FFATA Federal Funding Accountability and Transparency Act of 2006 or
Transparency Act--Public Law 109-282, as amended by Sec.  6202(a) of
Public Law 110-252 (31 U.S.C. 6101)
FICA Federal Insurance Contributions Act
FOIA Freedom of Information Act
FR Federal Register
FTE Full-time equivalent
GAAP Generally Accepted Accounting Principles
GAGAS Generally Accepted Government Auditing Standards
GAO Government Accountability Office
GOCO Government owned, contractor operated
GSA General Services Administration
HHS U.S. Department of Health and Human Services
IBS Institutional Base Salary
IHE Institutions of Higher Education
IRC Internal Revenue Code
ISDEAA Indian Self-Determination and Education and Assistance Act
MTC Modified Total Cost
MTDC Modified Total Direct Cost
OMB Office of Management and Budget
PII Personally Identifiable Information
PMS Payment Management System
PRHP Post-retirement Health Plans
PTE Pass-through Entity
REUI Relative Energy Usage Index
SAM System for Award Management
SF 424 Standard Form 424 series and Form Families Application for
Federal Assistance
SFA Student Financial Aid
SNAP Supplemental Nutrition Assistance Program
SPOC Single Point of Contact
TANF Temporary Assistance for Needy Families
TFM Treasury Financial Manual
U.S.C. United States Code
VAT Value Added Tax

Sec.  75.2  Definitions.

    These are the definitions for terms used in this part. Different
definitions may be found in Federal statutes or regulations that apply
more specifically to particular program or activities. These
definitions could be supplemented by additional instructional
information provided in in governmentwide standard information
collections.
    Acquisition cost means the cost of the asset including the cost to
ready the asset for its intended use. Acquisition cost for equipment,
for example, means the net invoice price of the equipment, including
the cost of any modifications, attachments, accessories, or auxiliary
apparatus necessary to make it usable for the purpose for which it is
acquired. Acquisition costs for software includes those development
costs capitalized in accordance with generally accepted accounting
principles (GAAP). Ancillary charges, such as taxes, duty, protective
in transit insurance, freight, and installation may be included in or
excluded from the acquisition cost in accordance with the non-Federal
entity's regular accounting practices.
    Advance payment means a payment that a Federal awarding agency or
pass-through entity makes by any appropriate payment mechanism,
including a predetermined payment schedule, before the non-Federal
entity disburses the funds for program purposes.
    Allocation means the process of assigning a cost, or a group of
costs, to one or more cost objective(s), in reasonable proportion to
the benefit provided or other equitable relationship. The process may
entail assigning a cost(s) directly to a final cost objective or
through one or more intermediate cost objectives.
    Audit finding means deficiencies which the auditor is required by
Sec.  75.516(a) to report in the schedule of findings and questioned
costs.
    Auditee means any non-Federal entity that expends Federal awards
which must be audited under Subpart F-of this part.
    Auditor means an auditor who is a public accountant, or a Federal,
state, local government, or Indian Tribe audit organization, which
meets the general standards specified for external auditors in
generally accepted government auditing standards (GAGAS). The term
auditor does not include internal auditors of nonprofit organizations.
    Awardee (see Non-Federal entity).
    Budget means the financial plan for the project or program that the
Federal awarding agency or pass-through entity approves during the
Federal award process or in subsequent amendments to the Federal award.
It may include the Federal and non-Federal share or only the Federal
share, as determined by the Federal awarding agency or pass-through
entity.
    Capital assets means tangible or intangible assets used in
operations having a useful life of more than one year which are
capitalized in accordance with GAAP. Capital assets include:
    (1) Land, buildings (facilities), equipment, and intellectual
property (including software) whether acquired by purchase,
construction, manufacture, lease-purchase, exchange, or through capital
leases; and
    (2) Additions, improvements, modifications, replacements,
rearrangements, reinstallations, renovations or alterations to capital
assets that materially increase their value or useful life (not
ordinary repairs and maintenance).
    Capital expenditures means expenditures to acquire capital assets
or expenditures to make additions, improvements, modifications,
replacements, rearrangements, reinstallations, renovations, or
alterations to capital assets that materially increase their value or
useful life.
    Catalog of Federal Domestic Assistance (CFDA) number means the
number assigned to a Federal program in the CFDA.
    CFDA program title means the title of the program under which the
Federal award was funded in the CFDA.
    Central service cost allocation plan means the documentation
identifying, accumulating, and allocating or developing billing rates
based on the allowable costs of services provided by a state, local
government, or Indian tribe on a centralized basis to its departments
and agencies. The costs of these services may be allocated or billed to
users.
    Claim means, depending on the context, either:
    (1) A written demand or written assertion by one of the parties to
a Federal award seeking as a matter of right:
    (i) The payment of money in a sum certain;
    (ii) The adjustment or interpretation of the terms and conditions
of the Federal award; or
    (iii) Other relief arising under or relating to a Federal award.
    (2) A request for payment that is not in dispute when submitted.
    Class of Federal awards means a group of Federal awards either
awarded under a specific program or group of programs or to a specific
type of non-Federal entity or group of non-Federal

entities to which specific provisions or exceptions may apply.
    Closeout means the process by which the Federal awarding agency or
pass-through entity determines that all applicable administrative
actions and all required work of the Federal award have been completed
and takes actions as described in Sec.  75.381.
    Cluster of programs means a grouping of closely related programs
that share common compliance requirements. The types of clusters of
programs are research and development (R&D), student financial aid
(SFA), and other clusters. ``Other clusters'' are as defined by OMB in
the compliance supplement or as designated by a state for Federal
awards the state provides to its subrecipients that meet the definition
of a cluster of programs. When designating an ``other cluster,'' a
state must identify the Federal awards included in the cluster and
advise the subrecipients of compliance requirements applicable to the
cluster, consistent with Sec.  75.352(a). A cluster of programs must be
considered as one program for determining major programs, as described
in Sec.  75.518, and, with the exception of R&D as described in Sec.
75.501(c), whether a program-specific audit may be elected.
    Cognizant agency for audit means the Federal agency designated to
carry out the responsibilities described in Sec.  75.513(a). The
cognizant agency for audit is not necessarily the same as the cognizant
agency for indirect costs. A list of cognizant agencies for audit may
be found at the FAC Web site.
    Cognizant agency for indirect costs means the Federal agency
responsible for reviewing, negotiating, and approving cost allocation
plans or indirect cost proposals developed under this part on behalf of
all Federal agencies. The cognizant agency for indirect cost is not
necessarily the same as the cognizant agency for audit. For assignments
of cognizant agencies see the following:
    (1) For IHEs: Appendix III to Part 75 C.11.
    (2) For nonprofit organizations: Appendix IV to Part 75 C.1.
    (3) For state and local governments: Appendix V to Part 75 F.1.
    (4) For Indian tribes: Appendix VII to Part 75 D.1.
    Commercial organization means an organization, institution,
corporation, or other legal entity, including, but not limited to,
partnerships, sole proprietorships, and limited liability companies,
that is organized or operated for the profit or benefit of its
shareholders or other owners. The term includes small and large
businesses and is used interchangeably with ``for-profit
organization.''
    Compliance supplement means Appendix XI to Part 75 (previously
known as the Circular A-133 Compliance Supplement).
    Computing devices means machines used to acquire, store, analyze,
process, and publish data and other information electronically,
including accessories (or ``peripherals'') for printing, transmitting
and receiving, or storing electronic information. See also Supplies and
Information technology systems.
    Contract means a legal instrument by which a non-Federal entity
purchases property or services needed to carry out the project or
program under a Federal award. The term as used in this part does not
include a legal instrument, even if the non-Federal entity considers it
a contract, when the substance of the transaction meets the definition
of a Federal award or subaward (see Subaward).
    Contractor means an entity that receives a contract as defined in
Contract.
    Cooperative agreement means a legal instrument of financial
assistance between a Federal awarding agency or pass-through entity and
a non-Federal entity that, consistent with 31 U.S.C. 6302-6305:
    (1) Is used to enter into a relationship the principal purpose of
which is to transfer anything of value from the Federal awarding agency
or pass-through entity to the non-Federal entity to carry out a public
purpose authorized by a law of the United States (see 31 U.S.C.
6101(3)); and not to acquire property or services for the Federal
Government or pass-through entity's direct benefit or use;
    (2) Is distinguished from a grant in that it provides for
substantial involvement between the Federal awarding agency or pass-
through entity and the non-Federal entity in carrying out the activity
contemplated by the Federal award.
    (3) The term does not include:
    (i) A cooperative research and development agreement as defined in
15 U.S.C. 3710a; or
    (ii) An agreement that provides only:
    (a) Direct United States Government cash assistance to an
individual;
    (B) A subsidy;
    (C) A loan;
    (D) A loan guarantee; or
    (E) Insurance
    Cooperative audit resolution means the use of audit follow-up
techniques which promote prompt corrective action by improving
communication, fostering collaboration, promoting trust, and developing
an understanding between the Federal agency and the non-Federal entity.
This approach is based upon:
    (1) A strong commitment by Federal agency and non-Federal entity
leadership to program integrity;
    (2) Federal agencies strengthening partnerships and working
cooperatively with non-Federal entities and their auditors; and non-
Federal entities and their auditors working cooperatively with Federal
agencies;
    (3) A focus on current conditions and corrective action going
forward;
    (4) Federal agencies offering appropriate relief for past
noncompliance when audits show prompt corrective action has occurred;
and
    (5) Federal agency leadership sending a clear message that
continued failure to correct conditions identified by audits which are
likely to cause improper payments, fraud, waste, or abuse is
unacceptable and will result in sanctions.
    Corrective action means action taken by the auditee that:
    (1) Corrects identified deficiencies;
    (2) Produces recommended improvements; or
    (3) Demonstrates that audit findings are either invalid or do not
warrant auditee action.
    Cost allocation plan means central service cost allocation plan or
public assistance cost allocation plan.
    Cost objective means a program, function, activity, award,
organizational subdivision, contract, or work unit for which cost data
are desired and for which provision is made to accumulate and measure
the cost of processes, products, jobs, capital projects, etc. A cost
objective may be a major function of the non-Federal entity, a
particular service or project, a Federal award, or an indirect
(Facilities & Administrative (F&A)) cost activity, as described in
Subpart E of this part. See also Final cost objective and Intermediate
cost objective.
    Cost sharing or matching means the portion of project costs not
paid by Federal funds (unless otherwise authorized by Federal statute).
This may include the value of allowable third party in-kind
contributions, as well as expenditures by the recipient. See also Sec.
75.306.
    Cross-cutting audit finding means an audit finding where the same
underlying condition or issue affects Federal awards of more than one
Federal awarding agency or pass-through entity.
    Departmental Appeals Board means the independent office established
in the Office of the Secretary with delegated authority from the
Secretary

