agency will take sanctions.
and procedures; and to make not have a designated cognizant agency (5) Provide OMB with the name of a
recommendations to address noted for audit will be under the general single audit accountable official from
audit quality issues, including oversight of the Federal agency among the senior policy officials of the
recommendations for any changes to determined in accordance with § 200.73 Federal awarding agency who must be:
applicable requirements, standards and Oversight agency for audit. A Federal (i) Responsible for ensuring that the
procedures indicated by the results of agency with oversight for an auditee agency fulfills all the requirement of
the project. This governmentwide audit may reassign oversight to another § 200.513 Responsibilities and
quality project must be performed once Federal agency that agrees to be the effectively uses the single audit process
every 6 years beginning in 2018 or at oversight agency for audit. Within 30 to reduce improper payments and
such other interval as determined by calendar days after any reassignment, improve Federal program outcomes.
OMB, and the results must be public. both the old and the new oversight (ii) Held accountable to improve the
(iii) Promptly inform other affected agency for audit must provide notice of effectiveness of the single audit process
Federal agencies and appropriate the change to the FAC, the auditee, and, based upon metrics as described in
Federal law enforcement officials of any if known, the auditor. The oversight paragraph (c)(3)(iv) of this section.
direct reporting by the auditee or its agency for audit: (iii) Responsible for designating the
auditor required by GAGAS or statutes (1) Must provide technical advice to Federal agency’s key management single
and regulations. auditees and auditors as requested. audit liaison.
(6) Provide OMB with the name of a expenditures of Federal awards is stated Where there have been changes to the
key management single audit liaison fairly in all material respects in relation compliance requirements and the
who must: to the auditee’s financial statements as changes are not reflected in the
(i) Serve as the Federal awarding a whole. compliance supplement, the auditor
agency’s management point of contact (c) Internal control. must determine the current compliance
for the single audit process both within (1) The compliance supplement requirements and modify the audit
and outside the Federal government. provides guidance on internal controls procedures accordingly. For those
(ii) Promote interagency coordination, over Federal programs based upon the Federal programs not covered in the
consistency, and sharing in areas such guidance in Standards for Internal compliance supplement, the auditor
as coordinating audit follow-up; Control in the Federal Government should follow the compliance
identifying higher-risk non-Federal issued by the Comptroller General of the supplement’s guidance for programs not
entities; providing input on single audit United States and the Internal Control— included in the supplement.
and follow-up policy; enhancing the Integrated Framework, issued by the (4) The compliance testing must
utility of the FAC; and studying ways to Committee of Sponsoring Organizations include tests of transactions and such
use single audit results to improve of the Treadway Commission (COSO). other auditing procedures necessary to
Federal award accountability and best (2) In addition to the requirements of provide the auditor sufficient
practices. GAGAS, the auditor must perform appropriate audit evidence to support
(iii) Oversee training for the Federal procedures to obtain an understanding an opinion on compliance.
awarding agency’s program management of internal control over Federal (e) Audit follow-up. The auditor must
personnel related to the single audit programs sufficient to plan the audit to follow-up on prior audit findings,
process. support a low assessed level of control perform procedures to assess the
(iv) Promote the Federal awarding risk of noncompliance for major reasonableness of the summary
agency’s use of cooperative audit programs. schedule of prior audit findings
resolution mechanisms. (3) Except as provided in paragraph prepared by the auditee in accordance
(v) Coordinate the Federal awarding (c)(4) of this section, the auditor must: with § 200.511 Audit findings follow-up
agency’s activities to ensure appropriate (i) Plan the testing of internal control paragraph (b), and report, as a current
and timely follow-up and corrective over compliance for major programs to year audit finding, when the auditor
action on audit findings. support a low assessed level of control concludes that the summary schedule of
(vi) Organize the Federal cognizant risk for the assertions relevant to the prior audit findings materially
agency for audit’s follow-up on cross- compliance requirements for each major misrepresents the status of any prior
cutting audit findings that affect the program; and audit finding. The auditor must perform
Federal programs of more than one (ii) Perform testing of internal control audit follow-up procedures regardless of
Federal awarding agency. as planned in paragraph (c)(3)(i) of this whether a prior audit finding relates to
(vii) Ensure the Federal awarding section. a major program in the current year.
(4) When internal control over some (f) Data Collection Form. As required
agency provides annual updates of the
or all of the compliance requirements in § 200.512 Report submission
compliance supplement to OMB.
(viii) Support the Federal awarding for a major program are likely to be paragraph (b)(3), the auditor must
agency’s single audit accountable ineffective in preventing or detecting complete and sign specified sections of
official’s mission. noncompliance, the planning and the data collection form.
performing of testing described in
Auditors paragraph (c)(3) of this section are not § 200.515 Audit reporting.
required for those compliance The auditor’s report(s) may be in the
§ 200.514 Scope of audit. form of either combined or separate
requirements. However, the auditor
(a) General. The audit must be must report a significant deficiency or reports and may be organized differently
conducted in accordance with GAGAS. material weakness in accordance with from the manner presented in this
The audit must cover the entire § 200.516 Audit findings, assess the section. The auditor’s report(s) must
operations of the auditee, or, at the related control risk at the maximum, state that the audit was conducted in
option of the auditee, such audit must and consider whether additional accordance with this Part and include
include a series of audits that cover compliance tests are required because of the following:
departments, agencies, and other ineffective internal control. (a) An opinion (or disclaimer of
organizational units that expended or (d) Compliance. opinion) as to whether the financial
otherwise administered Federal awards (1) In addition to the requirements of statements are presented fairly in all
during such audit period, provided that GAGAS, the auditor must determine material respects in accordance with
each such audit must encompass the whether the auditee has complied with generally accepted accounting
financial statements and schedule of Federal statutes, regulations, and the principles and an opinion (or disclaimer
expenditures of Federal awards for each terms and conditions of Federal awards of opinion) as to whether the schedule
such department, agency, and other that may have a direct and material of expenditures of Federal awards is
organizational unit, which must be effect on each of its major programs. fairly stated in all material respects in
considered to be a non-Federal entity. (2) The principal compliance relation to the financial statements as a
The financial statements and schedule requirements applicable to most Federal whole.
of expenditures of Federal awards must programs and the compliance (b) A report on internal control over
be for the same audit period. requirements of the largest Federal financial reporting and compliance with
(b) Financial statements. The auditor programs are included in the Federal statutes, regulations, and the
must determine whether the financial compliance supplement. terms and conditions of the Federal
statements of the auditee are presented (3) For the compliance requirements award, noncompliance with which
fairly in all material respects in related to Federal programs contained in could have a material effect on the
accordance with generally accepted the compliance supplement, an audit of financial statements. This report must
accounting principles. The auditor must these compliance requirements will describe the scope of testing of internal
also determine whether the schedule of meet the requirements of this Part. control and compliance and the results
of the tests, and, where applicable, it under § 200.520 Criteria for a low-risk program. Known questioned costs are
will refer to the separate schedule of auditee. those specifically identified by the
findings and questioned costs described (2) Findings relating to the financial auditor. In evaluating the effect of
in paragraph (d) of this section. statements which are required to be questioned costs on the opinion on
(c) A report on compliance for each reported in accordance with GAGAS. compliance, the auditor considers the
major program and report and internal (3) Findings and questioned costs for best estimate of total costs questioned
control over compliance. This report Federal awards which must include (likely questioned costs), not just the
must describe the scope of testing of audit findings as defined in § 200.516 questioned costs specifically identified
internal control over compliance, Audit findings, paragraph (a). (known questioned costs). The auditor
include an opinion or modified opinion (i) Audit findings (e.g., internal must also report known questioned
as to whether the auditee complied with control findings, compliance findings, costs when likely questioned costs are
Federal statutes, regulations, and the questioned costs, or fraud) that relate to greater than $25,000 for a type of
terms and conditions of Federal awards the same issue should be presented as compliance requirement for a major
which could have a direct and material a single audit finding. Where practical, program. In reporting questioned costs,
effect on each major program and refer audit findings should be organized by the auditor must include information to
to the separate schedule of findings and Federal agency or pass-through entity. provide proper perspective for judging
questioned costs described in paragraph (ii) Audit findings that relate to both the prevalence and consequences of the
(d) of this section. the financial statements and Federal questioned costs.
(d) A schedule of findings and awards, as reported under paragraphs (4) Known questioned costs that are
questioned costs which must include (d)(2) and (d)(3) of this section, greater than $25,000 for a Federal
the following three components: respectively, should be reported in both program which is not audited as a major
(1) A summary of the auditor’s results, sections of the schedule. However, the program. Except for audit follow-up, the
which must include: reporting in one section of the schedule auditor is not required under this Part
(i) The type of report the auditor may be in summary form with a to perform audit procedures for such a
issued on whether the financial reference to a detailed reporting in the Federal program; therefore, the auditor
statements audited were prepared in other section of the schedule. will normally not find questioned costs
accordance with GAAP (i.e., unmodified (e) Nothing in this Part precludes for a program that is not audited as a
opinion, qualified opinion, adverse combining of the audit reporting major program. However, if the auditor
opinion, or disclaimer of opinion); required by this section with the does become aware of questioned costs
reporting required by § 200.512 Report for a Federal program that is not audited
(ii) Where applicable, a statement
submission, paragraph (b) Data as a major program (e.g., as part of audit
about whether significant deficiencies
Collection when allowed by GAGAS follow-up or other audit procedures)
or material weaknesses in internal
and Appendix X to Part 200—Data and the known questioned costs are
control were disclosed by the audit of
Collection Form (Form SF–SAC). greater than $25,000, then the auditor
the financial statements;
must report this as an audit finding.
(iii) A statement as to whether the § 200.516 Audit findings. (5) The circumstances concerning
audit disclosed any noncompliance that (a) Audit findings reported. The why the auditor’s report on compliance
is material to the financial statements of auditor must report the following as for each major program is other than an
the auditee; audit findings in a schedule of findings unmodified opinion, unless such
(iv) Where applicable, a statement and questioned costs: circumstances are otherwise reported as
about whether significant deficiencies (1) Significant deficiencies and audit findings in the schedule of
or material weaknesses in internal material weaknesses in internal control findings and questioned costs for
control over major programs were over major programs and significant Federal awards.
disclosed by the audit; instances of abuse relating to major (6) Known or likely fraud affecting a
(v) The type of report the auditor programs. The auditor’s determination Federal award, unless such fraud is
issued on compliance for major of whether a deficiency in internal otherwise reported as an audit finding
programs (i.e., unmodified opinion, control is a significant deficiency or in the schedule of findings and
qualified opinion, adverse opinion, or material weakness for the purpose of questioned costs for Federal awards.
disclaimer of opinion); reporting an audit finding is in relation This paragraph does not require the
(vi) A statement as to whether the to a type of compliance requirement for auditor to report publicly information
audit disclosed any audit findings that a major program identified in the which could compromise investigative
the auditor is required to report under Compliance Supplement. or legal proceedings or to make an
§ 200.516 Audit findings paragraph (a); (2) Material noncompliance with the additional reporting when the auditor
(vii) An identification of major provisions of Federal statutes, confirms that the fraud was reported
programs by listing each individual regulations, or the terms and conditions outside the auditor’s reports under the
major program; however in the case of of Federal awards related to a major direct reporting requirements of
a cluster of programs only the cluster program. The auditor’s determination of GAGAS.
name as shown on the Schedule of whether a noncompliance with the (7) Instances where the results of
Expenditures of Federal Awards is provisions of Federal statutes, audit follow-up procedures disclosed
required; regulations, or the terms and conditions that the summary schedule of prior
(viii) The dollar threshold used to of Federal awards is material for the audit findings prepared by the auditee
distinguish between Type A and Type B purpose of reporting an audit finding is in accordance with § 200.511 Audit
programs, as described in § 200.518 in relation to a type of compliance findings follow-up, paragraph (b)
Major program determination paragraph requirement for a major program materially misrepresents the status of
(b)(1), or (b)(3) when a recalculation of identified in the compliance any prior audit finding.
the Type A threshold is required for supplement. (b) Audit finding detail and clarity.
large loan or loan guarantees; and (3) Known questioned costs that are Audit findings must be presented in
(ix) A statement as to whether the greater than $25,000 for a type of sufficient detail and clarity for the
auditee qualified as a low-risk auditee compliance requirement for a major auditee to prepare a corrective action
plan and take corrective action, and for logical link to establish the impact or writing by the cognizant agency for
Federal agencies and pass-through potential impact of the difference audit, oversight agency for audit,
entities to arrive at a management between the condition and the criteria. cognizant agency for indirect costs, or
decision. The following specific (6) Identification of questioned costs pass-through entity to extend the
information must be included, as and how they were computed. Known retention period. When the auditor is
applicable, in audit findings: questioned costs must be identified by aware that the Federal agency, pass-
(1) Federal program and specific applicable CFDA number(s) and through entity, or auditee is contesting
Federal award identification including applicable Federal award identification an audit finding, the auditor must
the CFDA title and number, Federal number(s). contact the parties contesting the audit
award identification number and year, (7) Information to provide proper finding for guidance prior to destruction
name of Federal agency, and name of perspective for judging the prevalence of the audit documentation and reports.
the applicable pass-through entity. and consequences of the audit findings,
(b) Access to audit documentation.
When information, such as the CFDA such as whether the audit findings
title and number or Federal award Audit documentation must be made
represent an isolated instance or a
identification number, is not available, available upon request to the cognizant
systemic problem. Where appropriate,
the auditor must provide the best or oversight agency for audit or its
instances identified must be related to
information available to describe the designee, cognizant agency for indirect
the universe and the number of cases
Federal award. cost, a Federal agency, or GAO at the
examined and be quantified in terms of
(2) The criteria or specific completion of the audit, as part of a
dollar value. The auditor should report
requirement upon which the audit quality review, to resolve audit findings,
whether the sampling was a statistically
finding is based, including the Federal or to carry out oversight responsibilities
valid sample.
statutes, regulations, or the terms and (8) Identification of whether the audit consistent with the purposes of this
conditions of the Federal awards. finding was a repeat of a finding in the Part. Access to audit documentation
Criteria generally identify the required immediately prior audit and if so any includes the right of Federal agencies to
or desired state or expectation with applicable prior year audit finding obtain copies of audit documentation, as
respect to the program or operation. numbers. is reasonable and necessary.
Criteria provide a context for evaluating (9) Recommendations to prevent § 200.518 Major program determination.
evidence and understanding findings. future occurrences of the deficiency
(3) The condition found, including identified in the audit finding. (a) General. The auditor must use a
facts that support the deficiency (10) Views of responsible officials of risk-based approach to determine which
identified in the audit finding. the auditee. Federal programs are major programs.
(4) A statement of cause that identifies (c) Reference numbers. Each audit This risk-based approach must include
the reason or explanation for the finding in the schedule of findings and consideration of: current and prior audit
condition or the factors responsible for questioned costs must include a experience, oversight by Federal
the difference between the situation that reference number in the format meeting agencies and pass-through entities, and
exists (condition) and the required or the requirements of the data collection the inherent risk of the Federal program.
desired state (criteria), which may also form submission required by § 200.512 The process in paragraphs (b) through
serve as a basis for recommendations for Report submission, paragraph (b) to (i) of this section must be followed.
corrective action. allow for easy referencing of the audit
(5) The possible asserted effect to (b) Step one.
findings during follow-up.
provide sufficient information to the (1) The auditor must identify the
auditee and Federal agency, or pass- § 200.517 Audit documentation. larger Federal programs, which must be
through entity in the case of a (a) Retention of audit documentation. labeled Type A programs. Type A
subrecipient, to permit them to The auditor must retain audit programs are defined as Federal
determine the cause and effect to documentation and reports for a programs with Federal awards
facilitate prompt and proper corrective minimum of three years after the date of expended during the audit period
action. A statement of the effect or issuance of the auditor’s report(s) to the exceeding the levels outlined in the
potential effect should provide a clear, auditee, unless the auditor is notified in table in this paragraph (b)(1):
Total Federal awards expended Type A/B threshold
Equal to $750,000 but less than or equal to $25 million ...................................................................................... $750,000.
Exceed $25 million but less than or equal to $100 million ................................................................................... Total Federal awards expended
times .03.
Exceed $100 million but less than or equal to $1 billion ...................................................................................... $3 million.
Exceed $1 billion but less than or equal to $10 billion ......................................................................................... Total Federal awards expended
times .003.
Exceed $10 billion but less than or equal to $20 billion ....................................................................................... $30 million.
Exceed $20 billion ................................................................................................................................................. Total Federal awards expended
times .0015.
(2) Federal programs not labeled Type times the largest non-loan program it is removing the total of all large loan
A under paragraph (b)(1) of this section
considered a large loan program, and programs. For the purposes of this
must be labeled Type B programs. the auditor must consider this Federal paragraph a program is only considered
(3) The inclusion of large loan and program as a Type A program and to be a Federal program providing loans
loan guarantees (loans) should not result exclude its values in determining other if the value of Federal awards expended
in the exclusion of other programs as Type A programs. This recalculation of for loans within the program comprises
Type A programs. When a Federal the Type A program is performed after fifty percent or more of the total Federal
program providing loans exceeds four
awards expended for the program. A B programs than at least one fourth the based approach to determine major
cluster of programs is treated as one number of low-risk Type A programs programs must be presumed correct.
program and the value of Federal identified as low-risk under Step 2 Challenges by Federal agencies and
awards expended under a loan program (paragraph (c) of this section). Except for pass-through entities must only be for
is determined as described in § 200.502 known material weakness in internal clearly improper use of the
Basis for determining Federal awards control or compliance problems as requirements in this Part. However,
expended. discussed in § 200.519 Criteria for Federal agencies and pass-through
(4) For biennial audits permitted Federal program risk paragraphs (b)(1), entities may provide auditors guidance
under § 200.504 Frequency of audits, (b)(2), and (c)(1), a single criteria in risk about the risk of a particular Federal
the determination of Type A and Type would seldom cause a Type B program program and the auditor must consider
B programs must be based upon the to be considered high-risk. When this guidance in determining major
Federal awards expended during the identifying which Type B programs to programs in audits not yet completed.
two-year period. risk assess, the auditor is encouraged to
(c) Step two. use an approach which provides an § 200.519 Criteria for Federal program risk.
(1) The auditor must identify Type A opportunity for different high-risk Type (a) General. The auditor’s
programs which are low-risk. In making B programs to be audited as major over determination should be based on an
this determination, the auditor must a period of time. overall evaluation of the risk of
consider whether the requirements in (2) The auditor is not expected to noncompliance occurring that could be
§ 200.519 Criteria for Federal program perform risk assessments on relatively material to the Federal program. The
risk paragraph (c), the results of audit small Federal programs. Therefore, the auditor must consider criteria, such as
follow-up, or any changes in personnel auditor is only required to perform risk described in paragraphs (b), (c), and (d)
or systems affecting the program assessments on Type B programs that of this section, to identify risk in
indicate significantly increased risk and exceed twenty-five percent (0.25) of the Federal programs. Also, as part of the
preclude the program from being low Type A threshold determined in Step 1 risk analysis, the auditor may wish to
risk. For a Type A program to be (paragraph (b) of this section). discuss a particular Federal program
considered low-risk, it must have been (e) Step four. At a minimum, the with auditee management and the
audited as a major program in at least auditor must audit all of the following Federal agency or pass-through entity.
one of the two most recent audit periods as major programs: (b) Current and prior audit
(in the most recent audit period in the (1) All Type A programs not experience.
case of a biennial audit), and, in the identified as low risk under step two (1) Weaknesses in internal control
most recent audit period, the program (paragraph (c)(1) of this section). over Federal programs would indicate
must have not had: (2) All Type B programs identified as higher risk. Consideration should be
(i) Internal control deficiencies which high-risk under step three (paragraph (d) given to the control environment over
were identified as material weaknesses of this section). Federal programs and such factors as
in the auditor’s report on internal (3) Such additional programs as may the expectation of management’s
control for major programs as required be necessary to comply with the adherence to Federal statutes,
under § 200.515 Audit reporting, percentage of coverage rule discussed in regulations, and the terms and
paragraph (c); paragraph (f) of this section. This may conditions of Federal awards and the
(ii) A modified opinion on the require the auditor to audit more competence and experience of
program in the auditor’s report on major programs as major programs than the personnel who administer the Federal
programs as required under § 200.515 number of Type A programs. programs.
Audit reporting, paragraph (c); or (f) Percentage of coverage rule. If the (i) A Federal program administered
(iii) Known or likely questioned costs auditee meets the criteria in § 200.520 under multiple internal control
that exceed five percent of the total Criteria for a low-risk auditee, the structures may have higher risk. When
Federal awards expended for the auditor need only audit the major assessing risk in a large single audit, the
program. programs identified in Step 4 (paragraph auditor must consider whether
(2) Notwithstanding paragraph (c)(1) (e)(1) and (2) of this section) and such weaknesses are isolated in a single
of this section, OMB may approve a additional Federal programs with operating unit (e.g., one college campus)
Federal awarding agency’s request that Federal awards expended that, in or pervasive throughout the entity.
a Type A program may not be aggregate, all major programs (ii) When significant parts of a Federal
considered low risk for a certain encompass at least 20 percent (0.20) of program are passed through to
recipient. For example, it may be total Federal awards expended. subrecipients, a weak system for
necessary for a large Type A program to Otherwise, the auditor must audit the monitoring subrecipients would
be audited as a major program each year major programs identified in Step 4 indicate higher risk.
at a particular recipient to allow the (paragraphs (e)(1) and (2) of this section) (2) Prior audit findings would
Federal awarding agency to comply and such additional Federal programs indicate higher risk, particularly when
with 31 U.S.C. 3515. The Federal with Federal awards expended that, in the situations identified in the audit
awarding agency must notify the aggregate, all major programs findings could have a significant impact
recipient and, if known, the auditor of encompass at least 40 percent (0.40) of on a Federal program or have not been
OMB’s approval at least 180 calendar total Federal awards expended. corrected.
days prior to the end of the fiscal year (g) Documentation of risk. The auditor (3) Federal programs not recently
to be audited. must include in the audit audited as major programs may be of
(d) Step three. documentation the risk analysis process
higher risk than Federal programs

