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the facility itself. In determining what constitutes a reasonable volume of services to persons unable to pay therefor, there shall be considered conditions in the area to be served by the applicant, including the amount of such services that may be available otherwise than through the applicant. The requirements of assurance from the applicant may be waived if the applicant demonstrates to the satisfaction of the State agency, subject to subsequent approval by the Secretary that to furnish such services is not feasible financially; and

(c) All portions and services of the entire facility for the construction of which, or in connection with which, aid under the Federal Act is sought will be made available without discrimination on account of creed; and no professionally qualified person will be discriminated against on account of creed with respect to the privilege of professional practice in the facility.

§ 53.112

Nondiscrimination on account of race, color, or national origin. Attention is called to the requirements of Title VI of the Civil Rights Act of 1964 (78 Stat. 252; P.L. 88-352) which provides that no person in the United States shall, on the ground of race, color, or national origin be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance (sec. 601). A regulation implementing such Title VI, applicable to grants for construction and modernization of hospitals and medical facilities, has been issued by the Secretary of Health, Education, and Welfare with the approval of the President (45 CFR Part 80). This regulation, published in the FEDERAL REGISTER Of December 4, 1964 (29 F.R. 16298-16305), will become effective on the 30th day after such publication.

§ 53.113 Nondiscrimination in construction contracts.

Each construction contract is subject to the condition that the grantee shall comply with the requirements of, and give the assurances required in Executive Order 11114, June 22, 1963 (28 F.R. 6485), and the applicable rules, regulations and procedures prescribed pursuant thereto by the President's Committee on Equal Employment Opportunity (28 F.R. 9812).

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The State plan shall provide for general methods of administration which are in accord with the principles set out in this subpart.

§ 53.122 Construction program.

The State programs for hospitals, facilities for long-term care, diagnostic or treatment centers, rehabilitation facilities, public health centers, and modernization shall be developed in the following manner:

(a) The State agency shall determine the need for additional hospital facilities of all types, facilities for long-term care, diagnostic or treatment centers, rehabilitation facilities, public health centers and for modernization of such facilities in accordance with the provisions of Subpart B through Subpart H.

(b) The State agency shall determine through field investigation, and otherwise, the approximate locations in each area in which the various types of health facilities identified in paragraph (a) of this section should most appropriately be built and the locations at which modernization projects are needed.

(c) After having determined the hospital, long-term care facilities, diagnostic or treatment center, rehabilitation facilities, public health center and modernization needs, the State agency shall establish an overall construction program. This program shall set forth all such needs in accordance with the standards specified in Subpart B through Subpart H and shall show the relative need for each project included, irrespective of the availability of funds for construction and for maintenance and operation of such project.

(d) The State agency shall from time to time as necessary, but not less often than annually, review the State plan, including the overall program for the construction of hospitals, long-term care facilities, diagnostic or treatment centers, rehabilitation facilities, public health centers and for modernization, and shall submit to the Secretary any modifications of the plan and the construction program as the State agency considers necessary to administer the plan and the annual allotment.

(e) At least thirty days prior to the submission of the State plan or any modification thereof to the Secretary, the State agency shall publish in newspapers having general circulation throughout the State a general description of the proposed plan or any such modification, and the State plan shall be available for examination and comment by interested persons prior to submission to the Secretary.

(f) The State agency shall establish a separate construction schedule on such forms and for such periods as the Secretary may prescribe. Insofar as funds are available for construction and for maintenance and operation, construction shall be scheduled in the order of relative need.

§ 53.123 Personnel administration.

(a) Merit system. A system of personnel administration on a merit basis shall be established and maintained with respect to the personnel employed in the administration of the State plan. Such a system shall include provision for:

(1) Impartial administration of the merit system;

(2) Operation on the basis of published rules or regulations;

(3) Classification of all positions on the basis of duties and responsibilities and establishment of qualifications necessary for the satisfactory performance of such duties and responsibilities;

(4) Establishment of compensation schedules adjusted to the responsibility and difficulty of the work;

(5) Selection of permanent appointees on the basis of examinations so constructed as to provide a genuine test of qualifications and so conducted as to afford all qualified applicants opportunity to compete;

(6) Advancement on the basis of capacity and meritorious service; and

(7) Tenure of permanent employees. Substantial compliance with the Standards for a Merit System of Personnel Administration, issued by the Secretary of Health, Education, and Welfare, the Secretary of Labor, and the Secretary of Defense on January 26, 1963, 28 F.R. 734, including any subsequent amendments thereof, will be deemed to meet the requirements of the regulations in this part.

(b) Conflict of interest. No full-time officer or employee of the State agency, or any firm, organization, corporation, or partnership which such officer or em

ployee owns, controls, or directs, shall receive funds from the applicant, directly or indirectly, in payment for services provided in connection with the planning, design, construction or equipping of the project.

§ 53.124 Fair hearings.

The State agency shall establish such rules and regulations as will provide an opportunity for an appeal to and a fair hearing before the State agency to every applicant for a construction project who is dissatisfied with any action of the State agency regarding its application. § 53.125 Construction standards.

