the financial interests of the United States.

(b) Direct Loan Agreement. (1) For each application for a direct loan which is approved by the Secretary, an offer of a direct loan will be sent to the applicant, setting forth the pertinent terms and conditions for the direct loan, and will be conditioned upon the fulfillment of those terms and conditions. The accepted direct loan offer will constitute the Direct Loan Agreement between the Secretary and the applicant.

(2) Each Direct Loan Agreement shall include such provisions as the Secretary finds necessary in order to protect the financial interests of the United States. § 53.153

Loan closing.

(a) Loan guarantees. Closing for any loan with respect to which a guarantee is made shall be accomplished at such time as may be agreed upon by the parties to such loan and found acceptable by the Secretary.

(b) Direct loans. Closing for any direct loan shall be accomplished at such time as may be determined by the Secretary.

§ 53.154 Waiver of right of recovery.

In determining whether there is good cause for waiver of any right of recovery which he may have against a nonprofit private agency by reason of any payments made pursuant to a loan guarantee, or against a public agency by reason of the failure of such agency to make payments of principal and interest on a direct loan to such agency, the Secretary shall take into consideration the extent to which:

(a) The facility with respect to which the loan guarantee or direct loan was made will continue to be devoted by the applicant or other owner to use for the purpose for which it was constructed or another public or nonprofit purpose which will promote the purposes of the Act;

(b) There are reasonable assurances that for the remainder of the repayment period of the loan 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; and

(c) Such recovery would seriously curtail the provision of medical services to persons in need of such services in the area.

§ 54.1 Definitions.

As used in this part:

(a) All terms shall have the same meaning as given them in the Act.

(b) "Act" means the Mental Retardation Facilities and Community Mental Health Center Construction Act of 1963. (P.L. 88-164.)

(c) "Affiliated hospital" means a hospital which has a written agreement with a college or university providing for effective control by such college or university of the teaching in the hospital.

(d) "Equipment" includes those items which are necessary for the functioning of the facility, but does not include items of current operating expense such as food, fuel, drugs, paper, printed forms, and soap.

(Sec. 122, 77 Stat. 284; 133, 77 Stat. 287; 42 U.S.C. 2662, 2673; Rev. Stat. sec. 161, 5 U.S.C. 22) [29 F.R. 12647, Sept. 5, 1964, as amended at 32 FR. 5676, April 7, 1967]

§ 54.2 Eligibility.

In order to be eligible for consideration for grant assistance:

(a) The application must be for construction of a public or other nonprofit clinical facility for the mentally retarded which will provide, as nearly as practicable, a full range of inpatient and outpatient services for the mentally retarded and which will either:

(1) Aid in the clinical training of physicians and other specialized personnel needed for research, diagnosis and treatment, education, training, or care of the mentally retarded; or

(2) Aid in demonstrating provision of specialized services for the diagnosis and treatment, education, training or care of the mentally retarded.

(b) The applicant must either (1) be a college or university, or an affiliated hospital, which will own and operate a facility for the mentally retarded, or (2) have a written agreement, not of a temporary nature, with a college or university or with an affiliated hospital providing, to the extent practicable, for the integration of the functions and activities of the facility for the mentally retarded with the programs of the college or university or of an affiliated hospital, through, but not limited to, the joint use of certain facilities, services, and equipment, the planning of curriculum and course work for the joint training of personnel, and the interchange of teaching staff and students.

§ 54.3 Nondiscrimination in construction

contracts.

Each construction grant shall be subjusted to the condition that the grantee shall comply with the requirements of, and give the assurances required of, Executive Order 11114, June 22, 1963, 3 CFR, 1959-1963 Comp. (28 F.R. 6485), and the applicable rules, regulations and procedures prescribed pursuant thereto by the President's Committee on Equal Employment Opportunity, 41 CFR Part 60-1 (28 F.R. 9812).

§ 54.4

Terms and conditions.

In addition to any other requirements imposed by law or determined by the Surgeon General to be reasonably necessary with respect to a particular project or projects to fulfill the purpose of the grant, each construction grant shall be subject to the condition that the applicant will furnish and comply with the following assurances. The Surgeon General may, at any time, approve exceptions to these terms and conditions where he finds that such exceptions are consistent with the Act and the purposes of the program:

(a) That applicant (or the public or nonprofit agency which is to operate the facility) has 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 Surgeon General's approval of the final working drawings and specifications, which conform to the general standards of construction and equipment (§ 54.7), 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 Surgeon General, upon written justification by the applicant, to be required by the needs of the program.

(d) That applicant will enter into no contruction 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 Surgeon General;

(e) That applicant will finance all costs in excess of the estimated costs approved in the application and submit to the Surgeon General 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 grant 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 time;

(h) That applicant will furnish progress reports and such other information as the Surgeon General 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 nonfederal 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) That for not less than 20 years after completion of construction the facility will continue to be (1) a public or nonprofit facility for the mentally retarded, and (2) owned and operated by the college or university, or associated with the college or university, as provided in § 54.2(b).

(m) (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 in accordance with the Davis-Bacon Act (40 U.S.C. 276a-276a-5) 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 work week in excess of eight hours in any calendar day or forty hours in the work week (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 "Labor Standards for United States Public Health Service Construction Grant Programs" PHS No. 930-A-5 pertaining to the Copeland Act (Anti-Kickback) Regulations and Labor Standards (prevailing rates of pay and overtime requirements) except in the case of contracts in the amount of $2,000 or less;

(ii) The contractor shall furnish performance and payment bonds 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 Public Health Service and such other persons as the Surgeon General may designate, 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.