(1) The auditor must identify Type B used in determining major programs. recently audited as major programs
programs which are high-risk using (h) Auditor’s judgment. When the without audit findings.
professional judgment and the criteria major program determination was (c) Oversight exercised by Federal
in § 200.519 Criteria for Federal program performed and documented in agencies and pass-through entities.
risk. However, the auditor is not accordance with this Subpart, the (1) Oversight exercised by Federal
required to identify more high-risk Type auditor’s judgment in applying the risk- agencies or pass-through entities could
be used to assess risk. For example, (b) The auditor’s opinion on whether (c)(3), a Federal awarding agency is
recent monitoring or other reviews the financial statements were prepared responsible for issuing a management
performed by an oversight entity that in accordance with GAAP, or a basis of decision for findings that relate to
disclosed no significant problems would accounting required by state law, and Federal awards it makes to non-Federal
indicate lower risk, whereas monitoring the auditor’s in relation to opinion on entities.
that disclosed significant problems the schedule of expenditures of Federal (c) Pass-through entity. As provided
would indicate higher risk. awards were unmodified. in § 200.331 Requirements for pass-
(2) Federal agencies, with the (c) There were no deficiencies in through entities, paragraph (d), the pass-
concurrence of OMB, may identify internal control which were identified through entity must be responsible for
Federal programs that are higher risk. as material weaknesses under the issuing a management decision for audit
OMB will provide this identification in requirements of GAGAS. findings that relate to Federal awards it
the compliance supplement. (d) The auditor did not report a makes to subrecipients.
(d) Inherent risk of the Federal substantial doubt about the auditee’s (d) Time requirements. The Federal
program. ability to continue as a going concern. awarding agency or pass-through entity
(1) The nature of a Federal program (e) None of the Federal programs had responsible for issuing a management
may indicate risk. Consideration should audit findings from any of the following decision must do so within six months
be given to the complexity of the in either of the preceding two audit of acceptance of the audit report by the
program and the extent to which the periods in which they were classified as FAC. The auditee must initiate and
Federal program contracts for goods and Type A programs: proceed with corrective action as
services. For example, Federal programs (1) Internal control deficiencies that rapidly as possible and corrective action
that disburse funds through third party were identified as material weaknesses should begin no later than upon receipt
contracts or have eligibility criteria may in the auditor’s report on internal of the audit report.
be of higher risk. Federal programs control for major programs as required
(e) Reference numbers. Management
primarily involving staff payroll costs under § 200.515 Audit reporting,
decisions must include the reference
may have high risk for noncompliance paragraph (c);
numbers the auditor assigned to each
with requirements of § 200.430 (2) A modified opinion on a major
audit finding in accordance with
Compensation—personal services, but program in the auditor’s report on major
§ 200.516 Audit findings paragraph (c).
otherwise be at low risk. programs as required under § 200.515
(2) The phase of a Federal program in Audit reporting, paragraph (c); or Appendix I to Part 200—Full Text of
its life cycle at the Federal agency may (3) Known or likely questioned costs Notice of Funding Opportunity
indicate risk. For example, a new that exceeded five percent of the total The full text of the notice of funding
Federal program with new or interim Federal awards expended for a Type A opportunity is organized in sections. The
regulations may have higher risk than program during the audit period. required format outlined in this appendix
an established program with time-tested indicates immediately following the title of
Management Decisions
regulations. Also, significant changes in each section whether that section is required
Federal programs, statutes, regulations, § 200.521 Management decision. in every announcement or is a Federal
awarding agency option. The format is
or the terms and conditions of Federal (a) General. The management decision designed so that similar types of information
awards may increase risk. must clearly state whether or not the will appear in the same sections in
(3) The phase of a Federal program in audit finding is sustained, the reasons announcements of different Federal funding
its life cycle at the auditee may indicate for the decision, and the expected opportunities. Toward that end, there is text
risk. For example, during the first and auditee action to repay disallowed costs, in each of the following sections to describe
last years that an auditee participates in make financial adjustments, or take the types of information that a Federal
a Federal program, the risk may be other action. If the auditee has not awarding agency would include in that
higher due to start-up or closeout of completed corrective action, a timetable section of an actual announcement.
A Federal awarding agency that wishes to
program activities and staff. for follow-up should be given. Prior to
include information that the format does not
(4) Type B programs with larger issuing the management decision, the specifically discuss may address that subject
Federal awards expended would be of Federal agency or pass-through entity in whatever section(s) is most appropriate.
higher risk than programs with may request additional information or For example, if a Federal awarding agency
substantially smaller Federal awards documentation from the auditee, chooses to address performance goals in the
expended. including a request for auditor announcement, it might do so in the funding
assurance related to the documentation, opportunity description, the application
§ 200.520 Criteria for a low-risk auditee. as a way of mitigating disallowed costs. content, or the reporting requirements.
An auditee that meets all of the The management decision should Similarly, when this format calls for a type
following conditions for each of the of information to be in a particular section,
describe any appeal process available to
a Federal awarding agency wishing to
preceding two audit periods must the auditee. While not required, the address that subject in other sections may
qualify as a low-risk auditee and be Federal agency or pass-through entity elect to repeat the information in those
eligible for reduced audit coverage in may also issue a management decision sections or use cross references between the
accordance with § 200.518 Major on findings relating to the financial sections (there should be hyperlinks for
program determination. statements which are required to be cross-references in any electronic versions of
(a) Single audits were performed on reported in accordance with GAGAS. the announcement). For example, a Federal
an annual basis in accordance with the (b) Federal agency. As provided in awarding agency may want to include in
provisions of this Subpart, including § 200.513 Responsibilities, paragraph Section I information about the types of non-
submitting the data collection form and (a)(7), the cognizant agency for audit Federal entities who are eligible to apply.
The format specifies a standard location for
the reporting package to the FAC within must be responsible for coordinating a that information in Section III.1 but that does
the timeframe specified in § 200.512 management decision for audit findings not preclude repeating the information in
Report submission. A non-Federal entity that affect the programs of more than Section I or creating a cross reference
that has biennial audits does not qualify one Federal agency. As provided in between Sections I and III.1, as long as a
as a low-risk auditee. § 200.513 Responsibilities, paragraph potential applicant can find the information
quickly and easily from the standard criterion by the time of an application to say so. This section must also state any
location. deadline will result in the Federal awarding limit on the number of applications an
The sections of the full text of the agency returning the application without applicant may submit under the
announcement are described in the following review or, even though an application may be announcement and make clear whether the
paragraphs. reviewed, will preclude the Federal awarding limitation is on the submitting organization,
agency from making a Federal award. Key individual investigator/program director, or
A. Program Description—Required both. This section should also address any
elements to be addressed are:
This section contains the full program 1. Eligible Applicants—Required. eligibility criteria for beneficiaries or for
description of the funding opportunity. It Announcements must clearly identify the program participants other than Federal
may be as long as needed to adequately types of entities that are eligible to apply. If award recipients.
communicate to potential applicants the there are no restrictions on eligibility, this
areas in which funding may be provided. It D. Application and Submission Information
section may simply indicate that all potential
describes the Federal awarding agency’s applicants are eligible. If there are 1. Address to Request Application
funding priorities or the technical or focus restrictions on eligibility, it is important to be Package—Required. Potential applicants
areas in which the Federal awarding agency clear about the specific types of entities that must be told how to get application forms,
intends to provide assistance. As appropriate, are eligible, not just the types that are kits, or other materials needed to apply (if
it may include any program history (e.g., ineligible. For example, if the program is this announcement contains everything
whether this is a new program or a new or limited to nonprofit organizations subject to needed, this section need only say so). An
changed area of program emphasis). This 26 U.S.C. 501(c)(3) of the tax code (26 U.S.C. Internet address where the materials can be
section may communicate indicators of 501(c)(3)), the announcement should say so. accessed is acceptable. However, since high-
successful projects (e.g., if the program Similarly, it is better to state explicitly that speed Internet access is not yet universally
encourages collaborative efforts) and may Native American tribal organizations are available for downloading documents, and
include examples of projects that have been eligible than to assume that they can applicants may have additional accessibility
funded previously. This section also may unambiguously infer that from a statement requirements, there also should be a way for
include other information the Federal that nonprofit organizations may apply. potential applicants to request paper copies
awarding agency deems necessary, and must Eligibility also can be expressed by of materials, such as a U.S. Postal Service
at a minimum include citations for exception, (e.g., open to all types of domestic mailing address, telephone or FAX number,
authorizing statutes and regulations for the Telephone Device for the Deaf (TDD), Text
applicants other than individuals). This
funding opportunity. Telephone (TTY) number, and/or Federal
section should refer to any portion of Section
Information Relay Service (FIRS) number.
B. Federal Award Information—Required IV specifying documentation that must be
2. Content and Form of Application
submitted to support an eligibility
This section provides sufficient Submission—Required. This section must
determination (e.g., proof of 501(c)(3) status
information to help an applicant make an identify the required content of an
as determined by the Internal Revenue
informed decision about whether to submit a application and the forms or formats that an
Service or an authorizing tribal resolution).
proposal. Relevant information could include applicant must use to submit it. If any
To the extent that any funding restriction in
the total amount of funding that the Federal requirements are stated elsewhere because
Section IV.5 could affect the eligibility of an they are general requirements that apply to
awarding agency expects to award through applicant or project, the announcement must
the announcement; the anticipated number of multiple programs or funding opportunities,
either restate that restriction in this section this section should refer to where those
Federal awards; the expected amounts of
or provide a cross-reference to its description requirements may be found. This section also
individual Federal awards (which may be a
in Section IV.5. should include required forms or formats as
range); the amount of funding per Federal
2. Cost Sharing or Matching—Required. part of the announcement or state where the
award, on average, experienced in previous
Announcements must state whether there is applicant may obtain them.
years; and the anticipated start dates and
required cost sharing, matching, or cost This section should specifically address
periods of performance for new Federal
participation without which an application content and form or format requirements for:
awards. This section also should address
would be ineligible (if cost sharing is not i. Pre-applications, letters of intent, or
whether applications for renewal or
required, the announcement must explicitly white papers required or encouraged (see
supplementation of existing projects are
eligible to compete with applications for new say so). Required cost sharing may be a Section IV.3), including any limitations on
Federal awards. certain percentage or amount, or may be in the number of pages or other formatting
This section also must indicate the type(s) the form of contributions of specified items requirements similar to those for full
of assistance instrument (e.g., grant, or activities (e.g., provision of equipment). It applications.
cooperative agreement) that may be awarded is important that the announcement be clear ii. The application as a whole. For all
if applications are successful. If cooperative about any restrictions on the types of cost submissions, this would include any
agreements may be awarded, this section (e.g., in-kind contributions) that are limitations on the number of pages, font size
either should describe the ‘‘substantial acceptable as cost sharing. Cost sharing as an and typeface, margins, paper size, number of
involvement’’ that the Federal awarding eligibility criterion includes requirements copies, and sequence or assembly
agency expects to have or should reference based in statute or regulation, as described in requirements. If electronic submission is
where the potential applicant can find that § 200.306 Cost sharing or matching of this permitted or required, this could include
information (e.g., in the funding opportunity Part. This section should refer to the special requirements for formatting or
description in A. Program Description— appropriate portion(s) of section D. signatures.
Required or Federal award administration Application and Submission Information iii. Component pieces of the application
information in section D. Application and stating any pre-award requirements for (e.g., if all copies of the application must bear
Submission Information). If procurement submission of letters or other documentation original signatures on the face page or the
contracts also may be awarded, this must be to verify commitments to meet cost-sharing program narrative may not exceed 10 pages).
stated. requirements if a Federal award is made. This includes any pieces that may be
3. Other—Required, if applicable. If there submitted separately by third parties (e.g.,
C. Eligibility Information are other eligibility criteria (i.e., criteria that references or letters confirming commitments
This section addresses the considerations have the effect of making an application or from third parties that will be contributing a
or factors that determine applicant or project ineligible for Federal awards, whether portion of any required cost sharing).
application eligibility. This includes the referred to as ‘‘responsiveness’’ criteria, ‘‘go- iv. Information that successful applicants
eligibility of particular types of applicant no go’’ criteria, ‘‘threshold’’ criteria, or in must submit after notification of intent to
organizations, any factors affecting the other ways), must be clearly stated and must make a Federal award, but prior to a Federal
eligibility of the principal investigator or include a reference to the regulation of award. This could include evidence of
project director, and any criteria that make requirement that describes the restriction, as compliance with requirements relating to
particular projects ineligible. Federal applicable. For example, if entities that have human subjects or information needed to
agencies should make clear whether an been found to be in violation of a particular comply with the National Environmental
applicant’s failure to meet an eligibility Federal statute are ineligible, it is important Policy Act (NEPA) (42 U.S.C. 4321–4370h).
3. Dun and Bradstreet Universal application has been submitted before the E. Application Review Information
Numbering System (DUNS) Number and deadline. This includes the form of 1. Criteria—Required. This section must
System for Award Management (SAM)— acceptable proof of mailing or system- address the criteria that the Federal awarding
Required. generated documentation of receipt date and agency will use to evaluate applications. This
This paragraph must state clearly that each time. includes the merit and other review criteria
applicant (unless the applicant is an This section also may indicate whether, that evaluators will use to judge applications,
individual or Federal awarding agency that is when, and in what form the applicant will including any statutory, regulatory, or other
excepted from those requirements under 2 receive an acknowledgement of receipt. This preferences (e.g., minority status or Native
CFR § 25.110(b) or (c), or has an exception information should be displayed in ways that American tribal preferences) that will be
approved by the Federal awarding agency will be easy to understand and use. It can be applied in the review process. These criteria
under 2 CFR § 25.110(d)) is required to: (i) Be difficult to extract all needed information are distinct from eligibility criteria that are
registered in SAM before submitting its from narrative paragraphs, even when they addressed before an application is accepted
application; (ii) provide a valid DUNS are well written. A tabular form for providing for review and any program policy or other
number in its application; and (iii) continue a summary of the information may help factors that are applied during the selection
to maintain an active SAM registration with applicants for some programs and give them process, after the review process is
current information at all times during which what effectively could be a checklist to verify completed. The intent is to make the
it has an active Federal award or an the completeness of their application package application process transparent so applicants
application or plan under consideration by a before submission. can make informed decisions when preparing
Federal awarding agency. It also must state 5. Intergovernmental Review—Required, if their applications to maximize fairness of the
that the Federal awarding agency may not applicable. If the funding opportunity is
make a Federal award to an applicant until process. The announcement should clearly
subject to Executive Order 12372, describe all criteria, including any sub-
the applicant has complied with all ‘‘Intergovernmental Review of Federal
applicable DUNS and SAM requirements criteria. If criteria vary in importance, the
Programs,’’ the notice must say so. In alerting announcement should specify the relative
and, if an applicant has not fully complied applicants that they must contact their state’s
with the requirements by the time the percentages, weights, or other means used to
Single Point of Contact (SPOC) to find out distinguish among them. For statutory,
Federal awarding agency is ready to make a about and comply with the state’s process
Federal award, the Federal awarding agency regulatory, or other preferences, the
under Executive Order 12372, it may be announcement should provide a detailed
may determine that the applicant is not useful to inform potential applicants that the
qualified to receive a Federal award and use explanation of those preferences with an
names and addresses of the SPOCs are listed explicit indication of their effect (e.g.,
that determination as a basis for making a in the Office of Management and Budget’s
Federal award to another applicant. whether they result in additional points
Web site. www.whitehouse.gov/omb/grants/ being assigned).
4. Submission Dates and Times—Required. spoc.html.
Announcements must identify due dates and If an applicant’s proposed cost sharing will
6. Funding Restrictions—Required. Notices be considered in the review process (as
times for all submissions. This includes not
must include information on funding opposed to being an eligibility criterion
only the full applications but also any
restrictions in order to allow an applicant to described in Section III.2), the announcement
preliminary submissions (e.g., letters of
develop an application and budget consistent must specifically address how it will be
intent, white papers, or pre-applications). It
with program requirements. Examples are considered (e.g., to assign a certain number
also includes any other submissions of
whether construction is an allowable activity, of additional points to applicants who offer
information before Federal award that are
separate from the full application. If the if there are any limitations on direct costs cost sharing, or to break ties among
funding opportunity is a general such as foreign travel or equipment applications with equivalent scores after
announcement that is open for a period of purchases, and if there are any limits on evaluation against all other factors). If cost
time with no specific due dates for indirect costs (or facilities and administrative sharing will not be considered in the
applications, this section should say so. Note costs). Applicants must be advised if Federal evaluation, the announcement should say so,
that the information on dates that is included awards will not allow reimbursement of pre- so that there is no ambiguity for potential
in this section also must appear with other Federal award costs. applicants. Vague statements that cost
overview information in a location preceding 7. Other Submission Requirements— sharing is encouraged, without clarification
the full text of the announcement (see Required. This section must address any as to what that means, are unhelpful to
§ 200.203 Notices of funding opportunities of other submission requirements not included applicants. It also is important that the
this Part). in the other paragraphs of this section. This announcement be clear about any restrictions
Each type of submission should be might include the format of submission, i.e., on the types of cost (e.g., in-kind
designated as encouraged or required and, if paper or electronic, for each type of required contributions) that are acceptable as cost
required, any deadline date (or dates, if the submission. Applicants should not be sharing.
Federal awarding agency plans more than required to submit in more than one format 2. Review and Selection Process—
one cycle of application submission, review, and this section should indicate whether Required. This section may vary in the level
and Federal award under the announcement) they may choose whether to submit of detail provided. The announcement must
should be specified. The announcement must applications in hard copy or electronically, list any program policy or other factors or
state (or provide a reference to another may submit only in hard copy, or may submit elements, other than merit criteria, that the
document that states): only electronically. selecting official may use in selecting
i. Any deadline in terms of a date and local This section also must indicate where applications for Federal award (e.g.,
time. If the due date falls on a Saturday, applications (and any pre-applications) must geographical dispersion, program balance, or