to review and decide certain disputes between recipients of HHS funds
and HHS awarding agencies under 45 CFR part 16 and to perform other
review, adjudication and mediation services as assigned.
    Disallowed costs means those charges to a Federal award that the
Federal awarding agency or pass-through entity determines to be
unallowable, in accordance with the applicable Federal statutes,
regulations, or the terms and conditions of the Federal award.
    Equipment means tangible personal property (including information
technology systems) having a useful life of more than one year and a
per-unit acquisition cost which equals or exceeds the lesser of the
capitalization level established by the non-Federal entity for
financial statement purposes, or $5,000. See also Capital assets,
Computing devices, General purpose equipment, Information technology
systems, Special purpose equipment, and Supplies.
    Excess property means property acquired in whole or in part under
the control of any Federal awarding agency that, as determined by the
head of the awarding agency or his/her delegate, is no longer required
for the agency's needs or the discharge of its responsibilities.
    Expenditure report means:
    (1) For non-construction awards, the SF-425 Federal Financial
Report (FFR) (or other OMB-approved equivalent report);
    (2) For construction awards, the SF-271 ``Outlay Report and Request
for Reimbursement'' (or other OMB-approved equivalent report).
    Expenditures means charges made by a non-Federal entity to a
project or program for which a Federal award was received.
    (1) The charges may be reported on a cash or accrual basis, as long
as the methodology is disclosed and is consistently applied.
    (2) For reports prepared on a cash basis, expenditures are the sum
of:
    (i) Cash disbursements for direct charges for property and
services;
    (ii) The amount of indirect expense charged;
    (iii) The value of third-party in-kind contributions applied; and
    (iv) The amount of cash advance payments and payments made to
subrecipients.
    (3) For reports prepared on an accrual basis, expenditures are the
sum of:
    (i) Cash disbursements for direct charges for property and
services;
    (ii) The amount of indirect expense incurred;
    (iii) The value of third-party in-kind contributions applied; and
    (iv) The net increase or decrease in the amounts owed by the non-
Federal entity for:
    (A) Goods and other property received;
    (B) Services performed by employees, contractors, subrecipients,
and other payees;
    (C) Programs for which no current services or performance are
required such as annuities, insurance claims, or other benefit
payments.
    Federal agency means an ``agency'' as defined at 5 U.S.C. 551(1)
and further clarified by 5 U.S.C. 552(f).
    Federal Audit Clearinghouse FAC means the clearinghouse designated
by OMB as the repository of record where non-Federal entities are
required to transmit the reporting packages required by Subpart F of
this part. The mailing address of the FAC is Federal Audit
Clearinghouse, Bureau of the Census, 1201 E. 10th Street,
Jeffersonville, IN 47132 and the web address is: http://harvester.census.gov/sac/. Any future updates to the location of the
FAC may be found at the OMB Web site.
    Federal award has the meaning, depending on the context, in either
paragraph (1) or (2) of this definition:
    (1)(i) The Federal financial assistance that a non-Federal entity
receives directly from a Federal awarding agency or indirectly from a
pass-through entity, as described in Sec.  75.101; or
    (ii) The cost-reimbursement contract under the Federal Acquisition
Regulations that a non-Federal entity receives directly from a Federal
awarding agency or indirectly from a pass-through entity, as described
in Sec.  75.101.
    (2) The instrument setting forth the terms and conditions. The
instrument is the grant agreement, cooperative agreement, other
agreement for assistance covered in paragraph (2) of Federal financial
assistance, or the cost-reimbursement contract awarded under the
Federal Acquisition Regulations.
    (3) Federal award does not include other contracts that a Federal
agency uses to buy goods or services from a contractor or a contract to
operate Federal Government owned, contractor operated facilities
(GOCOs).
    (4) See also definitions of Federal financial assistance, grant
agreement, and cooperative agreement.
    Federal award date means the date when the Federal award is signed
by the authorized official of the Federal awarding agency.
    Federal awarding agency means the Federal agency that provides a
Federal award directly to a non-Federal entity.
    Federal financial assistance:
    (1) For grants and cooperative agreements, Federal financial
assistance means assistance that non-Federal entities receive or
administer in the form of:
    (1) Grants;
    (ii) Cooperative agreements;
    (iii) Non-cash contributions or donations of property (including
donated surplus property);
    (iv) Direct appropriations;
    (v) Food commodities; and
    (vi) Other financial assistance (except assistance listed in
paragraph (b) of this section).
    (2) For Subpart F of this part, Federal financial assistance also
includes assistance that non-Federal entities receive or administer in
the form of:
    (i) Loans;
    (ii) Loan Guarantees;
    (iii) Interest subsidies; and
    (iv) Insurance.
    (c) Federal financial assistance does not include amounts received
as reimbursement for services rendered to individuals as described in
Sec.  75.502(h) and (i).
    Federal interest means, for purposes of Sec.  75.343 or when used
in connection with the acquisition or improvement of real property,
equipment, or supplies under a Federal award, the dollar amount that is
the product of the:
    (1) Federal share of total project costs; and
    (2) Current fair market value of the property, improvements, or
both, to the extent the costs of acquiring or improving the property
were included as project costs.
    Federal program means:
    (1) All Federal awards which are assigned a single number in the
CFDA.
    (2) When no CFDA number is assigned, all Federal awards to non-
Federal entities from the same agency made for the same purpose must be
combined and considered one program.
    (3) Notwithstanding paragraphs (1) and (2) of this definition, a
cluster of programs. The types of clusters of programs are:
    (i) Research and development (R&D);
    (ii) Student financial aid (SFA); and
    (iii) ``Other clusters,'' as described in the definition of Cluster
of Programs
    Federal share means the portion of total project costs that are
paid by Federal funds.
    Final cost objective means a cost objective which has allocated to
it both direct and indirect costs and, in the non-Federal entity's
accumulation system, is one of the final accumulation points, such as a
particular award, internal project, or other direct activity of a non-
Federal entity. See also Cost objective and Intermediate cost
objective.

    Fixed amount awards means a type of grant agreement under which the
Federal awarding agency or pass-through entity provides a specific
level of support without regard to actual costs incurred under the
Federal award. This type of Federal award reduces some of the
administrative burden and record-keeping requirements for both the non-
Federal entity and Federal awarding agency or pass-through entity.
Accountability is based primarily on performance and results. See
Sec. Sec.  75.201(b) and 75.353.
    Foreign organization means an entity that is:
    (1) A public or private organization located in a country other
than the United States and its territories that is subject to the laws
of the country in which it is located, irrespective of the citizenship
of project staff or place of performance;
    (2) A private nongovernmental organization located in a country
other than the United States that solicits and receives cash
contributions from the general public;
    (3) A charitable organization located in a country other than the
United States that is nonprofit and tax exempt under the laws of its
country of domicile and operation, and is not a university, college,
accredited degree-granting institution of education, private
foundation, hospital, organization engaged exclusively in research or
scientific activities, church, synagogue, mosque or other similar
entities organized primarily for religious purposes; or
    (4) An organization located in a country other than the United
States not recognized as a Foreign Public Entity.
    Foreign public entity means:
    (1) A foreign government or foreign governmental entity;
    (2) A public international organization, which is an organization
entitled to enjoy privileges, exemptions, and immunities as an
international organization under the International Organizations
Immunities Act (22 U.S.C. 288-288f);
    (3) An entity owned (in whole or in part) or controlled by a
foreign government; or
    (4) Any other entity consisting wholly or partially of one or more
foreign governments or foreign governmental entities.
    General purpose equipment means equipment which is not limited to
research, medical, scientific or other technical activities. Examples
include office equipment and furnishings, modular offices, telephone
networks, information technology equipment and systems, air
conditioning equipment, reproduction and printing equipment, and motor
vehicles. See also Equipment and Special Purpose Equipment.
    GAAP has the meaning specified in accounting standards issued by
the Government Accounting Standards Board (GASB) and the Financial
Accounting Standards Board (FASB).
    GAGAS, also known as the Yellow Book, means generally accepted
government auditing standards issued by the Comptroller General of the
United States, which are applicable to financial audits.
    Grant agreement means a legal instrument of financial assistance
between a Federal awarding agency or pass-through entity and a non-
Federal entity that, consistent with 31 U.S.C. 6302, 6304:
    (1) Is used to enter into a relationship the principal purpose of
which is to transfer anything of value from the Federal awarding agency
or pass-through entity to the non-Federal entity to carry out a public
purpose authorized by a law of the United States (see 31 U.S.C.
6101(3)); and not to acquire property or services for the Federal
awarding agency or pass-through entity's direct benefit or use;
    (2) Is distinguished from a cooperative agreement in that it does
not provide for substantial involvement between the Federal awarding
agency or pass-through entity and the non-Federal entity in carrying
out the activity contemplated by the Federal award.
    (3) Does not include an agreement that provides only:
    (i) Direct United States Government cash assistance to an
individual;
    (ii) A subsidy;
    (iii) A loan;
    (iv) A loan guarantee; or
    (v) Insurance.
    Grantee (see Recipient)
    HHS awarding agency means any organization component of HHS that is
authorized to make and administer awards.
    Hospital means a facility licensed as a hospital under the law of
any state or a facility operated as a hospital by the United States, a
state, or a subdivision of a state.
    Improper payment:
    (1) Means any payment that should not have been made or that was
made in an incorrect amount (including overpayments and underpayments)
under statutory, contractual, administrative, or other legally
applicable requirements; and
    (b) Includes any payment to an ineligible party, any payment for an
ineligible good or service, any duplicate payment, any payment for a
good or service not received (except for such payments where authorized
by law), any payment that does not account for credit for applicable
discounts, and any payment where insufficient or lack of documentation
prevents a reviewer from discerning whether a payment was proper.
    Indian tribe means any Indian tribe, band, nation, or other
organized group or community, including any Alaska Native village or
regional or village corporation as defined in or established pursuant
to the Alaska Native Claims Settlement Act (43 U.S.C. Chapter 33),
which is recognized as eligible for the special programs and services
provided by the United States to Indians because of their status as
Indians (25 U.S.C. 450b(e)). See annually published Bureau of Indian
Affairs list of Indian Entities Recognized and Eligible to Receive
Services.
    Indirect (Facilities and Administration or F&A) costs means costs
incurred for a common or joint purpose benefitting more than one cost
objective, and not readily assignable to the cost objectives
specifically benefitted, without effort disproportionate to the results
achieved. To facilitate equitable distribution of indirect expenses to
the cost objectives served, it may be necessary to establish a number
of pools of indirect (F&A) costs. Indirect (F&A) cost pools must be
distributed to benefitted cost objectives on bases that will produce an
equitable result in consideration of relative benefits derived.
    Indirect cost rate proposal means the documentation prepared by a
non-Federal entity to substantiate its request for the establishment of
an indirect cost rate as described in Appendix III through Appendix
VII, and Appendix IX of this part.
    Information technology systems means computing devices, ancillary
equipment, software, firmware, and similar procedures, services
(including support services), and related resources. See also Computing
devices and Equipment.
    Institution of Higher Education (IHE) is defined at 20 U.S.C. 1001.
    Intangible property means property having no physical existence,
such as trademarks, copyrights, patents and patent applications and
property, such as loans, notes and other debt instruments, lease
agreements, stock and other instruments of property ownership (whether
the property is tangible or intangible).
    Intermediate cost objective means a cost objective that is used to
accumulate indirect costs or service center costs that are subsequently
allocated to one or more indirect cost pools or final cost

