Managing Federally Funded Construction Projects ONLINE APPENDIX

MANAGING THE FEDERALLY FUNDED CONSTRUCTION PROJECT Table of Contents

ONLINE APPENDIX These files are available online at falmouthinstitute.com/files/cn013/index.html Glossary of Acquisition Terms ................................................................................ A-1 OMB Circular A-102................................................................................................... B-1 OMB Circular A-87..................................................................................................... C-1 Architectural and Engineering (A&E) Contracting ................................................. D-1 25 CFR 1000 ................................................................................................................E-1 42 CFR 137 N .............................................................................................................. F-1 42 CFR 136 ................................................................................................................. G-1 42 CFR 137 O & P ...................................................................................................... H-1 24 CFR 85 ..................................................................................................................... I-1 25 CFR 100 J ............................................................................................................... J-1 Comparison of Proposed Amendments of Tribal Workgroup (3-3-05), § 408 to Title Iv and Title V .............................................................................................................. K-1 The Stimulus Package and Its Impact on You ......................................................... L-1 2009 Economic Stimulus Package Native American Housing .............................. M-1

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Stimulus Monies Spark Tribal Construction........................................................... N-1 OSHA Inspection ....................................................................................................... O-1

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APPENDIX A

GLOSSARY OF ACQUISITION TERMS

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GLOSSARY OF ACQUISITION TERMS

Terms commonly used in the federal acquisition process.

Acceptance The act of an authorized representative of the Government by which the Government assumes for itself, or as agent of another, ownership of existing identified supplies tendered or approves specific services rendered as partial or complete performance of the contract on the part of the contractor.

ACUOlSlU8n The acquiring by contract, with appropriated funds, of property or services (including construction) by and for the use of the Federal Government and for its direct benefit or use through purchase or lease, whether the property or services are already in existence or must be created, developed, demonstrated, and evaluated. Acquisition begins at the point when agency needs are established and includes the description of requirements to satisfy the agency needs, solicitation, and selection of sources, award of contracts, contract financing, contract performance, contract administration, and those technical and management functions directly related to the process of fulfilling agency mission needs by contract.

ACUOISIUOII PlaOIllBB The process by which the acquisition planning efforts of all personnel responsible for the acquisition are coordinated and integrated through a comprehensive plan for the purpose of obtaining a quality product or service, in a timely manner, and at a reasonable cost.

Admlnlstrathre COOtraCtlng OtfiC8r [A601 A Government Contracting Officer, often at an installation other than the one which made the contract, who handles the business administration of the contract. For the larger prime contractors, the ACO is commonly resident a t the contractor's facility.

Advance PaYfflellt Monetary advance made available by the Government to a bank for a contractor's use in performing a contract.

AIIoCaUon Funds made available for departmental subdivisions (such as Navy, Army, or Air Force Commands) from the department's allocation.

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AllBtment Authorization by an agency head to an agency subdivision to incur obligations within a specified amount.

A I ~ B O ~ ~ ~ ~ ~ OAn ~ Iappropriation I ~ U O U which is available for incurring obligations during the fiscal year specified in the appropriation act.

mUD~Dflm8ntThe Office of Management and Budget's release (to a department) of funds provided by Congress in the DOD appropriation act.

&lDIODrlatlOfl Statutory authorization to spend from the Treasury for specified purposes. Armed SOWlCOS Beard Of COflrnCt AUlIeal~[ASBCAI Board established to act as the authorized representative of the Secretary of Defense, or Department Secretaries, in deciding appeals under the Disputes clause of Governmental contracts.

Basle ABM8BOflt A written instrument of understanding (not a contract) between a contractor and the Government. Sets forth the contract clauses applicable to future contracts entered into between the parties during the term of the basic agreement. Used to eliminate extensive and costly negotiation when a substantial number of separate contracts may be entered into with a contractor over a definite period of time.

Baslc 01(1811Og &reBmOflt An agreement similar to a basic agreement (not a contract) except that it also includes a description of the supplies OR SERVICES to be furnished or sewices to be performed when ordered and a description of the method for determination of prices to be paid.

Bid A prospective contractor's (bidder's) reply to an Invitation for Bid (IFB)issued under the sealed bidding method of contracting. Needs only Government acceptance to constitute a binding contract.

BlddOrS'eOflfereOCO In sealed bidding contracting, a meeting of prospective bidders arranged by the Contracting Officer during the solicitation period to help solicited firms fully understand the Government's requirement and to give them an opportunity to ask questions. (For negotiated acquisitions, see Preproposal Conference).

B l d d 8 r s ' ~ M a l l lUS1 ~ ~ l[Master Bldders'Ustl List of sources maintained by the contracting office from which bids (formal advertising) or proposals or quotations (negotiation) can be solicited.

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Blanket Purchase llgrm3meIIt A simplified method of filling anticipated repetitive needs for small quantities of supplies or services by establishing "charge accounts" with qualified sources of supply.

BUdu8t (a) a planned program for a fiscal period in terms of estimated costs, obligations, and expenditure, source of funds for financing, including reimbursement anticipated and other resources to be applied; and explanatory and workload data on the projected program and activities; (b) to prepare such a program; (c) the Federal administrative budget presented to Congress each year by the President as the nation's basic financial planning document.

BUSllllI88 EUaIUaUOD A measuring of a business proposal against the business requirements of the solicitation data and rating the proposal accordingly.

B I N AlllGliCan hCt Federal statute imposing restrictions on placing contracts with manufacturers who would deliver items with components not substantially mined, manufactured or produced in the United States.

Cateurrles ef Den's Rsssarcb, Devalopmsot Test and Evaluauon Prsonm UlDTaEl Resultant division of DoD's RDT&E Program into six categories: Research, Exploratory Development, Advanced Development, Engineering Development, Management and Support, Operational Systems Development.

ChaOBs Order A written order signed by the Contracting Officer, directing the contractor to make changes that the Changes clause of the contract authorizes the Contracting Officer to make without the consent of the contractor.

CIlsmerCe Buslness DalN A daily list of U.S. Government solicitations subcontracting leads, contracts awarded, sale of surplus property, and foreign business opportunities published by the Department of Commerce.

CDIIImerClal PrOdUCt A product, such as an item, material, component, subsystem, or system, sold or traded to the general public in the course of normal business operations at prices based on established catalog or market prices.

C~lMmerClal-TYUeProduct A commercial product (a) modified to meet some Governmentpeculiar physical requirement or addition or (b) otherwise identified differently from its normal commercial counterparts.

COglDIUll8Ilt (a) Government: A firm administrative reservation of funds authorizing subsidiary activities to start action leading to an obligation upon award of a contract; @)

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Contractor: Oral or written statements made by prime contractor personnel binding the contractor to a course of action.

~DmUUOllOrg8n8ral Head of the General Accounting Office appointed by the President (and confirmed by the Senate) for a 15-year term. COnSUUCtlYB Chanue During contract performance, an oral or written act or omission by the

Contracting Officer or other authorized Government official, which is of such a nature that it is construed to have the same effect as a written change order. g0nSOltant and cOnSOlUnfi SetViCeS Those services of a purely advisory nature relating to the

governmental functions of administrative and program management that are provided by persons or organizations considered to have knowledge and special abilities not available within the Government agency. (Source: OMB Circular A-120.) Consulting sewice arrangements may be used to: obtain specialized opinion or professional or technical advice that does not exist or is not available within the agency; obtain outside points of view to avoid a limited judgment on critical issues; obtain advice regarding developments in industry, university, or foundation research; obtain the opinion of noted experts whose national or international prestige can contribute to the success of important projects; and, secure citizen advisory participation in developing or implementing Government programs that by their nature or by statutory provision call for such participation. 680m6t A mutually binding legal relationship obligating the seller to furnish the supplies or

services (including construction) and the buyer to pay for them. It includes all types of commitments that obligate the Government to an expenditure of appropriated funds and that, except as otherwise authorized, are in writing. In addition to bilateral instruments, contracts include (but are not limited to) awards and notices of awards; job orders or task letters issued under basic ordering agreements; letter contracts; orders, such as purchase orders, under which the contract becomes effective by written acceptance or performance; and bilateral contract modifications. Contracts do not include grants and cooperative agreements covered by 41 USC 501, et seq.

COnUaCt AdJUSUlientBoard An agency board which deals with requests by contractors for extraordinary relief under Public Law 85-804. cOOVBC1ildDllllSUau@nThe management of all facets of contracts so as to assure that the contractor's total performance is in accordance with its contractual commitments and the obligations of the Government are fulfilled. This management is conducted within the framework of delegated responsibility and authority and includes support of, and may in some instances be performed by, the buying organization.

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COlltlaCt Award Date The date of execution of the contract by both parties. Under certain circumstances, the Contracting Officer may authorize work prior to the contract award date; such a date then becomes the effective date of the contract. eOnIfaCI, gomIll8UOll Form A contract which describes the scope of work to be done as a clearly

defined task or job with a definite goal or target expressed and with a specific end-product required. This form of contract normally requires the contractor to complete and deliver the specified end-product (in certain instances, a final report of research accomplishing the goal or target) as a condition for payment of the entire fixed-fee established for the work and within the estimated cost if possible; however, in the event the work cannot be completed within the estimated cost, the Government can elect to require more work and effort from the contractor without increase in fee provided it increases the estimated cost.

COnIfaet DeflllltiOn A funded effort, normally by two or more competing contractors, to establish specifications, to select technical approaches, to identify high-risk areas, and to make cost and production time estimates for developing large weapon systems. eBntHCI, lndeflnlte Dellvery Used when the precise quantity of items or specific t i e of

delivery desired is not known. Usually will specify a maximum and/or minimum quantity. Contracting is effected by (a) a definite quantity contract, @) a requirements contract, (c) an indefinite quantity contract. May be either negotiated o r formally advertised.

CODUatt ModIflCaUmll Any written change in the terms of a contract. It includes (i) bilateral actions such as supplemental agreements, and (i) unilateral actions such as change orders, orders for provisioned items, administrative changes, notices of termination, and notices of the exercise of a contract option. CBnUaCI, HegoUated One obtained by direct agreement with a contractor, by means other than sealed bidding.

COllYaCt QUalllY Assurance The various functions including inspection performed by the Government to determine whether a contractor has fulfilled its contract obligations pertaining to quality and quantity. This function is related to and generally precedes the act of acceptance. COOUaCI Reuulrement The acquisition by contract of a specifically identifiable end item@)

which may be hardware, but more than likely will be a report showing the results of research and development, validation of a concept, engineering, test, and evaluation, the preparation of a manual or other document, support services, the undertaking of a training program, e t c

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COOUBCt SDeCIaIISB The individuals who negotiate and administer the contract. Coiltlact, Task Order These are term-form, level-of-effort contracts for a specified number of Technical Staff Months. They are based on a Statement of Work (SOW) that establishes scope, describes areas of performance and parameters, and provides the framework for technical performance and management of the effort. The details of the work to be performed are further defined by issuance of task orders in a completion form with specific product deliverables identified.

Contlact,Tem Form A contract which describes the scope of work to be done in general terms and which obligates the contractor to devote a specified level of effort for a stated period of time. Under this form, the fixed-fee is payable at the termination of the agreed period of time on certification of the Contractor that the level of effort specified in the contract has been exerted in performance of the work called for, and such performance is considered satisfactory by the Government. Renewals for further periods of performance are new requirements and involve new fee and cost arrangements. C~BUaCtllmeand Materlalsllahor Hler Negotiated contracts based on specified fixed hourly rates to complete a given task. Used only in situations where it is not possible a t the outset to estimate the extent or duration of the work involved or to anticipate cost with any substantial accuracy.

COBUaCtTYD8 Normally, a reference to the pricing terms of the agreement between a buyer and a seller, but may refer to the special nature of other important terms in the agreement. Thus, a contract may be a "fixed-price" type. Further, a "letter contract" may be either a fixed-price type or a cost-reimbursement type.

Contlactlng Officer's ReuresantaWes [CORsl and Technical Representatives [COTRsl A Contracting Officer can designate Government personnel to act as authorized representatives for such functions as providing to contractors technical direction, Government-furnished property and other resources, property administration, inspection, approval of shop drawings, testing, approval of samples, and other functions of a tekhnical and/or administrative nature not involving a change in the scope, price, terms, or conditions of the contract or order. Representatives who perform primarily technical functions are called and can be designated as Contracting Officer's Technical Representatives (COTRs).

COllUaCIJnu OfRCEr A person with the authority to enter into, administer, and/or terminate contracts and make related determinations and findings. The term includes certain authorized representatives of the Contracting Officer acting within the limits of their authority as

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delegated by the Contracting Officer. "Administrative Contracting Officer (ACO)" refers to a Contracting Officer who is administering contracts. "Termination Contracting Officer (TCO)" refers to a Contracting Officer who is settling terminated contracts. A single Contracting Officer may be responsible for duties in any or all of these areas. Reference in this regulation to administrative Contracting Officer or termination Contracting Officer does not (a) require that a duty be performed at a particular office or activity or (b) restrict in any way a Contracting Officer in the performance of any duty properly assigned.

Contractor Enolneerlno and Technical Servlcas Those services performed by commercial or industrial companies which provide advice, instruction and training to Government personnel in the installation, operation and maintenance of Government equipment and systems. These services include transmitting the knowledge necessary to develop among these Government personnel the technical skill capability required for installing, maintaining and operating such equipment. Contractor Engineering and Technical Services consist of:

C8ntraCt Plant SeNiCeS IgPS1: Services provided to Government personnel by a manufacturer of technical equipment or components in the plants and facilities of the manufacturer. The specialized skills, knowledge, experience and technical data of the manufacturer are contracted for by Government components for the purposes of acquiring system and component knowledge, training and training aid programs, and other essential engineering and technical services relating directly to the development of the technical skill capability required for installing, maintaining and operating such equipment.

COnWaCt neld SarvlG8S [Cn]:

Those engineering and technical services provided to Government personnel by commercial or industrial companies on-site.

n8ld SlJNlC8 Beuresentatlve IRRI: An employee of a manufacturer of equipment of components who provides a liaison or advisory service between the company and the users of the company's equipment or components.

Cost AOalWlS The review and evaluation of a contractor's costs or pricing data and of the judgmental factors applied in projecting from the data to the estimated costs in order to form an opinion leading to a position on the degree to which the contractor's proposed costs represent what contract performance should cost, assuming reasonable economy and efficiency. It includes appropriate verification of cost data, evaluation of specific elements of costs, and projection of these data to determine the effect on price factors like cost necessity, allowances for contingencies, and the basis used for allocation of overhead costs.

C@SlR8lBbUB8Bl8Ot Refers to a family of contract types that provide for payment of allowable, allocable and reasonable costs incurred in the performance of a contract, to extent

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that such costs are prescribed or permitted by the contract. In exchange, the contractor merely promises to exert its "best efforts." In the case of a cost-plus-a-fixed-feearrangement, costs may vary under or over the initially agreed-to estimate, but the fee remains fixed as an expressed dollar amount and is not subject to adjustment by reason of contractor cost experience during the life of the contract. h S l

CBIIIHN The maximum allowable costs under a cost reimbursable type contract

independent of the funds obligated to a contract. C8St oY8AUn The amount by which a contractor exceeds (a) the estimated cost andlor (b) the

final limitation (ceiling) of the contract. C8StS Include all expenses of contract performance which are reasonable, allowable to the

contract, consistent with sound and generally accepted accounting principles and practices, and not excluded by the contract, regulations, and law. 68SB l P C O l ~ lThose l costs identified through the use of the accrual method of accounting and

reporting. Costs incurred are exclusive costs of direct labor, direct material, and direct services identified with, and necessary for, the performance of the contract, and all properly allocated and allowable indirect costs as shown by the books of the contractor.