Sunday, or Federal holiday, the reporting be submitted if sent by postal mail, electronic diversity). The Federal awarding agency may
package is due the next business day. means, or hand-delivery. For postal mail also include other appropriate details. For
ii. What the deadline means (e.g., whether submission, this must include the name of an example, this section may indicate who is
it is the date and time by which the Federal office, official, individual or function (e.g., responsible for evaluation against the merit
awarding agency must receive the application receipt center) and a complete criteria (e.g., peers external to the Federal
application, the date by which the mailing address. For electronic submission, awarding agency or Federal awarding agency
application must be postmarked, or this must include the URL or email address; personnel) and/or who makes the final
something else) and how that depends, if at whether a password(s) is required; whether selections for Federal awards. If there is a
all, on the submission method (e.g., mail, particular software or other electronic multi-phase review process (e.g., an external
electronic, or personal/courier delivery). capabilities are required; what to do in the panel advising internal Federal awarding
iii. The effect of missing a deadline (e.g., event of system problems and a point of agency personnel who make final
whether late applications are neither contact who will be available in the event the
reviewed nor considered or are reviewed and applicant experiences technical difficulties.1 accepting applicants’ submissions of information,
considered under some circumstances). each Federal awarding agency is responsible for
iv. How the receiving Federal office 1 With respect to electronic methods for providing compliance with Section 508 of the Rehabilitation
determines whether an application or pre- information about funding opportunities or Act of 1973 (29 U.S.C. 794d).
recommendations to the deciding official), award, but may refer to a document (with v. Include certain routine notices to
the announcement may describe the phases. information about how to obtain it) or applicants (e.g., that the Federal government
It also may include: the number of people on Internet site where applicants can see the is not obligated to make any Federal award
an evaluation panel and how it operates, the terms and conditions. If this funding as a result of the announcement or that only
way reviewers are selected, reviewer opportunity will lead to Federal awards with grants officers can bind the Federal
qualifications, and the way that conflicts of some special terms and conditions that differ government to the expenditure of funds).
interest are avoided. With respect to from the Federal awarding agency’s usual
electronic methods for providing information (sometimes called ‘‘general’’) terms and Appendix II to Part 200—Contract
about funding opportunities or accepting conditions, this section should highlight Provisions for Non-Federal Entity
applicants’ submissions of information, each those special terms and conditions. Doing so Contracts Under Federal Awards
Federal awarding agency is responsible for will alert applicants that have received
Federal awards from the Federal awarding In addition to other provisions required by
compliance with Section 508 of the
agency previously and might not otherwise the Federal agency or non-Federal entity, all
Rehabilitation Act of 1973 (29 U.S.C. 794d).
expect different terms and conditions. For contracts made by the non-Federal entity
In addition, if the Federal awarding agency
the same reason, the announcement should under the Federal award must contain
permits applicants to nominate suggested provisions covering the following, as
reviewers of their applications or suggest inform potential applicants about special
requirements that could apply to particular applicable.
those they feel may be inappropriate due to (A) Contracts for more than the simplified
a conflict of interest, that information should Federal awards after the review of
applications and other information, based on acquisition threshold currently set at
be included in this section. $150,000, which is the inflation adjusted
3. Anticipated Announcement and Federal the particular circumstances of the effort to
be supported (e.g., if human subjects were to amount determined by the Civilian Agency
Award Dates—Optional. This section is Acquisition Council and the Defense
intended to provide applicants with be involved or if some situations may justify
special terms on intellectual property, data Acquisition Regulations Council (Councils)
information they can use for planning as authorized by 41 U.S.C. 1908, must
purposes. If there is a single application sharing or security requirements).
3. Reporting—Required. This section must address administrative, contractual, or legal
deadline followed by the simultaneous remedies in instances where contractors
review of all applications, the Federal include general information about the type
(e.g., financial or performance), frequency, violate or breach contract terms, and provide
awarding agency can include in this section for such sanctions and penalties as
information about the anticipated dates for and means of submission (paper or
electronic) of post-Federal award reporting appropriate.
announcing or notifying successful and (B) All contracts in excess of $10,000 must
unsuccessful applicants and for having requirements. Highlight any special reporting
requirements for Federal awards under this address termination for cause and for
Federal awards in place. If applications are convenience by the non-Federal entity
received and evaluated on a ‘‘rolling’’ basis funding opportunity that differ (e.g., by
report type, frequency, form/format, or including the manner by which it will be
at different times during an extended period, effected and the basis for settlement.
circumstances for use) from what the Federal
it may be appropriate to give applicants an (C) Equal Employment Opportunity.
awarding agency’s Federal awards usually
estimate of the time needed to process an Except as otherwise provided under 41 CFR
require.
application and notify the applicant of the Part 60, all contracts that meet the definition
Federal awarding agency’s decision. G. Federal Awarding Agency Contact(s)— of ‘‘federally assisted construction contract’’
Required in 41 CFR Part 60–1.3 must include the equal
F. Federal Award Administration
Information The announcement must give potential opportunity clause provided under 41 CFR
applicants a point(s) of contact for answering 60–1.4(b), in accordance with Executive
1. Federal Award Notices—Required. This Order 11246, ‘‘Equal Employment
questions or helping with problems while the
section must address what a successful Opportunity’’ (30 FR 12319, 12935, 3 CFR
funding opportunity is open. The intent of
applicant can expect to receive following Part, 1964–1965 Comp., p. 339), as amended
this requirement is to be as helpful as
selection. If the Federal awarding agency’s by Executive Order 11375, ‘‘Amending
possible to potential applicants, so the
practice is to provide a separate notice stating Federal awarding agency should consider Executive Order 11246 Relating to Equal
that an application has been selected before approaches such as giving: Employment Opportunity,’’ and
it actually makes the Federal award, this i. Points of contact who may be reached in implementing regulations at 41 CFR part 60,
section would be the place to indicate that multiple ways (e.g., by telephone, FAX, and/ ‘‘Office of Federal Contract Compliance
the letter is not an authorization to begin or email, as well as regular mail). Programs, Equal Employment Opportunity,
performance (to the extent that it allows ii. A fax or email address that multiple Department of Labor.’’
charging to Federal awards of pre-award people access, so that someone will respond (D) Davis-Bacon Act, as amended (40
costs at the non-Federal entity’s own risk). even if others are unexpectedly absent during U.S.C. 3141–3148). When required by
This section should indicate that the notice critical periods. Federal program legislation, all prime
of Federal award signed by the grants officer iii. Different contacts for distinct kinds of construction contracts in excess of $2,000
(or equivalent) is the authorizing document, help (e.g., one for questions of programmatic awarded by non-Federal entities must
and whether it is provided through postal content and a second for administrative include a provision for compliance with the
mail or by electronic means and to whom. It questions). Davis-Bacon Act (40 U.S.C. 3141–3144, and
also may address the timing, form, and 3146–3148) as supplemented by Department
content of notifications to unsuccessful H. Other Information—Optional of Labor regulations (29 CFR Part 5, ‘‘Labor
applicants. See also § 200.210 Information This section may include any additional Standards Provisions Applicable to Contracts
contained in a Federal award. information that will assist a potential Covering Federally Financed and Assisted
2. Administrative and National Policy applicant. For example, the section might: Construction’’). In accordance with the
Requirements—Required. This section must i. Indicate whether this is a new program statute, contractors must be required to pay
identify the usual administrative and or a one-time initiative. wages to laborers and mechanics at a rate not
national policy requirements the Federal ii. Mention related programs or other less than the prevailing wages specified in a
awarding agency’s Federal awards may upcoming or ongoing Federal awarding wage determination made by the Secretary of
include. Providing this information lets a agency funding opportunities for similar Labor. In addition, contractors must be
potential applicant identify any requirements activities. required to pay wages not less than once a
with which it would have difficulty iii. Include current Internet addresses for week. The non-Federal entity must place a
complying if its application is successful. In Federal awarding agency Web sites that may copy of the current prevailing wage
those cases, early notification about the be useful to an applicant in understanding determination issued by the Department of
requirements allows the potential applicant the program. Labor in each solicitation. The decision to
to decide not to apply or to take needed iv. Alert applicants to the need to identify award a contract or subcontract must be
actions before receiving the Federal award. proprietary information and inform them conditioned upon the acceptance of the wage
The announcement need not include all of about the way the Federal awarding agency determination. The non-Federal entity must
the terms and conditions of the Federal will handle it. report all suspected or reported violations to
the Federal awarding agency. The contracts (H) Mandatory standards and policies credit basis, and whether they are offered
must also include a provision for compliance relating to energy efficiency which are through regular academic departments or
with the Copeland ‘‘Anti-Kickback’’ Act (40 contained in the state energy conservation separate divisions, such as a summer school
U.S.C. 3145), as supplemented by plan issued in compliance with the Energy division or an extension division. Also
Department of Labor regulations (29 CFR Part Policy and Conservation Act (42 U.S.C. considered part of this major function are
3, ‘‘Contractors and Subcontractors on Public 6201). departmental research, and, where agreed to,
Building or Public Work Financed in Whole (I) Debarment and Suspension (Executive university research.
or in Part by Loans or Grants from the United Orders 12549 and 12689)—A contract award (1) Sponsored instruction and training
States’’). The Act provides that each (see 2 CFR 180.220) must not be made to means specific instructional or training
contractor or subrecipient must be prohibited parties listed on the governmentwide activity established by grant, contract, or
from inducing, by any means, any person Excluded Parties List System in the System cooperative agreement. For purposes of the
employed in the construction, completion, or for Award Management (SAM), in cost principles, this activity may be
repair of public work, to give up any part of accordance with the OMB guidelines at 2 considered a major function even though an
the compensation to which he or she is CFR 180 that implement Executive Orders institution’s accounting treatment may
otherwise entitled. The non-Federal entity 12549 (3 CFR Part 1986 Comp., p. 189) and include it in the instruction function.
must report all suspected or reported 12689 (3 CFR Part 1989 Comp., p. 235), (2) Departmental research means research,
violations to the Federal awarding agency. ‘‘Debarment and Suspension.’’ The Excluded development and scholarly activities that are
(E) Contract Work Hours and Safety Parties List System in SAM contains the not organized research and, consequently, are
Standards Act (40 U.S.C. 3701–3708). Where names of parties debarred, suspended, or not separately budgeted and accounted for.
applicable, all contracts awarded by the non- otherwise excluded by agencies, as well as Departmental research, for purposes of this
Federal entity in excess of $100,000 that parties declared ineligible under statutory or document, is not considered as a major
involve the employment of mechanics or regulatory authority other than Executive function, but as a part of the instruction
laborers must include a provision for Order 12549. function of the institution.
compliance with 40 U.S.C. 3702 and 3704, as (J) Byrd Anti-Lobbying Amendment (31 b. Organized research means all research
supplemented by Department of Labor U.S.C. 1352)—Contractors that apply or bid and development activities of an institution
regulations (29 CFR Part 5). Under 40 U.S.C. for an award of $100,000 or more must file that are separately budgeted and accounted
3702 of the Act, each contractor must be the required certification. Each tier certifies for. It includes:
required to compute the wages of every (1) Sponsored research means all research
to the tier above that it will not and has not
mechanic and laborer on the basis of a and development activities that are
used Federal appropriated funds to pay any
standard work week of 40 hours. Work in sponsored by Federal and non-Federal
person or organization for influencing or
excess of the standard work week is agencies and organizations. This term
attempting to influence an officer or
permissible provided that the worker is
employee of any agency, a member of includes activities involving the training of
compensated at a rate of not less than one
Congress, officer or employee of Congress, or individuals in research techniques
and a half times the basic rate of pay for all
an employee of a member of Congress in (commonly called research training) where
hours worked in excess of 40 hours in the
connection with obtaining any Federal such activities utilize the same facilities as
work week. The requirements of 40 U.S.C.
contract, grant or any other award covered by other research and development activities
3704 are applicable to construction work and
provide that no laborer or mechanic must be 31 U.S.C. 1352. Each tier must also disclose and where such activities are not included in
required to work in surroundings or under any lobbying with non-Federal funds that the instruction function.
working conditions which are unsanitary, takes place in connection with obtaining any (2) University research means all research
hazardous or dangerous. These requirements Federal award. Such disclosures are and development activities that are
do not apply to the purchases of supplies or forwarded from tier to tier up to the non- separately budgeted and accounted for by the
materials or articles ordinarily available on Federal award. institution under an internal application of
the open market, or contracts for (K) See § 200.322 Procurement of recovered institutional funds. University research, for
transportation or transmission of intelligence. materials. purposes of this document, must be
(F) Rights to Inventions Made Under a combined with sponsored research under the
Appendix III to Part 200—Indirect function of organized research.
Contract or Agreement. If the Federal award
meets the definition of ‘‘funding agreement’’ (F&A) Costs Identification and c. Other sponsored activities means
under 37 CFR § 401.2 (a) and the recipient or Assignment, and Rate Determination programs and projects financed by Federal
subrecipient wishes to enter into a contract for Institutions of Higher Education and non-Federal agencies and organizations
with a small business firm or nonprofit (IHEs) which involve the performance of work other
organization regarding the substitution of than instruction and organized research.
A. General Examples of such programs and projects are
parties, assignment or performance of
experimental, developmental, or research This appendix provides criteria for health service projects and community
work under that ‘‘funding agreement,’’ the identifying and computing indirect (or service programs. However, when any of
recipient or subrecipient must comply with indirect (F&A)) rates at IHEs (institutions). these activities are undertaken by the
the requirements of 37 CFR Part 401, ‘‘Rights Indirect (F&A) costs are those that are institution without outside support, they may
to Inventions Made by Nonprofit incurred for common or joint objectives and be classified as other institutional activities.
Organizations and Small Business Firms therefore cannot be identified readily and d. Other institutional activities means all
Under Government Grants, Contracts and specifically with a particular sponsored activities of an institution except for
Cooperative Agreements,’’ and any project, an instructional activity, or any other instruction, departmental research, organized
implementing regulations issued by the institutional activity. See subsection B.1, research, and other sponsored activities, as
awarding agency. Definition of Facilities and Administration, defined in this section; indirect (F&A) cost
(G) Clean Air Act (42 U.S.C. 7401–7671q.) for a discussion of the components of activities identified in this Appendix
and the Federal Water Pollution Control Act indirect (F&A) costs. paragraph B, Identification and assignment of
(33 U.S.C. 1251–1387), as amended— indirect (F&A) costs; and specialized services
Contracts and subgrants of amounts in excess 1. Major Functions of an Institution facilities described in § 200.468 Specialized
of $150,000 must contain a provision that Refers to instruction, organized research, service facilities of this Part.
requires the non-Federal award to agree to other sponsored activities and other Examples of other institutional activities
comply with all applicable standards, orders institutional activities as defined in this include operation of residence halls, dining
or regulations issued pursuant to the Clean section: halls, hospitals and clinics, student unions,
Air Act (42 U.S.C. 7401–7671q) and the a. Instruction means the teaching and intercollegiate athletics, bookstores, faculty
Federal Water Pollution Control Act as training activities of an institution. Except for housing, student apartments, guest houses,
amended (33 U.S.C. 1251–1387). Violations research training as provided in subsection b, chapels, theaters, public museums, and other
must be reported to the Federal awarding this term includes all teaching and training similar auxiliary enterprises. This definition
agency and the Regional Office of the activities, whether they are offered for credits also includes any other categories of
Environmental Protection Agency (EPA). toward a degree or certificate or on a non- activities, costs of which are ‘‘unallowable’’
to Federal awards, unless otherwise such expenses should be set aside as a equitable allocation of the costs, or that a
indicated in an award. separate cost grouping for distribution on more readily available base would not
such basis to organized research, increase the costs charged to Federal awards,
2. Criteria for Distribution instructional, and other activities at the or
a. Base period. A base period for institution or within the department. (b) The institution qualifies for, and elects
distribution of indirect (F&A) costs is the (4) If activities provide their own to use, the simplified method for computing
period during which the costs are incurred. purchasing, personnel administration, indirect (F&A) cost rates described in Section
The base period normally should coincide building maintenance or similar service, the D, Simplified method for small institutions.
with the fiscal year established by the distribution of general administration and (5) Notwithstanding subsection (3),
institution, but in any event the base period general expenses, or operation and effective July 1, 1998, a cost analysis or base
should be so selected as to avoid inequities maintenance expenses to such activities other than that in Section B must not be used
in the distribution of costs. should be accomplished through cost to distribute utility or student services costs.
b. Need for cost groupings. The overall groupings which include only that portion of Instead, subsections B.4.c Operation and
objective of the indirect (F&A) cost allocation central indirect (F&A) costs (such as for maintenance expenses, may be used in the
process is to distribute the indirect (F&A) overall management) which are properly recovery of utility costs.
costs described in Section B, Identification allocable to such activities. e. Order of distribution.
and assignment of indirect (F&A) costs, to the (5) If the institution elects to treat fringe (1) Indirect (F&A) costs are the broad
major functions of the institution in benefits as indirect (F&A) charges, such costs categories of costs discussed in Section B.1,
proportions reasonably consistent with the should be set aside as a separate cost Definitions of Facilities and Administration
nature and extent of their use of the grouping for selective distribution to related (2) Depreciation, interest expenses,
institution’s resources. In order to achieve cost objectives. operation and maintenance expenses, and
this objective, it may be necessary to provide (6) The number of separate cost groupings general administrative and general expenses
for selective distribution by establishing within a category should be held within should be allocated in that order to the
separate groupings of cost within one or more practical limits, after taking into remaining indirect (F&A) cost categories as
of the indirect (F&A) cost categories referred consideration the materiality of the amounts well as to the major functions and
to in subsection B.1, Definition of Facilities involved and the degree of precision specialized service facilities of the
and Administration. In general, the cost attainable through less selective methods of institution. Other cost categories may be
groupings established within a category distribution. allocated in the order determined to be most
should constitute, in each case, a pool of d. Selection of distribution method. appropriate by the institutions. When cross
those items of expense that are considered to (1) Actual conditions must be taken into allocation of costs is made as provided in
account in selecting the method or base to be subsection (3), this order of allocation does
be of like nature in terms of their relative
not apply.
contribution to (or degree of remoteness used in distributing individual cost
(3) Normally an indirect (F&A) cost
from) the particular cost objectives to which groupings. The essential consideration in
category will be considered closed once it
distribution is appropriate. Cost groupings selecting a base is that it be the one best
has been allocated to other cost objectives,
should be established considering the general suited for assigning the pool of costs to cost
and costs may not be subsequently allocated
guides provided in subsection c of this objectives in accordance with benefits to it. However, a cross allocation of costs
section. Each such pool or cost grouping derived; with a traceable cause-and-effect between two or more indirect (F&A) cost
should then be distributed individually to relationship; or with logic and reason, where categories may be used if such allocation will
the related cost objectives, using the neither benefit nor a cause-and-effect result in a more equitable allocation of costs.
distribution base or method most appropriate relationship is determinable. If a cross allocation is used, an appropriate
in light of the guidelines set forth in (2) If a cost grouping can be identified modification to the composition of the
