(ii) Accept or modify a plan submitted pursuant to paragraph (e) of this section.

(4) The State agency shall notify the applicant in writing of the level of uncompensated services which it has established for the applicant for the fiscal year. At the time of notifying the applicant, the State agency shall also publish as a public notice in a newspaper of general circulation within the community served by the applicant the rate that has been established, a statement that the documents upon which the agency based its determination are available for public inspection at a location and time prescribed, and that persons wishing to object to the rate can do so by writing to the State agency within 20 days after publication of the notice.

(5) The applicant or any person or persons residing or located within the area served by the applicant, or any organization on behalf of such person or persons, may submit to the State agency within 20 days of the publication and sending of the notice objections to the rate established by the State agency for the applicant. Such objections may be supported in writing by factual information and argument. The State agency shall give public notice of other receipt of the objections and shall make the objections and their supporting documents available for public inspection and comment. It may, if it believes that determination of the objections will be assisted by oral evidence or by oral argument, set a public hearing on the objections and shall give notice of such hearing to all interested parties and to the public. The State agency shall within 60 days of the expiration of the period within which objections may be filed, rule upon the objections in writing, stating its reason for sustaining or overruling them, in whole or in part, and establishing finally the rate of uncompensated services either the same as, above, or below the rate previously established, as may best accord with all of the evidence on file with or heard by the State agency. Notice of the final determination shall be mailed to all parties who filed objections or who participated in the proceedings leading to the redetermination.

(6) Within 20 days of receipt of written notice of the final determination of a State agency after ruling on objections to the rate established by the State agency, the applicant or any other interested person or organization may submit

to the Secretary a written request for review of the State agency determination. Such review shall be made upon the record of the State agency determination which shall be sustained if supported by substantial evidence and is not otherwise arbitrary or capricious. If the Secretary or his designee determines that the rate established by the State agency is unsupported by the evidence in the record or is otherwise arbitrary or capricious, the Secretary or his designee shall, upon the basis of the record or upon other evidence or information which is before him or which he may obtain, establish a level of uncompensated services which he determines, in accordance with the criteria set out in subparagraph (2) of this paragraph, is appropriate.

(7) The level of uncompensated services established for an applicant under this section for any fiscal year shall constitute a reasonable volume of services to persons unable to pay therefor with respect to such applicant for such fiscal year.

(i) Evaluation and enforcement. The State plan shall provide for evaluation and enforcement of the assurance in accordance with the following requirements:

(1) The State agency shall, (i) at least annually, perform evaluations of the amount of the various services provided in each facility with respect to which Federal assistance has been provided under the Act, to determine whether such assurance is being complied with; and (ii) establish procedures for the investigation of complaints that such assurance is not being complied with.

(2) Evaluation pursuant to subparagraph (1) of this paragraph shall be based on the annual budget of each facility for uncompensated services and on financial statements of such facilities filed pursuant to section 646 of the Act and § 53.128(q), and on such other information, including reports of investigations and hearing decisions, as the State agency deems relevant and material.

(3) The State plan shall provide for adequate methods of enforcement of the assurance, including effective sanctions to be applied against any facility which fails to comply with such assurance. Such sanctions may include, but need not be limited to, license revocation, termination of State assistance, and court action.

(j) Reports. (1) The State agency shall, not less often than annually, report in writing to the Secretary its evaluation of each facility's compliance with the assurance, the disposition of each complaint received by the State agency, proposed remedial action with respect to each facility found by the State agency to be not in compliance with the assurance, and the status of such remedial action.

(2) In addition, the State agency shall promptly report to the Regional Attorney and Regional Health Director of the Department of Health, Education, and Welfare the institution of any legal action against a facility or the State agency involving compliance with the assurance. [37 F.R. 14721, July 22, 1972]

§ 53.112 Community service; nondis

crimination.

(a) Before an application under this part is recommended by a State agency to the Secretary for approval, the State agency shall obtain assurances from the applicant that:

(1) The facility will furnish a community service; and

(2) All portions and services of the entire facility for the construction or modernization of which, or in connection with which, aid under the 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.

(b) Each construction contract is subject to the condition that the applicant shall comply with the requirements of Executive Order 11246, September 24, 1965 (30 F.R. 12319), relating to nondiscrimination in construction contract employment, and the applicable rules, regulations, and procedures prescribed pursuant thereto.

(c) Attention is called to the requirement of title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d; 78 Stat. 252) 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. A regulation implementing such title VI, applicable to assistance under this part 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).

§ 53.121

General; review and comment by areawide health planning agencies.