Data Writings, drawings, or other recorded information concerning design, manufacturing processes, or the functioning of an item developed or produced under a contract. Includes (1)proprietary data, (2) operational data, and (3) descriptive data. Excludes financial data.

Debarred A contractor excluded from Government contracting or subcontracting for a specified period, typically one to three years (five years in the case of Drug-Free Workplace violations). DBfeHSB COntBCt Management gOmmad [DCMCl An agency, under direction of Director of

DLA, created to provide unified contract administration services to DOD components and NASA, for all contracts except those specifically exempted. DCMC was created in 1990 through a reorganization of the former Defense Contract Management Command (DCAS) and the Navy and Air Force Plant Representative Ofices (NAVPRO and AFPRO).

Defsnss MaterlalS%StOm [DM81 A system of priorities and allocations for scarce materials and equipment under control of the Bureau of the Domestic Commerce of the Department of Commerce.

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Glossary of Acquisition Terms

DeIRerabla A product of a contractor or "other" agency effort in partially or wholly fulfilling the objectives of a contract in accordance with the Statement of Work or other tasking. Examples are: (1)the end-product of the accomplishment of the entire contractual, MIPR, or EAO action; (2) a product of a task under a task order type contract; or (3) a product in a series of deliverables as a requirement of either a contract, a task order, or a subtask order; MIPR; or EAO.

Determlnatloo and Findlnus [ D m Written justification by a Contracting Officer or higher authority for (a) entering into certain contracts with less than full and open competition, (b) making advance payments under negotiated conkacts, (c) determining the type of contract to use, and (d) waiving a requirement for submission of cost or pricing data and certification thereof. DOD FAB SUDUlem8nt Department of Defense Federal Acquisition Regulation Supplement (DFARS). The DoD acquisition regulation implementing the FAR. Changes are issued as Defense Acquisition Circulars (DACs).

Education and Other HoODrOflt Organbatles Any corporation, foundation, trust, or institution operated for scientific or educational purposes not organized for profit and in which no part of the net earnings is passed on as investment profit to any private individual.

EXUaS Additions to items being acquired, or a quantity above that called for by the contract (besides allowable variation in quantity), or any combination of these two.

Escalatlrl A term traditionally used to indicate an upward or downward movement of price. "Economic price adjustment" is the contemporary term used to express the sense of "escalation."

Facllltlas CauablllN Revlew [FCRI See Preaward Survey. FBCIIbY See Industrial Facility. h a In specified cost-reimbursement pricing arrangements, fee represents an agreed-to amount beyond the initial estimate of costs. In most instances, fee reflects a variety of factors, including risk, and may be subject to statutory limitations. Fee may be filed at the outset of performance, as in a cost-plus-a-fixed-fee arrangement, or may vary (within a contractually specified minimum-maximum range) during performance, as in a cost-plus-incentive-fee arrangement.

m(8d Price Refers to a family of pricing arrangements whose common discipline is a ceiling beyond which the Government has no responsibility for payment. In the case of a firm fixed-

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price arrangement, the agreed-to price is not subject to any adjustment by reason of the contractor's cost experience in the performance of the contract.

6ellerai Aceountlng OmCe [6A01 An agency of the legislative branch, responsible solely to the Congress, which functions to audit and investigate matters relating to the receipt, disbursement, and application of public funds. Determines whether public funds are expended in accordance with appropriations.

6evernment-furnished Prouem [6FP1, Eaulument [6FU, Material [6FM1, rr Senrlcss [6FS1 Government-owned property or services furnished to a contractor for the performance of a contract. Include but are not limited to (a) industrial facilities, (b)material, (c) special tooling, (d) special test equipment, (e) military property, (f) ADP services, and (g) data.

6ratoity Any gift, favor, entertainment, hospitality, transportation, loan, any other tangible item, and any intangible benefit-for example, discounts, passes, and promotional vendor training-given or extended to, or on behalf of, Government personnel or their spouses, minor children, or households, for which fair market value is not paid by the recipient or the U.S. Government.

illC8nUV8 hMlg8m8m A negotiated pricing arrangement that structures a series of relationships designed to motivate and reward the contractor for performance in accordance with the contract specification.

InCr8B8ntsl FUndlIIN The obligation of funds to a contract (which contains a total price or estimated cost) in periodic installments as the work progresses, rather than in a lump sum.

Industrial Facility Property other than material and special tooling used in the performance of a Government prime contract or subcontract. Includes real property, rights in real property, buildings, structures, improvements, and plant equipment. I I S U ~ C ~ ~ OThe O examination and testing of supplies or services (including, when appropriate, raw materials, components, and intermediate assemblies) to determine whether they conform to contract requirements.

L8ttBr k?@llIMCtA written preliminary contractual instrument that authorizes the immediate commencement of activity under its terms and conditions, pending definitization of a fixedprice or cost-reimbursement pricing arrangement for the work to be done. Must specify the maximum liability of the Government and be superseded by a definite contract within a specified time. Not to be used except when a written determination is made that no other type of contract is suitable.

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LltVeI Bf EffOR The devotion of talent or capability to a predetermined level of activity, over a stated period of time, on the basis of a fixed-price or cost-reimbursement pricing arrangement. Payment is usually based on effort expended rather than on results achieved.

Make-Or-BM PrONCBm That part of a contractor's written plan for the development or production of an end item which outlines the subsystems, major components, assemblies, subassemblies, and parts the contractor intends to manufacture, test-treat, or assemble (make), and those the contractor intends to purchase from others (buy).

MatBriaI Anything incorporated into an end item or consumed in its manufacture. Includes not only raw and processed material but also parts, components, assemblies, and even usable tools.

Material IBSUeCtlOn and tlaeelvlng RepOR IMlRRl MIRRs are used to document Acquisition Quality Assurance, Acceptance of supplies and services, and shipments; they are used by receiving, status control, technical, contracting, inventory control, requisitioning, and paying activities. (DD 250 series of forms.)

ModlficaU#n Any formal revision of the terms of a contract. It may be in the form of a Supplemental Agreement (bilateral agreement) or a Change Order (unilateral direction by the Contracting Officer.) NOTE: New acquisitions cannot be implemented by a Change Order.

MUKI~GBIACUUISIUOII A method of competitively purchasing up to five years' requirements in one contract which is funded annually as appropriations permit. If necessary to cancel the remaining quantities in any year, the contractor is paid an agreed-upon portion of the unamortized nonrecurring startup costs.

HBUBU~~~OII The method of contracting used when one or more of the basic conditions incident to formal advertising are absent andlor when there is justification under one or more of the 17 exceptions provided by Title 10 USC 2304(a).

Obllgatlen A monetary liability of the Government limited in amount to the legal liability of the Government a t the time of recording. Must be supported by documentary evidence of the transaction involved.

Offer A bid where the acquisition is advertised, and proposal where the acquisition is negotiated.

BfflCltOf Managemant and Budget IOMBI Basic financial control agency in the executive branch. Reports directly to the President.

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O~UOOA unilateral right in a contract by which, for a specified time, the Government may elect to purchase additional quantities of the supplies or services called for by the contract, or may elect to extend the period of performance of the contract.

Ordering OfRCer A Government individual appointed by designated officials authorized to issue delivery orders under indefinite delivery (i.e., definite quantity, indefinite quantity, and requirements), time and material, and labor hour contracts; andlor to issue task orders under cost-reimbursement contracts. An Ordering Officer may be appointed and referred to as a "Contracting Officer" with appropriate limitations on the scope of his or her authority.

PaNaI PaMllBOt A payment authorized under a contract, made upon completion of the delivery of one or more complete units (or one or more distinct items of service), called for, delivered and accepted by the Government under the contract. Also a payment made against a termination claim upon prior approval before final settlement of the total termination claim.

PaNes Excloded from PlocOrem8IltP ~ O B ~A~list W compiled, S maintained, and distributed by the General Services Administration containing the names of contractors debarred, suspended, or declared ineligible from receiving Government contracts or subcontracts.

Pbaslng The dividing of the contractual effort into areas of stages of accomplishment, each of which must be completed and approved before the Contracting Officer authorizes the contractor to proceed to the next.

Preaward Sanrey [Faclllties Cauablllty Revlew [FCBII Study of a prospective contractor's financial, organizational, and operational status made prior to contract award to determine its capability, capacity, and facilities to perform a contract.

PleO8#OUaUOO &DnfBlBnC8 Meeting of the Government negotiation team prior to negotiation with the contractor in which negotiation goals are developed. PrePrOPOSaI CODlferBnC8 In negotiated acquisitions, a meeting held with potential contractors a few days after requests for proposal have been sent out, to promote uniform interpretation of work statements and specifications by all prospective contractors.

Pr0S8lltltaUO~conference A conference between Government and industry concerning technical problems or other areas of importance relating to the proposed acquisition. Precedes issuance of the solicitation to prospective contractors.

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PHCB The amount of the offer or negotiated monetary limit in a fixed-price type contract that

the Government is obligated to pay. The process of examining and evaluating a prospective price without evaluation of the separate cost elements and proposed profit of the individual offeror whoseprice is being evaluated. It may be accomplished by a comparison of submitted quotations, a comparison of price quotations and contract prices with current quotations for the same or similar items, the use of rough yardstick (dollars per pound, for instance), or a comparison of proposed prices with independently developed Government estimates. PllGB &lahlSlS

PlOeUrlnN ~ O l l t r a C I h gOfRCel [PC01 The Government Contracting Officer directing and administering the acquisition through the award of the contract. Administration of the contract after award may be delegated to an ACO, as defined herein. PlofeSSlOnal aDa Management SUDDORSeNlCBS Acquisition by contract of services related to

management and control of programs such as progradproject management, policy review and development, specification development, and systems engineering. These include omnibus service contracts for technical and managerial work; repetitive services to investigate, evaluate or assess existing managerial policies/organization and to independently develop alternate procedures, organizations and policies; development of hardware o r software specifications including efforts supporting configuration management; and system engineering services to investigate, evaluate or assess technical, scientific or engineering problems, concepts, and performance of existing or proposed hardware. Specifically excluded are those services procured under commerciaVindustrial (A-76) procedures such as guard or mess attendant services or services directly related to manufacture, repair or maintenance of hardware.

Prof11 Generally characterized as the basic motive of business enterprise; on occasion referred to as "the wages of risk". In contract pricing, profit represents a projected or known monetary excess realized by a producer or performer after the deduction of costs (both direct and indirect) incurred or to be incurred in the performance of a job, task or series of thesame. PlOSlam OMclals The term program officials includes research leaders, scientists, engineers,

project officers, administrative officers, and other program managers. P r r g M S S PallUlBntS Payments made to a prime contractor during the life of a fined-price type

contract on the basis of a percentage of incurred total cost or total direct labor and material cost.

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PIOJEQ OtflC8I The individual who, because of superior technical, leadership, and management skills and capabilities, is assigned technical responsibility from the inception of a requirement through its completion and closeout of the contract under which the requirement was satisfied.

PlOlBCt Plan A plan prepared by a Program Office setting forth the objectives, requirements, and means of achievement for a specific project.

PMDOSal The offeror's response to a Request for Proposal. Used only in conjunction with negotiated acquisitions.

PIoDOSBI hlahlSIS A brief formal document, which is an objective appraisal of a particular proposal's merits and shortcomings. The analysis is prepared under the direction of the Source Selection Advisory Council and is a summary of the findings of the Source Selection Evaluation Board supplemented by the judgments of the Source Selection Advisory Council.

P r O D I I I a N Bata That which provides information concerning the details of a contractor's secrets of manufacture to the extent that such information is not disclosed by inspection or analysis of the product itself and to the extent that the contractor has protected such information from unrestricted use by others.

Purchase BBSCllDtlOn A purchase description is any informal product description prepared for one-time use or for small purchase when issuance of a formal product description (specification, standard, CID) is not cost effective. Pnrcbase O d e C A contractual document used primarily to acquire supplies and nonpersonal services when the aggregate amount involved in any one transaction is relatively small.

PUmhlS8 8811UESt [PRI Document which describes the required supplies or services so that contracting can be initiated. Some activities actually refer to the document by this title, others use different titles, such as Purchase Directive, and so forth.

Puallflsd PMdUCtS US1 [PPU A list of products which are tested in advance of actual contracting to determine which suppliers can comply properly with specification requirements. This is usually done because of the length of time required for test and evaluation.

ReasonabIe Cost A cost is reasonable if, in its nature or amount, it does not exceed what would be incurred by an ordinarily prudent person in the conduct of competitive business.

Repuest for Pl8DOSal [RFPI The solicitation form generally used for negotiated acquisitions wherein the Government reserves the right to conduct written or oral discussions with any or

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all offerors, and also reserves the right to award without such discussions under certain conditions.

Resuest for

QUOtaIiOO [RFQI Used in small purchase or contracting procedures when it is

desired to get written price quotations.

Rsuulrln@ACUYltY Any activity originating a request for supplies or services. Sealed BlddlBN The preferred method for Government acquisition of supplies and services. After public opening of sealed competitive bids, award is made to the lowest responsive and responsible bidder, price and other price-related factors considered.

SGCletaN (As used in acquisition regulations) The Secretary, the Under Secretary, or any Assistant Secretary of any military department. Also includes the Director of DCA, except to the extent that any law or Executive Order limits the exercise of authority to persons at the Secretarial level. In the later situation, such authority shall be exercised by an Assistant Secretary of Defense.

Small B u s I ~ ~ SAdmlDlStraUDB S A Federal agency created to foster and protect the interests of small business concerns. Issues Small Business Certificates of Competency.

Small Buslnsss s D B ~ l a l l S IA DoD employee who has responsibility for implementing small business policy within his or her own activity. Small Purchase An acquisition action whose aggregate amount does not exceed $25,000. SDl8 SOUrCO When supplies or service can be obtained from only one person or firm ("sole

source of supply"). SOUrC8 S81eCtlDn [SSI The process wherein the requirements, facts, recommendations, and

Government policy relevant to an award decision in a competitive acquisition of a system or project are examined and the decision is made. SOUIC8 S810CuOQ Plan A proposed plan for conducting the proposal evaluation, source

selection, and negotiation, specifically including recommendations on the evaluation criteria, the functional areas that should be represented on the Source Selection Advisory Council, the chairperson and composition of the Source Selection Evaluation Board, the scoring or evaluation technique to be used, and the scheduling of all actions required between receipt of proposals and the signing of a definitized contract. The Selection Plan will normally be prepared by the SystemlProject Office, or its equivalent, for use by the Source Selection Authority and the Source Selection Advisory Council.

