yi?v
        United States       Administration and     ^PA 202-B-95-001
        Environmental Protection  Resources Management   o^ 1995
        Agency          (3903F)



ERA   Managing Your Financial

        Assistance Agreement




        Project Officer Responsibilities

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            TABLE OF CONTENTS
INTRODUCTION

MODULE I

MODULE II
MODULE V
MODULE VI
BACKGROUND

REQUIREMENTS GOVERNING
ASSISTANCE AGREEMENTS
MODULE III   PREAPPLICATION/APPLICATION PHASE

MODULE IV   AWARD PHASE
PROJECT ADMINISTRATION AND
MANAGEMENT PHASE

CLOSEOUT PHASE
MODULE VII   AUDIT

MODULE VIII  INTERAGENCY AGREEMENTS
APPENDIX A
APPENDIX B
APPENDIX C
APPENDIX D
FEDERAL GRANT AND COOPERATIVE
AGREEMENT ACT

POLICY FOR DISTINGUISHING BETWEEN
ASSISTANCE AND ACQUISITION

EPA INVOLVEMENT IN GRANTEE
PERSONNEL AND CONTRACTOR SELECTION
UNDER GRANTS AND COOPERATIVE
AGREEMENTS

40 CFR PART 30, "GRANTS AND
  AGREEMENTS WITH INSTITUTIONS OF
  HIGHER EDUCATION, HOSPITALS, AND
  OTHER NON-PROFIT ORGANIZATIONS"

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APPENDIX E
APPENDIX F
APPENDIX G
APPENDIX H
APPENDIX I
APPENDIX J
APPENDIX K
APPENDIX L
40 CFR PART 31, "UNIFORM
  ADMINISTRATIVE REQUIREMENTS FOR
  GRANTS AND COOPERATIVE
  AGREEMENTS TO STATE AND LOCAL
  GOVERNMENTS"

LIST OF EPA ASSISTANCE PROGRAMS
(CFDA Number, Title, Statutory Authority,
GICS Program Code, and Delegation Of
Authority Number)

GUIDE: "DELEGATIONS OF AUTHORITY --
WHAT MANAGERS NEED TO KNOW"

40 CFR PART 40, "RESEARCH AND
  DEMONSTRATION GRANTS"
40 CFR PART 45, "TRAINING ASSISTANCE"
40 CFR PART 46, "FELLOWSHIPS"
40 CFR PART 47, "NATIONAL
  ENVIRONMENTAL EDUCATION GRANTS"

EPA ORDER 1000.25, "USE OF RECYCLED
PAPER"

EPA ORDER 5730.1, "POLICY AND
PROCEDURES FOR FUNDING ASSISTANCE
AGREEMENTS

CARRYOVER POLICY (COMPTROLLER
POLICY ANNOUNCEMENT 88-09)

POLICY ON PERFORMANCE BASED
ASSISTANCE
APPENDIX M   USE OF DISADVANTAGED BUSINESS
            ENTERPRISES (DBE)

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APPENDIX N
APPENDIX O
POLICY ON THE TIMELY AWARD OF
ASSISTANCE FUNDS FOR CONTINUING
ENVIRONMENTAL PROGRAMS

STATE GRANT GUIDANCE, "INTEGRATION
OF POLLUTION PREVENTION"
APPENDIX P   SF 424, "APPLICATION FORM"

APPENDIX Q   OFFICIAL PROJECT AND GMO FILES

APPENDIX R   CLOSEOUT POLICY FOR ASSISTANCE
            AGREEMENTS

APPENDIX S   EPA ORDER 2200.4, "REVIEW PROCESS FOR
            SCIENTIFIC, INFORMATIONAL AND
            EDUCATIONAL DOCUMENTS"
APPENDIX T   SAMPLE INTERAGENCY AGREEMENT

SUBJECT INDEX

GLOSSARY

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      ASSISTANCE
    PROJECT OFFICERS
    TRAINING COURSE
INTRODUCTION

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                 WHY AN ASSISTANCE PROJECT
                      OFFICERS COURSE?

                   • TRAINING IDENTIFIED AS A
                    WEAKNESS

                   • ROLES AND RESPONSIBILITIES
                    NOT IDENTIFIED ELSEWHERE

                   • GROUNDWORK FOR PO
                    CERTIFICATION

VIEWGRAPH # 1
TITLE:       Why an Assistance Project Officers Course?

KEY POINTS:

    A large part of EPA's mission is accomplished by awarding
    extramural funds to other organizations to conduct environmental
    programs and or projects, approximately $3.5 Billion through
    assistance agreements.
    The Project Officer (PO) plays a key role in assuring the proper
    expenditure of these funds.
•   EPA (and other Federal agencies) award funds through one of two
    methods -- "acquisition" or "assistance." The  basic difference
    between acquisition and assistance is the relationship between the
    parties. If an activity is funded to meet an internal EPA need e.g., a
    specific report to Congress, purchase of furnishings for EPA staff,
    then an acquisition relationship exists and EPA's direct
    procurement requirements (e.g., the Federal Acquisition
    Regulations) apply.  If  the activity is funded to primarily benefit
    someone other than the Federal government,  e.g., build a
    wastewater treatment plant, then an assistance relationship exists
    and EPA's rules which  apply to assistance programs apply.  The
    latter is the subject of this course.
    Because of Congressional Hearings, inquiries on contract
    management, and recent audits, the area of assistance
    management is receiving increased scrutiny from EPA
    management.
    Several assessments identified PO training as one of the highest
    needs in the assistance management area.
   10/1/95                     lntro1

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VIEWGRAPH # 1 (Continued)
TITLE:       Why an Assistance Project Officers Course?

KEY POINTS:
    This course identifies the administrative responsibilities of the
    Project Officers (PO), Grants Management Offices (GMO),
    Financial Management Offices (FMO), and other players involved
    in managing assistance agreements.

    This course will give you:

    - A framework for the POs1 responsibilities;
    - An awareness of the interactions between the POs and others;

    - The cradle-to-grave responsibilities of POs; and a

    - Basis for PO Certification.

    This course will not provide specific PO programmatic
    requirements.  That is a responsibility of the  National Program
    Manager (NPM) for each program. Some NPMs (e.g., Office of
    Water, §106 grant program) have developed  training on the
    programmatic aspects of their POs1 responsibilities.
 10/1/95                     lntro2

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                           KEY PERSONNEL

                     • APPROVAL OFFICIAL

                     • SENIOR RESOURCE OFFICIAL

                     • GRANTS MANAGEMENT OFFICE

                     • AWARD OFFICIAL

                     • PROJECT OFFICER

VIEWGRAPH #2
TITLE:        Key Personnel

KEY POINTS:

 Approval Official
     The Approval Official is an EPA official delegated the authority
     (see Module II, pages 2.3 - 2.4) to approve or reject an
     application and to approve the technical and programmatic
     terms and conditions on proposed assistance projects.
 Senior Resource Official (SRO)
     The SRO is a Senior Executive Service manager who reports
     directly to the Assistant, Associate, or Regional Administrator.
     SROs are typically the Deputy Assistant Administrators and the
     Assistant Regional Administrators. The SRO is accountable for
     that Office's ethical, effective resource management, including
     acquisition, assistance, and programmatic financial
     management.
 Grants Management Office (GMO)
     The GMO is responsible for full "cradle to grave" management of
     financial  assistance agreements and interagency agreements.
 Award Official
     The Award Official is the EPA official with the delegated
     authority (see Module II, pages 2.3 and 2.4) to execute (sign)
     assistance agreements and to take other actions authorized by
     40 CFR Chapter I, Subchapter A and by EPA Orders.
 Project Officer (PO)
     The PO is the EPA official designated in the assistance
     agreement as EPA's program contact with the recipient.

  10/1/95                      lntro3

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                    ROLE OF THE PROJECT OFFICER
                      EXPERT ON PROGRAMMATIC
                      ISSUES
                     • HELP ADMINISTER THE
                      AGREEMENT
VIEWGRAPH #3
TITLE:       Role of the Project Officer

KEY POINTS:
    Working together as partners. EPA's Program and management
    officials approve, award, and manage assistance agreements.

    The program is responsible for ensuring their assistance
    agreements meet scientific, technical, and programmatic
    requirements; management is responsible for the "cradle to grave"
    management of EPA assistance agreements and interagency
    agreements.
    The Project Officer (PO) is the key program staff person on an
    assistance agreement, just as the Grants Management Specialist
    in the Grants Management Office (GMO) is the key management
    staff person on an assistance agreement.
    The PO and the GMO each have a role to ensure the proper
    stewardship of Federal funds. Proper stewardship of Federal
    funds depends on the combined efforts of the PO to determine the
    appropriateness and technical merit of proposals, as well as
    monitoring and overseeing projects; and the  GMO in performing
    required administrative tasks.
    The Award Official must be assured from both the programmatic
    and administrative perspectives of the appropriateness of decisions
    concerning applications and awards. The Award Official relies on
    the advice, guidance, and recommendations of both the program
    (primarily through the PO) and GMO.
    The PO is critical to the successful completion of work performed
    under an assistance agreement or interagency agreement. Many
    decisions and recommendations, including some administrative
    decisions, can be made only by persons with programmatic
    expertise. Input from the PO is required in a number of areas,
    including determination of the adequacy and technical soundness of
    the proposal, providing oversight, and certifying the quality and
    acceptability of a recipient's programmatic performance.

   10/1/95                     lntro4

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MODULE I

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     ASSISTANCE
    PROJECT OFFICERS
    TRAINING COURSE
   MODULE I
BACKGROUND

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                        OVERVIEW
                 FEDERAL GRANT AND
                 COOPERATIVE AGREEMENT
                 ACT OF 1977

                 COMPETITION IN ASSISTANCE
                 AGREEMENTS

                 CONFLICTS OF INTEREST
   VIEWGRAPH#1
   TITLE:        Overview  revised 6/23/94

   KEY POINTS:
In this module we will discuss the following:
    The Federal Grant and Cooperative Agreement Act of 1977.

    - The difference between a contract and an assistance
     agreement;
    - The types of assistance agreements (grants and cooperative
     agreements) and the difference between a grant and a
     cooperative  agreement;
    - When a contract, grant, cooperative agreement should/must be
     used; and
    - The Project Officer's (PO)/Program's role in making the decision
     of which instrument to use;
    Competition in the selection of recipients.
    - When it is required; and
    - The Office of Research and Development requirements for
     research awards.
•    Conflicts of  interest.
    - The requirements on Federal employees;
    - The restrictions  on EPA involvement in recipient decisions; and
    - The requirements on recipients.

  10/1/95                    '-1

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            FEDERAL GRANT AND COOPERATIVE
                 AGREEMENT ACT OF 1977
            • DISTINGUISHES BETWEEN
             PROCUREMENT AND ASSISTANCE

            • ESTABLISHES DECISION CRITERIA

            • DISTINGUISHES BETWEEN GRANTS
             AND COOPERATIVE AGREEMENTS
VIEWGRAPH # 2
TITLE:        Federal Grant And Cooperative Agreement
              Act of 1977
KEY POINTS:
    Various Federal statutes authorize and/or direct EPA to carry out
    specific environmental activities. These statutes may specify
    whether the activities may be accomplished in-house (using EPA
    staff) or by funding outside parties.  The Federal government
    awards extramural funding in one of two ways -- either through a
    procurement contract (acquisition) or through a grant or cooperative
    agreement (assistance).

    In the 1970's, Congress was concerned over the perceived misuse of
    assistance agreements. Specifically, Congress was concerned that
    agencies were misusing the assistance agreements to circumvent
    competition and other procurement rules, and also applying
    unnecessarily burdensome contract paperwork requirements to
    non-procurement transactions.
    To address these problems, and ensure consistent and uniform
    agency practice, Congress passed the Federal Grant and
    Cooperative Agreement Act (see Appendix A) Act in 1977.
    The purpose of the Act is to establish governmentwide criteria
    for determining the appropriate legal instrument to use for an
    extramural funding activity.
  10/1/95                    '-2

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VIEWGRAPH # 2 (continued)
TITLE:         Federal Grant And Cooperative Agreement
               Act of 1977
KEY POINTS:

    The Act distinguishes between procurement (acquisition) and
    assistance, based on the principle purpose of the relationship
    between the parties. If the principle purpose of the activity being
    funded (i.e., "relationship") is to provide something for the direct
    benefit or use of the Federal government, then a contract is the
    appropriate legal instrument to use. If the principle purpose of the
    activity is to provide something of value to someone  other than the
    Federal government (e.g., State, local government, university), then
    an assistance agreement may be used.
    It is important to note that the Act does not expand an Agency's
    authority to award assistance agreements. EPA has no inherent
    authority to award assistance agreements; such authority must be
    found in EPA's statutes and does not derive from the Federal Grant
    and Cooperative Agreement Act. On the other hand, unless
    legislatively prohibited, every Agency has inherent authority to enter
    into contracts related to the Agency's mission.
    Whether to use a contract or an assistance agreement is a
    decision which should be made in the planning process, and
    certainly before the Program develops any annual guidance or
    requests solicitations. Offices and laboratories should review
    all contemplated projects as soon as possible for the purpose
    of determining whether the nature of the project activity is
    acquisition or assistance.  If it is unclear whether a project is
    acquisition or assistance, the office or laboratory should
    contact the responsible GMO/Award Official for assistance.
    Please do not wait until the award package is ready to send to the
    GMO [or SRO (if appropriate)] to justify an assistance relationship.
    If the Approval Official or SRO has a problem justifying an
    assistance relationship, the GMO and auditors will also have a
    problem.
    10/1/95                     '-3

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                         WHO DOES WHAT?

                     APPROVAL OFFICIAL

                     SENIOR RESOURCE OFFICIAL

                     GRANTS MANAGEMENT OFFICE

                     AWARD OFFICIAL

                     PROJECT OFFICER
VIEWGRAPH #3
TITLE:       Who Does What?
KEY POINTS:

      The responsibility to determine whether to award a contract or
      an assistance agreement is shared between the program and
      GMO staffs.
  Approval Official

      Each Approval Official must determine whether a proposed
      relationship is one of acquisition or assistance.  In making this
      determination,  the Approval Official will use the criteria set
      forth in the "Policy for Distinguishing Between Acquisition and
      Assistance." (see Appendix B).

  •   In those limited occasions where the Approval Official has the
      responsibility of overseeing an award originating in another
      office, the Approval Official's responsibility is limited to
      ensuring that the originating Office determines an assistance
      relationship exists based on the criteria set forth in the policy.
      The Decision Memorandum (see Module 4) must justify the
      use of an assistance instrument based on the criteria in the
      policy.
  Senior Resource Official:

      The Senior Resource Official will concur in the Program's
      decision to use an assistance agreement when total project
      costs are expected to be $5 million or  more for continuing
      program grants and  over $1 million for project grants.  In
      Headquarters,  the SRO review will take place before the
      award package is sent to the GMO, in the Regions the SRO
      review may take place after the package is sent to the GMO.
   10/1/95                      '-4

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      VIEWGRAPH #3 (Continued)
      TITLE:       Who Does What?

      KEY POINTS:

      Grants Management Office

          The GMO will review the determination of the office or laboratory
          and decide whether to concur.  The GMO will consult with the
          Office of General Counsel, Grants and Intergovernmental Division
          (or Regional Counsel) if necessary.
          The GMO will return all completed assistance application
          packages that are acquisition activities to the office or
          laboratory and say why it cannot award the project as an
          assistance project.
      Award Official

          The Award Official ensures all technical, legal, and administrative
          evaluations have been made and that the proposed agreement is
          "awardable." The Award Official is responsible for making the final
          determination whether the award should be an assistance
          agreement. This determination is made when the Award Official
          signs the agreement and makes the offer to the applicant.
      Project Officer
          More than likely, the PO will be responsible for preparing the
          documentation supporting the use of an assistance
          agreement. Therefore, POs need to fully understand the
          requirements of the Federal Grant and Cooperative Agreement
          Act and the EPA Order on acquisition vs assistance.
                                   .r
-       10/1/95                      L5

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                 ACQUISITION VS ASSISTANCE
                            ACQUISITION


                                vs.


                            ASSISTANCE
VIEWGRAPH#4
TITLE:       Acquisition vs. Assistance

KEY POINTS:

   The critical determinant when selecting the appropriate award instrument
   is the principal purpose of the relationship.
   Except where the authorizing legislation was enacted after the FGCAA
   and the authorizing legislation specifically states it supersedes the
   FGCAA or other provisions of law, you must use the criteria in the FGCAA
   to determine the appropriate award instrument.  In cases where legislation
   specifically states that it supersedes the FGCAA, the award instrument
   specified in the authorizing legislation must be used.
   - If the principle purpose is acquiring property or services for the direct
     benefit or use of  the Federal Government, then a contract is the
     appropriate legal instrument to use.
   - If EPA is funding a recipient to support or stimulate activities that are
     not principally for the direct benefit or use of the Federal
     Government, and the award is authorized by Federal statute, then an
     assistance agreement may be used.
   Note that substantial involvement during performance is not relevant in
   determining whether an acquisition or assistance mechanism is required.
   It is only after determining that an assistance agreement is appropriate
   that substantial involvement becomes a factor.  In other words, the need
   for substantial involvement does not dictate the use of a cooperative
   agreement rather than a contract. The substantial involvement test is
   used to distinguish between a grant or a cooperative agreement.
     10/1/95                     l<6

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              IDENTIFYING PRINCIPAL PURPOSE


               • DIRECT BENEFIT OR USE

                 - INCIDENTAL USE OR BENEFIT

               • SUPPORT OR STIMULATION

               • TYPE OF ORGANIZATION NOT A
                FACTOR, e.g., NON-PROFIT VS
                              PROFIT

VIEWGRAPH # 5
TITLE:       Identifying Principal Purpose

KEY POINTS:

Direct Benefit or Use/Support or Stimulation
    The Federal Grant and Cooperative Agreement Act requires that
    to use an assistance agreement, the activity must accomplish a
    public purpose of  support or stimulation and must not be
    principally for the direct benefit or use of the Federal government.
    These tests must be applied to the original agreement and
    when any new work/tasks/activities are added to the
    agreement.

•   The program office plays the key role in determining whether the
    two tests are met.
    Direct Benefit or Use:
    - The originating office must determine whether the Federal
     government is the direct beneficiary or user of the activity. If
     EPA provides the specifications for the project; is having the
     project completed based  on its own identified needs; or will
     directly use the report or result of the project (for example, by
     incorporating or relying on information developed by the project
     in writing EPA guidance or standards) then, in most cases, the
     principal purpose is to acquire property or services for the direct
     benefit or use of  EPA and thus, a contract relationship exists.
    - However, there may be cases where EPA expects to derive
     some incidental use or benefit from funded activities. Such
     incidental use or benefit does not preclude an award of
     assistance when the principal purpose is public support or
     stimulation.  For such cases, an assistance vehicle may still
     appropriate.
  10/1/95                     '-7

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   VIEWGRAPH # 5 (Continued)
   TITLE:        Identifying Principal Purpose

   KEY POINTS:

      Support or Stimulation:

      - To determine "public purpose of support or stimulation", the
       program does not have to determine that the recipient
       needed the Federal assistance to perform the activity; nor is
       it necessary to determine that the recipient, rather than the
       EPA initiated the proposed project.  The applicant must
       perform the project for its own purposes and EPA is
       merely supporting the project with financial or other
       assistance.
  Type of Organization Not A Factor:

      The type of organization does not drive the decision to use
      one instrument or the other.
      A non-profit organization does not automatically qualify for an
      assistance relationship.
      Similarly, a profit making organization does not automatically
      reflect an acquisition relationship (although a profit making
      organization may be an assistance recipient only if the
      statutory authority so provides).
      Also, research does not always have to funded by an
      assistance agreement. Research can be funded by contract
      and universities can receive grants or contracts, as well as
      cooperative agreements.
10/1/95                      '-8

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                        CONFERENCES

                 • DEPENDS ON PURPOSE

                 • EXCEPTION: ASSOCIATIONS
                  OF STATE OFFICIALS

VIEWGRAPH #6
TITLE:       Conferences

KEY POINTS:

    Conferences may be funded with an assistance agreement if
    the principal purpose is not for the direct benefit of the
    Government.

    As a general rule, an assistance agreement may not be used
    to support a conference or other services if the principal
    purpose is to provide advice, recommendations, or other
    information for EPA's direct use in developing or changing
    guidance, regulations,  etc. For example, an office or
    laboratory cannot award an assistance agreement to a trade
    association or consulting firm to arrange and conduct a
    conference of EPA officials and members of the regulated
    community if the principal purpose is to enable EPA to obtain
    the views of the regulated community on a proposed new
    policy or changes in an existing one.  If the office or laboratory
    needs help in putting on such a conference, it should use a
    contract to acquire logistical support services.

    An exception to this general rule is assistance to associations
    of State officials who implement EPA programs. An
    assistance agreement  may be used to provide funding to an
    association of State officials or agencies to hold a conference
    among its members and EPA officials to discuss issues in the
    implementation of a Federal effort that the States implement
    on a day-to-day basis under a formal delegation or as partners
    with EPA in a coordinated, national effort.  Although EPA
    benefits from such a conference and may subsequently decide
    to adopt recommendations or use information provided by the
    State officials at the conference, the principal purpose is to
    support the association in helping its State members
    participate in developing the policies that they will carry out.
    (See Appendix B, page 9 for restrictions on these types of
    conferences.)

    10/1/95                      '-9

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                          GRANTS VS
                        COOPERATIVE
                         AGREEMENTS
                   SUBSTANTIAL FEDERAL INVOLVEMENT
                              vs.
                       NO SUBSTANTIAL FEDERAL
                             INVOLVEMENT
'IEWGRAPH #7
TTLE:        Grants vs Cooperative Agreements

:EY POINTS:

   The legal instruments for providing assistance to the recipient are
   either grants or cooperative agreements.
   The distinguishing factor between a grant and a cooperative
   agreement is the degree of Federal participation or involvement
   during performance.

   Section 5(2) of the Act requires that a grant instrument be used
   whenever:

    "(2) no substantial involvement is anticipated between the
       executive agency, acting for the Federal Government, and
       the State or local government or other recipient during
       performance of the contemplated activity."
   Section 6(2) of the Act requires that a cooperative agreement be
   used whenever:
    "(2) substantial involvement is anticipated between the
       executive agency, acting for the Federal Government, and
       the State or local government or other recipient during
       performance of the contemplated activity."
   10/1/95                     '-10

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 VIEWGRAPH #7 (continued)
 TITLE:        Grants vs Cooperative Agreements

 KEY POINTS:

•   Substantial involvement Substantial involvement must be fully
    explained in the agreement, either in the Workplan/Narrative or in a
    Term & Condition. Some examples of substantial involvement are:
    - EPA must approve one phase of the project before the recipient
      may proceed to the next phase.
    - EPA must approve key personnel involved in the project (other
      than the principal investigator);
    - EPA will review and approve provisions directly related to the
      work that a recipient may wish to add to proposed contracts;
    - EPA will participate (technically assist) in some of the project
      activities;
    - EPA prior review or approval of substantial portions of proposed
      contracts;
    - Joint operational involvement/participation and/or collaboration;
    - Intense monitoring by EPA; and

    - EPA collaboration on the Work Plan\Narrative, organizational
      structure, staffing, mode of operation, or other management
      process.
    It is important to note that the administrative requirements are the
    same for both grants and cooperative agreements. Whether a
    cooperative agreement or a grant is used,  EPA must:

    - Approve the narrative (workplan/scope of work) prior to award of
     the agreement;
    - Address any deficiencies in performance;
    - Review project results/products after completion of the work; and
    - Ensure recipient compliance with all applicable statutes,
     regulations, policies and all requirements in the agreement, e.g.,
     on-site reviews (semi-annual, annual); and
    - Review progress reports.
 10/1/95

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               FAILURE TO COMPLY

          GOOD FAITH EFFORTS TO
          DETERMINE

          TERMINATION, ANNULMENT,
          RATIFICATION
VIEWGRAPH #8
TITLE:      Failure to Comply

KEY POINTS:

    Individuals discovering situations where an assistance
    agreement was awarded when a contract was required, are
    directed to consult with representatives from the EPA
    program office or laboratory, the Award Official, and the
    Office of General Counsel to determine necessary actions.
    It is EPA policy to allow completion of the assistance
    agreement where good faith effort was made to
    determine principal purpose in accordance with the
    Federal Grant and Cooperative Agreement Act.
    It is not EPA policy to terminate, annul, or require ratification
    for these awards unless there were or will be serious
    irregularities, e.g.. conflict of interest or intentional
    misconduct.
10/1/95                    '-12

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                    IN-KIND ASSISTANCE


                   WHEN CAN BE USED

                   WHAT CONDITIONS APPLY
VIEWGRAPH #9
TITLE:       In-kind Assistance

KEY POINTS:

   In addition to transferring money to an authorized assistance
   recipient, EPA may use an assistance agreement to transfer
   anything of value, such as equipment or services to a recipient.
   If it is more efficient in terms of cost or time for EPA rather than the
   recipient to purchase equipment or services, EPA may do so and
   provide the equipment or services to the recipient under the
   assistance agreement.  This approach would be appropriate, for
   example, where a piece of equipment necessary for an assistance
   project can be purchased at a considerably lower price or be
   delivered much earlier using an existing EPA contract. Likewise,
   EPA may provide the services of an EPA contractor to an
   assistance recipient in lieu of money, where appropriate.

   To use in-kind assistance, the Program must comply with the
   following conditions:
   -  Document the expected savings of cost or time;
   -  Ensure that all charges are to the grants object class category;
     and
   -  Ensure that the in-kind assistance complies with the
     requirements in 40 CFR Part 30 or 31, (e.g., it is allowable and
     reasonable), and any program guidance.
  10/1/95                     '-13

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                    COMPETITION IN
                ASSISTANCE AGREEMENTS
            • ENCOURAGED BUT NOT REQUIRED

            • MAY BE REQUIRED BY PROGRAM
             OFFICES

VIEWGRAPH#10
TITLE:        Competition in Assistance Agreements

KEY POINTS:
   The Federal Grant and Cooperative Agreement Act encourages
   competition in assistance programs where appropriate, in order to
   identify and fund the best possible projects to achieve program
   purposes.
   However, there is no overall requirement for competition, certainly
   nothing approaching the detail of the legislation applicable to
   procurement contracts, such as the Competition in Contracting
   Act of 1984.

   While there are no EPA statutes requiring competition, some
   program offices are using competition to help ensure they fund
   the best proposals, e.g.,  Research and Development,
   Environmental Education, and some training.
   Programs should consider the nature of activities they fund and
   decide whether to compete an award.
   The Programs should justify in the Decision Memorandum (see
   Module IV) their decisions not to compete an award.
 10/1/95                     L14

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                      CONFLICTS OF INTEREST

                   • USING PUBLIC OFFICE FOR
                    PRIVATE GAIN

                   • PREFERENTIAL TREATMENT

                   • LOSING INDEPENDENCE OR
                    IMPARTIALITY OF DECISIONS

VIEWGRAPH#11
TITLE:       Conflicts of Interest

KEY POINTS:

 FEDERAL EMPLOYEE ETHICS STANDARDS

     All circumstances that might result in a conflict of interest, or the
     appearance of a conflict of interest, or any prejudices, biases, or
     predispositions on the part of reviewers must be avoided.
     Public service is a public trust.  To ensure that every citizen can have
     complete confidence in the integrity of the Federal Government, each
     Federal employee must comply with certain fundamental principles of
     ethical service.  These principles are contained in a regulation entitled,
     "Standards of Ethical Conduct for Employees of the Executive Branch,"
     published on August 7,1992, by the Office of Government Ethics (5
     CFR §2635).

     This regulation contains 14 general  principles which apply to Federal
     employees.  Some of these principles state that a Federal employee
     may not:
     - Use a public office for private gain;
     - Give preferential treatment to any organization or person; or
     - Lose independence or impartiality of action.
 RESPONSIBLE OFFICIALS
     Deputy Ethics Officials (DEO)
     • Each Regional Office has two persons designated as DEOs -- the
       Regional Counsel and either the Regional Administrator or the
       Deputy Regional Administrator.
     - In Headquarters, the DEOs are generally the Office Directors and
       Deputy Assistant Administrators.
     - In the EPA Laboratories, the DEOs are the Lab Directors.
     10/1/95
                               1.15

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 VIEWGRAPH #11 (Continued)
 TITLE:         Conflict of Interest

 KEY POINTS:

    Disciplinary action for violating governmental ethics rules will not be
    taken against an employee who has engaged in conduct based on
    advice of an EPA ethics official, provided that employee has made full
    disclosure of all relevant circumstances.

EXAMPLES

•   May an EPA employee who serves without compensation on the board
    of directors of a non-profit corporation that engages in environmental
    activities review a grant application submitted by the nonprofit
    organization? No, because even though the employee's personal
    financial interests will not be affected, the employee must
    disqualify himself from participating in the review of the grant
    application. Award or denial of the grant will affect the financial
    interests of the non-profit and its financial interests are imputed to
    the employee as a member of its board of directors.

    May an employee whose principal duty in their position is to write
    regulations relating to the disposal of hazardous waste serve as
    president of a non-profit environmental organization that routinely
    submits comments on such regulations?  No, the employee's service
    as an officer would require their disqualification from duties
    critical to the performance of their official duties on a basis so
    frequent as to materially impair the employee's ability to perform
    the duties of their position.

EPA INVOLVEMENT IN RECIPIENT DECISIONS

•   POs must not direct or require recipients to use particular persons or
    firms in the performance of a grant  or cooperative agreement. (See
    memo entitled "EPA Involvement in Grantee Personnel and Contractor
    Selection Under Grants and Cooperative Agreements," Appendix C.)
    EPA personnel may participate in a panel to evaluate the qualifications
    of potential contractors, but may not be involved in the selection of a
    contractor.
    EPA personnel may also suggest contractors, when asked by the
    recipient, but cannot tell a recipient to use a particular contractor.
RECIPIENT CODE OF CONDUCT
    The Code of Conduct standards for applicants/recipients are in 40 CFR
    30.42 for universities and nonprofits and in 40 CFR 31.36(b)(3) for
    States, local governments,  and Indian Tribes.

    10/1/95                      '-16

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                        DOS AND DONTs
                             DO
               • JUSTIFY ASSISTANCE VS ACQUISITION

               • JUSTIFY NOT COMPETING AWARD

                           DO NOT
               • USE ASSISTANCE FUNDS FOR EPA
               TRAVEL

               • ACCEPT GIFTS FROM RECIPIENTS

               • USE ASSISTANCE TO FUND EPA
                INTERNAL ACTIVITIES

VIEWGRAPH#12
TITLE:       Dos and Don'ts

KEY POINTS:

    The following are some of the basic "Dos and Don'ts" in the areas of
    assistance versus acquisition; competition; and conflicts of interest.

    Assistance vs Acquisition:

    -  DO NOT include EPA travel costs in an assistance agreement.

    -  DO NOT request an assistance agreement if the principle purpose
      is for an EPA conference or to train EPA employees.

    -  DO NOT request an assistance agreement if the principle purpose
      is to prepare EPA guidance or manuals.
    -  DO ensure that the justification for using an assistance agreement
      is adequately documented in the Decision  Memorandum.
    Grant vs Cooperative Agreement:
    - DO ensure that if you are recommending a Cooperative Agreement,
     the Decision Memorandum includes the "substantial involvement"
     which  will take place during the project.
    Competition:

    - DO ensure that the reasons for not competing an award are
     adequately documented and included in the Decision Memorandum.

    Conflicts of  Interest:
    - DO contact your Deputy Ethics Officer if you have any questions or
     concerns about this policy and its impact on a particular action.
   10/1/95                    '-17

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MODULE II

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          ASSISTANCE

        PROJECT OFFICERS

        TRAINING COURSE
        MODULE II

REQUIREMENTS GOVERNING
ASSISTANCE AGREEMENTS

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                       OVERVIEW

           REQUIREMENTS GOVERNING
           EPA ASSISTANCE PROGRAMS


           HIERARCHY OF REQUIREMENTS
    VIEWGRAPH # 1
    TITLE:      Overview


    KEY POINTS:

       EPA assistance programs are governed by requirements
       which apply to all Federal agencies and requirements which
       are specific to EPA programs.  Even though the Grants
       Management Office (GMO) has the overall responsibility for
       ensuring that the administrative requirements are met, the
       Program offices and laboratories are responsible for
       implementing many of these requirements. Therefore, POs
       must understand what the requirements are and should be
       familiar with the source of these requirements.
       This module describes the sources of requirements affecting
       assistance programs — Federal statutes, Delegations of
       Authority, Executive Orders, OMB Circulars, Federal
       regulations, EPA Orders, and policies -- and which
       requirements take precedence over the others.
10/1/95                      2.1

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                  FEDERAL STATUTES
               LEGAL BASIS FOR
               PROGRAMS
               ADMINISTRATIVE
                REQUIREMENTS
VIEWGRAPH # 2

TITLE:      Federal Statutes

KEY POINTS:
     Federal statutes form the legal basis for all EPA assistance
     programs and may establish administrative requirements for a
     specific program.
  Legal Basis for Programs
     All EPA projects/programs must have a statutory basis before EPA
     can legally fund them (see Module 1, page 1.3, and Appendix A,
     Federal Grant and Cooperative Agreement Act, §7(a)j.
     Appendix F contains a list of EPA's assistance programs along with
     the Federal statute which authorizes that program.
     If there is no statutory authority for an activity, EPA cannot
     legally fund the activity. As we will discuss in Module 3, the
     program's Decision Memorandum must contain the statutory
     authority for making an award.
  Source of Administrative Requirements
  •   Congress sometimes establishes administrative requirements
     through legislation, e.g., Clean Air Act, EPA's Appropriations Act.
     Sometimes these requirements are implemented through a
     regulation, (e.g., Anti-Lobbying -- 40 CFR Part 34, and the Single
     Audit Act -- 40 CFR Parts 30 &31), through an EPA Policy, (e.g., use
     of recycled paper), or through a condition to the award, (e.g., Hotel
     and Motel Fire Safety Act of 1990).

 10/1/95                       2.2

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              DELEGATIONS OF AUTHORITY


               •  REQUIRED TO MAKE AWARD


               •  TWO SEPARATE DELEGATIONS:


                 - APPROVAL AUTHORITY


                 - AWARD AUTHORITY

  VIEWGRAPH #3
  TITLE:       Delegations of Authority

  KEY POINTS:

       Delegation of Authority is a transfer of responsibility from the EPA
       Administrator to senior management officials in Headquarters and
       the Regions that allows those officials to exercise authority on
       behalf of the Administrator (see Appendix G). A Delegation of
       Authority is  necessary if someone other than the Administrator
       is to approve and sign the award.

       There are two types of assistance Delegations -- Approval and
       Award.
       The Award Delegation of Authority (1-14) transfers the authority to
       award an assistance agreement to the Regional Administrator
       (Regional awards) and to the Grants Administration Division
       Director (Headquarters awards). Delegation of Authority 1-11
       transfers authority to award an IAG to the Regional Administrator
       and the  Director of Grants Administration Division.
       The Approval Delegations of Authority transfer the authority to
       approve an application for award. Each assistance program will
       have a Delegation of Authority specific to that program.
   •   Each  Delegation tells:
       -  What authority is being delegated and to whom,
       - If the authority can be redelegated and to whom,
       - Limitations on redelegation, and
       - Additional references, e.g., regulations, policies, or other
        Delegations which affect this particular Delegation.

10/1/95                        2.3

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VIEWGRAPH #3 (Continued)
TITLE:       Delegations of Authority

KEY POINTS:


    All Delegations of Authority are contained in the Agency's Delegations
    Manual. The manual is maintained by the Management & Organization
    Division (M&O).  POs should have a copy of the approval Delegation of
    Authority which applies to the assistance agreements for which they are
    responsible. Copies of the Delegations can be obtained from M&O.
REGIONAL AWARDS

    Each Region will have a Regional Delegations Manual which will specify
    who in the Region may act as the Approval and/or Award Official. In some
    Regions the Regional Administrator retains all award authority, in others,
    the award authority is redelegated.
HEADQUARTERS AWARDS
•   The authority to make Headquarters awards is delegated  from the Director
    of Grants Administration Division to the Chiefs of the Grants Operation
    Branches.  In some cases, the award authority may be redelegated to
    Associate Award Officials within the Grants Administration Division.
 10/1/95                         2.4

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                    EXECUTIVE ORDERS


                  BAD ACTORS
                  SOCIO-ECONOMIC
                  NEW FEDERALISM
                  LEVERAGING
                  ENVIRONMENTAL JUSTICE
  VIEWGRAPH # 4

  TITLE:      Executive Orders

  KEY POINTS:

      Executive orders are requirements issued and signed by the
      President of the United States. They pertain to the business of
      Federal agencies and hold the force and effect of law.  In other
      words, EPA and our recipients must follow the requirements in an
      Executive Order.
  "BAD ACTORS"
      Executive Order 11738, "Clean Air/Water Violators," issued
      September 10,1973, prohibits the utilization of clean air/water
      violators for Federal contracts and projects funded, wholly or in
      part, with Federal grants or loans. If an entity is convicted of
      violating these provisions, they are listed along with the
      suspended and debarred entities in the General Service
      Administration's, "List of Parties Excluded from Federal
      Procurement and Nonprocurement Programs" (contact the
      General/Regional Council, or GMO for a copy of this publication).
      Executive Order 12549, "Debarment and Suspension Rules for
      Nonprocurement Activities," provides authority to suspend or
      debar any "person" from participation in any Federally  assisted
      project if necessary to protect the government's interest.  It is
      implemented in 40 CFR Part 32.
10/1/95                       2.5

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VIEWGRAPH # 4 (Continued)
TITLE:       Executive Orders

KEY POINTS:
 SOCIO-ECONOMIC ACTIVITIES
     Executive Order 11625, "National Minority Business Enterprise Program,"
     issued October 13,1971, clarified the authority of the Secretary of
     Commerce to implement policy and to assist minority business enterprise.
     This Order required the Secretary to develop comprehensive plans and
     specific program goals to promote the use of minority business enterprises,
     as well as the monitoring and reporting systems required to implement these
     plans and programs.  This Order also requires the head of each Federal
     department or agency to furnish information and reports in a manner
     prescribed by the  Secretary of Commerce.  It further stipulates that within the
     constraints of law and appropriations, Federal departments and agencies
     must foster and promote minority business  enterprise.
     Executive Order 12138, "National Women's Business Enterprise Policy,"
     issued May 18,1979, directed all Federal agencies to:
          Strengthen women's business enterprise and to ensure full
          participation by women in the free enterprise system;
          Take affirmative action in support of women's business enterprise; and
          Require the recipients of federal assistance to take appropriate
          affirmative action in support of women's business enterprise, and to
          prohibit actions or policies which discriminate against women's
          business enterprise.  Federal agencies were also required to prescribe
          sanctions for noncompliance.
     Executive Order 12432, "Minority Business Enterprise Development," issued
     July 14,1983, directed all Federal agencies to:
          Develop an MBE plan on an annual basis;
          Establish MBE objectives;
          Identify methods for encouraging prime contractors and recipients to
          utilize MBEs;
          Build upon programs  administered by the Small Business
          Administration and Minority Business Development Agency;
          Furnish an annual report regarding the accomplishments of their MBE
          programs; and
          Establish programs to deliver management and technical assistance to
          MBEs.
 •    EPA implements these Executive Orders in an Agency Disadvantaged
     Business Plan, which is discussed on page 2.24.
 10/1/95                          2.6

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VIEWGRAPH # 4 (Continued)
TITLE:       Executive Orders
KEY POINTS:

   NEW FEDERALISM
       Executive Order 12372, "Intergovernmental Review of Federal
       Programs," provides States the opportunity to review and comment
       on activities proposed for Federal funding. It is implemented in 40
       CFR Part 29.

   LEVERAGING FEDERAL DOLLARS
       Executive Order 12803, "Infrastructure Privatization", issued April
       30,1992, promotes private investment in local infrastructure.
   ENVIRONMENTAL JUSTICE
       Executive Order 12989, "Federal Actions to Address Environmental
       Justice in Minority Populations and Low-Income Populations,"
       signed February 11,1994, focuses on the environmental and
       human health conditions in minority and low-income communities.
       The goal of of the Executive Order is to achieve environmental
       justice through nondiscrimination in Federal programs, access to
       public information on, and opportunity for public participation in,
       matters relating to human health or the environment.
10/1/95                         2.7

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   OVERVIEW OF ADMINISTRATIVE REQUIREMENTS
  TYPE OF RECIPIENT
  STATE, LOCAL&
  INDIAN TRIBES
  UNIVERSITIES &
  NONPROFITS
  PROFIT MAKERS
  STATE, LOCAL &
  INDIAN TRIBES
  UNIVERSITIES &
  NONPROFITS
  PROFIT MAKERS

  STATE, LOCAL &
  INDIAN TRIBES
  UNIVERSITIES &
  NONPROFITS
  PROFIT MAKERS

  STATE, LOCAL &
  INDIAN TRIBES
  UNIVERSITIES
  NONPROFITS
  PROFIT MAKERS
   ACTIVITY

PROCUREMENT
                  ADMINISTRATION
  AUDIT
COST PRINCIPLES
REGULATION/CIRCULAR


 40CFRPART31/A-102

 40CFRPART30/A-110

 48CFRPART31/A-102

 40CFRPART31/A-102

 40CFRPART30/A-110

 40 CFR PART 30

 40CFRPART31/A-128

 40CFRPART30/A-133

 GOVERNMENT AUDITORS

40CFRPART31/A-87

40 CFR PART 30/A-21
40CFRPART30/A-122
48 CFR PART 31
  VIEWGRAPH #5
  TITLE:      Overview of Administrative Requirements

  KEY POINTS:

      This slide is an overview of administrative requirements for
      recipients by source of the administrative requirements and type of
      recipient for each major area.
      While the administrative requirements for assistance agreements
      are basically the same for all types of recipients, there are
      differences. This module will touch briefly on the source of the
      requirements and the major provisions of each.
10/1/95
        2.8

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                     OMB CIRCULARS/CFR
           ADMINISTRATIVE                            40 CFR
           •  A-102   Uniform Administrative Requirements for     Part 31
                    Grants-ln-Ald to State and Local Governments
           *  A-110   Grants and Agreements with Institutions of    Part 30
                    Higher Education. Hospitals, and Other
                    Non-Proflt Organizations
           COST
           •  A-21    Cost Principles for Educational Institutions    Part 30
           •  A-87    Cost Principles for State and Local Governments Part 31
           •  A-122   Cost Principles for Non-Proflt Organizations    Part 30
           AUDIT
           •  A-128   Audits of State and Local Governments       Part 31
           •  A-133   Audits of Institutions of Higher Learning and    Part 30
                    Other Non-Proflt Organizations

  VIEWGRAPH #6

  TITLE:       OMB Circulars/CFR

  KEY POINTS:

    OMB Circulars are guidelines issued by the Office of Management and
    Budget to Federal agencies. While they are binding on the Federal agency
    or agencies to which they relate, they do not hold the full force and effect of
    law. In other words, while EPA must follow the Circulars, unless the
    Circular is implemented in a Federal regulation, recipients are not required
    to follow them.  For instance, recipients are required to follow the cost
    principles because they are incorporated by reference in EPA regulations.

    This viewgraph identifies the primary OMB  Circulars governing EPA
    assistance programs.
ADMINISTRATIVE REQUIREMENTS

    OMB Circulars A-102 and A-110 provide uniform administrative
    requirements for managing the pre-award, award, and post-award phases.
    - OMB Circular A-102, issued on March 3,1988, establishes requirements
      for State and local governments. This Circular is  implemented  in 40 CFR
      Part 31.
    - OMB Circular A-110, revised November 29,1993, establishes
      requirements for institutions of higher learning, hospitals, and other
      non-profit organizations. This Circular is implemented in 40 CFR Part 30.
10/1/95                           2.9

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VIEWGRAPH # 6 (continued)

TITLE:       OMB Circulars/CFR

KEY POINTS:


COST PRINCIPLES
    The cost principles determine allowable, unallowable, and costs
    which are acceptable if approved by the Federal agency. The cost
    principles which apply to Federal assistance are contained in OMB
    Circulars A-21, A-87, and A-122 and in the Federal Acquisition Regulation.
    Whether or not a cost is eligible for a specific project or program is
    determined by the governing statutes and implementing program guidance
    and policy for that project or program.
    - OMB Circular A-21,  revised October, 1991, provides guidelines for
     educational institutions.
    - OMB Circular A-87,  revised May 4,1995, provides guidelines for State
     and local governments.
    - OMB Circular A-122, revised May 19,1987 provides guidelines for
     non-profit organizations other than States, local governments, and
     educational institutions.
    - Cost principles for profit making entities are contained in the Federal
     Acquisition Regulation (48 CFR Part 31).
NON-FEDERAL AUDITS
    OMB Circulars A-128 and A-133 provide audit guidance.
    - OMB Circular A-128, issued April  12,1985, provides Federal agencies
     with policy guidance for implementing the requirements of the Single
     Audit Act of 1984, which governs State and local governments, and
     Indian tribes.  This Circular is implemented in 40 CFR Part 31.
    - OMB Circular A-133, issued March 8,1990, provides policy guidance to
     Federal agencies for establishing uniform requirements for audits of
     institutions of higher education and other non-profit organizations
     receiving Federal assistance. This Circular is implemented in 40 CFR
     Part 30.
FEDERAL AUDITS
    Federal auditors, whether EPA or contract auditors, will conduct an audit of
    a profit  maker receiving an assistance agreement.
    EPA auditors may also conduct an audit  of any other assistance recipient,
    but are to rely, as much as possible, on audits conducted under A-128 and
    A-133.

 10/1/95                         2.10

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                TITLE 40 OF THE
 CODE  OF  FEDERAL  REGULATIONS
ji ;! PARTS; iG W^

PART 29
PART 30
PART 31
PART 32
PART 34
PART 35
PART 40
PART 45
PART 46
PART 47
Intergovernmental Review of EPA Programs and Activities
General Regulation for Assistance Programs For Other Than State
and Local Governments
Uniform Administrative Requirements For Grants and Cooperative
Agreements to State and Local Governments
Government-wide Debarment and Suspension (Nonprocurement) and
Government-wide Requirements for a Drua-Free Workplace
New Restrictions on Lobbying
State and Local Assistance
Research and Demonstration Grants
Training Assistance
Fellowships
Environmental Education Grants
All
Universities
Nonprofits
State, Locals
Indian tribes
All
All
Varies
All
All
All
All
   VIEWGRAPH #7
   TITLE:      Title 40 of the Code of Federal Regulations

   KEY POINTS:
      This viewgraph illustrates the primary EPA regulations governing
      assistance programs and recipients. All EPA regulations are codified
      in Title 40 of the Code of Federal Regulations.
      The Code of Federal Regulations contains rules developed by Federal
      agencies to implement Federal statutes or agency policy, and
      therefore, hold the full force and effect of law.
      If a Federal regulation conflicts with a statute or E.G., the statute or
      E.O. supercedes the regulations.
      Federal regulations may be more restrictive than OMB Circulars, if
      OMB approves. For instance, in the Superfund program, States are
      required to follow EPA specific procurement requirements because
      EPA made the case that more stringent requirements were necessary
      to comply with the program's cost recovery requirements.
      These regulations are described further in subsequent viewgraphs.
10/1/95
2.11

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                      40 CFR PART 29
             Provides Intergovernmental Review
             Requirements


             Applies to Most EPA Assistance
             Programs
             Implements Executive Order 12372
  VIEWGRAPH #8

  TITLE:      40 CFR Part 29

  KEY POINTS:

      40 CFR Part 29, issued June 24,1983, provides intergovernmental
      review requirements for EPA-specific programs and activities, as
      well as the appropriate communication channels for voicing
      comments. Intergovernmental review refers to coordinated review
      processes performed at two or more levels of government.

  •    40 CFR Part 29 implements Executive Order 12372
      "Intergovernmental Review of Federal Programs," which requires
      Federal agencies to allow State and local governments the
      opportunity to review proposed Federal financial assistance and
      direct Federal development impacting State and local programs.
      Further, Executive Order 12372 provides that where feasible, and to
      the extent permitted by law, State and local review processes and
      comments must be incorporated into Federal programs as early in
      the planning stage as possible.
  •    Additionally, 40 CFR Part 29 implements provisions of the
      Intergovernmental Cooperation Act of 1968 and the Demonstration
      Cities and Metropolitan Development Act of 1966.
      Indian Tribes are exempt from intergovernmental review
      requirements, but are encouraged to comply.
      Remember, the intergovernmental process is designed by the
      States.  The only time an intergovernmental review is not required is
      when the applicant's State process does not cover the program, or
      the program is exempt, based on government-wide criteria.

10/1/95                          2.12

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VIEWGRAPH #8 (Continued)

TITLE:         40 CFR Part 29

KEY POINTS:

  EO 12372
  •   The intent of the intergovernmental review process is to increase
     the responsiveness of EPA to State and local entities, and to
     identify potential duplication of effort, and/or lack of coordination
     with State and EPA projects conducted in a State. The process
     allows all officials directly affected by a proposed activity to
     comment on that activity.

     Though States are not required to do so, they are encouraged to
     develop an intergovernmental review process and identify under
     which assistance programs they want to review applications. Any
     application subject to a State's official review process must undergo
     intergovernmental review before EPA will obligate funds.  This
     procedure applies to most EPA programs. Exceptions are:
     - Training (other than Wastewater Treatment Operator and Landfill
       Operator training programs);
     - Fellowships;
     - Research & development, unless:
       • public health is affected;
       • an environmental impact statement is needed; or
       • the proposal has a unique geographic focus and is directly
         relevant to the governmental responsibilities of a State or local
         government within the geographic areas of the project site.
     The comment period is generally 60 days for new proposals and 30
     days for a continuation programs.
  If No E012372 Process:

     Applicants in States that do not have an official State process must
     comply with the Intergovernmental Cooperation Act of 1968, and
     Section 204 of the Demonstration Cities and Metropolitan
     Development Act of 1966, as amended. These Acts require
     applicants for federally funded projects in  metropolitan areas to give
     area-wide, metropolitan,  regional or local planning agencies
     designated to perform planning for the geographical location of the
     proposed project an opportunity to review and comment on a
     proposed application (generally 60 days).


 10/1/95                           2.13

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 VIEWGRAPH #8 (Continued)

 TITLE:        40CFRPart29

 KEY POINTS:
      The type of proposals subject to this requirement involve, among
      other things, the construction of highways, wastewater treatment
      facilities, sewers, airports, jails, mass transit, open-space land
      projects, water development, or land conservation projects. Section
      401 provides that to the maximum extent possible Federal financial .
      assistance for development purposes should be consistent with
      planning activities and decisions at State, regional, and local levels.

      To satisfy these requirements, the applicant sends a copy of its
      application to the areawide metropolitan, regional, or local planning
      agency designated to perform planning for the geographic location of
      the proposed project and allows them 60 days for review and
      comment.  If a project is proposed by a specialized unit of local
      government, the same opportunity must be given to the general  unit
      of local government having jurisdiction over the project area. The
      applicant must attach any comments that are received to the
      application and submit them to the Federal funding agency, i.e.,
      EPA.
10/1/95                          2.14

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                       40 CFR PART 30
                   Provides Administrative Requirements for
                   Assistance Agreements to Other Than State
                   and Local Governments
                   Implements OMB Circulars A-21, A-110,
                   A-122,andA-133
  VIEWGRAPH #9
  TITLE:       40 CFR Part 30
  KEY POINTS:

      40 CFR Part 30 "Grants and Agreements with Institutions of Higher
      Education, Hospitals, and Other Non-profit Organizations," (See
      Appendix D) provides administrative requirements for all recipients
      other than States, local governments, and Indian Tribes.
  •   40 CFR Part 30 implements: OMB Circular A-21 "Cost Principles for
      Educational Institutions;" OMB Circular A-110 "Grants and
      Agreements With Institutions of Higher Education, Hospitals, and
      Other Non-profit Organizations;" OMB Circular A-122 "Cost
      Principles for Non-profit Organizations," and OMB Circular A-133
      "Audits of Institutions of Higher Learning and Other Non-Profit
      Institutions."
      Commercial organizations receiving assistance agreements must
      comply with the administrative requirements in 40 CFR Part 30.
      Foreign governments, organizations under the jurisdiction of foreign
      governments, and international organizations are subject to the
      requirements in Part 30, but the Award Official may waive some of
      the requirements. All requirements waived will be stated in the
      assistance agreement.
10/1/95
2.15

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                    40 CFR PART 31

               • Provides Administrative
                Requirements for State, Local,
                and Indian Tribal Governments
               • Implements OMB Circulars
                A-87, A-102, and A-128
VIEWGRAPH#10
TITLE:      40 CFR Part 31

KEY POINTS:

     40 CFR Part 31, issued March 11,1988, with an effective date of
     October 1,1988, establishes uniform administrative rules for Federal
     grants and cooperative agreements and subawards to State, local,
     and Indian Tribal governments. (See Appendix E.)
     Audit requirements contained in 40 CFR Part 31 are prescribed by
     OMB Circular A-128 "Audits of State and Local Governments."
     Additionally, 40 CFR Part 31, implements OMB Circular A-87 "Cost
     Principles for State and Local Governments" and OMB Circular
     A-102 "Grants and Cooperative Agreements with State and Local
     Governments."
10/1/95                       2.16

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                        40 CFR PART 32

                Implements Executive Order 12549,
                Debarment and Suspension Rules For
                Nonprocurement Activities
                Describes Drug-Free Workplace
                Requirements For Assistance Recipients
VIEWGRAPH#11

TITLE:       40 CFR Part 32

KEY POINTS:
     This regulation requires EPA to exclude debarred or suspended
     parties from certain types of assistance, and to report certain
     information about debarred or suspended parties to the General
     Services Administration. Debarment or suspension of a party by one
     assistance agency has a government-wide effect, i.e., it debars or
     suspends them from receiving assistance agreements from all
     Federal agencies.

     40 CFR Part 32, revised October 5,1994, implements Sections 3
     and 6 of Executive Order 12549 (regarding government-wide
     debarment or suspension) and selected provisions of the Drug-Free
     Workplace Act of 1988. It establishes: (1) rules for debarring or
     suspending parties; (2) government authority for compiling and
     distributing lists of parties debarred or suspended from receiving
     Federal assistance; (3) requirements governing EPA reporting of
     parties debarred or suspended from Federal activities; and (4) rules
     governing  drug use among assistance recipients and their
     contractors in the project workplace.
10/1/95                         2.17

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                    40 CFR PART 34

               CANT USE FEDERAL FUNDS
               TO LOBBY

               CERTIFICATION REQUIREMENT

               DISCLOSURE FORM
     VIEWGRAPH #12
     TITLE:       40 CFR Part 34 - Anti-lobbying

     KEY POINTS:
        40 CFR Part 34, issued October 23,1989, prohibits the use of
        Federal funds to influence certain Federal contracting and
        financial transactions.

        Each applicant who requests or receives a Federal contract,
        loan, grant or cooperative agreement exceeding $100,000 must
        certify to that Agency that the applicant has not used, and
        will not use Federal funds to pay someone to influence or
        attempt to influence the Federal Agency or Member of
        Congress for that award.

        If the recipient uses non-Federal funds (regardless of dollar
        amount) to lobby a Federal Agency of Member of Congress for a
        specific grant or cooperative agreement, they must submit
        an SF LLL, "Disclosure of Lobbying Activities" with the
        application.
10/1/95                      2.18

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                            40 CFR PART 35

                    • Provides
                      Program-Specific
                      Assistance
                      Requirements

                    • Contains 16
                      Subparts
  VIEWGRAPH#13
  TITLE:      40 CFR Part 35
  KEY POINTS:
    While 40 CFR Parts 30 and 31  provide the general assistance requirements,
    40 CFR Part 35 provides the program-specific assistance requirements for
    other than Research & Development, Training,  Fellowship programs, and
    National Environmental Education Act grants.
    The subparts of 40 CFR Part 35 which apply to  construction grants are as
    follows:
      - Grants for Construction of Wastewater Treatment Work (Subpart C)
      - Reimbursement Grants (Subpart D)
      - Grants for Construction of Treatment Works/Clean Water Act (Subpart
         E)
      - Grants for Construction of Treatment Works (Subpart I)
      - Construction Grants Program  Delegation to  States (Subpart J).
    The subparts of 40 CFR Part 35 which apply to  non-construction grants are
    as follows:
      - Financial Assistance for Continuing Environmental Programs (Subpart A)
      - Cooperative Agreements for Protecting and  Restoring Publicly Owned
         Freshwater Lakes (Subpart H)
      - State Water Pollution Control Revolving  Funds (Subpart K)
      - Grants for Technical Assistance (Subpart M)
      - Cooperative Agreements and  Superfund State Contracts for Superfund
         Response Actions (Subpart O).
      - Financial Assistance for the National Estuary Program (Subpart P).
      - General Assistance Grants to Indian Tribes  (Subpart Q.)
    Subparts B, F, G, L, and N are reserved for  future use.
10/1/95                          2.19

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                 40 CFR PARTS 40,45,46, and 47

                • PART 40
                  Research and Demonstration
                  Grants

                • PART 45
                  Training Assistance

                • PART 46
                  Fellowships

                • PART 47
                  Environmental Education Grants

   VIEWGRAPH#14
   TITLE:       40 CFR Parts 40,45, 46, and 47

   KEY POINTS:

   •    EPA provides three primary types of assistance with a nationwide
       impact: research , development, and demonstration; training; and
       fellowships. These types of assistance are normally awarded by
       Headquarters and are governed by 40 CFR Parts 40, 45,46, and 47
       which are described below. (See Appendix H).
       40 CFR Part 40,  revised June 24,1983, establishes EPA's
       requirements for awarding and managing research and demonstration
       grants.  Research and demonstration projects are funded to research
       and analyze various environmental issues.
   •    40 CFR Part 45,  issued October 18,1984, implements EPA's
       requirements for awarding and managing training projects.  The
       purpose of this assistance is to improve and develop the skill base of
       students and professionals in the environmental field. Training
       assistance under 40 CFR Part 45 includes the following: (1) developing,
       expanding, planning, implementing, and improving environmental
       training; (2) increasing the number of trained pollution control and
       abatement personnel; (3) upgrading the level of occupational and
       professional training among State and local environmental control
       personnel; (4) training people to train others in occupations involving
       pollution abatement and control; and (5) bringing new people into the
       environmental control field.
10/1/95                         2.20

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VIEWGRAPH #14 (Continued)

TITLE:       40 CFR Parts 40,45,46, and 47

KEY POINTS:
       40 CFR Part 46, issued October 18,1984, sets forth EPA's
       requirements for awarding and managing fellowships. This program
       was created to enhance the capabilities of State and local agencies
       in the area of environmental protection and management. EPA
       fellowships are also awarded to individuals for specific educational
       programs in the area of environmental science. EPA sponsors the
       following three types of fellowships: (1) local agency fellowship, (2)
       State agency fellowships, and (3) special fellowships.
       40 CFR Part 47, issued March 1992, implements EPA's
       requirements for awarding Environmental Education grants,  These
       grants are awarded from both Headquarters and the Regions.  The
       grants are available to local  education agencies, colleges,
       universities, State education or environmental agencies, not for
       profit organizations, or noncommercial educational broadcasting
       entities.
10/1/95                          2.21

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                    EPA ORDERS, POLICIES &
                            GUIDANCE
                   • RECYCLED PAPER
                   • ASSISTANCE VS. ACQUISITION
                   • FUNDING ASSISTANCE AGREEMENTS
                   • CARRYOVER OF UNOBLIGATED BALANCES
                   • PERFORMANCE-BASED ASSISTANCE
                   • USE OF DISADVANTAGED BUSINESS
                    ENTERPRISES
                   • TIMELY AWARD OF ASSISTANCE
                   • POLLUTION PREVENTION GUIDANCE

     VIEWGRAPH#15
     TITLE:       EPA Orders, Policies, and Guidance

     KEY POINTS:
         EPA Orders and policies are agency requirements issued by EPA
         Headquarters.  Regions may also issue regional policies and
         guidance consistent with Headquarters policies and guidance
         issued by EPA's National Program Managers (NPM). Regions
         may also issue guidance to implement EPA Orders, policies, or
         guidance.
         The following are the major Orders,  policies, and guidance
         issuances affecting assistance administration.
     EPA ORDERS
         Recycled Paper
         EPA's policy on recycled paper is in EPA Order No. 1000.25 "Use
         of Recycled Paper." Issued on January 24,1990 and last
         amended on April 12,1990, this order was developed to promote
         the use of recycled paper.  Specifically, it requires new contracts
         and assistance agreements to specify that  reports delivered to
         EPA in conjunction with EPA contracts or assistance agreements
         must be printed on recycled paper (even if  recycled paper is more
         costly).  (See Appendix I)
         Acquisition vs Assistance
         EPA's Order on the use of assistance agreements versus
         acquisition (5700.1) is discussed in Module I. This Order
         describes when it is proper to use an assistance agreement and
         when a contract is required.
10/1/95                         2.22

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VIEWGRAPH#15 (Continued)

TITLE:       EPA Orders, Policies, and Guidance
KEY POINTS:
      Funding Assistance Agreements

      To help resolve problems EPA program and GMO staffs are
      experiencing in making awards for one-time projects, new programs,
      and using Administrator or Regional Administrator discretionary
      funds, EPA established consistent, standard operating procedures for
      funding assistance agreements. (See Appendix J for the Order,
      "Policy and Procedures for Funding Assistance Agreements.")

      - Clarifies what information is needed before an award can be made,
        and identifies which office is responsible for providing the
        information.
      - The policy states that the Program Office  must identify the Program
        Element, Statutory Authority, and Delegation of Authority before
        funds are distributed to Headquarters or the Region for award.

  EPA POLICIES

      Carryover of Unobligated Balances

      EPA's policy on carryover of unobligated balances is covered in EPA
      Policy Statement No. 88-09 "Disposition of Unobligated Balances of
      Assistance Agreements." Issued May 6,1988, by the Office of the
      Comptroller with an effective date of June 30,1988, this policy
      describes the cases  in which the use of appropriated funds may be
      carried over to subsequent budget periods and the documentation
      and accounting methods this involves.  Additionally, this policy
      statement  discusses cases in which budgets may be decreased
      without carrying over appropriated funds,  (see Appendix K.)
      - Carryover of unobligated balances is authorized for both project
        type assistance agreements and Continuing Environmental
        programs in cases where the source appropriation has not expired.
        For project type assistance agreements, carryover may also be
        approved when the source appropriation  has expired, if the scope
        of  the work has not changed and the project period  has not
        expired.
10/1/95                         2.23

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       VIEWGRAPH#15 (Continued)

       TITLE:       EPA Orders, Policies, and
           Guidance

       KEY POINTS:
          Performance-Based Assistance

          EPA's performance-based assistance policy, issued May 31,
          1985, establishes agency-wide procedures for negotiating
          and overseeing assistance agreements. It includes
          guidelines for: (1) assessing performance, (2) rewarding
          accomplishments, (3) correcting problems, and (4) imposing
          penalties.  (See Appendix L.) While the policy applies to
          Continuing Environmental Program Grants, the guidelines
          may be helpful to other programs.

          Disadvantaged Business Enterprises
          EPA's requirements on the use of disadvantaged business
          enterprises (DBE) are contained in two EPA plans. (See
          Appendix M) The plans set forth how EPA will implement the
          statutory provisions of the Clean Air Act Amendments of 1990
          and EPA's 1991 Appropriations Act as well as the
          requirements in the Executive Orders discussed on page 2.6.
          The Clean Air Act requires that EPA establish a minimum
          10% goal for the use of DBEs in contracts awarded under
          Clean Air research grants. The 1991 Appropriations Act
          requires that EPA establish a minimum 8% goal for the use of
          DBEs in contracts awarded under all other assistance
          agreements.
          In addition to the two plans, EPA's requirements on the use
          of DBEs are contained in 40 CFR 30.44(b) (for universities
          and other nonprofits); 40 CFR 31.36 (e) (for States, local
          governments, and Indian tribes); and 40 CFR 35.6580 (for
          Superfund recipients).
10/1/95                          2.24

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     VIEWGRAPH #15 (Continued)
     TITLE:      EPA Orders, Policies, and Guidance

     KEY POINTS:
        Timely Award
        The timely award policy ("Policy on the Timely Award of
        Assistance Funds for Continuing Environmental Programs") calls
        for funding  Continuing Environmental Programs as quickly as
        possible after funds become available. It was issued September
        14,1992, in conjunction with the Office of Comptroller's June 26,
        1992, memorandum clarifying Agency policy on when funds are
        available for award. (See Appendix N)
     EPA GUIDANCE
        Pollution Prevention
        The Agency's implementation of pollution prevention is provided in
        EPA's "State Grants Guidance: Integration of Pollution
        Prevention," dated November 12,1992. (See Appendix O.) This
        guidance establishes the Agency's pollution prevention
        commitment by:
        - Promoting pollution prevention in State programs supported by
          EPA funds;
        - Ensuring that grant requirements as interpreted by EPA/State
          workplans support innovative State pollution prevention
          activities;
        - Establishing a process to share information on successful State
          projects and identify statutory or other barriers to funding State
          proposals; and
        - Building State capacity in pollution prevention to the  extent
          consistent with statutory assistance requirements.
10/1/95                          2.25

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                    Hierarchy

             STATUTES

             EXECUTIVE ORDERS

             FEDERAL REGULATIONS
             OMB CIRCULARS (implemented
             through Federal regulations)

             EPA ORDERS & POLICIES

             EPA GUIDANCE
   VIEWGRAPH#16
   TITLE:      HIERARCHY

   KEY POINTS:

       If there is a conflict between two or more documents, those
       documents that have the force and effect of law take precedence
       over those that do not.
       The viewgraph lists in descending order which document has
       precedence over the others.
       A Federal statute carries the greatest amount of weight in this
       scheme, followed by an Executive Order, and down through EPA
       guidance.
10/1/95                    2.26

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                        DOS AND DONTs
              • INCLUDE THE DELEGATION OF AUTHORITY
               NUMBER IN THE DECISION MEMORANDUM

              • INCLUDE THE STATUTORY AUTHORITY IN THE
               DECISION MEMORANDUM

              DON'T

              • RELY ON THE GMO TO KNOW EVERY
               DELEGATION OF AUTHORITY

              • RELY ON THE GMO TO KNOW EVERY
               STATUTORY CITE

 VIEWGRAPH#17
 TITLE:       Dos and Don'ts

 KEY POINTS:


 DO

     Include the number of the approval Delegation of Authority in the
     Decision Memorandum.

     Include the statutory cite in the Decision Memorandum. This should
     reference not only the Federal Statute, but the specific section of the
     statute which authorizes EPA to make these awards.

 DON'T

     Rely on the GMO to identify your program's Delegation of Authority and
     statutory authority.
10/1/95                        2.27

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MODULE III

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     ASSISTANCE
   PROJECT OFFICERS
    TRAINING COURSE
   MODULE
PREAPPLICATION
  APPLICATION
     PHASE

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                       OVERVIEW


             • PROGRAM GUIDANCE OR
              SOLICITATION

             • PRE-APPLICATION ASSISTANCE

             • APPLICATION REVIEWS

VIEWGRAPH # 1
TITLE:       Overview

KEY POINTS:

    The PO reviews preapplications and applications to
    determine:

    -  Relevance of the proposal to EPA objectives;

    -  Programmatic, technical, and/or scientific merit;

    -  Relationship to other proposals and on-going work; and
    •  Availability of funds.
    The PO's and GMO's responsibilities begin with the assistance
    provided to prospective applicants in developing their
    application (pre-application assistance).  The PO conducts the
    programmatic evaluation of the narrative/workplan and
    provides assistance on the programmatic aspects of the
    application, while the GMO conducts the administrative
    evaluation and provides assistance on the administrative
    aspects of the application.  In some areas, such as reviewing
    the budget and determining whether a grant or a contract
    should be used, the expertise of both the PO and GMO are
    required to ensure that the Agency makes an appropriate
    determination.
    After the PO's and GMO's initial contact with a prospective
    applicant, they should keep a record of any material discussion
    with the applicant.  While the Official File is not required until
    the GMO assigns an Assistance Identification Number, it is
    helpful to keep a record of all discussions with the applicant in
    case an issue arises later which was discussed during this
    phase.
   10/1/95                    3.1

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                      GUIDANCE/SOLICITATION
                  • HEADQUARTERS GUIDANCE OR
                   SOLICITATION

                  • REGIONAL GUIDANCE OR
                   SOLICITATION

                  • DISTRIBUTION OF GUIDANCE OR
                   SOLICITATION

VIEWGRAPH #2
TITLE:       Guidance/Solicitation

KEY POINTS:

    The first step in awarding an assistance agreement is for the Program
    to inform potential applicants through Agency guidance of the
    availability of funding. For research grants, the solicitation serves
    the same purpose as the guidance does for other programs. The
    purpose of the guidance or solicitation is to inform applicants of the:
    - Amount of possible funding;
    - EPA (Headquarters/Regional) program priorities;
    - Tasks/activities applicants must address in the workplan or
      narrative;

    - Application due date;
    - Where to send the  application;
    - If the award is competed, the evaluation criteria and the relative
      weight of each criteria;
    - Statutory citation;

    - Match (cost sharing) requirements, if applicable;
    - Any special emphasis, e.g. the need to meet Disadvantaged
      Business Enterprise requirements; and
    - EPA Contact person.

    To eliminate misunderstanding over what EPA will fund and what is
    expected from the applicant, the guidance or solicitation must be in
    writing.

   10/1/95                   3.2

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VIEWGRAPH #2 (Continued)
TITLE:       Guidance/Solicitation

KEY POINTS:
    The Program may distribute the guidance or solicitation by:
    - Sending directly to the applicants, e.g., if the PO knows the
      potential applicants which are eligible, such as continuing
      environmental program grants;
    - Publishing in a publication (Federal Register. Commerce
      Business Daily, trade journal) which reaches the target
      audience,e.g., if the awards are to be made based on
      competition; or
    - Distributing to potential applicants in a meeting /conference.
     10/1/95                    3.3

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                PREAPPLICATION ASSISTANCE


                 • FORMAL OR INFORMAL

                 • RESULTS IN BETTER PROPOSALS

                 • BENEFITS BOTH EPA AND
                  THE APPLICANT
VIEWGRAPH # 3
TITLE:       Preapplication Assistance

KEY POINTS:

   EPA encourages POs to meet with prospective applicants and
   discuss the proposed work and budget before they submit an
   application. This will help the prospective applicant develop the
   proposal, or sharpen the focus of a proposal, and avoid delays
   caused by submitting an incomplete application.
   Preapplication assistance should take place if it is appropriate, i.e.,
   it may not be necessary for Continuing Environmental Program
   grants, but may be desirable for new recipients or for projects
   where the applicant or the Program wants to "grease the skids" to
   speed up the process.
   Preapplication assistance may be formal, i.e, the prospective
   applicant requests  in writing or sends in an SF 424 "Application
   For Federal Assistance," (see Appendix P) designated as a
   Preapplication; or informal, i.e., discussions with the PO and GMO
   concerning various aspects of the proposed project or questions
   on the process itself.
   The receipt point for formal preapplications should be negotiated
   between the Program office and the GMO.
   Program and GMO Reviews
   The discussions the PO will have with  the prospective
   applicant will focus on programmatic activities EPA will fund,
   e.g., does the application meet statutory goals and objectives
   and is it consistent with program goals and objectives.  When
   the application addresses areas the PO is not familiar with,
   they must obtain assistance from other EPA staff with
   expertise in the subject area, such as reviewing a Quality
   Assurance Plan.


  10/1/95                   3.4

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VIEWGRAPH # 3 (Continued)
TITLE:          Preapplication Assistance

KEY POINTS:
     The applicant's discussions with the GMO will focus on the
     administrative issues, e.g., what needs to be submitted with the
     application to make it acceptable from the administrative point of
     view, what certifications are required, what justification is needed to
     support the budget.

     After evaluating a formal preapplication, the Approval/Decision
     Official or their designee must notify the applicant, preferably in
     writing, of the results of the evaluation and either:
     - Encourage submission of a formal application for assistance.  The
       reviewer may suggest modifications or revisions to any aspect of
       the application, but under no circumstances should the
       applicant be assured of funding; or

     - Reject the preapplication. This letter should give specific reasons
       for rejection, e.g., lack of scientific/technical merit, not relevant to
       Agency's objectives, lack of funds; or

     - Take other action. Suggest the preapplication be submitted to
       another Federal agency which has a more direct interest in the
       project.
     Cautions
     Release of information:
     - If the Award is to be made based on competition.  EPA employees
       may not provide information to a particular applicant or other
       interested person, unless such information is available to all
       parties.
     - If the award is not based on competition. EPA employees may
       review draft narrative/workplans and provide input. EPA
       employees may also negotiate with the  applicant to change the
       proposed outputs, reduce the assistance amount, or condition the
       award based on approval of a revised workplan.
     - EPA employees should not prepare an application  for an individual
       or organization.  It is permissible to help applicants by answering
       questions, but the applicant should be preparing the application
       except in unusual circumstances, e.g., language barrier.
     10/1/95                    3.5

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VIEWGRAPH #3 (Continued)
TITLE:       Preapplication Assistance

KEY POINTS:
     Benefits

     Some benefits from preapplications are:

     -  Establishes communications between EPA and the
       potential applicant;

     -  Determines eligibility early in the process;
     -  Determines how well the project fits program guidance and
       objectives;
     -  Determines how well the project might compete with other
       similar applications;
     -  Discourages inappropriate proposals;
     -  Speeds award of meritorious proposals; and
     -  Prevents the need to rework inappropriately or incorrectly
       prepared formal applications.
     Timeframe for Review
     The POs and GMOs should review preapplications
     generally  within 45 days of receipt.
  10/1/95                    3.6

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                  APPLICATION PHASE

            • GMO RECEIVES APPLICATION

            • APPLICATION REVIEWS

            • REVIEW AND EVALUATE
             APPLICATIONS IN 60-90 DAYS

            • CBI/FOIA

 VIEWGRAPH #4
 TITLE:       Application Phase

 KEY POINTS:

     During this phase the PO and GMO will review the
     application to ensure that it meets programmatic and
     administrative requirements.

     Application Receipt Point

     The application should be sent to the GMO who will
     assign an Assistance Identification Number (see next
     viewgraph), establish the official  assistance file, and conduct
     legal and administrative evaluations. Remember, an
     application is not officially received in EPA until the GMO
     assigns an Assistance Identification Number and enters it
     into the Grants Information and Control System (GIGS).
     If the PO receives an application, they are responsible
     for sending the original to the  GMO, who will assign the
     Assistance Identification Number and enter the application
     into GIGS. The GMO will send a copy of the application to
     the PO.
     Application Reviews

     The programmatic and administrative reviews should be
     done concurrently to minimize delays. While the  length of
     the programmatic review will vary depending upon the
     complexity of the proposal, time of year, program workload,
     other EPA staff involvement, the PO should attempt to
     complete the review within 3 weeks from receipt of the
     application.
10/1/95                   3.7

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VIEWGRAPH # 4 (Continued)
TITLE:       Application Phase

KEY POINTS:
    Technical Review. The PO's technical review is an appraisal
    to select those proposals that will contribute most effectively
    to EPA's program objectives and priorities.  The PO must
    ensure that the proposal is consistent with applicable
    regulations and established EPA program criteria and annual
    guidance.  When the programmatic review of a proposal
    requires specific qualifications not available in the program,
    the reviewer must obtain assistance from other EPA staff with
    expertise in the subject area, such as reviewing a Quality
    Assurance Plan.
    Extramural (Non-EPA) Review.  EPA supplements the reviews of
    Agency personnel in some programs by obtaining independent
    reviews from qualified non-EPA professionals.
    -  Research and Demonstration.  The program must arrange for
       a  minimum of one intramural and  two extramural reviews
      for technical and scientific merit of applications found to be
       relevant.
     - Extramural reviews are not required for continuation
       applications, or for applications requesting support of a
       conference or symposium.
    A programmatic review should:
    -  Highlight strengths and weaknesses;
    -  Identify gaps between program objectives and intended
      activities;
    -  Determine that the correct funding mechanism (contract or
      assistance agreement) is being proposed;
    -  Identify best management approaches; and
    -  Suggest how a proposal might be strengthened.
  10/1/95                   3.8

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VIEWGRAPH # 4 (Continued)
TITLE:       Application Phase

KEY POINTS:
   Review Timef rame

   EPA's general goal is to complete its application review and
   evaluation within 90 days after the GMO receives the
   application, unless there is a statutory or program requirement to
   review the application sooner, e.g., the Waste Water Treatment
   Construction Grant program has a 60 day review requirement.
   Applicants for Continuation/Continuing Environmental Program
   grants should request assistance well  before the 60 day
   application due date to allow sufficient time for a thorough review.

   The PO and GMO may discuss with applicants how to improve
   applications. The application should not dwell on how the
   project will benefit EPA, but specifically address why it
   should  be a grant or cooperative agreement and not a
   contract.

   Confidential Business Information/  FOIA  Requests
   A recipient may claim confidential information on the the
   documents they submit to EPA.  If the recipient asserts a claim of
   confidentiality, they must mark their response "Confidential
   Business Information" or with a similar disclaimer.
   It is a good idea to ask applicants to identify Confidential
   Business Information in the application. If the recipient claims
   certain information is CBI, EPA cannot release that information
   under the Freedom of Information Act. If EPA does not ask the
   applicant to identify CBI in its application, and there is a FOIA
   request, the  EPA will have to go back to the recipient and ask
   them  to identify any CBI.
   POs must make sure any information they furnish the public
   is consistent with program objectives and guidance, as well
   as releasable under the Freedom of Information Act (FOIA).
   If you have any questions over whether the information is
   releasable under FOIA, contact the  Office of General
   Counsel/Office of Regional Counsel.
   10/1/95                    3.9

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  ASSISTANCE IDENTIFICATION NUMBER
                      PROGRAM CODE
                   r
SERIAL NUMBER

SEQUENCE NUMBER

AMENDMENT
 DESIGNATOR
   A1  000000  00 0
VIEWGRAPH #5
TITLE:       Assistance Identification Number

KEY POINTS:


    The EPA Assistance Identification Number consists of eleven
    characters and uses both letters and numbers. Sequential
    identification of these numbers is as follows:
    Program Code: A two-character alpha-numeric code
    identifies the assistance program.
    Serial Number: A six-position number identifies a specific
    assistance application or agreement.
    Sequence Number:  A two-position number identifies a fiscal
    year or budget period in all programs other than Wastewater
    Treatment Construction  and State Revolving Fund projects,
    where it identifies a specific project.
    Preapplication/Amendment Designator: A one-position
    code identifies a specific formal amendment to an assistance
    agreement or amendment. Number "0-9" are used to indicate
    no amendment through the ninth amendment and the alpha
    codes "A-Z" indicate the tenth through thirty-sixth
    amendment. An asterisk (*) identifies a preapplication.
10/1/95
 3.10

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                  THE APPLICATION PACKAGE

                  Standard   ij   I lntargev«mm*ntal Ravltw Sign-off	
                  Application  B i  	
                 Form (SF 424)  i T I Procurement System Certification, H applicable
                 B^getDetejTj
                 Project Narrative fc
                             I Certification Regarding Debarment and Suspeniton
                             Current Approved Indirect Cost Rat* Agre*m«nt
                             | AnH-Lobbylng CertHteatlori
                             I OualHy Aaaurance Protect Plan, II applicable
                             | Intended UM Plan, SRF only
                             | Health and Safety Plan. Sup»rfund only
                Program Specific	
                Requirements  § T | Community Rolallora Plan. Suptrtund only
                             | Enforc»m»nt L«tl»r, Sup«ftund only
VIEWGRAPH#6
TITLE:          The Application Package
KEY POINTS:
        The application consists of:
        - The SF 424, "Application for Federal Assistance",
        -  Detailed budget,
        -  A Narrative/Workplan, and
        -  Certification attachments.
        The application package may also contain program specific
        requirements, such as the Intended Use Plan for the State Revolving
        Fund program, or the Community Relations plan, Health and Safety
        Plan, and Enforcement Letter for the Superfund program.
        The following is a description of the contents of a "common"
        application package.
        10/1/95                       3.11

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                SF 424 - APPLICATION FOR FEDERAL
                           ASSISTANCE
                            FACESHEET

                            BUDGET INFORMATION

                            ASSURANCES

                            NARRATIVE/WORKPLAN
VIEWGRAPH # 7
TITLE:        SF 424-Application for Federal Assistance

KEY POINTS:

     The application (SF 424) consists of four parts -- the Facesheet, Budget
     information, Assurances, and a Program Narrative/Workplan.
     Even if an application has been through a preapplication evaluation,
     the GMO and PO may still have to work with the applicant to revise
     the application further before it is approvable.
     The PO is responsible for reviewing the application to ensure:
     - All budget items, proposed contracting and subcontracting, and
      work elements are reasonable and necessary. To do this, the PO
      needs to review the narrative/workplan and ask the applicant
      questions if the application does not provide a clear
      understanding of why the costs in the budget are necessary and
      reasonable.
     - The activities are eligible under the program statute(s), guidance,
      and regulations, and the work is allocable to the project.
     GMOs are responsible for reviewing and analyzing the application to
     ensure all information is complete and correct.  This includes ensuring
     all costs are allowable and that assistance is the appropriate funding
     mechanism. The GMOs also ensure the application meets statutory,
     regulatory, and legal requirements.

     The SF 424 application (see Appendix P) is used for all EPA programs
     except for the Wastewater Treatment Construction Grants program
     (which uses EPA Form  5720-12), and the Fellowship programs (which
     use EPA Form 5770-2). These last two forms were specifically
     developed for those two programs.
      10/1/95                   3.12

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                     FACESHEET
          GENERAL SUMMARY INFORMATION
              SF424

             Facesheet:

             • General
              Information

             • Project
              Summar
 Provides General
 Information About
 Applicant

 Provides Summary
 Information on the
 Proposed Project
 VIEWGRAPH # 8
 TITLE:        SF 424 - Facesheet

 KEY POINTS:
     The applicant provides the information on the Facesheet.

     The Facesheet provides:

     - General administrative information about the applicant, e.g.,
      type of entity, location of the project, name of the
      applicant's contact person, Congressional district, and

     - Summary information about the proposed project, e.g.,
      budget, length of budget and project periods.
     The GMO will review the Facesheet to ensure that all items
     are properly completed.  For Headquarters awards, the
     applicant should write in Block 9 the name of the EPA
     program person (usually the PO) who provided preapplication
     assistance.
     If the award of assistance involves verifying the recipient has
     met the required level of effort under a previous award (e.g.,
     §106 of the Clean Water Act and §105 of the Clean Air Act),
     the PO and GMO must review the most recent Financial
     Status Report and supporting documentation to ensure the
     applicant met the requirement.
10/1/95
3.13

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                              BUDGET INFORMATION
                         SF424-A

                         Budget
                         Information

                           $$
VIEWGRAPH # 9
                  SF 424-A Identifies Total Project Costs:
                  • Section A-Budget Summary
                  • Section B • Budget by Object Class
                   Category
                  • Section C • Non-Federal Resources
                  • Section D • Forecasted Cash Needs
                  • Section E • Budget Estimates of
                   Federal Funds Needed for Balance
                   of Project
                  • Section F- Other Budget Information
TITLE:

KEY POINTS:
SF 424 - Budget Information
    The budget is the financial expression of the project or program and
    includes both the Federal and non-Federal share.
    Sections A, B, C, and D call for budget estimates for the entire project,
    except for projects funded on an annual or other incremental basis.  In the
    latter case, Section E provides the budget information for subsequent
    budget periods.  The form itself provides detailed instructions for completing
    the form.
    The applicant is  responsible for preparing the budget.
    Budget Review Responsibilities

    The narrative/workplan must justify the necessity for every item .
    The PO is responsible for reviewing the proposed budget against the
    Narrative/Workplan to determine whether the budget is reasonable
    from a programmatic perspective. In making this determination, the PO
    should consider  the technical necessity for and price reasonableness of
    proposed personnel, travel, equipment, supplies, procurements, and other
    items in the budget.  There is no one way to determine the reasonableness
    of any particular item. If the PO questions whether a particular item is
    "reasonably" priced, they should ask other POs, call various suppliers, ask
    the GMO for advice, or ask the applicant how they arrived at the cost.
    The GMO is responsible for ensuring that budget information is complete
    and costs are consistent with Federal cost principles and policies. The
    GMO also reviews the indirect cost rate (if indirect costs are claimed) and
    will verify that the applicant has a current, approved rate (provisional or
    final).
        10/1/95
                    3.14

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VIEWGRAPH # 9 (Continued)
TITLE:         SF 424 - Budget Information

 KEY POINTS:
     If the applicant requests funds to purchase equipment, the PO
     should also consider what will happen to the property after it
     is no longer needed for the project/program or the
     project/program is terminated. The GMO will add a condition to
     the agreement regarding disposition based on the PC's
     recommendation.
     Section A - Budget Information provides a summary of the budget
     by program, function, or activity.
     Section B - Budget Categories identifies budget amounts by object
     class categories. Object Class categories include: personnel, fringe
     benefits, travel, equipment, supplies, contractual,  construction,
     indirect cost, and other.
     - The applicant must provide documentation to support the costs in
       each object class. This support may either be in the
       narrative/workplan or may be an attachment to the application.

     - For Personnel, the applicant must identify all staff positions by
       title, annual salary, and the percentage of time  each  position will
       be assigned to the project/program. The PO must examine
       staffing requirements for the project and must determine
       whether project staff support is adequate and the right mix to
       meet the project objectives. (The GMO will review this
       category to determine if the salary ranges proposed  are
       reasonable.) Some of the questions the PO should consider
       are:
          -  Who is charged with the ultimate responsibility to
            manage the project?
          -  Will key staff members participate full time ?
          - Are there gaps in areas of expertise?
     - For Equipment, the applicant must identify each item and its
       cost.
     - Some programs (such as Superfund) require the applicant to
       conduct a cost/benefit analysis of purchasing equipment,
       leasing, or letting the contractor purchase the equipment.  The
       PO is responsible for ensuring that the applicant complies
       with any preaward program specific requirements regarding
       property (or any other cost item).

   10/1/95                    3.15

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VIEWGRAPH # 9 (Continued)
TITLE:         SF 424 • Budget Information

 KEY POINTS:

   - For Supplies, the applicant must only request supplies which are
     needed to complete the proposed workplan.  The PO must review
     these costs to determine that the requested supplies are needed
     for the proposed workplan.
   - For Travel, the applicant must identify the number of trips planned,
     the destination for each trip, the number of travelers, and the
     estimated cost of each trip. The PO must review these costs to
     ensure that the number of trips are necessary to complete the
     scope of work and that the number of travelers is consistent
     with the purpose of the trip. The GMO will review these costs to
     verify that the costs are reasonable, e.g., airline ticket costs, per
     diem rates, mileage rates.
   - For the Other category of costs, the PO must review these to
     determine that they are consistent with the proposed workplan
     and are necessary to complete the approved workplan.
   - For contractual costs, the applicant must identify what contracts
     they intend to award during the budget period and that any
     proposed contractors are not suspended or debarred.  The PO
     must review this list and satisfy themselves that:
     -  The contract support proposed is necessary to carry out the
        objectives of the project/program; and
     -  The proposed costs appear reasonable.
   - The GMO will be reviewing costs for allowability  and allocability.
   - If the applicant is proposing to award a sole-source contract, they
     must provide their reasoning so the PO and GMO can determine if
     there is adequate justification .
   - For Indirect Costs, the applicant must provide a copy of its current
     approved indirect cost rate. EPA will not allow a recipient to draw
     down on indirect costs unless they have an approved,  current rate.
     The GMO will verify that the applicant has an approved rate. (If not,
     the GMO will condition the award to limit the applicant's ability to draw
     down indirect costs until a final rate is approved by the applicant's
     Cognizant Federal Agency.)
    10/1/95                    3.16

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VIEWGRAPH # 9 (Continued)
TITLE:           SF 424 - Budget Information

KEY POINTS:
    Section C - Non-Federal Resources includes a list of funding
    sources and amounts other than those provided by EPA or other
    Federal agencies. If the applicant is required to cost share, this
    section is where those costs will be shown. The amount of the
    cost share, if any, will be determined by statute, program
    regulations, or guidance.
    Section D - Forecasted Cash Needs shows the estimated rate of
    expenditures by quarter over the Fiscal Year. EPA does  not
    generally require that its applicants complete this Section.
    Section E - Budget Estimates of Federal Funds Needed for the
    Balance of  the Project provides useful information to estimate
    funds necessary for future years.
    Section F - Other Budget Information is used to list and explain
    specific direct and indirect charges that appear in Section B.
    Space is  also provided to allow the applicant to clarify other parts
    or sections of the application.
 10/1/95                   3.17

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               COST SHARING (MATCH)
            Requirements Vary
            With Program
            Only Allowable
            Costs Can Be Used
            Cannot Use Federal
            Funds As Match
            May Use In-Kind
VIEWGRAPH#10
TITLE:       Cost Sharing (Match)

KEY POINTS:
   The amount of the cost share is specified in the regulations
   applicable to the program.
   Cost sharing requirements may be required by statute (e.g., Air
   §105 grants), program policy (Toxic Substances Controj Act
   §10 grants), or by regulation (Superfund Technical Assistance
   Grants.)
   Recipients can claim only allowable and eligible costs to meet
   cost sharing requirements.
   Recipients subject to OMB Circular A-110 (see Module 2) may
   claim unrecovered indirect costs as part of their cost share, with
   the prior approval of the EPA Award Official.
   Funds awarded under assistance programs of other Federal
   agencies cannot be used to meet EPA cost sharing
   requirements unless the other agency's legislation explicitly
   authorizes such use, e.g., Department of Housing and Urban
   Development's Community Development Block Grant program,
   or the Indian Self-Determination Act.
10/1/95                   3.18

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VIEWGRAPH # 10 (Continued)
TITLE:        Cost Sharing (Match)

KEY POINTS:
        Sources of funds for recipient cost sharing are either:
        -  Third Party in-kind contributions e.g., facilities, equipment,
          materials, professional services, volunteer staff time
          provided by non-Federal public agencies, organizations,  or
          individuals; or
        - Cash.
        If there is a cost sharing requirement, the recipient cannot
        decide which task, sub task, etc., is funded with Federal
        dollars and which is not.  Each assistance-related dollar
        includes both the Federal and recipient shares. Recipients
        cannot avoid Federal statutory or regulatory requirements by
        separating their funds from Federal funds.
     10/1/95                    3.19

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                 PROGRAM INCOME
             WHAT IS INCLUDED
           • HOW IT IS TO BE USED

VIEWGRAPH#11

TITLE:       Program Income


KEYPOINTS:

    What is Program Income?
        "Program Income" is the gross income received by the
        recipient or subrecipient:
        - Directly generated by an assistance supported activity,
         or
        - Earned only as a result of the assistance agreement
         during the project period.
    •   If authorized by regulation or the assistance agreement,
        the recipient may deduct costs incident to the generation
        of "program income."
        "Program income" does not include interest earned on
        assistance funds, rebates, credits, discounts, refunds,
        etc., unless specifically made so in EPA regulations.
        Income from royalties and license fees for copyrighted
        materials, patents, and inventions developed by a
        recipient or subrecipient is not "program income"  unless
        specifically identified as such in the assistance
        agreement or EPA regulation.
    •   Taxes, special assessments, levies, fines, and other
        such revenues raised by a recipient or subrecipient are
        not program income unless the revenues are specifically
        identified as program income in the assistance
        agreement or EPA regulations.
10/1/95                    3.20

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VIEWGRAPH#11 (Continued)
TITLE:       Program Income


KEY POINTS:
 Use of Program Income

     Recipients must use program income for current costs
     unless EPA regulations or the assistance agreement specify
     another alternative use for the program income.
     Further, program income which was not anticipated at the
     time of award shall be used to reduce the Federal and
     recipient contributions rather than increase the funds
     committed to the project.
     - Addition. When authorized, program income may be
      added to the funds committed to the agreement. The
      program income shall be used for the purposes and under
      the conditions of the assistance agreement.

     - Cost Sharing or matching. When authorized, program
      income may be used to meet the cost sharing or matching
      requirement of the assistance agreement.
     Unless the terms of the agreement or EPA regulations
     provide otherwise, there are no Federal requirements
     governing disposition of program income earned after the
     project period end date.
10/1/95                    3.21

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    CRITERIA FOR APPROVING COSTS
         Costs Conform to OMB Cost
         Principles

         Costs Conform to Applicable
         Regulations

         Costs Conform to Terms of
         Assistance Agreement

         Costs Are Incurred During the
         Project Period

         Costs Are Eligible, Allowable,
         Allocable and Reasonable
 VIEWGRAPH#12
 TITLE:       Criteria for Approving Costs

 KEY POINTS:

      Recipients must maintain and report costs in accordance
      with the regulation that governs the agreement, i.e.,
      either 40 CFR 30.27 or 40 CFR 31.20.
      Each recipient must follow the Federal cost principles
      applicable to that type of organization. (See page 2.10
      for a list of the cost principles.)
  •    The recipient cannot be reimbursed for costs that are
      contrary to the specific terms of the agreement or are
      outside its scope.
      The recipient may only charge costs if they resulted from
      obligations made during the approved funding period.
      The next few pages explain "eligible," "reasonable,"
      "allowable," and "allocable" in detail.
10/1/95
3.22

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                ELIGIBLE, REASONABLE, ALLOWABLE,
                      AND ALLOCABLE COSTS


                 • ELIGIBLE - STATUTORY BASIS

                 • REASONABLE - PRUDENT PERSON
                  THEORY

                 • ALLOWABLE • PERMITTED BY
                  REGULATION, CIRCULAR, ETC.

                 • ALLOCABLE - BENEFITS RECEIVED


VIEWGRAPH#13
TITLE:        Eligible, Reasonable, Allowable, and Allocable Costs

KEY POINTS:
The PO is responsible for determining that costs are:
    Eligible: To be eligible, the cost must be permitted by statute, program
    guidance, or regulations. The costs must also conform to any Federal
    limitations (e.g., real property purchases under the Construction Grants
    program, mobile treatment systems under Superfund);

•    Reasonable: A cost is reasonable if it does not exceed that which
    would be incurred by a prudent person under the circumstances
    prevailing at the time the decision was made to incur the cost. To
    determine the reasonableness of a specific cost, consideration must be
    given to:

    - Whether the cost is of a type generally recognized as ordinary and
      necessary for the operation of the organization or performance of the
      award.
    - The restraints or requirements imposed by such factors as generally
      accepted sound business practices, arms length bargaining, Federal
      and State laws and regulations, and terms and conditions of the
      award.
    - Whether the individuals concerned acted with prudence under the
     circumstances, considering their responsibilities to the organization,
     its members, employees, and clients, the public at large, and the
     Government.
    - Significant deviations from the established practices of the
     organization which may unjustifiably increase the award costs.

      10/1/95                    3.23

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VIEWGRAPH #13 (Continued)
TITLE:          Eligible, Allowable, Allocable

KEY POINTS:
 The GMO is responsible for determining that costs are:

     Allowable: To be allowable, the costs must meet the following
     general criteria:

     -  Be necessary and reasonable for the performance of the award;

     -  Be authorized by the appropriate Cost Principles;

     -  Be authorized, or not prohibited, under Federal, State or local
        laws or regulations (see definition of "eligible);
     -  Be consistent with the recipient's policies, regulations, and
        procedures. The recipient  must apply the same policies,
        regulations, etc. to both  Federally assisted and non-Federally
        assisted activities;
     -  Be consistent with Generally Accepted Accounting Principles;
     -  Not be included as a cost or used to meet cost sharing/matching
        requirements of any other federally financed program (unless
        specifically authorized by Federal law); and
     -  Be adequately documented.
     Allocable : A cost is "allocable" to an assistance agreement to the
     extent that it directly benefits the approved work, or to the extent it
     can be distributed in proportion to the benefits received. A cost is
     distributed to a particular cost objective (e.g., assistance agreement,
     project, service, or other activity) based on benefit received by that
     cost objective. A cost is allocable to an agreement if it is treated
     consistently with other costs incurred for the same purposes in like
     circumstances and if  it:
     -  Is incurred specifically for the award;
     -  Benefits the award and can be distributed in reasonable
        proportion to the benefits received; and

     -  Is necessary to the overall operation of the organization,
        although a direct relationship to any particular cost objective
        cannot be shown.
   10/1/95                     3.24

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             PREAWARD COSTS


            DEPENDS ON:

              • RECIPIENT

              • PROGRAM
 VIEWGRAPH#14
 TITLE:       Preaward Costs

 KEY POINTS:

 STATE, LOCAL GOVERNMENTS, AND INDIAN TRIBES

    EPA allows pre-award costs only in the following circumstances
    and programs:

    Programs

    Construction Grants: The Award Official must specifically
    approve preaward costs before they are allowable.  (See 40
    CFR 35.2118 for the limitations on pre-award costs.)

    Continuing Environmental Program Awards: EPA will reimburse
    the applicant for allowable costs incurred from the beginning of
    the budget period, provided such costs are contained in the
    approved application and that the application was submitted
    before the expiration of the prior budget period.
    If an application is received before the end of the prior budget
    period, no deviation is necessary.
    If an application is not received before the end of the prior
    budget period, a deviation from 40 CFR 35.141 is necessary.
    Superfund Awards: Except as permitted in §35.6285 (credits and
    advanced match), the Award Official must sign the assistance
    agreement before costs are incurred.
    The recipient may incur costs between the date the Award
    Official signs the assistance agreement and the date the
    recipient signs the agreement, if the costs are identified in the
    agreement and the recipient does not change the agreement.


10/1/95                   3.25

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 VIEWGRAPH #14 (Continued)
 TITLE:        Preaward Costs

 KEY POINTS:
 INSTITUTIONS OF HIGHER EDUCATION AND OTHER
     NONPROFITS
     Can incur preaward costs 90 calendar days prior to the
     award without prior approval from EPA.
 •   Can incur preaward costs more than 90 calendar days prior
     to award only with prior approval from the EPA Award
     Official.
     The applicant must include all preaward costs in it
     application.
     The applicant incurs such costs at its own risk, EPA is
     not obligated to pay for any costs if:
     - The applicant does not receive an award,
     - The award is less than anticipated,
     - The award is inadequate to cover preaward costs, or
     - The costs do not conform to the cost principles.
     Also, the Program must determine there are sufficient
     programmatic reasons to incur the expenditure prior to
     award, e.g., time constraints, weather factors.)
10/1/95                   3.26

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             CLASSIFICATION OF PROPERTY


              Personal        Real
                Property        Property
   VIEWGRAPH#15
   TITLE:       Classification of Property

   KEY POINTS:

        Property can be "personal property," or "real property."
    PERSONAL PROPERTY

        Personal property can be tangible, Le, equipment and
        supplies, intangible, or notes and debt instruments.

        - Equipments defined as items with a useful life of more
         than 1 year and an acquisition cost of $5,000 or more
         per unit.

        - Supplies are defined as tangible personal property other
         than equipment and intangible property.

        - Intangible property includes trademarks, copyrights,
         rights  in data, and patents.
        - Notes and debt instruments include  lease agreements,
         stock, and other instruments of property ownership.

        Whether a piece of property is "equipment" or a "supply"
        makes a difference when the agreement is closed out and
        at the time of disposition (see Module  VI). It also makes a
        difference because each piece of "equipment" must be
        separately approved by the PO and itemized in the
        application  Workplan/Narrative, or as an attachment to
        the budget page, whereas "supplies" do not have to
        be itemized.
10/1/95                   3.27

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VIEWGRAPH #15 (Continued)
TITLE:       Classification of Property


KEY POINTS:
    Tangible personal property where the Federal Agency has
    statutory authority to vest the title to the recipient without
    further obligation to the Federal Government is called
    "exempt property."  An example is given in the Federal
    Grant and Cooperative Agreement Act for property
    acquired under an assistance agreement to conduct basic
    or applied research by a non-profit institution of higher
    education or non-profit organization whose principle
    purpose is conducting scientific research.
REAL PROPERTY
•   Real property under all EPA assistance programs is
    defined as land, including land improvements, structures
    and appurtenances thereto, excluding movable machinery
    and equipment.
10/1/95                    3.28

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                ACQUISITION/TITLE OF PROPERTY


                  • LISTED IN ASSISTANCE
                   AGREEMENT

                  • ACQUIRED DURING
                   BUDGET/PROJECT PERIOD

                  • RECIPIENT HAS TITLE
VIEWGRAPH#16
TITLE:      Acquisition/Title of Property

KEY POINTS:

 ACQUISITION

 All recipients:
     The purchase of property must be authorized in the
     assistance agreement.
     Property may be purchased only during the budget/project
     period of the assistance agreements.

 Superfund Recipients:

     In addition to the above, to acquire equipment with CERCLA
     funds, the recipient must conduct and document a cost
     comparison analysis to determine the most cost effective
     method for obtaining the equipment (e.g., leasing, using
     contractor services, or purchasing the equipment with
     CERCLA funds.)
 Federally-owned property
 •   Recipients may use Federally-owned property.
 TITLE
 All recipients:
     The title to personal property purchased under an assistance
     agreement is always vested with the recipient; however, EPA
     reserves the right (in condition(s) to the assistance
     agreement) to transfer title to the Federal Government or
     another entity within  120 days after the end of the project.
   10/1/95                   3.29

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VIEWGRAPH #16 (Continued)
TITLE:        Acquisition/Title of Property
  Non-profit institutions of higher education conducting basic or
      applied research and non-profit organizations whose primary
      purpose is the conduct of scientific research:

      If EPA does not condition the assistance agreement to reserve
      the right to transfer title within the 120 day time period, the
      recipient has no further obligations or accountability to EPA.

  Federally-owned property

  •   The title remains with the Federal government.

  Supplies

      The title to supplies also vests with the recipient.
  EPA interest in the property:
      EPA has an "interest" in the property equal to the percent of
      Federal funds in the property, e.g., if the match is 90% Federal
      and 10% recipient, EPA has a 90% "interest" in the property.
      At time of disposal, EPA gets 90% of the proceeds from the
      sale based on current fair market value or, if EPA gets the
      property, EPA owes the recipient 10% of the proceeds from
      the sale.
  10/1/95                    3.30

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                         ASSURANCES

                           Standard Form 424-B:
                SF424-B
                               Outlines Federal Laws
Applicable

laws             for Applicants
Assurance
of compliance
                             • Lists Requirements
                                Applicants Must
                                Comply With

VIEWGRAPH#17
TITLE:       Assurances

KEY POINTS:
    The purpose of the assurances in the SF 424B is to emphasize the
    Federal laws and requirements applicable to all Federally assisted
    projects, i.e., "crosscutting" requirements.

    The applicant must sign this page as well as the Facesheet. Usually,
    the same person signs both places, but whoever signs must have
    the authority to bind the organization to the terms of the
    assistance agreement.

    By signing the Assurance page, the applicant is indicating they will
    comply with each of these requirements. Some of the major
    requirements the applicant is agreeing to are:
    - They will complete the project within the time specified in the
      agreement.
    - They will comply with all applicable Federal laws,  regulations, and
     policies.
    - They have the financial, managerial, and legal authority to complete
      the project.
    - The person signing the form is authorized by their governing body to
      sign the application as the official representative of the applicant.
     10/1/95                   3.31

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           PROJECT NARRATIVE/
                 WORKPLAN
         PROJECT NARRATIVE

       L  History
                            • Describes the
                              History of the
                              Problem, and
                              Proposed
                              Actions

                            • Indicates
                              Compliance with
                              Regulatory
                              Requirements

VIEWGRAPH#18
TITLE:        Project Narrative/Workplan

KEY POINTS:

   The approved project narrative/workplan is the basis for making
   an award and is used by the PO to manage and evaluate
   performance under the agreement.
   A narrative/workplan must be included as part of the application.  It
   should justify proposed financial, facility, equipment, and resource
   needs and provide technical and other information required by
   program-specific regulations/requirements.
   The narrative/workplan also must describe the need for the
   project/program; its objectives; the method to accomplish the
   objectives; the geographical location of the project; and the "public"
   benefits or results expected to be obtained from the assistance, e.g.,
   why the activity should be funded with an assistance relationship and
   not a contract.
   The PO performs a technical review of the narrative/workplan. If
   the PO does not have the technical expertise to perform the
   review, they must obtain assistance from other EPA staff with the
   expertise.

   The PO may negotiate the narrative/workplan. The negotiation
   should be a two-way process to accommodate applicant needs
   and practices, as long as they do not conflict with Federal and/or
   EPA program requirements/priorities.
10/1/95
                             3.32

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VIEWGRAPH # 18 (Continued)
TITLE:         Project Narrative/Workplan
KEY POINTS:
     An effective narrative/workplan:
     - Will list expected outputs;
     - Quantify outputs;
     - Link outputs to funding;
     - Identify target dates and milestones,
     - Require periodic reporting, and
     - Explain how the activities will be accomplished.
     The workplan for each Continuing Environmental Program must
     also:
     - Specify work years and amount and source of funds,
     - Identify the agency responsible for each of the outputs, and
     - Discuss performance to date under the existing award.
     For research awards, the workplan should contain a biographical
     sketch(es) of the Key Person(s).
   10/1/95                    3.33

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                 TIPS FOR NEGOTIATING
                      WORKPLANS
              • STRIVE FOR REALISTIC GOALS
              . ADDRESS MAJOR OBJECTIVES
              • USE DIPLOMACY
              • COMPROMISE
              • PAY ATTENTION TO DETAIL

VIEWGRAPH#19
TITLE:       Tips for Negotiating Workplans
KEY POINTS:
    The goal is to negotiate a workable document that is:
    - Realistic and contains well defined commitments that foster
      accountability.
    - Reflects all activities to be conducted with total assistance
      dollars (every dollar includes the Federal and recipient shares.)
    Seven management principles to follow are:
    - Set priorities and commitments.
    - Set a realistic schedule.
    - Ensure applicant structures their workplan according to key
      program elements with specific outputs.
    - Negotiate to improve the workplan.
    - Involve other programs in developing the workplan, if appropriate.
    - Plan for evaluation from the outset.
    - Coordinate with the GMO staff during workplan development, as
      needed.
    The PO will, In most cases, be EPA's lead negotiator. The PO
    also may often need to negotiate internally to establish their
    program's officialposition in dealing with the applicant. To be
    successful the PO should:
    - Start the process early; provide guidance timely; if necessary,
      convene a meeting with the applicant early in the process to
      answer questions and influence the drafting of the workplan.
    - Have accurate data about the applicant's past performance.

  10/1/95                    3.34

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VIEWGRAPH #19 (Continued)
TITLE:        Tips for Negotiating Workplans

KEY POINTS:

     - Realistically assess the applicant's capacity to meet
       commitments.  Understand their current workload and
       ability and/or capability to take on new work.
     - Identify areas of potential consensus and potential
       disagreements early in the process.

     - Focus on interests basic to achieving program objectives.
       Make EPA's objectives clear to the applicant and work to
       identify shared interests.

     - Search for options to resolve conflicts.
     - HAVE A PLAN. Know what role EPA personnel will have in
       reviewing the draft and final workplan submittals.
       Establish firm deadlines for negotiating the workplan and
       stick to them.
     Evaluation Plan.  Introduce your plan for evaluating progress and
     performance EARLY in your negotiating process. Define
     consequences of inadequate and or nonperformance. Include
     reporting plans and schedules and describe the contents
     expected  in the reports. Coordinate with and include the GMO
     during the development of the evaluation plan.
   10/1/95                   3.35

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                   CERTIFICATIONS

             SUSPENSION AND DEBARMENT

             ANTI-LOBBYING

             DRUG-FREE WORKPLACE

             PROCUREMENT SYSTEM
             CERTIFICATION
  VIEWGRAPH #20
  TITLE:      Certifications

  KEY POINTS:

  The applicant must make the following certifications.
  •   Suspension and Debarment are methods which can be used
      to keep "bad actors" from receiving Federal funds.
      Suspended or debarred entities are listed in the General
      Services Administration's publication, "Lists of Parties
      Excluded from Federal Procurement and Nonprocurement
      Programs." The Program Offices and the GMO should
      ensure that the list has been checked before an award is
      made.  The GMO or the Headquarters/Regional Counsel's
      office or your Program office will probably have the current
      publication.
      -  Debarment requires a formal investigation, notification, a
       hearing, and (if requested) an appeals process before the
       EPA Debarment Official can debar an entity.

      - Suspension is an immediate temporary action taken  to
       protect the Federal government and/or public interest
       pending the completion of an investigation or ensuing
       legal or debarment proceedings. The EPA Debarment
       Official is the only person that can suspend an entity.
10/1/95                    3.36

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VIEWGRAPH #20 (continued)
TITLE:        Certifications

KEY POINTS:
     The Anti-lobbying requirements in 40 CFR Part 34, require that
     applicants certify that no appropriated funds will be expended to
     pay any person for influencing or attempting to influence an
     officer or employee of any agency, a Member of Congress, an
     officer or employee of Congress, or an employee of a Member
     of Congress, in connection with any Federal award in excess
     of $100,000. 40 CFR Part 34 requires applicants and
     recipients to submit the Standard Form LLL. "Disclosure of
     Lobbying Activities." if they used non-Federal funds to "lobby" in
     relation to certain Federal contracting and financial
     transactions. This form is not required if the entity did not
     "lobby" for the assistance agreement.
     The Drug Free Workplace Act of 1988 requires contractors and
     recipients of Federal funds to certify that they will provide a
     drug-free workplace. The Act applies to all Federal assistance
     programs and contracts,  regardless of value.  No separate
     certification form is required.  The applicant certifies by
     signing the application.
     The Procurement System Certification Form (EPA Form
     5700-48) indicates whether or not the applicant will follow its
     own procurement system (provided system(s) comply with EPA
     requirements). The form does not apply to State
     governments except under the Superfund program [see 40
     CFR 35.6550(a)].  Local governments and Indian Tribal
     governments may use the form to self-certify under the
     self-certification provision in 40 CFR Part 31.
 10/1/95                    3.37

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                   QUALITY ASSURANCE/
                     QUALITY CONTROL
                         • MANAGEMENT SYSTEM

                           MANAGEMENT PLAN
                          PROJECT PLAN
VIEWGRAPH #21
TITLE:      Quality Assurance/Quality Control

KEY POINTS:

    If the project involves environmentally related measurements or data
    generation, the applicant/recipient must develop and implement QA
    practices. These practices, or quality management system, must
    comply with the requirements of ANSI/ASQI E4, "Specifications and
    Guidelines for Quality Systems for Environmental Data collection
    and Environmental Technology Programs."
With the Application
    All applications for financial assistance where the project involves
    environmentally related measurements or data generation must
    include a quality management plan to document the applicant's
    quality assurance capabilities. The management plan describes the
    quality management system in terms of the organizational structure,
    functional responsibilities of management and staff, lines of
    authority, and required interface for those planning, implementing
    and assessing all activities conducted.
    The Award Official must approve the quality management plan
    before they make the award.
After Award
    Once the award is made, the recipient must submit a quality
    assurance project plan for EPA's review and approval. The project
    plan is an organization's written procedures which delineate  how it
    produces quality data for a specific project or measurement method.
    The recipient must  not obtain or generate environmental data
    until an EPA QA Officer approves the QA Project Plan.

10/1/95                   3.38

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 VIEWGRAPH #21 (Continued)

 TITLE:       Quality Assurance/Quality Control


 KEY POINTS:

 •   It is the POs responsibility to obtain their designated
    Quality Assurance Officer's concurrence on the QA
    program/project plans.

    If an applicant is unfamiliar with EPA Quality Assurance
    (QA) requirements, the PO should direct them to the
    appropriate QA office in Headquarters, laboratories, or
    the Region.
10/1/95                   3.39

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                    APPLICATIONS INVOLVING
                   INTERNATIONAL ACTIVITIES
                               • ALL APPLICATIONS
                                THROUGH AA FOR IA

                               • STATE DEPARTMENT
                                REVIEW MAY BE NECESSARY
                      ^*	^
VIEWGRAPH # 22
TITLE:        International Activities

KEY POINTS:

     All applications where all or part of the project is to be performed in a
     foreign country by a US recipient, a foreign recipient, or an
     international organization regardless of where it is located must be:
     - Approved by the Assistant Administrator for International
      Activities; and, if necessary
     - Submitted to the Department of State for clearance. A minimum of
      35 calendar days must be allowed to obtain State Department clearance.
      The OIA will submit the applications to the Department of State.
     Any agreement where there will be substantial foreign travel should go
     through the OIA.
     The "Fly America Act" requires that all government-financed foreign air
     travel must be on U.S. air carriers certified under 49 U.S.C. §1371 to the
     extent that service by such carriers is available. This applies to Federal
     employees and their dependents,  consultants, contractors,  recipients, and
     others traveling for the U.S. Government.
     The Program Office is responsible for sending a copy of the application to
     OIA for approval.  This approval must be obtained before the Program
     submits the funding  recommendation to the GMO.
     The Assistant Administrator for International Activities will review each
     proposal with a substantial international component to determine whether
     it is in accordance with the EPA and US Government International
     Environmental Mission as well as  EPA's and the US Government's overall
     relationship with the foreign country concerned.
     If you have any questions, please  call the Office of International Activities,
     Washington, DC.
        10/1/95                   3.40

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                PROJECT OFFICER
                   ROLES AND
                RESPONSIBILITIES
          • PROVIDE TECHNICAL EXPERTISE

          • APPROVE BUDGET/WORKPLAN

          • WORK WITH APPLICANT

          • INITIAL DETERMINATION OF GRANT
           VS CONTRACT

          • DETERMINE GRANTS VS
           COOPERATIVE AGREEMENT ISSUES

VIEWGRAPH #23
TITLE:       Project Officer Roles and Responsibilities
              Preapplication/Application
KEY POINTS:

 In this phase, the PO is responsible for:

    Determining the appropriateness of the workplan (narrative)
    activities, whether they comply with program regulations and
    guidelines, and identifying any deficiencies in the application.

