(d) Such application shall set forth the membership of the Project Policy Board (hereinafter referred to as the board) described in § 56.105 and shall also be executed by the chairman or such other representative selected by the board, authorized to act for the board and to assume on its behalf the obligations imposed by the Act and by the terms and conditions of any award, and the regulations of this part. Such execution shall constitute the acceptance by the board of the terms and conditions of the grant and obligate it to perform its functions under the approved project in accordance with the terms thereof, the Act and the regulations of this part. § 56.105 Project Policy Board.

(a) Except as provided in paragraph (b) of this section. Project Policy Board shall be established by an applicant as follows:

(1) Size. The board shall be sufficiently large to provide adequate participation by the population to be served and shall have its chairman or other such leadership elected by the members of the board.

At

(2) Selection and composition. least 51 percent of the members of the board shall be chosen by a democratic process by the population to be served and at least three members shall be representatives of the community with knowledge of the health needs of the population to be served and experience in the delivery of health care services. All members of the board shall be selected to serve for a period of one year.

(3) Meetings. The board shall meet as often as necessary but not less than once a month during the time project services are being offered.

(4) Functions. (i) The board, after consultation with appropriate project staff shall from time to time establish, amend, and revise general policy in areas indicated in subdivision (ii) of this subparagraph with regard to the operation of the project: Provided, however, That in establishing such policy the board shall not

(a) Establish any policy which is inconsistent with the Act or these regulations or which prevents the fulfillment of obligations imposed under the grant, or

(b) Involve itself in the day-to-day administration of the project, including the hiring or firing of any specific per

sonnel except the project director, who shall be hired or fired only with the approval of the board.

(ii) The areas in which the board shall establish, amend, and revise general policy shall include at least the following:

(a) Selection and dismissal of personnel, including qualifications, salary and benefits, and grievance procedures;

(b) Selection and elimination of health care services;

(c) Eligibility for services;

(d) Hours and location of services; (e) Priorities for allocation of project funds among services; and

(f) Methods of evaluating the project. (b) The Secretary may, for good cause shown, allow a grantee a period of time for compliance with the requirements of these regulations with respect to the board as follows:

(1) Continuation grants. A grantee under a continuation grant may be given a reasonable period of time, not to exceed 1 year from the effective date of these regulations, to establish a board meeting the requirements of paragraph (a) of this section.

(2) Inconsistent State or local law. In addition, in the case of a grantee which is a State or local governmental agency and which has demonstrated to the satisfaction of the Secretary that it is unable, under State or local law, to establish a board pursuant to paragraph (a) of this section, the Secretary may allow such grantee a reasonable period of time to take the appropriate steps to have such legal disability removed, Provided That, such grantee, in the interim, must establish alternate procedures, approved by the Secretary, to assure maximum participation in the development, implementation, and evaluation of the project by the population to be served consistent with the concept of a Project Policy Board as set forth in paragraph (a) of this section.

Nothing in this paragraph shall relieve an applicant of the requirements of § 56.106 (a) (2).

(2) That persons broadly representative of all elements of the population to be served and others in the community knowledgeable about such needs have been given an opportunity to participate in the development of such program and will be given an opportunity to participate in the implementation and evaluation of such program.

(3) That the project will deliver or arrange for the delivery of familyoriented primary health care which shall include, but not be limited to:

(i) Ambulatory patient diagnosis, treatment, and followup care for acute and chronic conditions;

(ii) Preventive, maternal, child health, and family planning services integrated into the delivery of treatment services;

(iii) Emergency medical and dental care; and

(iv) Diagnostic, preventive, and basic restorative dental care.

(4) That the project has established a system for maintaining health services records.

(5) That the project will arrange for: (i) Referral of complex, difficult, or unusual cases and adequate followup to insure continuity of care;

(ii) Hospitalization of patients and hospital staff privileges for project physicians; and

(iii) Transportation, if required for patient care.