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SDBClal Toollnp All jigs, dies, fixtures, molds, patterns, special taps, special gauges, special test equipment, other special equipment and manufacturing aids, and replacements thereof, acquired or manufactured by the contractor for use in the performance of a Government contract. Must he of such a specialized nature that, without substantial modifications or alteration, its use is limited to production peculiar to Government needs. Sp~~lflCatlOn A specification is a clear and accurate description of a product or service, used in invitations for bids, requests for proposals, and contracts, to tell prospective suppliers precisely what the agency requires. Standard A standard is a prescribed set of rules, conditions, or requirements concerned with the definition of terms; classification of components; delineation of procedures; specification of materials, performance, design, or operations; or measurement of quality and quantity in describing materials, products, systems, services, or practices. 8tet8m8nt d Wtrk [SOW1 A Statement of Work (SOW) is a specification for services. It describes the work or services to be performed and may enumerate the methods (statistical, clinical, laboratory, etc.) to be used. It can apply to the acquisition of services or the development of hardware. The SOW is the contractual vehicle for expressing exactly what the contractor is agreeing to and what the Government is agreeing to. It becomes the keystone of the RFP, the proposal, and the contract. To be legal and binding, the SOW must be complete and specific. Its clarity has a direct effect on efficient contract administration since it defines the scope of work to be performed. Any work outside the scope will be considered new procurement with increase costs probable. StUhlBS and AIlahrSlS Those nonrecurring examinations of a subject undertaken to provide greater understanding of relevant issues and alternatives regarding organizations, tactics, doctrine, policies, force plans, strategies, procedures, intelligence, weapons selection and mix, systems, programs or resources, and leading to conclusions and recommendations contributing to planning, programming, budgeting, decision making and policy development, including those studies initiated by or for the program management office. It also includes research and development of related data base structures and models for the support of studies and analysis. Subcontract A contract, other than a prime contract, calling for the performance of work, or for the making or furnishing of any material, required for the performance of any one or more prime contracts. Sobcentracter Any supplier, distributor, vendor, or firm which furnishes supplies or services to or for a prime contractor or another subcontractor.

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Glossaw of Acoulsitlon Terms

S0u~l8mentaIRgr08ment A contract modification that is accomplished by the mutual action of the parties.

SOSPendBd A contractor temporarily disqualified from Government contracting or subcontracting.

SYSt8m/PIOI8Ct Equipment andlor skills together with any related facilities, services, information, and techniques, that form a complex or an entity capable of performing specific operational tasks in support of an identifiable DoD objective.

TechnIcaI 0118CUOn The direction or guidance of the scientific, engineering, and other technical aspects of a contractual effort, as distinguished from the administrative and business management aspects. The term includes: directions to the contractor which redirect the contract effort, shift work emphasis between work areas of task, require pursuit of certain lines of inquiry, fill in details or otherwise serve to accomplish contractual statement of work; provision of information to the contractor which assists in the interpretation of drawings, specifications or technical portions of the work description and, review; and, where required by the contract , approval of technical reports, drawings, specifications and technical information to be delivered by the contractor to the Government under the contract. Technical direction must be within the general scope of work stated in the contracts. CORslCOTRs do not have the authority to and may not issue any technical direction which (i) constitutes an assignment of additional work outside the general scope of the contract; (i) constitutes a change as defined in the contract clause entitled "Changes"; (iii) in any manner causes an increase or decrease in the total estimated contract cost or price, the fixed fee or the time required for contract performance; or (iv) changes any of the expressed terms, conditions, or specifications of the contract.

Tecbnlcal hral~atl8n(a) a measuring of a technical proposal against established technical criteria and rating the proposal accordingly; or (b)the measuring of a contractor's technical achievement and status during performance under a contract.

TecbnlcalEvalOaUOn Criteria Criteria against which proposals are evaluated. Offerors must be advised of the general factors and their relative importance in the RFPIRFQ.

Tothnlcal Staff MOPth Means one month of one technical, scientific, or professional person's time, directed to performance of the task(s) contained in the SOW, or in tasks subsequently issued under the SOW (Task Order Contract). Fringe benefits such as any leave allowed per company policy will not be considered as time directed to task performance. General administration and clerical support labor, which may he either a direct or indirect charge

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against the Contract, will not be considered as fulfillment of the technical staff month definition or the resultant contractual obligation.

TermlnatlBn The canceling of all or a part of a prime contract or subcontract prior to completion through performance. T6SU0H That element of inspection that determines the properties or elements, including

functional operation of supplies or their components, by the application of established scientific principles and procedures.

UnssIIclt~dPC8POSaI A written offer to perform a proposed task or effort, initiated and submitted to the Government by a prospective contractor (offeror) without a solicitation by the Government, with the objective of obtaining a contract. Advertising material, commercial product offerings, contributions, or technical correspondence which are submitted to the Government shall not be considered to constitute unsolicited proposals.

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APPENDIX B

OMB CIRCULAR A-102 August 2 9 ,

1997

MEMORANDUM F O R THE RECORD FROM:

Norwood J. Jackson Deputy Controller Office of Federal Financial Management

SUBJECT: Recompilation of OMB Circular A-102 I certify that the attached document constitutes a recompilation of Office of Management and Budget Circular A-102, "Grants and Cooperative Agreements with State and Local Governments." The recompilation consists of the last complete revision of the Circular published at 59 FR 52224 (dated October 7, 1994, published October 14, 1994), as further amended at 62 FR 45934 (August 29, 1997).

CIRCULAR A-102 (REVISED 10/7/94, As Further Amended 8/29/97) CIRCULAR NO. A-102 Revised TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS SUBJECT: Grants and Cooperative Agreements with State and Local Governments 1. Purpose. This Circular establishes consistency and uniformity among Federal agencies in the management of grants and cooperative agreements with State, local, and federally- recognized Indian tribal governments. This revision supersedes Office of Management and Budget (OMB) Circular No. A-102, dated March 3, 1988. 2. Authority. This Circular is issued under the authority of the Budget and Accounting Act of 1921, as amended; the Budget and Accounting Procedures Act of 1950, as amended; Reorganization Plan No. 2 of 1970; Executive Order 11541 and the Chief Financial Officers Act, 31 U.S.C. 503. O The Falmouth Institute

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Also included in the Circular are standards to ensure consistent implementation of sections 202, 203, and 204 of the lntergovenunental Cooperation Act of 1968, the Office of Federal Procurement Policy Act Amendments of 1983, and sections 6301-08, title 31, United States Code. 3. Background. On March 12, 1987, the President directed all affected agencies to issue a grants management common rule to adopt govemment-wide terms and conditions for grants to State and local governments, and they did so. In 1988, OMB revised the Circular to provide guidance to Federal agencies on other matters not covered in the common rule.

4. Required Action. Consistent with their legal obligations, all Federal agencies administering programs that involve grants and cooperative agreements with State, local and Indian tribal governments (grantees) shall follow the policies in this Circular. If the enabling legislation for a specific grant program prescribes policies or requirements that differ from those in this Circular, the provisions of the enabling legislation shall govern. 5. OMB Responsibilities. OMB may grant deviations from the requirements of this Circular when permissible under existing law. However, in the interest of uniformity and consistency, deviations will be permitted only in exceptional circumstances.

6. Information Contact. Further information concerning this Circular may be obtained from: Office of Federal Financial Management Office of Management and Budget Room 6025 New Executive Office Building Washington, DC 20503 (202) 395-3993

7. Termination Review Date. The Circular will have a policy review three years from the date of issuance. 8. Effective Date. The Circular is effective on publication. Attachment

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ATTACHMENT Circular No. A-102 GRANTS AND COOPERATlVE AGREEMENTS WITH STATE AND LOCAL GOVERNMENTS 1. Pre-Award Policies. a. Use of grants and cooperative agreements. Sections 6301-08, title 31, United States Code govern the use of grants, contracts and cooperative agreements. A grant or cooperative agreement shall be used only when the principal purpose of a transaction is to accomplish a public purpose of support or stimulation authorized by Federal statute. Contracts shall be used when the principal purpose is acquisition of property or services for the direct benefit or use of the Federal Government. The statutory criterion for choosing between grants and cooperative agreements is that for the latter, "substantial involvement is expected between the executive agency and the State, local government, or other recipient when carrying out the activity contemplated in the agreement." b. Advance Public Notice and Priority Setting. (1) Federal agencies shall provide the public with an advance notice in the Federal Register, or by other appropriate means, of intended funding priorities for discretionary assistance programs, unless funding priorities are established by Federal statute. These priorities shall be approved by a policy level official. (2) Whenever time permits, agencies shall provide the public an opportunity to comment on intended funding priorities. (3) All discretionary grant awards in excess of $25,000 shall be reviewed for consistency with agency priorities by a policy level official. c. Standard Forms for Applying for Grants and Cooperative Agreements (1) Agencies shall use the following standard application forms unless they obtain Office of Management and Budget (OMB) approval under the Paperwork Reduction Act of 1980 (44 U.S.C. 35) and the 5 CFR Part 1320, "Controlling Paperwork Burdens on the Public": S F 4 2 4 Facesheet SF424a Budget Information (Non-Construction) SP424b Standard Assurances (Non-Construction) SF-424c Budget Information (Construction) SF-424d Standard Assurances (Construction) When different or additional information is needed to comply with legislative requirements or to meet specific program needs, agencies shall also obtain prior OMB approval. @The Falmouth Institute

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(2) A preapplication shall be used for all construction, land acquisition and land development projects or programs when the need for Federal funding exceeds $100,000, unless the Federal agency determines that a preapplication is not needed. A preapplication is used to: (a) Establish communication between the agency and the applicant, (b) Determine the applicant's eligibility, (c) Determine how well the project can compete with similar projects from others, and (d) Discourage any proposals that have little or no chance for Federal funding before applicants incur significant costs in preparing detailed applications. (3) Agencies shall use the Budget Information (Construction) and Standard Assurances (Construction) when the major purpose of the project or program is construction, Iand acquisition or land development.

(4) Agencies may specify how and whether budgets shall be shown by functions or activities within the program or project.

(5) Agencies should generally include a request for a program narrative statement which is based on the following instructions: (a) Objectives and need for assistance. Pinpoint any relevant physical, economic, social, financial, institutional, or other problems requiring a solution. Demonstrate the need for the assistance and state the principal and subordinate objectives of the project. Supporting documentation or other testimonies from concerned interests other than the applicant may be used. Any relevant data based on planning studies should be included or footnoted. @) Results or Benefits Expected. Identify costs and benefits to be derived. For example, show how the facility wiIl be used. For land acquisition or development projects, explain how the project will benefit the public.

(c) Approach. Outline a plan of action pertaining to the scope and detail how the proposed work will be accomplished for each assistance program. Cite factors which might accelerate or decelerate the work and reasons for taking this approach as opposed to others. Describe any unusual features of the project, such as design or technological innovations, reductions in cost or time, or extraordinary social and community involvements. Provide for each assistance program quantitative projections of the accomplishments to be achieved, if possible. When accomplishments cannot be quantified, list the activities in chronological order to show the schedule of accomplishments and target expected completion dates.

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Identify the kinds of data to be collected and maintained, and discuss the criteria to be used to evaluate the results and success of the project. Explain the methodology that will be used to determine if the needs identified and discussed are being met and if the results and benefits identified are being achieved. List each organization, cooperator, consultant, or other key individuals who will work on the project along with a short description of the nature of their effort or contribution. (d) Geographic location. Give a precise location of the project and area to be served by the proposed project. Maps or other graphic aids may be attached. (e) If applicable, provide the following information: for research and demonstration assistance requests, present a biographical sketch of the program director with the following information: name, address, telephone number, background, and other qualifying experience for the project. Also, list the name, training and background for other key personnel engaged in the project. Describe the relationship between this project and other work planned, anticipated, or underway under Federal assistance. Explain the reason for all requests for supplemental assistance and justify the need for additional funding. Discuss accomplishments to date and list in chronological order a schedule of accomplishments, progress or milestones anticipated with the new funding request. If there have been significant changes in the project objectives, location, approach or time delays, explain and justify. For other requests for changes, or amendments, explain the reason for the change(s). If the scope or objectives have changed or an extension of time is necessary, explain the circumstances and justify. If the total budget has been exceeded or if the individual budget items have changes more than the prescribed limits, explain and justify the change and its effect on the project.

(6) Additional assurances shall not be added to those contained on the standard forms, unless specifically required by statute. d. Debarment and Suspension. Federal agencies shall not award assistance to applicants that are debarred or suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs under Executive Order 12549. ~ ~ e n c ishall e s establish procedures for the effective use of the List of Parties Excluded from Federal Procurement or Nonprocurement programs to assure that they do not award assistance to listed parties in violation of the Executive Order. Agencies shall also establish procedures to provide for effective use andlor dissemination of the list to assure that their grantees and subgrantees (including contractors) at any tier do not make awards in violation of the nonprocurement debarment and suspension common rule.

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e. Awards and Adjustments. (1) Ordinarily awards shall be made at least ten days prior to the beginning of the grant period. (2) Agencies shall notify grantees immediately of any anticipated adjustments in the amount of an award. This notice shall be provided as early as possible in the funding period. Reductions in funding shall apply only to periods after notice is provided. Whenever an agency adjusts the amount of an award, it shall also make an appropriate adjustment to the amount of any required matching or cost sharing. f. Carryover Balances. Agencies shall be prepared to identify to OMB the amounts of carryover balances (e.g., the amounts of estimated grantee unobligated balances available for carryover into subsequent grant periods). This presentation shall detail the fiscal and programmatic (level of effort) impact in the following period. g. Special Conditions or Restrictions. Agencies may impose special conditions or restrictions on awards to "high risk" applicantslgrantees in accordance with section -.I2 of the grants management common rule. Agencies shall document use of the "Exception" provisions of section -.6 and "High-risk" provisions of section -.I2 of the grants management common rule. h. Waiver of Single State Agency Requirements. (1) Requests to agencies from the Governors, or other duly constituted State authorities, for waiver of "single" State agency requirements in accordance with section 31 U.S.C. 6504, "Use of existing State or multimember agency to administer grant programs," shall be given expeditious handling and, whenever possible, an affirmative response. (2) When it is necessary to refuse a request for waiver of "single" State agency requirements under section 204 of the Intergovernmental Corporation Act, the Federal grantor agency shall advise OMB prior to informing the State that the request cannot be granted. The agency shall indicate to OMB the reasons for the denial of the request. (3) Legislative proposals embracing grant-in-aid programs shall avoid inclusion of proposals for "single" State agencies in the absence of compelling reasons to do otherwise. In addition, existing requirements in present grant-in-aid programs shall be reviewed and legislative proposals developed for the removal of these restrictive provisions. i. Patent Rights. Agencies shall use the standard patent rights clause specified in "Rights to Inventions made by Non-profit Organizations and Small Business Firms" (37 CFR Part 401), when providing support for research and development.

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j.

Metric System of Measurement. The Metric Conversion Act of 1975, as amended, declares that the metric system is the preferred measurement system for U.S. trade and commerce. The Act requires each Federal agency to establish a date(s), in consultation with the Secretary of Commerce, when the metric system of measurement will be used in the agency's procurement, grants, and other business-related activities. Metric implementation may take longer where the use of the system is initially impractical or likely to cause significant inefficiencies in the accomplishment of federally-funded activities. Heads of departments and agencies shall establish a process for a policy level and program level review of proposed exceptions to metric usage in grants programs. Executive Order 12770 ("Metric Usage in Federal Government Programs") elaborates on implementation of the Act.

2. Post-award Policies. a. Cash Management. Agency methods and procedures for transfemng funds shall minimize the time elapsing between the transfer to recipients of grants and cooperative agreements and the recipient's need for the funds. (1) Such transfers shall be made consistent with program purposes, applicable law and Treasury regulations contained in 31 CFR Part 205, Federal Funds Transfer Procedures. (2) Where letters-of-credit are used to provide funds, they shall be in the same amount as the award.

b. Grantee Financial Management Systems. In assessing the adequacy of an applicant's financial management system, the awarding agency shall rely on readily available sources of information, such as audit reports, to the maximum extent possible. If additional information is necessary to assure prudent management of agency funds, it shall be obtained from the applicant or from an on-site review. c. Financial Status Reports. (1) Federal agencies shall require grantees to use the SF-269, Financial Status ReportLong Form, or SF-269a, Financial Status Report-Short Form, to report the status of funds for all non-construction projects or programs. Federal agencies need not require the Financial Status Report when the SF-270, Request for Advance or Reimbursement, or SF-272, Report of Federal Cash Transactions, is determined to provide adequate information. (2) Federal agencies shall not require grantees to report on the status of funds by object class category of expenditure (e.g., personnel, travel, equipment).