objectives. See also Cost objective and Final cost objective.
    Internal controls means a process, implemented by a non-Federal
entity, designed to provide reasonable assurance regarding the
achievement of objectives in the following categories:
    (1) Effectiveness and efficiency of operations;
    (2) Reliability of reporting for internal and external use; and
    (3) Compliance with applicable laws and regulations.
    Internal control over compliance requirements for Federal awards
means a process implemented by a non-Federal entity designed to provide
reasonable assurance regarding the achievement of the following
objectives for Federal awards:
    (1) Transactions are properly recorded and accounted for, in order
to:
    (i) Permit the preparation of reliable financial statements and
Federal reports;
    (ii) Maintain accountability over assets; and
    (iii) Demonstrate compliance with Federal statutes, regulations,
and the terms and conditions of the Federal award;
    (2) Transactions are executed in compliance with:
    (i) Federal statutes, regulations, and the terms and conditions of
the Federal award that could have a direct and material effect on a
Federal program; and
    (ii) Any other Federal statutes and regulations that are identified
in the Compliance Supplement; and
    (3) Funds, property, and other assets are safeguarded against loss
from unauthorized use or disposition.
    Loan means a Federal loan or loan guarantee received or
administered by a non-Federal entity, except as used in the definition
of Program income.
    (1) The term ``direct loan'' means a disbursement of funds by the
Federal Government to a non-Federal borrower under a contract that
requires the repayment of such funds with or without interest. The term
includes the purchase of, or participation in, a loan made by another
lender and financing arrangements that defer payment for more than 90
days, including the sale of a Federal Government asset on credit terms.
The term does not include the acquisition of a federally guaranteed
loan in satisfaction of default claims or the price support loans of
the Commodity Credit Corporation.
    (2) The term ``direct loan obligation'' means a binding agreement
by a Federal awarding agency to make a direct loan when specified
conditions are fulfilled by the borrower.
    (3) The term ``loan guarantee'' means any Federal Government
guarantee, insurance, or other pledge with respect to the payment of
all or a part of the principal or interest on any debt obligation of a
non-Federal borrower to a non-Federal lender, but does not include the
insurance of deposits, shares, or other withdrawable accounts in
financial institutions.
    (4) The term ``loan guarantee commitment'' means a binding
agreement by a Federal awarding agency to make a loan guarantee when
specified conditions are fulfilled by the borrower, the lender, or any
other party to the guarantee agreement.
    Local government means any unit of government within a state,
including a:
    (1) County;
    (2) Borough;
    (3) Municipality;
    (4) City;
    (5) Town;
    (6) Township;
    (7) Parish;
    (8) Local public authority, including any public housing agency
under the United States Housing Act of 1937;
    (9) Special district;
    (10) School district;
    (11) Intrastate district;
    (12) Council of governments, whether or not incorporated as a
nonprofit corporation under state law; and
    (13) Any other agency or instrumentality of a multi-, regional, or
intra-state or local government.
    Major program means a Federal program determined by the auditor to
be a major program in accordance with Sec.  75.518 or a program
identified as a major program by a Federal awarding agency or pass-
through entity in accordance with Sec.  75.503(e).
    Management decision means the evaluation by the Federal awarding
agency or pass-through entity of the audit findings and corrective
action plan and the issuance of a written decision to the auditee as to
what corrective action is necessary.
    Micro-purchase means a purchase of supplies or services using
simplified acquisition procedures, the aggregate amount of which does
not exceed the micro-purchase threshold. Micro-purchase procedures
comprise a subset of a non-Federal entity's small purchase procedures.
The non-Federal entity uses such procedures in order to expedite the
completion of its lowest-dollar small purchase transactions and
minimize the associated administrative burden and cost. The micro-
purchase threshold is set by the Federal Acquisition Regulation at 48
CFR Subpart 2.1 (Definitions). It is $3,000 except as otherwise
discussed in Subpart 2.1 of that regulation, but this threshold is
periodically adjusted for inflation.
    Modified Total Direct Cost (MTDC) means all direct salaries and
wages, applicable fringe benefits, materials and supplies, services,
travel, and up to the first $25,000 of each subaward (regardless of the
period of performance of the subawards under the award). MTDC excludes
equipment, capital expenditures, charges for patient care, rental
costs, tuition remission, scholarships and fellowships, participant
support costs and the portion of each subaward in excess of $25,000.
Other items may only be excluded when necessary to avoid a serious
inequity in the distribution of indirect costs, and with the approval
of the cognizant agency for indirect costs.
    Non-Federal entity means a state, local government, Indian tribe,
institution of higher education (IHE), or nonprofit organization that
carries out a Federal award as a recipient or subrecipient.
    Nonprofit organization means any corporation, trust, association,
cooperative, or other organization, not including IHEs, that:
    (1) Is operated primarily for scientific, educational, service,
charitable, or similar purposes in the public interest;
    (2) Is not organized primarily for profit; and
    (3) Uses net proceeds to maintain, improve, or expand the
operations of the organization.
    Obligations means orders placed for property and services,
contracts and subawards made, and similar transactions during a given
period that require payment by the non-Federal entity during the same
or a future period.
    Office of Management and Budget (OMB) means the Executive Office of
the President, Office of Management and Budget.
    Oversight agency for audit means the Federal awarding agency that
provides the predominant amount of funding directly to a non-Federal
entity not assigned a cognizant agency for audit. When there is no
direct funding, the Federal awarding agency which is the predominant
source of pass-through funding must assume the oversight
responsibilities. The duties of the oversight agency for audit and the
process for any reassignments are described in Sec.  75.513(b).
    Participant support costs means direct costs for items such as
stipends or subsistence allowances, travel allowances, and registration
fees paid to or on behalf of participants or trainees (but not
employees) in connection with conferences, or training projects.

    Pass-through entity means a non-Federal entity that provides a
subaward to a subrecipient to carry out part of a Federal program.
    Performance goal means a target level of performance expressed as a
tangible, measurable objective, against which actual achievement can be
compared, including a goal expressed as a quantitative standard, value,
or rate. In some instances (e.g., discretionary research awards), this
may be limited to the requirement to submit technical performance
reports (to be evaluated in accordance with agency policy).
    Period of performance means the time during which the non-Federal
entity may incur new obligations to carry out the work authorized under
the Federal award. The Federal awarding agency or pass-through entity
must include start and end dates of the period of performance in the
Federal award (see Sec. Sec.  75.210(a)(5) and 75.352(a)(1)(v)).
    Personal property means property of any kind except real property.
It may be tangible, having physical existence, or intangible, such as
copyrights, patents, or securities.
    Personally Identifiable Information (PII) means information that
can be used to distinguish or trace an individual's identity, either
alone or when combined with other personal or identifying information
that is linked or linkable to a specific individual. Some information
that is considered to be PII is available in public sources such as
telephone books, public Web sites, and university listings. This type
of information is considered to be Public PII and includes, for
example, first and last name, address, work telephone number, email
address, home telephone number, and general educational credentials.
The definition of PII is not anchored to any single category of
information or technology. Rather, it requires a case-by-case
assessment of the specific risk that an individual can be identified.
Non-PII can become PII whenever additional information is made publicly
available, in any medium and from any source, that, when combined with
other available information, could be used to identify an individual.
    Principal Investigator/Program Director (PI/PD) means the
individual (s) designated by the recipient to direct the project or
program being supported by the grant. The PI/PD is responsible and
accountable to officials of the recipient organization for the proper
conduct of the project, program, or activity.
    Prior approval means written approval by an authorized HHS official
evidencing prior consent before a recipient undertakes certain
activities or incurs specific costs.
    Program income means gross income earned by the non-Federal entity
that is directly generated by a supported activity or earned as a
result of the Federal award during the period of performance except as
provided in Sec.  75.307(f). (See Period of performance.) Program
income includes but is not limited to income from fees for services
performed, the use or rental or real or personal property acquired
under Federal awards, the sale of commodities or items fabricated under
a Federal award, license fees and royalties on patents and copyrights,
and principal and interest on loans made with Federal award funds.
Interest earned on advances of Federal funds is not program income.
Except as otherwise provided in Federal statutes, regulations, or the
terms and conditions of the Federal award, program income does not
include rebates, credits, discounts, and interest earned on any of
them. See also Sec.  75.307, Sec.  75.407 and 35 U.S.C. 200-212
(applies to inventions made under Federal awards).
    Project costs means total allowable costs incurred under a Federal
award and all required cost sharing and voluntary committed cost
sharing, including third-party contributions.
    Project period (see Period of performance).
    Property means real property or personal property.
    Protected Personally Identifiable Information (Protected PII)
Protected PII means an individual's first name or first initial and
last name in combination with any one or more of types of information,
including, but not limited to, social security number, passport number,
credit card numbers, clearances, bank numbers, biometrics, date and
place of birth, mother's maiden name, criminal, medical and financial
records, educational transcripts. This does not include PII that is
required by law to be disclosed. (See also Personally Identifiable
Information (PII)).
    Questioned cost means a cost that is questioned by the auditor
because of an audit finding:
    (1) Which resulted from a violation or possible violation of a
statute, regulation, or the terms and conditions of a Federal award,
including for funds used to match Federal funds;
    (2) Where the costs, at the time of the audit, are not supported by
adequate documentation; or
    (3) Where the costs incurred appear unreasonable and do not reflect
the actions a prudent person would take in the circumstances.
    Real property means land, including land improvements, structures
and appurtenances thereto, but excludes moveable machinery and
equipment.
    Recipient means an entity, usually but not limited to non-Federal
entities, that receives a Federal award directly from a Federal
awarding agency to carry out an activity under a Federal program. The
term recipient does not include subrecipients. See also Non-Federal
entity.
    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.
    Research and Development (R&D) means all research activities, both
basic and applied, and all development activities that are performed by
HHS award recipients. 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.
    Simplified acquisition threshold means the dollar amount below
which a non-Federal entity may purchase property or services using
small purchase methods. Non-Federal entities adopt small purchase
procedures in order to expedite the purchase of items costing less than
the simplified acquisition threshold. The simplified acquisition
threshold is set by the Federal Acquisition Regulation at 48 CFR
Subpart 2.1 and in accordance with 41 U.S.C. 1908. See also Micro-
purchase
    Special purpose equipment means equipment which is used only for
research, medical, scientific, or other technical activities. Examples
of special purpose equipment include microscopes, x-ray machines,
surgical instruments, and spectrometers. See also Equipment and General
purpose equipment.
    State means any state of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands,
Guam, American Samoa, the Commonwealth of the Northern Mariana Islands,
and any agency or instrumentality thereof exclusive of local
governments.
    Student Financial Aid (SFA) means Federal awards under those
programs of general student assistance, such as those authorized by
Title IV of the Higher Education Act of 1965, as amended, (20

U.S.C. 1070-1099d), which are administered by the U.S. Department of
Education, and similar programs provided by other Federal agencies. It
does not include Federal awards under programs that provide fellowships
or similar Federal awards to students on a competitive basis, or for
specified studies or research.
    Subaward means an award provided by a pass-through entity to a
subrecipient for the subrecipient to carry out part of a Federal award
received by the pass-through entity. It does not include payments to a
contractor or payments to an individual that is a beneficiary of a
Federal program. A subaward may be provided through any form of legal
agreement, including an agreement that the pass-through entity
considers a contract.
    Subrecipient means a non-Federal entity that receives a subaward
from a pass-through entity to carry out part of a Federal program; but
does not include an individual that is a beneficiary of such program. A
subrecipient may also be a recipient of other Federal awards directly
from a Federal awarding agency.
    Supplies means all tangible personal property other than those
described in Equipment. A computing device is a supply if the
acquisition cost is less than the lesser of the capitalization level
established by the non-Federal entity for financial statement purposes
or $5,000, regardless of the length of its useful life. See also
Computing devices and Equipment.
    Surplus property (see Excess property)
    Suspension of award activities means an action by the HHS awarding
agency requiring the recipient to cease all activities on the award
pending corrective action by the recipient. It is a separate action
from suspension under HHS regulations (2 CFR part 376) implementing
Executive Orders 12549 and 12689.
    Termination means the ending of a Federal award, in whole or in
part at any time prior to the planned end of period of performance.
    Third-party in-kind contributions means the value of non-cash
contributions (i.e., property or services) that:
    (1) Benefit a federally assisted project or program; and
    (2) Are contributed by non-Federal third parties, without charge,
to a non-Federal entity under a Federal award.
    Total Costs (see Sec.  75.402).
    Unliquidated obligations means, for financial reports prepared on a
cash basis, obligations incurred by the non-Federal entity that have
not been paid (liquidated). For reports prepared on an accrual
expenditure basis, these are obligations incurred by the non-Federal
entity for which an expenditure has not been recorded.
    Unobligated balance means the amount of funds authorized under a
Federal award that the non-Federal entity has not obligated. The amount
is computed by subtracting the cumulative amount of the non-Federal
entity's unliquidated obligations and expenditures of funds under the
Federal award from the cumulative amount of the funds that the Federal
awarding agency or pass-through entity authorized the non-Federal
entity to obligate.
    Voluntary committed cost sharing means cost sharing specifically
pledged on a voluntary basis in the proposal's budget or the Federal
award on the part of the non-Federal entity and that becomes a binding
requirement of Federal award.

Subpart B--General Provisions

Sec.  75.100  Purpose.

    (a)(1) This part establishes uniform administrative requirements,
cost principles, and audit requirements for Federal awards to non-
Federal entities, as described in Sec.  75.101. HHS awarding agencies
must not impose additional or inconsistent requirements, except as
provided in Sec. Sec.  75.102 and 75.210, or unless specifically
required by Federal statute, regulation, or Executive Order.
    (2) This part provides the basis for a systematic and periodic
collection and uniform submission by Federal agencies of information on
all Federal financial assistance programs to the Office of Management
and Budget (OMB). It also establishes Federal policies related to the
delivery of this information to the public, including through the use
of electronic media. It prescribes the manner in which General Services
Administration (GSA), OMB, and Federal agencies that administer Federal
financial assistance programs are to carry out their statutory
responsibilities under the Federal Program Information Act (31 U.S.C.
6101-6106).
    (b) Administrative requirements. Subparts B through D of this part
set forth the uniform administrative requirements for grant and
cooperative agreements, including the requirements for HHS awarding
agency management of Federal grant programs before the Federal award
has been made, and the requirements HHS awarding agencies may impose on
non-Federal entities in the Federal award.
    (c) Cost Principles. Subpart E of this part establishes principles
for determining the allowable costs incurred by non-Federal entities
under Federal awards. The principles are for the purpose of cost
determination and are not intended to identify the circumstances or
dictate the extent of Federal Government participation in the financing
of a particular program or project. The principles are designed to
provide that Federal awards bear their fair share of cost recognized
under these principles except where restricted or prohibited by
statute.
    (d) Single Audit Requirements and Audit Follow-up. Subpart F of
this part is issued pursuant to the Single Audit Act Amendments of
1996, (31 U.S.C. 7501-7507). It sets forth standards for obtaining
consistency and uniformity among Federal agencies for the audit of non-
Federal entities expending Federal awards. These provisions also
provide the policies and procedures for HHS awarding agencies and pass-
through entities when using the results of these audits.
    (e) For OMB guidance to Federal awarding agencies on Challenges and
Prizes, please see M-10-11 Guidance on the Use of Challenges and Prizes
to Promote Open Government, issued March 8, 2010, or its successor.