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

(b) Prior to submission of the State plan or any modifications thereof to the Secretary, the State agency shall submit such plan or modifications for review and comment to each agency or organization which has developed an areawide health plan pursuant to section 314(b) of the Public Health Service Act with respect to any area in such State for which there is no such agency or organization, to the State agency administering or supervising the administration of the State plan approved under section 314(a) of the Public Health Service Act. Comments from any such agency received by the State agency within 30 days after such submission shall be considered by the State agency prior to submission of the State plan to the Secretary.

Subpart M-Methods of Administration of the State Plan § 53.122 Construction program.

The State programs for hospitals, facilities for long-term care, outpatient facilities, 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, outpatient facilities, 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, outpatient facility, 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, outpatient facilities, 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 30 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. The State plan shall provide for the establishment and maintenance of personnel standards on a merit basis for persons employed in the administration of the State plan. Conformity with the Standards for a Merit System of Personnel Administration, 45 CFR Part 70, including any amendments thereto, and any standards prescribed by the U.S. Civil Service Commission pursuant to section 208 of the Intergovernmental Personnel Act of 1970 (Public Law 91-648; 84 Stat. 1915) modifying or superseding such Standards, will be deemed to meet this requirement as determined by said Commission.

(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 employee 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, outpatient facilities, 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).

§ 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 Act, and shall provide for enforcement of such standards.

§ 53.127 Application; submittal; amendment; processing.

(a) Submittal of application. Applications for grants, loan guarantees, and direct loans under the Act, including both detailed narrative descriptions and detailed estimates of the cost of the respective projects, shall be submitted to the Secretary through the State agency in such form as the Secretary may prescribe.

(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, loan guarantee, and direct loan 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 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 con

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struction 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 source to pay the cost of the project, and permit audit of such records and accounts at any reasonable times. All records shall be retained for 3 years after the close of the fiscal year in which construction is completed. Such records may be destroyed at the end of such 3-year period if the applicant has been notified of the completion of the Federal audit by such time. If the applicant has not been so notified by the end of such 3-year period, such records shall be retained (1) for 5 years after the close of the fiscal year in which construction is completed or (2) until the grantee is notified of the completion of the Federal audit, whichever comes first. In all cases where audit questions have arisen before the expiration of such 5-year period, records shall be retained until resolution of all such questions;

(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 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 8 hours in any calendar day or 40 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 set forth in "DHEW Requirements for Federally Assisted Construction Contracts Regarding Labor Standards and Equal Employment Opportunities," Form DHEW 514 (April 1969) (issued by the Office of Grants Administration Policy, U.S. Department of Health, Education, and Welfare) pertaining to the Davis-Bacon Act, the Contract Work Hours Standards Act, and the Copeland Act (Anti-Kickback) Regulations, except in the case of contracts in the amount of $2,000 or less; and pertaining to Executive Order 11246, September 24, 1965 (30 F.R. 12319), relating to nondiscrimination in construction contract employment, except in the case of contracts in the amount of $10,000 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) (1) That, in the case of any project for construction or modernization of a general hospital, there will be adequate provision for extended care services to patients of such hospital when such serv

ices are medically appropriate for them. Subject to the provisions of subparagraph (2) of this paragraph, such services must be provided in facilities which

(i) Are structurally part of, physically connected with, or in immediate proximity to, such hospital; and

(ii) Either are under the supervision of the professional staff of such hospital or have organized medical staffs and have in effect written transfer agreements with such hospital which provide for:

(a) The transfer of patients between the hospital and the long-term care facility (s) whenever such transfer is determined to be medically appropriate;

(b) The exchange between the facilities of appropriate medical and other information relating to the care and treatment of patients;

(c) Prompt initiation of transfer of the patient to the hospital for acute care should there be a reversal in the patient's medical condition requiring more intensive medical and nursing care;

(d) The amount and types of services offered in the long-term care facility (s) which correspond to those specified for reimbursement eligibility for the skilled nursing home care category under titles XVIII and XIX of the Social Security Act, as amended; and

(e) The general availability of the medical, diagnostic, and rehabilitative services of the hospital to any patient of the long-term care facility (s) who requires them.

(2) The Secretary may, at the request of the State agency, waive compliance with the requirements of subparagraph (1) (i) or (ii), or both of this paragraph, in the case of any project if the State agency has determined that compliance with such subsection or subsections would be inadvisable;

(0) That, in the case of any project for construction or modernization of an outpatient facility, the services of a general hospital will be available to patients of such outpatient facility who are in need of hospital care. Such assurance may be provided by a written transfer agreement with one or more general hospitals which provides for

(1) The transfer of patients from the outpatient facility to the general hospital where such transfer is determined to be medically appropriate;

(2) The exchange of appropriate medical and other information relating to