(3) If reporting on the status of funds by programs, functions or activities within the project or program is required by statute or regulation, Federal agencies shall instruct grantees to use block 12, Remarks, on the SF-269, or a supplementary form approved by the OMB under the Paperwork Reduction Act of 1980.

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(4) Federal agencies shall prescribe whether the reporting shall be on a cash or an accrual basis. If the Federal agency requires accrual information and the grantees's accounting records are not normally kept on an accrual basis, the grantee shall not be required to convert its accounting system but shall develop such accrual information through an analysis of the documentation on hand. d. Contracting With Small and Minority Firms, Women's Business Enterprises and Labor Surplus Area Firms. It is national policy to award a fair share of contracts to small and minority business firms. Grantees shall take similar appropriate affirmative action to support of women's enterprises and are encouraged to procure goods and services from labor surplus areas. e. Program Income. (1) Agencies shall encourage grantees to generate program income to help defray program costs. However, Federal agencies shall not permit grantees to use grant-acquired assets to compete unfairly with the private sector. (2) Federal agencies shall instruct grantees to deduct program income from total program costs as specified in the grants management common rule at paragraph -.25 (g)(l), unless agency regulations or the terms of the grant award state otherwise. Authorization for recipients to follow the other alternatives in paragraph -.25 (g) (2) and (3) shall be granted sparingly. f. Site Visits and Technical Assistance. Agencies shall conduct site visits only as warranted by program or project needs. Technical assistance site visits shall be provided only (1) in response to requests from grantees, (2) based on demonstrated program need, or (3) when recipients are designated "high risk" under section -.I2 of the grants management common rule. g. Infrastructure Investment. Agencies shall encourage grantees to consider the provisions of the common rule at Section -. 31 and Executive Order 12803 ("Infrastructure Privatization"). This includes reviewing and modifying procedures affecting the management and disposition of federally-financed infrastructure owned by State and local governments, with their requests to sell or lease infrastructure assets, consistent with the criteria in Section 4 of the Order. Related guidance contained in Executive Order 12893 ("Principles for Federal Infrastructure Investments") requiring economic analysis and the development of investment options, including public-private partnership, shall also be applied. On March 7, 1994, OMB issued guidance on Executive Order 12893 in OMB Bulletin No. 94-16. h. Resource Conservation and Recovery Act. Agencies shall implement the Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C. 6962). Any State agency or agency of a political subdivision of a State which is using appropriated Federal funds must comply with Section 6002 of RCRA. Section 6002 requires that preference be given in procurement programs to the purchase of specific products containing recycled materials identified in guidelines developed by the Environmental Protection Agency O The Falmouth Institute B-8

(EPA). Current guidelines are contained in 40 CF'R P a t s 247-253. State and local recipients of grants, loans, cooperative agreements or other instruments funded by appropriated Federal funds shall give preference in procurement programs to the purchase of recycled products pursuant to the EPA guidelines. i. Procurement of Goods and Services. Agencies should be aware of and comply with the requirement enacted in Section 623 of the Treasury, Postal Service and General Government Appropriations Act, 1993, and reenacted in Section 621 of the fiscal year 1994 Appropriations Act. This Section requires grantees to specify in any announcement of the awarding of contracts with an aggregate value of $500,000 or more, the amount of Federal funds that will be used to finance the acquisitions. j.

Conditional exemptions. (1) OMB authorizes conditional exemption from OMB administrative requirements and cost principles circulars for certain Federal programs with statutorily-authorized consolidated planning and consolidated administrative funding, that are identified by a Federal agency and approved by the head of the Executive deparhnent or establishment. A Federal agency shall consult with OMB during its consideration of whether to grant such an exemption.

(2) To promote efficiency in State and local program administration, when Federal nonentitlement programs with common purposes have specific statutorily-authorized consolidated planning and consolidated administrative funding and where most of the State agency's resources come from non-Federal sources, Federal agencies may exempt these covered State-administered, non-entitlement grant programs from certain OMB grants management requirements. The exemptions would be from all but the allocability of costs provisions of OMB Circulars A-87 (Attachment A, subsection C.3), "Cost Principles for State, Local, and Indian Tribal Governments," A-21 (Section C, subpart 4), "Cost Principles for Educational Institutions," and A-122 (Attachment A, subsection A.4), "Cost Principles for Non-Profit Organizations," and from all of the administrative requirements provisions of OMB Circular A-110, "Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations," and the agencies' grants management common rule. (3) When a Federal agency provides this flexibility, as a prerequisite to a State's exercising this option, a State must adopt its own written fiscal and administrative requirements for expending and accounting for all funds, which are consistent with the provisions of OMB Circular A-87, and extend such policies to all subrecipients. These fiscal and administrative requirements must be sufficiently specific to ensure that: funds are used in compliance with all applicable Federal statutory and regulatory provisions, costs are reasonable and necessary for operating these programs, and funds are not be used for general expenses required to carry out other responsibilities of a State or its subrecipients.

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3. After-the-grant Policies. a. Closeout. Federal agencies shall notify grantees in writing before the end of the grant period of final reports that shall be due, the dates by which they must be received, and where they must be submitted. Copies of any required forms and instructions for their completion shall be included with this notification. The Federal actions that must precede closeout are:

(1) Receipt of all required reports, (2) Disposition or recovery of federally-owned assets (as distinct from property acquired under the grant), and (3) Adjustment of the award amount and the amount of Federal cash paid the recipient. b. Annual Reconciliation of Continuing Assistance Awards. Federal agencies shall reconcile continuing awards at least annually and evaluate program performance and financial reports.

Items to be reviewed include:

(1) A comparison of the recipient's work plan to its progress reports and project outputs, (2) the Financial Status Report (SF-269), (3) Request(s) for payment,

(4) Compliance with any matching, level of effort or maintenance of effort requirement, and

(5) A review of federally-owned property (as distinct from property acquired under the grant).

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APPENDIX C OMB CIRCULAR A-87

August 29, 1997

MEMORANDUM FOR THE RECORD FROM:

Nonvood J. Jackson Deputy Controller Office of Federal Financial Management

SUBJECT: Recompilation of OMB Circular A-87 I certify that the attached document constitutes a recompilation of Office of Management and Budget Circular A-87, "Cost Principles for State, Local, and Indian Tribal Governments." The recompilation consists of the last complete revision of the Circular published at 60 FR 26484 (dated May 4, 1995, published May 17,1995), as further amended at 62 FR 45934 (August 29, 1997).

OMB CIRCULAR A-87 (REVISED 5/4/95, As Further Amended 8/29/97) CIRCULAR NO. A-87 Revised

TO THE I-IEADS O F EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS

SUBJECT: Cost Principles for State, Local, and Indian Tribal Governments

1. Purpose. This Circular establishes principles and standards for determining costs for Federal awards carried out through grants, cost reimbursement contracts, and other agreements with State and local governments and federally-recognized Indian tribal governments (governmental units).

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2. Authority. This Circular is issued under the authority of the Budget add Accounting Act of 1921, as amended; the Budget and Accounting Procedures Act of 1950, as amended; the Chief Financial Officers Act of 1990; Reorganization Plan No. 2 of 1970; and Executive Order No. 11541 ("Prescribing the Duties of the Office of Management and Budget and the Domestic Policy Council in the Executive Office of the President").

3. Background. An interagency task force was established in 1987 to review existing cost principles for Federal awards to State, local, and Indian tribal governments. The task force studied Inspector General reports and recommendations, solicited suggestions for changes to the Circular from govemmental units, and compared for consistency the provisions of other OMB cost principles circulars covering non-profit organizations and universities. A proposed revised Circular reflecting the results of those efforts was issued on October 12, 1988, and August 19, 1993. Extensive comments on the proposed revisions, discussions with interest groups, and related developments were considered in developing this revision.

4. Rescissions. This Circular rescinds and supersedes Circular A-87, issued January 15, 1981.

5. Policy. This Circular establishes principles and standards to provide a uniform approach for determining costs and to promote effective program delivery, efficiency, and better relationships between govemmental units and the Federal Government. The principles are for determining allowable costs only. They are not intended to identify the circumstances or to dictate the extent of Federal and govemmental unit participation in the financing of a particular Federal award. Provision for profit or other increment above cost is outside the scope of this Circular.

6. Definitions. Definitions of key terms used in this Circular are contained in Attachment A, Section B.

7. Required Action. Agencies responsible for administering programs that involve cost reimbursement contracts, grants, and other agreements with governmental units shall issue codified regulations to implement the provisions of this Circular and its Attachments by September 1, 1995. 8. OMB Responsibilities. The Office of Management and Budget (OMB) will review agency regulations and implementation of this Circular, and will provide policy interpretations and assistance to insure 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.

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9, Wormation Contact. Further information concerning this Circular may be obtained by contacting the Office of Federal Financial Management, Financial Standards and Reporting Branch, Office of Management and Budget, Washington, DC 20503, telephone 202-395-3993

10. Policy Review Date. OMB Circular A-87 will have a policy review three years from the date of issuance. 11. Effective Date. This Circular is effective as follows:

- For costs charged indirectly or otherwise covered by the cost allocation plans described in Attachments C, D and E, this revision shall be applied to cost allocation plans and indirect cost proposals submitted or prepared for a governmental unit's fiscal year that begins on or after September 1, 1995.

- For other costs, this revision shall be applied to all awards or amendments, including continuation or renewal awards, made on or after September 1, 1995.

Attachments

OMB CIRCULAR NO. A-87 COST PRINCIPLES FOR STATE, LOCAL AND INDIAN TRIBAL GOVERNMENTS TABLE OF CONTENTS Attachment A - General Principles for Determining Allowable Costs Attachment B - Selected Items of Cost Attachment C - Statekocal-Wide Central Service Cost Allocation Plans Attachment D - Public Assistance Cost Allocation Plans Attachment E - State and Local Indirect Cost Rate Proposals

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ATTACHMENT A Circular No. A-87

GENERAL PRINCIPLES FOR DETERMINING ALLOWABLE COSTS

TABLE OF CONTENTS A. Purpose and Scope 1. Objectives 2. Policy guides

3. Application

B. Definitions 1. Approval or authorization of the awarding or cognizant Federal agency 2. Award 3. Awarding agency

4. Central service cost allocation plan

5. Claim

6. Cognizant agency 7. Common rule 8. Contract

9. Cost 10. Cost allocation plan 11. Cost objective

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12. Federally-recognized Indian tribal govelnment 13. Governmental unit

14. Grantee department or agency 15. Indirect cost rate proposal

16. Local government 17.Public assistance cost allocation plan 18. State

C. Basic Guidelines 1. Factors affecting allowability of costs 2. Reasonable costs 3. Allocable costs

4. Applicable credits

D. Composition of Cost 1. Total cost 2. Classification of costs

E. Direct Costs 1. General 2 . Application 3. Minor items

F. Indirect Costs 1. General

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2. Cost allocation plans and indirect cost proposals 3. Limitation on indirect or administrative costs

G. Interagency Services H. Required Certifications A. Purpose and Scope

1. Objectives. This Attachment establishes principles for determining the allowable costs incurred by State, local, and federally-recognized Indlan tribal governments (governmental units) under grants, cost reimbursement contracts, and other agreements with the Federal Government (collectively referred to in this Circular as "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 or governmental unit 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 law. Provision for profit or other increment above cost is outside the scope of this Circular.

2. Policy guides.

a. The application of these principles is based on the fundamental premises that:

(1) Governmental units are responsible for the efficient and effective administration of Federal awards through the application of sound management practices.

(2) Governmental units assume responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. (3) Each governmental unit, in recognition of its own unique combination of staff, facilities, and experience, will have the primary responsibility for employing whatever form of organization and management techniques may be necessary to assure proper and efficient administration of Federal awards.

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b. Federal agencies should work with States or localities which wish to test alternative mechanisms for paying costs for administering Federal programs. The Office of Management and Budget (OMB) encourages Federal agencies to test fee-for-service alternatives as a replacement for current cost-reimbursement payment methods in response to the National Performance Review's (NPR) recommendation. The NPR recommended the fee-for-service approach to reduce the burden associated with maintaining systems for charging administrative costs to Federal programs and preparing and approving cost allocation plans. This approach should also increase incentives for administrative efficiencies and improve outcomes.

3. Application.

a. These principles will be applied by all Federal agencies in determining costs incurred by govemmental units under Federal awards (including subawards) except those with (1) publiclyfinanced educational institutions subject to OMB Circular A-21, "Cost Principles for Educational Institutions," and (2) programs administered by publicly-owned hospitals and other providers of medical care that are subject to requirements promulgated by the sponsoring Federal agencies. However, this Circular does apply to all central service and departmentlagency costs that are allocated or billed to those educational institutions, hospitals, and other providers of medical care or services by other State and local government deparhnents and agencies.

b. All subawards are subject to those Federal cost principles applicable to the particular organization concerned. Thus, if a subaward is to a governmental unit (other than a college, university or hospital), this Circular shall apply; if a subaward is to a commercial organization, the cost principles applicable to commercial organizations shall apply; if a subaward is to a college or university, Circular A-21 shall apply; if a subaward is to a hospital, the cost principles used by the Federal awarding agency for awards to hospitals shall apply, subject to the provisions of subsection A.3.a. of this Attachment; if a subaward is to some other non-profit organization, Circular A-122, "Cost Principles for Non-Profit Organizations," shall apply.

c. These principles shall be used as a guide in the pricing of fixed price arrangements where costs are used in determining the appropriate price.

d. Where a Federal contract awarded to a govemmental unit incorporates a Cost Accounting Standards (CAS) clause, the requirements of that clause shall apply. In such cases, the govemmental unit and the cognizant Federal agency shall establish an appropriate advance agreement on how the governmental unit will comply with applicable CAS requirements when estimating, accumulating and reporting costs under CAS-covered contracts. The agreement shall indicate that OMB Circular A-87 requirements will be applied to other Federal awards. In all cases, only one set of records needs to be maintained by the governmental unit.

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e. Conditional exemptions,

(1) OMB authorizes conditional exemption from OMB administrative requirements and cost principles circulars for certain Federal programs with statutorily-authorized consolidated planning and consolidated administrative funding, that are identified by a Federal agency and approved by the head of the Executive department or establishment. A Federal agency shall consult with OMB during its consideration of whether to grant such an exemption.

(2) To promote efficiency in State and local program administration, when Federal nonentitlement programs with common purposes have specific statutorily-authorized consolidated planning and consolidated administrative funding and where most of the State agency's resources come from non-Federal sources, Federal agencies may exempt these covered State-administered, non-entitlement grant programs from certain OMB grants management requirements. The exemptions would be from all but the allocability of costs provisions of OMB Circulars A-87 (Attachment A, subsection C.3), "Cost Principles for State, Local, and Indian Tribal Governments," A-21 (Section C, subpart 4), "Cost Principles for Educational Institutions," and A-122 (Attachment A, subsection A.4), "Cost Principles for Non-Profit Organizations," and from all of the administrative requirements provisions of OMB Circular A-110, "Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations," and the agencies' grants management common rule.