The State agency shall adopt general standards of construction and equipment for the various types of hospitals, facilities for long-term care, diagnostic or treatment centers, rehabilitation facilities, and public health centers assisted under this program. The standards adopted shall not be less than the general standards prescribed by the Public Health Service and set forth in the document "General Standards of Construction and Equipment for Hospital and Medical Facilities", as incorporated by reference in § 53.101 (a).

[32 F.R. 17662, Dec. 12, 1967]

§ 53.126 Minimum standards of maintenance and operation.

The State plan shall provide for minimum standards of maintenance and operation of facilities providing inpatient care which receive aid under the Federal Act, and effective not later than July 1, 1966, shall provide for enforcement of such standards. § 53.127

Application; submittal; amendment; processing.

(a) Submittal of application. Construction applications, including both a detailed narrative description and a detailed estimate of the cost of the project, shall be submitted to the Secretary through the State agency on forms prescribed by the Secretary.

(b) Amendment to application. An amendment to any application approved by the Secretary shall be processed in the same manner as an original application, except that the original application's conformity with the priority regulations shall suffice for an amendment which does not modify the factors on which the priority was granted.

(c) Processing of application. The State agency shall approve, recommend, and forward applications received in the order of priority, except that the State agency may approve, recommend and forward to the Secretary applications out of the order of priority if:

(1) The State agency has afforded reasonable opportunity for development and presentation of projects in the order of priority; and

(2) The State agency certifies to the Secretary that financial resources for the construction, maintenance and operation of projects of higher priority are not then available.

§ 53.128 Assurances from applicant.

In addition to any other requirements imposed by law, each construction grant shall be subject to the condition that the applicant will furnish and comply with the following assurances. The Secretary may, at any time, approve exceptions to those conditions and assurances where he finds that such exceptions are not inconsistent with the Federal Act and the purposes of the program:

(a) That the applicant (or other public or nonprofit agency which is to operate the facility) has or will have a fee simple or such other estate or interest in the site, including necessary easements and rights-of-way, sufficient to assure for a period of not less than 50 years undisturbed use and possession for the purpose of the construction and operation of the facility;

(b) That the Secretary's approval of the final working drawings and specifications, which conform to the general standards of construction and equipment, will be obtained before the project is advertised or placed on the market for bidding;

(c) That applicant will perform actual construction work by the lump sum (fixed price) contract method; employ adequate methods of obtaining competitive bidding prior to awarding the construction contract, either by public advertising or circularizing three or more bidders, and award the contract to the responsible bidder submitting the lowest acceptable bid; and will purchase all fixed equipment by adequate methods of competitive bidding (including such fixed equipment as is not purchased through the construction contract) and award the contract to the responsible bidder submitting the lowest acceptable

bid, except that competitive bidding procedures need not be employed for the purchase of specific fixed equipment items which are not included in the construction contract where such action is found by the State agency and the Secretary, upon written justification by the applicant, to be required by the needs of the program.

(d) That applicant will enter into no construction contract or contracts for the project or a part thereof, the cost of which is in excess of the estimated cost approved in the application for that portion of the work covered by the plans and specifications, without the prior approval of the Secretary;

(e) That applicant will submit to the Secretary for prior approval changes that substantially alter the scope of work, function, utilities or safety of the facility.

(f) That applicant will construct the project, or cause it to be constructed, to final completion in accordance with the application and approved plans and specifications;

(g) That applicant will maintain adequate and separate accounting and fiscal records and accounts for all funds provided from any surce to pay the cost of the project, and permit audit of such records and accounts at any reasonable times;

(h) That applicant will furnish progress reports and such other information as the Secretary may require;

(i) That applicant will provide and maintain competent and adequate architectural or engineering supervision and inspection at the construction site to insure that the completed work conforms with the approved plans and specifications;

(j) That sufficient funds will be available to meet the non-Federal share of the cost of constructing the facility;

(k) That sufficient funds will be available when construction is completed for effective use of the facility for the purposes for which it is being constructed;

(1) (1) That any laborer or mechanic employed by any contractor or subcontractor in the performance of work on the construction of the facility will be paid wages at rates not less than those prevailing on similar construction in the locality as determined under the DavisBacon Act (40 U.S.C. 276 et seq.) and will receive compensation at a rate not less than one and one-half times his basic rate of pay for all hours worked in

any workweek in excess of eight hours in any calendar day or forty hours in the workweek (40 U.S.C. 327-332); and

(2) That the following conditions and provisions will be included in all construction contracts:

(i) The provisions of Labor Standards for U.S. Public Health Service Construction Grant Programs (PHS 930-A-5) pertaining to the Copeland Act (AntiKickback) Regulations and Labor Standards (prevailing rates of pay and overtime requirements) except in the case of contracts in the amount of $2,000.00 or less;

(ii) The contractor shall furnish performance and payment bonds, each of which shall be in the full amount of the contract price, and shall maintain, during the life of the contract, adequate fire, workmen's compensation, public liability and property damage insurance;

(iii) Representatives of the Secretary and State agency will have access at all reasonable times to work wherever it is in preparation or progress, and the contractor shall provide proper facilities for such access and inspection;

(m) That a facility providing inpatient care will be operated and maintained in accordance with minimum standards prescribed by the State agency for the maintenance and operation of such facilities;

(n) That the applicant will conform to all the applicable requirements of the State plan and the regulations of this part.