(6) That no person shall be denied service by reason of his inability to pay therefor: Provided, however, That a charge for the provision of services will be made to the extent that a third party (including a Government agency) is authorized or is under legal obligation to pay such charge: And further provided, That where the cost of care and services furnished by or through the project is to be reimbursed under title XIX of the Social Security Act, a written agreement with the title XIX agency is required.

(7) That subject to the provisions of subparagraph (6) of this paragraph, charges to be made for services rendered pursuant to the project, must be in accordance with a schedule submitted and approved as part of the project. Such schedule may provide for services to be rendered on a prepaid capitation basis. In those cases in which the project will provide services by contract or other similar arrangement

with the actual providers of services, a plan shall be provided establishing rates and methods of payment (including payment on a prepaid capitation basis) for medical care. Such payment must be made pursuant to agreements with a schedule of rates, and payment procedures maintained by the grantee. The grantee must be prepared to substantiate that such rates are reasonable and necessary.

(8) That a Project Policy Board will be established in accordance with § 56.105; and

(9) That the project shall provide and implement methods of evaluating the performance of activities being carried out under the grant to assure that such activities are carried out in accordance with the regulations of this part.

(b) An approvable application must also include the following elements unless the Secretary determines that the applicant has established good cause for their omission:

(1) That in developing and operating the project, arrangements have been made for the provision of the following ancillary services: Nutrition, respiratory disease care, accident prevention, environmental health services, and health and sanitation education;

(2) That paramedical and allied health professional personnel have been or will be employed by the project; and

(3) That a plan for education of the population to be served as to the availability and location of supplementary health facilities and services has been or will be developed.

§ 56.107

Grant evaluation and award.

(a) Within the limits of funds available for such purpose, the Secretary may award grants to cover part of the cost of projects to those applicants whose projects will in his judgment best promote the purposes of the Act taking into account.

(1) The overall significance of the project in terms of the numbers of persons served, the relative need to be met, the duration of services to be provided, and the general quality of the project's plan in accordance with the project elements cited in § 56.106;

(2) The administrative and management capability and competence of the applicant;

(3) The competence of the staff in relation to the services to be provided;

(4) The extent to which the project will provide a continuity of patient care; and

(5) The comments and evaluations of the population to be served relative to the proposed project.

(b) The amount of any award shall be determined by the Secretary on the basis of his estimate of the sum necessary for all or a designated portion of direct project costs plus an additional amount for indirect costs, if any, which will be calculated by the Secretary either (1) on the basis of his estimate of the actual indirect costs reasonably related to the project, or (2) on the basis of a percentage of all, or a portion of, the estimated direct costs of the project when there are reasonable assurances that the use of such percentage will not exceed the approximate actual indirect costs. Such award may include an estimated provisional amount for indirect costs or for designated direct costs (such as hospital per diem rates or fringe benefit rates) subject to upward (within the limits of available funds) as well as downward adjustments to actual costs when the amount properly expended by the grantee for provisional items has been determined by the Secretary: Provided, however, That no grant shall be made for an amount equal to the total cost as found necessary by the Secretary for the carrying out of the project. In determining the grantee's share of project costs, costs for which Federal grants from other sources have been or may be claimed or received or costs used to match other Federal grants except as may be otherwise provided by law, or costs to be met from the Federal share of grant related income (except as may be permitted by chapter 1-420 of the Department of Health, Education, and Welfare Grants Administration Manual1) may not be included.

(c) Except as may otherwise be provided by the regulations of this part, the identification of direct and indirect costs will be consistent with the generally accepted and established accounting prac

1 The Department Grants Administration Manual is available for inspection at the Public Information Office of the several Department Regional Offices and available for purchase at the Government Printing Office, GPO Document No. 894-523.

tices that the grantee applies to its own activities and in conformance with the applicable principles set forth in chapters 1-76, 2-65, 2-66, and 5-60 of the Department of Health, Education, and Welfare Grants Administration Manual.

