Sec. 74.173 Hospitals. 74.174 Other nonprofit organizations. APPENDIX E-PRINCIPLES FOR DETERMINING COSTS APPLICABLE TO RESEARCH AND DEVEL- AUTHORITY: 5 U.S.C. 301, unless otherwise noted. SOURCE: 45 FR 30856, May 9, 1980, unless otherwise noted. Subpart A-General § 74.1 Purpose and scope of this part. This part establishes uniform requirements for the administration of ED grants and principles for determining costs applicable to activities assisted by ED grants. 8 74.2 Scope of subpart. This subpart contains general rules pertaining to this Part 74 (definitions, purpose and scope, applicability, and appeals) and procedures for control of deviations from the part. § 74.3 Definitions. As used in this part: "Awarding party" means (1) with respect to a grant, ED, and (2) with respect to a subgrant, the grantee. (See § 74.4(b)) "Contract" means (except as used in the definitions for "grant" and "subgrant" in this section and except where qualified by "Federal") a procurement contract under a grant or subgrant, and "subcontract" means a procurement subcontract under such a contract. "Cost-type contract" means a contract or subcontract in which the contractor or subcontractor is paid on the basis of the costs it incurs, but the term does not include such subcontracts under a non-cost-type contract or subcontract. "ED" means the U.S. Department of Education. "Expenditure report" means: (1) For nonconstruction grants, the "Financial Status Report" (or other equivalent report); (2) for construction grants, the "Outlay Report and Request for Reimbursement for Construction Programs" (or other equivalent report). (See Subpart I of this part.) "Federally recognized Indian tribal government" means the governing body or a governmental agency of any Indian tribe, band, nation, or other organized group or community (including any Native village as defined in section 3 of the Alaska Native Claims Settlement Act, 85 Stat. 688) certified by the Secretary of the Interior as eligible for the special programs and services provided by him through the Bureau of Indian Affairs. However, for policies applicable to tribal government hospitals and institutions of higher education, see § 74.4(c), “Applicability of this part." "Government" means a State or local government or a Federally recognized Indian tribal government. However, for policies applicable to government hospitals and institutions of higher education, see § 74.4(c), “Applicability of this part." "Grant" means an award of financial assistance in the form of money, or property in lieu of money, by the Federal Government to an eligible recipient. The term includes such financial assistance when provided by contract, but does not include any Federal procurements subject to the procurement regulations in 41 CFR, nor does it include technical assistance, which provides services instead of money, or other assistance in the form of revenue sharing, loans, loan guarantees, interest subsidies, insurance, or direct appropriations. Also, the term does not include assistance, such as a fellowship or other lump sum award, which the recipient is not required to account for on an actual cost basis. "Grantee" means the government, nonprofit corporation, or other legal entity to which a grant is awarded and which is accountable to the Federal Government for the use of the funds provided. The grantee is the entire legal entity even if only a particular component of the entity is designated in the award document. For example, a grant award document may name as the grantee an agency of a State, or one school or campus of a university. In these cases, the granting agency usually intends, or actually requires, that the named component assume primary or sole responsibility for administering the grant-assisted project or program. Nevertheless, the naming of a component of a legal entity as the grantee in a grant award document shall not be construed as relieving the whole legal entity from accountability to the Federal Government for the use of the funds provided. (This definition is not intended to affect the eligibility provisions of grant programs in which eligibility is limited to organizations, such as State educational agencies, which may be only components of a legal entity.) The term "grantee" does not include any secondary recipients such as subgrantees, contractors, etc., who may receive funds from a grantee pursuant to a grant. "Local government" means a local unit of government including specifically a county, municipality, city, town, township, local public authority, school district, special district, intrastate district, council of governments (whether or not incorporated as a nonprofit corporation under State law), "sponsor or sponsoring local organization" of a watershed project (as defined in 7 CFR 620.2, 40 FR 12472, March 19, 1975), any other regional or interestate government entity, or any agency or instrumentality of a local government. However, for policies applicable to government hospitals and institutions of higher education, see § 74.4(c), "Applicability of this part." "OMB" means the Office of Management and Budget within the Executive Office of the President. "Recipient" means grantee or subgrantee. (See § 74.4(b).) "State" means any of the several States of the United States, the Dis trict of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, or any agency or instrumentality of a State exclusive of local governments. However, for policies applicable to government hospitals and institutions of higher education, see § 74.4(c), “Applicability of this part.” "Subgrant" means an award of financial assistance in the form of money, or property in lieu of money, made under a grant by a grantee to an eligible subgrantee. The term includes financial assistance when provided by contract, but does not include procurements; nor does it include any form of assistance which is excluded from the definition of “grant” in this section. "Subgrantee" means the government, nonprofit corporation, or other legal entity to which a subgrant is awarded and which is accountable to the grantee for the use of the funds