Sec.  75.101  Applicability.

    (a) General applicability to Federal agencies. The requirements
established in this part apply to Federal agencies that make Federal
awards to non-Federal entities. These requirements are applicable to
all costs related to Federal awards.
    (b)(1) Applicability to different types of Federal awards. The
following table describes what portions of this part apply to which
types of Federal awards. The terms and conditions of Federal-awards
(including this part) flow down to subawards to subrecipients unless a
particular section of this part or the terms and conditions of the
Federal award specifically indicate otherwise. This means that non-
Federal entities must comply with requirements in this part regardless
of whether the non-Federal entity is a recipient or subrecipient of a
Federal award. Pass-through entities must comply with the requirements
described in Subpart D of this part, Sec. Sec.  75.351 through 75.353,
but not any requirements in this part directed towards Federal awarding
agencies unless the requirements of this part or the terms and
conditions of the Federal award indicate otherwise.
    This table must be read along with the other provisions in this
section

------------------------------------------------------------------------
                                Are applicable to
                               the following types   Are NOT applicable
  The following portions of     of Federal Awards     to the following
          the Part:            (except as noted in    types of Federal
                               paragraphs (d) and          Awards:
                                   (e)) below:
------------------------------------------------------------------------
Subpart A_Acronyms and        _All................  ....................
 Definitions.
Subpart B_General             _All................  ....................
 Provisions, except for Sec.
  Sec.   75.111, 75.112. and
 75.113..
Sections 75.111, 75.112, and  _Grant agreements     _Agreements for:
 75.113.                       and cooperative       loans, loan
                               agreements.           guarantees,
                                                     interest subsidies
                                                     and insurance
                                                    _Cost-reimbursement
                                                     contracts awarded
                                                     under the Federal
                                                     Acquisition
                                                     Regulations and
                                                     cost-reimbursement
                                                     and subcontracts
                                                     under these
                                                     contracts
                                                    _Fixed-price
                                                     contracts and
                                                     subcontracts
                                                     awarded under the
                                                     Federal Acquisition
                                                     Regulation whenever
                                                     cost analysis is
                                                     performed or the
                                                     contract requires
                                                     the determination
                                                     or negotiation of
                                                     costs
Subparts C-D, except for      _Grant agreements     _Agreements for:
 Subrecipient Monitoring and   and cooperative       loans, loan
 Management.                   agreements.           guarantees,
                                                     interest subsidies
                                                     and insurance
                                                    _Cost-reimbursement
                                                     contracts awarded
                                                     under the Federal
                                                     Acquisition
                                                     Regulations and
                                                     cost-reimbursement
                                                     and subcontracts
                                                     under these
                                                     contracts
                                                    _Fixed-price
                                                     contracts and
                                                     subcontracts
                                                     awarded under the
                                                     Federal Acquisition
                                                     Regulation whenever
                                                     cost analysis is
                                                     performed or the
                                                     contract requires
                                                     the determination
                                                     or negotiation of
                                                     costs
Subpart D_Post Federal Award  _All................  ....................
 Requirements, Subrecipient
 Monitoring and Management.
Subpart E_Cost Principles...  _Grant agreements     _Grant agreements
                               and cooperative       and cooperative
                               agreements, except    agreements
                               those providing       providing food
                               food commodities.     commodities
                              _Cost-reimbursement   _Fixed amount awards
                               contracts awarded    _Agreements for:
                               under the Federal     loans, loan
                               Acquisition           guarantees,
                               Regulations and       interest subsidies
                               cost-reimbursement    and insurance
                               and subcontracts     _Federal awards to
                               under these           hospitals (See
                               contracts in          Appendix IX)
                               accordance with the
                               FAR.
                              _Fixed-price
                               contracts and
                               subcontracts
                               awarded under the
                               Federal Acquisition
                               Regulation whenever
                               cost analysis is
                               performed or the
                               contract requires
                               the determination
                               or negotiation of
                               costs.
Subpart F_Audit Requirements  _All................  ....................
------------------------------------------------------------------------

    (2) Federal award of cost-reimbursement contract under the FAR to a
non-Federal entity. When a non-Federal entity is awarded a cost-
reimbursement contract, only Subpart D of this part, Sec. Sec.  75.351
through 75.353 (in addition to any FAR related requirements for
monitoring Subpart E of this part and Subpart F of this part are
incorporated by reference into the contract. However, when the Cost
Accounting Standards (CAS) are applicable to the contract, they take
precedence over the requirements of this part except for Subpart F of
this part when they are in conflict. In addition, costs that are made
unallowable under 10 U.S.C. 2324(e) and 41 U.S.C. 4304(a) as described
in the FAR subpart 31.2 and subpart 31.603 are always unallowable. For
requirements other than those covered in Subpart D of this part,
Sec. Sec.  75.351 through 75.353, Subpart E of this part-and Subpart F
of this part, the terms of the contract and the FAR apply.
    (3) With the exception of Subpart F of this part, which is required
by the Single Audit Act, in any circumstances where the provisions of
Federal statutes or regulations differ from the provisions of this
part, the provision of the Federal statutes or regulations govern. This
includes, for agreements with Indian tribes, the provisions of the
Indian Self-Determination and Education and Assistance Act (ISDEAA), as
amended, 25 U.S.C. 450-458ddd-2.
    (c) HHS awarding agencies may apply subparts A through E of this
part to Federal agencies (see Sec.  75.215), for-profit entities,
foreign public entities, or foreign organizations, except where the HHS
awarding agency determines that the application of these subparts would
be inconsistent with the international obligations of the United States
or the statutes or regulations of a foreign government.
    (d) Except for Sec.  75.202 and Sec. Sec.  75.351 through 75.353 of
Subpart D of this part, the requirements in Subpart C of this part,
Subpart D of this part, and Subpart E of this part do not apply to the
following programs:
    (1) The block grant awards authorized by the Omnibus Budget
Reconciliation Act of 1981 (including Community Services, except to the
extent that the cost and accounting standards of OMB apply to
subrecipients of Community Services Block Grant funds pursuant to 42
U.S.C. 9916(a)(1)(B); Preventive 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 Development Block Grant Awards for Small Cities;
and Elementary and Secondary Education other than programs administered
by the Secretary of Education under title V, subtitle D, chapter 2,
section 583--the Secretary's discretionary award program) and both the
Alcohol and Drug Abuse Treatment and Rehabilitation Block Grant Award
(42 U.S.C. 300x-21 to 300x-35 and 42 U.S.C. 300x-51 to 300x64) and the

Mental Health Service for the Homeless Block Grant Award (42 U.S.C.
300x to 300x-9) under the Public Health Service Act.
    (2) Federal awards to local education agencies under 20 U.S.C.
7702-7703b, (portions of the Impact Aid program);
    (3) Payments under the Department of Veterans Affairs' State Home
Per Diem Program (38 U.S.C. 1741); and
    (4) Federal awards authorized under the Child Care and Development
Block Grant Act of 1990, as amended:
    (i) Child Care and Development Block Grant (42 U.S.C. 9858)
    (ii) Child Care Mandatory and Matching Funds of the Child Care and
Development Fund (42 U.S.C. 9858)
    (e) Except for Sec.  75.202, the guidance in Subpart C of this part
does not apply to the following programs:
    (1) Federal awards to carry out the following programs of the
Social Security Act:
    (i) Temporary Assistance for Needy Families (title IV-A of the
Social Security Act, 42 U.S.C. 601-619);
    (ii) Child Support Enforcement and Establishment of Paternity
(title IV-D of the Social Security Act, 42 U.S.C. 651-669b);
    (iii) Foster Care and Adoption Assistance (title IV-E of the Act,
42 U.S.C. 670-679c);
    (iv) Aid to the Aged, Blind, and Disabled (titles I, X, XIV, and
XVI-AABD of the Act, as amended);
    (v) Medical Assistance (Medicaid) (title XIX of the Act, 42 U.S.C.
1396-1396w-5) not including the State Medicaid Fraud Control program
authorized by Sec.  1903(a)(6)(B) of the Social Security Act (42 U.S.C.
1396b(a)(6)(B)); and
    (vi) Children's Health Insurance Program (title XXI of the Act, 42
U.S.C. 1397aa-1397mm).
    (2) A Federal award for an experimental, pilot, or demonstration
project that is also supported by a Federal award listed in paragraph
(e)(1) of this section;
    (3) Federal awards under subsection 412(e) of the Immigration and
Nationality Act and subsection 501(a) of the Refugee Education
Assistance Act of 1980 (Pub. L. 96-422, 94 Stat. 1809), for cash
assistance, medical assistance, and supplemental security income
benefits to refugees and entrants and the administrative costs of
providing the assistance and benefits (8 U.S.C. 1522(e));
    (4) Entitlement awards under the following programs of The National
School Lunch Act:
    (i) National School Lunch Program (section 4 of the Act, 42 U.S.C.
1753),
    (ii) Commodity Assistance (section 6 of the Act, 42 U.S.C. 1755),
    (iii) Special Meal Assistance (section 11 of the Act, 42 U.S.C.
1759a),
    (iv) Summer Food Service Program for Children (section 13 of the
Act, 42 U.S.C. 1761), and
    (v) Child and Adult Care Food Program (section 17 of the Act, 42
U.S.C. 1766).
    (5) Entitlement awards under the following programs of The Child
Nutrition Act of 1966:
    (i) Special Milk Program (section 3 of the Act, 42 U.S.C. 1772),
    (ii) School Breakfast Program (section 4 of the Act, 42 U.S.C.
1773), and
    (iii) State Administrative Expenses (section 7 of the Act, 42
U.S.C. 1776).
    (6) Entitlement awards for State Administrative Expenses under The
Food and Nutrition Act of 2008 (section 16 of the Act, 7 U.S.C. 2025).
    (7) Non-discretionary Federal awards under the following non-
entitlement programs:
    (i) Special Supplemental Nutrition Program for Women, Infants and
Children (section 17 of the Child Nutrition Act of 1966) 42 U.S.C.
1786;
    (ii) The Emergency Food Assistance Programs (Emergency Food
Assistance Act of 1983) 7 U.S.C. 7501 note; and
    (iii) Commodity Supplemental Food Program (section 5 of the
Agriculture and Consumer Protection Act of 1973) 7 U.S.C. 612c note.

Sec.  75.102  Exceptions.

    (a) With the exception of Subpart F of this part, OMB may allow
exceptions for classes of Federal awards or non-Federal entities
subject to the requirements of this part when exceptions are not
prohibited by statute. However, in the interest of maximum uniformity,
exceptions from the requirements of this part will be permitted only in
unusual circumstances. Exceptions for classes of Federal awards or non-
Federal entities will be published on the OMB Web site at
www.whitehouse.gov/omb.
    (b) Exceptions on a case-by-case basis for individual non-Federal
entities may be authorized by the HHS awarding agency or cognizant
agency for indirect costs except where otherwise required by law or
where OMB or other approval is expressly required by this part. No
case-by-case exceptions may be granted to the provisions of Subpart F
of this part.
    (c) The HHS awarding agency may apply more restrictive requirements
to a class of Federal awards or non-Federal entities when approved by
OMB, or when required by Federal statutes or regulations, except for
the requirements in Subpart F of this part. An HHS awarding agency may
apply less restrictive requirements when making fixed amount awards as
defined in Subpart A of this part, except for those requirements
imposed by statute or in Subpart F of this part.
    (d) On a case-by-case basis, OMB will approve new strategies for
Federal awards when proposed by the HHS awarding agency in accordance
with OMB guidance (such as M-13-17) to develop additional evidence
relevant to addressing important policy challenges or to promote cost-
effectiveness in and across Federal programs. Proposals may draw on the
innovative program designs discussed in M-13-17 to expand or improve
the use of effective practices in delivering Federal financial
assistance while also encouraging innovation in service delivery.
Proposals submitted to OMB in accordance with M-13-17 may include
requests to waive requirements other than those in Subpart F of this
part.

