defined in § 100.1 of this subchapter) are permitted without the necessity for an approved amendment or revision where (1) they do not result in expenditures in excess of the total amount granted, (2) there is not any material change in the content or the administration of the approved project, and (c) expenditures are otherwise made in accordance with, and for kinds of expenditures authorized in, the approved application.

(20 U.S.C. 1221c (b) (1).)

§ 100a.30 Service contracts.

(a) Each project application shall provide that the activities and services for which Federal financial assistance is sought will be administered by, or under the supervision of, the applicant.

(b) The applicant shall not transfer to others responsibility in whole or in part for the use of Federal funds or for the conduct of project activities, but may enter into contracts or arrangements with others for carrying out a portion of any such activities pursuant to Subpart I of this part.

(c) In applying for Federal assistance, the applicant shall indicate in the application any intention it may have of entering into contracts or other arrangements with individuals or organizations to conduct any portion of any activity proposed in the application. The applicant shall not enter into any such contract or arrangement unless the intention to do so is included in the approved application or an approved amendment or revision thereto.

(20 U.S.C. 1221c (b) (1), 1232c (b) (1).)

Where he deems it necessary or desirable for the efficient administration of a Federal program, the Commissioner may require any applicant for assistance under such program to submit a preapplication for review prior to the acceptance of an application submitted under § 100a.15.

(20 U.S.C. 1221c (b) (1).)

Subpart C-Application Forms for State and Local Governments

§ 100a.40 Authorized forms and instructions.

(a) Only those forms specified in §§ 100a.41 through 100a.45, inclusive, and such supplementary or other forms as may from time to time be authorized by the Commissioner may be used by State

and local governments in applying for Federal assistance.

(b) All applicable standard instructions for use in connection with the forms specified in §§ 100a.41 through 100a.45, inclusive, shall be followed.

(c) State and local governments shall submit the number of copies of their application as prescribed by the Commissioner.

(d) Except as provided by § 100a.29 (a) (7), all requests by these recipients for changes, continuations, and supplements to approved applications shall be submitted on the same form as the original application. For those purposes, only the affected pages of the forms should be submitted.

(OMB Circular No. A-102, Attachment M.) § 100a.41 Preapplication for Federal

assistance.

(a) The preapplication for Federal assistance form prescribed by Attachment M of OMB Circular No. A-102, will be used to:

(1) Establish communication between State and local government applicants and the Office of Education;

(2) Determine these applicants' eligibility;

(3) Determine how well the project can compete with similar applications from others; and

(4) Eliminate any proposals which have little or no chance for Federal funding before applicants incur significant expenditures for preparing an application.

(b) Preapplications shall be mandatory for all construction, land acquisition, or land development projects for which the need for Federal funding exceeds $100,000.

(c) Any State or local government applicant shall have the right to submit a preapplication even when not required by the Commissioner.

(OMB Circular No. A-102, Attachment M.) § 100a.42 Notice of preapplication re

view action.

The Notice of Preapplication Review Action form prescribed by Attachment M of OMB Circular No. A-102 will be used by the Commissioner to inform State and local government applicants of the results of the review of the preapplications submitted by them. The Commissioner will send a notice to the applicant within 45 days of the receipt of the preapplication form. When the review cannot be made

within 45 days, the applicant will be informed by letter as to when the review will be completed.

(OMB Circular No. A-102, Attachment M.)

§ 100a.43

Application for Federal assistance (nonconstruction projects). The application for Federal Assistance (Nonconstruction Programs) form prescribed by Attachment M of OMB Circular No. A-102 shall be used by State and local governments to apply for Federal assistance, except where the forms specified in §§ 100a.44 and 100a.45 are to be used.

(OMB Circular No. A-102, Attachment M.) § 100a.44

Application for Federal assistance (for construction projects). The Application for Federal Assistance (for Construction Programs) form prescribed by Attachment M of OMB Circular No. A-102 shall be used by State and local governments to apply for any award whose purpose is solely or primarily construction, land acquisition, or land development.

(OMB Circular No. A-102, Attachment M.)

§ 100a.45 Application for Federal assistance (short form).