[29 F.R. 18447, Dec. 29, 1964, as amended at 31 F.R. 12095, Sept. 16, 1966]

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After the State agency has approved a construction application, it shall recommend it to the Secretary for approval and shall certify;

(a) That the application contains reasonable assurance as to the availability of funds for the cost of construction and the entire cost of maintenance and operation when completed:

(1) Availability of funds for the nonFederal share of construction costs shall mean (i) funds immediately available, placed in escrow, or acceptably pledged, or (ii) funds or fund sources specifically earmarked in a sum sufficient for that purpose, or (iii) other assurances acceptable to the Secretary;

(2) To assure the availability of funds for maintenance and operation, the ap

plication for the construction of a new project must include a proposed operating budget, on a form prescribed by the Secretary, for the two-year period immediately following its completion. In the case of an addition to an existing facility, the application must include a statement showing that funds are or will be available to meet any excess of proposed expenditures over anticipated income from the operation of the constructed addition for the two-year period immediately following its completion.

(b) That the application is in conformity with and contains the assurances required by the State plan and these regulations.

§ 53.130 Requests for construction pay.

ments.

(a) Certification by State agency. The State agency shall certify to the Secretary the amount of payments due to an applicant for the cost of work performed and materials and equipment furnished.

(b) Inspection by State agency. As a basis for certification by the State agency that payment of an installment is due an applicant, the State agency shall make adequate inspections to determine that the work has been performed upon a project, or purchases have been made, in accordance with the approved plans and specifications.

[29 F.R. 18447, Dec. 29, 1964, as amended at 32 F.R. 11875, Aug. 17, 1967]

§ 53.131 Fiscal and accounting require

ments.

(a) Construction allotments. (1) The State agency shall be responsible for establishing and maintaining accounts and fiscal controls of all Federal and State funds allotted for construction projects. Federal and State funds shall be separately identified by maintaining separate fund accounts for this purpose.

(2) The fiscal records shall be so designed as to show at any given time the Federal funds allotted, encumbered, and unencumbered balances. If State contributions are made for construction, separate accounts, reflecting similar information, shall be maintained for State funds.

(b) Construction payments. (1) Where the State may receive Federal funds for applicants for construction project grants, or the State itself is an applicant, adequate records of account and fiscal controls shall be established and main

tained by the State to assure proper accounting of all funds received and disbursed. Similar suitable accounts shall be maintained to show the receipt and disbursement of State, local or other funds used for matching purposes.

(2) The State agency shall require that applicants receiving Federal funds establish and maintain adequate accounting and fiscal records to reflect the receipt and expenditure of funds allotted and paid for construction projects.

(3) The States which by law are authorized to make payments to applicants shall promptly pay such applicants funds certified for payment by the Secretary for approved construction projects.

(c) Retention of records. All records required by this section shall be retained for fiscal audit purposes for a period of five years following final payment or until a Federal audit of the record is completed and all resulting questions resolved, whichever occurs first.

[29 F.R. 18447, Dec. 29, 1964, as amended at 33 F.R. 10145, July 16, 1968]

§ 53.132 Access by Comptroller General.

The State plan shall provide that the Comptroller General of the United States or his duly authorized representatives will have access for purposes of audit and examination to such records of the State agency as are required to be maintained by the Secretary. § 53.133

Notice of change of status of

facility.

The State agency shall promptly notify the Secretary in writing, if at any time within 20 years after completion of construction, any facility which received funds under the Federal Act, as amended, is transferred to any person, agency, or organization, not qualified to file an application under the Federal Act or not approved as a transferee by the State agency; or ceases to be a public health center or a public or other nonprofit hospital, diagnostic or treatment center, facility for long-term care or rehabilitation facility, as defined in the Federal Act. § 53.134

pital, diagnostic or treatment center, facility for long-term care, or rehabilitation facility the Secretary, in determining whether there is good cause for releasing the applicant or other owner of the facility from its obligation shall take into consideration the extent to which:

(a) The facility will be devoted by the applicant or other owner to use for another public or nonprofit purpose which will promote the purpose of the Federal Act; or

(b) There are reasonable assurances that for the remainder of the twenty year period other public or nonprofit facilities not previously utilized for the purpose for which the facility was constructed will be so utilized and are substantially equivalent in nature and extent for such purposes.

(c) The facility has been acquired from an agency of the United States (e.g., the Federal Housing Administration under its mortgage insurance commitment program) which has made a reasonable effort to dispose of it for operation as a public or nonprofit facility. [29 F.R. 18447, Dec. 29, 1964, as amended at 31 F.R. 12095, Sept. 16, 1966]

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Good cause for other use of

General standards fo construction and equipment.

54.107

facility.

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If within twenty years after completion of any construction for which a construction grant has been made the facility shall cease to be a public health center or a public or other nonprofit hos

Construction program.

Personnel administration.

Application: submittal; amendment; processing.

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