Sec.  75.103  Authorities.

    This part is issued under the following authorities.
    (a) Subpart B of this part through Subpart D of this part are
authorized under 31 U.S.C. 503 (the Chief Financial Officers Act,
Functions of the Deputy Director for Management), 31 U.S.C. 1111
(Improving Economy and Efficiency of the United States Government), 41
U.S.C. 1101-1131 (the Office of Federal Procurement Policy Act),
Reorganization Plan No. 2 of 1970, and Executive Order 11541, the
Single Audit Act Amendments of 1996, (31 U.S.C. 7501-7507), as well as
The Federal Program Information Act (Public Law 95-220 and Public Law
98-169, as amended, codified at 31 U.S.C. 6101-6106).
    (b) Subpart E of this part is authorized under the Budget and
Accounting Act of 1921, as amended; the Budget and Accounting
Procedures Act of 1950, as amended (31 U.S.C. 1101-1125); the Chief
Financial Officers Act of 1990 (31 U.S.C. 503-504); Reorganization Plan
No. 2 of 1970; and Executive Order No. 11541.
    (c) Subpart F of this part is authorized under the Single Audit Act
Amendments of 1996, (31 U.S.C. 7501-7507).

Sec.  75.104  Supersession.

    As described in Sec.  75.110, this part supersedes:
    (a) The following OMB guidance documents and regulations under
Title 2 of the Code of Federal Regulations:
    (1) A-21, ``Cost Principles for Educational Institutions'' (2 CFR
part 220);
    (2) A-87, ``Cost Principles for State, Local and Indian Tribal
Governments''

(2 CFR part 225) and also Federal Register notice 51 FR 552 (January 6,
1986);
    (3) A-89, ``Federal Domestic Assistance Program Information'';
    (4) A-102, ``Grant Awards and Cooperative Agreements with State and
Local Governments'';
    (5) A-110, ``Uniform Administrative Requirements for Awards and
Other Agreements with Institutions of Higher Education, Hospitals, and
Other Nonprofit Organizations'' (codified at 2 CFR 215);
    (6) A-122, ``Cost Principles for Non-Profit Organizations'' (2 CFR
part 230);
    (7) A-133, ``Audits of States, Local Governments and Non-Profit
Organizations, and
    (8) Those sections of A-50 related to audits performed under
Subpart F of this part.
    (b) This part also supersedes HHS' regulations at 45 CFR parts 74
and 92.

Sec.  75.105  Effect on other issuances.

    For Federal awards subject to this part, all administrative
requirements, program manuals, handbooks and other non-regulatory
materials that are inconsistent with the requirements of this part are
superseded upon implementation of this part by the HHS awarding agency,
except to the extent they are required by statute or authorized in
accordance with the provisions in Sec.  75.102.

Sec.  75.106  Agency implementation.

    HHS is implementing the language in 2 CFR part 200 in these
codified regulations.

Sec.  75.107  OMB responsibilities.

    OMB will review HHS agency regulations and implementation of 2 CFR
part 200, and will provide interpretations of policy requirements and
assistance to ensure effective and efficient implementation. Any
exceptions will be subject to approval by OMB. Exceptions will only be
made in particular cases where adequate justification is presented.

Sec.  75.108  Inquiries.

    Inquiries concerning 2 CFR part 200 may be directed to the Office
of Federal Financial Management, Office of Management and Budget, in
Washington, DC. Inquiries concerning 45 CFR part 75 should be addressed
to the HHS awarding agency, cognizant agency for indirect costs,
cognizant or oversight agency for audit, or pass-through entity as
appropriate.

Sec.  75.109  Review date.

    OMB will review 2 CFR part 200 and HHS will review 45 Part 75 at
least every five years after December 26, 2013.

Sec.  75.110  Effective/Applicability date.

    (a) The standards set forth in this part which affect
administration of Federal awards issued by Federal agencies become
effective December 26, 2014. For the procurement standards in 2 CFR
200.317-200.326, non-Federal entities previously subject to OMB
Circular A-110 may continue to comply with the procurement standards in
previous OMB guidance (superseded by this part as described in 2 CFR
200.104) for one additional fiscal year after this part goes into
effect. If an entity chooses to remain with the previous procurement
standards for an additional fiscal year before adopting the procurement
standards in this part, they must document this decision in their
internal procurement policies, in accordance with the guidance in
Appendix XI to this part.
    (b) The standards set forth in Subpart F of this part and any other
standards which apply directly to HHS agencies will be effective
December 26, 2013, and will apply to audits of fiscal years beginning
on or after December 26, 2014.

Sec.  75.111  English language.

    (a) All Federal financial assistance announcements and Federal
award information must be in the English language. Applications must be
submitted in the English language and must be in the terms of U.S.
dollars. If the HHS awarding agency receives applications in another
currency, the HHS awarding agency will evaluate the application by
converting the foreign currency to United States currency using the
date specified for receipt of the application.
    (b) Non-Federal entities may translate the Federal award and other
documents into another language. In the event of inconsistency between
any terms and conditions of the Federal award and any translation into
another language, the English language meaning will control. Where a
significant portion of the non-Federal entity's employees who are
working on the Federal award are not fluent in English, the non-Federal
entity must provide the Federal award in English and the language(s)
with which employees are more familiar.

Sec.  75.112  Conflict of interest.

    (a) HHS awarding agencies must establish conflict of interest
policies for Federal awards. The non-Federal entity must disclose in
writing any potential conflict of interest to the respective HHS
awarding agency or pass-through entity in accordance with applicable
HHS awarding agency's policy. As a general matter, HHS awarding
agencies' conflict of interest policies must:
    (1) Address conditions under which outside activities,
relationships, or financial interests are proper or improper;
    (2) Provide for advance notification of outside activities,
relationships, or financial interests, and a process of review as
appropriate; and
    (3) Outline how financial conflicts of interest may be addressed.
    (b) Agencies with Public Health Service (PHS) funded research will
ensure that any conflict of interest policies are aligned with the
requirements of 42 CFR part 50, subpart F.

Sec.  75.113  Mandatory disclosures.

    The non-Federal entity or applicant for a Federal award must
disclose, in a timely manner, in writing to the HHS awarding agency or
pass-through entity all violations of Federal criminal law involving
fraud, bribery, or gratuity violations potentially affecting the
Federal award. Failure to make required disclosures can result in any
of the remedies described in Sec.  75.371, including suspension or
debarment. (See also 2 CFR parts 180 and 376, and 31 U.S.C. 3321).

Subpart C--Pre-Federal Award Requirements and Contents of Federal
Awards

Sec.  75.200  Purpose.

    (a) Sections 75.201 through 75.208 prescribe instructions and other
pre-award matters to be used in the announcement and application
process.
    (b) Use of Sec. Sec.  75.203, 75.204, 75.205, and 75.207, is
required only for competitive Federal awards, but may also be used by
the HHS awarding agency for non-competitive awards where appropriate or
where required by Federal statute.

Sec.  75.201  Use of grant agreements (including fixed amount awards),
cooperative agreements, and contracts.

    (a) The HHS awarding agency or pass-through entity must decide on
the appropriate instrument for the Federal award (i.e., grant
agreement, cooperative agreement, or contract) in accordance with the
Federal Grant and Cooperative Agreement Act (31 U.S.C. 6301-08).
    (b) Fixed Amount Awards. In addition to the options described in
paragraph (a) of this section, HHS awarding agencies, or pass-through
entities as permitted in Sec.  75.353, may use fixed amount awards (see
Sec.  75.2 Fixed amount awards) to which the following conditions
apply:

    (1) The Federal award amount is negotiated using the cost
principles (or other pricing information) as a guide. The HHS awarding
agency or pass-through entity may use fixed amount awards if the
project scope is specific and if adequate cost, historical, or unit
pricing data is available to establish a fixed amount award based on a
reasonable estimate of actual cost. Payments are based on meeting
specific requirements of the Federal award. Accountability is based on
performance and results. Except in the case of termination before
completion of the Federal award, there is no governmental review of the
actual costs incurred by the non-Federal entity in performance of the
award. Some of the ways in which the Federal award may be paid include,
but are not limited to:
    (i) In several partial payments, the amount of each agreed upon in
advance, and the ``milestone'' or event triggering the payment also
agreed upon in advance, and set forth in the Federal award;
    (ii) On a unit price basis, for a defined unit or units, at a
defined price or prices, agreed to in advance of performance of the
Federal award and set forth in the Federal award; or,
    (iii) In one payment at Federal award completion.
    (2) A fixed amount award cannot be used in programs which require
mandatory cost sharing or match.
    (3) The non-Federal entity must certify in writing to the HHS
awarding agency or pass-through entity at the end of the Federal award
that the project or activity was completed or the level of effort was
expended. If the required level of activity or effort was not carried
out, the amount of the Federal award must be adjusted.
    (4) Periodic reports may be established for each Federal award.
    (5) Changes in principal investigator, project leader, project
partner, or scope of effort must receive the prior written approval of
the HHS awarding agency or pass-through entity.

Sec.  75.202  Requirement to provide public notice of Federal financial
assistance programs.

    (a) The HHS awarding agency must notify the public of Federal
programs in the Catalog of Federal Domestic Assistance (CFDA),
maintained by the General Services Administration (GSA).
    (1) The CFDA, or any OMB-designated replacement, is the single,
authoritative, government-wide comprehensive source of Federal
financial assistance program information produced by the executive
branch of the Federal Government.
    (2) The information that the HHS awarding agency must submit to GSA
for approval by OMB is listed in paragraph (b) of this section. GSA
must prescribe the format for the submission.
    (3) The HHS awarding agency may not award Federal financial
assistance without assigning it to a program that has been included in
the CFDA as required in this section unless there are exigent
circumstances requiring otherwise, such as timing requirements imposed
by statute.
    (b) For each program that awards discretionary Federal awards, non-
discretionary Federal awards, loans, insurance, or any other type of
Federal financial assistance, the HHS awarding agency must submit the
following information to GSA:
    (1) Program Description, Purpose, Goals and Measurement. A brief
summary of the statutory or regulatory requirements of the program and
its intended outcome. Where appropriate, the Program Description,
Purpose, Goals, and Measurement should align with the strategic goals
and objectives within the HHS awarding agency's performance plan and
should support the HHS awarding agency's performance measurement,
management, and reporting as required by Part 6 of OMB Circular A-11;
    (2) Identification of whether the program makes Federal awards on a
discretionary basis or the Federal awards are prescribed by Federal
statute, such as in the case of formula grants.
    (3) Projected total amount of funds available for the program.
Estimates based on previous year funding are acceptable if current
appropriations are not available at the time of the submission;
    (4) Anticipated Source of Available Funds: The statutory authority
for funding the program and, to the extent possible, agency, sub-
agency, or, if known, the specific program unit that will issue the
Federal awards, and associated funding identifier (e.g., Treasury
Account Symbol(s));
    (5) General Eligibility Requirements: The statutory, regulatory or
other eligibility factors or considerations that determine the
applicant's qualification for Federal awards under the program (e.g.,
type of non-Federal entity); and
    (6) Applicability of Single Audit Requirements as required by
Subpart F of this part.

Sec.  75.203  Notices of funding opportunities.

    For competitive grants and cooperative agreements, the HHS awarding
agency must announce specific funding opportunities by providing the
following information in a public notice:
    (a) Summary Information in Notices of Funding Opportunities. The
HHS awarding agency must display the following information posted on
the OMB-designated government-wide Web site for finding and applying
for Federal financial assistance, in a location preceding the full text
of the announcement:
    (1) HHS Awarding Agency Name;
    (2) Funding Opportunity Title;
    (3) Announcement Type (whether the funding opportunity is the
initial announcement of this funding opportunity or a modification of a
previously announced opportunity);
    (4) Funding Opportunity Number (required, if applicable). If the
HHS awarding agency has assigned or will assign a number to the funding
opportunity announcement, this number must be provided;
    (5) Catalog of Federal Domestic Assistance (CFDA) Number(s);
    (6) Key Dates. Key dates include due dates for applications or
Executive Order 12372 submissions, as well as for any letters of intent
or pre-applications. For any announcement issued before a program's
application materials are available, key dates also include the date on
which those materials will be released; and any other additional
information, as deemed applicable by the relevant HHS awarding agency.
    (b) The HHS awarding agency must generally make all funding
opportunities available for application for at least 60 calendar days.
The HHS awarding agency may make a determination to have a less than 60
calendar day availability period but no funding opportunity should be
available for less than 30 calendar days unless exigent circumstances
require as determined by the HHS awarding agency head or delegate.
    (c) Full Text of Funding Opportunities. The HHS awarding agency
must include the following information in the full text of each funding
opportunity. For specific instructions on the content required in this
section, refer to Appendix I of this part.
    (1) Full programmatic description of the funding opportunity.
    (2) Federal award information, including sufficient information to
help an applicant make an informed decision about whether to submit an
application. (See also Sec.  75.414(c)(4)).
    (3) Specific eligibility information, including any factors or
priorities that affect an applicant's or its application's eligibility
for selection.