 •  Comparing proposed work with other similar efforts the PO is
    aware of and ensuring that any overlap or duplication is
    absolutely necessary, e.g., in research, some duplication maybe
    beneficial.
    Informing the prospective applicant that EPA does not
    automatically pay for costs incurred before an award is made
    (except in limited circumstances, see p. 3.23 and 3.24.)
    Informing the prospective applicant that there is no obligation by
    EPA to fund the proposal.
    Negotiating the level of funding within constraints of the available
    funds.
    Providing the prospective applicant with the Catalog of Federal
    Domestic Assistance (CFDA) number for the assistance program,
    if applicable.   If in doubt, the PO should contact the GMO.
    Notifying the GMO of anticipated applications/solicitations and
    receipt date.  This will help the GMO plan their work and may help
    avoid unnecessary delays in making the award.


   10/1/95                   3.41

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VIEWGRAPH #23 (Continued)
TITLE:        Project Officer Roles and Responsibilities
              Pre-application/Application

KEY POINTS:

    Making the initial determination whether an assistance
    agreement or a contract should be used. (The GMO will also
    review the decision when they review the award package.) The
    Program's rationale for deciding that an assistance agreement
    is appropriate must be included in the Decision Memorandum.

    Determining if there will be substantial Federal involvement and
    if so, developing a condition to include in the cooperative
    agreement explaining the substantial involvement
    Serving as primary program and technical resource to the
    Selection  Panel, if one is used, regarding program policy,
    objectives, and goals.

    Reviewing the application (along with the GMO) to assure that
    the work plan is consistent with the budget, e.g.,  whether any
    proposed procurements or property purchases are necessary
    and reasonable.
    Obtaining required in-house and/or extramural reviews of the
    application.

    Cautioning the applicant against making an award or permitting
    any award (subgrant or contract) at any tier to any party which is
    debarred or suspended or is otherwise excluded from or
    ineligible for participation in Federal assistance programs. (The
    applicant must also submit a Debarment Certification with the
    application.)

    Conducting preaward or post award site visits as necessary to
    evaluate programmatic capability.
    Ensuring the Approval/Decision Official informs the applicant
    and the GMO if the application will not be funded.
    10/1/95                   3.42

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                     GMO ROLES AND
                    RESPONSIBILITIES


          • OFFICIAL RECEIPT POINT FOR
           APPLICATIONS

          • PROVIDE ADMINISTRATIVE EXPERTISE

          • REVIEW APPLICATION FOR
           ADMINISTRATIVE ISSUES

          • COMMUNICATE ADMINISTRATIVE
           ISSUES TO APPLICANT

VIEWGRAPH #24
TITLE:        GMO Roles and Responsibilities
               Preapplication/Application

KEY POINTS:

    In this phase the GMO is responsible for:

    - Developing and distributing application kits.

    - Responding to the prospective applicant's administrative questions
      and issues.

    - Receiving, logging in the application, and distributing a copy to the PO
      for their programmatic review.  (Preapplications may go directly to the
      Program for review. The receipt point for formal pre-applications
      should be negotiated between the Program and the GMO.)
    - Reviewing the application (in conjunction with the PO) to ensure that it
      is complete and complies with EPA's administrative requirements.
     - Performing a cost review of the budget to ensure that the costs are
      allowable and are adequately supported. This may require working
      with the PO to obtain additional information.
    - Notifying the recipient if any administrative deficiencies are found in
      the application and working with the applicant to resolve the  issues.
    - Conducting a review of the applicant's management systems, i.e.,
      procurement, property, administrative and financial (with the
      FMO/SFO), if necessary.
    - Reviewing the program decision to ensure that an appropriate
      instrument is proposed and determining that an assistance agreement
      rather than a contract is the appropriate funding instrument.

    10/1/95                   3.43

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                             OTHER PLAYERS'
                      ROLES AND RESPONSIBILITIES


                        • APPLICANT

                        • FMO/SFO

                        • OGC/ORC

                        • MBE/WBE COORDINATOR
VIEWGRAPH #25
TITLE:        Applicant Roles And Responsibilities
              Preapplication/Application
KEY POINTS:
       In this phase, the applicant is expected to:
       - Seek informal/formal assistance to answer questions concerning
        the technical or administrative requirements,
       - Respond to inquiries from the PO and GMO concerning the
        application,
       - Revise the application based on comments received from the PO
        and GMO,  and
       - Comply with Executive Order 12372  intergovernmental review
        requirements, if required.

       In this phase, the FMO/SFO is responsible for:
       - Responding to any request for assistance from the applicant to
        establish or improve the recipient's financial management system.

      "-* Determining whether to use the EPA/Automated Clearinghouse
        Payment System, advance payment,  or reimbursement by Treasury
        check to pay the  recipient.
       In this phase, the PO or GMO may need the assistance of the Office
       of General Counsel/Regional Counsel if legal issues arise.  For
       instance, if it is unclear whether the award should be a contract, grant
       or cooperative agreement, it may be necessary for the GMO to get
       OGC/ORC's  legal opinion.  Also, if there is a question over who is
       eligible or if certain activities are eligible, OGC/ORC may be able to
       help the PO make the decision.
        10/1/95                   3.44

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VIEWGRAPH #25 (Continued)
TITLE:       Other Players' Roles and Responsibilities
             Application/Preapplication Phase

KEY POINTS:
    In this phase, the Regional or Headquarters MBE Coordinator may
    negotiate with the applicant to determine the Fair Share percentage
    the applicant will use if EPA makes an award.  If this negotiation
    does not take place during this phase, it must be done during the
    award phase.
    - The MBE Coordinators are responsible for negotiating the Fair
      Share objectives with each recipient.  The recipient must agree to a
      Fair Share percentage before they award any contracts under the
      assistance agreement. The Fair Share is the percentage of contract
      awards that the recipient will try to award to MBE/WBE contractors.
    - Each Region has a Regional MBE Coordinator who should be
      contacted for questions on regional assistance agreements. The
      MBE Coordinator in Headquarters is in the Grants Administration
      Division.  If there are questions on Headquarters awarded awards,
      this individual should be contacted. See Appendix R for a list of the
      Headquarters and Regional MBE Coordinators.
        10/1/95                    3.45

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MODULE IV

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   ASSISTANCE
 PROJECT OFFICERS
  TRAINING COURSE
MODULE IV
  AWARD

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           THE ASSISTANCE AGREEMENT:
                   AWARD PHASE

           RESPONSIBILITIES


           PROGRAM APPROVAL VS THE
           AWARD DECISION


           FUNDING RECOMMENDATION AND
           THE ASSISTANCE AGREEMENT
      VIEWGRAPH # 1
      TITLE:       The Assistance Agreement: Award Phase


      KEY POINTS:

         This module discusses the award stage of funding an
         application.
         The award stage consists of making the program and award
         decisions; preparing the funding recommendation package
         and the assistance agreement; notifying the Congressional
         delegation, various EPA offices, and the recipient, and
         executing the assistance agreement.

         During the award phase, the PO and the GMO must
         prepare various documents, including the funding
         recommendation/Decision Memorandum and the
         assistance agreement.
10/1/95                   4.1

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                 OVERVIEW OF THE AWARD PHASE
          Program Office/lab
             Issues
           Programmatic
            Approval
 Financial Management
   Office (Regions)
 Allowance Holder (HQ)
   Commits Funds
  Program Office
Prepared/approves
   Funding
 Recommendation/
  Decision Memo
        SRO Reviews Awards
        Over Thresholds
  GMO Prepares
   Assistance
Agreement/Amendment
Award Official Executes
      the
Agreement/Amendment
               f
           GAD notifies the
          Congressional Affairs
              Office
 5 Workday Waiting
   Period
  Award mailed to
    Applicant
       VIEWGRAPH # 2
       TITLE:  Overview of the Award Phase
       KEY POINTS:

            The award phase of assistance administration consists of
            nine stages, as illustrated.
            The program office  (Approval/Decision Official) approves an
            application for award and obtains funding approval.

            All funds must be entered into IFMS. In the Regions, the
            FMO commits, records, and obligates funds, in
            Headquarters, GOB and GIAB obligate the funds.
            The program office  prepares and forwards its funding
            recommendation package to the GMO.
        •    The Senior Resource Official must review all program grants
            and State  Revolving Fund grants over $5 million, and all
            other awards over $1 million to ensure that the proper
            funding mechanism is being proposed and, if there was no
            competition, there is adequate justification for not competing
            the award.
10/1/95
    4.2

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 VIEWGRAPH # 2 (Continued)
 TITLE:        Overview of the Award Phase
  KEY POINTS:

     The Allowance Holder is the person who has control over the
     funds, generally the Office Director or the National Program
     Manager.

     The GMO prepares the assistance agreement and forwards it
     to the Award Official.  The GMO must also verify commitments
     against data in IFMS (Prevalidation ) before the Award Official
     signs the award.
  •  Once the Award Official signs the assistance agreement, the
     GMO informs the Grants Administration Division which, in turn,
     informs the Congressional and Legislative Affairs, which is
     responsible  for notifying the appropriate House and Senate
     members.
     After the 5 workday Congressional notification hold period has
     passed, the  GMO mails the award offer to the applicant for
     their signature.  During this 5 day period, the PO must not
     tell the applicant they are getting an award.
10/1/95                        4.3

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                      COMPONENTS OF
                         THE AWARD
                                         Assistance
                                         Application
                                         Assistance
                                         Agreement
                                         Applicable
                                         Regulations
         VIEWGRAPH # 3

         TITLE:       Components of the Award

         KEY POINTS:

             The award includes the following:

             (1) EPA Assistance Application, including the
                approved workplan/narrative (by reference);

             (2) EPA Assistance Agreement (EPA Form
                5700-20/20A), including any Terms  and
                Conditions, and/or any Special Conditions for
                "High Risk" applicants; and

             (3) EPA regulations (by reference).
10/1/95
4.4

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                     CONTENTS OF FUNDING
                  RECOMMENDATION PACKAGE

DECISION MEMORANDUM
FUNDING ORDER
PROGRAMMATIC TERMS &
CONDITIONS
COMMFTMENT NOTICE
IN-HOUSE REVIEW
EXTRAMURAL REVIEWS
(OR PANEL REVIEW)
RESEARCH ONLY
ENVIRONMENTAL REVIEW,
ORD GRANTS ONLY
QUALITY ASSURANCE
REVIEWS, IF APPLICABLE
ADDITIONAL INFORMATION
NEGOTIATED WITH RECIPIENT
NEW AWARD
X
X
X
X
X
X
X
X
X
INCREMENTAL
FUNDING
N/A
X
X
X
N/A
N/A
N/A
N/A
X
SUPPLEMENTAL
FUNDING
X
X
X
X
X
N/A
N/A
X
X
CONTINUATION!
AWARD j
X
X
X
X
X
N/A
N/A
X
X
      VIEWGRAPH#4
      TITLE:       Contents of Funding Recommendation Package

      KEY POINTS:
        Definitions

        •   New/Initial award: the initial award of a project.

            Incremental Funding (Partial Funding): an amendment to an
            initial award or continuation award to provide additional funds
            to the recipient per the original application when the initial
            award has not been fully funded.
            Supplemental Funding: an amendment to an initial award or
            continuation award, based on  a written request from the
            recipient, to provide additional funds over and above the
            amount requested in their original application.
            Continuation Award:the award of a subsequent budget
            period within an approved project period. For projects over
            two years, more than one budget period may be required.
            The PO should consult appropriate regulations for limits
            that apply to duration of budget and project periods.

10/1/95                       4.5

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  VIEWGRAPH #4 (Continued)
  TITLE:       Contents of the Funding Package

  KEY POINTS:
     The Program Office prepares and forwards to the GMO the:

     - Funding Order (EPA Form 5700-14), if required by the GMO;
     - Commitment Notice (EPA Form 2550-9), if required by the GMO;
       and

     - Decision documentation.

     The Funding Order (signed by the Approval Official) identifies the
     approved funding amounts and the name of the assigned Project
     Officer. The Funding Order provides the GMO with the financial
     information needed to prepare the award document. The PO is
     responsible for attaching any programmatic terms and
     conditions. The program may provide this information in the
     Decision Memorandum.
     The Commitment Notice is used to reserve funds.  EPA cannot
     make an award unless funds are "committed" in the Integrated
     Financial Management System (IFMS). The PO is responsible for
     ensuring the Commitment Notice is filled out and is in the
     Funding Package.  The PO can get budget information from
     their Budget office.
 •   For research grants, the Office of Research and Development has
     special review procedures.  Compliance with these extramural (or
     panel) reviews must be addressed in the funding package.
     The Decision Memorandum is the Program's recommendation for
     award.  This documentation must include:
     - What actions the Program wants the GMO to take, e.g., transfer
       funds among categories, make an award, approve equipment.
     - Statutory authority for the award;
     - Objectives of the project/program;
     - Summary  of review(s) and reconciliation of issues identified in
       any reviews;
     - Delegation of Authority number;

     - Total amount of the award;
     - Amount of Federal funds;

10/1/95                       4.6

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VIEWGRAPH # 4 (Continued)
TITLE:       Contents of the Funding Package

KEY POINTS:

   -  Budget/project period;
   -  Statement that the award should be awarded as an assistance
     agreement and a brief statement why (e.g., statute requires, direct
     beneficiary not the Federal government, see Module I, pages 1.6 -
     1.8);
   -  If the award is to be a cooperative agreement, what the substantial
     Federal involvement will be;
   -  Whether QA/QC approval is necessary and whether EPA has given
     that approval; and
   -  Specific program conditions to be added to the award, e.g.,
     need quarterly progress reports rather than annual; need
     specific PO approval before recipient starts specific
     tasks/activities; equipment disposition, if applicable.
   -  State that the award does not duplicate other EPA funded efforts,
     or if it does, why it is necessary to fund this project.
   -  Justify using funds from  two different appropriation accounts (split
     funding/ mixing appropriations), e.g., funding a project with both
     Research and Solid Waste funds. The Program must be able to
     track funds by appropriation.  If more than one appropriation
     account is used, contact your Senior Budget Officer to ensure
     the proper accounting  data is used. Since this could be time
     consuming, start this as soon as you know two or more
     appropriations will be used.
   -  For Headquarters awards to fund a Conference, Workshop, or
     Symposium, address:
     1) Who is initiating the request?
     2) How will it be advertised?
     3) Whose logo will be on the agenda and materials?
 10/1/95                        4.7

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                    CONDITIONS IN THE
               ASSISTANCE AGREEMENT
             Terms and
             Conditions
             Special Conditions
VIEWGRAPH # 5
TITLE:        Conditions in the Assistance Agreement
KEY POINTS:

     Terms and Conditions and Special Conditions are the additional
     requirements that will govern an award. These are either spelled out
     directly in the assistance agreement or are incorporated by reference
     (e.g., the 40 CFR Parts 30 and 31 administrative regulations).
 Terms and Conditions:
     Each recipient is subject to certain terms and conditions.  These
     include all applicable provisions of Title 40 of the Code of Federal
     Regulations as well as other pertinent laws and regulations.

     Terms and conditions of a programmatic nature, for example, include
     restricting work on a part of the project until specific milestones are
     met, restricting certain activities until qualified personnel are hired, and
     specifying the frequency & content of progress reports.
     Terms and conditions of an administrative nature may include
     requirements which:

     - Are not in a regulation because the requirement was implemented
      after the regulation was last changed, e.g., recycled paper, the 8%
      DBE plan, or

     - Are added to emphasize a requirement for a particular project,
      recipient, or group of recipients, e.g., the need for an approved
      indirect cost rate before the recipient can draw down on indirect
      costs.
 10/1/95
4.8

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   VIEWGRAPH # 5  (Continued)
   TITLE:       Conditions in the Assistance Agreement

   KEY POINTS:

       Terms and Conditions need to be clear and specific.

       In the case of Cooperative Agreements, EPA's "substantial
       involvement" is spelled out either in the terms and conditions or in the
       approved application's narrative/workplan (which becomes part of the
       award.)  For Headquarter's awarded Cooperative Agreements, the
       "substantial involvement" must be included in the Terms and
       Conditions. (See Module II for examples of "substantial involvement.")
       High Risk Applicants (Special Conditions)
       In some cases, EPA may determine that an applicant is a "High Risk"
       and should, therefore, be subject to certain "Special Conditions."
       An applicant is considered "high risk if it:
       -  Has a history of unsatisfactory performance;
       -  Is not financially stable;
       -  Has a management system which does not meet the management
         standards set forth in EPA administrative regulations;
       -  Has not conformed to the terms and conditions of a previous award;
         or

       -  Is otherwise considered "not responsible" by the Award Official.

       The following Special Conditions may be included in  the assistance
       agreement:
       -  Paying on a reimbursement basis;
       -  Withholding authority to proceed beyond one phase without proof of
         acceptable performance;
       -  Requiring the recipient to furnish specially detailed financial reports;
       -  Providing additional project monitoring;
       -  Requiring the recipient to obtain technical or management
         assistance; or
       -  Establishing additional prior approvals.
10/1/95                        4.9

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                       EXECUTION OF
             THE ASSISTANCE AGREEMENT
          Award Official
            Signs
           Agreement
                   Appropriate
                 Notifications are
                     Made
                            Agreement is
                             Issued to
                             Recipient
                                      Recipient
                                       Signs
                                      Agreement
                                             Countersigned
                                              Agreement is
                                             Returned to EPA
VIEWGRAPH # 6
TITLE:       Execution of the Assistance Agreement
KEY POINTS:

     Executing an agreement involves obtaining signatures from both
     parties to the agreement. This illustration describes the primary steps
     involved in fully executing an assistance agreement.
     When the Award Official  signs the assistance agreement, EPA
     assumes legal and fiscal obligations.
     Immediately after the Award Official signs the agreement, the GMO
     enters the signature date into the Grants Information Control System
     (GIGS).  This date is the  award date.

     Overnight, GIGS generates a report of all awards made the previous
     day.  The report is simultaneously delivered to the GAD and to the
     Office of Congressional Liaison (OCL). GAD logs and conducts a
     "quality control" on the data and notifies OCL of any corrections.

     The OCL notifies the appropriate Congressional representative or
     designee.

     Once the five-day Congressional notification requirement is met, the
     GMO mails the award offer to the recipient.

     In emergencies, the five-day hold (5 workdays) for Congressional
     notification may be waived pursuant to OCL procedures.

     Once a recipient signs an agreement and sends it back to the GMO,
     the recipient assumes a legal obligation to perform all of the activities
     listed in the agreement, in the timeframe agreed to, and for the dollar
     amount specified.
 10/1/95
4.10

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                      PROJECT OFFICER
                         ROLES AND
                      RESPONSIBILITIES

               PREPARE FUNDING PACKAGE

               OBTAIN PROGRAMMATIC
               CONCURRENCES

               ESTABLISH THE OFFICIAL
               TECHNICAL PROJECT FILE

               REVIEW THE AWARD DOCUMENT
  VIEWGRAPH # 7
  TITLE:        Project Officer Responsibilities


       In this phase, the PO is responsible for:

       -  Preparing a funding package consisting of the: Decision
         Memorandum; Funding Order (EPA Form 5700-14), if
         required by the Grants Management Office; and
         Commitment Notice (EPA Form 2550-9), if required by the
         Grants Management Office.

       •  Obtaining the necessary programmatic concurrences and
         signatures on the funding package and sending the
         package to the next level in the concurrence chain.
       -  Obtaining Office of International Activities' approval for all
         international awards.
       -  Obtaining the Office of Research and Development's
         Office of Health Research approval for all projects
         involving human subjects.
       -  Establishing an offficial technical'project file.  See Appendix
         Q). (The GMO will have the official assistance file and
         Finance will have the official financial file.)
10/1/95                     4.11

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                 GRANTS MANAGEMENT OFFICE
                         ROLES AND
                      RESPONSIBILITIES
               • REVIEW FUNDING PACKAGES
               • PREPARE AWARD DOCUMENT
               • ASSURE COMPLIANCE WITH
                CONGRESSIONAL NOTIFICATION
               • SEND AWARD OFFER TO
                 APPLICANT
 VIEWGRAPH # 8
 TITLE:        Grants Management Office Roles and
                Responsibilities
 KEY POINTS:

 •    In this phase, the GMO is responsible for:
     - Ensuring that all elements of the application and funding package
      meet legal and regulatory requirements.
     - Reviewing the funding package and assuring it is complete and is
      signed by authorized officials.
     - Assuring that there is a Commitment Notice and verification of
      available funds.
     - Assuring the agreement contains all required administrative and
      program conditions, and any Special Conditions for a "High Risk"
      recipient.
     - Preparing the award/amendment document (EPA Form
      5700-20A/B).
     - Forwarding the award package to the Award Official for signature.
     - Assuring compliance with the Congressional Notification
      requirements.
     - Verifying the Indirect Cost Rate.
     - Mailing the award offer to the applicant.
     - Confirming the statutory authority and delegation of Authority.
     - Assuring appropriate funding mechanism.
10/1/95                      4.12

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                       OTHER PLAYERS'
                          ROLES AND
                       RESPONSIBILITIES

                  •  APPLICANT/RECIPIENT

                  •  FINANCIAL MANAGEMENT

                  •  SENIOR RESOURCE OFFICIAL

                  •  OGC/ORC

                  •  MBE/WBE COORDINATOR

VIEWGRAPH # 9
TITLE:       Other Players' Roles And Responsibilities

KEY POINTS:

  Applicant/recipient Roles and Responsibilities

      In this phase, the applicant is responsible for signing the award
      offer, or requesting a time extension, within 3 weeks of receipt. If
      the applicant does not sign the award within 3 weeks, the Award
      Official may withdraw the offer (EPA policy.)

  Financial Management Office Roles and Responsibilities
      The FMO will record an obligation in the Integrated Financial
      Management System (IFMS) immediately after receiving the
      signed agreement from the Award Official.

  Senior Resource  Official

      The SRO will be reviewing and concurring on funding
      recommendations for awards over $1 million for project awards,
      and $5 million for Continuing Environmental Program grants.
  Office of General Counsel/Regional Counsel
      OGC/ORC may have to become involved in contracts versus
      assistance decisions, eligibility of activities, etc.
  Minority Business Enterprise (MBE) Coordinators
  •    If not already done, the MBE Coordinators will have to negotiate
      the Fair Share percentage if the award includes funds for
      equipment, supplies, or construction.
10/1/95                      4.13

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MODULE V

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        ASSISTANCE
      PROJECT OFFICERS
      TRAINING COURSE
      MODULE V
PROJECT ADMIN & MGT

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                    OVERVIEW


             PERFORMANCE

             REPORTS

             TECHNICAL ASSISTANCE

             MODIFICATION REQUESTS

             DEVIATIONS/DISPUTES

             NONCOMPLIANCE
      VIEWGRAPH #1
      TITLE:      Overview

      KEY POINTS:

         This module discusses the general responsibilities of GMOs,
         POs, and SFOs during project administration.

         The Project Officer serves as EPA's technical manager
         and liaison with the recipient's project manager on all
         matters relating to project performance.

         The Project Officer serves as a source of programmatic
         oversight (on-site reviews; review/approval of progress
         reports, FSRs, payment requests), and provides
         technical assistance if needed.

         Generally, the GMO serves as a source of administrative
         oversight for all EPA assistance agreements.  However, the
         GMO also serves as the liaison between the Project Officer
         and SFO, and the recipient's project manager and
         administrative staff  with regard to the administrative aspects
         of assistance.
10/1/95                   5>1

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         MONITORING RECIPIENT PERFORMANCE
               On-Site Reviews
               Technical Assistance
               Reports
               Communications
               Audit
10/1/95
    VIEWGRAPH # 2
    TITLE:       Monitoring Recipient Performance

    KEY POINTS:

         One of the POs' main responsibilities is to keep track of progress
         on the project and ensure the recipient complies with the
         programmatic requirements of the award.
         To do this, the PO needs information. This information will come
         directly from the recipient through  reports, or, if resources permit,
         from on-site reviews.
     ON-SITE REVIEWS
         Mid-year and end-of-year  reviews are helpful to evaluate
         recipient performance.  These reviews are required under the
         "Policy on Performance Based Assistance" for Continuing
         Environmental Program Grants, and are strongly encouraged for
         other assistance programs.
     TECHNICAL ASSISTANCE REVIEWS
         Technical assistance reviews are used to help ensure the
         highest quality recipient management practices,  and to avoid
         future audit findings and difficulties by ensuring recipient
         compliance with EPA regulations.  These reviews also assist the
         recipient in implementing changes to their systems and
         processes in response to changing Federal requirements,
         following up on these changes, and gaining a better
         understanding of specific regulations that govern the Recipient's
         assistance agreement.
                           5.2

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    VIEWGRAPH # 2 (Continued)

    TITLE:       Monitoring Recipient Performance
    KEY POINTS:

    REPORTS

    •   Financial Reports: The PO may receive financial information on
        the project from:

        SF269, "Financial Status Report" (FSR). The FSR provides
        information on the total amount expended versus the total grant
        award. It is valuable for continuation awards because it lets the
        PO know if there are any funds to be "carried over," i.e., available
        for the next award (see Appendix K for the Carryover Policy).
        The FSR is required at the end of the award and is due 90 days
        after the end of budget period.  If the Program wants a FSR more
        frequently, they should discuss it with the GMO.
        The Integrated Financial Management System (IFMS). IFMS
        gives POs information on the funds disbursed for specific
        assistance agreements.  A PO can use  an IFMS report on draw
        downs to compare  the funds spent with the progress on the
        project.  This report can be obtained from the Service Finance
        Office (or anyone else with access to IFMS).
        Payment Requests:

        Whether the PO receives the recipient's  payment request for
        approval will depend on the method of payment.

        Under the reimbursement payment system, POs should review
        the request and determine if payment should be made.
        Under the ACH payment system, the PO and the GMO will not
        see the payment request before it is made. The recipient sends
        the request directly to the SFO.
        Performance  Reports: the Performance Report is perhaps the
        POs1 best source of information.
        Each Program Office determines what information they need
        to adequately monitor the recipient's  progress. The report
        should require information on the rate of expenditure versus
        progress on the project, actual  accomplishments, and problems
        encountered during the performance period which may interfere
        with meeting program/project objectives.
10/1/95                      5-3

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10/1/95
       VIEWGRAPH # 2 (Continued)
       TITLE:       Monitoring Recipient Performance

       KEY POINTS:

           The PO should review each report to determine how the
           project is progressing.  If there appears to be a problem(s),
           the PO should work to resolve it.  Some solutions may mean
           getting the Grants Specialist and the OGC/ORC involved.
           The PO should never let a problem go unresolved. Also,
           the PO should document how each problem was resolved.
           This will come in handy if there is a question later on, e.g.,
           during an audit.
           The frequency of a Performance Report will vary with the
           program and is usually required by regulation or program
           policy.  The  PO should request the reports as often as
           necessary to adequately monitor recipient performance.
           However, the OMB Circulars prohibit requesting Performance
           Reports more often than quarterly.

       Tracking Receipt of Reports
           The GMO is responsible for obtaining administrative reports
           required by the agreement, and will follow up if the reports are
           not received by the dates specified in the agreement.
           Recipients may be told to send some reports directly to
           Offices other than the GMO (e.g., MBE/WBE reports to the
           MBE Coordinator).

           The POs and others who receive a report should let the
           GMO know when the reports are received or not received
           on time.  During closeout, the GMO will be asking the other
           offices if all reports were received when requested and met
           EPA requirements (see Module 6).
       COMMUNICATIONS:

           Keep in touch with the recipient. This is the best way to keep
           aware of what is going on with the project. Although
           telephone calls are not a total substitute for on-site visits they
           may be all that can be done when resources do not  permit
           on-site reviews.
       AUDIT

           If an audit is conducted, the PO should take the opportunity tc
           rectify/resolve problems by taking corrective actions as
           necessary (See Module 7).

                            5.4

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Electronic

Transfer
                         PAYMENT

               • METHODS

                - Advance Payment
                 (EPA-ACH or
                 Treasury Check)

                - Reimbursement
                 Payment (Treasury
                 Check)

               • WITHHOLDING
                PAYMENTS

     VIEWGRAPH # 3
     TITLE:        Payment

     KEY POINTS:

         Payment Methods

         There are two payment methods available

         -  Advance Payment; and

         -  Reimbursement.

         (Recipients may be paid through a combination
         Advance/Reimbursement, i.e., Working Capital Advance.)

         Under these payment methods, recipients will receive payment
         under one of two mechanisms:

         -  Electronic transfer of funds. This includes the Automated
           Clearing House (ACH) mechanism for domestic entities only,
           and FEDLINE for international entities.
         -  U.S. Treasury check.

         POs should not make promises regarding how a recipient is
         to be paid under their assistance agreement. Because each
         recipient must comply with the U.S. treasury and Office of
         Management and Budget cash management guidelines,
         recipients should contact the appropriate EPA Service Finance
         Office (SFO) directly for questions on how and when their
         payments will be processed.
         Payment methods are determined by the SFO, however, the
         SFO, GMO, and program may have to get together to determine
         the appropriate payment method/mechanism.

10/1/95                     5-5

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      VIEWGRAPH #3 (Continued)
      TITLE:       Payment

      KEY POINTS:

      ADVANCE PAYMENTS METHODS

          Recipients are to be paid in advance provided they have
          written procedures which limit the time between receiving
          funds from the Federal Government and disbursing those
          funds; and meet the financial management standards in 40
          CFR Parts 30 and 31.

          Cash advances are limited to actual, immediate cash
          requirements.

      REIMBURSEMENT PAYMENT METHOD

          Reimbursement is the preferred when the recipient does not
          meet the requirements for advance payment.
          Under this method, the recipient asks for payment after it s
          actual cash disbursements.
          If the recipient is under a reimbursement payment system
          (for other than construction grants), the recipient is to
          request payments on the SF-270, Request for Advance or
          Reimbursement.
          -  The PO should review the recipient's request for
            payment to determine if programmatic progress is
            consistent with the request for funds. If there is any
            question, the PO should contact the GMO and both
            should decide what action, if any,  is necessary.

          •  For Headquarters awards, the PO and GMO do not see
            the payment request, and therefore, the PO must rely on
            the progress reports or an IFMS report to determine if
            progress on the project/program is consistent with the
            recipient's requests for payment.
          If a Wastewater Treatment Construction Grant recipient is
          requesting a reimbursement, they must submit the request
          for reimbursement on SF 271, "Outlay Report and Request
          for Reimbursement for Construction Programs."  For
          Headquarters awards, the SFO performs this review and
          the PO and GMO do not see the payment request.
10/1/95                     5-6

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      VIEWGRAPH # 3 (Continued)
      TITLE:        Payment

      KEY POINTS:

          The GMO reviews reimbursement payment requests for
          compliance with the cost sharing requirements of the
          agreement. For Headquarters awards the SFO ensures
          compliance with the cost sharing requirements.
          The SFO is responsible for:

          - Processing payment requests,

          - Ensuring that payments to the recipient are proper and
            are made within a reasonable time after receiving the
            payment request. (For ACH recipients, however, EPA
            has 24 hours to deny a request.)
      Working Capital Advance
          If a recipient cannot met the criteria for the advance
          payment method and the EPA determines that the
          recipient lacks sufficient working capital,  EPA may provide
          cash on a working capital advance basis. The advance
          covers the first funding period; thereafter, funds are
          disbursed on a reimbursement basis.
      WITHHOLDING PAYMENTS

          EPA shall not withhold payments for proper charges made
          by recipient unless:

          - A recipient fails to comply with the project objectives,
           terms and conditions of the award, or Federal reporting
           requirements; or
          - A recipient is delinquent in a debt to the Federal
           Government as defined in OMB Circular A-129.
10/1/95                      5-7

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           CHANGES REQUIRING PRIOR PO
        APPROVAL OR FORMAL AMENDMENT
Type of Change
Requested
Change in $
Change in Scope
Approvals Required
by Cost Principles
Extend Award
Key Personnel
Transfer of Costs to
Different Activities
Some 3rd Party
Services
Indirect to Direct
State/Local/Indian
Formal
Amendment
X
X
X
X
X
X
X
N/A
Universities
PO
Approval




X
X
X
X
5/Nonprofits
Formal
Amendment
X
X
Varies
Varies




     VIEWGRAPH#4
     TITLE:       Changes Requiring Prior PO Approval or
                 Formal Amendment
     KEY POINTS:

        Certain post-award changes cannot be made without a formal
        amendment to the agreement. However, recipients are
        permitted to rebudget within the approved direct cost budget to
        meet unanticipated requirements and may make limited
        program changes to the approved project.

        A recipient's written request for a change must be accompanied
        by a narrative justification for the proposed revision, and must be
        submitted to the PO.
        Any change to add work/tasks/activities must meet the
        principle purpose test of the Federal Grant and Cooperative
        Agreement Act (See Module 1, page 1.7).
        The PO should notify recipients in writing of disapprovals
        (with a copy to the GMO) of requests for changes.  This is
        necessary to answer any future claims against EPA because
        the recipient "thought" EPA had approved the change.
10/1/95
                          5.8

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     VIEWGRAPH # 4 (Continued)
     TITLE:      Changes Requiring Prior PO Approval or
                  Formal Amendment
     KEY POINTS:

          The PO must forward to the GMO requests for changes
          requiring formal amendments. The PO must also include
          their recommendation for approval.

      CHANGES WHICH  REQUIRE A FORMAL AMENDMENT

          All recipients
          Any revision resulting in the increase or decrease in funds.
          Revisions to the objectives  or scope of the project.
          Inclusions of costs which require prior approval under the cost
          principles, e.g.,  equipment. The EPA Award Official may waive
          this requirement.
          State, local government, and Indian Tribal Governments

          Extensions to the period of  availability of funds.
          Changes in key project personnel,if key personnel were identified
          in the agreement. For research projects, this means a change in
          the recipient's project manager or principle investigator.
          Cumulative transfers among direct cost categories, or, if
          applicable, among separately budgeted programs, projects,
          functions, or activities which exceed or are expected to exceed
          10% of the current total approved budget, whenever EPA's
          share exceeds $100,000.  (If less than $100,000, the recipient
          does not need  prior written approval, but should discuss
          with the PO before doing.) For example, for a grant with an
          EPA share of $150,000, the recipient transfers $15,000 from one
          budget category to another, there is no requirement for prior
          approval.  If the recipient later transfers $18,000 from one
          category to another (whether from the same category as before or
          not), the recipient, must obtain prior approval from the Award
          Official.
          Transfer of funds allotted for training allowances,  i.e., from
          direct payments to trainees to other expense categories.
          Rebudgeting funds from construction to nonconstruction
          activities,  or vice versa.
10/1/95                      5-9

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        VIEWGRAPH #4 (Continued)
        TITLE:       Changes Requiring Prior PO Approval or
                    Formal Amendment
        KEY POINTS:


            Under nonconstruction projects, contracting out or
            otherwise obtaining services of a third party to
            perform activities central to the purpose of the
            award not already approved in the
            Workplan/narrative. this does not include the
            procurement of equipment, supplies, and general
            support services.
         CHANGES WHICH REQUIRE ONLY PO APPROVAL
            Universities of Higher Education and other
            Non-Profits
            The PO may approve the following:
            - Rebudgeting funds for indirect costs to absorb
              increases in direct costs.
            - Key personnel
            - Moving training funds to other categories.
            - Subaward, transfer,  or contracting out of any
              work under the award, unless approved in the
              award. Does not apply to the purchase of
              supplies, material, equipment, or general
              support services
         EXCEPTIONS FOR RESEARCH AWARDS
            For awards supporting research the prior approvals
            are automatically waived unless:
            - EPA regulations provided otherwise;
            - The assistance agreement provides otherwise;
            - Additional Federal funds are required; or
            - The change involves a change in the approved
              objectives or scope of the project.
10/1/95                      5-10

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                CHANGES NOT REQUIRING
                 PRIOR PO APPROVAL OR
                  FORMAL AMENDMENT
             Minor Adjustments to
             Methodology or Approach
             Minor Adjustments to
             Project Budget
             Staff Changes
   VIEWGRAPH # 5
   TITLE:       Changes Which Do Not Require Prior PO Approval or
                Formal Amendment

   KEY POINTS:

       Recipients may need to change their projects to respond to
       changed conditions. Neither a formal amendment nor prior
       written approval is necessary for minor changes that are
       consistent with the project objective and within the scope of the
       agreement.  For example, recipients may, without prior written
       approval:

       - Make minor changes to the methodology, approach, or other
         aspects of the project to meet objectives or to expedite
         completion.
       - Adjust their project budgets (except for adjustments requiring
         formal amendments) provided they use the funds in
         accordance with the approved workplan/narrative, EPA
         regulations, and applicable cost principles.
       - Changes in the staff (other than key personnel), provided they
         will not affect the objectives of the project.
       However, the recipient should discuss these changes with
       the PO because EPA is not obligated to pay for any changes
       that result in cost overruns.
10/1/95                     5'11

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       VIEWGRAPH # 5
       TITLE:       Changes Which Do Not Require Prior PO
                     Approval or Formal Amendment (Continued)

       KEY POINTS:

            Universities and other nonprofit recipients may also:
            Extend the award one-time for up to 12 months, unless
            the:

            -  Terms and conditions of the award prohibit the extension;
            -  Extension requires additional Federal funds; or
            -  Extension involves any change in the approved
              objectives or scope of the project.
            For these extensions, the recipient must notify the Award
            Official in writing with supporting reasons and revised
            expiration date at least 10 days before the expiration date
            specified in the award.
            Also, the recipient cannot extend the award to merely use
            up unobligated balances.
            Carry forward any unobligated balance to subsequent
            funding periods,  provided the recipient notifies the Award
            Official by means of the Financial Status Report.
10/1/95                       5-12

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             TRANSFERRING AN AWARD

         Transfer By Award of
         New Assistance
         Agreement
         Transfer By
         Amendment
     VIEWGRAPH # 6
     TITLE:      Transferring an Award

     KEY POINTS:

         Recipients may request that EPA transfer a project to another
         organization for a number of reasons, e.g., transfer of the Project
         Manager to another organization, reorganization, changes in the
         recipient organization's name.
         There are two ways to transfer an award (procedures for each
         may be found in Chapter 34 of the Assistance Administration
         Manual).
         - Terminate the existing award and make a new award (called a
           "novation").  The  PO should contact the GMO if this is to be
           used.
         - Amend the existing award.
         If a legislative or other legal action (e.g., merger, divestiture,
         reorganization, or recipient name change) affects the status of
         the recipient, the Award Official may transfer the award to the
         new recipient or change the recipient's name by issuing an
         amendment.
10/1/95
                          5.13

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                           DEVIATIONS
               NEED:

               • BASIC INFORMATION

               • REGULATORY CITE

               • CIRCUMSTANCES/JUSTIFICATIONS

               • PREVIOUS DEVIATION?
    VIEWGRAPH #7
    TITLE:       Deviations

    KEY POINTS:

         Recipients are required to comply with all EPA
         requirements. In some cases, however, it may be
         necessary to deviate from (waive) a regulatory provision.
         EPA does not have the authority to deviate from
         statutory or Executive Order requirements.
     •   The Director, Grants Administration Division is the person
         delegated by the Administrator to approve or disapprove
         deviations from regulatory provisions not required by
         statute or Executive Order.
         Recipient deviation requests for Regional awards must be
         submitted in writing to the Region or delegated State
         agency, as appropriate. The Region (generally the GMO),
         with input from the PO and the delegated State agency, as
         appropriate, then submits the request to the Director, GAD
         for signature.
         For deviations for Headquarters awards, the recipient
         sends the request directly to PO who forwards the request
         with a recommendation to the GMO. The GMO processes
         and submits the request to the Director, GAD for signature.
         Deviation requests should be submitted as soon as
         the need for the deviation is known,  NOT AFTER THE
         FACT.
10/1/95                      5-14

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   VIEWGRAPH #7 (Continued)
   TITLE:       Deviations

   KEY POINTS:

         Each request for a deviation must include:

         - The name of the applicant or recipient, the assistance
          identification number of the application (if available) or
          award, the date of the award, and the dollar value of the
          application or award and the amount in question.
         - The section(s) of the regulation from which a deviation is
          requested.
         - A complete description of the circumstances, a careful
          analysis of the situation,  justification for the deviation, an
          explanation of what the deviation will do, and any pertinent
          background information,  including a copy of the applicant's
          or recipient's request.
         - A statement as to whether the  same or a similar deviation
          has been previously requested for the same project, and if
          so, an explanation as to why the previous request was
          made and the outcome.

         - If a deviation is requested for a project administered in a
          Regional Office, the  deviation must also contain the
          Region's recommendation,  including the delegated State's
          recommendation, if appropriate, and the name of a contact
          in the Regional Office who is most familiar with the request.
         GMO internal procedures may vary, so PO's should contact
         their GMO to find out the required steps.
     •    The applicant may request a deviation before the agreement
         is awarded.  If a deviation is approved before award, the
         approval will be contingent upon the approval of the
         application and award of the assistance agreement.
         The Award Official must incorporate the provisions of any
         approved pre-award deviation in the agreement.
         The GMO must retain  a copy of each deviation decision in the
         official assistance file.  The PO should also keep a copy in the
         project file.
         The Director, Grants Administration Division may reconsider
         the decision if that decision was based on incomplete
         information.


10/1/95                      5-15

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                         DISPUTES



           • Responsibility for

               Disputes Resolution


           • Some EPA Action

             NOT Subject to Review

    VIEWGRAPH # 8
    TITLE:       Disputes

    KEY POINTS:

        Whenever possible, disputes between EPA and recipients
        should be resolved at the lowest level possible.
        Each Award Official (Regional and Headquarters) may
        designate one or more Disputes Decision Officials (DDO).
        The Disputes Decision Official is responsible for deciding
        disagreements between EPA and recipients (they may also
        decide disputes with applicants).
        The most frequent formal disputes are a result of recipient
        disagreements with audit findings.
        The following EPA actions cannot be disputed:
        - Denials of deviation requests (40 CFR Parts 30 and 31);
        - Bid protest decisions (40 CFR Parts 31 and 30);
        - National Environmental Policy Act decision (40 CFR Part 6);
        - Audit Resolution Board decisions (EPA Order 2750); and
        - Debarments/suspensions (40 CFR Part 32).
        For Headquarter awards, the disputee may request that the
        appropriate Assistant Administrator review the Dispute
        Decision Official's decision and render the Agency's final
        decision. These requests must be sent directly to the
        Assistant Administrator.
10/1/95                      5<16

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     VIEWGRAPH #8 (Continued)
     TITLE:     Disputes

     KEY POINTS:
          For disputes of Regional awards, if a recipient disagrees with
          a decision made by a Disputes Decision Official, the
          disputee may request a review by the Regional
          Administrator. The Regional Administrator's decision is final
          unless the disputee requests a discretionary review by the
          Assistant Administrator of the affected program. If the
          Assistant Administrator does not elect to review the dispute,
          the Regional Administrator's decision  is the final Agency
          action.  If the Assistant Administrator reviews the dispute, the
          Assistant Administrator's decision is the final Agency action.
10/1/95                       5-17

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                       EPA RESPONSE TO
                    RECIPIENT PERFORMANCE
                  • NONCOMPLIANCE AND HIGH
                   RISK

                  • PERFORMANCE-BASED
                   ASSISTANCE POLICY

        VIEWGRAPH #9
        TITLE:       EPA Response to Recipient Performance

        KEY POINTS:
            EPA officials are faced with a wide range of potential problems
            involving participants in the assistance process.  The
            participant may be an assistance recipient, a contractor, a
            subcontractor, or a supplier to a recipient. In some cases, the
            problem may involve a technical matter which can easily be
            resolved by informal discussions with the participant. At other
            times, the matter may involve nonperformance, poor
            performance, or a criminal matter which places the Agency's
            assistance programs at significant risk.
            Noncompliance and High Risk Recipients
            To deal with noncompliance or high risk participants, Award
            Officials may:
            -  Impose special conditions on the award,
            -  Find a person or organization to be non-responsible,
            -  Issue stop work orders,
            -  Withhold payment of funds,
            -  Terminate or annul an award, or
            -  Initiate an investigation to determine if further action is
              necessary.
            Further, after all administrative remedies are exhausted, the
            Director, OGD, may suspend and/or debar any person or
            organization from participation in all EPA assisted activities for a
            specified period of time.
10/1/95                       5-18

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        VIEWGRAPH #9 (Continued)
        TITLE:     EPA Response to Recipient Performance

        KEY POINTS:

             Performance Based Assistance
             For Continuing Environmental Program grants, EPA
             developed a "Policy on Performance-Based Assistance"
             to ensure a consistent effort within the Agency to assess
             recipient performance against negotiated commitments,
             to reward accomplishments, and to correct problems
             (See Appendix L for a copy of the policy.)

             The principles and procedures in this policy can be used
             and have been applied to other programs.
             Internal Coordination
             Because the remedies for recipient noncompliance may
             have ramifications outside the Agency, it is important that
             any Agency action be coordinated among the various
             offices concerned. Principal participants in the decision
             to take an action are the program office, GMO, and the
             Office of General Counsel or Office of Regional Counsel.
             The Office of Inspector General (OIG) is also a key
             participant in suspension or debarment actions or where
             a matter may involve an audit or potential criminal
             wrongdoing.
10/1/95                      5-19

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                       PROJECT OFFICER
                          ROLES AND
                       RESPONSIBILITIES

                • TECHNICAL EXPERTISE

                • DAY-TO-DAY MANAGEMENT OF
                 THE AGREEMENT

                • FOCAL POINT FOR PROGRAMMATIC
                 ISSUES

  VIEWGRAPH4MO
  TITLE:        Project Officer Responsibilities
  KEY POINTS:

  In this phase, the PO is responsible for:

      Monitoring all activities and the recipient's progress on the
      project.

      Reviewing progress reports and other work products to assure
      that the recipient is complying with the applicable regulations
      and the programmatic terms and conditions in the agreement.
      These products should be reviewed for timeliness and
      completeness.  The PO must also track the receipt of
      programmatic reports and work products and inform the GMO
      when they are received so that the GMO can keep track of
      reports and work products in the grant.
      Providing comments to the recipient on the progress reports
      and other work products and sending copies to the GMO if
      funding is potentially affected.

      Providing technical assistance to recipients when requested or
      required by terms and conditions of the award.
      Maintaining the official technical project file and ensuring that it
      is complete.
      Maintaining a record of communications with the recipient and
      providing, as appropriate, the GMO or other EPA offices with
      copies of pertinent correspondence to and from the recipient.
      Advising the GMO whenever anything occurs which could
      endanger the successful completion of the project, and working
      with these  offices to decide what actions need to be taken to
      assure that the  project will be completed as designed, that
      funds are spent properly,  and, if necessary, what sanctions
      would be appropriate.

10/1/95                     5-20

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   VIEWGRAPH # 10 (Continued)
   TITLE:      Project Officer Responsibilities

   KEY POINTS:

       Reviewing requests for modifications (time extensions,
       additional funding, etc.) and recommending to the GMO
       whether the agreement should be changed.
       Recommending to the GMO whether an agreement should be
       terminated.

       Reviewing the Financial Status Reports (SF 269 or 269A).
       Meeting with the GMO to discuss administrative/financial
       problems and issues on an "as needed" basis.
       Conducting periodic reviews to assure that the recipient is
       complying with the terms and conditions of the agreement.
       he PO should provide the GMO a copy of the evaluations.
       Communicating regularly with any other program staff with
       responsibility for aspects of the project/program to keep
       apprised of the progress on issues which need resolution.
       Assisting the recipient, where appropriate, with the
       development of an Action Plan for conducting subsequent
       years of the project.
       Providing input to their GMO on recipient's requests for any
       rebudgeting or other actions which require EPA prior
       approval.

       Notifying the GMO if the recipient is not complying with the
       terms & conditions of the agreement.
10/1/95                     5-21

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                 GRANTS MANAGEMENT OFFICE
                         ROLES AND
                      RESPONSIBILITIES

              • ADMINISTRATIVE EXPERTISE

              • ASSURE ADMINISTRATIVE
               REQUIREMENTS ARE MET

              • FOCAL POINT FOR ADMINISTRATIVE
                ISSUES

     VIEWGRAPHtf 11
     TITLE:       Grants Management Office Roles and
                  Responsibilities

     KEY POINTS:
     In this phase, the GMO is responsible for:

     •   Maintaining the official administrative file and ensuring that the
         file contains all required materials, records, and
         documentation.
         Assuring that all reports and work products required by the
         agreement are received in EPA . Some reports may go
         directly to the PO (e.g., progress reports), or the FMO (e.g.
         Federal Cash Transaction Reports) but the GMO has to
         ensure that all reports required by the agreement have been
         received.  Some GMOs may ask the POs to send a
         memorandum certifying that all programmatic reports and
         work products were received on time and were of
         acceptable  quality.
     •   Reviewing the Financial Status Reports and resolving any
         discrepancies.
         Monitoring the financial and management aspects of awards
         through reviews of reports, correspondence, site visits, or other
         appropriate means.
         Ensuring that the recipient complies with the applicable
         administrative requirements, including certifications,
         procurement, and indirect cost agreements.
         Conducting oversight reviews of recipient's administrative
         systems, e.g., procurement, property, and general
         administrative.
10/1/95                      5-22

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                          RECIPIENT
                          ROLES AND
                       RESPONSIBILITIES

                  • COMPLYING WITH ALL
                    REQUIREMENTS IN THE
                    AGREEMENT

        VIEWGRAPH#12
        TITLE:       Recipient Roles And Responsibilities

        KEY POINTS:

         In this phase, the recipient is responsible for:

            Expending and accounting for funds in accordance with the
            agreement, program regulations, and statutes.

            Accounting for total project costs and segregating allowable
            and unallowable costs.
            Conducting procurements in accordance with the appropriate
            procurement rules, including ensuring that debarred or
            suspended bidders are not awarded a contract using Federal
            funds.

            Complying with the appropriate Disadvantaged Business
            Utilization requirements and ensuring that their contractors
            comply with the requirements.
            Recording the receipt and expenditure of program income as a
            project transaction.
            Complying with the appropriate property purchase,
            management, and disposition requirements.
            Complying with EPA requirements and the Uniform Relocation
            Acquisition Assistance and Real Property Acquisition Act, if
            real property is purchased under the agreement.
            Requesting the Award Official's required approval for a formal
            assistance amendment.
            Requesting the PO's approval for an informal amendment.
            Complying with all applicable reporting requirements, including
            submitting progress reports, Financial Status Reports,
            MBE/WBE reports.
10/1/95                      5-23

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                       OTHER OFFICE
                        ROLES AND
                      RESPONSIBILITIES

                • FINANCIAL MANAGEMENT OFFICE

                • OFFICE OF GENERAL COUNSEL

                • MBE/WBE COORDINATORS

     VIEWGRAPH4M3
     TITLE:      Other Office Roles And Responsibilities

     KEY POINTS:

      Financial Management Office (FMO)

          Processing requests for payments.

          Complying with any request from the GMO to restrict
          payment for appropriate programmatic or administrative
          reasons.  For instance, the PO may want to review and
          approve the results of one part or activity of the work before
          allowing the recipient to draw down  on additional funds.

      Office of General Counsel/Regional Counsel
          The Office of General or Regional Counsel may need to be
          involved from time to time as legal issues arise.
      MBE/WBE Coordinator

          The MBE/WBE Coordinator ensures that, when required,
          recipients send in completed MBE/WBE reports (SF 334,
          "MBE/WBE Utilization under Federal Grants, Cooperative
          Agreements, and Other Federal Financial Assistance").
10/1/95                      5-24

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MODULE VI

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    ASSISTANCE
  PROJECT OFFICERS
  TRAINING COURSE
MODULE VI
CLOSEOUT

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                   PURPOSE OF CLOSEOUT

                Proper Closeout  Ensures the
                Completion of All:
              Technical Work
                                          Human LMg«
              Administrative Work
VIEWGRAPH #1
TITLE:      Purpose of Closeout
KEY POINTS:

    The closeout process is a systematic method of ensuring that all
    technical work (e.g., product development, construction) and
    administrative requirements (e.g., review of FSRs) have been
    finalized.

    Closeout is initiated when a project ends due to completion or
    termination. A project may be terminated because of insufficient
    funds, non-funding of a renewal, or decision by the recipient or EPA
    not to continue the project/program.
    Closeout ensures a final accounting of expenditures and an
    assessment by the PO that all technical work has been
    completed and is satisfactory.
    Closeout also ensures that any remaining unexpended funds are
    deobligated.
 •  EPA issued a closeout policy for all EPA programs on August 27,
    1992. (See Appendix R.)
     10/1/95
6.1

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                 ROLES AND RESPONSIBILITIES
Category
Technical Issues
Financial Issues
Legal Issues
Institutional Issues
(Superfund Clean ups)
Property
Inventions
Recipient Role
• Submits Final Report or
Product(s)
• Submits Final FSR and/or
Final Payment Request
• Completes Cost Recovery
Requirements (Superfund)
• Provides Notification of
Settlements (Superfund)
• Provides Assurance that
Institutional Controls, if
Required, are in Place
• Requests Disposition
Instructions
• Reports Inventions
EPA Role
• PO Provides Comment to Recipients
• PO Notifies GMO of Acceptance or
Rejection
• FMO Settles Billings and Payments
• GMO & PO Review and Approve
Financial Status Report
• GMO Amends Agreement or Issues
Assistance Adjustment Notice
• GMO & FMO Deobligate balances
• GMO & PO Assure All Audit
Exceptions Are Resolved
• GMO & PO Resolve Any Disputes
• GMO Documents Closure in Files
• GMO, PO, & FMO Maintain Official
Records
• PO Disposition of Property
• GMO Provides Disposition
Instructions
• OGC Resolve Patent Interest
• GMO Provides Instructions
   VIEWGRAPH #2
   TITLE:       Roles and Responsibilities
   KEY POINTS:


        This viewgraph provides an overview of the recipient's
        and EPA's roles and responsibilities in the closeout
        requirements for assistance agreements.
        All assistance agreements are subject to audit.
        However, an assistance agreement may be closed out
        before an audit takes place. If this is the case, the GMO
        should inform the recipient that while the assistance
        agreement is being closed out:
        - The award may be audited at a later date, and
        - The recipient is responsible for maintaining the
          records for the length of the record retention period for
          that particular program.
10/1/95
6.2

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               TIMING OF CLOSEOUT
AGREEMENT TIMING
PROJECT GRANTS
CONTINUATION/CONTINUING
ENVIRONMENTAL PROGRAMS
SUPERFUND
Pre-Remedial
Single Site
Multi-Site
Core Program
ALL
Project Complete
Previous Award Ends
Work Complete
Work Complete
Work Complete at Each
Site, Activity or All Sites
Work Complete
Project Complete,
Terminated or Annulled
    VIEWGRAPH #3
    TITLE:       Timing of Closeout
    KEY POINTS:

         Formal closeout can occur only when all parties are
         satisfied with the final product, all eligible costs have
         been accepted, all repayments have been received,
         all terms and conditions or Special Conditions have
         been met. If an audit is underway prior to
         closeout, all issues must be resolved prior to
         closeout.

         The timing of closeout depends primarily on the type
         of agreement. The viewgraph illustrates when
         closeout of various types of agreements should take
         place.
         Closeout of most non-Superfund project grants,
         including WWT Construction grants,  begins when the
         project period has expired.
         Closeout of Continuation and Continuing
         Environmental Program grants begins on the date the
         previous, (i.e., most recent) Continuation Agreement
         expires.
10/1/95
6.3

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       VIEWGRAPH # 3 (CONTINUED)
       TITLE:       TIMING OF CLOSEOUT

       KEY POINTS:

         Closeout of Superfund Cooperative Agreements occurs at
         the following times:
              Pre-remedial - when all preliminary assessment/ site
              inspection (PA/SI) activities have been completed or
              terminated at all sites.
              Single-Site CA - when all activities covered by the
              statement of work (SOW) are completed or
              terminated at that site.

              Superfund Multi-Site Cooperative Agreement
              (MSCA) - is somewhat different from other CAs.
               o Closeout of an individual site covered by the
                MSCA occurs when all activities at that site are
                completed or terminated.
               o Closeout of the MSCA occurs when all activities
                at all sites covered by the SOW have been
                completed or terminated.
              Superfund Core Program Cooperative Agreements
              (CPCAs) - when the State has completed the
              activities specified in the SOW.
10/1/95                     6.4

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              INITIATING CLOSEOUT

      GMOs:
      • Obtain Status Report
      • Send "Reminder
        Letter"

      • Update GICS
      POs:

      •  Close out or Extend?
    VIEWGRAPH#4
    TITLE:       Initiating Closeout
    KEY POINTS:


      Monthly, the GMO should obtain and review the "Status
      Report of Projects Completed But Not Closed Out" through
      the Grants Information Control System (GICS).
      90 days prior to the project expiration date, the GMOs are to
      send a "Reminder Letter" to remind the recipient and
      Project Officer of the closeout requirements. The GMOs will
      update GICS when the status changes.
      The PO informs the GMO in writing (for file documentation) if
      the project should be closed out or extended.
10/1/95
6.5

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                  DELIVERY OF PRODUCTS AND REPORTS


             THE RECIPIENT MUST DELIVER:
                           Satisfactory Final
                           Product
      VIEWGRAPH # 5
      TITLE:       Delivery of Products and Reports
      KEY POINTS:

          The PO must provide the GMO with written confirmation
          that:
          • Project is completed;

          • Final report/product(s) were submitted and are
           satisfactory and comply with Agency Peer and
           Publication Review requirements.
          - The PO must inform the GMO how property
           purchased under the agreement, if any, should be
            handled.
      •   Other reports:
          -  Invention: If the project resulted in any inventions being
            produced, the recipient must report them to the Award
            Official. The PO should be aware of any inventions,
            and should remind the recipient to report inventions.
          -  Request for final payment: The PO should remind the
            recipient to submit a final SF270, "Request for
            Payment," or SF 271,  "Outlay Report and Request for
            Reimbursement." In  Headquarters, the GMO will notify
            the recipient through an Assistance Adjustment Notice to
            request final payment.
          -  MBE/WBE Reports- SF 334: The recipient must submit
            a final report on their contracting with MBE/WBE firms.


10/1/95                    6.6

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   VIEWGRAPH #5 (Continued)
   TITLE:        Delivery of Products and Reports

   KEY POINTS:

       If the recipient used any Federally-owned property, the
       recipient must ensure the proper disposal of this property
       before closeout can be completed.  Once the GMO receives
       the recipient's list of Federally-owned property, it must notify
       the recipient of property disposition requirements.

       Recommended disposition of funds: remaining funds are
       treated differently for Regional and Headquarters
       administered awards. Regional POs must inform their GMO
       how the program recommends handling any remaining funds.
       In Headquarters, any remaining funds will be deobligated.
       If a recipient owes EPA funds, the recipient has 30 days to
       pay this debt. The GMO will inform the FMO so the FMO can
       establish an accounts receivable in IFMS. The assistance
       agreement cannot be closed out until the debt is paid.
       After receiving confirmation from the PO that all
       deliverables were received and acceptable, the GMO will
       prepare a closeout  letter/amendment (using the Assistance
       Adjustment Notice (EPA Form 5700-42), indicating the
       disposition of any unused funds. At this time, the GMO
       notifies the FMO to deobligate any unobligated balances.
    Peer and Publications Review Requirements.
       EPA encourages the independent publication of the results of
       its assistance research in appropriate scientific journals as an
       important method of recording and reporting scientific
       information.  Any journal article so published must contain a
       disclaimer that even though it has been funded with EPA
       funds, it has not been subjected to the Agency's peer and
       policy review and does not reflect the views of EPA (See
       Appendix S, page 7 for the exact wording of the disclaimer).
10/1/95                      6.7

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     VIEWGRAPH #5 (Continued)
     TITLE:       Delivery of Products and Reports

     KEY POINTS:

         The recipient should send a courtesy copy of the paper
         to the EPA PO who is responsible for forwarding it to
         the appropriate Office Director, Associate, Assistant, or
         Regional Administrator, and the Science Advisor. EPA
         Order 2200.4, "Review Process for Scientific, Informational,
         and Educational Documents," (see Appendix S) identifies
         which documents are exempt from this process (e.g.,
         Congressional testimony; press releases; legal opinions;
         Requests for Proposals, etc.) and which documents must
         go through the process (all scientific, informational, or
         educational publications designed for public distribution and
         created by an EPA employee, contractor, recipient, or
         consultant unless specifically exempted by the Order.)

         The PO is responsible for insuring that adequate EPA
         review consistent with the rights and data clauses of
         EPA assistance agreements is conducted, including the
         approvals by appropriate Associate, Assistant, or
         Regional Administrators, the Science Advisor, and the
         Office of Public Affairs, if necessary.
         For all Reports accepted for publication, the Project Officer
         submits a Technical Data Report (EPA Form 2220-1)  to the
         appropriate GMO and submits a Technical Data Report
         and two copies of the Final Progress Report to the
         Headquarters library.
10/1/95                     6.8

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                       DISPOSITION OF
                    PERSONAL PROPERTY
               •STATE GOVERNMENTS

               • LOCAL AND INDIAN TRIBAL
                GOVERNMENTS

               • UNIVERSITIES AND NONPROFITS

               • RESEARCH ENTITIES
VIEWGRAPH #6

TITLE:       Disposition of Personal Property

KEY POINTS:
STATE GOVERNMENTS

    Equipment: A State will dispose of equipment acquired under an
    assistance agreement in accordance with State laws and
    procedures.
    Supplies: When the award is terminated or completed, or the
    supplies are no longer needed for any Federally sponsored
    program or project, disposition will be as follows:
    - If the aggregate fair market value of  the unused supplies
      total $5,000 or more, the recipient will compensate  EPA for
      its proportionate share of the fair market value based on the
      cost share ratio in the agreement.
    - If the aggregate fair market value is less than $5,000, the
      recipient may keep the supplies and is not required  to
      reimburse EPA.

Local Governments and Indian Tribal Governments
•   Equipment: When the original or replacement equipment
    acquired under an assistance agreement is no longer needed for
    the original project or program or for other activities currently or
    previously supported by a Federal agency, disposition will be as
    follows:
                                    •\
    - Equipment with a fair market value of less than $5,000 may
      be retained , sold,  or disposed of with no further obligation to
      EPA.
    - Equipment with a current per unit fair market value of more
      than $5,000 may be retained or sold and EPA reimbursed for
      its share of the fair market value based on the cost share ratio
      in the agreement.  EPA may waive reimbursement.

10/1/95                     6.9

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VIEWGRAPH#6 (continued)
TITLE:       Disposition of Personal Property


KEY POINTS:

    Supplies: When the award is terminated or completed, or the
    supplies are no longer needed for any Federally sponsored
    program or project, disposition will be as follows:
    - If the aggregate fair market value of the unused supplies total
      $5,000 or more, the recipient will compensate EPA for its
      proportionate share of the fair market value based on the cost
      share ratio in the agreement.

    - If the aggregate fair market value is less than $5,000, the
      recipient may keep the supplies and is not required to
      reimburse EPA.
 10/1/95                     6.10

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       DISPOSITION OF REAL PROPERTY



          • SAME FOR ALL RECIPIENTS

          • THREE OPTIONS


 VIEWGRAPH #7

 TITLE:       Real Property Disposition


 KEY POINTS:


    When real property is no longer needed for the originally authorized
    purpose, the recipient must request disposition instructions from
    EPA.
    Real property must be disposed of using one of the following
    options:
    -  Retain title and compensate EPA;
    -  Sell the property and compensate EPA; or
    -  Transfer title to EPA or a third party designated/approved by EPA.
    The amount paid to EPA (or to the recipient, if transferred) is
    computed by applying  EPA's (or the recipient's) percentage
    participation in the cost of the original purchase to the proceeds of
    the sale after deducting any actual and reasonable selling and fix-up
    expenses.
    Sales procedures must provide for competition to the extent
    practicable and result in the highest possible  return.
10/1/95                     6.11

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                  DISPOSITION OF
        INTANGIBLE & FEDERALLY-OWNED
                    PROPERTY
        INTANGIBLE

          • SAME FOR ALL RECIPIENTS
          • FEDERAL GOVERNMENT MAY USE

        FEDERALLY-OWNED

         • RECIPIENT SENDS LIST TO GMO
         • GMO GIVES INSTRUCTIONS FOR
          DISPOSITION
 VIEWGRAPH #8

 TITLE:      Disposition of Intangible and Federally-Owned Property


 KEY POINTS:

  Intangible Property
     The same disposition rules apply to all recipients.

     Unless waived by EPA, the Federal Government retains a royalty
     free, nonexclusive, and irrevocable license to:
     - Obtain, reproduce, publish, or otherwise use the data first
       produced under an assistance agreement.
     - Authorize others to receive, reproduce, publish, or otherwise use
       such data for Federal purposes.
     Otherwise, the recipient has no obligation to EPA.
  Federally-Owned Property

     The same disposition rules apply to all recipients.
     If the recipient used any Federally-owned property, the recipient
     must ensure the property is disposed of before closeout can be
     completed.

     The recipient must notify the GMO that the property is available
     for return to EPA and the GMO will issue disposition instructions to
     the recipient.

10/1/95                   6.12

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          RECORD RETENTION REQUIREMENTS


           • Generally 3 years


           • Longer for Superfund, Construction
             Grants, & State Revolving Fund


           • Starts With Final Expenditure
             Report

      VIEWGRAPH #9
      TITLE:       Record Retention Requirements

      KEY POINTS:

       Record Retention Requirements

          Record retention requirements apply to all supporting
          documentation, including documentation of significant
          actions and decisions, cost records, scopes of work,
          correspondence, applications, pre-award reviews, and
          funding decisions.

          The record retention requirements begin with the date the
          recipient submits the final expenditure report. For most
          programs the expenditure report is the SF-269, Financial
          Status Report," but for reimbursement programs, the
          expenditure report is either the SF 270, "Request for
          Advance or Reimbursement," or the SF 271, "Outlay
          Report and Request for Reimbursement for Construction
          Programs."
       Record Retention Period
       All Programs Except Superfund. the Wastewater Treatment
          Construction Grants Program, and the State Revolving
          Fund Program
          Recipients must keep records for three (3) years after the
          date they submitted the final SF 269, "Financial  Status
          Report (FSR)."
10/1/95                     6.13

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    VIEWGRAPH #9 (Continued)
    TITLE:       Record Retention Requirements (Continued)
    KEY POINTS:
     Superfund:

        Site specific awards:

        - 7 years after the date the recipient submits the final FSR (SF
          269), if not used for cost recovery,

        - 30 years after the date the recipient submits the final FSR
          (SF 269), if used for cost recovery.

        Technical Assistance Grants (TAG): 3 years after the date the
        recipient submits the final FSR (SF 269).

        Non-site specific awards:  7 years after the date  the recipient
        submits the final FSR (SF 269).

     Wastewater Treatment Construction Grants

        Recipients must keep records for twenty (20) years after the
        date the recipient submits the final SF 271.

     State Revolving Fund Grants

        Recipients must keep records for twenty (20) years after the
        date the recipient submits the final FSR (SF 269).
     Start Date of Record Retention Period
        The start date for Project grants  (except Wastewater
        Construction grants) is the date the recipient submits the final
        FSR (SF 269). (The FSR is final  only when there are zero (0)
        dollars in the "Unliquidated Obligations" column.)
        For all Continuation grants (including Continuing
        Environmental Program grants), the start  date begins with the
        date the recipient submits its last  FSR (SF 269) for the period
        covered  in the agreement.
        For the State Revolving Fund grants, the start date is the
        date the recipient submits the final FSR (SF 269).
        For Wastewater Treatment Construction grants, the start
        date is the date the recipient submits the final request for
        payment SF 271.
        Also, if a litigation, claim, negotiation, audit, or other action
        involving the records was  started  before the end of the
        retention period, the recipient must keep records until either
        the completion of the action and resolution of all  issues which
        arise from it, or until the end of the established retention
        period, whichever is later.

10/1/95                      6.14

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                   PROJECT OFFICER
                     ROLES AND
                   RESPONSIBILITIES

             CERTIFY ALL WORK PRODUCTS
             SUBMITTED

             RECOMMEND DISPOSITION OF
             PROPERTY

             RESPOND TO OIG QUESTIONS
   VIEWGRAPH010
   TITLE:        Project Officer Responsibilities

   KEY POINTS:
  In this phase, the PO is responsible for:
     Certifying to the GMO within 90 days of project completion,
     that all project activities were satisfactorily completed and
     all work products submitted as required in the agreement.
     Providing assistance as necessary to recipients and the GMO
     to assure that the agreement is closed out in a timely
     manner.

     Discussing equipment disposition and closeout of technical
     requirements with the recipient at least 30 days prior to
     project completion.

  •   Obtaining assistance and advice, if necessary, on property
     disposition issues (including transfer or reimbursement
     issues) or on any follow-up action relative to incomplete
     outputs, including the need for sanctions.
     If there is an audit of the project, the PO will be required to
     respond to any programmatic issues and may be the
     responsible program person to ensure that the recipient
     complies with any programmatic audit recommendations.
10/1/95                    6.15

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             GRANTS MANAGEMENT OFFICE
                     ROLES AND
                   RESPONSIBILITIES

             •  INITIATE CLOSEOUT

             •  INFORM OIG OF PENDING
               CLOSEOUT, IF REQUIRED

             •  DEOBLIGATE FUNDS

             •  RESPOND TO OIG QUESTIONS
    VIEWGRAPH#11
    TITLE:      Grants Management Office Roles and
                 Responsibilities
    KEY POINTS:
   In this phase, the GMO is responsible for:
      Initiating the closeout process by sending the recipient and
      PO a reminder letter 90 days before the project period expires.
      Informing the Office of  Inspector General of pending closeouts
      of Wastewater Construction Grants and Superfund projects.
      Taking necessary actions to close out awards when all project
      work in the agreement  is completed.

   •   Issuing an amendment/Assistance Adjustment  Notice to
      deobligate remaining funds.
      If there is an audit of the project, the GMO will respond to any
      administrative findings  and recommendations.  If there are
      administrative recommendations affecting the recipient, the
      GMO will be responsible for following up to ensure the
      recipient complies with the recommendations.
10/1/95                     6.16

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                      OTHER PLAYER'S
                         ROLES AND
                      RESPONSIBILITIES

                       • RECIPIENT

                       • SFO/FMO
       VIEWGRAPH#12
       TITLE:       Other Player's Roles And Responsibilities

       KEY POINTS:

         In this phase, the recipient is responsible for:
            Responding to any inquiries from the PO and GMO.
            Submitting technical, financial, and administrative
            reports as required.
            If an audit is conducted, providing the auditors with all
            necessary information, documentation, etc. related to
            the agreement.
         In this phase, the Servicing Finance Office  (SFO) is
            responsible for:
            Reviewing the Integrated Financial Management
            System (IFMS) record and working with the GMO to
            resolve any differences between the final Financial
            Status  Report and  IFMS balance.
            Deobligating from IFMS any remaining balance and
            reducing the Automated Clearinghouse or payment
            records, as necessary.
            Responding to any financial audit questions during an
            audit.
10/1/95                     6.17

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MODULE VII

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    ASSISTANCE
  PROJECT OFFICERS
   TRAINING COURSE
MODULE VII
    AUDIT

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                           AUDITS

               THIS MODULE DESCRIBES:
               •  THE BASIC AUDIT PROCESS
                  THE P0fs ROLE IN THE AUDIT
                  PROCESS
        VIEWGRAPH #1
        TITLE:       Audits

        KEY POINTS:

           The Inspector General Act authorizes the Inspector General
           (IG) to have access to all records, reports, audits, reviews,
           documents, papers, recommendations, or other material
           available to the Agency. To meet its responsibilities, the IG
           must have the cooperation of Agency personnel.

        •   Title 18, United States Code, Section 1516 states that
           whoever, with intent to deceive or defraud the United
           States, endeavors to influence, obstruct, or impede a
           Federal auditor shall be fined or imprisoned. Therefore, it
           is imperative that all personnel recognize their obligation to
           make full disclosure of information pertaining to instances of
           waste, fraud, or abuse.
        •   The next few slides will provide an overview of EPA's audit
           process, identify some of the key individuals involved in
           conducting and resolving audits,  how to survive an audit, and
           the PO's responsibilities during the audit and during audit
           resolution.
10/1/95                      7-1

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                         TYPES OF AUDITS
                  • Internal
                   Audits
                   External
                   Audits
      VIEWGRAPH # 2

      TITLE:       Types of Audits

      KEY POINTS:

           Internal audits are performance audits that examine the
           programs or operations of Federal agencies. (However, as
           part of an internal audit, State agencies or assistance recipients
           may be evaluated to provide further information about the
           performance of a Federal agency.) Internal audits are used to
           test the adequacy of an organization's regulatory compliance
           and financial reporting.  Additionally, they are used to test the
           effectiveness of its resource management, operating
           procedures, program results, and financial operations. Internal
           audits may evaluate the entire organization or only one or two of
           an organization's programs or operations.  Internal audits of  EPA
           are conducted by the U.S. General Accounting Office (GAO) or
           EPA's Office of the Inspector General (EPA OIG).
           External audits are audits that examine a Federal agency's
           assistance recipients. These audits are conducted by the EPA
           OIG or its contractor, or, in the case of Single Audits, by the
           recipient. They may be performed before, during,  or after the
           completion of a project. Examples of external audits include
           single audits, pre-award audits,  interim and final cost audits,  and
           indirect cost audits.
                Single audits are financial and compliance audits of State
                and local governments or  universities and nonprofits that
                are performed in accordance with  OMB Circular A-128 (for
                States, local governments, and Indian tribes), or OMB
                Circular A-133 (for universities and other nonprofits). The
                cost of a Single Audit is an allowable cost. Applicants
                should either include audit costs in their indirect cost
                rate or, if the cost is not included in the indirect cost
                rate, as a direct cost to the grant.
10/1/95
7.2

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      VIEWGRAPH # 2 (Continued)

      TITLE:        Types of Audits

      KEY POINTS:
               Pre-award audits are reviews conducted to evaluate
               prospective cost or pricing data.
               Interim and final cost audits are reviews conducted to
               assess the allowability of costs claimed under the
               assistance agreement or contract and to ensure
               compliance with the applicable requirements and award
               conditions.

            -  Indirect cost audits are reviews conducted to determine
               whether the prospective indirect cost rate properly
               allocates allowable costs.
          Audits of recipients may be requested by the program
          office, GMO, or Award Official when considered
          necessary. These requests should be made on EPA Form
          5700-29, "Assistance Audit Request." The PO may submit
          the form directly to the appropriate Divisional Office of
          the Assistant Inspector General of Audits (DIGA), but to
          the extent possible, the POs should coordinate requests
          for audits with the GMO. The OIG Hotline number is
          1 -800-424-4000 for all non-Government locations outside the
          Washington metropolitan local calling area; and
          202-260-4977 from all Government locations in the
          Washington metropolitan calling area.

          EPA is authorized to audit the financially-assisted activities of
          any recipient organization.  However, it is Federal policy to
          place maximum reliance on a recipient's own audits (i.e.,
          Single Audits) if they are carried out in accordance with
          applicable Federal audit standards.
10/1/95                         7.3

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                          AUDIT OFFICIALS
                                       • Inspector General

                                       • Agency Audit
                                         Follow-up Official

                                       • Audit Follow-up
                                         Coordinator

                                       • Disputes Decision
                                         Official

                                       • Action Official
     VIEWGRAPH # 3

     TITLE:       Audit Officials

     KEY POINTS:

        On behalf of EPA's Inspector General, the Office of the
        Assistant Inspector General for Audits (OAIGA) arranges for
        and monitors the audits of EPA's financial assistance program
        activities.

        The Agency Audit Follow-up Official is responsible for
        Agency-wide audit resolution and implementation of required
        corrective actions.  The Assistant Administrator for
        Administration and Resources Management is the Agency
        Audit Follow-up Official.
        The Audit  Follow-up Coordinator (AFC) is responsible for
        the day-to-day activities that relate to audit management,
        response, and resolution. These individuals are designated
        by the Regional Administrators or Assistant Administrators.
        The Disputes Decision Official (DDO) is the individual
        identified by the Award Official to be responsible for resolving
        all action regarding recipients.
        The Action Official is responsible for responding (on behalf of
        the audited organization) to the draft and final reports and for
        all actions required to deal with the specific OIG report.  For
        grants and cooperative agreements, it is the Disputes
        Decision Official.
10/1/95
7.4

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                             THE AUDIT PROCESS

                             |  Entrance Conference "|

                                   t
                             | Advisement of Findings |

                                   f
                             |    Draft Report  |

                                   t
                             |   Exit Conference  |

                                   t

                             |   Final Report   |
                                Audit Resolution
     VIEWGRAPH #4

     TITLE:  The Audit Process

     KEY POINTS:

          Entrance Conference. At the entrance conference, the auditors
          explain the purpose and scope of the audit and receive comments
          from the organization being audited regarding potential audit
          areas. Logistical issues are addressed, such as access to records,
          working space requirements, and who will be interviewed.

          All personnel with extensive knowledge of the area being
          audited should be at the entrance conference. The OIG will
          ask for program and GMO contacts for the audit, and will provide a
          list of key audit personnel.

          Also, have the OIG state in writing the objectives of the audit.
      •   Advisement of findings. During the audit, the auditors should
          provide the organization with feedback about preliminary findings
          and developing issues.  If any of these findings are inaccurate,
          based on factual information, you should immediately discuss
          your concerns with the lead auditor and explain your
          interpretation of the situation. Conversely, if any of the
          preliminary findings are accurate, you  should immediately
          begin to take corrective action.  Further, significant or sensitive
          findings should be brought to the attention of the organization's
          senior management immediately.
10/1/95                        7.5

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     VIEWGRAPH # 4 (continued)
     TITLE:     The Audit Process
     KEY POINTS:

         Draft Report. A draft report is usually issued shortly after the audit is
         completed. The report contains the auditor's findings and
         documentation to support these findings. Agency management is
         expected to provide a written response to the audit findings
         contained in the draft report within 30 days, either concurring with
         the findings or providing explanations for any disagreements with the
         findings. Any planned or implemented corrective actions should be
         documented in the response.

         The PO's and GMO's goal should be to resolve the audit
         finding(s).  You should not concentrate solely on writing a response
         to the report. As soon as a problem is identified, it is important to
         start corrective actions. By starting corrective actions
         immediately, you may be able to resolve the audit finding(s)
         before the final audit report is issued and avoid having to
         respond to the finding(s) in your response to the final audit
         report.
     •    Exit Conference. At the exit conference, the auditors discuss the audit
         findings with the organization to clarify any questions they may have
         about the audit. If possible, auditors and management should try to
         reach agreement on the audit results.
         Final report. The final report contains the auditor's findings and
         recommendations. It should reflect the pertinent information obtained
         from the audit and from the discussions with Agency management
         throughout the audit process.
         Audit resolution. Audit resolution occurs either when a "final
         determination" is issued (in the case of an external audit), or when a
         "final response" is issued (in the case of an internal audit). If the
         questioned costs are $100,000 or more, the Action Official must
         obtain the concurrence of the EPA OIG  on proposed corrective action.
         If the questioned costs are less than $100,000, management does not
         have to get OIG concurrence before issuing the decision.
         Under the Inspector General Act Amendments, EPA management
         must track audit follow-up actions until all corrective actions are
         complete. Further, EPA management must report to Congress
         semi-annually on the status of audit resolution and follow-up
         activities, as well as provide an explanation for audits not
         resolved within 180 days and final actions that have remained
         incomplete for one year or more.

10/1/95                         7.6

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                   SURVIVING AN AUDIT


                    • DOCUMENTATION

                    • COURTESY

                    • PREPARATION

                    • COMMUNICATION
           VIEWGRAPH #5
           TITLE:      Surviving an Audit

           KEY POINTS:

             To help make the audit process proceed as smoothly as
             possible, POs should keep the following in mind:
             Documentation:
             The PO must document in the official Project File all
             decisions, communications, memos, etc. from the
             beginning of the agreement (see Appendix Q). The
             auditors will assume that the PO has approved all
             actions taken by the recipient unless there is some
             documentation in the file to show otherwise.
             Be responsive to requests for information. Make all
             documents available to the auditors.
             The following list of documents may be helpful to identify the
             project management records needed by the auditors:
             - Applications, agreements, amendments, contracts and
               subcontracts;
             - Accounting records, including disbursements of funds,
               travel, records of in-kind contributions, etc.
             - Copies of performance reports and any other reports or
               products developed under the agreement.
             - Copies of Financial Status Reports or any requests for
               reimbursements.
10/1/95                      7.7

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     VIEWGRAPH #5 (Continued)
     TITLE:        Surviving an Audit
     KEY POINTS:
              The following are some guidelines to follow when
              interacting with the auditors:
              Courtesy.
              - Maintain good working relationships with the auditors.
              - Use audit as an opportunity to identify and address
                weaknesses.

          Preparation.
              - Determine what auditors will look for.
              - Cooperate & demonstrate steps already taken to
                resolve issues  or agree to take corrective actions.
              - Demonstrate knowledge of program.
              - Ask other POs who have been through an audit what
                to expect during an audit.
          Communication.
              - Answer all questions.
              - Tell auditors what action(s) you have taken to improve
                problem areas.
              - Be truthful. Discuss all problems and issues; give
                auditors all data they request.
              - Advise auditors of matters which you believe they
                should review during the audit.
10/1/95                         7.8

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                            DOS AND DONTS
            VIEWGRAPH #6
            TITLE:       Dos and Don'ts
            KEY POINTS:
              DO
              •   Cooperate with the auditors.
                 Question an auditor if you believe they
                 are wrong.
                 Point out factual errors.
              DON'T
                 Hide or destroy information, documents,
                 or any records.
              •   Take an audit or audit findings lightly.
                 Confuse facts with opinion.
10/1/95                        7.9

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MODULE VIII

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          ASSISTANCE
         PROJECT OFFICERS
         TRAINING COURSE
        MODULE VIII
INTERAGENCY AGREEMENTS

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                         DEFINITION OF AN IAG

                   AGREEMENT BETWEEN EPA AND A
                   FEDERAL AGENCY, STATE, OR
                   LOCALITY.

                   IAGS PROVIDE:

                     • GOODS OR SERVICES IN
                      EXCHANGE FOR FUNDS,

                     • MISSION SUPPORT OR
                      ENVIRONMENTAL POLICY
                      WITHOUT EXCHANGE OF FUNDS

          VIEWGRAPH #1
          TITLE:        Definition of an IAG


          KEY POINTS:
               The acronym "IAG" is used as an abbreviation for both:

               -  Federal interagency agreements, and

               -  Intergovernmental agreements between a Federal
                 agency and a State or local government.

               There are 2 participants in lAGs:

               -  "Ordering Agency," which pays for the goods or services
                 under a "funds in" agreement, and

               -  "Servicing Agency," which provides the goods or services
                 under a "funds out" agreement.

          •    lAGs are not assistance agreements. They are used for
               different purposes. However, the PO's monitoring
               requirements are the same.

               There is no application form. lAGs are prepared and
               submitted to GAD on EPA Form 1610-1, "Interagency
               Agreement/Amendment."  (See Appendix T for a sample with
               instructions and GAD's guidance for completion.)

               lAGs are subject to the "Servicing Agency's" rules and
               regulations and to any special conditions the "Ordering
               Agency" places on the IAG, e.g., MBE/WBE requirements,
               Superfund audit.
10/1/95                         8.1

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         VIEWGRAPH # 1 (Continued)
         TITLE:       Definition of an IAG

         KEY POINTS:

             EPA can provide funds directly to States and local
             governments only under an assistance agreement.

         THERE ARE FOUR (4) TYPES OF IAGS

         Federal  Interagency Agreements

             Written agreements between Federal agencies under which
             goods and services are provided in exchange for funds, or
             where services are exchanged without payment. (See
             Appendix T for a sample IAG.)

             lAGs where funds are exchanged involve either:

             -  One agency providing goods or services to another agency,
               or

             -  Both agencies having a mutual need for the goods or
               services and sharing in the costs incurred.
             lAGs may be awarded to any Federal agency, including
             bureaus and offices within an Agency. Government-owned,
             contractor-operated facilities (GOCOS) such as the
             Department of Energy's labs, (e.g., Lawrence Livermore) are
             considered components of the Federal government and,
             therefore, eligible to receive lAGs. (The District of Columbia is
             not a Federal agency.)
         "Policy Agreements or Memorandums of Understanding"

             These are lAGs where no funds change hands. These
             agreements set forth basic policies and procedures governing
             the relationship  between the agencies (i.e., their respective
             roles and responsibilities) to accomplish a joint goal or project.
             An example is the agreement between EPA and the
             Department of Energy, whereby EPA will oversee a cleanup at
             a Federal facility.
         Intergovernmental  Agreements
             These are agreements between a Federal agency and a State
             or local government under which the State or local
             government reimburses the Federal agency for the costs of
             providing a specific technical service, e.g., statistical studies
             and  compilations, technical tests and evaluations, training,
             surveys, reports, documents, and data.

10/1/95                          8.2

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          VIEWGRAPH #1 (Continued)
          TITLE:         Definition of an IAG

          KEY POINTS:

           International Agreements.

              These are agreements under which work will be
              conducted for a foreign government or international
              organization.  EPA uses the EPA IAG form for these
              agreements.

              The Office of International Activities (OIA) must be involved
              as soon as practicable after the need for international
              agreements is known.
           •   The OIA must approve every international agreement.
              The OIA is responsible for obtaining State Department and
              the Trade Development Agency's approval when the IAG
              includes international activities. OIA must also obtain the
              Office of General Counsel's approval.

              lAGs  cannot be used to provide funds directly to a
              foreign government or international agency. Funds may be
              transferred to these agencies only under an assistance
              agreement between EPA and  the foreign entity.  However,
              EPA can use one of our Cooperation Authorities to join with
              other Federal agencies to provide goods or services to
              foreign governments through contracts or assistance
              agreements as long as both EPA  and the other agency
              have  responsibility/authority for the proposed project.  For
              example, EPA provided waste water treatment equipment
              for  Poland by transferring the funds to the Corps of
              Engineers which did the purchasing and accepted delivery
              of the equipment in Poland.
              EPA can accept funds directly from foreign governments
              and organizations to provide services. These "foreign"
              agreements are authorized by the Foreign Assistance Act
              and must be approved by the Trade Development Agency.
10/1/95                           8.3

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                               AUTHORITY


                       • ECONOMY ACT OF 1932

                       • COOPERATION AUTHORITIES

                       • INTERGOVERNMENTAL
                         COOPERATION ACT

        VIEWGRAPH # 2
        TITLE:       Authority

        KEY POINTS:
       THE ECONOMY ACT OF 1932

           The Economy Act is the general authority under which Federal
           agencies exchange goods and services and reimburse one
           another.

           The primary purpose of the Act is to allow an agency to obtain
           goods or services from another agency to improve economy
           and efficiency in the government.
           This Act is often used to fund lAGs which bolster one agency's
           capability to conduct an activity in a specific area with another
           agency's expertise.
           To use the Economy Act, both Federal agencies must be
           inherently responsible for conducting the proposed activities
           and authorized to use their appropriation for the work. Under
           these lAGs, a Federal Agency may provide the services or goods
           with its own staff or through agency contracts.
           The Economy Act is to be cited as the authority for an IAG
           only if:

           - The IAG involves one agency "providing goods or services" to
           another agency. That is, the performing agency has no need for
           the goods and services and would not have bought the goods or
           done the work but for the request of the funding agency.
           - The amount of the IAG equals the total estimated cost of the
           goods and services, including all direct and indirect costs.
           (Indirect costs may be included only if the providing agency has
           an indirect cost rate. At this time EPA does not.)

           - None of the funds will be used for a grant or cooperative
           agreement.
10/1/95                         8.4

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          VIEWGRAPH # 2
          TITLE:       Authority (Continued)

          KEY POINTS:

            - The ordering agency will be able to perform the service or
              obligate the funds within the period of fund availability.  If the
              ordering agency will be using a contractor to carry out the
              work, the contract or task order must be awarded within the
              period of availability (i.e., before the end of the contract or
              project period.)

            - The Approval Official has determined the requested services
              cannot be provided as conveniently or cheaply by a
              commercial enterprise.  (This determination is not necessary if
              the servicing agency will use a contractor to provide the goods
              or services.)
            - The Approval Official has determined the costs of the goods or
              services are reasonable.
            - The Ordering Agency must also determine the work does not
              conflict with any other agency's authority or responsibility.

            If the other agency cites the Economy Act, and the PO is unsure
            the activities are eligible under the requirements of the Act, the
            PO should contact OGC/ORC.
        COOPERATION AUTHORITIES
        •   EPA also has authority to enter into lAGs with other Federal
            agencies under "cooperation" provisions of our program
            statutes, e.g., §103 of the Clean Air Act, and §104 of the Clean
            Water Act.  If the ordering agency will use any of the funds to
            award a grant or cooperative agreement, the EPA Form 1610-1
            must identify EPA's statutory authority to "cooperate" with the
            other agency.
            One or more of EPA's cooperation authorities must be listed  as
            the authority when the project is a joint effort of the involved
            agencies. Cooperation authorities should be cited if the following
            statements are true:
            - The project is directly related to the needs and interest of both
              agencies.
            - Both agencies are committing resources to the project,
              whether in the form of grant/cooperative agreement funds,
              salaries, equipment, travel, or contract services.
10/1/95                            8.5

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            VIEWGRAPH #2 (Continued)
            TITLE:       Authority

            KEY POINTS:

                - The work is eligible under one or more of EPA's
                  cooperation authorities.
                - If any of the funds will be used for a grant or cooperative
                  agreement, both of the following conditions must be met:
                 (1) The relationship between the recipient and the
                     ordering agency must be one of assistance.

                 (2) Both agencies must have legal authority to award the
                    grant or cooperative agreement.

                Current EPA cooperation authorities include:
                - Clean Water Act, §104(b)(2);

                - Clean Air Act, §103(b)(2);
                - RCRA, §8001;
                - TSCA, §10(d) and §26 (funds out only);
                - FIFRA,§10,§20,and§22;
                - CERCLA, §105(4), and §115 (together with EO 12316);
                  and
                - Marine Protection,  Research, and Sanctuaries Act, §203.
             •   The Safe Drinking Water Act does not have cooperation
                authority for lAGs, but projects involving drinking water
                protection can be authorized under one or more of the
                statutes listed above, except CERCLA.
             INTERGOVERNMENTAL COOPERATION ACT
                The Intergovernmental Cooperation Act is the general
                authority which allows State and local governments to
                obtain goods/services from the Federal government.  It
                authorizes, in part, an Intergovernmental Agreement
                between a Federal agency and a State or local
                government under which the Federal agency provides
                technical services it is especially capable to perform in
                exchange for reimbursement. The Office of Management
                and Budget Circular A-97 provides detailed guidance for
                these agreements.


10/1/95                          8.6

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          VIEWGRAPH #2 (Continued)
          TITLE:       Authority

          KEY POINTS:

               Intergovernmental agreements can involve services from an
               EPA contract only if:

               - The State or local government certifies that the
                services are not reasonably and quickly available
                through ordinary business channels; and
               - The services performed under the contract are
                regular and continuing activities performed by the
                agency (i.e., almost as if the contractor were doing
                regular work of the agency, such as, contractors working
                on site at EPA labs.) For example, GAD recently had a
                request from a State to allow it access to one of EPA's
                PC maintenance contracts; however, this is not fundable
                because it is a service not  normally provided by EPA and
                it is readily available through ordinary business channels.

           OTHER AUTHORITIES

               Many other agencies have IAG authorities similar to EPA's
               cooperation authorities. EPA can generally accept the
               other agency's citation as authority for the IAG (e.g., the
               Brooks Act for computer services with the General Service
               Administration). The PO should contact OGC/ORC or GAD
               as soon as they are aware of such circumstances.
           INTERNATIONAL AUTHORITIES
           •   The authority to use either funds-in or funds-out
               international lAGs with other Federal agencies is either the
               Economy Act or EPA's cooperation authorities and
               §102(2)(F) of the National Environmental Policy Act.
           •   The authority for funds-in agreements with foreign
               governments or international organizations (not technically
               lAGs, but use the IAG form)  is §607 of the Foreign
               Assistance Act (22 U.S.C. 2357).
10/1/95                           8.7

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                          IAG GUIDANCE
                     COMPENDIUM
                      PRINCIPLES OF FEDERAL
                      APPROPRIATIONS LAW
        VIEWGRAPH #3
        TITLE:       IAG Guidance


        KEY POINTS:
             There are no EPA regulations which apply to the development
             and management of an IAG.  Instead, EPA uses:

             - The IAG Compendium.  The"lnteragency Agreement Policy
              and Procedures Compendium" is a compilation of information
              pertaining to lAGs. It includes information in general terms
              that apply to all EPA programs and offices that use lAGs. It is
              specifically directed to EPA program administrative and
              financial staff who have an active part in developing and
              administering lAGs.

             - Appropriations law. Many IAG issues revolve around
              interpretation of appropriations law.   For example, EPA can
              not use an IAG to augment EPA's appropriations. We must
              use funds only for the purpose they were appropriated and
              only as long as they are available. The Comptroller
              General's "Fundamentals of Appropriations Law" (the Red
              Book) provides guidance in making these determinations.

             All IAG EPA-wide guidance is developed by the Grants
             Administration Division.  Program offices may develop
             office-specific procedures where appropriate.

             GAD draft guidance for preparing an IAG  Decision
             Memorandum and several other memoranda which update IAG
             policy are included in Appendix T.
10/1/95                          8.8

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                   AVAILABILITY OF FUNDS

                   • APPROPRIATION UNDER
                   THE ECONOMY ACT
                    PROJECT PERIOD FOR
                    COOPERATION PROVISIONS
          VIEWGRAPH#4
          TITLE:      Availability of Funds

          KEY POINTS:

          ECONOMY ACT IAGS

              lAGs which cite the Economy Act for authority are subject to
              the limits of availability established for each appropriation
              (e.g., Superfund, ACC, Research, etc.) from which the
              funds come.
              - If the funds are used for personnel, travel, or other
                expenses (e.g., supplies), the funds expire when the
                appropriation expires or when the project period
                ends, whichever comes first. This is true even if the
                planned work is not complete.
              - If the funds are obligated to a contract, they are
                available for expenditure until the contract or the
                project period ends, whichever comes first.
          COOPERATION PROVISION IAGS
              Funds for lAGs which cite the cooperation  provisions of
              EPA's statutes for authority are available until the project
              period ends. This means all funds used for activities in the
              approved workplan (e.g., personnel, travel, and other
              expenses, as well as funds used for contracts and grants
              and cooperative agreements) can be spent even after the
              appropriation(s) expires.
10/1/95                        8.9

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                  DECISION MEMORANDUM
                   • REQUIRED

                   • MUST ADDRESS SPECIFIC
                     AREAS
          VIEWGRAPH # 5
          TITLE:       Decision Memorandum

          KEY POINTS:

              A Decision Memorandum is required with every IAG.
              The Decision Memorandum must be signed by the Approval
              Official (generally the Allowance Holder) or their designee.

          Contents of the Decision Memorandum
              Summarizes EPA's objectives to be met through the
              proposed IAG and certifies the proposed IAG is consistent
              with the EPA program office's mission.
              States the IAG is the best means for achieving the objective
              and, if the Economy Act is the statutory authority for the
              agreement, how the IAG will enhance government economy
              and efficiency.
          •    Assures all technical and scientific measures will be
              performed in accordance with an approved Quality
              Assurance Plan and, if required, include a Quality
              Assurance form signed by the Quality Assurance Officer.
              Includes a statement that any proposed travel funds are
              necessary for the project, not intended to augment either
              agency's travel ceiling, and the travel would not occur
              except for the other agency's project.
10/1/95                         8.10

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        VIEWGRAPH # 5
        TITLE:       Decision Memorandum


        KEY POINTS:

            If IAG funds will be used for a grant or cooperative
            agreement, the funding package must include a
            statement from the EPA PO that the principle purpose of
            the work is to support or stimulate the recipient to
            accomplish a public purpose and not for the direct use
            and benefit of the Federal government.  For a funds-out
            agreement, the funding package must include a similar
            statement from the other agency's PO. The Decision
            Memorandum must cite both EPA's and the other
            agency's grant making authority.
            For lAGs with other Federal agencies which involve
            international work and for funds-in agreements with
            foreign governments  or international organizations, the
            Decision Memorandum mist include a statement the
            project has  been reviewed and approved by Office of
            General Counsel/Office of Regional Counsel and the
            Office of International Activities,(OIA). OIA will obtain
            necessary clearance  from the US Trade and
            Development Agency for agreements with foreign
            governments and international organizations.)
10/1/95                           8.11

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                     CINCINNATI FINANCIAL
                     MANAGEMENT CENTER

               •  RECORDS OBLIGATIONS

               •  PROCESSES PAYMENT REQUESTS

               •  DEOBLIGATES UNUSED
                 FUNDS
          VIEWGRAPH#6
          TITLE:      Cincinnati Financial Management Center

          KEY POINTS:

              The Cincinnati Financial Management Center (CFMC) is the
              Servicing Financial Management Office for all lAGs.
              Funds-Out IAGS: CFMC records obligations in the
              Integrated Financial Management System (IFMS). CFMC
              will not obligate funds until the other agency accepts
              the IAG and returns a signed copy of the forms to GAD.
              Because GAD provides copies of the signed IAG to CFMC,
              the IAG specialists will call at the end of the year to enlist
              your aid in getting documents returned from other agencies.
              If the other Agency does not accept an IAG before the end
              of the Fiscal Year, the process must be started again. Also,
              if the proposed IAG is using expiring appropriations,
              the funds will be lost unless the IAG is signed by both
              Agencies before the end of the Fiscal Year.
              Funds-ln IAGS: CFMC establishes accounts and assigns
              account numbers for other agencies' funds.
              CFMC and GMOs work together to close out lAGs and
              deobligate unused funds.
10/1/95                        8.12

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                        PAYMENT/BILLING

                      TWO PAYMENT SYSTEMS


                      BILLING SYSTEM


                     INDIRECT COSTS
        YIEWGRAPH #7
        TITLE:       Payment/Billing
        KEY POINTS:

         Payments
            Payments under lAGs are made under one of the following
            systems. EPA may use either system, depending upon the
            other Agency's payment system.

            Reimbursement  Reimbursement is the most frequently used
            method of payment. Under this method, the billing agency
            (i.e., Servicing Agency) submits an itemized bill to the
            Cincinnati Financial Management Center (CFMC) on a SF
            1080/1081, or the On-Line Payment and Collection system
            (OPAC).
            SF 1080/1081 billing system: Agencies not using the
            OPAC billing system use an SF 1080 or SF 1081 to
            request payment. (The Department of Defense uses a SF
            1080, and other Agencies use the SF1081.)  When CFMC
            receives a payment request, they will send the EPA PO
            an IAG Invoice Approval Form (EPA  Form 2550-21). The
            PO must sign and return to CFMC the EPA Form 2550-21
            (IAG Invoice Approval) before CFMC will release a
            payment (through a Treasury check).
            OPAC billing system: The OPAC is an on-line system
            maintained by the Department of Treasury that allows
            agencies to obtain funds as soon as they are needed.
            Treasury immediately transfers payments under this system
            to the Servicing Agency.  CFMC charges the bill to the
            appropriate IAG and sends the PO an EPA Form 2550-21
            to approve the request. If there is a problem with the
            bill, EPA has 90 days to charge back to the account.

10/1/95                         8.13

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            VIEWGRAPH #7 (Continued)
            TITLE:      Payment/Billing

            KEY POINTS:

               Advance.  Agencies with Working Capital funds may request
               payment in advance. In this case, the Servicing Agency
               may bill for the entire amount of the IAG as soon as the
               obligation is recorded in IFMS. It must then submit quarterly
               cost reports to CFMC. POs should assure they receive
               copies of these reports from CFMC.
           Billing
               After EPA accepts funds-in lAGs, EPA must bill the Ordering
               Agency as EPA incurs costs. POs must assure that all
               charges to the project under a funds-in IAG are charged
               to the IAG account. POs must ensure that each funding
               document (e.g., travel order, contract, assistance
               agreement, and personnel charge) reflects the
               appropriate account number from the IAG.
               EPA will bill the other Agency in accordance with the terms
               of the IAG, but at least quarterly.
               POs must prepare a Report of Reimbursable Services
               Rendered (EPA Form 2550-8) to allow EPA to bill the
               Ordering Agency.  When completed, the PO sends the
               Form to CFMC.

           Indirect Costs
               To claim indirect costs, a Federal Agency must have an
               approved indirect cost rate.

               Because EPA does not have an approved indirect cost rate,
               we cannot claim indirect costs under an  IAG.
10/1/95                         8.14

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                           EPA REQUIREMENTS

                      • ASSISTANCE VS ACQUISITION

                      • TRAVEL

                      • MBE/WBE

                      • SUPERFUND COST RECOVERY
                        AND AUDIT

                      • INDIRECT COST

       VIEWGRAPH # 8
       TITLE:      EPA Requirements

       KEY POINTS:

          In  accordance with EPA's Appropriation Act, each
          "funds-out" IAG which includes funds for extramural
          agreements (i.e., contracts, grants, or cooperative
          agreements) must include a condition requiring the
          receiving agency to follow EPA's Disadvantaged Business
          Utilization plan. In the event an agency claims they will not
          accept this condition, contact the Office of Small and
          Disadvantaged Business Utilization.

       •   lAGs which include Superfund monies must include a
          condition on record keeping and cost recovery. Also, all
          Superfund expenditures by other agencies must be audited by
          their Office of Inspector General annually.
       •   If an IAG budget includes indirect costs, the IAG must include
          an indirect cost condition.
10/1/95                          8.15

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                         PROJECT OFFICER
                         RESPONSIBILITIES
                   • WORK CONSISTENT WITH EPA'S MISSION

                   • NEGOTIATE SCOPE OF WORK, FUNDING
                    AND BUDGET

                   • OBTAIN NECESSARY APPROVALS

                   • PREPARE FUNDING PACKAGE

                   • ASSURE PERFORMANCE

                   • REVIEW AND APPROVE PAYMENT REQUESTS

                   • CLOSE OUT AGREEMENTS


       VIEWGRAPH # 9
       TITLE:       Project Officer Responsibilities

       KEY POINTS:

          Activities under lAGs must be consistent with EPA's mission and
          statutory authority. EPA cannot use an IAG to acquire authority it
          does not already have.
          Each IAG should be for a distinct project with a clearly defined
          objective or work product. The Program Office must assign a PO
          to negotiate the work EPA and the other agency will perform.
          Both agency's POs should negotiate the estimated cost the IAG.
          The estimate must reflect all substantial costs necessary to
          carry out the project, e.g., personnel, equipment, extramural
          agreements, and travel.
          After the scope of work is determined, the PO must prepare a
          Decision Memorandum.
          The Decision Memorandum must be signed by the Approval Official
          (the individual in the program office delegated the responsibility for
          approving the office's use of funds -- generally the Allowance
          Holder.)
          If the IAG includes international activities, the PO must obtain
          the approval of the Office of International Activities.
          For funds-out  lAGs, the program office must prepare a Commitment
          Notice which approves funds for the IAG. GMO staff will verify
          (prevalidate) the commitment in the IFMS Automated Document
          Control Register (ADCR) before award.


10/1/95                          8.16

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     VIEWGRAPH # 9 (Continued)
     TITLE:       Project Officer Responsibilities

     KEY POINTS:

        If the IAG includes funds for a detail for an EPA employee for more than
        120 days, the package must include a completed Personnel Action form
        (SF 52).

        The PO must prepare EPA Form 1610-1 for each IAG.  (GMOs will
        assist in preparing this form).

        The PO must determine and provide any conditions which the GMO
        will add to the IAG, e.g., reporting.
        The PO must determine the method of payment. Generally,
        payment is made by reimbursement, i.e., after costs are incurred. In
        some cases, however, it may be necessary to make advance
        payments. In such cases, the funding package must include a
        justification for advance payment.  If the agreement is "funds-in"
        the PO should discuss payment method with the other agency's
        Project Manager.
        The PO must assure products to be produced under an I A G are
        provided in a timely manner.
    •   Although the relationship under an IAG is with another Federal agency,
        inadequate performance should be considered in deciding whether to
        undertake future cooperative efforts with that agency. POs should also
        report poor performance (in writing) to the GMO.
10/1/95                         8.17

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                        GMO RESPONSIBILITIES

                     • PREVALIDATE COMMITMENT

                     • PREPARE AWARD

                     • SIGN IAG AND DISTRIBUTE

                     • MONITOR PROJECT TO
                      ASSURE TIMELY
                      COMPLETION AND CLOSEOUT

    VIEWGRAPH#10
    TITLE:       GMO Responsibilities

    KEY POINTS:

         In reviewing funding packages, the GMO will:

         - Assure that all required information is included;
         -  Proper authorities are cited; and

         -  Prevalidate the commitment in the IFMS Automated Document
          Control Register (ADCR) before award.
         When corrections or changes are required, the GMO will often make
         the changes after discussing them with POs.
         When clearances by other offices (such as Office of International
         Activities) are required, the GMO will assure that the clearances are
         included.
         The GMO will ensure that information on lAGs is included in the
         Grants Information and Control System (GIGS). GMOs can provide
         reports on lAGs in many forms.  If a PO wants a report, they should
         contact their GMO.
         The GMO staff will prepare a transmittal letter and submit the
         documents to the Award Official for signature, send the IAG to the
         other Agency for  signature,  and distribute copies (e.g., PO, Budget,
         other Agencies, Cincinnati).
         -  In Headquarters, the Award Officials are the Chiefs of the Grants
          Operations Branches, GAD.
         -  In the Regions, the Award Officials are the Regional Administrators
          or their designees.
         The GMO staff maintains the official IAG file, and the PO maintains
         files which document their project management activities.
         When lAGs are completedf the GMO will work with the PO to
         assure that the IAG is closed out in a timely manner.
10/1/95                          8.18

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APPENDIX A

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         APPENDIX A
FEDERAL GRANT AND COOPERATIVE
       AGREEMENT ACT

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              PUBLIC LAW 95-224—FEB. 3, 1978
  92 STAT. 3
Public Law 95-224
95th Congress
                            An Act
To distinguish Federal grant and cooperative agreement relationships from    Feb. 3. 1978
        Federal procurement relationships, and for other purposes.            [H.R. 7691]

  Be it enacted by the Senate and House of Representatives of  the
United  State* of America in Congress assembled, That this Act be  Federal Grant
cited  as 'he "Federal  Grant  and Cooperative Agreement  Act of  "<* Cooperative
                                                .                  Agreement Act of
                                                                  1977.
                      FINDINGS AND PURPOSE                        41 usc
  SEC. 2. (a) The Congress
      (1) there is a need to distinguish Federal assistance relation-
    ships from  Federal procurement relationships and thereby to
    standardize  usage and clarify the meaning of the legal instru-
    ments which reflect such relationships;
      (2) uncertainty as to the meaning of such terms as "contract",
    "grant", and "cooperative agreement" and the relationships they
    reflect causes operational inconsistencies, confusion, inefficiency,
    and waste for recipients of awards as well as for executive agen-
    cies; and
      (3) the Commission on Government Procurement has docu-
    mented these findings and concluded that a reduction of the exist-
    ing inconsistencies, confusion, inefficiency,  and waste  is feasible
    and necessary through legislative action.
  (b) The purposes of this Act are—-
      (1) to characterize the  relationship between the Federal Gov-
    ernment and contractors, State and local governments, and other
    recipients  in the acquisition of property and services and in the
    furnishing of assistance by the Federal Government so as to pro-
    mote a better understanding of Federal spending and help elimi-
    nate unnecessary administrative  requirements  on recipients of
    Federal awards;
      (2) to establish Government-wide criteria for selection of appro-
    priate legal  instruments to achieve uniformity  in the  use by the
    executive agencies of such instruments, a  clear definition of the
    relationships thev reflect, and a better  understanding of the
    responsibilities of the parties;
      (3) to promote increased discipline in the selection and use of
    types of contract, grant  agreement,  and cooperative agreements
    and  to maximize competition  in the award of  contracts and
    encourage competition, where deemed appropriate, in the award
    of grants and cooperative agreements; ana
      (4) to require a study  of the relationship between the Federal
    Government and  grantees and other recipients in Federal assist-
    ance programs and the feasibility of developing a comprehensive
    system of guideline for the use of grant and cooperative agree-
    ments, and other forms of Federal assistance in carrying out such
    programs.
41 USC 501.

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 92 STAT. 4                   PUBLIC LAW 95-224—FEB. 3, 1978

                                         DEFINITIONS

 41 USC 502.       SEC, 3. As used in this Act, the term—
                     (1) "State government" means any of the several States of the
                   United States, the District  of Columbia, the Commonwealth of
                   Puerto Rico, any territory or possession of the United States, any
                   agency  or  instrumentality  of & State,  and any multi-State,
                   regional, or interstate entity which has governmental functions;
                     (2) "local government" means any unit of government within
                   a State, a county, municipality, city, town, township, local public
                   authority, special district, intrastate district, council of govern-
                   ments, sponsor group representative organization, other inter-
                   state government entity, or  any other instrumentality of a local
                   government;
                     (3) "other recipient" means any person or recipient other than
                   a State or local government who is authorized to receive Federal
                   assistance or procurement contracts and includes any charitable
                   or educational institution;
                     (4) "executive agency" means any. executive department as
                   defined in section 101 of  title 5, United States Code, a military
                   department as defined in section 102 of title 5, United States Code,
                   an independent establishment as defined in section 104 of title 5,
                   United States Code (except that it shall not include the General
                   Accounting Office), a wholly owned Government corporation;
                   and
                     (5) "grant or cooperative agreement" does not include  any
                   agreement  under which  only  direct  Federal  cash  assistance
                   to individuals, a subsidy, a loan, a loan guarantee, or insurance is
                   provided.
                                     USE  OF CONTRACTS

41 USC 503.        SEC. 4. Each executive agency shall use a type of procurement con-
               tract as  the legal instrument reflecting a relationship between the
               Federal  Government and a  State-  or local  government or other
               recipient—
                     fi) whenever  the principal purpose  of the instrument is the
                   acquisition, by purchase, lease, or barter, of property or services
                   for the direct benefit or use of the Federal Government; or
                     (2)  whenever  an executive agency determines in a  specific
                   instance that the  us® of a type  of procurement  contract is
                   appropriate.
                                   USE OF GRANT AGREEMENTS

41 USC 504.        Ssc. 5. Each executive agjency shall use a type of grant agreement as
               th® legal instrument reflecting a relationship between the Federal Gov-
               ernment and a State or local government or other recipient whenever—
Trangfers.              (l)  the principal purpose of the relationship is the transfer of
                   money, property, services, or anything of value to the State or
                   local government or other recipient in order to accomplish a pub-
                   lic purpose of support  or  stimulation  authorized by  Federal
                   statute, rather than acquisition, by purchase, lease, or barter, of
                    Sroperty or services for the direct benefit or use of the Federal
                    overnment; and
                     (2)  no substantial  involvement is anticipated between the
                   executive agency, acting  for the Federal Government, and the
                   State or local government or other recipient during performance
                   of the contemplated activity.

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              PUBLIC LAW 95-224—FEB. 3, 1978
                                                                     92 STAT. 5
                  USE OF COOPERATIVE AGREEMENTS

  SEC. 6. Each executive agency shall use a type of cooperative agree-  41 USC 505.
ment as the legal instrument reflecting a relationship between the Fed-
eral  Government  and a State or local government or other recipient
whenever—
       (1) the principal purpose of the relationship is the transfer of  Transfer*.
    money, property, services,  or anything of value to the  State or
    local government or other  recipient to accomplish a public pur-
    pose of support  or  stimulation authorized  by Federal  statute,
    rather than acquisition, by  purchase, lease, or barter, of property
    or services for the direct benefit or rse of the Federal  Govern-
    ment; and
      (2) substantial involvement is anticipated between the execu-
    tive agency, acting for the Federal Government, and the State or
    local government or other recipient during performance of the
    contemplated activity.
                         AUTHORIZATIONS

  SEC. 7. (a) Notwithstanding any other provision of law, each execu-
tive agency authorized by law to enter into contracts, grant or coopera-
tive agreements, or similar arrangements is authorized and directed to
enter into and use types of contracts, grant agreements, or cooperative
agreements as required by this Act
  (b)  The authority to make contracts, grants, and cooperative agree-
ments for the conduct of basic or applied scientific research at non-
profit institutions of higher  education, or  at nonprofit organizations
whose primary purpose is  the conduct of scientific  research  shall
include discretionary authority, when it is  deemed by the head of the
executive agency to be in furtherance of the objectives of the agency,
to vest in such institutions or organizations, without further obliga-
tion to the Government, or  on such other terms and conditions as
deemed appropriate, title to equipment or other tangible personal
property purchased with such funds.