(3) When a Federal agency provides this flexibility, as a prerequisite to a State's exercising this option, a State must adopt its own written fiscal and administrative requirements for expending and accounting for all funds, which are consistent with the provisions of OMB Circular A-87, and extend such policies to all subrecipients. These fiscal and administrative requirements must be sufficiently specific to ensure that: funds are used in compliance with all applicable Federal statutory and regulatory provisions, costs are reasonable and necessary for operating these programs, and funds are not be used for general expenses required to carry out other responsibilities of a State or its subrecipients.

B. Definitions 1. "Approval or authorization of the awarding or cognizant Federal agency" means documentation evidencing consent prior to incurring a specific cost. If such costs are specifically identified in a Federal award document, approval of the document constitutes approval of the costs. If the costs are covered by a Statellocal-wide cost allocation plan or an indirect cost proposal, approval of the plan constitutes the approval.

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2. "Award" means grants, cost reimbursement contracts and other agreements between a State, local and Indian tribal government and the Federal Government. 3. "Awarding agency" means (a) with respect to a grant, cooperative agreement, or cost reimbursement contract, the Federal agency, and (b) with respect to a subaward, the party that awarded the subaward.

4. "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 govemmental unit on a centralized basis to its departments and agencies. The costs of these services may be allocated or billed to users.

5. "Claim" means a written demand or written assertion by the govenunental unit or grantor seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of award terms, or other relief arising under or relating to the award. A voucher, invoice or other routine request for payment that is not a dispute when submitted is not a claim. Appeals, such as those filed by a govemmental unit in response to questioned audit costs, are not considered claims until a final management decision is made by the Federal awarding agency.

6. "Cognizant agency" means the Federal agency responsible for reviewing, negotiating, and approving cost allocation plans or indirect cost proposals developed under this Circular on behalf of all Federal agencies. OMB publishes a listing of cognizant agencies.

7. "Common Rule" means the "Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments; Final Rule" originally issued at 53 FR 8034-8103 &larch 11, 1988). Other common mles will be referred to by their specific titles. 8. "Contract" means a mutually binding legal relationship obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them. It includes all types of commitments that obligate the government to an expenditure of appropriated funds and that, except as otherwise authorized, are in writing. In addition to bilateral instruments, contracts include (but are not limited to): awards and notices of awards; job orders or task orders issued under basic ordering agreements; letter contracts; orders, such as purchase orders, under which the contract becomes effective by written acceptance or performance; and, bilateral contract modifications. Contracts do not include grants and cooperative agreements covered by 31 U.S.C. 6301 et seq.

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9. "Cost" means an amount as determined on a cash, accrual, or other basis acceptable to the Federal awarding or cognizant agency. It does not include transfers to a general or similar fund.

10. "Cost allocation plan" means central service cost allocation plan, public assistance cost allocation plan, and indirect cost rate proposal. Each of these terms are further defined in this section.

11. "Cost objective" means a function, organizational subdivision, contract, grant, or other activity for which cost data are needed and for which costs are incurred.

12. "Federally-recognized Indian tribal government" means the governing body or a governmental agency of any Indian tribe, band, nation, or other organized group or community (including any native village as defined in Section 3 of the Alaska Native Claims Settlement Act, 85 Stat. 688) certified by the Secretary of the Interior as eligible for the special programs and services provided through the Bureau of Indian Affairs.

13. "Governmental unit" means the entire State, local, or federally-recognized Indian tribal govenunent, including any component thereof. Components of governmental units may function independently of the governmental unit in accordance with the term of the award.

14. "Grantee department or agency" means the component of a State, local, or federallyrecognized Indian tribal government which is responsible for the performance or administration of all or some part of a Federal award.

15. "Indirect cost rate proposal" means the documentation prepared by a governmental unit or component thereof to substantiate its request for the establishment of an indirect cost rate as described in Attachment E of this Circular.

16. "Local government" means a county, municipality, city, town, township, local public authority, school district, special district, intrastate district, council of governments (whether or not incorporated as a non-profit corporation under State law), any other regional or interstate government entity, or any agency or instrumentality of a local government.

17. "Public assistance cost allocation plan" means a narrative description of the procedures that will be used in identifying, measuring and allocating all administrative costs to all of the programs administered or supervised by State public assistance agencies as described in Attachment D of this Circular.

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18. "State" means any of the several States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any tenitory or possession of the United States, or any agency or instrumentality of a State exclusive of local governments.

C. Basic Guidelines

1. Factors affecting allowability of costs. To be allowable under Federal awards, costs must meet the following general criteria:

a. Be necessary and reasonable for proper and efficient performance and administration of Federal awards.

b. Be allocable to Federal awards under the provisions of this Circular

c. Be authorized or not prohibited under State or local laws or regulations.

d. Conform to any limitations or exclusions set forth in these principles, Federal laws, terms and conditions of the Federal award, or other governing regulations as to types or amounts of cost items. e. Be consistent with policies, regulations, and procedures that apply uniformly to both Federal awards and other activities of the governmental unit.

f. Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.

g. Except as otherwise provided for in this Circular, be determined in accordance with generally accepted accounting principles. h. Not be included as a cost or used to meet cost sharing or matching requirements of any other Federal award in either the current or a prior period, except as specifically provided by Federal law or regulation.

i. Be the net of all applicable credits.

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j. Be adequately documented.

2. Reasonable costs. A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when governmental units or components are predominately federally- funded. In determining reasonableness of a given cost, consideration shall be given to: a. Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the govenunental unit or the performance of the Federal award.

b. The restraints or requirements imposed by such factors as: sound business practices; arms length bargaining; Federal, State and other laws and regulations; and, terms and conditions of the Federal award.

c. Market prices for comparable goods or services,

d. Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the governmental unit, its employees, the public at large, and the Federal Government.

e. Significant deviations from the established practices of the governmental unit which may unjustifiably increase the Federal award's cost.

3. Allocable costs. a. A cost is allocable to a particular cost objective if the goods or services involved are chargeable or assignable to such cost objective in accordance with relative benefits received.

b. All activities which benefit from the governmental unit's indirect cost, including unallowable activities and services donated to the governmental unit by third parties, will receive an appropriate allocation of indirect costs.

c. Any cost allocable to a particular Federal award or cost objective under the principles provided for in this Circular may not be charged to other Federal awards to overcome fund deficiencies, to avoid restrictions imposed by law

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or terns of the Federal awards, or for other reasons. However, this prohibition would not preclude governmental units from shifting costs that are allowable under two or more awards in accordance with existing program agreements.

d. Where an accumulation of indirect costs will ultimately result in charges to a Federal award, a cost allocation plan will be required as described in Attachments C, D, and E.

4. Applicable credits.

a. Applicable credits refer to those receipts or reduction of expenditure-type transactions that offset or reduce expense items allocable to Federal awards as direct or indirect costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the governmental unit relate to allowable costs, they shall be credited to the Federal award either as a cost reduction or cash refund, as appropriate.

b. In some instances, the amounts received from the Federal Government to finance activities or service operations of the governmental unit should be treated as applicable credits. Specifically, the concept of netting such credit items (including any amounts used to meet cost sharing or matching requirements) should be recognized in determining the rates or amounts to be charged to Federal awards. (See Attachment B, item 15, "Depreciation and use allowances," for areas of potential application in the matter of Federal financing of activities.)

D. Composition of Cost

1. Total cost. The total cost of Federal awards is comprised of the allowable direct cost of the program, plus its allocable portion of allowable indirect costs, less applicable credits.

2. Classification of costs. There is no universal rule for classifying certain costs as either direct or indirect under every accounting system. A cost may be direct with respect to some specific service or function, but indirect with respect to the Federal award or other final cost objective. Therefore, it is essential that each item of cost be treated consistently in like circumstances either as a direct or an indirect cost. Guidelines for determining direct and indirect costs charged to Federal awards are provided in the sections that follow.

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E. Direct Costs 1. General. Direct costs are those that can be identified specifically with a particular final cost objective.

2. Application. Typical direct costs chargeable to Federal awards are:

a. Compensation of employees for the time devoted and identified specifically to the performance of those awards.

b. Cost of materials acquired, consumed, or expended specifically for the purpose of those awards.

c. Equipment and other approved capital expenditures,

d. Travel expenses incurred specifically to carry out the award.

3. Minor items. Any direct cost of a minor amount may be treated as an indirect cost for reasons of practicality where such accounting treatment for that item of cost is consistently applied to all cost objectives.

F. Indirect Costs

1. General. Indirect costs are those: (a) incurred for a common or joint purpose benefiting more than one cost objective, and (b) not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved. The term "indirect costs," as used herein, applies to costs of this type originating in the grantee department, as well as those incurred by other departments in supplying goods, services, and facilities. To facilitate equitable distribution of indirect expenses to the cost objectives served, it may be necessary to establish a number of pools of indirect costs within a governmental unit department or in other agencies providing services to a governmental unit department. Indirect cost pools should be distributed to benefitted cost objectives on bases that will produce an equitable result in consideration of relative benefits derived.

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2. Cost allocation plans and indirect cost proposals. Requirements for development and submission of cost allocation plans and indirect cost rate proposals are contained jn Attachments C, D, and E.

3. Limitation on indirect or administrative costs. a. In addition to restrictions contained in this Circular, there may be laws that further limit the amount of administrative or indirect cost allowed.

b. Amounts not recoverable as indirect costs or administrative costs under one Federal award may not be shifted to another Federal award, unless specifically authorized by Federal legislation or regulation.

G. Interagency Services. The cost of services provided by one agency to another within the governmental unit may include allowable direct costs of the service plus a pro rate share of indirect costs. A standard indirect cost allowance equal to ten percent of the direct salary and wage cost of providing the service (excluding overtime, shift premiums, and fringe benefits) may be used in lieu of determining the actual indirect costs of the service. These services do not include centralized services included in central service cost allocation plans as described in Attachment C. H. Required Certifications. Each cost allocation plan or indirect cost rate proposal required by Attachments C and E must comply with the following: 1. No proposal to establish a cost allocation plan or an indirect cost rate, whether submitted to a Federal cognizant agency or maintained on file by the governmental unit, shall be acceptable unless such costs have been certified by the governmental unit using the Certificate of Cost Allocation Plan or Certificate of Indirect Costs as set forth in Attachments C and E. The certificate must be signed on behalf of the governmental unit by an individual at a level no lower than chief financial officer of the governmental unit that submits the proposal or component covered by the proposal. 2. No cost allocation plan or indirect cost rate shall be approved by the Federal Government unless the plan or rate proposal has been certified. Where it is necessary to establish a cost allocation plan or an indirect cost rate and the governmental unit has not submitted a certified proposal for establishing such a plan or rate in accordance with the requirements, the Federal Government may either disallow all indirect costs or unilaterally establish such a plan or rate. Such a plan or rate may be based upon audited historical data or such other data that have been furnished to the cognizant Federal agency and for which it can be demonstrated that all

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unallowable costs have been excluded. When a cost allocation plan or indirect cost rate is unilaterally established by the Federal Government because of failure of the governmental unit to submit a certified proposal, the plan or rate established will be set to ensure that potentially unallowable costs will not be reimbursed.

ATTACHMENT B Circular No. A-87

SELECTED ITEMS OF COST TABLE OF CONTENTS 1. Accounting 2. Advertising and public relations costs 3. Advisory councils 4. Alcoholic beverages 5. Audit services 6. Automatic electronic data processing 7. Bad debts 8. Bonding costs 9. Budgeting 10. Communications 11. Compensation for personnel services a. General b. Reasonableness c. Unallowable costs d. Fringe benefits e. Pension plan costs f. Post-retirement health benefits g. Severance Pay h. Support of salaries and wages i. Donated services 12. Contingencies 13. Contributions and donations 14. Defense and prosecution of criminal and civil proceedings, and claims 15. Depreciation and use allowances 16. Disbursing service 17. Employee morale, health, and welfare costs 18. Entertainment 19. Equipment and other capital expenditures 20. Fines and penalties @ T h e Falmouth Institute C-16

21. Fund raising and investment management costs 22. Gains and losses on disposition of depreciable property and other capital assets and substantial relocation of Federal programs. 23. General government expenses 24. Idle facilities and idle capacity 25. Insurance and indemnification 26. Interest 27. Lobbying 28. Maintenance, operations, and repairs 29. Materials and supplies 30. Memberships, subscriptions, and professional activities 31. Motor pools 32. Pre-award costs 33. Professional service costs 34. Proposal costs 35. Publication and printing costs 36. Rearrangements and alterations 37. Reconversion costs 38. Rental costs 39. Taxes 40. Training 41. Travel costs 42. Underrecovery of costs under Federal agreements

Sections 1 through 42 provide principles to be applied in establishing the allowability or unallowability of certain items of cost. These principles apply whether a cost is treated as direct or indirect. A cost is allowable for Federal reimbursement only to the extent of benefits received by Federal awards and its conformance with the general policies and principles stated in Attachment A to this Circular. Failure to mention a particular item of cost in these sections is not intended to imply that it is either allowable or unallowable; rather, determination of allowability in each case should be based on the treatment or standards provided for similar or related items of cost,

1. Accounting. The cost of establishing and maintaining accounting and other information systems is allowable.

2. Advertising and public relations costs.

a. The term "advertising costs" means the costs of advertising media and corollary administrative costs. Advertising media include magazines, newspapers, radio and television programs, direct mail, exhibits, and the like.

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b. The term "public relations" includes community relations and means those activities dedicated to maintaining the image of the governmental unit or maintaining or promoting understanding and favorable relations with the community or public at large or any seapent of the public.

c. Advertising costs are allowable only when incurred for the recruitment of personnel, the procurement of goods and services, the disposal of surplus materials, and any other specific purposes necessary to meet the requirements of the Federal award. Advertising costs associated with the disposal of surplus materials are not allowable where all disposal costs are reimbursed based on a standard rate as specified in the grants management common rule.

d. Public relations costs are allowable when:

(1) Specifically required by the Federal award and then only as a direct cost;

(2) Incurred to communicate with the public and press pertaining to specific activities or accomplishments that result from performance of the Federal award and then only as a direct cost; or

(3) Necessary to conduct general liaison with news media and government public relations officers, to the extent that such activities are limited to communication and liaison necessary to keep the public informed on matters of public concern, such as notices of Federal contract/grant awards, financial matters, etc.

e. Unallowable advertising and public relations costs include the following:

(1) All advertising and public relations costs other than as specified in subsections c. and d.;

(2) Except as otherwise permitted by these cost principles, costs of conventions, meetings, or other events related to other activities of the governmental unit including:

(a) Costs of displays, demonstrations, and exhibits; @) Costs of meeting rooms, hospitality suites, and other special facilities used in conjunction with shows and other special events; and

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(c) Salaries and wages of employees engaged in setting up and displaying exhibits, making demonstrations, and providing briefings;

(3) Costs of promotional items and memorabilia, including models, gifts, and souvenirs; and

(4) Costs of advertising and public relations designed solely to promote the governmental unit. 3. Advisory councils. Costs incurred by advisory councils or committees are allowable as a direct cost where authorized by the Federal awarding agency or as an indirect cost where allocable to Federal awards.

4. Alcoholic beverages. Costs of alcoholic beverages are unallowable,

5. Audit services. The costs of audits are allowable provided that the audits were performed in accordance with the Single Audit Act, as implemented by Circular A-128, "Audits of State and Local Governments." mote: In June 1997, OMB rescinded Circular A-128 and co-located all audit requirements in a re-titled Circular A-133, "Audits of States, Local Governments, and NonProfit Organizations."] Generally, the percentage of costs charged to Federal awards for a single audit shall not exceed the percentage derived by dividing Federal funds expended by total funds expended by the recipient or subrecipient (including program matching funds) during the fiscal year. The percentage may be exceeded only if appropriate documentation demonstrates higher actual costs.