provided. The subgrantee is the entire legal entity even if only a particular component of the entity is designated in the subgrant award document. "Terms of a grant or subgrant” means all requirements of the grant or subgrant, whether in statute, regulations, the award document or elsewhere. § 74.4 Applicability of this part. (a) General. (1) Except as provided in paragraphs (a) (2) and (3) of this section or where inconsistent with Federal statutes, regulations, or other terms of a grant, this part applies to all ED grants. (2) With the exception of 34 CFR 74.62, which applies to Chapter 1, this part does not apply to the programs authorized under Chapter 1 and Subchapters A through C of Chapter 2 of the Education Consolidation and Improvement Act of 1981. (3) Unless expressly made applicable by ED, this part does not apply when the grantee is a Federal agency, foreign government or organization, international organization such as the United Nations, for profit organization, or individual. (b) Subgrants. For each substantive provision in this part, either the language of the provision itself or other text in the same subpart will indicate whether the provision affects only grants, only subgrants, or both. Use of the term "recipient" (as defined in § 74.3) in a provision shall be taken as referring equally to grantees and subgrantees. Similarly, use of the term "awarding party" (as defined in § 74.3) shall be taken as referring equally to granting agencies and to grantees awarding subgrants. However, unless expressly made applicable by ED this part need not be applied by the grantee to a subgrant if the subgrantee is a Federal agency, foreign government or organization, international organization such as the United Nations, forprofit organization, or individual. (c) Public institutions of higher education and hospitals. Grants and subgrants to institutions of higher education and hospitals operated by a government shall be subject only to provisions of this subpart that apply to nongovernmental organizations. [45 FR 30856, May 9, 1980, as amended at 47 FR 52354, Nov. 19, 1982] 874.6 Deviations. (a) Except as provided in § 74.7, a deviation is any exception to this part not required by Federal statute without allowance of agency discretion. A deviation may be either: (1) Use of any policy, procedure, form, standard, or grant or subgrant term which is inconsistent with an applicable provision of this part, or (2) Failure to use any applicable policy, procedure, form, standard, or grant or subgrant term which is required by this part. (b) In order to maintain uniformity to the greatest extent feasible, deviations shall be kept to a minimum. A deviation, whether proposed by an applicant, a recipient, or an official of ED may be authorized only when it is necessary to meet programmatic objectives, or to conserve grant funds, or when it is otherwise essential in the public interest. (c) Except as provided in paragraph (d) of this section, a deviation from this part may be made only when authorized by the Secretary. § 74.7 Special grant or subgrant conditions. (a) Without regard to the deviation control procedures of § 74.6, special grant conditions more restrictive than those prescribed in this Part 74 may be imposed as needed when ED has determined that the grantee: (1) Is financially unstable, (2) Has a history of poor performance, or (3) Has a management system which does not meet the standards of this part. (b) When special conditions are imposed under paragraph (a) of this section, the grantee will be notified in writing: (1) Why the special conditions were imposed and (2) What corrective action is needed. Furthermore, in accordance with OMB Circulars A-102 and A-110, OMB and other Federal agencies in a granting relationship with the grantee will be provided copies of the notice to the grantee. (c) Grantees may apply the provisions of paragraphs (a) and (b) of this section to their subgrantees. Whenever they do so, a copy of the notice to the subgrantee shall be furnished to ED. Subpart B-Cash Depositories § 74.10 Physical segregation and eligibility. Except as provided in § 74.11, awarding parties shall not impose grant or subgrant terms which: (a) Require the recipient to use a separate bank account for the deposit of grant or subgrant funds, or (b) Establish any eligibility requirements for banks or other financial institutions in which recipients deposit grant or subgrant funds. § 74.11 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. A checks-paid basis letter of credit is one under which funds are not drawn until the recipient's checks have been presented to its bank for payment. (See Subpart K for definition of "letter of credit.") § 74.12 Minority-owned banks. Consistent with the national goal of expanding opportunities for minority business enterprises, grantees and subgrantees are encouraged to use minority-owned banks. Upon request, ED will furnish a list of minority-owned banks. Subpart C-Bonding and Insurance 874.15 General. In administering grants and subgrants, recipients shall observe their regular requirements and practices with respect to bonding and insurance. No additional bonding and insurance requirements, including fidelity bonds, shall be imposed by the terms of the grant or subgrant except as provided in §§ 74.16 through 74.18. § 74.16 Construction and facility improvement. (a) Scope of this section. This section covers requirements for bid guarantees, performance bonds, and payments bonds when the recipient will contract for construction or facility improvement (including alterations and renovations of real property) under a grant or subgrant. (b) Definitions. (1) “Bid guarantee” means a firm commitment such as a bid bond, certified check, or other negotiable instrument accompanying a bid as assurance that the bidder will, if its bid is accepted, execute the required contractual documents within the time specified. (2) "Performance bond" means a bond executed in connection with a contract to secure fulfillment of all the contractor's obligations under the contract. (3) "Payment bond" means a bond executed in