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vestigation; (6) supervision and inspection at the site; (7) fixed equipment; (8) movable equipment; and (9) other costs specifically approved in the application.

(c) Federal funds shall not be available for the costs of offsite improvements. § 404.28 Construction payments.

Payments will be made on the basis of a certification by a qualified individual as to the amounts due the applicant for the cost of work performed and materials and equipment furnished. Such certification shall be based on 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. Payments shall be made at periodic intervals consistent with the construction progress of the project. In extraordinary circumstances when necessary to maintain construction progress, advance payments may be made. Final payments shall not be made until after completion of the project.

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Pursuant to section 203 of the Intergovernmental Cooperation Act of 1968 (Public Law 90-577), a State, as defined in section 102 of that Act, will not be held accountable for interest earned on grant funds, pending their disbursement for program purposes. A State, as defined in the Intergovernmental Cooperation Act, section 102, means any one of the several States, the District of Columbia, Puerto Rico, any territory or possession of the United States, or any agency or instrumentality of a State, but does not include the governments of the political subdivisions of the State. All other grantees must return to the Social and Rehabilitation Service all interest earned on grant funds.

§ 404.30 Construction standards.

Approved projects shall be constructed according to minimum standards of construction and equipment for rehabilitation facilities specified by the Administrator. Applicable State and local codes and regulations must be observed. The Administrator's standards must be followed where they exceed any State and local codes and regulations.

§ 404.31 Recovery: good cause for other use of facility.

(a) If, within 20 years after completion of any construction project for

which funds have been paid under this subpart, the rehabilitation facility shall cease to be a public or other nonprofit rehabilitation facility, the United States shall be entitled to recover from the applicant or other owner of the facility the amount bearing the same ratio to the then value (as determined by agreement of the parties or by action brought in the U.S. district court for the district in which such facility is situated) of the facility, as the amount of the Federal participation bore to the cost of construction of such facility.

(b) In determining whether there is good cause for releasing the applicant or other owner of the facility from its obligation, the Administrator shall take into consideration the extent to which:

(1) 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 act; or

(2) There are reasonable assurances that for the remainder of the 20-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.

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§ 404.42 Eligibility of rehabilitation facilities.

Initial staffing grants may be made only with respect to operation of a rehabilitation facility following construction. Preference shall be given to the staffing of rehabilitation facilities constructed with assistance under Subpart C of this part. Where the rehabilitation facility was in operation prior to construction, an initial staffing grant shall be made only for additional staff which enables the facility to provide new services or extend existing services to a substantially increased number of clients. Where the construction consists of remodeling, renovation, or alteration of an existing rehabilitation facility, such remodeling, renovation, or alteration shall be extensive enough to result in the addition of new services or the extension of existing services to a substantially increased number of handicapped individuals. If the requirements for a grant are met in each instance, there shall be no maximum number of initial staffing grants for which a rehabilitation facility may be eligible.

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The application for initial staffing grants may be made prior to the commencement of operation of a rehabilitation facility or during the 15-month period following the commencement of operation of the facility. Applications shall be in the form and detail required by the Administrator. The project application shall include (a) a narrative description of the rehabilitation facility's existing program services and staff; (b) a list of job titles and job specifications of staff positions for which assistance is requested; (c) estimates of salary needs for the initial 15 months of assistance and for the following 3-year period; (d) a financial statement for the most recent year of operation; (e) a narrative description of the need for personnel; (f) a narrative description of the related construction project; (g) evidence of new services or of the extension of services to an additional number of clients; (h) a description of the facility's plans for assuming the full cost of staffing at the termination of the grant; (i) in the case of a grant for a private, nonprofit rehabilitation facility which is or which includes a workshop, assurance that applicable Federal and State wage and hour standards will be observed or, in the case of a grant for a rehabilitation facility which

is or which includes a workshop, and is operated by a State, county, or municipal government, assurance that the facility will comply with wage and hour standards specified by the Administrator, which will be at least equal to those imposed by the Fair Labor Standards Act; (j) assurance that the rehabilitation facility meets safety standards specified by the Administrator; (k) assurance that salaries are commensurate with the duties performed; (1) proposed starting date for the staffing project; (m) an agreement to make such financial and administrative reports and to make such records and accounts as the Administrator may require and to make such records and accounts available for audit purposes; and (n) such other information as the Administrator may require. § 404.44 Approval of State agency.

(a) The applicant shall be responsible for securing the advice and assistance of the appropriate State vocational rehabilitation agency or agencies in the development of an application. Each application shall be reviewed by the appropriate State agency or agencies for approval. Approved applications shall be forwarded to the Regional Commissioner for review for approval.