subsection d of this section. directly with the cost objective benefitted, it indirect (F&A) cost categories described in
c. General considerations on cost should be assigned to that cost objective. Section B is required.
groupings. The extent to which separate cost (3) If the expenses in a cost grouping are
groupings and selective distribution would more general in nature, the distribution may B. Identification and Assignment of Indirect
be appropriate at an institution is a matter of be based on a cost analysis study which (F&A) Costs
judgment to be determined on a case-by-case results in an equitable distribution of the 1. Definition of Facilities and Administration
basis. Typical situations which may warrant costs. Such cost analysis studies may take
the establishment of two or more separate into consideration weighting factors, See § 200.414 Indirect (F&A) costs which
cost groupings (based on account population, or space occupied if appropriate. provides the basis for this indirect cost
classification or analysis) within an indirect Cost analysis studies, however, must (a) be requirements.
(F&A) cost category include but are not appropriately documented in sufficient detail 2. Depreciation
limited to the following: for subsequent review by the cognizant
a. The expenses under this heading are the
(1) If certain items or categories of expense agency for indirect costs, (b) distribute the portion of the costs of the institution’s
relate solely to one of the major functions of costs to the related cost objectives in buildings, capital improvements to land and
the institution or to less than all functions, accordance with the relative benefits derived, buildings, and equipment which are
such expenses should be set aside as a (c) be statistically sound, (d) be performed computed in accordance with § 200.436
separate cost grouping for direct assignment specifically at the institution at which the Depreciation.
or selective allocation in accordance with the results are to be used, and (e) be reviewed b. In the absence of the alternatives
guides provided in subsections b and d. periodically, but not less frequently than rate provided for in Section A.2.d, Selection of
(2) If any types of expense ordinarily negotiations, updated if necessary, and used distribution method, the expenses included
treated as general administration or consistently. Any assumptions made in the in this category must be allocated in the
departmental administration are charged to study must be stated and explained. The use following manner:
Federal awards as direct costs, expenses of cost analysis studies and periodic changes (1) Depreciation on buildings used
applicable to other activities of the in the method of cost distribution must be exclusively in the conduct of a single
institution when incurred for the same fully justified. function, and on capital improvements and
purposes in like circumstances must, through (4) If a cost analysis study is not equipment used in such buildings, must be
separate cost groupings, be excluded from the performed, or if the study does not result in assigned to that function.
indirect (F&A) costs allocable to those an equitable distribution of the costs, the (2) Depreciation on buildings used for
Federal awards and included in the direct distribution must be made in accordance more than one function, and on capital
cost of other activities for cost allocation with the appropriate base cited in Section B, improvements and equipment used in such
purposes. Identification and assignment of indirect buildings, must be allocated to the individual
(3) If it is determined that certain expenses (F&A) costs, unless one of the following functions performed in each building on the
are for the support of a service unit or facility conditions is met: basis of usable square feet of space, excluding
whose output is susceptible of measurement (a) It can be demonstrated that the use of common areas such as hallways, stairwells,
on a workload or other quantitative basis, a different base would result in a more and rest rooms.
(3) Depreciation on buildings, capital measurement of usage related to that space, wide deans’ offices, academic departments,
improvements and equipment related to costs must be assigned to the function organized research units, or similar
space (e.g., individual rooms, laboratories) located in that space. organizational units. (See subsection 6,
used jointly by more than one function (as (2) Where space is allocated to different Departmental administration expenses.)
determined by the users of the space) must functions and metering does not allow b. In the absence of the alternatives
be treated as follows. The cost of each jointly unambiguous measurement of usage by provided for in Section A.2.d, the expenses
used unit of space must be allocated to function, costs must be allocated as follows: included in this category must be grouped
benefitting functions on the basis of: (i) Utilities costs should be apportioned to first according to common major functions of
(a) The employee full-time equivalents functions in the same manner as the institution to which they render services
(FTEs) or salaries and wages of those depreciation, based on the calculated or provide benefits. The aggregate expenses
individual functions benefitting from the use difference between the site or building actual of each group must then be allocated to
of that space; or square footage for monitored research serviced or benefitted functions on the
(b) Institution-wide employee FTEs or laboratory space (site, building, floor, or modified total cost basis. Modified total costs
salaries and wages applicable to the room), and a separate calculation prepared by consist of the same elements as those in
benefitting major functions (see Section A.1) the IHE using the ‘‘effective square footage’’ Section C.2. When an activity included in
of the institution. described in subsection (c)(2)(ii) of this this indirect (F&A) cost category provides a
(4) Depreciation on certain capital section. service or product to another institution or
improvements to land, such as paved parking (ii) ‘‘Effective square footage’’ allocated to organization, an appropriate adjustment must
areas, fences, sidewalks, and the like, not research laboratory space must be calculated be made to either the expenses or the basis
included in the cost of buildings, must be as the actual square footage times the relative of allocation or both, to assure a proper
allocated to user categories of students and energy utilization index (REUI) posted on the allocation of costs.
employees on a full-time equivalent basis. OMB Web site at the time of a rate
6. Departmental Administration Expenses
The amount allocated to the student category determination.
must be assigned to the instruction function A. This index is the ratio of a laboratory a. The expenses under this heading are
of the institution. The amount allocated to energy use index (lab EUI) to the those that have been incurred for
the employee category must be further corresponding index for overall average administrative and supporting services that
allocated to the major functions of the college or university space (college EUI). benefit common or joint departmental
institution in proportion to the salaries and B. In July 2012, values for these two activities or objectives in academic deans’
wages of all employees applicable to those indices (taken respectively from the offices, academic departments and divisions,
functions. Lawrence Berkeley Laboratory ‘‘Labs for the and organized research units. Organized
21st Century’’ benchmarking tool http:// research units include such units as
3. Interest labs21benchmarking.lbl.gov/ institutes, study centers, and research
Interest on debt associated with certain CompareData.php and the US Department of centers. Departmental administration
buildings, equipment and capital Energy ‘‘Buildings Energy Databook’’ and expenses are subject to the following
improvements, as defined in § 200.449 http://buildingsdatabook.eren.doe.gov/ limitations.
Interest, must be classified as an expenditure CBECS.aspx) were 310 kBtu/sq ft-yr. and 155 (1) Academic deans’ offices. Salaries and
under the category Facilities. These costs kBtu/sq ft-yr., so that the adjustment ratio is operating expenses are limited to those
must be allocated in the same manner as the 2.0 by this methodology. To retain currency, attributable to administrative functions.
depreciation on the buildings, equipment OMB will adjust the EUI numbers from time (2) Academic departments:
and capital improvements to which the to time (no more often than annually nor less (a) Salaries and fringe benefits attributable
interest relates. often than every 5 years), using reliable and to the administrative work (including bid and
publicly disclosed data. Current values of proposal preparation) of faculty (including
4. Operation and Maintenance Expenses both the EUIs and the REUI will be posted department heads) and other professional
a. The expenses under this heading are on the OMB Web site. personnel conducting research and/or
those that have been incurred for the instruction, must be allowed at a rate of 3.6
administration, supervision, operation, 5. General Administration and General percent of modified total direct costs. This
maintenance, preservation, and protection of Expenses category does not include professional
the institution’s physical plant. They include a. The expenses under this heading are business or professional administrative
expenses normally incurred for such items as those that have been incurred for the general officers. This allowance must be added to the
janitorial and utility services; repairs and executive and administrative offices of computation of the indirect (F&A) cost rate
ordinary or normal alterations of buildings, educational institutions and other expenses for major functions in Section C,
furniture and equipment; care of grounds; of a general character which do not relate Determination and application of indirect
maintenance and operation of buildings and solely to any major function of the (F&A) cost rate or rates; the expenses covered
other plant facilities; security; earthquake institution; i.e., solely to (1) instruction, (2) by the allowance must be excluded from the
and disaster preparedness; environmental organized research, (3) other sponsored departmental administration cost pool. No
safety; hazardous waste disposal; property, activities, or (4) other institutional activities. documentation is required to support this
liability and all other insurance relating to The general administration and general allowance.
property; space and capital leasing; facility expense category should also include its (b) Other administrative and supporting
planning and management; and central allocable share of fringe benefit costs, expenses incurred within academic
receiving. The operation and maintenance operation and maintenance expense, departments are allowable provided they are
expense category should also include its depreciation, and interest costs. Examples of treated consistently in like circumstances.
allocable share of fringe benefit costs, general administration and general expenses This would include expenses such as the
depreciation, and interest costs. include: those expenses incurred by salaries of secretarial and clerical staffs, the
b. In the absence of the alternatives administrative offices that serve the entire salaries of administrative officers and
provided for in Section A.2.d, the expenses university system of which the institution is assistants, travel, office supplies, stockrooms,
included in this category must be allocated a part; central offices of the institution such and the like.
in the same manner as described in as the President’s or Chancellor’s office, the (3) Other fringe benefit costs applicable to
subsection 2.b for depreciation. offices for institution-wide financial the salaries and wages included in
c. A utility cost adjustment of up to 1.3 management, business services, budget and subsections (1) and (2) are allowable, as well
percentage points may be included in the planning, personnel management, and safety as an appropriate share of general
negotiated indirect cost rate of the IHE for and risk management; the office of the administration and general expenses,
organized research, per the computation General Counsel; and the operations of the operation and maintenance expenses, and
alternatives in paragraphs (c)(1) and (2) of central administrative management depreciation.
this section: information systems. General administration (4) Federal agencies may authorize
(1) Where space is devoted to a single and general expenses must not include reimbursement of additional costs for
function and metering allows unambiguous expenses incurred within non-university- department heads and faculty only in
exceptional cases where an institution can Federal awards when this category includes This expense category also includes the
demonstrate undue hardship or detriment to similar or identical activities as those fringe benefit costs applicable to the salaries
project performance. included in the general administration and and wages included therein, an appropriate
b. The following guidelines apply to the general expense category or other indirect share of general administration and general
determination of departmental administrative (F&A) cost items, such as accounting, expenses, operation and maintenance,
costs as direct or indirect (F&A) costs. procurement, or personnel administration. interest expense, and depreciation.
(1) In developing the departmental b. In the absence of the alternatives
administration cost pool, special care should 8. Library Expenses provided for in Section A.2.d, the expenses
be exercised to ensure that costs incurred for a. The expenses under this heading are in this category must be allocated to the
the same purpose in like circumstances are those that have been incurred for the instruction function, and subsequently to
treated consistently as either direct or operation of the library, including the cost of Federal awards in that function.
indirect (F&A) costs. For example, salaries of books and library materials purchased for the
technical staff, laboratory supplies (e.g., 10. Offset for Indirect (F&A) Expenses
library, less any items of library income that
chemicals), telephone toll charges, animals, Otherwise Provided for by the Federal
qualify as applicable credits under § 200.406
animal care costs, computer costs, travel Government
Applicable credits. The library expense
costs, and specialized shop costs must be category should also include the fringe a. The items to be accumulated under this
treated as direct costs wherever identifiable benefits applicable to the salaries and wages heading are the reimbursements and other
to a particular cost objective. Direct charging included therein, an appropriate share of payments from the Federal government
of these costs may be accomplished through general administration and general expense, which are made to the institution to support
specific identification of individual costs to operation and maintenance expense, and solely, specifically, and directly, in whole or
benefitting cost objectives, or through depreciation. Costs incurred in the purchases in part, any of the administrative or service
recharge centers or specialized service of rare books (museum-type books) with no activities described in subsections 2 through
facilities, as appropriate under the value to Federal awards should not be 9.
circumstances. See §§ 200.413 Direct costs, allocated to them. b. The items in this group must be treated
paragraph (c) and 200.468 Specialized b. In the absence of the alternatives as a credit to the affected individual indirect
service facilities. provided for in Section A.2.d, the expenses (F&A) cost category before that category is
(2) Items such as office supplies, postage, included in this category must be allocated allocated to benefitting functions.
local telephone costs, and memberships must
first on the basis of primary categories of C. Determination and Application of Indirect
normally be treated as indirect (F&A) costs.
users, including students, professional (F&A) Cost Rate or Rates
c. In the absence of the alternatives
employees, and other users.
provided for in Section A.2.d, the expenses 1. Indirect (F&A) Cost Pools
(1) The student category must consist of
included in this category must be allocated
full-time equivalent students enrolled at the a. (1) Subject to subsection b, the separate
as follows:
institution, regardless of whether they earn categories of indirect (F&A) costs allocated to
(1) The administrative expenses of the
credits toward a degree or certificate. each major function of the institution as
dean’s office of each college and school must
(2) The professional employee category prescribed in paragraph B of this paragraph
be allocated to the academic departments
must consist of all faculty members and other C.1 Identification and assignment of indirect
within that college or school on the modified
total cost basis. professional employees of the institution, on (F&A) costs, must be aggregated and treated
(2) The administrative expenses of each a full-time equivalent basis. This category as a common pool for that function. The
academic department, and the department’s may also include post-doctorate fellows and amount in each pool must be divided by the
share of the expenses allocated in subsection graduate students. distribution base described in subsection 2 to
(1) must be allocated to the appropriate (3) The other users category must consist arrive at a single indirect (F&A) cost rate for
functions of the department on the modified of a reasonable factor as determined by each function.
total cost basis. institutional records to account for all other (2) The rate for each function is used to
users of library facilities. distribute indirect (F&A) costs to individual
7. Sponsored Projects Administration c. Amount allocated in paragraph b of this Federal awards of that function. Since a
a. The expenses under this heading are section must be assigned further as follows: common pool is established for each major
limited to those incurred by a separate (1) The amount in the student category function of the institution, a separate indirect
organization(s) established primarily to must be assigned to the instruction function (F&A) cost rate would be established for each
administer sponsored projects, including of the institution. of the major functions described in Section
such functions as grant and contract (2) The amount in the professional A.1 under which Federal awards are carried
administration (Federal and non-Federal), employee category must be assigned to the out.
special security, purchasing, personnel, major functions of the institution in (3) Each institution’s indirect (F&A) cost
administration, and editing and publishing of proportion to the salaries and wages of all rate process must be appropriately designed
research and other reports. They include the faculty members and other professional to ensure that Federal sponsors do not in any
salaries and expenses of the head of such employees applicable to those functions. way subsidize the indirect (F&A) costs of
organization, assistants, and immediate staff, (3) The amount in the other users category other sponsors, specifically activities
together with the salaries and expenses of must be assigned to the other institutional sponsored by industry and foreign
personnel engaged in supporting activities activities function of the institution. governments. Accordingly, each allocation
maintained by the organization, such as stock method used to identify and allocate the
9. Student Administration and Services indirect (F&A) cost pools, as described in
rooms, print shops, and the like. This
category also includes an allocable share of a. The expenses under this heading are Sections A.2, Criteria for distribution, and
fringe benefit costs, general administration those that have been incurred for the B.2 through B.9, must contain the full
and general expenses, operation and administration of student affairs and for amount of the institution’s modified total
maintenance expenses, and depreciation. services to students, including expenses of costs or other appropriate units of
Appropriate adjustments will be made for such activities as deans of students, measurement used to make the
services provided to other functions or admissions, registrar, counseling and computations. In addition, the final rate
organizations. placement services, student advisers, student distribution base (as defined in subsection 2)
b. In the absence of the alternatives health and infirmary services, catalogs, and for each major function (organized research,
provided for in Section A.2.d, the expenses commencements and convocations. The instruction, etc., as described in Section A.1,
included in this category must be allocated salaries of members of the academic staff Major functions of an institution) must
to the major functions of the institution whose responsibilities to the institution contain all the programs or activities which
under which the sponsored projects are require administrative work that benefits utilize the indirect (F&A) costs allocated to
conducted on the basis of the modified total sponsored projects may also be included to that major function. At the time an indirect
cost of sponsored projects. the extent that the portion charged to student (F&A) cost proposal is submitted to a
c. An appropriate adjustment must be administration is determined in accordance cognizant agency for indirect costs, each
made to eliminate any duplicate charges to with Subpart E—Cost Principles of this Part. institution must describe the process it uses
to ensure that Federal funds are not used to sponsored activities, and other institutional other pertinent facts do not justify the use of
subsidize industry and foreign government activities. The base on which such remaining predetermined rates, or a fixed rate with a
funded programs. expenses are allocated should be carry-forward, or if the parties cannot agree
b. In some instances a single rate basis for appropriately adjusted. on an equitable rate, a provisional rate must
use across the board on all work within a be established. To prevent substantial
4. Predetermined Rates for Indirect (F&A)
major function at an institution may not be overpayment or underpayment, the
Costs
appropriate. A single rate for research, for provisional rate may be adjusted by the
example, might not take into account those Public Law 87–638 (76 Stat. 437) as cognizant agency for indirect costs during the
different environmental factors and other amended (41 U.S.C. 4708) authorizes the use institution’s fiscal year. Predetermined or
conditions which may affect substantially the of predetermined rates in determining the fixed rates may replace provisional rates at
indirect (F&A) costs applicable to a particular ‘‘indirect costs’’ (indirect (F&A) costs) any time prior to the close of the institution’s
segment of research at the institution. A applicable under research agreements with fiscal year. If a provisional rate is not
particular segment of research may be that educational institutions. The stated replaced by a predetermined or fixed rate
performed under a single sponsored objectives of the law are to simplify the prior to the end of the institution’s fiscal
agreement or it may consist of research under administration of cost-type research and year, a final rate will be established and
a group of Federal awards performed in a development contracts (including grants) upward or downward adjustments will be
common environment. The environmental with educational institutions, to facilitate the made based on the actual allowable costs
factors are not limited to the physical preparation of their budgets, and to permit incurred for the period involved.
location of the work. Other important factors more expeditious closeout of such contracts
when the work is completed. In view of the 7. Fixed Rates for the Life of the Sponsored
are the level of the administrative support
potential advantages offered by this Agreement
required, the nature of the facilities or other
resources employed, the scientific disciplines procedure, negotiation of predetermined Federal agencies must use the negotiated
rates for indirect (F&A) costs for a period of rates except as provided in paragraph (e) of
or technical skills involved, the
two to four years should be the norm in those § 200.414 Indirect (F&A) costs, must
organizational arrangements used, or any