The Application for Federal Assistance (Short Form) form subscribed by Attachment M of OMB Circular No. A-102 shall be used to apply for any singlepurpose, one-time award of less than $10,000 not requiring clearinghouse approval, an environmental impact statement, or the relocation of persons, businesses, or farms.

(OMB Circular No. A-102, Attachment M.) Subpart D-Federal Financial Participation § 100a.50 Amount of award.

Federal assistance may be provided to meet all or part of the allowable costs of projects which meet the requirements contained in the applicable Federal statutes and regulations. (20 U.S.C. 1221c(b) (1).) § 100a.51

Limitations on costs.

The amount of the award shall be set forth in the grant award or contract document. The total cost to the Federal Government will not exceed the amount set forth in the grant award or contract document. The Federal Government shall not be obligated to reimburse the recipient for costs incurred in excess of such amount unless and until the Com

missioner has notified the recipient in writing that such amount has been increased and has specified such increased amount in a revised grant award or contract document pursuant to § 100a.28. Such revised amount shall thereupon constitute the revised maximum total cost to the Federal Government of the performance of the grant or contract. (31 U.S.C. 200.)

§ 100a.52 Federal obligation.

The issuance of a grant award or contract document will be regarded as an obligation of the Federal Government in the amount of the award. (31 U.S.C. 200.)

§ 100a.53 Payments.

(a) Payment methods and adjustments.-Payments pursuant to grants, contracts, or other arrangements may be made in installments, and in advance or by way of reimbursement, pursuant to Subpart E of this part, with necessary adjustments on account of overpayments or underpayments, as the Commissioner may determine.

(b) Violations.-A payment under any such grant, contract, or other arrangement for expenditures which fail to meet the requirements of any of the provisions of applicable Federal statutes, regulations, or the approved project application (including any terms and conditions applicable thereto), may be taken into account in the determination of any such overpayments and any adjustments relating thereto.

(c) Adjustment of records.-Each recipient, in its maintenance of project expenditure accounts, records, and reports shall promptly make any necessary adjustments in its records to reflect refunds, credits, underpayments, or overpayments, resulting from Federal or State administrative reviews and audits or otherwise. Such adjustments shall be set forth in any financial reports required to be filed with the Commissioner. (20 U.S.C. 1232c (a) (1), 1232d.)

§ 100a.54 Duration of project.

(a) The amount of the award shall remain available for obligation by the recipient during the period specified in the grant award or contract document or until otherwise suspended or terminated. Such period may be extended by revision of the grant or contract without additional funds pursuant to para

graph (b) of this section where otherwise permitted by law.

(b) When it is determined that special or unusual circumstances will delay the completion of the project beyond the period for obligation, the recipient must in writing request the Commissioner to extend such period and shall indicate the reasons therefor.

(20 U.S.C. 1221(c) (b) (1), 1232c (b) (3).) § 100a.55 Obligation by recipients.

Obligations will be considered to have been incurred by a recipient on the basis of documentary evidence of binding commitments for the acquisition of goods or property or for the performance of work, except that funds for personal services, for services performed by public utilities, for travel, and for the rental of facilities, shall be considered to have been obligated as of the time such services were rendered, such travel was performed, and such rented facilities were used, respectively.

(20 U.S.C. 1232c (b) (2); 31 U.S.C. 200.) Subpart E-Grant Payment Requirements § 100a.60 Scope of subpart.

This subpart sets forth the methods of making grant payments to recipients. These methods will minimize the time elapsing between the disbursement by a recipient and the transfer of funds from the United States Treasury to the recipient, whether such disbursement occurs prior to or subsequent to the transfer of funds.

(20 U.S.C. 1232d; OMB Circular No. A-102, Attachment J.)

As used in this subpart:

"Advance by Treasury check" is a payment made by a Treasury check to a recipient upon its request or through the use of predetermined payment schedules before payments are made by the recipient.

"Letter of credit" is an instrument certified by an authorized official of the Federal Government which authorizes a recipient to draw funds when needed from the Treasury, through a Federal Reserve Bank and the recipient's commercial bank, in accordance with the provisions of Treasury Circular No. 1075. "Percentage of completion method" refers to a system under which payments are made to the recipient for construction according to a schedule which relates the amount and timing of each pay

ment primarily or solely to the actual percentage of completion of the construction work under the grant or contract rather than to the recipient's actual rate of disbursements.