(b) The approval by the State vocational rehabilitation agency or agencies shall contain or be accompanied by a statement indicating the relationship of the project to the purposes and priorities established in the State rehabilitation facilities plan and shall indicate the manner and extent to which the project will increase the scope and effectiveness of rehabilitation programs within the State with specific reference to the program of the State agency.

(c) Each applicant shall be notified in writing of the action on the application. Where an application is disapproved by the State agency, the applicant shall be notified by the State agency, giving the reasons for disapproval, and the State agency shall forward a copy of such notification to the Social and Rehabilitation Service.

§ 404.45 Federal financial participation.

The amount of Federal financial participation under an initial staffing grant shall be related directly to the date of the commencement of the operation of the rehabilitation facility. The date of commencement of operation of a rehabilitation facility shall be that date on

which the first client is admitted for services after the completion of the related construction project or such earlier date after completion of such project as is specified in the approved application for the initial staffing grant. A grant shall not exceed 75 per centum of eligible compensation costs (including salary and fringe benefits) for the period ending with the close of the 15th month following the month in which such operation commenced, 60 per centum of such costs for the first year thereafter, 45 per centum of such costs for the second year thereafter, and 30 per centum of such costs for the third year thereafter.

§ 404.46 Payments.

Payment of the Federal share of the costs of the initial staffing project shall be made quarterly, or for such other period as the Administrator may determine, as an advance for estimated costs or as reimbursement to the grantee. § 404.47

Interest.

Pursuant to section 203 of the Intergovernmental Cooperation Act of 1968 (Public Law 90-577), a State, as defined in section 102 of that Act, will not be held accountable for interest earned on grant funds, pending their disbursement for program purposes. A State, as defined in the Intergovernmental Cooperation Act, section 102, means any one of the several States, the District of Columbia, Puerto Rico, any territory or possession of the United States, or any agency or instrumentality of a State, but does not include the governments of the political subdivisions of the State. All other grantees must return to the Social and Rehabilitation Service all interest earned on grant funds.

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termination of the grant. Upon termination or completion of a project, the proportion of unexpended funds attributable to the Federal grant shall be refunded. Subpart E-Rehabilitation Facility Improvement Grants

404.50 Purpose.

Rehabilitation facility improvement grants authorized in section 13(b) of the act shall be made for paying part of the cost of projects for rehabilitation facilities to analyze, improve, and increase their professional services to the handicapped, their business management or any other part of their operations affecting their capability to provide employment and services for the handicapped. § 404.51 Eligible applicants.

Any public or other nonprofit rehabilitation facility which has been in operation for at least 12 months (or an organization directly responsible for operation of such a rehabilitation facility) shall be eligible to apply for a rehabilitation facility improvement grant.

§ 404.52 Applications.

Applications for rehabilitation facility improvement grants may be made at any time. Applications shall be made in the form and detail required by the Administrator. The project application shall include (a) a detailed description of the present program within the rehabilitation facility and of existing needs for improvement; (b) a statement of the extent to which the rehabilitation facility improvement grant will make possible such improvement; (c) a proposed project budget; (d) in the case of a grant for a private, nonprofit rehabilitation facility which is or which includes a workshop, assurance that applicable Federal and State wage and hour standards will be observed or, in the case of a grant for a rehabilitation facility which is or which includes a workshop and is operated by a State, county, or municipal government, assurance that the facility will comply with wage and hour standards specified by the Administrator which will be at least equal to those imposed by the Fair Labor Standards Act; (e) assurance that the rehabilitation facility meets safety standards prescribed by regulations of the Secretary of Labor; (f) an agreement to make such administrative and financial reports and to keep such records and accounts as the Administrator may require and to make

such records and accounts available for audit purposes; (g) a description of plans for maintaining the improvement after the expiration of the period of Federal assistance; and (h) such other information as the Administrator may require. Applications for grants for salary assistance shall also include (i) a description of how existing staff are and will be utilized; (j) description of qualifications and utilization of additional staff; and (k) assurance that salaries of staff assisted through the grant will be commensurate with the duties performed.

§ 404.53 Review by State agency.

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(a) The applicant shall be responsible for securing the advice and assistance of the appropriate State vocational rehabilitation agency or agencies in the development of an application. Each application shall be reviewed by the appropriate State vocational rehabilitation agency or agencies prior to forwarding to the Regional Commissioner for review for approval.