situations where the cost experience and paragraph (b)(1) for indirect (F&A) costs in
combination thereof. If a particular segment
other pertinent facts available are deemed effect at the time of the initial award
of a sponsored agreement is performed
sufficient to enable the parties involved to throughout the life of the Federal award.
within an environment which appears to
reach an informed judgment as to the Award levels for Federal awards may not be
generate a significantly different level of
probable level of indirect (F&A) costs during adjusted in future years as a result of changes
indirect (F&A) costs, provisions should be
the ensuing accounting periods. in negotiated rates. ‘‘Negotiated rates’’ per the
made for a separate indirect (F&A) cost pool
applicable to such work. The separate 5. Negotiated Fixed Rates and Carry-Forward rate agreement include final, fixed, and
indirect (F&A) cost pool should be developed Provisions predetermined rates and exclude provisional
during the regular course of the rate rates. ‘‘Life’’ for the purpose of this
When a fixed rate is negotiated in advance
determination process and the separate subsection means each competitive segment
for a fiscal year (or other time period), the
indirect (F&A) cost rate resulting therefrom of a project. A competitive segment is a
over- or under-recovery for that year may be
should be utilized; provided it is determined included as an adjustment to the indirect period of years approved by the Federal
that (1) such indirect (F&A) cost rate differs (F&A) cost for the next rate negotiation. awarding agency at the time of the Federal
significantly from that which would have When the rate is negotiated before the carry- award. If negotiated rate agreements do not
been obtained under subsection a, and (2) the forward adjustment is determined, the carry- extend through the life of the Federal award
volume of work to which such rate would forward amount may be applied to the next at the time of the initial award, then the
apply is material in relation to other Federal subsequent rate negotiation. When such negotiated rate for the last year of the Federal
awards at the institution. adjustments are to be made, each fixed rate award must be extended through the end of
negotiated in advance for a given period will the life of the Federal award.
2. The Distribution Basis b. Except as provided in § 200.414 Indirect
be computed by applying the expected
Indirect (F&A) costs must be distributed to indirect (F&A) costs allocable to Federal (F&A) costs, when an educational institution
applicable Federal awards and other awards for the forecast period plus or minus does not have a negotiated rate with the
benefitting activities within each major the carry-forward adjustment (over- or under- Federal government at the time of an award
function (see section A.1, Major functions of recovery) from the prior period, to the (because the educational institution is a new
an institution) on the basis of modified total forecast distribution base. Unrecovered recipient or the parties cannot reach
direct costs (MTDC), consisting of all salaries amounts under lump-sum agreements or agreement on a rate), the provisional rate
and wages, fringe benefits, materials and cost-sharing provisions of prior years must used at the time of the award must be
supplies, services, travel, and subgrants and not be carried forward for consideration in adjusted once a rate is negotiated and
subcontracts up to the first $25,000 of each the new rate negotiation. There must, approved by the cognizant agency for
subaward (regardless of the period covered however, be an advance understanding in indirect costs.
by the subaward). MTDC is defined in each case between the institution and the 8. Limitation on Reimbursement of
§ 200.68 Modified Total Direct Cost (MTDC). cognizant agency for indirect costs as to Administrative Costs
For this purpose, an indirect (F&A) cost rate whether these differences will be considered
should be determined for each of the separate in the rate negotiation rather than making the a. Notwithstanding the provisions of
indirect (F&A) cost pools developed pursuant determination after the differences are subsection C.1.a, the administrative costs
to subsection 1. The rate in each case should known. Further, institutions electing to use charged to Federal awards awarded or
be stated as the percentage which the amount this carry-forward provision may not amended (including continuation and
of the particular indirect (F&A) cost pool is subsequently change without prior approval renewal awards) with effective dates
of the modified total direct costs identified of the cognizant agency for indirect costs. In beginning on or after the start of the
with such pool. the event that an institution returns to a post- institution’s first fiscal year which begins on
determined rate, any over- or under-recovery or after October 1, 1991, must be limited to
3. Negotiated Lump Sum for Indirect (F&A) 26% of modified total direct costs (as defined
during the period in which negotiated fixed
Costs in subsection 2) for the total of General
rates and carry-forward provisions were
A negotiated fixed amount in lieu of followed will be included in the subsequent Administration and General Expenses,
indirect (F&A) costs may be appropriate for post-determined rates. Where multiple rates Departmental Administration, Sponsored
self-contained, off-campus, or primarily are used, the same procedure will be Projects Administration, and Student
subcontracted activities where the benefits applicable for determining each rate. Administration and Services (including their
derived from an institution’s indirect (F&A) allocable share of depreciation, interest costs,
services cannot be readily determined. Such 6. Provisional and Final Rates for Indirect operation and maintenance expenses, and
negotiated indirect (F&A) costs will be (F&A) Costs fringe benefits costs, as provided by Section
treated as an offset before allocation to Where the cognizant agency for indirect B, Identification and assignment of indirect
instruction, organized research, other costs determines that cost experience and (F&A) costs, and all other types of
expenditures not listed specifically under 11. Negotiation and Approval of Indirect educational institution may reach an
one of the subcategories of facilities in (F&A) Rate agreement on rates without a formal
Section B. a. Cognizant agency for indirect costs is negotiation conference; for example, through
b. Institutions should not change their defined in Subpart A—Acronyms and correspondence or use of the simplified
accounting or cost allocation methods if the Definitions. method described in this section D of this
effect is to change the charging of a particular (1) Cost negotiation cognizance is assigned Appendix.
type of cost from F&A to direct, or to to the Department of Health and Human g. Formalizing determinations and
reclassify costs, or increase allocations from Services (HHS) or the Department of agreements. The cognizant agency for
the administrative pools identified in Defense’s Office of Naval Research (DOD), indirect costs must formalize all
paragraph B.1 of this Appendix to the other normally depending on which of the two determinations or agreements reached with
F&A cost pools or fringe benefits. Cognizant agencies (HHS or DOD) provides more funds an educational institution and provide copies
agencies for indirect cost are authorized to to the educational institution for the most to other agencies having an interest.
allow changes where an institution’s recent three years. Information on funding Determinations should include a description
charging practices are at variance with must be derived from relevant data gathered of any adjustments, the actual amount, both
acceptable practices followed by a substantial by the National Science Foundation. In cases dollar and percentage adjusted, and the
majority of other institutions. where neither HHS nor DOD provides reason for making adjustments.
Federal funding to an educational institution, h. Disputes and disagreements. Where the
9. Alternative Method for Administrative cognizant agency for indirect costs is unable
Costs the cognizant agency for indirect costs
assignment must default to HHS. to reach agreement with an educational
a. Notwithstanding the provisions of Notwithstanding the method for cognizance institution with regard to rates or audit
subsection 1.a, an institution may elect to determination described in this section, other resolution, the appeal system of the
claim a fixed allowance for the arrangements for cognizance of a particular cognizant agency for indirect costs must be
‘‘Administration’’ portion of indirect (F&A) educational institution may also be based in followed for resolution of the disagreement.
costs. The allowance could be either 24% of part on the types of research performed at the
modified total direct costs or a percentage 12. Standard Format for Submission
educational institution and must be decided
equal to 95% of the most recently negotiated For facilities and administrative (indirect
based on mutual agreement between HHS
fixed or predetermined rate for the cost pools (F&A)) rate proposals, educational
and DOD.
included under ‘‘Administration’’ as defined institutions must use the standard format,
(2) After cognizance is established, it must
in Section B.1, whichever is less. Under this shown in section E of this appendix, to
continue for a five-year period.
alternative, no cost proposal need be submit their indirect (F&A) rate proposal to
b. Acceptance of rates. See § 200.414
prepared for the ‘‘Administration’’ portion of the cognizant agency for indirect costs. The
Indirect (F&A) costs.
the indirect (F&A) cost rate nor is further cognizant agency for indirect costs may, on
c. Correcting deficiencies. The cognizant
identification or documentation of these an institution-by-institution basis, grant
agency for indirect costs must negotiate
costs required (see subsection c). Where a exceptions from all or portions of Part II of
changes needed to correct systems
negotiated indirect (F&A) cost agreement the standard format requirement. This
deficiencies relating to accountability for
includes this alternative, an institution must requirement does not apply to educational
Federal awards. Cognizant agencies for
make no further charges for the expenditure institutions that use the simplified method
indirect costs must address the concerns of
categories described in Section B.5, General for calculating indirect (F&A) rates, as
other affected agencies, as appropriate, and
administration and general expenses, Section described in Section D of this Appendix.
must negotiate special rates for Federal
B.6, Departmental administration expenses, In order to provide mutually agreed upon
agencies that are required to limit recovery of
Section B.7, Sponsored projects information for management purposes, each
indirect costs by statute.
administration, and Section B.9, Student F&A cost rate negotiation or determination
d. Resolving questioned costs. The
administration and services. must include development of a rate for each
cognizant agency for indirect costs must
b. In negotiations of rates for subsequent F&A cost pool as well as the overall F&A rate.
conduct any necessary negotiations with an
periods, an institution that has elected the educational institution regarding amounts D. Simplified Method for Small Institutions
option of subsection a may continue to questioned by audit that are due the Federal
exercise it at the same rate without further government related to costs covered by a 1. General
identification or documentation of costs. negotiated agreement. a. Where the total direct cost of work
c. If an institution elects to accept a e. Reimbursement. Reimbursement to covered by this Part at an institution does not
threshold rate as defined in subsection a of cognizant agencies for indirect costs for work exceed $10 million in a fiscal year, the
this section, it is not required to perform a performed under this Part may be made by simplified procedure described in
detailed analysis of its administrative costs. reimbursement billing under the Economy subsections 2 or 3 may be used in
However, in order to compute the facilities Act, 31 U.S.C. 1535. determining allowable indirect (F&A) costs.
components of its indirect (F&A) cost rate, f. Procedure for establishing facilities and Under this simplified procedure, the
the institution must reconcile its indirect administrative rates must be established by institution’s most recent annual financial
(F&A) cost proposal to its financial one of the following methods: report and immediately available supporting
statements and make appropriate (1) Formal negotiation. The cognizant information must be utilized as a basis for
adjustments and reclassifications to identify agency for indirect costs is responsible for determining the indirect (F&A) cost rate
the costs of each major function as defined negotiating and approving rates for an applicable to all Federal awards. The
in Section A.1, as well as to identify and educational institution on behalf of all institution may use either the salaries and
allocate the facilities components. Federal agencies. Non-cognizant Federal wages (see subsection 2) or modified total
Administrative costs that are not identified as agencies for indirect costs, which make direct costs (see subsection 3) as the
such by the institution’s accounting system Federal awards to an educational institution, distribution basis.
(such as those incurred in academic must notify the cognizant agency for indirect b. The simplified procedure should not be
departments) will be classified as costs of specific concerns (i.e., a need to used where it produces results which appear
instructional costs for purposes of establish special cost rates) which could inequitable to the Federal government or the
reconciling indirect (F&A) cost proposals to affect the negotiation process. The cognizant institution. In any such case, indirect (F&A)
financial statements and allocating facilities agency for indirect costs must address the costs should be determined through use of
costs. concerns of all interested agencies, as the regular procedure.
appropriate. A pre-negotiation conference
10. Individual Rate Components may be scheduled among all interested 2. Simplified Procedure—Salaries and Wages
In order to provide mutually agreed-upon agencies, if necessary. The cognizant agency Base
information for management purposes, each for indirect costs must then arrange a a. Establish the total amount of salaries and
indirect (F&A) cost rate negotiation or negotiation conference with the educational wages paid to all employees of the
determination shall include development of institution. institution.
a rate for each indirect (F&A) cost pool as (2) Other than formal negotiation. The b. Establish an indirect (F&A) cost pool
well as the overall indirect (F&A) cost rate. cognizant agency for indirect costs and consisting of the expenditures (exclusive of
capital items and other costs specifically indirect (F&A) cost pool, subsection b, by the Certificate of Indirect (F&A) Costs
identified as unallowable) which customarily amount of the distribution base, subsection c. This is to certify that to the best of my
are classified under the following titles or e. Apply the indirect (F&A) cost rate to the knowledge and belief:
their equivalents: modified total direct costs for individual (1) I have reviewed the indirect (F&A) cost
(1) General administration and general agreements to determine the amount of proposal submitted herewith;
expenses (exclusive of costs of student indirect (F&A) costs allocable to such (2) All costs included in this proposal
administration and services, student agreements. [identify date] to establish billing or final
activities, student aid, and scholarships). indirect (F&A) costs rate for [identify period
E. Documentation Requirements
(2) Operation and maintenance of physical covered by rate] are allowable in accordance
plant and depreciation (after appropriate The standard format for documentation
with the requirements of the Federal
adjustment for costs applicable to other requirements for indirect (indirect (F&A))
agreement(s) to which they apply and with
institutional activities). rate proposals for claiming costs under the
the cost principles applicable to those
(3) Library. regular method is available on the OMB Web
site here: http://www.whitehouse.gov/omb/ agreements.
(4) Department administration expenses, (3) This proposal does not include any
which will be computed as 20 percent of the grants_forms.
costs which are unallowable under
salaries and expenses of deans and heads of F. Certification applicable cost principles such as (without
departments. limitation): public relations costs,
In those cases where expenditures 1. Certification of Charges
contributions and donations, entertainment
classified under subsection (1) have To assure that expenditures for Federal costs, fines and penalties, lobbying costs, and
previously been allocated to other awards are proper and in accordance with defense of fraud proceedings; and
institutional activities, they may be included the agreement documents and approved (4) All costs included in this proposal are
in the indirect (F&A) cost pool. The total project budgets, the annual and/or final fiscal properly allocable to Federal agreements on
amount of salaries and wages included in the reports or vouchers requesting payment the basis of a beneficial or causal relationship
indirect (F&A) cost pool must be separately under the agreements will include a between the expenses incurred and the
identified. certification, signed by an authorized official agreements to which they are allocated in
c. Establish a salary and wage distribution of the university, which reads ‘‘By signing accordance with applicable requirements.
base, determined by deducting from the total this report, I certify to the best of my
I declare that the foregoing is true and
of salaries and wages as established in knowledge and belief that the report is true,
correct.
subsection a from the amount of salaries and complete, and accurate, and the
wages included under subsection b. expenditures, disbursements and cash Institution of Higher Education:
receipts are for the purposes and intent set Signature: llllllllllllllll
d. Establish the indirect (F&A) cost rate,
forth in the award documents. I am aware Name of Official: llllllllllll
determined by dividing the amount in the
that any false, fictitious, or fraudulent Title: llllllllllllllllll
indirect (F&A) cost pool, subsection b, by the
information, or the omission of any material Date of Execution: llllllllllll
amount of the distribution base, subsection c.
e. Apply the indirect (F&A) cost rate to fact, may subject me to criminal, civil or
administrative penalties for fraud, false
Appendix IV to Part 200—Indirect
direct salaries and wages for individual (F&A) Costs Identification and
agreements to determine the amount of statements, false claims or otherwise. (U.S.
Code, Title 18, Section 1001 and Title 31, Assignment, and Rate Determination
indirect (F&A) costs allocable to such
agreements. Sections 3729–3733 and 3801–3812)’’. for Nonprofit Organizations
3. Simplified Procedure—Modified Total 2. Certification of Indirect (F&A) Costs A. General
Direct Cost Base a. Policy. Cognizant agencies must not 1. Indirect costs are those that have been
a. Establish the total costs incurred by the accept a proposed indirect cost rate must incurred for common or joint objectives and
institution for the base period. unless such costs have been certified by the cannot be readily identified with a particular
educational institution using the Certificate final cost objective. Direct cost of minor
b. Establish an indirect (F&A) cost pool
of indirect (F&A) Costs set forth in subsection amounts may be treated as indirect costs
consisting of the expenditures (exclusive of
F.2.c under the conditions described in § 200.413
capital items and other costs specifically
b. The certificate must be signed on behalf Direct costs paragraph (d) of this Part. After
identified as unallowable) which customarily
of the institution by the chief financial officer direct costs have been determined and
are classified under the following titles or or an individual designated by an individual
their equivalents: assigned directly to awards or other work as
at a level no lower than vice president or appropriate, indirect costs are those
(1) General administration and general chief financial officer.
expenses (exclusive of costs of student remaining to be allocated to benefitting cost
(1) No indirect (F&A) cost rate must be objectives. A cost may not be allocated to a
administration and services, student binding upon the Federal government if the
activities, student aid, and scholarships). Federal award as an indirect cost if any other
most recent required proposal from the cost incurred for the same purpose, in like
(2) Operation and maintenance of physical institution has not been certified. Where it is
plant and depreciation (after appropriate circumstances, has been assigned to a Federal
necessary to establish indirect (F&A) cost award as a direct cost.
adjustment for costs applicable to other rates, and the institution has not submitted
institutional activities). ‘‘Major nonprofit organizations’’ are
a certified proposal for establishing such defined in § 200.414 Indirect (F&A) costs. See
(3) Library. rates in accordance with the requirements of
(4) Department administration expenses, indirect cost rate reporting requirements in
this section, the Federal government must sections B.2.e and B.3.g of this Appendix.
which will be computed as 20 percent of the unilaterally establish such rates. Such rates
salaries and expenses of deans and heads of may be based upon audited historical data or B. Allocation of Indirect Costs and
departments. In those cases where such other data that have been furnished to Determination of Indirect Cost Rates
expenditures classified under subsection (1) the cognizant agency for indirect costs and
have previously been allocated to other 1. General
for which it can be demonstrated that all
institutional activities, they may be included unallowable costs have been excluded. When a. If a nonprofit organization has only one
in the indirect (F&A) cost pool. The modified indirect (F&A) cost rates are unilaterally major function, or where all its major
total direct costs amount included in the established by the Federal government functions benefit from its indirect costs to
indirect (F&A) cost pool must be separately because of failure of the institution to submit approximately the same degree, the
identified. a certified proposal for establishing such allocation of indirect costs and the
c. Establish a modified total direct cost rates in accordance with this section, the computation of an indirect cost rate may be
distribution base, as defined in Section C.2, rates established will be set at a level low accomplished through simplified allocation
The distribution basis, that consists of all enough to ensure that potentially procedures, as described in section B.2 of
institution’s direct functions. unallowable costs will not be reimbursed. this Appendix.
d. Establish the indirect (F&A) cost rate, c. Certificate. The certificate required by b. If an organization has several major
determined by dividing the amount in the this section must be in the following form: functions which benefit from its indirect
costs in varying degrees, allocation of modifications must be made in order to of a general nature which do not relate solely
indirect costs may require the accumulation develop the special rate(s). to any major function of the organization.
of such costs into separate cost groupings e. For an organization that receives more This category must also include its allocable
which then are allocated individually to than $10 million in Federal funding of direct share of fringe benefit costs, operation and
benefitting functions by means of a base costs in a fiscal year, a breakout of the maintenance expense, depreciation, and
which best measures the relative degree of indirect cost component into two broad interest costs. Examples of this category
benefit. The indirect costs allocated to each categories, Facilities and Administration as include central offices, such as the director’s
function are then distributed to individual defined in section A.3 of this Appendix, is office, the office of finance, business services,
Federal awards and other activities included required. The rate in each case must be stated budget and planning, personnel, safety and
in that function by means of an indirect cost as the percentage which the amount of the risk management, general counsel,