    (4) Application Preparation and Submission Information, including
the applicable submission dates and time.
    (5) Application Review Information including the criteria and
process to be used to evaluate applications. See also Sec. Sec.  75.204
and 75.205. See also 2 CFR part 27 (forthcoming at time of
publication).
    (6) Federal Award Administration Information. See also Sec.
75.210.

Sec.  75.204  HHS funding agency review of merit of proposals.

    For competitive grants or cooperative agreements, unless prohibited
by Federal statute, the HHS awarding agency must design and execute a
merit review process for applications. This process must be described
or incorporated by reference in the applicable funding opportunity (see
Appendix I to this part.) See also Sec.  75.203.

Sec.  75.205  HHS awarding agency review of risk posed by applicants.

    (a) Prior to making a Federal award, the HHS awarding agency is
required by 31 U.S.C. 3321 and 41 U.S.C. 2313 note to review
information available through any OMB-designated repositories of
government-wide eligibility qualification or financial integrity
information, such as SAM Exclusions, and ``Do Not Pay.'' See also
suspension and debarment requirements at 2 CFR part 180 as well as HHS
suspension and debarment regulations at 2 CFR part 376.
    (b) In addition, for competitive grants or cooperative agreements,
the HHS awarding agency must have in place a framework for evaluating
the risks posed by applicants before they receive Federal awards. This
evaluation may incorporate results of the evaluation of the applicant's
eligibility or the quality of its application. If the HHS awarding
agency determines that a Federal award will be made, special conditions
that correspond to the degree of risk assessed may be applied to the
Federal award. Criteria to be evaluated must be described in the
announcement of funding opportunity described in Sec.  75.203.
    (c) In evaluating risks posed by applicants, the HHS awarding
agency may use a risk-based approach and may consider any items such as
the following:
    (1) Financial stability;
    (2) Quality of management systems and ability to meet the
management standards prescribed in this part;
    (3) History of performance. The applicant's record in managing
Federal awards, if it is a prior recipient of Federal awards, including
timeliness of compliance with applicable reporting requirements,
conformance to the terms and conditions of previous Federal awards, and
if applicable, the extent to which any previously awarded amounts will
be expended prior to future awards;
    (4) Reports and findings from audits performed under Subpart F of
this part or the reports and findings of any other available audits;
and
    (5) The applicant's ability to effectively implement statutory,
regulatory, or other requirements imposed on non-Federal entities.
    (d) In addition to this review, the HHS awarding agency must comply
with the guidelines on government-wide suspension and debarment in 2
CFR part 180, and must require non-Federal entities to comply with
these provisions. These provisions restrict Federal awards, subawards
and contracts with certain parties that are debarred, suspended or
otherwise excluded from or ineligible for participation in Federal
programs or activities.

Sec.  75.206  Standard application requirements, including forms for
applying for HHS financial assistance, and state plans.

    (a) Paperwork clearances. The HHS awarding agency may only use
application information collections approved by OMB under the Paperwork
Reduction Act of 1995 and OMB's implementing regulations in 5 CFR part
1320. Consistent with these requirements, OMB will authorize additional
information collections only on a limited basis.
    (b) If applicable, the HHS awarding agency may inform applicants
and recipients that they do not need to provide certain information
otherwise required by the relevant information collection.
    (c) Forms for applying for HHS financial assistance. HHS awarding
agencies should use the Standard Form 424 (SF-424 Application for
Federal Assistance) series (or its successor) and its program narrative
whenever possible. Alternative mechanisms may be used for formula grant
programs which do not require applicants to apply for funds on a
project basis.
    (1) Applicants shall use the SF-424 series or those forms and
instructions prescribed by the HHS awarding agency.
    (2) For Federal programs covered by Executive Order 12372, as
amended by Executive Order 12416, the applicant shall complete the
appropriate sections of the SF-424 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 the HHS awarding agency 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.
(See also 45 CFR part 100.)
    (3) HHS awarding agencies that do not use the SF-424 series will
indicate on the application form they prescribe whether the application
is subject to review by the State under Executive Order 12372.
    (4) This section does not apply to applications for subawards.
    (5) Except where otherwise noted, or granted by HHS deviation, HHS
awarding agencies shall direct applicants to apply for HHS financial
assistance through Grants.gov, an OMB-designated Web site for Find and
Apply.
    (d) State plans. The statutes for some programs require States to
submit plans before receiving grants. Under regulations implementing
Executive Order 12372, States are allowed to simplify, consolidate and
substitute plans. This section contains additional provisions for plans
that are subject to regulations implementing Executive Order 12372.
    (1) Requirements. A State need meet only Federal administrative or
programmatic requirements for a plan that are in statutes or codified
regulations.
    (2) Assurances. In each plan, the State will include an assurance
that the State will comply with all applicable Federal statutes and
regulations in effect with respect to the periods for which it receives
grant funding. For this assurance and other assurances required in this
plan, the State may:
    (i) Cite by number the statutory or regulatory provisions requiring
the assurances and affirm that it gives the assurances required by
those provisions,
    (ii) Repeat the assurance language in the statutes or regulations,
or
    (iii) Develop its own language to the extent permitted by law.
    (3) Amendments. A State will amend a plan whenever necessary to
reflect:
    (i) New or revised Federal statutes or regulations, or
    (ii) 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 portions of the plan.

Sec.  75.207  Specific award conditions.

    (a) The HHS awarding agency or pass-through entity may impose
additional

specific award conditions as needed in accordance with paragraphs (b)
and (c) of this section, under the following circumstances:
    (1) Based on the criteria set forth in Sec.  75.205;
    (2) When an applicant or recipient has a history of failure to
comply with the general or specific terms and conditions of a Federal
award;
    (3) When an applicant or recipient fails to meet expected
performance goals as described in Sec.  75.210, or;
    (4) When the applicant or recipient is not otherwise responsible.
    (b) These additional Federal award conditions may include items
such as the following:
    (1) Requiring payments as reimbursements rather than advance
payments;
    (2) Withholding authority to proceed to the next phase until
receipt of evidence of acceptable performance within a given period of
performance;
    (3) Requiring additional, more detailed financial reports;
    (4) Requiring additional project monitoring;
    (5) Requiring the non-Federal entity to obtain technical or
management assistance; or
    (6) Establishing additional prior approvals.
    (c) The HHS awarding agency or pass-through entity must notify the
applicant or non-Federal entity as to:
    (1) The nature of the additional requirements;
    (2) The reason why the additional requirements are being imposed;
    (3) The nature of the action needed to remove the additional
requirement, if applicable;
    (4) The time allowed for completing the actions if applicable, and
    (5) The method for requesting reconsideration of the additional
requirements imposed.
    (d) Any specific conditions must be promptly removed once the
conditions that prompted them have been corrected.

Sec.  75.208  Certifications and Representations.

    Unless prohibited by Federal statutes or regulations, each HHS
awarding agency or pass-through entity is authorized to require the
non-Federal entity to submit certifications and representations
required by Federal statutes, or regulations on an annual basis.
Submission may be required more frequently if the non-Federal entity
fails to meet a requirement of a Federal award.
    (a) The funds governed under this part shall be administered in
compliance with the standards set forth in 45 CFR part 87.
    (b) For assurances under State plans, see Sec.  75.206(d)(2).

Sec.  75.209  Pre-award costs.

    For requirements on costs incurred by the applicant prior to the
start date of the period of performance of the Federal award, see Sec.
75.458.

Sec.  75.210  Information contained in a Federal award.

    A Federal award must include the following information:
    (a) General Federal Award Information. The HHS awarding agency must
include the following general Federal award information in each Federal
award:
    (1) Recipient name (which must match the name associated with their
unique entity identifier as defined in 2 CFR 25.315);
    (2) Recipient's unique entity identifier;
    (3) Unique Federal Award Identification Number (FAIN);
    (4) Federal Award Date (see Sec.  75.2 Federal award date);
    (5) Period of Performance Start and End Date;
    (6) Amount of Federal Funds Obligated by this action,
    (7) Total Amount of Federal Funds Obligated;
    (8) Total Amount of the Federal Award;
    (9) Budget Approved by the HHS Awarding Agency;
    (10) Total Approved Cost Sharing or Matching, where applicable;
    (11) Federal award project description (to comply with statutory
requirements (e.g., FFATA));
    (12) Name of HHS awarding agency and contact information for
awarding official,
    (13) CFDA Number and Program Name;
    (14) Identification of whether the award is R&D and
    (15) Indirect cost rate for the Federal award (including if the de
minimis rate is charged per Sec.  75.414).
    (b) General Terms and Conditions (1) HHS awarding agencies must
incorporate the following general terms and conditions either in the
Federal award or by reference, as applicable:
    (i) Administrative requirements implemented by the HHS awarding
agency as specified in this part.
    (ii) National policy requirements. These include statutory,
executive order, other Presidential directive, or regulatory
requirements that apply by specific reference and are not program-
specific. See Sec.  75.300.
    (2) The Federal award must include wording to incorporate, by
reference, the applicable set of general terms and conditions, The
reference must be to the Web site at which the HHS awarding agency
maintains the general terms and conditions.
    (3) If a non-Federal entity requests a copy of the full text of the
general terms and conditions, the HHS awarding agency must provide it.
    (4) Wherever the general terms and conditions are publicly
available, the HHS awarding agency must maintain an archive of previous
versions of the general terms and conditions, with effective dates, for
use by the non-Federal entity, auditors, or others.
    (c) HHS Awarding Agency, Program, or Federal Award Specific Terms
and Conditions. The HHS awarding agency may include with each Federal
award any terms and conditions necessary to communicate requirements
that are in addition to the requirements outlined in the HHS awarding
agency's general terms and conditions. Whenever practicable, these
specific terms and conditions also should be shared on a public Web
site and in notices of funding opportunities (as outlined in Sec.
75.203) in addition to being included in a Federal award. See also
Sec.  75.206.
    (d) Federal Award Performance Goals. The HHS awarding agency must
include in the Federal award an indication of the timing and scope of
expected performance by the non-Federal entity as related to the
outcomes intended to be achieved by the program. In some instances
(e.g., discretionary research awards), this may be limited to the
requirement to submit technical performance reports (to be evaluated in
accordance with HHS awarding agency policy). Where appropriate, the
Federal award may include specific performance goals, indicators,
milestones, or expected outcomes (such as outputs, or services
performed or public impacts of any of these) with an expected timeline
for accomplishment. Reporting requirements must be clearly articulated
such that, where appropriate, performance during the execution of the
Federal award has a standard against which non-Federal entity
performance can be measured. The HHS awarding agency may include
program-specific requirements, as applicable. These requirements should
be aligned with agency strategic goals, strategic objectives or
performance goals that are relevant to the program. See also OMB
Circular A-11, Part 6 for definitions of strategic objectives and
performance goals.
    (e) Any other information required by the HHS awarding agency.

Sec.  75.211  Public access to Federal award information.

    (a) In accordance with statutory requirements for Federal spending
transparency (e.g., FFATA), except as noted in this section, for
applicable Federal awards the HHS awarding agency must announce all
Federal awards publicly and publish the required information on a
publicly available OMB-designated government-wide Web site (at time of
publication, www.USAspending.gov).
    (b) Nothing in this section may be construed as requiring the
publication of information otherwise exempt under the Freedom of
Information Act (5 U.S.C. 552), or controlled unclassified information
pursuant to Executive Order 13556.

Sec.  75.212  Suspension and Debarment.