(b) The State agency or agencies shall make recommendations for approval or disapproval, and shall indicate the relationship of the project to the purposes and priorities established in the State rehabilitation facilities plan and the manner and extent to which the project will increase the scope and effectiveness of rehabilitation programs within the State with specific reference to the program of the State agency.

(c) Each applicant shall be notified in writing of the action on the application, by the Social and Rehabilitation Service.

§ 404.54

Federal financial participation. Federal financial participation shall be available for the following types of expenditures under approved projects: (a) Staff salary assistance (including fringe benefits) in the employment of additional staff; (b) staff development activities, including educational leave; (c) studies by a recognized expert or consultant concerning the professional or business practices within the rehabilitation facility; (d) purchase or rental of equipment; and (e) other forms of assistance to rehabilitation facilities to carry out the purposes of this subpart as may be approved in the application. Federal financial participation shall not be available to pay costs of acquiring, construct

ing, expanding, remodeling, or altering any building. Federal financial participation shall not exceed 90 per centum of the total project cost for the first year of each project and may decrease in each subsequent year in which continuation support is provided.

§ 404.55 Grant awards.

All grant awards shall be in writing, shall set forth the amount of funds granted, and shall constitute for such amounts the encumbrances of Federal funds available for such purpose on the date of the award. The initial award shall also specify the project period (not in excess of 3 years) for which support is contemplated if the activity is satisfactorily carried out and Federal funds are available. For continuation support, grantees must make separate application in the form and detail prescribed by the Administrator.

§ 404.56 Distribution of funds.

Federal funds available for rehabilitation facility improvement grants (except for a reserve for priority projects) will be distributed initially each year to each region on the basis of population, with a view to making grants available for rehabilitation facilities in each State. Funds may be redistributed from time to time during the year if they are not to be used within the region.

§ 404.57 Payments.

Payments of the Federal share of the cost of the rehabilitation facility improvement project shall be made quarterly, or for such other period as the Administrator may determine, as an advance for estimated costs or as reimbursement to the grantee.

§ 404.58 Interest.

Pursuant to section 203 of the Intergovernmental Cooperation Act of 1968 (Public Law 90-599), a State, as defined in section 102 of that Act, will not be held accountable for interest earned on grant funds, pending their disbursement for program purposes. A State, as defined in the Intergovernmental Cooperation Act, section 102, means any one of the several States, the District of Columbia, Puerto Rico, any territory or possession of the United States, or any agency or instrumentality of a State, but does not include the governments of the political

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If for any reason the grantee discontinues an approved project, the grantee shall notify the Regional Commissioner and the State agency in writing, giving the reasons for termination, an accounting of funds granted for the project, and other pertinent information. The grant may be terminated in whole or in part, at any time at the discretion of the Adminstrator. The grantee and the State agency will be given prompt notice of the termination, including the reasons therefor. Such termination shall not affect obligations incurred prior to the termination of the grant. Upon termination or completion of a project, the proportion of unexpended funds attributable to the Federal grant shall be refunded. Subpart F-Technical Assistance to Rehabilitation Facilities

§ 404.65 Furnishing of technical assist

ance.

Technical assistance authorized in section 13(c) of the act will be furnished, directly, or by contract with State vocational rehabilitation agencies or experts or consultants or groups thereof to provide technical assistance and consultation to public and other nonprofit rehabilitation facilities. Such technical assistance may be in such areas as the provision of medical, psychological, social, vocational, and other rehabilitation services within rehabilitation facilities; the utilization of subprofessional and support personnel within rehabilitation facilities; vocational evaluation and work adjustment techniques and practices; plant layout, contract procurement wage standards, industrial engineering, systems accounting, planning for efficient production on new contracts, work simplification, labor relations, and quality control.

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§ 404.70

Appointment and composition. The National Policy and Performance Council shall consist of 12 members not otherwise in the full-time regular employ of the United States and appointed by the Secretary without regard to civil service laws. The Secretary shall, from time to time, appoint one of the members to serve as chairman. The appointed members shall be selected from among leaders in the vocational rehabilitation and workshop fields, State and local government, business and from among representatives of related professions, labor leaders, and the general public. § 404.71 Term of office.

Each appointed member shall hold office for a term of 4 years except that any member appointed to fill a vacancy occurring prior to the expiration of the term for which his predecessor is appointed shall be appointed for the remainder of such term; and except that, of the members first appointed, three shall hold office for a term of 3 years, three shall hold office for a term of 2 years, and three shall hold office for a term of 1 year, as designated by the Secretary at the time of appointment. No

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