"Reimbursement by Treasury check" is a payment made to a recipient with a Treasury check upon request for reimbursement from the recipient.

(20 U.S.C. 1232d; OMB Circular No. A-102, Attachment J.)

§ 100a.62 Payment methods for nonconstruction projects.

(a) Letters of credit will be used to pay recipients when all of the following conditions exist:

(1) there is or will be a continuing relationship between the recipient and the responsible Department finance office for at least a twelve-month period and the total amount of advances to be received from the finance office is $250,000 or more, as prescribed by Treasury Circular No. 1075;

(2) the recipient has established, or demonstrated to the Commissioner the willingness and ability to establish procedures that will minimize the time elapsing between the transfer of funds from the Treasury and their disbursement by the recipient; and

(3) the recipient's financial management system meets the standards for fund control and accountability prescribed in Subpart P of this part.

(b) Advances by Treasury check will be used, in accordance with the provisions of Treasury Circular No. 1075, when the recipient meets all of the requirements specified in paragraph (a) of this section except those in paragraph (a)(1) of this section.

(c) Reimbursement by Treasury check will be the preferred (although not mandatory) method when the recipient does not meet the requirements specified in either or both of paragraphs (a) (2) and (a) (3) of this section. This method may also be used when the major portion of the program is accomplished through private market financing or Federal loans, and the Federal assistance constitutes a minor portion of the program.

(d) Recipients will be authorized to submit no less often than monthly their requests for advances or reimbursements when letters of credit or predetermined automatic Treasury check advances are not used.

(20 U.S.C. 1232d; OMB Circular No. A-102, Attachment J.)

§ 100a.63 Payment methods for construction projects.

(a) The percentage of completion method will not be used to pay for construction.

(b) Reimbursement by Treasury check shall be the preferred method when the recipient does not meet the requirements specified in § 100a.62(a) (2) and (3), and may be used for any other construction grant or contract except where the Commissioner has entered into an agreement with a recipient to use a letter of credit for all Federal assistance, including assistance for construction.

(c) When the reimbursement by Treasury check method is used, recipients I will be authorized to submit no less often than monthly their requests for reimbursement.

(d) When the reimbursement by Treasury check method is not used, § 100a.62 (a) and (b) shall be applicable to the construction grant or contract. Implementing procedures under § 100a.62 (a) and (b) will be insofar as possible the same for construction grants and contracts as for nonconstruction grants and contracts awarded to the same recipient.

(20 U.S.C. 1243d; OMS Circular No. A-102, Attachment J.)

§ 100a.64 Withholding of payments.

Unless otherwise required by law, payments for proper charges, incurred by recipients will not be withheld unless the grant or contract is suspended pursuant to § 100a.495(c), or the recipient is indebted to the United States and collection of the indebtedness will not impair the accomplishment of the objectives of any grant or contract program sponsored by the United States. When a grant or contract is suspended, payment adjustments will be made in accordance with § 100a.495. When an indebtedness is to be collected, the Commissioner may, upon reasonable notice to the recipient, withhold from the recipient the right to receive payments under the grant or contract or require appropriate accounting adjustments to recorded cash balances for which the recipient is accountable to the Federal Government, in order to liquidate the indebtedness.

(20 U.S.C. 1243d; OMS Circular No. A-102, Attachment J.)

§ 100a.65 Requesting advances or reim

bursements.

Subpart P of this part sets forth the procedures and forms for requesting advances or reimbursements.

(20 U.S.C. 1232d; OMB Circular No. A-102, Attachment J.)

Subpart F-Cash Depositories

§ 100a.70 Physical segregation and eligibility.

Except as provided in § 100a.71:

(a) Physical segregation of cash depositories for Federal funds which are provided to a recipient is not required; and

(b) There will be no eligibility requirements for cash depositories in which Federal funds are deposited by recipients.

(OMB Circular No. A-102, Attachment A.) § 100a.71 Checks-paid basis letter of credit.