             STUDY OP FEDERAL ASSISTANCE PROGRAMS

  SEC. 8. The Director of the Office of Management and Budget, in
cooperation with the executive agencies, shall undertake a study to
develop a better understanding of alternative moans of implementing
Federal assistance programs, and to determine the feasibility of devel-
oping  a comprehensive  system of guidance  for  Federal  assistance
programs. Such study shall  include a thorough consideration of the
findings and recommendations of  the Commission on  Government
Procurement relating to the feasibility of  developing such a system.
The Director shall consult with and to the extent practicable, involve
representatives of the executive agencies,  the Congress, the General
Accounting Office, and State and local governments, other recipients
and other interested members of the public. The result of the  study
shall be reported to the Committee  on Government Operations of the
House of Representatives and the Committee on Governmental Affairs
of the Senate at the earliest practicable date, but in no event later than
two years after the date of enactment of this  Act. The report on the
study shall include ( 1 ) detailed descriptions of the alternative means
of implementing Federal assistance programs and of the circumstances
         thp. use of  each a D Dears to be  most  desirable,  (2) detailed
                                                                  Contracts, grant
                                                                  or cooperative
                                                                  agreements.
                                                                  41 USC 506.
                                                                  Scientific
                                                                  research.
                                                                  41 USC 507.
                                                                  Contents.
                                                                  Consultation.
                                                                  Report to
                                                                  congressional
                                                                  committees.
n

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 92 STAT. 6
41 USC 508.
Repeal; effective
date.
41 USC 501 note.
41 USC 509.
Excepted
transactions.
41 USC 501 note.
Expiration date.
                PUBLIC LAW 95-224-FEB. 3, 1978

 descriptions of the basic characteristics and an outline of such compre-
 hensive system of guidance for Federal assistance programs, the devel-
 opment of which may be determined feasible, and (3) recommendations
 concerning arrangements to proceed with the full development of such
 comprehensive system  of guidance and for such administrative or
 statutory changes, including changes in the provisions of sections 3
 through 7 of this Act, as may be deemed appropriate on the basis of the
 findings of the study.
                           GUIDELINES

  SEC. 9. The  Director of the  Office of  Management and Budget is
 authorized to issue supplementary interpretative guidelines to promote
 consistent and efficient use of contract, grants agreement, and coopera-
 tive agreements as defined in this Act.

                 REPEALS AND  SAVINGS PROVISIONS

  SEC. 10. (a) The Act entitled "An Act to authorize the expenditure
 of funds through grants for support of scientific research, and for other
 purposes", approved September 6, 1958 (72 Stat. 1793; 42 U.S.C. 1891
 and 1892), is repealed, effective one year after the date of enactment of
 this Act.
  (b)  Nothing in this Act shall be construed to render void or voidable
 any existing contract, grant, cooperative agreement, or other contract,
 grant,  or cooperative agreement entered into up to one year after the
 date of enactment of this Act.
  (c)  Nothing in this Act shall require the establishment of a single
 relationship between the  Federal  Government and  a State or  local
government or other recipient on a jointly funded project, involving
 funds from more than one program or appropriation where different
relationships would otherwise be appropriate for different components
of the project.
  (d)  The Director of the Office of Management  and Budget  may
except individual transactions or programs of any executive agency
 from the application of the provisions of this Act. This authority  shall
expire «^ne year after receipt by the Congress of the study provided for
 in section 8 of this Act.

  Approved February 3,  1978.
               LEGISLATIVE HISTORY:

               HOUSE REPORT No. 95-481 (Comm. on Government Operations).
               SENATE REPORT No. 95-449 accompanying S. 431 (Comm. on Governmental Affairs).
               CONGRESSIONAL RECORD:
                    Vol. 123 (1977): Sept 27, considered and passed House.
                                 Oct. 1, considered and passed Senate, amended, in lieu of S.
                                   431.
                    Vnl  19d nQ7R\- Tan. 10 HOM<»*« »«»r*»<»rl to Senate amendment.

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APPENDIX B

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           APPENDIX B
   EPA ORDER 5700.1, "POLICY FOR
DISTINGUISHING BETWEEN ASSISTANCE
        AND ACQUISITION"

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 &EPA
Classification No.:  5700.1

Approval Date:    3/22/94
                                     POLICY
                           FOR DISTINGUISHING BETWEEN
                           ASSISTANCE AND ACQUISITION

        1.   PURPOSE AND APPLICABILITY.   The purpose of this policy is to
        clarify  the  criteria  for  and  to  achieve consistency  in  the
        selection and use of  contracts, cooperative agreements and grants
        by all  EPA offices and laboratories. This  policy  expands on the
        December 2,  1992  memorandum from the Assistant Administrator for
        Administration and Resources Management on  "When to Use Contracts
        or  Cooperative Agreements, and  Grants"  and  the  EPA  Assistance
        Administration Manual, Chapter 1.

             This policy does not  apply to interagency agreements because
        they are  not considered assistance under the  Federal  Grants and
        Cooperative Agreement Act.

             Please  contact  the  Grants  Administration  Division's  (GAD)
        Grants Policy and Procedures Branch regarding the contents.

        2.    BACKGROUND.   Various  Federal  statutes  authorize  and/or
        direct the  EPA Administrator to  carry out specific environmental
        activities.  These statutes may specify whether the activities may
        be accomplished in-house by using EPA staff or by funding outside
        parties  (extramural  funding).    The  latter  includes  financial
        assistance  (grants and  cooperative  agreements)  and acquisition
         (contracts).  Certain activities may be undertaken in conjunction
        with another Federal department  or  agency, a State, or a local
        government by  Interagency  or Intergovernmental Agreements  (IAG).

             The Federal Grant and Cooperative Agreement Act of 1977  (FGCAA
        or Act) , PL 95-224,  as amended  (31 U.S.C.  6301 et seq..) established
        government-wide   criteria  for   determining   whether  a grant or
        cooperative  agreement  or a  contract is  the  appropriate legal
        instrument to use for an extramural  funding activity. Guidance on
        implementing  the  Act was  issued by  the  Office  of Management and
        Budget  (OMB) in 1978, (see 43 Fed. Reg. 36860  [August 18,  1978]).

             'The Act  was  based on a congressional  finding that executive
        agencies  were  not  adequately differentiating between procurement

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EPA ORDER                                         57XX XXX
                                                  XXXXXX

and assistance relationships.  Specifically, Congress was concerned
that agencies were misusing assistance agreements to circumvent
competition  and  other  procurement  rules,   and  also  applying
unnecessarily burdensome contract paperwork requirements  to non-
procurement transactions.   To  address  these problems, and ensure
consistent and uniform agency practice, Congress defined in the Act
the standards for determining the appropriate use of contracts and
assistance agreements.

     Under the  Act, grants  and  cooperative  agreements are both
assistance agreements and are  different from  contracts. The only
distinction between a grant agreement and a cooperative agreement
is the degree of federal involvement.

     Under section 4 of the Act, 31 U.S.C.  6303, an agency must use
a contract if the principal purpose of an instrument is to acquire,
by purchase,  lease, or barter,  property or services for the direct
benefit  or  use of  the federal  government,   or if  the  agency
otherwise  determines  that  use  of  a procurement   contract  is
appropriate.   Under sections 5 and 6 of the FGCAA,  31 U.S.C. 6304
and 6305,  an agency may use an assistance agreement  only if the
principal purpose of an agreement is  to transfer anything of value
(e.g.,   money,  equipment,   services)  to  an  eligible  entity  to
accomplish a  public purpose of support or stimulation authorized by
statute.  Where an agency will not be substantially involved with
the recipient during the performance  of an assistance  agreement, a
grant  is  the  appropriate  instrument.    If  substantial  federal
involvement  is  contemplated in the  assistance relationship,  the
Agency must select a cooperative agreement.

     Under section 10 of the Act,  31 U.S.C. 6307, OMB is authorized
to  allow exceptions  from  the Act's requirements in individual
cases.    OMB's policy is not to  allow exceptions absent  a clear
demonstration that compliance with the  Act would result in serious
harm.

     It  is important  to note that the FGCAA does not expand the
Agency's authority to award assistance agreements.  The Agency has
no  inherent  authority  to  award  assistance  agreements;  such
authority  must  be  found  in the Agency's  statutes  and does  not
derive from  the FGCAA.   On the other  hand, unless  legislatively
prohibited,  every  agency has  inherent authority  to  enter into
contracts  as  long  as the procurement  is related to  the agency's
mission.

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EPA ORDER                                         57XX XXX
                                                  XXXXXX

3.   POLICY.   EPA  offices  and laboratories awarding extramural
funds  must determine  whether to  award a  grant or  cooperative
agreement  or  a contract  based on the  principal purpose  of  the
relationship between the parties.

     If an office or laboratory's principal purpose in undertaking
a project is to obtain a product or service for the direct benefit
or  use of  the Agency,  or any part of  the Federal government
including the legislative and judicial branches, a contract, rather
than an  assistance agreement, must  be  used.   This  is  the case
regardless of the  benefit the  project may have  for the recipient
organization, other non-federal entities, or the  public.   Offices
and laboratories cannot satisfy the principal purpose test to allow
the use of an assistance agreement merely by developing a scope of
work describing a project as not being for EPA's direct benefit and
use.   To  withstand an audit,   there must be  substance behind the
written scope of work demonstrating that the project is, in fact,
intended to support or stimulate a recipient to accomplish a public
purpose authorized by statute.

     Offices and  laboratories  may  use a contract even  where the
principal purpose is to establish an assistance relationship, where
the use  of a contract  is  appropriate  (i.e., when  the  office or
laboratory determines that specific public needs can be satisfied
best by using the procurement process).   Offices and laboratories
should retain documentation that supports their determination that
use of a contract is appropriate.  (For example,  evidence that use
of  a contract  would be substantially more  cost-effective.)  Such
documentation may be part of the Decision Memorandum.

4.   DEFINITIONS.

      a.  Approval   Official.      The   individual    having   the
responsibility and delegated authority in an EPA organization for
determining whether to fund or reject an application for technical
or programmatic reasons.

      b.  Award Official.   The individual who signs the assistance
agreement  ensuring  that all technical,  legal,  and administrative
evaluations  have been  made  and  that the  proposed agreement is
awardable.

     The  Award  Official for regionally administered  programs is
either   the   Regional  Administrator,  the  Assistant  Regional
Administrator, or the Division Director, depending upon Delegation
of Authority  and any subseguent Redelegations. The Award Official

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EPA ORDER                                         57XX XXX
                                                  XXXXXX

for grants and cooperative agreements at Headquarters is the Branch
Chief, Grants Operations Branch,  Grants Administration Division,
Office  of Grants  and  Debarment,  Office  of Administration  and
Resources Management.

      c.   Decision  Memorandum.   An  EPA office  or laboratory's
memorandum  to  an  Award  Official  containing the  decision  and
justification for  funding or  rejecting an  assistance  proposal.
This  decision  is  signed  by  the  Approval  Official or  his/her
respective designee.

      d.  Grants Management  Offices  (GMO).   The  Headquarters and
Regional  units  responsible  for   business   management  aspects
associated with the review  and  negotiation of applications and the
award and administration of  funded  projects  from pre-application
through audit resolution and final close out.  In the Regions the
GMOs report organizationally to the ARA;  in  Headquarters the GMO
reports to the Director, GAD.

       e.   Statutory  Authority.    The section  of  authorizing
legislation (such as Clean Water Act or Pollution Prevention Act,
etc.) specifically  stating  that  EPA or the  Administrator  may or
shall make grants or provide  financial assistance for the intended
purpose. (Appears as Item #19 on EPA's Assistance Agreement.)

5.   IMPLEMENTATION PROCEDURES: ROLES AND RESPONSIBILITIES

     a.    Approval Official Responsibilities.     Each EPA approval
official must determine whether a proposed relationship is one of
acquisition or assistance.   In  making this determination, each EPA
office and laboratory will use the criteria set forth in Section VI
of  this  policy. In  those  limited  occasions where  the  approval
official has the responsibility of overseeing an award originating
in another office, then the approval official's responsibility is
limited  to  ensuring  that  the  originating office states  it  has
determined an assistance relationship exists based on the criteria
set forth in this policy.

     Offices  and  laboratories should  review  all  contemplated
projects as soon as possible for the  purpose of determining whether
the nature of the project  activity  is  acquisition or assistance.
If it is unclear whether a project  is  acquisition or assistance,
the office or laboratory should request the responsible GMO/Award
Official for assistance.

          (2)    The  Decision Memo must  state  that the assistance
instrument is appropriate based on  the  criteria  outlined in this
policy.

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EPA ORDER                                         57XX XXX
                                                  XXXXXX

          (3)  In most  instances,  offices and  laboratories must
allow at least 60 days lead time (Superfund awards require 90 days)
from receipt of application by the GMO to the award date.   A much
longer lead time may be needed to award a contract.

     b.   Grants Management Office (GMO) Responsibilities.

          (1)  The GMO.  will review the determination of the office
or laboratory and decide whether to concur. The GMO will make this
decision in a timely manner and in conjunction with the Office of
General Counsel, Grants  and Intergovernmental Division  (or Regional
Counsel), if necessary.

          (2)   The GMO  must  return  all  completed  assistance
application packages that are  acquisition activities to the office
or  laboratory and  say why  it cannot  award the  project  as  an
assistance project.

          (3)  The  GMO  will   provide  training  and  information
dissemination regarding the appropriate use of grants,  cooperative
agreements and contracts to staff and  project officers to help the
offices  and   laboratories  determine  the   appropriate  use  of
assistance funds and to ensure high  guality application packages
are produced.

     c.   Award Official Responsibilities.

          (1) The Award Official ensures all technical, legal, and
administrative evaluations have been made and  that the proposed
agreement is awardable. If a proposed agreement is awardable, the
Award Official is responsible  for making the official offer to the
designated recipient by signing the award agreement.

6. DISTINGUISHING ACQUISITION AND ASSISTANCE RELATIONSHIPS.

    a.    Criteria  for  Distinguishing  Between  Acquisition  and
Assistance.    The  following  criteria apply  to  all EPA awards of
extramural  funds,  except where the  authorizing  legislation was
enacted after  the  FGCAA and  specifically supersedes the FGCAA or
other  provisions  of  law.  In  that   case,  the award  instrument
specified in the authorizing  legislation must be used. Otherwise,
the Agency must use the  appropriate award instrument as required by
the FGCAA.  Approval Officials  and Award Officials must determine
in each instance the proper instrument to use,  given the particular
circumstances  of the transaction.

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EPA ORDER                                         57XX XXX
                                                  XXXXXX

     The decision to use a contract or an assistance agreement must
be based solely on  the principal  purpose  of the relationship. If
EPA's principal purpose is  acquiring property  or services from a
recipient for  direct  Agency  (or  government)  benefit or  use, an
acquisition relationship exists requiring the use of a contract.

      If  EPA  is  funding  a  recipient  to  support or  stimulate
activities that are not principally for the direct benefit or use
of the Federal Government, and the award is authorized by federal
statute,  an  assistance  relationship  exists  and  a  financial
assistance agreement (i.e.,  grant  or  cooperative agreement) may be
used.

     Note that substantial  involvement during  performance is not
relevant  in determining  whether  an acquisition or  assistance
mechanism  is  required.  It  is only after  determining that an
assistance agreement is appropriate  that  substantial involvement
becomes  a  factor.  In  other  words, the  need   for  substantial
involvement does  not dictate the use of  a cooperative agreement
rather than a contract. The substantial involvement test  is used to
distinguish between a grant or a cooperative agreement.

     b.   Identifying Principal Purpose of Relationship

          (1)   Direct Benefit or Use - In applying the principal
purpose test, offices and laboratories must determine whether the
government is  the direct  beneficiary or user of the activity. If
EPA provides the specifications for the project; or is having the
project  completed based  on  its  own identified  needs;  or  will
directly use the report or result of the project  (for example, by
incorporating or relying on information developed by the project in
writing  EPA guidance  or  standards) then,  in  most cases,  the
principal purpose is to acquire property or services for the direct
benefit or use of EPA and thus,  a contract relationship exists.
However,  there may be  cases  where  EPA  expects  to derive  some
incidental use or benefit from funded activities. Such incidental
use or benefit does not preclude  an  award of assistance when the
principal purpose is public support or stimulation. For such cases,
an assistance vehicle may be still be appropriate.

     Not every benefit  to  or use by the government is direct.  Any
extramural expenditure that furthers  the Agency's  goals or mission
can be  said  to be of benefit or  use to  the government.  But not
every expenditure produces for the government a benefit or use that
is  direct,  e.g.  immediate,  uninterrupted,  or  specific. If an
expenditure will  produce  a  benefit or use  that  is  not  direct, a
contract is not required.

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          (2)   Support or Stimulation.  "Support or stimulation",
although a relatively broad term, does not encompass every agency
extramural award.  Every award could be construed to serve a public
support or stimulation  function if this means  that  its ultimate
goal is to serve the public welfare. However, an award that is not
authorized by statute or is intended to acquire goods or services
for the  direct benefit or use of the  government can not  be an
assistance agreement, regardless of how  well it serves the public.

     To  find  a public  purpose  of support  or stimulation,  the
office or laboratory does  not have  to determine that the recipient
needed the federal  assistance  to perform  the  activity;  nor is it
necessary to determine that the recipient, rather than the Agency
initiated the proposed project.  It is necessary to find that the
project is being performed by the recipient, for its own purposes,
which EPA is merely  supporting  with financial or other assistance.

          (3)   Non-Profit  vs.   Profit  Organizations.    Type  of
organization does not drive the decision to use one instrument or
the  other.    A non-profit  organization  does not  automatically
qualify for an assistance relationship.  Similarly, a profit-making
organization  does   not   automatically  reflect  an  acquisition
relationship  (although  a  profit-making organization  may  be an
assistance recipient only if  the statutory  grant  authority so
provides).   The  sole  determinant of  the proper  mechanism is
principal purpose. Other 'myths' in this area lead one to believe
that research should always be funded by  an assistance agreement
and that universities automatically receive cooperative agreements.
In fact,  research can be  funded by contract and universities can
receive grants or contracts,  as well as cooperative agreements.

     c.   Acquisition and Assistance Examples.    Examples    of
activities that EPA may  (per  individual statutory language) fund
through assistance agreements include:

          (1)   State continuing environmental programs,  such as
groundwater protection, pesticide enforcement, and  public water
system supervision;

          (2)   Constructing local waste water treatment plants;

          (3)   State  and  local  government  cleanup  of  hazardous
waste sites;

          (4)   Environmental education projects;

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EPA ORDER                                         57XX XXX
                                                  XXXXXX

          (5)  Conducting surveys, studies,  and research, when the
principal  purpose  is  to  stimulate  or  support  development  or
dissemination of knowledge (not primarily for use of EPA;

          (6)  Training  for   non-Federal  personnel   where  the
recipient selects the trainees,  specifies the plan for training,
and provides the trainers.

          (7)  Assistance to  associations of  State officials,  as
follows:

        As a general rule,  an assistance agreement may not be used
to support a conference or other services,  the  principal purpose of
which is to provide advice, recommendations, or other information
for  EPA's   direct  use   in   developing  or  changing  guidance,
regulations, etc.   Thus,  for example, an office  or  laboratory
cannot  award an assistance  agreement  to  a trade  association  or
consulting  firm  to arrange  and  conduct  a  conference  of  EPA
officials and members of the regulated community if the principal
purpose  is  to  enable EPA  to obtain  the  views of  the regulated
community on a proposed new policy or changes in an existing one.
If  the  office or  laboratory  needs help  in putting  on such a
conference, it should use a contract to  acquire logistical support
services.

     An  exception  to   this  general  rule  is   assistance  to
associations of State officials  who implement EPA  programs.   An
assistance   agreement  may be   used to   provide  funding to   an
association  of  State officials or agencies to hold a conference
among  its  members  and  EPA  officials  to discuss  issues in  the
implementation of a Federal effort that the States implement on a
day-to-day basis under a formal delegation or  as partners with EPA
in  a  coordinated,  national  effort.    Although  EPA does  derive
benefits from  such  a conference  and  may subsequently  decide  to
adopt  recommendations  or use information   provided by  the State
officials at the conference, the principal  purpose of the agreement
is not  to acquire services for the direct  benefit  or  use of the
Federal  Government.   The principal  purpose  is  to support  the
association in  helping its  State members participate in developing
the policies that  they will carry out.  State  officials and agencies
are in the unique role of sharing operational responsibility with
EPA for implementation of environmental efforts.  EPA may issue the
guidance  and regulations,  but  the  States are at least  equal
partners in  implementing them.   They need,  and clearly benefit
from,   an  opportunity   to discuss the  policies   they  will  be
implementing before EPA  adopts those  policies.  The same  is also
true  of Tribal  governments   that  are  also partners  of EPA  in
implementing EPA efforts.


                                8

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EPA ORDER                                         57XX XXX
                                                  XXXXXX

        At  such  a  conference of  EPA and  State officials,  EPA
officials  should  not  finally agree  to  adopt  particular  policy
positions.  EPA officials may tentatively  agree on  positions, or
agree on  draft or  proposed  positions,  but any  final  decisions
should be made solely  by EPA  after review,  consideration,  and
modification by the Agency itself, e.g.,  by senior managers.  The
need for  subsequent and well documented EPA  review and decision
should be made clear to  conference participants.  Such intervening
steps  between the  Agency's  receipt  of  recommendations  or
information and the Agency's adoption of final positions indicate
that EPA does not directly use the State's  information.

        EPA   may not treat  an  association  to which  it  awards
assistance  as it would  a contractor.   Thus,  an EPA  office or
laboratory  may  not  direct  an  association  in  arranging  the
association's conference or in providing other services for EPA's
benefit.   The conference should be run by the association,  not by
EPA. The benefits of the assistance should  flow primarily to  the
association and its State members, not to EPA. If the association
is merely providing  logistical support and other services to EPA in
arranging an EPA conference,  a contract should be used.  This does
not mean  that  EPA personnel  may  not be substantially involved in
the performance of a cooperative agreement,  so long as the purpose
of the agreement is  assistance and they do not  give daily direction
to the recipient or its contractor.

     Examples of activities that MUST be  funded through a contract
(if not performed 'in-house' by EPA) include:

               (a)  Evaluation  of  performance of  EPA  efforts,
projects, or grantee  activity when the evaluation is required by
or is for the direct use of the Agency;

               (b)  Surveys,   studies,  and   research  which  gather
specific  information  desired by  EPA for its  own  use  or  for
dissemination to the public as EPA materials;

               (c)  Training  projects   where  EPA   directs  the
selection  of  the trainers  or  trainees,  or  the  content of  the
curriculum;

               (d)  Design or development of items to meet a direct
EPA need;

               (e)  Conferences  sponsored  or  initiated  by  EPA
primarily to meet a  specific EPA need or obtain information for use
by EPA;

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EPA ORDER                                         57XX XXX
                                                  XXXXXX

               (f)  Support  the  work  of   EPA  Federal  Advisory
Committee Act (FACA) Committees, as appropriate;

               (g)  Provide technical, analytical, and application
review services/advice for the direct benefit or use of EPA; such
as information used to set guidelines;

               (h)  Evaluate or improve the internal operations of
EPA;

               (i)  Provide  support to  EPA,  with  the  statutory
exception of the Senior Environmental Employee Program;

               (j)  Produce  specific  information  that  will  be
directly incorporated by EPA into technical, policy or regulatory
decisions;

               (k)  Develop   computer  models   (i.e.   software)
specifically for EPA use;

               (1)  Produce  data  for input into  internal Agency
computer data bases;

               (m)  Help  (as  allowed  under  EPA  Order  1900.2)
prepare required EPA reports to Congress;

               (n)  Help  (as  allowed  under  EPA  Order  1900.2)
prepare EPA guidance documents or manuals;

               (o)  Operate EPA facilities;

               (p)  Organize   training   or  other   conferences
principally for federal employee benefit;

               (q)  Help perform policy analyses (as allowed under
EPA Order  1900.2) for EPA offices;

               (r)  Provide  logistic  or  other  support  to  EPA
employees carrying out technology transfer activities;

7.   SELECTING BETWEEN A GRANT OR COOPERATIVE AGREEMENT.

     After an office or  laboratory determines that an assistance
agreement rather  than a  contract  is  appropriate,  it  must then
decide  whether  to  use a  grant  or  a  cooperative agreement  to
provide the  assistance.  The office or  laboratory  must  base this
decision on the extent and  nature of the Agency's involvement in
the activities to be supported under the agreement.


                                10

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EPA ORDER                                         57XX XXX
                                                  XXXXXX

     a.   Grant  Agreements.    EPA  shall  use  a grant  agreement
whenever an assistance agreement is appropriate and the office or
laboratory does  not anticipate substantial  involvement  with the
recipient during performance of the.contemplated activities.

     b.   Cooperative  Agreements.   EPA  shall  use  a  cooperative
agreement whenever an assistance agreement is appropriate and the
office or laboratory anticipates substantial involvement with the
recipient during performance of the contemplated activity.

          (1)  Generally,  substantial   Federal  involvement  is
anticipated where a project is expected to entail:

               a    Intense monitoring by EPA;

               b    Joint operational involvement,  participation,
and/or collaboration between EPA and the recipient;

               c    EPA prior review or  approval of project phases
or the substantive  provisions  of  proposed contracts found within
the scope of the agreement;

               d    Agency involvement  in  the selection  of key
recipient personnel; or

               e    EPA  collaboration regarding  scope  of  work,
organizational structure,  staffing, mode of  operation  and other
management  process  (assuming  the  principal purpose  is  not  to
acquire  goods  or services for the  government,  in which  case a
contract would be required).

          (2)  Anticipated    substantial    involvement    during
prformance does not include:

               a    Agency approval of  recipient plans  prior to
award;

               b    Normal overview activities such as site visits,
performance reporting, financial reporting and audit;

               c    Unanticipated  agency involvement  to correct
deficiencies in project or financial performance;

               d    Agency review of performance after completion.
                                11

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8.   STATUTORY AUTHORITY for ASSISTANCE AGREEMENT.

      A grant or cooperative agreement may be awarded only if EPA
possesses statutory authority to provide financial assistance for
the activity to be supported.  If a statute authorizes the award of
'grants' or  'financial assistance'  it  is  deemed to authorize the
award of grants and cooperative agreements, whichever is consistent
with the FGCAA.

     Sometimes  EPA   provides  assistance  to   one   party  that
subsequently uses the funds for the  benefit of others. EPA may use
an assistance agreement with  an eligible  intermediary to provide
assistance  to  the  ultimate   beneficiaries,  who  must  also  be
eligible. The FGCAA does not indicate who is to receive support or
stimulation. It does  not require that the support or stimulation be
only of the immediate party to the agreement.  On  the other hand, if
the intermediary  is  not  itself an eligible recipient,  or  if the
intermediary is effectively serving as  a  contractor  to EPA,  then
EPA should normally  use  a procurement contract  to  obtain the
services of the intermediary in assisting eligible recipients.

9. IN-KIND ASSISTANCE.   in addition to transferring  money to an
authorized assistance recipient,  EPA offices and laboratories may
use assistance agreements to transfer anything of value; such as,
equipment  or services, to a  recipient.    If  it  would be  more
efficient  in terms  of cost  or  time  for  EPA  rather than the
assistance recipient to purchase equipment or services, EPA may do
so and provide the equipment or services to the recipient under the
assistance  agreement.   This  approach  would be  appropriate, for
example, where a piece of equipment  necessary for a grant assisted
project  can be purchased  at  a  considerably lower  price or be
delivered much earlier using  an existing  EPA contract. Likewise,
EPA may provide the services of an EPA contractor to an assistance
recipient in lieu of money, where appropriate.

     Offices  and  laboratories  should  provide  the  following
documentation in their files when providing in-kind assistance:

     a.  a savings of cost or time is expected;

     b.  all charges are to the grants object class series; and

     c.  all  other details are in  accordance with  the "in-kind"
grant feature as defined by EPA regulations e.g.  40 CFR parts 30 &
31 and guidance.
                                12

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EPA ORDER
57XX XXX
XXXXXX
10.   FAILURE TO COMPLY. In certain circumstances,  it may become
apparent that an individual office, laboratory,  or recipient failed
to comply with this Order by awarding an assistance agreement where
a contract was required.

     Individuals  discovering  such situations are  directed  to
consult with representatives from the EPA office or laboratory, the
Award Official,  and the Office of  General Counsel to determine all
necessary actions. It  is GAD  policy to  allow  completion of  the
assistance  agreement where good faith effort was made to determine
principal purpose in accordance with  the FGCAA.  GAD will seeJc to
ensure that  future funding decisions  by  the  involved office  or
laboratory are consistent with the FGCAA. It is not EPA policy to
terminate, annul, or require ratification for these awards unless
there were  or will  be serious irregularities, e.g.  conflict of
interest or  intentional misconduct.
                        Jonathan fc.^Cannon
                                               MAR  22 1994
                                13

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EPA ORDER                                         57XX XXX
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                                                  APPENDIX A
             ACQUISITION AND ASSISTANCE CASE  STUDIES

 (These  case  studies  do  not  depict actual  EPA  situations.
However,  they  do  illustrate  commonly  raised  circumstances
regarding acquisition and assistance.)
                                14

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EPA ORDER
CASE STUDY #1
                                   57XX XXX
                                   XXXXXX
FACTS:

1.   An EPA office has recently announced a new regulatory program.
     A trade  association  has  submitted  a proposal requesting EPA
     financial assistance for a national conference to inform its
     members about the new program and its requirements.

2.   The  trade association  will run  the conference,  including
     developing the agenda and selecting the speakers.  Association
     employees and members are among the  featured  speakers.  EPA's
     role will consist of  sending a few officials to the conference
     to speak, answering questions and monitoring  the proceedings.

3.   The proposal  calls for funds to cover the travel  expenses of
     the non-federal speakers and others who  will participate in
     programs and  workshops at the conference.

4.   For  purposes  of  this  case  study, assume  that  there  is
     statutory authority  and delegated approval authority
     for this award.
QUESTION A:


ANSWER A:
the
QUESTION B:
ANSWER B:
May the office use an assistance agreement to fund
this conference?

Yes.  The principal purpose of the agreement is to
support the trade association in training and
educating its members,  not to acquire services for
the Government's direct use  or  benefit.   Although
EPA officials will speak at the conference and EPA
derives some benefit from  explaining its program,
principal purpose  of  the agreement  is  to provide
information to the regulated parties.

May the agreement pay for travel expenses of n o n -
federal  speakers  and  other  participants  in  the
conference?

Yes.   Participant  support  costs such as stipends,
subsistence  allowances,  travel  allowances,  and
registration  fees  for  a  conference, meeting,  or
training are allowable under an assistance agreement
and  are covered by  OMB Circular  A-122.  However,
travel  costs for Federal  personnel cannot be paid
for through assistance agreements.
                                15

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EPA ORDER
CASE STUDY #1  (continued)
                                   57XX XXX
                                   XXXXXX
QUESTION C:




ANSWER C:

QUESTION D:




ANSWER D:
Could this award be made to a State or local entity
covered  by OMB  Circular  A-87  or an  educational
institution covered by Circular A-21?

Yes, if there is no statutory prohibition to do so.

Can  this  State  recipient  pay  travel  and  other
conference costs  for state and  other  non-federal
participants at this conference?

Yes. A-87 and A-21 do not directly address
"participant costs" as does A-122; they only address
"selected items" of cost. However, both Circular A-
87 and A-21 provide that if an item of cost is not
addressed, a determination of allowability should be
based on the treatment of similar items. Moreover;
EPA believes it would not be  appropriate  to treat
State   and   local  government   or   educational
institutions  more  restrictively than  non-profit
organizations in this regard. Therefore, consistent
with Circular A-122, as long as not  prohibited by
the authorizing statute (e.g.  Clean  Water  Act), a
state or  local recipient may pay travel and other
allowable conference costs for  participants at an
EPA funded conference.
                                16

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EPA ORDER                                         57XX XXX
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CASE STUDY #2

FACTS:

1.   An EPA  office has an  assistance  effort open  to non-profit
     organizations.   The  EPA office would  like a  non-profit to
     provide technical skills to generate data and prepare a report
     for EPA's use concerning the effort.

2.   The work being conducted falls within the statutory authority
     of the effort.

3.   For  purposes  of  this  case  study, assume that  there  is
     statutory authority and delegated  approval authority for this
     award.

QUESTION: Can  EPA  fund  this  non-profit  organization  with  an
          assistance  agreement?

ANSWER:   No. Even though the non-profit organization is eligible
          for funding, the principal purpose seems to be to acquire
          services for  the direct benefit or use of EPA.
                                17

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EPA ORDER                                         57XX XXX
                                                  XXXXXX

CASE STUDY #3

FACTS:

1.   An  EPA  office wants  to fund  a  training session  for State
     personnel involved in permit writing and issuance.  The office
     intends  to use  a cooperative agreement with  a  non-profit
     organization  knowledgeable  in the  subject  and  expert  in
     training.

2.   The non-profit  organization  will run  the  training session)
     consulting with  EPA  on  the agenda  and the training methods,
     but not taking direction and supervision from an EPA office.

3.   The audience  is  expected to consist  primarily  of personnel
     from  State agencies.    The  course  is  designed  for  State
     personnel and a  sufficient number  of  State (or non-federal)
     personnel will attend to make holding the training session for
     those  personnel  financially  feasible   and  practicable.
     However,   15  percent  of the  audience  will be  EPA  Regional
     personnel.

QUESTION: May the EPA office use  a  cooperative  agreement to fund
          the training session?

ANSWER:   Yes. It  is  reasonable to determine that the principal
          purpose  is  to  train  non-federal  personnel  and  this
          training session would  be feasible even if  no federal
          participants  attended.   Conversely,  if  the  training
          session would not be held but for the attendance  of the
          federal personnel,  the principal  purpose test would not
          be  met  and  a  contract  would  be required because  the
          training would not be feasible and practicable.

          Here, the principal purpose of the agreement is to train
          non-federal personnel.  That purpose  is  not  changed by
          the attendance of some federal  personnel. Of course, the
          travel and  associated costs  of  the  federal  personnel
          attending the training  cannot be paid for by the award.
          Principal purpose should not be determined based simply
          on  a  count of the participants,  i.e.,  the   principal
          purpose is not necessarily to train non-federal personnel
          any time  at least 51 percent  of the audience  is non-
          federal.
                                18

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EPA ORDER                                         57XX XXX
                                                  XXXXXX

CASE STUDY #4

FACTS:

1.   An EPA HQ office wants to award a cooperative agreement to a
     non-profit organization to hold  a  conference.   The proposal
     for the conference describes it as an "EPA conference".  The
     agreement provides that EPA will develop  the agenda,  select
     the   speakers,   determine   participant   costs,   and   set
     registration fees.

2.   The non-profit organization will help develop the agenda and
     will provide the programs  and conference materials.  The non-
     profit   organization  will  plan   and   handle   conference
     registration  and hotel   reservations,  arrange  the  meeting
     space, and prepare and distribute publicity materials.

3.   The non-profit will provide a five  percent match and will use
     information  obtained  at  the  conference  for  educational
     purposes.

4.  . The speakers and the  audience will be from  federal, State, and
     local governments, plus private  nonprofit and profit-making
     firms.

5.   For  purposes  of  this  case  study,  assume  that  there  is
statutory  authority  and  delegated  approval  authority for  this
award.

QUESTION: May the  EPA office use  a  cooperative agreement to fund
this conference?

ANSWER:   No. The  principal purpose  apparently is to acquire the
          non-profit  organization's   services  to enable  the EPA
          office to hold an EPA conference based on the facts that
          EPA will  develop the agenda,  select  the speakers, etc.
          Accordingly,  a  contract is  required. Although the non-
          profit organization will perform numerous tasks, they are
          essentially ministerial duties and logistical support.
          The non-profit  will  assist  EPA in accomplishing Agency
          objectives. The non-profit's use of information from the
          conference  for educational purposes does not appear to be
          the principal purpose of the agreement.  The provision of
          a  match may  suggest an assistance relationship, but in
          this  case  it  does  not  outweigh  the  evidence  of  a
          procurement relationship.
                                19

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EPA ORDER                                         57XX XXX
                                                  XXXXXX

CASE STUDY #5

FACTS:

1.   EPA wants to award a cooperative agreement for research on the
     impacts   of  a  treatment  standard  that   the   Agency  is
     considering.  Before issuing a regulation proposing use of the
     standard, EPA  believes  it needs  more information to explain
     the proposal adequately for public comment.

2.   The laboratory does  not have clearly defined specifications
     for  the  research  to  be performed  and will   need  to  be
     substantially  and frequently involved in technical decisions
     in the research.

3.     For purposes of  this  case  study,  assume  that  there  is
     statutory authority and delegated approval authority for this
     award.

QUESTION: May  EPA  use  a  cooperative  agreement  to  fund  this
          research?

ANSWER:   No.     Although  the  research  may   benefit   others,
          EPA's  principal  purpose  in  funding the research  is  to
          obtain  information  EPA  needs  to  draft  a  proposed
          regulation.  Therefore,  a contract is required.
                                20

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EPA ORDER                                         57XX XXX
                                                  XXXXXX

CASE STUDY #6

FACTS:

1.   An  EPA  laboratory  is  planning  to  issue  a  request  for
     applications from  universities  and  others  for a cooperative
     research  effort   and  has   written  a   clear  and  precise
     description of the research and how it is to be carried out.

2.   All  sampling  activities  will  be carried  out  according  to
     established  protocols,  which  describe  in  detail how  the
     samples are to be  taken  and what  chemicals are to be tested
     for  in the  samples.  Recipient  personnel  will  have to  be
     trained in the use of  the protocol by Laboratory staff.

3.   Analysis  of the  resulting  data  (and  any  changes to  the
     sampling protocols)  will be carried out by  EPA scientists.
     However, the recipient may propose additional  uses for the
     data.

4.   The recipient will be directed to  "complete the processing of
     the  ...  analytical   chemistry  samples  and  transmit  the
     information to EPA in  computerized format".
QUESTION: A.



ANSWER:   A.
QUESTION B.


ANSWER   B.
Is a  cooperative agreement the  appropriate  award
instrument for this activity?

No. The activity described above is not assistance.
From  the information  provided,  the  Laboratory's
principal  purpose  is  to  acquire  sampling  and
analyses support for the direct benefit and use of
EPA.  Since  the sampling and analysis  protocol is
already  developed, there is no  evidence that the
award would stimulate  or support the  recipient in
carrying out a public purpose.

What  is  the appropriate award  instrument for this
activity?

The appropriate award instrument for this activity
is a contract.  The principal purpose of the activity
described above fulfills an  Agency need and further
provides the laboratory with sampling and analytical
services for the direct benefit and use of EPA.
                                21

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EPA ORDER
57XX XXX
XXXXXX
CASE STUDY #7

FACTS:

1.   An EPA laboratory has submitted to Headquarters an assistance
     package to conduct cooperative research regarding wood burning
     stoves.

2.   The recipient  will  monitor emissions  from the  stove flues,
     analyze  the  data,  and  submit periodic  reports  to  the EPA
     Project  Officer.  For  emission levels  detected outside  of
     acceptable variances, the recipient will work  jointly with EPA
     to modify the protocol and test the changes.

3.   Bench and pilot studies  plus  the protocol  have already been
     published.   This research  is an  opportunity to prove the
     protocol  in  the  field and  will  have  a  long-term,  national
     impact on air quality, as the technology finds its ways into
     the manufacturing sector.

4.   For  purposes  of  this   case  study,   assume   that  there  is
     statutory authority and delegated approval authority for this
     award.

QUESTION: Is the planned activity  described above an appropriate
          use of a cooperative agreement?

ANSWER:    Yes. Although  EPA  will  receive some benefit from the
          field  research, the  principal  purpose of  the  above
          mentioned  activity  fulfills   a  public  purpose  of
          stimulation  and support.  This   work  is  not  merely  a
          sampling  and data   collection  activity.  Even  if the
          protocol survives the field tests intact, the principal
          purpose of this activity stimulates and supports research
          regarding wood burning stoves  and satisfies a  public
          purpose. This activity meets the criteria for selecting
          assistance as the appropriate award instrument.  Further,
          the  statement , of  work  indicates  joint  operational
          collaboration  and   meets  the  criteria  for"substantial
          involvement" by EPA  and demonstrates the appropriate use
          of a cooperative agreement in this instance.
                                22

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APPENDIX C

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            APPENDIX C
    EPA INVOLVEMENT IN GRANTEE
PERSONNEL AND CONTRACTOR SELECTION
   UNDER GRANTS AND COOPERATIVE
           AGREEMENTS

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             UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                             24 1992
MEMORANDUM

SUBJECT:  EPA Involvement  in Grantee Personnel and Contractor
                     Under  Grant/ and Cooperative Agreements
FROM:   /Sallyanne Carper, 'Acting Deputy Assistant Administrator
                        and Acquisition
                          ,  Deputy Assistant Administrator
                     Research and Development

TO:       ORD  Office Directors
          Laboratory Directors


     The  Office of Research and Development is currently shifting^
some of its  extramural resources from contract to assistance
instruments.   Although the  Inspector  General and Congress have
focused in recent months  on inappropriate direction  and control
of contractor  employees,  the Agency must be aware of similar
prohibitions in dealing with assistance recipients.

     Under an  assistance  agreement, EPA transfers money,
property, services or anything else of va£ue to support or
stimulate an activity to  accomplish a public purpose rather than
to acquire property or. services for the direct benefit of EPA.
This memorandum reaffirms the regulatory requirements regarding
relationships  between EPA employees and assistance recipients.

     EPA's Code of Conduct  states that EPA employees must not use
their  Government positions  to "coerce, or appear to  coerce,
anyone tc provide any financial benefit to themselves or others*
 (40 CFR 3.103(d)).  The Code also states that EPA employees "must
.not take  any action, whether specifically prohibited or not,
which  would  result in or  create the reasonable appearance of  ...
giving preferential treatment to any  organization or person"  (40
CFR 3.103(d)(2)).  Additionally, our  regulations for procurement
under  assistance state that "the recipient shall conduct all
procurement  transactions  in a manner  that provides maximum open
and free  competition" (40 CFR 33.230(a)).  These regulations
prohibit  EPA staff from directing whom assistance recipients
should hire  or whom they  should contract with under  a grant or
cooperative  agreement.

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                             -2-

     While EPA has the responsibility to manage grants and
cooperative agreements, EPA employees must make certain that they
do not become involved in certain areas of personnel and
recipient procurement.  This memorandum sets forth when EPA
employees may become involved in personnel and procurement
actions of an assistance recipient, and when they may not, based
on existing regulations.

o EPA employees may not:

  o    Consistent with the EPA Code of Conduct, take any action
       under a grant or cooperative agreement that would be a
       conflict of interest or result in an appearance of a
       conflict of interest.

  o    Direct the hiring, firing, promoting, disciplining, or
       rewarding of recipient personnel or contractors under
       grants or cooperative agreements.  (In the Senior
       Environmental Employment Program, EPA employees may refer
       eligible senior citizens to recipients, and select persons
       to be enrolled by recipients.)

  o    Direct a recipient to award a contract to a specific
       individual or firm.

  o    Participate in the negotiation or award of a contract
       under a grant or cooperative agreement.

o EPA employees may:

  o    Approve the key personnel of the grantee organization and
       the project director or principal investigator.

  o    Review and comment on a grantee's procurement process or a
       particular procurement action.

  o    Participate in review panels to make recommendations on
       qualified offers and acceptable proposals based on
       published evaluation criteria.

  o    Upon request by a recipient organization, EPA employees
       may provide a reference for individuals who are employed
       by EPA contractors and who are being considered for
       employment by the recipient institution to work on EPA
       matters.  In doing so, however, EPA employees should take
       great care to avoid even the appearance of undue influence
       in hiring decisions, especially EPA officials who have a
       role in selecting the assistance recipient or in defining
       the scope and amount of the assistance received.

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                             -3-

     In summary, it is inappropriate for Agency staff to direct
or require the use of particular persons or firms by assistance
recipients in the performance of a grant or cooperative
agreement.

     Should you have any questions on this memorandum, please
contract Bruce Feldman in the Grants Administration Division on
(202) 260-5268.

cc:  David O'Connor        Gary Katz
     Harvey Pippen         Clarence Mahan

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APPENDIX D

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          APPENDIX D
   40 CFR PART 30, "GRANTS AND
AGREEMENTS WITH INSTITUTIONS OF
HIGHER EDUCATION, HOSPITALS, AND
OTHER NON-PROFIT ORGANIZATIONS

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                ENVIRONMENTAL PROTECTION AGENCY
                                                  RIN 2030-AA32

                       40 CFR Parts 30, 33

Grants  and Agreements  with  Institutions  of  Higher  Education,
Hospitals, and Other Non-Profit Organizations

AGENCY: Environmental Protection Agency

ACTION: Interim Final Rule, Request for Comments

SUMMARY:    This  interim  final rule revises  40  CFR Part  30 and
deletes Part 33 to incorporate the changes established by revised
Office  of Management and  Budget  (OMB) Circular  A-110,  "Uniform
Administrative  Requirements   for   Grants  and   Agreements  with
Institutions of Higher Education,  Hospitals and  Other Non-Profit
Institutions," published by OMB on November 29, 1993  (58 FR 62992) .

DATES:   This  interim final  rule  is  effective   (insert date of
publication).   Written comments must  be  submitted on  or  before
(insert date 60 days after publication).

ADDRESS:   Written comments should be  sent  to: Richard Mitchell,
Grants  Policy  and  Procedures  Branch   (3903F)   United  States,
Environmental Protection Agency, 401 M  Street SW, Washington, D.C.
20460  (202)  260-6077.    Inquiries  may  also  be submitted  via
electronic  mail  (e-mail)  to:   mitchell.richard@epamail.epa.gov.
Electronic  inquiries must be  submitted as an ASCII  file avoiding
the  use  of  special  characters   and  any  form  of  encryption.
Inquiries will also be accepted on discs in WordPerfect in 5.1 file
format or ASCII file  format.   No Confidential Business Information
should be submitted through e-mail.

FOR FURTHER INFORMATION CONTACT:   Richard Mitchell,  Grants Policy
and  Procedures   Branch   (3903F),   United  States  Environmental
Protection Agency, 401 M Street SW, Washington,  D.C. 20460, (202)
260-6077.

SUPPLEMENTARY  INFORMATION:   On November  29,  1993,  OMB  issued a
revised   Circular A-110,   entitled     "Uniform  Administrative
Requirements for Grants and Agreements  With  Institutions of Higher
Education,  Hospitals and Other Non-Profit Organizations".   The
Circular   provides   standards  for  obtaining   consistency  and
uniformity among Federal agencies in the administration of grants
and agreements with  institutions of higher education,  hospitals,
and other non-profit organizations.

     OMB initially issued Circular  A-110 in 1976 and, except for a
minor  revision  in  February  1987,  the   Circular contained  its

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original provisions  until  the revised Circular was  published in
1993.   To update  the Circular,  OMB established  an interagency
review  task  force.   The  task force  solicited suggestions  for
changes  to  the  Circular  from  university  groups,  non-profit
organizations  and other  interested  parties  and  compared,  for
consistency,  the provisions of similar provisions applied to State
and local governments.  The revised Circular reflects the results
of these efforts.

     In addition, OMB published a notice  in the Federal Register
(57 FR 39018) on August 27, 1992,  requesting comments on proposed
revisions to Circular A-110.   Interested  parties were invited to
submit  comments.   OMB  received  over  200 comments  from  Federal
agencies, non-profit organizations, professional organizations and
others.   All comments  were  considered  in developing  the  final
revision.

     OMB directed  Federal  agencies responsible for  awarding  and
administering grants and other agreements with institutions of
higher learning, hospitals, and other non-profit organizations to
adopt the language as it appears  in the Circular unless different
provisions are required by Federal statute or are approved by OMB.

     This  rule  does  not  apply to grants,  contracts,  or  other
agreements between the  Federal Government and units  of State or
local  governments covered  by  OMB Circular  A-102,   "Grants  and
Cooperative Agreements with State and Local Governments," and EPA's
regulation at 40 CFR  Part 31.  In addition,  subawards and contracts
to  State or  local  governments  are  not   covered  by this  rule.
However, the  rule applies to subawards  made by State  and  local
governments to organizations covered  by this rule.  The provisions
of the  rule  may be applied to commercial organizations,  foreign
governments,   organizations  under the  jurisdiction  of  foreign
governments,  and international organizations.

     The circular inadvertently misstates  the applicability of the
statute commonly  known  as  the BYRD Anti-Lobbying  Amendment  , 31
U.S.C. 1352.   The statute applies to organizations which apply or
bid for an award exceeding $100,000, not $100,000 or more.  We have
made this correction in Appendix A.

     Two other  changes  have  been  made  to Appendix A because of
recent   changes  brought  about   by  the   Federal   Acquisition
Streamlining Act  of  1994.   The threshold  for  the  requirement to
include a provision for compliance with the Copeland "Anti-Kickback
Act" (18 U.S.C.  874)  was raised from $2,000 to $100,000.'

     The threshold for the requirement to include the provision for
compliance with  sections  102  and  107 of  the  Contract Work  Hours
and  Safety  Standards Act  (40 U.S.C.   327-333)   was  raised  to
$100,000.

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     The Environmental Protection Agency  (EPA) is promulgating the
Circular (with the changes discussed below)  as an EPA regulation at
40 CFR  Part  30.   This  regulation will  supersede the  existing
regulations at both 40 CFR Part 30 and 40 CFR Part 33.

     This rule adopts  all of the OMB Circular provisions except for
the following EPA-specific changes to the text:

     1.    30.18 Hotel and motel fire safety.   The Hotel and Motel
          Fire Safety Act  of 1990  (P.  L.  101-391) requires the
          General  Services  Administration  (GSA)  to  limit  its
          lodging directories and lodging expense per diem surveys
          to hotels and motels that meet the law's fire protection
          and control guidelines.  The Act establishes a number of
          fire safety standards  which must be met  for hotels and
          motels  to  be so  listed  by GSA.    Further,  beginning
          October 1,  1994, Federal funds may not be used to sponsor
          a conference,  meeting, or training seminar held  in  a
          hotel or motel which does not meet  these standards.  If
          necessary,  the head of the Federal agency may waive this
          prohibition in the public interest.

     2.    30.54  Quality  assurance.   A  new  section  on  quality
          assurance will be  added  to ensure  that environmentally
          related measurements or data generation by recipients are
          performed in a manner designed to meet  EPA's standards.
          This   section  will  require  recipients   to   develop
          procedures and standards to produce information of high
          quality and to minimize the potential  for loss of data.

     3.    Except in the definitions, certain  generic terms in the
          Circular are being  changed, if appropriate,  to reflect
          EPA's  terminology  and usage,  e.g., the term  "Federal
          awarding agency"  and  "Federal Government"  and similar
          terms will be changed to "EPA." In appropriate cases the
          term "Federal awarding agency" has  been changed to "EPA
          award official."  Other minor editing has been done as
          well.   None of  the  editing  of this  type alters  the
          provisions of the Circular.

     4.    In  certain  cases  the  Circular  includes  indefinite
          language such  as  "The Federal government may  require.
          EPA  is changing  such wording to   "shall  or will"  to
          reflect EPA's policies or procedures, where appropriate.

     5.    At  §30.23 EPA  is adding language  stipulating  that EPA
          will not require cost sharing or matching unless required
          by  statute,  regulation,   Executive  Order,   or  official
          Agency policy.

     6.    At §30.25(c) the  wording  is being changed to specify the
          office/official  (i.e.,  the  award official   or  the

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          responsible technical program office) from whom written
          approvals are to be obtained.

     7.   At §30.25(e)  EPA is changing the language to provide that
          recipients may incur pre-award costs 90 days before award
          and more than 90 days before award with approval of the
          award official.

     8.   At §30.27(b) EPA is adding language limiting the salary
          rate of consultants to the maximum daily rate for level
          4 of the Executive Schedule.   This is a requirement of
          EPA's appropriation act.

     9.   30.44 Procurement procedures.  EPA is  adding language to
          ensure  that if  the  contractor  awards contracts,  the
          recipient must ensure that the contractor take the same
          five  steps as  the recipient  is  required  to  take  to
          utilize  small  businesses,  minority-owned  firms  and
          women's business enterprises,  whenever  possible.   This
          additional language is needed to meet the requirements of
          EPA's  1991  Appropriations Act,  P.L.  101-507.   That
          statute requires EPA for  that  fiscal  year and for each
          one thereafter, to the fullest extent possible, to ensure
          at least 8% of  federal funding for prime  and subcontracts
          awarded  in  support  of  authorized  programs  be  made
          available  to  business  concerns owned or  controlled by
          socially  and  economically  disadvantaged  individuals
          within the meaning of sections 8(a)(5)  and  (6)   of the
          Small  Business Act,  including women and Historically
          Black  colleges  and universities.

Public Participation

     The policy of the Agency is,  whenever practicable, to afford
the public an opportunity to participate in the rulemaking process.
Accordingly,  interested  persons  may submit  written  comments,
suggestions, or objections regarding the  interim final rule to the
location identified in this preamble

Regulatory Impact Analysis

     EPA has determined that this  interim final  rule will not have
a significant  economic impact on  a substantial  number  of  small
entities because it does  not effect the amount of funds provided in
the   covered  programs,   but   rather   modifies  and   updates
administrative   and   procedural   requirements.     Therefore,   a
regulatory flexibility     analysis has not  been prepared pursuant
to the Regulatory Flexibility Act, 5 U.S.C. 601 et  seq.  In keeping
with  the  requirements   of  44  U.S.C. 3504(h),  the  information
collection requirements contained in this rule have been approved
by OMB as Standard Forms.  The Agency has  determined that this rule
does not  have  sufficient federalism  implications to  warrant the

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preparation of a Federalism Assessment pursuant to Executive Order
12612.  In addition,  the Agency has determined that implementation
of this action will not have any significant impact on the quality
of the  human  environment pursuant to the  National Environmental
Policy Act.

     Except for the few EPA-specific additions detailed above, EPA
is  adopting the  full text  of  the Circular.    The Agency  has
submitted the rule to OMB for review.

Paperwork Reduction Act

     This rule does not contain a collection of information subject
to the Paperwork Reduction Act of 1980 (44 U,.S.C. 3501 et seq.).

Unfunded Mandates Reform Act

     Under section 202 of the Unfunded Mandates Reform Act of 1995
(the  UMRA),  P.L.  104-4,  EPA  generally must  prepare a  written
statement,  including  a  cost-benefit  analysis,   for rules  with
"Federal mandates" that may result in expenditures by  State, local,
and tribal governments in the aggregate, or to the private sector,
of $100 million in any one year.  When  such  a statement is required
for EPA rules, under section 205  of the UMRA EPA must identify and
consider  alternatives, including  the least  costly, most  cost-
effective  or  least  burdensome  alternative  that   achieves  the
objectives of the rule.  EPA must select that alternative, unless
the  Administrator explains  in the  final rule  why  it  was  not
selected or it  is  inconsistent with law.   Before EPA establishes
regulatory requirements that may significantly or uniquely affect
small governments, including tribal governments,  it  must develop
under section 203 of the  UMRA a small government agency plan.  The
plan  must  provide  for  notifying  potentially  affected  small
governments,  giving  them meaningful  and timely input  in  the
development of  EPA regulatory  proposals with significant Federal
intergovernmental mandates, and informing,  educating, and advising
them on compliance with the regulatory requirements.

     Today's  interim  final  rule  contains  no  Federal  mandates
(within  the meaning  of  the UMRA)  for State,  local, or tribal
governments or the  private  sector.  The UMRA excludes  from the
definitions of  "Federal  intergovernmental mandate"  and  "Federal
private  sector mandate"  duties that  arise  from conditions  of
federal  assistance.    This  interim  final  rule  prescribes  as
conditions  of  federal  assistance  administrative  requirements
governing  EPA  grants  to institutions   of  higher  education,
hospitals, and  other non-profit  organizations.    Thus, it is not
subject to the  requirements of sections 202  and  205  of the UMRA.
In  addition,  EPA  has determined  that this  interim  final  rule
contains no regulatory requirements that  might  significantly or
uniquely affect small governments.  Accordingly,  it is not subject
to the requirements of section 203 of the UMRA.

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List of Subjects in 40 CFR Part 30

     Accounting,  Administrative practice  and procedures,  grant
programs,  Grants  Administration,  Reporting  and  Recordkeeping
requirements.

(Date)

Carol Browner

Administrator

Billing code:  6560-50-M

     1.   For the reasons set forth in the preamble, Title 40, Part
30 of  the Code  of Federal Regulations  is revised as  set forth
below:

Part 30 - Grants and Agreements with Institutions of Higher
Education, Hospitals, and Other Non-Profit Organizations

SUBPART  A - GENERAL

30.1  Purpose.
30.2  Definitions.
3O.3  Effect: on other issuances.
30.4  Deviations.
30.5  Subawards.

SUBPART  B - PRE-AWARD REQUIREMENTS

30.10 Purpose.
30.11 Pre-award policies.
30.12 Forms for applying for Federal assistance.
30.13 Debarment and suspension.
30.14 Special award conditions.
30.15 Metric system of measurement.
30.16 Resource Conservation and Recovery Act.
30.17 Certifications and representations.
30.18 Hotel and motel fire safety.

SUBPART C - POST-AWARD REQUIREMENTS

Financial and Program Management
30.20 Purpose of financial and program management.
30.21 Standards for financial management systems.
30.22 Payment.
30.23 Cost sharing or matching.
30.24 Program income.
30.25 Revision of budget and program plans.
30.26 Non-Federal audits.
30.27 Allowable costs.

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30.28 Period of availability of funds.

Property Standards
30.30 Purpose of property standards.
30.31 Insurance coverage.
30.32 Real property.
30.33 Federally-owned and exempt property.
30.34 Equipment.
30.35 Supplies and other expendable property.
30.36 Intangible property.
30.37 Property trust relationship.

Procurement Standards
30.40 Purpose of procurement standards.
30.41 Recipient responsibilities.
30.42 Codes of conduct.
30.43 Competition.
30.44 Procurement procedures.
30.45 Cost and price analysis.
30.46 Procurement records.
30.47 Contract administration.
30.48 Contract provisions.

Reports and Records
30.50 Purpose of reports and records.
30.51 Monitoring and reporting program performance.
30.52 Financial reporting.
30.53 Retention and access requirements for records.
30.54 Quality assurance

Termination and Enforcement
30.60 Purpose of termination and enforcement.
30.61 Termination.
30.62 Enforcement.
30.63 Disputes.

SUBPART D - AFTER-THE-AWARD REQUIREMENTS

30.70 Purpose.
30.71 Closeout procedures.
30.72 Subsequent adjustments and continuing responsibilities.
30.73 Collection of amounts due.

APPENDIX A - CONTRACT PROVISIONS

Authority: 33 U.S.C. 1251 et seq.; 42 U.S.C. 7401 et seq.; 42
U.S.C. 6901 et seq.; 42 U.S.C. 241, 242b, 243, 246, 300f, 300J-1,
300J-2, 300J-3,   42 U.S.C. 1857 et seq.; 7 U.S.C. 135 et seq.;
15 U.S.C. 2601 et seq.; 42 U.S.C. 9601 et seq.

SUBPART A - General

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30.1  Purpose.
     This Subpart establishes uniform administrative requirements
for Federal grants and agreements awarded to institutions of
higher education, hospitals, and other non-profit organizations.
The Environmental Protection Agency (EPA) may not impose
additional or inconsistent requirements, except as provided in
Sections 30.4, and 30.14 or unless specifically required by
Federal statute or executive order.  Non-profit organizations
that implement Federal programs for the States are also subject
to State requirements.

30.2  Definitions.
     (a)  Accrued expenditures means the charges incurred by the
recipient during a given period requiring the provision of funds
for: (1) goods and other tangible property received; (2) services
performed by employees, contractors, subrecipients, and other
payees; and, (3) other amounts becoming owed under programs for
which no current services or performance is required.

     (b)  Accrued income means the sum of: (1) earnings during a
given period from (i) services performed by the recipient, and
(ii) goods and other tangible property delivered to purchasers,
and (2) amounts becoming owed to the recipient for which no
current services or performance is required by the recipient.

     (c)  Acquisition cost of equipment means the net invoice
price of the equipment, including the cost of modifications,
attachments, accessories, or auxiliary apparatus necessary to
make the property usable for the purpose for which it was
acquired.  Other charges, such as the cost of installation,
transportation, taxes, duty or protective in-transit insurance,
shall be included or excluded from the unit acquisition cost in
accordance with the recipient's regular accounting practices.

     (d)  Advance means a payment made by Treasury check or other
appropriate payment mechanism to a recipient upon its request
either before outlays are made by the recipient or through the
use of predetermined payment schedules.

     (e)  Award means financial assistance that provides support
or stimulation to accomplish a public purpose.  Awards include
grants and other agreements in the form of money or property in
lieu of money, by the Federal Government to an eligible
recipient.  The term does not include: technical assistance,
which provides services instead of money; other assistance in the
form of loans, loan guarantees, interest subsidies, or insurance;
direct payments of any kind to individuals; and, contracts which
are required to be entered into and administered under
procurement laws and regulations.
                                8

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     (f)  Cash contributions means the recipient's cash outlay,
including the outlay of money contributed to the recipient by
third parties.

     (g)  Closeout means the process by which a Federal awarding
agency determines that all applicable administrative actions and
all required work of the award have been completed by the
recipient and Federal awarding agency.

     (h)  Contract means a procurement contract under an award or
subaward, and a procurement subcontract under a recipient's or
subrecipient's contract.

     (i)  Cost sharing or matching means that portion of project
or program costs not borne by the Federal Government.

     (j)  Date of completion means the date on which all work
under an award is completed or the date on the award document, or
any supplement or amendment thereto, on which Federal sponsorship
ends.

     (k)  Disallowed costs means those charges to an award that
the Federal awarding agency determines to be unallowable, in
accordance with the applicable Federal cost principles or other
terms and conditions contained in the award.

     (1)  Equipment means tangible nonexpendable personal
property including exempt property charged directly to the award
having a useful life of more than one year and an acquisition
cost of $5000 or more per unit.  However, consistent with
recipient policy, lower limits may be established.

     (m)  Excess property means property under the control of any
Federal awarding agency that, as determined by the head thereof,
is no longer required for its needs or the discharge of its
responsibilities.

     (n)  Exempt property means tangible personal property
acquired in whole or in part with Federal funds, where the
Federal awarding agency has statutory authority to vest title in
the recipient without further obligation to the Federal
Government.  An example of exempt property authority is contained
in the Federal Grant and Cooperative Agreement Act (31 U.S.C.
6306),  for property acquired under an award to conduct basic or
applied research by a non-profit institution of higher education
or non-profit organization whose principal purpose is conducting
scientific research.

     (o)  Federal awarding agency means the Federal agency that
provides an award to the recipient.

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     (p)  Federal funds authorized means the total amount of
Federal funds obligated by the Federal Government for use by the
recipient.  This amount may include any authorized carryover of
unobligated funds from prior funding periods when permitted by
agency regulations or agency implementing instructions.

     (q)  Federal share of real property, equipment, or supplies
means that percentage of the property's acquisition costs and any
improvement expenditures paid with Federal funds.

     (r)  Funding period means the period of time when Federal
funding is available for obligation by the recipient.

     (s)  Intangible property and debt instruments means, but is
not limited to, trademarks, copyrights, patents and patent
applications and such property as loans, notes and other debt
instruments, lease agreements, stock and other instruments of
property ownership, whether considered tangible or intangible.

     (t)  Obligations means the amounts of orders placed,
contracts and grants awarded, services received and similar
transactions during a given period that require payment by the
recipient during the same or a future period.

     (u)  Outlays or expenditures means charges made to the
project or program.  They may be reported on a cash or accrual
basis.   For reports prepared on a cash basis, outlays are the sum
of cash disbursements for direct charges for goods and services,
the amount of indirect expense charged, the value of third party
in-kind contributions applied and the amount of cash advances and
payments made to subrecipients.  For reports prepared on an
accrual basis, outlays are the sum of cash disbursements for
direct charges for goods and services, the amount of indirect
expense incurred, the value of in-kind contributions applied, and
the net increase (or decrease) in the amounts owed by the
recipient for goods and other property received, for services
performed by employees, contractors, subrecipients and other
payees and other amounts becoming owed under programs for which
no current services or performance are required.

     (v)  Personal property means property of any kind except
real property.  It may be tangible, having physical existence, or
intangible, having no physical existence, such as copyrights,
patents, or securities.

     (w)  Prior approval means written approval by an authorized
official evidencing prior consent.

     (x)  Program income means gross income earned by the
recipient that is directly generated by a supported activity or
earned as a result of the award (see exclusions in paragraphs


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30.24 (e) and (h)).  Program income includes, but is not limited
to, income from fees for services performed, the use or rental of
real or personal property acquired under federally-funded
projects, the sale of commodities or items fabricated under an
award, license fees and royalties on patents and copyrights, and
interest on loans made with award funds.  Interest earned on
advances of Federal funds is not program income.  Except as
otherwise provided in Federal awarding agency regulations or the
terms and conditions of the award, program income does not
include the receipt of principal on loans, rebates, credits,
discounts, etc., or interest earned on any of them.

      (y)  Project costs means all allowable costs, as set forth
in the applicable Federal cost principles, incurred by a
recipient and the value of the contributions made by third
parties in accomplishing the objectives of the award during the
project period.

      (z)  Project period means the period established in the
award document during which Federal sponsorship begins and ends.

      (aa) Property means, unless otherwise stated, real property,
equipment, intangible property and debt instruments.

      (bb) Real property means land, including land improvements,
structures and appurtenances thereto, but excludes movable
machinery and equipment.

      (cc) Recipient means an organization receiving financial
assistance directly from Federal awarding agencies to carry out a
project or program.  The term includes public and private
institutions of higher education, public and private hospitals,
and other quasi-public and private non-profit organizations such
as, but not limited to, community action agencies, research
institutes, educational associations, and health centers.  The
term may include commercial organizations, foreign or
international organizations (such as agencies of the United
Nations) which are recipients, subrecipients, or contractors or
subcontractors of recipients or subrecipients at the discretion
of the Federal awarding agency.  The term does not include
government-owned contractor-operated facilities or research
centers providing continued support for mission-oriented, large-
scale programs that are government-owned or controlled, or are
designated as federally-funded research and development centers.

      (dd) Research and development means all research activities,
both basic and applied, and all development activities that are
supported at universities, colleges, and other  non-profit
institutions.  "Research" is defined as a systematic study
directed toward fuller scientific knowledge or understanding of
the subject studied.  "Development" is the systematic use of
knowledge and understanding gained from research directed toward

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the production of useful materials, devices, systems, or methods,
including design and development of prototypes and processes.
The term research also includes activities involving the training
of individuals in research techniques where such activities
utilize the same facilities as other research and development
activities and where such activities are not included in the
instruction function.

     (ee) Small award means a grant or cooperative agreement not
exceeding the small purchase threshold fixed at 41 U.S.C. 403(11)
(currently $100,000).

     (ff) Subaward means an award of financial assistance in the
form of money, or property in lieu of money, made under an award
by a recipient to an eligible subrecipient or by a subrecipient
to a lower tier subrecipient.  The term includes financial
assistance when provided by any legal agreement, even if the
agreement is called a contract, but does not include procurement
of goods and services nor does it include any form of assistance
which is excluded from the definition of "award" in paragraph
(e).

     (gg) Subrecipient means the legal entity to which a subaward
is made and which is accountable to the recipient for the use of
the funds provided.  The term may include foreign or
international organizations (such as agencies of the United
Nations) at the discretion of the Federal awarding agency.

     (hh) Supplies means all personal property excluding
equipment, intangible property, and debt instruments as defined
in this section, and inventions of a contractor conceived or
first actually reduced to practice in the performance of work
under a funding agreement ("subject inventions"), as defined in
37 CFR part 401, "Rights to Inventions Made by Nonprofit
Organizations and Small Business Firms Under Government Grants,
Contracts, and Cooperative Agreements."

     (ii) Suspension means an action by a Federal awarding agency
that temporarily withdraws Federal sponsorship under an award,
pending corrective action by the recipient or pending a decision
to terminate the award by the Federal awarding agency.
Suspension of an award is a separate action from suspension under
Federal agency regulations implementing E.O.s 12549 and 12689,
"Debarment and Suspension."

     (jj) Termination means the cancellation of Federal
sponsorship, in whole or in part, under an agreement at any time
prior to the date of completion.

     (kk) Third party in-kind contributions means the value of
non-cash contributions provided by non-Federal third parties.
Third party in-kind contributions may be in the form of real

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property, equipment, supplies and other expendable property, and
the value of goods and services directly benefiting and
specifically identifiable to the project or program.

     (11) Unliquidated obligations, for financial reports
prepared on a cash basis, means the amount of obligations
incurred by the recipient that have not been paid.  For reports
prepared on an accrued expenditure basis, they represent the
amount of obligations incurred by the recipient for which an
outlay has not been recorded.

     (mm) Unobligated balance means the portion of the funds
authorized by the Federal awarding agency that has not been
obligated by the recipient and is determined by deducting the
cumulative obligations from the cumulative funds authorized.

     (nn) Unrecovered indirect cost means the difference between
the amount awarded and the amount which could have been awarded
under the recipient's approved negotiated indirect cost rate.

     (oo) Working capital advance means a procedure where by
funds are advanced to the recipient to cover its estimated
disbursement needs for a given initial period.

     30.3  Effect on other issuances.

     For awards subject to this Circular, all administrative
requirements of codified program regulations, program manuals,
handbooks and other nonregulatory materials which are
inconsistent with the requirements of this Circular shall be
superseded, except to the extent they are required by statute, or
authorized in accordance with the deviations provision in Section
30.4.

     30.4  Deviations.

     The Office of Management and Budget (OMB) may grant
exceptions for classes of grants or recipients subject to the
requirements of this Circular when exceptions are not prohibited
by statute.  However, in the interest of maximum uniformity,
exceptions from the requirements of this Circular shall be
permitted only in unusual circumstances.  EPA may apply more
restrictive requirements to a class of recipients when approved
by OMB.  EPA may apply less restrictive requirements when
awarding small awards, except for those requirements which are
statutory.  Exceptions on a case-by-case basis may also be made
by EPA.

     30.5  Subawards.
     Unless sections of this Circular specifically exclude
subrecipients from coverage, the provisions of this Circular
shall be applied to subrecipients performing work under awards if

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such subrecipients are institutions of higher education,
hospitals or other non-profit organizations.  State and local
government subrecipients are subject to the provisions of
regulations implementing the grants management common rule,
"Uniform Administrative Requirements for Grants and Cooperative
Agreements to State and Local Governments," published at 53 FR
8034 (3/11/88).

SUBPART B - Pre-Award Requirements

     30.10  Purpose.
     Sections 30.11 through 30.18 prescribes forms and
instructions and other pre-award matters to be used in applying
for Federal awards.

     30.11  Pre-award policies.

     (a)  Use of Grants and Cooperative Agreements, and
Contracts.  In each instance, EPA shall decide on the appropriate
award instrument (i.e., grant, cooperative agreement, or
contract).  The Federal Grant and Cooperative Agreement Act (31
U.S.C. 6301-08) governs the use of grants, cooperative agreements
and contracts.  A grant or cooperative agreement shall be used
only when the principal purpose of a transaction is to accomplish
a public purpose of support or stimulation authorized by Federal
statute.  The statutory criterion for choosing between grants and
cooperative agreements is that for the latter, "substantial
involvement is expected between the executive agency and the
State, local government, or other recipient when carrying out the
activity contemplated in the agreement." Contracts shall be used
when the principal purpose is acquisition of property or services
for the direct benefit or use of the Federal Government.

     (b)  Public Notice and Priority Setting. EPA shall notify
the public of its intended funding priorities for discretionary
grant programs, unless funding priorities are established by
Federal statute.

     (c)  By submitting an application to EPA, the applicant
grants EPA permission to share the application with technical
reviewers both within and outside the Agency.

     30.12  Forms for applying for Federal assistance.

     (a)  EPA shall comply with the applicable report clearance
requirements of 5 CFR part 1320, "Controlling Paperwork Burdens
on the Public," with regard to all forms used by EPA in place of
or as a supplement to the Standard Form 424 (SF-424) series.

     (b)  Applicants shall use the SF-424 series or those forms
and instructions prescribed by EPA.


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     (c)  For Federal programs covered by E.O. 12372,
"Intergovernmental Review of Federal Programs," the applicant
shall complete the appropriate sections of the SF-424
(Application for Federal Assistance) indicating whether the
application was subject to review by the State Single Point of
Contact (SPOC).  The name and address of the SPOC for a
particular State can be obtained from EPA or the Catalog of
Federal Domestic Assistance.  The SPOC shall advise the applicant
whether the program for which application is made has been
selected by that State for review.

     (d)  If the SF-424 form is not used EPA should indicate
whether the application is subject to review by the State under
E.O. 12372.

     30.13  Debarment and suspension.

     EPA and recipients shall comply with the nonprocurement
debarment and suspension common rule implementing E.O.s 12549 and
12689, "Debarment and Suspension."  This common rule restricts
subawards and contracts with certain parties that are debarred,
suspended or otherwise excluded from or ineligible for
participation in Federal assistance programs or activities.

     30.14  Special award conditions.

     If an applicant or recipient:  (a) has a history of poor
performance, (b) is not financially stable, (c) has a management
system that does not meet the standards prescribed in this
Circular,  (d) has not conformed to the terms and conditions of a
previous award, or (e) is not otherwise responsible, EPA may
impose additional requirements as needed, provided that such
applicant or recipient is notified in writing as to: the nature
of the additional requirements, the reason why the additional
requirements are being imposed, the nature of the corrective
action needed, the time allowed for completing the corrective
actions, and the method for requesting reconsideration of the
additional requirements imposed.  Any special conditions shall be
promptly removed once the conditions that prompted them have been
corrected.

     30.15  Metric system of measurement.

     The Metric Conversion Act, as amended by the Omnibus Trade
and Competitiveness Act (15 U.S.C. 205) declares that the metric
system is the preferred measurement system for U.S. trade and
commerce.   The Act requires each Federal agency to establish a
date or dates in consultation with the Secretary of Commerce,
when the metric system of measurement will be used in the
agency's procurements, grants, and other business-related
activities.  Metric implementation may take longer where the use
of the system is initially impractical or likely to cause

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significant inefficiencies in the accomplishment of federally-
funded activities.  EPA shall follow the provisions of E.G.
12770, "Metric Usage in Federal Government Programs."

     30.16  Resource Conservation and Recovery Act (RCRA)  (Pub.
L. 94-580 codified at 42 U.S.C. 6962).  Under the Act, any State
agency or agency of a political subdivision of a State which is
using appropriated Federal funds must comply with Section 6002.
Section 6002 requires that preference be given in procurement
programs to the purchase of specific products containing recycled
materials identified in guidelines developed by EPA (40 CFR parts
247-254).  Accordingly, State and local institutions of higher
education, hospitals, and non-profit organizations that receive
direct Federal awards or other Federal funds shall give
preference in their procurement programs funded with Federal
funds to the purchase of recycled products pursuant to EPA's
guidelines.  Further, pursuant to Executive Order 12873  (dated
October 20, 1993) recipients are to print documents/reports
prepared under an EPA award of assistance double sided on
recycled paper.  This requirement does not apply to Standard
Forms.  These forms are printed on recycled paper as available
trough the General Services Administration.

30.17  Certifications and representations.

     Unless prohibited by statute or codified regulation, EPA
will allow recipients to submit certifications and
representations required by statute, executive order, or
regulation on an annual basis, if the recipients have ongoing and
continuing relationships with the agency.  Annual certifications
and representations shall be signed by responsible officials with
the authority to ensure recipients' compliance with the pertinent
requirements.

30.18 Hotel and motel fire safety.

     The Hotel and Motel Fire Safety Act of 1990 (P.  L. 101-391)
establishes a number of fire safety standards which must be met
for hotels and motels.  The law provides further that Federal
funds may not be used to sponsor a conference, meeting, or
training seminar held in a hotel or motel which does not meet the
law's fire protection and control guidelines.  If necessary, the
head of the Federal agency may waive this prohibition in the
public interest.

SUBPART C - Post-Award Requirements

Financial and Program Management

30.20  Purpose of financial and program management.
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     Sections 30.21 through 30.28 prescribe standards for
financial management systems, methods for making payments and
rules for: satisfying cost sharing and matching requirements,
accounting for program income, budget revision approvals, making
audits, determining allowability of cost, and establishing fund
availability.

30.21  Standards for financial management systems.

     (a)  EPA shall require recipients to relate financial data
to performance data and develop unit cost information whenever
practical.

     (b)  Recipients' financial management systems shall provide
for the following.

     (1)  Accurate, current and complete disclosure of the
financial results of each federally-sponsored project or program
in accordance with the reporting requirements set forth in
Section 30.52.  If EPA requires reporting on an accrual basis
from a recipient that maintains its records on other than an
accrual basis, the recipient shall not be required to establish
an accrual accounting system.  These recipients may develop such
accrual data for its reports on the basis of an analysis of the
documentation on hand.

     (2)  Records that identify adequately the source and
application of funds for federally-sponsored activities.  These
records shall contain information pertaining to Federal awards,
authorizations, obligations, unobligated balances, assets,
outlays, income and interest.

     (3)  Effective control over and accountability for all
funds,  property and other assets.  Recipients shall adequately
safeguard all such assets and assure they are used solely for
authorized purposes.

     (4)  Comparison of outlays with budget amounts for each
award.   Whenever appropriate, financial information should be
related to performance and unit cost data.

     (5)  Written procedures to minimize the time elapsing
between the transfer of funds to the recipient from the U.S.
Treasury and the issuance or redemption of checks, warrants or
payments by other means for program purposes by the recipient.
To the extent that the provisions of the Cash Management
Improvement Act (CMIA) (Pub. L. 101-453) govern, payment methods
of State agencies, instrumentalities, and fiscal agents shall be
consistent with CMIA Treasury-State Agreements or the CMIA
default procedures codified at 31 CFR part 205, "Withdrawal of
Cash from the Treasury for Advances under Federal Grant and Other
Programs."

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     (6)  Written procedures for determining the reasonableness,
allocability and allowability of costs in accordance with the
provisions of the applicable Federal cost principles and the
terms and conditions of the award.

     (7)  Accounting records including cost accounting records
that are supported by source documentation.

     (c)  Where the EPA guarantees or insures the repayment of
money borrowed by the recipient, the recipient shall provide
adequate bonding and insurance if the bonding and insurance
requirements of the recipient are not deemed adequate to protect
the interest of the Federal Government.

     (d)  Recipients shall obtain adequate fidelity bond coverage
where coverage to protect the Federal Government's interest is
insufficient.

     (e)  Where bonds are required in the situations described
above, the bonds shall be obtained from companies holding
certificates of authority as acceptable sureties, as prescribed
in 31 CFR part 223, "Surety Companies Doing Business with the
United States."

30.22  Payment.

     (a)  Payment methods shall minimize the time elapsing
between the transfer of funds from the United States Treasury and
the issuance or redemption of checks, warrants, or payment by
other means by the recipients.  Payment methods of State agencies
or instrumentalities shall be consistent with Treasury-State CMIA
agreements or default procedures codified at 31 CFR part 205.

     (b)  Recipients are to be paid in advance, provided they
maintain or demonstrate the willingness to maintain: (1) written
procedures that minimize the time elapsing between the transfer
of funds and disbursement by the recipient, and (2)  financial
management systems that meet the standards for fund control and
accountability as established in Section 30.21.  Cash advances to
a recipient organization shall be limited to the minimum amounts
needed and be timed to be in accordance with the actual,
immediate cash requirements of the recipient organization in
carrying out the purpose of the approved program or project.  The
timing and amount of cash advances shall be as close as is
administratively feasible to the actual disbursements by the
recipient organization for direct program or project costs and
the proportionate share of any allowable indirect costs.

     (c)  Whenever possible, advances shall be consolidated to
cover anticipated cash needs for all awards made by the EPA to
the recipient.
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     (1)  Advance payment mechanisms include, but are not limited
to, Treasury check and electronic funds transfer.

     (2)  Advance payment mechanisms are subject to 31 CFR part
205.

     (3)  Recipients shall be authorized to submit requests for
advances and reimbursements at least monthly when electronic fund
transfers are not used.

     (d)  Requests for Treasury check advance payment shall be
submitted on SF-270, "Request for Advance or Reimbursement," or
other forms as may be authorized by OMB.  This form is not to be
used when Treasury check advance payments are made to the
recipient automatically through the use of a predetermined
payment schedule or if precluded by special instructions for
electronic funds transfer.

     (e)  Reimbursement is the preferred method when the
requirements in paragraph (b) cannot be met.  EPA may also use
this method on any construction agreement, or if the major
portion of the construction project is accomplished through
private market financing or Federal loans, and the Federal
assistance constitutes a minor portion of the project.

     (1)  When the reimbursement method is used, EPA shall make
payment within 30 days after receipt of the billing, unless the
billing is improper.

     (2)  Recipients shall be authorized to submit request for
reimbursement at least monthly when electronic funds transfers
are not used.

     (f)  If a recipient cannot meet the criteria for advance
payments and EPA has determined that reimbursement is not
feasible because the recipient lacks sufficient working capital,
EPA may provide cash on a working capital advance basis.  Under
this procedure, EPA shall advance cash to the recipient to cover
its estimated disbursement needs for an initial period generally
geared to the awardee's disbursing cycle.  Thereafter, EPA shall
reimburse the recipient for its actual cash disbursements.  The
working capital advance method of payment shall not be used for
recipients unwilling or unable to provide timely advances to
their subrecipient to meet the subrecipient's actual cash
disbursements.

     (g)  To the extent available, recipients shall disburse
funds available from repayments to and interest earned on a
revolving fund, program income, rebates, refunds, contract
settlements, audit recoveries and interest earned on such funds
before requesting additional cash payments.


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     (h)  Unless otherwise required by statute, EPA shall not
withhold payments for proper charges made by recipients at any
time during the project period unless (1) or (2) apply.

     (1)  A recipient has failed to comply with the project
objectives, the terms and conditions of the award, or Federal
reporting requirements.

     (2)  The recipient or subrecipient is delinquent in a debt
to the United States as defined in OMB Circular A-129, "Managing
Federal Credit Programs."  Under such conditions, EPA may, upon
reasonable notice, inform the recipient that payments shall not
be made for obligations incurred after a specified date until the
conditions are corrected or the indebtedness to the Federal
Government is liquidated.

     (i)  Standards governing the use of banks and other
institutions as depositories of funds advanced under awards are
as follows.

     (1)  Except for situations described in paragraph (i)(2),
EPA shall not require separate depository accounts for funds
provided to a recipient or establish any eligibility requirements
for depositories for funds provided to a recipient.  However,
recipients must be able to account for the receipt, obligation
and expenditure of funds.

     (2)  Advances of Federal funds shall be deposited and
maintained in insured accounts whenever possible.

     (j)  Consistent with the national goal of expanding the
opportunities for women-owned and minority-owned business
enterprises, recipients shall be encouraged to use women- owned
and minority-owned banks (a bank which is owned at least 50
percent by women or minority group members).

     (k)  Recipients shall maintain advances of Federal funds in
interest bearing accounts, unless (1), (2) or  (3) apply.

     (1)  The recipient receives less than $120,000 in Federal
awards per year.

     (2)  The best reasonably available interest bearing account
would not be expected to earn interest in excess of $250 per year
on Federal cash balances.

     (3)  The depository would require an average or minimum
balance so high that it would not be feasible within the expected
Federal and non-Federal cash resources.

     (1)  For those entities where CMIA and its implementing
regulations do not apply, interest earned on Federal advances

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deposited in interest bearing accounts shall be remitted annually
to Department of Health and Human Services, Payment Management
System, P.O. Box 6021, Rockville, MD 20852.  Interest amounts up
to $250 per year may be retained by the recipient for
administrative expense.  State universities and hospitals shall
comply with CMIA, as it pertains to interest.  If an entity
subject to CMIA uses its own funds to pay pre-award costs for
discretionary awards without prior written approval from EPA, it
waives its right to recover the interest under CMIA.  In keeping
with Electronic Funds Transfer rules, (31 CFR Part 206), interest
should be remitted to the HHS Payment Management System through
an electronic medium such as the FEDWIRE Deposit system.
Recipients which do not have this capability should use a check.

     (m)  Except as noted elsewhere in this Circular, only the
following forms shall be authorized for the recipients in
requesting advances and reimbursements.  EPA shall not require
more than an original and two copies of these forms.

     (1)  SF-270, Request for Advance or Reimbursement.  EPA
shall adopt the SF-270 as a standard form for all nonconstruction
programs when electronic funds transfer or predetermined advance
methods are not used.  However,  EPA has the option of using this
form for construction programs in lieu of the SF-271, "Outlay
Report and Request for Reimbursement for Construction Programs."

     (2)  SF-271, Outlay Report and Request for Reimbursement for
Construction Programs.  EPA shall adopt the SF-271 as the
standard form to be used for requesting reimbursement for
construction programs.  However, the SF-270 may be substituted
when EPA determines that it provides adequate information to meet
its needs.

30.23  Cost sharing or matching.

     EPA shall not require cost sharing or matching unless
required by statute, regulation, Executive Order, or official
Agency policy.

     (a)  All contributions, including cash and third party in-
kind, shall be accepted as part of the recipient's cost sharing
or matching when such contributions meet all of the following
criteria.

     (1)  Are verifiable from the recipient's records.

     (2)  Are not included as contributions for any other
federally-assisted project or program.

     (3)  Are necessary and reasonable for proper and efficient
accomplishment of project or program objectives.


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     (4)  Are allowable under the applicable cost principles.

     (5)  Are not paid by the Federal Government under another
award,  except where authorized by Federal statute to be used for
cost sharing or matching.

     (6)  Are identified in the approved budget.

     (7)  Conform to other provisions of this Circular, as
applicable.

     (b)  Unrecovered indirect costs may be included as part of
cost sharing or matching only with the prior approval of the EPA
Award Official.

     (c)  Values for recipient contributions of services and
property shall be established in accordance with the applicable
cost principles.  If, after consultation with Agency property
management personnel, the EPA Award Official authorizes
recipients to donate buildings or land for construction or
facilities acquisition projects or long-term use, the value of
the donated property for cost sharing or matching shall be the
lesser of (1) or (2).

     (1)  The certified value of the remaining life of the
property recorded in the recipient's accounting records at the
time of donation.

     (2)  The current fair market value.  However, when there is
sufficient justification, the EPA Award Official may approve the
use of the current fair market value of the donated property,
even if it exceeds the certified value at the time of donation to
the project.

     (d)  Volunteer services furnished by professional and
technical personnel, consultants, and other skilled and unskilled
labor may be counted as cost sharing or matching if the service
is an integral and necessary part of an approved project or
program.  Rates for volunteer services shall be consistent with
those paid for similar work in the recipient's organization.  In
those instances in which the required skills are not found in the
recipient organization, rates shall be consistent with those paid
for similar work in the labor market in which the recipient
competes for the kind of services involved.  In either case, paid
fringe benefits that are reasonable, allowable, and allocable may
be included in the valuation.

     (e)  When an employer other than the recipient furnishes the
services of an employee, these services shall be valued at the
employee's regular rate of pay (plus an amount of fringe benefits
that are reasonable, allowable, and allocable, but exclusive of
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overhead costs), provided these services are in the same skill
for which the employee is normally paid.

     (f)  Donated supplies may include such items as expendable
equipment, office supplies, laboratory supplies or workshop and
classroom supplies.  Value assessed to donated supplies included
in the cost sharing or matching share shall be reasonable and
shall not exceed the fair market value of the property at the
time of the donation.

     (g)  The method used for determining cost sharing or
matching for donated equipment, buildings and land for which
title passes to the recipient may differ according to the purpose
of the award, if (1) or (2) apply.

     (1)  If the purpose of the award is to assist the recipient
in the acquisition of equipment, buildings or land, the total
value of the donated property may be claimed as cost sharing or
matching.

     (2)  If the purpose of the award is to support activities
that require the use of equipment, buildings or land, normally
only depreciation or use charges for equipment and buildings may
be made.  However,  the full value of equipment or other capital
assets and fair rental charges for land may be allowed, provided
that the EPA technical program office, after consultation with
EPA property management personnel, has approved the charges.

     (h)  The value of donated property shall be determined in
accordance with the usual accounting policies of the recipient,
with the following qualifications.

     (1)  The value of donated land and buildings shall not
exceed its fair market value at the time of donation to the
recipient as established by an independent appraiser (e.g.,
certified real property appraiser or General Services
Administration representative) and certified by a responsible
official of the recipient.

     (2)  The value of donated equipment shall not exceed the
fair market value of equipment of the same age and condition at
the time of donation.

     (3)  The value of donated space shall not exceed the fair
rental value of comparable space as established by an independent
appraisal of comparable space and facilities in a privately-owned
building in the same locality.

     (4)  The value of loaned equipment shall not exceed its fair
rental value.
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     (5)  The following requirements pertain to the recipient's
supporting records for in-kind contributions from third parties.

     (i)  Volunteer services shall be documented and, to the
extent feasible, supported by the same methods used by the
recipient for its own employees.

     (ii) The basis for determining the valuation for personal
service, material, equipment, buildings and land shall be
documented.

30.24  Program income.

     (a)  EPA shall apply the standards set forth in this section
in requiring recipient organizations to account for program
income related to projects financed in whole or in part with
Federal funds.

     (b)  Except as provided in paragraph (h) below, program
income earned during the project period shall be retained by the
recipient and, in accordance with EPA regulations or the terms
and conditions of the award, shall be used in one or more of the
ways listed in the following.

     (i)  Added to funds committed to the project by EPA and
recipient and used to further eligible project or program
objectives.

     (2)  Used to finance the non-Federal share of the project or
program.

     (3)  Deducted from the total project or program allowable
cost in determining the net allowable costs on which the Federal
share of costs is based.

     (c)  When EPA authorizes the disposition of program income
as described in paragraphs (b)(1) or (b)(2), program income in
excess of any limits stipulated shall be used in accordance with
paragraph (b)(3).

     (d)  In the event that the EPA does not specify in its
regulations or the terms and conditions of the award how program
income is to be used, paragraph  (b)(3)  shall apply automatically
to all projects or programs except research.  For awards that
support research, paragraph (b)(1) shall apply automatically
unless EPA indicates in the terms and conditions another
alternative on the award or the recipient is subject to special
award conditions, as indicated in Section 30.14.

     (e)  Unless EPA regulations or the terms and conditions of
the award provide otherwise, recipients shall have no obligation


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to the Federal Government regarding program income earned after
the end of the project period.

     (f)  If authorized by EPA regulations or the terms and
conditions of the award, costs incident to the generation of
program income may be deducted from gross income to determine
program income, provided these costs have not been charged to the
award.

     (g)  Proceeds from the sale of property shall be handled in
accordance with the requirements of the Property Standards (See
Sections 30.30 through 30.37).

     (h)  Unless EPA regulations or the terms and condition of
the award provide otherwise, recipients shall have no obligation
to the Federal Government with respect to program income earned
from license fees and royalties for copyrighted material,
patents, patent applications, trademarks, and inventions produced
under an award.  However, Patent and Trademark Amendments (35
U.S.C. 18) apply to inventions made under an experimental,
developmental, or research award.

30.25  Revision of budget and program plans.

     (a)  The budget plan is the financial expression of the
project or program as approved during the award process.  The
budget shall include both the Federal and non-Federal share.   It
shall be related to performance for program evaluation purposes
whenever appropriate.

     (b)  Recipients are required to report deviations from
budget and program plans, and request prior approvals for budget
and program plan revisions, in accordance with this section.

     (c)  For nonconstruction awards, unless EPA regulations
provide otherwise, recipients shall request prior written
approvals from:

     (1)  the EPA Award Official for the following:

     (i)  Change in the scope or the objective of the project or
program (even if there is no associated budget revision requiring
prior written approval).

     (ii)  The need for additional Federal funding.

     (iii)     The inclusion of costs that require prior approval
in accordance with OMB Circular A-21, "Cost Principles for
Institutions of Higher Education," OMB Circular A-122,  "Cost
Principles for Non-Profit Organizations," or 45 CFR Part 74
Appendix E, "Principles for Determining Costs Applicable to
Research and Development under Grants and Contracts with

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Hospitals," or 48 CFR Part 31, "Contract Cost Principles and
Procedures," as applicable.

     (2)  The technical program office for the following:

     (i)  Change in a key person specified in the application or
award document.

     (ii) The absence for more than three months, or a 25 percent
reduction in time devoted to the project, by the approved project
director or principal investigator.

     (iii)     The transfer of amounts budgeted for indirect
costs to absorb increases in direct costs, or vice versa.

     (iv) The transfer of funds allotted for training allowances
(direct payment to trainees) to other categories of expense.

     (v)  Unless described in the application and funded in the
approved award, the subaward, transfer or contracting out of any
work under an award.  This provision does not apply to the
purchase of supplies, material, equipment or general support
services.

     (d)  No other prior approval requirements for specific items
may be imposed unless a deviation has been approved by OMB.

     (e)  Except for requirements listed in paragraphs (c)(1)(i)
and (ii), the EPA Award Official may waive cost-related and
administrative prior written approvals required by this
regulation and OMB Cost Principles.  For awards that support
research, these prior approval requirements are automatically
waived unless EPA provides otherwise in the award or agency
regulations.

     (f)  Recipients are authorized without prior approval or a
waiver to:

     (1)  Incur pre-award costs 90 calendar days prior to award.

     (i)  Pre-award costs incurred more than 90 calendar days
prior to award require the prior approval of the EPA Award
Official.

     (ii) The applicant must include all pre-award costs in its
application.

     (iii)     The applicant incurs such costs at its own risk
(i.e.,  EPA is under no obligation to reimburse such costs if for
any reason the recipient does not receive an award or if the
award is less than anticipated and inadequate to cover such
costs).

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     (iv) EPA will only allow pre-award costs without approval if
there are sufficient programmatic reasons for incurring the
expenditures prior to the award (e.g., time constraints, weather
factors,  etc.), they are in conformance with the appropriate cost
principles, and any procurement complies with the requirements of
this rule.

     (2)   Extend the expiration date of the award one time for up
to 12 months.

     (i)   A one-time extension may not be initiated if:

     (A)   the terms and conditions of the award prohibit the
extension,

     (B)   the extension requires additional Federal funds, or

     (C)   the extension involves any change in the approved
objectives or scope of the project.

     (ii) For one-time extensions, the recipient must notify the
EPA Award Official in writing with the supporting reasons and
revised expiration date at least 10 days before the expiration
date specified in the award.

     (iii)     This one-time extension may not be exercised
merely for the purpose of using unobligated balances.

     (3)   Carry forward unobligated balances to subsequent
funding periods providing the recipient notifies the EPA Award
Official by means of the Financial Status Report.

     (g)   The EPA technical program office may, at its option,
restrict the transfer of funds among direct cost categories or
programs, functions and activities for awards in which the
Federal share of the project exceeds $100,000 and the cumulative
amount of such transfers exceeds or is expected to exceed 10
percent of the total budget as last approved by EPA. Except as
provided for at §30.25(c),for awards in which the Federal share
is less than $100,000 -there are no restrictions on transfers of
funds among direct cost categories.  EPA shall not permit a
transfer that would cause any Federal appropriation or part
thereof to be used for purposes other than those consistent with
the original intent of the appropriation.

     (h)   All other changes to nonconstruction budgets, except
for the changes described in paragraph (j), do not require prior
approval.

     (i)   For construction awards, recipients shall request prior
written approval promptly from EPA for budget revisions whenever
(1), (2)  or (3) apply.

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     (1)  The revision results from changes in the scope or the
objective of the project or program.

     (2)  The need arises for additional Federal funds to
complete the project.

     (3)  A revision is desired which involves specific costs for
which prior written approval requirements may be imposed
consistent with applicable OMB cost principles listed in Section
30.27.

     (j)  No other prior approval requirements for specific items
may be imposed unless a deviation has been approved by OMB.

     (k)  When EPA makes an award that provides support for both
construction and nonconstruction work, EPA may require the
recipient to request prior approval before making any fund or
budget transfers between the two types of work supported.

     (1)  For both construction and nonconstruction awards, EPA
shall require recipients to notify the agency in writing promptly
whenever the amount of Federal authorized funds is expected to
exceed the needs of the recipient for the project period by more
than $5000 or five percent of the Federal award, whichever is
greater.  This notification shall not be required if an
application for additional funding is submitted for a
continuation award.

     (m)  When requesting approval for budget revisions,
recipients shall use the budget forms that were used in the
application unless the EPA indicates that a letter clearly
describing the details of the request will suffice.

     (n)  Within 30 calendar days from the date of receipt of the
request for budget revisions, EPA shall review the request and
notify the recipient whether the budget revisions have been
approved.  If the revision is still under consideration at the
end of 30 calendar days, EPA shall inform the recipient in
writing of the date when the recipient may expect the decision.
30.26  Non-Federal audits.

     (a)  Recipients and subrecipients that are institutions of
higher education or other non-profit organizations shall be
subject to the audit requirements contained in OMB Circular A-
133, "Audits of Institutions of Higher Education and Other Non-
profit Institutions."

     (b)  State and local governments shall be subject to the
audit requirements contained in the Single Audit Act (31 U.S.C.
7501-7) and EPA regulations implementing OMB Circular A-128,
"Audits of State and Local Governments."
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     (c)  Hospitals not covered by the audit provisions of OMB
Circular A-133 shall be subject to the audit requirements of EPA.

     (d)  Commercial organizations shall be subject to the audit
requirements of EPA or the prime recipient as incorporated into
the award document.

30.27  Allowable costs.

     (a)  For each kind of recipient, there is a set of Federal
principles for determining allowable costs.  Allowability of
costs shall be determined in accordance with the cost principles
applicable to the entity incurring the costs. Thus, allowability
of costs incurred by State, local or federally-recognized Indian
tribal governments is determined in accordance with the
provisions of OMB Circular A-87, "Cost Principles for State and
Local Governments."  The allowability of costs incurred by non-
profit organizations is determined in accordance with the
provisions of OMB Circular A-122, "Cost Principles for Non-Profit
Organizations."  The allowability of costs incurred by
institutions of higher education is determined in accordance with
the provisions of OMB Circular A-21, "Cost Principles for
Educational Institutions."  The allowability of costs incurred by
hospitals is determined in accordance with the provisions of
Appendix E of 45 CFR part 74, "Principles for Determining Costs
Applicable to Research and Development Under Grants and Contracts
with Hospitals."  The allowability of costs incurred by
commercial organizations and those non-profit organizations
listed in Attachment C to Circular A-122 is determined in
accordance with the provisions of the Federal Acquisition
Regulation (FAR) at 48 CFR part 31.

     (b)  EPA will limit its participation in the salary rate
(excluding overhead) paid to individual consultants retained by
recipients or by a recipient's contractors or subcontractors to
the maximum daily rate for level 4 of the Executive Schedule
unless a greater amount is authorized by law.  (Recipient's may,
however, pay consultants more than this amount.)   This limitation
applies to consultation services of designated individuals with
specialized skills who are paid at a daily or hourly rate.  This
rate does not include transportation and subsistence costs for
travel performed; recipients will pay these in accordance with
their normal travel reimbursement practices.  Contracts with
firms for services which are awarded using the procurement
requirements in this part are not affected by this limitation.

30.28  Period of availability of funds.

     Where a funding period is specified, a recipient may charge
to the grant only allowable costs resulting from obligations
incurred during the funding period and any pre-award costs
authorized by EPA.

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Property Standards

30.30  Purpose of property standards.

     30.31 through 30.37 set forth uniform standards governing
management and disposition of property furnished by the Federal
Government whose cost was charged to a project supported by a
Federal award. EPA shall require recipients to observe these
standards under awards and shall not impose additional
requirements, unless specifically required by Federal statute.
The recipient may use its own property management standards and
procedures provided it observes the provisions of Sections 30.31
through 30.37.

30.31  Insurance coverage.

     Recipients shall, at a minimum, provide the equivalent
insurance coverage for real property and equipment acquired with
Federal funds as provided to property owned by the recipient.
Federally-owned property need not be insured unless required by
the terms and conditions of the award.

30.32  Real property.

     EPA shall prescribe requirements for recipients concerning
the use and disposition of real property acquired in whole or in
part under awards.  Unless otherwise provided by statute, such
requirements, at a minimum, shall contain the following.

     (a)  Title to real property shall vest in the recipient
subject to the condition that the recipient shall use the real
property for the authorized purpose of the project as long as it
is needed and shall not encumber the property without approval of
EPA.

     (b)  The recipient shall obtain written approval by EPA for
the use of real property in other federally-sponsored projects
when the recipient determines that the property is no longer
needed for the purpose of the original project.  Use in other
projects shall be limited to those under federally-sponsored
projects (i.e., awards) or programs that have purposes consistent
with those authorized for support by EPA.

     (c)  When the real property is no longer needed as provided
in paragraphs (a) and (b), the recipient shall request
disposition instructions from EPA or its successor Federal
awarding agency.  EPA shall observe one or more of the following
disposition instructions.

     (1)  The recipient may be permitted to retain title without
further obligation to the Federal Government after it compensates
the Federal Government for that percentage of the current fair

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market value of the property attributable to the Federal
participation in the project.

     (2)  The recipient may be directed to sell the property
under guidelines provided by EPA and pay the Federal Government
for that percentage of the current fair market value of the
property attributable to the Federal participation in the project
(after deducting actual and reasonable selling and fix-up
expenses, if any, from the sales proceeds).  When the recipient
is authorized or required to sell the property, proper sales
procedures shall be established that provide for competition to
the extent practicable and result in the highest possible return.

     (3)  The recipient may be directed to transfer title to the
property to the Federal Government or to an eligible third party
provided that, in such cases, the recipient shall be entitled to
compensation for its attributable percentage of the current fair
market value of the property.

30.33  Federally-owned and exempt property.

     (a)  Federally-owned property.
     (1)  Title to federally-owned property remains vested in the
Federal Government.  Recipients shall submit annually an
inventory listing of federally-owned property in their custody to
EPA's property management staff.  Upon completion of the award or
when the property is no longer needed, the recipient shall report
the property to EPA's property management staff for further
utilization.

     (2)  If EPA has no further need for the property, it shall
be declared excess and reported to the General Services
Administration, unless EPA has statutory authority to dispose of
the property by alternative methods (e.g., the authority provided
by the Federal Technology Transfer Act (15 U.S.C. 3710 (I)) to
donate research equipment to educational and non-profit
organizations in accordance with E.O. 12821, "Improving
Mathematics and Science Education in Support of the National
Education Goals.11) Appropriate instructions shall be issued to
the recipient by EPA's property management staff.

     (b)  Exempt property.  When statutory authority exists, EPA
has the option to vest title to property acquired with Federal
funds in the recipient without further obligation to the Federal
Government and under conditions EPA considers appropriate.  Such
property is "exempt property."  Should EPA not establish
conditions, title to exempt property upon acquisition shall vest
in the recipient without further obligation to the Federal
Government.

30.34  Equipment.


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     (a)  Title to equipment acquired by a recipient with Federal
funds shall vest in the recipient, subject to conditions of this
section.

     (b)  The recipient shall not use equipment acquired with
Federal funds to provide services to non-Federal outside
organizations for a fee that is less than private companies
charge for equivalent services, unless specifically authorized by
Federal statute, for as long as the Federal Government retains an
interest in the equipment.

     (c)  The recipient shall use the equipment in the project or
program for which it was acquired as long as needed, whether or
not the project or program continues to be supported by Federal
funds and shall not encumber the property without approval of
EPA.  When no longer needed for the original project or program,
the recipient shall use the equipment in connection with its
other federally-sponsored activities, in the following order of
priority:  (i)  Activities sponsored by EPA, then (ii) activities
sponsored by other Federal awarding agencies.

     (d)  During the time that equipment is used on the project
or program for which it was acquired, the recipient shall make it
available for use on other projects or programs if such other use
will  not interfere with the work on the project or program for
which the equipment was originally acquired.  First preference
for such other use shall be given to other projects or programs
sponsored by EPA; second preference shall be given to projects or
programs sponsored by other Federal awarding agencies.  If the
equipment is owned by the Federal Government, use on other
activities not sponsored by the Federal Government shall be
permissible if authorized by EPA.  User charges shall be treated
as program income.

     (e)  When acquiring replacement equipment, the recipient may
use the equipment to be replaced as trade-in or sell the
equipment and use the proceeds to offset the costs of the
replacement equipment subject to the approval of EPA.

     (f)  The recipient's property management standards for
equipment acquired with Federal funds and federally-owned
equipment shall include all of the following.

     (1)  Equipment records shall be maintained accurately and
shall include the following information.

     (i)  A description of the equipment.

     (ii) Manufacturer's serial number, model number, Federal
stock number, national stock number, or other identification
number.
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     (iii)     Source of the equipment, including the award
number.

     (iv) Whether title vests in the recipient or the Federal
Government.

     (v)  Acquisition date (or date received, if the equipment
was furnished by the Federal Government) and cost.

     (vi) Information from which one can calculate the percentage
of Federal participation in the cost of the equipment (not
applicable to equipment furnished by the Federal Government).

     (vii)     Location and condition of the equipment and the
date the information was reported.

     (viii)    Unit acquisition cost.

     (ix) ultimate disposition data, including date of disposal
and sales price or the method used to determine current fair
market value where a recipient compensates EPA for its share.

     (2)  Equipment owned by the Federal Government shall be
identified to indicate Federal ownership.

     (3)  A physical inventory of equipment shall be taken and
the results reconciled with the equipment records at least once
every two years.  Any differences between quantities determined
by the physical inspection and those shown in the accounting
records shall be investigated to determine the causes of the
difference.  The recipient shall, in connection with the
inventory, verify the existence, current utilization, and
continued need for the equipment.

     (4)  A control system shall be in effect to insure adequate
safeguards to prevent loss, damage, or theft of the equipment.
Any loss, damage, or theft of equipment shall be investigated and
fully documented; if the equipment was owned by the Federal
Government, the recipient shall promptly notify EPA.

     (5)  Adequate maintenance procedures shall be implemented to
keep the equipment in good condition.

     (6)  Where the recipient is authorized or required to sell
the equipment, proper sales procedures shall be established which
provide for competition to the extent practicable and result in
the highest possible return.

     (g)  When the recipient no longer needs the equipment, the
equipment may be used for other activities in accordance with the
following standards.  For equipment with a current per unit fair
market value of $5000 or more, the recipient may retain the

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equipment for other uses provided that compensation is made to
the original Federal awarding agency or its successor.  The
amount of compensation shall be computed by applying the
percentage of Federal participation in the cost of the original
project or program to the current fair market value of the
equipment.  If the recipient has no need for the equipment, the
recipient shall request disposition instructions from EPA.  EPA
shall determine whether the equipment can be used to meet the
agency's requirements.  If no requirement exists within that
agency, the availability of the equipment shall be reported to
the General Services Administration by EPA to determine whether a
requirement for the equipment exists in other Federal agencies.
EPA shall issue instructions to the recipient no later than 120
calendar days after the recipient's request and the following
procedures shall govern.

     (1)  If so instructed or if disposition instructions are not
issued within 120 calendar days after the recipient's request,
the recipient shall sell the equipment and reimburse EPA an
amount computed by applying to the sales proceeds the percentage
of Federal participation in the cost of the original project or
program.  However, the recipient shall be permitted to deduct and
retain from the Federal share $500 or ten percent of the
proceeds, whichever is less, for the recipient's selling and
handling expenses.

     (2)  If the recipient is instructed to ship the equipment
elsewhere, the recipient shall be reimbursed by the Federal
Government by an amount which is computed by applying the
percentage of the recipient's participation in the cost of the
original project or program to the current fair market value of
the equipment, plus any reasonable shipping or interim storage
costs incurred.

     (3)  If the recipient is instructed to otherwise dispose of
the equipment, the recipient shall be reimbursed by EPA for such
costs incurred in its disposition.

     (4)  EPA may reserve the right to transfer the title to the
Federal Government or to a third party named by the Federal
Government when such third party is otherwise eligible under
existing statutes.  Such transfer shall be subject to the
following standards.

     (i)  The equipment shall be appropriately identified in the
award or otherwise made known to the recipient in writing.

     (ii) EPA shall issue disposition instructions within 120
calendar days after receipt of a final inventory.  The final
inventory shall list all equipment acquired with grant funds and
federally-owned equipment.  If EPA fails to issue disposition


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instructions within the 120 calendar day period, the recipient
shall apply the standards of this section, as appropriate.

     (iii)     When EPA exercises its right to take title, the
equipment shall be subject to the provisions for federally-owned
equipment.

30.35  Supplies and other expendable property.

     (a)  Title to supplies and other expendable property shall
vest in the recipient upon acquisition.  If there is a residual
inventory of unused supplies exceeding $5000 in total aggregate
value upon termination or completion of the project or program
and the supplies are not needed for any other federally-sponsored
project or program, the recipient shall retain the supplies for
use on non-Federal sponsored activities or sell them, but shall,
in either case, compensate the Federal Government for its share.
The amount of compensation shall be computed in the same manner
as for equipment.

     (b)  The recipient shall not use supplies acquired with
Federal funds to provide services to non-Federal outside
organizations for a fee that is less than private companies
charge for equivalent services, unless specifically authorized by
Federal statute as long as the Federal Government retains an
interest in the supplies.

30.36  Intangible property.

     (a)  The recipient may copyright any work that is subject to
copyright and was developed, or for which ownership was
purchased, under an award.  EPA reserves a royalty-free,
nonexclusive and irrevocable right to reproduce, publish, or
otherwise use the work for Federal purposes, and to authorize
others to do so.

     (b)  Recipients are subject to applicable regulations
governing patents and inventions, including government-wide
regulations issued by the Department of Commerce at 37 CFR part
401, "Rights to Inventions Made by Nonprofit Organizations and
Small Business Firms Under Government Grants, Contracts and
Cooperative Agreements."

     (c)  Unless waived by EPA, the Federal Government has the
right to  (1) and (2).

     (1)  Obtain, reproduce, publish or otherwise use the data
first produced under an award.

     (2)  Authorize others to receive, reproduce, publish, or
otherwise use such data for Federal purposes.


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     (d)  Title to intangible property and debt instruments
acquired under an award or subaward vests upon acquisition in the
recipient.  The recipient shall use that property for the
originally-authorized purpose, and the recipient shall not
encumber the property without approval of EPA.  When no longer
needed for the originally authorized purpose, disposition of the
intangible property shall occur in accordance with the provisions
of paragraph 30.34(g).

30.37  Property trust relationship.

     Real property, equipment,  intangible property and debt
instruments that are acquired or improved with Federal funds
shall be held in trust by the recipient as trustee for the
beneficiaries of the project or program under which the property
was acquired or improved.  Agencies may require recipients to
record liens or other appropriate notices of record to indicate
that personal or real property has been acquired or improved with
Federal funds and that use and disposition conditions apply to
the property.

Procurement Standards

30.40  Purpose of procurement standards.

     Sections 30.41 through 30.48 set forth standards for use by
recipients in establishing procedures for the procurement of
supplies and other expendable property, equipment, real property
and other services with Federal funds.  These standards are
furnished to ensure that such materials and services are obtained
in an effective manner and in compliance with the provisions of
applicable Federal statutes and executive orders.  No additional
procurement standards or requirements shall be imposed by EPA
upon recipients, unless specifically required by Federal statute
or executive order or approved by OMB.

30.41  Recipient responsibilities.

     The standards contained in this section do not relieve the
recipient of the contractual responsibilities arising under its
contract(s).  The recipient is the responsible authority, without
recourse to EPA, regarding the settlement and satisfaction of all
contractual and administrative issues arising out of procurements
entered into in support of an award or other agreement.  This
includes disputes, claims, protests of award, source evaluation
or other matters of a contractual nature.  Matters concerning
violation of statute are to be referred to such Federal, State or
local authority as may have proper jurisdiction.

30.42  Codes of conduct.
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     The recipient shall maintain written standards of conduct
governing the performance of its employees engaged in the award
and administration of contracts.  No employee, officer, or agent
shall participate in the selection, award, or administration of a
contract supported by Federal funds if a real or apparent
conflict of interest would be involved.  Such a conflict would
arise when the employee, officer, or agent, any member of his or
her immediate family, his or her partner, or an organization
which employs or is about to employ any of the parties indicated
herein, has a financial or other interest in the firm selected
for an award.  The officers, employees, and agents of the
recipient shall neither solicit nor accept gratuities, favors, or
anything of monetary value from contractors, or parties to
subagreements.  However, recipients may set standards for
situations in which the financial interest is not substantial or
the gift is an unsolicited item of nominal value.  The standards
of conduct shall provide for disciplinary actions to be applied
for violations of such standards by officers, employees, or
agents of the recipient.