    Non-federal entities and contractors are subject to the non-
procurement debarment and suspension regulations implementing Executive
Orders 12549 and 12689, 2 CFR parts 180 and 376. These regulations
restrict awards, subawards and contracts with certain parties that are
debarred, suspended or otherwise excluded from or ineligible for
participation in Federal assistance programs or activities.

Sec.  75.213  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 United States trade and commerce.
HHS awarding agencies will follow the provisions of Executive Order
12770.

Sec.  75.214  Disclosure of Lobbying Activities.

    Recipients are subject to the restrictions on lobbying as set forth
in 45 CFR part 93.

Sec.  75.215  Special Provisions for Awards to Commercial Organizations
as Recipients.

    (a) This section contains provisions that apply to awards to
commercial organizations. These provisions are in addition to other
applicable provisions of this part, or they make exceptions from other
provisions of this part for awards to commercial organizations.
    (b) Prohibition against profit. Except for awards under the Small
Business Innovation Research (SBIR) and Small Business Technology
Transfer Research (STTR) programs (15 U.S.C. 638), no HHS funds may be
paid as profit to any recipient even if the recipient is a commercial
organization. Profit is any amount in excess of allowable direct and
indirect costs.
    (c) Program Income. Except for grants for research, program income
earned by a commercial organization may not be used to further eligible
project or program objectives except in the SBIR and STTR programs.
    (d)(1) Commercial organizations that receive awards (including for-
profit hospitals) have two options regarding audits:
    (i) A financial related audit of a particular award in accordance
with Generally Accepted Government Auditing Standards issued by the
Comptroller General of the United States, in those cases where the
commercial organization receives awards under only one HHS program; or,
if awards are received under multiple HHS programs, a financial related
audit of all awards in accordance with Generally Accepted Government
Auditing Standards issued by the Comptroller General of the United
States; or
    (ii) An audit that meets the requirements contained in subpart F.
    (2) Commercial organizations that receive annual awards totaling
less than the audit requirement threshold in subpart F are exempt from
HHS audit requirements for that year, but records must be available for
review by appropriate officials of Federal agencies or the Government
Accountability Office. (See Sec.  75.501).

Sec.  75.216  Special Provisions for Awards to Federal Agencies.

    (a) In order for an HHS awarding agency to make a Federal award to
a Federal agency, the HHS awarding agency must have statutory authority
that makes such Federal agency explicitly eligible for a Federal award.
    (b) All provisions of this part and other HHS regulations apply to
Federal entities receiving Federal awards, except for the following:
    (1) Except for grants for research, any program income earned by a
Federal institution must be used under the deduction alternative. Any
program income earned after the end of grant support should be returned
to the United States Treasury.
    (2) No salary or fringe benefit payments may be made from HHS
awarding agency grant funds to support career, career-conditional, or
other Federal employees (civilian or uniformed services) without
permanent appointments at a Federal institution receiving a grant.
While the level of effort required for the project must be allowed by
the recipient as part of each individual's official duties, salary
costs associated with an individual participating in an official
capacity as a Federal employee under a grant to that Federal
institution are not allowable costs under an HHS awarding agency grant.
    (3) Federal agencies may not be reimbursed for indirect costs under
Federal awards.

Sec.  75.217  Participation by faith-based organizations.

    The funds provided under this part must be administered in
compliance with the standards set forth in 45 CFR part 87.

Subpart D--Post Federal Award Requirements

Standards for Financial and Program Management

Sec.  75.300  Statutory and national policy requirements.

    (a) The Federal awarding agency must manage and administer the
Federal award in a manner so as to ensure that Federal funding is
expended and associated programs are implemented in full accordance
with U.S. statutory and public policy requirements: Including, but not
limited to, those protecting public welfare, the environment, and
prohibiting discrimination. The Federal awarding agency must
communicate to the non-Federal entity all relevant public policy
requirements, including those in general appropriations provisions, and
incorporate them either directly or by reference in the terms and
conditions of the Federal award.
    (b) The non-Federal entity is responsible for complying with all
requirements of the Federal award. For all Federal awards, this
includes the provisions of FFATA, which includes requirements on
executive compensation, and also requirements implementing the Act for
the non-Federal entity at 2 CFR part 25 and 2 CFR part 170. See also
statutory requirements for whistleblower protections at 10 U.S.C. 2324
and 2409, and 41 U.S.C. 4304, 4310, and 4712.

Sec.  75.301  Performance measurement.

    The HHS awarding agency must require the recipient to use OMB
approved standard information collections when providing financial and
performance information. As appropriate and in accordance with above
mentioned information collections, the HHS awarding agency must require
the recipient to relate financial data to performance accomplishments
of the Federal award. Also, in accordance with above mentioned standard
information collections, and when applicable, recipients must also
provide cost information to demonstrate cost effective practices (e.g.,
through unit

cost data). The recipient's performance should be measured in a way
that will help the HHS awarding agency and other non-Federal entities
to improve program outcomes, share lessons learned, and spread the
adoption of promising practices. The HHS awarding agency should provide
recipients with clear performance goals, indicators, and milestones as
described in Sec.  75.210. Performance reporting frequency and content
should be established to not only allow the HHS awarding agency to
understand the recipient progress but also to facilitate identification
of promising practices among recipients and build the evidence upon
which the HHS awarding agency's program and performance decisions are
made.

Sec.  75.302  Financial management and standards for financial
management systems.

    (a) Each state must expend and account for the Federal award in
accordance with state laws and procedures for expending and accounting
for the state's own funds. In addition, the state's and the other non-
Federal entity's financial management systems, including records
documenting compliance with Federal statutes, regulations, and the
terms and conditions of the Federal award, must be sufficient to permit
the preparation of reports required by general and program-specific
terms and conditions; and the tracing of funds to a level of
expenditures adequate to establish that such funds have been used
according to the Federal statutes, regulations, and the terms and
conditions of the Federal award. See also Sec.  75.450.
    (b) The financial management system of each non-Federal entity must
provide for the following (see also Sec. Sec.  75.361, 75.362, 75.363,
75.364, and 75.365):
    (1) Identification, in its accounts, of all Federal awards received
and expended and the Federal programs under which they were received.
Federal program and Federal award identification must include, as
applicable, the CFDA title and number, Federal award identification
number and year, name of the HHS awarding agency, and name of the pass-
through entity, if any.
    (2) Accurate, current, and complete disclosure of the financial
results of each Federal award or program in accordance with the
reporting requirements set forth in Sec. Sec.  75.341 and 75.342. If an
HHS awarding agency requires reporting on an accrual basis from a
recipient that maintains its records on other than an accrual basis,
the recipient must not be required to establish an accrual accounting
system. This recipient may develop accrual data for its reports on the
basis of an analysis of the documentation on hand. Similarly, a pass-
through entity must not require a subrecipient to establish an accrual
accounting system and must allow the subrecipient to develop accrual
data for its reports on the basis of an analysis of the documentation
on hand.
    (3) Records that identify adequately the source and application of
funds for federally-funded activities. These records must contain
information pertaining to Federal awards, authorizations, obligations,
unobligated balances, assets, expenditures, income and interest and be
supported by source documentation.
    (4) Effective control over, and accountability for, all funds,
property, and other assets. The non-Federal entity must adequately
safeguard all assets and assure that they are used solely for
authorized purposes. See Sec.  75.303.
    (5) Comparison of expenditures with budget amounts for each Federal
award.
    (6) Written procedures to implement the requirements of Sec.
75.305.
    (7) Written procedures for determining the allowability of costs in
accordance with Subpart E of this part and the terms and conditions of
the Federal award.

Sec.  75.303  Internal controls.

    The non-Federal entity must:
    (a) Establish and maintain effective internal control over the
Federal award that provides reasonable assurance that the non-Federal
entity is managing the Federal award in compliance with Federal
statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in
``Standards for Internal Control in the Federal Government,'' issued by
the Comptroller General of the United States or the ``Internal Control
Integrated Framework,'' issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
    (b) Comply with Federal statutes, regulations, and the terms and
conditions of the Federal awards.
    (c) Evaluate and monitor the non-Federal entity's compliance with
statutes, regulations and the terms and conditions of Federal awards.
    (d) Take prompt action when instances of noncompliance are
identified including noncompliance identified in audit findings.
    (e) Take reasonable measures to safeguard protected personally
identifiable information and other information the HHS awarding agency
or pass-through entity designates as sensitive or the non-Federal
entity considers sensitive consistent with applicable Federal, state,
local, and tribal laws regarding privacy and obligations of
confidentiality.

Sec.  75.304  Bonds.

    The HHS awarding agency may include a provision on bonding,
insurance, or both in the following circumstances:
    (a) Where the Federal Government guarantees or insures the
repayment of money borrowed by the recipient, the HHS awarding agency,
at its discretion, may require adequate bonding and insurance if the
bonding and insurance requirements of the non-Federal entity are not
deemed adequate to protect the interest of the Federal Government.
    (b) The HHS awarding agency may require adequate fidelity bond
coverage where the non-Federal entity lacks sufficient coverage to
protect the Federal Government's interest.
    (c) Where bonds are required in the situations described above, the
bonds must be obtained from companies holding certificates of authority
as acceptable sureties, as prescribed in 31 CFR part 223.

Sec.  75.305  Payment.

    (a) For states, payments are governed by Treasury-State CMIA
agreements and default procedures codified at 31 CFR part 205 and TFM
4A-2000 Overall Disbursing Rules for All Federal Agencies.
    (b) For non-Federal entities other than states, payments methods
must minimize the time elapsing between the transfer of funds from the
United States Treasury or the pass-through entity and the disbursement
by the non-Federal entity whether the payment is made by electronic
funds transfer, or issuance or redemption of checks, warrants, or
payment by other means. See also Sec.  75.302(b)(6). Except as noted
elsewhere in these part, Federal agencies must require recipients to
use only OMB-approved standard government-wide information collection
requests to request payment.
    (1) The non-Federal entity must be paid in advance, provided it
maintains or demonstrates the willingness to maintain both written
procedures that minimize the time elapsing between the transfer of
funds and disbursement by the non-Federal entity, and financial
management systems that meet the standards for fund control and
accountability as established in this part. Advance payments to a non-
Federal entity must be limited to the minimum amounts needed and be
timed to be in accordance with the actual,