(d) All grant awards shall be in writing, shall set forth the amount of funds granted and the period for which support is recommended.

(e) Neither the approval of any project nor any grant award shall commit or obligate the United States in any way to make any additional, supplemental, continuation, or other award with respect to any approved project or portion thereof. For continuation support, grantees must make separate applications annually at such times and in such form as the Secretary may direct.

§ 56.108 Grant payments.

The Secretary shall from time to time make payments to a grantee of all or a portion of any grant award, either in advance or by way of reimbursement for expenses incurred or to be incurred in the performance of the project to the extent he determines such payments necessary to promote prompt initiation and advancement of the approved project. Such payments may include reimbursement to a grantee for services rendered on a prepaid capitation basis.

§ 56.109 Use of project funds.

(a) Any funds granted pursuant to this part as well as other funds to be used in performance of the approved project shall be expended solely for carrying out the approved project in accordance with the statute, the regulations of this part, the terms and conditions of the award and cost principles set forth in the Department of Health, Education, and Welfare Grants Administration Manual.

(b) Project funds may be used to reimburse members of the Project Policy Board for actual expenses: Provided, That Domestic Agricultural Migratory Workers and Seasonal Agricultural Workers may also be reimbursed for wages lost by reason of attendance at meetings.

(c) Prior approval by the Secretary of revision of the budget and project plan is required whenever there is to be a significant change in the scope or nature of project activities.

§ 56.110 Civil rights.

Attention is called to the requirements of title VI of the Civil Rights Act of 1964 (78 Stat. 252, 42 U.S.C. 2000d et seq.) and in particular section 601 of such Act which provides that no person in the United States shall on the grounds 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, which applies to grants made under this part, has been issued by the Secretary of Health, Education, and Welfare with the approval of the President (45 CFR Part 80). In addition, no person shall on the grounds of age, sex, creed, or marital status (unless otherwise medically indicated) be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance. Nor shall any person be denied employment in or by such program or activity so receiving Federal financial assistance on the grounds of age, sex, creed, or marital status.

Each grant award is subject to the condition that all information obtained by the personnel of the project from participants in the project related to their examination, care, and treatment, shall be held confidential, and shall not be divulged without the individual's consent except as may be required by law or as may be necessary to provide service to the individual. Information may be disclosed in summary, statistical, or other form which does not identify particular individuals.

§ 56.112 Inventions or discoveries.

Any grant award pursuant to § 56.107 is subject to the regulations of the Department of Health, Education, and Welfare as set forth in 45 CFR Parts 6 and 8, as amended. Such regulations shall apply to any activity for which grant funds are in fact used whether within the scope of the project as approved or otherwise. Appropriate measures shall be taken by the grantee and by the Secretary to assure that no contracts, assignments or other arrangements inconsistent with the grant obligation are continued or entered into and that all

personnel involved in the supported activity are aware of and comply with such obligations. Laboratory notes, related technical data, and information pertaining to inventions and discoveries shall be maintained for such periods, and filed with or otherwise made available to the Secretary, or those he may designate at such times and in such manner, as he may determine necessary to carry out such Department regulations.

§ 56.113 Publications and copyright.

Except as may otherwise be provided under the terms and conditions of the award, the grantee may copyright without prior approval any publications, films or similar materials developed or resulting from a project supported by a grant under this part, subject, however, to a royalty-free, nonexclusive, and irrevocable license or right in the Government to reproduce, translate, publish, use, disseminate, and dispose of such materials and to authorize others to do so. § 56.114

Grantee accountability.

(a) Accounting for grant award payments. All payments made by the Secretary shall be recorded by the grantee in accounting records separate from the records of all other grant funds, including funds derived from other grant awards. With respect to each approved project the grantee shall account for the sum total of all amounts paid by presenting or otherwise making available evidence satisfactory to the Secretary of expenditures for direct and indirect costs meeting the requirements of this part: Provided, however, That when the amount awarded for indirect cost was based on a predetermined fixed-percentage of estimated direct costs, the amount allowed for indirect costs shall be computed on the basis of such predetermined fixed-percentage rates applied to the total, or a selected element thereof, of the reimbursable direct costs incurred.