30.43  Competition.

     All procurement transactions shall be conducted in a manner
to provide, to the maximum extent practical, open and free
competition.  The recipient shall be alert to organizational
conflicts of interest as well as noncompetitive practices among
contractors that may restrict or  eliminate competition or
otherwise restrain trade.  In order to ensure objective
contractor performance and eliminate unfair competitive
advantage, contractors that develop or draft specifications,
requirements, statements of work, invitations for bids and/or
requests for proposals shall be excluded from competing for such
procurements.  Awards shall be made to the bidder or offerer
whose bid or offer is responsive to the solicitation and is most
advantageous to the recipient, price, quality and other factors
considered.  Solicitations shall clearly set forth all
requirements that the bidder or offerer shall fulfill in order
for the bid or offer to be evaluated by the recipient.  Any and
all bids or offers may be rejected when it is in the recipient's
interest to do so.

30.44  Procurement procedures.

     (a)  All recipients shall establish written procurement
procedures.  These procedures shall provide for, at a minimum,
that (1), (2) and (3) apply.

     (1)  Recipients avoid purchasing unnecessary items.

     (2)  Where appropriate, an analysis is made of lease and
purchase alternatives to determine which would be the most
economical and practical procurement for the Federal Government.

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     (3)  Solicitations for goods and services provide for all of
the following.

     (i)  A clear and accurate description of the  technical
requirements for the material, product or service to be procured.
In competitive procurements, such a description shall not contain
features which unduly restrict competition.

     (ii) Requirements which the bidder/offerer must fulfill and
all other factors to be used in evaluating bids or proposals.

     (iii)     A description, whenever practicable, of technical
requirements in terms of functions to be performed or performance
required, including the range of acceptable characteristics or.
minimum acceptable standards.

     (iv) The specific features of "brand name or equal"
descriptions that bidders are required to meet when such items
are included in the solicitation.

     (v)  The acceptance, to the extent practicable and
economically feasible, of products and services dimensioned in
the metric system of measurement.

     (vi) Preference, to the extent practicable and economically
feasible, for products and services that conserve natural
resources and protect the environment and are energy efficient.

     (b)  Positive efforts shall be made by recipients to utilize
small businesses, minority-owned firms, and women's business
enterprises, whenever possible.  Recipients of Federal awards
shall take all of the following steps to further this goal.

     (1)  Ensure that small businesses, minority-owned firms, and
women's business enterprises are used to the fullest extent
practicable.

     (2)  Make information on forthcoming opportunities available
and arrange time frames for purchases and contracts to encourage
and facilitate participation by small businesses, minority-owned
firms,  and women's business enterprises.

     (3)  Consider in the contract process whether firms
competing for larger contracts intend to subcontract with small
businesses, minority-owned firms, and women's business
enterprises.

     (4)  Encourage contracting with consortiums of small
businesses, minority-owned firms and women's business enterprises
when a contract is too large for one of these firms to handle
individually.
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     (5)  Use the services and assistance, as appropriate, of
such organizations as the Small Business Administration and the
Department of Commerce's Minority Business Development Agency in
the solicitation and utilization of small businesses, minority-
owned firms and women's business enterprises.

     (6)  If the contractor awards contracts, requiring the
contractor to take steps in paragraphs (b)(l)-(5) of this
section.

     (c)  The type of procuring instruments used (e.g., fixed
price contracts, cost reimbursable contracts, purchase orders,
and incentive contracts) shall be determined by the recipient but
shall be appropriate for the particular procurement and for
promoting the best interest of the program or project involved.
The "cost-plus-a-percentage-of-cost" or "percentage of
construction cost" methods of contracting shall not be used.

     (d)  Contracts shall be made only with responsible
contractors who possess the potential ability to perform
successfully under the terms and conditions of the proposed
procurement.  Consideration shall be given to such matters as
contractor integrity, record of past performance, financial and
technical resources or accessibility to other necessary
resources.  In certain circumstances, contracts with certain
parties are restricted by agencies' implementation of E.O.s 12549
and 12689, "Debarment and Suspension."

     (e)  Recipients shall, on request, make available for EPA,
pre-award review and procurement documents, such as request for
proposals or invitations for bids, independent cost estimates,
etc., when any of the following conditions apply.

     (1)  A recipient's procurement procedures or operation fails
to comply with the procurement standards in EPA's implementation
of this Circular.

     (2)  The procurement is expected to exceed the small
purchase threshold fixed at 41 U.S.C. 403  (11) (currently
$100,000) and is to be awarded without competition or only one
bid or offer is received in response to a solicitation.
     (3)  The procurement, which is expected to exceed the small
purchase threshold, specifies a "brand name" product.

     (4)  The proposed award over the small purchase threshold is
to be awarded to other than the apparent low bidder under a
sealed bid procurement.

     (5)  A proposed contract modification changes the scope of a
contract or increases the contract amount by more than the amount
of the small purchase threshold.
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30.45  Cost and price analysis.

     Some form of cost or price analysis shall be made and
documented in the procurement files in connection with every
procurement action.  Price analysis may be accomplished in
various ways, including the comparison of price quotations
submitted, market prices and similar indicia, together with
discounts.  Cost analysis is the review and evaluation of each
element of cost to determine reasonableness, allocability and
allowability.

30.46  Procurement records.

     Procurement records and files for purchases in excess of the
small purchase threshold shall include the following at a
minimum:  (a) basis for contractor selection, (b) justification
for lack of competition when competitive bids or offers are not
obtained, and (c) basis for award cost or price.

30.47  Contract administration.

     A system for contract administration shall be maintained to
ensure contractor conformance with the terms, conditions and
specifications of the contract and to ensure adequate and timely
follow up of all purchases.  Recipients shall evaluate contractor
performance and document, as appropriate, whether contractors
have met the terms, conditions and specifications of the
contract.

30.48  Contract provisions.

     The recipient shall include, in addition to provisions to
define a sound and complete agreement, the following provisions
in all contracts.  The following provisions shall also be applied
to subcontracts.

     (a)  Contracts in excess of the small purchase threshold
shall contain contractual provisions or conditions that allow for
administrative,  contractual, or legal remedies in instances in
which a contractor violates or breaches the contract terms, and
provide for such remedial actions as may be appropriate.
     (b)  All contracts in excess of the small purchase threshold
shall contain suitable provisions for termination by the
recipient, including the manner by which termination shall be
effected and the basis for settlement.  In addition, such
contracts shall describe conditions under which the contract may
be terminated for default as well as conditions where the
contract may be terminated because of circumstances beyond the
control of the contractor.

     (c)  Except as otherwise required by statute, an award that
requires the contracting (or subcontracting) for construction or

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facility improvements shall provide for the recipient to follow
its own requirements relating to bid guarantees, performance
bonds, and payment bonds unless the construction contract or
subcontract exceeds $100,000.  For those contracts or
subcontracts exceeding $100,000, EPA may accept the bonding
policy and requirements of the recipient, provided EPA has made a
determination that the Federal Government's interest is
adequately protected.  If such a determination has not been made,
the minimum requirements shall be as follows.

      (1)  A bid guarantee from each bidder equivalent to five
percent of the bid price.  The "bid guarantee" shall consist of a
firm commitment such as a bid bond, certified check, or other
negotiable instrument accompanying a bid as assurance that the
bidder shall, upon acceptance of his bid, execute such
contractual documents as may be required within the time
specified.

      (2)  A performance bond on the part of the contractor for
100 percent of the contract price.  A "performance bond" is one
executed in connection with a contract to secure fulfillment of
all the contractor's obligations under such contract.

      (3)  A payment bond on the part of the contractor for 100
percent of the contract price.  A "payment bond" is one executed
in connection with a contract to assure payment as required by
statute of all persons supplying labor and material in the
execution of the work provided for in the contract.

      (4)  Where bonds are required in the situations described
herein, the bonds shall be obtained from companies holding
certificates of authority as acceptable sureties pursuant to 31
CFR part 223, "Surety Companies Doing Business with the United
States."

      (d)  All negotiated contracts (except those for less than
the small purchase threshold) awarded by recipients shall include
a provision to the effect that the recipient, EPA, the
Comptroller General of the United States, or any of their duly
authorized representatives, shall have access to any books,
documents, papers and records of the contractor which are
directly pertinent to a specific program for the purpose of
making audits, examinations, excerpts and transcriptions.

      (e)  All contracts, including small purchases, awarded by
recipients and their contractors shall contain the procurement
provisions of Appendix A to this Circular, as applicable.
Reports and Records

30.50  Purpose of reports and records.
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     Sections 30.51 through 30.53 set forth the procedures for
monitoring and reporting on the recipient's financial and program
performance and the necessary standard reporting forms.  They
also set forth record retention requirements.

30.51  Monitoring and reporting program performance.

     (a)  Recipients are responsible for managing and monitoring
each project, program, subaward, function or activity supported
by the award.  Recipients shall monitor subawards to ensure
subrecipients have met the audit requirements as delineated in
Section 30.26.

     (b)  EPA shall prescribe the frequency with which the
performance reports shall be submitted.  Except as provided in
paragraph 30.51(f), performance reports shall not be required
more frequently than quarterly or, less frequently than annually.
Annual reports shall be due 90 calendar days after the grant
year; quarterly or semi-annual reports shall be due 30 days after
the reporting period.  EPA may require annual reports before the
anniversary dates of multiple year awards in lieu of these
requirements.  The final performance reports are due 90 calendar
days after the expiration or termination of the award.

     (c)  If inappropriate, a final technical or performance
report shall not be required after completion of the project.

     (d)  When required, performance reports shall generally
contain, for each award, brief information on each of the
following.

     (1)  A comparison of actual accomplishments with the goals
and objectives established for the period, the findings of the
investigator, or both.  Whenever appropriate and the output of
programs or projects can be readily quantified, such quantitative
data should be related to cost data for computation of unit
costs.

     (2)  Reasons why established goals were not met, if
appropriate.

     (3)  Other pertinent information including, when
appropriate, analysis and explanation of cost overruns or high
unit costs.

     (e)  Recipients shall not be required to submit more than
the original and two copies of performance reports.

     (f)  Recipients shall immediately notify EPA of developments
that have a significant impact on the award-supported activities.
Also, notification shall be given in the case of problems,
delays, or adverse conditions which materially impair the ability

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to meet the objectives of the award.  This notification shall
include a statement of the action taken or contemplated, and any
assistance needed to resolve the situation.

     (g)  EPA may make site visits, as needed.

     (h)  EPA shall comply with clearance requirements of 5 CFR
part 1320 when requesting performance data from recipients.

30.52  Financial reporting.

     (a)  The following forms or such other forms as may be
approved by OMB are authorized for obtaining financial
information from recipients.

     (1)  SF-269 or SF-269A, Financial Status Report.

     (i)  EPA shall require recipients to use the SF-269 or SF-
269A to report the status of funds for all nonconstruction
projects or programs.  However, EPA has the option of not
requiring the SF-269 or SF-269A when the SF-270, Request for
Advance or Reimbursement, or SF-272, Report of Federal Cash
Transactions, is determined to provide adequate information to
meet its needs, except that a final SF-269 or SF-269A shall be
required at the completion of the project when the SF-270 is used
only for advances.

     (ii) EPA shall prescribe whether the report shall be on a
cash or accrual basis.  If EPA requires accrual information and
the recipient's accounting records are not normally kept on the
accrual basis, the recipient shall not be required to convert its
accounting system, but shall develop such accrual information
through best estimates based on an analysis of the documentation
on hand.

     (iii)     EPA shall determine the frequency of the Financial
Status Report for each project or program, considering the size
and complexity of the particular project or program.  However,
the report shall not be required more frequently than quarterly
or less frequently than annually.  A final report shall be
required at the completion of the agreement.

     (iv) EPA shall require recipients to submit the SF-269 or
SF-269A (an original and no more than two copies) no later than
30 days after the end of each specified reporting period for
quarterly and semi-annual reports, and 90 calendar days for
annual and final reports.  Extensions of reporting due dates may
be approved by EPA upon request of the recipient.

     (2)  SF-272, Report of Federal Cash Transactions.
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     (i)  When funds are advanced to recipients EPA shall require
each recipient to submit the SF-272 and, when necessary, its
continuation sheet, SF-272A.  EPA shall use this report to
monitor cash advanced to recipients and to obtain disbursement
information for each agreement with the recipients.

     (ii) EPA may require forecasts of Federal cash requirements
in the "Remarks" section of the report.

     (iii)     When practical and deemed necessary, EPA may
require recipients to report in the "Remarks" section the amount
of cash advances received in excess of three days.  Recipients
shall provide short narrative explanations of actions taken to
reduce the excess balances.

     (iv) Recipients shall be required to submit not more than
the original and two copies of the SF-272 15 calendar days
following the end of each quarter.  EPA may require a monthly
report from those recipients receiving advances totaling $1
million or more per year.

     (v)  EPA may waive the requirement for submission of the SF-
272 for any one of the following reasons:    (l)  When monthly
advances do not exceed $25,000 per recipient, provided that such
advances are monitored through other forms contained in this
section;  (2) If, in EPA's opinion, the recipient's accounting
controls are adequate to minimize excessive Federal advances; or,
(3) When the electronic payment mechanisms provide adequate data.

     (b)  When EPA needs additional information or more frequent
reports, the following shall be observed.

     (1)  When additional information is needed to comply with
legislative requirements, EPA shall issue instructions to require
recipients to submit such information under the "Remarks" section
of the reports.

     (2)  When EPA determines that a recipient's accounting
system does not meet the standards in Section 30.21, additional
pertinent information to further monitor awards may be obtained
upon written notice to the recipient until such time as the
system is brought up to standard.  EPA, in obtaining this
information, shall comply with report clearance requirements of 5
CFR part 1320.

     (3)  EPA may shade out any line item on any report if not
necessary.

     (4)  EPA may accept the identical information from the
recipients in machine readable format or computer printouts or
electronic outputs in lieu of prescribed formats.
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     (5)  EPA may provide computer or electronic outputs to
recipients when such expedites or contributes to the accuracy of
reporting.

30.53  Retention and access requirements for records.

     (a)  This section sets forth requirements for record
retention and access to records for awards to recipients. EPA
shall not impose any other record retention or access
requirements upon recipients.

     (b)  Financial records, supporting documents, statistical
records, and all other records pertinent to an award shall be
retained for a period of three years from the date of submission
of the final expenditure report or, for awards that are renewed
quarterly or annually, from the date of the submission of the
quarterly or annual financial report, as authorized by EPA.  The
only exceptions are the following.

     (1)  If any litigation, claim, or audit is started before
the expiration of the 3-year period, the records shall be
retained until all litigation, claims or audit findings involving
the records have been resolved and final action taken.

     (2)  Records for real property and equipment acquired with
Federal funds shall be retained for 3 years after final
disposition.

     (3)  When records are transferred to or maintained by EPA,
the 3-year retention requirement is not applicable to the
recipient.

     (4)  Indirect cost rate proposals, cost allocations plans,
etc. as specified in paragraph 30.53(g).

     (c)  Copies of original records may be substituted for the
original records if authorized by EPA.

     (d)  EPA shall request transfer of certain records to its
custody from recipients when it determines that the records
possess long term retention value.  However, in order to avoid
duplicate recordkeeping, EPA may make arrangements for recipients
to retain any records that are continuously needed for joint use.

     (e)  EPA, the Inspector General, Comptroller General of the
United States, or any of their duly authorized representatives,
have the right of timely and unrestricted access to any books,
documents, papers, or other records of recipients that are
pertinent to the awards, in order to make audits, examinations,
excerpts, transcripts and copies of such documents.  This right
also includes timely and reasonable access to a recipient's
personnel for the purpose of interview and discussion related to

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such documents.  The rights of access in this paragraph are not
limited to the required retention period, but shall last as long
as records are retained.

     (f)  Unless required by statute, EPA shall not place
restrictions on recipients that limit public access to the
records of recipients that are pertinent to an award, except when
it can be demonstrated that such records shall be kept
confidential and would have been exempted from disclosure
pursuant to the Freedom of information Act (5 U.S.C. 552) if the
records had belonged to EPA.

     (g)  Indirect cost rate proposals, cost allocations plans,
etc.  Paragraphs (g)(1) and (g)(2) apply to the following types
of documents, and their supporting records: indirect cost rate
computations or proposals, cost allocation plans, and any similar
accounting computations of the rate at which a particular group
of costs is chargeable  (such as computer usage chargeback rates
or composite fringe benefit rates).

     (l)  If submitted for negotiation.  If the recipient submits
to EPA or the subrecipient submits to the recipient the proposal,
plan, or other computation to form the basis for negotiation of
the rate, then the 3-year retention period for its supporting
records starts on the date of such submission.

     (2)  If not submitted for negotiation.  If the recipient is
not required to submit to EPA or the subrecipient is not required
to submit to the recipient the proposal, plan, or other
computation for negotiation purposes, then the 3-year retention
period for the proposal, plan, or other computation and its
supporting records starts at the end of the fiscal year (or other
accounting period)  covered by the proposal, plan, or other
computation.

30.54  Quality assurance.

     If the project officer determines that the grantee's project
involves environmentally related measurements or data generation,
the grantee shall develop and implement quality assurance
practices consisting of policies, procedures, specifications,
standards, and documentation sufficient to produce data of
quality adequate to meet project objectives and to minimize loss
of data due to out-of-control conditions or malfunctions.  The
quality system must comply with the requirements of ANSI/ASQC E4,
"Specifications and Guidelines for Quality Systems for
Environmental Data Collection and Environmental Technology
Programs."

Termination and Enforcement

30.60  Purpose of termination and enforcement.

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     Sections 30.61 and 30.62 set forth uniform suspension,
termination and enforcement procedures.

30.61  Termination.

     (a)  Awards may be terminated in whole or in part only if
(1), (2) or (3) apply.

     (1)  By EPA, if a recipient materially fails to comply with
the terms and conditions of an award.

     (2)  By EPA with the consent of the recipient, in which case
the two parties shall agree upon the termination conditions,
including the effective date and, in the case of partial
termination, the portion to be terminated.

     (3)  By the recipient upon sending to EPA written
notification setting forth the reasons for such termination, the
effective date, and, in the case of partial termination, the
portion to be terminated.  However, if EPA determines in the case
of partial termination that the reduced or modified portion of
the grant will not accomplish the purposes for which the grant
was made, it may terminate the grant in its entirety under either
paragraphs  (a)(1) or  (2).

     (b)  If costs are allowed under an award, the
responsibilities of the recipient referred to in paragraph
30.71(a), including those for property management as applicable,
shall be considered in the termination of the award, and
provision shall be made for continuing responsibilities of the
recipient after termination, as appropriate.

30.62  Enforcement.

     (a)  Remedies for noncompliance.  If a recipient materially
fails to comply with the terms and conditions of an award,
whether stated in a Federal statute, regulation, assurance,
application, or notice of award, EPA may, in addition to imposing
any of the special conditions outlined in Section 30.14, take one
or more of the following actions, as appropriate in the
circumstances.

     (1)  Temporarily withhold cash payments pending correction
of the deficiency by the recipient or more severe enforcement
action by EPA.

     (2)  Disallow (that is, deny both use of funds and any
applicable matching credit for) all or part of the cost of the
activity or action not in compliance.

     (3)  Wholly or partly suspend or terminate the current
award.

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     (4)  Withhold further awards for the project or program.

     (5)  Take other remedies that may be legally available.

     (b)  Hearings and appeals.  In taking an enforcement action,
EPA shall provide the recipient an opportunity for hearing,
appeal, or other administrative proceeding to which the recipient
is entitled under any statute or regulation applicable to the
action involved.  EPA's Dispute Provisions found at 40 CFR Part
31, Subpart F, Disputes, are applicable to assistance awarded
under the provisions of this Part.

     (c)  Effects of suspension and termination.
     Costs of a recipient resulting from obligations incurred by
the recipient during a suspension or after termination of an
award are not allowable unless EPA expressly authorizes them in
the notice of suspension or termination or subsequently.  Other
recipient costs during suspension or after termination which are
necessary and not reasonably avoidable are allowable if (1) and
(2) apply.

     (1)  The costs result from obligations which were properly
incurred by the recipient before the effective date of suspension
or termination, are not in anticipation of it, and in the case of
a termination, are noncancellable.

     (2)  The costs would be allowable if the award were not
suspended or expired normally at the end of the funding period in
which the termination takes effect.

     (d)  Relationship to debarment and suspension.  The
enforcement remedies identified in this section, including
suspension and termination, do not preclude a recipient from
being subject to debarment and suspension under E.O.s 12549 and
12689 and EPA's implementing regulations (see Section 30.13).

30.63  Disputes.

     (a)  Disagreements should be resolved at the lowest possible
level.

     (b)  If an agreement cannot be reached, the EPA disputes
decision official will provide a written final decision.  The EPA
disputes decision official is the individual designated by the
award official to resolve disputes concerning assistance
agreements.  If the dispute cannot be resolved the procedures
outlined at 40 CFR Part 31, Subpart F, should be followed.

SUBPART D - After-the-Award Requirements

 30.70   Purpose.
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     Sections 30.71 through 30.73 contain closeout procedures and
other procedures for subsequent disallowances and adjustments.

30.71  Closeout procedures.

     (a)  Recipients shall submit, within 90 calendar days after
the date of completion of the award, all financial, performance,
and other reports as required by the terms and conditions of the
award.   EPA may approve extensions when requested by the
recipient.

     (b)  Unless EPA authorizes an extension, a recipient shall
liquidate all obligations incurred under the award not later than
90 calendar days after the funding period or the date of
completion as specified in the terms and conditions of the award
or in agency implementing instructions.

     (c)  EPA shall make prompt payments to a recipient for
allowable reimbursable costs under the award being closed out.

     (d)  The recipient shall promptly refund any balances of
unobligated cash that EPA has advanced or paid and that is not
authorized to be retained by the recipient for use in other
projects. OMB Circular A-129 governs unreturned amounts that
become delinquent debts.

     (e)  When authorized by the terms and conditions of the
award,  EPA shall make a settlement for any upward or downward
adjustments to the Federal share of costs after closeout reports
are received.

     (f)  The recipient shall account for any real and personal
property acquired with Federal funds or received from the Federal
Government in accordance with Sections 30.31 through 30.37.

     (g)  In the event a final audit has not been performed prior
to the closeout of an award, EPA shall retain the right to
recover an appropriate amount after fully considering the
recommendations on disallowed costs resulting from the final
audit.

30.72  Subsequent adjustments and continuing responsibilities.

     (a)  The closeout of an award does not affect any of the
following.

     (1)  The right of EPA to disallow costs and recover funds on
the basis of a later audit or other review.

     (2)  The obligation of the recipient to return any funds due
as a result of later refunds, corrections, or other transactions.
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      (3)  Audit requirements in Section 30.26.

      (4)  Property management requirements in Sections 30.31
through 30.37.

      (5)  Records retention as required in Section 30.53.

      (b)  After closeout of an award, a relationship created
under an award may be modified or ended in whole or in part with
the consent of EPA and the recipient, provided the
responsibilities of the recipient referred to in paragraph
30.73(a), including those for property management as applicable,
are considered and provisions made for continuing
responsibilities of the recipient, as appropriate.

30.73  Collection of amounts due.

      (a)  Any funds paid to a recipient in excess of the amount
to which the recipient is finally determined to be entitled under
the terms and conditions of the award constitute a debt to the
Federal Government.  If not paid within a reasonable period after
the demand for payment, EPA may reduce the debt by (1), (2) or
(3).

      (l)  Making an administrative offset against other requests
for reimbursements.

      (2)  Withholding advance payments otherwise due to the
recipient.

      (3)  Taking other action permitted by statute.

      (b)  Except as otherwise provided by law, EPA shall charge
interest on an overdue debt in accordance with 4 CFR Chapter II,
"Federal Claims Collection Standards."

                           Appendix  A

                       Contract Provisions

     All contracts awarded by a recipient, including small
purchases, shall contain the following provisions as applicable:

     1.  Equal Employment Opportunity - All contracts shall
contain a provision requiring compliance with E.O. 11246, "Equal
Employment Opportunity," as amended by E.O. 11375, "Amending
Executive Order 11246 Relating to Equal Employment Opportunity,"
and as supplemented by regulations at 41 CFR part 60, "Office of
Federal Contract Compliance Programs, Equal Employment
Opportunity,  Department of Labor."
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     2.  Copeland "Anti-Kickback" Act (18 U.S.C. 874 and 40
U.S.C. 276c) - All contracts and subgrants in excess of $100,000
for construction or repair awarded by recipients and
subrecipients shall include a provision for compliance with the
Copeland "Anti-Kickback" Act (18 U.S.C.  874), as supplemented by
Department of Labor regulations (29 CFR part 3, "Contractors and
Subcontractors on Public Building or Public Work Financed in
Whole or in Part by Loans or Grants from the United States").
The Act provides that each contractor or subrecipient shall be
prohibited from inducing, by any means,  any person employed in
the construction, completion, or repair of public work, to give
up any part of the compensation to which he is otherwise
entitled.  The recipient shall report all suspected or reported
violations to EPA.

     3.  Davis-Bacon Act, as amended (40 U.S.C. 276a to a-7) -
When required by Federal program legislation, all construction
contracts awarded by the recipients and subrecipients of more
than $2000 shall include a provision for compliance with the
Davis-Bacon Act  (40 U.S.C. 276a to a-7)  and as supplemented by
Department of Labor regulations (29 CFR part 5, "Labor Standards
Provisions Applicable to Contracts Governing Federally Financed
and Assisted Construction").  Under this Act, contractors shall
be required to pay wages to laborers and mechanics at a rate not
less than the minimum wages specified in a wage determination
made by the Secretary of Labor.  In addition, contractors shall
be required to pay wages not less than once a week.  The
recipient shall place a copy of the current prevailing wage
determination issued by the Department of Labor in each
solicitation and the award of a contract shall be conditioned
upon the acceptance of the wage determination.  The recipient
shall report all suspected or reported violations to EPA.

     4.  Contract Work Hours and Safety Standards Act  (40 U.S.C.
327-333) - Where applicable, all contracts awarded by recipients
in excess of $100,000 for construction contracts and in excess of
$2500 for other contracts that involve the employment of
mechanics or laborers shall include a provision for compliance
with Sections 102 and 107 of the Contract Work Hours and Safety
Standards Act (40 U.S.C. 327-333), as supplemented by Department
of Labor regulations (29 CFR part 5).  Under Section 102 of the
Act, each contractor shall be required to compute the wages of
every mechanic and laborer on the basis of a standard work week
of 40 hours.  Work in excess of the standard work week is
permissible provided that the worker is compensated at a rate of
not less than 1/2 times the basic rate of pay for all hours
worked in excess of 40 hours in the work week.  Section 107 of
the Act is applicable to construction work and provides that no
laborer or mechanic shall be required to work in surroundings or
under working conditions which are unsanitary, hazardous or
dangerous. These requirements do not apply to the purchases of
supplies or materials or articles ordinarily available on the

                                51

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open market, or contracts for transportation or transmission of
intelligence.

     5.  Rights to Inventions Made Under a Contract or
Agreement - Contracts or agreements for the performance of
experimental, developmental, or research work shall provide for
the rights of the Federal Government and the recipient in any
resulting invention in accordance with 37 CFR part 401, "Rights
to Inventions Made by Nonprofit Organizations and Small Business
Firms Under Government Grants, Contracts and Cooperative
Agreements," and any implementing regulations issued by EPA.

     6.  Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal
Water Pollution Control Act (33 u.s.c. 1251 et seq.), as amended
- Contracts and subgrants of amounts in excess of $100,000 shall
contain a provision that requires the recipient to agree to
comply with all applicable standards, orders or regulations
issued pursuant to the Clean Air Act (42 U.S.C. 7401 et seq.) and
the Federal Water Pollution Control Act as amended (33 U.S.C.
1251 et seq.).  Violations shall be reported to the Regional
Office of the Environmental Protection Agency (EPA).

     7.  Byrd Anti-Lobbying Amendment (31 U.S.C. 1352) -
Contractors who apply or bid for an award of more than $100,000
shall file the required certification.  Each tier certifies to
the tier above that it will not and has not used Federal
appropriated funds to pay any person or organization for
influencing or attempting to influence an officer or employee 01
any agency, a member of Congress, officer or employee of
Congress, or an employee of a member of Congress in connection
with obtaining any Federal contract, grant or any other award
covered by 31 U.S.C. 1352.  Each tier shall also disclose any
lobbying with non-Federal funds that takes place in connection
with obtaining any Federal award. Such disclosures are forwarded
from tier to tier up to the recipient.

     8.  Debarment and Suspension (E.O.s 12549 and 12689) - No
contract shall be made to parties listed on the General Services
Administration's List of Parties Excluded from Federal
Procurement or Nonprocurement Programs in accordance with E.O.s
12549 and 12689, "Debarment and Suspension."  This list contains
the names of parties debarred, suspended, or otherwise excluded
by agencies, and contractors declared ineligible under statutory
or regulatory authority other than E.G.  12549.  Contractors with
awards that exceed the small purchase threshold shall provide the
required certification regarding its exclusion status and that of
its principal employees.

PART 33 - PROCUREMENT UNDER ASSISTANCE AGREEMENTS

     2.   Upon promulgation of this rule 40 CFR Part 33 is
rescinded.

                                52

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APPENDIX E

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           APPENDIX E
      40 CFR PART 31, "UNIFORM
  ADMINISTRATIVE REQUIREMENTS FOR
GRANTS AND COOPERATIVE AGREEMENTS
 TO STATE AND LOCAL GOVERNMENTS"

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Environmental Protection Agency
                           Part 31
                                         PART   31— UNIFORM   ADMIN1STRA
                                            TIVE REQUIREMENTS FOR GRANTS
                                            AND  COOPERATIVE  AGREEMENTS
                                            TO  STATE AND LOCAL  GOVERN-
                                            MENTS
                                                    Subpart A—General
                                         Sec.
                                         31.1
                                         31.2
                                         31.3
                                         31.4
                                         31.5
                                         31.6
 Purpose and scope of this part.
 Scope of subpart.
 Definitions.
 Applicability.
 Effect on other issuances.
 Additions and exceptions.

Subpart B—Pro-Award Requirements
                                         31.10 Forms for applying for grants.
                                         31.11 State plans.
                                         31.12 Special grant or subgrant conditions
                                            for "high-risk" grantees.
                                         31.13 Principal  environmental  statutory
                                            provisions applicable to EPA assistance
                                            awards.

                                             Subpart C—Pott-Award Requirement!

                                                 FINANCIAL ADMINISTRATION

                                         31.20 Standards for financial management
                                            systems.
                                         31.21 Payment.
                                         31.22 Allowable costs.
                                         31.23 Period of availability of funds.
                                         31.24 Matching or cost sharing.
                                         31.25 Program income.
                                         31.26 Non-Federal audit.

                                             CHANGES, PROPERTY. AND SUBAWARDS
                                         31.30
                                         31.31
                                         31.32
                                         31.33
                                         31.34
                                         31.35
                                             ed parties.
                                         31.36 Procurement.
                                         31.37 Subgrants.
  Changes.
  Real property.
  Equipment.
  Supplies.
  Copyrights.
  Subawards to debarred and suspend-
                                              REPORTS, RECORDS. RETENTION, AND
                                                       ENFORCEMENT
                                         31.40 Monitoring  and reporting  program
                                             performance.
                                         31.41 Financial reporting.
                                         31.42 Retention and acr.i'ss  requirements
                                             for records.
                                         31.43 Enforcement.
                                         31.44 Termination for convenience.
                                         31.45 Quality assurance.

                                            Swbpart 0—After-the-Grant Requirement*

                                         31.50 Closeout.

                                                               A*** an AMP** I**"

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§31.1

31.51  Later disallowances and adjustments.
31.52  Collection of amounts due.

     Subpart E— Entitlements [Reserved]

           Subpart F — Disputes

31.70  Disputes
APPENDIX A— PART 30 AUDIT REQUIREMENTS
   FOR STATE  AND LOCAL  GOVERNMENT RE-
   CIPIENTS

  AUTHORITY:  33  U.S.C.  1251  et seq.;  42
U.S.C. 7401 et seq.; 42 U.S.C. 6901 et seq.; 42
U.S.C. 300f et  seq.; 7 U.S.C. 136 et seq.; 15
U.S.C. 2601 et seq.; 42 U.S.C. 9801 et seq.; 20
U.S.C. 4011 et seq.; 33 U.S.C. 1401 et seq.
  SOURCE: 53 PR  8075  and 8087.  Mar.  11,
1988. unless otherwise noted.
  EFFECTIVE DATE Noi*. At 53 PR 8075  ad
8087. Mar. 11. 1988, Part 31 was added, ef-
fective October 1. 1988.

         Subport A — General

§ 31.1  Purpose and scope of this part.
  This  part establishes  uniform  ad-
ministrative rules for  Federal  grants
and  cooperative   agreements  and
subawards to State,  local and  Indian
tribal governments.

§ 31.2  Scope of subpart.
  This subpart contains general rules
pertaining to this part  and procedures
for control  of  exceptions from this
part.

§ 31.3  Definitions.
  As used in this part:
  "Accrued expenditures"  mean  the
charges   incurred  by  the   grantee
during  a given period  requiring  the
provision of funds for: (1) Goods and
other tangible property received;  (2)
services performed by employees, con-
tractors.  subgrantees,  subcontractors,
and other  payees;  and  (3)   other
amounts  becoming  owed under pro-
grams for which no current services or
performance is required, such as annu-
ities, insurance claims, and other bene-
fit payments.
  "Accrued income" means the sum of:
(1)  Earnings during a  given  period
from services performed by the grant-
ee and goods and other tangible prop-
erty delivered  to purchasers, and  (2)
amounts  becoming owed to the grant-
ee  for  which  no current  services or
         40 CFR Ch. I (7-1-88 Edition)

performance is required by the grant-
ee.
  "Acquisition cost" of an item of pur-
chased equipment  means  the  net  in-
voice unit price of the property includ-
ing the cost of modifications,  attach-
ments, accessories,  or  auxiliary appa-
ratus  necessary to  make the property
usable for. the purpose for which  it
was acquired. Other charges such as
the cost of installation, transportation
taxes, duty or protective in-transit in-
surance,  shall be included  or excluded
from  the unit acquisition cost in  ac-
cordance with the grantee's regular ac-
counting practices.
  "Administrative"  requirements mean
those matters common to grants in
general,  such  as  financial  manage-
ment, kinds and  frequency of reports,
and  retention  of records.  These are
distinguished  from  "programmatic"
requirements, which concern matters
that can be treated only on a program-
by-program  or   grant-by-grant basis,
such as kinds of  activities that can be
supported by grants under a particular
program. •
  "Awarding agency"  means (1) with
respect to a grant, the Federal agency,
and (2) with respect to a subgrant. the
party that awarded the subgrant.
  "Cash   contributions"  means  the
grantee's cash  outlay,  including  the
outlay of  money  contributed to  the
grantee  or subgrantee by other public
agencies and institutions,  and private
organizations and  individuals.  When
authorized by Federal legislation. Fed-
eral funds received from other assist-
ance agreements may be considered as
grantee  or subgrantee cash contribu-
tions.
  "Contract" means (except as used in
the definitions for "grant" and "sub-
grant"   in  this  section  and  except
where qualified  by "Federal")  a pro-
curement  contract  under a grant or
subgrant,  and means  a procurement
subcontract under a contract.
  "Cost  sharing  or matching"  meant
the  value of the  third party in-kind
contributions and  the portion of the
costs of  a federally assisted project or
program not  borne by the Federal
Government.
  "Cost-type  contract,"  means a con-
tract or subcontract under a .front in
which the contractor or suocontractcr

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iiniviip©(n)(nn)Q[nifl@J
                        Agoney
§31.3
 is paid on  the  basis of the costs it
 incurs, with or without a fee.
  "Equipment" means tangible, nonex-
 pendable, personal  property having a
 useful life of more  than one year and
 an  acquisition cost  of $5,000 or more
 per unit.  A grantee may use its own
 definition of equipment provided that
 such  definition would at least include
 all equipment defined above.
  "Expenditure report" means: (1) For
 nonconstruction  grants, the  SP-269
 "Financial Status Report" (or  other
 equivalent report); (2) for construction
 grants,  the  SP-271 "Outlay  Report
 and Request for Reimbursement" (or
 other equivalent report).
  "Federally recognized Indian  tribal
 government"  means the  governing
 body or a governmental agency of any
 Indian tribe, band, na*'^n. or other or-
 ganized group or con^unity (includ-
 ing any  Native  village  as  defined  in
 section 3 of the Alaska  Native Claims
 Settlement Act,  8§  Stat 688) certified
 by the Secretary of  the  Interior as eli-
 gible  for  the special  programs and
 services provided by him through the
 Bureau of Indian Affairs.
  "Government"  'means a  State  or
 local government or a federally recog-
 nized  Indian tribal government.
  "Grant" means an award of finan-
 cial assistance,  Including cooperative
 agreements, in the  form of money, or
 property in lieu of money, by the Fed-
 eral Government to an  eligible grant-
 ee. The term does not include techni-
cal  assistance which provides services
 instead of money, or other assistance
 in the form of revenue sharing, loans,
loan guarantees, interest subsidies, in-
surance, or direct appropriations. Also,
the term do
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 §31.4
        40 OFR Ch. I (7-1-83
 means  the same  percentage as  the
 awarding agency's portion of the ac-
 quiring party's total costs under  the
 grant  to  which the acquisition costs
 under the grant to which the acquisi-
 tion cost of the property was charged.
 Only costs are to be counted—not the
 value of third-party in-kind contribu-
 tions.
  "State"  means any  of the several
 States of the United States, the Dis-
 trict of Columbia,  the Commonwealth
 of Puerto  Rico, any territory or pos-
 session of the United States, or  any
 agency or instrumentality of a State
 exclusive  of local governments. The
 term does not include any public  and
 Indian  housing  agency under United
 States Housing Act 01 1937.
  "Subgrant"  means an award  of fi-
 nancial  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
 contractual legal agreement, but does
 not  include  procurement purchases,
 nor does it include any form of assist-
 ance which is excluded  from the defi-
 nition of "grant" in this part.
  "Subgrantee"  means  the  govern-
 ment or other legal entity to which a
 subgrant is awarded and  which is ac-
 countable to the grantee for the use of
 the funds provided.
  "Supplies" means  all  tangible per-
sonal  property  other  than  "equip-
 ment" as defined in this part.
  "Suspension" means  depending  on
 the  context,  either  (1)  temporary
withdrawal of  the authority  to obli-
 gate grant funds  pending  corrective
action by the grantee or subgrantee or
 a decision to terminate  the grant, or
(2)^n action taken by a suspending of-
 ficial in accordance with agency regu-
lations implementing E.O. 12549 to im-
mediately exclude a person from par-
ticipating in grant transactions for a
 period,  pending completion of an in-
vestigation  and such legal or debar-
ment proceedings as may ensue.
  "Termination"   means  permanent
 withdrawal of  the authority  to obli-
gate previously-awarded  grant  funds
before that authority would otherwise
expire. It also means the voluntary re-
 linquishment of that authority by the
grantee or subgrantee. "Terminatic
does not include:
  (1) Withdrawal of funds awarded
the basis  of  the  grantee's undere?
mate of the unobligated balance  ir
prior period;
  (2) Withdrawal of  the  unobliga-
balance as of the expiration of a gr:.
  (3) Refusal  to  extend  a grant
award  additional funds,  to  make
competing or  noncompeting  conti:
ation,  renewal, extension, or  sup?
mental award: or
  (4) Voiding  of a grant upon deter •
nation that the award was obtair
fraudulently,  or was otherwise ille
or invalid from inception.
  "Terms  of   a  grant  or subgrar
mean all requirements of the grant
subgrant,  whether in statute, regu
tions, or the award document.
  "Third party in-kind  contribution
mean property or services which be-
fit a federally assisted project or  p:
gram  and which are  contributed
non-Federal   third   parties  withe
charge  to the grantee,  or a cost-ty
contractor under the grant, agreeme:
  "Unliquidated  obligations"  for  i
ports prepared on a cash basis me;
the amount of obligations incurred ;
the grantee that has not been pa:
For reports prepared on an accm
expenditure basis, they represent t.
amount of obligations incurred by t.
grantee for which an outlay has n
been recorded.
  "Unobligated balance"  means  tl
portion of the funds authorized by tl
Federal agency that has not been ob
gated  by  the grantee  and is  dete
mined by deducting the cumulative o
ligations from the cumulative func
authorized.

§31.4   Applicability.
  (a)  General Subparts A-D  of  th.
part apply to  all grants and subgram
to governments, except where  incoi
sistent with Federal  statutes or wit
regulations authorized  in accordant
with the exception provision of § 31.
or:
  (1)  Grants  and subgrants to SUi
and local institutions  of higher educs
tion or State and local hospitals.
  (2) The block grants  authorized b:
the  Omnibus Budget  Reconciliatici
                                   360

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Environmental Protection Agency
                              §31.6
Act of 1981 (Community Services; Pre-
ventive Health and Health  Services;
Alcohol,  Drug  Abuse,  and  Mental
Health Services;  Maternal and Child
Health Services; Social Services; Low-
Income  Home   Energy   Assistance;
States' Program of Community Devel-
opment Block Grants for Small Cities;
and Elementary and Secondary Educa-
tion   other  than  programs  adminis-
tered by the  Secretary of Education
under Title V. Subtitle D, Chapter 2,
Section  583—the  Secretary's  discre-
tionary grant program) and  Titles I-
III of the Job Training  Partnership
Act  of 1982  and  under the  Public
Health Services Act (Section 1921), Al-
cohol and Drug Abuse Treatment and
Rehabilitation Block Grant and  ^art
C  of  Title V, Mw^al Health S«  .ice
for the Homeless Block Grant).
  (3)  Entitlement grants to carry out
the following programs of the Social
Security Act;
  (i)  Aid to Needy  Families with De-
pendent Children (Title  IV-A of the
Act, not including the Work Incentive
Program (WIN) authorized by section
402(a)19(G); HHS grants for WIN are
subject to this part);
  (ii)  Child Support Enforcement and
Establishment of Paternity (Title IV-
D of the Act);
  (iii) Foster Care  and Adoption As-
sistance (Title IV-E of the Act);
  (iv) Aid to the Aged, Blind, and Dis-
abled  (Titles  I,  X. XIV, and  XVI-
AABD of the Act); and
  (v)  Medical  Assistance  (Medicaid)
(Title XIX of the Act) not including
the State Medicaid Fraud Control pro-
gram    authorized    by    section
1903(a)(6)(B).
  (4) Entitlement grants under the fol-
lowing  programs  of  The  National
School Lunch Act;
  (i)  School Lunch  (section  4 of the
Act),
  (ii)  Commodity  Assistance (section 6
of the Act),
  (iii) Special Meal  Assistance (seclion
11 of  the Act).
  (iv) Summer Food Service for Chil-
dren (section 13 of the Act), and
  (v)  Child  Care  Food Program  (sec-
tion 17 of the Act).
  (5) Entitlement grants under the fol-
lowing programs  of The  Child Nutri-
tion Act of 1966:
  (i) Special  Milk (section  3  of  the
Act), and
  (ii) School  Breakfast  (section 4 of
the Act).
  (6) Entitlement grants for  State Ad-
ministrative expenses under The Food
Stamp Act of 1977 (section  16 of the
Act).
  (7)  A  grant  for  an  experimental,
pilot, or demonstration project that is
also supported by  a  grant listed  in
paragraph (a)(3) of this section;
  (8) Grant funds awarded under  sub-
section 412(e) of the Immigration and
Nationality Act (8 U.S.C. 1522(e)) and
subsection  501(a) of the Refugee Edu-
cation Assistance Act of 1980 (Pub. L.
96-422, 94  Stat.  1809), for cash assist-
ance,  medical assistance,  and supple-
mental security income benefits to ref-
ugees and  entrants and the adminis-
trative costs  of providing the assist-
ance and benefits;
  (9) Grants  to  local  education agen-
cies under  20 U.S.C. 236 through  241-
l(a), and 242 through 244 (portions of
the Impact Aid program), except fcf
20 U.S.C. 238(d)(2)(c) and  240(f) (Enti-
tlement  Increase  for   Handicapped
Children):  and
  (10) Payments under the  Veterans
Administration's  State  Home   Per
Diem Program (38 U.S.C. 641(a)).
  (b)  Entitlement programs.  Entitle-
ment programs enumerated above in
§ 31.4(a) (3) through (8) are subject to
Subpart E.

§ 31.5  Effect on other issuances.
  All other grants administration pro-
visions  of codified program  regula-
tions,  program manuals, handbooks
and  other  nonregulatory   materials
whicn are inconsistent  with this part
are superseded, except to the extent
they  are required  by statute, or au-
thorized in accordance with the excep-
tion provision in § 31.6.

§ 31.6 Additions and exceptions
  (a)  For classes of grants  and grant
ees subject to this part. Federal age._
cies may not impose additional admin-
istrative requirements except in  codi-
fied regulations published in  the FED-
ERAL REGISTER.

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 §31.10

  (b) Exceptions for classes of grants
 or grantees may be authorized only by
 OMB.
  (c) Exceptions  on  a  case-by-case
 basis and for subgrantees may be au-
 thorized by the affected Federal agen-
 cies.
  (1) In the Environmental Protection
 Agency^the Director, Grants Adminis-
 tration Division, is authorized to grant
 the exceptions.
  (d) The EPA Director is also author-
 ized to approve exceptions, on a class
 or an individual  case  basis,  to EPA
 program—specific  assistance   regula-
 tions other than  those which imple-
 ment statutory and executive order re-
 quirements.

 [53  FR 8068 and 8087. Mar. 11. 1988, .ind
 amended at 53 FR 8075, Mar. 11, 1988]
  EFFECTIVE DATE NOTE: At 53 FR 8075, Mar.
 11. 1988. 5 31.6 (0(1) and (d)  were added, ef-
 fective October 1, 1988.

 Subpart B—Pre-Award Requirements

§ 31.10 Forms for applying for grants.
  (a) Scope. (1) This section prescribes
forms and instructions to be  used by
governmental  organizations  (except
 hospitals  and  institutions  of  higher
education operated  by  a  government)
in applying for grants.  This section is
not  applicable,  however, to  formula
grant programs which  do not require
applicants to apply for funds on  a
project basis.
  (2) This section applies  only to appli-
cations to Federal agencies for grants,
and  is not required to be  applied by
grantees in dealing with applicants for
subgrants. However, grantees are en-
couraged  to avoid  more detailed  or
burdensome  application  requirements
for subgrants.
  (b) Authorized  forma  and  instruc-
 tions for governmental organizations.
(1)  In applying for grants, applicants
shall only  use standard  application
 forms or  those  prescribed  by  the
granting agency with the approval of
OMB under the Paperwork Reduction
Act of 1980.
  (2) Applicants are not required to
submit more than the original and two
copies of preapplications  or applica-
 tions.
         40 CFR Ch. I  (7-1-88 Edition)

  (3) Applicants must follow all appli-
cable  instructions  that  bear  OMB
clearance numbers.  Federal  agencies
may  specify  and describe the  pro-
grams, functions, or activities that will
be used to plan,  budget, and evaluate
the work under a grant. Other supple-
mentary instructions  may  be issued
only with the approval of OMB to the
extent required under the Paperwork
Reduction  Act of 1980. For any stand-
ard form, except the SF-424 facesheet,
Federal agencies may shade out or in-
struct the  applicant to disregard any
line item that is not needed.
  (4) When a grantee applies for addi-
tional funding (such as a continuation
or supplemental award) or amends a
previously  submitted application, only
the affected  pages need be submitted.
Previously submitted pages with infor-
mation that is still current need not be
resubmitted.

§31.11 State plans.
  (a) Scope. The statutes for some pro-
grams require States to submit plans
before receiving grants. Under regula-
tions  implementing Executive Order
12372, "Intergovernmental Review of
Federal Programs," States are allowed
to simplify, consolidate and substitute
plans. This section contains additional
provisions  for plans that are subject to
regulations implementing  the Execu-
tive Order.
  (b) .Requirements. A State need meet
only  Federal  administrative  or  pro-
grammatic  requirements for a  plan
that are in statutes or codified regula-
tions.
  (c) Assurances. In  each plan  the
State will include  an assurance  that
the  State shall comply with all appli-
cable Federal statutes and regulations
in effect with respect  to the periodi
for  which it receives grant funding.
For this assurance  and other assur-
ances required in the plan, the  Sut«
may:
  (1) Cite by number the statutory or
regulatory provisions requiring the as-
surances and affirm  that it gives the
assurances required  by those provi-
sions,
  (2) Repeat the assurance language in
the statutes or regulations, or
                                     362

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  (3) Develop its own language to the
 extent permitted by law.
  (d) Amendments.  A State will amend
 a plan whenever necessary to  reflect:
 (1) New  or revised  Federal statutes or
 regulations or (2) a material change in
 any State law, organization, policy, or
 State agency operation. The State will
 obtain approval  for  the amendment
 and its effective date but need submit
 for  approval  only  the  amended  por-
 tions of the plan.

 §31.12 Special grant or  subgrant condi-
    tions  for "high-risk" grantees.
  (a) A grantee or subgrantee may be
 considered "high risk" if an awarding
 agency determines  that a grantee or
 subgrantee:
  (1) Has a history of  unsatisfactory
 performance, or
  (2) Is not financially stable, or
  (3) Has a management sy oem which
 does not meet the management stand-
 ards set forth in this part, or
  (4) Has not conformed to terms and
conditions of previous awards, or
  (5) Is otherwise not responsible; and
if  the awarding agency  determines
that an  award will be made,  special
conditions  and/or  restrictions  shall
correspond to the high risk condition
and shall be included in the award.
  (b) Special conditions or restrictions
may include:
  (1)  Payment on  a  reimbursement
basis;
  (2)  Withholding  authority  to  pro-
ceed to the next phase until receipt of
evidence  of  acceptable  performance
within a given funding period;
  (3)  Requiring additional, more de-
tailed financial reports;
  (4) Additional project monitoring;
  (5) Requiring the  grante or subgran-
tee to obtain technical or management
assistance; or
  (6) Establishing additional prior ap-
provals.
  (c) If an awarding agency decides to
impose such conditions,  the awarding
official will notify the grantee  or sub-
grantee as early as possible, in writing,
of:
  (1) The nature  of the  special condi-
tions/restrictions;
  (2) The reason(s) for imposing them;
  (3)  The  corrective  actions  which
 must be  taken before they will be re-
moved and the time allowed  for com-
pleting the corrective actions and
  (4) The method of requesting recon-
sideration  of  the  conditions/restric-
tions imposed.

§ 31.13  Principal  environmental statutory
    provisions applicable  to  EPA  assist-
    ance awards.

  Grantees shall comply with all appli-
cable Federal laws including:
  (a) Section 306 of the Clean Air Act,
(42 U.S.C. 7606).
  (b) Section 508 of the Federal Water
Pollution Control Act. as amended. (33
U.S.C. 1368).
  (c)  Section  1424(e)  of  the  Safe
Drinking Water Act, (42 U.S.C. 300h-
[53 PR 8075. Mar. 11. 1988]

  EFFECTIVE DATE NOTE: At 53 FR 8075, Mar.
11. 19J 8, §31.13 was added, effective Octo-
ber 1, 1988.
Subpart C — Post-Award Requirements

      FINANCIAL ADMINISTRATION

§ 31.20  Standards  for financial manage-
    ment systems.

  (a)  A State  must expand  and ac-
count for grant  funds in accordance
with State laws and procedures for ex-
pending  and accounting  for its own
funds. Fiscal control  and accounting
procedures of the State, as well as its
subgrantees and cost-type contractors.
must be sufficient to—
  (1) Permit preparation of reports re-
quired by this part and  the statutes
authorizing the grant,  and
  (2) Permit the  tracing of funds to a
level  of expenditures  adequate to  es-
tablish that such funds have not been
used  in  violation of  the restrictions
and prohibitions of  applicable stat-
utes.
  (b)  The financial  management  sys-
tems  of  other  grantees  and subgran-
tees must meet  the following  stand-
ards:
  (1)  Financial  reporting.  Accurate,
current,  and  complete  disclosure of
the financial results of financially as-
sisted activities must  be made in  ac-
cordance with  the financial reporting
requirements of the  grant or subgrant.
                                    363

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 §31.21

  ~2)  Accounting  records.  Grantees
 ^d   subgrantees   must  maintain
 records which adequately identify the
 source and application of funds pro-
 vided for financially-assisted activities.
 These records must contain  informa-
 tion pertaining  to  grant  or subgrant
 awards and  authorizations,   obliga-
 tions,  unobligated balances, assets, li-
 abilities, outlays or expenditures, and
 income.
  (3) Internal control. Effective con-
 trol and accountability must be main-
 tained for all grant and subgrant cash,
 real and personal property, and other
 assets. Grantees and subgrantees must
 adequately safeguard  all such proper-
 ty  and must  assure  that it  is used
 solely for authorized purposes.
  (4) Budget control  Actual  expendi-
 tures or outlays must be compared
 with budgeted amounts for each grant
 or  subgrant.  Financial   information
 must be related to performance or pro-
 ductivity data, including the  develop-
 ment of unit cost information when-
 ever appropriate or  specifically  re-
  "red in the grant or subgrant agree-
 ment. If unit  cost data are required,
 estimates based on available documen-
 tation will be accepted whenever possi-
 ble.
  (5) Allowable cost Applicable OMB
 cost principles, agency program regu-
 lations, and the terms of grant and
subgrant agreements will  be  followed
in determining the reasonableness, al-
lowability, and allocability of costs.
  (6) Source documentation. Account-
ing  records must be supported by such
source documentation  as  cancelled
checks, paid bills, payrolls, time and
 attendance records,  contract and sub-
 grant award documents, etc.
  (7)  Cash  management  Procedures
for  minimizing the  time elapsing be-
tween the transfer of funds from the
U.S. Treasury  and disbursement by
grantees and subgrantees most be fol-
lowed whenever advance payment pro-
cedures are used. Grantees must estab-
lish  reasonable procedures to  ensure
the  receipt of  reports on subgrantees'
0*^1 balances and cash disbursements
iL sufficient time to  enable  them  to
prepare complete and accurate cash
 transactions reports to the awarding
 agency. When advances are made by
letter-of-credit or  electronic  transfer
         40 CFR Ch. I (7-1-33 Edition)

of funds methods, the grantee must
make drawdowns as close  as possible
to the time of making disbursements.
Grantees  must monitor  cash  draw-
downs by their subgrantees to assure
that they conform substantially to the
same standards of timing and amount
as apply to advances to the  grantees.
  (c) An awarding agency may review
the adequacy of the financial manage-
ment system of any applicant for fi-
nancial  assistance  as  part   of   a
preaward review or at any  time subse-
quent to award.

§31.21  Pavment.
  (a) Scope. This section prescribes the
basic standard and the methods under
which a Federal agency will make pay-
ments to grantees, and grantees will
make payments  to subgrantees and
contractors.
  (b)  Baste standard.  Methods and
procedures for payment  shall  mini-
mize  the  time elapsing  between  the
transfer of funds  and disbursement by
the grantee or subgrantee, in accord-
ance with Treasury regulations at 31
CFR Part 205.
  (c) Advances. Grantees and subgran-
tees shall be paid in advance, provided
they maintain or demonstrate the will-
ingness and ability to maintain proce-
dures to minimize the time elapsing
between the transfer of the funds and
their disbursement by the  grantee or
subgrantee.
  (d) Reimbursement Reimbursement
shall  be the preferred method when
the requirements in paragraph  (c) of
this section are not met. Grantees and
subgrantees may  also be paid by reim-
bursement for any construction  grant.
Except as otherwise specified in regu-
lation. Federal agencies shall not use
the percentage of completion method
to pay construction grants. The  grant-
ee or subgrantee may use that method
to pay its construction contractor, and
if it  does, the  awarding agency's pay-
ments to the  grantee  or  subgrantee
will be based on  the grantee's or sub-
grantee's actual rate of disbursement.
  (e)  Working  capital advances. If  a
grantee cannot meet the  criteria for
advance  payments described in para-
graph (c) of this  section, and the Fed-
eral  agency has determined that reim-

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 Environmental Protection Agency

 bursement is not feasible because the
 grantee  lacks sufficient  working cap-
 ital, the awarding agency may provide
 cash or  a  working  capital advance
 basis. Under this procedure the award-
 ing  agency  shall advance cash to the
 grantee  to  cover  its estimated  dis-
 bursement needs for  an  initial period
 generally geared to the grantee's dis-
 bursing cycle. Thereafter, the  award-
 ing agency shall reimburse the grantee
 for its actual cash disbursements. The
 working capital  advance method  of
 payment shall not be  used by grantees
 or subgrantees if the  reason for using
 such method  is the  unwillingness or
 inability of  the grantee to  provide
 timely advances to the subgrantee to
 meet the subgrantee's actual cash dis-
 bursements.
  (f) Effect of  program  income,  re-
funds,  and  audit recoveries 01  pay-
 ment.  (1) Grantees and  subgrantees
shall disburse repayments to and  in-
terest  earned  on  a  revolving  fund
before  requesting additional cash pay-
ments for the same activity.
  (2) Except as provided in paragraph
(f)(l) of this section, grantees and sub-
grantees  shall  disburse   program
income, rebates, refunds, contract set-
tlements, audit recoveries and interest
earned on such  funds before request-
ing additional cash payments.
  (g)   Withholding   payments.   (1)
Unless  otherwise required by Federal
statute, awarding  agencies  shall  not
withhold payments for proper charges
incurred by grantees or subgrantees
unless—
  (i)  The  grantee or  subgrantee  has
failed to comply with grant award con-
ditions or
  (ii) The grantee or subgrantee is  in-
debted  to the United States.
  (2) Cash  withheld for -failure  to
comply  with grant award condition,
but without suspension of the grant,
shall be released to the grantee upon
subsequent compliance. When a grant
is  suspended,  payment  adjustments
will  be  made  in  accordance  with
§ 31.43(0.
  (3) A Federal agency shall not make
payment to grantees for amounts that
are withheld by grantees or  subgran-
tees  from payment to contractors to
assure   satisfactory  completion  of
work. Payments shall  be  made  by the
                            §31.22

Federal agency when  the grantees or
subgrantees  actually  disburse  the
withheld funds to the contractors or
to  escrow  accounts  established  to
assure  satisfactory  completion  of
work.
  (h)  Cash depositories. (1)  Consistent
with  the  national goal  of  expanding
the opportunities for minority busi-
ness  enterprises,  grantees  and sub-
grantees are encouraged to use minori-
ty banks  (a bank which is  owned at
least  50 percent by  minority  group
members). A list of  minority  owned
banks can be  obtained  from the Mi-
nority Business Development Agency,
Department of Commerce,  Washing-
ton, DC 20230.
  (2)  A grantee  or  subgrantee shall
maintain a separate bank account only
when required by Federal-State agree-
ment.
  (i)  Interest   earned on   advances.
Except for interest earned on advances
of funds exempt under the Intergov-
ernmental Cooperation Act (31 U.S.C.
6501 et seq.) and the Indian Self-De-
termination Act (23 U.S.C. 450), grant-
ees and subgrantees  shall  promptly,
but at least quarterly, remit interest
earned  on advances  to  the Federal
agency. The  grantee or subgrantee
may keep interest amounts up to $100
per year for administrative expenses.

§ 31.22  Allowable costs.
  (a)  Limitation  on  use   of  funds.
Grant funds may be used only for:
  (1) The  allowable costs of the grant-
ees, subgrantees and cost-type contrac-
tors, including allowable costs  in the
form  of payments to fixed-price con-
tractors: and
  (2) Reasonable fees or profit to cost-
type  contractors  but not any  fee  or
profit (or  other  increment above al-
lowable costs) to the grantee or sub-
grantee.
  (b)  Applicable  cost principles. For
each  kind of organization, there is a
set of Federal principles for determin-
ing allowable  costs.  Allowable costs
will be determined in accordance with
the cost principles applicable  to the
organization incurring the costs. The
following  chart lists the kinds of orga-
nizations and the applicable cost prin-
ciples.
                                   365

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 9 41.24
                                     v.n. i  i/-i-oo
   for the costs of a—
 Stale, local or Indian tribal
  government.
 Pnvate nonprofit organization
  other than an (1) institution
  of  higher education,  (2) |
  hospital, or (3) organization ;
  Lisa the pnnciples in—
OMB Ocular A-87

OBM Circular A-122.
  named in OMB Circular A
  122 as not subject to that
  circular
 Educational institutions	
 For-profrt organization other
  than a hospital and an or-
  ganization  named in OBM
  Circular A-122 as not sub-
  ject to that circular.
OMB Circular A-21.
48  CFR Part  31. Contract
 Cost Principles and Proce-
 dures, or uniform cosi ac-
 counting  standards that
 comply with cost pnnciples
 acceptable to the Federal
 agency.
 § 31.23  Period fo availability of funds.
  (a) General. Where a funding period
 is specified,  a grantee may charge to
 the  award  only costs resulting  from
 obligations   of  the  funding  period
 unless  carryover of unobligated  bal-
 ances is permitted, in which case the
 carryover balances may be charged for
 costs resulting from obligations of the
 subsequent funding period.
  (b) Liquidation of  obligations. A
 grantee must liquidate all obligations
 incurred  under  the  award not  later
 than 90  days after the  end of the
 funding period (or as specified  in  a
 program  regulation) to coincide  with
 the  submission of the annual Finan-
 cial  Status Report (SF-269). The Fed-
 eral  agency may extend this deadline
 at the request of the grantee.

 § 31.24  Matching or cost sharing.
  (a) Basic  rule:  Costs and contribu-
 tions acceptable.  With  the qualifica-
 tions and exceptions listed  in  para-
 graph (b) of this section, a matching
or cost sharing  requirement  may be
satisfied by either or  both of the fol-
lowing:
  (1) Allowable costs incurred by the
grantee, subgrantee or a cost-type con-
tractor  under the assistance agree-
ment. This  includes  allowable  costs
borne by non-Federal  grants or  by
others cash donations from non-Feder-
al third parties.
  (2) The value of third party in-kind
contributions applicable to the period
to which the cost sharing or matching
requirements applies.
  (b)  Qualifications  and exceptions—
(1) Costs borne by other Federal grant
agreements.  Except  as  provided  by
Federal  statute,  a  cost  sharing  or
matching requirement may not be met
by costs  borne  by  another  Federal
grant. This prohibition does not apply
to income earned by  a grantee or sub-
grantee  from  a  contract  awarded
under another Federal grant.
  (2)  General  revenue sharing. For the
purpose of  this section, general  reve-
nue sharing funds distributed  under
31 U.S.C. 6702 are not considered Fed-
eral grant funds.
  (3)  Cost or contributions counted to-
wards nther Federal  costs?sharing  re-
quirements.  Neither  costs  nor  the
values of third party in-kind contribu-
tions  may  count towards satisfying a
cost sharing or matching requirement
of  a  grant agreement  if  they  have
been  or will be counted towards satis-
fying a cost sharing or matching  re-
quirement of another Federal grant
agreement,  a Federal  procurement
contract, or any other award of Feder-
al funds.
  (4)   Costs  financed  by  program
income.  Costs financed  by program
income, as defined in § 31.25, shall not
count towards satisfying a cost sharing
or matching requirement  unless they
are expressly permitted in  the terms
of the assistance agreement. (This use
of  general program income  is de-
scribed in § 31.25(g).)
  (5)  Services or property financed by
income earned  by contractors.  Con-
tractors  under  a grant  may  earn
income from the activities carried out
under the  contract in addition to the
amounts earned from the party award-
ing the contract. No costs of services
or property supported  by this income
may  count toward satisfying a cost
sharing  or  matching  requirement
unless other  provisions of  the grant
agreement expressly  permit this kind
of income  to  be  used to meet the re-
quirement.
  (6)  Records. Costs  and  third party
in-kind contributions counting towards
satisfying a cost sharing or matching
requirement must  be verifiable  from
the records of grantees and subgrantee
or cost-type contractors. These records
                                     366

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 Environmental Protection Agency

 must show how  the  value  placed  on
 third party in-kind contributions was
 derived. To the extent feasible, volun-
 teer services will be supported by the
 same methods that the organization
 uses to support the allocability of reg-
 ular personnel costs.
  (7) Special standards for third party
 in-kind contributions, (i)  Third party
 in-kind contributions  count  towards
 satisfying a cost  sharing or matching
 requirement only where, if the party
 receiving  the contributions were  to
 pay  for them, the payments would be
 allowable costs.
  (ii) Some third party  in-kind contri-
 butions are goods and services that, if
 the grantee, subgrantee. or contractor
 receiving the  contribution had to pay
 for them,  the payments  would have
 been an indirect costs. Costs sharing
 or matching credit for such contribu-
 tions shall be given only if the grant-
 ee, subgrantee, or contractor has  es-
 tablished, along with its regular indi-
 rect  cost rate, a  special rate for allo-
cating  to individual projects or pro-
grams the value of the contributions.
  (iii) A third party in-kind contribu-
tion  to  a  fixed-price  contract  may
count towards satisfying- a cost sharing
or matching requirement only if it  re-
sults in:
  (A) An  increase in the  services  or
property provided under the contract
(without additional cost to the grantee
or subgrantee) or
  (B) A cost savings to the grantee or
subgrantee.
  (iv) The values placed on third party
in-kind contributions for cost sharing
or matching purposes will conform to
the rules in the succeeding sections of
this  part. If a third party in-kind con-
tribution is a type not treated in those
sections, the value placed upon it shall
be fair and reasonable.
  (c) Valuation  of donated services—
(1) Volunteer services. Unpaid services
provided to a grantee or subgrantee by
individuals will oe valued at rates con-
sistent with those ordinarily paid for
similar work in  the grantee's or sub-
grantee's organization.  If the grantee
 or subgrantee noes not have  employ-
ee* performing simitar wor-,  •;''? --ales
will be consistent with those ordinan'y
paid  by  other employers  for  similar
work in the  same labor  market.  In
                             §31.24

either  case, a reasonable  amount  for
fringe benefits may be included in the
valuation.
  (2)  Employees  of  other  organiza-
tions. When an employer other than a
grantee, subgrantee, or  cost-type con-
tractor furnishes free of charge the
services of an employee in the employ-
ee's normal line of work,  the  services
will be valued at the employee's regu-
lar  rate of  pay exclusive of the em-
ployee's fringe benefits and overhead
costs. If the services are in a different
line of work, paragraph (c)(l) of this
section applies.
  (d) Valuation of third party donated
supplies  and  loaned equipment  or
space. (1) If a third party donates sup-
plies,  the contribution will be valued
at the market value of the suppues at
the time of donation.
  (2) If a third party donates the  use
of equipment or space in a building
but retains title, the contribution will
be valued at the fair rental rate of the
equipment or space.
  (c) Valuation of third party  donated
equipment,  ouildings,  and land. If  a
third  party donates equipment,  build-
ings,  or  land,  and  title  passes to  a
grantee or subgrantee,  the treatment
of the donated property will depend
upon the purpose of the grant or sub-
grant, as follows:
  (1) Awards for capital expenditures.
If the purpose of the grant or sub-
grant is to  assist the grantee or sub-
grantee in the acquisition of property,
the market value  of that property at
the time of donation may be  counted
as cost sharing or matching,
  (2) Other awards.  If assisting  in the
acquisition of property is not  the pur-
pose of the grant or subgrant, para-
graphs (e)(2) (i) and (ii) of this section
apply:
  (i) If approval is obtained from the
awarding agency, the market  value at
the time of donation of  the  donated
equipment or  buildings and  the  fair
rental rate of the donated land may be
counted as  cost sharing or matching.
In the case of a subgrant, the terms of
the grant agreement may require ::ha,
the  sppr«v.'i.i  be  obtained from  ':.h-'
Federal agency 3-5 weil  as the graiuei
In all cases, th> approval may be 2-lv*"..
only if a purchase of the equipment or
rental of the land would be approved
                                    367

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 §31.25
         40 CfR Qi. I (7-1-88 fcditic
 as an allowable direct cost. If any part
 of the donated property was acquired
 with Federal funds, only the non-fed-
 eral share of  the property may be
 counted as cost-snaring or matching.
  (ii) If approval is not obtained under
 paragraph (eX2XD of this section, no
 amount may be counted for donated
 land,  and only depreciation  or use al-
 lowances may be counted for donated
 equipment and buildings. The depre-
 ciation or use allowances for this prop-
 erty are not treated as third party in-
 kind contributions. Instead, they are
 treated  as costs incurred by the grant-
 ee or  subgrantee. They are  computed
 and  allocated (usually  as indirect
 costs)  in  accordance with  the  cost
 principle^ specified in §	in the
 same way as depreciation or  use allow-
 ances for purchased  equipment and
 buildings. The amount of depreciation
 or use v allowances for donated equip-
 ment  And buildings  is  based on. the
 property's market value at the time it
 was donated.
  (f) Valuation of grantee or tubgran-
 tee donated real property for construc-
 tion/acquisition.  If a grantee or sub-
 grantee donates  real property for a
 construction  or facilities acquisition
 project, the current market value of
 that property may be counted as cost
 sharing or matching. If any part -of
 the donated  property  was  acquired
 with Federal funds, only the non-fed-
 eral share of  the property may be
 counted as cost sharing or matching.
  (g) Appraital of real  property. In
 some cases under paragraphs (d), (e)
 and (f) of this section, it will be neces-
sary to  establish  the market value of
land or a building or the fair rental
 rate of land or of space in a building.
 In these  cases, the  Federal agency
may require the market value or fair
rental value be set by an independent
appraiser, and that the value or rate
be certified  by the grantee. This re-
quirement will also be imposed by the
grantee on subgrantees.

S 31.25  Program income.
  (a)  General  Grantees are encour-
aged to earn income to  defray  pro-
 gram  costs. Program income includes
 income  from  fees for services  per-
 formed, from the use or rental of real
or personal  property  acquired  with
grant funds, from the sale of comm<
ities or items fabricated under a gra
agreement,  and  from  payments
principal and interest on loans ma
with grant funds. Except as otherw
provided in regulations of the Fedej
agency,  program  income does not
elude interest on grant funds, rebat
credits, discounts, refunds, etc. and
terest earned on any of them.
  (b)  Definition of program  incor,
Program income  means gross Incoi
received by the grantee or subgrant
directly generated by a grant suppo
ed activity, or earned only as  a resi
of the  grant  agreement during t
grant  period.  "During  the  gra
period"  is the time between the eff«
tive date of the award and the endi
date of the award reflected in the fir
financial report.
  (c)  Cost  of .generating  progri
income. If authorized by Federal rei
lations or the grant agreement, co:
incident to the generation of progn
income  may  be deducted from  grc
income to determine program incon
  (d)  Governmental  revenues. Tax
special assessments,  levies, fines, a
other such revenues raised by a grai
ee  or subgrantee are  not  progrt
income unless the revenues are spec!
cally identified in the grant agreeme
or Federal agency regulations as pi
gram income.
  (e) Royalties. Income  from royalt:
and license fees for copyrighted ma
rial, patents, and  inventions develop
by a grantee or subgrantee is progrt
income only if the revenues are spec
ically identified  in the grant agri
ment or Federal agency regulations
program income. (See S 31.34.)
  (f) Property. Proceeds from  the st
of real property or equipment will
handled  in  accordance  with  the i
quirements of SS 31.31 and 31.32.
  (g)  Use of program income. Progrt
income shall be deducted from outla
which may be both Federal and nc
Federal as described below, unless t
Federal  agency  regulations  or t
grant agreement specify another alt
native (or a combination of the alt-
natives). In specifying alternatives, t
Federal  agency may distinguish I
tween income earned by the grant
and income earned by subgrantees a
between  the -. sources,   kinds.

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Environmental Protection Agency
amounts of  Income. When Federal
agencies authorize the alternatives in
paragraphs (g) (2) and (3) of this sec-
tion, program income In excess of any
limits stipulated shall also be deducted
from outlays.
  (1)  Deduction.  Ordinarily  program
income  shall be deducted from  total
allowable costs to determine the net
allowable costs. Program income shall
be used  for current costs unless the
Federal agency authorizes otherwise.
Program income  which the grantee
did not anticipate at the time of the
award shall be used to reduce the Fed-
eral agency and grantee contributions
rather than to increase the funds com-
mitted to the project.
  (2) Addition. When authorized, pro-
gram  income  may be added to the
funds committed  to the grant  agree-
ment  by the Federal agency and the
grantee. The program income shall be
used for the purposes and under the
conditions of the grant agreement.
  (3) Cost sharing or matching. When
authorized, program  income may be
used  to meet  the  cost sharing or
matching requirement  of  the  grant
agreement. The amount of the Federal
grant award remains the same.
  (h)  Income after the award period.
There are  no  Federal  requirements
governing the disposition of program
income  earned after the end of the
award period (i.e., until the ending
date of  the final  financial report, see
paragraph, (a) of  this section),  unless
the terms  of the agreement or the
Federal  agency  regulations provide
otherwise.

§ 31.2* Noo-fW«nl audit.
  (a)  Boric  rate.  Grantees  and sub-
grantees are responsible for obtaining
audits, in accordance with the  Single
Audit Art of 1984 (31 U.S.C. 7501-7)
and Federal agency implementing reg-
ulations. The audits shall be made by
an independent auditor in accordance
with  generally accepted government
auditing standards covering firmnHai
and compliance audits.
  4b>- Subgrantees. State or  local gov-
ernments, as those terms are defined
for purposes of the  Single Audit Act,
that receive  Federal financial assist-
ance and provide  $25,000 or  more of it
in a fiscal year to  a subgrantee shall:
  (1) Determine whether State or local
subgrantees have met the audit re-
quirements of the Act  and whether
subgrantees covered by OMB Circular
A-110,  "Uniform  Requirements  for
Grants  and Other  Agreements with
Institutions of Higher Education, Hos-
pitals and Other Nonprofit Organiza-
tions" have met the  audit  require-
ment. Commercial contractors (private
forprofit and private and governmen-
tal organizations) providing goods and
services  to State  and  local  govern-
ments are not  required  to  have  a
single audit performed. State and local
govenments should use their own  pro-
cedures to ensure that the contractor
has  complied  with laws and  regula-
tions affecting the expenditure of Fed-
eral funds;
  (2) Determine whether the auogran-
tee spent Federal assistance funds pro-
vided in  accordance  with  applicable
laws and regulations. This may be ac-
complished by reviewing an audit of
the  subgrantee  made in  accordance
with  the  Act,  Circular   A-110, or
through other means (e.g., program
reviews) if the subgrantee has not hatf
such an audit;
  (3)  Ensure  that appropriate correc-
tive action is taken within six months
after receipt of the audit report in in-
stance of noncompliance with Federal
laws and regulations;
  (4)  Consider  whether   subgrantee
audits necessitate  adjustment of the
grantee's own records; and
  (5) Require  each  subgrantee  to
permit  independent  auditors to  have
access to  the records  and financial
statements.
  (c)  Auditor selection. In arranging
for audit services,  § 31.36 shall be fol-
lowed,

  CHANGES, PROPERTY. AND SUBA WARDS
 331.30 Change*.
  (*) General.  Grant
                       and subgran-
tees are. permitted to rebudget within
the approved direct cost  budget to
meet unanticipated requirements and
may make limited program changes to.
the approved project. However, unlei
waived  by the awarding agency, cer-
tain types of post-award changes in
budgets and projects shall require the
                                   369

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§31.31
         40 CFR Ch. I (7-1-88 Edition)
orior written approval of the awarding
 ,gency.
  (b) Relation to cost principles. The
applicable cost principles (see §31.22)
contain requirements for prior approv-
al of certain types of costs. Except
where   waived,   those   requirements
apply to all grants and subgrants even
if paragraphs (c) through (f) of this
section do not.
  (c) Budget changes. (1) Nonconstruc-
tion projects. Except as stated in other
regulations  or  an  award document,
grantees or subgrantees  shall  obtain
the  prior approval  of  the  awarding
agency whenever any of the  following
changes is anticipated under a noncon-
struction award:
  (i) Any revision which  would  result
in the need for additional funding.
  (ii) Unless waived by  the  awarding
agency, cumulative  transfers  among
direct cost categories, or, if applicable,
among separately budgeted programs,
projects, functions,  or activities which
exceed or are expected to exceed ten
percent of the current total  approved
 Budget, whenever the awarding agen-
-y's share exceeds $100,000.
  (iii) Transfer  of funds allotted for
training  allowances  (i.e., from  direct
payments to trainees to other expense
categories).
  (2) Construction  projects.  Grantees
and  subgrantees shall  obtain  prior
written approval for any budget revi-
sion which  would result  in  the  need
for additional funds.
  (3) Combined construction and non-
construction projects. When a grant or
subgrant provides  funding  for  both
construction and nonconstruction ac-
tivities,  the grantee  or  subgrantee
must obtain  prior  written  approval
from the   awarding  agency  before
making any fund or budget transfer
from nonconstruction to  construction
or vice versa.
  (d) Programmatic changes.  Grantees
or subgrantees must  obtain  the prior
approval  of  the  awarding agency
whenever any of the following actions
is anticipated:
  (1) Any revision of the scope or ob-
jectives of  the project  (regardless of
whether there is an  associated budget
revision requiring prior approval).
  (2) Need  to  extend  the  period of
availability of funds.
  (3) Changes in  key persons in cases
where specified in an application or a
grant award.  In  research  projects,  a
change in the project director or prin-
cipal investigator shall always require
approval unless waived by  the  award-
ing agency.
  (4) Under nonconstruction projects.
contracting  out,  subgranting (if  au-
thorized  by law)  or  otherwise obtain-
ing the services of a third party to per-
form  activities which are central  to
the purposes  of  the award.  This ap-
proval requirement  is in addition  to
the approval  requirements of  § 31.36
but does not apply to the procurement
of equipment, supplies, and general
support services.
  (e)  ..dd.iti.onal  prior  approval  re-
quirements. The awarding agency may
not  require  prior  approval for any
budget revision which is not described
in paragraph (c) of this section.
  (f) Requesting prior approval. (DA
request  for  prior   approval  of any
budget  revision will be in the same
budget formal the grantee used in  its
application and shall be accompanied
by  a narrative justification  for  the
proposed revision.
  (2) A request for a prior .approval
under the applicable Federal cost prin-
ciples (see § 31.22)  may be  made  by
letter.
  (3) A  request by  a subgrantee  for
prior approval will  be  addressed   in
writing to the grantee. The grantee
will promptly review such request and
shall  approve  or disapprove the  re-
quest in writing. A grantee will not  ap-
prove any budget or project revision
which is inconsistent with the purpose
or terms and conditions of the Federal
grant to the  grantee. If the revision.
requested  by the  subgrantee  would
result in a change to the grantee's  ap-
proved project which requires Federal
prior approval, the grantee will obtain
the Federal  agency's approval before
approving the subgrantee's request.

§31.31  Real property.
  (a) Title. Subject  to the obligations
and  conditions set  forth in this sec-
tion,  title to real  property acquired
under  a grant or  subgrant will vest
upon acquisition in the grantee or sub-
grantee respectively.
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 Environmental Protection Agency

  (b) Use. Except as otherwise provid-
 ed  by Federal statutes, real property
 will be used for the originally author-
 ized purposes  as long as needed for
 that purposes, and the grantee or sub-
 grantee shall not dispose of  or encum-
 ber its title or other interests.
  (c) Disposition. When real property
 is no longer needed for the originally
 authorized purpose,  the grantee  or
 subgrantee will request disposition in-
 structions from the awarding agency.
 The instructions will provide for one
 of the following alternatives:
  (1)  Retention of title. Retain title
 after  compensating  the   awarding
 agency.  The   amount  paid  to the
 awarding agency will be computed by
 applying the  awarding agency'% per-
 centage of participation in the cost of
 the  original  purchase  to   the fair
 market value of the property. Howev-
 er, in those situations where a grantee
or subgrantee  is disposing of real prop-
 erty acquired with grant funds and ac-
 quiring  replacement  real   property
 under the same program, the net pro-
 ceeds  from the  disposition may be
 used as an offset to the cost of the re-
 placement property.
  (2) Sale of property. Sell the proper-
 ty  and  compensate  the   awarding
 agency. The amount due to the award-
 ing  agency will be calculated by apply-
 ing  the awarding agency's percentage
 of  participation  in  the cost of the
original purchase  to the  proceeds  of
the sale after  deduction of any actual
and reasonable selling  and  fixing-up
expenses. If the  grant  is still active,
the net  proceeds  from sale may be
offset against  the original cost of the
property. When a grantee or subgran-
tee  is directed to  sell property, sales
procedures shall be followed that pro-
vide for competition  to the  extent
practicable and result in the highest
possible return.
  (3) Transfer of title. Transfer title to
the awarding  agency  or  to a  third-
party  designated/approved by the
awarding agency. The grantee or sub-
grantee shall be paid an amount calcu-
lated by  applying the grantee or sub-
grantee's percentage of  participation
in the purchase of the real property to
the current fair market value of the
property.
                             §31.32

§31.32  Equipment.

  (a) Title. Subject to the obligations
and conditions set forth in this sec-
tion, title to equipment acquired under
a grant or subgrant will vest upon ac-
quisition in the grantee  or subgrantee
respectively.
  (b) States. A State will use, manage,
and  dispose  of equipment acquired
under a grant by the State in accord-
ance with State laws and procedures.
Other  grantees  and subgrantees will
follow  paragraphs (c) through (e)  of
this section,
  (c) Use. (1) Equipment shall  be used
by the  grantee  or subgrantee in the
program or project  for which it was
acquired as long as needed, whether or
not the project  or program c  -Mnues
to be  supported  by Federal funds.
When no longer needed for the origi-
nal program or project, the equipment
may be used in other  activities cur-
rently  or previously supported by  a
Federal agency.
  (2) The grantee  or subgrantee shall
also make equipment available for use
on other projects or programs  current-
ly or previously supported by the Fed-
eral Government,  providing such use
will not interfere with the work on the
projects or program for which it was
originally acquired. First  preference
for other use shall be given to other
programs or projects supported by the
awarding agency. User fees should be
considered if appropriate.
  (3) Notwithstanding the  encourage-
ment  in § 31.25(a)  to  earn  program
income,  the  grantee  or  subgrantee
must not use equipment acquired with
grant funds  to  provide services for a
fee to compete unfairly with private
companies  that  provide  equivalent
services, unless  specifically permitted
or contemplated by Federal statute.
  (4)  When  acquiring replacement
equipment, the  grantee or subgrantee
may use the  equipment to be  replaced
as a trade-in or sell the property and
use the proceeds to offset the cost of
the replacement property,  subject to
the approval of the awarding agency.
  (d)  Management requirements. Pro-
cedures for managing equipment (in-
cluding   replacement    equipment).
whether acquired in whole or in part
with  grant  funds,  until  disposition
                                   371

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                                               40 CFR Ch. I (7-1-88 Edition)
  ices place will, as a minimum, meet
the following requirements:
  (1) Property  records must be main-
tained that include a  description of
the property, a serial number or other
identification  number,  the  source of
property, who holds title, the acquisi-
tion date, and cost of the  property,
percentage of Federal participation in
the cost  of the property, the location,
use and condition of the property,  and
any  ultimate disposition data  includ-
ing the date of disposal and sale price
of the property.
  (2) A physical inventory of the prop-
erty must be taken and the results  rec-
onciled with the property records at
least once every two years.
  (3) A control system must be devel-
oped to ensure adequate safeguards to
prevent loss, damage, or theft of  the
property. Any  loss,  damage, or theft
shall be investigated.
  (4)  Adequate maintenance  proce-
dures must be  developed  to keep  the
property in good condition.
   5) If the grantee or subgrantee is
authorized  or  required to  sell  the
property,  proper  sales   procedures
must be  established  to  ensure  the
highest possible return.
  (e) Disposition. When original or re-
placement equipment acquired under
a  grant   or  subgrant  is  no  longer
needed for the original project or pro-
gram or  for other activities currently
or previously supported by  a Federal
agency, disposition of  the equipment
will be made as follows:
  (1) Items of equipment with a cur-
rent per-unit fair market value of  less
than $5,000 may be retained, sold or
otherwise disposed of with no further
obligation to the awarding agency.
  (2) Items of equipment with a cur-
rent per  unit  fair  market  value in
excess  of $5,000 may  be retained or
sold  and  the  awarding agency shall
have a right to an  amount  calculated
by  multiplying  the current market
value or  proceeds  from sale by  the
~-Wding agency's share of the equip-
  jnt.
  (3) In cases where a grantee  or sub-
grantee fails to take appropriate dispo-
sition actions,  the  awarding  agency
may direct the grantee or subgrantee
to take excess and disposition actions.
  (f) Federal equipment. In the event a
grantee or subgrantee is provided fed-
erally-owned equipment:
  (1) Title will remain vested  in  the
Federal Government.
  (2)  Grantees  or  subgrantees  will
manage the equipment in accordance
with Federal agency rules and proce-
dures, and submit an annual inventory
listing.
  (3) When the equipment is no longer
needed, the grantee  or subgrantee  will
request disposition  instructions from
the Federal agency.
  (g) Right to transfer title. The Feder-
al awarding agency may reserve  the
right to transfer title to the Federal
Government or a third  part named by
the  awarding  agency  when such  a
third party is otherwise eligible under
existing statutes. Such  transfers shall
be subject to the following standards:
  (1) The property shall be identified
in the grant or otherwise made known
to the grantee in writing.
  (2)  The Federal  awarding  agency
shall  issue   disposition  instruction
within 120 calendar days after the end
of the Federal support of the  project
for which it was acquired. If the Fed-
eral awarding agency fails to issue dis-
position instructions within the  120
calendar-day period the grantee shall
follow 31.32(e).
  (3) When title to equipment is trans-
ferred,  the  grantee shall be paid an
amount  calculated  by  applying  the
percentage of participation in the  pur-
chase to the current fair market value
of the property.

§ 31.33  Supplies.
  (a) Title. Title to supplies acquired
under  a grant or subgrant  will vest,
upon acquisition, in the grantee  or
subgrantee respectively.
  (b) Disposition. If there is a residual
inventory of unused supplies  exceed-
ing  $5,000  in  total   aggregate  fair
market  value  upon  termination  or
completion of  the award, and if the
supplies are not needed for any other
federally  sponsored   programs    or
projects,  the  grantee  or subgrantee
shall compensate the awarding agency
for its share.
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 Environmental Protection Agency

 §31.34  Copyright*.
  The  Federal  awarding  agency  re-
 serves  a  royalty-free,  nonexclusive,
 and irrevocable license  to reproduce,
 publish  or otherwise use, and to au-
 thorize others to use, for Federal Gov-
 ernment purposes:
  (a) The copyright in any work devel-
 oped under a grant, subgrant, or con-
 tract under a grant or subgrant; and
  (b) Any rights of copyright to which
 a grantee, subgrantee or a contractor
 purchases ownership with grant sup-
 port.

 § 31.35  Subawards to debarred and  sus-
    pended parties.
  Grantees and subgrantees must not
 make any award or permit any award
 (subgrant or contract) at  any  tier to
 any party which  is debarred or sus
 pended or is otherwise excluded from
 or ineligible for participation in Feder-
 al assistance programs under Execu-
 tive Order 12549, "Debarment and
 Suspension."

 § 31.36  Procurement
  <^al States. When procuring property
 and services under a grant, a State will
 follow  the same policies  and  proce-
 dures it uses for procurements from its
 non-Federal  funds.  The  State will
 ensure that every purchase  order  or
 other contract includes any clauses re-
 quired by Federal statutes and execu-
 tive orders and  their  implementing
 regulations. Other grantees and sub-
 grantees  will  follow paragraphs (b)
 through (i) in this section.
  (b)   Procurement   standards.  (1)
Grantees  and  subgrantees  will  use
their own  procurement  procedures
which  reflect  applicable  State and
local laws and  regulations,  provided
that the procurements conform to ap-
plicable Federal law and the standards
identified in this section.
  (2) Grantees and  subgrantees will
maintain  a  contract  administration
system which ensures that contractors
perform in accordance with the terms,
conditions, and specifications of their
contracts or purchase orders.
  (3) Grantees and  subgrantees will
maintain  a written code of standards
of conduct governing the performance
of  their  employees engaged in  the
award and administration of contracts.
                             §31.3o

No  employee,  officer  or  agent of the
grantee or subgrantee shall participate
in selection, or in the  award or admin-
istration of a contract supported by (
Federal funds if a conflict of interest,
real or apparent,  would be involved.
Such a conflict would arise when:
  (i) The employee, officer or agent,
  (ii) Any  member of his immediate
family,
  (iii) His or her partner, or
  (iv) An organization which employs,
or  is about  to  employ,  any  of the
above,  has a financial  or other interest
in the  firm selected  for  award.  The
grantee's or subgrantee's officers, em-
ployees or agents will neither solicit
nor  accept gratuities, favors or  any-
thing of monetary value from contrac-
tors, potential contractors,  or parties
to subagreements. Grantee ~nd  sub-
grantees  may  set   minimum  rules
where the financial interest  is not sub-
stantial or the gift  is an  unsolicited
item of nominal intrinsic value. To the
extent permitted by State or local law
or regulations, such standards or con-
duct will provide  for penalties, sanc-
tions, or other disciplinary actions for
violations of  such standards  by the
grantee's  and subgrantee's officers,  {
employees, or agents, or by contrac-
tors or  their agents. The awarding
agency may in regulation provide addi-
tional prohibitions relative to real, ap-
parent, or potential conflicts of inter-
est.
  (4) Grantee and subgrantee proce-
dures will provide for a review of pro-
posed procurements to avoid purchase
of unnecessary  or duplicative items.
Consideration should be given to con-
solidating  or  breaking  out procure-
ments  to obtain  a more  economical
purchase. Where appropriate, an anal-
ysis will be made  of lease versus pur-
chase alternatives, and any other ap-
propriate analysis to determine  the
most economical approach.
  (5) To foster greater economy and
efficiency,  grantees  and subgrantees
are encouraged to enter into State and
local  intergovernmental  agreements
for  procurement  or  use of common
goods and services.
  (6) Grantees and subgrantees are en-
couraged  to use  Federal  excess and
surplus property in lieu of purchasing
new equipment and  property when-
                                   373

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  31.36
                v.n. t i,/-i-oo cauion;
 ever such use  is feasible and reduces
 project costs.
  (7) Grantees  and subgrantees are en-
 couraged to  use  value  engineering
 clauses in contracts for construction
 projects  of sufficient size to offer rea-
 sonable  opportunities for cost  reduc-
 tions. Value engineering is a systemat-
 ic and creative anaylsis of each  con-
 tract item or task to ensure that its es-
 sential  function  is  provided  at  the
 overall lower cost.
  (8)  Grantees and  subgrantees  will
 make awards only to responsible  con-
 tractors  possessing the ability to  per-
 form successfully under the terms and
 conditions of a proposed procurement.
 Consideration  will be  given to such
 matters  us contractor  intep^'ty, com-
 pliance with public policy,  io-ord  of
 past performance, and  financial  and
 technical resources.
  (9)  Grantees and  subgrantees  will
 maintain records sufficient to detail
 the significant history  of  a procure-
 ment. These records will include, but
 are not necessarily limited to the fol-
slow'.ng:  rationale for  the method  of
 procurement,   selection  of  contract
 type, contractor selection or rejection,
 and the basis for the contract price.
  (10) Grantees  and subgrantees will
 use time and material  type contracts
 only—
  (i) After a  determination  that no
 other contract is suitable, and
  (ii) If the contract includes a  ceiling
 price that the contractor exceeds at its
 own risk.
  (11) Grantees and subgrantees alone
 will be responsible, in accordance with
 good   administrative   practice  and
 sound business judgment,  for the set-
 tlement of all contractual and admin-
 istrative  issues arising out of procure-
 ments. These  issues  include, but are
 not limited to  source evaluation,  pro-
tests,   disputes,  and   claims.  These
standards do not r-lieve the grantee or
subgrantee of any contractual respon-
sibilities  under its contracts. Federal
agencies  will not substitute their judg-
ment  for tha'  of the grantee or  sub-
rrantee unless  the matter is primarily
jt Federal concern.  Violations  of law
will be referred to the  local, State,  or
Federal authority having proper juris-
diction.
  (12) Grantees and  subgrantees will
have protest procedures to handle and
resolve disputes relating to their pro-
curements and shall in all  instances
disclose  information  regarding  the
protest to the awarding agency. A pro-
testor must exhaust all administrative
remedies  with the grantee  and  sub-
grantee before pursuing a protest with
the Federal agency.  Reviews  of pro-
tests  by the  Federal agency  will be
limited to:
  (i) Violations of Federal law or regu-
lations and the standards of this sec-
tion (violations of  State  or  local law
will be under the jurisdiction of  State
or local authorities) and
  (ii)  Violations  of the  grantee's or
subgrantee's  protest  procedures  for
fail  ° to  review a complaint  or pro-
test. Protests received by the  Federal
agency  other than   those  specified
above will be referred to the  grantee
or subgrantee.
 ^(c) Competition. (1) All  procurement
transactions will  be  conducted  in  a
manner providing full and open com-
petition consistent  with the  standards
of § 31.36.  Some of the situations con-
sidered to be restrictive of competition
include but are not limited to:
  (i)  Placing  unreasonable   require-
ments on  firms in order  for them to
qualify to do business,
  (")  Requiring  unnecessary  experi-
ence and excessive bonding,
  (iii) Noncompetitive pricing practices
between firms or  between  affiliated
companies,
  (iv) Noncompetitive awards  to con-
sultants that are on retainer contracts,
  (v) Organizational conflicts of  inter-
est,
  (vi) Specifying only a "brand name"
product instead of allowing "an equal"
product to be offered and describing
the performance of other relevant re-
quirements of the procurement, and
  (vii) Any arbitrary action in  the pro-
curement process.
  (2)  Grantees  and  subgrantees  will
conduct  procurements in  a  manner
that prohibits the use of statutorily or
administratively  imposed in-State or
local  geographical  preferences in the
evaluation of bids or proposals, except
in those cases where applicable Feder-
al statutes expressly mandate or en-
courage geographic preference.  Noth-
                                    374

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 Environmental Protection Agency

 ing in  this section  preempts State li-
 censing laws. When contracting for ar-
 chitectural  and  engineering  (A/E)
 services, geographic location may be a
 selection criteria provided its applica-
 tion leaves an appropriate number of
 qualified firms, given the nature  and
 size of  the project, to compete for the
 contract.
  (3) Grantees will have written selec-
 tion   procedures   for   procurement
 transactions.  These  procedures   will
 ensure  that all solicitations:
  (i) Incorporate a clear and accurate
 description of the  technical require-
 ments  for  the material,  product,  or
 service  to be procured. Such descrip-
 tion shall not, in competitive procure-
 ments,  contain features which unduly
 restrict competition. The description
 may include a st->t   °nt  of the quali-
 tative nature of the material, product
 or service to be procured, and when
 necessary, shall set forth those mini-
 mum   essential  characteristics  and
 standards to which it must conform if
 it  is to satisfy its intended  use.  De-
 tailed product specifications should be
 avoided if at all possible. When  it is
 impractical or uneconomical to make a
 clear and accurate description of  the
 technical   requirements,  a  . "brand
 name or  equal" description  may be
 used as  a means to define the perform-
 ance or  other salient requirements of a
 procurement. The specific features of
 the named brand which must be met
 by offerers shall be clearly stated; and
  (ii) Identify all requirements which
 the offerers must fulfill and all other
 factors  to be used in evaluating bids or
 proposals.
  (4) Grantees  and  subgrantees  will
 ensure  that all  prequalified lists  of
 persons, firms, or products which are
 used in acquiring goods  and services
are current and include enough quali-
 fied sources to ensure maximum open
and  free  competition. Also,  grantees
and subgrantees will not  preclude po-
tential bidders from qualifying during
the solicitation period.
  (5)  Construction   grants   awarded
 under Title II of the Clean Water Act
are  subject  to  the following  "Buy
American"   requirements  in   para-
graphs  (c)(5)(i)-(iii)  of  this section.
Section  215 of the Clean Water Act re-
quires that contractors give preference
                             §31.36

to the use of domestic material in the
construction of EPA-funded treatment
works.
  (i) Contractors  must use  domestii*
construction materials in preference to
nondomestic material if it is priced no
more than 6 percent higher than the
bid or offered price  of the nondomes-
tic material, including all costs of de-
livery to the construction site and any
applicable  duty,  whether  or not as-
sessed. The  grantee will normally base
the computations  on prices and  costs
in effect on  the date  of opening bids or
proposals.  •
  (ii) The award official may waive the
Buy American provision based on fac-
tors  the award official  considers rele-
vant, including:
  (A) Such use is not in the public in-
terest;
  (B) The cost is unreasonable;
  (C) The Agency's available resources
are not sufficient to implement the
provision, subject  to the  Deputy Ad-
ministrator's concurrence;
  (D) The  articles,  materials or sup-
plies of the  class or kind to be used or
the articles, materials or supplies from
which they  are manufactured are nof
mined,  produced or manufactured irr
the  United States  in  sufficient  and
reasonably available commerical quan-
tities or satisfactory quality for the
particular project; or
  (E) Application  of this provision  is
contrary to multilateral  government
procurement agreements,  subject to
the  Deputy Administrator's concur-
rence.
  (iii)  All  bidding  documents,  suba-
greements,  and,  if  appropriate,  re-
quests for proposals must  contain the
following "Buy American" provision:
In accordance with section 215 of the
Clean  Water  Act (33 U.S.C. 1251  et
seq.)  and implementing EPA  regula-
tions, the contractor agrees that pref-
erence  will  be  given to domestic con-
struction materials by the contractor,
subcontractors, materialmen and sup-
pliers in the performance of this suba-
greement.
  (dJ Methods of procurement to be fol-
lowed. (1) Procurement by small pur-
chase procedures. Small purchase pro'
cedures are  those relatively simple ancS-
informal procurement methods for se-
curing  services,  supplies,  or   other
                                    375

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§31.36
         40 CFR Ch. I (7-1-88 Edition)
property that do not cost more than
 "5,000 in the aggregate. If small pur-
-.iase procurements are used, price or
rate  quotations will be obtained from
in  adequate  number   of  qualified
sources.
 (2)  Procurement  by  sealed  bids
[formal  advertising). Bids are publicly
solicited  and  a  firm-fixed-price  con-
tact  (lump  sum or  unit  price)  is
iwarded  to  the  responsible  bidder
jvhose  bid, conforming  with  all the
naterial  terms and conditions  of the
nvitation for bids,  is the  lowest  in
3rice. The sealed  bid method  is the
sreferred  method for procuring  con-
struction,   if   the  conditions   in
5 31.36(d)(2)(i) apply.
 (i)  In order for sealed biding to  be
feasible,   the  following  conditions
should be present:
 (A) A complete, adequate, and realis-
tic specification  or purchase descrip-
tion is available;
 (B) Two or more responsible bidders
ire willing and able to compete effec-
tively for the business; and
 .(C) The procurement lends itself to
  'inn fixed price contract and the se-
ection of the successful bidder can be
nade principally on the basis of price.
 (ii)- If  sealed bids are  used, the fol-
owing requirements apply:
 (A) The invitation for bids will  be
jublicly advertised and bids shall  be
iolicited from  an adequate number of
mown suppliers, providing them suffi-
:ient time  prior  to  the  date set for
>pening the bids;
 (B) The invitation  for bids, which
vill include any specifications and per-
inent attachments,  shall define the
terns or  services in order for the
ndder to properly respond;
 (C) All bids  will be publicly opened
it the time and place prescribed in the
nvitation for bids;
 (D)  A  firm  fixed-price   contract
tward will be  made in writing to the
owest   responsive   and  responsible
)idder. Where specified in bidding doc-
iments,   factors  such  as   discounts,
ransportation  cost,  and  life  cycle
     shall be  considered in  determin-
  ; which bid  is lowest.  Payment dis-
:ounts will only  be used to determine
he low  bid when prior experience  in-
iicates that such discounts are usually
aken advantage of; and
  (E) Any or all bids may be rejected if
there is a sound documented reason.
  (3) Procurement by competitive pro-
posals.  The technique of competitive
proposals is normally conducted with
more  than one  source submitting  an
offer, and either a fixed-price or cost-
reimbursement type contract is award-
ed.  It  is generally used when  condi-
tions are not  appropriate for the use
of sealed bids. If this method is used,
the following requirements apply:
  (i) Requests for proposals will  be
publicized and identify all evaluation
factors  and their  relative importance.
Any response to  publicized requests
for  proposals shall be honored  to the
maximum extent practical;
  (ii) P-oposals  will be solicited from
an  adequate number  of  qualified
sources;
  (iii) Grantees  and  subgrantees  will
have a  method for conducting techni-
cal  evaluations  of the  proposals  re-
ceived and for selecting awardees;
  (iv) Awards will be made to the re-
sponsible firm whose proposal is most
advantageous to  the program, with
price and other factors considered; and
  (v) Grantees  and subgrantees may
use competitive proposal procedures
for  qualifications-based procurement
of  architectural/engineering   (A/E)
professional services whereby competi-
tors' qualifications are evaluated and
the most qualified competitor is select-
ed,  subject to negotiation of fair and
reasonable    compensation.     The
method, where  price is not  used  as a
selection factor, can only be used in
procurement of  A/E professional serv-
ices. It  cannot  be used to  purchase
other  types  of  services though  A/E
firms are a potential source to perform
the proposed effort.
  (4) Procurement by noncompetitive
proposals is  procurement  through so-
licitation of a proposal from only one
source,  or  after solicitation  of a
number of sources, competition is de-
termined inadequate.
  (i) Procurement by noncompetitive
proposals may be used only  when the
award of a contract is infeasible under
small purchase  procedures, sealed bids
or  competitive  proposals  and  one of
the following circumstances applies:
  (A) The item is available only from a
single source:
                                   376

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 Environmental Protection Agency

  (B) The public exigency or emergen-
 cy for the requirement will not permit
 a delay resulting from competitive so-
 licitation.
  (C) The awarding agency  authorizes
 noncompetitive proposals; or
  (D) After solicitation of a  number of
 sources, competition is determined in-
 adequate.
  (ii) Cost  analysis, i.e..  verifying the
 proposed cost data,  the projections of
 the  data, and the  evaluation of the
 specific elements of  costs  and profit, is
 required.
  (iii) Grantees and subgrantees may
 be  required  to submit the proposed
 procurement to the awarding agency
 for  pre-award review in accordance
 with paragraph (g) of this section.
  ^££ Contracting wiL. ~.nall and mi-
 nority firms, women's business enter-
 prise and labor surplus area firms. (U
 The grantee  and subgrantee will take
 all   necessary  affirmative   steps  to
 assure that  minority  firms, women's
 business enterprises, and labor surplus
 area firms are used when possible.
  (2) Affirmative steps shall  include:
  (i) Placing qualified small and mi-
 nority businesses and women's  busi-
 ness enterprises on solicitation lists;
  (ii) Assuring that small and minority
 businesses, and women's  business en-
 terprises are solicited whenever they
 are potential sources;
  (iii)  Dividing  total  requirements,
 when   economically  feasible,   into
smaiier tasks or quantities  to permit
maximum participation by  small and
minority business,  and women's busi-
ness enterprises;
  (iv) Establishing delivery  schedules,
where the requirement permits, which
encourage participation by  small and
minority business, and women's busi-
ness enterprises;
  (v) Using the services and assistance
of the Small Business Administration.
and  the Minority  Business Develop-
ment Agency of the  Department of
Commerce; and
  (vi) Requiring the prime contractor.
if subcontracts are  to be let. to take
the affirmative steps listed in para-
graphs (e)(2) (i) through (v)  of  this
section.
  (f)_ Contract  cost  and  price.  (1)
Grantees and  subgrantees  must  per-
 form a cost or price analysis in connec-
                             §31.36

tion with every procurement action in-
cluding contract  modifications.  The
method and degree of analysis is de-
pendent on the facts surrounding the
particular procurement situation, but
as a  starting  point,  grantees  must
make independent estimates before re-
ceiving bids or proposals. A cost analy-
sis must be performed when the of-
feror  is required  to submit the ele-
ments of his estimated cost, e.g., under
professional, consulting,  and architec-
tural  engineering services contracts. A
cost  analysis will  be  necessary  when
adequate price competition  is lacking,
and for sole source procurements, in-
cluding  contract  modifications  or
change orders, unless price  resonable-
ness can be established on the basis of
a catalog or market price of a commer-
cial product sold in substantial quanti-
ties to the general public or based on
prices set by law or regulation. A  price
analysis will be used in all other in-
stances to determine the reasonable-
ness of the proposed contract price.
  (2)  Grantees and subgrantees will
negotiate profit as a separate element
of the price for each contract in which
there is no price competition and in all
cases  where cost analysis is performed.
To  establish  a fair  and reasonable
profit, consideration will be given to
the complexity of the work to be per-
formed, the risk borne by the contrac-
tor, the contractor's  investment, the
amount of subcontracting, the quality
of its record of past performance, and
industry profit rates in the surround-
ing geographical area for similar work.
  (3)  Costs or  prices based on estimat-
ed costs for contracts under grants will
be allowable only to the extent that
costs  incurred or cost estimates includ-
ed in negotiated  prices are consistent
with   Federal cost  principles   (see
§ 31.22). Grantees may reference their
own cost principles that comply with
the applicable Federal cost principles.
  (4)  The cost plus  a percentage of
cost  and  percentage of  construction
cost methods  of contracting shall not
be used.
  ^g^ Awarding   agency  review.  (1)
Grantees  and subgrantees must  make
available,  upon request  of the award-
ing agency, technical specifications on
proposed  procurements where  the
awarding  agency believes such review
                                    377

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 3
         40 CFR Ch. I (7-1-88 Edition)
 is needed to ensure that the item and/
 or service specified is the  one being
 proposed for purchase. This  review
 generally will take place prior to  the
 time  the specification is incorporated
 into a solicitation document. However,
 if the grantee or subgrantee desires to
 have the review accomplished  after a
 solication  has  been  developed,  the
 awarding agency may still review  the
 specifications, with such review usual-
 ly limited to the technical  aspects of
 the proposed purchase.
  (2)  Grantees and subgrantees must
 on request make available for  award-
 ing agency pre-award review [  delete
 ","] procurement documents, such as
 requests for  proposals or invitations
 for bids,  independent cost  estimates,
 etc., when:
  (i) A grantee's or subgran tee's-pro-
 curement procedures or operation fails
 to  comply   with  the  procurement
 standards in this seciton; or
  (ii)  The procurement is expected to
 exceed $25,000 and  is to be awarded
 without competition or only one bid or
 offer is received in response to a solici-
 tation; or
  (iii) The procurement, which is ex-
 pected  to exceed $25,000,  specifies a
 "brand name" product; or
  (iv) The proposed award over $25,000
 is to be awarded to  other than the ap-
 parent low bidder under a sealed bid
 procurement; or
  (v) A proposed contract modification
 changes the scope of a contract or in-
 creases the contract amount by more
 than $25,000.
  (3) A grantee or subgrantee  will be
 exempt from the pre-award review in
 paragraph (g)(2) of this section if the
 awarding agency determines that  its
 procurement  systems comply with the
 standards of this section.
  (i) A grantee or subgrantee may  re-
 quest that its procurement  system be
 reviewed  by  the  awarding agency to
 determine whether  its system  meets
 these standards in order for its  system
 to  be  certified. Generally, these  re-
 views shall occur where there is a con-
 tinuous high-dollar funding, and third-
party contracts are awarded on  a regu-
lar basis;
  (ii)  A  grantee  or  subgrantee may
self-certify its procurement  system.
Such  self-certification shall not limit
the awarding agency's right to survey
the system. Under a self-certification
procedure,   awarding  agencies  may
wish  to  rely  on written  assurances
from the grantee or subgrantee that it
is complying with these  standards. A
grantee or subgrantee will cite specific
procedures,   regulations,  standards,
etc., as being in compliance with these
requirements  and  have  its  system
available for review.
 ^h^,  Bonding requirements. For con-
struction or facility improvement con-
tracts  or   subconstracts  exceeding
$100,000, the  awarding  agency may
accept the bonding policy and require-
ments of the grantee or  subgrantee
provided the  awarding  agency  has
made  a determination that the award-
ing agency's interest is adequately pro-
tected. If such  a determination has
not been made, the minimum require-
ments shall be as follows:
  (1) A bid guarantee from each bidder
equivalent  to five percent of the  bid
price.  The  "bid guarantee" shall con-
sist of a firm commitment such as  a
bid bond, certified check, or other ne-
gotiable  instrument accompanying  a
bid as assurance that the bidder will,
upon  acceptance of his  bid, execute
such contractual documents as may be
required  within the time specified.
  (2) A performance bond on the part
of the contractor for 100 percent of the
contract  price. A "performance bond"
is ,one executed in  connection with  a
contract  to secure fulfillment of all
the  contractor's  obligations  under
such contract.
  (3) A payment  bond on  the part of
the contractor for 100 percent of the
contract price. A "payment  bond"  is
one executed in connection with a con-
tract 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.
  H] Contract provisions. A grantee's
and subgrantee's contracts must con-
tain provisions in paragraph (i) of thi^
section.  Federal agencies are permit-
ted  to  require  changes,  remedies.
changed  conditions, access and records
retention,  suspension of  work,  and
other clauses approved by the Office
of Procurement Policy.
  (1)  Administrative, contractual." or
legal remedies in instances where con-
                                   378

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 environmental Protection
 tractors  violate  or  breach  contract
 terras, and  provide for such sanctions
 and penalties as may be appropriate.
 (Contracts  other  than  small   pur-
 chases)
  (2) Termination  for cause and  lur
 convenience by  the  grantee or  sv fa-
 grantee   including  the  manner  by
 which it will be effected and the basis
 for settlement. (All contracts in excess
 of $10, 000)
  (3)  Compliance   with  Executive
 Order 11246 of September 24. 1965 en-
 titled "Equal Employment Opportuni-
 ty," as amended by  Executive  Order
 11375 of October 13.  1967 and as sup-
 plemented  in  Department  of  Labor
 regulations  (41 CFR  Chapter 60). (All
 construction  contracts  awarded   in
 excess of $10,1)00 by grantees and their
 contractors  or subgrantees)
  (4) Compliance  v  ch  th°  Copeland
 "Anti-Kickback" Act (18 ij.&.C. 874) as
 supplemented in Department of Labor
 regulations  (29 CFR Part 3). (All con-
 tracts and subgrants for construction
 or repair)
  (5) Compliance  with  the  Davis-
 Bacon Act (40 U.S.C. 276a to a-7) as
 supplemented by Department of Labor
 regulations  (29 CFR Part 5).  (Con-
 struction contracts in excess of $2,000
 awarded by grantees  and subgrantees
 when required by Federal  grant pro-
 gram legislation)
  (6) Compliance with sections 103 and
 107  of the Contract Work Hours and
Safety Standards Act (40 U.S.C. 327-
330) as supplemented by Department
of Labor regulations (29 CFR Part 5).
(Construction  contracts  awarded  by
grantees and subgrantees Ln excess of
$2,000,  and in  excess of $2,500  for
other contracts which involve the em-
ployment of mechanics or laborers)
  (7) Notice of awarding agency  re-
quirements and regulations pertaining
to reporting.
  (8) Notice of awarding agency  re-
quirements and regulations pertaining
to patent rights  with respect to any
discovery or invention which arises or
is developed in the course of or under
such contract.
  (9) Awarding agency requirements
and  regulations  pertaining  to  copy-
rights and rights in data.
  (10) Access by the grantee,  the sub-
grantee,  the Federal  grantor agency,
                             § 3T.36

the  Comptroller   General  of  the
United States, or any of their duly au-
thorized representatives to any books,
documents, papers, and records of U
Contractor which  are directly pertr-
n^nt to that specific contract for the
purpose of making audit, examination.
excerpts, and transcriptions.
  (11)   Retention    of  all  required
records for three years after grantees
or subgrantees  make  final payments
and  all  other  pending matters are
closed.
  (12) Compliance with all apolicable
standards, orders,  or  requirements
issued  under section 306 of the Clear
Air Act (42 U.S.C. 1857(h)), section 508
01 the  Clean Water  Act  (33  U.S.C.
1368), Executive Order 11738, and En-
vironmental Protection Agency  regula-
tions  (40 CFR  Part  15).  (Contracts.
subcontracts,    and   subgrar.is    of
amounts in excess of $100.000)
  (13) Mandatory  standards and  poli-
cies  relating  to   energy  efficiency
which   are  contained  in  the  state
energy  conservation  plan  issued  in
compliance  with  the  Energy  Policy
and Conservation Act (Pub. L. 94-163).
  (i) Payment to consultants. (1)  EPA
will limit its participation in the salai
rate (excluding overhead) paid to  indi-
vidual  consultants  retained by grant-
ees or by a  grantee's contractors  or
subcontractors to  the  maximum  daily-
rate for a GS-18. (Grantees may,  how-
ever, pay consultants  more than this
amount).  This  limitation  applies  to
consultation services of designated  in-
dividuals  with specialized skills  who
are paid at a daily  or hourly rate. This
rate  does not include transportation
and subsistence costs for  travel per-
formed; grantees will pay these Ln  ac-
cordance  with their normal trave1  re-
imbursement  practices.  (Pub.  L. 99-
591).
  (2)  Subagreements  with firms  for
services which are awarded using the
procurement requirements in this part
are not affected  by this limitation.
  OO Use  of the same architect or engi-
neer during  construction. (1)  If the
grantee is satisfied with the qualifica-
tions and performance of the architect
or engineer who provided any or  all of,
the facilities  planning or design  sen
ices for a waste-water treatment works-
project and  wishes to  retain that firm
                                    379

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 §31.37
         40 CFR Ch. I (7-1-33 Edition)
 or  individual during construction of
 the project, it may do so without fur-
 ther  public notice and  evaluation of
 qualifications, provided:
  (i) The grantee received a facilities
 planning (Step  1)  or  design  grant
 (Step 2), and selected the architect or
 engineer in  accordance  with  EPA's
 procurement  regulations  in   effect
 when EPA awarded the grant; or
  (ii)  The award official approves non-
 competitive    procurement    under
 § 31.36(d)(4)  for  reasons other than
 simply  using  the same  individual or
 firm that provided facilities planning
 or design services for the project; or
  (iii) The pan tee attests that:
  (A) The initial request for proposals
 clearly stated the possibility that the
 firm  or  individual selected  could be
 awarded a subagreement for services
 during construction; and
  (B) The  firm or individual was se-
 lected for facilities planning or  design
 services in accordance with procedures
 specified in this section.
  (C)  No employee, officer or agent of
 the grantee, any  member of their im-
 mediate  families,  or  their partners
 have financial or other interest  in the
 firm selected for award; and
  (D) None of the grantee's officers,
 employees  or agents solicited  or ac-
 cepted gratuities,  favors  or anything
 of monetary value from contractors or
 other parties to subagreements.
  (2) However, if  the grantee uses the
 procedures in paragraph (k)(l) of this
 section to retain an architect or engi-
 neer,  any Step  3 subagreements be-
 tween the  architect or  engineer  and
 the grantee must meet all of the other
 procurement provisions in § 31.36.
 [53  FR 8068 and 8087, Mar. 11. 1988, and
 amended at 53 FR 8075. Mar. 11. 1988]
  EFFECTIVE DATE NOTE At 53 FR 8075, Mar.
 11.  1988.  531.36 (c)(5), (j)  and (k) were
 added, effective October 1, 1988.