(Sec. 122, 77 Stat. 284; 133, 77 Stat. 287; 42 U.S.C. 2662, 2673; Rev. Stat. sec. 161, 5 U.S.C. 22) [29 F.R. 12647, Sept. 5, 1964, as amended at 32 F.R. 5676, April 7, 1967]

§ 54.6 Good cause for other use of completed facilities.

If, within twenty years after the completion of construction of any facility with respect to which a construction grant has been made, the facility shall cease to be a public or other nonprofit facility for the mentally retarded, the Surgeon General, in determining whether there is good cause for releasing the applicant or other owner from the obligation to continue as such a facility, shall take into consideration the extent to which:

(a) The facility will be devoted by the applicant or other owner to the provision of comprehensive health services, demonstrations, or clinical training comparable to that provided for the mentally retarded, and the failure of the facility to continue as a public or other nonprofit facility for the mentally retarded was reasonably beyond the control of the applicant; or

(b) There are reasonable assurances that for the remainder of the twentyyear period, other facilities not previously utilized for providing services to the mentally retarded, or for demonstrating the provision of specialized services for the mentally retarded or in the clinical training of physicians and other specialized personnel needed for research, diagnosis and treatment, education, training, or care of the mentally retarded will be so utilized and are substantially the equivalent in nature and extent for such purposes.

(a) Using the latest available published data from the Department of Commerce, Bureau of the Census, each State shall determine what percentage of families living in each catchment area within its territorial borders have incomes below the poverty level described in subparagraph (2) of this paragraph.

(1) The term "catchment area" means a geographic area designated by a State which is served or will be served by an existing or proposed community mental health center.

(2) In determining the poverty level, the following standards shall be used: (i) Revised OEO income Poverty Guidelines (Published in OEO Instructions, No. 6004-1.b., dated Dec. 1, 1970) for the 50 States and the District of Columbia. Those Guidelines are as follows:

ALL STATES (INCLUDING THE DISTRICT OF COLUMBIA) EXCEPT ALASKA AND HAWAII

2

3.

4.

5.

Family size

ALASKA

Nonfarm family

Farm family

$2,400

$2,000

For families with more than five members, add $750 for each additional member in a nonfarm family and $625 for each additional member in a farm family.

For families with more than five members, add $650 for each additional member in a nonfarm family and $525 for each additional member in a farm family.

(ii) Income poverty levels established by territorial or commonwealth governments for the following: American Samoa, Guam, Puerto Rico, Trust Territories of the Pacific Islands, and the Virgin Islands.

(b) Each State shall rank its catchment areas according to the percentage of families whose incomes fall below the poverty level in each area. The catchment area in each State with the highest percentage of families whose incomes fall below the poverty level shall be designated as number 1, and areas with lower percentages of such families shall be arrayed in ascending numerical order. § 54.102 Designation of poverty areas.

The Secretary will designate as poverty areas a percentage of catchment areas in each State to be determined as follows:

(a) The percentage of poverty catchment areas for each State shall be determined by subtracting 25 percent from each State's Federal percentage.

(b) The State's Federal percentage is the percentage established pursuant to section 401 (i) of the Mental Retardation Facilities and Community Mental Health Centers Construction Act of 1963 (42 U.S.C. 2661 et seq.) (hereinafter referred to as the "Act"), and promulgated in 33 F.R. 18593, for fiscal years 1971 and 1972.

EXAMPLE: If the Federal percentage for State X is 50 percent, 25 percent would be subtracted, leaving a balance of 25 percent. This means that the highest ranking 25 percent of the catchment areas listed by each State pursuant to § 54.101 (b) would be designated as poverty areas.

§ 54.103 Additional poverty area designations.

(a) An applicant for a grant under any program authorized by Title II of the Act who wishes to serve a catchment

area which was not designated as an urban or rural poverty area in accordance with the above procedures may apply to the Secretary to have such area designated as a poverty area under the provisions of section 410 of the Act.

(b) The Secretary shall add the area in question to the list of poverty areas with respect to the particular project if the applicant demonstrates to the Secretary's satisfaction that:

(1) At least one-half the population of the catchment area lives in one or more impoverished subareas.

(2) The percentage of families with incomes below the poverty level (as determined in accordance with § 54.101 (a)) who lives in these subareas is at least one and one-half times greater than the percentage of families with incomes below the poverty level living in the lowest ranked area for that State which has been designated as a poverty area pursuant to section 54.102.

(3) The project, facility, or program of services for which the applicant seeks support does, or will, focus on the needs of persons living in such subareas of poverty.

Subpart C-Grants for Construction of Community Mental Health Centers

AUTHORITY: The provisions of this Subpart C issued under sec. 203, 77 Stat. 291; 42 U.S.C. 2683. Secs. 200 to 207, 401-407, 77 Stat. 290294, 296-299; 42 U.S.C. 2681-2687, 2691-2696.

SOURCE: The provisions of this Subpart C appear at 29 F.R. 5951, May 6, 1964, unless otherwise noted.

§ 54.201 Definitions.

As used in this subpart all terms not defined herein shall have the same meaning as indicated in the Act.

(a) "Act" means the Mental Retardation Facilities and Community Mental Health Centers Construction Act of 1963 (Pub. Law 88-164).

(b) "Area" means the geographic territory which includes one or more communities served or to be served by existing or proposed community mental health facilities, the delineation of which is based on such factors as population distribution, natural geographic boundaries, and transportation accessibility. Nothing in the regulations in this subpart shall preclude the formation of an interstate area with the mutual agreement of the States concerned.