rate(s). particular indirect cost category (i.e., management information systems, and
c. The determination of what constitutes an Facilities or Administration) is of the library costs.
organization’s major functions will depend distribution base identified with that In developing this cost pool, special care
on its purpose in being; the types of services category. should be exercised to ensure that costs
it renders to the public, its clients, and its incurred for the same purpose in like
3. Multiple Allocation Base Method circumstances are treated consistently as
members; and the amount of effort it devotes
to such activities as fundraising, public a. General. Where an organization’s either direct or indirect costs. For example,
information and membership activities. indirect costs benefit its major functions in salaries of technical staff, project supplies,
d. Specific methods for allocating indirect varying degrees, indirect costs must be project publication, telephone toll charges,
costs and computing indirect cost rates along accumulated into separate cost groupings, as computer costs, travel costs, and specialized
with the conditions under which each described in subparagraph b. Each grouping services costs must be treated as direct costs
method should be used are described in must then be allocated individually to wherever identifiable to a particular program.
section B.2 through B.5 of this Appendix. benefitting functions by means of a base The salaries and wages of administrative and
e. The base period for the allocation of which best measures the relative benefits. pooled clerical staff should normally be
indirect costs is the period in which such The default allocation bases by cost pool are treated as indirect costs. Direct charging of
costs are incurred and accumulated for described in section B.3.c of this Appendix. these costs may be appropriate where a major
allocation to work performed in that period. b. Identification of indirect costs. Cost project or activity explicitly requires and
The base period normally should coincide groupings must be established so as to permit budgets for administrative or clerical services
with the organization’s fiscal year but, in any the allocation of each grouping on the basis and other individuals involved can be
event, must be so selected as to avoid of benefits provided to the major functions. identified with the program or activity. Items
inequities in the allocation of the costs. Each grouping must constitute a pool of such as office supplies, postage, local
expenses that are of like character in terms telephone costs, periodicals and
2. Simplified Allocation Method of functions they benefit and in terms of the memberships should normally be treated as
a. Where an organization’s major functions allocation base which best measures the indirect costs.
benefit from its indirect costs to relative benefits provided to each function. c. Allocation bases. Actual conditions must
approximately the same degree, the The groupings are classified within the two be taken into account in selecting the base to
allocation of indirect costs may be broad categories: ‘‘Facilities’’ and be used in allocating the expenses in each
accomplished by (i) separating the ‘‘Administration,’’ as described in section grouping to benefitting functions. The
organization’s total costs for the base period A.3 of this Appendix. The indirect cost pools essential consideration in selecting a method
as either direct or indirect, and (ii) dividing are defined as follows: or a base is that it is the one best suited for
the total allowable indirect costs (net of (1) Depreciation. The expenses under this assigning the pool of costs to cost objectives
applicable credits) by an equitable heading are the portion of the costs of the in accordance with benefits derived; a
distribution base. The result of this process organization’s buildings, capital traceable cause and effect relationship; or
is an indirect cost rate which is used to improvements to land and buildings, and logic and reason, where neither the cause nor
distribute indirect costs to individual Federal equipment which are computed in the effect of the relationship is determinable.
awards. The rate should be expressed as the accordance with § 200.436 Depreciation. When an allocation can be made by
percentage which the total amount of (2) Interest. Interest on debt associated assignment of a cost grouping directly to the
allowable indirect costs bears to the base with certain buildings, equipment and function benefitted, the allocation must be
selected. This method should also be used capital improvements are computed in made in that manner. When the expenses in
where an organization has only one major accordance with § 200.449 Interest. a cost grouping are more general in nature,
function encompassing a number of (3) Operation and maintenance expenses. the allocation must be made through the use
individual projects or activities, and may be The expenses under this heading are those of a selected base which produces results that
used where the level of Federal awards to an that have been incurred for the are equitable to both the Federal government
organization is relatively small. administration, operation, maintenance, and the organization. The distribution must
b. Both the direct costs and the indirect preservation, and protection of the be made in accordance with the bases
costs must exclude capital expenditures and organization’s physical plant. They include described herein unless it can be
unallowable costs. However, unallowable expenses normally incurred for such items demonstrated that the use of a different base
costs which represent activities must be as: janitorial and utility services; repairs and would result in a more equitable allocation
included in the direct costs under the ordinary or normal alterations of buildings, of the costs, or that a more readily available
conditions described in § 200.413 Direct furniture and equipment; care of grounds; base would not increase the costs charged to
costs, paragraph (e) of this Part. maintenance and operation of buildings and Federal awards. The results of special cost
c. The distribution base may be total direct other plant facilities; security; earthquake studies (such as an engineering utility study)
costs (excluding capital expenditures and and disaster preparedness; environmental must not be used to determine and allocate
other distorting items, such contracts or safety; hazardous waste disposal; property, the indirect costs to Federal awards.
subawards for $25,000 or more), direct liability and other insurance relating to (1) Depreciation. Depreciation expenses
salaries and wages, or other base which property; space and capital leasing; facility must be allocated in the following manner:
results in an equitable distribution. The planning and management; and central (a) Depreciation on buildings used
distribution base must exclude participant receiving. The operation and maintenance exclusively in the conduct of a single
support costs as defined in § 200.75 expenses category must also include its function, and on capital improvements and
Participant support costs. allocable share of fringe benefit costs, equipment used in such buildings, must be
d. Except where a special rate(s) is required depreciation, and interest costs. assigned to that function.
in accordance with section B.5 of this (4) General administration and general (b) Depreciation on buildings used for
Appendix, the indirect cost rate developed expenses. The expenses under this heading more than one function, and on capital
under the above principles is applicable to are those that have been incurred for the improvements and equipment used in such
all Federal awards of the organization. If a overall general executive and administrative buildings, must be allocated to the individual
special rate(s) is required, appropriate offices of the organization and other expenses functions performed in each building on the
basis of usable square feet of space, excluding this Appendix, the separate groupings of work may be that performed under a single
common areas, such as hallways, stairwells, indirect costs allocated to each major Federal award or it may consist of work
and restrooms. function must be aggregated and treated as a under a group of Federal awards performed
(c) Depreciation on buildings, capital common pool for that function. The costs in in a common environment. These factors may
improvements and equipment related space the common pool must then be distributed to include the physical location of the work, the
(e.g., individual rooms, and laboratories) individual Federal awards included in that level of administrative support required, the
used jointly by more than one function (as function by use of a single indirect cost rate. nature of the facilities or other resources
determined by the users of the space) must f. Distribution basis. Indirect costs must be employed, the scientific disciplines or
be treated as follows. The cost of each jointly distributed to applicable Federal awards and technical skills involved, the organizational
used unit of space must be allocated to the other benefitting activities within each major arrangements used, or any combination
benefitting functions on the basis of: function on the basis of MTDC (see definition thereof. When a particular segment of work
(i) the employees and other users on a full- in § 200.68 Modified Total Direct Cost is performed in an environment which
time equivalent (FTE) basis or salaries and (MTDC) of Part 200. appears to generate a significantly different
wages of those individual functions g. Individual Rate Components. An level of indirect costs, provisions should be
benefitting from the use of that space; or indirect cost rate must be determined for made for a separate indirect cost pool
(ii) organization-wide employee FTEs or each separate indirect cost pool developed. applicable to such work. The separate
salaries and wages applicable to the The rate in each case must be stated as the indirect cost pool should be developed
benefitting functions of the organization. percentage which the amount of the during the course of the regular allocation
(d) Depreciation on certain capital particular indirect cost pool is of the process, and the separate indirect cost rate
improvements to land, such as paved parking distribution base identified with that pool. resulting therefrom should be used, provided
areas, fences, sidewalks, and the like, not Each indirect cost rate negotiation or it is determined that (i) the rate differs
included in the cost of buildings, must be determination agreement must include significantly from that which would have
allocated to user categories on a FTE basis development of the rate for each indirect cost been obtained under sections B.2, B.3, and
and distributed to major functions in pool as well as the overall indirect cost rate. B.4 of this Appendix, and (ii) the volume of
proportion to the salaries and wages of all The indirect cost pools must be classified work to which the rate would apply is
employees applicable to the functions. within two broad categories: ‘‘Facilities’’ and material.
(2) Interest. Interest costs must be allocated ‘‘Administration,’’ as described in section
in the same manner as the depreciation on A.3 of this Appendix. C. Negotiation and Approval of Indirect Cost
the buildings, equipment and capital Rates
equipment to which the interest relates. 4. Direct Allocation Method
(3) Operation and maintenance expenses. 1. Definitions
a. Some nonprofit organizations treat all
Operation and maintenance expenses must costs as direct costs except general As used in this section, the following terms
be allocated in the same manner as the administration and general expenses. These have the meanings set forth in this section:
depreciation. organizations generally separate their costs a. Cognizant agency for indirect costs
(4) General administration and general into three basic categories: (i) General means the Federal agency responsible for
expenses. General administration and general administration and general expenses, (ii) negotiating and approving indirect cost rates
expenses must be allocated to benefitting fundraising, and (iii) other direct functions for a nonprofit organization on behalf of all
functions based on modified total costs (including projects performed under Federal Federal agencies.
(MTC). The MTC is the modified total direct awards). Joint costs, such as depreciation, b. Predetermined rate means an indirect
costs (MTDC), as described in Subpart A— rental costs, operation and maintenance of cost rate, applicable to a specified current or
Acronyms and Definitions of Part 200, plus facilities, telephone expenses, and the like future period, usually the organization’s
the allocated indirect cost proportion. The are prorated individually as direct costs to fiscal year. The rate is based on an estimate
expenses included in this category could be each category and to each Federal award or of the costs to be incurred during the period.
grouped first according to major functions of other activity using a base most appropriate A predetermined rate is not subject to
the organization to which they render to the particular cost being prorated. adjustment.
services or provide benefits. The aggregate b. This method is acceptable, provided c. Fixed rate means an indirect cost rate
expenses of each group must then be each joint cost is prorated using a base which which has the same characteristics as a
allocated to benefitting functions based on accurately measures the benefits provided to predetermined rate, except that the difference
MTC. each Federal award or other activity. The between the estimated costs and the actual
d. Order of distribution. bases must be established in accordance with costs of the period covered by the rate is
(1) Indirect cost categories consisting of reasonable criteria, and be supported by carried forward as an adjustment to the rate
depreciation, interest, operation and current data. This method is compatible with computation of a subsequent period.
maintenance, and general administration and the Standards of Accounting and Financial d. Final rate means an indirect cost rate
general expenses must be allocated in that Reporting for Voluntary Health and Welfare applicable to a specified past period which
order to the remaining indirect cost Organizations issued jointly by the National is based on the actual costs of the period. A
categories as well as to the major functions Health Council, Inc., the National Assembly final rate is not subject to adjustment.
of the organization. Other cost categories of Voluntary Health and Social Welfare e. Provisional rate or billing rate means a
should be allocated in the order determined Organizations, and the United Way of temporary indirect cost rate applicable to a
to be most appropriate by the organization. America. specified period which is used for funding,
This order of allocation does not apply if c. Under this method, indirect costs consist interim reimbursement, and reporting
cross allocation of costs is made as provided exclusively of general administration and indirect costs on Federal awards pending the
in section B.3.d.2 of this Appendix. general expenses. In all other respects, the establishment of a final rate for the period.
(2) Normally, an indirect cost category will organization’s indirect cost rates must be f. Indirect cost proposal means the
be considered closed once it has been computed in the same manner as that documentation prepared by an organization
allocated to other cost objectives, and costs described in section B.2 Simplified allocation to substantiate its claim for the
must not be subsequently allocated to it. method of this Appendix. reimbursement of indirect costs. This
However, a cross allocation of costs between proposal provides the basis for the review
two or more indirect costs categories could 5. Special Indirect Cost Rates and negotiation leading to the establishment
be used if such allocation will result in a In some instances, a single indirect cost of an organization’s indirect cost rate.
more equitable allocation of costs. If a cross rate for all activities of an organization or for g. Cost objective means a function,
allocation is used, an appropriate each major function of the organization may organizational subdivision, contract, Federal
modification to the composition of the not be appropriate, since it would not take award, or other work unit for which cost data
indirect cost categories is required. into account those different factors which are desired and for which provision is made
e. Application of indirect cost rate or rates. may substantially affect the indirect costs to accumulate and measure the cost of
Except where a special indirect cost rate(s) is applicable to a particular segment of work. processes, projects, jobs and capitalized
required in accordance with section B.5 of For this purpose, a particular segment of projects.
2. Negotiation and Approval of Rates the cognizant agency for indirect costs and agencies, there needs to be a process whereby
a. Unless different arrangements are agreed the nonprofit organization. The cognizant these central service costs can be identified
to by the Federal agencies concerned, the agency for indirect costs must make available and assigned to benefitted activities on a
Federal agency with the largest dollar value copies of the agreement to all concerned reasonable and consistent basis. The central
of Federal awards with an organization will Federal agencies. service cost allocation plan provides that
be designated as the cognizant agency for h. If a dispute arises in a negotiation of an process. All costs and other data used to
indirect costs for the negotiation and indirect cost rate between the cognizant distribute the costs included in the plan
approval of the indirect cost rates and, where agency for indirect costs and the nonprofit should be supported by formal accounting
necessary, other rates such as fringe benefit organization, the dispute must be resolved in and other records that will support the
and computer charge-out rates. Once an accordance with the appeals procedures of propriety of the costs assigned to Federal
agency is assigned cognizance for a particular the cognizant agency for indirect costs. awards.
nonprofit organization, the assignment will i. To the extent that problems are 2. Guidelines and illustrations of central
not be changed unless there is a shift in the encountered among the Federal agencies in service cost allocation plans are provided in
dollar volume of the Federal awards to the connection with the negotiation and approval a brochure published by the Department of
organization for at least three years. All process, OMB will lend assistance as Health and Human Services entitled ‘‘A
concerned Federal agencies must be given required to resolve such problems in a timely Guide for State, Local and Indian Tribal
the opportunity to participate in the manner. Governments: Cost Principles and Procedures
negotiation process but, after a rate has been D. Certification of Indirect (F&A) Costs for Developing Cost Allocation Plans and
agreed upon, it will be accepted by all Indirect Cost Rates for Agreements with the
Required Certification. No proposal to Federal Government.’’ A copy of this
Federal agencies. When a Federal agency has
establish indirect (F&A) cost rates must be brochure may be obtained from the
reason to believe that special operating
factors affecting its Federal awards acceptable unless such costs have been Superintendent of Documents, U.S.
necessitate special indirect cost rates in certified by the non-profit organization using Government Printing Office.
accordance with section B.5 of this the Certificate of Indirect (F&A) Costs set
forth in section j. of this appendix. The B. Definitions
Appendix, it will, prior to the time the rates
are negotiated, notify the cognizant agency certificate must be signed on behalf of the 1. Agency or operating agency means an
for indirect costs. (See also § 200.414 Indirect organization by an individual at a level no organizational unit or sub-division within a
(F&A) costs of Part 200.) lower than vice president or chief financial governmental unit that is responsible for the
b. Except as otherwise provided in officer for the organization. performance or administration of Federal
§ 200.414 Indirect (F&A) costs paragraph (e) j. Each indirect cost rate proposal must be awards or activities of the governmental unit.
of this Part, a nonprofit organization which accompanied by a certification in the 2. Allocated central services means central
has not previously established an indirect following form: services that benefit operating agencies but
cost rate with a Federal agency must submit Certificate of Indirect (F&A) Costs are not billed to the agencies on a fee-for-
its initial indirect cost proposal immediately service or similar basis. These costs are
This is to certify that to the best of my
after the organization is advised that a allocated to benefitted agencies on some
knowledge and belief:
Federal award will be made and, in no event, reasonable basis. Examples of such services
(1) I have reviewed the indirect (F&A) cost
later than three months after the effective might include general accounting, personnel
proposal submitted herewith;
date of the Federal award. administration, purchasing, etc.
(2) All costs included in this proposal
c. Unless approved by the cognizant 3. Billed central services means central
[identify date] to establish billing or final
agency for indirect costs in accordance with services that are billed to benefitted agencies
indirect (F&A) costs rate for [identify period
§ 200.414 Indirect (F&A) costs paragraph (f) or programs on an individual fee-for-service
covered by rate] are allowable in accordance
of this Part, organizations that have or similar basis. Typical examples of billed
with the requirements of the Federal awards
previously established indirect cost rates central services include computer services,
to which they apply and with Subpart E—
must submit a new indirect cost proposal to transportation services, insurance, and fringe
Cost Principles of Part 200.
the cognizant agency for indirect costs within benefits.
(3) This proposal does not include any
six months after the close of each fiscal year. 4. Cognizant agency for indirect costs is
costs which are unallowable under Subpart
d. A predetermined rate may be negotiated defined in § 200.19 Cognizant agency for
E—Cost Principles of Part 200 such as
for use on Federal awards where there is indirect costs of this Part. The determination
(without limitation): public relations costs,
reasonable assurance, based on past of cognizant agency for indirect costs for
contributions and donations, entertainment
experience and reliable projection of the states and local governments is described in
costs, fines and penalties, lobbying costs, and
organization’s costs, that the rate is not likely section F.1, Negotiation and Approval of
to exceed a rate based on the organization’s defense of fraud proceedings; and
Central Service Plans.
actual costs. (4) All costs included in this proposal are
5. Major local government means local
e. Fixed rates may be negotiated where properly allocable to Federal awards on the
government that receives more than $100
predetermined rates are not considered basis of a beneficial or causal relationship
million in direct Federal awards subject to
appropriate. A fixed rate, however, must not between the expenses incurred and the
this Part.
be negotiated if (i) all or a substantial portion Federal awards to which they are allocated
of the organization’s Federal awards are in accordance with applicable requirements. C. Scope of the Central Service Cost
expected to expire before the carry-forward I declare that the foregoing is true and Allocation Plans
adjustment can be made; (ii) the mix of correct. The central service cost allocation plan
Federal and non-Federal work at the Nonprofit Organization: lllllllll will include all central service costs that will
organization is too erratic to permit an Signature: llllllllllllllll be claimed (either as a billed or an allocated
equitable carry-forward adjustment; or (iii) Name of Official: llllllllllll cost) under Federal awards and will be
the organization’s operations fluctuate Title: llllllllllllllllll documented as described in section E. Costs
significantly from year to year. Date of Execution: llllllllllll of central services omitted from the plan will
f. Provisional and final rates must be not be reimbursed.