831.37  Subgrants.
  (a) States. States shall follow state
law and procedures  when   awarding
and administering subgrants (whether
on  a cost  reimbursement   or  fixed
amount  basis) of  financial  assistance
to  local and Indian  tribal  govern-
ments. States shall:
  (1) Ensure that every subgrant in-
cludes any clauses required by Federal
statute and executive orders and their
.implementing regulations:
  (2)   Ensure  that  subgrantees  are
aware of requirements imposed  upon
them  by Federal  statute and  regula-
tion;
  (3)  Ensure that  a provision for com-
pliance with § 31.42  is placed in every
cost reimbursement subgrant; and
  (4)  Conform any advances of grant
funds to subgrantees substantially to
the  same standards  of timing  and
amount that apply  to  cash  advances
by Federal agencies.
  (b)   All  other  grantees. All  other
grantees shall follow the provisions of
this  part which  are  applicable to
awarding agencies when awarding and
administering subgrants (whether on a
cost reimbursement or fixed amount
basis; of financial assistance to local
and Indian tribal governments. Grant-
ees shall:
  (1)  Ensure  that every subgrant in-
cludes a provision for compliance with
this part;
  (2)  Ensure  that every subgrant in-
cludes any clauses required by Federal
statute and executive orders and their
implementing regulations; and
  (3)   Ensure  that  subgrantees are
aware of requirements imposed upon
them by Federal statutes and regula-
tions.
  (c)  Exceptions. By their own  terms,
certain provisions of this part do not
apply to the award and administration
of subgrants:
  (1) Section 31.10;
  (2) Section 31.11;
  (3)  The letter-of-credit procedures
specified in  Treasury Regulations at
31 CFR Part 205,  cited in § 31.21; and
  (4) Section 31.50.

  REPORTS, RECORDS. RETENTION, AND
            ENFORCEMENT

§31.40  Monitoring  and reporting program
    performance.
  (a)  Monitoring by grantees. Grantees
are responsible for managing the day-
to-day  operations of  grant  and  sub-
grant supported  activities.  Grantees
must monitor grant  and subgrant sup-
ported activities to assure compliance
with  applicable Federal requirements
and that performance goals  are being
achieved.  Grantee  monitoring  must
                                    380

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 Environmental Protection Agency

 cover each program  function or activi-
 ty.
  (b) Nonconstruction performance re-
 ports.  The Federal  agency may, if it
 decides that  performance information
 available from subsequent applications
 contains  sufficient  information  to
 meet its programmatic needs,  require
 the  grantee  to submit a performance
 report only upon expiration or termi-
 nation of grant support.  Unless waived
 by the Federal agency this report will
 be due  on  the same date as the  final
 Financial Status Report.
  (1) Grantees  shall  submit  annual
 performance reports unless the award-
 ing agency requires quarterly or semi-
 annual reports. However, performance
 reports will not be required more fre-
 quently than  quarterly. Annual  re-
 ports shall be due 90 days after the
 grant year, quarterly or semi-annual
 reports shall be aue 30 days afte. the
 reporting  period. The final perform-
 ance report will be due  90 days after
 the expiration or termination of grant
 support. If a justified request  is sub-
 mitted  by  a  grantee,  the  Federal
 agency may  extend the due date for
 any  performance report. Additionally,
 requirements for  unnecessary  per-
 formance  reports  may be waived  by
 the Federal agency.
  (2) Performance reports will contain,
 for each grant, brief  information  on
 the following:
  (i) A  comparison  of actual  accom-
plishments  to the  objectives estab-
lished  for  the  period.  Where  the
output of the project can be  quanti-
fied, a  computation  of  the cost per
 unit of output may be required if that
information will be useful.
  (ii) The reasons for slippage if estab-
 lished objectives were not met.
  (lii) Additional  pertinent  informa-
 tion including, when appropriate, anal-
 ysis  and explanation of  cost overruns
or high unit costs.
  (3) Grantees will  not be  required to
submit more  than the original and two
copies of performance reports.
  (4) Grantees  will adhere  to  the
standards in  this section in prescribing
performance   reporting  requirements
for subgrantees.
  (c)  Construction  performance  re-
ports. For the most  part, on-site tech-
nical inspections and certified percent-
                             §31.41

age-of-completion data  are  relied on
heavily by Federal agencies to monitor
progress  under  construction  g
and  subgrants.  The  Federal  agei
will require additional formal perfornr-
ance  reports  only  when  considered
necessary, and  never more frequently
than quarterly.
  (d) Significant developments. Events
may occur between the scheduled per-
formance reporting dates which have
significant  impact upon  the grant  or
subgrant supported activity. In such
cases,  the  grantee  must inform the
Federal agency as soon as the follow-
ing types of conditions become known:
  (1) Problems, delays, or adverse con-
ditions which  will  materially  impair
the ability to meet the objective of the
award. This disclosure must include a
statement of the action taken, or con-
templated,  and any assistance needed
to resolve the situation.
  (2)  Favorable developments which
enable meeting time schedules and ob-
jectives sooner  or at less cost than an-
ticipated or producing more beneficial
results than originally planned.
  (e) Federal agencies may  make si££
visits as warranted by program nee
  (f)  Waivers, extensions. (1)  Federal
agencies may waive any performance
report required by this  part  if not
needed.
  (2) The grantee may waive any per-
formance  report from a  subgrantee
when not  needed. The  grantee may
extend the due date for any perform-
ance report from a subgrantee  if the
grantee will still be able to meet  its
performance reporting  obligations  to
the Federal agency.

§ 31.41  Financial Reporting.
  (a)  General  (1) Except as provided
in paragraphs  (a) (2) and (5)  of this
section, grantees will  use only the
forms specified  in-  paragraphs   (a)
through (e) of this section, and such
supplementary or other  forms as may
from time to  time be  authorized  by
OMB, for:
  (i) Submitting financial reports  to
Federal agencies, or
  (ii) Requesting advances  or rei/
bursements when letters of credit aic
not used.
                                    381

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 a «»i ••»
         40 CFR Ch. I (7-1-88 Edition)
   (2)  Grantees need  not apply  the
 -i^te or contribute to the accuracy of
   porting.  Federal   agencies   may
 accept  the required information from
 grantees in  machine usable format or
 computer printouts  instead  of  pre-
 scribed forms.
   (6)  Federal  agencies may waive any
 report  required by this section if not
 needed.
   (7)  Federal agencies  may extend the
 due date of any financial report upon
 receiving a justified request  from a
 grantee.
   (b)   Financial  Status   Report—(1)
 Form.  Grantees  will  use Standard
 Form 269 or  269A, Financial Status
 Report, to report the status of funds
 for all nonconstruction grants and for
 construction grants  when  required in
 accordance with § 31.41(e)(2)(iii).
   (2)  Accounting basis. Each  grantee
 will report  program outlays and pro-
 gram income on a cash or accrual basis
 as prescribed by the awarding agency.
 If the Federal agency requires accrual
 information and the grantee's   ac-
   Mnting records are  not normally
 ^._pt  on the accural  basis, the grantee
 shall not be required to convert its ac-
 counting system  but  shall  develop
 such  accrual information through sind
analysis  of  the  documentation  on
hand.
  (3) Frequency. The Federal agency
may prescribe  the frequency of the
report  for  each project or program.
However, the report will not be  re-
quired  more frequently than quarter-
ly.  If  the  Federal  agency  does not
specify the frequency of the report, it
will  be submitted  annually. A  final
report  will be  required upon expira-
tion or termination of grant support.
  (4) Due date. When reports are re-
quired  on a quarterly or semiannual
basis, they will  be due 30 days  after
the reporting period. When required
on an annual basis, they will be due 90
days after  the grant year. Final  re-
ports will be due 90 days after the ex-
piration or termination of grant sup-
port.
  (c)   Federal   Cash   Transactions
Report—(1) Form,  (i) For grants paid
by letter or credit. Treasury check ad-
vances  or electronic transfer of funds,
the grantee will submit the Standard
Form 272, Federal Cash Transactions
Report, and when necessary,  its con-
tinuation sheet, Standard Form  27 2a,
unless  the terms of the award exempt
the grantee from this requirement.
  (ii) These reports will be used by the
Federal agency to monitor cash  ad-
vanced to grantees and to obtain  dis-
bursement  or outlay information  for
each grant from grantees. The format
of the  report may be adapted as  ap-
propriate when reporting is to be ac-
complished  with  the  assistance  of
automatic data  processing equipment
provided that the information  to be
submitted is not changed in substance.
  (2) Forecasts of Federal cash require-
ments.  Forecasts of Federal cash re-
quirements  may be  required in  the
"Remarks" section of the report.
  (3) Cash in  hands  of subgrantees.
When  considered necessary and  feasi-
ble by  the  Federal agency, grantees
may be required to report the amount
of cash  advances  in excess of  three
days' needs in the hands of their sub-
grantees or contractors and to provide
short narrative explanations of actions
taken  by the grantee  to reduce  the
excess  balances.               ^
  (4) Frequency and  due  date. Lrrant-
ees must submit  the report no later
than 15 working  days following  the
                                    382

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 Environmental Protection Agency

 end of each  quarter. However, where
 an advance either by letter of credit or
 electronic transfer of funds  is author-
 ized at an annualized rate of one mil-
 lion  dollars  or  more,  the  Federal
 agency may  require the report  to  be
 submitted within 15 working days fol-
 lowing the end of each month.
  (d) Request for  advance  or  reim-
 bursement—(I) Advance payments. Re-
 quests for Treasury check advance
 payments will be submitted  on Stand-
 ard Form 270, Request for Advance or
 Reimbursement. (This  form will not
 be used for drawdowns  under a  letter
 of credit, electronic funds transfer  or
 when Treasury check  advance  pay-
 ments are made to the grantee auto-
 matically on a predetermined basis.)
  (2) Reimbursements. Requests for re
 imbursement  under  nonconstruction
 grants will also be submitted on Stand-
 ard Form 270. (For reimbursement re-
 quests under construction grants, ses
 paragraph (e)(l) of this section.)
  (3)  The  frequency for submitting
 payment  requests   is   treated   in
 §31.41(b)(3).
  (e) Outlay report  and request for  re-
 imbursement for   construction . pro-
 grams. (1) Grants  that support con-
 struction activities paid by reimburse-
 ment method.
  (i)  Requests  for  reimbursement
 under construction  grants will be sub-
 mitted on Standard Form 271, Outlay
 Report and  Request for Reimburse-
 ment for Construction Programs. Fed-
 eral agencies may,  however, prescribe
 the  Request for Advance  or Reim-
 bursement   form,   specified    in
 § 31.41(d). instead of this form.
  (ii) The frequency for submitting re-
 imbursement requests  is treated  in
 § 31.41(b)(3).
  (2) Grants that support construction
 activities paid by letter of credit, elec-
 tronic funds  transfer  or   Treasury
 check advance, (i)  When a  construc-
tion grant is rrold by letter of credit,
electronic funds w/ansfer or Treasury
check  advances,   the   grantee  will
report its outlays to  the  Federal
 agency  using  Standard Form  271,
Outlay Report and  Request for Reim-
 bursement for Construction  Programs.
The Federal  agency will provide any
 necessary special instruction. Howev-
                            §31.4

er,  frequency  and due date shall t
governed by § 31.4Kb) (3) and (4).
  (ii)  When a construction grant
paid  by  Treasury  check  advanc*
based on  periodic requests  from tr
grantee, the advances will be reques
ed on the form specified  in § 31.41(d
  (iii) The Federal agency may subst
tute the Financial Status Report spe
ified  in   § 31.4Kb)  for  the  Outla
Report  and Request for Reimburs.
ment  for Construction Programs.
  (3) Accounting basis. The accountir
basis  for the  Outlay Report and R/
quest for  Reimbursement  for  Coi
struction Programs shall be governe
by § 31.41(b)(2).

§31.42 Retention and  access requiremen
    for records.
  (a) Applicability. (1) This section a>
plies to all financial and programmat:
records, supporting documents, stati:
tical  records,  and  other records c
grantees or subgrantees which are:
  (i) Required  to be maintained by th
terms of  this Part, program reguh
tions  or the grant agreement, or
  (ii)  Otherwise reasonably considere
as pertinent to program regulations c
the grant agreement.
  (2)  This section does  not apply c
records  maintained  by contractors c
subcontractors. For  a requirement t
place a provision concerning records i
certain   kinds   of   contracts,   se
§31.36(i)(10).
  (b)  Length  of  retention period. C
Except as otherwise provided, recorc
must be retained for three years f roi
the  starting  date specified in  par
graph (c) of this section.
  (2)  If any litigation, claim, negoti
tion,  audit  or other action involvii
the  records has been started befo:
the expiration of the  3-year perio
the  records  must be retained  un'.
completion  of the action and  resol
tion of  all issues which  arise  from
or until the end  of the regular  3-ye:
period, whichever is  later.
  (3)  To  avoid  duplicate recordkee
ing. awarding agencies may  make sp
cial arrangements with  grantees ai
subgrantees   to  retain  any  recor
which are  continuously needed f
joint use. The awarding agency will i
quest transfer of records to its custO'
                                   383

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 §31.43
         40 C?R Ch. I  (7-1-38 Edition;
 when it  determines  that  the  records
•—possess   long-term   retention  value.
  /hen the  records are transferred  to
 or maintained by the Federal  agency,
 the  3-year  retention requirement  is
 not applicable to the grantee or sub-
 grantee.
   (c)  Starting   date   of  retention
 period—(1) General.  When grant sup-
 port 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 or sub-
 grantee  submits  to  the  awarding
 agency its  single or last  expenditure
 report  for that  period.  However,  if
 grant support is continued or renewed
 quarterly,  the retention  period for
 each year's records starts on the day
 the grantee  submits its  expe- -Mture
 report for the last quarter of the Fed-
 eral fiscal year. In all other cases, the
 retention period starts on  the  day the
 grantee submits  its final  expenditure
 report. Lf an expenditure report has
 been  waived, the  retention  period
 starts on  the day the  report would
 have been due.
  (2) Real  property  and  equipment
 .ecords. The retention period  for real
 property and equipment records starts
 from the date of the disposition or re-
 placement or transfer at the direction
 of the awarding agency.
  (3) Records for  income transactions
 after grant  or subgrant  support.  In
 some  cases  grantees  must   report
 income after the period of grant sup-
 port. Where there is such a require-
 ment, the  retention  period for the
 records pertaining to the earning  of
 the income starts from the end of the
 grantee's fiscal  year in  which the
 income is earned.
  (4) Indirect cost rate proposals, cost
 allocations plans, etc. This paragraph
 applies to the following types of docu-
 ments,  and their supporting  records:
 indirect cost rate computations or pro-
 posals, cost allocation plans, and any
 similar accounting  computations  of
 the rate at which a particular group of
 costs is chargeable (such as computer
 usage chargeback rates or  composite
 Mnge benefit rates).
  (i) // submitted for negotiation.  If
 the proposal, plan, or other computa-
 tion is required to be submitted to the
 Federal Government (or to the grant-
ee) to form the basis for negotiation of
the rate,  then  the 3-year  retention
period for its supporting records starts
from the date of such submission.
  (ii) // not submitted for negotiation.
If the proposal,  plan, or other compu-
tation is not  required to be submitted
to the Federal Government (or to the
grantee)  for negotiation  purposes,
then the  3-year retention period for
the proposal  plan, or computation and
its supporting records starts from end
of the fiscal year (or other accounting
period)  covered  by the proposal, plan,
or other computation.
  (d) Substitution of microfilm. Copies
made by microfilming,  photocopying,
or similar methods may be substituted
for the original records.
  (e) Access to records—(1) Records of
grantees and subgrantees. The award-
ing agency and  the Comptroller  Gen-
eral  of  the United States, or  any of
their authorized representatives,  shall
have the right of access to any perti-
nent  books,  documents, papers,  or
other records of grantees and subgran-
tees which are pertinent to the grant,
in order to make audits, examinations,
excerpts, and transcripts.
  (2) Expiration of right of access. The
rights of  access in this section  must
not be  limited to the required reten-
tion period but shall last as long as the
records  are retained.
  (f)  Restrictions   on public  access.
The Federal  Freedom of Information
Act (5 U.S.C. 552)  does not  apply to
records  Unless  required  by Federal.
State, or local law, grantees and sub-
grantees are not required to  permit
public access to their records.

§31.43   Enforcement.
  (a) Remedies for noncom-oliance. If a
grantee or subgrantee materially fails
to comply with any term of an award,
whether stated in a Federal statute or
regulation, an assurance, in  a  State
plan or application, a notice of award,
or  elsewhere,  the awarding  agency
may take one or more of the following
actions, as appropriate  in the  circum-
stances:
  (1) Temporarily withhold cash pay-
ments pending correction of the defi-
ciency by the grantee or subgrantee or
                                    384

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               rrotection Agency
 more severe enforcement action by the
 awarding agency,
   (2) Disallow (that is, deny both use
 of funds and matching credit for) all
 or part  of  the cost of the activity or
 action not in compliance.
   (3) Wholly or partly suspend or ter-
 minate  the current  award  for the
 grantee's or subgrantee's program.
   (i)  EPA can also wholly  or partly
 annul the current award for the grant-
 ee's or subgrantee's program,
   (4)  Withhold further awards for the
 program, or
   (5)  Take other remedies that may be
 legally available.
   (b)  Hearings, appeals. In taking an
 enforcement  action,   the  awarding
 agency will provide the grantee or sub-
 grantee an  opportunity for such hear-
 ing,  appeal, or other administrative
 proceeding  to  which  the grantee or
 subgrantee  is  entitled under any  stat-
 ute  or  regulation applicable  to the
 action involved.
  (c)  Effects of suspension and termi-
 nation.  Costs of grantee or subgrantee
 resulting from obligations incurred by
 the grantee or subgrantee  during a
 suspension  or after termination of an
 award, are  not  allowable unless the
 awarding agency expressly authorizes
 them in the notice of suspension or
 termination or subsequently.  Other
 grantee  or subgrantee costs  during
 suspension or after termination which
 are  necessary  and   not  reasonably
 avoidable are allowable if:
  (1) The costs result from obligations
 which were properly incurred by the
 grantee or  subgrantee before  the ef-
 fective date of suspension or termina-
 tion, are not in anticipation of it, and,
 in the case  of a termination, are  non-
 cancellable, and,
  (2)  The costs would be allowable if
 the award were not suspended or ex-
 pired  normally at the end of the fund-
 ing period  in which the termination
 takes effect.
  (d)  Relationship to  Debarment and
Suspension. The  enforcement reme-
 dies identified  in  this section, includ-
 ing suspension and termination, do not
 preclude grantee  or subgrantee from
being subject to "Debarment and Sus-
pension"   under  E.O.  12549   (see
 § 31.35).
                             §31.50

[53  FR 8068 and 8087. Mar. 11. 1988, an
amended at 53 FR 8076, Mar. 11. 1988]
  EFFECTIVE DATE NOTE: At 53 FR 8076, Mar.
I1.,  1988, §31.43 (a)(3)(i) was added, effec-
tive October 1, 1988.

§ 31.44  Termination for convenience.
  Except as provided in  § 31.43 awards
may be terminated in whole or in part
only as follows:
  (a) By the awarding agency with the
consent of the grantee  or subgrantee
in which  case  the two  parties shall
agree  upon  the  termination  condi-
tions, including the effective date  and
in the  case of partial termination, the
portion to be terminated, or
  (b)  By  the  grantee or  :    — intee
upon  written   notification  to   the
awarding  agency, setting  forth  the
reasons for such termination, the ef-
fective date, and in the case of  partial
termination, the  portion to be termi-
nated.  However,  if,  in the  case  of  a
partial  termination,  the  awarding
agency determines that  the  remaining
portion of the award will not  accom
plish  the  purposes  for which  tlA
award  was made, the awarding  agency
may terminate the award in its entire-
ty under either § 31.43 or paragraph
(a) of this section.

§ 31.45  Quality assurance.
  If the grantee's project involves en-
vironmentally  related  measurements
or data generation,  the  grantee shall
develop and implement quality assur-
ance practices consisting of policies,
procedures,  specifications,  standards,
and  documentation   sufficient   to
produce data  of quality adequate to
meet project objectives  and to mini-
mize loss of data due to out-of-control
conditions or malfunctions.

[53 PR 8078. Mar. 11. 19881
          DATE NOTE: At 53 FR 8076, Mar.
11. 1988. § 31.45 was added, effective Octo-
ber 1. 1988.

     Subpart D — After-The-Grant
            Requirements

§ 31.50  Closeout

  (a) General The Federal agency will
close  out the  award  when it  deter-
mines  that  all applicable administra
                                    ooc

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 §31.51
         40 CFR Ch. I (7-1-88 Edition)
 tive actions  and all required work of
 the grant has been completed.
  (b) Reports. Within 90 days after the
 expiration or termination of the grant,
 the grantee must submit all  financial,
 performance, and other  reports  re-
 quired  as a condition of the  grant.
 Upon request by the grantee. Federal
 agencies may extend  this timeframe.
 These may include but are not limited
 to:
  (1)  Final  performance  or  progress
 report.
  (2)  Financial Status Report (SF 269)
 or  Outlay Report and Request for Re-
 imbursement for Construction Pro-
 grams (SF-271) (as applicable.)
  (3)  Final request for payment (SF-
 270) (.if applicable).
  (4)  Invention  disclosure (if applica-
 ble).
  (5) Federally-owned property report-
 In accordance with § 31.32(f), a grant-
 ee must submit an inventory of all fed-
 erally owned  property  (as  distinct
 from  property  acquired  with grant
 funds) for which it is accountable and
 request disposition instructions from
 the Federal agency  of property  no
 longer needed.
  (c)  Cost adjustment.  The  Federal
 agency  will,  within 90 days  after  re-
 ceipt  of reports in paragraph  (b)  of
 this section, make upward or  down-
 ward  adjustments to  the allowable
 costs.
  (d) Cash adjustments. (1) The Feder-
 al agency will make prompt  payment
 to the grantee for allowable reimburs-
 able costs.
  (2)  The  grantee must  immediately
refund to the Federal agency any bal-
ance  of  unobligated  (unencumbered)
cash advanced that is not authorized
to be  retained for use on other grants.

§ 31.51  Later  disallowances  and  adjust-
    ments.
  The closeout  of a grant  does not
affect:
  (a) The Federal agency's right to dis-
allow  costs and  recover funds on the
basis of a later audit or other review;
  (b)  The   grantee's  obligation  to
 return any funds due  as  a  result  of
later  refunds,  corrections, or  other
transactions;
  (c) Records retention as required in
 § 31.42;
  (d)  Property management require-
ments in §§ 31.31 and 31.32; and
  (e) Audit requirements in § 31.26.

§ 31.52  Collection of amounts due.
  (a) Any funds paid to a grantee in
excess of the  amount  to which  the
grantee is finally determined to be en-
titled under  the terms of the award
constitute a debt to the Federal Gov-
ernment. If not paid within a reasona-
ble period after demand,  the Federal
agency may reduce the debt by:
  (1)  Making an adminstrative offset
against  other requests for reimburse-
ments.
  (2)  Withholding  advance payments
otherwise due to the grantee, or
  (3) Other action permitted by law.
  (b) Except where otherwise provide^
by statutes or regulations, the Federal
agency will charge interest on an over-
due debt in  accordance with the  Fed-
eral  Claims  Collection Standards (4
CFR Ch. II). The date from which in-
terest is computed is not  extended by
litigation or the filing of  any form of
appeal.

  Subpart E—Entitlement [Reserved]

        Subpart F—Disputes

  SOURCE: 53 FR  8076, Mar. 11, 1988, unless
otherwise noted.
  EFFECTIVE DATE NOTE: At 53  FR 8076, Mar.
11. 1988,  Subpart F was added, effective Oc-
tober 1. 1988.

§ 31.70  Disputes.
  (a)  Disagreements  should be  re-
solved at the lowest level possible.
  (b)  If  an  agreement   cannot  be
reached, the EPA disputes decision of-
ficial  will provide  a written final  deci-
sion. The EPA disputes decision offi-
cial is the individual designated by the
award official to resolve disputes con-
cerning assistance  agreements.
  (c)  The disputes decision officials
decision will constitute  final agency
action unless a request for  review  is
filed by registered mail, return receipt
requested, within  30 calendar days of
the date of the decision.
  (1) For final decisions issued by an
EPA disputes decision official at Head-
quarters, the request for  review shall
                                    386

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 Environmental Protection Agency

 be filed with the Assistant Administra-
 tor responsible for the assistance pro-
 gram.
  (2) For final  decisions  issued by a
 Regional disputes decision official, the
 request for review shall be  filed with
 the Regional Administrator.  If the Re-
 gional Administrator  issued the final
 decision,  the request for reconsider-
 ation shall be filed with the Regional
 Administrator.
  (d) The request shall include:
  (1) A copy of the EPA disputes deci-
 sion official's final decision;
  (2) A statement of the amount in
 dispute;
  (3) A description of the  issues  in-
 volved; and
  (4) A concise statement of  the objec-
 tions to the final decision.
  (p) The disputants may  be  repre-
 sented by counsel and may submit doc-
 umentary evidence and briefs  for  in-
 clusion in a written record.
  (f) Disputants  are entitled to  an  in-
 formal conference with EPA  officials.
  (g) Disputants  are entitled to a writ-
 ten decision from the appropriate Re-
 gional or Assistant Administrator.
  (h) A decision  by the Assistant  Ad-
 ministrator  to confirm the final deci-
sion of a Headquarters disputes deci-
sion official  will constitute  the final
 Agency action.
  (i) A decision  by the Regional  Ad-
 ministrator  to confirm  the Regional
 disputes decision official's decision will
 constitute  the  final  Agency  action.
However,  a  petition for discretionary
review by the Assistant Administrator
 responsible for the assistance program
may be filed within 30 calendar days
of the Regional  Administrator's deci-
sion. The petition shall be sent to the
Assistant  Administrator by  registered
mail, return  receipt  requested, and
shall include:
  (DA copy  of the Regional Adminis-
 trator's decision;  and
  (2) A concise statement of  the objec-
 tions to the decision.
  (j) If the Assistant Administrator de-
cides not to  review the Regional  Ad-
 ministrator's decision, the  Assistant
 Administrator    will    advise    the
 disputant(s)  in  writing  that the  Re-
 gional  Administrator's   decision   re-
 mains the final Agency action.
                     Part 31, App. A

  (k)  If  the Assistant Administrator
decides to review the Regional Admin-
istrator's decision, the review will gen-
erally be limited to the written  record
on which the Regional Administrator's
decision was based. The Assistant Ad-
ministrator may allow the disputants)
to submit briefs in support of the peti-
tion for review and may provide an op-
portunity for an informal conference
in order to clarify technical or legal
issues. After  reviewing  the Regional
Administrator's decision, the Assistant
Administrator will issue a written deci-
sion which  will then  become the final
Agency action.
  (1) Reviews may not be requested of:
  (1) Decisions on requests for  excep-
tions under § 31.6;
  (2)   Bid  protest   decisions   under
§ 3L36(b)(12);
  (3)  National  Environmental  Policy
Act decisions under Part 6;
  (4) Advanced wastewater treatment
decisions of the Administrator; and
  (5)  Policy  decisions  of  the  EPA
Audit Resolution Board.

APPENDIX A—PART 31 AUDIT REQUIRE-
    MENTS FOR STATE AND  LOCAL GOV-
    ERNMENT RECIPIENTS
     EXECUTIVE OFFICE OF THE
             PRESIDENT

     Office of Management and Budget

           Circular No. A-128

April 12. 1985

To  the  Heads of Executive Departments
   and Establishments.
Subject: Audits of State and Local Govern-
   ments.
  1. Purpose. This Circular Is issued pursu-
ant to the Single Audit Act of 1984. Pub. L.
98-502. It establishes audit requirements for
State and local governments that  receive
Federal aid, and define Federal responsibil-
ities for implementing and monitoring those
requirements.
  2. Supersession. The  Circular supersedes
Attachment  P.  "Audit  Requirements."  of
Circular A-102, "Uniform requirements for
grants to State and local governments."
  3.  Background.  The  Single Audit Act
builds upon earlier efforts to improve audits
of. Federal aid programs. The Act requires
State or local  governments  that  receive
$100.000 or more a year in Federal funds to
have an audit made for that year. Section
                                     387

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 Part 31, App. A
           40 CFR Ch. I  (7-1-88 Edition)
 7505 of the Act requires the Director of the
 Office of Management and Budget to pre-
 scribe policies, procedures and guidelines to
 implement the Act. It specifies that the Di-
 rector shall  designate  "cognizant" Federal
 agencies, determine criteria for making ap-
 propriate charges to Federal programs for
 the cost of audits, and provide procedures to
 assure that small firms or firms owned and
 controlled  by  disadvantaged  individuals
 have the opportunity to participate in con-
 tracts for single audits.
  4. Policy. The Single  Audit Act  requires
 the following:
  a. State or local governments that receive
 $100,000 or more a year in Federal financial
 assistance shall have an audit made in ac-
 cordance with this Circular.
  b. State or local governments that receive
 between $25,000 and $100.000 a year shall
 have an  audit made in accordance with this
 Circular, or in accordance with Federal laws
 and  regulations governing  tve    --grams
 they participate in.
  c. State or  local governments that receive
 less than $25,000 a year shall  be exempt
 from compliance  with the  Act and other
 Federal  audit  requirements.  These State
 and local governments shall be governed by
 audit requirements prescribed by  State  or
 local law or regulation.
  d. Nothing in this paragraph  exempts
 State or local governments from maintain-
 ing records of  Federal financial assistance
 or from providing access to such records to
 Federal agencies, as provided for in Federal
 law or in Circular A-102. "Uniform require-
 ments for grants to State or local govern-
 ments."
  5.  Definitions.  For the purposes  of this
 Circular  the  following definitions from the
Single Audit Act apply:
  a. "Cognizant agency" means the Federal
agency assigned by the Office of  Manage-
ment and Budget to carry out the responsi-
bilities described in paragraph  11 of this
Circular.
  b. "Federal  financial assistance" means as-
sistance provided by a Federal agency in the
form of grants, contracts, cooperative agree-
ments, loans, loan guarantees, property, in-
terest subsidies, insurance, or direct appro-
priations, but does not include direct Feder-
al cash assistance to individuals. It includes
awards received directly from Federal agen-
cies, or indirectly through  other  units  of
State and local governments.
  c. "Federal  agency" has the same meaning
as the term  "agency" in section 551(1)  of
Title 5. United States Code.
  d. "Generally accepted accounting princi-
ples" has the meaning specified in the gen-
erally accepted government auditing stand-
ards.
  e. "Generally accepted government audit-
Ing standards"  means  the  Standards  for
Audit of Government Organizations, Pro-
 grams, Activities, and Functions, developed
 by the Comptroller  General, dated Febru-
 ary 27, 1981.
   f. "Independent auditor" means:
   (DA State  or local government  auditor
 who  meets the independence standards
 specified  in generally accepted  government
 auditing standards; or
   (2) A public accountant who meets such
 independence standards.
   g. "Internal  controls" means  the  plan of
 organ:~ 
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Environmental Protection Agency

  a.  The audit shall  be  made  by an inde-
pendent auditor in accordance with general-
ly accepted government  auditing standards
covering financial and compliance audits.
  b.  The audit shall cover the  entire oper-
ations of a State or local government or, at
the option  of that government,  it may cover
departments,  agencies   or  establishments
that  received,  expended, or  otherwise ad-
ministered   Federal  financial   assistance
during the  year. However, if a State or local
government  receives  $25,000 or  more  in
General Revenue Sharing Funds in a fiscal
year, it shall have an audit of its entire op-
erations. A series of audits of individual de-
partments,  agencies, and establishments for
the same fiscal year  may be considered  a
single audit.
  c. Public  hospitals and  public colleges and
universities may be excluded from State and
local  audits and  the  requirements of this
Circular. However, if such entities are ex-
cluded, audits of  ine-e  entities  shal'  be
made in accordance witn statutory require-
ments and  the provisions of Circular A-110.
"Uniform requirements for grants to univer-
sities, hospitals, and other nonprofit organi-
zations."
  d. The auditor shall  determine whether:
  (1)  The financial statements of the gov-
ernment, department, agency or establish-
ment present fairly  its financial  position
and the results of its financial operations in
accordance with generally accepted account-
ing principles:
  (2) The organization has internal account-
ing and other control systems to provide
reasonable  assurance that it is managing
Federal  financial  assistance  programs  in
compliance with applicable laws and regula-
tions: and
  (3)  The  organization  has complied with
laws and regulations that may have materi-
al effect on its financial statements and on
each major Federal assistance program.
  7.  Frequency of audit  Audits shall  be
made annually unless the State or local gov-
ernment has. by January 1. 1987, a constitu-
tional or statutory requirement for less fre-
quent audits. For those governments, the
cognizant  agency  shall  permit  biennial
audits, covering both years,  if  the govern-
ment so requests. It shall also honor  re-
quests for  biennial audits by governments
that have  an administrative policy calling
for audits  less frequent than  annual, but
only for fiscal years beginning  before Janu-
ary 1. 1987.
  8.  Internal  control  and  compliance  re-
views. The Single Audit Act requires that
the  independent  auditor determine  and
report on whether the organization has in-
ternal control systems to provide reasonable
assurance that it is managing Federal assist-
ance  programs in compliance with applica-
ble laws and regulations.
                       Part 31, App. A

  a. Internal control review. In order to p;
vide this assurance the auditor must makt -
study and evaluation of internal control sys-
tems  used in  administering Federal  assist-
ance  programs.  The study and evaluation
must  be made whether or not  the  auditor
intends to place reliance  on  such  systems.
As part of this review, the  auditor shall:
  (1)  Test whether  these internal  control
systems are functioning in accordance  with
prescribed procedures.
  (2)  Examine the  recipient's  system for
monitoring subrecipients and obtaining and
acting on subrecipient audit reports.
  b. Compliance review.  The law also re-
quires the auditor to determine  whether the
organization  has complied with laws and
regulations that may have a material effect
on each major Federal assistance program.
  (1)  In order to determine which major
programs  are to be tested for compliance,
State and local  government-- shall identify
in their accounts all Federal funds received
and  expended  and  the  programs  under
which they were received. This shall include
funds received directly from Federal agen-
cies and through other State and local gov-
ernments.
  (2)  The review must include the selection
and testing of a representative number  of
charges from each major  Federal assistan
program.  The selection and testing of trans-
actions shall be  based on the auditor's pro-
fessional judgment considering  such factors
as the amount of expenditures for the pro-
gram and the individual awards: the  new-
ness of the program or changes in its condi-
tions; prior experience with the  program,
particularly as revealed in audits and other
evaluations (e.g.,  inspections  program  re-
views);  the extent to which the program is
carried  out  through subrecipients;  the
extent to which the program contracts for
goods or services; the level to which the pro-
gram is already subject to program  reviews
or  other  forms of  independent oversight:
the adequacy of the  controls  for ensuring
compliance; the  expectation of  adherence or
lack of adherence to the applicable laws and
regulations; and the potential impact of  ad-
verse findings.
  (a) In making the test of transactions, the
auditor shall determine whether.
—The  amounts  reported as  expenditures
  were for allowable services, and
—The records show that the; 3  who received
  services or benefits were eligible  to receive
  them.
  (b) In addition to transaction testing,
 auditor shall determine whether:
 —Matching requirements,  levels of effort
  and earmarking limitations were met,
 —Federal  financial reports and claims  for
  advanced and reimbursements contain in-
  formation that is supported by the bookr
                                         389

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 Part 31, App. A
          40 CFR Ch. I (7-1-88 Edition)
     J records from which the basic financial
  statements have been prepared, and
 —Amounts  claimed  or used for matching
  were determined in accordance with OMB
  Circular A-87, "Cost principles for State
  and local  governments,"  and Attachment
  F  of  Circular  A-102, "Uniform  require-
  ments  for grants to  State  and local gov-
  ernments."
  (c) The principal compliance requirements
 of the largest  Federal aid programs may be
 ascertained  by referring to the Compliance
 Supplement for Single Audits of State and
 Local  Governments, issued  by OMB and
 available  from the  Government  Printing
 Office. For  those programs not covered in
 the  Compliance  Supplement,  the auditor
 may ascertain compliance  requirements  by
 researching  the statutes,  regulations, and
 agreements governing individual programs.
  (3) Transactions related to other Feo...   :
 assistance programs that  are  selected  in
 connection with  examinations of  financial
 statements and evaluations of internal con-
 trols shall be tested for compliance  with
 Federal laws and regulations that apply to
 such transactions.
  9.  Subrecipients.  State  or local govern-
 ments that receive Federal financial assist-
 ant-sand provide  $25,000 or more of it in a
 fU   year to a subrecipient shall:
  a. Determine whether State or local subre-
 cipients have met the audit requirements of
 this Circular and whether subrecipients cov-
 ered by Circular  A-110. "Uniform require-
 ments  for grants to universities, hospitals,
 and  other nonprofit organizations,"  have
 met that requirement;
  b.  Determine  whether  the  subrecipient
 spent Federal  assistance funds provided in
 accordance with applicable laws and regula-
 tions. This may be accomplished by review-
 ing an audit of the subrecipient made in ac-
 cordance with  this Circular, Circular A-110.
 or through  other means (e.g.,  program re-
 views)  if the subrecipient has  not yet had
 such an ai'dit;
  c.  Ensure   that  appropriate  corrective
 action is taken within  six months after re-
 ceipt of the audit report in  instances of non-
 compliance  with  Federal  laws and  regula-
 tions;
  d.  Consider  whether subrecipient audits
necessitate  adjustment of  the recipient's
own records; and
  e. Require each subrecipient to permit in-
 dependent auditors  to have access to the
 records  and financial statements  as neces-
sary to comply with this Circular.
  /""*\ Relation to  other audit requirements.
 T;  Single Audit  Act provides that an audit
 made in accordance with this Circular shall
 be in lieu of any financial or financial com-
 pliance audit required under individual Fed-
 eral assistance programs. To the extent that
 a  single audit provides  Federal  agencies
 with information and  assurance they need
to carry out their overall  responsibilities,
they shall rely  upon and use such informa-
tion. However, a Federal agency shall make
any additional audits which are necessary to
carry out its responsibilities under Federal
law and regulation. Any additional Federal
audit effort shall be planned and carried out
in such a way as to avoid duplication.
  a. The provisions of this Circular do not
limit the  authority of  Federal agencies to
make, or contract for audits and evaluations
of Federal  financial  assistance  programs,
nor do they limit the  authority of any Fed-
eral agency Inspector  General or other Fed-
eral audit official.
  b. The provisions of this  Circular do not
authorize any State or  local government or
subrecipient  thereof  to constrain Federal
agencies, in any manner, from carrying out
additional audits.
  c. A Fede  '.  agency  that  makes or con-
tracts for audits in additon to the  audits
made by recipients pursuant to this Circular
shall, consistent with other applicable laws
and  regulations, arrange for  funding the
cost  of  such additional audits. Such addi-
tional audits include economy  and efficien-
cy audits, program results audits, and pro-
gram evaluations.
  11. Cognizant agency  responsibilities. The
Single Audit Act provides for congnizant
Federal agencies to oversee the implementa-
tion of this Circular.
  a. The Office of Management and Budget
will assign cognizant agencies for States and
their subdivisions and  larger local  govern-
ments and their subdivisions. Other Federal
agencies m_y participate with an assigned
cognizant agency, in order to fulfill the cog-
nizant responsibilities. Smaller governments
not  assigned  a cognizant  agency  will be
under the general oversight of the Federal
agency that provides them the most funds
whether directly or indirectly.
  b. A cognizant agency shall have the fol-
lowing responsibilities:
  (1)  Ensure that audits are made and re-
ports are received in a timely manner and in
accordance  with the requirements of this
Circular.
  (2) Provide technical  advice and liaison to
State and local governments and  independ-
ent auditors.
  (3) Obtain or make quality control reviews
of selected  audits  made  by non-Federal
audit organizations, and provide the results,
when appropriate, to other interested orga-
nizations.
  (4) Promptly inform other affected Feder-
al agencies and appropriate Federal law en-
forcement officials of  any reported illegal
acts  or  irregularities.  They  should  also
inform  State or local law enforcement and
prosecuting authorities,  if not advised  by
the recipient, of any  violation of law within
their jurisdiction.
                                         39O

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cnvironmen/ol Protection  Agency

  (5)  Advise the recipient  of  audits  that
have  been found not to have  met the re-
quirements  set  forth in  this  Circular.  In
such instances, the  recipient  will be expect-
ed to work with the auditor  to take correc-
tive action. If corrective actionis not taken.
the cognizant agency shall notify the recipi-
ent and  Federal awarding agencies  of the
facts and make recommendations for follow-
up action. Major inadequacies  or repetitive
substandard  performance  of  independent
auditors  shall  be referred  to  appropriate
professional bodies for disciplinary action.
  (6) Coordinate, to the extent practicable,
audits made by or for Federal agencies that
are in addition to the audits made pursuant
to this  Circular,  so that  the  additional
audits build up such audits.
  (7) Oversee the resolution of audit  find-
ings that affect the programs of more  than
one agency.
  12.  niegai  acts or irregularities.  If the
auditor  becomes aware of  illegal acts  or
other irregularities, prompt notice shall be
given to recipient  mar..*    nt officials
above the level of  involvement.  (See also
program  13(a)(3) below  for the  auditor's re-
porting  responsibilities.) The  recipient,  in
turn,  shall promptly notify  the  cognizant
agency of the  illegal acts or irregularities
and of proposed and actual actions, if any.
Illegal acts and irregularities include  such
matters as conflicts  of interest, falsification
of records or  reports, and misappropriations
of funds or other assets.
  13. Audit Reports. Audit reports must  be
prepared at the completion of the audit. Re-
ports serve many needs of State and  local
governments  as well as meeting the require-
ments of  the Single Audit Act.
  a. The  audit report shall state  that the
audit was made in accordance with the pro-
visions of this Circular.  The report shall be
made up of at least:
  (1) The auditor's report on financial state-
ments and on a schedule of  Federal assist-
ance; the financial statements;  and a sched-
ule of Federal assistance, showing the  total
expenditures  for each Federal assitance pro-
gram as identified in the Catalog  of Federal
Domestic Assistance.  Federal programs  or
grants that have not been assigned a catalog
number shall be Identified under the cap-
tion "other Federal assistance."
  (2) The author's report on the study and
evaluation of internal control systems  must
identify the organization's significant inter-
nal accounting controls, and  those controls
designed  to  provide reasonable  assurance
that  Federal  programs  are being  managed
in compliance with  laws and  regulations. It
must also identify  the  controls that  were
evaluated, the controls that were  not evalu-
ated, and the material weaknesses identified
as a result of the evaluation.
  (3) The auditor's  report  on compliance
containing:
                       Part 31, App. A

—A statement o.f positive assurance \vith re-
  spect to those items tested for compliance.
  including compliance with law and regula-
  tions pertaining to financial  reports and
  claims for advances and reimbursements;
—Negative  assurance  on  those items  not
  tested;
—A summary of all instances of noncornpli-
  ance; and
—An  identification of total amounts ques-
  tioned, if any, for each Federal assistance
  award,  as a result of noncompliance.
  b. The  three parts of the audit report may
be bound into a single report, or presented
at the same time as separate documents.
  c. All fraud abuse, or illegal acts or indica-
tions  of such acts, including  all questioned
costs  found as the result of these acts that
auditors  become aware of.  should normally
be covered  in a separate written report sub-
mitted in accordance with paragraph 13f.
  d. In addition to the audit report, the re-
cipient shall  provide comments on the find
:.i.gs and recommendations  in the report, in-
cluding a plan for corrective action taken or
planned and  comments on the status of cor-
rective action taken on prior findings. If cor-
rective action is not necessary, a statement
describing the reason it is not should accom-
pany  the audit report.
  e. The reports shall  be made available by
the State or  local  government for public in-
spection  within 30 days after the completion
of the audit.
  f. In accordance with generally accepted
government  audit standards,  reports shall
be submitted by the  auditor to the organiza-
tion audited and  to those requiring or ar-
ranging for the audit. In addition, the recip-
ient shall submit copies of the reports  to
each  Federal department  or  agency that
provided Federal assistance funds to the re-
cipient. Subrecipients shall submit copies  to
recipients that  provided them  Federal as-
sistance  funds.  The  reports shall  be  sent
within 30 days after the completion of the
audit, but no later than one year after the
end of the  audit period  unless  a  longer
period  is  agreed to  with  the cognizant
agency.
  g. Recipients of more  than  $100.000  in
Federal funds shall  submit one copy of the
audit report within 30 days after issuance to
a central clearinghouse to  be designated by
the Office of Management and Budget. The
clearinghouse will keep completed audits on
file and follow up with State and local gov-
ernments that have  not submitted  required
audit reports.
  h. Recipients shall keep audit reports on
file for three years from their issuance.
  14.  Audit Resolution. As  provided in para-
graph 11. the cognizant agency shall be re-
sponsible for monitoring the resolution  of
audit findings that  affect the programs  of
more than one Federal agency. Resolution
                                        391

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 fart 41, App. A
          40 C?R Ch. I (7-1-38 Editio,
 of findings that relate to the programs of a
 single Federal agency will be the responsi-
 bility of the recipient and that agency. Al-
 ternate arrangements may be made on  a
 case-by-case basis by  agreement among the
 agencies concerned.
   Resolution  shall  be  made within  six
 months after receipt of the report  by the
 Federal departments  and agencies. Correc-
 tive action should proceed as rapidly as pos-
 sible.
   15. Audit workpapers and  reports. Work-
 papers and reports shall  be  retained for a
 minimum of three  years  from the date of
 the audit report, unless the auditor is noti-
 fied in writing by the cognizant  agency to
 extend  the retention period. Audit  work-
 papers shall be made available upon request
 to the cognizant agency or its designee or
 the General Accounting Office, at the com-
 pletion of the audit.
   16. Audit Costs. The cost of aud('-s made in
 accordance with the provisions of this ^.. -
 cular are allowable charges  to Federal as-
 sistance programs.
   a. The charges may  be considered a direct
 cost or an allocated  indirect cost, deter-
 mined in  accordance  with  the provision of
 Circular  A-87,  "Cost  principles  for  State
 and local governments."
   b.  Generally,  the  percentage  of  costs
 charged to Federal  assistance programs for
   single audit shall  not exceed the percent-
 >ge that  Federal funds expended represent
 of total  funds  expended  by  the  recipient
 during the fiscal year. The percentage may
 be exceeded, however, if appropriate docu-
 mentation demonstrates higher actual cost.
   17. Sanctions. The Single Audit Act pro-
 vides that no cost may be charged to Feder-
 al assistance programs for audits required
 by the Act that are  not made in accordance
 with this Circular. In  cases of continued in-
 ability  or unwillingness to have a proper
 audit. Federal agencies must consider other
 appropriate sanctions including:
 —Withholding a percentage  of assistance
  payments  until the  audit  its completed
  satisfactorily,
 —Withholding  or  disallowing  overhead
  costs, and
 —Suspending the Federal assistance agree-
  ment until the audit is made.
  18. Auditor Selection.  In  arranging  for
 audit services State and local governments
 shall follow the procurement  standards pre-
 scribed by Attachment O of Circular A-102,
 "Uniform  requirements for grants to State
 and local governments." The standards pro-
 vide that while recipients are encouraged to
^nter  into intergovernmental agreements
  r audit and other services, analysis should
 <• made to determine whether it would be
 more economical to purchase the services
 from private  firms.  In instances where  use
 of such  intergovernmental agreements  are
required by State statutes (e.g., audit ser
ices) these statutes will take precedence.
  19.  Small  and Minority Audit  Firm
Small  audit  firms and audit firms owne
and controlled by socially and economicall
disadvantaged  individuals shall  have  th
maximum  practicable opportunity to par
ticipate in contracts  awarded to  fulfill th<
requirements of this Circular. Recipients 01
Federal assistance shall take the following
steps to further this goal:
  a. Assure that small audit firms and audit
firms owned  and controlled by socially and
economically disadvantaged individuals are
used to the fullest extent practicable.
  b. Make  information on forthcoming op-
portunities  Available and  arrange  time-
frames for the audit so as to encourage and
facilitate participation by small audit firms
and audit firms owned and controlled by so-
cially and economically disadvantaged indi-
viduals.
  c. Consider in the contract process wheth-
er firms competing for larger audits intend
to subcontract with small audit  firms and
audit firms owned and controlled  by socially
and economically disadvantaged individuals.
  d. Encourage contracting with small audit
firms or audit firms  owned  and  controlled
by  socially and economically disadvantaged
individuals which have traditionally audited
government  programs and,  in  such  cases
where this is not possible, assure  that these
firms are given consideration for audit sub-
contracting opportunities.
  e. Encourage  contracting  with consorti-
ums of small audit  firms  as described in
paragraph (a) above when a contract is too
large for an  individual small audit firm or
audit firm owned and controlled  by socially
and economically disadvantaged individuals.
  f. Use the  services  and  assistance, as ap-
propriate,  of such   organizations as  the
Small Business Administration in the solici-
tation and utilization  of small audit firms or
audit firms owned and controlled  by socially
and economically disadvantaged individuals.
  20. Reporting. Each Federal agency will
report to the Director of OMB on or before
March 1,  1987, and annually thereafter on
the effectiveness of State and local govern-
ments in carrying out the provisions of this
Circular.  The  report must identify  each
State or local government or Indian  tribe
that, in the opinion of the agency, is failing
to comply with the Circular.
  21.  Regulations. Each  Federal  agency
shall include the provisions of this Circular
in its regulations  implementing  the Single
Audit Act.
  22. Effective date.  This Circular is effec-
tive upon  publication and shall apply to
fiscal yea" of State and local governments
that begin after December 31, 1984. Earlier
Implementation   is  encouraged.   However,
     it is implemented, the audit provisions
                                         392

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 Environmental Protection Agency

 of Attachment P to Circular  A-102 shall
 continue to be observed.
   23. Inquiries, All  questions  or  Inquiries
 should be addressed to  Financial Manage-
 ment Division. Office of Management and
 Budget, telephone number 202/395-3993.
   24. Sunset review date. This Circular shall
 have an independent policy  review to ascer-
 tain its effectiveness three  years from the
 date of Issuance.
                     DAVID A. STOCKMAN,
                               Director.

     ATTACHMENT—CIRCULAR A-128

    Definition of Major Program as
       Provided in Pub. L. 96-502

  "Major  Federal  Assistance Program," for
 State and local governments having Federal
 assistance  expenditures be'-veen  $100.000
 and $100.000,000,  means aitj program  for
 which  Federal  expenditures during the ap-
 plicable year exceed the larger of $308,000.
 or 3 percent of such total expenditures.
  Where total  expenditures  of Federal as-
 sistance exceed $100.000,000. the following
 criteria apply:
                                                                            Part 32
Tout expenditures of Federal
financial assistance tor all programs
More than
$100 million 	
$1 billion
$2 billion
S3 billion
$4 billion 	
$5 billion
$6 billion 	
Over $7 billion .

But less man
$1 billion . . ..
$2 billion
S3 billon
$4 billion
$5 billion 	
$6 billion .
$7 billion 	


Major Federal
assistance program
means any program
that exceeds
S3 million.
$4 million.
$7 million.
$10 million.
$13 million.
$16 million.
$19 million.
$20 million.
[51 FR 6353. Feb. 21. 1986. Redesignated at
53 FR 8076. Mar. 11. 1988]

  EFFECTIVE DATE NOTE: At 53 FR 8076. Mar.
11. 1988. Appendix E to Part 30 was redesig-
nated as Appendix A to Part 31, effective
October 1.1988.
                                        393

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                     PART 31 POLICY GUIDANCE

1.   How does EPA treat pre-award costs?

     The  treatment  depends  on  the  type  of  grant in  question:
     Construction Grants,  Continuing Environmental Program Grants,
     or project type grants.

     For Construction Grants EPA shall continue to deal with such
     costs as we have in the past; i.e., require prior approval by
     the award official (see 40 CFR 35.2118(a)) or, if applicable,
     request a deviation from that Section.

     for  continuation  awards  (e.g.,  Continuing  Environmental
     Program grants), 40 CFR 35.141 provides that for awards:

          . . .  made after the beginning of the approved
          budget  period,   EPA   will  reimburse   the
          applicant  for allowable costs  incurred from
          the beginning of  the  budget period, provided
          that such costs are contained in the approved
          application  and  that  the  application  was
          submitted before  the  expiration of the prior
          (emphasis added) budget period.

     Thus, if an application for a continuing environmental program
     grant is received before the end of the prior budget period,
     no  deviation  is  needed.   If  such  is not  the  case,  the
     recipient must request a deviation from 40 CFR 35.141.

     We are interpreting 40  CFR  31.23  to mean that pre-award costs
     are unallowable and that the funding period should not start
     until after the  award  is made.  For project type grants in
     which a  funding period is  specified, grantees may charge to
     the award only  those costs resulting from obligations incurred
     during the funding period (see Section  31.23(a)).  Under Part
     31, pre-award  costs  will be allowed only  if a deviation is
     granted.   (The deviation process remains the same as it was
     under Part  30  [see 40  CFR 31.6].)

2.   Is  every   expenditure  deemed  to include  the Federal share
     (30.307(0))?

     Yes.  Though not addressed in Part 31,   EPA shall continue to
     interpret the relationship between Federal funds and recipient
     funds in the manner described at 40 CFR 30.307(c);  i.e., each
     grant related  dollar includes both the  Federal and recipient
     shares,  One reason  for aai::itainir.g  this postv,re is so that
     recipients  cannot  avoid  Federal statutory  or   regulatory
     requirements by separating  their  funds from the Federal funds.
     EPA  continues  to  consider all  allowable project  costs to
     include both the Federal and recipient  shares.

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                              - 2  -


3.   May EPA continue to require the minimum five  percent match?

     No.   The  five  percent  match  is  no  longer  a  regulatory
     requirement for State, local, and Indian tribal  governments
     under Part 31  as was the case under Part 30.  However,  in the
     absence  of statutory/regulatory  requirements  or,  program
     guidance  to  the  contrary,  it  remains national  policy  to
     encourage a minimum five  percent  match if the approval and
     award officials consider it appropriate.  A non-statutory or
     non-regulatory  match  requirement   is  basically  a program
     decision.  Therefore,  program officials must address matching
     requirements in  the annual national program guidance.   EPA
     considers  a  minimum  match   as  ensuring   the  recipient's
     commitment to the project. Because Part 30 still applies to
     Circular A-110 recipients, universities,  hospitals,  and non-
     profit institutions must still meet the minimum five percent
     matching requirement.

4.   How do applicants/recipients self-certify  their procurement
     systems?

     Under Part 31  States may use their  own systems largely without
     restriction   and  without   self-certifying   (see   Section
     31.36(a)).   Section 31.36(g)(3)(ii) notes  requirements for
     self-certification  by local  and  Indian  tribal  government
     recipients.  EPA is continuing  to use the previously approved
     self-certification  form  for governmental  applicants.   The
     Superfund regulation (40 CFR  Part  35, Subpart 0) includes the
     requirement for applicants to self-certify  using the existing
     form.

5.   Does the purchase of equipment require prior approval?

     Yes.   Equipment which is  beyond  the  scope  of the approved
     project   (i.e.,  not  included  in  the award  document)  is
     unallowable.    Pursuant  to Section 3l.30(b)  grantees must
     follow   the   applicable   cost  principles   which  contain
     requirements  for prior approval  of certain types  of  costs
     except where waived by EPA.  Under  Circular A-87, States  and
     local and Indian tribal governments are  required to  obtain
     prior approval  for purchases of equipment.

6.   How should EPA  handle conditions for "high risk"  grantees?

     Award conditions based or. a ct:rtv>«, a  policy consistent with
     Part 31, or which are technical or programmatic in nature c.rc
     not considered "high risk" conditions.   EPA officials  include
     such  conditions in award  documents to ensure, for example,
     compliance  with  the  work plan  or to  establish technical
     standards  for work under the grant.  By way of  contrast  you

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                              - 3 -
     should use "high risk" conditions to radically modify, alter,
     or restrict a grantee's planned  activities  in  light of,  for
     example, the terms and conditions of a previous award.

     Section  31.12   applies  only  to  grantees  which,  based  on
     criteria listed at 31.12(a), have been formally determined to
     be  "high  risk."    You  must  base such  determinations  on
     objective  criteria such  as  monitoring,  pre-award  surveys,
     audits,  credit  reports,  or the  performance history  of  the
     applicant/recipient.  As a result, the award is made subject
     to special conditions designed to forestall or preclude the
     recurrence of the incident(s)  which led to their imposition.

     Part 31 clearly allows EPA to  include  in  an award terms and
     conditions other than those for "high risk" grantees,  Section
     31.10(b)(3) provides that "Federal agencies may specify and
     describe the programs, functions, or activities that will be
     used to plan, budget,  and evaluate the work under a grant."

     When Regions add  "non-high-risk11 conditions to awards, they
     should use the  phrase  "terms and  conditions  of award" in lieu
     of "special conditions."  Regions should  reserve the latter
     phrase for "high  risk" grantees.  (The definition of "terms
     a  grant  or subgrant  is found  at  31.3  and  means  "all
     requirements of the grant or  subgrant, whether in statute,
     regulations, or the award document.")

7.   Must  we  adhere  to the  Part  31  requirement  to  liquidate
     obligations within 90 days?

     Yes.   However,  we  may  allow additional  time  under Section
     31.23(b) which stipulates that grantees must:

          liquidate all  obligations incurred under the
          award not later than 90 days  after the end of
          the funding period ....   [but] The Federal
          agency may extend this deadline at the request
          of the grantee.

     By granting  approval  under this  provision  submittal of the
     final FSR may be postponed (31.41(b)(4)).  If a grantee does
     not  use  this  provision,  it  would  need  a deviation from
     31.41(b)(4).

     foc^   !r-?».r.?>g'*rv?r»t.    requires   timely   liquidation   of  all
     obligations; buu  we must  also  recognize that there are many
     good and valid  reasons  for approving an extension of the  90
     day deadline.

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                              - 4 -
8.   What is  EPA's  policy on the  recipient's acceptance of  the
     award within 21 days?
     EPA will continue to  follow its longstanding policy requiring
     acceptance of the grant within 21 days unless an extension has
     been granted.  We encourage Regions to include the requirement
     in transmittal letters.

9.   What is the definition of "Funding Period" as used in Part 31?

     "Funding Period" as used in Part 31 means the same as "Budget
     Period" in Part 30  and therefore you should use it in the same
     way.  Part 31 does  not include the term  "Project Period."  EPA
     policy is  to continue to use  "Project  Period"  as defined in
     Part 30.

10.  Is there  a dollar  level  on State awarded subgrants at which
     EPA must give approval?

     No.  Section 31.37(a) provides that "States shall follow State
     law and procedures when awarding and administering subgrants
          .  to local and Indian  tribal governments."    This is
     consistent with the principles of Federalism as discussed in
     the March  11, 1988, preamble to the common rule.

11.  How shall EPA address the use of Force Account in grants under
     Part 31?

     Part  31  does  not  include special  requirements  for Force
     Account  work.   However,  under  OMB  Circular  A-87 to be
     allowable, costs (e.g.,  Force Account costs) must be necessary
     and reasonable.  Accordingly,  to help ensure the allowability
     of  such costs,  it remains EPA policy  that  grantees should
     demonstrate to the reviewing office during the

     application  period  that  proposed  Force  Account  work  over
     $25,000  is more economical than contracting and/or  dictated
     by an  emergency.

12.  Do changes/transfers require prior approval?

     No.    Section  31.30(a)  allows  grantees  and  subgrantees to
     "rebudget within  the  approved  direct  cost budget  to  meet
     unanticipated  requirements and   .  .  .  make limited program
     changes  to  the approved  project"  without  prior approval.
     However,  certain changes in budgets and projects (as  outlined
     at Section 3:1.30, paragraphs (c) through (fj) require vrittsr.
     approval.

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APPENDIX F

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            APPENDIX F
 LIST OF EPA ASSISTANCE PROGRAMS
(CFDA Number, Title, Statutory Authority,
 GICS Program Code, and Delegation of
         Authority Number)

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CFDA      PROGRAM TITLE                                     PROGRAM        DELEGATION OF
NO.            STATUTORY AUTHORITY                          CODE           AUTHORITY NO.
66.001    Air Pollution Control Program Support                A                   7-1
             Clean Air Act: Sees.  105; 106

66.003    Air Pollution Control Manpower Training              T                   7-35
               Clean Air Act: Sec.  103(b)

66.006    Air Pollution Control— Technical Training          T                   7-35
               Clean Air Act: Sec.  103

66.032    State Indoor Radon Program                           Kl                  27-3
               Toxic Substances Control Act: Sec. 306
               (indoor Radon Abatement Act)

66.419    Water Pollution Control  State and Interstate         I                   2-3
          Interstate Program S.upport
               Clean Water Act: Sec^  106

66.432    State Public Water System Supervision                F                   9-11
               Safe Drinking Water Act: Sec. 1443(a)

66.433    State Underground Water  Source Protection (UIC)      G                   9-21
               Safe Drinking Water Act: Sec. 1443(b)

66.435    Water Pollution Control— Lake Restoration           CL                  2-16
          Cooperative Agreements
               Clean Water Act: Sec.  314(b)

66.438    Construction Management  Assistance                   C                   2-74
               Clean Water Act: Sec.  205(g)

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CFDA
NO.
PROGRAM TITLE
     STATUTORY AUTHORITY
PROGRAM
CODE
DELEGATION OF
AUTHORITY NO.
66.454    Water Quality Management Planning                     C6
               Clean Water Act: Sees. 205(j)(l) & (2)

66.456    National Estuary Program                              CE
               Clean Water Act: Sec. 320(g)                     X

66.458    Capitalization Grants for State Revolving             CS
          Fund
               Clean Water Act: Sees. 205(m), 601(a)

66.460    Nonpoint Source Implementation Grants                 C9
               Clean Water Act: Sees. 205(j)(5); 319(h)

66.461    Wetlands Protection—State Development Grants         CD
               Clean Water Act: Sec. 104

66.463    National Pollutant Discharge Elimination              CP
          System Related State Program Grants
               Clean Water Act: Sec. 104

66.465    Wellhead Protection Program Grants                    WH
               Safe Drinking Water Act: Sec. 1428

66.466    Chesapeake Bay Program                                CB
               Clean Water Act: Sec. 104(b)(3)

66.500    Environmental Protection—Consolidated Research       R
               (Combination of 2 or more Research authorities.)


66.501    Air Pollution Control Research                        R
          Clean Air Act: Sees. 104; 617(b)
                                                                          2-55
                                                                          2-45

                                                                          2-42
                                                                          2-54
                                                                          2-23
                                                                          2-43
                                                                          2-84
                                                                          9-37
                                                                          2-46
                                                             (identify delegs.
                                                             for  all  auths.  used
                                                             in award)

                                                                          7-61

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CFDA
NO.
PROGRAM TITLE
     STATUTORY AUTHORITY
PROGRAM
CODE
DELEGATION OF
AUTHORITY NO.
66.502
66.504
66.505
66.506
66.507
66.508
66.600
Pesticides Control Research
     Federal Insecticide, Fungicide, and
     Rodenticide Act: Sec. 20(a)

Solid Waste Disposal Research
     Solid Waste Disposal Act:  Sec. 8001

Water Pollution Control—Research, Development,
Demonstration
     Clean Water Act: Sees. 104; 105; 107; 113

Safe Drinking Water Research and Demonstration
     Safe Drinking Water Act: Sees. 1442; 1444

Toxic Substances Research
Toxic Substances Control Act: Sec. 10
   R
   R
   S
   R
   S

   R
Senior Environmental Employment Program              Q
     Environmental Programs Assistance Act of 1984     QS
     (NOTE:  "Q" used when enrollee(s) assigned to EPA;
     "QS" used when assigned to other Federal agency)

Environmental Protection Consolidated Grants—       M
Program Support
     Omnibus Territory Act: Title V
     Toxic Substances Control Act: Sec. 28
     Clean Air Act: Sec. 105
     Solid Waste Disposal Act: Sees. 3011; 3012(c); 4008
Federal Insecticide, Fungicide, and Rodenticide Act: Sec.  23 (a)
Safe Drinking Water Act: Sees. 1443(a); 1443(b)
Clean Water Act: Sec. 106
        5-23



     (pending)


     (pending)



     (pending)


     (pending)


        1-67
                     (identify
                     delegs.
                     for  all
                     auths.
                     used in
                     award)

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CFDA      PROGRAM TITLE                                     PROGRAM        DELEGATION OF
NO.            STATUTORY AUTHORITY                          CODE           AUTHORITY  NO.
66.604    Environmental Equity .                                EQ                   1-86
               Clean Water Act: Sec. 104(b)(3);
               Safe Drinking Water Act: Sec.  1442(b)(3);
               Solid Waste Disposal Act: Sec. 8001(a);
               Clean Air Act: Sec. 103(b)(3);
               Toxic Substances Control Act:  Sec. 10(a);
               Federal Insecticide, Fungicide, and Rodenticide Act: Sec.  20(a);
               Comprehensive Environmental Response,
               Compensation and Liability Act: Sec. lll(c) (10) ;
               Marine Protection, Research and Sanctuaries Act: Sec.  203,  and
               National Environmental Education Act: Sec. 6

66.700    Consolidated Pesticide Compliance Monitoring         E                    5-27
          and Program Cooperative Agreements
               Federal Insecticide, Fungicide, and Rodenticide Act: Sec.  23(a)

66.701    Toxic Substances Compliance Monitoring Program       K                    12-9
               Toxic Substances Control Act:  Sec. 28

66.707    State Lead Program Grants                            PB                (pending)
               Toxic Substances Control Act:  Sec. 404(g)

66.801    Hazardous Waste Management—State Program            D                    8-13
          Support •
           •   • Solid Waste Disposal Act: Sec. 3011

66.802    Hazardous Substance Response Trust Fund              V                    14-1-B
               Comprehensive Environmental Response,                                14-4-A
               Compensation, and Liability Act: Sec. 104(d)                         14-4-C

66.804    State Underground Storage Tanks Program              L                    8-14
               Solid Waste Disposal Act: Sec.2007(f)(2)

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CFDA      PROGRAM TITLE                                     PROGRAM        DELEGATION OF
NO.            STATUTORY AUTHORITY                          CODE           AUTHORITY NO.
66.805    Undergound Storage  Tank Trust Fund Program           L                   8-38
               Solid Waste  Disposal Act:  Sec.2007(f)(2)

66.806    Superfund Technical Assistance Grants for            1                   14-24
          Citizen Groups at Priority Sites
               Comprehensive  Environmental Response,
               Compensation,  and Liability Act: Sec.117(e)

66.807    Superfund Innovative Technology Evaluation           S                   14-18-A
          Program
               Comprehensive  Environmental Response,
               Compensation,  and Liability Act: Sec. 311

66.808    Solid Waste Management Assistance                    XI                  8-42
               Solid Waste  Disposal Act:  Sec. 8001

66.809    Core Program Cooperative Agreements                  VC                  14-4-C
               Comprehensive  Environmental Response,                               14-4-A
               Compensation,  and Liability Act: Sec. 104

66.810    Emergency Planning  & Community Right to Know         X                   12-25
               Toxic Substances Control Act: Sees.  10 &  28                          12-26

66.900    Pollution Prevention Grants Program                  NP                  28-1
               Pollution Prevention Act of 1990:  Sec.  6605
               Solid Waste  Disposal Act:  Sec. 8001
               Clean Water  Act:  Sec.  104
               Safe Drinking  Water Act: Sec. 1442
               Toxic Substances Control Act: Sec. 10
               Clean Air Act:  Sec.  103

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CFDA      PROGRAM TITLE                                     PROGRAM         DELEGATION OF
NO.            STATUTORY AUTHORITY                          CODE            AUTHORITY NO.
66.925    State/EPA Data Management Financial Assistance       X2                   1-61
          Program
               Federal Insecticide, Fungicide, and Rodenticide Act: Sec.  20
               Solid Waste Disposal Act: Sec. 8001
               Clean Water Act: Sec. 104
               Safe Drinking Water Act: Sec. 1442
               Comprehensive Environmental Response, Compensation,
               and Liability Act: Sec. 311
               Toxic Substances Control Act: Sec. 10
               Clean Air Act: Sec. 103

66.926    Indian Environmental General Assistance Program      GA                   1-71
               Indian Environmental General Assistance Program Act
               of 1992: Sec. 11

66.950    Environmental Education and Training Program         NT                   1-74
               National Environmental Education Act: Sec. 5


66.951    Environmental Education Grants                       NE                   1-74
               National Environmental Education Act: Sec. 6

66.CAF    Air Pollution Control Fellowships                    U                    7-36
               Clean Air Act: Sec. 103(b)(5)

66.CWF    Water Pollution Control Fellowships                  U                    2-40
               Clean Water Act: Sec. 104(g)(3)(B)

66.CWT    Water Pollution Control Professional Training        T                    2-39
               Clean Water Act: Sec. 104(g)(3)(A) & (c)

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CFDA      PROGRAM TITLE                                     PROGRAM         DELEGATION OF
NO.            STATUTORY AUTHORITY                          CODE            AUTHORITY NO.
66.CWT    Water Pollution Control Technical Training           T                    2-41
               Clean Water Act:  Sees.  109;  110

66.DWF    Drinking Water Fellowships                           U                    9-10
               Safe Drinking Water Act:  Sec.  1442(b)(3)

66.DWT    Drinking Water Training                              T                    9-15
               Safe Drinking Water Act:  Sees.  1442 (b) (3) (A)
               and 1442 (d)(1)

66.INT    Interdisciplinary Training                           T                 (identify
               Clean Air Act:  Sec.  103                                           delegs.
               Clean Water Act:  Sec. 104                                         for all
               Safe Drinking Water Act:  Sec.  1442                                training
               Solid Waste Disposal Act: Sec.  8001                               auths.
                                                                                 used in
                                                                                 award)

66.MIA    Minority Institution Assistance Program (MIAP)       U                 (identify
          Fellowship                                                             delegs.
               Clean Air Act:  Sec.  103                                           for all
               Clean Water Act:  Sec. 104                                         auths.
               Safe Drinking Water Act:  Sec.  1442                                used in
               Solid Waste Disposal Act: Sec.  8001                               award)

66.NMS    National Network for Environmental  Management        U                    r-75
          (NNEMS)  Fellowship
               Clean Air Act:  Sec.  103
               Clean Water Act:  Sec. 104
               Safe Drinking Water Act:  Sec.  1442
               Solid Waste Disposal Act: Sec.  8001

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CFDA
NO.
PROGRAM TITLE
     STATUTORY AUTHORITY
PROGRAM
CODE
DELEGATION OF
AUTHORITY NO.
66.RTX    Radon Training
               Toxic Substances Control Act: Sec. 308

66.SFT    Superfund Training
               Comprehensive Environmental Response,
               Compensation, and Liability Act: Sec. 311(b)

66.SPX    Environmental Protection Consolidated Grants—
               (Combination of 2 or more statutory
               authorities delegated to Headquarters AAs)
66.SRF    Superfund Research (includes "Centers")
               Comprehensive Environmental Response,
               Compensation, and Liability Act: Sec.311

66.SSI    Investigations, Surveys or Studies con-
          sidered neither Research, Demonstration
          nor Training
               Clean Water Act: Sec. 104(b)(3)
               Clean Water Act: Sec. 105; 107; 113
               Clean Air Act: Sec. 617(b)

66.SWF    Solid Waste Fellowship
               Solid Waste Disposal Act: Sec. 8001

66.SWT    Solid Waste Training
               Solid Waste Disposal Act: Sec. 7007
                                                     U
                                                                          27-1
                                                                          14-18-A
                                                                       (identify
                                                                       delegs.
                                                                       for  all
                                                                       auths.
                                                                       used in
                                                                       award)

                                                                         14-18-B
                                                                       (identify
                                                                       delegs.
                                                                       for all
                                                                       auths.
                                                                       used in
                                                                       award)
                                                                          8-17
                                             8

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CFDA
NO.
PROGRAM TITLE
     STATUTORY AUTHORITY
PROGRAM
CODE
DELEGATION OF
AUTHORITY NO.
66.TSD    Toxic Substances Control Act Development
               Toxic Substances Control Act: Sec. 10
                                                                   OPPT — 12-22
                                                                 (ORD — pending)

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APPENDIX G

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          APPENDIX G
GUIDE: "DELEGATIONS OF AUTHORITY
  WHAT MANAGERS NEED TO KNOW"

-------
   ?/EPA
                            United States
                            Environmental Protection
                            Agency
                        Administration
                        and Resources
                        Management
          EPA 202-F-94-002
          February 1994
Delegations  of
Authority —
 What  Managers  Need
to  Know
     Office of Administration
Management and Organization Division
      INSIDE

 Background —
  Delegated Authority ... 1

 Delegated Authority vs.
  General Authority  . .  . . 1

 Delegation Floors	2
Common Management
  Concerns	2


Delegation Principles &
  Philosophies	3


Types of LimitatiOR$,~>-  . . 4


Green Border
  Review Process	4
Conclusion
   This Guide is designed to give you an
   overview of EPA'si delegations of
authority and  to discuss your
responsibility jn managing "delegated
programs. -A delegation  of authority is
defined as the Administrator's charge to
senior Headquarters and Regional
managers to carry out  statutory and
regulatory responsibilities on her behalf.


I.   Background—
    Delegated Authority


   There are 555+ delegations in  the
   Agency's  Delegations Manual.
Delegations are  important for two
reasons. First, they are a legal record—
documenting which Agency officials
have authority to make decisions for the
Administrator.  Second, delegations are
a management tool that establishes
operating    conditions    among
organizations and  individuals as they
carry out authorities.

Figure 1 shows the distribution  of 555+
delegations throughout  the Agency.
Approximately  40%  are held  in
Headquarters, 29% in the Regions and
31% shared by Headquarters and the
Regions. Figure 1 also shows that EPA
is a fairly decentralized Agency, with
60% of its delegations going either solely
or on a shared basis to the Regions.

EPA's delegations tend to fall into one of
several categories, such as enforcement
actions, administrative decisions, state
environmental  agreements/approvals,
                                                            Distribution of EPA's Delegations
                                                              Headquarters
                                                              224 - (40%)
             Shared
           Headquarters
            & Regions
           172-(31%)
 FIGURE 1
              Based on data as ot 3/10/93
ce rt if icat ion/permits/registration
decisions, and awarding grants and
cooperative agreements. Figure 2
shows that the largest number of
delegations result from the Clean Water
Act and the Clean Air Act.

II.   Delegated Authority vs.
     General Authority

 It's important to note that a delegation
 of authority is not needed for all work
that is performed by an office. Delegated
authority   generally   refers   to
decision-making that flows directly from
legislation  or regulation. General
authority stems from activities that an
office does as a result of its functions
and can  be found in functional ar
mission statements, operating guidance,
and strategic plans.
                                                                   Recycled/Recyclable
                                                                   Printed with Soy/Canola Ink on paoer :hat
                                                                   contains al least 50% recycled fiber

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                    Delegations Sorted By Act
                       (Total Delegations = 555)
        CM J
      CEIPCL/i [
                                           Based on data as of 3/10/93
i
        0    10    20   30    40    50    60   70    80    90   100

1Other Acts: Includes delegations from acts with fewer than 15 delegations.
 Acts included are: PPA, EPCRA, IRAA, MPRSA, NCA, & OAPCA.

2Multi-Act: Delegations use multiple statutory authorities and cannot be
 attributed to any one specific act.

3Non-Statutory: Includes delegations that are not based on legislation (i.e.,
 General/Administrative delegations based on management decision-making
 protocol, Executive Orders, Federal Register Notices, etc.).

FIGURE 2
To put it simply, a general authority is an activity that an office
performs—such.as the analysis and work that is involved in
reviewing a permit. A delegated authority is an accountable
decision-making responsibility—such as  approving or
denying a permit.
III.  Delegation Floors	

    An action can be redelegated to various levels  in an
    organization,  such as the Division Director or Branch
Chief level. A delegation floor is the lowest level  in an
organization to which an action can be redelegated. This floor
is written into the delegation as a specific authorized level.
Delegatees may choose to have actions actually carried out
at a level above the authorized floor, but not below it.

As of March, I993, the majority of delegations are authorized
to  be redelegated to  the  Division Director level (43%),
followed by 25% with no floor identified, and 15% that cannot
be redelegated. (In  light of the Inspector General's concern
•"'bout delegation floors, the Agency now identifies a floor on
Jl delegations  as they are  written  or revised.)  Figure 3
indicates that Division  Directors are the critical action and
decision-making level for the majority of delegated  Agency
authorities.
IV.  Common Management Concerns

    As managers,  delegated authorities are an
    important  part  of the way you manage  your
organization and your programs.  In addition to the
technical  and programmatic issues inherent  in a
delegation, you  also need  to  be aware  of some
common management concerns.

(1) There Is  considerable disagreement about
how to determine the lowest appropriate level for
redelegatlon  In a  highly  decentralized
decision-making management structure.

—  In  EPA a  significant amount  of discretion and
    autonomy is held in the Regional  offices. It is
    crucial to decide how much authority you wish to
    delegate to the  Regions.

—  The  level of delegation sometimes  receives
    Congressional  interest.  In general, Congress
    prefers to keep decisions and accountability at
    high levels  in the Agency to ensure effective
    oversight.

—  In  contrast, recent AA/RA Forums,  the National
    Performance Review,  and individual Regions
    have  raised issues  suggesting  a  need for
    additional  employee empowerment  and
    autonomy in making decisions under delegated
    authority.

    These tensions are  symptomatic of the pull and
    tug  in a centralized vs.  decentralized
    management structure and are important for you
    to  keep in mind as you make your delegation
    decisions.
                                                                              Delegations Sorted By Floor'
                                                                                 [Tola! Delegations c-S5t
                                                                 Cannot Be  " ' ; • >
                                                                Rodolcgatcd '"••:—		-—'
                                                              Division Director
                                                                 icli Chief
                                                                 or Below
                                                                      ..•__•._.-._:_...'-_		—	f  Based on data as of 3 '10/93

                                                                      1      ^'      '--^     1"0     ?QO      ?50

                                                          1Floor= Lowest level to which a delegation can be redelegated, e.g.,
                                                           Branch Chief, Division Director.
                                                          2Other= Includes delegations with floors identified as On-Site
                                                           Coordinators, National Program Managers, Senior Budget Officers,
                                                           or Human Resources Officers.


                                                          FIGURES

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                               DELEGATION PRINCIPLES & PHILOSOPHIES
   EPA's delegation system is based on five core principles and philosophies:

   (1) Act for the Administrator — Generally the Administrator only
   delegates to one or more senior officials reporting directly to her to
   act on her behalf. This means the AA/RAs, General Counsel, and
   Associate Administrators.

   (2) Right to Exercise or Withdraw — The Administrator and other
   delegatees always retain the  right to exercise or withdraw a
   delegated authority at any time.

   (3) Allocate Authority — Delegations allocate authority between
   the Regions and Headquarters, as well as among Headquarters
   Offices. As a way of deciding who should hold what authority, issues
   mainly affecting Regional or field offices are delegated to Regional
   Administrators, and issues that are multi-regional or of national
   significance generally remain  with the Administrator or are
   delegated to senior officials at Headquarters.

   (4) Authority at Lowest Level —When deciding  to delegate
   authorities, consider the following:

   — Review enabling legislation—sometimes it dictates the level of
      decision-making authority.
   —  Delegate an action to the lowest level that is appropriate for
       efficiency and effectiveness.

   —  Decide whether or not to redelegate authority to lower levels
       based on areas of responsibility, the staff's technical expertise,
       and political judgment, then delegate as close as possible to
       where the action takes place.

   —  Determine if an action has a high degree of importance and
       visibility and, if so, retain  authority at an appropriate level
       capable of performing the  task and making the appropriate
       technical, political and policy judgments.

   —  Determine whether full or partial authorization is needed based
       on the above criteria; decide who should exercise what parts of
       the authority; and what should not be delegated.

   (5)  Delegatees Are Accountable — Regardless of the level to
   which an action is redelegated, you remain accountable  for all
   decisions or actions taken by your redelegatees in exercising the
   authority. In the following chain of accountability, it is very important
   for you to understand the level at which delegated authorities are
   or should be exercised.
(2) Determining the appropriate level to  carry out an
authority is closely aligned with the  notion  of what
restrictions or limitations should be placed upon
officials as they carry out authorities. While limitations
are used most frequently with enforcement delegations,
the majority of EPA's delegations (approximately 64%)
have no  restrictions limiting how officials exercise the
delegated authority (see Figure 4).

—  Historically the Agency's Administrators,  the recipients
    of delegations, and the Management and Organization
    Division (M&O)  have  strongly discouraged limitations
    because they  undermine the  accountability  and
    effectiveness that a delegation is intended to provide.
    Limitations result in "phantom" delegations, meaning that
    the delegatee only appears to have the authority, but in
    reality  it is  held by the office or person who must
    ultimately approve the  action.

    Although delegatees  want  to receive  authorities as
    unencumbered as possible, National Program Managers
    often  want  to  maintain control  or ensure  national
    consistency by placing limitations in delegations.

—  Limitations,  when necessary,  establish  operating
    procedures  between programs that must  share
    delegated authority.

—  EPA officials who have been given a delegated authority
    can only carry it out within the stated parameters of the
    limitations included  in the delegation.

(3) Timing is  an  important issue  In managing your
delegations and programs.  Delegation  actions
submitted at the last minute force an expedited review
(or no review at all), limit input by essential parties
affected by the delegation, and create the potential for
vulnerability when the delegation Is exercised.
For example, regulations and permits are sometimes
approved and ready to be carried out before an office
realizes they do not have appropriate delegated authority
to approve the action.
               Delegations Sorted By Limitations
                      (Total Delegations = 555)
  No Limitations
         Notify
       Consult
       Concur
                                                    !355.
                    42
                         93
                       65
                                             Bated on dau u ol 3/10,93
                   50    100    ISO    200    250   300   350   400
  1No specific restrictions on officials in exercising the delegated
  authority.
  2Requires informing other official(s) named when exercising the
  authority.
  3Requires discussing action with other official(s) named before
  exercising the authority.
  4Requires approval from other official(s) named before exercising the
  authority.

  FIGURE 4

-------
  Delegations with limitations are separated
  into three types:

  J Notify requires the delegatee to inform another
     off icial(s) when exercising the authority. Notify is used
     in 21% of the delegations with limitations;

  D Consult requires that an action official discuss the
     action with another official(s) before exercising the
     authority. Consult is used in 46% of the delegations
     with limitations;

  D Concur is the most rigid of all limitations, is used in
     33% of the delegations with limitations, and requires
     the delegatee to  obtain the approval of another
     official(s) before exercising the authority.
(4) A delegation of authority should be considered an
initial management step, not a final one. As a manager,
you must also control delegations after they are
redelegated. Several methods can be used:

—  Consider crafting delegations to stipulate dollar levels or
    types of actions as a way of control rather than delegating
    broad authority or imposing unnecessary limitations. An
    example are dollar  limits used with some grant or
    cooperative agreement delegations.

    Build a management infrastructure for  your program
    using a  mix of applicable  program guidance,  plans,
    evaluations, technical assistance, information sharing
    systems, and other mechanisms.  Don't rely solely on
    delegations of   authority for  program management
    directions.

—  Systematically review your delegations on a  regular
    basis to  make sure they are compatible with program
    objectives.  Periodic program evaluations and
    conferences can help the National Program Manager
    assure that the entire program, including the  exercise of
    delegated authority, is solid and consistent.

—  Revise delegations as  understanding and experience
    with the authority grows in the organization.

—  Show confidence  in the  redelegation decisions  you
    make. Once decisions are redelegated, it is important to
    demonstrate trust, integrity, and  consistency toward
    redelegatees and the actions they take  under the
    redelegations.

—  Exercise a delegated authority yourself when it is
    appropriate for policy or political reasons to  do so; and
   withdraw an authority if it is being improperly carried out.
    Before deciding to exercise or withdraw a delegation,
    explore alternatives and discuss your concerns with the
    redelegatee. Withdrawing a delegated authority should
    be used as a  last resort  after other alternatives are
    exhausted.

V.   The Green Border Review Process

    Before the  Administrator  approves a  delegation of
    authority, it is circulated through the Agency's "Green
Border" review process. This review process is the
mechanism for the  Administrator to receive the advice and
counsel of her senior managers and to be sure that all legal
oroperational issues have been raised before she makes her
decision.  Green Border  is also  an  Agencywide
consensus-building process, and is managed by the
Management and Organization Division (M&O) in the Office
of Administration and Resources Management. Your staff
has more detailed information about the Green Border review
process.

VI.  Conclusion
D
elegations of authority are management tools that:
(1) Ease the burden of obligations for which the Administrator
is responsible by giving authority to senior managers to carry
out  actions on  her behalf.   By delegating these
responsibilities to EPA senior officials, the Administrator has
more time to address  other pressing issues affecting the
Agency; and

(2) Provide a legal record of Agency officials who carry out
authority on behalf of the Administrator.  This becomes very
important when EPA actions are challenged in court.

If you are interested in learning about specific delegations in
your program, please consult the M&O Management Analyst
for your organization ((202) 260-5000) who will be happy to
assist you.
                  How EPA Gens i t
                 Oe legatee!  Author

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APPENDIX H

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           APPENDIX H
   40 CFR PART 40, "RESEARCH AND
     DEMONSTRATION GRANTS"
40 CFR PART 45, "TRAINING ASSISTANCE
     40 CFR 46, "FELLOWSHIPS"
  40 CFR PART 47, "ENVIRONMENTAL
        EDUCATION GRANTS"

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              United States
              Environmental Protection
              Agencv
             Grants Administration
             Division (PM-216)
             Washington, DC 20460
EPA GAD/10-80-1
Jun» 19SO
v>EPA
Interim Regulations
and Procedures
Applicable to
                        Research
                        and
                        Demonstration
                        Grants

-------
Reprinted from Code-of Federal Regulations, Title 40, Part 40, revised as
                            of July 1, 1979

                       First Printing June 1980

-------
    Table   of     Sections
      PART 40—RESEARCH AND
      DEMONSTRATION GRANTS

Sec.
40.100 Purpose of regulation.
40.105 Applicability and scope.
40.110 Authority.
40.115 Definitions.
40.115-1  Construction.
40.115-2  Intermunlcipal agency.
40.115-3  Interstate agency.
40.115-4  Muncipallity.
40.115-5  Person.
40.115-8  State.
40.120 Publication  of EPA research objec-
   tives.
40.125 Grant limitations.
40.125-1  Limitations on duration.
40.125-2  Limitations on assistance.
40.130 Eligibility.
40.135 Application.
40.135-1  Preappllcatlon coordination.
40.135-2  Application requirements.
40.140 Criteria for award.
40.140-1  All applications.
40.140-2  [Reserved]
40.140-3  Federal Water Pollution  Control
   Act.
40.145 Supplemental grant conditions.
40.145-1  Resource  Conservation and Re-
   covery Act.
40.145-2  Federal Water Pollution  Control
   Act.
40.145-3  Projects Involving construction.
40.150 Evaluation of applications.
40.155 Availability of information.
40.160 Reports.
40.180-1  Progress reports.
10.160-2  Financial status  report.
40.180-3  Reporting of Inventions.
40.180-4  Equipment report.
40.180-5  Final report.
40.185 Continuation grant*.
  AOTROKITT: Authorities cited In I 40.110.
  Sooner 38 PR 12784. May 15. 1973, unle»
 otherwise noted.

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                                                                                                           §40.115-1
 {40.100  Purpose of regulation.
  These   provisions   establish  and
 codify policies and procedures govern-
 ing the award of research and demon-
 stration grants by the Environmental
 Protection Agency.

 } 40.105  Applicability and trope.
  This   part   establishes  mandatory
 policies and procedures for all EPA re-
 search and demonstration grants. The
 provisions of this part supplement the
 EPA general  grant regulations and
 procedures (40 CFR Part 30), Accord-
 ingly, all  EPA research and demon-
 stration grants are awarded subject to
 the EPA Interim general grant regula-
 tions and procedures (40 CFR Part 30)
 and to the applicable provisions of this
 Part 40.

 $40.110   Authority.
  EPA  research  and  demonstration
 grants  are  authorized  under the fol-
 lowing statutes:
  (a) The Clean Air Act. as amended,
 42 U.S.C. 1857 et seq.
  (1)  Section 103 (42 U.S.C. 1857b) au-
 thorizes grants for research and dem-
 onstration  projects  relating  to the
 causes, effects, extent, prevention, and
 control of air pollution.
  (2)  Section  104 (42 U.S.C.  1857b-l)
 authorizes grants for research and de-
 velopment of new and improved meth-
 ods for the prevention and control  of
 air pollution resulting  from the com-
 bustion of fuels.
  (b)  The  Federal  Water  Pollution
 Control  Act, as amended. Pub. L. 92-
 500.
  (1) Section 104(b) (33 U.S.C. 1254(b)>
 authorizes  grants for  research  and
 demonstration projects relating to the
 causes,  effects, extent,  prevention, re-
 duction, and elimination of water pol-
 lution.
  (2)   Section   104(h)  (33   U.S.C.
 1254(h))  authorizes grants  for  re-
 search  and development of new and
 improved methods for the prevention.
 removal, reduction, and elimination  of
 pollution in lakes, including the unde-
 sirable effects of nutrients and vegeta-
 tion,  and for  construction of publicly
 owned research facilities for such pur-
 pose.
  (3) Section 104(1) (33 U.S.C. 1254(1))
 authorizes grants for research, studies.
 experiments, and demonstrations rela-
 tive  to  the removal of oil from any
 waters and for the prevention, control.
and elimination of oil and hazardous
substances pollution.
  (4) Section 104(r) (33 U.S.C. 1254(D)
authorized grants for the conduct of
basic  research  into the structure and
function of freshwater aquatic ecosys-
tems, and to improve understanding of
the  ecological characteristics neces-
sary to the maintenance of the chemi-
cal, physical  and biological integrity
of freshwater aquatic ecosystems.
  (5) Section 104(s) (33 U.S.C.  (s)) au-
thorizes grants to conduct and report
on  Interdisciplinary studies on river
systems,  including hydrology, biology,
ecology,  economics, the relationship
between river uses and land uses, and
the  effects  of  development   within
river basins on river systems  and on
the  value  of water   resources  and
water-related activities.
  (6) Section 105(a) (33 U.S.C. 1255(a))
authorizes  grants  for  research  and-
demonstration of  new or  Improved
methods for preventing, reducing, and
eliminating the  discharge  into  any
waters  of  pollutants  from   sewers
which  carry  storm  water or both
storm  water and pollutants; and for
the demonstration  of  advanced waste
treatment  and   water  purification
methods (including the temporary use
of new or improved chemical additives
which  provide substantial  immediate
Improvement  to  existing  treatment
processes), or new or improved meth-
ods of joint treatment systems  for mu-
nicipal and industrial wastes.
  (7) Section lC5(b) (33 U.S.C. 1255(b)>
authorizes grants for  demonstrating,
in river basins or portions thereof, ad-
vanced  treatment and environmental
enhancement  techniques to  control
pollution  from all sources, within such
basin or  portions  thereof,  including
nonpolnt  sources,  together with  in-
stream  water  quality  improvement
techniques.
  (8) Section 105(C) (33 U.S.C. 1255(O)
authorizes  grants  for  research  and
demonstration projects for  prevention
of pollution of any waters by Industry
Including, but not limited to. the pre-
vention, reduction, and elimination of
the discharge of pollutants.
  (9)  Section   10S(e)(l) (33   U.S.C.
1255(eXD)  authorizes  grants  for  re-
search  and  demonstration  projects
with  respect to new  and  improved
methods of preventing, reducing,  and
eliminating pollution from agriculture.
  (10)  Section  105(e)(2) (33   U.S.C.
1253(eK2)) authorizes grants for dem-
onstration projects  with  respect  to
new and Improved methods of prevent-
ing, reducing, storing, collecting, treat-
Ing, or otherwise eliminating pollution
from sewage in rural and other areas
where collection of sewage in conven-
tional,  communitywide  sewage collec-
tion systems Is impractical, unecono-
mical,  or  otherwise   infeaaible.  or
where soil conditions or other  factors
preclude the use of septic tank and
drainage field systems.
  (11) Section 107 (33 U.S.C. 1297) au-
thorizes grants for projects  to demon-
strate  comprehensive  approaches  to
the elimination or control of acid or
other mine water pollution resulting
from active or abandoned mining oper-
ations and other environmental pollu-
tion affecting water quality within all
or part of a watershed or river basin.
including   siltatlon   from   surface
mining.
   (12) Section 108 (33 U.S.C. 1258) au-
 thorizes grants for projects to demon-
 strate  new  methods and  techniques,
 and to  develop  preliminary plans for
 the elimination or control of pollution
 within  all or any part of the water-
 sheds of the Great Lakes.
   (13) Section 113 (33 U.S.C. 1263) au-
 thorizes grants for projects to demon-
 strate methods to provide for central
 community  facilities for  safe  water
 and elimination or control of pollution
 in those native villages of Alaska with-
 out such facilities.
   (c) The Public Health Service Act. as
 amended. 42 U.S.C. 241 et seq.
   (1) Section 301 (42 U.S.C. 241. 242b,
 and  246)  authorises  grants  for re-
 search relating to the  human and en-
 vironmental effects of radiation.
   (d) The Solid Waste Disposal Act, as
 amended, by the Resource Conserva-
 tion  and Recovery  Act  of 1978  (42
 U.S.C. 6901 etseq.).
   (1) Section 8001 (42 U.S.C. 6981) au-
 thorizes grants for research and dem-
 onstration projects  relating to  solid
 waste.
   (2) Section 8004 (42 U.S.C. 6984) au-
 thorizes brants for demonstration of
 new or  Improved technologies for re-
 source recovery.
   (3) Section 8006 (42 U.S.C. 6985) au-
 thorize*  grants  to conduct  special
 studies and demonstration  projects on
 recovery of useful energy and materi-
 als.
   (4) Section 8006 (42 U.S.C. 6986) au-
 thorizes grants for the demonstration
 of resource recovery system or for the
 construction of new or improved solid
 waste disposal facilities.
   (e) The Federal Insecticide. Fungi-
 cide, and Rodenticide Act. as amended.
 Pub. L. 92-516.
   (1) Section 20  authorizes grants for
 research in  the  pesticides  areas with
 priority  given to  the development of
 biologically integrated alternatives for
 pest control.
   (f) The Grant Act. 42 U.S.C. 1891 et
 seq.. authorizes grants for basic scien-
 tific research.

 [38 PR 12784.  May IS. 1973. a* amended at
 42 FR 38056. Oct. 20. 1977]

 {40.115   Definitions.
  The statutes  Identified  in {40.110
 contain  definitions which  are not all
 repeated here.  The following  terms
 shall have   the meaning  set  forth
 below:
 C42 FR 38036. Oct. 20. 19771

 9 40.115-1 Coiutructlon.
  May Include the preliminary plan-
 ning to  determine the economic  and
 engineering feasibility of a facility, the
engineering, architectural, legal, fiscal.
 and economic Investigations and stud-
 lea, surveys,   designs,  plans, working
drawings, specifications,  procedures.
and other action necessary to the con-
struction of a facility, the erection, ac-

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                                                                                                           §40.130
quisition.  alteration,  remodeling, im-
provement, or extension of a facility.
and the inspection and supervision of
the construction of a facility.

§ 40.115-2  Intermunieipal agency.
  (a)  Under  the  Clean Air  Act.  an
agency of two or more municipalities
located in the same State or in differ-
ent  States  and  having  substantial
powers or duties pertaining to the pre-
vention and control of air pollution.
  (b)  Under  the  Resource Conserva-
tion and Recovery Act. an agency es-
tablished by two or  more municipal-
ities with  responsibility for planning
or administration of solid waste.
  (c) In  all other cases, an agency of
two or more municipalities having sub-
stantial powers or duties pertaining to
the control of pollution.
[38 FR 12784. May  IS. 1973. u amended at
42 FR 56056, Oct. 20. 1977)

§40.115-3  Interstate agency.
  (a)   Under  the Clean Air Act, an
agency established by  two  or  more
States, or by two or more municipal-
ities located in different States, having
substantial powers or  duties pertain-
ing to the prevention  and control of
air pollution.
  (b) Under  the  Federal Water Pollu-
tion Control Act, an  agency of two or
more  States established by  or pursu-
ant to an agreement or compact ap-
proved by the Congress or any  other
 agency of two or more States, having
 substantial powers or  duties pertain-
 ing to  the  control  of  pollution  of
 waters.
  (c) Under the Resource Conservation
 and Recovery Act, an agency of two or
 more municipalities in different States
 or  an agerfcy established by two or
 more States, with authority to provide
 for the disposal  of  solid  wastes  and
 serving two or more  municipalities lo-
 cated  in different States.
  (d) In all other cases, an  agency of
 two or more States having substantial
 powers or duties pertaining to the con-
 trol of pollution.
 (38 FR 12784. May 15.  1973. as amended at
 42 FR  S6056. Oct. 20, 1977]

 §40.115-4  Municipality.
  (a) Under the Federal Water  Pollu-
 tion  Control Act. a city, town, bor-
 ough, county, parish,  district, associ-
 ation, or other public body created by
 or pursuant to State law. or an Indian
 tribe or an authorized Indian tribal or-
 ganization, with  jurisdiction over dis-
 posal of sewage, industrial  wastes, or
 other wastes: or  a designated and ap-
 proved management agency under sec-
 tion 208 of the act.
   (b)  Under the  Resource  Conserva-
 tion and Recovery Act, a city, town,
 borough.  Bounty, parish, district, or
 other public body created by or pursu-
 ant to State  law, with
for the planning or administration  of
solid waste management, or an Indian
tribe or authorized tribal organization
or Alaska Native  village or organiza-
tion, and any rural community or un-
incorporated town or village or any
other public entity for which an appli-
cation for assistance is made  by a
State or political subdivision thereof.
  (c) In all  other cases, a city. town.
borough,  county,  parish,  district,  or
other public body  created by or pursu-
ant to State law. or an Indian tribe  or
an  authorized Indian tribal organiza-
tion,  having  substantial  powers   or
duties pertaining to the control of pol-
lution.

[38 FR 12784. May 15. 1973. as amended at
42 FR 56056. Oct. 20. 1977]

§40.115-5  Person.
  (a) Under the Federal Water  Pollu-
tion Control Act. an individual, corpo-
ration, partnership, association. State,
municipality, commission,  or political
subdivision of a State,  or  any inter-
state body.
  (b)  Under  the  Resource Conserva-
tion and Recovery Act.  an  individual,
trust, firm,  joint stock company, cor-
poration (including a government cor-
poration),   partnership,   association.
State, municipality, commission,  polit-
ical subdivision  of a  State, or any in-
terstate body.

[38 FR 12784. May 15. 1973. as amended at
42 FR 56057, Oct. 20. 1977]

§40.115-«  State.
  (a) Under the Federal Water Pollu-
tion Control  Act. a State, the District
of  Columbia, the Commonwealth  of
Puerto  Rico,   the  Virgin  Islands.
Guam, American  Samoa,  and  the
Trust Territory  of the Pacific Islands.
  (b)  Under  the  Resource Conserva-
tion and  Recovery Act. a  State, the
District  of  Columbia,  the Common-
wealth of Puerto  Rico, the Virgin Is-
lands,  Guam, American Samoa, and
the Commonwealth  of  the  Northern
Mariana Islands.
  (c)  In all other cases, a  State, the
District  of  Columbia,  the Common-
wealth of Puerto  Rico, the Virgin Is-
lands, Guam and American Samoa.
[42 FR 56057. Oct. 20, 1977]

§ 40.120  Publication of EPA  research  ob-
    jective*.
  The Office of Research and Develop-
ment of EPA publishes - statement  of
research objectives and priorities an-
nually in a document entitled "Office
of  Research  and Development—Pro-
gram Guide." This document may be
obtained from either the Office of Re-
search  and  Development,  RD-874.  or
the Grants  Administration Division,
PM-216, U.S. Environmental Protec-
tion Agency. Washington. D.C. 20480.
[42 FR 56087. Oct. 20. 19173
§ 40.125  Grant limitations.

§40.125-1  Limitations on duration.
  (a)  No  research or  demonstration
grant shall  be approved for a budget
period in excess of 2 years except dem-
onstration grants involving construc-
tion.
  (b)  No  research or  demonstration
grant shall  be approved for a project
period in excess of 5 years.
  (c)  The.grant award official may
extend the budget and project periods
for up  to  an additional  12 months
without additional  grant funds, when
such extensions are in  the  best inter-
est of the  Government.
[42 FR 56057. Oct. 20. 1977]

§ 40.125-2  Limitations on assistance.
  In addition to the cost-sharing  re-
quirements   pursuant  to   40  CFR
30.720,  research  and  demonstration
grants shall be governed by the specif-
ic assistance limitations listed below:
  (a) Federal  Water Pollution Control
Act  (1)  Section 104(s)—no grant in
any fiscal year may exceed  $1 million.
  (2) Sections 105(a),  105(c) and  108—
no grant may exceed 75 percent of the
allowable  actual project costs.
  (b) Clean Air Act. (1) Section 104—no
grant may exceed $1.500,000.
  (c)  Resource Conservation  and Re-
covery Act
  (1)  Sections 8001.  8004.  and  800,r
The maximum practicable  cost  shai
ing is required.
  (2) Section 8006. The Federal share
for any grant for the demonstration of
resource  recovery  systems shall not
exceed 75 percent and Is subject to the
conditions contained In section 8006(b)
of the Act.  The Federal share for any
grant for the construction of new or
Improved solid waste disposal facilities
shall not  exceed 50 percent In the case
of a project serving an area which in-
cludes only one municipality and 75
percent in any other case, and is sub-
ject to the limitations contained in
section  8006(c) of  the  Act.  Not more
than 15 percent of the  total funds au-
thorized  to  be appropriated for any
fiscal year  to carry  out this section
shall be awarded for projects in any
one State.
(38 FR 12784. May 19. 1973. as amended at
42 FR 20083. May 8. 1975: 42 FR 56057. Oct.
20. 1977]

§40.130  Eligibility.
  Except  as otherwise provided below,
grants for research and demonstration
projects may  be awarded  to  any re-
sponsible  applicant In accordance with
40 CFR 30.340:
  (a) The Clean Air Act, as amended—
public or nonprofit private agencies,
institutions, organizations, and to Lnd
vlduals.
  (b) Resource Conservation and  Re-
covery Act.
  (1) Section 8001. puolic  authorities.

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                                                                                                          §40.140-3
agencies,  and  Institutions;   private
Ancles and institutions; and individ-
   j.
  (2)  Section 8004  and 8005. public
agencies and authorities  or  private
persons.
  (3)  Section 8008.  State, muni- ipal.
intersate or intermunicipal agencies.
  (4) No grant may be made under this
Act to any private profit-malting orgv
nizatlon.
  (c)  The Federal Insecticide. Fungi-
cide,  and  Rodenticide Act. as  amend-
ed—other Federal agencies, universi-
ties, or others as may be necessary to
carry out the purposes of the act.
  (d) The  Federal  Water  Pollution
Control Act,  as amended:
  (1) Section 104(b)—State water pol-
lution  control  agencies,  interstate
agencies, other public or nonprofit pri-
vate  agencies, institutions,  organiza-
tions, and to individuals.
  (2)  Sections  104(h)  and   104(1)—
public or private agencies and organi-
zations and to individuals.
  (3) Section 104(r>—colleges and uni-
versities.
  (4)  Section 104(s)—institutions  of
 higher education.
  (5) Sections  lOS(a),  105(e)(2).  and
 107—State, municipal. Interstate,  and
 Intermunicipal agencies.
  (6) Section 195(b>—State or States or
 Interstate agency.
  (7) Sections 105(c) and lOS(eXl)—
  .rsons.
  (8) Section 108—State, political sub-
 division.  Interstate  agency, or  other
 public  agency, or combination thereof.
  (9) Section 113—only to the  State of
 Alaska.
  (e) The Public Health Service Act. as
 amended—only to nonprofit agencies.
 institutions, organizations, and to Indi-
 viduals.
 [38 FR 12784. May 15. 1973, as amended at
 40 FR 20083. May 8. 1975; 42 FR 56057. Oct.
 20. 1977]

 5 40.135  Application.

 § 40.135-1   Preapplication coordination.
  (a) All applicants. (1) Applicants for
 research and demonstration grants are
 encouraged to contact EPA for further
 information  and assistance  prior to
 submitting a formal application. The
 EPA regional office or the laboratory
 nearest the applicant will be able to
 provide such assistance or to refer the
 applicant to an appropriate EPA  rep-
 resentative.
   (2) Applicants shall prepare an envi-
 ronmental assessment of the proposed
 project where applicable, outlining the
 anticipated  impact on  the  environ-
 ment pursuant to 40 CFR. Part 8.
   (b) Demonstration grants. All appli-
 -mnts  for demonstration  grants must
  omply with  all  applicable  require-
 ments of Office  of Management  and
 Budget (OMB) Circular  No.  A-9S as
 revised, see  i 30.309 of this subchapter.
  (c) Applications for grants for dem-
onstration projects  funded  by  the
Office of  Solid Waste will be solicited
through the Department of Commerce
Business Daily, and selections  will be
made on a competitive basis.
[38 FR 12784. May  15. 1973, as amended at
41 FR 20659. May  20. 1976; 42  FR 56057.
Oct. 20. 19771

{ 40.135-2  \pplication requirement*.
  All applications  for  research  and
demonstration grants shall be submit-
ted in an original and 8 copies to the
Environmental   Protection   Agency.
Grants   Administration   Division,
Washington. D.C. 20480, In accordance
with li 30.315 through 30.315-3.
  (a) Applications involving  human
subjects. (1)  Safeguarding the rights
and  welfare  of  human  subjects  in-
volved In projects  supported by EPA
grants Is the responsibility of the Insti-
tution which receives or is accountable
to EPA for the funds awarded for the
support of the project.
  (2) Institutions must submit to EPA.
for review,  approval, and official  ac-
ceptance, a written  assurance of its
compliance with guidelines established
by Department of Health. Education.
and  Welfare concerning protection of
human subjects.  However, institutions
which have submitted  and  have had
accepted, general assurance to DHEW
under these guidelines  will be consid-
ered as being in  compliance with this
requirement. These guidelines are pro-
vided in DHEW Publication No. (NIH)
72-102. the  "Institutional Guide to
DHEW Policy on Protection of Human
Subjects." Copies of this publication
are available from the Superintendent
of  Documents.  U.  S.  Government
Printing  Office,  Washington,  D.C.
20420.
  (3) Applicants  must  provide with
each proposal involving  human sub-
jects a certification that it has  been or
will  be reviewed in  accordance with
the  Institution's  assurance. This < erti-
fication must be  renewed  annually on
the  basis of continuing review of the
supported project.
  (b) Applications involving  labora-
tory animals. Each application for a
project Involving  the  use of  warm-
blooded animals  shall include a writ-
ten  assurance that the applicant has
registered with the Department of Ag-
riculture and is in compliance with the
rules, regulations, and standards enun-
ciated in the Animal Welfare Act, Pub.
L. 89-554. as amended.
  (c) Notice of research project (NRP).
Each application for research must in-
clude  a summary (NRP) of proposed
work (200 words  or less) incorporating
objectives, approach and current plans
and/or progress.  Upon  approval of an
application, summaries are forwarded
to the Smithsonian Science Informa-
 tion Exchange. Summaries of  work in
 progress  are  exchanged  with  govern-
ment and private agencies supporting
research and are forwarded to investi-
gators who request such information.
  (d)  Federal Water Pollution Control
Act.  (I) All applications  for grants
under section 105(a) must have  been
approved by  the  appropriate  State
water pollution  control  agency  or
agencies.
  (2) All applications for grants under
section  107, where the proposed  proj-
ect will be located in the Appalachian
region,  shall have  been  coordinated
with  the Appalachian Regional Com-
mission for determination that  such
demonstration   project is consistent
with the objectives of the Appalachian
Regional Development Act of 1985. as
amended.

(38 FR 12784. May 15. 1973. as amended at
40 FR 20083. May  8. 1975: 42 FR S6057. Oct.
20. 1977]

§40.140  Criteria for award.
  In determining the desirability and
extent of funding for a project and the
relative merit of an application, con-
sideration will be given to the follow-
ing criteria:

9 40.140-1  All application*.
  (a)  The  relevancy of the  proposed
project to the  objectives  of  the  EPA
research and demonstration program;
  (b)  The availability of funds within
EPA:
  (c)  The technical feasibility of the
project;
  (d)  The seriousness, extent, and ur-
gency of the environmental  problems
toward which the project is directed;
  (e)  The  anticipated public benefits
to be derived from the project in rela-
tion to the costs of the project;
  (f)  The  competency of the  appli-
cant's staff and the adequacy of the
applicant's  facilities and available re-
sources;
  (g)  The degree to which the project
can  be  expected to produce results
that  will have  general application to
pollution control problems nationwide:
  (h) Whether  the  project is consist-
ent  with  existing  plans or ongoing
planning for the project area at the
State, regional, and local levels;
  (i) The existence and extent of local
public support for the project;
  (j) Whether the proposed  project is
environmentally sound;
  (k)  Proposed cost sharing.

{40.140-2  [RcMTTcd]

{40.140-3  Federal  Water Pollution Con.
   trel Act
  (a)  All applications for grants under
section 105(c) must provide evidence
that the proposed project will contrib-
ute to the development or demonstra-
tion of a new or Improved method of
treating industrial wastes or otherwise
preventing  pollution  tey   Industry,
which method shall have industrywide
application;

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                                                                                                          §40.150
  (b) All applications for grants under
section 113 must include provisions for
community safe water supply systems,
toilets, bathing and  laundry facilities,
sewage  disposal  facilities  and  pro-
grams relating to health and hygiene.
Such projects must also be for the fur-
ther  purpose of developing prelimi-
nary  plans for providing  such  safe
water and such elimination or control
of water pollution for all  native vil-
lages in the State of Alaska.

§ 40.145  Supplemental grant condition*.
  In addition to the EPA general grant
conditions  (40 CFR. Part 30. Subpart
C). all grants are awarded subject to
the following requirements:
  (a) The project will be conducted in
an environmentally sound manner.
  (b) In addition to the notification of
project changes required pursuant to
40 CFR 30.900, prior written approval
by the grants officer is  required for
project changes which may (1) alter
the approved scope of the project. (2)
substantially  alter the design  of the
project, or (3) Increase the amount of
Federal funds needed to complete the
project. No approval or disapproval of
a project change pursuant  to 40 CFR
30.900 or this section shall commit or
obligate the United States to an in-
crease in the amount of  the grant or
payments  thereunder,  but  shall not
preclude submission or consideration
of a request  for a  grant  amendment
pursuant to 40 CFR 30.900-1.