immediate cash requirements of the non-Federal entity in carrying out
the purpose of the approved program or project. The timing and amount
of advance payments must be as close as is administratively feasible to
the actual disbursements by the non-Federal entity for direct program
or project costs and the proportionate share of any allowable indirect
costs. The non-Federal entity must make timely payment to contractors
in accordance with the contract provisions.
    (2) Whenever possible, advance payments must be consolidated to
cover anticipated cash needs for all Federal awards made by the HHS
awarding agency to the recipient.
    (i) Advance payment mechanisms include, but are not limited to,
Treasury check and electronic funds transfer and must comply with
applicable guidance in 31 CFR part 208.
    (ii) Non-Federal entities must be authorized to submit requests for
advance payments and reimbursements at least monthly when electronic
fund transfers are not used, and as often as they like when electronic
transfers are used, in accordance with the provisions of the Electronic
Fund Transfer Act (15 U.S.C. 1693-1693r).
    (3) Reimbursement is the preferred method when the requirements in
paragraph (b) cannot be met, when the HHS awarding agency sets a
specific condition per Sec.  75.207, or when the non-Federal entity
requests payment by reimbursement. This method may be used on any
Federal award for construction, or if the major portion of the
construction project is accomplished through private market financing
or Federal loans, and the Federal award constitutes a minor portion of
the project. When the reimbursement method is used, the HHS awarding
agency or pass-through entity must make payment within 30 calendar days
after receipt of the billing, unless the HHS awarding agency or pass-
through entity reasonably believes the request to be improper.
    (4) If the non-Federal entity cannot meet the criteria for advance
payments and the HHS awarding agency or pass-through entity has
determined that reimbursement is not feasible because the non-Federal
entity lacks sufficient working capital, the HHS awarding agency or
pass-through entity may provide cash on a working capital advance
basis. Under this procedure, the HHS awarding agency or pass-through
entity must advance cash payments to the non-Federal entity to cover
its estimated disbursement needs for an initial period generally geared
to the non-Federal entity's disbursing cycle. Thereafter, the HHS
awarding agency or pass-through entity must reimburse the non-Federal
entity for its actual cash disbursements. Use of the working capital
advance method of payment requires that the pass-through entity provide
timely advance payments to any subrecipients in order to meet the
subrecipient's actual cash disbursements. The working capital advance
method of payment must not be used by the pass-through entity if the
reason for using this method is the unwillingness or inability of the
pass-through entity to provide timely advance payments to the
subrecipient to meet the subrecipient's actual cash disbursements.
    (5) Use of resources before requesting cash advance payments. To
the extent available, the non-Federal entity must disburse funds
available from program income (including repayments to a revolving
fund), rebates, refunds, contract settlements, audit recoveries, and
interest earned on such funds before requesting additional cash
payments.
    (6) Unless otherwise required by Federal statutes, payments for
allowable costs by non-Federal entities must not be withheld at any
time during the period of performance unless the conditions of
Sec. Sec.  75.207, Subpart D of this part, 75.371, or one or more of
the following applies:
    (i) The non-Federal entity has failed to comply with the project
objectives, Federal statutes, regulations, or the terms and conditions
of the Federal award.
    (ii) The non-Federal entity is delinquent in a debt to the United
States as defined in OMB Guidance A-129. Under such conditions, the HHS
awarding agency or pass-through entity may, upon reasonable notice,
inform the non-Federal entity that payments must not be made for
obligations incurred after a specified date until the conditions are
corrected or the indebtedness to the Federal Government is liquidated.
(See 45 CFR part 30).
    (iii) A payment withheld for failure to comply with Federal award
conditions, but without suspension of the Federal award, must be
released to the non-Federal entity upon subsequent compliance. When a
Federal award is suspended, payment adjustments will be made in
accordance with Sec.  75.375.
    (iv) A payment must not be made to a non-Federal entity for amounts
that are withheld by the non-Federal entity from payment to contractors
to assure satisfactory completion of work. A payment must be made when
the non-Federal entity actually disburses the withheld funds to the
contractors or to escrow accounts established to assure satisfactory
completion of work.
    (7) Standards governing the use of banks and other institutions as
depositories of advance payments under Federal awards are as follows:
    (i) The HHS awarding agency and pass-through entity must not
require separate depository accounts for funds provided to a non-
Federal entity or establish any eligibility requirements for
depositories for funds provided to the non-Federal entity. However, the
non-Federal entity must be able to account for the receipt, obligation
and expenditure of funds.
    (ii) Advance payments of Federal funds must be deposited and
maintained in insured accounts whenever possible.
    (8) The non-Federal entity must maintain advance payments of
Federal awards in interest-bearing accounts, unless the following
apply:
    (i) The non-Federal entity receives less than $120,000 in Federal
awards per year.
    (ii) The best reasonably available interest-bearing account would
not be expected to earn interest in excess of $500 per year on Federal
cash balances.
    (iii) 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.
    (iv) A foreign government or banking system prohibits or precludes
interest bearing accounts.
    (9) Interest earned amounts up to $500 per year may be retained by
the non-Federal entity for administrative expense. Any additional
interest earned on Federal advance payments deposited in interest-
bearing accounts must be remitted annually to the Department of Health
and Human Services Payment Management System through an electronic
medium using either Automated Clearing House (ACH) network or a Fedwire
Funds Service payment. Remittances must include pertinent information
of the payee and nature of payment in the memo area (often referred to
as ``addenda records'' by Financial Institutions) as that will assist
in the timely posting of interest earned on federal funds. Pertinent
details include the Payee Account Number (PAN) if the payment
originated from PMS, or Agency information if the payment originated
from ASAP, NSF or another federal agency payment system. The remittance
must be submitted as follows:

For ACH Returns:
Routing Number: 051036706
Account number: 303000

Bank Name and Location: Credit Gateway--ACH Receiver St. Paul, MN

For Fedwire Returns*:
Routing Number: 021030004
Account number: 75010501
Bank Name and Location: Federal Reserve Bank Treas NYC/Funds Transfer
Division New York, NY
(* Please note organization initiating payment is likely to incur a
charge from your Financial Institution for this type of payment)

For International ACH Returns:
Beneficiary Account: Federal Reserve Bank of New York/ITS (FRBNY/ITS)
Bank: Citibank N.A. (New York)
Swift Code: CITIUS33
Account Number: 36838868
Bank Address: 388 Greenwich Street, New York, NY 10013 USA
Payment Details (Line 70): Agency Name (abbreviated when possible) and
ALC Agency POC: Michelle Haney,<PHONE_NUMBER>

    For recipients that do not have electronic remittance capability,
please make check** payable to:

``The Department of Health and Human Services''

Mail Check to Treasury approved lockbox:
HHS Program Support Center
P.O. Box 530231
Atlanta, GA 30353-0231
(** Please allow 4-6 weeks for processing of a payment by check to be
applied to the appropriate PMS account)

Any additional information/instructions may be found on the PMS Web
site at http://www.dpm.psc.gov/.

Sec.  75.306  Cost sharing or matching.

    (a) Under Federal research proposals, voluntary committed cost
sharing is not expected. It cannot be used as a factor during the merit
review of applications or proposals, but may be considered if it is
both in accordance with HHS awarding agency regulations and specified
in a notice of funding opportunity. Criteria for considering voluntary
committed cost sharing and any other program policy factors that may be
used to determine who may receive a Federal award must be explicitly
described in the notice of funding opportunity. Furthermore, only
mandatory cost sharing or cost sharing specifically committed in the
project budget must be included in the organized research base for
computing the indirect (F&A) cost rate or reflected in any allocation
of indirect costs. See also Sec. Sec.  75.414, 75.203, and Appendix I
to this part.
    (b) For all Federal awards, any shared costs or matching funds and
all contributions, including cash and third party in-kind
contributions, must be accepted as part of the non-Federal entity's
cost sharing or matching when such contributions meet all of the
following criteria:
    (1) Are verifiable from the non-Federal entity's records;
    (2) Are not included as contributions for any other Federal award;
    (3) Are necessary and reasonable for accomplishment of project or
program objectives;
    (4) Are allowable under Subpart E of this part;
    (5) Are not paid by the Federal Government under another Federal
award, except where the Federal statute authorizing a program
specifically provides that Federal funds made available for such
program can be applied to matching or cost sharing requirements of
other Federal programs;
    (6) Are provided for in the approved budget when required by the
HHS awarding agency; and
    (7) Conform to other provisions of this part, as applicable.
    (c) Unrecovered indirect costs, including indirect costs on cost
sharing or matching may be included as part of cost sharing or
matching. Unrecovered indirect cost means the difference between the
amount charged to the Federal award and the amount which could have
been charged to the Federal award under the non-Federal entity's
approved negotiated indirect cost rate.
    (d) Values for non-Federal entity contributions of services and
property must be established in accordance with the cost principles in
Subpart E. If an HHS awarding agency authorizes the non-Federal entity
to donate buildings or land for construction/facilities acquisition
projects or long-term use, the value of the donated property for cost
sharing or matching must be the lesser of paragraphs (d)(1) or (2) of
this section.
    (1) The value of the remaining life of the property recorded in the
non-Federal entity's accounting records at the time of donation.
    (2) The current fair market value. However, when there is
sufficient justification, the HHS awarding agency may approve the use
of the current fair market value of the donated property, even if it
exceeds the value described in paragraph (1) of this section at the
time of donation.
    (e) Volunteer services furnished by third-party 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 third-party volunteer services must be consistent with those paid
for similar work by the non-Federal entity. In those instances in which
the required skills are not found in the non-Federal entity, rates must
be consistent with those paid for similar work in the labor market in
which the non-Federal entity competes for the kind of services
involved. In either case, paid fringe benefits that are reasonable,
necessary, allocable, and otherwise allowable may be included in the
valuation.
    (f) When a third-party organization furnishes the services of an
employee, these services must be valued at the employee's regular rate
of pay plus an amount of fringe benefits that is reasonable, necessary,
allocable, and otherwise allowable, and indirect costs at either the
third-party organization's approved federally negotiated indirect cost
rate or, a rate in accordance with Sec.  75.414(f), provided these
services employ the same skill(s) for which the employee is normally
paid. Where donated services are treated as indirect costs, indirect
cost rates will separate the value of the donated services so that
reimbursement for the donated services will not be made.
    (g) Donated property from third parties may include such items as
equipment, office supplies, laboratory supplies, or workshop and
classroom supplies. Value assessed to donated property included in the
cost sharing or matching share must not exceed the fair market value of
the property at the time of the donation.
    (h) The method used for determining cost sharing or matching for
third-party-donated equipment, buildings and land for which title
passes to the non-Federal entity may differ according to the purpose of
the Federal award, if paragraph (h)(1) or (2) of this section applies.
    (1) If the purpose of the Federal award is to assist the non-
Federal entity in the acquisition of equipment, buildings or land, the
aggregate value of the donated property may be claimed as cost sharing
or matching.
    (2) If the purpose of the Federal award is to support activities
that require the use of equipment, buildings or land, normally only
depreciation charges for equipment and buildings may be made. However,
the fair market value of equipment or other capital assets and fair
rental charges for land may be allowed, provided that the HHS awarding
agency has approved the charges. See also Sec.  75.420.
    (i) The value of donated property must be determined in accordance
with the usual accounting policies of the

non-Federal entity, with the following qualifications:
    (1) The value of donated land and buildings must not exceed its
fair market value at the time of donation to the non-Federal entity 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 non-Federal entity as
required by the Uniform Relocation Assistance and Real Property
Acquisition Policies Act of 1970, as amended, (42 U.S.C. 4601-4655)
(Uniform Act) except as provided in the implementing regulations at 49
CFR part 24.
    (2) The value of donated equipment must 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 must 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 must not exceed its fair rental
value.
    (j) For third-party in-kind contributions, the fair market value of
goods and services must be documented and to the extent feasible
supported by the same methods used internally by the non-Federal
entity.
    (k) For IHEs, see also OMB memorandum M-01-06, dated January 5,
2001, Clarification of OMB A-21 Treatment of Voluntary Uncommitted Cost
Sharing and Tuition Remission Costs.

Sec.  75.307  Program income.

    (a) General. Non-Federal entities are encouraged to earn income to
defray program costs where appropriate.
    (b) Cost of generating program income. If authorized by Federal
regulations or the Federal award, costs incidental 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 Federal
award.
    (c) Governmental revenues. Taxes, special assessments, levies,
fines, and other such revenues raised by a non-Federal entity are not
program income unless the revenues are specifically identified in the
Federal award or HHS awarding agency regulations as program income.
    (1) The Patent and Trademark Laws Amendments, 34 U.S.C. 200-212,
apply to inventions made under an award for performance of
experimental, developmental, or research work.
    (2) Unless the terms and conditions for the Federal award provide
otherwise, recipients shall have no obligation to HHS with respect to
program income earned from license fees and royalties for copyrighted
material, patents, patent applications, trademarks, and inventions made
under a Federal award. However, no scholarship, fellowship, training
grant, or other funding agreement made primarily to a recipient for
educational purposes will contain any provision giving the HHS awarding
agency rights to inventions made by the recipient.
    (d) Property. Proceeds from the sale of real property, equipment,
or supplies, are not program income; such proceeds will be handled in
accordance with the requirements of Subpart D of this part, Sec. Sec.
75.318, 75.320, and 75.321, or as specifically identified in Federal
statutes, regulations, or the terms and conditions of the Federal
award.
    (e) Use of program income. If the HHS awarding agency does not
specify in its regulations or the terms and conditions of the Federal
award, or give prior approval for how program income is to be used,
paragraph (e)(1) of this section must apply. For Federal awards made to
IHEs and nonprofit research institutions, if the HHS awarding agency
does not specify in its regulations or the terms and conditions of the
Federal award how program income is to be used, paragraph (e)(2) of
this section must apply unless the recipient is subject to conditions
under Sec.  75.207 or Sec.  75.215. In specifying alternatives to
paragraphs (e)(1) and (2) of this section, the HHS awarding agency may
distinguish between income earned by the recipient and income earned by
subrecipients and between the sources, kinds, or amounts of income.
When the HHS awarding agency authorizes the approaches in paragraphs
(e)(2) and (3) of this section, program income in excess of any amounts
specified must also be deducted from expenditures.
    (1) Deduction. Ordinarily program income must be deducted from
total allowable costs to determine the net allowable costs. Program
income must be used for current costs unless the HHS awarding agency
authorizes otherwise. Program income that the non-Federal entity did
not anticipate at the time of the Federal award must be used to reduce