connection with a contract to assure payment as required by law of all persons supplying labor and material in the execution of the work provided for in the contract. (c) Bids and contacts of $100,000 or less. The recipient shall follow its own requirements and practices relating to bid guarantees, performance bonds, and payment bonds. (d) Bids and contracts exceeding $100,000. The recipient may follow its own regular policy and requirements if the Secretary has determined that the Federal Government's interest will be adequately protected. If this determination has not been made, the minimum requirements shall be as follows: (1) A bid guarantee from each bidder equivalent to 5 percent of the bid price; (2) A performance bond on the part of the contractor for 100 percent of the contract price; and (3) A payment bond on the part of the contractor for 100 percent of the contract price. § 74.17 Fidelity bonds. (a) If the grantee is not a government, ED may require it to carry adequate fidelity bond coverage where the absence of coverage for the grantsupported activity is considered as creating an unacceptable risk. (b) If the subgrantee is not a government, ED or the grantee may require that it carry adequate fidelity bond coverage where the absence of coverage for the subgrant-supported activity is considered as creating an unacceptable risk. (c) A fidelity bond is a bond indemnifying the recipient against losses resulting from the fraud or lack of integrity, honesty or fidelity of one or more employees, officers or other persons holding a position of trust. § 74.18 Source of bonds. Any bonds required under § 74.16(d)(1) through (3) or § 74.17 shall be obtained from companies holding certificates of authority as acceptable sureties (31 CFR, Part 223). A list of these companies is published annually by the Department of the Treasury in its Circular 570. Subpart D-Retention and Access Requirements for Records § 74.20 Applicability. (a) Except as provided in paragraph (b) of this section, this subpart applies to all financial and programmatic records, supporting documents, statistical records and other records of re cipients and of contractors and subcontractors under grants and subgrants, which are: (1) Required to be maintained by the terms of an ED grant, or (2) Otherwise reasonably considered as pertinent to an ED grant. (b) This subpart does not apply to records maintained by the contractor or subcontractor for any of the following types of awards it has received under a grant or subgrant: (1) Any contract or subcontract of $10,000 or less, or (2) Any contract or subcontract awarded using the formal advertising method of procurement, whether or not required to be so awarded, or (3) Any subcontract awarded under a contract or subcontract described in paragraph (b)(2) of this section. § 74.21 Length of retention period. (a) Except as provided in paragraphs (b) and (c) of this section, records shall be retained for 3-years from the starting date specified in § 74.22. (b) If any litigation, claim, negotiation, audit or other action involving the records has been started before the expiration of the 3-year period, the records shall be retained until completion of the action and resolution of all issues which arise from it, or until the end of the regular 3-year period, whichever is later. (c) In order to avoid duplicate recordkeeping, awarding parties may make special arrangements with recipients to retain any records which are continuously needed for joint use. The awarding party will request transfer of records to its custody when it determines that the records possess long-term retention value. When the records are transferred to or maintained by the awarding party the 3year retention requirement is not applicable to the recipient. § 74.22 Starting date of retention period. (a) General. (1) Where ED grant support is continued or renewed at annual or other intervals, the retention period for the records of each funding period starts on the day the grantee submits to ED its single or last expenditure report for that period. However, if ED grant support is con tinued or renewed quarterly, the retention period for each year's records starts on the day the grantee submits to ED its expenditure report for the last quarter of the Federal fiscal year. In all other cases, the retention period starts on the day the grantee submits its final expenditure report to ED. If an expenditure report has been waived, the retention period starts on the day the report would have been due. "Expenditure report" is defined in § 74.3. (2) Exceptions to this paragraph are contained in paragraphs (b) through (d) of this section. (b) Equipment records. The retention period for the equipment records required by § 74.140(a) starts from the date of the equipment's disposition (§ 74.139) or replacement (§ 74.138) or transfer at the direction of the awarding party (§ 74.136). (c) Records for income transactions after grant or subgrant support. (1) In some cases an ED requirement concerning the disposition of program income, as defined in Subpart F of this part, will be satisfied by applying the income to costs incurred after expiration or termination of grant or subgrant support for the activity giving rise to the income. In such a case, the retention period for the records pertaining to the costs starts from the end of the recipient's fiscal year in which the costs are incurred. (2) In some cases, there may be an ED requirement concerning the disposition of copyright royalties or other program income which is earned after expiration or termination of grant or subgrant support. Where there is such a requirement, the retention period for the records pertaining to the earning of the income starts from the end of the recipient's fiscal year in which the income is earned. (See Subpart F of this part.) (d) Indirect cost rate proposals, cost allocation plans, etc.—(1) Applicability. This paragraph applies to the following types of documents, and their supporting records: (i) Indirect cost rate computations or proposals; (ii) Cost allocation plans under Appendix C to this part; and |