 [38 FR 12784. May 15. 1973. a* unended tt
40 FR 20083. Mfcy 6. 1975]

J 40.145-1  Resource Conservation and Re-
    covery Act.
  Programs for which a Federal grant
is awarded by the Environmental  Pro-
tection Agency to a State, municipal,
interstate or Intel-municipal agency, or
to any  public authority, agency or in-
stitution, under the Resource Conser-
vation and Recovery Act. shall be the
subject of public participation consist-
ent with Part 249 of this chapter.
 [42 FR 58057. Oct. 20. 1977]

$40.14,1-2  Federal  Water Pollution  Con-
    trol Act.
   (a) No person in  the United States
 shall on the ground of sex be excluded
 from participation  In. be denied the
 benefits of, or be subjected to discrimi-
 nation under any program or activity
 receiving assistance under the Act.
   (b) Grants  under section  107 are
 awarded subject to the conditions—(1)
 that the State shall acquire any  land
 or interests therein  necessary for  such
 project  to assure the elimination  or
 control  of acid or  other mine water
 pollution; and (2) that the State  shall
 provide legal and practical protection
 to the project area to insure  against
 any  activities which will cause future
 acid or other mine water pollution.
$ 40.145-3  Project* involving construction.
  Research and demonstration grants
for  projects  involving  construction
shall be subject to the following condi-
tions:
  (a) The applicant will  demonstrate
to the satisfaction of the grants officer
that he has or will have  a  fee simple
or such other estate or interest in the
site  of the  project,  and  rights  of
access, as the grants officer finds suffi-
cient  to assure undisturbed use and
possession for the purpose of construc-
tion and operation for the estimated
life of the project; and in the case of
projects serving more  than one mu-
nicipality, that the participating com-
munities have su?h interests or rights
as the grants officer finds sufficient to
assure their undisturbed utilization of
the project for the estimated life of
the project.
  (b) Invitations for  bids or requests
for proposals shall bs based upon a
clear and accurate description of the
technical requirements for the materi-
al, product, or service to  be procured.
Such description shall not. In competi-
tive procurements,  contain  features
which  unduly  restrict  competition.
"Brand name or  equal" description
may be used as a  means to define the
performance or other salient require-
ments of a procurement,  and when so
used  the  specific  features of  the
named  brand which  must be met by
offerers should be clearly specified.
  (c) Positive efforts shall be made by
the grantees to utilize small business
and  minority-owned  business sources
of supplies and services.
  (d) Subagreements for  construction
work  may be negotiated  when adver-
tising for  competitive bids is not feasi-
ble;  however, the grantee  must ade-
quately demonstrate  its need to con-
tract with a  single or sole source. All
such  subagreements  are subject  to
prior approval by the grants officer.
  (e) Construction work  will be per-
formed by the fixed-price (lump sum)
or fixed-rate  (unit price) method, or a
combination  of these  two  methods,
unless the grants officer gives advance
written approval  to  use  some  other
method of contracting. The cost-plus-
a-percentage-of-cost  method  of  con-
tracting shall not be  used. Adequate
methods of advertising for and obtain-
ing competitive sealed bids will be em-
ployed prior to award of the construc-
tion contract. The award of the con-
tract will  be made to the responsible
bidder submitting the  lowest respon-
sive  bid. which shall be determined
without regard  to State  or  local law
whereby preference is given on factors
other than the specification require-
ments  and the amount  of  bid. The
grantee must promptly transmit to the
grants officer copies of bid protests.
decisions on such protests, and related
correspondence.  The  grants  officer
will cause appropriate review of grant-
ee procurement methods to be made.
  (f) On  construction  contracts  elf
 ceeding $100,000.  each  bidder must
 furnish a bid guarantee equivalent to 5
 percent of the bid  price. In addition.
 the contractor awarded  the contract
 must furnish  performance and pay-
 ment bonds, each of which shall be in
 an amount not less than 100 percent
 of  the  contract  price.  Construction
 contracts  less  than S100.000  shall
 follow the State or  local  requirements
 relating to bid guarantees,  perform-
 ance bonds, and payment  bonds.
  (g) The construction of the project,
 including the  letting of  contracts  In
 connection therewith, shall conform
 to  the  applicable   requirements   of
 State,  territorial,  and local laws and
 ordinances to the extent  that such re-
 quirements do not conflict with Feder-
 al laws.
  (h) The  grantee  will  provide  and
 maintain competent and  adequate en-
 gineering supervision and inspection
 for the project to insure that the con-
 struction conforms with the approved
 plans and specifications.
  (1) Any construction contract must
 provide that representatives of the En-
 vironmental Protection  Agency and
 the  State,  as  appropriate,  will have
 access  to the work  whenever it is  in
 preparation or progress and that the
 contractor will  provide proper faci^
 ties  for such  access  and  inspection*-
 The contract must  also  provide that
 the  grants officer,   the  Comptroller
 General of the  United States, or any
 authorized  representative shall  have
 access   to  any  books,   documents.
 papers,  and records  of the contractor
 which are pertinent  to the project for
 the purpose of making audit, examina-
 tion,   excerpts,  and  transcriptions
 thereof.
  (j) The grantee  agrees  to construct
 the project or cause  it to be construct-
 ed in accordance with the application,
 plans and specifications, and subagree-
 ments  approved by  EPA  in the grant
 agreement or amendments.
  (k) In addition to the notification of
 project  changes pursuant to 40 CFR
 30.900. a copy of any construction con-
 tract or modifications thereof, and of
 revisions  to  plans  and specifications
 must be submitted to the grants offi-
 cer.
 [38 FR  12784. May 15.  1973. a* amended at
 40 FR 20083. May 8. 1975}

 § 40.150  Evaluation or applications.
  Every application  for a research  or
 demonstration grant will be evaluated
 by appropriate EPA staff in terms  of
 relevancy and  the applicable criteria
 set forth In i 40.140. Only application^
 considered relevant  to EPA researc,
and demonstration  objectives will r£*
ceive further consideration and be sub-
jected to additional review.  Relevancy
will  be  measured  by  program  needs
and priorities as defined in the Agen-
cy's  current  planned objectives. Rel-
evancy,  coupled with the  results  of

-------
                                                                                                          §40.165
    nical review, will provide the basis
for funding recommendations.
  (a)  New applications.  Applications
considered relevant to EPA research
and demonstration  objectives  will be
reviewed for technical merit  by at
least  one reviewer within EPA and at
least   two  reviewers   outside   EPA.
Review by a National  Advisory Coun-
cil  is  statutorily required for radiation
grants.
  (b)  Continuation applications. Con-
tinuation applications  will be reviewed
by  appropriate EPA staff only. Recom-
mendations for continuation of  fund-
in? will be based on  progress toward
.tr-r- accomplishment  •  -.he goals set
forth  for  the  project and continued
Agency needs and priorities.

f 40.155  Availability of information.
  (a) The  availability  to the public of
Information  provided  to, or otherwise
obtained by. the Administrator under
this Part shall be governed by  Part 2
of this chapter.
  (b) An assertion  of entitlement to
confidential treatment of part or all of
the Information in  an  application may
be  made using the procedure described
in  530.235(b). See also Si 2.205  and
2.204 of this chapter.
  (c)  All information  and data  con-
>~
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Thursday
October 18, 1984
Part III


Environmental

Protection  Agency

40 CFR Part 45
Training Assistance Final Rult
40 CFR Part 46
Fellowship Assistance; Final Rule

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   41004     Federal Register  /  Vol. 49.  No. 203  /  Thursday.  October 18.  1984 / Ruins and Regulations
   ENVIRONMENTAL PROTECTION
   AGENCY

   40 CFR Part 45

   < OA-FBC 2621-20)1

   raining Assistance; Final Ruto

  AGENCY: Environmental Protection
  Agency.
  ACTION: Final rule.	

  SUMMARY: This final rule revises the
  Environmental Protection Agency's
  (EPA) regulation at 40 CFR Part 45
  governing the award and administration
  of EPA training assistance. The
  revisions are designed to ensure
  consistency with EPA's "General
  Regulation for Assistance Programs"
  and to reflect current EPA policies on
  training assistance awards.
  DATE This rule applies to all training
  assistance which EPA awards on or
  after October IS, 1964.
  FOR FUMTMt* INFORMATION CONTACT:
  Richard A. Johnson, Grants
  Administration Division (PM-218).
  Environmental Protection Agency, 401M
  Street SW., Washington, D.C., 20460
  (202) 382-5296.
  SUPflKMBhTARY INFORMATION: Part 45
 establishes the policies and procedures
 for the award of training assistance by
 EPA. We have not updated the training
 assistance rule since October 20.1977.
   This document updates Part 45 and
 incorporates changes to EPA policies on
 training assistance awards. Since the
 revisions to this rule are largely
 technical in nature, we did not publish a
 proposed rule for public comment. The
 changes to the rule include:

 Stipend Levels
   In the previous rule, we had a dollar
 limit on the use of awarded funds for
 stipend amounts in any particular
 budget period and a dollar limit on the
 amount of an annual stipend. We
 deleted those levels from this rule in
 order to  provide program offices the
 flexibility to make changes in the
 stipend levels based on program needs
 and funding levels without seeking a
 deviation from the rule.

 Subpart B—Manpower Forecasting
  EPA anticipated funding for.
 manpower forecasting when the Agency
 was first established, therefore, we
 reserved Suboart B for the development
 of oolicies and procedures for
 manpower forecasting assistance
agreements. Since no funds have been
available for such agreements, and none
is anticipated, we deleted the reference
  to manpower forecasting in the title of
  this part and in the table of contents.
  Consistency With 40 CFR Part 30.
  "General Regulation for Assistance
  Programs"
    EPA published a final revision to 40
  CFR Part 30 on September 30,1983 (46
  FR 45056). EPA revised this rule to make
  it consistent with the revised 40 CFR
  Part 30, "General Regulation for
  Assistance Programs." September 30,
  1983.
  Regulation Development
    Under Executive Order 12291, EPA is
  required to make a judgement whether a
  regulation is "major" and. therefore,
  subject to the regulatory impact analysis
  requirements of the Order. We have
  determined that this rule is not "major"
  because it will not have a substantial
  impact on the Nation's economy or large
  numbers of individuals or businesses.
 There will be no major increases in
 costs or prices for consumers.
 individuals, industries, or Federal, State,
 or local governments. The rule was
 submitted to the Office of Management
 and Budget as required by Executive
 Order 12291.
   Under the Paperwork Reduction Act
 of 1980.44 U.S.C. 3501 et seq.. the
 information provisions in this rule have
 been approved by the Office of
 Management and Budget (OMB
 clearance number 2010-0004).

 List of Subjects in 40 CFR Put 45
   Administrative practice and
 procedures. Environmental protection.
 Grant programs—environmental
 protection. Reporting and recordkeeping
 requirements.
  Dated: October 3.1964.
 WUttunD.Rucfcelfhau*,
 Administrator.
  Accordingly, title 40, Chapter I is
 amended by revising Part 45 to read as
 follows.

 PART 45-TRAINING ASSISTANCE

 S«t
 49.100  Purpose and scope.
 43.103  Authority.
 45.110  Objectives.
 49.113  Definitions.
 45.120  Applicant eligibility.
 49.123  Application requirements.
 45.130  Evaluation of applications.
 43.133  Supplemental conditions.
43.140  Budget and project period.
49.145  Allocabiliry and allowability of costs.
45.190  Reports.
49.159  Continuation assistance.
 Appendix A—environmental Protection
    Agency Training Programs
  Authority: Sec. 103 of the Clean Air Act as
amended (42 U.S.C. 7403). sec. 104(g). 100.
 ,ind n l of the Clean Water Au. j
 133 I -.5 C. ' 254(8). 1259. and 12811. socs. 7U07
 art! SOOT of '.he Soiid Waste Disposal Act. 
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           Federal  Register / Vol.  49,  No. 203  / Thursday, October 18.  1984 /  Rules and Regulations     41005
 §45.120  Applicant eligibility.  .
   Institutions, organizations, and
 individuals are eligible for EPA training
 awards as follows:
   (a) Clean Air Act. Section 103(b)—Air
 pollution control agencies, public and
 nonprofit private agencies, institutions.
 organizations, and individuals.  \o
 award may be made under this Act to
 any private, profitmaking organization.
   (b) Clean Water Act. (1) Section
 T)4(b)(3)— State water pollution control
 agencies, interstate agencies, other
 public or nonprofit private agencies,
 institutions, organizations, and
 individuals. No award may be made to
 any private, profitmaking organization.
   (2} Section 104(g|(3|(A|—Publicor
 private agencies and institutions, and
 individuals.
   (3) Sections 104(g)(l) and
 l04(g)(3)(Q—State and interstate
 agencies, municipalities,  educational
 institutions and other organizations and
 individuals.
   (4) Sections 109.110. and Ill-
 Institutions of higher education, or
 combinations of such institutions.
   (c) Solid Waste Disposal Act. (1)
 Section 8001(a)—Public or private
 authorities, agencies,  and institutions
 and individuals. No award may be made
 to any private, profitmaking
 organization.
   (2) Section 7007(a)—State or interstate
 agencies, municipalities,  educational
 institutions, and other organizations.
   (d) Safe Drinking Water Act. Sections
 1442(b) and 1442(d)—Public agencies.
 educational institutions, and other
organizations. No awards may be made
 to profitmaking agencies  or institutions.

§45.125 Application requlremcnta.
   Applicants must submit their requests
 for assistance on EPA Form 5700-12.
 'Application for Federal  Assistance."
Applicants must submit the original and
 two copies of the application to EPA. If
 the assistance agreement is  to be
j warded by EPA Headquarters, the
 applicant must  send the application to
 the Environmental Protection Agency.
Grants Administration Division. Grants
Operation Branch (PM-218). 401 M
Street SW.. Washington.  D.C. 20460. If
 the assistance agreement is  to be
awarded by an EPA Regional Office, the
applicant must send the application to
the appropriate Regional  Office. (OMB
clearance number 2010-0004.)

§ 45.130 Evaluation of application*.
   (aj Consistent with  40 CFR 30.301. the
appropriate EPA program office staff
wili review training applications in
accordance with the following criteria:
  (l) Relevance of proposal to Agency
objectives, priorities, achievement of
national goals.and technical merit:
  (2) Competency of the proposed staff
in relation to the type of project
proposed:
  (3) Feasibility of the proposal;
  (4J Adequacy of the applicant's
resources available for the project:
  (5) Amount of funds necessary for the
completion of the project:
  (b) In addition, awards under section
104(g)(l) of the Clean Water Act. are
subject to the following criteria:
  (1) Assessment of need for training in
a State or municipality based on
problems with existing wastewater
treatment plants, such as violation of
discharge permit conditions, and faulty
or improper operation or maintenance.
  (2) Need for operating training based
on the number of wastewater treatment
construction grants in the State.

§ 45.135  Supplemental condition*.
  Training awards are subject to the
following conditions:
  (a) Trainees must be citizens of the
United States, its territories, or
possessions, or lawfully admitted to the
United States for permanent residence.
  (b) Recipients shall not require the
performance of personal services by
individuals receiving training as a
condition for assistance.
  (c) Trainees are entitled to the normal
student holidays observed by an
academic institution, or the holiday and
vacation schedule applicable to all
trainees at a nonacademic institution.
  (d) Training awards may include a
provision to pay stipends to trainees.
Stipends must be paid under section 111
of the Clean Water Act consistent with
prevailing practices under comparable
federally supported programs.
  (e) Training awards under section 111
of the Clean Water Act are subject to
the following conditions:
  (1) Recipients must obtain the
following agreement in writing from
persons awarded scholarships for
undergraduate study of the operation
and maintenance of treatment works:
  I agree to enter and remain in an
occupation involving the design, operation, or
maintenance of wastewater treatment works
for a period of two yean after the
satisfactory completion of my studies under
this program. 1 understand that if I fail to
perform this obligation I may be required to
repay the amount of my scholarship.
  (2) Recipients must take such action
as may be reasonably required to
enforce the condition in paragraph
(e)(l). Recipients shall credit or pay EPA
for any repayments.
§45.140  Budget and project period.
  The budget and project periods for
training awards may not exceed three
years.
§ 45.145  Allocability and allowability o(
coata.
  (a) Allocability and allowabiliiy of
costs  will be determined in accordance
with 40 CFR 30.410.
  (b)  Costs incurred for the purchase of
land or the construction of builrlinqs «re
not allowable.
§45.150  Report*.
  (a)  Recipients must submit the reports
required in 40 CFR 30.505.
  (b)  A draft of the final project report is
required 90  days before the end of the
project period.  The recipient shall
prepare the final projects report in
accordance with the project officer's
instructions, and submit the final project
report within 30 days after the end of :hp
project period.
§45.155  Continuation aaaiatance.
  To  be eligible for continuation
assistance,  the recipient must:
  (a)  Demonstrate satisfactory
performance during all previous budget
periods:
  (b) Include in the application a
detailed progress report showing the
progress achieved and explain special
problems or delays, a budget for the
new budget period, and a detailed work
plan for the new budget period: and
  (c)  Submit a  preliminary financial
statement for the current budget period
that includes estimates of the amount
the recipient expects to spend by the
end of the current budget period and the
amount of any  uncommitted funds
which the recipient proposes to carry
over beyond the term of the current
budget period.

  APPENDIX A—ENVIRONMENTAL PROTECTION
       AGENCY  TRAINING PROGRAMS
                    I	 Admimitaonf :•!,;•
Ofllc* ol A». Nona, and Raov

  Air Pollution  Control Man-
   D0»xr Training GranH,
  Air Poilunon Cortroi— T«eft-
   ncal
Office ol Watar
  watar  Pollution Control—
   Proiauional   Tranog
   Grant*.
  Saia Ormkng Watar Prola*-
   s«nal Tranng Gram*.
  SaK  Onnk«9 Watar—Oc-
   cupational Training.
OMoa 01 Sow waat*  ana
  Enwrgancy Raaponar. Max-
  •room Wait* TYanng.   j
(FR Doe. M-2T408 Fil«d 10-1: -aj. t-.ti ./-;
MUINOCOOC

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 41006    Federal  Register / Vol. 49. No. 203 / Thursday. October 18. 1984  /  Rules and RegulaHona
 40 CFR Part 4«

 (OA-FRL2621-2(b)J

 Fellowships; Final Ruta

 AGENCY: Environmental Protection
 Agency.
 ACTION: Final rule.

 SUMMAMY: This final rule revises the
 Environmental  Protection Agency's
 (EPA) regulation at 40 CFR Part 46.
 "Fellowships."  governing the award and
 administration  of EPA fellowship
 assistance. The revisions are designed
 to ensure consistency with EPA's
 "General  Regulation for Assistance
 Programs" (40 CFR Part 30) and to
 reflect current EPA policies on
 fellowship awards.
 OATt This rule is effective for all  .
 fellowships which EPA awards on or
 after October 18,1984.
 fO* FURTHER INFORMATION CONTACT:
 Richard A. Johnson. Grants
 Administration Division (PM-216).
 Environmental  Protection Agency, 401 M
 Street SW.. Washington. D.C. 20460
 (202) 382-5296.
 3UPPUEMVNTAMV INFORMATION! Part 46
 establishes the  policies and procedures
 for the award of fellowships by EPA.
 We have not substantially updated the
 fellowship rule  since June 30,1973. This
 document updates Part 46 and
 incorporates  changes to EPA policies  on
 fellowship awards. Since the revisions
 to this rule are largely technical in
 nature, we did not publish a proposed
 rule for public comment. The changes to
 the rule include:

Stipend Levels
  In the previous rule, we had a dollar
level for the maximum annual stipend.
We deleted the  reference to • maximum
level in this rule in order to give the
program offices the flexibility to make
changes in stipend levels based on
program needs and funding levels
without seeking a deviation from the
rule.

Book Allowance
  We increased the book allowance
from S250  to $750

Authority
  We updated the Authority section of
the existing regulation to include
references to  two additional fellowship
programs. The two additional programs
are suction 8001 of the Solid Waste
Disposal Act  and section 1442(d)(2) of
the Safe Drinking Water Act.  as
amended.
 Consistency With 40 CFR Part 30,
 "General Rafulatioo for Assistance
 Programs"
   EPA published a final revision to 40
 CFR Part 30 on September 30.1983 (48
 FR 45056). We revised this rule to make
 it consistent with the revised 40 CFR
 Part 30. "General Regulation for
 Assistance Programs," September 30,
 1983.

 Regulation Development
   Under Executive Order 12291. EPA is
 required to make a judgment whether a
 regulation is "major" and.  therefore.
 subject to the regulatory impact analysis
 requirements of the Order. We have
 determined that this rule is not "major"
 because it will not have a substantial
 impact on the Nation's economy or large
 numbers of individuals or businesses.
 There will be no major increases in
 costs or prices for consumers.
 individuals, industries, or Federal. State.
 or local governments. The  rule was
 submitted to the Office of Management
 and Budget as required by Executive
 Order 12291.
   Under the Paperwork Reduction Act
 of 1980.44 U.S.C 3501 et seq., the
 information provisions in this rule have
 been approved by the Office of
 Management and Budget (OMB
 clearance number 2010-0004).

 List of Subjects in 40 CFR Part 46
   Administrative practice  and
 procedures. Environmental Protection,
 Grant programs—environmental
 protection. Reporting and recordkeeping
 requirements.
  Dated: October 3.1984.
 WUlUm 0. RuckelshaiM.
 Administrator.
   Accordingly, title 40, chapter 1 is
 amended by revising Part 46 to read as
 follows:
 PAIIT 4€—FELLOWSHIPS

 SM.
 46.100  Purpose.
 46.109  Authority.
 46.110  Objectives.
 46.115  Type* of fellowshipe.
 46.130  Definitions.
 48.123  Benefits.
 46.130  Eligibility.
 46.135  Submission of applications.
 46.140  Evaluation of applications.
 46.145  Fellowship agreement.
 46.130  Fellowship agreement amendment
 46.155  Supplemental conditions.
 46.160  Acceptance of fellowship award.
 46.165  Duration of fellowship.
46.170  Initiation of studies.
46.175 Completion of studies.
46.180 Payment.
Appendix A—Environmental Protection
    Agency Fellowship Programs.
  Authority: Sec. 103(b)(5) of the Clean Air
Act as amended. (42 U.S.C. 7*03(b)(5)); tecs.
lOKblO) and 104(gM3)(B) of the Clean Water
Act. as amended. (33 U.S.C I254(b)(5) snd
12S4(g)(3)(B)): sec 1442(d)(2) of the Safe
Drinking Water Act ss amended. (42 U.S.C.
300j-l(d)(2)); and sec. 8001 of the Solid Waste
Disposal Act as amended. (42 U.S.C. 0961).

{46.100  Purpoea.
  This part establishes the policies and
procedures for all Environmental
Protection Agency (EPA) fellowships
and supplements the requirements in 40
CFR Part 30, "General Regulation for
Assistance Programs."

946.108  Authority.
  The EPA is authorized to award
fellowships under the following statutes:
  (a) Section 103(b)(5) of the Clean Air
Act as amended (42 U.S.C. 7403(b)(5)]:
  (b) Section 104(b)(S] and 104(g)(3)(B)
of the Clean Air Act as amended (33
U.S.C. 1254(b)(5) and 1254(g)(3)rjB):
  (c) Section 1442(d)(2) of the Safe
Drinking Water Act as amended (42
U.S.C. 300j-l(d)(2); and
  (d) Section 8001 of the Solid Waste
Disposal Act as amended (42 U.S.C.
6981).
146.110
  Fellowships awarded under this part
are intended to enhance the capability
of State or local agencies responsibile
for environmental pollution control or
other agencies with similar pollution
control responsibilities: provide
educational renewal opportunities for
their career oriented personnel to
achieve additional knowledge through
academic professional training; and to
bring new people into the environmental
control field.

146.116  Typaa «f faaovaMpa.
  (a) Local agency fellowships are
awarded to current or prospective
employees of a local environmental
pollution control or regulatory agency
for academic professional training in
pollution control science, engineering.
and technology and in specialty areas
supportive of pollution abatement and
control efforts.
  (b) State agency fellowships are
awarded to current or prospective
employees of a State environmental
pollution control or regulatory agency to
provide academic professional training
in the areas of pollution abatement and
control.
  (c) Special fellowships are awarded to
individuals for education and training in
pollution control science, engineering,
and technology aad in specialty areas

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           Federal  Register  /  Vol. 49.  No. 203  /  Thursday. October 18. 1984 /  Rules and Regulations     41007
 supportive of pollution abatement and
 cor.trol efforts. •

 § 48.120  Definition*
   The following definitions supplement
 the definitions in  40 CFR 30.200.
   Full-time fellow. An individual
 enrolled in an academic educational
 program directly related to pollution
 abatement and control, and taking a
 minumum of 30 credit hours or an
 academic workload otherwise defined
 by the institution  as a full-time
 curriculum for a school year. The fellow
 need not be pursuing a degree.
   Part-time fellow.  An individual
 enrolled in an academic educational
 program directly related to pollution
 abatement an control and  taking at least
 6 credit hours but less than 30 credit
 hours per school year, or an academic
 workload otherwise defined by the
 institution as less than a full-time
 curriculum. The fellow need not be
 pursuing a degree.
  Special fellow. An individual enrolled
 in an educational  program relating to
 environmental sciences, engineering.
 professional schools, and allied
 sciences.
  Stipend. Supplemental financial
 assistance other than tuition, fees, and
 book allowance, paid directly to the
 fellow.

 §46.125  Benefit*.
  (a) Recipients of assistance under this
 part  shall be entitled to tuition and fees.
 Recipients may receive an  allowance for
 books and supplies  up to a maximum of
 S750 for the school year for a full-time
 fellow, and are entitled to the normal
 student holidays observed  by the
 academic institution.
  (b) Recipients of a fellowships may
 receive a stipend at  a level determined
 by the EPA program office  based on
 EPA's needs and resources, and on the
 student's course load.
  (c) Part-time fellows will not be paid
 more, than the maximum amount paid to
 an equivalent full-time fellow under the
 same fellowships program.

 546.130  Eligibility.
  (a) All applicants  for fellowships
 under this part must be:
  (1) Citizens of the  United States, its
 territories, or possessions, or lawfully
admitted to the United States for
permanent residence; and
  (2) Accepted by an accredited
educational institutional for full-time or
part-i <.me enrollment for academic credit
 in cr  ducational program  directly
 relai    to pollution abatement and
 control.
  (b) Applicants for State or local
 agency fellowships must be current or
 prospective employees of a State or
 local agency with responsibilities for
 environmental pollution control, and
 must be recommended by the
 administrator, or designee, of the State
 or local agency. The administrator, or
 designee. will recommend applicants
 based on the State or local need for
 academic professional training which
 will enhance the capability of the State
 or local agency.

 § 46.135 Submission of applications.
  (a) Applicants must submit their
 requests for assistance on EPA Form
 5770-2. "Fellowship Application."
 Applicants must submit the original and
 two copies of the application and
 undergraduate or graduate transcripts.
 as appropriate, to the Grants
 Administration Division. Grants
 Operation Branch (PM-216),
 Environmental Protection Agency, 401 M
 Street SW.. Washington. D.C.. 20460.
 (OMB clearance number 2010-0004.)
  (b) The applicant must submit
 documentation to show compliance with
 the eligibility requirements in § 46.130.
 and any additional information required
 by the award official. Instructions for
 filing are contained in the application
 kit.

 § 46.140  Evaluation of applications,
  (a) EPA will evaluate fellowship
 applications based upon:
  (1) Their relevance to EPA's program
 needs;
  (2) The availability of funds; and
  (3) EPA's priorities.
  (4) Appropriateness of the fellow's
 proposed course of study:
  (5) Evaluation of the applicant in
 terms of potential for study, as
 evidenced by academic record, letters of
 reference, training plans; and any other
 available information.

 J 46.145  Fellowship agreement.
  (a) The fellowship agreement is the
 written agreement, including
amendments, between EPA and a
 fellow. The agreement. EPA Form 5770-
8. "Fellowship Agreement." will state
 the terms and conditions governing the
 fellowship. (OMB clearance number
2010-0004.)
  (b) EPA will not participate in costs
 incurred by the fellow before both the
award official and the fellow sign the
agreement.
  (c) The fellow must use the funds for
 the purposes stated in the fellowship
agreement If the fellow fails  to comply
with the terms and conditions of the
award, the award official may apply the
 sanctions in 40 CFR Part 30, Subpart I.
§ 46.150  Fellowship agreement
amendment
  (a) The fellow must receive a formal
amendment before implementing:
  (1) Changes in the objective of the
agreement:
  (2) Changes in the assistance amount:
  (3) Substantial changes within the
scope of the agreement: or
  (4) Changes in the project period.
  (b) Fellows must submit a completed
EPA Form 5770-6. "Fellowship
Amendment" (OMB clearance number
2010-0004) when requesting an
amendment to the fellowship agreement.
  (c) Minor changes in the agreement
that are consistent with the objective of
the agreement and within the scope of
the agreement do not require a formal
amendment before the fellow
implements the  change. However, such
changes do not obligate EPA to provide
Federal funds for any costs incurred by
the fellow in excess of the assistance
amount unless the award official
approves the change in advance under
§ 46.150(a). The fellow must ..form the
EPA project officer in writing before
implementing minor changes.

$46.155  Supplemental conditions.
  Recipients of  a State or local
fellowship receiving financial assistance
under section 1442(d)(2) of the Safe
Drinking Water Act. as amended:
sections 104(b)(5) and 104{g)(3)(B) of the
Clean Water Act as amended: and
section 6001 of the Solid Waste Disposal
Act must agree to remain in the
employment of the State or local agency
that recommended the recipient for an
EPA fellowship  for twice the period of
the fellowship. If the recipient fails to
perform this obligation the recipient may
be required to repay the amount of the
EPA fellowship.

9 49.160  Acceptance of fellowship award.
  The applicaat accepts the fellowship
by signing and returning the fellowship
agreement to the EPA award official
within three weeks after receipt, or
within any extension of such time that
may be permitted by the EPA award
official. If the applicant does not sign
and return the agreement to the award
official or request an extension of the
acceptance time within three calendar
weeks after receiving the agreement, the
offer is null and void

{46.166  Duration of fetowsMp.
  (a) Full-time fellowships will not
exceed one year.
  (b) Part-time fellowships will not
exceed three years.

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 41008    Federal Register / Vol. 49. No. 203 / Thursday. October 18.  1984 / Rules and Regulations
 {46.170  InHtattofi of ttidtas.
   (a) The fellow must submit EPA 5770-
 7 "Fellowship Activation Notice" when
 they start their course of studies (OMB
 clearance number 2010-0004).
   (b) If the  EPA Grants Administration
 Division has not received the signed
 Fellowship Activation Notice within six
 months following the date of the award.
 EPA may terminate the fellowship.

 546.175  Completion of studlM.
  Fellows must  submit EPA Form 5770-9
 "EPA Fellowship Termination Notice."
 when the fellow completes the course of
 study. (OMB clearance number 2010-
0004)
J46.HO  Payment
  (a) EPA will pay stipends directly to
the fellow on a monthly basis or any
other basis approved by the Project
Officer, only after EPA has received the
signed EPA Form 5770-7, "Fellowship
Activation Notice." (OMB clearance
number 2010-0004).
  (b) EPA will pay the book allowance
directly to the fellow only after EPA
receives the signed EPA Form 5770-7.
  (c) EPA will pay tuition and fees in a
lump payment directly to the sponsoring
institution only after EPA has received
the signed EPA Form 5770-7.
  APPCN04X A—ENVmONMENTAl PROTECTION
      AGENCY FELLOWSHIP PAOQMAMS
Otfic* ol Mr. Now, mtf ««*•
 •IKK A* PoMon
                                                                             in DM. M-T40S PtM tO-tr-tfc *tt ta|

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Monday
March 9, 1992
Part III

Environmental
Protection Agency
40 CFR Part 47
National Environmental Education Act
Grants Regulations; Interim Final Rule

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8390        Federal Register / Vol  57, No.  46 / Monday,  March 9.  1992 / Rules and Regulations
ENVIRONMENTAL PROTECTION
AGENCY

40 CFR Part 47

[FRL-40W-7]

National Environmental Education Act
Grants Regulations

AGENCY: Environmental Protection
Agency (EPA).
ACTION: Interim final rule.

SUMMARY: The Environmental Protection
Agency (EPA) is promulgating an
interim final rule on the award of
financial assistance under section 6 of
the National Environmental Education
Act (NEEA). This rule codifies policies
and procedures for financial assistance
awarded by EPA to eligible agencies,
institutions and organizations to support
projects related to environmental
education and training.
EFFCCTIVC DATES: EPA is publishing this
rule as an interim final rule which is
effective on March 9,1992. EPA will
accept public comments on this rule
until April 8,1992.
ADDRtttKK Comments may be mailed
to Mr. George Walker. Office of
Environmental Education (A-107). U.S.
Environmental Protection Agency, 401 M
Street SW., Washington. DC 20460.
  The docket for this rule and copies of
the public comments submitted will be
available for public inspection and
copying at a reasonable fee at EPA
Headquarters Library, Public
Information Reference Unit room 2904.
401 M Street telephone (202) 280-5928.
FOR FURTHER INFORMATION CONTACT
Mr. George Walker. (202) 260-4484.
SUPPLEMENTARY MFOaMATIOtC
I. Background
  On November 16,1990; Congress
enacted and the President signed the
National Environmental Education Act
(NEEA). Public Law 101-619. In section 6
of the NEEA. it established a program
for grants and cooperative agreements
to support projects related ta
environmental education~and training,
and directed EPA to pvbiian a regulation
to implement the programs This
regulation implements the statutory
requirements of section 8 of the NEEA.
The definitions, eligibility requirements.
solicitation procedures, priorities for
award, and limits on amount of award
p.:.: .aken directly frc.. -,h3 K.™A.
  The NEEA also establishes a
maximum Federal share of 75% for
demonstration projects. As a policy
matter, to  ensure that recipients are
committed to successful completion of
projects. EPA has decided to apply this
maximum to all types of grants h warded
under section 6. Thus, as a general rule.
all grant recipients in this program will
be expected to provide at least a 25%
match, including in-kind contributions.
   In addition to the requirements of the
Act. recipients must comply with the
provisions of EPA'3 general assistance
regulations at 40 CFR parts 30 and 31. as
appropriate.
   This regulation applies only to the
environmental education program
established by section 6 of the NEEA. It
does not govern the Environmental
Education and Training Program to train
education professionals authorized by
section 5,  nor the Internship/Fellowship
Program authorized by section 7 of the
NEEA. EPA will develop separate
guidance for these programs.
II. Executive Order 12291
   Under Executive Order 12291. EPA
must judge whether a new regulation is
"major" and therefore subject to the
requirement of a Regulatory Impact
Analysis.  This regulation does not
satisfy any of the  criteria the Executive
Order specifies for a major rulemaking.
and therefore this is not subject to a
Regulatory Impact Analysis.
   This regulation  was submitted to the
Office of Management and Budget
(OMB) for review as required by
Executive Order 12291.
IIL Paperwork Reduction Act
   The information collection
requirements in this rule have been
approved by the Office of Management
and Budget (OMB) under the Paperwork
Reduction Act 44 U.S.C. 3501 et *eq. and
have been assigned control number'
2030-0020.
   Public reporting burden for this
collection of information is estimated at
19 hours per response, including time for
reviewing instructions, gathering
information, preparing the application
package and status reports, maintainmg
records on the data needed, and
completing the collection of information.
   Send comments regarding the burden
estimate or any other aspect of this
collection of information, including
suggestions for reducing this burden to?
Chief. Information Policy Branch.
Regulatory Management Division (PM-
223Y): EPA: 401M St. SW.. Washington.
DC 20460, and to  the Office of
Information and Regulatory Affairs,
Office of Management and BudgeC
 Washington, F'2 £?:'". na.v.ed
 "Attention: Desk  Officer for EPA."
. IV. Regulatory Flexibility Act
   EPA did not develop a Regulatory
Flexibility Analysis for this regulation-
 because it is exempt from notice and
comment rulemaking.under section 553
of the APA. and therefore, is not subject
to the analytical requirements of
sections 603 and 604 of the Regulatory
Flexibility Act (5 U.S.C. 603 and 604).

List of Subjects in 40 CFR Part 47

  Grant programs— education. Grant
programs — environmental protection,
and Reporting and recordkeeping
requirements.
  Dated: February 27. 1992.
William K. Redly,
Administrator.

  For the reasons set out in the
preamble, title 40, chapter I of the Code
of Federal Regulations is amended by
adding a new part 47 to read as follows:

PART 47-NAT1ONAL
ENVIRONMENTAL EDUCATION ACT
GRANTS

Sac
47.100  Purpose and scope.
47.105  Definitions.
47.110  Eligible applicants.
47.115  Award amount and matching
    requirements.
47.120  Solicitation notice and proposal
    procedures.
47.125  Eligible and priority projects and
    activities.
47.130  Project performance.
47.135  Disputes.
  Authority: 20 U.S.C 5505.

947.180 Purpose and scope.
  This regulation codifies policy and
procedures for the award of grants or
cooperative agreements under section 6
of the NEEA. Specifically, this regulation
defines eligible applicants, eligible
activities, EPA priorities for selecting
recipients, funding limits, and matching
requirements. Projects funded under this
regulation are also subject to the Code
of Federal Regulations (40 CFR) part 31
for State and local recipients, and part
30 for other than State and local
recipients. Those regulations contain
Federal audit and other general
administrative requirements. This
regulation does not apply to the
programs implemented under sections 5
and 7 of the NEEA.

{47.109 Deflnloona,
  (a) Environmental education and
environmental education and training
mean educational activities and training
 activities involving elementary,
 secondary, and po§'"""""'4 — / students,
as Mch terms are deiineii in the State in
 which may reside, and environmental
 educan ersonnel, but does not
             ical training activities
         toward environmental
 management professionals or activities

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             Federal Register  /  Vol 57. No.  46 / Monday, March 9. 1992  /  Rules and Regulations         8391
primarily directed toward the support of
noneducational research and
development;
  (b) Federal agency or agency of the
United States means any department.
agency or other instrumentality of the
Federal Government, any independent
agency or establishment of the Federal
Government including any Government
corporation:
  (c) Local education agency means any
education agency as defined in section
198 of the Elementary and Secondary'
Education Act of 1965 (20 U.S.C. 3381)
and shall include any tribal education
agency, as defined in { 47.l05(f);
  (d) Not-for-profit organization means
an organization, association, or
institution described in section 501(c)(3)
of the Internal Revenue Code of 1988,
which is exempt from taxation pursuant
to the provisions of section S01(a) of
such Code;
  (e) Noncommercial education
broadcasting entities means any
noncommercial educational
broadcasting station (and/or its legal
nonprofit affiliates) as defined and
licensed by the Federal Communications
Commission:
  (f) Tribal education agency means a
school or community college which is
controlled by an Indian tribe, band, or
nation, including any Alaska Native
village, which is recognized as eligible
for special programs and services
provided by the United States to Indians
because of their status as Indians and
which is not administered by the Bureau
of Indian Affairs:
  (g) Refer to 40 CFR parts 30 and 31 for
definitions for budget period, project
period, continuation award, cooperative
agreement, grant agreement, and other
Federal assistance terms.

{47.110   EMgMe sppUcsnts.
  Any local education agency (including
any tribal education agency), college or
university. State education agency or
environmental agency, not-for-profit
organization, or noncommercial
educational  broadcasting entity may
submit an application to the>
Administrator in response to the
solicitations described in 147.120.
§47.115 Award amount and matching
requirements.
  (a) Individual awards shall not exceed
$250.000, and 25 percent of all funds
obligated under this section in a fiscal
year shall be for individual awards of
not more than $5,000.
  (b) The Federal share shall not exceed
75 percent of the total project costs. The
non-Federal share of project costs may
be provided by in-kind contributions
and other noncash support. In cases
where the EPA determines that a
proposed project merits support and
cannot be undertaken without a higher
rate of Federal support, the EPA may
approve awards with a matching
requirement other than that specified in
this paragraph, including full Federal
funding.

§ 47.120 Solicitation notice and proposal
procedures.
  Each fiscal year the Administrator
shall publish a solicitation for
environmental education grant
proposals. The solicitation notice shall
prescribe the information to be included
in the proposal and other information
sufficient to permit EPA to assess the
project.

§47.125 Eligible end priority projects and
activities.
  (a) Activities eligible for funding shall
include, but not be limited to.
environmental education  and training
programs for
  (1) Design, demonstration, or
dissemination of environmental
curricula, including development of
educational tools and materials;
  (2) Design and demonstration of field
methods, practices, and techniques,
including assessment of environmental
and ecological conditions and analysis
of environmental pollution problems;
  (3) Projects to understand and assess
a specific environmental issue or a
specific environmental problem;
  (4) Provision of training or related
education for teachers, faculty, or
related personnel in a specific
geographic area or region; and
  (5) Design and demonstration of
projects to foster international
cooperation in addressing
environmental issues and problems
involving the United Slates and Canada
or Mexico.
  (b) EPA shall give priority to those
proposals which will develop:
  (1) A new or significantly improved
environmental education practice,
method, or technique;  .
  (2) An environmental education
practice, method, or technique which
may have wide application:
  (3) An environmental education
practice, method, or technique which
addresses a skill or scientific field
identified as a priority in the report
which will be developed within two
years of enactment pursuant to section
9(d) of the Act: and
  (4) An environmental education
practice, method, or technique which
addresses an environmental issue
which, in the judgment of EPA. is of a
high priority.

§ 47.130  Performance of grant
  (a) Each project shall be performed by
the recipient, or by a person satisfactory
to the recipient and to the EPA.
Workplans shall accompany all
applications,  shall identify who will be
performing activities, and shall be
approved by EPA prior to funding.
  (b) Budget periods normally will not
exceed one year. Project periods may be
longer, and additional funding may be
awarded for continuations.
  (c) Procurement procedures, which are
found in 40 CFR part 33 for all recipients
other than State and local governments.
Procurement  procedures for State and
local governments are described in 40
CFR part 31. These procedures include
provisions for small purchase
procedures.

§47.135 Disputes.
  Disputes arising under these grants
shall be governed by 40 CFR 30.1200 for
recipients other than State and local
governments and 40 CFR 31.70 for State
and local governments.
(FR Doc. 92-5263 Filed i-6-92; 8:45 am)
MJUMOCOOf M40-M-M

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APPENDIX I

-------
           APPENDIX I
EPA ORDER 1000.25, "USE OF RECYCLED
             PAPER"

-------
     EPA
          No.:

Approv,) D«t.: JAN 2 *  -9SO
                               Use of Recycled  Pacer
              1.    PURPOSE.  This Order establishes Agency policy to
         encourage the use of recycled paper.

              2.    BACKGROUND.  The EPA has set a  goal  for the nation to
         reduce and recycle twenty-five percent of municipal solid waste
         by 1992.   One of the keys to Baking recycling  successful Is the
         development of stable markets for produces containing recovered
         materials.  The Federal government needs  to  do its part by
         purchasing such products; the EPA should  be  a  leader in this
         effort.   This Order promotes this end by  establishing an Agency
         policy promoting the use of recycled paper.

              3.    £2LI£X.  It is Environmental Protection Agency policy
         to use,  and to promote the use of, recycled  paper.

              4.    RESPONSIBILITIES.  The Procurement and Contracts
         Management Division  (PCXD) is directed to ensure that all new
         contracts specify that contractors use recycled paper for all
         reports required for delivery to the Agency.  Where feasible,
         PCKD should seek to modify existing contracts  to include the same
         requirement.

                   The Grants Administration Division (GAD) is directed to
         include in all new grants and cooperative agreements a special
         condition requiring that grantees and recipients of cooperative
         agreement funds use recycled paper for all  reports submitted to
         the Agsncy.

              All Agency employees should be mindful  of our initiatives in
         the area and should do their part to reduce and_recycle waste.
                                        *               ^^
                                            am
 form I31j.ll*ij-4«i

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MEMORANDUM

SUBJECT:  EPA Order on the Use of Recycled Paper

FROM:     Harvey G, Pippen, Jr.,  Director
          Grants Administration Division

TO:       Assistant Regional Adninistrators
          Regions T - x


     On April 12,  1990; I issued a memorandum covering an EPA Order
on  the  use  of  recycled   paper.    The  memorandum  included  a
requirement for the inclusion of A special condition.

     Since  that  time,  we  have  received  several questions  and
comments on  the special  condition.   ^ised  on  these  comments,  we
have revised the special condition to read as follows:

     "Pursuant  to EPA Order 1000.25, dated January 24,  1990,
     the  recipient agrees to use  recycled  paper -for  all
     reports which  are prepared  as  a  part of this agreement
     and delivered  to the  Agency.  This requirement does not
     apply to reports which are prepared on  forms  supplied by
     EPA.   This requirement  applies  even when the  cost of
     recycled paper is higher than that of virgin paper."

     This  new  version  makes  it clear  that the  recycled  paper
special condition  results  from ar, EPA Order, and applies only to
reports  delivered  to the  Agency.  Also,  please  note  that this
special  condition applies  to  all new and  continuing  grants and
cooperative  agreements.    You should begin using it  as revised
irtuned lately.

     Should  you have  any  questions  or comments  regarding this
matter, please  call me or  have your staff contact  Ton Fletcher on
382-5297.

Attachment

cc:  Regional Grants Branch Chiefs, Regions I  - X

bcc: Bruce Faldman
     Frad Meadows
     Scott McMoran
Official  H. Pippen     P. Hull   3. Feldman
Reading  T. Fletcher    R, Johnson
Division
PM-216F:TFLETCHER:tf:801 FC:382-5297:4/24/90
C:\WP50\WPFILE\RECYCLE3.MEM

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APPENDIX J

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           APPENDIX J
   EPA ORDER 5730.1, "POLICY AND
PROCEDURES FOR FUNDING ASSISTANCE
          AGREEMENTS"

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 &EPA
Classification No.:

Approval Date:
5730.1

1/21/94
            POLICY AND PROCEDURES FOR FUNDING ASSISTANCE AGREEMENTS

       1.    PURPOSE.    The  purpose  of  this  policy  is  to  establish
       consistent, .  standard  operating  procedures  for   Regional   and
       Headquarters Program Offices  and Grants Management Offices (GMOs)
       to follow  in  awarding  grants.  While  the  policy and  procedures
       address  the   funding process  for  all  grants  and  cooperative
       agreements,  it focuses primarily on new\unique assistance programs
       or  individual project  grants  and  cooperative  agreements  not
       previously funded and for which the GMOs have  limited background
       information.   These  assistance  awards are other  than continuing
       assistance programs,  are  frequently new programs,  Congressional
       add-ons,  or special  projects to be funded with the Administrator's
       or Regional Administrator's discretionary funds.  Currently,  there
       is   confusion  regarding   assistance  awards   resulting   from
       Congressional  add-ons or that have no administrative procedures in
       place,  i.e.  funds  that are unexpectedly identified for assistance
       awards in the fourth  quarter of the fiscal year.   In  many cases,
       the GMO is made aware of these grants  late  in the fiscal year.

             The Headquarters  and Regional Program, Budget,  and Grants
       Management Offices  are  participants  in  this assistance  funding
       process.   Close coordination between and understanding of roles and
       responsibilities of these key participants  is vital to making the
       process work efficiently.  The Program Office provides the funding
       and is responsible for the programmatic and technical oversight of
       the assistance process  to ensure the purposes  of  the assistance
       award are achieved in a timely and high quality manner.  The Budget
       Office maintains assistance funds availability through control of
       advices of allowance  and reprogrammings to the Agency's .Operating
       Plan.  The GMOs assure the assistance application completeness by
       performing  and  documenting  an  administrative  review  of  the
       assistance application.   To avoid an unmanageable assistance award
       workload  in  the  fourth  quarter,  there  is  a  need  for  regular
       communications and coordination of planning throughout the fiscal
       year between  these offices.

            This  policy  addresses   two concerns:     (1)  the  need  for
       communication and early planning and scheduling  for making awards,
       and   (2)  identifying  appropriate  program  elements,  statutory
       authorities,  and  delegations for  such  awards.

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EPA ORDER                                         5730 .1
                                                  1/21/94

2.    POLICY.  It is EPA policy to award assistance agreements that
are  legal,  administratively  correct,  and  support the  Agency's
mission,  as quickly as possible after funds become available.  In
furtherance of this policy, EPA establishes the following:

     a.   Planning and  Communication.  Good management  practices
dictate the need for strong communication and early planning.  To
facilitate better planning, the Program Offices are encouraged to
establish an annual plan and schedule for awarding their assistance
agreements and to regularly communicate that plan and schedule to
the appropriate Budget and Grants Management Offices.   To promote
earlier planning and increased communication, both Headquarters and
Regional  Grants Management, Budget, and Program Offices should hold
periodic  meetings,  initiated by the  GMOs,  to reduce the impact
created by last-minute, fourth-quarter awards.  These last-minute
awards  are  often  due  to  late  reprogramming  of  funds  from
Headquarters to the Regions or to grants hastily awarded to avoid
having funds carried-over and reissued for a different purpose or
Office.  Both the National Program Manager and the Program Office
must  recognize  that  the  GMO  needs  at least  60  days  lead  time
(Superfund awards require 90 days)  from receipt of application to
the award date to assure award of a grant by the end of the fiscal
year.

     b.   Program  Element.  Statutory Authority,  Delegation  of
Authority.    The  program  element,   statutory   authority,-  and
delegation of  authority are information required  before EPA can
award a grant.  They are documented on the EPA Assistance Agreement
-  EPA Form 5700-20A.   The  National  Program Office  will verify
statutory authority, program element, and delegation of authority
before funds are  sent to the Regions to award assistance.   This
information must appear in  a memorandum or d-mail from the National
Program  Office  to the Regional  Program  Office prior to  the
distribution of  the funds.   The  memorandum or d-mail  should .be
referenced on the budget reprogramming document in IFMS.

3.    DEFINITIONS.

     a.   Approval Official.   The individual  within  the Program
having the responsibility  and delegated authority for determining
whether  to  fund  or  reject  an   application on  the   basis  of
technical\programmatic  considerations.    The Approval  Official
communicates this funding decision to the Award Official  through  a
Decision Memorandum and\or an Assistance  Funding Order  (EPA  Form
5700-14)  .

      b.   Assistance  Funding  Process.    The process   by   which
assistance  funds  are  (1)  planned  in a Program  Office's budget
request to OMB and Congress,  (2) distributed during their  operating

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EPA ORDER                                         5730. 1
                                                  1/21/94


plan  development,  (3)  received  in an  advice  of  allowance,   (4)
committed in  IFMS,  and (5)  ultimately  routed  to  the appropriate
Grants Management Office for award.

     c.   Award Official.   The  individual who signs the assistance
agreement ensuring that all  technical,  legal,  and administrative
evaluations have  been  made  and that  the  proposed  agreement  is
awardable.  The Award Official for regionally administered programs
is  either  the  Regional  Administrator, the  Assistant  Regional
Administrator, or the Division  Director, depending upon the region
or program.   The Award Officials for  Headquarters  are the Branch
Chief, Grants Operations Branch,  and  the  Branch Chief,  Grants
Information and Analysis  Branch, Grants Administration Division,
Office of  Grants  and  Debarment,  Office  of  Administration  and
Resources Management.

     d.   Carry-over Funds.   Funds that are:  (1)  not obligated by
the end  of  a  fiscal year; and (2)  may be obligated  in  the next
fiscal  year  according   to  the  terms of   the  appropriations
legislation that  first made  these funds  available.   This term
should not  be confused with  'recipient requested  carryover'  of
(unused,  previously obligated)  funds on a continuation assistance
agreement.  The  latter do not require any action to  be  taken by the
Budget Division. (Ref. - EPA  Resources Management Directive System
(RMDS) Chapter 2510)

     e.   Comptroller's Year-End Close-Out Procedures  Guidance.
Each July, the Comptroller issues guidance entitled "FY 19-- Year-
End  Close-Out  Procedures".    This broadly  distributed  package
includes  a  schedule  with  cut-off  dates  for  all  end-of-year
activities  associated  with   the  Budget,   Finance,  'and  Grants
Administration Divisions and the Office  of Acquisition Management.
It also includes a cut-off date  (usually the last business day in
August) for all routine budget reprogrammings,  beyond which, IFMS
security  is modified so only reprogrammings approved on a case-by
case basis are processed by the Budget Division.  This  cut-off date
is  imposed to  encourage  all  offices  to  get their  end-of-year
funding  in  place with sufficient lead time  for  processing  the
commitment  and obligation.

      f.   Cooperative  Agreement.   The  agreement  used  when  the
principal purpose  of the  relationship  is  the  transfer of  money,
property, or  anything of  value to  a State  or local government or
other  recipient in order to accomplish a public purpose of support
or stimulation authorized by Federal statute  in which  substantial

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EPA ORDER                                         5730. 1
                                                  1/21/94

involvement is  anticipated between EPA and the  recipient during
performance -of.  the  contemplated  activity.   (Also  known as  an
assistance  agreement.)  - (Ref.   -  Federal  Grant  and  Cooperative
Agreement Act of 1977 and 40 CFR Part 30)

     g.   Decision  Memorandum.   The Program  Office's  memorandum
containing the  decision and justification for either  funding or
rejecting an assistance proposal.  The memorandum is sent to the
Grants Management Office as part of the assistance funding package.
For grants awarded  in the Regions, this decision is  signed by the
Approval Official or his\her respective designee.  For all grants
awarded from Headquarters  (except  fellowships),  the Recommending
Official  (RO)   writes  the  Decision  Memorandum.    The  Approval
Official  approves  or  rejects  the  proposal   based  upon  the
justification and recommendation made by the  RO.

     h.   Delegation-of Authority.  The official basic directive to
senior Headquarters and Regional management officials to exercise
authority for the Administrator. Statutory authorities to approve
assistance  agreements  are  assigned to EPA's Administrator  and
implemented  through delegation  to the Regional  Administrators,
National  Program  Managers or  their  designees.    The  Agency's
Delegation Manual  identifies each  delegation of authority  by a
specific  number.   EPA's  Management and  Organization  Division
records  all delegations  of  authority,  except  emergency\letter
delegations  in  the Delegation  Manual  and  distributes  them  to
Regional and Headquarters offices.

     i.   Grant.  The agreement used when the principal purpose of
the relationship  is the transfer of money, property,  or anything
else of va'lue to a State or local government or other recipient in
order  to  accomplish a  public  purpose  of  support or  stimulation
authorized  by  Federal  statute   in  which  substantial  Federal
involvement is not anticipated between EPA  and the recipient during
performance  of  the  contemplated  activity.   (Also  known as  an
assistance  agreement.)  (Ref.   -  Federal  Grant  and  Cooperative
Agreement Act of 1977 and 40 CFR Part 31.)

     j.   Grants. Management  Offices (GMO).   The Headquarters and
Regional  units responsible  for all business  management aspects
associated with the review and negotiation of  applications and the
award   and   administration  of  funded projects  through  audit
resolution and  final  close out.

     k.   National  Program Manager. The individual responsible  for
management of  a program on a national level.

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EPA ORDER                                         5730.1
                                                  1/21/94
     1.   Program   Element.     A  classification   within  EPA's
program\budget  structure  which  represents  a  distinct  program
activity.    The  Program  Element  is  supported  by  one   or  more
authorizing sections of law and must be associated with the grant
statutory authority. (Appears  as part of Item #39  -  Fiscal  Data -on
EPA's Assistance Agreement.)

     m.   Program  Office.    Refers  to  either  the  Headquarters
Program Office or Regional  Program Office responsible for managing
the technical\programmatic aspects of a specific media program.

     n.   Regional Program  Manager.  The individual  responsible for
technical\programmatic management of an assistance program at the
regional level.

     o.    Statutory  Authority.    The. section  of  authorizing
legislation specifically providing authority to  the EPA to award
assistance agreements including grants and cooperative agreements
for the intended purpose.   (Appears as Item #19 on EPA's Assistance
Agreement.)

4.   PROCEDURES.

     a.   Planning  and Communication.

          (1)  Program Office Responsibilities.

                (a)  The Program Office(s) should be encouraged to
establish  an  annual  plan  (including  early  identification  of
additional award activities for the fiscal year) and schedule for
recommending  awards and to  regularly communicate  that  plan and
schedule to  Headquarters and  Regional Grants Management  Offices.
In particular,  the  Program Office must communicate its plans for
spending  last-minute  money to  these  offices.    These  plans must
comply  with  the  timetables  cited in  the  Comptroller's  Year-End
Close-Out Procedures  (See  definition).

                (b)     The   Program  Office  should  do   as  much
preliminary planning and work as possible (including a prioritized
list of potential projects and possibly completed applications and
workplans  from   potential recipients   for  these  projects)   in
anticipation  of  possible,  last-minute,  year-end  funding.

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EPA ORDER                                         5730.1
                                                  1/21/94
           (2)   Grants Management Office Responsibilities.

                (a)  The Grants Administration Division should hold
periodic meetings with the National  Program Managers/Contacts and
the Budget Division to discuss proposed assistance funding plans,
schedules,  and  related  information  and  then  distribute  that
information to  both Headquarters and  Regional  Grants  Management
Offices so they can adjust their workload.

                (b)   The GMOs should hold periodic  meetings with
Program Contacts to discuss proposed assistance funding plans and
to plan their workload.

                (c)  The GMOs must plan  their workload to allow for
processing some unexpected, last-minute,  fourth-quarter awards.

     b.    Identifying   Program  Element,   Statutory   Authority,
Delegation of Authority.

           (1)   Program Office Responsibilities.

                (a)   The  National   Program Manager  (NPM)  should
notify the Regional Program Manager  (RPM) via memorandum or d-mail,
whenever  the  NPM  initiates  a reprogramming  for  distribution  of
assistance funds to the Region.   The NPM must identify the purpose
of the funding;  program element; statutory authority; delegation of
authority, and an appropriate program contact person familiar with
the project in the memorandum\d-mail.  The  NPM should carbon copy
the  Headquarters  Budget   and Grants  Management  Office  if  the
assistance  is  to  be  awarded  from  Headquarters or  the  Regional
Budget and  Grants  Management Offices if  the assistance  is  to  be
awarded from the Region.

                (b)  The NPM must  reference the dated memorandum or
d-mail on the budget reprogramming which transmits  the funds  to the
Regions.   This  reference  should be  entered  in the justification
section of the IFMS reprogramming document.  Funds provided  to the
Regions  for assistance projects should be  placed  in  the proper
Budget Object Class  (41).

                (c)  The NPM must  include the Grants Administration
Division's  (GAD) Assistance Administrative Summary Sheet  in program
guidance.    The  Summary  Sheet  includes  the  program  element,
statutory  authority and the delegation of authority for the

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 EPA ORDER                                          5730.1
                                                   1/21/94

 respective  assistance  program.   The  NPM must  submit  the completed
 Summary Sheet and program guidance to GAD for concurrence  prior to
 its issuance.

                (d)  The Program must identify and verify the match
 requirement (s),  if  any,  for the assistance against  the statutory
 authority,  program regulation,  or administrative regulation for the
 assistance. In addition, the program will identify and verify the
 program element and delegation of authority supporting the match.

                If an application will be  funded  under an  existing
 program described in the  Catalogue of Federal Domestic Assistance
 (CFDA), the Program must verify that the proposed activity meets
 the program's eligibility criteria published  in  the  CFDA.   If the
 assistance  program  is  not in the CFDA,  the Program  must  identify
 the eligibility requirements for the award and ensure that these
 eligibility requirements agree  with  the  statutory  authority and
 delegation  of authority  under  which  the grant is  being awarded.

                (e)  The  Program  Office should coordinate  with the
 appropriate NPM,  and  Headquarters  or Regional  Budget Office  to
 provide the GMO with missing information if the GMO returns a grant
 award\funding   package  to   the  Program  Office   because   it  is
 incomplete  regarding  program element,  statutory  authority  and
 delegation  of authority.

                (f)  The  Program  Office must designate the  program
 element,  statutory  authority,  and delegation of  authority  in the
 decision memorandum.

                (g)   The  Program Office  should  refer any  legal
 questions   such  as  those  regarding  statutory  authority,   match
 requirements,  and eligibility to the  Office of  General  Counsel,
 Grants Law  Branch,  or  Regional Counsel.

            (2)   Grants  Management Office  Responsibilities.

                (a)  The GMO provides  an overall "check and balance"
 function,   assuring  the   correctness  of  the  program  element and
 statutory   authority,   and   the   existence   of   a  delegaticr.  of
• authority.

                (b)   The  GMO should  request  clarification  from che
 Office of  General Counsel  or  Regional Counsel on any outstanding
 legal questions.

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EPA ORDER                                         5730.1
                                                  1/21/94


               (c)  The GMO should return, in a timely manner, all
incomplete. funding\grant packages to the Program Office and should
communicate  to  the  Program  Office  the  information  needed  to
complete the package.

               (d)   The  Grants  Administration  Division (GAD) and
GMOs, when  appropriate,  must incorporate the  standard operating
procedures stated in  this policy into their training programs,
e.g., project officer training, and Basic Grants course.

          (e)  GAD should verify that its Assistance Administrative
Summary Sheet appears in all program guidance.

5.   ADDITIONAL REFERENCES.

     a.      For   further   information   regarding    the    legal
responsibilities   of  the   Approval  Official   under  borrowed
authorities,  refer   to  Sallyanne  Harper's  6/9/93  memorandum,
Approval Official's Responsibilities for Grants  and Cooperative
Agreements Originating and Managed in Other Offices.

     b.  For further information regarding  the administration of
grants, cooperative  agreements, and interagency agreements,  refer
to the Assistance Administration Manual,  EPA Document Number 5700
1984 Edition.

     c.   For  further information  regarding  this  Order,  please
contact  Chief,  Grants  Policy  and  Procedures  Branch,  Grants
Administration Division.
                        Jonathan fc. Cannon
                      Assistant Administrator

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EPA ORDER
                                                                     5730 .1
                                                                     1/21/94
&EPA
                              United States
ENVIRONMENTAL PROTECTION  AGENCY
                         Washington, DC 20460
                             ASSISTANCE ADMINISTRATIVE  SUMMARY  SHEET
 JOTE:  Quality Assurance:  Any applicant proposing environmentally related measurements or data collection must comply with EPA's
       requirements for quality assurance as cited in 4O CFR Part 30.503 and 40 CFR Part 31.45.
 . Operating Program/Office:
                              2. Program Contact(s):
  Catalog of Federal Domestic Assistance (CFDA) Number:
  Program Title:
  Program Purpose:
 . Eligible Applicants/Recipients:
 '. Type of Assistance:

    |  |  Grant

    ["n  Loan

    |~~]  Cooperative Agreement
                              8. Nature of Assistance:

                                  I   I  Continuing Program

                                  I   I   Project
3. Statutory Authority:

    Act:        	

    Section:    ___
                               10. Regulatory Authority:

                                     Programmatic:

                                     Administrative:  _
11a. Cost Sharing/Match Requirements:

     Yes [   |    No |   |
                      MOE
                        lib. Basis of Cost Sharing/Match Requirement (Check One):

                          Statute           I	I     Program Regulation        I	I



                          Program Guidance  |  |      Administrative Regulation   |	|
 12. Limitations:   Yes  |   |   No  |   |  (If "Yes", list the limitations)
 13. Delegation of Authority:
       Delegation Number:
                   Title of Delegation:
 14. Subject to Intergovernmental Review?    Yes  |	|   No  |  |   (If No, why?)
 15. Program Code:
                      16. Program Element:
17. Object Class:

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               ASSISTANCE ADMINISTRATIVE SUMMARY SHEET INSTRUCTIONS

 1.      OPERATING PROGRAM OR OFFICE: (Office establishing program.)

 2.      PROGRAM CONTACT(S): (Name, location and phone K of individual(s) who can be contacted for further
        information on this program.)

 3.      CATALOG OF FEDERAL DOMESTIC ASSISTANCE (CFDA) NUMBER:  (The number assigned to
        an  EPA  assistance program for inclusion in the government-wide catalog.   Coordinate with Grants
        Information and Analysis Branch, Grants Administration Division to determine if listing is required.).

 4.      OFFICIAL PROGRAM TITLE:  (The official title of the assistance program.  May or may not be included
        in the Catalogue of Federal Domestic Assistance. (See 03.) Be concise and descriptive (40 characters or
        less).

 5.      PURPOSE: (A one or two sentence summary description of eligible activities.)

, 6.      ELIGIBLE APPLICANTS\RECIPIENTS:  (Who is eligible to receive  this assistance from EPA?  Often
        identified in the authorizing legislation.)

 7.      TYPE OF  ASSISTANCE:  (Grant, Cooperative Agreement, Loan)

 8.      NATURE OF ASSISTANCE: (Continuing Program; Project)

 9.      STATUTORY AUTHORITY: (EPA's legal authority to fund activities; cite the Act, and the Section.  As
        necessary,  OGC will verify statutory authority to award financial assistance as proposed and make other
        legal determinations.)

 10.    REGULATORY AUTHORITY: (Cite programmatic regulation(s)  governing the assistance program in
        addition to the standard grant administrative regulations.)

 11.    COST-SHARING\MATCH REQUIREMENTS:  (What share  must the applicant contribute  to the
        assistance?   Is it a  statutory or regulatory  requirement?  Reminder:  For those  programs with no
        statutory/regulatory match requirements, it is national policy to encourage a minimum five percent match
        (to States/locals) to ensure the recipient's committment to the project.  The five percent minimum is a
        regulatory  requirement for all educational and non-profit organizations per 40 CFR 30.307.)

 12.    LIMITATIONS: (What restrictions, if any, are there e.g.,  10% statutory limitation on administrative costs
        for 319(h)  Non-point source grants?)

 13.    DELEGATION OF  AUTHORITY:  (Provide number and title of Delegation of Authority(s) for these
        grants. Identifies the official(s) who have the authority to approve  or reject  the funding of the grant and
        the  official(s) who have the authority to award the grant.  Management and  Organization Division
        coordinates Delegations  of Authority for EPA.)

 14.     INTERGOVERNMENTAL REVIEW: (Is this required? Executive Order 12372 provides for State's right
         to review  applications for Federal assistance.  Coordinate with Grants Policy and Procedures  Branch,
         Grants Administration Division for verification of requirement.)

 15.     PROGRAM CODEVIDENTIFIER:  (The administrative code that identifies  the program and assures the
         proper recording of the receipt of applications for assistance,  their disposition, and related financial
         transactions.  It is an integral part of the assistance identification number.  Obtain from GICS Policy
         Specialist, Grants Administration Division.)

 16.     PROGRAM ELEMENT: (Budgetary classification which identifies the source of the funding; is supported
         by one or  more authorizing sections of law and must be associated with the grant statutory authority.)

  17.     OBJECT CLASS:  (Budgetary classification used to identify the transactions of the Federal Government
         by the nature of the goods or services purchased, as required by OMB Circular A-l 1.)

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APPENDIX K

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         APPENDIX K
CARRYOVER POLICY (COMPTROLLER
  POLICY ANNOUNCEMENT 88-09

-------
       UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                      WASHINGTON. O.C. 20460
                            MAY   6
               COMPTROLLER POLICY ANNOUNCEMENT
                           NO. 88-09
                                                           OF
                                                     ADMINISTRATION
                                                     AMD RESOURCES
                                                      MANAGEMENT
MEMORANDUM
SUBJECT:
FROM
TO:
                'nolig«ted Balances of
Disposition
Assistance
David P.
Comptroll
Assistant Regional [Administrators
Management Division/Directors
Senior Budget Officers
Regional Comptrollers
Financial Management Officers
     This Policy Announcement clarifies EPA policies and
procedures for the disposition of unobligated balances of
assistance awards, i.e., grants and cooperative agreements.
It describes the circumstances when EPA may carry these funds
forward and provides specific procedures to ensure proper
accounting for assistance awards.

POLICIES AND PROCEDURES

     There are three attachments to this Policy Announcement.
Attachments I and II describe policies and procedures appli-
cable to the disposition of these funds.  These policies and
procedures address all financial assistance programs except
those funded from no-year appropriations.  Guidance on two of
the no-year appropriations can be found in Comptroller Policy
and Procedure Memorandum 9-F, "Recovery and Use of Construc-
tion Funds," and will be found in the Resources Management
Directives System 2550D, Superfund Financial Management, which
will be issued shortly.
     Attachment III contains examples of how this guidance
applies to specific types of assistance agreements.

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                                              Attachment  I
           POLICIES FOR THE DISPOSITION OF UNOBLIGATED
                  BALANCES OF ASSISTANCE AWARDS
      Accounting  for the disposition of recipients' unobligated
balances of assistance awards requires at least two actions:  a
downward adjustment to one budget period's  funding and a comple-
mentary accounting entry to show the disposition of those funds.
Regarding the disposition of unobligated balances of project
type assistance awards, these funds generally remain available
to recipients until the project is completed.  With respect to
continuing environmental programs, funds can be made available
in subsequent budget periods only if the source appropriation
for those funds has not expired.  A detailed description of these
policies is found below in Section II.  The policies are also
summarized on the chart following page 4 of this Attachment.

I. BACKGROUND AND BASIS FOR POLICIES

   A. EPA Appropriations.  Each year EPA receives several
appropriations from Congress to fund the numerous programs for
which it is responsible.  Besides appropriating funds to pay our
internal expenses. Congress also gives EPA appropriations that
are intended to fund a wide variety of assistance agreements
(grants and cooperative agreements), among other things.

     The appropriations may limit the time periods within which
the funds are available for Agency obligation.  Grants and co-
operative agreements are generally funded under either two-year
or "no-year"  (i.e., indefinite period) appropriations.

      When Congress limits the time period in which funds are
available, it increases its control over the resources available
to EPA to carry out authorized programs.  If EPA does not obli-
gate appropriated funds for assistance awards or other approved
purposes during the life of the appropriation, the funds will
expire.  Should Congress wish to fund activities in subsequent
periods, new funding would be provided in later appropriations.

      In contrast, when Congress appropriates "no-year" funds,
these funds remain available until fully expended — they do
not. expire.  Both the Construction Grants Program and Super fund
activities have historically been funded with such appropriations.
Congress may choose to add to the Agency's  "no-year" balances
through subsequent appropriations.

   B. EPA Assistance Awards.  When EPA awards a grant or cooperative
agreement, the agreement defines a specific "budget period" during
which the funds obligated by EPA are available to the recipient.
Assistance agreements also define the project period, which is the
length of time EPA specifies to complete the "project" described
in the agreement.  The project period may be made up of one or more
budget periods.   (In some cases, such as the Asbestos School Hazard
Abatement Act program, it may be appropriate to have open-ended
work progress milestones or similar criteria.)

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EFFECTIVE DATE

     Allowance Holders must ensure that assistance  awards
•ade fron their respective allowances are administered  in
accordance with this Policy Announcement no  later than
June 30, 1988.

FOR ADDITIONAL INFORMATION

     If you would like additional information on the specific
policies and procedures described in this Policy Announcement,
please contact Bob Cluck, Fiscal Policies and Procedures
Branch, Financial Management Division, at 382-5113.

     Inquiries about the Agency's general policies  and
procedures on the administration of assistance projects
should be made to Scott McMoran, Grants Policies and Proce-
dures Branch, Grants Administration Division, at 382-5293.

     Questions concerning recoveries of funds under Agency
appropriations and about the scope of this Policy Announcer  t
(i.e., the statutory authorities to which it applies) should
be directed to Rick Peterson,  Budget Control Section, Budget
Formulation and Control Branch, at 382-4212.

•SUNSET PROVISIONS"

     The guidance in this Policy Announcement will be
incorporated in the Resources Management Directives System
(RMDS) chapter on assistance projects (RMDS Division 2550C,
Chapter 2).  This chapter,  which covers all financial manage-
ment guidance relevant to assistance awards, is currently
under development and will be issued later this fiscal year.
The RMDS chapter will supersede this document.

Attachments

cc:  Harvey Pippen
     J. Richard Bashar
     John Sandy
     Alvin Pesachowitz
     Vincette L.  Goerl
     Tony Musick
     John Elliott
     Carole Ansheles
     FMD Branch Chiefs

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     The recipient (e.g., a State or local government agency,
or a university) uses the EPA award as  its authority to enter
into its own "obligations" \J for internal expenses, contracts,
etc., to carry out program/project objectives during the budget
period.  For various reasons, a recipient may not be able to
obligate all the funds awarded by EPA.  At the end of each budget
period the recipient must report any "unused" funds to EPA on
their Financial Status Report.  The "unused" amounts are shown as
the unobligated balance of Federal funds.  The final disposition
of -those unobligated balances depends on several factors, as
discussed in Section II below.

   c. GAP Review.  In 1984 GAO reviewed EPA compliance with the
Federal Managers Financial Integrity Act (FMFIA).  In that re-
view, they raised questions about EPA's apparent inclusion of
unexpended balances carried forward to grants several years
after the source appropriation expired.  As a result, in our
letter to the President on FNFIA weaknesses, we made a commit-
ment to review our current practices for making recipients'
unexpended bala.._3s available in later budget periods.  Im-
policies and procedures set out in the  following sections are a
result of that review and seek to strengthen our management of
those funds.

II. GENERAL POLICIES

   a. Adjustments for Unobligated Balances.  EPA assistance
awards are recorded as Agency obligations in EPA's Financial
Management System (FMS).  They are identified in FMS by obliga-
tion document numbers, which are derived from the assistance
identification number that EPA assigns  to the assistance award.
Both a project number and budget period are encoded in this
identifier.

      When adjustments are to be made to obligation balances,
they must be supported by written amendments to the assistance
agreement that established the original obligation.  Assistance
award officials must provide to their servicing financial manage-
ment offices (FMO) copies of the documents used to effect the
amendments.

   b. Decreases in Obligation Amounts.  Decreases in budget
period funding levels typically occur after a budget period ends
£/  In order to understand and implement the policies and procedures
    described  in this document, it is very  important to distinguish
between EPA obligations and recipient obligations.

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and the recipient determines what, if any, portion of the award
was unused (i.e., unobligated by the recipient) during the budget
p«riod.  However, decreases could be executed  for various reasons
during the budget period.  In either case, the adjustments must
be properly documented and provided timely to  the FMOs, as noted
above.

     The financial management office (FMO) will record the
decreases in budget period funding in the Financial Management
System (FMS).  The accounting procedures are outlined in section
III.of this attachment.  Whether the decreases against one bud-
get period may be available in a subsequent budget period depends
on the factors described below.

   c. Disposition of Adjusted Amounts.  Unobligated balances of
assistance awards from one budget period have generally been made
available in subsequent budget periods either as additional fund-
ing for the later budget period or as partial  funding in lieu of
a like amount from a new Agency appropriation.  However, before
taking either action, an award official must first determine
which of the fo? ~«ing criter'^ fit:

      1. Project agreements.  Project type assistance agreements
involve undertakings with a discrete outcome, product or report.
Most of EPA's assistance agreements awarded in Headquarters are
examples of this type, although project agreements may be made
in the regions and by other EPA offices as well.  The project
periods and funding for these projects are often provided incre-
mentally over several years.  Any reports submitted at the end of
a budget period, or at any time prior to the final report, product
Of outcome, would be merely informational and are not independent
or separate from the final project outcome, product or report.

  Criterion: With respect to project agreements, unobligated
            . funds from one budget period may be made available
             in a subsequent Budget period of the same project
             by properly executing an assistance amendment as
             long as the general project scope of work remains
             unchanged.  If there are major change* in the scope
             of work, the unexpended balances may be carried
             forward only if the source appropriation for those
             balances hat not expired prior to the date of the
             amendment.

      2. Continuing Environmental Program and Other General Support
Assistance Agreements.  In addition to project type assistance, EPA
provides funding for a number of environmental programs or other
continuing activities.  The recipients are often State or local
governments, but may include organizations involved in general
research activities.

  Criterion: With respect to program agreements, unobligated
             balances from one budget period of a continuing

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             environmental program or activity may bs made
             available in a subsequent budget period of that
             program c  activity as long as: 1) the transfer
             to the su-sequent budget period is made before
             the source appropriation for those funds expires,
             and 2) the assistance agreement includes a
             special condition limiting the recipient's
             obligation of these funds before the end of
             the subsequent budget period or within one year
             of the amendment, whichever is earlier.

      3. Recoveries of Assistance Award Balances.  If a recipient's
unobligated balances will not or cannot be available in a subse-
quent budget period, the downward adjustment will be considered a
recovery to the source appropriation.

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              DISPOSITION OF UNOBLIGATED BALANCES OF ASSISTANCE A WARPS.

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     If the less structured Form 5700-20B  is used to execute the
preceding actions, the same information must be contained in
readily identifiable form on  that document.

II.  DISPOSITION OF AWARD BALANCES AT END  OF A CONTINUING
ENVIRONMENTAL PROGRAM OR AT EKD OF PROJECT PERIOD FOR OTHER
ASSISTANCE PROJECTS

     If a continuing environmental program is terminated, or
whenever a project period ends for other types of assistance
awards (e.g., project type agreements), the FSR for these pro-
jects may contain balances of Federal funds unobligated by the
recipient.  In such a case, a Form 5700-20A/B must be completed
to decrease the award by that amount.  The 5700-20A/B and FSR
will be submitted to the servicing financial management office
so that the deobligated amount can be recorded in EPA's FMS.

     The deobligated amount would create a recovery to the source
appropriation.  Detailed information on recoveries is found in
Office of the Comp' -oiler Policy and Procedure Memorandum (PPM)
13-B, "Overrun and Recovery of .rior Year  Obligations."  This PPM
was amended in part by the OC memorandum of September 12, 1984,
entitled "Recertification of  Funds," and is being revised.

III.  DEOBLIGATION OF EXPIRED FUNDS

     Generally, effective management of assistance awards and
timely processing of financial reports  (e.g., the FSR) both by
the recipient and by EPA can  keep expired, unavailable amounts
to a minimum.  Charging outlays first against older funding
sources of an assistance agreement, where  otherwise appropriate,
is one way of avoiding the loss of funds.

     In the following two instances, deobligations would be
necessary.  First, an assistance recipient might submit a final
FSR for a program grant budget period after the Appropriation
which originally funded that  budget period had expired.  If the
recipient reports on that FSR that they have an unobligated
balance of Federal funds, EPA would prepare a 5700-20A to docu-
ment the decrease and to use  as a basis to record a corresponding
deobligation in FMS.  Second, if as a result of an audit, costs
are disallowed and the source of funding for these costs has
expired, the amount of the receivable for  the disallowed costs
would be deobligated.

IV. FUNDING BUDGET PERIODS THAT EXTEND BEYOND THE LIFE OF AN
APPROPRIATION

     In some instances, assistance project budget periods are not
concurrent with the Federal fiscal year.   When they are not con-
current, a budget period could very possibly be funded by an
appropriation that expires before the budget period itself ends.
Such awards are allowable as  long as EPA's obligation of the
assistance funds occurs before the source  appropriation expires.
In  the case of amendments transferring unobligated balances
to  a subsequent budget period, the criteria in Attachment I,
Section II.c must also be met.

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                                              Attachment II


          PROCEDURES FOR THE DISPOSITION OF UNOBLIGATED
                  BALANCES OF ASSISTANCE AWARDS



I.  TRANSFER OF FUNDS FROM ONE BUDGET PERIOD TO ANOTHER

     Transfers of funds from one budget period to another must
be documented by the execution of two complementary and concur-
rent EPA Assistance Agreement/Amendments (EPA Form 5700-20A).
(EPA1s optional amendment form, 5700-20B, or other appropriate
form, may be used in the following procedures in lieu of the
5700-20A to amend agreements as long as the same accounting
information outlined below is included on the form.)  The
executed forms must be provided to the servicing financial
management office when signed both by EPA and the recipient.

     The first Form 5700-20A/B will decrease funds awarded for
the earlier budget period.  For the succeeding budget period,  the
second 5700-20A/B may:  1) provide interim funding, 2) increase
the funds availal    or 3) replace "current year" (i.e., new
obligational authority) funds.  In the last instance, the dis-
placed funds could be used by the regions as discretionary funding
for other approved purposes.

   a. Decrease to prior budget period.  In order to decrease
funds awarded for one budget period, so that they may be carried
forward to a subsequent budget period, a Form 5700-20A/B must  be
completed and signed by the Award Official.  If a decrease is
nade before the end of the budget period, or at any time without
the support of a signed FSR or other signed authorization,  the
Form 5700-20A/B must be signed by the recipient's authorizing
official.

     In lieu of the recipient official's signature on the 5700-20A/
an award official can use the recipient's interim or final FSR if
the FSR:  1) covers the full budget period, and 2) is signed by an
authorized recipient official.  If this option is used,  the award
official must provide the FSR along with the 5700-20A/B signed
by the award official to the Financial Management Official to  docu-
ment the transaction.

     The financial data will be entered on the Form 5700-20A as
follows:

     1) Item 1.  The assistance ID in item 1 serves as the
obligating document number for the Financial Management System
(IT-IS), thus serving as a common data element for grants and
finance.

     2) Item 22.  The narrative in this item will include a
brief description of the action being taken by this amendment  to
the original award.

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     3) Item 30.   Item 30  ("EPA Amount  this Action") will  include
the former award,  the amount of the decrease  in  "(  )" and  the
amended total.   [(The financial management office will use Trans-
action code 050.2  to record the decrease  in the  Financial
Management System  (FMS)].

     4) Items 34 and 38.   Items 34  (Recipient Contribution) and
38 (Allowable Project Cost) will be modified  to  show the effect,
if any, of this  amendment  on these categories.

     5) Item 39.   Item 39  (Fiscal) includes the  standard accounting
information for  the funds  being transferred.  The amount of the
decrease will be entered in parentheses in the last block on that
line.

   b. Transfer to  Succeeding Budget Period.  A properly completed
Form 5700-20A must also be executed to  make prior year balances
available, where allowable, for the recipient's  obligation during
the succeeding budget period.  The financial data will be entered
as follows:

     1. Item 1.  Again, the assistance  ID will be entered here.

     2* I tea 22.   A brief  explanation of  the action will be
included in the  narrative.

     3. Item 30.   This item would be completed only if the amount
of the award for the "current" budget period were being decreased,
i.e., the amount being carried forward  was displacing current year
funds.  The amount of the  decrease would be placed  in "( )."

     4. Item 32.   This item will include the former award, if any,
the amount being transferred forward from the prior budget period,
and the amended  total for  this category of funds.   (The financial
management office  will use Transaction  Code 059.1 to record the
increased amount available under this obligation document number.)

     5. Items 34 and 38.   Items 34  (Recipient Contribution) and
38 (Allowable Project Cost) will be modified to  show the effect,
if any, of this action on  these categories.

     6. Item 39.   Item 39  (Fiscal) includes the  standard accounting
information for the prior  budget period's funds  that EPA is trans-
ferring to this budget period for the recipient's obligation.   The
dollar amount being brought forward will be entered in the last
position on that line, following the other accounting data.

     If the amount being transferred forward is  intended to displace
aaountu already awarded from current year funds, a second line of
accounting data must be entered on line 39.  The data would be the
accounting information associated with  the decrease, and the amount
of the decrease would be placed in parentheses in the final block
of that line item.

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                                              Attachment III
              APPLICATION OF POLICIES AND PROCEDURES

                              ON THE

          DISPOSITION OF RECIPIENT UNOBLIGATED BALANCES
     The following examples show how EPA's policies and procedures
on the disposition of recipient unobligated balances would apply
to ZPA assistance projects.  In reality, of course, how these
rules apply to any specific assistance project will be affected
by many possible variables.  These variables  include the State
fiscal year (whether it is coincident with the Federal fiscal
year or not), the type of assistance program, differing regional
practices, when the action was taken (before  or after the end of
the budget period), the options chosen for the disposition of the
funds, etc.  Nevertheless, these examples should be helpful.

EXAMPLE A — Continuing Environmental Program, Unexpired
             Appropriation

     EPA awarded a $1,000,000 grant to a State for a continuing
environmental program.  The one-year grant budget period covered
the grantee's fiscal year.  The award was recorded as an EPA
obligation in EPA's Financial Management System (FMS).

     The award was made from a regional allowance for Fiscal Year
1987, and the obligation for that award was recorded against
the 1987 account number for that program and  region.  (The allow-
ance was derived from the Agency's 87/88 Abatement, Compliance
and Control (AC6C) appropriation.)

     The State made its own obligations against the EPA award
during the budget period.  As the State needed funds to pay pro-
gram costs, it drew down funds from EPA through its letter of
credit and contributed its own required cost  share.

     Shortly after the end of the fiscal year, the recipient
submitted a Financial Status Report (FSR) that shows an unobli-
gated balance of $50,000 in Federal funds after paying all their
allowable costs for the budget period.  The FSR thus established
at $950,000 EPA's share under the grant agreement for the State's
costs for that year.  To accurately account for this assistance
award, the Region prepared a 5700-20B showing the reduction, and
provided a copy (along with a copy of the FSR) to their financial
management office (FMO).  The FMO recorded the downward adjustment
uiiing Transaction Code 050.2, and the accounting data for those
funds.

     Based on earlier discussions with the State, the Region had
agreed to make the $50,000 available as additional funding in the
then-current budget period.  Before the appropriation expired, an
amendment  increased the current year funding.

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     The amendment was provided to the FMO with the uocuments
effecting the decrease.  The FMO recorded the increase against
the current year obligation document number using Transaction
Code 059.1, and the accounting data for these funds.
EXAMPLE B — Continuing Environmental Program, Expired
Appropriation

     In the previous example, all the necessary actions to make
these funds available in the subsequent budget period, including
execution of the amendment, occurred before the appropriation
expired.  Assume in Example B that there were delays in the
submission of the FSR.

     The Region had intended to take the balances remaining from
the prior budget period and substitute them for current year
funds awarded for the grantee's ongoing budget period.  The cur-
rent year funds would have then been available to the Region.
However, the FSR was /^t received until after the source appro-
priation had expired.  Because the appropriation had expired,
the recipient's $50,000 in unobligated balances were no longer
available to the Agency, the Region or the recipient.

     To ensure proper accounting for the Agency's funds, the
award official was responsible for executing an assistance amend-
ment to document the decrease in the Agency's estimated liability
(i.e., obligation) for the assistance agreement.  The amendment
and FSR were provided to the FMO, who recorded the decrease, which
is reflected in FMS, as a recovery to the expired appropriation.
EXAMPLE C — Project Agreement, Availability of Funds in the
Second and Later Budget Periods

     The Headquarters Grants Operations Branch awarded a research
cooperative agreement to a University tec-support investigation of
the environmental fate of certain pesticides.  At the end of the
project, the recipient was required to provide a detailed final
report of the project and findings.

     For effective oversight and administration, the project
period was divided into three budget periods.  At the end of each
budget period, and at other times during the project, the Univer-
sity researchers would submit progress reports to EPA.  These
reports merely provided information which was not independent or
separate from the final project outcome, product or report.

     Using an unexpired RfcD appropriation as its source of funding,
EPA made the initial award (budget period "01") for the project
late in Fiscal Year 1986 (see Figure 1 on next page).  The project

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proceeded satisfactorily during budget period "01," and the
University submitted a continuation application for budget period
"02." EPA provided incremental funding for this project through a
continuation award (budget period "02") made late in Fiscal Year
1987.  A third, and final, budget period was approved in Fiscal
Year 1988 to conclude the project.
                      Figure 1 — Example B


     FY 1986    FY 1987    FY 1988    FY 1989    FY 1990
             B.P. "01"  B.P. "02"  B.P. "03"
     During early fiscal year 1988, the University submitted its
final FSR for budget period "01."  The FSR reported that $10,000
of the original award was unused, and requested that these funds
be made available in budget period "02" for continued work on the
project.  Upon approval from the Office of Research and Develop-
ment,, the award official executed an amendment to make these
funda available in addition to the previously awarded amounts for
budget period "02."  As costs were incurred and drawdowns made
during Fiscal Year 1988, the drawdowns were charged off first to
the  funds awarded for budget period "01."

     The recipient's unobligated balances for budget period "02"
were reported in budget period "03," during our Fiscal Year 1989.
Again, the balances were made available, but in this instance
no additional funding was required to complete the project.  Thus,
Fiscal Year 1988 funding awarded for budget period "03" was re-
placed by the funds made available from budget period "02."
The  source appropriation for these "displaced" funds was the two-
year RfcD appropriation available for obligation in Fiscal Years
1988 and 1989, and therefore these funds became available for
the  Budget Division to recover and reissue.

     The FSR for budget period "03" contained unobligated balances
as well, but since the project was now over, the balances were
treated as recoveries to the appropriation.

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APPENDIX L

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        APPENDIX L
POLICY ON PERFORMANCE BASED
        ASSISTANCE

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 •4
A \
        UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                      WASHINGTON. 0 C. 20460
                              31
                                                TMf ADMINISTRATOR
MEMORANDUM

SUBJECT:  Policy on Performance-Bashed Assistance

FRONs     Lee M. Thomas

TOt       Assistan^ Administrators
          General Counsel
          Inspector General
          Associate Administrator
          Regional Administrators
          Staff Office Directors
          Division Directors
     I an pleased to issue the attached policy on EPA's perfor-
mance-based assistance to States*  This policy represents an
important step in the continuing effort to achieve environmental
results through a strong EPA/State partnership.

     Our assistance to States covers a wide range of continuing
environmental programs*  In the past, the process for developing
and managing assistance agreements has varied significantly among
programs and Regions.  This policy establishes an Agency-wide
approach toward negotiating assistance agreements, conducting
oversight of those agreements, and responding to key oversight
findings.  While the aim of the policy is a consistent approach
acroas Agency programs, it retains considerable flexibility for
Regions to tailor assistance agreements to the unique environ-
mental conditions of particular States.

     This policy is effective immediately.  The accompanying
Question and Answer Package explaine how FY'86 assistance agree-
ments will be expected to comply with it and details the rationale
behind major policy components.

     The Deputy Administrator will monitor implementation of the
Policy on Performance-Based Assistance and issue special instruc-
tions as necessary.  I expect Assistant Administrators to advise
the Deputy Administrator of actions planned or taken to make their
prograa policies, guidance and procedures fully consistent with
this policy within thirty days.

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                               -2-
     Regional Administrators are responsible for ensuring that
their staffs and States receive, understand and begin to apply
this policy package to their assistance activities.  To assist
in its prompt and proper implementation, members of the task
force and staff instrumental in the development of this policy
have agreed to make Regional visits to explain and discuss it.

     I would like to commend the task force that developed this
policy, whose members included managers and staff from EPA's
Headquarters and Regions, and State Environmental Directors,
and representatives from the Washington-based Executive Branch
Organizations.  I believe they have done an excellent job and
hope their effort can serve as a model for future EPA/State
decision-making.

     I look forward to strong Agency commitment to this policy.
You can be assured of my full support as EPA and the States move
forward with its implementation.

Attachments

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             POLICY ON PERFORMANCE-BASED ASSISTANCE
     I aa pleaaed to iaaue this EPA Policy on Performance-Based
Assistance.  Thia document waa developed by a taak force compoaed
of repreaentativea from EPA Readquartera and Regiona* State envi-
ronmental agenciea and Executive Branch Organizations to eatabliah
a conaistent, Agency-wide approach toward negotiating and managing
assistance agreements with States.

     The three major components of the policy deacribe how assis-
tance agreements should be negotiated, how a State'a performance
against negotiated commitments should be aaaessed* and what actions
should be taken to reward accomplishments and correct problema.
The overall approach is one of EPA/State cooperation in setting
and attaining environmental goala through.effective State programa.

     I anticipate strong Agency commitment to the principles of
this policy and look forward to the strengthening of the EPA/State
partnership I believe will reault from this approach.
                                    Lee N. Thomas            Date
                                    Adminiatrator

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           EPA POLICY ON  PERFORMANCE-BASED ASSISTANCE
PURPOSE
     This policy establishes an Agency-wide approach which links
U.S. EPA1s assistance  funds for continuing State environmental
programs to recipient  performance*  The approach employs assistance
as a management tool to promote effective State environmental pro-
grams.  The policy's goal  is the consistent and predictable appli-
cation of the performance-based approach across Agency programs
and among Regions.

     Mechanisms for tying  EPA assistance to a recipient's accom-
plishment of specific  activities agreed to in advance are conca*..«d
in EPA's regulations governing State and Local Assistance (40 CPR
Part 35, Subpart A).   The  degree and manner in which EPA programs
and Regions have applied these regulations has varied greatly.
Through this policy,.the Agency articulates how it will consistently
manage its intergovernmental assistance*
SCOPE	


     EPA's Regions will be expected to implement the portions of
this policy governing the management of assistance agreements
("Oversight" and "Consequences of Oversight" sections) upon the
policy's issuance.  To the greatest extent possible* this policy
should also guide the negotiation of grants and cooperative
agreements for fiscal year 1986.

     This policy supersedes all previous policies on performance-
based assistance to the extent they conflict with the approach
outlined below.  Zt elaborates on regulations governing State and
and Local Assistance (40 CPR Part 35, Subpart A) promulgated
October 12, 1982, and the General Regulation for Assistance Programs
(40 CFR Part 30) promulgated September 30, 1983.  This policy does
not replace funding or grant/cooperative agreement requirements
established by Federal statutes or EPA regulations.  States applying
for Federal financial assistance are required to have adequate
financial management systems capable of ensuring proper fiscal
control.

     The policy complements and is in complete accordance with
EPA's Policy on Oversight of Delegated Programs (April 4, 1984)
and the Policy Framework for State/EPA Enforcement "Agreements
(June 26, 1984).

     while this policy will refer to all assistance recipients as
"States" (since States receive most of SPA's assistance for con-
tinuing environmental programs), it applies equally to interstate
and local agencies which receive similar support.

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                              -2-
PRINCIPLES AND APPROACH
PRINCIPLES

     This policy on performance-based assistance is designed to
strengthen the EPA/State partnership by ensuring that EPA assis-
tance facilitates the iraplmentation of national environmental goals
and promotes and sustains effective State environmental programs.
The policy provides a framework within which EPA and States can
clarify performance expectations and solve problems through a system
of negotiation, according to a predictable but flexible set of
national guidelines.  This framework is built around several funda-
mental principles which will also guide the policy's implementation:

     o EPA will use "erformance-based assistance as a management
       tool to promoce and recognize the effective performance
       of State environmental program*, and to ensure mutual
       accountability;
     o EPA Regions and programs will retain flexibility to tailor
       the performance-bas
       guiding principle*}
the performance-based approach to their needs and the policy's
  - -ir
     o States and EPA should share a common set of expectations
       regarding performance coanitments and likeiy responses
       to identified problems*  There should be no surprieee as
       EPA and Statee relate to each other under this policy;

     o In negotiating State- performance objectives, EPA and the
       States will seek realistic commitments and presume good
       faith in their accomplishment)

     o EPA and the States should maintain continuous dialogue
       for the rapid identification, solution and escalation
       of problems to top level managers;
     o EPA i« fully coaaitted to the success of State environ-
       mental programs and will seek opportunities to acknowl-
       edge tneir accomplishments.


APPROACH

     The policy consists of three basic parts.  The first section
describes components of assistance agreements and how they are to
be negotiated.  The second section lays out BPA's expectations for
the review and evaluation of assistance agreements and escalation
of significant findings.  The final section describes how EPA should
respond to the findings of oversights  rewarding strong performancei
applying corrective actions to solve problems; escalating signif-
icant conflicts to top management; and, in cases of persistent per-
formance problems, imposing sanctions.

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                               -3-



                        ASSISTANCE A^REEME^T
      Clear expectations for program performance are crucial to an
 effective EPA/State partnership.  Annual assistance agreements pro-
 vide a key vehicle for expressing these performance expectations.
 Negotiated work programs, contained in an assistance agreement, form
 a fundamental basis for evaluation of State performance.

      An assistance agreement should include three components:   1) a
 work program; 2) identification of support (other than federal
 assistance funds)  a State needs from EPA to accomplish work program
 commitments;  and,  3) a monitoring and evaluation plan.


 APPROACH

      EPA will require that the top national priorities as iden  'led
 in Agency guidance b« explicitly addressed in all State work pro-
 grams.  As EPA and States negotiate outputs, national priorities
 should be tailored to the real environmental conditions of each State
 and Region.  .        ,

      Assistance agreements may include outputs based on a State's
 priorities if those activities promise to deliver a greater environ-
 mental benefit than a national priority.  State priorities should
 represent only those activities allowable under Federal statutes.

      The appropriate mix of national and State priorities will vary
 from work program  to work program, according to the unique features
 of each environmental program in each State.  Regional offices must
 exercise their judgment and negotiate wi£h States over what combina-
 tion of national and State priorities can deliver the greatest
 environmental benefit with resources available after EPA's top
 national priorities have been addressed.

      To better facilitate the negotiation of assistance agreements,
 the Agency's  Operating Guidance should be strengthened through early
 State involvement  in defining the order and scope of Agency
•priorities, a realistic consideration of funding limitations
 throughout its development, and specific identification of top
 priorities by Program Offices.

      The development and oversight of an assistance agreement  should
 be supervised by one senior Regional manager.  EPA Regional Admini-
 strators are  ultimately accountable for all assistance agreements
 made with States and should be familiar with the significant
 outputs and conditions of each agreement.  They will be respon-
 sible for all major assistance-related decisions.

      Assistance agreements may be amended by mutual agreement  of
 the Regional  Administrator and his/her State counterpart.   A major
 change in national or State priorities, environmental emergencies,
 and the discovery  of greatly overestimated commitments are examples
 of the types  of circumstances which may necessitate renegotiation.

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                              -4-
WORK PROGRAM

     The work program should specify the outputs a State will pro-
duce under its federal assistance award (including the State match
and level of e-ffort) and the resources and time frames for completing
the outputs.

     o Outputs should be measurable commitments/ reflective
       to the extent possible of real environmental results.
       They should be ambitious but realistic commitments —
       achievable objectives rather than lofty goals.

     o Work programs should focus on the objectives a State
       will meet, not how the State will accomplish an output.

     o Past performance should affect work program*.  The good
       or poor performance of a State (or EPA) identified through
       oversight she "* influence -he outputs and conditions
       contained in the next annual assistance agreement.

     o Work programs should specifically identify completion
       timeframes for outputs.  EPA may also specify interim
       milestones and reporting requirements based on the
       priority needs of national programs and in keeping with
       good management practice.  Reporting required under an
       assistance agreement should be consistent with EPA's
       information systems.

     o States should draft their work programs but may request
       assistance from EPA Regions in developing them.

     o States should be encouraged to volunteer a comprehensive
       work program that indicate* activities, if any, outside
       those paid for with the federal and State funds included
       in the federal assistance agreement budget.  Awareness
       of State responsibilites not related to federal assistance
       greatly enhances EPA's understanding of the scope* of
       State environmental programs.  Should a State choose to
       submit plans for its entire program, it n««d not indicate
       resource levels, but only program activities.  EPA will
       not exaaino these activities in the course of assistance
       oversight except when necessary to ascertain the cause
       of a performance problem or to identify the corrective
       action which can best address a problem.


SUPPLEMENTAL EPA SUPPORT TO STATES

     An assistance agreement should describe the types of support
EPA will endeavor to provide in addition to an assistance award to
enable a State to meet its work program outputs.  Regions should
consult with Headquarters about support which will require Head-
quarters action.

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                               -5-


     o The assistance agreement should describe  the specific
       research, technical  advice, guidance, regulations,
       contractor assistance or other support EPA will furnish
       States to enable  them to fulfill  specific work program
       outputs, making clear that accomplishment of the outputs
       is contingent upon the  receipt of  the EPA support.   If
       EPA does not furnish the support described in the assistance
       agreement, the State will be relieved of  output commitments
       contingent upon that support.


 EVALUATION PLAN

     The final component of an assistance agreement is a plan
 for EPA's evaluation of State performance.  The  evaluation plan
 should be mutually acceptable  to EPA and a State.

     o The plan should outline the schedule and  scope of review
       EPA will conduct and should identify areas the evaluation
       will focus on.

     o An evaluation plan must specify at least  one on-site
       review per year, performance measures, and reporting
       requirements.
          	ASSISTANCE OVERSIGHT	


     EPA should oversee assistance agreements both informally and
formally.  Regions and States should maintain continuous dialogue
so that States may alert EPA to problems they are experiencing and
EPA can monitor State progress toward accomplishing outputs.  EPA
should also periodically conduct a formal evaluation of State per-
formance.  Oversight should identify the successes and problems
States have encountered in meeting their commitments*  Oversight
also entails the joint analysis of identified problems to determine
their nature, cause, and appropriate solution, and the escalation
of significant findings (both positive and negative) to top managers
in the Region and the State*


APPROACH

     The formal assessment of State performance under assistance
agreements should occur as part of EPA's comprehensive review
and evaluation of State programs.  This process is governed by
EPA's Policy on Oversight of Delegated Programs which states
that evaluations should focus on overall program performance
(within a given program), rather than individual actions} they
should be based on objective measures and standards agreed to
in advance;  they should be conducted on-site at least once a
year by experienced, skilled EPA staff; they should contain no

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                               -6-
 surprises for States regarding content or expectations; and
 results should be documented in a written report.

      EPA should adhere to these principles of oversight and to
 the scope and schedule of evaluation agreed to in the assistance
 agreement.
 FEATURES

 o States are responsible for notifying EPA in a timely manner of
   problems they experience in trying to accomplish their outputs.
   Likewise, EPA is responsible for promptly notifying States of
   itii inability to supply promised support.

 o Formal and informal evaluations by EPA should be constructive,
   conducted in the spirit of promoting good performance through
   problem-solving, not *-Ult-finding.

 o EPA's review and evaluation should emphasize overall performance
   within each program, concentrating on the composite picture
   revealed by total outputs and the quality of accomplishments.

 o EPA should focus on a State's performance against work program
   outputs and conditions unless other aspects of a State's program
   (procedures, processes,  other activities) must be examined to
   analyze a problem or find its appropriate solution.

 o Formal review of State performance under the assistance agreement
   will entail, at a minimum, one on-site annual evaluation of each
   assistance agreement.

 o Review and evaluation of assistance agreements should be con-
   ducted by skilled, experienced EPA evaluators.

 o Oversight findings, successes as well as problems, should be
   documented to establish an accurate record of State performance
   over timo.

.o Assistance oversight should use existing reporting and evaluation
   mechanisms to the extent possible.
                    CONSEQUENCES OF OVERSIGHT


      Oncrt the assistance oversight process has identified and
 documented areas  in which States have had success or difficulty
 in meeting their  commitments under the assistance agreement,  EPA
 should  respond to those oversight findings.   Potential responses
 range from rewards and incentives for good performance, application
 of corrective actions to solve uncovared  problems, and the imposi-
 tion of sanctions to address persistent,  serious performance  prob-
 lems.

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                              -7-
APPROACH TO OVERSIGHT RESPONSE

     The Agency's goal  in providing performance-baaed assistance
is to promote national  program objectives by supporting effective
State environmental programs.  Actions in response to oversight
findings will be oriented toward finding the most effective
ways to maintain or improve a State program's performance.
Wherever possible, EPA  should acknowledge excellent performance
and help States solve problems which impede performance through
corrective actions.

     If problems regarding State achievement of work program
commitments persist, EPA should pursue corrective steps as
necessary based on experience with a given State*  In general,
sanctions should be imposed only when corrective actions have
failed to solve persistent, significant performance problems.
Before taking any sanction against a state, EPA should raise
the performance issu* to the highest levels of the Region and
State necessary to negotiate an effective solution to the
underlying problem.  Sanctions should not be necessary if both
parties are explicit, straightforward and realistic in their
expectations of one another and approach the assistance agreement
process in the spiri't of cooperation.


INCENTIVES

     o When a State meets its negotiated commitments or other-
       wise demonstrates success, the EPA Regional Office
       should take steps to acknowledge excellent State
       performance at the conclusion of the oversight review
       or at the end of the' assistance agreement period.

     o EPA is committed to publicising State program success.
       Assured recognition of a State's environmental achievements
       is one of th« most effective incentives at EPA1 a disposal.
       Publicizing accomplishments also benefits States with per-
       formance problems by providing them with models for success.

     o In general, when a State demonstrates steady progress or
       a  sustained level of high performance against negotiated
       commitments, EPA will institute the most appropriate rewards
       for achievement and incentives to promote continued success.
       Possible actions include but are not limited tot

           -  Reducing the number,  level,  scope and/or
              frequency of reviews, reporting,  or in-
              spections to the minimum necessary for
              effective national program management;

           -  Increasing State flexibility in using funds
              for special projects  or State priorities;

           -  Offering financial incentives (within existing
              resources), such as supplemental  funding;

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                              -8-


           -  Publicizing program successes through joint
              media presentations, awards/ special letters
              of commendation to the Governor* or technology
              transfer to other States, EPA Regions and
              Headquarters.


CORRECTIVE ACTIONS

     o When oversight review uncovers a performance problem and
       determines its cause, EPA and the State must act on those
       findings by taking appropriate corrective steps.

     o Regions must initiate discussions with those States where
       problems have emerged, and work cooperatively with them to
       establish effective remedial strategies.  This negotiated
       strategy should specify the time frame during which EPA will
       expect the problem to be resolved, and any interim milestones
       that will be necessary to monitor State progress.

     o Regions and States should follow a corrective action strat-
       egy based on tthe unigue history and needs of a given State.
       This policy does not prescribe any particular sequence of
       corrective actions which must be undertaken, nor does it
       link specific corrective actions to particular types of
       performance problems.

     o Possible corrective actions include but are not limited tot
       providing EPA technical or managerial assistance, training,
       or additional resources; increasing the number and/or fre-
       quency of reporting and oversight requirements* and shifting
       State resources or otherwise renegotiating the assistance
       agreement.

     o If a Region is not able to provide a particular essential
       type of specialized assistance to a State, the Region should
       bring this corrective action requirement to the attention
       of Headquarters program managers for action as appropriate.

     o The intent of this policy is to see that EPA assumes a
       constructive approach in responding to State performance
       problesie.  When corrective actions have failed* or EPA and
       a State cannot agree on a corrective action, the Region
       may coneider imposing a sanction.  If a sanction ie contem-
       plated, the performance issue should be escalated to the
       highest appropriate level of EPA and the State.  The follow-
       ing sequence should be observed whenever possible to ensure
       that significant problems receive prompt attention and are
       solved expeditiouslys

         a.  The Regional Division Director responsible for
             managing the assistance agreement will raise the
             issue to the attention of the Deputy Regional
             Admininstrator or Regional Administrator and advise
             his/her State counterpart of this notification.

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                              -9-
             The Regional Administrator will personally contact
             the State Environmental Director or other appropriate
             State manager to attempt to reach agreement on a
             corrective action, and to discuss the contemplated
             sanction.

             National Program Managers should be advised of any
             State program problems warranting a sanction, and
             should be notified of any final decision to take
             such action.

             If negotiations between the Regional Administrator
             and State counterpart fail to solve the problem,
             the Regional Administrator should judge under what
             circumstances notification of the Governor should
             occur.
SANCTIONS
     o Regional Administrators must recognise that national re-
       sponsibility for any State environmental program continues
       after the imposition of a sanction.  They should make ar-
       rangements for completion of crucial outstanding outputs
       and should take steps to promote and sustain activities
       the State is performing effectively.

     o As with corrective actions, any decision to impose a
       sanction must be based on EPA's particular experience
       with any given State.  The Regional Administrator is
       responsible for determining when a problem may be signif-
       icant enough to warrant such action, and for determining
       the appropriate type of section to apply.

     o Current regulations detail those sanctions traditionally
       available to EPA.  They includes  step-work actions,
       withholding payment, suspension or termination of agree-
       ment for cause, agreement annulment, and other appropriate
       judicial or administrative actions.

     o Adjusting the schedule for award or payment of assistance
       funds to quarterly, semi-annual, or other similar restrictive
       disbursement schedules is considered a sanction under the
       terms of this policy.  (The customary mechanisms for the
       release of funds, such as standard letter of credit
       procedures, are not affected by this policy.)

     o 40 CPR Part 30 Subpart L details formal procedures for
       resolving EPA/State disputes concerning assistance
       agreements.  These procedures provide the opportunity
       for a State to document the grounds for any objections
       to the imposition of a sanction and for EPA to review
       its decision and address the State's objections on the
       basis of a written record.

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            Policy on Performance-Based Assistance
                  Question and Answer Package


PURPOSE

1.  What  it the purpose of this policy?

         This policy lays out a framework for managing EPA's
    assistance to States for continuing environmental programs.
    It ties performance against negotiated work program outputs to
    federal financial assistance funds.  It provides a consistent
    approach for managing assistance programs through negotiating
    work outputs, overseeing States' performance against agreed
    upon commitments, solving problems through corrective action
    strategies, and imposing sanctions when corrective actions
    have failed or EPA and a Stato cannot agree on a corrective
    action strategy.

         Although the policy aims for a consistent approach toward
    managing assistance agreements, it provides Regional managers
    with flexibility to use their best judgment in applying the
    provisions of this policy to specific conditions that exist
    within their Regions and among programs.


TIMING

2.  How will this policy affect PY'86 assistance agreements?

         Any PY'86 assistance agreement negotiated after the
    issuance of this policy will be expected to conform to
    all of its provisions.
                         *
         Assistance agreements for PY'86 agreed upon prior to
    the issuance of the Policy on Performance-Based Assistance
    will not have to be renegotiated.  However, EPA's Regions
    will be expected to manage those assistance agreements
    according to the approach outlined in the "Oversight" and
    "Consequences of Oversight* sections of the policy.

         PY'86 assistance agreements may be amended if a Region
    and State both agree to do so, under the terms of governing
    regulations*

         All assistance agreements for PY'87 will be negotiated
    and managed according to this policy.


PRIORITIES

3.  Why should EPA assistance support some State priorities
    in addition to national priorities?

         •State priorities* refer to activities which are allow-
    able for funding under federal statutes and which, although
    not always important enough nationwide to warrant a place

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                               -2-
    on OK1 at  the  top  of  the  national  priority  list, are of
    great concern to  a particular  Statt due  to  that State's
    unique environmental  conditions.  Recognizing  that each of
    EPA's continuing  environmental programs  requires a combination
    of Federal and  State  resources, EPA may  direct some of its
    assistance to support what States view as  their most
    significant initiatives,  if  those activities promise to
    deliver a greater environmental benefit  than a national
    priority. (National  priorities include Regional priorities).
    In many instances, a  State's priority activities will cor-
    respond closely to the list of national  priorities in a
    given program,  but the State may  wish to distribute resources
    among those activities with a  slightly different emphasis.
    The Regions have  flexibility under this  policy to negotiate
    support for those activities,  consistent with Program
    Guidance.
4.  How is the proper oalance between national and State
    priorities to be achieved?

         The appropriate mix of national and State priorities
    will vary from work program to work program* according to
    the unique features of each environmental program in each
    State.  After ensuring that top national priorities as
    identified in the Agency Operating Guidance and Regional
    Guidance are included in a work program, Regional officials
    must exercise their judgment and negotiate with a State
    over what combination of national and State priorities can
    deliver the greatest environmental benefit, given the remaining
    resources available. .
GUIDANCE

5.  How should the Agency Operating Guidance- be refined to
    facilitate improved work planning?

         EPA's annual Operating Guidance should clearly arti-
    culate national priorities.  The Agency Priority list should
    be limited to those top priorities across all media.  Bach
    Prograa Office should also list priority activities in its
    media area* ranking them and identifying those which must
    be reflected in every State work program.  The Program Office
    and Agency priority lists should complement one another.
    EPA will involve states early on in defining the order and
    scope of Agency and Program Office priorities*

         EPA Regions should negotiate work program outputs based
    upon priorities as identified and ranked in the Guidance.
    Carefully delineated priorities will help ensure work programs
    that contain clear and measureable output commitments.

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                              -3-


ESCALATION

6.  What if the purpose of the escalation sequence outlined in
    the policy?

         The Policy on Performance-Based Assistance establishes
    a problem-solving approach toward managing EPA assistance to
    States.  It has been designed to promote the prompt identi-
    fication and resolution of any problems States encounter in
    trying to fulfill the output commitments they agree to meet.
    The purpose in laying out a process by which issues can be
    surfaced quickly up the chain of command in both Regions and
    States is to ensure that significant problems rtctivt the
    prompt attention of managers capable of solving those problems
    expeditiouily.  This sequence was included in the policy to
    address concern that State performance problems too fr;<;   tly
    lie unattended at the lower levels of Regions and States where
   * they become bigger problems.

          while this process calls for consultation with state
    representatives and notification of the National Program
    Manager, EPA's Regions are responsible for managing the
    escalation sequence and rendering any final decision to
    Impose a sanction.


7.  Under what circumstances should the escalation sequence be
    followed?

         The escalation sequence was designed specifically as a
    mechanism for obtaining quick decisions on whether EPA will
    impose a sanction on a State demonstrating performance pro-
    blems.   By establishing a predictable process for addressing
    these major conflicts, the policy seeks to expedite, not cr.-
    cumber with formality, resolution of the most serious problems
    likely to be encountered in an assistance relationship.  While
    this escalation sequence applies uniquely to decisions regardin
    sanctions, the policy encourages the escalation of any signi-
    ficant information (positive and negative) regarding the per-
    formance) of a State program within both Regions and States as
    appropriate*


QUARTERLY DISBURSEMENTS

8.  Why does this policy classify quarterly disbursement schedules
    (or similar restrictive disbursement schedules) as sanctions?

         Quarterly disbursement schedules involve awarding a
    portion of a State's grant each quarter or imposing quarterly
    performance-based restrictions on standard payment procedures.
    The Task Force agreed that putting States on quarterly or
    semi-annual disbursement schedules makes it difficult for

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                              -4-


     States  to  plan  their  programs, which are generally based on
     a yearly cycle.  The  Task  Force  felt that  this type of action
     would signify a  lack  of  faith  in  a State's ability to perform.
     Consequently, the Task Force viewed this type of action as a
     sanction which would  reflect a State's  inability to perform.
     As with other sanctions, quarterly disbursement schedules,
     should  not be imposed before attempting to resolve the problem
     through more cooperative efforts  (corrective actions) or after
     a demonstration  of continued past performance problems by a
     State.  As with  all sanction decisions, the decision to place
     a State on a quarterly disbursement schedule should be made
     at the highest level  of  the Region.