negotiated where neither predetermined nor Appendix V to Part 200—State/Local
fixed rates are appropriate. Predetermined or Government and Indian Tribe-Wide D. Submission Requirements
fixed rates may replace provisional rates at Central Service Cost Allocation Plans 1. Each state will submit a plan to the
any time prior to the close of the Department of Health and Human Services
organization’s fiscal year. If that event does A. General for each year in which it claims central
not occur, a final rate will be established and 1. Most governmental units provide certain service costs under Federal awards. The plan
upward or downward adjustments will be services, such as motor pools, computer should include (a) a projection of the next
made based on the actual allowable costs centers, purchasing, accounting, etc., to year’s allocated central service cost (based
incurred for the period involved. operating agencies on a centralized basis. either on actual costs for the most recently
g. The results of each negotiation must be Since federally-supported awards are completed year or the budget projection for
formalized in a written agreement between performed within the individual operating the coming year), and (b) a reconciliation of
actual allocated central service costs to the a summary schedule showing the allocation health insurance plans, the following
estimated costs used for either the most of each service to the specific benefitted information must be provided: the
recently completed year or the year agencies. If any self-insurance funds or fringe governmental unit’s funding policies, e.g.,
immediately preceding the most recently benefits costs are treated as allocated (rather legislative bills, trust agreements, or state-
completed year. than billed) central services, documentation mandated contribution rules, if different from
2. Each major local government is also discussed in subsections 3.b. and c. must also actuarially determined rates; the pension
required to submit a plan to its cognizant be included. plan’s costs accrued for the year; the amount
agency for indirect costs annually. funded, and date(s) of funding; a copy of the
3. All other local governments claiming 3. Billed Services current actuarial report (including the
central service costs must develop a plan in a. General. The information described in actuarial assumptions); the plan trustee’s
accordance with the requirements described this section must be provided for all billed report; and, a schedule from the activity
in this Part and maintain the plan and related central services, including internal service showing the value of the interest cost
supporting documentation for audit. These funds, self-insurance funds, and fringe associated with late funding.
local governments are not required to submit benefit funds.
their plans for Federal approval unless they b. Internal service funds. 4. Required Certification
are specifically requested to do so by the (1) For each internal service fund or similar Each central service cost allocation plan
cognizant agency for indirect costs. Where a activity with an operating budget of $5 will be accompanied by a certification in the
local government only receives funds as a million or more, the plan must include: a following form:
subrecipient, the pass-through entity will be brief description of each service; a balance CERTIFICATE OF COST ALLOCATION
responsible for monitoring the subrecipient’s sheet for each fund based on individual PLAN
plan. accounts contained in the governmental
4. All central service cost allocation plans unit’s accounting system; a revenue/expenses This is to certify that I have reviewed the
will be prepared and, when required, statement, with revenues broken out by cost allocation plan submitted herewith and
submitted within six months prior to the to the best of my knowledge and belief:
source, e.g., regular billings, interest earned,
beginning of each of the governmental unit’s (1) All costs included in this proposal
etc.; a listing of all non-operating transfers (as
fiscal years in which it proposes to claim [identify date] to establish cost allocations or
defined by Generally Accepted Accounting
central service costs. Extensions may be billings for [identify period covered by plan]
Principles (GAAP)) into and out of the fund;
granted by the cognizant agency for indirect are allowable in accordance with the
a description of the procedures
costs on a case-by-case basis. requirements of this Part and the Federal
(methodology) used to charge the costs of
award(s) to which they apply. Unallowable
E. Documentation Requirements for each service to users, including how billing
costs have been adjusted for in allocating
Submitted Plans rates are determined; a schedule of current
costs as indicated in the cost allocation plan.
rates; and, a schedule comparing total (2) All costs included in this proposal are
The documentation requirements revenues (including imputed revenues)
described in this section may be modified, properly allocable to Federal awards on the
generated by the service to the allowable basis of a beneficial or causal relationship
expanded, or reduced by the cognizant costs of the service, as determined under this
agency for indirect costs on a case-by-case between the expenses incurred and the
Part, with an explanation of how variances Federal awards to which they are allocated
basis. For example, the requirements may be will be handled.
reduced for those central services which have in accordance with applicable requirements.
(2) Revenues must consist of all revenues Further, the same costs that have been treated
little or no impact on Federal awards. generated by the service, including unbilled
Conversely, if a review of a plan indicates as indirect costs have not been claimed as
and uncollected revenues. If some users were direct costs. Similar types of costs have been
that certain additional information is needed, not billed for the services (or were not billed
and will likely be needed in future years, it accounted for consistently.
at the full rate for that class of users), a
may be routinely requested in future plan I declare that the foregoing is true and
schedule showing the full imputed revenues
submissions. Items marked with an asterisk correct.
associated with these users must be
(*) should be submitted only once; provided. Expenses must be broken out by Governmental Unit: lllllllllll
subsequent plans should merely indicate any object cost categories (e.g., salaries, supplies, Signature: llllllllllllllll
changes since the last plan.
etc.). Name of Official: llllllllllll
1. General c. Self-insurance funds. For each self- Title: llllllllllllllllll
insurance fund, the plan must include: the Date of Execution: llllllllllll
All proposed plans must be accompanied
by the following: an organization chart fund balance sheet; a statement of revenue F. Negotiation and Approval of Central
sufficiently detailed to show operations and expenses including a summary of Service Plans
including the central service activities of the billings and claims paid by agency; a listing
of all non-operating transfers into and out of 1. Federal Cognizant Agency for Indirect
state/local government whether or not they Costs Assignments for Cost Negotiation
are shown as benefitting from central service the fund; the type(s) of risk(s) covered by the
functions; a copy of the Comprehensive fund (e.g., automobile liability, workers’ In general, unless different arrangements
Annual Financial Report (or a copy of the compensation, etc.); an explanation of how are agreed to by the concerned Federal
Executive Budget if budgeted costs are being the level of fund contributions are agencies, for central service cost allocation
proposed) to support the allowable costs of determined, including a copy of the current plans, the cognizant agency responsible for
each central service activity included in the actuarial report (with the actuarial review and approval is the Federal agency
plan; and, a certification (see subsection 4.) assumptions used) if the contributions are with the largest dollar value of total Federal
that the plan was prepared in accordance determined on an actuarial basis; and, a awards with a governmental unit. For
with this Part, contains only allowable costs, description of the procedures used to charge indirect cost rates and departmental indirect
and was prepared in a manner that treated or allocate fund contributions to benefitted cost allocation plans, the cognizant agency is
similar costs consistently among the various activities. Reserve levels in excess of claims the Federal agency with the largest dollar
Federal awards and between Federal and (1) submitted and adjudicated but not paid, value of direct Federal awards with a
non-Federal awards/activities. (2) submitted but not adjudicated, and (3) governmental unit or component, as
incurred but not submitted must be appropriate. Once designated as the
2. Allocated Central Services identified and explained. cognizant agency for indirect costs, the
For each allocated central service, the plan d. Fringe benefits. For fringe benefit costs, Federal agency must remain so for a period
must also include the following: a brief the plan must include: a listing of fringe of five years. In addition, the following
description of the service, an identification of benefits provided to covered employees, and Federal agencies continue to be responsible
the unit rendering the service and the the overall annual cost of each type of for the indicated governmental entities:
operating agencies receiving the service, the benefit; current fringe benefit policies; and Department of Health and Human
items of expense included in the cost of the procedures used to charge or allocate the Services—Public assistance and state-wide
service, the method used to distribute the costs of the benefits to benefitted activities. cost allocation plans for all states (including
cost of the service to benefitted agencies, and In addition, for pension and post-retirement the District of Columbia and Puerto Rico),
state and local hospitals, libraries and health cash refunds may include, at the option of indirect costs regulations to the Federal
districts. the cognizant agency for indirect costs, Government for the Federal share of the
Department of the Interior—Indian tribal earned or imputed interest from the date of adjustment, (b) credits to the amounts
governments, territorial governments, and expenditure and delinquent debt interest, if charged to the individual programs, (c)
state and local park and recreational districts. applicable, chargeable in accordance with adjustments to future billing rates, or (d)
Department of Labor—State and local labor applicable cognizant agency claims adjustments to allocated central service costs.
departments. collection regulations. These adjustments or Adjustments to allocated central services will
Department of Education—School districts refunds are designed to correct the plans and not be permitted where the total amount of
and state and local education agencies. do not constitute a reopening of the the adjustment for a particular service
Department of Agriculture—State and local negotiation. (Federal share and non-Federal) share
agriculture departments. exceeds $500,000. Adjustment methods may
Department of Transportation—State and G. Other Policies include, at the option of the cognizant
local airport and port authorities and transit 1. Billed Central Service Activities agency, earned or imputed interest from the
districts. date of expenditure and delinquent debt
Each billed central service activity must
Department of Commerce—State and local interest, if applicable, chargeable in
separately account for all revenues (including
economic development districts. accordance with applicable cognizant agency
imputed revenues) generated by the service,
Department of Housing and Urban claims collection regulations.
expenses incurred to furnish the service, and
Development—State and local housing and
profit/loss. 5. Records Retention
development districts.
Environmental Protection Agency—State 2. Working Capital Reserves All central service cost allocation plans
and local water and sewer districts. and related documentation used as a basis for
Internal service funds are dependent upon
claiming costs under Federal awards must be
2. Review a reasonable level of working capital reserve
retained for audit in accordance with the
to operate from one billing cycle to the next.
All proposed central service cost allocation records retention requirements contained in
Charges by an internal service activity to
plans that are required to be submitted will Subpart D—Post Federal Award
provide for the establishment and
be reviewed, negotiated, and approved by the Requirements, of Part 200.
maintenance of a reasonable level of working
cognizant agency for indirect costs on a
capital reserve, in addition to the full 6. Appeals
timely basis. The cognizant agency for
recovery of costs, are allowable. A working If a dispute arises in the negotiation of a
indirect costs will review the proposal within
capital reserve as part of retained earnings of plan between the cognizant agency for
six months of receipt of the proposal and
up to 60 calendar days cash expenses for indirect costs and the governmental unit, the
either negotiate/approve the proposal or
normal operating purposes is considered dispute must be resolved in accordance with
advise the governmental unit of the
reasonable. A working capital reserve the appeals procedures of the cognizant
additional documentation needed to support/
exceeding 60 calendar days may be approved agency for indirect costs.
evaluate the proposed plan or the changes
by the cognizant agency for indirect costs in
required to make the proposal acceptable.
exceptional cases. 7. OMB Assistance
Once an agreement with the governmental
unit has been reached, the agreement will be 3. Carry-Forward Adjustments of Allocated To the extent that problems are
accepted and used by all Federal agencies, Central Service Costs encountered among the Federal agencies or
unless prohibited or limited by statute. governmental units in connection with the
Allocated central service costs are usually negotiation and approval process, OMB will
Where a Federal awarding agency has reason
negotiated and approved for a future fiscal lend assistance, as required, to resolve such
to believe that special operating factors
year on a ‘‘fixed with carry-forward’’ basis. problems in a timely manner.
affecting its Federal awards necessitate
Under this procedure, the fixed amounts for
special consideration, the funding agency
will, prior to the time the plans are
the future year covered by agreement are not Appendix VI to Part 200—Public
subject to adjustment for that year. However, Assistance Cost Allocation Plans
negotiated, notify the cognizant agency for
when the actual costs of the year involved
indirect costs. A. General
become known, the differences between the
3. Agreement fixed amounts previously approved and the Federally-financed programs administered
The results of each negotiation must be actual costs will be carried forward and used by state public assistance agencies are funded
formalized in a written agreement between as an adjustment to the fixed amounts predominately by the Department of Health
the cognizant agency for indirect costs and established for a later year. This ‘‘carry- and Human Services (HHS). In support of its
the governmental unit. This agreement will forward’’ procedure applies to all central stewardship requirements, HHS has
be subject to re-opening if the agreement is services whose costs were fixed in the published requirements for the development,
subsequently found to violate a statute or the approved plan. However, a carry-forward documentation, submission, negotiation, and
information upon which the plan was adjustment is not permitted, for a central approval of public assistance cost allocation
negotiated is later found to be materially service activity that was not included in the plans in Subpart E of 45 CFR Part 95. All
incomplete or inaccurate. The results of the approved plan, or for unallowable costs that administrative costs (direct and indirect) are
negotiation must be made available to all must be reimbursed immediately. normally charged to Federal awards by
Federal agencies for their use. implementing the public assistance cost
4. Adjustments of Billed Central Services
allocation plan. This Appendix extends these
4. Adjustments Billing rates used to charge Federal awards requirements to all Federal agencies whose
Negotiated cost allocation plans based on must be based on the estimated costs of programs are administered by a state public
a proposal later found to have included costs providing the services, including an estimate assistance agency. Major federally-financed
that: (a) are unallowable (i) as specified by of the allocable central service costs. A programs typically administered by state
law or regulation, (ii) as identified in subpart comparison of the revenue generated by each public assistance agencies include:
F, General Provisions for selected Items of billed service (including total revenues Temporary Aid to Needy Families (TANF),
Cost of this Part, or (iii) by the terms and whether or not billed or collected) to the Medicaid, Food Stamps, Child Support
conditions of Federal awards, or (b) are actual allowable costs of the service will be Enforcement, Adoption Assistance and
unallowable because they are clearly not made at least annually, and an adjustment Foster Care, and Social Services Block Grant.
allocable to Federal awards, must be will be made for the difference between the
adjusted, or a refund must be made at the revenue and the allowable costs. These B. Definitions
option of the cognizant agency for indirect adjustments will be made through one of the 1. State public assistance agency means a
costs, including earned or imputed interest following adjustment methods: (a) a cash state agency administering or supervising the
from the date of transfer and debt interest, if refund including earned or imputed interest administration of one or more public
applicable, chargeable in accordance with from the date of transfer and debt interest, if assistance programs operated by the state as
applicable Federal cognizant agency for applicable, chargeable in accordance with identified in Subpart E of 45 CFR Part 95. For
indirect costs regulations. Adjustments or applicable Federal cognizant agency for the purpose of this Appendix, these programs
include all programs administered by the Disputes involving only one funding agency the Superintendent of Documents, U.S.
state public assistance agency. will be resolved in accordance with the Government Printing Office.
2. State public assistance agency costs Federal awarding agency’s appeal process. 4. Because of the diverse characteristics
means all costs incurred by, or allocable to, 4. To the extent that problems are and accounting practices of governmental
the state public assistance agency, except encountered among the Federal agencies or units, the types of costs which may be
expenditures for financial assistance, medical governmental units in connection with the classified as indirect costs cannot be
contractor payments, food stamps, and negotiation and approval process, the Office specified in all situations. However, typical
payments for services and goods provided of Management and Budget will lend examples of indirect costs may include
directly to program recipients. assistance, as required, to resolve such certain state/local-wide central service costs,
problems in a timely manner. general administration of the non-Federal
C. Policy
entity accounting and personnel services
State public assistance agencies will F. Unallowable Costs performed within the non-Federal entity,
develop, document and implement, and the Claims developed under approved cost depreciation on buildings and equipment,
Federal Government will review, negotiate, allocation plans will be based on allowable the costs of operating and maintaining
and approve, public assistance cost costs as identified in this Part. Where facilities.
allocation plans in accordance with Subpart unallowable costs have been claimed and 5. This Appendix does not apply to state
E of 45 CFR Part 95. The plan will include reimbursed, they will be refunded to the public assistance agencies. These agencies
all programs administered by the state public program that reimbursed the unallowable should refer instead to Appendix VII to Part
assistance agency. Where a letter of approval cost using one of the following methods: (a) 200—States and Local Government and
or disapproval is transmitted to a state public a cash refund, (b) offset to a subsequent Indian Tribe Indirect Cost Proposals.
assistance agency in accordance with Subpart claim, or (c) credits to the amounts charged
E, the letter will apply to all Federal agencies B. Definitions
to individual Federal awards. Cash refunds,
and programs. The remaining sections of this offsets, and credits may include at the option 1. Base means the accumulated direct costs
Appendix (except for the requirement for of the cognizant agency for indirect cost, (normally either total direct salaries and
certification) summarize the provisions of wages or total direct costs exclusive of any
earned or imputed interest from the date of
Subpart E of 45 CFR Part 95. extraordinary or distorting expenditures)
expenditure and delinquent debt interest, if
D. Submission, Documentation, and applicable, chargeable in accordance with used to distribute indirect costs to individual
Approval of Public Assistance Cost applicable cognizant agency for indirect cost Federal awards. The direct cost base selected
Allocation Plans claims collection regulations. should result in each Federal award bearing
a fair share of the indirect costs in reasonable
1. State public assistance agencies are Appendix VII to Part 200—States and relation to the benefits received from the
required to promptly submit amendments to Local Government and Indian Tribe costs.
the cost allocation plan to HHS for review 2. Base period for the allocation of indirect
and approval.
Indirect Cost Proposals
costs is the period in which such costs are
2. Under the coordination process outlined A. General incurred and accumulated for allocation to
in section E, Review of Implementation of
1. Indirect costs are those that have been activities performed in that period. The base
Approved Plans, affected Federal agencies
incurred for common or joint purposes. period normally should coincide with the
will review all new plans and plan
These costs benefit more than one cost governmental unit’s fiscal year, but in any
amendments and provide comments, as
objective and cannot be readily identified event, must be so selected as to avoid
appropriate, to HHS. The effective date of the
with a particular final cost objective without inequities in the allocation of costs.
plan or plan amendment will be the first day
effort disproportionate to the results 3. Cognizant agency for indirect costs
of the calendar quarter following the event
achieved. After direct costs have been means the Federal agency responsible for
that required the amendment, unless another
determined and assigned directly to Federal reviewing and approving the governmental
date is specifically approved by HHS. HHS,
as the cognizant agency for indirect costs awards and other activities as appropriate, unit’s indirect cost rate(s) on the behalf of the
acting on behalf of all affected Federal indirect costs are those remaining to be Federal government. The cognizant agency
agencies, will, as necessary, conduct allocated to benefitted cost objectives. A cost for indirect costs assignment is described in
negotiations with the state public assistance may not be allocated to a Federal award as Appendix VI, section F, Negotiation and
agency and will inform the state agency of an indirect cost if any other cost incurred for Approval of Central Service Plans.
the action taken on the plan or plan the same purpose, in like circumstances, has 4. Final rate means an indirect cost rate
amendment. been assigned to a Federal award as a direct applicable to a specified past period which
cost. is based on the actual allowable costs of the
E. Review of Implementation of Approved 2. Indirect costs include (a) the indirect period. A final audited rate is not subject to
Plans costs originating in each department or adjustment.
1. Since public assistance cost allocation agency of the governmental unit carrying out 5. Fixed rate means an indirect cost rate
plans are of a narrative nature, the review Federal awards and (b) the costs of central which has the same characteristics as a