Other audit costs are allowable if specifically approved by the awarding or cognizant agency as a direct cost to an award or included as an indirect cost in a cost allocation plan or rate.

6. Automatic electronic data processing. The cost of data processing services is allowable (but see section 19, Equipment and other capital expenditures). 7. Bad debts. Any losses arising from uncollectible accounts and other claims, and related costs, are unallowable unless provided for in Federal program award regulations. 8. Bonding costs. Costs of bonding employees and officials are allowable to the extent that such bonding is in accordance with sound business practice.

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9. Budgeting. Costs incurred for the development, preparation, presentation, and execution of budgets are allowable. 10. Communications. Costs of telephone, mail, messenger, and similar communication services are allowable. 11. Compensation for personnel services.

a. General. Compensation for personnel services includes all remuneration, paid currently or accrued, for services rendered during the period of performance under Federal awards, including but not necessarily limited to wages, salaries, and fringe benefits. The costs of such compensation are allowable to the extent that they satisfy the specific requirements of this Circular, and that the total compensation for individual employees:

(1) Is reasonable for the services rendered and conforms to the established policy of the govemmental unit consistently applied to both Federal and non-Federal activities;

(2) Follows an appointment made in accordance with a govemmental unit's laws and rules and meets merit system or other requirements required by Federal law, where applicable; and

(3) Is determined and supported as provided in subsection h.

b. Reasonableness. Compensation for employees engaged in work on Federal awards will be considered reasonable to the extent that it is consistent with that paid for similar work in other activities of the governmental unit. In cases where the kinds of employees required for Federal awards are not found in the other activities of the govemmental unit, compensation will be considered reasonable to the extent that it is comparable to that paid for similar work in the labor market in which the employing government competes for the kind of employees involved. Compensation surveys providing data representative of the labor market involved will be an acceptable basis for evaluating reasonableness.

c. Unallowable costs. Costs which are unallowable under other sections of these principles shall not be allowable under this section solely on the basis that they constitute personnel compensation.

d. Fringe benefits.

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(1) Fringe benefits are allowances and services provided by employers to their employees as compensation in addition to regular salaries and wages. Fringe benefits include, but are not limited to, the costs of leave, employee insurance, pensions, and unemployment benefit plans. Except as provided elsewhere in these principles, the costs of fringe benefits are allowable to the extent that the benefits are reasonable and are required by law, governmental unit-employee agreement, or an established policy of the govemmental unit.

(2) The cost of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, sick leave, holidays, court leave, military leave, and other similar benefits, are allowable if: (a) they are provided under established written leave policies; (b) the costs are equitably allocated to all related activities, including Federal awards; and, (c) the accounting basis (cash or accrual) selected for costing each type of leave is consistently followed by the governmental unit.

(3) When a governmental unit uses the cash basis of accounting, the cost of leave is recognized in the period that the leave is taken and paid for. Payments for unused leave when an employee retires or terminates employment are allowable in the year of payment provided they are allocated as a general administrative expense to all activities of the govemmental unit or component.

(4) The accrual basis may be only used for those types of leave for which a liability as defined by Generally Accepted Accounting Principles (GAAP) exists when the leave is earned. When a governmental unit uses the accrual basis of accounting, in accordance with GAAP, allowable leave costs are the lesser of the amount accrued or funded.

(5) The cost of fringe benefits in the form of employer contributions or expenses for social security; employee life, health, unemployment, and worker's compensation insurance (except as indicated in section 25, Insurance and indemnification); pension plan costs (see subsection e.); and other similar benefits are allowable, provided such benefits are granted under established written policies. Such benefits, whether treated as indirect costs or as direct costs, shall be allocated to Federal awards and all other activities in a manner consistent with the pattern of benefits attributable to the individuals or group(s) of employees whose salaries and wages are chargeable to such Federal awards and other activities.

e. Pension plan costs. Pension plan costs may be computed using a pay-as-you-go method or an acceptable actuarial cost method in accordance with established written policies of the governmental unit.

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(1) For pension plans financed on a pay-as-you-go method, allowable costs will be limited to those representing actual payments to retirees or their beneficiaries.

(2) Pension costs calculated using an actuarial cost- based method recognized by GAAF' are allowable for a given fiscal year if they are funded for that year within six months after the end of that year. Costs funded after the six month period (or a later period agreed to by the co,pizant agency) are allowable in the year funded. The cognizant agency may agree to an extension of the six month period if an appropriate adjustment is made to compensate for the timing of the charges to the Federal Government and related Federal reimbursement and the govemmental unit's contribution to the pension fund. Adjustments may be made by cash refund or other equitable procedures to compensate the Federal Government for the time value of Federal reimbursements in excess of contributions to the pension fund.

(3) Amounts funded by the governmental unit in excess of the actuarially determined amount for a fiscal year may be used as the governmental unit's contribution in future periods.

(4) When a governmental unit converts to an acceptable actuarial cost method, as defined by GAAP, and funds pension costs in accordance with this method, the unfunded liability at the time of conversion shall be allowable if amortized over a period of years in accordance with GAAF'.

(5) The Federal Government shall receive an equitable share of any previously allowed pension costs (including earnings thereon) which revert or inure to the govemmental unit in the form of a refund, withdrawal, or other credit. f. Post-retirement health benefits. Post-retirement health benefits (PRHB) refers to costs of health insurance or health services not included in a pension plan covered by subsection e. for retirees and their spouses, dependents, and survivors. PRHB costs may be computed using a pay-as-yougo method or an acceptable actuarial cost method in accordance with established written polices of the govemmental unit. (1) For PRHB financed on a pay as-you-go method, allowable costs will be limited to those representing actual payments to retirees or their beneficiaries.

(2) PRHB costs calculated using an actuarial cost method recognized by GAAP are allowable if they are funded for that year within six months after the end of that year. Costs funded after the six month period (or a later period agreed to by the cognizant agency) are allowable in the year funded. The cognizant agency may agree to an extension of the six month period if an appropriate adjustment is made to compensate for the timing of the charges to the Federal

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Government and related Federal reimbursements and the governmental unit's contributions to the PRHB fund. Adjustments may be made by cash refund, reduction in current year's PRHB costs, or other equitable procedures to compensate the Federal Government for the time value of Federal reimbursements in excess of contributions to the PRHB fund.

(3) Amounts funded in excess of the actuarially determined amount for a fiscal year may be used as the government's contribution in a future period. (4) When a governmental unit converts to an acceptable actuarial cost method and funds PRHB costs in accordance with this method, the initial unfunded liability attributable to prior years shall be allowable if amortized over a period of years in accordance with GAAP, or, if no such GAAP period exists, over a period negotiated with the cognizant agency.

(5) To be allowable in the current year, the PRHB costs must be paid either to: (a) An insurer or other benefit provider as current year costs or premiums, or

(b) An insurer or trustee to maintain a trust fund or reserve for the sole purpose of providing post-retirement benefits to retirees and other beneficiaries.

(6) The Federal Government shall receive an equitable share of any amounts of previously allowed post-retirement benefit costs (including earnings thereon) which revert or inure to the governmental unit in the form of a refund, withdrawal, or other credit. g. Severance pay.

(1) Payments in addition to regular salaries and wages made to workers whose employment is being terminated are allowable to the extent that, in each case, they are required by (a) law, (b) employer-employee agreement, or (c) established written policy. (2) Severance payments (but not accruals) associated with normal turnover are allowable. Such payments shall be allocated to all activities of the governmental unit as an indirect cost.

(3) Abnormal or mass severance pay will be considered on a case-by-case basis and is allowable only if approved by the cognizant Federal agency.

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h. Support of salaries and wages. These standards regarding time distribution are in addition to the standards for payroll documentation.

(1) Charges to Federal awards for salaries and wages, whether treated as direct or indirect costs, will be based on payrolls documented in accordance with generally accepted practice of the governmental unit and approved by a responsible official(s) of the govemmental unit.

(2) No further documentation is required for the salaries and wages of employees who work in a single indirect cost activity.

(3) Where employees are expected to work solely on a single Federal award or cost objective, charges for their salaries and wages will be supported by periodic certifications that the employees worked solely on that program for the period covered by the certification. These certifications will be prepared at least semi-annually and will be signed by the employee or supervisory official having first hand knowledge of the work performed by the employee.

(4) Where employees work on multiple activities or cost objectives, a distribution of their salaries or wages will be supported by personnel activity reports or equivalent documentation which meets the standards in subsection (5) unless a statistical sampling system (see subsection (6)) or other substitute system has been approved by the cognizant Federal agency. Such documentary support will be required where employees work on:

(a) More than one Federal award,

(b) A Federal award and a non-Federal award,

(c) An indirect cost activity and a direct cost activity,

(d) Two or more indirect activities which are allocated using different allocation bases, or

(e) An unallowable activity and a direct or indirect cost activity.

(5) Personnel activity reports or equivalent documentation must meet the following standards:

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(a) They must reflect an after-the-fact distribution of the actual activity of each employee,

(b) They must account for the total activity for which each employee is compensated,

(c) They must be prepared at least monthly and must coincide with one or more pay periods, and

(d) They must be signed by the employee.

(e) Budget estimates or other distribution percentages determined before the services are performed do not qualify as support for charges to Federal awards but may be used for interim accounting purposes, provided that:

(i) The governmental unit's system for establishing the estimates produces reasonable approximations of the activity actually performed;

(ii) At least quarterly, comparisons of actual costs to budgeted distributions based on the monthly activity reports are made. Costs charged to Federal awards to reflect adjustments made as a result of the activity actually performed may be recorded annually if the quarterly comparisons show the differences between budgeted and actual costs are less than ten percent; and

(iii) The budget estimates or other distribution percentages are revised at least quarterly, if necessary, to reflect changed circumstances.

(6) Substitute systems for allocating salaries and wages to Federal awards may be used in place of activity reports. These systems are subject to approval if required by the cognizant agency. Such systems may include, but are not limited to, random moment sampling, case counts, or other quantifiable measures of employee effort.

(a) Substitute systems which use sampling methods (primarily for Aid to Families with Dependent Children (AFDC), Medicaid, and other public assistance programs) must meet acceptable statistical sampling standards including: (i) The sampling universe must include all of the employees whose salaries and wages are to be allocated based on sample results except as provided in subsection (c);

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(ii) The entire time period involved must be covered by the sample; and

(iii) The results must be statistically valid and applied to the period being sampled.

(b) Allocating charges for the sampled employees' supervisors, clerical and support staffs, based on the results of the sampled employees, will be acceptable.

(c) Less than full compliance with the statistical sampling standards noted in subsection (a) may be accepted by the cognizant agency if it concludes that the amounts to be allocated to Federal awards will be minimal, or if it concludes that the system proposed by the governmental unit will result in lower costs to Federal awards than a system which complies with the standards.

(7) Salaries and wages of employees used in meeting cost sharing or matching requirements of Federal awards must be supported in the same manner as those claimed as allowable costs under Federal awards. i. Donated services.

(1) Donated or volunteer services may be furnished to a governmental unit by professional and technical personnel, consultants, and other skilled and unskilled labor. The value of these services is not reimbursable either as a direct or indirect cost. However, the value of donated services may be used to meet cost sharing or matching requirements in accordance with the provisions of the Common Rule. (2) The value of donated services utilized in the performance of a direct cost activity shall, when material in amount, be considered in the determination of the governmental unit's indirect costs or rate(s) and, accordingly, shall be allocated a proportionate share of applicable indirect costs.

(3) To the extent feasible, donated services will be supported by the same methods used by the governmental unit to support the allocability of regular personnel services.

12. Contingencies. Contributions to a contingency reserve or any similar provision made for events the occurrence of which cannot be foretold with certainty as to time, or intensity, or with an assurance of their happening, are unallowable. The term "contingency reserve" excludes selfinsurance reserves (see subsection 25.c.), pension plan reserves (see subsection 1l.e.), and postretirement health and other benefit reserves (see subsection 11.f.) computed using acceptable actuarial cost methods.

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13. Contributions and donations. Contributions and donations, including cash, property, and services, by governmental units to others, regardless of the recipient, are unallowable. 14. Defense and prosecution of criminal and civil proceedings, and claims,

a. The following costs are unallowable for contracts covered by 10 U.S.C. 2324(k), "Allowable costs under defense contracts."

(1) Costs incurred in defense of any civil or criminal fraud proceeding or similar proceeding (including filing of false certification brought by the United States where the contractor is found liable or has pleaded nolo contendere to a charge of fraud or similar proceeding (including filing of a false certification).

(2) Costs incurred by a contractor in connection with any criminal, civil or administrative proceedings commenced by the United States or a State to the extent provided in 10 U.S.C. 23240.

b. Legal expenses required in the administration of Federal programs are allowable. Legal expenses for prosecution of claims against the Federal Government are unallowable.

15. Depreciation and use allowances.

a. Depreciation and use allowances are means of allocating the cost of fixed assets to periods benefitting from asset use. Compensation for the use of fixed assets on hand may be made through depreciation or use allowances. A combination of the two methods may not be used in connection with a single class of fixed assets (e.g., buildings, office equipment, computer equipment, etc.) except as provided in subsection g. Except for enterprise funds and internal service funds that are included as part of a Statellocal cost allocation plan, classes of assets shall be determined on the same basis used for the government-wide financia1 statements.

b. The computation of depreciation or use allowances shall be based on the acquisition cost of the assets involved. Where actual cost records have not been maintained, a reasonable estimate of the original acquisition cost may be used. The value of an asset donated to the governmental unit by an unrelated third party shall be its fair market value at the time of donation. Governmental or quasi-governmental organizations located within the same State shall not be considered unrelated third parties for this purpose.

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c. The computation of depreciation or use allowances will exclude:

(1) The cost of land;

(2) Any portion of the cost of buildings and equipment borne by or donated by the Federal Government irrespective of where title was originally vested or where it presently resides; and

(3) Any portion of the cost of buildings and equipment contributed by or for the governmental unit, or a related donor organization, in satisfaction of a matching requirement.

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d. Where the use allowance method is followed, the use allowance for buildings and improvements (including land improvements, such as paved parking areas, fences, and sidewalks) will be computed at an annual rate not exceeding two percent of acquisition costs The use allowance for equipment will be computed at an annual rate not exceeding 6 213 percent of acquisition cost. When the use allowance method is used for buildings, the entire building must be treated as a single asset; the building's components (e.g., plumbing system, heating and air condition, etc.) cannot be segregated from the building's shell. The two percent limitation, however, need not be applied to equipment which is merely attached or fastened to the building but not permanently fixed to it and which is used as furnishings or decorations or for specialized purposes (e.g., dentist chairs and dental treatment units, counters, laboratory benches bolted to the floor, dishwashers, modular furniture, carpeting, etc.). Such equipment will be considered as not being permanently fixed to the building if it can be removed without the destruction of, or need for costly or extensive alterations or repairs, to the building or the equipment. Equipment that meets these criteria will be subject to the 6 213 percent equipment use allowance limitation.

e. Where the depreciation method is followed, the period of useful service (useful life) established in each case for usable capital assets must take into consideration such factors as type of construction, nature of the equipment used, historical usage patterns, technological developments, and the renewal and replacement policies of the governmental unit followed for the individual items or classes of assets involved. In the absence of clear evidence indicating that the expected consumption of the asset will be significantly greater in the early portions than in the later portions of its useful life, the straight line method of depreciation shall be used. Depreciation methods once used shall not be changed unless approved by the Federal cognizant or awarding agency. When the depreciation method is introduced for application to an asset previously subject to a use allowance, the annual depreciation charge thereon may not exceed the amount that would have resulted had the depreciation method been in effect from the date of acquisition of the asset. The combination of use allowances and depreciation applicable to the asset shall not exceed the total acquisition cost of the asset or fair market value at time of donation.