          A quarterly disbursement schedule signifies that the
     recipient's performance would be reviewed after each quarter
     to determine whether  full  release of funds would be made
     for the next quarter.  Urder the policy, putting a State
     on this type of  schedule is considered to be a sanction.


 9.  Does this  policy affect draw-downs under the letter of credit*11
     or other payment mechanisms?

          The customary mechanisms for the release of funds are
     not affected by  this  policy.  For example, letter off credit
     procedures, which are used by most Regions, provide a
     system whereby the recipient may promptly obtain the funds
     necessary  to finance  the Federal portion of a project, and
     which precludes  the withdrawal of funds from the Department
     of the Treasury  any sooner than absolutely necessary.
     (Payment procedures are described* in the Assistance Admini-
     stration Manual, 12/3/84, Chapter 33.)   However, to the
     extent that Regions impose performance-related restrictions
     on letter of crMit or other payment mechanism*, these
     restrictions would be considered a sanction under the policy.


10.  How will this policy affect States currently on quarterly
     disbursement schedules?

          Currently,  a number of States are on quarterly disburse-
     ment schedules,  primarily under the RCRA program.   This policy
     does not prohibit the practice of imposing a quarterly schedule
     on a Stats, but   it does consider this practice a sanction.
     It is not necessary to amend FY'85 or FY'86 assistance agree-
     ments that already place States on quarterly disbursement
     schedules.   However,  States should not automatically be either
     extended or taken off of quarterly schedules for the following
     year's grant cycle.   In deciding whether to continue or dis-
     continue quarterly disbursements, Regions should review State
     performance.   A decision to continue or discontinue a quarterly
     schedule should  be based on the presence or absence of
     performance problems,  or successful or unsuccessful attempts
     to resolve  the problems through corrective steps.   Regional
     and program*tic  differences call  for Regional managers to
     use their best judgment  in  making such  decisions.

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                               -5-


11.  What does this policy imply for withholding funds for
     problems that are not directly related to a State's perfor-
     mance of negotiated outputs under the assistance agreement?

          This policy relates primarily to a State's performance
     of negotiated outputs under an assistance agreement.  The
     decision to withhold funds from a State for output-related
     problems is a sanction which should be preceded by appropriate
     corrective actions and notification of high-level managers.
     However, funds are sometimes withheld for problems not directly
     related to a State's accomplishment of negotiated outputs
     under an assistance agreement.  This may occur as a result
     of problems with a State's financial reporting and accounting
     system.  For problems resulting from improper fiscal manage-
     ment or administrative practice (but not directly related to
     a State's performance on work outputs), the Regions may *^th-
     hold funds in Accordance with governing regulations.


OTHER QUESTIONS AND ANSWERS


12.  Do assistance administration procedures need to be changed?

          No.  The policy was developed carefully so as not to
     conflict with the Agency's existing procedures for managing
     assistance agreements.  Procedural details for administration
     are provided in the current (12/3/84) Assistance Administration
     Manual and they are consistent with the policy.


13.  Why does the policy encourage the submission of comprehensive
     State work plans but not require them?

          The current policy is consistent with existing regulations
     foir State and Local Assistance (40 CPR Part 35, Subpart A).
     Tho policy encourages but does not require States to volunteer
     a comprehensive work program that indicates all activities
     the State is conducting under its environmental program.


14.  Why does this policy call for a mutually acceptable evaluation
     plan?

          The policy calls for EPA's evaluation of State performance
     to be described in a plan that is mutually acceptable to EPA
     and the State before the assistance agreement is finalised!,
     This is consistent with the regulation which calls for the
     Regional Administrator to develop an evaluation plan in consul-
     tation with the State, and it reflects the principles of EPA's
     Policy on Oversight of Delegated Programs.  Under the policy,
     changes to the original evaluation plan could occur as corr-
     ective actions.

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                                -6-
 15.  How can  the assistance  agreement be  amended?

          Both  the policy and  the  regulation  allow  for  the assist-
     ance agreement  to be amended  at any  time by mutual agreement
     between  the Regional Administrator and the State.  Either
     party  (State or Region) may ask for  amendment  of the assist-
     ance agreement.  (See 40  CPR  Part 30-700, Subpart G.)


 16.  Do Regions have discretion to dtvist corrective action
     strategies and  determine  the  timing  and  sequence of
     corrective actions?

          Yes.  Regions should attempt to implement corrective
     action strategies which respond to the problem in a timely
     and appropriate manner.

                  i .
17.  why doesn't the policy deal with the 'quality' of outputs?

          While this Policy on Performance-Based Assistance
     focuses on State performance against measureable outputs,
     it complements and is in  complete conformance with EPA'a
     Policy on Oversight of Delegated Programs, which calls for
     review and evaluation activities which ensure quality
     State programs.  Most of  ERA'S programs have instituted
     evaluation programs which examine not only 'beans,* but   (,
     the quality of those beans..-  The oversight of work program
     outputs should occur *s part of a pomprehensive examination
     of State program performance.


18.  How 
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APPENDIX M

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         APPENDIX M
USE OF DISADVANTAGED BUSINESS
      ENTERPRISES (DBE)

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            UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                       WASHINGTON, D.C. 20460

                           JAN 1 5 1992
                                                      office 
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          UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                       WASHINGTON, D.C. 20460
                               FEB 1  5 1991
                                                            OFFICE OF
                                                         THE ADMINISTRATOR
MEMORANDUM

SUBJECT:  FY-91 Program for Utilization of Disadvantaged Business Enterprises
          in Procurement Under Assistance Programs

FROM:     F. Henry Habicht, III
          Deputy Administrator \

TO:       Assistant Administrators
          General Counsel
          Inspector General
          Associate Administrators
          Regional Administrators
          Staff Office Directors
          Laboratory Directors

     On November 5, 1990, President Bush signed into law, the 1991
Appropriations Act, P.L. 101-507, which includes the appropriations for
the Environmental Protection Agency.

     The Administrative Provisions of this Act contains the following
language:

          "The Administrator of the Environmental Protection Agency
     shall, to the fullest extent possible, ensure that at least 8 per
     centum of Federal funding for prime and subcontracts awarded in
     support of authorized programs, including grants, loans and contracts
     for wastewater treatment and leaking underground storage tanks grants,
     be made available to business concerns or other organizations owned
     or controlled by socially and economically disadvantaged individuals
     (within the meaning of Section 8(a)(5) and (6) of the Small Business
     Act (15 U.S.C. 637(a)(5) and (6)), including historically black
     colleges and universities.  For purpose of this section, economically
     and socially disadvantaged individuals shall be deemed to include
     women

     As a result of the above, EPA is required to establish a minimum eight
percent goal on all procurements emanating from any grant, cooperative
agreement or loan awarded during FY-91.  This will, of course, also
include cny new procurement und^r FY-91 grant ancndments which involve
the use of additional Agency funds.
                                                                 Pr\n»d at Rtcycltd Faptr

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                                  -  2 -
     The enactment of this section will also require grant or cooperative
agreement  recipients who, in the past, have not been required to establish
a "fair share" objective or to report on their procurement activities,
to now conduct both.  An example of such activity will include  those
recipients who heretofore came under the authority of OMB Circular A-110.
These recipients were primarily universities and colleges, non-profit
organizations and hospitals.  As stated, these entities were required to
negotiate  a "fair share" objective and to use positive efforts  to assist
disadvantaged (minority and women) businesses.  However, such recipients
were not required to report on their activities concerning these business
elements.  With the passage of P.L. 101-507, these recipients are now
required to report on an annual basis.  Additional information  Is covered
in the attachment on how a recipient may operate in order to meet the 8
percent requirements.

     Congress has also directed that the Administrator shall repor* upon
conclusion of the fiscal year, the Agency's efforts in achieving the minimum
8 percent  level.

     A review of all program activities should be undertaken to determine the
extent in which the 8 percent goal for disadvantaged businesses may impact
your programs.  A special attachment has been prepared to assist you in
assuring that you have considered all aspects on the impact of this
section of current law on EPA's procurement under assistance programs.
All of the requirements cited in the attachment are effective as of
October 1, 1990.

     I am positive that each of you will join me in making a firm commitment
to enhance the utilization of disadvantaged businesses, Including the Histori-
cally Black Colleges and Universities in all Agency programs.  Working together
we can achieve a more equitable distribution of Federal dollars to the benefit
of the underutilized segment of our Nation's economy.

     The Office of Small and Disadvantaged Business Utilization (OSDBU)
is prepared to offer technical assistance to individuals who are assigned
responsibility in these areas.  All requests for information on this
program should be directed to John M. Ropes, Director, OSDBU, or George
Mori, Senior Program Officer.  John can be reached at FTS 557-7777 and
George on FTS 557-9301.

Attachment

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                   U.S. ENVIRONMENTAL  PROTECTION AGENCY

              Disadvantaged Business Enterprise Program Plan

                      Financial Assistance Programs
I.  BACKGROUND.

     .under the authority of Executive Orders 11625, L2432 and 12138, the
Agency established annual objectives for minority and women-owned businesses.
These objectives are accomplished by mandating that the recipient and the
prime contractor carry out six affirmative steps if any subcontracting was
to be performed.

     The Executive Orders also provided the authority for the Agency to require
quarterly reporting from the States and local governments to inform the Agency
how well they were doing in meeting their "Fair Share" objectives.

     Prior to Fiscal Year 1991, the Environmental Protection Agency's (EPA's)
' 7air Share" policy "^r utilization of small, minority and women-owned   ci-
nesses applied to State and local governments only and did not affect univer-
sities, colleges, hospitals and other non-profit institutions which came under
the purview of OMB Circular A-110.  Under that Circular institutions of higher
education and other non-profit organizations had only to exert "positive efforts"
in their attempts to utilize small and -minority businesses.  ' Iditionally, all
of the non-profit institutions and universities were exempt from .any reporting
requirements.

II.  GENERAL INFORMATION.

     A.  This Plan sets forth the manner in which EPA proposes to implement
the requirements of the Administrative Provisions pertaining to the 8 percent
objective for Disadvantaged Business Enterprises, (DBEs), required by Public
Law 101-507.

     B.  The Office of Small and Disadvantaged Business Utilization (OSDBU), is
responsible for developing policy and providing procedural guidance for the
utilization of disadvantaged businesses under the Agency's financial assistance
programs.

III.  SPECIFIC INFORMATION.

     In EPA's FY-1991 Appropriations Act, Congress requires EPA to ensure, to
the fullest extent possible, that at least 8 percent of Federal funding for
prime and -subcontracts awarded in support of authorized EPA programs for FY-91
go to businesses or other organizations owned or controlled by socially and
economically disadvantaged individuals (see VII. "definition").  Accordingly,
any grant, cooperative agreement or loan awarded by EPA in FY-91 must stipulate
that a minimum objective of 8X of such funding be directed to DBEs.

     To the extent that the requirements of OMB Circulars A-102 and A-110 as they*
pertain to the utilization of minority and women-owned businesses conflict with
the FY-91 Appropriations Act language, the Circular provisions are superseded.
State government agencies receiving EPA funding will be required to establish a
minimum 8% "Fair Share" objective for disadvantaged business utilization in
contracting for goods and services in their grants, cooperative agreements and

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loans,  including State Revolving Fund (SRF) loans.  Likewise, institutions
of higher education, hospitals and other non-profit organizations receiving
grants, cooperative agreements or loans, including those for research and
development (other than research awards under the Clean Air Act) will be subject I
to the  same requirement; "positive efforts" (as required in OMB Circular A-110)
for the utilization of small businesses and minority businesses are not suf-
ficient to meet the requirement of P.L. 101-507.

     The Appropriations Act specifically includes Historically Black Colleges
and Universities (HBCL's) as part of the definition of DBEs.  Therefore, EPA
will require that all recipients, including institutions of higher education,
include HBCUs, in their definition of DBEs.

     The following is taken verbatim from P.L. 101-507 signed by the President
on November 5, 1990.  The Administrative Provisions contains the following
language:

          "The Administrator of the Environmental Protection Agency
     shall, to the fullest extent- possible, ensure that at least 8.
     percentum of Federal funding for prime and subcontracts awarded
     in support of authorized program;,, including grants,  loans, and
     contracts for wastewater treatment and leaking underground stor-
     age tanks grants, be made available to business concerns or other
     organizations owned or controlled  by socially and economically
     disadvantaged individuals (within  the meaning of Section 8(a) (5)
     and (6) of the Small Business Act  (15 U.S.C 637(a) (5) and (6),
     including historically black colleges and universities.
     For purposes of  this section, economically and socially disad-
     vantaged individuals shall be deemed to  include women..."

     Therefore, it is imperative that all EPA program managers understand
that the requirements for utilization of disadvantaged businesses in the
award  of prime and subcontracts have changed  considerably.

IV.  AUTHORITY.        .

     The Administrative Provisions of the EPA's FY-91 Appropriations Act,
P.L. 101-507, is the  Agency's statutory authority for its  "Fair Sftare" policy
in FY-1991.

V.  POLICY.

     It  is EPA policy that  recipients of EPA  financial assistance awards utilize
the services of DBEs  to the maximum extent practicable.  P.L.  101-507  establishes
a minimum objective of 8% of  total contract and subcontract awards.  It  is  EPA's
policy that such business entities be afforded  the maximum practicable opportunity
to participate as contractors, subcontractors,  suppliers and otherwise in EPA
awarded  financial assistance  programs.  This  policy applies  to  all contracts and
subcontracts  for supplies,  construction,, equipment and services under  EPA grants,
cooperative agreements  or loans  awarded in F-Y-91.  For the SRF  program,  the policy
applies  to funds orovided to  States in  Capitalization grant awards in  FY-91.
Recipient's small purchases are  also subject  to this policy.

VI.  OBJECTIVE.                   '     '

     The objective  of  the Disadvantaged Business  Enterprise Program  Plan  is to

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                                  _  •> _


encourage recipients and  their prime contractors  to  seek out DBEs as subcon-
tractors  to  the maximum extent possible.

VII.  DEFINITIONS.

     The  following definitions are used  in  this Plan.  The definitions as
cited herein are  for use  of grant-making personnel and small and disad-
vantaged  business utilization officers to assure  consistency.

     A.   Disadvantaged Business Enterprise  (QBE).  DBE is a business concern
which meets  the criteria  of Sections 8(a) (5) and (6) of the Small Business
Act (15 U.S.C. 637(a) (5) and (6)).  Sections 8(a) (5) and (6) are cited below:

          1.  Socially disadvantaged  individuals are  those who have been
subjected to racial or ethnic prejudice or  cultural  bias because of their
identity  as  a member of a group without  regard to their individual qualities.
(Section  8(a) (5)).

          2.  Economically disadvantaged  individuals  are those socially disad-
vantnged  individuals whr^e ability to compete in  the free enterprise system has
been impaired due to diminished capital and credit opportunities, as compared
to others in the  same business area who are not socially disadvantaged.  In
determining  the degree of diminished credit and capital opportunities, the
Small Business Administration shall consider, but not be limited, to the assets
and net worth of  such socially disadvantaged individuals.  In determining the
economic disadvantage of an Indian tribe, che Small  Business Administration
shall consider, where available, information such as the following:  The per
capita income of  members of the tribe excluding judgement awards, the percentage
of local Indian population below the poverty level,  and the tribe's access to
capital markets.  (Section 8(a) (6)).

     For  purposes of this definition, individuals who are socially
disadvantaged shall include the following:

             a.   Black Americans.

             b.   Hispanic Americans.

             c.   Native Americans.

             d.   Indian Tribes.

             e.  Asian Pacific Americans.

             f.  Native Hawaiian Organizations.

             g.  Women.

             h.  Historically Black Colleges and Universities.

     B.  Historically Black Colleges and Universities (HBCUs).  The HBCUs
are identified by the Department of Education Listing of Minority Colleges
and Universities.  The authority vested in  the Department of Education by
law and Executive Order 12320 dated September 15, 1981, is included as
Attachment No. 1.  For purposes of the above cited documentation the Depart-
ment of Education recognizes HBCUs as any institution established prior to

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1964.  A copy of the listing of predominantly minority institutions,
including HBCUs is included as Attachment No. 2.

     C.  Plan.  EPA's proposed program of action for the utilization of DBEs
in financial assistance programs.  The Plan will contain, as a minimum,
methods for encouraging grant recipients and their prime contractors to
utilize DBEs.

     D.  Financial Assistance.  The term financial assistance is synonymous
with "grant-making" in the Act, and is meant to include any Federal support
whenever the principal purpose of the relationship is the transfer of money,
property, services, or anything of value to a State or local Government, or
other recipient, in order to accomplish a public purpose of support or
stimulation authorized by Federal Statute.

     E.  Goal.  The use of the term goal or goaling is to be used synonymously
with "Fair Share" objective.  A recipient's minimum objective will not be less
than 8% of all extramural funds contained in the award document.  Recipients
must establish a separate "Fair Share" objective for both minority business
enterprises (MBEs) and women-owned businesses (WBEs).  HBCUs will be included
in the MBE objective.

VIII.  THE DISADVANTAGED BUSINESS ENTERPRISE PLAN FOR FINANCIAL ASSISTANCE
PROGRAMS.

     A.  The Plan.  EPA's plan is to require that each financial assistance
agreement awarded by EPA in FY-91 contain a requirement for a minimum goal of
8% for DBEs.  In order to accomplish this goal, States will have to look more
closely at their overall spending with respect to extramural funds and to place
greater emphasis on projects where the chances to exceed the minimum can be ex-
pected.  This will allow the recipient to lower their goal on projects having
few or no qualified DBEs available to perform the work; conversely, it will re-
quire higher goals being established in areas having substantial qualified DBEs.
Recipients below the State level must use their resources wisely in order to
meet the minimum 8% goal for DBEs.

     B.  Implementation.  With the passage of P.L. 101-507, the following
implementation activities are now required:

         1.  Program.  Each program will need to immediately examine
its FY-91 plans for extramural expenditures to identify areas, projects and
activities that will need to direct their efforts toward complying with the
above statutory requirements.  Each grant, cooperative agreement or loan awarded
in FY-91 will contain a special coudition establishing a minimum goal of 8% for
the utilization of DBEs, including HBCUs, in the award of prime and subcontracts.
However, in the SRF program, State selected equivalency loans resulting from a
Capitalization grant awarded in FY-91 are used to comply with the overall negoti-
ated "Fair Share"-amount for that grant. The SRF program also is discussed sep-
arately oelow.

             Programs which primarily place work with institutions of higher
education can achieve their 82 goal by utilizing HBCUs either on a direct
basis, as part of a consortium or as a subcontractor.  If an HBCU receives an
award as a recipient or as part of a consortium, a negotiated "Fair Share"
objective must be established by the HBCU or the consortium.

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         2.  Contracts.  Procurement actions which originate from the recipient
must include an objective of at least 8% of the Federal share of the value of
contracts and subcontracts be placed with DBEs.

         3.  State Grants, Cooperative Agreements and Loans.  States receiving
grants, cooperative agreements or loans must include as a minimum an objective
of B% of all extramural funds will be placed with DBEs.

         4.  Local Level Grants, Cooperative Agreements, and Loans.  Local units
of governments receiving grants, cooperative agreements and loans to local re-
cipients must include as a minimum objective that 8% of all extramural funds
will be placed with DBEs.

         5.  Research and Development Programs.  All universities,  colleges,
hospitals and other non-profit organizations receiving R&D funds or  any other
Agency funds will have a minimum objective of 8% for DBEs, including HBCUs,  in
the award of prime and subcontracts.  (Except for research awards under the
Clean Air Act).

         6.  "Fair Sh- -•" Objectives.  The Award Official or his designee will
negotiate a "Fair Share  objective with the recipient.  "Fair Share" objectives
should be negotiated to a level that is achievable;  however, the floor of
any objective shall be at least 8%.  On programs which have Statewide application,
e.g., SRF or Superfund, the recipient may apply the "Fair Share" objective on a
Statewide basis.  This provides the State some flexibility in the "Fair Share"
objective of each grant;  in some cases, especially in areas having few qualified
DBEs available to perform the work, the State may elect to set a lower target
for participation; however, in areas having a substantial number of  qualified
DBEs available a greater target for participation would be required  in order
for the the State to meet an overall minimum 8% goal objective.  The Agency
strongly encourages maintenance of effort provisions where previous  "Fair
Share" accomplishments have exceeded the statutory level.

         7.  Bidding Requirements.  States and/or recipients are required to
include in their bid documents the negotiated "Fair Share" objectives separated
into two categories, i.e., MBEs, (including HBCUs) and WBEs.  Additionally,
prime contractors are to include in their bid documents the recipient's "Fair
Share" objectives.

         8.  To comply.with this policy, recipients of assistance awards and
their prime contractors must comply with the following affirmative steps before
a contract is awarded:

             a.  placing DBEs on solicitation lists;

             b.  making sure that DBEs are solicited whenever they are potential
sources;

             c.  dividing total requirements, when economically feasible, into
small tasks or quantities to permit maximum participation by DBEs;

             d.  establishing delivery schedules, where the requirements of work
will permit, which would encourage participation by DBEs;

             e.  using the services of the Small Business Administration and the
Minority Business Development Agency of the U.S. Department of Commerce,
as appropriate; and

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             f.   requiring the contractor to take the affirmative steps in
subparagraphs a. through e. of this part if subcontracts are awarded.

         9.  SRF equivalency loans are subject to EPA's "Fair Share" objective,
which is a minimum of 8%, and must comply with the requirements of paragraph B.7.
above.  SRF equivalency loans are those identified as such by the State and which
equal the total amount of the Capitalization grant.  States should not count re-
financing projects toward meeting their "Fair Share" objective except in unusual
cases.  In such cases, prior approval must be obtained from OSDBU and the Head-
quarters program office.  If a State accomplishes its "Fair Share" objective by
requiring only certain equivalency projects to undertake the six affirmative steps,
other SRF equivalency projects are not required to undertake them.  A State may,
however, require such other SRF equivalency projects to do so.  That is the
State's prerogative and not EPA's.

        10.  All actions taken in carrying out the affirmative steps [see 40 CFR
§33.240, §31.36(e), §35.6580(a) and §35.3145(d)] must be fully documented and
retained in the official files.

     C.  Agreement Conditions.  All EPA grants, cooperative agreements and loans,
mad?, in FY-91 must contain a condition requiring recipients to meet the require-
ments of the Act.  Citacion of the 'Fair Share" objectives for MBEs (inc^. —^ng
HBCUs) and WBEs must be inserted as well as the total "Fair Share" objective in
the condition.  These conditions are retroactive to October 1, 1990.  SRF condi-
tions are cited in c. and d- below:

         1.  "Fair Share" Conditions.

             a.  If the Award Official or his designee HAS NEGOTIATED a "Fair Shat
with the recipient, use the following condition or equivalent.  The "Fair Share"
must be at least 8Z.

             "The recipient must ensure to the fullest .extent possible that at
             least (insert the negotiated "Fair Share" percentages) of Federal
             funds for prime contracts or subcontracts for supplies, construc-
             tion, equipment or services are made available to organizations
             owned or controlled by socially and economically disadvantaged indi-
             viduals, women and historically black colleges and universities.

             The recipient agrees to include in its bid documents a (insert the
             negotiated "Fair Share" percentages) and require all of its prime
             contractors to include in their bid documents for subcontracts
             a (insert the negotiated "Fair Share" percentages) "Fair Share"
             percentage.

             To evaluate compliance with the "Fair Share" policy, the recipient
             also agrees to comply with the six affirmative steps stated in 40
             CFR §33.240,  §31.36(e) or §35.680(a), as appropriate."

             b.  If the Award Official or his Designee HAS NOT NEGOTIATED a "Fair
Share" with the recipient, use the following condition or equivalent.  The "Fair
Share" must be at least 8%:

             "The recipient agrees to negotiate a "Fair Share" percentage of not
             less than 8%  with EPA before the recipient begins the  process to
             award any contracts under this agreement.

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             The recipient must ensure to the fullest extent possible that at
             least the negotiated "Fair Share" percentage of Federal funds for
             prime contracts or subcontracts for supplies, construction, equipment
             or services are made available to organizations owned or controlled
             by socially and economically disadvantaged individuals, women, and
             historically black colleges and universities."

             The recipient agrees to include in its bid documents a (insert the
             negotiated "Fair Share" percentages) and require all of its prime
             contractors to include in their bid documents for subcontracts a
             (insert the negotiated "Fair Share" percentages) "Fair Share" per-
             centage .

             To evaluate compliance with the "Fair Share" policy, the recipient
             also agrees to comply with the six affirmative steps stated in 40
             CFR §33.240, §31.36(e) or §35.6580(a), as appropriate."

             c.  If the Award Official or his designee HAS NEGOTIATED a "Fair Share
with the recipient for Capitalization grants use the following condition, or
equivalent.  "Fair Share" for these grants must be at least 8%;
             "The recipiu^,. must ensure  j the fullest extent possible that at
             least (insert the negotiated "Fair Share" percentages) of equivalency
             funds for prime contracts or subcontracts for supplies, construction,
             equipment or services are made available by the State and/or SRF
             assistance recipient to organizations owned or controlled by socially
             and economically disadvantaged individuals, women and historically
             black colleges and universities."

             The recipient agrees to select certain equivalency projects to achieve,
             to the fullest extent possible, the State's "Fair Share" objective and
             to require those selected equivalency projects to comply with the six
             affirmative steps.  The recipient agrees to require (and to assure
             that the selected assistance recipients also require) that all prime
             contractors include in their bid documents for subcontracts the (insert
             the negotiated "Fair Share" percentage) "Fair Share" percentage.

             d.  If the Award Official or his designee HAS NOT NEGOTIATED a "Fair
Share" with the recipient for Capitalization grants use the following condition or
equivalent.  The "Fair Share" for these grants must be at least 81;

             "The recipient, agrees to negotiate a "Fair Share" percentage of not
             less than 8Z with EPA before the recipient begins the process to
             award any contracts under this agreement.

             The recipient must ensure to the fullest extent possible that at least
             (insert the negotiated "Fair Share" percentages) of equivalency funds
             for prime contracts or subcontracts for supplies, construction, equip-
             ment or services are made available by the State and/or SRF assistance
             recipient to organizations owned or controlled by socially and economi-
             cally disadvantaged individuals, women and historically black collets
             and universities.                                                     "

             The recipient agrees to select certain equivalency projects to achieve
             to the fullest extent possible, the State's "Fair Share" objective and
             to require those selected equivalency projects to comply with the six

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                                  - 8 -
             affirmative steps.  The recipient agrees to require (and to assure
             that the selected assistance recipients also require) that all prim*
             contractors include in their bid documents for subcontracts the
             (insert the negotiated "Fair Share" percentage) "Fair Share" percentage.

         5.  Reporting Conditions.  The above stated conditions (a.- d.)
must also include the following statement with the appropriate reporting require-
ments, i.e., a., b. , c. or d.:

             a.  For Project Grant Recipients (except Institutions of Higher
Education and Other Non-Profits) and Loan Recipients:

                 "The State and/or recipient agrees to submit a SF-334 "MBE/WBE
             Utilization Under Federal Grants, Cooperative Agreements, and other
             Federal Financial Assistance", to the EPA award official beginning
             with the Federal fiscal year quarter the recipient awards its first
             contract and continuing until all contracts and subcontracts have
             been reported.  These reports must be submitted to the award official
             within 30 days of the end of the Federal fiscal quarter (January 30,
             April 30, July 30 and October 30)."

             b.  For Continuing Environmental Program Grants;

                 "The State and/or recipient agrees to submit a SF-334 "MBE/WBE
             Utilization Under Federal Grants, Cooperative Agreements, and other
             Federal Financial Assistance", to the EPA award official within 30
             days of the end of each Federal fiscal year, i.e., by October 30th   |
             of each year."

             c.  For Grants to Institutions of Higher Education and Non-Profits:

                 "The State and/or recipient agrees to. submit a SF-334 "MBE/WBE
             Utilization Under Federal Grants, Cooperative Agreements, and other
             Federal Financial Assistance", to the EPA award official within 30
             days of the end of each Federal riscal year, i.e., by October 30th
             of each year.

     D.  Responsibilities.

         1.  The OSDBU will provide copies of the approved Plan to all Program
and Regional offices associated with financial assistance programs.

         2.  Award Official or their designee will negotiate a "Fair  Share" objec-
tive for each program.  The negotiated "Fair Share" objective will include separate
objectives for MBEs, (including HBCUs), and WBEs.  Negotiated objectives should be
developed on the basis that the minimum can be no less than 82; however, those
States and recipients who have negotiated a higher percentage in the  past should
be strongly encouraged to maintain the higher level.  Percentage ranges e.g.,  4-9
percent or 6-8 percent etc., are not authorized.

         3.  The (SDBUO) must provide the Grants Management Offices (CMOs) with
the negotiated "Fair Share" objective for each State or other recipient at the
earliest practicable date, but in no event later than August 31st  of  each fiscal
year for the following year.  In addition, the SDBUO will be responsible for
the following actions:

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             a.  Ensure that the Statj or recipient Is fully cognizant of the
requirements of this Plan and the necessity for compliance.

             b.  Follow-up with recipients if they do not submit the MBE/WBE Report.
         4.  The GMOs.  GMOs will:

             a.  Include the appropriate condition in this policy (VIII.C.)

             b.  Assuring the timely receipt of quarterly and/or annual reports
as required by the Conditions.  Reports are due within 30 days after the close
of each Federal fiscal quarter or fiscal year, as the the case may be.

         5.  Reporting.  Reporting  will be carried out by any entity receiving
EPA funds.  Universities, Hospitals and other Non-Profit Institutions, which were
formerly not required Co report are now required to report in order for the Agency
to determine if it has met the 8% goal for each EPA-funded program.   No waivers
will be approved for reporting requirements.  Quarterly or annual reporting will be
conducted by using the Standard Form 334.

         6.  The Clean Air Act Research Grants.  The 8 percent goal for the utili-
zation of DBEs in FDA-funded procurement under assistance programs applies to
all programs, except for .:search awards funded under the Clean Air Act.  The Clean
Air Act Amendments requires a 10Z goal for research programs awarded by EPA for
DBEs.  This requirement will be addressed under separate cover.
2 Attachments

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APPENDIX N

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          APPENDIX N
 POLICY ON THE TIMELY AWARD OF
ASSISTANCE FUNDS FOR CONTINUING
   ENVIRONMENTAL PROGRAMS

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                         SEP 14 1592
MEMORANDUM
SUBJECT:  Policy on the Timely Award of Assistance Funds
          for Continuing Environmental  Programs
           Original signed by Harvey Plppen, Jr.
FROM:     Harvey G. Pippen Jr., Director
          Grants Administration Division

TO:       Assistant Regional  Administrators
          Regions I-X

     Attached  is  a policy  entitled "Timely  Award of Assistance
Funds  for Continuing  Environmental  Programs."    This policy  is
issued in conjunction  with a  memorandum dated June 26, 1992,  from
the Office of Comptroller which clarifies general Agency  policy on
when funds are available for  award.

     If  you have  any  questions  concerning  this matter,  please
contact Bruce Feldman  at 202  260-5268.

Attachment

cc:  Howard Corcoran,  OGC,  (LE-132G)
     Becky Fredericks,  HQ, Budget  Division  (PM-225)
     Kathy Payne, HQ/OW (WH-556)
     Jerry Kurtzweg, HQ - Office of  Air & Radiation (ANR-443)
     Dick White, HQ -  Pesticides & Toxic  Substances (TS-788)
     Judy Kertcher, HQ - Hazardous Waste  (OS-110)
     Doug Barrett, HQ  - OC/FMD (PM-226F)
     Jane Ephrimedes,  HQ - OW (WH-546)
     Carol Crow, HQ -  OW (WH-546)
     Robbie Savage, ASWIPCA
     Marian Cody, HQ,  (PM-216F)
     Corinne Allison,  HQ,  (PM-216F)


bcc: Official       R. Johnson     B.  Feldraan
     Reading        Grants Management  Offices -   Regions I-X
     Division       GPPB Staff     GAD Branch Chiefs
PM-216F:RJohnson:RAJ:260-5296:FC 801:Disk -  RJ:MEMO2.FNL

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                 TIMELY  AWARD OF ASSISTANCE FUNDS
              FOR CONTINUING ENVIRONMENTAL PROGRAMS
PART I:        PURPOSE

PART II:       POLICY

PART III:      BACKGROUND

PART IV:       ROLES AND RESPONSIBILITIES

PART V:        Appendices

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I.    PURPOSE

     The purpose  of this  policy is  to clarify  existing policy
concerning  the  timeliness  of  awarding  assistance  funds  for
Continuing  Environmental  Programs.    Continuing  environmental
programs are  generally those programs  cited  in 40 CFR  Part 35,
Subpart A.   See Appendix 3  for a  listing, as of September  1992, of
Continuing-Environmental Program grants.

II.  POLICY

     It is EPA's policy  to award assistance funds for Continuing
Environmental Programs as  quickly as  possible after funds become
available,   in  accordance  with  40  CFR 35.141,  "EPA Action on
Application".  The procedures in this policy apply to awards made
under a  normal or  a  late  Appropriation Act  as well as  under a
Continuing Resolution(s).

III. BACKGROUND

     During the past year,  some States have rai.ad concerns about
the timing of assistance  awards which fund continuing environmental
programs.  Frequently EPA does not award its environmental program
grants until  after the start of the grant budget year.  There are
a  number of  causes for  the delays. Two examples  often  cited are
confusion  about when  funds  become  available  for  obligation and
difficulties  in work plan  approvals.  Due to the confusion on the
availability  of funds  and  the degree  of flexibility the  Regions'
have to plan  and to award  grants within their quarterly Operating
Plan, the Regions frequently delay awarding grants.  Additionally,
work plan negotiations between State and EPA program officials are
often not  completed in a timely manner due to disagreements over
State and EPA initiatives and requirements.   Such disagreements can
hold up a grant award  until all work plan issues are resolved and
the work plan is approved.

     Most  States,   by  law,  cannot  operate their  programs  in a
deficit mode.   With a  tightening economy,  States face laying off
workers  or  changing to  shorter work weeks  if Federal funding is
delayed for  Continuing Environmental Programs.  Additionally, due
to the cash Management Improvement Act,  the Agency could be liable
 for interest  penalties when grants  are  awarded late.

     To help clarify EPA policies  and the  concepts governing the
use  and  availability of funds,  Budget  Director,  Richard Brozen,
 issued a  policy memorandum dated June  26,   1992,  to  the ARAs and
Senior Budget Officers.  See Appendix 1.

Funding Availability and Flexibility

   o Under an Annual Appropriation

     The   Office   of   Management  and  Budget  has  historically
 apportioned  funds  for the AC&C account in a quarterly split of 80-

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10-5-5 percent of total  (i.e. 80 percent of the funds are available
in the  first quarter;  10  percent are  available for  the second
quarter; and five percent each  are available  for the remaining two
quarters of  the  fiscal  year).   The apportionment  reflects the
quarterly split for the entire  appropriation.   During Phase III of
the President's Budget,  this quarterly split  is equally applied to
every program element in the appropriation.  Regional Offices may
adjust the amount awarded under each program element provided the
total awards do not exceed their quarterly split.

     By adjusting the Regional resources during Phase  III, Regional
Comptroller Offices, working with the Regional Grant Management and
Program Offices  can,  to the maximum  extent  possible,  fully fund
their continuing environmental  program grants in the first quarter
while funding project grants, contracts, or lAGs later in the year.
Thus, the decision rests with the Region to determine which awards
to make using the Region's first quarter allowance of AC&C funds.
(The  assumption  is that sufficient  resources are  available  to
permit  the Region  to  fund  100 percent  of  fundable continuing
environmental grants.)


   o Under a Continuing Resolution

     Under  a Continuing Resolution  (CR), all affected  agencies
receive limited funds based on  constraints written by Congress and
OMB applicable  for  the time  period covered by  the CR.

     During the CR, funds are  available to the regions based on a
percentage of their total appropriation and they are not restricted
by program  element  or  object class  totals.  Regional offices may
adjust the amounts  funded under each program element provided the
Region  does not  exceed its total  available allowance.   Thus,
depending on its priorities and the  amount of funds available, the
Region may  fully  fund its continuing environmental program grants
even under a CR.
PART IV. GMO ROLES AND RESPONSIBILITIES

     This Section outlines the basic roles and responsibilities of
the Grants Management Office (GMO) in awarding assistance funds for
continuing environmental programs.

     FUNDING AVAILABILITY

     1.   GMOs  must  coordinate with the  Regional  Comptroller to
          ensure  inclusion on distribution  lists  of information
          received  from the  Office of  Comptroller  relating  to
          assistance funds. This information includes the Regional
          Operating   Plan   (and  any  revisions)  and  all  other
          pertinent grant  correspondence and policy  issued by the
          Office of Comptroller.

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2.    GMOs must  work  jointly  with program  offices  and  the
     Regional  Comptroller  to   adjust   individual  Program
     Elements within the quarterly allowance to allow to the
     maximum  extent  practicable  100  percent  funding  of
     acceptable    grant   applications    for    continuing
     environmental programs.

3.    GMOs and the Program Offices should jointly ensure grants
     awards are made as soon as possible after the funds are
     available to the Regional offices.

     Conditional Approval.  If an application is conditionally
     acceptable, and only minor revisions to the workplan are
     required, the award should  be made  as  soon as possible
     after Federal funds become  available,  either partially
     or  at  100  percent.     The  award  must  include  the
     condition(s)  which the  applicant  must meet  -to secure
     final approval  and the date by  which  those conditions
     must be met.
     Disapproval.    If  the  application  cannot  be  either
     approved or conditionally approved, and negotiations to
     revise  the work  plan  fail, the  GMO working  with the
     program   office  should   provide  a   formal   written
     notification to  the  recipient  which states the reasons
     for disapproval  of  the Application, in accordance with
     40 CFR 35.141(C).
KEY MILESTONES IN THE AWARDS PROCESS

1.   GMOS  should  coordinate  with the program offices in the
     forwarding of  application  kits and program guidance to
     continuing program  grants  applicants.  GMOs should send
     application kits to continuing program grants applicants
     three and one  half  (3 1/2)  months before the end of the
     current grant  budget period.

2.   GMOs  should  jointly work  with the  program offices to
     provide  a  formal   written  notification  to applicants
     regarding  the status  of  award  of their continuing
     environmental  applications  within 45 days after receipt
     of  the application.    This notification  must include
     whether  the  application  is  acceptable,  conditionally
     acceptable,  or unacceptable and  inform the  applicant of
     any outstanding administrative  issues which would delay
     award.   (See Appendix 2 for a  sample status report.)

3.   GMOs  should make their final determination on whether an
     application  is  approved,   conditionally  approved,  or
     disapproved within 60 days of receipt of the application.

4.   GMOs  and the  program offices  should  jointly ensure that

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                                                                     Appendix 1


                    UNITED STATES FNVIRONMENTAL PROTECTION AGENCY
\ ^|^ *                         WASHINGTON, O.C.   204M
\TT^


                                  JUN2S1992
                                                                          CfFCeOF
                                                                        AOMMSTRATON
                                                                        ANDKtOMCa
  MEMORANDUM

  SUBJECT:   A1

  FROM:
                              (PM-225)
  TO:         Assistant Regional  Administrators
              Senior Budget Officers
         This memo  is intended to clarify some of the geaenl policies and ooooepts  dot
  govern  funds availability and flexibility in the Agency Wind a fiscal year begins. Hie
  "financial environment" has been rapidly changing over the-last tew years both hukfe
  EPA as well as government-wide. These  changes have 'raised questions aa to the
  fundamental core responsibilities of the Agency's management  of our financial resources.
  These issues are extremely complex and highly variable, requiring aa undemanding  of
  the inter-relationship  of four core funding documents.  This memo provide! an overview
  of the fiinHam^ntu]  core responsibilities.   The Budget Division is cnmntiy in the. process
  of updating  the Planning and Budget Manual and the' Fund* Control Manual  which wffl
  incorporate  the more detailed  guidance.   As part of this process, I would welcome
  comments and suggestions for additional  clarifications,  as needed

  Background

        Several recent events have focused our attention on how the division is
  communicating  resource decisions and providing information cononraing the  reieaae of
  funds to the Agency. First, many new and complex laws have been enacted that affect
  the Agency's funds.  These include the Budget Enforcement Act of 1990,71ft» Chief
  Financial Officer Act of 1990, Federal Credit Reform Act of 1990 and the Cash
  Management Improvement Act of 1990.  Second, we have impiMMntftl  tfm Mnttki
  Financial Management System (IFMS) within the last few yean which hit bad >
  significant impact on the flow of information concerning financial  leaources and added
  new responsibilities  for the Responsible Planning and Implementation Officers (KPIOa).

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Third, a quality  action team  was convened by the Office of Wastewater Enforcement
and Compliance for the purpose of addressing State  concerns on the grants process.
And fir illy, we recognize  that there has been significant turnover in the Agency's
resource community, resulting in many new employees new to the budget  world.

       Tt has come to our attention  that there are many unanswered questions 03 fund
availability and flexibility. In particular, it is clear that there has been some confusion
about when funds become available for obligation and how  much flexibility the Agency
has in making resource management decisions.  I would like to take advantage of these
circumstances  and take a  first step in providing some clarification on the general
concepts,  controls, and procedures which  make funds available  for obligation.

Availability of Funds

       At any time, the funds available  to the Agency is governed by four  bask
documents:  (1) the Congressional Budget Justification; (2)  the Appropriation LAW under
which the Agency is funded;  (3) the OMB Apportionment;  and  (4) die Agency's
approved  financial  Operating  Plan.  In general, each document governs a different  aspect
of the Agency's cash flow and flexibility.

(1)    Confrwkraal Budget Justification provides Congress and the Admlnlmaion with
       the Agency's basic blueprint on where we are spending our money, what ttafti
       we expect to achieve,  and our accomplishments for the previous two fiscal years.
       Since OMB  and Congress consider this document to be the basis of our buffet,
       deviation from it usually require* action, by either Contfpi  and/or  OMB.

(2)    Appropriations Law provides the Agency with the basic requirements eefahtishfd
       by Congress. It includes the total level of funds available within each •financial
       account and specific guidance to the Agency  through  specific appropriations
       language, report language,  and other legislative history.  The law enacts the
       underlying structure of our appropriations accounts and Congressional  Budget
       Justification  wtth modifications spelled out in the legislative history. Hie Law
       provides both  restrictions (account transfers;  Travel ceilings; PCAB floors) and
       flexibility (reprogramming  authority;  appropriation  charging).

 (3)    OMB Apportionment control the rate at which obligations  can be  made by the
       Agency and in some instance the exact purpose  for the obligations.  UsnaOy,
       OMB apportions  the  Agency's funds by quarter. Then  are, however, other cases
       where  OMB limits the use of funds either through a set aside (in a "njftjuiji B")
       or through footnotes  to the apportionment.  One recent use of these insfrktlona
       has been OMB's establishment of a clean-up category in the Soperfend
       apportionment.

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(4)    Approved Financial Operating Plan implements  the Congressional Budget
      Justification,  Appropriations  Law, and OMB Apportionment.  The
      Operating Plan  essentially governs the purposes  for which the Agency
      CApends  funds.  The Operating Plan is the document against which the
      Agency is monitored  for compliance with Congressional and OMB
      directives.

      In an attempt to maintain communication  with the resource community and to
implement  these four governing documents, the Budget Division has established several
institutional  methods of communication that  provide  guidance  as to the  availability of
resources to the Agency's managers.  The are:  (1) Advice of Allowance for each
appropriation to each Responsible  Planning and Implementation  Officer (RPIO);   (2) an
online financial Operating  Plan  contained in the Integrated  Financial Management
System (IFMS); and (3) the Appropriations  Analysis, Bills and Reports digest* ^

      These sources of information establish spending  limits at a detailed level to
ensure  compliance with appropriated  amounts, directives, and  guidance  (including add*
ons and reductions) as well as OMB apportionment  restrictions.  The use and
applicability of each guidance source is dependent  upon the  status of the Agency's
appropriations  and  Operating Plan,

Appropriations

    At the  beginning of the fiscal year, the Appropriations -Law governing die Agency
will take one of two forms:  either  an annual Appropriations  Bffl covering the raH year
or a Continuing Resolution  that covers a shorter period of time. (If the Agency baa no
Appropriations  Law, the Agency must "shut-down" operations which is addressed  by EPA
Order on Actions in the Event of an Appropriations  and/or  Debt Cefling Hiatus). The
status of the Agency's appropriations  significantly affects the level of funds  available  to
the Agency and the amount  of flexibility with which foe Agency can operate.  The
following lays out general principles for the availability of funds under each
appropriation scenario  and  attempts to illustrate  the  interrelationship between the
controlling  documents  listed above.

       One  special  note, however,  is that the specific rule* and conditions under which
the Agency operates can vary significantly from year to year. Congress and OMB
generally provide us with a complex set of rules that  can be  modified yearly,  quarterly,
or monthly.  The resource  community should stay in close contact with the  Budget
Division to  determine  specific needs during any fiscal year and should follow the  yearly
guidance and Advice of Allowance  to implement the special  needs identified.

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    Avaiiabilirv of Funds Unfor  an  Annual Appropriation

      The budget statutes that govern the federal  budget  process provide that the
Agency  begins its fiscal year on October  1 with an enacted Appropriations  Bill. Once
the  Appropriations Bill is signed by the President,  EPA has 30 days to provide an
enacted  Operating Plan to the Office of Management  and Budget (OMB) and the
Congress for their approval.  This Operating Plan uses the Congressional Budget
Justification  as its baseline and modifies it according to Congressional  directives
contained  in the Appropriations  Law.  In addition, OMB has 30 days following
enactment to provide  the Agency with the apportionment  of its appropriations.

      After enactment of the  annual Appropriations bill, the  Comptroller  transmits the
Appropriations  Analysis, Bill and Report digest to each RPIO. This digest is an analysis
of the Appropriations  bill, its legislative history, and hi requirements.   This transmittal.
represents a formal delegation from the Comptroller to the BPIOf of the program
responsibilities contained in our Appropriations Law and  iti legislative history.

      During the interim period prior to approval of the  enacted Openting  Plan,  the
Operating Plan based on the President's request (Phase EU) is loaded in the  IFMS.  A
guidance memo  based on initial temporary estimates included in OMB •jyottkninfnti  is
issued to the RPIO* on how to proceed until the Agency has IB approved  <\f»«*¥g
Plan. We try to provide the maximum amount of funding to allow normal Agency
operations.  However, RPIC*  are advised that the Openting Plan in IFMS his not been
adjusted to reflect Congressional actions or the final Administrator  distribution of
resources.  Therefore, Agency managers must &e prudent  and careful in  •""•iHt their
1st  quarter resources  that have been made available in the event Oat the modifications
reduce the amounts available.

      Once the Openting  Plan has been approved, the RPIO is notified through the
normal  Advice of Allowance letter.  This letter sets .out the funding available to the
allowance holders for that quarter as well as provides guidance on the MrninHoni and
flexibilities on the use of funds (ceilings, floors, reprogramming requirements),

                o           er a Continuing
       In recent yean, our annual Appropriations  Bill has not been enacted by die atart
 of the fiscal year.  In this situation, the  Agency begins the fiscal year  under a fonthnring
 Resolution  (CR).  During this time, the RPIOs are provided' general  guidance
 memoranda from the Comptroller Budget Division on  the rules governing Agency
 operations  until we have a full year Appropriationt Law and die resulting  enacted
 Operating  Plan. These rales include, but are not limited  to, the use of foada  tor the
 purposes for which they were requested in the Congressional Budget  Jnsdficaflttn, H toett
 as the restraints included  in the Continuing  Resolution, as written by Congress, and
 OMB's Apportionment  of the Continuing Resolution  funds.

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                                          5

      Generally,  CRs  hold the Agency to a more  restrictive level than our proposed
President's  Budget.  At that  more restrictive level, the  Agency is provided sufficient
funds for the time period covered by the CR.  The CR, however, rarely provides  enough
funds to cover "normal" operations.   While operating under a CR, each RFIO is provided
a portion of their total appropriation to obligate.   Because  of the allotment process that
we have ?greed to with OMB, the Agency maintains  significant flexibility.  Therefore,
monitoring  and lockout of fuads during this time are done  at the highest possible level
for each Allowance  Holder.   Maximum flexibility by program element  and object class is
permitted.

Funding Flexibility

      During the execution phase of the budget,  the Agency must take ore to adhere  to
the  limits and constraints of its four governing documents.  Within the limits, however,
the  Agency maintains considerable  flexibility in the use of funds. Some of me fleadbffity .
is laid out in the  Agency's Appropriation Law. For example, the Agency is allowed to
reprogram  funds  up to a certain level  ($500,000 for FY 1992) between programs  in the
operating plan.

      Another example  of flexibility is in the quarterly apportionments by OMB.
During the development  of the Operating Plan, the "rt*cipntH qnarteriy  spttta an
equally applied to every program element in the appropriation.  These
quarterly splits to resources  may be adjusted, however, fo obtain dedred
as long as the quarterly split at the RFIO level for that appropriation  is
                                           •*•
      Flexibility is, therefore, within the limits Mrahlishnd in the justification,
Appropriations Law, and the OMB  Apportionment  The •**«•***"• and variables are ftr
to numerous  and complex to set out specific guidance  in this memo.  The f^fffJynf** to  .
this  memo  gives  one specific case example .of flexibility within our limitations.  Within
these limitations, the Agency doe* maintain a significant amount of flexibility in  fundmf.

Closing

     I hope this information  clarifies some of the confusion on these issues.  In addition, I
would like your input, comments and  questions regarding the  type of specific girirtanro
you believe would be helpful to you in managing the Agency's resources.  Please direct
your comments and inquiries to Delia Scott, Chief, Formulation  and Control Bonch, at
260-1176 or Becky  Fredericks,  Chief, Management and Policy Staff, at 260-2470.

Attachment

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                                 ATTACHMENT

CASE EXAMPLE
      The Agency begins the year on a Continuing Resolution  (CR) for 30 days which
provides  us with an automatic apportionment  for 30/365ths or approximately  8% of each
of our appropriations  based on the levels  of the  year just ended.

      The status of our Appropriation's Bill is still delayed in Congress or the White
House and we cannot yet operate at the levels expected for the current  year or use the
Phase IH Operating Plan (OPLAN) which is awaiting action to incorporate
Congressional  add-ons and reductions  following enactment.

      How do Agency managers  operate  under  this scenario?

      In terms of the four funding documents needed, we htvt two at this point..a
limited Appropriations Bill (CR)  and the  (automatic CR) apportionment.  The fan-year
Appropriations  Bill based on the  Congressional Budget Justification, and the  Operating
Flan, are still pending. Funds are now available,  however, aa is guidance and flexibility.

      The Comptroller/Budget Division issues a aeries of status and guidance
memoranda  (or EMAIL) providing aa much specific ^formation and genual  funding
guidance  as is available to EPA.  Among  other features, mis guidance ilyjyj. stresses:

      1. Caution and prudent management

      2. Availability of funds (CR percentage) at the Appropxiatioa/AUowance  Bolder
total level for each RPIO/Region.  Allowance Holders are  not held to lower
program  element/object  class level during a CR.

      So, even under the most restrictive  (CR) circumstances, m
being provided  within the total pool  of resources  available for the
fund the  highest priorities based on their  own determfiutiocu "If SAB
or an AC&C grant to a particular State is the highest priority, then  the oppoi&fifty for
obligation is in place.
END  OF THE CR - As soon as the CR is ended (usually during the first quarter) by the
enactment of EPA's Appropriations Bill and signature by the President, the full year
Phase m Operating plan is loaded into IFMS and guidance to obligate omrinuriy whfle
Congressional  add-ons  and reductions are implemented is issued.

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      Now that  a full year's appropriation  is enacted, the budget planning  process, if
followed correctly should provide the Program Offices with availability of funds
opportunities  to  award any priority  items (e.g, grants) in the first quarter  of the fiscal
year  The budget process includes  steps to ensure that we have  this flexibility.
Appropriations such as Construction Grants,  Lust,  AC&C and R&D  are
disptiportionately "front loaded" in the 1st quarter  apportionment  to allow Program
oiJices to fund Priorities (such as grants  i.1 the 1st quarter should they choose to do S
during the phases of Operating Plan development.

CONCLUSION

      In terms of proper budget planning, the following steps by the  Program Offices
will allow for priority items  to be funded in the first quarter:
      A. ftftgjp.p»i fllrtributiQM  of the Pres. Budget resource* have been made by the
National Program Manager and  incorporated into the OPLAN.

      B. Priority items (such as grants) have all been budgeted  in die 1st quarter
OPLAN by the RPIO during Phase m.

      c: RPIO* begin the obligating paperwork for me priority hems as soon as die
year begins so it is ready to go as soon as sufficient rands are.

      D. Commitments are entered promptly as won as die Appropriation!  BUI if
signed and IFMS is open.

      E. Obligating  documents  are promptly forwarded to Oftnts Offices, Contacts
Offices, etc.  for obligation,

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APPENDIX O

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           APPENDIX 0
STATE GRANT GUIDANCE, "INTEGRATION
     OF POLLUTION PREVENTION"

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11/18/92   11:54   ©202 252 0516
                      OCLA/OLA DIV
•*--» EPA/GAD
(2)002
                 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                            WASHINGTON. D.C. 20460

                               NOV I 2 1932
                                                            OFFICE OF
                                                         THE ADMINISTRATOR
    MEMORANDUM
state Grants tiuiaance:   integration or Pollution
Prevention

F. Henry Habicht I AJ#
Deputy Administrator

Assistant Administrators
Regiona.7 Administrators
    SUBJECT:
    JTKOH:
    TO:
         Attached is the new Agency-wide Guidance
    pollution  prevention into EPA'e media grant  programs, beginning
    in FY'94.   This Guidance builds on the Agency's pollution
    prevention commitment, already reflected  in  many exciting
    activities throughout our programs and in the States.

         I want to thank all those who labored so effectively to
    d«v«lop  this Guidance.  The document reflects the many
    constructive comments provided by Agency  headquarters, Reqional
    Offices, and State governments.  In response to those comments
    the  final  product is shorter, tighter, and IRSS pT-p.strriptnve,  in
    tone.

         With  this Guidance in hand, the Agency  r-*r< now move* rjuiclcly
    to develop specific Guidance documents for our individual media.
    grant programs in concert with our State  partners.

    Attachment
                                                      Printed on Pecyclod Paper

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11/18/92   11:54    O202 252 0516         OCLA'OLA DIV     -— EPA/GAD            ®003
 I KM£r s      UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
KO&
                          WASHINGTON, D.C. 20460

                              NOV I 2 1892
   MEMORANDUM                                         THE ADMINISTRATOR

   SUBJECT:   State Grants Guidance:  Integration of Pollution
              Prevention

   FROK:      F.  Henry Habicht
              Deputy Administrator
   TO:        Assistant
              Regional Administrator-

         This memorandum announces the Agency-wide pollution ,
   prevention Guidance, beginning with the FY'94 State grantjs cycle.
   It has four goals:

         •    Promoting pollution prevention in State programs
              supported through Federal grants by establishing
              National Principles to guide workplans negotiated
              between Regional Offices and States;

         •    Ensuring that grant requirements as interpreted by
              EPA/ State workplans are flexible enough to support
              innovative State pollution prevention activities;

         •    Establishing a sijnple accounting process to share
              information on successful State projects, and identify
              statutory or other barriers to funding State proposals;
              and

         •    Building sustained State capacity in pollution
              prevention to the extent consistent with statutory
              grant requirements .

   All  of these objectives are subject to any statutory and
   regulatory limitations that apply in specific circumstances.

         The Guidance should help integrate pollution prevention  into
   the  Agency's activities as required by the Pollution Prevention
   Act  of 1990.  By emphasizing flexibility, the Guidance
   complements other Agency efforts to build a productive
   environmental management system in partnership with the States,
   and  improve coordination with existing State pollution prevention
   programs .
                                                    Printed on

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11/18/92   11:55    ®202 252 0516         OCLA/OLA DIV    -.-.- EPA/GAD            14)004
         In general, this Guidance applies to all of the Agency's
    media-specific State grant programs, but particularly to the
    following: Clean Air Act §105—Air Pollution Planning and'
    Control; Resource Conservation and Recovery Act §3011—Hazardous
    Waste; Federal Insecticide. Fungicide, and Rodenticide Act
    §23(a)(1)—Pesticides; Toxic Substances Control Act §28—:
    Enforcement and Enforcement Activities under §313 of the
    Emergency Planning and Community Right-to-Know Act; and Clean
    Water Act §106—Surface Water, §104(b)(3)—Wetlands and Water
    Quality Management, and §319(h)—Non-Point Source Management.

           Building on the Agency's many successful pollutionj
    prevention efforts, beginning in FY'94 EPA's grant programs—
    working with States—should explicitly promote pollution
    prevention in State workplans  (also called agreements).  This
    memorandum will be incorporated into the annual Agency Operating
    Guidance as well as program-specific Guidance ceveloped this
    winter with the advice of the State/EPA Operations Committee.
    Program Guidance, intended to tailor the Agency-wide commitment
    to each grant program, will be applied by Regional Offices and
    States in the development of grant-assisted work.

         The National Principles stated below should help guide
    development of EPA/State workplans.  These should be reflected in
    program-specific Guidance, weighed in vorkplan discussions, and
    used to qualitatively assess program progress in integrating
    pollution prevention.  In applying these Principles, Regional
    Offices should use or expand upon the menu of flexibility! options
    below to respond to state needs to the extent possible.  Annual
    accomplishment reports, discussed below, will help assess| EPA's
    progress in supporting pollution prevention-oriented state
    workplans and initiatives.

                           National Principles

         Guidance for each grant program covered by this document
    should make clear that pollution prevention—as defined in the
    Agency-wide memorandum of May 28, 1992  (attached)—is EPA's
    preferred approach to environmental management where technically
    and economically feasible.  Consistent with the Pollution;
    Prevention Act, the Guidance should further the integration of
    pollution prevention into State activities—e.g. inspections and
    permits—that are supported by EPA grants.  While pollution
    prevention is not mandated, the Principles are intended to ensure
    that it is considered fairly in EPA/State workplans.

         Specific proposals from States that are consistent with.
    these Principles should be considered good candidates forj  funding
    through the grant programs.  In addition. Regional Offices should
    take the initiative to suggest pollution prevention approaches,
    drawing upon program-specific Guidance and implementation!
    workshops.  Regional Offices and states are expected to use their

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11/18/92   11:55    S202 252 0516         OCLA/OLA DIV    ~-» EPA/GAD            1^005
    discretion in applying these Principles; they are not obligatory
    elements of every negotiated workplan, but rather factors for
    serious consideration in the negotiation process.        ;

    The Principles are:

    1)  The workplan applies the EPA definition of pollution |
    prevention (see memorandum of May 28, 1992) consistent with the
    Pollution Prevention Act of 1990 and the 1991 EPA Pollution
    Prevention Strategy.                                     '••

    2)  The workplan reflects an explicit preference for pollution
    prevention and identifies pollution prevention activities,
    products, or approaches.                                 i
                                                             i
    3)  The workplan 'ncornorates pollution prevention as a priority
    in environmental management decisions made by the grantee| as part
    of the grant-assisted activities.                        i

    4)  The workplan encourages opportunities to modify existing or
    to develop new eguipment, technology, processes, procedures,
    products, or educational or training materials to promote',
    pollution prevention.                                    !

    5)  The workplan encourages institutional coordination—including
    coordination with existing State pollution prevention programs—
    and multi-media opportunities for pollution prevention.  j

    6}  The workplan complements or builds upon existing EPA |
    pollution prevention projects (e.g. the work of multi-media
    industry clusters such as the Source Reduction Review Project,
    and the use of pollution prevention in enforcement settlements).
                                                             i
    7)  The workplan identifies and applies measures and ways '. of
    •documenting pollution prevention progress as part of the grant-
    assisted activities (e.g. provides opportunities for measurable
    pollution prevention).                                   i

    8)  The workplan includes activities or approaches that may serve
    nationally as innovative models for other State or local  j
    programs.  Workplans also should encourage innovative approaches
    already developed by other State or local programs, and improve
    coordination to build on existing successes.              I

    9)  The workplan structures grant output information so -that EPA
    can make pollution prevention data and experience available to
    other States and the Pollution Prevention Information
    Clearinghouse.

    Clearly, both partners must comply with any applicable statutory
    or regulatory regjuirements and ta?e into account other factors
    that may be important.  Regional Offices and States may identify

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11/18/92   11:56    ©202 25.2 0516        OCLA/OLA DIV     -.-.-* EPA/GAD            1^)006
                                    4

    additional Principles to guide workplan requirements.

                               Flexibility

         Many Regional Offices already have made adjustments to
    accojamodate flexibility needs.  The purpose of this Guidance is
    to encourage such flexibility.  Whenever possible,  workplans
    should accommodate State flexibility needs associated with
    incorporating pollution prevention approaches Into  their grant-
    assisted activities.   That means working within the parameters of
    statutory and regulatory requirements to arrive at  an agreement
    that is practical and meets the parties'  needs.   Options for
    flexibility include (but are not limited to):

         a)   Adjustments  in numbers or types of required outputs
         including,  for --xample,  (l)  tradeoffs or disinvestment from
         traditional requirements (non-statutory and non-regulatory)
         and (2)  multiple credit for a single "multi-media"
         inspection  that  emphasizes pollution prevention.
           —An example of (1)  is RCRA's RIP-Flex Guidance, wnich
         allows disinvestment from national priority activities and
         re-investment in Regional or State priorities:  up to J25% of
         enforcement resources in IT'92 and '93.
           —An example of (2)  is being tested in Region One with
         Massachusetts' Blackstone project.   The key issue is jhow to
         "bean-count" a single multi-media inspection claiming to
         satisfy enforcement requirements under multiple statutes and
         promote pollution prevention technical assistance.

         b)   Adjustments  in timing of non-statutory  and non-
         regulatory  EPA deadlines.

         c)   Identification of a  percentage of funds for pollution
         prevention  within each media program,  coordinated by |a
         pollution prevention office.
           —For example,  Region  10 has agreed to Alaska's request to
         allow the State  to identify  3% (5% over the next  two years)
         of grant program monies—RCRA,  air,  and water—for pollution
         prevention,  to be coordinated by the pollution prevention
         office.   The monies will be  reflected in specific activities
         reasonably  related to each program's contribution and;
         statutory objectives.  The annual EPA/State Agreement will
         explicitly  identify pollution prevention activities and
         specific disinvestments  in each program.

         d)   Adjustments  in traditional or administrative  procedures
         or  schedules to  ease EPA/State interaction.

                      Annual Accomplishment Report

         To  allow EPA to  evaluate progress in integrating  pollution
   prevention into  State grant programs,  each Regional  Office' should

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H/18/92   11:56    ®202 252 0516         OCLA/OLA DIY     —EPA/GAD            ©007
    provide an annual report summarizing pollution prevention
    accomplishments  (e.g. activities, products, approaches, e|tc.)/
    reflected in grants-assisted work.  The report may take any  form
    and may draw upon reports developed to satisfy other
    requirements.

         While program-specific Guidance may elaborate further,  each
    report should identify: a) success stories, including  innovative
    State projects funded under this Guidance; and b) any  barriers
    (statutory or otherwise) that led a program to reject  State
    proposals or to  decide against including pollution prevention
    approaches.  In  addition, recommendations on regulatory,  |
    administrative,  or other changes to improve flexibility would be
    helpful.  Your contribution of this information  is key to| making
    pollution prevention a reality in EPA's on-going bread and butter
    work.

                                Conclusion

         Incorporating pollution prevention into EPA's policies  and
    programs is a collaborative effort requiring EPA to work  in
    concert with our State partners.  The National Principlesjand
    Annual Reports described above will help us to measure our
    progress and build on our successes.

    Attachment

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APPENDIX?

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       APPENDIX P
SF 424, "APPLICATION FORM
ii

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                                                                                                                                                      OMB Approval No. 0348-0043
APPLICATION FOR 2- OATE SUBMITTED Applicant identifier
FEDERAL ASSISTANCE
1. TYPE OF SUBMISSION: 3. DATE RECEIVED BY STATE Stale Application identifier
Application Pre-application
LJ ^instruction [J Consirudion } DATE RECEIVED BY FEDERAL AGENCY Federal identifier
Q Non-Construction Q Non-Construction


5. APPLICANT INFORMATION
Legal Name:
Address (give city, county, state, and zip code):
6. EMPLOYER IDENTIFICATION NUMBER (EIN):
—
a TYPE OF APPLICATION
1 | New LJ Continuation |_J Revision
II Revision, enter appropnc-te le!ter(s) in box(es): | |
A. Increase Award B. Decrease Award C. Increase Duration
D. Decrease Duration D. Other (specify):
10. CATALOG OF FEDERAL DOMESTIC _
ASSISTANCE NUMBER:
TITLE:
12. AREAS AFFECTED BY PROJECT (cities, counties, stales, etc.):
Organizational Unit:
Name and telephone number of the person to be contacted on matters involving
this application (give area code)
7. TYPE OF APPLICANT: (enter appropriate letter in box) | 	 |
A. State H. Independent School Disi.
B. County 1. State Controlled Institution of Higher Learning
C. Municpal J. Private University
D. Township K. Indian Tribe
E. Interstate L. Individual
F. Intermunicipal M. Profit Organization
G. Special District N. Other (Specify):

9. NAME OF FEDERAL AGENCY
11. DESCRIPTIVE TITLE OF APPLICANTS PROJECT:
13. PROPOSED PROJECT: 14. CONGRESSIONAL DISTRICTS OF:
Stan Date Ending Date a. Applicant b. Project
15. ESTIMATED FUNDING: 16. IS APPLICANT SUBJECT TO REVIEW BY STATE EXECUTIVE ORDER 12372 PROCESS?
a. Federal $ .00
a. YES. THIS PREAPPLICATION/APPLICATION WAS MADE AVAILABLE TO THE
STATE EXECUTIVE ORDER 12372 PROCESS FOR REVIEW ON:
b. Applicant $ .00
DA
c. State $ .00 |—
b. NO. 1
d. Local $ .00 _
e. Other $ .00
FE:

] PROGRAM IS NOT COVERED BY E.O. 12372
J OR PROGRAM HAS NOT BEEN SELECTED BY STATE FOR REVIEW
f Program Income $ 00 17. IS APPLICANT DELINQUENT ON ANY FEDERAL DEBT?
g. TOTAL $ .00 1 1 Yes If "Yes." attach an explanation. I 1
No
18. TO THE BEST OF MY KNOWLEDGE AND BELIEF, ALL DATA IN THIS APPUCATION/PREAPPUCATION ARE TRUE AND CORRECT. THE DOCUMENT HAS BEtN DULY
a. Typed Name of Authorized Representative b. Title
d. Signature of Authorized Representative
c. Telephone number
e. Dale Signed
Previous Editions Not Usable
                                                                                                                                                      Standard Form 124  (REV 4-1
                                                                                                                                                    Prescribed by OMB Circular A-103

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                                  INSTRUCTIONS FOR THE SF 424
     is a standard form used by applicants as a required facesheet for preapplications and applications submitted
 or Federal assistance. It will be used by Federal agencies to obtain applicant certification that States which have
established a review and comment procedure in response to Executive Order 12372 and have selected the program
to be included in their process, have been given an opportunity to review the applicant's submission.
Item:                 Entrv:                        Item:                  Entrv:
  1.  Self-explanatory.
 2.  Date application submitted to Federal agency (or
     State if applicable) & applicant's control number
     (if applicable).
 3.  State use only (if applicable).

 4.  If this application is to continue or revise an
     existing award, enter present Federal identifier
     number. If for a new project, leave blank.

 5.  Legal name of applicant, name of  primary
     organizational unit which will undertake the
     assistance activity, complete address of the
     applicant, and name and telephone number of the
     person to contact on  matters related to this
     application.

 6.  Enter Employer Identification Number (EIN) as
     assigned by the Internal Revenue Service.

 7.  Enter the appropriate  letter  in  the space
     provided.

 8.  Check appropriate box and  enter appropriate
     letteHs) in the space{s) provided:
     — "New" means a new assistance award.
     — "Continuation" means an extension for an
       additional funding/budget period for a project
       with a projected completion date.
     — "Revision" means any change in the Federal
       Government's financial obligation or
       contingent liability from an existing
       obligation.
 9.  Name of Federal agency from which assistance is
     being requested with this application.

10.  Use the Catalog of Federal Domestic Assistance
     number and title of the program under which
     assistance is requested.

11.  Enter a brief descriptive title of the project, if
     more than one program is involved, you should
     append an explanation  on a  separate  sheet. If
     appropriate (e.g., construction or real  property
     projects), attach a map showing project location.
     For preapplications, use a separate  sheet to
     provide a summary description of this project.
12.   List only the largest political entities affected
     (e.g., State, counties, cities)

13.   Self-explanatory.

14.   List the applicant's  Congressional District and
     any District(s) affected by the program or project. •

15.   Amount requested or to be contributed during
     the first  funding/budget period by  each
     contributor. Value of in-kind contributions
     should be included on appropriate  lines as
     applicable. If the action will result in a dollar
     change to an existing award,  indicate  only the
     amount of the change. For decreases, enclose the
     amounts in parentheses.  If both  basic and
     supplemental  amounts  are  included,  show
     breakdown on an attached sheet. For  multiple
     program funding, use totals and show breakdown
     using same categories as item 15.

16.   Applicants should contact the State Single Point
     of Contact (SPOC) for Federal Executive Order
     12372 to determine  whether the application  is
     subject to the State  intergovernmental review
     process.

17.   This question applies to the applicant organi-
     zation,  not the person  who  signs  as the
     authorized representative. Categories of debt
     include delinquent audit disallowances,  loans
     and taxes.

18.   To be signed by the authorized representative of
     the applicant. A copy of the governing body's
     authorization for you to sign this application as
     official representative  must be on  file in the
     applicant's office. (Certain Federal agencies may
     require that this authorization be submitted as
     part of the application.)
                                                                                     SF 424  (PEV 4-88) Bac*

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OMB Approval No. 0348-0044
BUDGET INFORMATION -- Non-Construction Programs

Grant Program
Function
or Activity
(a)
1.
2.
3.
4.
5. TOTALS

SECTION A -- BUDGET SUMMARY
Catalog of Federal
Domestic Assistance
Number
(b)





Esti.nated Unobligated Funds
Federal
(c)
S



$
Non-Federal

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SECTION C -- NON-FEDERAL RESOURCES
(a) Grant Program
8.
9.
10.
11.
12. TOTALS (sum of lines 8 -11)
(b) Applicant
$



$
(c) State
$



$
(d) Other Sources
$



$
(e) TOTALS
$



$
SECTION D - FORECASTED CASH NEEDS
13. Federal
14. Non-Federal
15. TOTAL (sum of lines 13 and 14)
Total for 1st Year
$

$
1st Quarter
$

$
2nd Quarter
$

$
3rd Quarter
$

$
4th Quarter
$

$
SECTION E - BUDGET ESTIMATES OF FEDERAL FUNDS NEEDED FOR BALANCE OF THE PROJECT
(a) Grant Program
16.
17.
18.
19.
20. TOTALS (sum of lines 16-19)
FUTURE FUNDING PERIODS (Years)
(b) First
$



$
(c) Second
$



$
(d) Third
$



$
(e) Fourth
$



$
SECTION F - OTHER BUDGET INFORMATION
(Attach additional Sheets if Necessary)
21. Direct Charges:
22. Indirect Charges:
23. Remarks
Prescribed
         Sf     \(4-ee) Page;
          bp^. .j Circular A-10;
    2
A-102

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                                INSTRUCTIONS FOR THE SF-424A
 General Instructions
 This form is designed so that application can be made
 for funds from one or more grant programs.  In pre-
 paring the budget, adhere  to any existing Federal
 grantor agency guidelines which prescribe how and
 whether budgeted amounts should  be  separately
 shown for different functions or activities within the
 program.  For some programs, grantor agencies may
 require budgets to be separately shown by function or
 activity.  For other programs, grantor agencies may
 require a breakdown by function or activity. Sections
 A,B,C, and D should include budget estimates for the
 whole project except when applying  for assistance
 which requires  Federal authorization in annual  or
 other funding period increments. In the  latter case,
 Sections A,B, C, anft D should provide the budget for
 the first budget period (usually  a year) and Section E
 should present the need for Federal assistance in the
 subsequent budget periods.  All applications  should
 contain a. breakdown by the object class categories
 shown in Lines a-k of Section B.
 Section A. Budget Summary
 Lines 1-4, Columns (a) and (b)
 For applications pertaining to a single Federal grant
program (Federal Domestic  Assistance Catalog
number) and not requiring a functional  or activity
breakdown, enter on Line 1 under Column (a) the
catalog program title and  the catalog  number  in
Column (b).
  For applications pertaining  to a single program
requiring budget amounts by multiple functions  or
activities, enter the name of each activity or function
on each line in Column (a), and enter the catalog num-
ber in Column (b). For applications pertaining to mul-
tiple programs where none of the programs require a
breakdown by function or activity, enter  the catalog
program  title on each  line in Column (a) and the
respective catalog number on each line in Column (b).
  For applications pertaining to multiple programs
where one or more programs require a breakdown by
function or activity, prepare a separate sheet for each
program requiring the breakdown. Additional sheets
should be used when one  form does not provide
adequate space for all breakdown  of data required.
However,, when more than one sheet is used, the first
page should provide the summary totals by programs.
Lines 1-4, Columns (c) through (g.)
For new applications, leave Columns (c) and (d) blank.
 For each line entry in Columns (a) and (b), enter in
Columns  (e), (f),  and (g) the appropriate  amounts of
funds needed to support the project for the first
funding period (usually a year).
 Lines 1-4, Columns (c) through (g.) ( continued)
   For continuing grant program applications, submit
 these forms before the end of each funding period as
 required by the grantor agency. Enter in Columns (c)
 and (d)  the estimated amounts of funds which will
 remain  unobligated  at the end of the grant  funding
 period only if the Federal grantor agency instructions
 provide for this. Otherwise, leave  these columns
 blank. Enter in columns (e)  and (f) the amounts of
 funds needed for the upcoming period. The amount(s)
 in Column (g) should be the sum  of amounts  in
 Columns (e) and (f).
  For supplemental  grants and changes to existing
 grants,  do  not use  Columns (c) and (d). Enter  in
 Column (e) the amount of the increase or decrease of
 Federal  funds and enter in Column (f) the  amount of
 the increase or decrease of non-Federal  funds.  In
Column (g) enter the new total budgeted amount
(Federal and non-Federal) which includes the total
 previous authorized budgeted amounts plus or minus,
as appropriate, the amounts shown in Columns (e) and
(f). The amount(s) in Column (g) should not equal  the
 sum of amounts in Columns (e) and (f).
 Line 5 — Show the totals for all columns used.

 Section B Budget Categories
 In the column headings (1) through (4), enter the titles
of the same programs, functions, and activities shown
on Lines 1-4, Column (a), Section A. When  additional
sheets are prepared  for Section A, provide  similar
column  headings on  each  sheet. For each program,
 function or activity,  fill in the total requirements for
funds (both Federal  and non-Federal)  by object class
categories.

 Lines 6a-i — Show the totals of Lines 6a to  6h in each
column.

 Line 6j - Show the amount of indirect cost.

 Line 6k - Enter the  total of amounts  on Lines 6i and
 6j.  For all applications  for new grants and
 continuation grants  the total amount in column (5),
 Line 6k, should be the same as the total amount shown
 in Section A, Column  (g), Line 5.  For supplemental
 grants and changes to grants, the total amount of the
 increase or decrease as shown in Columns (l)-(4). Line
 6k should be the same as  the sum  of the amounts in
 Section A, Columns (e) and (0 on Line 5.
                                                                                    Sf 424A .4-88)

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                                                                               OM« Appro**! No. 0344-0040
                       ASSURANCES — NON-CONSTRUCTION PROGRAMS
Note:   Certain of these assurances may not be applicable to your project or program. If you have questions,
        please contact the awarding agency. Further, certain Federal awarding agencies may require applicants
        to certify to additional assurances. If such is the case, you will be notified.
As the duly authorized representative of the applicant I certify that the applicant.	
 1.  Has the legal authority to  apply for Federal
    assistance, and the institutional, managerial and
    financial capability (including funds sufficient to
    pay the non-Federal share of project costs) to
    ensure  proper planning,  management and com-
    pletion of the project described in this application.

2.  Will give the awarding agency, the Comptroller
    General of the United States, and if appropriate,
    the State, through any authorized representative,
    access to and the  right to examine all records.
    books, papers, or documents related to the award;
    and will establish  a proper accounting system in
    accordance with generally accepted accounting
    standards or agency directives.

3.  Will establish safeguards to prohibit  employees
    from using their  positions  for a  purpose that
    constitutes or presents the appearance  of personal
    or organizational conflict of interest, or personal
    gain.

4.  Will initiate and complete the work  within the
    applicable time frame after receipt of approval of
    the awarding agency.

5   Will comply  with the Intergovernmental
    Personnel Act of 1970  (42 U.S.C. 1$ 4728-4763)
    relating to prescribed standards for merit systems
    for programs funded under one of the nineteen
    statutes or regulations specified in Appendix A of
    OPM's Standards for a Merit System of Personnel
    Administration (5 C.F.R. 900, Subpart F).

6.  Will comply with all Federal statutes  relating to
    nondiscrimination. These include but are not
    limited  to:  (a) Title VI of the Civil Rights Act of
    1964 (P.L. 88-352) which  prohibits discrimination
    on the basis of race, color or national origin; (b)
    Title IX of the Education  Amendments of 1972, as
    amended (20 U.S.C. §§ 1681-1683, and 1685-1686),
    which prohibits discrimination on the basis of sex;
    (c) Section 504 of the Rehabilitation Act of 1973, as
    amended (29 U S.C. § 794), which prohibits dis-
    crimination on the basis of handicaps:  (d) the Age
    Discrimination Act of  1975,  as  amended  (42
    L'.S.C.§§ 6101-6107), which prohibits discrim-
    ination  on the basis of age;
9.
(e)the Drug Abuse Office and Treatment Act of
1972 (PL.  92-255), as amended, relating to
nondiscrimination on the basis of drug abuse, (f)
the Comprehensive Alcohol Abuse and Alcoholism
Prevention, Treatment  and Rehabilitation Act of
1970 (P.L.  91-616), as amended, relating to
nondiscrimination on the basis of alcohol abuse or
alcoholism; (g) 55 523 and 527 of the Public Health
Service Act of 1912 (42 U.S.C. 290dd-3 and 290 ee-
3), as amended, relating to confidentiality of
alcohol and drug abuse patient records; (h) Title
VIII  of the Civil Rights Act of 1968 (42 U S C  §
3601 et  seq.),  as amended, relating to non-
discrimination in the sale, rental or financing of
housing; (i) any other nondiscrimination
provisions in the specific statute(s) under which
application for Federal  assistance is being made;
and   (j)  the  requirements  of any  other
nondiscrimination statute
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APPENDIX Q

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         APPENDIX Q
OFFICIAL PROJECT AND GMO FILES

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                 OFFICIAL EPA PROJECT FILE
Project File: The official file developed and maintained by the Project Officer to serve
as a collection of documents and or items that provide programmatic and/or fiscal
information on the purpose, performance and history of an award to a sepcific
recipient.
      Contents:
      Part I
           1) Copy of application and any application amendments with
           Work Plan/Budget (copy)
           2) Administrative Review Checklist signed by the Grants
           Specialist and the  Project Officer  (copy)
           3) Quality Assurance documentation
      Part II
           1) Correspondence relating to the application and/or
           summaries of same
           2) Application reviews, in-house and extramural
           3) Programmatic reviews
           4) Program Program memo regarding funding recommendation
           to Regional Administrator
      Part III
           A copy of Assistance Agreement and any amendments (a copy
           of agreement should be retained until a signed original is
           returned by recipient to the Grants Management Office (GMO).
      Part IV
            1) Copies  of Correspondence relating to the awards
                 A. Award letter
                 B. Acceptance letter
                 C. Close-out letter

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            2)  Correspondence concerning negotiations and agreements
           '3)  Recipient requests for deviation; EPA approval or denial
            4)  Correspondence concerning continuation or renewal of
            project
            5)  Site visit reports
            6)  Administrative reports
            7)  Stop-work order and related correspondence
            8)  Correspondence concerning termination actions
            9)  Correspondence concerning disputes and appeals
            10) Final determinations
            11) Audit reports
            12) Regional and General Counsel opinions
            13) End of year evaluation
      PartV
            1)  Reimbursement requests (copy)
            2)  Payment vouchers (copy)
            3)  Financial Status Reports (copy)
            4)  Automated Clearinghouse Authorization (copy)
            5)  Increase and decrease amendments (copy).
            6)  Close-out checklist/memo (copy)
            7)  Commitment Notices (copy)
      Part VI
            Technical Reports— if the report is too bulky,  place it in an accordian file
and rubber band it to the six part file. If it is a film, computerized disk, etc., a document
spelling out its location  must be filed in this section.

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                        OFFICIAL EPA GMO FILE
Official EPA GMO File: The official file developed and maintained by the Grants
Management Office to serve as a composite collection of documents and or items that
provide programmatic and fiscal information on the purpose, performance and history
of an award to a specific recipient.
Contents:
      Parti
            1)  Complete application and ?ny application amendments (original
            signed)
            2)  Administrative Review Checklist (original signed by Grants Specialist
            and the Project Officer).
            3)  Procurement System Certification (original signed)
            4)  Governor's letter and certification for Superfund enforcement.
            5)  Anti-Lobbying Certification (original signed)
            6)  Debarment/Suspension Certification  (original signed)
      Part II
            1)   Correspondence relating to the application (copy)
            2)  Applciation reviews, in-house and extramural (copy)
            3)  Programmatic reviews (copy)
            4)  Program memo regarding funding recommendation (copy)
      Part III
            Assistance Agreements and any amendments (a copy of agreement
            should be retained until a signed original is returned by the
            recipient)

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Part IV
      1) Correspondence relating to the awards
            A. Award letter
            B. Acceptance letter
            C. Interim close-out letter
            D. Close-out letter          ,
      2) Correspondence concerning negotiations and agreements
      3) Recipient requests for deviation; EPA approval or denial
      4) Correspondence concerning continuation or renewal of project
      5) Site visit reports
      6) Administrative reports
      7) Stop-work order and related correspondence
      8) Correspondence concerning termination actions
      9) Correspondence concerning disputes and appeals
      10) Final determinations
      11) Annulment
      12) Requests for audit
      13) Audit reports
      14) Correspondence related to  audit reports and resolution of audit
      findings
      15) Regional and General Counsel opinions
      16) Interim and final audit reports, comments and resolution
      17) Final disputes decision and any appeal or reconsideration
      determination/resolution documents
PartV
      1) Reimbursement requests

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    2) Payment vouchers
    3) Financial Status Reports
     4) Automated Clearinghouse Authorization  (ACH)
     5)  increases and decreases
     6)  Close-out check list
     7) commitment Notices
Part VI
            Funding recap

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APPENDIX R

-------
         APPENDIX R
CLOSEOUT POLICY FOR ASSISTANCE
         AGREEMENTS

-------
                             AUG 2 7 1992
MEMORANDUM
SUBJECT:  Final Closeout Policy For Assistance Agreements
FROM:
TO:
                                        r • •» -,
     Harvey G. Pippen, Jr., Directo£g"e:!
     Grants Administration
     Assistant Regional Administrators
     Grants Management Offices
     Regions I-X
     Millie Lee, Chief, Grants Operations Branch
     Carlene Foushee,  Acting Chief, Grants  Information and
          Analysis Branch
     We are pleased  to issue the attached final Closeout Policy.
This policy  establishes EPA's closeout  requirements for closing
out completed grants and cooperative agreements and deobligating
unliquidated  obligations for  all  of EPA's  assistance programs.
This policy represents the combined efforts of all of the members
of the  Closeout/Deobligation task force over the  past year.  We
greatly appreciate their time and many contributions  in developing
this policy document.

     We  strongly  encourage  you to  use  the  policy and   again
emphasize  the importance  of continuously closing out completed
projects  and deobligating  unliquidated  obligations  in  a timely
manner.    Closeout  is  an  essential  function of  prudent grants
administration.

     Finally, we ask that  you develop your   fn specific Regional
(>-i. headquarters) procedures to implement the closeout requirements
in this policy.

     If  you  have  any  questions regarding  this  policy,  please
contact Bruce Feldman on 260-5268.
Attachment
CC:
Official
Reading
Division
M. Ross
L. Ross
M. Lee
R. Johnson
S. McMoran
C. Allison
R. Mitchell
A. Mason
C. Foushee
B. Feldman
M. Cody
E. Haffa
C. Thomas
V. Martin
R. Meunier
     Taskforce Members
PM-216F: V.Martin:RM 801 FC:260-9294:8/14/92

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      EPA CLOSEOUT POLICY FOR GRANTS AND
               COOPERATIVE AGREEMENTS
Introduction

Part I:      Purpose and Objectives

Part 11:     Basic Closeout Requirements for Grants and Cooperative Agreements

                A.  Roles and Responsibilities

                B.  GICS Requirements

                C.  Notification and Follow Up

Part III:     Program Specific Requirements

                A.  State Revolving Fund Program

                B.  Superfund

                C.  Construction Grants



Part TV:     Record Retention Requirements


Part V:     Audit Resolution and Disputes



Appendix A:  Listing of Existing EPA Closeout Regulations, Policies, and Related Guidance

Appendix B:  Listing of GICS Data Elements Used in Closeout

Appendix C:  Types of Construction Grant Awards

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                                          2

PART I    PURPOSE AND OBJECTIVE

      The purpose of this document is to establish EPA policy for closing out completed grants
and cooperative agreements for all EPA Assistance Programs.

      Closeout is the systematic process by which EPA determines that all required technical
work under a grant or cooperative agreement has been completed by the recipient and EPA, and
all applicable administrative requirements  met.  Protection  of the government's interest and
prudent grants administrative practices require that sufficient time and effort be devoted to the
closeout process.

      This  document includes the closeout requirements basic to all grants and cooperative
agreements,  the roles and responsibilities of EPA and  its recipients, and the specific closeout
requirements unique to the Superfund, Construction Grants, and the State Revolving Fund (SRF)
Programs.

      The procedures to follow for timely closeout of all completed projects are contained in
40 CFR Part 31 Subpart D, 40 CFR Part  30 Subpart H, 40 CFR Part 35.6780, and the EPA
Assistance Administration Manual (Chapter 40). This policy supplements and clarifies existing
agency closeout policy.

      EPA  should close out non-construction grant projects within 180 days after receipt
of all required reports and other  deliverables. Delays can unnecessarily tie up obligated but
unexpended  funds.  Also,  closeout becomes more difficult with the passage of time because
persons  responsible for managing various  aspects of a  project may resign, retire, or transfer;
memories of events are less clear; the interests of the Project Officer and Project Manager may
shift to other priorities; and award documents may become lost or destroyed.

      For Construction Grants, closeout should occur within six months of the last grant action
which can be any one of the following acuons:

       •     Final audit resolution

       •     Project screenout

       •     Project returned unaudited by OIG

       •     Administrative completion for grants less than $1 million

       •     Regional or Headquarters issuance of a decision of an appeal filed in accordance
             with 40 CFR Parts 30 and 31.

       •     Final debt collection, forgiveness of debt or dismissal of debt.

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PART H   BASIC CLOSEOUT REQUIREMENTS FOR GRANTS AND
             COOPERATIVE AGREEMENTS

      A. Roles and Responsibilities

    This section outlines the basic closeout roles and responsibilities of the Recipient, the
Program Office, the Grants Management Office (GMO) and the Financial Management Office
(FMO).
Recipient

1.    Complete all work satisfactorily and timely as specified in the assistance agreement.

2.    Submit the following required reports to EPA within 90 days after the project completion
      date:

      o     Final Technical Report
      o     Final Financial Status Report (Standard Form 269 or 269A)
      o     Federally Owned Property Report, if applicable
      o     Invention Disclosure Report (EPA Form 3340-3), if applicable
      o     Final Request for Payment (Standard Form 270), if applicable
      o     Final EPA ACH Payment Request, if applicable
      o     Outlay Report and Request for Reimbursement (Standard Form 271), if
            applicable
      o     Property Inventory of all Federally Owned Property, if applicable
      o     Final Minority Business Enterprise/Women Business Enterprise Report (Standard
            Form 334), if applicable

3.    Submit a written request to EPA's award official to request an extension of time to the
      90 day period required for submittal of the FSR (or other required reports), along with
      a justification for the extension.

4.    Submit all manuals, plans, specifications, data, or other  deliverables as required in the
      assistance agreement to EPA, or make the deliverables available for EPA inspection.
The Program Office (Project Officer)

1.    Review and approve all technical reports, including final technical/performance reports
      in accordance with the requirements of the award and the statement of work.

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2.     Ensure that any/all deliverables required under the award are received when required by
       the award, and are acceptable.

3.     Certify to the GMO within 90 days of completion of the project that all work has been
       satisfactorily completed.  For continuing programs, specific work elements  may be
       carried forward and funded in the next year provided the recipient submits an application
       with an acceptable workplan.  For additional information, refer to  Comptroller Policy
       Announcement N. 88-09, "Disposition of Unobligated Balance of Assistance Awards."

4.     Certify to the GMO within 90 days of project completion that all tehnical (programmatic)
       award conditions have been met.

The Grants Management Office (GMO)

1.     Ensure receipt of final certification of project completion from the project officer, receipt
       of all  required reports including the final FSR, MBE/WBE,  invention disclosure, and
       Federally owned property reports, and compliance with all terms and conditions of the
       grant.

2.     Provide property disposition  instructions (as  necessary)  to   recipients, and ensure
       receipt/acceptability  of property inventory report; and ensure  reimbursement to EPA of
       its proportionate share of equipment or supply inventories, if applicable.

3.     Receive and approve the Final Financial Status Report (except for construction grants)
       and:

       o     ensure timely receipt and distribute copies  to program and finance offices as
             necessary;

       o     review and analyze FSR's contents, inching recipient's cost share;

       o     maintain/update current information in the Grants Information and Control System
             (GICS), i.e., FINANCIAL-STATUS-CODE, FINANCIAL-STATUS-DATE, and
             ACTION-CODE;

       o     ensure that financial data on FSR is reconciled with the Integrated Financial
             Management System (IFMS);

       o     determine allowability of any reported indirect costs based on the provisions of
             the assistance agreement and the final negotiated indirect cost rate;

       o     determine amount of any unliquidated obligations and/or funds owed to  EPA by
             the recipient  and provide instructions to the FMO for the disposition of those
             funds.

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                                         5

4.    Request final audit (if applicable and required for closeout)

5.    Prepare close-out amendment.

      o      Ensure receipt of request for final payment; review and approve appropriateness
             of such payments and notify the FMO to process or deny the payment.

      o      Ensure compliance with Agency's carryover policy.

      o      Ensure that the FMO makes necessary adjustments to IFMS and deobligates
             any unliquidated obligations as appropriate.

      o      Complete Assistance Adjustment Notice (EPA Form 5700-42) or  Assistance
             Amendment and distribute to FMO and Program Offices.

6.    Prepare close-out letter

      o      Issue  final  close-out letter to recipient and provide copies to the appropriate
             Project Officer and FMO.

7.    Retire file and follow appropriate record retention requirements.  (See page 11, Part IV)


Financial Management Office (FMO)

1.    Assist GMO in reconciling IFMS  data with reported FSR data.

2.    Review  close-out  amendment  and  either  deobligate  any  unliquidated
      obligations,  or  bill  the  recipie^  for any funds ^ue EPA;  establish  an accounts
      receivable if appropriate and perfoim follow-up collection efforts.

3.    Make necessary entries to IFMS for any deobligations and collections.

4.    Approve/process final  payment request.


      B. The Grants Information and Control Systems (GICS) Requirements
      The Grants Information and Control System (GICS)  is EPA's official  assistance
information management system and plays an integral part in the closeout process.  It provides
grants managers with information to manage and track progress on grant agreements.  The
system contains a collection of closeout data elements to track a grant's progress through the

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closeout process.  Grant specialists update the closeout milestones in GICS by accessing the
appropriate closeout screens in EPA's Automated Grants Document Systems, i.e. the Regional
Automated Grants Document System (RAGDS), the Headquarters Automated Grants Document
System (HAGDS), the Fellowship Automated Document System (FADS), and the Interagency
Agreement Management System (IAMS),  as each milestone is achieved. The most frequently
used closeout milestones  for non-construction grants are incorporated into a Table  below.
Appendix B contains definitions for these milestones and general  information on the closeout
screens used for Construction Grants. Further information on these data elements can be found
in the GICS Data Dictionary [GIRD] and the Headquarters and Regional procedural manuals.
                           COMP-LTR-SENT-CODE/DATE (Ml)

                           FINANCIAL-STATUS-CODE/DATE (M5)

                           REAL-PROPERTY-CODE/DATE (L7)

                           PERS-PROPERTY-CODE/DATE (L2)

                           INVENTION-CODE/DATE (L4)

                           FINAL-REPORT-CODE/DATE (L8)

                           AUDIT-REQUEST-DATE (N8)

                           AUDIT-RESULTS-CODE (N9)

                           FINAL-AUDIT-DATE (91)

                           ACTION-CODE/DATE
      C.  Notification and Follow Up
1.    Closeout Notification

      Monthly

      The GMO should provide each  Grants Specialist a Grants Information and
      Control  Systems  (GICS)  printout  each  month  which  identifies  those
      projects/agreements that are in the closeout process or are scheduled to end in the
      next 90-120 days. These printouts (Status Report of Projects Completed But Not

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       Closed Out) list projects in sequence by project-end-date and indicate the status
       of each milestone event leading to close out and the date that it was entered as
       such.

       90 Davs Before End of Project Period

       The Grants Specialist prepares for the EPA Project Officer a "completion alert"
       90 days before the end of the project period. The memo requests information on
       whether the project/budget period needs to be extended or if the assistance award
       can be closed out.

2.     Follow up Schedule

       0-30 Days after Completion.

       A letter requesting the necessary closeout reports should be mailed to the individual who
       accepted the most recent  award document on behalf of the recipient, with a copy to the
       EPA Project Officer.

       90 Davs after Completion

       The recipient will submit final progress  (technical) reports to the Project Officer 90 days
       after the project's completion or end date, whichever comes first and notify the GMO of
       their receipt and acceptability.   Other reports, including the final  Financial Status
       Reports, are also due within 90 days, and should be submitted to the Grants Specialist.
       The Grants Specialist will then review those projects that have overdue reports (over 90
       days) and determine whether another followup letter should be sent to the recipient.  This
       letter must be tailored to address specific deficiencies of the project, e.g., what required
       deliverables were not received and are overdue? A copy of this letter should also be sent
       to the  FMO\PO.

       120 Days after Completion

       If the  recipient  has  not provided the information required for closeout 4 months after
       completion of the project, the Grants Specialist should  confer with the Project Officer
       and send another follow-up letter.  This  letter shall  be signed by the  RA/ARA or
       Director, GAD  (for headquarters projects), and addressed to the head of the recipient
       organization, with a copy to the FMO\PO.  It should provide a chronology of earlier
       efforts to obtain the materials required by the agreement, enclose a copy of previous
       reminders  and follow-up  correspondence, and  establish a specific date (suggest 2 to 3
       weeks) for receipt of a  response.

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                                           8

       180 Davs after Completion

       Closeout should be completed within 6 months (180 days) after the end of the agreement.
       When closeout has been completed, the Award Official should provide the recipient with
       the closeout letter or a letter of final determination, with copies to the FMO and PO.
       (See Disputes Section in Part V)

Part ffl:   Program Specific Requirements

       A. State Revolving Fund Loan Program
       This section defines the basic policy on the timing of capitalization grant closeout and
highlights specific SRF requirements.   Capitalization closeout procedures  parallel closeout
procedures for continuing program grants.

       In general, closeout will occur at the end of each capitalization grant's budget period, i.e.
when all the cash is drawn down from that grant providing, however, that the audit for the State
fiscal year in which the last cash draw occurred has been issued and any findings resolved.
Closing a capitalization grant will not mean that all statutory work and regulatory requirements
have been satisfied.1 Nor will closeout indicate that all the "work" agreed to in the assistance
agreement has been completed or that all the loans have been repaid.  Rather,  closeout will
indicate that EPA is satisfied that the State has established a viable and fiscally sound SRF loan
program. EPA will assure continued compliance with statutory and regulatory requirements by
reviewing a State's Intended Use Plan [40 CFR 35.3150], reviewing a State's Annual Report
[CWA Title VI, §606(d)], by performing annual oversight visits of the State's operations [CWA
Tide VI, §606(e)], and by receiving audits of the program [CWA Tide VI, §606(b)].  If,
however, a State is found to be out of compliance with any part of Tide VI or the implementing
regulations, 40 CFR Parts 31 and 35, Subpart K, and corrective action has not been initiated by
the State, a grant cannot be closed out.  To close out  a capitalization grant,  the  GMO, in
conjunction witii die Project Officer (die SRF Coordinator) would follow die requirements as
specified in Part n.
       B. Superfund

    The following are die additional steps each GMO must follow in closing out a Superfund
Cooperative Agreement.   Superfund recipients are usually States, Political Subdivisions, or
Federally Recognized Indian Tribes, and die closeout procedures in this section apply to these
    'For example, a Region may decide to closeout a capitalization grant before an equivalency
project has met all of its equivalency requirements  [Sixteen Tide n requirements CWA, Title
VI §602(b)(6)].

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recipients.  Recipients of other Superfund grants,  such as; Research and Development; and
Technical Assistance Grants (TAG), follow the closeout requirements for project-specific grants.
    Superfund Cooperative Agreements

     Superfund response Cooperative Agreements (CAs) provide funding from EPA to conduct
the response activity at a Superfund site. These CAs can provide funding for the following types
of activities:
  Pre-Remedial Activities
Remedial Response
Activities
Other Activities
  Preliminary Assessment
  (PA)
  Site Investigation (SI)
  Hazardous Ranking System
  (HRS)
Remedial Investigation (RI)
Feasibility Study (FS)
Remedy Selection/Record of
Decision (ROD)
Remedial Design (RD)
Remedial Action (RA)
Removal Program
Core Program
Enforcement
Support Agency
    In a Superfund CA, closeout of the CA usually occurs when all work, as specified in the
scope of work,  has been completed.   Due to the complexity and  "umbrella-like" structure of
Superfund CAs, closeout can often become an unduly complicated situation, with many activities
taking place over extended periods of time.   To improve our management of Superfund CA
closeout, it is desirable to close out each diverse activity or operable unit as it is completed.  As
each activity or operable unit is completed,  the activity would be designated as an "Activity
Completion" and the same  steps in the closeout process would be followed.   In the case of a
pre-remedial or  a remedial CA, as  each activity  (or operable unit) is completed,  activity
completion (or operable unit completion) should  take place for that discrete activity.    This
approach is a more manageable way to ultimately achieve closeout of the entire agreement.

      Since many Superfund  CAs last for many  years and may include more than one site, it
is important to initiate completion by activity, site, or operable unit. This will simplify the
administrative closeout process later on when the  entire agreement is closed out, and will help
the  cost recovery effort which may begin before all activities at the site are complete or when
all sites under the multi-site are complete.

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                                           10

    For a Superfund site-specific CA, if the CA is terminated when a responsible party takes1
over the cleanup or the lead changes from State to EPA, the CA should  be closed out and any
unliquidated obligations balance should be de-obligated.

       A Superfund Core Program cooperative agreement provides funds to a State or Indian
Tribe to conduct CERCLA implementation activities that are not assignable to specific sites, but
are intended to  support  a State's (or Indian Tribe's)  ability to participate in the CERCLA
response program.  In the Core Program, the CA is closed out when the activities identified in
the scope of work are completed.  Likewise for Enforcement, Support Agency, or Removal
cooperative agreements.  When all required work as specified in the scope of work has been
completed, the CA should be closed out. To close out a Superfund CA, the GMO and PO must
follow the requirements specified in Part H.
       C.  Construction Grants

       Construction Grants are awarded to local  municipalities to fund construction of waste
water treatment plants.  It is  EPA policy to close out construction grants promptly; funds not
needed  on one project can be deobligated and reallotted to  finance  other treatment works
projects. The Construction Grants Program is also different from other EPA programs because
this is a delegated program. EPA is responsible for overall program management but most of
the day-to-day administrative duties have been delegated to the State water pollution control
agencies or the US Army Corps of Engineers. EPA Regional Offices retain some project-related
decision authorities that are not legally delegable.

       Eligible activities funded by construction grants can include facility plans (Step 1), plans
and specifications (Step 2), and the building of a treatment plant (Step 3).  A full listing of the
different types of construction grants is included in Appendix C.
                     KEY COMPLETION/CLOSEOUT MILESTONES
         Physical Completion:  When the scope of the work is completed.  For Steps 1 & 2,
         project completion and physical completion are synonymous. (For steps 2 + 3, 3, 7 & 9
         project completion, physical completion, and construction completion are synonymous.)
         Initiation of Operations (IO): When the wastewater treatment works becomes capable of
         operating for the purposes planned, designed and built. (Steps 3, 2 + 3, 7 & 9)
         Project Performance Certification:  One year after IO, the grantee certifies that the
         treatment facility is meeting project performance standards.  (Steps 3, 2 + 3, 7 & 9)
         Please note that the project cannot be sent to audit until the certification is received.

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                                           11
        Administration Completion:  All administrative aspects of the project have been
        completed, final payment has been requested, eligible costs have been determined, all
        grant conditions have been satisfied and the audit has been requested.  All excess balances
        (unliquidated obligations) should be deobligated at this point.
        Audit: Project is sent to the Office of Audit, Office of Inspector General (OIG) for audit.
        Audit Resolution:  Audit resolution occurs when one of the following actions have
        been performed by the Regional Office:

        o      Issuance of a final determination letter to the recipient.

        o      Submission of a valid response to the OIG addressing all findings and
               recommendations contained in the final audit report.
        Closeout: All administrative activities have been completed, including corrective actions
        and debt collection; the reviewing agency issues a standard closeout letter to the recipient
        and the grant project file is sent to record storage.
       The time between physical completion and administrative completion can be no less than 14
months because the project performance certification period is one year after physical completion and
initiation of operations. The project can not be sent to audit until after project certification. If the IG
accepts the project for audit, it may be 24 months before the final audit report is issued.

PART IV: RECORD RETENTION REQUIREMENTS

    EPA's Uniform Administrative Requirements  for Grants and Cooperative Agreements to
State  and Local  Governments  (40 CFR Part 31.42) establishes minimum records retention
requirements for all assistance recipients.  In general, a  recipient must  retain all financial
records, supporting documents, accounting books and other evidence of assisted activities for
three years from the date of the final Financial Status Report submission. If any litigation, claim,
or audit is started before the expiration of the three year period, the recipient must maintain ail
appropriate  records until these actions are completed and  all issues resolved.  The retention
period starts on the day the recipient submits its final Financial Status Report.  A recipient may
always choose to implement stricter or longer retention periods to meet their own needs.   For
construction grants,  the retention period starts the day the grantee submits the final payment
request.  For the SRF Program, official records include copies of the State/EPA agreements,
SRF Intended Use Plans, SRF Operating Agreements, SRF Annual Reports, and SRF Program
Evaluation Reports.  Only the grant agreement can be retired after grant closeout.  All other
documents must be retained for Program Management purposes.

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                                         12

      Superfund Assistance Agreements

      *      For recipients'records, the length of retention is 10 years from the date
      of submission of the final FSR (unless otherwise directed by the award official).

      *      For EPA's records, the retention period  is 30  years  after closeout of the
      assistance agreement.

      Construction Assistance Agreements

      *      For recipients, the retention period is 3 years from the date of the final payment
      request.

      *      For EPA's records, the retention period is 20 years from the date of submission
      of the final payment request.

      ALL Other Assistance Agreements

      *      For recipients, the length of retention  is  3 years from the date  of
      submission of the final FSR.

      *      For EPA's records, the retention period is 7 years after closeout of the assistance
      agreement.
PARTY:   AUDIT RESOLUTION AND DISPUTES

      A.    Audit Resolution - General Information

    EPA Order 2750.2A (Management of EPA Audit Report^ . .d Followup Actions) jtates that
audit resolution must occur within 150 days of the final audit report issuance.  Resolving audit
findings, issues or exceptions is a multi-step process involving many different offices.  Audits
which cannot be resolved at the Regional or Headquarters level between the OIG and the Audit
Action Official are referred to EPA's Audit Resolution Board.

   EPA relies primarily on Single Audits of recipients carried out in accordance with the
requirements of the Single Audit Act and Federal Audit policy expressed in OMB Circulars A-
128 and A-133.   Consistent with that policy, most  assistance agreements will not  receive
individual final audits.  A final audit is usually not a prerequisite for closeout.

      All Superfund Cooperative Agreements are subject to audit by the Office of Inspector
General. Projects may be audited prior to or even after closeout. The Program Office is usually
responsible for requesting  an audit.  Closeout of all  completed phases  of response activities
should be undertaken regardless of whether or not an audit is actually performed. However, any

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                                          13

findings/issues arising from an audit must be resolved before the cooperative agreement can be
officially closed out.

       For Construction Grants, an audit request is sent to the appropriate Divisional Inspector
General for Audit who determines if an audit will be conducted. For more detailed information
on the steps involved in this process, refer to the appropriate Construction Grant Program Audit
and Closeout Procedures.

    The OIG will normally audit construction grants according to criteria published in the OIG
Manual, Chapter 102 -- Audit Planning Appendix 6,  Issued October 1984 and revised June 5,
1990.

       If the OIG  (EPA, contract CPA firm, State Auditor, or GAO) conducts an audit,  the
project cannot be closed out until the final audit is completed, all findings and recommendations
are resolved, corrective actions are completed, and any outstanding debts are collected.

       B.    Disputes

       Definition

       Disputes are petitions of review filed by recipients asking EPA to reconsider decisions
affecting assistance agreements.

       Many (but  not all) disputes between recipients and  EPA  concern  the eligibility or
allowability of a project or portions of a project for reimbursement by EPA under the provisions
of the assistance agreement, usually resulting from an audit or other determination by EPA's
award official.

       Authority                                   '

       Disagreements between EPA and applicants/recipients should be resolved at the lowest
possible level by the EPA Project  Officer and the  appropriate Grants Specialist  having  the
authority to resolve the dispute.

        The applicable regulations depend on the award  date of the grant  agreement or
amendment.  If the award date is before October 1, 1988, 40 CFR Part 30 Subpart L applies.
If the award date is after October 1,  1988, 40 CFR Part 31 Subpart F applies. Disputants may
not ask EPA to review the following Agency actions:
       1. Denials of requests for a deviation under 40 CFR Part 30, Subpart J;

       2. Bid protest decisions under 40 CFR Parts 31/33;

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                                           14

       3. National Environmental Policy Act decisions under 40 CFR Part 6;

       4. Advanced wastewater treatment decisions of the Administrator;

       5. Policy decisions of the EPA Audit Resolution Board; and

       6. Debarment/suspension actions taken by the Director, Grants Administration Division.


       Role of the Disputes Decision Official

       The Award Official may act as the Disputes Decision Official (DDO) or appoint a senior
EPA Official who is knowledgeable about EPA's assistance programs  as the DDO.  The DDO
reviews and issues the final decision for all disputes.  If an applicant or recipient disagrees with
the Regional DDO's decision, the disputant may file a request for a review with the Regional
Administrator (RA), who will in turn issue a written determination.

       If an applicant or recipient disagrees with a RA's decision, they may request a review
by the appropriate Assistant Administrator (AA).  The AA in the appropriate media Program
Office has the authority to review appeals of RA decisions.   The AA will analyze the request
to determine if it  warrants further review. The AA will then notify the recipient in writing of
their decision to review or  not to review the disputed action. In the limited number of cases
which  are reviewed, the AA will also provide the  results of the review  at this time.   The
recipient may request reconsideration of any decision of the RA or AA.

       Impact of Disputes on Closeout

       Disputes can be very resource intensive and  will bring the audit decision-making process
under closer scrutiny.  It is for this reason that the Audit Action Official should resolve all audit
findings and avoid incomplete final determination letters (see Put V Audit Section). Inadequate
or incomplete  audit resolution can increase the number  of disputes  filed  by  recipients.
Unresolved disputes further delay closeout of the award until the action or claim is settled.

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                                        15

                                  APPENDIX A

LISTING OF EXISTING EPA CLOSEOUT REGULATIONS, POLICIES, AND RELATED
GUIDANCE

.(1)   40 GFR Part 4 (Uniform Relocation Assistance), or 49 CFR Part 24 if applicable;

(2)   40 CFR Pait 30 (for non-State and local government recipients);

(3)   40 CFR Part 31 (for State and local governments);

(4)   40 CFR Part 32 (Debarment and Suspension);

(5)   40 CFR Part 33 (Procurement for non-State and local government recipients);

(6)   40 CFR Part 34 (Restriction on Lobbying, interim final rule);

(7)   40 CFR Part 35 (State and Local Assistance);

(8)   40 CFR Part 40 (Research and Demonstration Grants);

(9)   40 CFR Parts 45 and 46 (Training and Fellowship grants);

(10)  OMB Circulars  A-102 (Grants  and Cooperative  Agreements to State  and Local
      Governments) and A-128 (Audits of State and Local Governments);

(11)  OMB Circulars A-110 (Grants and Cooperative Agreements with Institutions of Higher
      Education, Hospitals and Other Nonprofit Organizations), A-133 (Audits of Institutions
      of Higher Education and Other Nonprofit Institutions), and  A-21  (Cost Principles for
      Universities;

(12)  OMB Circulars A-87 (Cost Principles for State and  Local Governments) and A-122
      (Cost Principles for Nonprofit Organizations);

(13)  Policy on Performance-Based Assistance (EPA policy memorandum dated May 31,
      1985);

(14)  Comptroller Policy Announcement No. 88-09 (Disposition of Unobligated Balance of
      Assistance Awards);

(15)  EPA Directive 2750 (Management of EPA Audit Reports and Follow-up Actions).

(16)  Chapter 40 of EPA's Assistance Administration Manual

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                                        16

(17)   Construction grants Program For Municipal Waste water Treatment Works Handbook of
      Procedures

(18)   CG-250, Managing Construction Projects Student Manual: and

(19)   The Strategy Paper for Closing Out the  Construction Grant Program, dated  10/90 and
      formally released January,  1991.

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                                        17

                                   APPENDIX B

  GICS DATA ELEMENTS FOR CLOSING OUT NON-CONSTRUCTION GRANTS

      GICS contains a series of data elements used to track grant closeout.  This appendix
      provides definitions and applicable codes for the most commonly used data elements.
      Note:  not all closeout data elements are available in RAGDS, FADS, or JAMS.  It is
      GAD's intention to revise the GICS Data Dictionary and appropriate screens in the
      Automated  Grants Document Systems  to  make all standard closeout data elements
      universally  available.
COMP-LTR-SENT-CODE/DATE

      A code indicating the most recent completion/follow-up letter  sent to the recipient

      For purposes of Closeout the following codes are applicable:

      A     Pre-completion reminder mailed
      B     Completion reminder mailed
      C     Reminder(s) to signatory of agreement
      D     Warning to President/chief officer of recipient  organization
      X     Final determination recommendation prepared by Grants Operations Branch and
             forwarded for required approvals/concurrences


FINANCIAL-STATUS-CODE/DATE

      A code indicating the status of the final financial status report (report of expenditures)
      submitted by the recipient.  The d; te related to thi.» code is  contained in Final Financial
      Status Report Date (Ref No M5-A, Financial-Status-Date).

      For purposes of Closeout the following codes are applicable:

      DE    Financial status report approved; FMC, Las Vegas requested to deobligate
      DR    Financial status report approved; EPA owes recipient; Recipient advised to draw
             down
      NA    Not applicable to  this project/budget period
      OU    Financial status report approved;  Recipient owes  EPA; Requested to submit
             refund or adjust letter of credit
      PU    Financial status report approved; Recipient has paid EPA
      RA    Received  an acceptable/approved report; Zero unobligated balance
      RP    Received  report/acceptability to be determined
      RU    Received  an unacceptable report; Follow-up to  recipient initiated

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                                         18

PERS-PROPERTY-CODE/DATE

      A code indicating the status of the personal property or equipment inventory purchased
      under a grant. The date related to this code is contained in Personal Property Inventory
      Date (Ref No L2-A,  Pers-Property-Date).

      For purposes of Closeout the following codes are applicable:

      DI    Disposition instructions issued; further action required
      DW  Disposition instructions being withheld by Grants Administration Staff
      DX   Disposition instructions executed/completed; no further property action required
      NA   Not applicable to this project
      PD   Project Officer provided disposition recommendation
      PR   Project Officer received report; Grants Administration  staff awaiting disposition
             recommendation
      RF   Received and forwarded to Project Officer
      RN   Received negative report
      RP   Received positive report
REAI^PROPERTY-CODE/DATE

       A code indicating the status of the real property inventory purchased under a grant. The
       date related to this code  is contained in Real Property Inventory Date (Ref No L7-A,
       Real-Property-Date).

       For purposes of Closeout the following codes are applicable:

       DI    Disposition instructions issued; further action required
       DW   Disposition instructions beir^ withheld
       DX   Disposition instructions executed/completed; no further property action required
       NA   Not applicable to this project
       PD   Project Officer provided disposition recommendation
       PR   Project Officer received report; awaiting disposition recommendation
       RF   Received and forwarded to Project Officer
       RN   Received negative report
       RP   Received positive report
INVENTION-CODE/DATE

       A code indicating the status of the invention report.  The date related to this code is
       contained in Invention Report Status Date.