A separate bank account shall be used when payments under letter of credit are made on a "checks-paid" basis in accordance with agreements entered into by a recipient, the Federal Government, and the banking institutions involved. A checks-paid basis letter of credit is one under which funds are not drawn from the Treasury until the recipient's checks have been presented to its bank for payment.

(OMB Circular No. A-102, Attachment A.) § 100a.72 Minority-owned banks.

Consistent with the national goal of expanding opportunities for minority business enterprises, recipients are encouraged to use minority-owned banks. (OMB Circular No. A-102, Attachment A.)

Subpart G-Cost Principles

§ 100a.80 Scope of subpart.

This subpart establishes the principles to be used (except to the extent inconsistent with an applicable Federal statute or regulation) in determining allowability of costs under grants and contracts awarded by the Commissioner and under cost-type contracts awarded by the recipient.

(20 U.S.C. 1221c(b) (1); OMB Circular Nos. A-21, A-87.)

§ 100a.81 State and local governments.

The principles to be used in determining the allowable costs of activities con

(a) Research and development. The principles for determining the allowable costs of research and development work performed by institutions of higher education are set forth in Part I of Appendix C to this subchapter.

(b) Training and other educational services. The principles for determining the allowable costs of training and other educational services provided by institutions of higher education are set forth in Part II of Appendix C to this subchapter.

(c) Other activities. Appendix C to this subchapter shall be used as a guide for determining the allowable costs of other activities conducted by institutions of higher education.

(OMB Circular No. A-21.)

§ 100a.83 Nonprofit organizations.

(a) Nonconstruction. The principles for determining the allowable costs of nonconstruction activities conducted by nonprofit organizations other than institutions of higher education, hospitals, States, and local governments are set forth in Appendix D to this subchapter.

(b) Construction. Appendix D to this subchapter shall be used as a guide for determining the allowable costs of construction by nonprofit organizations (other than institutions of higher education, hospitals, States and local governments).

(20 U.S.C. 1221c(b) (1).)

(a) It should be noted that the cost principles applicable to a cost-type contractor under a grant or contract will not necessarily be the same as those applicable to the recipient. For example, where a State government awards a costtype contract to an institution of higher education, Appendix C to this subchapter would apply to the costs incurred by the institution of higher education, even though Appendix B to this subchapter would apply to the costs incurred by the State.

(b) The principles to be used in determining the allowable costs of work performed by commercial organizations

under cost-type contracts awarded to them are set forth in 41 CFR Subpart 1-15.2.

(20 U.S.C. 1221c(b) (1).)

Subpart H-Matching and Cost Sharing § 100a.90 Purpose ar.d scope.

This subpart sets forth criteria and procedures for the allowability and evaluation of cash and in-kind contributions in satisfying matching or cost sharing requirements.

(OMB Circular No. A-102, Attachment F.) § 100a.91 Definitions.

"Cash contributions" means the recipient's cash outlay, including the outlay of money contributed to the recipient by third parties. Unless authorized by Federal legislation, outlays charged to other Federal grants or to Federal contracts may not be considered as recipient's cash contributions.

"In-kind contributions" represent the value of noncash contributions provided by the recipient or third parties. In-kind contributions may consist of charges for real property and nonexpendable personal property, and the value of goods and services directly benefiting and specifically identifiable to the federallysupported activity. Unless otherwise authorized by Federal legislation, charges for property purchased wholly with Federal funds, and charges based on the Federal share of the value of property purchased partly with Federal funds, may not be considered as the recipient's in-kind contributions.

"Matching or cost sharing" represents, in general, that portion of project costs not borne by the Federal Government.

"Project costs" means the sum of (a) the allowable costs incurred by the recipient and (b) the allowable in-kind contributions made by third parties. (OMB Circular No. A-102, Attachment F.) § 100a.92

Allowability.

(a) Matching or cost sharing may consist of:

(1) Charges incurred by the recipient as project costs. Not all charges require cash outlays during the grant period by the recipient; examples are depreciation and use allowances for buildings and equipment.

(2) Project costs financed with cash contributed or donated to the recipient by third parties.