(b) Accounting for equipment. As used in this section the term "equipment" means an article of property procured or fabricated which is complete in itself, is of a durable nature, and has an expected service life of more than 1 year. Equipment on hand on the date of termination for which accounting is required in accordance with the procedures set forth in chapter 1-410-50 of the Department of Health, Education, and Wel

fare Grants Administration Manual shall be identified and reported by the grantee in accordance with such procedures, and, accounted for by one or a combination of the following methods, as determined by the Secretary:

(1) Retention of equipment for other migrant health projects Equipment may be used, without adjustment of accounts, on other grant supported projects (whether or not federally supported) within the scope of the Act, and no other accounting for such equipment shall be required: Provided, however, (i) That during such period of use no charge for depreciation, amortization, or for other use of the equipment shall be made against any existing or future Federal grant or contract, and (ii) if, within the period of its useful life, the equipment is transferred by sale or otherwise for use outside the scope of the Act, the Federal portion of the fair market value at the time of transfer shall be refunded to the Federal Government.

(2) Sale or other disposition of equipment, crediting of proceeds or value. The equipment may be sold by the grantee and the net proceeds of the sale credited to the grant account for project use, or they may be used or disposed of in any manner by the grantee by crediting to the grant account the Federal share of the fair market value on the termination date. To the extent equipment purchased from grant funds is used for credit or trade-in on the purchase of new equipment, the accounting obligation shall apply to the same extent to such new equipment.

(3) Return or transfer of equipment. The equipment may be returned to the Federal Government by the grantee or, in accordance with the provisions of chapter 1-410-50B of the Department of Health, Education, and Welfare Grants Administration Manual may be transferred to another grantee for the purpose of continuing the project for which the equipment was purchased.

(c) Accounting for grant related income-(1) Interest. Pursuant to section 203 of the Intergovernmental Cooperation Act of 1968 (42 U.S.C. 4213), a State will not be held accountable for interest earned on grant funds, pending their disbursement for grant purposes. A State, as defined in section 102 of the Intergovernmental Cooperation Act, 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 grantees other than a State, as defined in this subsection, must return all interest earned on grant funds to the Federal Government.

(2) Royalties. Royalties earned from publications or similar material produced from a grant must first be used to reduce the Federal share of the grant to cover the costs of publishing or producing the materials. Royalties in excess of the costs of publishing or producing the materials shall be distributed as in subparagraph (3) of this paragraph.

(3) Other income. Other income earned by the grantee shall be disposed of in accordance with one of the alternatives specified in chapter 1-420 of the Grants Administration Manual as determined by the Secretary in the grant award.

(d) Grant closeout—(1) Date of final accounting. A grantee shall render, with respect to each approved project, a full account, as provided herein, as of date of the termination of grant support. The Secretary may require other special and periodic accounting.

(2) Final settlement. There shall be payable to the Federal Government as final settlement with respect to each approved project the total sum of:

(i) Any amount not accounted for pursuant to paragraph (a) of this section;

(ii) Any credits for material on hand as provided in paragraph (b) of this section:

(iii) Any credits for earned interest pursuant to paragraph (c)(1) of this section;

(iv) Any other settlements required pursuant to paragraph (c) (2) and (3) of this section.

Such total sum shall constitute a debt owed by the grantee to the Federal Government and shall be recovered from the grantee or its successors or assignees by set off or other action as provided by law.

§ 56.115 Records, reports, inspection, and audit.

(a) Records and reports. Each grant awarded pursuant to this part shall be subject to the condition that the grantee shall maintain such operational and accounting records, identifiable by grant number, and file with the Secretary such