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                                         19

      For purposes of Closeout the following codes are applicable:

      NA    Not applicable to this project/budget period
      RF    Received and forwarded to Office of General Counsel
      RN    Received negative report
      RP    Received positive report


FINAL-REPORT-CODE/DATE

      A code indicating  the status of the final  report.   The date   related to  this  code is
      contained in Final Report Status Date (Ref No L8-A, Final-Report-Date).

      For purposes of Closeout the following codes are applicable:

      AA    Report approved; confirmation in official project file;  EPA Report Publication
             Number assigned and recorded in  Report Publication Number (Ref No 40-A,
             Publication-No)
      NA    Not applicable to this project
      PR    Project Officer  received report; awaiting peer   review/approval;  (Consider
             applicability of  entering code   "FR" in Action Step Code (Ref No 23-A,
             Action-Code) and date in Action Step Date (Ref No 24-A, Action-Date))
      RF    Received and forwarded to Project Officer
      RU    Received an unacceptable report; follow-up to recipient initiated
AUDIT-REQUEST-DATE

      The date of the request for a financial audit of a non-Construction grant. Use of this
      element is limited to grants meeting certain select cru> :ia and is not applicable to Single
      Audits.  For Regions using Audit Request Code (Audit-Request-Code, Ref No N8-A),
      this is the date related to the code contained in that element.

            Positions 1-2 - Year
                     3-4 - Month
                     5-6 - Day

AUDITS-RESULTS-CODE

      A  code indicating the  status  of the completion  of  the   financial  audit  of  a
      non-Construction grant.  This element is not used for Single Audits.  The date related
      to this code is contained in Audit Completion Date (Ref No N9-A, Audit-Results-Date).

      For purposes of Closeout the following codes are applicable:

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                                         20

      CA    Cost analysis
      FA    Final audit
      IA    Interim audit
      RN    Received notice of cancellation of audit request
      RP    Received audit report
FINAL-AUDIT-DATE

      The date a final audit is resolved satisfactorily.

             Positions 1-2 -  Year
                "   3-4 - Month
                "   5-6 - Day
ACTION-CODE/DATE

      A code which identifies the current status and/or disposition  of a prospective project,
      application, or active or  completed project for which financial assistance has been
      requested or given.   Codes are from the GICS-ACTION-CODE-TABLE [not GICS-
      ACTION-CODE-NON-TABLE]  The date related to this code is contained in Action
      Step Date.

      For purposes of Closeout the following codes are applicable:

      FA    Completion of all administrative work connected with  an assistance agreement
             by the administering office.  Applicable only to WWT Construction and State
             Revolving Fund (Project level).

      FC    Completed assistance agreement closed c "  For  EPA  assistance agreements,
             letter issued by EPA to the recipient closing out the agreement.

      FD    Project completion: For assistance programs  administered in Headquarters, the
             award official (Chief, Grants Operations Branch) has issued final determination
             to the recipient.

      FR    Project close-out complete except  for approval of final project report and final
             disposition of property,   if any.    Applicable only to assistance programs
             administered in Headquarters.

             Assistance terminated by EPA before completion. Termination letter sent from
             Grants Operations  Branch or  appropriate Regional grants administration staff to
             the recipient.

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                                       21

         GICS SCREENS FOR CLOSING OUT CONSTRUCTION GRANTS

      Closeout milestones for construction grants are found on a number of different screens
      in GICS.  Screens include:

      *     Post Award/Targeting (PTN) which tracks the completion of certain activities
            such as WWT Start, Initiation of Operation, development of the O&M Manual,
            Initiation of Administrative Completion.

      *     Project Completion (PCN) which  tracks a grant's progress through  Physical
            Completion and Administrative Completion.

      *     Payment Data (PDN) which tracks cumulative payment data.

Because Construction Grants is a delegated program, data entry can take place at the delegated
State or in the Regional office.  Regional procedures vary greatly.

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                                          22

                                     APPENDIX C

Types of Construction Grant Awards

Step 1:  Development of a facilities plan.  No  new awards were issued after 12/29/81. It is
EPA policy that all Step 1 projects should have  been completed by 9/30/85.

Step 2:  Preparation of plans and specifications for a treatment works.  No new awards were
issued after 12/29/81.  It is EPA policy that all step 2 projects should have been completed by
9/30/85.

Step 3:  Building of treatment works and related services and supplies.

Step 2  + 3:   Combination design and building of a  treatment works and building related
services and supplies.

Step 7:  Combination design and building of a treatment works wherein a grantee awards a
single contract for designing and building a treatment works.

Step 9:  Construction of a State training wastewater facility combining design and-building for
operations and maintenance personnel.
                        OU.S. GOVERNMENT PRINTING OFFICE: 1993-"! 3- ^JS-SIOI1-

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APPENDIX S

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            APPENDIX S
EPA ORDER 2200.4, "REVIEW PROCESS FOR
    SCIENTIFIC, INFORMATIONAL, AND
      EDUCATIONAL DOCUMENTS"

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 ENVIRONMENTAL
 PROTECTION      TRANSMITTAL
 AGENCY
2200.4
                                               Decert^r 28, la8 2
	PUBLICATIONS AMD COMMUNICATIONS MATERIALS  - GENERAL

MATERIAL TRANSMITTED:
EPA Order No. 2200.4 - Review Process  for Scientific, Informational
                    and Educational Documents.
MATERIAL SUPERSEDED:
None.
FILING INSTRUCTIONS:
File the attached material  in numerical order in a three-ring binder
established for EPA Directives System.
                                 Joh» P. Horton
                      Assistant Administrator for Administration
 Otst:  Directives

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ENVIRONMENTAL
PROTECTION               ORDER                    22004
AGENCY
             PUBLICATION AND OCmirilCATIOrG MATERIALS -
       RPVIEK PROCESS FDR sciEmric, iHFORrwriONAL AND EnoTinriAL
  l.   PURPOST.

      a.  This Order establishes Aqency policy on reviewing scientific,  infor-
  mational or educational .-rwterials.  The purpose of this review process is to
  protect the technical and  scientific quality of these types of public  materials
  distributed by the Environmental Protection Agency, and ensure that  they are
  based on the best scientific and technical evidence available.  Such a review
  process will further engender the respect and recognition deserved by  Anency
  scientists and staff.

      h.  The process will provide a clearly defined route for the expeditious
  review and approval of the publications before their public release.   The goal
  is  to establish Agency responsibility for literature published in its  nane and
  by  its employees when they are acting in an official capacity.  This document
  will not be construed as const ituting any suggestion of constraints  on the
  fme expression of ^Vjency  employees.
     c.  This Order is intended to supplement other applicable guidelines
  reonmendations, and supersedes other directives only to the extent that  it  is
  inconsistent with then.   Any program area or office may adopt procedures  consistent
  with this Order to meet  its specific needs.

 , 2.  noojripTrs SUBTECT TO REVIEW.
     a.  T^e review process described in Paragraph 5 is applicable to all scientific,
  informational, or educational publications,  designed for public distribution and
  created by an EPA erployee, contractor, grantee or consultant with the excep-
  tions of:

         (1)  Congressional testimony;

         (2)  verbati-n testimony from hearings;

         (3)  Advance notices of Proposed Rulemakings (AITPRM's), proposed or
  final regulations subject to a formal comment period;
     directives Distribution                                        Initiated by:

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                                              ORDER           22n°'4
        (4)  press releases approved by the Office of Public Affairs within
the office of the Administrator;

        (•5)  legal opinions, briefs or memoranda, including initial, final,
or other decisions in quasi-judicial administrative proceedings;

        (6)  Federal Register Notices;

        (7)  ifotices of Public Hearinqs;

        (8)  tfcqoest for Proposals;
         (9)  publications by EPA employees proposed for scientific  journals
which incorporate peer review  (inclusion of a disclaimer statement  is apnco-
nriatie when policy  issues are  incorporated in the article);

       (in)  Criteria rrxruments or other similar documents subject  to
a  forma I public  conirent period or review by the Science Advisory Board  or
the c!cierice Advisorv Panel;

       (11)  advisory cormittee stat'^ments and reports;

       (.12)  materials Generated on  an enployee's own  time usinq private
facilities;

       (13)  'internal policy statements or memoranda;  and

       (14)  official Aoency correspondence.

1.  \PPLICARILITY.  These auide lines are applicable  to employees actinq in an
official canacity T.^ed to their work for the Aoency.  They are also applicable
to rPA contractors, consultants,  and qrantees to  the extent  provided for in
thoir anre«T*>nt  with F^>A.   Publications hy EPA enployecs are subject to review
if they  are generated on Agency tiw? or are based on materials derived from EPA
sur«x.rt-.od  activities.  This Order does not provide  for, nor  describe,  all of the
steos in the  publication process;   it is desioned to outline the mview procodurp
Tnis  Order should not be construed  to conflict with  the disclosure pwvi«ions of
the Freedom of Information  Act.

4. DRFPIITirrK.

    a .   The  tern "publication" incluoes all EPA generated materials that may be
released in mass to the general public,  inclurling:

         (1)   written statements necked to satisfy a statutory or requlatory
reouiroment;

         (2)   published or unpublished booVs, manuals, and research reports;


                                       -2-

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                                                                2200.4
         (3)   informational  brochures  cr materials an:! newsletters or other
periodic  reports;

         (4)   publications by EPA en-pioy^s nrc-rosod for outsit journals other
than Lose that  incorporate peer
         (5)  project  reports  and  other  naterials file--: with the National Technical
Informaticn Fervice  (bJTIS);
         (6)   EFA  published  proceedings resulting fr~m .Viency sponsored conferences,
wor^-shors , and seminars  (papers  by  non-P^A er^pioyees  should go through this peer
review process or co-.tain an adeouate -Jiscl
         (?)  contributions made  to pub] -'cations  by inter-igency working groups
where authorship  is  to be attributed to EPA or its employees (these publications
should no throuch  this peer  review process  or contain an  adequate disclaimer);
         (3)  audiovisual  materials designed ti") be reisds^ to the general public
in other than a single presentation;  cr,

         (9)  computer software  c5esijnor:  for release to the general public.


5.  PROCEDURES.

    a.   Initiation of the Review Process.

         (i)  T^.e review process is initiated vhen the author (hereinafter includes
authors) submit? a publication  to his/her  inrcriarc supervisor or office director
for review, cootther with recormndaticr.s  for at lease cwo peer reviewerr: who
should be specialists in the subject.  Tr.v author nay r3quest that a reasonable
review schedule be established  to ensure ti^vsiy processing.

         (2)  Iho nanuscript should he  in near-finished fom to the- satisfaction
of the author.  Typically,  it should  ba  in a double-spaced,  typed format with
all of the necessary tables, charts,  illustrations and figures attached.  A
designated supervisor evaluates the text and fon.-an" : it to,  usually, the author's
reoonnended reviewers for scientific  and technical review.   Reviews nay be done
simultaneously in order to  reduce the tine required.

         (3)  A<5ditional review  by other EPA offict-s and laboratories may be
requested by any office through which a publication r»»st pess enroin-e to its
final publication form.

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                                                                2200.4
    b.   Peer Review.

         (1)  Peer  review  is designed  to  identify weak, .Doubtful,  ambiguous  or
unsupportable statements  or conclusions.  Itte peer reviewer  is expect^  to  <--v,3i-j-
ate the  manuscript for general content,  organization and  scone, present at-, ion and
quality  of data, validity of analytical  technioues, soundness of  conclusion.
and consistency of the text with  tables,  figures, illustrations and  nans.

         (2)  A reviewer should use marginal notes or interlineations on  tV»
draft publication  to  indicate suggested  changes or questions,  vjhore suggestions
are numerous or complex,  or where more serious questions  arise, an attached
memorandum is appropriate.  Marked-up drafts, and accomoanyinq statements  from
reviewers, are returned directly  to the  author unless other directions are  provided.

         (3)  Reviews  should be completed in a reasonably  prompt fashion.  Peer-
reviewers and those in the administrative chain should make every attempt to
meet the proposed  time schedule.  A goal would be for review from the office
director level up  through the Associate, Assistant or Regional Administrator
level to be completed within two weeks.  Refusal at any level of  manaqement to
approve  a document may be appealed once  to the next higher level  of  management.

    c.   Redrafting.

         (1)  Ttie author should make efforts to give thoughtful consideration to
and to accommodate the comments provided by reviewers in  modifying and redrafting
of the text.  In preparing a revised  draft, acceptable changes and corrections
should be incorporated.   If only relatively minor differences of  opinions on
scientific or technical issues exist  between the author and reviewers, the
author should briefly explain his positions on the revised draft  when it  is sent
out for  re-review.  T^ie author should also indicate changes that  may or  mav
<£+ h-r-3 been made so as  to alert the reviewers of a revised draft.

         (2)  Where substantial differences or misunderstandings occur, the
author should explain his/her views in more formal comments in a  memorandum
attached to the revised draft of  the  manuscript.  Informal consultation  an^
discussion between reviewers and author  are highly desirable in order to clarify
points of view and to facilitate agreement when significant differences  arise.

         (3)  Ttie review process is repeated until the author feels that  the
proposed publication  is ready for submission for final administrative and
technical review.  At this point, statements of concurrence and the  signature
of the designated peer reviewprs should  he attached to the text.  In cases  where
the author has not reached a consensus with the reviewers, comments  on the  nature
of their differences, prepared by the reviewers, should be attached  to the  text
and transmitted to subsequent administrative levels for review.
                                       -A-

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                                             ORDER
                                                                2200. 4
     d.   Administrative  Review.

         (1)  The prepared publication  should  then  he  submitted  to the office
 director level  for review.  This office  is expected to provide  final approval
 for technical and scientific  soundness and overall organization and presentation
 of  data.

         (2)  At this level, or  if  appropriate at a lower  level,  a memorandum
 outlininq any expenditures, and sources  of funds or priorities,  or unusuil condi-
 tions should be attached.  This memo should also include  plans  for publication,
 dates, and the  anticipated number  of copies,  as well  as the purpose of the publi-
 cation,  the intended audience,  a full  description  of  the  proposed format  (i.e.,
 size, number of pages,  design and  color) and/or a  mockup  of the  finished  product.

         (3)  The publication  and accompanying memorandum  then move to the Associate,
 Assistant or Regional Administrator  who  has final  authority on deciding whether
 the document is a "major" document which then must be reviewed  by the Science
 Advisor and/or  the Office of  Public  Affairs.  In the  Office of  the Administrator,
 the office director will  have responsibility  for the  document and make this
 decision.  In sone cases, certain  documents will be reviewed by  both the  .Science
 Advisor and the Office  of Public Affairs.

         (4)  All documents which are not "major" should he carefully examined
 before publication as to  their  technical and  scientific credence  and quality.
 The Associate,  Assistant, or  Regional  Administrator is responsible for these
 documents with  regard to  conformity  with budgetary and quality guidelines.

     e.  Review  by the Science Advisor

         (1)  If a document of any  cost contains significant scientific or technical
 uncertainties,  it  becomes a "major"  document  subject  to review by the faience
 Advisor or his  designated representatives.  The Associate, Assistant, or  Regional
 Administrator in whose  program, region, or office  the docinent originates, is
 responsible for determining if  the document contains  scientific  or technical
 uncertainties.   The  latter may  be  determined  by examination of peer reviewers'
 comments and any attachments  submitted by the author or reviewers.

         (2)  The  Science Advisor,  or his designated renresentatives, will review
 the manuscript  on  behalf of the Administrator.  The Science Advisor may sent?
manuscripts related  to  technical issues to other senior officials  in the  -«rjencv for
 additional internal  review.  Those manuscripts of  a complex technical nature may
be sent to selected experts outside  the Agency for confidential review.
                                       -5-

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                                            0*0£"            2200. 4
         (3)  The Science Advisor, or his designate, will review documents for
general  scientific and technical content, clarity, loqic, consistency, soundness
of conclusions, organization and scope, presentation and quality ot data, validity
of analytical techniques and overall conformity with research and publication
aims of  the Agency.  TTie Science Advisor will develop .systems for review, for
report, of cements to the author, and for notifying program areas of the final
decision regarding the publication.

    f.   Administrative and Technical Review by the Office of Public Affairs

         (1)  If a document falls into any of the following categories, it is a
"major"  document subject to review by the Office of Public Affairs:

         - any material of any cost that has policy implications.  Tfte
          Associate, Assistant, or Regional Administrator in whose
          program, region, or office the documents originated,
          is responsible for determining if a report has policy
          implications;

         - any product from a project funded at 550,000 or more;

         - any single product that costs $10,000 or'more to print;

         - any category or series of reports that costs $25,000 or
          more a year to print; or,

         - any periodical as defined by OM3 Circular A-3.

         (2)  Ttie Director of the Office of Public Affairs, or his designated
representatives, will review the manuscript on behalf of the Administrator.  The
Director of the Office of Public Affairs may send manuscripts related to policy
issues to other senior officials in the Agency for additional internal review.

         (3)   The Office of Public Affairs will review both technical and non-
technical information materials for conformity with £PA's Public Information
Policy and Graphics Standards System. The Office of Public Affairs will oversee
the entire publication and printing system for major documents of the Agency to
ensure consistency and to avoid duplication.  The Office of Public Affairs will
also be  responsible for approving the mechanical matters of distribution,
manner of printed presentation, conformity to budget requirements, and overall
consistency with Agency goals.  The  Office of Public Affairs will develop systems
for review, for report of comments to the author, and for notifying program areas of
the final decision regarding the publication.


                                       -6-

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                                              ORDER           2200. 4
    g.  Ancroval and Publication Process
         (1)  T^e  final Tannscript ,  if approved by the Associate,  Assistant,
or T^-;ional Administrator  is returned to the author  for appropriate distribution
or publication,   -la-jor" documents  must he approved  by the Sciencr? Advisor and/or
the Office of Public Affairs prior  to publication.   Followirrj such approval,
each administrative office that participated in the  review process will be notified
of the action.  Ttic author is responsible for ensuring publication and distribution
in accordance with guidelines established by the Office of Public Affairs.

         (2)  Papers Prepared for publication for outside journals are returned to
the author after  aopropriate approval.  Each administrative office that partici-
pated in the review process will be notified of this action.  Ttx? author  is
responsible for mailing the text to the outside journal and for supplying appropriate
offices  in the Agency with depository copies.  At this point, the paper may be
distributed by the author  to the general public.

         (3)  In the event  of an unfavorable review by OPA and/or  the Science
Advisor, the manuscript is returned to the originating office or  the author as
is annnnriatc.   All comments should be addressed and necessary revisions made.

    h.   Products of External Contracts and Grants.

         ( 1 )  CT>A encouraoos the independent publication of the results of its
contract and grant research in appropriate scientific journals as an important
method of recording and renorting scientific information.  Any journal article
so published must, however, contain the following statement:
             "Although the research described in this article has
             funded wholly or in part by the United States Environmental
             Protection Agency throtxgh contract or grant  (number) to  (name),
             it has not been subjected to the Agency's required peer  and
             policy review and therefore does not necessarily reflect the
             views of the Agency- and no official endorsement should be
             inferred."

        (2)  When an author receiving a contract or grant from EPA sends out a paper
for publication, a courtesy copy should also be sent to the EPA Project Officer who
will forward it to the appropriate Office Director, Associate, Assistant, or Regional
Administrator, and the Science Advisor.  Following publication, copies of the journal
paper should be submitted to addressees in quantities as may be directed by the
Project officer.  Provisions to ensure EPA receipt of journal papers  by contractors
or grantees should be included in research agreements.


                                       -7-

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                                                                2200.4
        (3)  Informational rnaterials, reports, and other products produced under
an EPA contract, grant, or cooperative agreement should go through a comparable
system of review prior to their release to the public as an EPA publication or
product,  i^e Project Officer is responsible for insuring that adequate EPA
review consistent with the rights and data clauses of EPA contracts, grants or
cooperative agreements is conducted, including approvals by appropriate Associate,
Assistant, or tegional Administrators and the Science Advisor and/or Office of
Public Affairs, if necessary.  Grant officers developing grants which involve
public information/public participation activities should encourage the use o*.
cooperative agree-nents which enable EPA to require the grantees to submit
their material for review and/or approval prior to its completion and distribution.
                                            Anne n. Gorsuch
                                             Administrator
                                       -8-

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APPENDIX T

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         APPENDIX T
SAMPLE INTERAGENCY AGREEMENT

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 8-EPA
United States Environmental Protection Agency
         Washington. DC 20460
 Interagency Agreement/
         Amendment
  Part 1 - General Information
                                                       1. EPA IAG identification Number
                                                       2. Other Agency !AG ID Number  (if known)
                                                       3. Type of Action
                                                   4. Funding Location by
                                                      Region
                                                   5. Program Office
                                                      Abbreviation
6. Name and Address of EPA Organization
                                       7. Name and Address of Other Agency
8. Project Title
9. EPA Project Officer (Name, Address. Telephone Number)
                                        10. Other Agency Project Officer (Name, Address, Telephone Number)
11. Project Period
                                        12. Budget Period
13. Scope of Work (Attach additional sheets, as needed)
14. Statutory Authority for Both Transfer of Funds and Project Activities
                                                                               15. Other Agency Type
            Funds
                                     Previous Amount
                                                                Amount This Action
                                                                                                 Amended Total
16. EPA Amount
17. EPA In-Kind Amount
18. Other Agency Amount
19. Other Agency In-Kind Amount
20. Total Project Cost
21. Fiscal Information
 Program Element
  FY    I   Appropriation
Doc. Control No.
                    Account Number
Object
Class
                                                  Obligation/Deobligation Anr.
EPA Form 1610-1 (Rev. 10-88)  Previous editions are obsolete

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                        Part II - Approved Budget
                                                                                    i EPA IAG Identification Number
                     22. Budget Categories
                                            Itemization of      [
                                             This Action       i
                                                        Itemization of Total Project
                                                          Estimated Cost to Date
  (a) Personnel
  (b) Fringe Benefits
  (c) Trave,
  (dl Equipment
  (e) SuDDiies
  (f) Procurement/Assistance
  (g) Construction
  (h) Other
  (i) Total Direct Charges
  (i) Indirect Costs:  Rate
      %  Base $
  (k) Total

     (EPA Share
%)   (Other Agency Share
                      %) $
 23. Is equipment a-thorized to be furnished by EPA or leased, purchased, or rented with EPA funds?
     (Identify all equipment costing $1,000 or more)
                                                                       Yes
                                                                      No
 24. Are any ot tnese funds being used on extramural agreements?  (See Item 22t)
                                                                                  Yes
                                                                        No
Type of Extramural Agreement
                                   Grant
                            Cooperative Agreement
                                                                               J Procurement (Includes Small Purchase Order)
 Contractor/Recipient Name (if known)
                   Total Extramural Amount Under This Project      Percent Funded by EPA (if known)
                                   Part III - Funding Methods and Billing Instructions
 25.
           Funds-Out Agreement             (Note: EPA Agency Location Code (ALC) - 68010727)


             •    ; Disbursement Agreement
                    U
 Repayment
Request for repayment of actual costs must be itemized on SF 1081 or SF 1080 and submitted to the
Financial Management Center, EPA, Cincinnati. OH 45268:
                                            Monthly
                                          Quarterly
                                                Upon Completion of Work
                         Advance
               Only available for use by Federal agencies on working capital fund or with appropriate justification of
               need for this type of payment method. Unexpended funas at completion of work will be returned to
               EPA. Quarterly cost reports will  be forwarded to the Financial  Management Center. EPA. Cincinnati.
                                       OH 45268.
                  Allocation      Used to transfer obligational authority or transfer of function between Federal agencies. Must receive
                  T,     "      prior approval by the Office of the Comptroller, Budget Division, Budget Formulation and  Control
                  i ransier-uut   Branch, EPA Headquarters. Forward appropriate reports to the  Financial  Reports and  Analysis
                                Branch, Financial Management Division, PM-226F, EPA, Washington. DC 20460.
26.
           Funds-ln Agreement

                 • Reimbursement Agreement
                       Repayment

                       Advance
                  Allocation Transfer-In
Other Agency's IAG Identification Number
                                        EPA Program Office Allowance Holder/Responsibility Center Number
Other Agency's Billing Address  (Include Agency Location Code
                            or Station Symbol Number)
                                        Other Agency's Billing Instructions and Frequency
EPA Form 1610-1 (R«v. 10-M)

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                            Part IV  -  Acceptance Conditions
                                                                                           EPA IAG Identification Number
27. General Conditions
                The other agency covenants and agrees that ft will expedltlously Initiate and
	complete the project for which funds have been awarded under this agreement.
28. Special Conditions
                                            Part V  •  Offer and Acceptance
NOTE:   1)  For Funds-Out actions, the agreement/amendment must be signed by the other agency official In duplicate and one
            original returned to the Grants Administration Division for Headquarters agreements or to the appropriate EPA Regional
            IAG administration office within 3 calendar weeks after receipt or within any extension of time as may be granted by the
            EPA. The agreement/amendment must be forwarded to the address cried In Item 29 after acceptance signature.
            Receipt of a written refusal or failure to return the properly executed document within the prescribed time may result In the
            withdrawal of the offer by EPA. Any change to the agreement by the other agency subsequent to the document being
            signed by the EPA Action Official, which the Action Official determines to materially alter the agreement/amendment, shall
            void the agreement/amendment
        2)  For Funds-ln actions, the other agency will Initiate the action and forward two original  agreements/amendments to the
            appropriate EPA program office for signature. The agreements/amendments will then be forwarded to the appropriate
            EPA IAG administration office for acceptance signature on behalf of the EPA. One original copy will be returned to the
            other agency after acceptance.
EPA IAG Administration Office (for administrative assistance)
29. Organization / Address
US ENVIRONMENTAL PROTECTION AGENCY
GiAB, GRANTS ADMIN. DIVISION, (3903F)
401 M STREET, SW
WASHINGTON, DC 20460 .
EPA Program Office (for technical assistance)
30. Organization / Address
ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, DC 20460
                                                      Certification
          All signers certify that the statements made on this form and all attachments thereto are true,
          accurate, and complete.  Signers acknowledge that any knowingly false or misleading statement
          may be punishable by fine or Imprisonment or both under applicable law.	
                          Decision Official on Behalf of the Environmental Protection Agency Program Office
31. Signature
Typed Name and Title
                                                                                                      Data
                                  Action Official on Behalf of the Environmental Protection Agency
32. Signature
Typed Name and Trite
 W. SCOTT McMORAN, Chief
 GRANTS INFORMATION & ANALYSIS BRANCH
                                                                                                       Date
                                         Authorizing Official on Behalf of Other Agency
33. Signature
Typed Name and Thle
                                                                                                       Date
EPA Form 181O-1 (R«». 11X88)

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                                           Instructions
This form is to be used for all Funds-Out imeragency
agreements.  It may be  used for Funds-In interagency
agreements if the other funding agency agrees to do so. It
may not be used for policy agreements.  However, if the
other agency's instrument is used, it and  any attachments
thereto must reflect aJI the information contained in thus
form.

This form is to be used in conjunction with the Assistance
Administration Manual and any other supplemental in-
formation.

1. The original agreement identification number will be
assigned  by the LAG administration/management office
servicing the EPA program office initiating  the action. If
rhe original project is amended, cite only the first 10 char-
acters   of  the  original   agreement   number   (e.g.,
DW81931013). The servicing LAG administration/man:
agement office will assign the amendment designator (e.g.,
-1).
2. Enter the other agency's LAG identification number (if
known).

3. Identify the purpose of this action using one of the fol-
lowing terms:

        New Agreement
        Increase in Funds
        Decrease in Funds
        Administrative Amendment

"Administrative amendment" is used to identify project
period extensions, project officer changes, special condi-
tion changes, rebudgeting of funds, etc.

The four terms above are listed in order of priority, there-
fore, should an action involve multiple  changes use the
first term that appropriately identifies one of the changes.

4. Identify the regional location of the EPA program of-
fice disbursing/receiving funds (e.g., projects funded by
EPA Headquarters and  ORD laboratories will cite Re-
gion XI).

:". Enter the EPA GICS abbreviation for the program of-
fice. This should be at the Office Director or comparable
level (e.g., OERR/HQ),  except for EPA ORD laborato-
ries (e.g., ERIVDUL).
<>. Enter "Environmental Protection Agency" followed by
the name and  mailing address of the EPA organization
responsible for  technical  management of the project.
EPA offices should be identified at the Office Director or
comparable level for Headquarters or the appropriate Re-
gional Office.
7.  Enter the name and  mailing address of the  other
agency.  Identify the Department and the appropriate or-
ganizational components within  the  Department (e.g.,
DHHS,  PHS, Center for Disease Control).

Note: Use the appropriate Department of Energy area of-
fice for agreements with a DOE National Laboratory.

8.  Enter project title. Be concise and use only the space
provided. If Superfund site specific, include site location
(e.g.. city and State).

9.  Enter the EPA Project Officer name, EPA mailing ad-
dress, and telephone number.

10. Enter the other agency project officer name,  other
agency mailing address, and telephone number.

11. Enter beginning and ending dates of entire period ex-
pected to be needed to complete the project. This period
of time  should not be longer than 5 years. For projects
requiring more than  5  years, appropriate justification
must be submitted in the decision memorandum.

12. Enter the period of time  this transaction will fund
project  activities. (Note budget period cannot exceed the
period of appropriation.)

13. Provide a complete description of the project work to
be performed under the agreement. In jointly funded pro-
jects, the scope of work should describe specific responsi-
bilities of the participating agencies, not just the portion
funded  by EPA. Additional pages should be attached as
necessary.

14. Enter both the appropriate statutory authority that
authorizes the interagency agreement mechanism and the
appropriate statutory authority that authorizes project ac-
tivities.

When entering into Funds-Out agreements with Federal
agencies, cite (1) Economy Act of 1932, as amended (31
USC 1535) and/or other independent program authority
and (2)  the statutory authority that authorizes the project
activities (e.g., Clean Water Act).
When entering into Funds-In agreements with State and
local governments, cite (1) Intergovernmental Coopera-
tion Act of  1968 (31 USC 6505) and. to the extent that the
agreement involves contractor services, also cite appropri-
ate cooperation authorities and (2) the statutory authority
that authorizes the project activities.

For Funds-In agreements with Federal agencies, cite (1)
Economy Act of 1932,  as amended (31 USC 1535) and/or
other independent program authority and (2) the  other
agency's statutory authority authorizing the project activi-
ties.
 EPA Form 1610-1 (Rev. 10-88)
                                         Page 4 of 5

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                                   DRAFT

                                   May 3, 1995
MEMORANDUM

SUBJECT:  Interagency Agreement Decision Memorandum Guidance/ Pre-
          award IAG Activities, and Subcontractor Selection

FROM:     Gary Katz/ Director
          Grants Administration Division

TO:       Addressees

     This  memorandum  specifies  the   information   Interagency
Agreement decision  memorandums should  include.   If each decision
memorandum   is  complete,   your   offices'   rework   and  our  IAG
specialists'  follow-up will  be reduced.   This  guidance clarifies
existing  policy  and  responds to weaknesses  identified by  the
Inspector  General.    (Simple transmittal  notes  may  be used  to
transmit amendments  to  agreements initially approved based on a
decision memorandum developed in accordance with this  guidance
unless  there have  been  significant  changes  from the  original
agreement.)

     Effective June 1, Interagency Agreement decision memorandums
should include at least the following—

1.   A description  of the  proposed  project's  objectives and  an
     explanation  as  to  how  the  IAG will  accomplish them.    The
     description of  the project benefits should  be consistent with
     the authority  for the agreement  (see paragraph 2) .  If  the
     funded work  is  a part of a  larger project/ the description
     should be clear  as to which  parts of  the  work are  funded  by
     the IA6 and which are not.
2.   A statOMnt of which statutory authority is thought to be the
     basis for the IAG.  Generally/  the  authority will be either
     the  Economy Act  or  EPA's  "cooperation"  authorities  (see
     attachment 4).

3.   For   lAGs   with  other   Federal  agencies  which  involve
     international work and for  funds-in agreements with foreign
     governments or international organizations, a statement that
     the project  has  been reviewed  and  approved by OGC  and the
     Office of International Activities and the OLA clearance form.
     (OIA  will  obtain  necessary clearance from the US Trade and

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     Development Agency for agreements with foreign governments and
     international  organizations.)   Authority for  international
     lAGs with other federal agencies  is  either the Economy Act or
     EPA's  cooperation authorities and  Section 102(2)(F)  of the
     National  Environmental Policy Act.   Authority  for  funds-in
     agreements   with   foreign   governments   or   international
     organizations  (not  technically lAGs, but  using the IAG form)
     is Section 607 of the Foreign  Assistance Act (22 U.S.C. 2357) .

4.   A  discussion  of  the  alternatives  to  an  IAG  which  you
     considered  and  why the  IAG  mechanism  was  selected.    The
     discussion should explain  how  the IAG will further economy and
     efficiency in  the  government.  For Economy Act lAGs,  if the
     IAG  involves  another agency providing EPA good* or  services
     through a contract,  the economy and efficiency determination
     should    be    based   on    an    (independent    government
     estimate?????????).   A copy of the estimate should be attached
     to the decision memorandum.  If the other  agency vi11 perform
     the  services  with   its   in-house  staff,  an  analysis  of
     government  performance   versus  commercial   performance  in
     accordance with OMB  circular  A-76 should  be attached,  unless
     the other agency has already  performed the analyst!*..

5.   An explanation of why the  other agency was selected, or why the
     other agency selected EPA.

6.   (a)  For Economy Act lAGs,  if  funds under the IAG will be used
     for travel, the purpose of  the IAG and the associated travel
     must  be to  carry  out  a  project  in support of  the  other
     agency's mission and not  to augment the performing  agency's
     travel ceiling.   If EPA will use more  than 15% or  $15,000,
     whichever  is  less,  of  the funds under a funds-in  IAG  for
     travel, the decision memo must  include  a statement  that the
     purpose of the IAG and the  associated travel  is to carry out
     a project in  support of the  other agency's mission  and  not to
     augment EPA's  travel ceiling.  It must make clear  that the EPA
     staff would not make the trips planned under the IAG/  except
     for  the  other agency's project.   (For funds-out lAGs  with
     travel budgets which meet the criteria  above, the statement
     must come from the other agency's project officer.)

     (b)  Efec an IAG  under EPA's cooperation authorities,  if EPA
     will ttSte more than 15% or $15,000, whichever  is less,  of the
     funds under a  funds-in IAG for travel, the decision memo must
     include a statement that the purpose of the IAG is not for the
     purpose of exceeding a travel ceiling or  similar limitation.

7.   if  funds  under  an  IAG   authorized by  EPA's  cooperation
     authorities  will   be  used  for  a  grant   or  cooperative
     agreements, a project officer's statement that the principle
     purpose  of the project   is  to  support  or  stimulate  the
     recipient  to  accomplish  a public porposa and  not for  the
     direct  use  or  benefit  of  the  Federal  government  (see
     attachment 4).

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8.   If  the  IAG  proposes  that payments  be made  in  advance,  a
     justification  for  use  of  the  advance   payment  method.
     Generally, advance payments are  authorized only when an agency
     has  a working capital fund or  other  statutory  or regulatory
     requirement  for  advances;  EPA  does  not  have  authority  to
     request  payments  in  advance.
     I  am attaching  several memorandums which  have updated  TAG
policy  in  recent  years.    Some  of then  may  require  decision
memorandums  to include additional  information to cover  specific
circumstances.  Attached are—

     o    An  August  10,   1988,  memorandum  from Dave  Ryan,  EPA
          Comptroller   and   Harvey  Pippen,   which    explains
          justification requirements when LAGs are submitted to GAD
          after EPA staff have authorized start of work (generally,
          of  course,   such authorization*  should not  b«  given)
          (Attachment  1).

     o    A memorandum signed by Jon Cannon, which makes clear that
          EPA  staff should  not be involved  in selecting  other
          agencies'  contractors or subcontractors  under  lAGs
          (Attachment  2).

     o    A memorandum from Scott McMoran and concurred in by Steve
          Pressman, OGC, which clarifies the availability period of
          funds under  lAGs (Attachment 3).

     o    A  list  of the statutory  and  related authorities which
          authorize  the   agency to enter  into  lAGs   with  an
          explanation  of when to use them  (Attachment 4).

     If you  have questions  on  this guidance, please call  Scott
McMoran in the Grants  Information and Analysis Branch  on  (202)  260-
4392.

ATTACHMENTS

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      \      UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
            '        .    WASHINGTON, D.C. 20460
                                                         AOMINISTSAT C'.
                                                         AND RESOURCE 3
                                                         MANAGEMEV

MEMORANDUM

SUBJECT:  Availability .of  IAG  Funds
            u&te/foyA^i-—
FROM:     ScottMcMoran, Chief
          Grants Information and Analysis  Branch

TO:       Steve Pressman,  Chief
          Office of  General Counsel Grants Branch


     Several  offices have, asked questions concerning when  funds
expire  under  Interagency Agreements,   i.e.,  can  no  longer  be
obligated or expended.

     In  our  opinion,   current  guidance  in  the  Compendium  of
Procedures  is fuzzy.   We, with  assistance  from the Cincinnati
Financial Management Office,   have  drafted the  following set  of
principles  based  on our understanding  of  the relevant  statutory
provisions and appropriations  law guidance.

     o    Funds  transferred for  expenses  such  as  salaries  and
          benefits,  and travel  which  cite  the  Economy Act  for
          authority. Appropriations law is clear—the funds expire
          when the parent appropriation  expires.   (31 USC  1535(d)).
          This would be true  even  if the IAG  was  for  a  project
          which was  not completed  during the availability period
          (Compendium of Procedures,  Chapter  1,  paragraph  7.g.)-

     o    Funds  transferred   for   expenses  such  as   salaries,
          benefits,  and  travel and  which  cite  CERCLA  or  the
          cooperation  provisions of  EPA's program  statutes  for
          authority  are  obligated  when  the IAG  is fully executed
          (signed by both  agencies).   The funds  are available  to
          the receiving agency  for obligation and expenditure  until
          they are  expended or  the  project  ends (Compendium  of
          Procedures, Chapter  2, paragraph III.c.l.).

     o    Funds transferred for use under a contract and which cite
          the Economy Act for  authority are obligated when the IAG
          is fully  executed.   However,  the receiving  agency must
          obligate the  funds to the contract  before  the  period of


                                                     R»cycl«d/R«cyclable
                                                     Printed with SoyCanoia in* on :a:ar '-a:

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          availability of the source appropriation ends.  Then, the
          funds are available for expenditure until  t.ie project is
          completed  or  the  contract  ends,  whichever  is  first
          (Compendium   of   Procedures,   Chapter   2,   paragraph
          III.c.l.).

     o    Funds transferred  for use under a contract or grant and
          which  cite  as  authority  CERCLA  or  the   cooperation
          provisions of EPA's statutes are obligated when the IAG
          is  fully  executed.  The funds are  available until the
          project*  is   completed,  or   the  contract/grant  ends
          (Compendium   of   Procedures,   Chapter   2,   paragraph
          III.c.l.).

     If  we  can  agree  on  these principles,  or  a  reasonable
facsimile, we can add  the appropriate  information  to each IAG so
that the program offices and  other agencies will be aware  of how we
will treat the funds.

     If you concur,  please sign the block below.  Please call Scott
McMoran on 260-4392 if you have questions.
     CONCUR:
                             _
              Steve Pressman, OGC

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SUBJECT INDEX

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SUBJECT INDEX

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                  SUBJECT INDEX

(Numbers Refer to the Module and Page in a Module)

Acquisition vs Assistance
    Approval/Decision Official role — 1.4
    Award Official role — 1.5
    Direct Benefit — 1.7; 8.11
    EPA Order — 1.4; Appendix B
        Failure to comply — 1.12
    GMO Role — 1.5
    Principle Purpose — 1.6-8
    Support or Stimulation —  1.8

Administrative Requirements
    Cooperative Agreements —  1.10-11; 2.8-9
    Grants — 1.10; 2.8-9

Application Package
    Content — 3.11; Appendix  P
    GMO Responsibility — 3.7-8
    PO Responsibility —3.7-8

Approval/Decision Official
    Roles and Responsibilities —  1.4

Assistance Identification Number -- 3.10

Assurances
    Purpose — 3.31
    Signatures — 3.31

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(Numbers Refer to the Module and Page in a Module)

Audits
    Audit Officials — 7.4
    Audit Process — 7.5-6
    Documentation — 7.7
    External
        Single Audit  Act  (Non-Federal  Audits --
        2.10;  7.2-3
    Interaction With Auditors — 7.7-8
    Interagency Agreements -- 8.15
    Internal — 7.2
    Requests — 7.3
    Surviving an Audit — 7.7-8

Automated Clearinghouse  (ACH) — 5.5

Award Package — 4.4

Award Instrument
    Assistance vs Acquisition — 1.2
    Cooperative Agreement, definition — 1.10
    Grant,  definition — 1.10
    Interagency Agreement, definition — 8.1

Carryover of Unobligated Balances  --  2.23;    App
                                              end
                                              i  x
                                              K
Certifications
    Anti-lobbying — 3.37
    Drug-free Workplace — 3.37
    Procurement System -- 3.37
    Suspension and Debarment — 3.36

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(Numbers Refer to the Module and Page in a Module)


Chcinges
    Informal Approval — 5.11-12
    Prior Written Approval — 5.8
        All Recipients — 5.9
        Exceptions for Research Awards — 5.10
        Nonprofits — 5.10
        State, Local,  Tribal Governments — 5.9-10
        Universities — 5.10

Closeout — Appendix R
    FMO Roles and Responsibilities •— 6.2; 6.17
    GMO Roles and Responsibilities — 6.2; 6.16
    Initiating — 6.1; 6.5
    PO Roles and Responsibilities — 6.2; 6.15
    Products/Reports
        Inventions — 6.6
        Peer Review — 6.7
        Publications -- 6.7-8
    Property Disposition — 6.9-12
    Recipient Responsibilities — 6.2;6.17
    Record Retention — 6.13-14
    Repayment of Debts — 6.8
    Timing — 6.3-4

Code of Federal Regulations
    Force and Effect of Law -- 2.11
    General Administrative Regulations
        Nonprofits — 2.15
        State,   Local  Governments,   and  Indian
        Tribes — 2.16
        Universities — 2.15
    Intergovernmental Review — 2.13

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(Numbers Refer to the Module and Page in a Module)

    Program Specific Regulations — 2.19

Competition
    Justification in Decision Memorandum —-1.14
    Requirements for — 1.14

Conferences — 1.9

Conditions
    High Risk Applicants/Recipients -- 4.9
    Special Conditions — 4.9
    Terms and Conditions — 4.8-9

Conflicts of Interest
    Deputy Ethics Officials — 1.15
    EPA Employees — 1.15
    Preferential Treatment -- 1.15
    Recipient Code of Conduct —1.16
    Recipient Decisions — 1.16

Confidential Business Information —  3.9

Cooperative Agreement — 1.11

Cooperation Authorities --8.5-6

Cost Principles — 2.10
    Allocable —3.24
    Allowable — 3.24
    Eligible — 3.23
    Preaward — 3.25-26
    Reasonable — 3.23

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(Numbers Refer to the Module and Page in a Module)


Cost Sharing
    Federal vs Recipient Share — 3.18-19
    In-kind — 3.19

Debarment and Suspension — 2.17; 3.36

Decision Memorandum
    Assistance Agreement — 1.4; 4.6-7; 8.12-13
    Interagency Agreement — 8.10-11

Delegations of Authority — 2.3-4; Appendix F & G

Deviations
    Actions
        Can Deviate From — 5.15
        Cannot Deviate From — 5.15
    Approval/Disapproval Authority — 5.14
    Content of Request — 5.15

Disadvantaged  Business  Utilization  Plan—2.24;
    8.15; Appendix M

Disputes
    Disputable Activities — 5.16
    Nondisputable Activities — 5.16

Economy Act of 1932 — 8.5

Equipment -- 3.27

Executive Orders — 2.5-7

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(Numbers Refer to the Module and Page in a Module)

Federal  Grant and  Cooperative  Agreement  Act —
    1.2-3; Appendix A

Federal Statutes — 2.2; Appendix F

Freedom of Information Act — 3.9

Funding Package — 4.5-7

Guidance, Program
    Distribution — 3.2-3
    National Program Manger — 3.2
    Purpose — 3.2
    Regional — 3.2

Indian Tribes
    Intergovernmental Reviews — 2.12

Indirect Cost Rate Agreements — 3.16;  8.15

In kind Assistance — 1.12; 3.17

Interagency Agency Agreements
    Authority — 8.4-7
    Decision Memorandum — 8.10-11
    Federal lAGs ~ 8.1-2
    Funds Out — 8.1; 8.12
    Funds In — 8.1; 8.12
    Guidance — 8.8
    Intergovernmental Agreement  — 8.2; Appendix T
    International lAGs — 8.3
       Authority — 8.7
       Funds From Foreign Governments — 8.3

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(Numbers Refer to the Module and Page in a Module)

    Limits on Availability of Funds — 8.9
    Memorandum of Understanding  (MOU) — 8.2
    Ordering Agency — 8.1
    Payment/Billing — 8.13-14
        Advance — 8.10;  8.13
        Reimbursement —  8.13
    Policy Agreements — 8.2
    Requirements — 8.15
    Servicing Agency — 8.1
    Travel — 8.10

Intergovernmental Cooperation Act  —  8.5

Intergovernmental Review — 2.12-14

International Agreements
    Approvals — 3.40; 8.3
    Department of State Role — 3.40; 8.3
    Office  of International  Activities Role  —
    3.40; 8.3

Minority   Business   Enterprise/Women   Business
Enterprise
    EPA Plan -- 2.6; 2.24; 8.11
    Executive Orders — 2.6
    Objectives — 2.24
    Reports — 6.6

Monitoring
    In-house Reviews — 5.2-4
    On-site Reviews — 5.2

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(Numbers Refer to the Module and Page in a Module)

Official Files — Appendix Q
    Grants Management Office — 5.14; 8.14
    Program Office — 8.14

OMB Circulars
    Applicability to Federal Agencies — 2.9
    Applicability to Recipients — 2.9
    Nonprofits
        Administrative Requirements  (A-110)  —  2.9
        Cost  Principles  (A-122)  — 2.10
        Audits (A-133)  — 2.10
    State, Local Governments, and Indian Tribes
        Administrative Requirements  (A-102)  —  2.9
        Cost  Principles  (A-87)  — 2.10
        Audits (A-128)  ~ 2.10
    Universities
        Administrative Requirements  (A-110)  —  2.9
        Cost  Principles  (A-21)  — 2.10
        Audits (A-133)  -- 2.10

Payment
    Advance
        Automated Clearinghouse (ACH) -- 5.6
        Working Capital  Advance — 5.7
    Reimbursement — 5.6

Peer and Publication Review —  6.8-9; Appendix S

Performance Based Assistance — 2.24; Appendix L

Pollution Prevention -- 2.25; Appendix  O

Preapplication Assistance — 3.4-6

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(Numbers Refer to the Module and Page in a Module)

Principle Purpose
    Grants vs Contracts — 1.3

Procurement
    Certification Form (EPA Form 5700-48) — 3.37
    MBE/WBE Requirements — 2.6; 2.24

Program Guidance
    Annual Guidance — 3.2-3
    Annual Planning Process — 3.2

Program Income — 3.20-21

Project Narrative/Workplan — 3.12;  3.32
    Continuing  Environmental Program  Grants   —
    3.33
    Key Persons — 3.33
    Negotiations — 3.32-33
    Purpose — 3.32
    Technical Review — 3.12; 3.32

Property
    Acquisition — 3.29
    Disposition — 6.3; 6.7
    EPA Interest in Property — 3.30
    Exempt Property — 3.28
    Intangible — 3.27
    Personal — 3.27
    Real — 3.28
    Supplies — 3.27
    Title — 3.29-30

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(Numbers Refer to the Module and Page in a Module)

Quality Assurance/Quality Control
    Management Plan — 3.38
    PO responsibilities — 3.39
    Program Plan — 3.38
    Project Plan — 3.38
    Requirements — 3.38

Recipient Performance
    Coordination -- 5.18
    Noncompliance — 5.18
    Performance Based Assistance — 5.19

Recycled Paper — 2.22, Appendix I
Regulatory
    40 CFR
    40 CFR
    40 CFR
    40 CFR
    40 CFR
    40 CFR
    40 CFR
    40 CFR
    40 CFR
    40 CFR
Authorities
Part 29 ~ 2.12
Part 30 — 2.15;
Part 31 — 2.16;
Part 32 — 2.17
Part 34 — 2.18
Part 35 — 2.19
Part 40 — 2.20;
Part 45 — 2.20;
Part 46 — 2.21;
Part 47 — 2.21;
Appendix D
Appendix E
Appendix H
Appendix H
Appendix H
Appendix H
Reports
    GMO Responsibilities -
    PO Responsibilities —
    Requirements -- 5.2-4
               - 5.2-4
                5.2-4
                        10

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(Numbers Refer to the Module and Page in a Module)

Reviews
    Administrative — 3.7
    Budget
        Categories — 3.14-16
        GMO Responsibilities— 3.14
        PO Responsibilities — 3.14
    Extramural (non-EPA) Reviews — 3.8
    Peer — 6.8
    Technical — 3.7-8; 5.3-4
    Time Frames — 3.9

Roles and Responsibilities
    Award Official — 4.10
    Applicant  — 3.44; 4.13
    Financial  Management  Office  —  3.44;  4.13;
    5.22
    Grants Management Offices — 3.43; 4.3; 4.10;
        4.12;  5.22;  8.14
    MBE/WBE Coordinators — 3.45; 4.13; 5.22
    Office of General Counsel/Regional Counsel  --
        3.44;  4.13;  5.24
    Project/Program  Offices  — 1.5;  3.41-42; 4.11;
        5.20-21;  8.12-13
    Recipient — 4.10; 4.13; 5.23
    Senior Resource Official — 1.4;  4.2; 4.13

Solicitations  (Research and Development) -- 3.2-3

Substantial Involvement —  1.11

Timely Award — 2.25; Appendix N

Transferring an Award -- 5.13

                        11

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(Numbers Refer to the Module and Page in a Module)

Travel — 3.16; 8.7;  8.11

Workplan
    Review — 3.32-33
    Tips  for Negotiating — 3.34-35
                          12

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GLOSSARY

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GLOSSARY

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                          GLOSSARY

1.    ACCRUED  EXPENDITURES:   The  charges  incurred  by the
     recipient during a given period requiring the provision of funds for
     (a)   goods and other tangible property received;

     (b)   services performed by employees, contractors, subrecipients,
          and other payees, and

     (c)   other amounts becoming owed under programs for which no
          current services or performance is required (such as annuities,
          insurance claims, and other benefit payments. (40 CFR Parts 30
          &31)

2.    ACCRUED INCOME; The sum of:
     (a)   earnings during a given period from services performed by the
          recipient and  goods and other tangible property delivered to
          purchasers, and

     (b)   amounts becoming owed to the recipient for which no current
          services or performance is required by the recipient. (40 CFR
          Parts 30 & 31)

3.    ACQUISITION COST OF EQUIPMENT; The net invoice unit price
     of the equipment, including the cost of modifications, attachments,
     accessories, or auxiliary apparatus necessary to make the property
     Disable for the purpose for which it was acquired. Other charges such
     as the cost of installation, transportation, taxes, duty or protective in-
     transit insurance,  shall  be included or excluded from the  unit
     acquisition cost in accordance with the recipient's regular accounting
     practices. (40 CFR Parts 30 & 31)

4.    ADMINISTRATIVE REQUIREMENTS: Those matters common to
     grants in general, such as financial management, kinds and frequency
     of reports, and retention of records. These are distinguished from

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     programmatic requirements, which concern matters that can be
     treated only on a program-by-program or grant-by-grant basis, such
     as activities  that can be supported by grants under a particular
     program. (40 CFR Part 31)

5.    ADVANCE;   A  payment  made  by treasury  check or  other
     appropriate payment mechanism to a recipient upon its request either
     before outlays are made by the recipient or through the use of
     predetermined payment schedules. (40 CFR Part 30)

6.    ALLOCABLE COSTS:
     (a)  A cost is allocable to a particular cost objective if the goods or
          services involved  are  chargeable or assignable to such cost
          objective in accordance with relative benefits received.

     (b)  All activities which  benefit from  the governmental  unit's
          indirect cost, including unallowable activities and services
          donated to the governmental unit by third parties, will receive
          an appropriate allocation of indirect costs.

     (c)  Any cost allocable  to a particular Federal award  or cost
          objective under the principles provided for in OMB Circular A-
          87 may not be charged to other Federal awards to overcome
          fund deficiencies, to avoid restriction imposed by law or terms
          of the  Federal awards, or for other reasons.  However, this
          prohibition  would not  preclude governmental units from
          shifting costs that are allowable under two or more awards in
          accordance with existing program agreements.

     (d)  Where an accumulation of indirect costs will ultimately result
          in charges to a Federal award, a cost  allocation plan will be
          required as  described in Attachments C, D, and E of OMB
          Circular A-87. (OMB Circular A-87)

7.    ALLOTMENT: An amount representing a state's share of funds
     requested in the president's budget or appropriated by Congress for

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     an environmental program, as EPA determines after considering any
     factors indicated by 40 CFR Part 35-Subpart A.  The allotment is not
     an entitlement but rather the objective basis for determining the
     range for a state's planning target.  (40 CFR Part 35—Subpart A)

8.    ALLOWABLE  COSTS:  Those project costs  that  are:  eligible,
     reasonable, necessary, and allocable to the project; permitted by the
     appropriate Federal cost principles, and approved by EPA in the
     assistance agreement. (40 CFR Part 30)

9.    AMENDMENT:
     (a)   FORMAL AMENDMENT;  A  written  modification of an
          assistance agreement signed by both the Award Official and the
          authorized  representative of  the recipient.    (Assistance
          Administration Manual)

     (b)   INFORMAL AMENDMENT:    Proposed  project   change
          which does not substantially alter the objective or scope of the
          project.

10.   APPLICABLE CREDITS:
     (a)   Those receipts or reduction of expenditure-type transactions
          that offset or reduce expense items allocable to Federal awards
          as direct or indirect costs, e.g., purchase discounts; rebates or
          allowances,  recoveries  or indemnities on losses,  insurance
          refunds  or  rebates, and adjustments of overpayments or
          erroneous charges. To the extent that such credits accruing to
          or received by the governmental unit relate to allowable costs,
          they shall be credited to the Federal  award either as a  cost
          reduction or cash refund, as appropriate.

     (b)   In  some instances, the  amounts received from the Federal
          Government to finance  activities or service operations of the
          governmental unit should  be treated as applicable credits.
          Specifically, the concept of netting such credit items (including
          any  amounts  used  to meet  cost  sharing  or  matching

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          requirements) should be recognized in determining the rates or
          amounts to be charged to Federal awards. (See Attachment B
          of OMB Circular A-87, item 15, "Depreciation and  use
          allowances," for areas of potential application in the matter of
          Federal financing of activities.)

10.   APPLICANT:  Any entity that files an application or unsolicited
     proposal for EPA financial assistance under 40  Chapter I—
     Environmental Protection Agency, Subchapter A — General. (40 CFR
     Part 30)

11.   APPROVAL MEMO: A memo originated by the Project Officer and
     concurred in by the immediate supervisor which denotes work plan
     and Federal funding approval. (Region 9)

12.   APPROVAL OFFICIAL: An EPA official delegated the authority to
     approve   or  reject   applications   for   assistance  and   the
     technical/programmatic terms and conditions of proposed assistance
     projects.  (Assistance Administration Manual)

13.   ASSISTANCE AGREEMENT; The legal instrument EPA uses to
     transfer money, property, services, or anything of value to a recipient
     to accomplish a public purpose. It is either a grant or a cooperative
     agreement and will specify:  budget and project periods; the Federal
     share of eligible project costs; a  description  of the work to  be
     accomplished, and any terms and conditions/special conditions.

14.   AUTOMATED  CLEARING  HOUSE  (ACH);  Electronic wire
     transfer system to pay recipients through the Federal Reserve System
     and their local bank.  (Replaced  former letter of credit system.)
     (Region 9)

15.   AWARD:   (see  also  "Assistance Agreement",  "Cooperative
     Agreement", "Grant", "Grant Agreement")
     (a)   Financial assistance that provides  support or stimulation to
          accomplish a public purpose. Awards include grants and other

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          agreements in the form of money or property in lieu of money
          by the Federal Government to an eligible recipient. The term
          does not include: technical assistance which provides services
          instead of money, other assistance in the form of leans, loan
          guarantees, interest subsidies, or insurance; direct payments of
          any kind to individuals, and contracts which are required to be
          entered  into and administered under procurement laws and
          regulations. (40 CFR Part 30)

     (b)   Grants,  cost reimbursement contracts and other agreements
          between a State, local and Indian tribal government and the
          Federal Government. (OMB Circular A-87)

16.   AWARD OFFICIAL:  The EPA official with the authority to execute
     assistance agreements and to take other actions authorized by 40 CFR
     Chapter I, Subchapter A and by EPA Orders. (40 CFR Part 30) The
     EPA official delegated the authority to execute assistance agreements.
     (Assistance Administration Manual)

17.   AWARDING AGENCY:
     (a)   With  respect to  a  grant, cooperative  agreement,  or cost
          reimbursement contract, the Federal agency, and

     (b)   With respect to a subgrant/subaward, the party that awarded
          the subgrant/subaward. (40 CFR Part 31 & OMB Circular A-
          87)

18.   BUDGET PERIOD: (see also "Funding Period"): The length of time
     EPA specifies in an assistance agreement during which the recipient
     may expend or obligate Federal funds.

19.   CASH CONTRIBUTIONS;
     (a)   The recipient's  cash  outlay, including  the  outlay of money
          contributed to the recipient or subrecipient by other public
          agencies  and institutions,  and  private  organizations and
          individuals (i.e., third parties).  When authorized by federal

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          legislation, Federal funds  received from other assistance
          agreements may be considered as recipient or subrecipient cash
          contributions. (40 CFR Parts 30 & 31)

     (b)  Actual non-Federal dollars that a recipient expended for goods
          and services and real or personal property used to satisfy cost
          sharing   requirements   (see   "In-kind   Contributions").
          (Assistance Administration Manual)

20.   CENTRAL  SERVICE  COST  ALLOCATION PLAN:    The
     documentation   identifying,  accumulating,  and  allocating  or
     developing billing rates based on the  allowable costs of services
     provided  by  a  governmental unit on a  centralized  basis to its
     departments  and agencies.  The costs of these services may be
     allocated or billed to users.

20.   CLOSEOUT:
     (a)  The  process by which a Federal awarding agency determines
          that all applicable administrative actions and all required  work
          of the award have been completed  by the recipient and federal
          awarding agency. (40 CFR Part 30)

     (b)  The  final  EPA actions to assure satisfactory completion of
          project work and administrative requirements: the submission
          of acceptable required final reports; financial settlement; the
          resolution  of  any outstanding issues  under an assistance
          agreement, and the notification of the recipient.  (Assistance
          Administration Manual)

21.   CLOSEOUT MEMO:  The Project Officer's memo which documents
     their review of the recipient's financial status report against their
     performance; states that performance has  been completed, and
     identifies the disposition of any remaining Federal funds. (Region 9)

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22.   COGNIZANT AGENCY:   The Federal agency  responsible  for
     reviewing, negotiating, and approving cost allocation plans or indirect
     cost proposals developed under OMB Circular A-87 on behalf of all
     Federal agencies.  OMB publishes a listing of cognizant agencies.
     (OMB Circular A-87)

23.   COMMITMENT:
     (a)   The official reservation of funds and authorization to incur
          obligations. (Assistance Administration Manual)

     (b)   A formal action to reserve funds for a specific purpose in the
          future (e.g., a  grant/cooperative agreement). For financial
          assistance, the commitment  is reflected  by  a  commitment
          notice. (Region 9)

24.   CONTINUATION: An extension of an assistance agreement for an
     additional funding/budget period for a project the  agency initially
     agreed  to  fund  for a  definite number of years.   (Assistance
     Administration Manual)

25.   CONTINUATION AWARD: (see also "Renewal") An  assistance
     agreement after the initial award, for a project which has more than
     one budget period in  its approved project period, or annual awards,
     after  the first award, to state, interstate, or local  agencies  for
     Continuing Environmental Programs. (40 CFR Part 30)

26.   CONTINUING    ENVIRONMENTAL    PROGRAM:       A
     state/interstate/local environmental agency pollution control program
     which will not be completed within a definable time period.  (See 40
     CFR Part 35-Subpart A.)

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27.   CONTINUING RESOLUTION: Legislation enacted by Congress to
     provide budget  authority for Federal agencies and/or specific
     activities to continue in operation until the regular appropriations are
     enacted.   Continuing Resolutions  are  enacted  when  action on
     appropriations is not completed by the beginning of a Fiscal Year.
     ("Principles of Federal Appropriations Law")

28.   CONTRACT;
     (a)   A procurement contract under a  grant or subgrant,  and  a
          procurement subcontract under a contract. (40 CFR Parts 30
          &31)

     (b)   A mutually binding legal relationship obligating the seller to
          furnish the supplies or services (including construction) and the
          buyer to pay for them. It includes all types of commitments
          that obligate the government to an expenditure of appropriated
          funds and that, except as otherwise authorized, are in writing.
          In addition to bilateral instruments, contracts include (but are
          not limited to): awards and notices of  awards; job orders or
          task orders issued under basic  ordering agreements; letter
          contracts; orders, such as purchase orders, under which the
          contract  becomes  effective  by   written  acceptance  or
          performance; and, bilateral contract modifications. Contracts
          do not include grants and cooperative agreements covered by 31
          U.S.C. 6301 et seq.

9.    CONTRACTOR: Any party to whom a recipient awards a contract.

30.   COOPERATIVE AGREEMENT: (see also "Assistance Agreement",
     "Award"):  An  assistance agreement in  which substantial EPA
     involvement is anticipated during the performance of the project
     (does not include fellowships). (Federal Grant  and  Cooperative
     Agreement Act)

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31.  COST: An amount as determined on a cash, accrual, or other basis
     acceptable to the Federal awarding or cognizant agency. It does not
     include transfers to a general or similar fund. (OMB Circular A-87)

32.,  COST ALLOCATION PLAN (CAP): Central service cost allocation
     plan, public assistance cost allocation plan, and indirect cost rate
     proposal.  (OMB Circular A-87)

     (a)  "Central  service cost allocation plan" - the documentation
          identifying,  accumulating,  and  allocating  or  billing the
          allowable costs of services provided by a governmental unit on
          a centralized basis to its departments/agencies as described in
          Attachment C of OMB Circular A-87.

     (b)  "Public assistance cost allocation  plan"  - the documentation
          identifying, accumulating, and distributing the allowable costs
          of services provided by a public assistance agency/department
          in support  of  all federal financial assistance  programs
          administered or supervised by  that  agency/department  as
          described in Attachment D of OMB Circular A-87.  A narrative
          description of the procedures that will be used in identifying,
          measuring and allocating all administrative costs to all of the
          programs administered or supervised by State public assistance
          agencies as described in Attachment D of  OMB Circular A-87.

     (c)  "Indirect cost rate proposal" - the documentation prepared by
          a governmental unit or component thereof to substantiate its
          request for the establishment of an indirect cost rate  as
          described  in Attachment E of OMB Circular A-87.

33.  COST OBJECTIVE:   A  function,  organizational  subdivision,
     contract, grant, or other activity for which cost data are needed and
     for which costs are incurred. (OMB Circular A-87)

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4.    COST SHARING:  (see also "Matching Funds") The portion of
     allowable project costs that a recipient contributes toward completing
     its project (i.e., non-Federal share, matching share). (40 CFR Part 30)

35.   COST-TYPE CONTRACT: A contract or subcontract under a grant
     in which the contractor or subcontractor is paid on the basis of the
     costs it incurs, with or without a fee. (40 CFR Part 31)

36.   DATE OF COMPLETION; The date on which all work under an
     award is completed  or the date on  the award document, or any
     supplement or amendment thereto, on which Federal sponsorship
     ends. (40 CFR Part 30)

37.   DECISION OFFICIAL; (see "Approval Official")

38.   DEVIATION;   Written  approval  from  the Director,  Grants
     Administration Division for exception(s) from financial assistance
     regulations not based  on statutory or Executive Order requirements.
     (Grants Administration Division)

39.   DISALLOWED COSTS; Those charges to an award that the Federal
     awarding agency determines to be unallowable, in accordance with
     the applicable Federal cost principles or other terms and conditions
     contained in the award. (40 CFR Part 30)

40.   EQUIPMENT;    Tangible, nonexpendable,  personal  property
     including exempt property charged directly to the award having a
     useful life of more than one year and an acquisition cost of $5,000 or
     more per unit. However, consistent with recipient policy, lower limits
     may be established.  A  recipient may use its own  definition of
     equipment provided that such  definition would at least include all
     equipment defined above. (40 CFR Parts 30 & 31)
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41.   ENVIRONMENTALLY RELATED MEASUREMENTS; Any data
     collection  activity or  investigation  involving  the  assessment of
     chemical, physical, or biological factors in the environment which
     affect human health or the quality of life.

42.   EXCESS PROPERTY; Property under the control of any federal
     awarding agency that, as determined by the head thereof, is no longer
     required for its needs or the discharge of its responsibilities. (40 CFR
     Part 30)

43.   EXEMPT  PROPERTY;  Tangible personal  property acquired in
     whole or in part with Federal funds, where the Federal awarding
     agency has statutory authority to vest title in the recipient without
     further obligation to the Federal Government.  An example of exempt
     property  authority  is  contained  in  The  Federal  Grant  and
     Cooperative Agreement Act (31 U.S.C. 6306) for property acquired
     under an award to conduct basic or  applied research by a non-profit
     institution  of higher education or non-profit organization  whose
     principal purpose is conducting scientific research. (40 CFR Part 30)

44.   EXPENDITURE REPORT;
     (a)   For non-construction grants, the SF-269  "Financial  Status
          Report" (FSR) (or equivalent report);

     (b)   For  construction grants, the  SF-271  "Outlay  Report and
          Request for Reimbursement" (or equivalent report). (40 CFR
          Part 31)

45.   FEDERAL AWARDING  AGENCY;  The  Federal  agency  that
     provides an award to the recipient. (40 CFR Part 30)

46.   FEDERAL FUNDS AUTHORIZED; The total amount of Federal
     funds obligated by the Federal Government for use by the recipient.
     This amount may include any authorized carryover of unobligated
     funds from prior funding  periods when permitted by agency
     regulations or agency implementing instructions. (40 CFR Part 30)

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47.   FEDERAL SHARE OF REAL PROPERTY, EQUIPMENT, OR
     SUPPLIES: That percentage of the property's acquisition costs and
     any improvement expenditures paid with Federal funds. (40 CFR
     Part 30)

48.   FEDERALLY RECOGNIZED INDIAN TRIBAL GOVERNMENT;
     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 through the
     Bureau of Indian Affairs. (OMB Circular A-87 & 40 CFR Part 31)

49.   FINANCIAL STATUS REPORT (FSR): A standard, government
     wide report recipients must submit to the Federal funding agency
     that identifies  the status of funds for a specific grant or cooperative
     agreement. (40 CFR Part 31)

50.   FUNDING PERIOD: (see also "Budget Period")  The period of time
     when Federal funding is available for obligation by the recipient. (40
     CFR Part 30)

51.   GOVERNMENT;   A State or  local  government or a Federally
     recognized Indian tribal government. (40 CFR Part 31)

52.   GRANT:  (see  also "Assistance Agreement", "Award", "Cooperative
     Agreement", "Grant Agreement") An award of financial assistance,
     including cooperative agreements, in the form of money, or property
     in lieu of money, by the Federal government to an eligible grantee.
     The term does  not 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  grantee is not
     required to account for. (40 CFR Part 31)
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53.   GRANT AGREEMENT:   (see also "Assistance Agreement") An
     assistance agreement that does not substantially involve EPA in the
     project and where the recipient has the authority and capability to
     complete all elements of the program (does not include fellowships).
     (40 CFR Part 30)

54.   GRANT SPECIALIST: The EPA official designated in the assistance
     agreement as EPA's administrative contact with the recipient. The
     grant specialist provides administrative guidance to recipients and
     Project Officers; reviews and approves the administrative portion of
     the application; prepares  the  assistance  agreement; evaluates
     effectiveness/compliance with administrative conditions, and closes
     out assistance agreements.

55.   GRANTEE: (see also "Recipient") The government to which a grant
     is  awarded and which is  accountable 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 grant award
     document. (40 CFR Part 31)

56.   INDIRECT COSTS: Costs
     (a)    incurred for a common or joint purpose benefiting more than
          one cost objective and

     (b)   not readily assignable  to  the  cost  objectives  specifically
          benefitted without effort disproportionate to the  results
          achieved. (OMB Circular A-87)

57.   INDIRECT COST RATE; A device for determining in a reasonable
     manner the proportion of indirect costs each program should bear.
     It is the ratio (expressed  as a percentage) of the indirect costs to a
     direct cost base. (OMB Circular A-87)

58.   INDIRECT COST RATE AGREEMENT; An agreement between
     the recipient and the cognizant Federal agency which identifies the
     basis for the indirect cost rate. (Region 9)
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59.   INDIRECT  COST  RATE  PROPOSAL:   The documentation
     prepared  by a  governmental unit or  component  thereof  to
     substantiate its request for the establishment of an indirect cost rate
     as described in OMB Circular A-87.

60.   IN-KIND CONTRIBUTION; The value of a non-cash contribution to
     meet a recipient's cost sharing requirements. An in-kind contribution
     may consist of charges for real property and equipment or the value
     of goods and services directly benefiting the EPA funded project.  (40
     CFR Part 30) note: the assistance amount may also include an EPA
     in-kind contribution. (See "cost sharing" and "cash contributions.")
     (Assistance Administration Manual)

61.   INTEGRATED FINANCIAL MANAGEMENT SYSTEM (IFMS):
     EPA's official automated accounting system.

62.   INTERAGENCY/INTERGOVERNMENTAL
     AGREEMENT/INTERNATIONAL AGREEMENT (IAG):
     (a)   a written agreement between Federal agencies under which
          goods and services are provided in exchange for funds, or where
          services are provided without payment.

     (b)   A written agreement between a Federal agency and a State  or
          local  government under which the State or local government
          reimburses  the Federal agency for the costs of providing a
          specific  technical  service,  e.g.,  statistical  studies  and
          compilations, technical tests and evaluations, training, surveys,
          reports, documents, and data.

     (c)   A written agreement between a Federal agency and a foreign
          government under which work will be conducted for,  or
          services provided to, a foreign government or international
          organization. (Grants Administration Division)

63.   INTANGIBLE PROPERTY AND DEBT INSTRUMENTS: Means
     (but is  not limited to) trademarks, copyrights, patents and patent

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     applications and  such  property  as  loans, notes  and other debt
     instruments,  lease agreements, stock and other instruments of
     property ownership, whether considered tangible or intangible. (40
     CFR Part 30)

64.   LOCAL GOVERNMENT;  A county, municipality, city, town,
     township, local public authority (including any public and Indian
     housing agency under the United States Housing Act of 1937), school
     district, special district, intrastate district, council of governments
     (whether or not incorporated as a nonprofit corporation under State
     law),  any other regional or interstate government entity, or  any
     agency or instrumentality of a local government. (OMB Circular A-
     87 & 40 CFR Part 31)

65.   MAINTENANCE OF EFFORT: A requirement contained in certain
     legislation or regulations that a recipient must maintain/contribute a
     specified level of financial effort in a specified area in order to receive
     Federal assistance funds, which ensures that those Federal funds are
     used to supplement, but not supplant, expenditures of the recipient's
     funds. (Assistance Administration Manual)

66.   MATCHING FUNDS:  (see also  "Cost Sharing") The portion of
     allowable project costs a recipient contributes to a Federally funded
     project (sometimes determined by  statute). The match may include
     in-kind as well as cash contributions.  (Region 9)

67.   NEGOTIATION; The process of give and take by assistance Project
     Officers and applicants to agree on  work plans and funds available to
     carry out the work plan activities.  (Region 9)

68.   NONEXPENDABLE PERSONAL  PROPERTY; Personal property
     with a useful life of at least two years and an acquisition cost of $500
     or more. (Assistance Administration Manual)
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69.   OBLIGATIONS:  The amounts of orders placed, contracts and
     grants/subgrants awarded, goods and services received and similar
     transactions during a given period that will require payment by the
     grantee/recipient during the same or a future period.  (40 CFR Parts
     30 & 31)

70.   OFFICIAL FILE; The administrative file for each  assistance
     agreement  (or  each application or unsolicited proposal) that is
     established and  maintained by the appropriate grants management
     office and/or State office when provided  for under  a  delegation
     agreement.  (The official technical file and the official financial
     management file both complement the official administrative file.)
     (Assistance Administration Manual)

71.    OMB: The U.S. Office of Management and Budget.

72.   OUTLAYS OR  EXPENDITURES:  Charges made to the project or
     program.  They may be reported on a cash or accrual basis. For
     reports prepared on a cash basis, outlays are the sum of actual cash
     disbursements for direct charges for goods and services, the amount
     of indirect expense incurred [charged], the value of [third-party] in-
     kind contributions applied, and the amount of cash advances and
     payments made to contractors and subgrantees [subrecipients]. For
     reports prepared on an accrued expenditure [accrual] basis, outlays
     are the sum of actual cash disbursements [for goods and services], the
     amount of indirect expense incurred, the value of [third-party] in-
     kind contributions applied, and the new [net] increase (or decrease)
     in the amounts  owed by the grantee for goods and  other property
     received,  for  services performed  by employees,  contractors,
     subgrantees/subrecipients, subcontractors, and other payees, and
     other amounts becoming owed under programs for which no current
     services or  performance are required, such as annuities, insurance
     claims, and other benefit payments.  (A combination of  OMB
     Circulars A-102 & A-110; 40 CFR Part 35)
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73.   OUTPUT:  An activity or product which the applicant agrees to
     complete during the budget period.

74.   PERCENTAGE OF COMPLETION METHOD:  A system under
     which payments are made for construction work according to the
     percentage of completion of the  work, rather than  to  the
     grantee's/recipient's cost incurred. (40 CFR Part 31)

75.   PERSONAL PROPERTY:
     (a)   Property of any kind except real property.  It may be tangible,
          having physical existence, or intangible, having no physical
          existence, such as copyrights, patents, or securities. (40 CFR
          Part 30)

     (b)   Property other than real property. It may be tangible (having
          physical  existence), such as  equipment  and  supplies,  or
          intangible (having no physical existence), such as patents,
          inventions, and copyrights.  (40 CFR Part 30 & Assistance
          Administration Manual)

76.   PLANNING TARGET: The amount of financial assistance which the
     Regional Administrator suggests that an applicant for Continuing
     Environmental Program Support (State, interstate or local agency)
     consider in developing its application and work program. (Assistance
     Administration Manual)

77.   PRICE ANALYSIS;  The  process of evaluating a prospective price
     without regard to the contractor's  separate cost elements and
     proposed profit. Price analysis determines the reasonableness of the
     proposed contract price  based on  adequate price competition,
     previous experience with similar work, established catalog or market
     price, law, or regulation. (Assistance Administration Manual)

78.   PRINCIPAL INVESTIGATOR; (see "Project Manager")
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79.   PRIOR APPROVAL:   Documentation/written approval by an
     authorized official evidencing consent prior to incurring specific cost.
     (40 CFR Parts 30 & 31)

80.   PROFIT; The net proceeds obtained by deducting all allowable costs
     (direct and indirect) from the price. (Because this definition of profit
     is based on applicable Federal Cost Principles, it may vary  from
     many firms' definition of profit, and may correspond to those firms'
     definition of "fee".)

81.   PROGRAM ELEMENT:  One of the major groupings of outputs of
     a  Continuing  Environmental  Program  (e.g.,  administration,
     enforcement,  monitoring). (Assistance Administration  Manual)

82.   PROGRAM INCOME:
     (a)   Gross income earned by the recipient that is directly generated
          by a supported activity or earned as a result of the award (see
          exclusions in paragraphs 30.24(e) and (h)). Program income
          includes, but  is not  limited to,  income from fees for services
          performed, the use or rental  of real or personal property
          acquired  under  Federally-funded  projects,  the  sale of
          commodities or items fabricated under an award, license fees
          and royalties on patents and copyrights, and interest on  loans
          made with award funds.  Interest earned on  advances of
          Federal funds is not program  income.  Except as otherwise
          provided in Federal awarding agency regulations  or the terms
          and conditions of the award, program income does not include
          the receipt of principal on loans,  rebates, credits, discounts, etc.,
          or interest earned on any of them. (40 CFR Part  30)

     (b)   Gross income the recipient earns during its project  period from
          charges for the project. This may include income from service
          fees, sale of commodities, trade-in allowances, or usage or rental
          fees.   Fees from royalties are program  income only if the
          Assistance Agreement so states.  Revenue generated under the
          governing powers of a State or  local government  which  could

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          have been  generated without an award is  not  considered
          program income.  Such  revenues include fines or penalties
          levied under judicial or penal power and used as a means to
          enforce   laws.    (Revenue  from  wastewater  treatment
          construction grant projects under title II of the clean water act,
          as amended, is not program income.   It must be used for
          operation and maintenance costs of the  recipient's wastewater
          facilities.) (Assistance Administration Manual)

83.   PROJECT COSTS; All allowable costs, as set  forth in the applicable
     Federal cost principles, incurred by a recipient and the value of the
     contributions made by third parties in accomplishing the objectives
     of the award during the project period. (40 CFR Part 30)

84.   PROJECT MANAGER: (see also "Principal Investigator")  The
     researcher, business  officer,  or other  person authorized and
     designated by the  recipient to serve as its principal contact with EPA.

85.   PROJECT NARRATIVE; (see  "Work plan/Work program")

86.   PROJECT OFFICER; The EPA official designated in the assistance
     agreement as EPA's program  contact with the recipient.  Project
     Officers are responsible for monitoring the project.  (Assistance
     Administration Manual)

87.   PROJECT PERIOD;
     (a)   The period  established in the award document during which
          Federal sponsorship begins and ends. (40 CFR Part 30)

     (b)   The length of time EPA specifies in the assistance agreement for
          completion  of all project work. It may be composed of more
          than one budget period. (Assistance Administration Manual)

88.   PROPERTY;  Unless otherwise stated, real  property,  equipment,
     intangible property and debt instruments. (40  CFR Part 35; 40 CFR
     Part 30)

                               19

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89.   QUALITY  ASSURANCE  NARRATIVE  STATEMENT;    A
     description included in an application which explains how precision,
     accuracy, representativeness, completeness, and comparability will be
     assessed, and which is sufficiently detailed to allow an unambiguous
     determination of the quality assurance practices to  be followed
     throughout a research project. (Assistance Administration Manual)

90.   QUALITY ASSURANCE PROGRAM PLAN:  A formal document
     which  describes an  orderly assembly  of management policies,
     objectives, principles, organizational responsibilities, and procedures
     by which  an agency or laboratory specifies how  it intends to: (a)
     produce  data  of documented  quality,  and  (b)  provide  for  the
     preparation  of Quality Assurance Project Plans and standard
     operating procedures. (Assistance Administration Manual)

91.   QUALITY ASSURANCE PROJECT PLAN;   An organization's
     written procedures which delineate how it produces quality data for
     a  specific   project  or  measurement   method.  (Assistance
     Administration Manual)

92.   REAL PROPERTY;  Land, including land improvements, structures
     and  appurtenances  thereto,  excluding  movable machinery and
     equipment.  (40 CFR Parts 30 & 31; Assistance Administration
     Manual)

93.   RECIPIENT; (see also "Grantee")
     (a)   An organization receiving financial assistance directly from
          Federal awarding agencies to carry out a project or program.
          The  term  includes public and private institutions of higher
          education, public and private hospitals, and other quasi-public
          and private non-profit organizations such as, but not limited to,
          community action agencies, research institutes, educational
          associations  and health  centers.   The  term may  include
          commercial   organizations,   foreign   or   international
          organizations (such as agencies of the United Nations) which are
          recipients, subrecipients, or contractors or subcontractors of

                               20

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          recipients or subrecipients at the discretion of the Federal
          awarding agency.  The term does not include government-
          owned contractor-operated  facilities  or research  centers
          providing continued support for mission-oriented, large-scale
          programs that are government-owned or controlled, or are
          designated as Federally-Funded Research and Development
          Centers. (40  CFR Part 30)
     (b)   Any entity which has been awarded and accepted an EPA
          assistance agreement. (Assistance Administration Manual)

94.   RECURRENT EXPENDITURES;  Those expenses associated with
     the activities  of  a Continuing  Environmental  Program.   All
     expenditures, except those for equipment  purchases  with a unit
     acquisition cost of $5,000 or more,  are considered  recurrent unless
     justified by the applicant as unique and approved as  such by the
     Award Official in the assistance award. (Assistance Administration
     Manual; 40 CFR Part 35)

95.   RENEWAL: (see also "Continuation Award") An extension for an
     additional funding/budget period for a project having no projected
     completion date, but for which Federal support must be renewed
     each year. (Assistance Administration Manual)

96.   RESEARCH AND DEVELOPMENT: All research activities, both
     basic and applied,  and  all development activities that are supported
     at universities, colleges,  and other non-profit institutions.  "Research"
     is defined as a systematic study directed toward fuller scientific
     knowledge or understanding of the subject studied.  "Development"
     is the systematic use of knowledge  and understanding gained from
     research directed toward the production of useful materials, devices,
     systems, or methods, including design and development of prototypes
     and processes.  The term research  also includes activities involving
     the training  of individuals in research techniques where such
     activities use the same facilities as other research and development
     activities and where such activities are not included in the instruction
     function. (40 CFR Part 30)

                               21

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97.   SERVICES:  A contractor's labor, time, or efforts which do not
     involve the delivery of a specific end item, other than documents,
     (e.g., Reports, design drawings, specifications).  This term does not
     include employment agreements or collective bargaining agreements.
     (Assistance Administration Manual)

98.   SHARE:  When referring to the awarding agency's portion of real
     property, equipment or supplies, share means the same percentage as
     the awarding agency's portion of the acquiring party's  total costs
     under the grant to which the acquisition cost of the property was
     charged.  Only costs are to be counted — not the value of third-party
     in-kind contributions. (40 CFR Part 31)

99.   SMALL AWARD: A grant or cooperative agreement not exceeding
     the small purchase threshold fixed at 41 U.S.C. 403(11) (Currently
     $100,000). (40 CFR Part 30 and 40 CFR Part 31)

100.  STATE:  Any of the several States of the United States, the District
     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. The term does not include any
     public and Indian housing agency under United States Housing Act
     of 1937.  (OMB Circular A-87)

101.  CONTRACT: A written agreement between an EPA recipient and
     another party (other than another public agency) and any lower tier
     agreement  for services, supplies, or construction  necessary  to
     complete  the  project.    Subagreements  include contracts and
     subcontracts for personal and professional services, agreements with
     consultants,  and  purchase  orders.  (Assistance Administration
     Manual)

102.  SUBAWARD: An  award of financial assistance in  the form of
     money, or property in lieu of money, made under an award by a
     recipient  to an eligible subrecipient or by a subrecipient to a lower
     tier subrecipient.   The  term includes financial assistance when

                                22

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     provided by any legal agreement, even if the agreement is called a
     contract, but does not include procurement of goods and services nor
     does it include any form of assistance which is excluded from the
     definition of "award". (40 CFR Part 30)

103. SUBGRANT:  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 contractual legal agreement, but  does  not include
     procurement purchases, nor does it include any form of assistance
     which is excluded from the definition of grant in 40 CFR Part 31. (40
     CFR Part 31)

104. SUBGRANTEE:  The government or other legal entity to which a
     subgrant is awarded and which is accountable to the grantee for the
     use of the funds provided. (40 CFR Part 31)

105. SUBRECIPIENT; The legal entity to which a subaward is made and
     which is accountable to the recipient for the use of the  funds
     provided.   The term  may  include foreign  or international
     organizations  (such  as  agencies of the  United Nations) at the
     discretion of the Federal awarding agency. (40 CFR Part 30)

106. SUPPLIES:
     (a)   All tangible personal property other than equipment as defined
          in 40 CFR Part 31. (40 CFR Part 31)

     (b)   AH tangible personal property excluding equipment, intangible
          property, and debt instruments, and inventions of a contractor
          conceived  or  first actually  reduced  to  practice in  the
          performance of work under a  funding agreement ("subject
          inventions"), as defined in 37 CFR 401, "Rights to Inventions
          Made by Nonprofit Organizations and Small Business Firms
          Under Government   Grants, Contracts,  and Cooperative
          Agreements."  (40 CFR Part 30)
                               23

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107.   SUSPENSION:
     (a)   An  action by a federal awarding agency that temporarily
          withdraws  Federal  sponsorship under  an award, pending
          corrective action by the grantee/recipient or pending a decision
          to terminate the  award by the Federal awarding agency.
          Suspension of an award is a separate act from suspension under
          Federal agency regulations implementing E.O.s 12549 And
          12689, "Debarment and Suspension." (40 CFR Part 30)

     (b)   Depending on the context, either (1) temporary withdrawal of
          the authority to obligate grant funds pending corrective action
          by the  grantee or subgrantee or a decision to terminate the
          grant, or (2) an action  taken  by  a Suspending Official in
          accordance with agency regulations implementing E.0.12549
          to immediately exclude  a person from participating in grant
          transactions for  a  period,  pending  completion  of an
          investigation and such legal or debarment proceedings as may
          ensue.  (40 CFR Part 31)

108.  TERMINATION:
     (a)   Permanent withdrawal of the authority to obligate previously
          awarded grant funds before that authority would otherwise
          expire.   It also means the  voluntary relinquishment  of that
          authority by the grantee or subgrantee. Termination does not
          include: (1) withdrawal of funds awarded on the basis of the
          grantee's underestimate of the unobligated balance in  a prior
          period;  (2) withdrawal  of the  unobligated balance  as of the
          expiration of a grant; (3) refusal to extend a grant or award
          additional  funds,  to make a competing or  noncompetihg
          continuation, renewal, extension, or supplemental award; or (4)
          voiding of a grant upon determination  that the award was
          obtained fraudulently, or was otherwise illegal or invalid from
          inception.  (40 CFR Part 31)
     (b)   The cancellation of Federal sponsorship, in whole or in part,
          under an agreement at any time prior to the date of completion.
          (40 CFR Part 30)

                               24

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     (c)   The cancellation of an assistance agreement, in whole or in part,
          before the scheduled project completion date. The recipient is
          entitled to be paid the EPA share of allowable costs incurred up
          to the date of termination and of allowable costs related to non-
          cancelable  commitments   made  prior  to   termination.
          (Assistance Administration Manual)

109.  TERMS OF A GRANT OR SUBGRANT: AH requirements of the
     grant or subgrant, whether in statute, regulations  or the award
     document. (40 CFR Part 31)

110.  THIRD PARTY IN-KIND CONTRIBUTIONS:
     (a)   The value of non-cash contributions provided by non-Federal
          third parties. Third party in-kind contributions may be in the
          form  of real property, equipment,  supplies  and  other
          expendable  property, and the value of goods  and services
          directly benefiting and specifically identifiable to the project or
          program. (40  CFR Part 30)

     (b)   Property or services which benefit a Federally assisted project
          or program and which are contributed by non-Federal third
          parties without charge to the grantee, or a cost-type contractor
          under the grant agreement. (40 CFR Part 31)

111.  TOTAL COST;  Total cost of Federal award is comprised of the
     allowable direct cost of the program, plus its allocable portion of
     allowable indirect costs, less applicable credits. (OMB Circular A-87)

111.  UNEXPENDED  FEDERAL  FUNDS;   (see also  "Unobligated
     Balance") Federal funds obligated but not yet disbursed. Represents
     the difference between the amount of EPA funds awarded to the
     recipient of an assistance agreement and the amount EPA has paid
     that recipient. (Assistance Administration Manual)
                               25

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112.  UNLIQUIDATED OBLIGATIONS:
     (a)   For reports  prepared  on a cash basis -- the amount  of
          obligations incurred by the grantee that have not been paid.
          For reports prepared on an accrued expenditure basis, they
          represent the amount of obligations incurred by the grantee for
          which an outlay has not been recorded. (40 CFR Part 31)

     (b)   The portion of the funds authorized by the Federal awarding
          agency  that has not been obligated by the recipient and is
          determined by deducting the cumulative obligations from the
          cumulative funds authorized.  (40 CFR Part 30)

     (c)   An  obligation  for which payment  has not  been made;
          contingent liabilities for contracts and orders outstanding.
          (Assistance Administration Manual)

113.  UNOBLIGATED BALANCE: The portion of the funds authorized
     by the federal awarding agency that has not been obligated by the
     grantee/recipient and is  determined by deducting the cumulative
     obligations from the cumulative funds authorized. (40 CFR Parts 30
     &31)

114.  UNOBLIGATED FEDERAL FUNDS:  Federal funds that  the
     recipient has not spent; the difference between the amount of EPA
     funds awarded  to the recipient of an assistance agreement and the
     EPA share of the project obligations that the recipient has incurred
     under that agreement. (Assistance Administration Manual)

115.  UNRECOVERED INDIRECT COST:  The difference between the
     amount awarded and the amount which could have been awarded
     under the recipient's approved negotiated indirect cost rate. (40 CFR
     Part 30)

116.  UNSOLICITED PROPOSAL: An informal written offer to perform
     EPA funded work for which EPA did not publish a solicitation.  (40
     CFR Part 30; Assistance Administration Manual)

                               26

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117.  VIOLATING FACILITY:  Any facility that is owned, leased, or
     supervised by an applicant, recipient, contractor, or subcontractor
     that EPA lists under 40 CFR Part 15 as not in compliance with
     Federal, State, or local  requirements under the Clean Air Act or
     Clean Water Act. A facility includes any building, plant, installation,
     structure, mine, vessel,  or other floating craft. (40 CFR Part 30;
     Assistance Administration Manual)

118.  VOLUNTARY EXCLUSION:  A term of settlement in lieu of a
     finding for debarment under which a person or entity agrees to
     voluntarily  abstain from participation in EPA assisted projects.
     (Assistance Administration Manual)

119.  WORKING CAPITAL ADVANCE: A procedure whereby funds are
     advanced to the recipient to cover its estimated disbursement needs
     for a given initial period. (40 CFR Part 30)

120.  WORK PLAN/WORK PROGRAM: (see also "Project Narrative")
     The document which identifies how and when the applicant will use
     program  funds to  produce specific outputs.  (40 CFR Part 35;
     Assistance Administration Manual)
                               27

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                                                  '  198
              From the desk of:

                         TEAM LEADER
       GRANTS AND CONTRACTS MANAGEMENT BRANCH

TO: Region 2 Project Officers

Re: Modifications to the Project Officer Manual

      Attached are revised pages to the Project Officer Manual (Managing Your Financial
      Assistance Agreement; Project Officer Responsibilities). The manual was revised to include
      information on EPA's Small Grants Policy that was issued on September 1, 1998. Please
      replace the Table of Contents, pages 2.22 through 2.25 of Module II and insert EPA Order
      5700.2 (Small Grants Policy) as Appendix V in your manual with the attached pages.

      The purpose of the Small Grants Policy is to simplify and improve the administration of small
      grants and cooperative agreements (SIQQ^QO or less) without compromising accountability.
      The Policy becomes effective for, new grants awarded on or after October 1,  1998.  GCMB will
      provide additional information as we implement the Small Grants Policy in Region 2.

      Attachments

      CC: $qnna  Vizian, Chief, GCMB

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               TABLE OFCONfENTS?
MODULE I

MODULES


MODULE ill


MODULE IV

MODULE V


MODULE VI

MODULE VII

MODULE VIII
BACKGROUND

REQUIREMENTS GOVERNING,
ASSISTANCEAGREEMENES;

RREAPPLIGATTON/APPLIGATION^
PHASE

AWARD PHASE

PROJECT ADMINISTRATION AND
MANAGEMENT PHASE

CLOSEOUT PHASE

AUDIT

INTERAGENCY~AGREEMEfltrS~
APPENDIX A-   FEDERAL^GRANTrANDlCODPERATIVE
APPENDIX BF
POtlCY FOFFD1STINGUISH1NG BETWEEN
ASSISTANCE AND ACQUISITION
APPENDIX C    EPA INVOLVEMENT IN^GRANTEE
             UNDER GRANTS^ANDXJOBPEfSCTVE
             AGREEMENTS^

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APPENDIX D
APPENDIX E
APPENDIX F
APPENDIX G
APPENDIX H
APPENDIX I
APPENDIX J
APPENDIX K
APPENDIX L
40 CFR PART 30, "GRANTS AND
AGREEMENTS WITH INSTITUTIONS OF
HIGHER EDUCATION, HOSPITALS, AND
OTHER NON-PROFIT ORGANIZATIONS"

40 CFR PART 31, "UNIFORM ADMINISTRATIVE
REQUIREMENTS FOR GRANTS AND
COOPERATIVE AGREEMENTS TO STATE AND
LOCAL GOVERNMENTS"

LIST OF EPA ASSISTANCE PROGRAMS 
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APPENDDCM
             ENTERPRISES (DBE)
APPENDIX N    POLICY ON THE
APPENDJX^O-


APPENDIX P

APPENDIX Q

APPENDIX R


APPENDIX S
APPENDIX T

APPENDIX U
APPENDIX V
ASSISTANCE FUNDS^OR'COWJNUING
ENVIRONMENTAL PROGRAMS

STATBGRANT GUIDANCE, "INTEGRATION'QF
POLLUTION PREVENTION"-

SF: 424rifAPPt:lCATfON FORMT

OFFICIAL PROJEGTAND GMOTILES:

CLOSEOUT POLICY FOR ASSISTANCE
AGREEMENTS

EPA ORDER 2200.4, "REVIEW PROCESS TOR
SCIENTIFIC, INFORMATIONAL AND
EDUCATIONAL DOCUMENTS"

SAMPLE INTERAGENCY AGREEMENT
             AGREECTENTS7AWARO ED TO- NONPROFIT
             ORGANIZATTONS ANDLEDUCATIOWAL-
EPA ORDER 5700.2, "IMPLEMENTATION
ORDER TO STREAMLINE SMALL GRANTS
SUBJECT INDEX
GLOSSARY

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             EPA ORDERS, POLICIES

                RECYCLEDPAPER"
                ASSISTANGE^/S. ACQUISITION^
                STREAMLINING SMALL GRANTS?
                PERFORMANCE-: BASED ASSISTANCE :
                USE OF. DISADVANTAGED BUSINESS ENTERPRISES
                TIMELYAWARD13Fy»SSISTANCElPObLUTI0N«PREV£NTION*
                GUIDANGEf:

VIEWGRAPHfclS.
TITLE!;     EPA Orders^ Pol iciesrand Guidance a

KEY POINTS:

     •  EPA Orders and policies are^gencyfequirementsjssuediby £PA~
        Headquarters. Regions may-also issue regional policies'end -guidance
        consistent with Headquarters policies and guidance issued by EPA's
        National Program Managers (NPM). Regions may alsoissue guidance
        to implement EPA Orders, policies, or guidance.

     •  The following  are the major Orders, policies, and -guidance -issuances
        affecting assistance administration.

EPA ORDERS

     Recycled Paper

     •  EPA's policy on recycled'pape&is in EPAK3rtler*t4c&j1 000:25 ^Useaof
        Recycled Paper.- Issued onvJaauary 24/1 999:ancUasframended-orr
        April :1 2,<.1 990, thisconcter--wa99developBd4o-pcx)mote^theiJse of recycled
        paper; Specifically^it requireafiew contracts^nd^ssistance-
        agreementstto^peeify^hfatM^portSKleiiveredrto EPAMn'Conjunction with
        EBA^x3rrtractssor«ssistajxMeegj^ements'fnust berprintedBn recycled
        paper (even if recycled -papems^more -costly). (See Appendix 1 )

     Acquisition vs Assistance ^

     •  EPA's Order on the use of assistance agreements versus acquisition
        (5700.1) is discussed in Module -1. This Order^see Appendix B)
        describes when it is proper to use an assistance agreement and when a
        contract is required.
10/1/96                            2.22.

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VIEWGRAPH #15 (Continued)
TITLE:     EPA Orders, Policies, and Guidance
KEY POINTS:

      Funding Assistance Agreements

      •  To help resolve problems EPA program and GMO staffs are
        experiencing in making awards for one- time projects, new programs,
        and using Administrator or Regional Administrator discretionary funds,
        EPA established consistent, standard operating procedures for funding
        assistance agreements. (See Appendix J for the Order, "Policy and
        Procedures for Funding Assistance Agreements.")

        - Clarifies what information is needed before an award can be made,
        and identifies which office is responsible for providing the information.

        - The policy states that the Program Office must identify the Program
        Element, Statutory Authority, and Delegation of Authority before funds
        are distributed to Headquarters or the Region for award.

      Streamlining Small Grants

      •  To simplify and improve administration of small grants and cooperative
        agreements without compromising standards of accountability.  See
        Appendix V.

EPA POLICIES                           .

      Carryover of Unobligated Balances

      •  To EPA's policy on carryover of unobligated balances is .covered jn ERA
        Policy Statement No. 88- 09 "Disposition of Unobligated Balances of
        Assistance Agreements." Issued May 6,1988, by the Office of the
        Comptroller with an effective date of June 30,1988, this policy
        describes the cases in which the use of appropriated funds maybe
        carried over to subsequent budget periods and the documentation and
        accounting methods this involves. Additionally, this policy statement
        discusses cases in which budgets may be decreased without carrying
        over appropriated funds, (see Appendix K.)

        - Carryover of unobligated balances is authorized for both  project type
        assistance agreements and Continuing Environmental programs in
        cases where the source appropriation has not expired. For project type
        assistance agreements, carryover may also be approved when the
        source appropriation has expired, if the scope of the work has not
        changed  and the project period has not expired.


10/1/96                            2.23

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VIEWGRAPHtftS (Continued)
TITLE:     EPA Orders, Policies, and Guidance
KEY POINTS:
      Performance- Based Assistance

      •  EPA's performance- based -assistance-policy, issued May 31 , ,1 985,
        establishes.agency>wide^cedures^fornegotiatingand2overseeingx:
        assistance--agceements.Jt^ndud6s.guidelines fon (1 ) assessing r
        perfoiTTianc^-v^Zl^ewarding^ccDmplishments, (3):correcting,prDbIemsr^
        and (4) imposing penalties. (Sfee-Appendix L.) WhiJeihe-pDJicy applies*
        to Continuing.,BMronrnental:(Pf0^rTrGrants, thesggidelines mayiea-
        helpful to other programs^:

      Disadvantaged Business Enterprises-

      •  EPA's requirements on the use of disadvantaged -business -.
        enterprises (DBE) are contained in two EPA plans. (See Appendix Ivl)
        The plans set forth how EPA will implement the statutory provisions of
        the Clean Air Act Amendments of 1990 and EPA's 1991 Appropriations
        Act as well as the requirements in the Executive Orders discussed on
        page 2.6. The Clean Air Act requires that EPA establish -a-minimum,
        10% goal for the use of DBEs in contracts awarded under Clean Air
        research grants. The 1991 Appropriations Act requires that€PA
        establish a minimum 8% goal for the use of DBEs in contracts awarded
        under all other assistance agreements.

      •  In additionlo the-two plansj-EPA^s requirements onllre use-otDBEssaie
        contained in^Q;CFR30.44f b)Xfor.;universities andiother -nonprofits);^^:
        CFR 31 ;36^(e).(for States, locaJ^govemments, and-Jndian tribes); and 40
                        Superfand recipients).
     Timely Awaud-r

     •  TReiimelyrewardpolicy.(uPolicy--orrthe^nmely Award:of Assistance
        Funds^forCbntinuing Environmental Programs") calls for funding
        Continuing Environmental Programs as quickly as possible after funds
        become available. It was issued September 14, 1992, in conjunction
        with the Office of Comptroller's June 26, 1992, memorandum clarifying
        Agency policy on when funds are available for award. (See Appendix N)
10/1/96                           2.24

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VIEWGRAPH #15 (Continued)
TITLE:     EPA Orders, Policies, and Guidance
KEY POINTS:
EPA GUIDANCE

      Pollution Prevention
         The Agency's implementation of pollution prevention is provided in
         EPA's "State Grants Guidance: Integration of Pollution Prevention,"
         dated November 12,1992. (See Appendix 0.) This guidance
         establishes the Agency's pollution prevention commitment by:

         - Promoting pollution prevention in State programs supported by EPA
         funds;

         - Ensuring that grant requirements as interpreted by EPA/State
         workplans support innovative State pollution prevention activities;

         - Establishing a process to share information on successful State
         projects and identify statutory or other barriers to funding State
         proposals; and

         - Building State capacity in pollution prevention to the extent-consistent
         with statutory assistance requirements.
10/1/96                                2.25

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       APPENDIX V

     EPA ORDER 5700.2

IMPLEMENTATION ORDER TO
STREAMLINE SMALL GRANTS

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 Classification No:   5700.2
 Approval Date:-   9/1/38,   . •
I .     PURPOSE. To simplify and improve admifflstration of small grants andcoopctativeagfeements,vdlhout.r.
compromising standards of accountability.

2.     APPLICABILITY. This order applies to all grants and cooperative agreements (hereinafter referred lo as
 small grants" or "grants") SI 00,000 o'rless in Federal funds; have budget^uidprojcctpEriodswMcn-aretjfthe-same
duration; and for which the totalamount of Federal grant funds is obligated at the time of-award.-Thist)rderdocs
not apply to the following: Performance Partnership "grants'; Fellowship ^rants;doans;'^enior £nvuonmiental
Employment (SEE) Program Cooperative Agreements; Environmental Program Grants to^tate^TntcrstateandLocal
agencies; ConstnictibnGi^ts;SuperIulttdQ>^^
the State Revolving Fund Program Capitalization Grants.
                                      •.<•'.                 •             '
      This order does not relieve recipients from complying with any statutet>r^egulafion>_ThJcjoiider .clarifies
situations when a more flexible approach can Hbc -used if a-£rant^ward4s^lO{l,<}OQ;^^
submission of an application by a small grant recipient as thd'applicant's assuranoftthatitiwintocetthe following
criteria:
       (I)    a sarisfaotoiyjerfomaaoegcooi^                                        •
                                                             • *                .  •"•     •
                                             <^^
       (3)    .technical qualifications, experience, organization, and facilities -adequate to cany out' the
       project, or a demonstrated ability to obtain these.-
                                                 *  '                '
       Agency officials must comply with-this pfderninless tiw applicant/recipient is a high risk grantee under 40
 CFR 31.12 or is subject to special -award xx>nditibns under-40 CFR^O.14.

 3.     EFFECTIVE DATE.  Tbis policy is effective for all new grants awarded on or after October 1, 1998.
                                                  •*     *
 4.     BACKGROUND. The number.of Ep A ^grant programs has increased five-fold overtfie past tctty ears with
 a dramatic increase in graot awards .of S 100*000 or less on average. These small awards account forabbut 50% of
 new project grant awards, but less than^%of
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EPAOrder                           '                                       •                5700.2
                                     '                                                      9/1/98
       Current practice subjects all grant awards regardless of the dollar amount to the same administrative
requirements  and procedures.  This order reduces the administrative burden for both the EPA arid :the
applicant/recipient while maintaining sufficient accountability. 'Its intent is to increase customer satisfaction $od
to focus EPA's limited resources on larger dollar grant programs. .                                     ^

5.     DEFINITIONS.                      •                                    .

       a.     Advance Payment.  A payment made by Treasury check or other, appropriate payment
       mechanism to a recipient either before outlays are made by the recipient or through the use of pre-
       determined payment schedules.

       b.     Approval Official. An EPA official delegated the authority to approve or reject applications
       for assistance and the techrucal/programmatic terms and conditions of proposed assistance projects.

       c.     Award Official. The EPA official with the authority to execute assistance agreements^and
       to take other actions authorized by 40 CFR Chapter I, Subchapter A and by EPA Orders.

       d.     Funding Recommendation. Decision and Approval Packaee. The EPA Program Office's
       memorandum containing the decision and justification to fund  an* assistance .proposal -jphe
       memorandum is sent to the Grants Management 'Office (GMO) as part of the assistance funding
       package.  (See  attached suggested Model  Funding Recommendation, Decision'•and "Approval
       Package).                  '
             *i                         '                    • •           "•
       e.   "  Indirect Cost Rate Proposal. .The documentation prepared by an organization ^substantiate'
       its claim for the reimbursement of indirect costs.

       f.     . Supplemental Funding. Additional funding over and above what was'TigreetlTrptTn^rtbc
       grant agreement for a given.budget period.    •      .'

 5.     POLICY. This order establishes simplified and^streamlined policies for small grants. Receiptof-asmall
 grant does notrelieve the applicant/recipient from compliance with any statute, circularxarregula.tion.iu'faitlg
 of this new approach, EPA establishes the following for Small Giants:                  •

       a.    • Limitation on Number of-Application'Copies Required for Submission.  Applicants are
       required to submit only the original application and one copy to EPA unless otherwise required by.
      • the regulations.   •     . •   .                          •   .
                                              <      • •
       b.   •  Abbreviated WoTkplan and Resume. TTae narrative workplan should not exceed five pages
       in length. The workplan must include a:             '

              1)     summary of specific objectives, expected outcomes and deliverables; and '
             2)     discussion  of the budget and how the budget relates to the objectives,
             outcomes and deliverables in the workplan.          •      .
              •'                               •*•."**.             •"
             • 'Resumes and supplementary "biographical information, if any, should not exceed  an
       additional two pages.

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                                                                                     57002"
                                                                                     98*98?
c.      ftudget. Applicants arc not required to submit supporting.budget detail over andbeyondthc
object class categories identified on the applicant's Form 424A (formal 1wdgetpage)*THe-EE2£_
Program Office should base the reasonableness of the cost of the grant on its evaluation ofsthe-
workplan, using its technical knowledge and previous experience with similar work; The wbrkplan -
should stand on its own merit in support of project costs. If the Program Office is unable to make
a determination solely on tHis basis, it should first request additional information on how -the
workplan supports the budget- However, ihere may be some circumstances where evaluating the
workplan.  TKpse.;applicantsirequesting -
reimbursement for indirect costs -andjwht)vd6«ioX haveBn-established indirebtcostratewith'feiEedisral;.
agency must prepare an Iridirc'ct : Cost Rate Proposal -but?are only required-to retainirin^etritles,
subject to audit The proposal -must be based on.gujdan(»,in*heEPARecommendalioni|Prbcess» Grants -Management aOfficesrlshould
streamline meir-rFimding*/Reoonmiendafo^
                                                                                      •
 andApprovali'acIcage.
                                          w^
                                                       i
 reguiattttyerequircmentsshaUlje cuminatiytfJivitfe?td;t
 of theT^evarit^iegulatory-Tequircmenlsr- However; .terms. and condifions^detaUing.-reporting
 requirements may be included in the assistance agreement at the discretion of the GMO or Program
 Office.--  ' '           '       .        •     . •            '

 K.     Limitation on^Length of Award-Document  The .GMO will ensure that the EPA* award
 document will, to the maximum extentpossible, not exceed four pages in length.
                                                 •      *
 i.     Payment Policy. •.'..,

       (1)    -AU-SmairtGrant ^Recipients. GMOs, will: work with Program Offices and:
      .  ScrYicihgrFiiiancc^ffiixs40tensur^smaUvgra^                           To
       ensure expeditious^reimbuisttnentof payment requests, recipients of small grants

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EPA Order         .                                       "   .                               5700.2
                                                                                            9/1/98

             should submit requests for payment directly to the EPA Servicing Finance Office.
             Recipients shall be reimbursed for grant-jrelatcd eligible, allocable, allowable, and
             reasonable costs up to die amount of the grant which have been incurred and which
             the recipients arc currently and legally obligated to pay. Project Officers and GMOs
             shall monitor grantee performance and compliance with applicable rules, and when
             appropriate, may recommend withholding or requiring prior approval of future, grant    '  •
             payments.                 "                                        .   •

             (2)    Small Grants S5.000 or Less.  Recipients of small grants up to and including
            . S5,000 may request an advance payment of up to eighty (80) percent of the total
             Federal share of the project by submitting a Request for Advance or Reimbursement
             (Form SF-270) upon acceptance of the.assistance agreement The remaining twenty
             (20) percent will be reimbursed to the recipient upon satisfactory completion of the
             Final Project Report and Final Financial Status Report                '  .

       j.     Simplified  Minority  Business  Enterprise/Women's Business  Enterprise^.Reporting
       Requirements. Small Grant recipients av/arded assistance agreements under 40 CFTCTarODXi.e-.
       Institutions of Higher Education, Hospitals  and other Non-Profit Organizations) will meet
       MBE/WBE reporting requirements by submitting xi MBE/WBE Utilization Form {Standard Form
       5700-52A) origan annual basis. The reports are due within one month after the-end of .the Federal
       fiscal year.        •         '      •      '

             Small Grantrecipients awarded assistance agreements under 40 CFRPart31^5.e.,Tkatearinfomancewiuithe'appropriatec^^
       requirements of this policy.  Further, recipients may be reimbursed for preraward costs they incur
     .. 90 days prior to award provided they include such costs in the application and the application in its
       entirety'is approved by EPA.      .  .                            ....           *•   .

 7.  "  ROLES AND RESFONSIBtLnJES. Inadditionto the roles and responsibilities cited in Section 5, "Policy",
 the following "are actions the Grants Management Office, Program Office and recipient are expected to take:

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                                                                                      5700.2..
                                                                                     • srimr
a.    '  Grants Management Orhce.

       (I)    Develop and distribute application kits,

       (2)    Provide the same level of advice, technical assistance and guidance to
       potential applicants and small award recipients as they would to any other recipients.
                                    • #
       (3)    Ensure^application.includes  all essential.information (erg,-;  assurances,
       certifications, narrative).

       (4)    Ensure'thatall elements oftheapplicationand funding package comply with
       EPA's legal and regulatory requirements:-

       (5)    Review application and determine eligibility of EPA assistance recipientsto
       receive indirect costs.                                                *•   o

       (6)    Determine that the grantee has sound financial management          ''

       (7)    Prepare awards/amendments.               .

       (8)    Monitor the financial and management aspects of awards through reviews of
     •  reports, correspondence, site visits, or other appropriate means.

       (9)    Ensure timely close out of awards when all project work in the agreement is
       completed!                    .    •

b.- '   Program Office.
       (1) .    Ensure :applican&&WBi^aasieas6na^
                                  ^
       that foster accountabflityr-'       . "  ''cr;;!CV
       (2)*    DctcniaSneJthatthbiaHplac^
               '    -   '  .-  <-,.*•":  .   . .-...v  ^r»- ..-    , -..; ..,.,jj\>   ;
       (3)    Review &e workplan and- budget (along, wim the GMO) to; determine.
       appropriateness and  reasonableness of the project, whether-diey comply witH^
       program regulations and guidelines, and identify, any deficiencies in the application.

       (4)    If the proposal is approved, prepare and forward a funding recommendation,
       which consists of the following primary documents:
        ",                 •      •           •                      .             .
              1)   .Commitment Notice (EPATorm 2550-9), and         • •     •
                             .*_'_.             •                •
              2)   , ^ Decbion Documeatation
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                •
             ,,,(5)    Monitor the recipient's progress on the project.

               (6)    Conduct periodic reviews 'to assure that the recipient is complying with
               applicable regulations and programmatic teems and conditions of die agreement.

              " (7)    Ensure that any/all delivcrables required under the award are received,'end
               arc acceptable in a timely manner.                             .

               Recipient

               (1)    Expend and account for funds in accordance with the assistance agreement,
               program regulations and statutes."                             .

               '(2)    Maintain sound fiscal management.        •        .        ^e
                                                                                  ••/
               (3)    Comply with all applicable reporting requirements, including submitting
             .  timely Financial Status Reports, Final Technical Reports, Property -Reports and
               MBE/WBE Reports.                                        .

   8-     ADDITIONAL REFERENCES.     •            '    .

     .  '• ? a,  iiFfederal Grant and Cooperative Agreement Act of 1977 (FGCAA), 3KJ.S:Cv$630 1-6308.
         b.    40 CFR Parts 30, 3 1,35, 40, 45, and 47.
   •      c:-f< OMB Circular A-l 10,
         d.  •  OMB Circular A-102.
         c.    OMB Circular A-133
     ;    £    OMB Ci^bilar A-87            .
                                                                   '
 ,        iL     EPA-Manafflns Your financial Assistance Agreement - Project Officer Responsibilities.
       '-. L '    EPA 96-1 IndirectjCost Policy forNopprofiCOrganl^ofis and Educational Institutions.

 / 9.    FORFiJRTOER'thffORMA'tTOR For furuaer infpmwtion regarding this Order, please contact
  ,\ Chief, Policy, InFormation and Training Branch, Grants Administration Division, on i
       '                                   -'            -
   10.   APPROVMG SIGNATORE
                   ; Director        (         •          .                 .    ...„  . •' -*.,- ...1-™^—"":;" Date
        : of fe&iman Resources aiKi Organizational Services                     „                  ^   '   •
                                                                                 U:
  „ -r?
,-»--": r

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