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f. When the depreciation method is used for buildings, a building's shell may be segregated from the major component of the building (e.g., plumbing system, heating, and air conditioning system, etc.) and each major component depreciated over its estimated useful life, or the entire building (i.e., the shell and all components) may be treated as a single asset and depreciated over a single useful life.

g. A reasonable use allowance may be negotiated for any assets that are considered to be fully depreciated, after taking into consideration the amount of depreciation previously charged to the govenunent, the estimated useful life remaining at the time of negotiation, the effect of any increased maintenance charges, decreased efficiency due to age, and any other factors pertinent to the utilization of the asset for the purpose contemplated.

h. Charges for use allowances or depreciation must be supported by adequate property records. Physical inventories must be taken at least once every two years (a statistical sampling approach is acceptable) to ensure that assets exist, and are in use. Governmental units will manage equipment in accordance with State laws and procedures. When the depreciation method is followed, depreciation records indicating the amount of depreciation taken each period must also be maintained.

16. Disbursing service. The cost of disbursing funds by the Treasurer or other designated officer is allowable.

17. Employee morale, health, and welfare costs. The costs of health or first-aid clinics andlor infirmaries, recreational facilities, employee counseling services, employee information publications, and any related expenses incurred in accordance with a governmental unit's policy are allowable. Income generated from any of these activities will be offset against expenses.

18. Entertainment. Costs of entertainment, including amusement, diversion, and social activities and any costs directly associated with such costs (such as tickets to shows or sports events, meals, lodging, rentals, transportation, and gratuities) are unallowable. 19. Equipment and other capital expenditures.

a. As used in this section the following terms have the meanings as set forth below:

(1) "Capital expenditure" means the cost of the asset including the cost to put it in place. Capital expenditure for equipment means the net invoice price of the equipment, including the cost of

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any modifications, attachments, accessories, or auxiliary apparatus necessary to make it usable for the purpose for which it is acquired. Ancillary charges, such as taxes, duty, protective in transit insurance, freight, and installation may he included in, or excluded from, capital expenditure cost in accordance with the governmental unit's regular accounting practices.

(2) "Equipment" means an article of nonexpendable, tangible personal property having a useful life of more than one year and an acquisition cost which equals the lesser of (a) the capitalization level established by the governmental unit for financial statement purposes, or (b)$5000.

(3) "Other capital assets" mean buildings, land, and improvements to buildings or land that materially increase their value or useful life.

b. Capital expenditures which are not charged directly to a Federal award may be recovered through use allowances or depreciation on buildings, capital improvements, and equipment (see section 15). See also section 38 for allowability of rental costs for buildings and equipment.

c. Capital expenditures for equipment, including replacement equipment, other capital assets, and improvements which materially increase the value or useful life of equipment or other capital assets are allowable as a direct cost when approved by the awarding agency. Federal awarding agencies are authorized at their option to waive or delegate this approval requirement.

d. Items of equipment with an acquisition cost of less than $5000 are considered to be supplies and are allowable as direct costs of Federal awards without specific awarding agency approval.

e. The unamortized portion of any equipment wlitten off as a result of a change in capitalization levels may be recovered by (1)continuing to claim the otherwise allowable use allowances or depreciation charges on the equipment or by (2) amortizing the amount to be written off over a period of years negotiated with the co-gizant agency.

f. When replacing equipment purchased in whole or in part with Federal funds, the governmental unit may use the equipment to be replaced as a trade-in or sell the property and use the proceeds to offset the cost of the replacement property. 20. Fines and penalties. Fines, penalties, damages, and other settlements resulting from violations (or alleged violations) of, or failure of the governmental unit to comply with, Federal, State, local, or Indian tribal laws and regulations are unallowable except when incurred as a result of compliance with specific provisions of the Federal award or written instructions by the

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awarding agency authorizing in advance such payments. 21. Fund raising and investment management costs.

a. Costs of organized fund raising, including financial campaigns, solicitation of gifts and bequests, and similar expenses incurred to raise capital or obtain contributions are unallowable, regardless of the purpose for which the funds will be used.

b. Costs of investment counsel and staff and similar expenses incurred to enhance income from investments are unallowable. However, such costs associated with investments covering pension, self-insurance, or other funds which include Federal participation allowed by this Circular are allowable.

c. Fund raising and investment activities shall be allocated an appropriate share of indirect costs under the conditions described in subsection C.3.b. of Attachment A.

22. Gains and losses on disposition of depreciable property and other capital assets and substantial relocation of Federal programs.

a. (1) Gains and losses on the sale, retirement, or other disposition of depreciable property shall be included in the year in which they occur as credits or charges to the asset cost grouping(s) in which the property was included. The amount of the gain or loss to be included as a credit or charge to the appropriate asset cost grouping(s) shall be the difference between the amount realized on the property and the undepreciated basis of the property.

(2) Gains and losses on the disposition of depreciable property shall not be recognized as a separate credit or charge under the following conditions:

(a) The gain or loss is processed through a depreciation account and is reflected in the depreciation allowable under sections 15 and 19. (b) The property is given in exchange as part of the purchase price of a similar item and the gain or loss is taken into account in determining the depreciation cost basis of the new item.

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(c) A loss results from the failure to maintain permissible insurance, except as othelwise provided in subsection 25.d.

(d) Compensation for the use of the property was provided through use allowances in lieu of depreciation.

b. Substantial relocation of Federal awards from a facility where the Federal Government participated in the financing to another facility prior to the expiration of the useful life of the financed facility requires Federal agency approval. The extent of the relocation, the amount of the Federal participation in the financing, and the depreciation charged to date may require negotiation of space charges for Federal awards.

c. Gains or losses of any nature arising from the sale or exchange of property other than the property covered in subsection a,, e.g., land or included in the fair market value used in any adjustment resulting from a relocation of Federal awards covered in subsection b. shall be excluded in computing Federal award costs.

23. General government expenses.

a. The general costs of government are unallowable (except as provided in section 41). These include:

(1) Salaries and expenses of the Office of the Governor of a State or the chief executive of a political subdivision or the chief executives of federally-recognized Indian tribal governments;

(2) Salaries and other expenses of State legislatures, tribal councils, or similar local governmental bodies, such as county supervisors, city councils, school boards, etc., whether incurred for purposes of legislation or executive direction;

(3) Cost of the judiciary branch of a government;

(4) Cost of prosecutorial activities unless treated as a direct cost to a specific program when authorized by program regulations (however, this does not preclude the allowability of other ; legal activitiks-of the ~ t t & n e~~e n e r a l ) and

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(5) Other general types of government services normally provided to the general public, such as fire and police, unless provided for as a direct cost in program regulations.

b. For federally-recognized Indian tribal governments and Councils Of Governments (COGS), the portion of salaries and expenses directly attributable to managing and operating Federal programs by the chief executive and his staff is allowable. 24. Idle facilities and idle capacity.

a. As used in this section the following terms have the meanings set forth below:

(1) "Facilities" means land and buildings or any portion thereof, equipment individually or collectively, or any other tangible capital asset, wherever located, and whether owned or leased by the governmental unit.

(2) "Idle facilities" means completely unused facilities that are excess to the governmental unit's current needs.

(3) "Idle capacity" means the unused capacity of partially used facilities. It is the difference between (a) that which a facility could achieve under 100 percent operating time on a one-shift basis less operating interruptions resulting from time lost for repairs, setups, unsatisfactory materials, and other normal delays and @) the extent to which the facility was actually used to meet demands during the accounting period. A multi-shift basis should be used if it can be shown that this amount of usage would normally be expected for the type of facility involved. (4) "Cost of idle facilities or idle capacity" means costs such as maintenance, repair, housing, rent, and other related costs, e.g., insurance, interest, and depreciation or use allowances.

b. The costs of idle facilities are unallowable except to the extent that:

(1) They are necessary to meet fluctuations in workload; or

(2) Although not necessary to meet fluctuations in workload, they were necessary when acquired and are now idle because of changes in program requirements, efforts to achieve more economical operations, reorganization, termination, or other causes which could not have been reasonably foreseen. Under the exception stated in this subsection, costs of idle facilities are

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allowable for a reasonable period of time, ordinarily not to exceed one year, depending on the initiative taken to use, lease, or dispose of such facilities.

c. The costs of idle capacity are normal costs of doing business and are a factor in the normal fluctuations of usage or indirect cost rates from period to period. Such costs are allowable, provided that the capacity is reasonably anticipated to be necessary or was originally reasonable and is not subject to reduction or elimination by use on other Federal awards, subletting, renting, or sale, in accordance with sound business, economic, or security practices. Widespread idle capacity throughout an entire facility or among a group of assets having substantially the same function may be considered idle facilities.

25. hsurance and indemnification.

a. Costs of insurance required or approved and maintained, pursuant to the Federal award, are allowable.

b. Costs of other insurance in connection with the general conduct of activities are allowable subject to the following limitations:

(1) Types and extent and cost of coverage are in accordance with the governmental unit's policy and sound business practice.

(2) Costs of insurance or of contributions to any reserve covering the risk of loss of, or damage to, Federal Government property are unallowable except to the extent that the awarding agency has specifically required or approved such costs. c. Actual losses which could have been covered by permissible insurance (through a selfinsurance program or otherwise) are unallowable, unless expressly provided for in the Federal award or as described below. However, the Federal Government will participate in actual losses of a self insurance fund that are in excess of reserves. Costs incurred because of losses not covered under nominal deductible insurance coverage provided in keeping with sound management practice, and minor losses not covered by insurance, such as spoilage, breakage, and disappearance of small hand tools, which occur in the ordinary course of operations, are allowable.

d. Contributions to a reserve for certain self-insurance programs including workers compensation, unemployment compensation, and severance pay are allowable subject to the

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following provisions:

(1) The type of coverage and the extent of coverage and the rates and premiums would have been allowed had insurance (including reinsurance) been purchased to cover the risks. However, ~rovisionfor known or reasonablv estimated self-insured liabilities, which do not become payable for more than one year after the provision is made, shall not exceed the discounted present value of the liability. The rate used for discounting the liability must be determined by giving consideration to such factors as the governmental unit's settlement rate for those liabilities and its investment rate of return.

(2) Earnings or investment income on reserves must be credited to those reserves.

(3) Contributions to reserves must be based on sound actuarial principles using historical experience and reasonable assumptions. Reserve levels must be analyzed and updated at least biennially for each major risk being insured and take into account any reinsurance, coinsurance, etc. Reserve levels related to employee-related coverages will normally be limited to the value of claims (a) submitted and adjudicated but not paid, (b)submitted but not adjudicated, and (c) incurred but not submitted. Reserve levels in excess of the amounts based on the above must be identified and justified in the cost allocation plan or indirect cost rate proposal. (4) Accounting records, actuarial studies, and cost allocations (or billings) must recognize any significant differences due to types of insured risk and losses generated by the various insured activities or agencies of the govenunental unit. If individual departments or agencies of the governmental unit experience significantly different levels of claims for a particular risk, those differences are to be recognized by the use of separate allocations or other techniques resulting in an equitable allocation.

(5) Whenever funds are transferred from a self-insurance reserve to other accounts (e.g., general fund), refunds shall be made to the Federal Government for its share of funds transferred, including earned or imputed interest from the date of transfer. e. Actual claims paid to or on behalf of employees or former employees for workers' compensation, unemployment compensation, severance pay, and similar employee benefits (e.g., subsection 1l.f. for post retirement health benefits), are allowable in the year of payment provided (1) the governmental unit follows a consistent costing policy and (2) they are allocated as a general administrative expense to all activities of the governmental unit.

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f. Insurance refunds shall be credited against insurance costs in the year the refund is received.

g. Indemnification includes securing the govemmental unit against liabilities to third persons and other losses not compensated by insurance or otherwise. The Federal Government is obligated to indemnify the govemmental unit only to the extent expressly provided for in the Federal award, except as provided in subsection d.

h. Costs of commercial insurance that protects against the costs of the contractor for correction of the contractor's own defects in materials or workmanship are unallowable.

26. Interest.

a. Costs incurred for interest on borrowed capital or the use of a governmental unit's own funds, however represented, are unallowable except as specifically provided in subsection b. or authorized by Federal legislation.

b. Financing costs (including interest) paid or incurred on or after the effective date of this Circular associated with the otherwise allowable costs of building acquisition, construction, or fabrication, reconstruction or remodeling completed on or after October 1, 1980 is allowable, subject to the conditions in (1)-(4). Financing costs (including interest) paid or incurred on or after the effective date of this Circular associated with otherwise allowable costs of equipment is allowable, subject to the conditions in (1)-(4).

(1) The financing is provided (from other than tax or user fee sources) by a bona fide third party external to the governmental unit;

(2) The assets are used in support of Federal awards;

(3) Earnings on debt service reserve funds or interest earned on borrowed funds pending payment of the construction or acquisition costs are used to offset the current period's cost or the capitalized interest, as appropriate. Earnings subject to being reported to the Federal Internal Revenue Service under arbitrage requirements are excludable.

(4) Governmental units will negotiate the amount of allowable interest whenever cash payments (interest, depreciation, use allowances, and contributions) exceed the governmental unit's cash payments and other contributions attributable to that portion of real property used for Federal

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awards.

27. Lobbying. The cost of certain influencing activities associated with obtaining grants, contracts, cooperative agreements, or loans is an unallowable cost. Lobbying with respect to certain grants, contracts, cooperative agreements, and loans shall be governed by the common rule, "New Restrictions on Lobbying" published at 55 FR 6736 (February 26, 1990), including definitions, and the Office of Management and Budget "Govemment-wide Guidance for New Restrictions on Lobbying" and notices published at 54 FR 52306 (December 20, 1989), 55 FR 24540 (June 15, 1990), and 57 FR 1772 (January 15, 1992), respectively.

28. Maintenance, operations, and repairs. Unless prohibited by law, the cost of utilities, insurance, security, janitorial services, elevator service, upkeep of grounds, necessary maintenance, normal repairs and alterations, and the like are allowable to the extent that they: (1) keep property (including Federal property, unless otherwise provided for) in an efficient operating condition, (2) do not add to the permanent value of property or appreciably prolong its intended life, and (3) are not otherwise included in rental or other charges for space. Costs which add to the permanent value of property or appreciably prolong its intended life shall be treated as capital expenditures (see sections 15 and 19). 29. Materials and supplies. The cost of materials and supplies is allowable. Purchases should be charged at their actual prices after deducting all cash discounts, trade discounts, rebates, and allowances received. Withdrawals from general stores or stockrooms should be charged at cost under any recognized method of pricing, consistently applied. Incoming transportation charges are a proper part of materials and supply costs.

30. Memberships, subscriptions, and professional activities. a. Costs of the governmental unit's memberships in business, technical, and professional organizations are allowable.

b. Costs of the governmental unit's subscriptions to business, professional, and technical periodicals are allowable.

c. Costs of meetings and conferences where the primary purpose is the dissemination of technical information, including meals, transportation, rental of meeting facilities, and other incidental costs are allowable.

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d. Costs of membership in civic and community, social organizations are allowable as a direct cost with the approval of the Federal awarding agency.

e. Costs of membership in organizations substantially engaged in lobbying are unallowable.