during the plan approval process consists of governmental services distributed through predetermined rate, except that the difference
evaluating the appropriateness of the the central service cost allocation plan (as between the estimated costs and the actual,
proposed groupings of costs (cost centers) described in Appendix V to Part 200—State/ allowable costs of the period covered by the
and the related allocation bases. As such, the Local Government and Indian Tribe-Wide rate is carried forward as an adjustment to
Federal government needs some assurance Central Service Cost Allocation Plans) and the rate computation of a subsequent period.
that the cost allocation plan has been not otherwise treated as direct costs. 6. Indirect cost pool is the accumulated
implemented as approved. This is 3. Indirect costs are normally charged to costs that jointly benefit two or more
accomplished by reviews by the funding Federal awards by the use of an indirect cost programs or other cost objectives.
agencies, single audits, or audits conducted rate. A separate indirect cost rate(s) is usually 7. Indirect cost rate is a device for
by the cognizant audit agency. necessary for each department or agency of determining in a reasonable manner the
2. Where inappropriate charges affecting the governmental unit claiming indirect costs proportion of indirect costs each program
more than one funding agency are identified, under Federal awards. Guidelines and should bear. It is the ratio (expressed as a
the cognizant HHS cost negotiation office illustrations of indirect cost proposals are percentage) of the indirect costs to a direct
will be advised and will take the lead in provided in a brochure published by the cost base.
resolving the issue(s) as provided for in Department of Health and Human Services 8. Indirect cost rate proposal means the
Subpart E of 45 CFR Part 95. entitled ‘‘A Guide for States and Local documentation prepared by a governmental
3. If a dispute arises in the negotiation of Government Agencies: Cost Principles and unit or subdivision thereof to substantiate its
a plan or from a disallowance involving two Procedures for Establishing Cost Allocation request for the establishment of an indirect
or more funding agencies, the dispute must Plans and Indirect Cost Rates for Grants and cost rate.
be resolved in accordance with the appeals Contracts with the Federal Government.’’ A 9. Predetermined rate means an indirect
procedures set out in 45 CFR Part 16. copy of this brochure may be obtained from cost rate, applicable to a specified current or
future period, usually the governmental allowable indirect costs bears to the base e. The distribution base used in computing
unit’s fiscal year. This rate is based on an selected. This method should also be used the indirect cost rate for each function may
estimate of the costs to be incurred during where a governmental unit’s department or be (1) total direct costs (excluding capital
the period. Except under very unusual agency has only one major function expenditures and other distorting items such
circumstances, a predetermined rate is not encompassing a number of individual as pass-through funds, subcontracts in excess
subject to adjustment. (Because of legal projects or activities, and may be used where of $25,000, participant support costs, etc.),
constraints, predetermined rates are not the level of Federal awards to that (2) direct salaries and wages, or (3) another
permitted for Federal contracts; they may, department or agency is relatively small. base which results in an equitable
however, be used for grants or cooperative b. Both the direct costs and the indirect distribution. An indirect cost rate should be
agreements.) Predetermined rates may not be costs must exclude capital expenditures and developed for each separate indirect cost
used by governmental units that have not unallowable costs. However, unallowable pool developed. The rate in each case should
submitted and negotiated the rate with the costs must be included in the direct costs if be stated as the percentage relationship
cognizant agency for indirect costs. In view they represent activities to which indirect between the particular indirect cost pool and
of the potential advantages offered by this costs are properly allocable. the distribution base identified with that
procedure, negotiation of predetermined c. The distribution base may be (1) total pool.
rates for indirect costs for a period of two to direct costs (excluding capital expenditures
and other distorting items, such as pass- 4. Special Indirect Cost Rates
four years should be the norm in those
situations where the cost experience and through funds, subcontracts in excess of a. In some instances, a single indirect cost
other pertinent facts available are deemed $25,000, participant support costs, etc.), (2) rate for all activities of a non-Federal entity
sufficient to enable the parties involved to direct salaries and wages, or (3) another base or for each major function of the agency may
reach an informed judgment as to the which results in an equitable distribution. not be appropriate. It may not take into
probable level of indirect costs during the account those different factors which may
3. Multiple Allocation Base Method
ensuing accounting periods. substantially affect the indirect costs
10. Provisional rate means a temporary a. Where a non-Federal entity’s indirect applicable to a particular program or group
indirect cost rate applicable to a specified costs benefit its major functions in varying of programs. The factors may include the
period which is used for funding, interim degrees, such costs must be accumulated into physical location of the work, the level of
reimbursement, and reporting indirect costs separate cost groupings. Each grouping must administrative support required, the nature
on Federal awards pending the establishment then be allocated individually to benefitted of the facilities or other resources employed,
of a ‘‘final’’ rate for that period. functions by means of a base which best the organizational arrangements used, or any
measures the relative benefits. combination thereof. When a particular
C. Allocation of Indirect Costs and b. The cost groupings should be Federal award is carried out in an
Determination of Indirect Cost Rates established so as to permit the allocation of environment which appears to generate a
each grouping on the basis of benefits significantly different level of indirect costs,
1. General
provided to the major functions. Each provisions should be made for a separate
a. Where a governmental unit’s department grouping should constitute a pool of indirect cost pool applicable to that Federal
or agency has only one major function, or expenses that are of like character in terms award. The separate indirect cost pool should
where all its major functions benefit from the of the functions they benefit and in terms of be developed during the course of the regular
indirect costs to approximately the same the allocation base which best measures the allocation process, and the separate indirect
degree, the allocation of indirect costs and relative benefits provided to each function. cost rate resulting therefrom should be used,
the computation of an indirect cost rate may The number of separate groupings should be provided that: (1) The rate differs
be accomplished through simplified held within practical limits, taking into significantly from the rate which would have
allocation procedures as described in consideration the materiality of the amounts been developed under paragraphs (C)(2) and
subsection 2. involved and the degree of precision needed. (C)(3) of this Appendix, and (2) the Federal
b. Where a governmental unit’s department c. Actual conditions must be taken into award to which the rate would apply is
or agency has several major functions which account in selecting the base to be used in material in amount.
benefit from its indirect costs in varying allocating the expenses in each grouping to b. Where Federal statutes restrict the
degrees, the allocation of indirect costs may benefitted functions. When an allocation can reimbursement of certain indirect costs, it
require the accumulation of such costs into be made by assignment of a cost grouping may be necessary to develop a special rate for
separate cost groupings which then are directly to the function benefitted, the the affected Federal award. Where a
allocated individually to benefitted functions allocation must be made in that manner. ‘‘restricted rate’’ is required, the same
by means of a base which best measures the When the expenses in a grouping are more procedure for developing a non-restricted
relative degree of benefit. The indirect costs general in nature, the allocation should be rate will be used except for the additional
allocated to each function are then made through the use of a selected base step of the elimination from the indirect cost
distributed to individual Federal awards and which produces results that are equitable to pool those costs for which the law prohibits
other activities included in that function by both the Federal government and the reimbursement.
means of an indirect cost rate(s). governmental unit. In general, any cost
c. Specific methods for allocating indirect element or related factor associated with the D. Submission and Documentation of
costs and computing indirect cost rates along governmental unit’s activities is potentially Proposals
with the conditions under which each adaptable for use as an allocation base 1. Submission of Indirect Cost Rate Proposals
method should be used are described in provided that: (1) it can readily be expressed
subsections 2, 3 and 4. in terms of dollars or other quantitative a. All departments or agencies of the
measures (total direct costs, direct salaries governmental unit desiring to claim indirect
2. Simplified Method costs under Federal awards must prepare an
and wages, staff hours applied, square feet
a. Where a non-Federal entity’s major used, hours of usage, number of documents indirect cost rate proposal and related
functions benefit from its indirect costs to processed, population served, and the like), documentation to support those costs. The
approximately the same degree, the and (2) it is common to the benefitted proposal and related documentation must be
allocation of indirect costs may be functions during the base period. retained for audit in accordance with the
accomplished by (1) classifying the non- d. Except where a special indirect cost records retention requirements contained in
Federal entity’s total costs for the base period rate(s) is required in accordance with the Common Rule.
as either direct or indirect, and (2) dividing paragraph (C)(4) of this Appendix, the b. A governmental department or agency
the total allowable indirect costs (net of separate groupings of indirect costs allocated unit that receives more than $35 million in
applicable credits) by an equitable to each major function must be aggregated direct Federal funding must submit its
distribution base. The result of this process and treated as a common pool for that indirect cost rate proposal to its cognizant
is an indirect cost rate which is used to function. The costs in the common pool must agency for indirect costs. Other governmental
distribute indirect costs to individual Federal then be distributed to individual Federal department or agency must develop an
awards. The rate should be expressed as the awards included in that function by use of indirect cost proposal in accordance with the
percentage which the total amount of a single indirect cost rate. requirements of this Part and maintain the
proposal and related supporting herewith and to the best of my knowledge of rate negotiated (predetermined, final,
documentation for audit. These governmental and belief: fixed, or provisional).
departments or agencies are not required to (1) All costs included in this proposal
F. Other Policies
submit their proposals unless they are [identify date] to establish billing or final
specifically requested to do so by the indirect costs rates for [identify period 1. Fringe Benefit Rates
cognizant agency for indirect costs. Where a covered by rate] are allowable in accordance If overall fringe benefit rates are not
non-Federal entity only receives funds as a with the requirements of the Federal award(s) approved for the governmental unit as part of
subrecipient, the pass-through entity will be to which they apply and the provisions of the central service cost allocation plan, these
responsible for negotiating and/or monitoring this Part. Unallowable costs have been rates will be reviewed, negotiated and
the subrecipient’s indirect costs. adjusted for in allocating costs as indicated approved for individual recipient agencies
c. Each Indian tribal government desiring in the indirect cost proposal during the indirect cost negotiation process.
reimbursement of indirect costs must submit (2) All costs included in this proposal are In these cases, a proposed fringe benefit rate
its indirect cost proposal to the Department properly allocable to Federal awards on the
computation should accompany the indirect
of the Interior (its cognizant agency for basis of a beneficial or causal relationship
cost proposal. If fringe benefit rates are not
indirect costs). between the expenses incurred and the
used at the recipient agency level (i.e., the
d. Indirect cost proposals must be agreements to which they are allocated in
agency specifically identifies fringe benefit
developed (and, when required, submitted) accordance with applicable requirements.
costs to individual employees), the
within six months after the close of the Further, the same costs that have been treated
governmental unit should so advise the
governmental unit’s fiscal year, unless an as indirect costs have not been claimed as
cognizant agency for indirect costs.
exception is approved by the cognizant direct costs. Similar types of costs have been
accounted for consistently and the Federal 2. Billed Services Provided by the Recipient
agency for indirect costs. If the proposed
government will be notified of any Agency
central service cost allocation plan for the
accounting changes that would affect the
same period has not been approved by that In some cases, governmental departments
predetermined rate.
time, the indirect cost proposal may be or agencies (components of the governmental
prepared including an amount for central I declare that the foregoing is true and unit) provide and bill for services similar to
services that is based on the latest federally- correct. those covered by central service cost
approved central service cost allocation plan. Governmental Unit: lllllllllll allocation plans (e.g., computer centers).
The difference between these central service Signature: llllllllllllllll Where this occurs, the governmental
amounts and the amounts ultimately Name of Official: llllllllllll departments or agencies (components of the
approved will be compensated for by an Title: llllllllllllllllll governmental unit)should be guided by the
adjustment in a subsequent period. Date of Execution: llllllllllll requirements in Appendix VI relating to the
development of billing rates and
2. Documentation of Proposals E. Negotiation and Approval of Rates.
documentation requirements, and should
The following must be included with each 1. Indirect cost rates will be reviewed, advise the cognizant agency for indirect costs
indirect cost proposal: negotiated, and approved by the cognizant of any billed services. Reviews of these types
a. The rates proposed, including subsidiary agency on a timely basis. Once a rate has of services (including reviews of costing/
work sheets and other relevant data, cross been agreed upon, it will be accepted and billing methodology, profits or losses, etc.)
referenced and reconciled to the financial used by all Federal agencies unless will be made on a case-by-case basis as
data noted in subsection b. Allocated central prohibited or limited by statute. Where a warranted by the circumstances involved.
service costs will be supported by the Federal awarding agency has reason to
summary table included in the approved believe that special operating factors affecting 3. Indirect Cost Allocations Not Using Rates
central service cost allocation plan. This its Federal awards necessitate special In certain situations, governmental
summary table is not required to be indirect cost rates, the funding agency will, departments or agencies (components of the
submitted with the indirect cost proposal if prior to the time the rates are negotiated, governmental unit), because of the nature of
the central service cost allocation plan for the notify the cognizant agency for indirect costs. their Federal awards, may be required to
same fiscal year has been approved by the 2. The use of predetermined rates, if develop a cost allocation plan that distributes
cognizant agency for indirect costs and is allowed, is encouraged where the cognizant indirect (and, in some cases, direct) costs to
available to the funding agency. agency for indirect costs has reasonable the specific funding sources. In these cases,
b. A copy of the financial data (financial assurance based on past experience and a narrative cost allocation methodology
statements, comprehensive annual financial reliable projection of the non-Federal entity’s should be developed, documented,
report, executive budgets, accounting reports, costs, that the rate is not likely to exceed a maintained for audit, or submitted, as
etc.) upon which the rate is based. rate based on actual costs. Long-term appropriate, to the cognizant agency for
Adjustments resulting from the use of agreements utilizing predetermined rates indirect costs for review, negotiation, and
unaudited data will be recognized, where extending over two or more years are approval.
appropriate, by the Federal cognizant agency encouraged, where appropriate.
3. The results of each negotiation must be 4. Appeals
for indirect costs in a subsequent proposal.
c. The approximate amount of direct base formalized in a written agreement between If a dispute arises in a negotiation of an
costs incurred under Federal awards. These the cognizant agency for indirect costs and indirect cost rate (or other rate) between the
costs should be broken out between salaries the governmental unit. This agreement will cognizant agency for indirect costs and the
and wages and other direct costs. be subject to re-opening if the agreement is governmental unit, the dispute must be
d. A chart showing the organizational subsequently found to violate a statute, or the resolved in accordance with the appeals
structure of the agency during the period for information upon which the plan was procedures of the cognizant agency for
which the proposal applies, along with a negotiated is later found to be materially indirect costs.
functional statement(s) noting the duties and/ incomplete or inaccurate. The agreed upon
rates must be made available to all Federal 5. Collection of Unallowable Costs and
or responsibilities of all units that comprise Erroneous Payments
the agency. (Once this is submitted, only agencies for their use.
revisions need be submitted with subsequent 4. Refunds must be made if proposals are Costs specifically identified as unallowable
proposals.) later found to have included costs that (a) are and charged to Federal awards either directly
3. Required certification. unallowable (i) as specified by law or or indirectly will be refunded (including
Each indirect cost rate proposal must be regulation, (ii) as identified in § 200.420 interest chargeable in accordance with
accompanied by a certification in the Considerations for selected items of cost, of applicable Federal cognizant agency for
following form: this Part, or (iii) by the terms and conditions indirect costs regulations).
of Federal awards, or (b) are unallowable
CERTIFICATE OF INDIRECT COSTS because they are clearly not allocable to 6. OMB Assistance
This is to certify that I have reviewed the Federal awards. These adjustments or To the extent that problems are
indirect cost rate proposal submitted refunds will be made regardless of the type encountered among the Federal agencies or
governmental units in connection with the 14. Institute of Gas Technology, Chicago, Appendix IX to Part 200—Hospital Cost
negotiation and approval process, OMB will Illinois Principles
lend assistance, as required, to resolve such 15. Institute for Defense Analysis,
problems in a timely manner. Alexandria, Virginia Based on initial feedback, OMB proposes
16. LMI, McLean, Virginia to establish a review process to consider
Appendix VIII to Part 200—Nonprofit 17. Mitre Corporation, Bedford, existing hospital cost determine how best to
Organizations Exempted From Subpart Massachusetts update and align them with this Part. Until
E—Cost Principles of Part 200 18. Noblis, Inc., Falls Church, Virginia such time as revised guidance is proposed
19. National Radiological Astronomy
1. Advance Technology Institute (ATI), and implemented for hospitals, the existing
Observatory, Green Bank, West Virginia
Charleston, South Carolina 20. National Renewable Energy Laboratory, principles located at 45 CFR Part 74
2. Aerospace Corporation, El Segundo, Golden, Colorado Appendix E, entitled ‘‘Principles for
California 21. Oak Ridge Associated Universities, Oak Determining Cost Applicable to Research and
3. American Institutes of Research (AIR), Ridge, Tennessee Development Under Grants and Contracts
Washington, DC 22. Rand Corporation, Santa Monica, with Hospitals,’’ remain in effect.
4. Argonne National Laboratory, Chicago, California
Illinois 23. Research Triangle Institute, Research Appendix X to Part 200—Data
5. Atomic Casualty Commission, Triangle Park, North Carolina Collection Form (Form SF–SAC)
Washington, DC 24. Riverside Research Institute, New York,
New York The Data Collection Form SF–SAC is
6. Battelle Memorial Institute, Headquartered available on the FAC Web site.
in Columbus, Ohio 25. South Carolina Research Authority
7. Brookhaven National Laboratory, Upton, (SCRA), Charleston, South Carolina
26. Southern Research Institute, Birmingham,
Appendix XI to Part 200—Compliance
New York Supplement
Alabama
8. Charles Stark Draper Laboratory,
27. Southwest Research Institute, San The compliance supplement is available on
Incorporated, Cambridge, Massachusetts Antonio, Texas
9. CNA Corporation (CNAC), Alexandria, the OMB Web site: (e.g. for 2013 here
28. SRI International, Menlo Park, California
Virginia 29. Syracuse Research Corporation, Syracuse, http://www.whitehouse.gov/omb/circulars/)
10. Environmental Institute of Michigan, Ann New York
Arbor, Michigan 30. Universities Research Association, PARTS 215, 220, 225, and 230—
11. Georgia Institute of Technology/Georgia Incorporated (National Acceleration Lab), [REMOVED]
Tech Applied Research Corporation/ Argonne, Illinois
Georgia Tech Research Institute, Atlanta, 31. Urban Institute, Washington DC ■ 4. Remove parts 215, 220, 225, and
Georgia 32. Non-profit insurance companies, such as 230.
12. Hanford Environmental Health Blue Cross and Blue Shield Organizations
Foundation, Richland, Washington 33. Other non-profit organizations as [FR Doc. 2013–30465 Filed 12–19–13; 8:45 am]
13. IIT Research Institute, Chicago, Illinois negotiated with Federal awarding agencies BILLING CODE P

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achieving their desired results, and will

4. Subpart D—Post-Award explicit a non-Federal entity’s inclusion of this language would be

worked on the award.

200.718 Major Program Determination Appendix XI Compliance Supplement PART 200—UNIFORM

■ 2. The heading of chapter II is revised recognized Indian tribe’’).

200.59 Intangible property. 200.206 Standard application requirements. 200.339 Termination.

200.335 Methods for collection,

200.508 Auditee responsibilities.

Accounting Standards Board (FASB). discerning whether a payment was

or pass-through entity in accordance including IHEs, that:

accordance with agency policy).

Mariana Islands, and any agency or that—

Authority: 31 U.S.C. 503

awards when proposed by the Federal 220); Financial Management Office of

through entity must use judgment in

accordance with CAS takes precedence

local governments and 200.419 Cost

(1) Administrative or clerical services annuity or retirement plans, and

interest to be used must be the three-

costs. from any award or contract to another through entity.

cognizant agency for indirect costs may

individual’s travel for the Federal

Total Federal awards expended Type A/B threshold

higher risk than Federal programs

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