31. Motor pools. The costs of a service organization which provides automobiles to user governmental units at a mileage or fixed rate and/or provides vehicle maintenance, inspection, and repair services are allowable.

32. Pre-award costs. Pre-award costs are those incurred prior to the effective date of the award directly pursuant to the negotiation and in anticipation of the award where such costs are necessary to comply with the proposed delivery schedule or period of performance. Such costs are allowable only to the extent that they would have been allowable if incurred after the date of the award and only with the written approval of the awarding agency.

33. Professional service costs.

a. Cost of professional and consultant services rendered by persons or organizations that are members of a particular profession or possess a special skill, whether or not officers or employees of the governmental unit, are allowable, subject to section 14 when reasonable in relation to the services rendered and when not contingent upon recovery of the costs from the Federal Government.

b. Retainer fees supported by evidence of bona fide services available or rendered are allowable.

34. Proposal costs. Costs of preparing proposals for potential Federal awards are allowable. Proposal costs should normally be treated as indirect costs and should be allocated to all activities of the governmental unit utilizing the cost allocation plan and indirect cost rate proposal. However, proposal costs may be charged directly to Federal awards with the prior approval of the Federal awarding agency.

35. Publication and printing costs. Publication costs, including the costs of printing (including the processes of composition, plate-making, press work, and binding, and the end products produced by such processes), distribution, promotion, mailing, and general handling are allowable.

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36. Rearrangements and alterations. Costs incurred for ordinary and normal rearrangement and alteration of facilities are allowable. Special arrangements and alterations costs incurred specifically for a Federal award are allowable with the prior approval of the Federal awarding agency. 37. Reconversion costs. Costs incurred in the restoration or rehabilitation of the governmental unit's facilities to approximately the same condition existing immediately prior to commencement of Federal awards, less costs related to normal wear and tear, are allowable.

38. Rental costs. a. Subject to the limitations described in subsections b. through d. of this section, rental costs are allowable to the extent that the rates are reasonable in light of such factors as: rental costs of comparable property, if any; market conditions in the area; alternatives available; and, the type, life expectancy, condition, and value of the property leased.

b. Rental costs under sale and leaseback arrangements are allowable only up to the amount that would be allowed had the governmental unit continued to own the property.

c. Rental costs under less-than-arms-length leases are allowable only up to the amount that would be allowed had title to the property vested in the governmental unit. For this purpose, lessthan-arms-length leases include, but are not limited to, those where:

(1) One party to the lease is able to control or substantially influence the actions of the other;

(2) Both parties are parts of the same governmental unit; or

(3) The govenunental unit creates an authority or similar entity to acquire and lease the facilities to the governmental unit and other parties.

d. Rental costs under leases which are required to be treated as capital leases under GAAP are allowable only up to the amount that would be allowed had the govenunental unit purchased the property on the date the lease agreement was executed. This amount would include expenses such as depreciation or use allowance, maintenance, and insurance. The provisions of Financial Accounting Standards Board Statement 13 shall be used to determine whether a lease is a capital lease. Interest costs related to capital leases are allowable to the extent they meet the criteria in

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section 26.

39. Taxes.

a. Taxes that a governmental unit is legally required to pay are allowable, except for selfassessed taxes that disproportionately affect Federal programs or changes in tax policies that disproportionately affect Federal programs. This provision becomes effective for taxes paid during the governmental unit's first fiscal year that begins on or after January 1, 1998, and applies thereafter.

b. Gasoline taxes, motor vehicle fees, and other taxes that are in effect user fees for benefits provided to the Federal Government are allowable.

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c. This ~rovisiondoes not restrict the authoritv of Federal agencies to identifv taxes where Federal participation is inappropriate. Where the identification of the amount of unallowable taxes would require an inordinate amount of effort, the cognizant agency may accept a reasonable approximation thereof.

40. Training. The cost of training provided for employee development is allowable,

41. Travel costs. a. General. Travel costs are allowable for expenses for transportation, lodgng, subsistence, and related items incurred by employees traveling on official business. Such costs may be charged on an actual cost basis, on a per diem or mileage basis in lieu of actual costs incurred, or on a combination of the two, provided the method used is applied to an entire trip, and results in charges consistent with those nolmally allowed in like circumstances in non-federally-sponsored activities. Notwithstanding the provisions of section 23, travel costs of officials covered by that section, when specifically related to Federal awards, are allowable with the prior approval of a grantor agency. b. Lodging and subsistence. Costs incurred by employees and officers for travel, including costs of lodging, other subsistence, and incidental expenses, shall be considered reasonable and allowable only to the extent such costs do not exceed charges normally allowed by the governmental unit in its regular operations as a result of the governmental unit's policy. In the absence of a written governmental unit policy regarding travel costs, the rates and amounts established under subchapter I of Chapter 57 of Title 5, United States Code "Travel and Subsistence Expenses; Mileage Allowances," or by the Administrator of General Services, or the

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President (or his designee) pursuant to any provisions of such subchapter shall be used as guidance for travel under Federal awards (41 U.S.C. 420, "Travel Expenses of Government Contractors").

c. Commercial a i r travel. Airfare costs in excess of the customary standard (coach or equivalent) airfare, are unallowable except when such accommodations would: require circuitous routing, require travel during unreasonable hours, excessively prolong travel, greatly increase the duration of the flight, result in increased cost that would offset transportation savings, or offer accommodations not reasonably adequate for the medical needs of the traveler. Where a govenunental unit can reasonably demonstrate to the awarding agency either the nonavailability of customary standard airfare or Federal Government contract airfare for individual trips or, on an overall basis, that it is the governmental unit's practice to make routine use of such airfare, specific determinations of nonavailability will generally not be questioned by the Federal Government, unless a pattern of avoidance is detected. However, in order for airfare costs in excess of the customary standard commercial airfare to be allowable, e.g., use of first-class airfare, the governmental unit must justify and document on a case-by-case basis the applicable condition(s) set forth above. d. Air travel by other than commercial carrier. Cost of travel by govemmental unit-owned, leased, or -chartered aircraft, as used in this section, includes the cost of lease, charter, operation (including personnel costs), maintenance, depreciation, interest, insurance, and other related costs. Costs of travel via govemmental unit-owned, -leased, or -chartered aircraft are unallowable to the extent they exceed the cost of allowable commercial air travel, as provided for in subsection c.

42. Underrecovery of costs under Federal agreements. Any excess costs over the Federal contribution under one award agreement are unallowable under other award agreements.

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ATTACHMENT C Circular No. A-87

STATELOCAL-WIDE CENTRAL SERVICE COST ALLOCATION PLANS TABLE OF CONTENTS A. General

B. Definitions

1. Billed central services 2. Allocated central services 3. Agency or operating agency

C. Scope of the Central Service Cost Allocation Plans

D. Submission Requirements

E. Documentation Requirements for Submitted Plans 1. General 2. Allocated central services

3. Billed services a. General

b. Internal service funds c. Self-insurance funds d. Fringe benefits

4. Required certification

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F. Negotiation and Approval of Central Service Plans

G. Other Policies 1. Billed central service activities 2. Working capital reserves

3. Carry-fonvard adjustments of allocated central service costs

4. Adjustments of billed central services

5. Records retention 6. Appeals 7. OMB assistance A. General.

-

1. Most governmental units provide certain services, such as motor pools, computer centers, purchasing, accounting, etc., to operating agencies on a centralized basis. Since federallysupported awards are performed within the individual operating agencies, there needs to be a whereby these central service costs can be identified and assigned to benefitted activities on a reasonable and consistent basis. The central service cost allocation plan provides that process. All costs and other data used to distribute the costs included in the plan should be supported by fo~malaccounting and other records that will support the propriety of the costs assigned to Federal awards.

2. Guidelines and illustrations of central service cost allocation plans are provided in a brochure published by the Department of Health and Human Services entitled "A Guide for State and Local Government Agencies: Cost Principles and Procedures for Establishing Cost Allocation Plans and Indirect Cost Rates for Grants and Contracts with the Federal Government." A copy of this brochure may be obtained from the Superintendent of Documents, U.S. Government Printing Office.

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B. Definitions. 1. "Billed central services" means central services that are billed to benefitted agencies andlor programs on an individual fee-for-service or similar basis. Typical examples of billed central services include computer services, transportation services, insurance, and fringe benefits.

2. "Allocated central services" means central services that benefit operating agencies but are not billed to the agencies on a fee-for-service or similar basis. These costs are allocated to benefitted agencies on some reasonable basis. Examples of such services might include general accounting, personnel administration, purchasing, etc.

3. "Agency or operating agency" means an organizational unit or sub-division within a governmental unit that is responsible for the performance or administration of awards or activities of the governmental unit.

C. Scope of the Central Service Cost Allocation Plans. The central service cost allocation plan will include all central service costs that will be claimed (either as a billed or an allocated cost) under Federal awards and will be documented as described in section E. Costs of central services omitted from the plan will not be reimbursed.

D. Submission Requirements 1. Each State will submit a plan to the Department of Health and Human Services for each year in which it claims central service costs under Federal awards. The plan should include (a) a projection of the next year's allocated central service cost (based either on actual costs for the most recently completed year or the budget projection for the coming year), and (b) a reconciliation of actual allocated central service costs to the estimated costs used for either the most recently completed year or the year immediately preceding the most recently completed year.

2. Each local government that has been designated as a "major local government" by the Office of Management and Budget (OMB) is also required to submit a plan to its cognizant agency annually. OMB periodically lists major local governments in the Federal Register.

3. All other local governments claiming central service costs must develop a plan in accordance with the requirements described in this Circular and maintain the plan and related supporting documentation for audit. These local governments are not required to submit their plans for

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Federal approval unless they are specifically requested to do so by the cognizant agency. Where a local government only receives funds as a sub-recipient, the primary recipient will be responsible for negotiating indirect cost rates andlor monitoring the sub-recipient's plan.

4. All central service cost allocation plans will be prepared and, when required, submitted within six months prior to the beginning of each of the governmental unit's fiscal years in which it proposes to claim central service costs. Extensions may be granted by the cognizant agency on a case-by-case basis.

E. Documentation Requirements for Submitted Plans. The documentation requirements described in this section may be modified, expanded, or reduced by the cognizant agency on a case-by-case basis. For example, the requirements may be reduced for those central services which have little or no impact on Federal awards. Conversely, if a review of a plan indicates that certain additional information is needed, and will likely be needed in future years, it may be routinely requested in future plan submissions. Items marked with an asterisk (*) should be submitted only once; subsequent plans should merely indicate any changes since the last plan. 1. General. All proposed plans must be accompanied by the following: an organization chart sufficiently detailed to show operations including the central service activities of the Statellocal government whether or not they are shown as benefiting from central service functions; a copy of the Comprehensive Annual Financial Report (or a copy of the Executive Budget if budgeted costs are being proposed) to support the allowable costs of each central service activity included in the plan; and, a certification (see subsection 4.) that the plan was prepared in accordance with this Circular, contains only allowable costs, and was prepared in a manner that treated similar costs consistently among the various Federal awards and between Federal and non-Federal awardslactivities.

2. Allocated central services. For each allocated central service, the plan must also include the following: a brief description of the service*, an identification of the unit rendering the service and the operating agencies receiving the service, the items of expense included in the cost of the service, the method used to distribute the cost of the service to benefitted agencies, and a summary schedule showing the allocation of each service to the specific benefitted

agencies. If any self-insurance funds or fringe benefits costs are treated as allocated (rather than billed) central services, documentation discussed in subsections 3.b. and c. shall also be included. 3. Billed services.

a. General. The information described below shall be provided for all billed central services, including internal service funds, self-insurance funds, and fringe benefit funds.

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b. Internal service funds,

(1) For each internal service fund or similar activity with an operating budget of $5 million or more, the plan shall include: a brief description of each service; a balance sheet for each fund based on individual accounts contained in the governmental unit's accounting system; a revenuelexpenses statement, with revenues broken out by source, e.g., regular billings, interest earned, etc.; a listing of all non-operating transfers (as defined by Generally Accepted Accounting Principles (GAAP)) into and out of the fund; a description of the procedures (methodology) used to charge the costs of each service to users, including how billing rates are determined; a schedule of current rates; and, a schedule comparing total revenues (including imputed revenues) generated by the service to the allowable costs of the service, as determined under this Circular, with an explanation of how variances will be handled.

(2) Revenues shall consist of all revenues generated by the service, including unbilled and uncollected revenues. If some users were not billed for the services (or were not billed at the full rate for that class of users), a schedule showing the full imputed revenues associated with these users shall be provided. Expenses shall be broken out by object cost categories (e.g., salaries, supplies, etc.).

c. Self-insurance funds. For each self-insurance fund, the plan shall include: the fund balance sheet; a statement of revenue and expenses including a summary of billings and claims paid by agency; a listing of all non-operating transfers into and out of the fund; the type(s) of risk(s) covered by the fund (e.g., automobile liability, workers' compensation, etc.); an explanation of how the level of fund contributions are determined, including a copy of the current actuarial report (with the actuarial assumptions used) if the contributions are determined on an actuarial basis; and, a description of the procedures used to charge or allocate fund contributions to benefitted activities. Reserve levels in excess of claims (1) submitted and adjudicated but not paid, (2) submitted but not adjudicated, and (3) incurred but not submitted must be identified and explained.

d. Fringe benefits. For fringe benefit costs, the plan shall include: a listing of fringe benefits provided to covered employees, and the overall annual cost of each type of benefit; current fringe benefit policies*; and procedures used to charge or allocate the costs of the benefits to benefitted activities. In addition, for pension and post-retirement health insurance plans, the following information shall be provided: the governmental unit's funding policies, e.g., legislative bills, trust agreements, or State-mandated contribution rules, if different from actuarially determined rates; the pension plan's costs accrued for the year; the amount funded, and date@)of funding; a copy of the current actuarial report (including the actuarial assumptions); the plan trustee's report; and, a schedule from the activity showing the value of the interest cost associated with late funding.

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4. Required certification. Each central service cost allocation plan will be accompanied by a certification in the following form:

CERTIFICATE OF COST ALLOCATION PLAN This is to certify that I have reviewed the cost allocation plan submitted herewith and to the best of my knowledge and belief:

(1) All costs included in this proposal [identify date] to establish cost allocations or billings for [identify period covered by plan] are allowable in accordance with the requirements of OMB Circular A-87, "Cost Principles for State, Local, and Indian Tribal Governments," and the Federal award(s) to which they apply. Unallowable costs have been adjusted for in allocating costs as indicated in the cost allocation plan.

(2) All costs included in this proposal are properly allocable to Federal awards on the basis of a beneficial or causal relationship between the expenses incurred and the awards to which they are allocated in accordance with applicable requirements. Further, the same costs that have been treated as indirect costs have not been claimed as direct costs. Similar types of costs have been accounted for consistently.

I declare that the foregoing is true and correct. Governmental Unit:

Signature:

Name of Official:

Title:

Date of Execution:

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F. Negotiation and Approval of Central Service Plans 1. All proposed central service cost allocation plans that are required to be submitted will be reviewed, negotiated, and approved by the Federal cognizant agency on a timely basis. The cognizant agency will review the proposal within six months of receipt of the proposal and either negotiatelapprove the proposal or advise the governmental unit of the additional documentation needed to support/evaluate the proposed plan or the changes required to make the proposal acceptable. Once an agreement with the governmental unit has been reached, the agreement will be accepted and used by all Federal agencies, unless prohibited or limited by statute. Where a Federal funding agency has reason to believe that special operating factors affecting its awards necessitate special consideration, the funding agency will, prior to the time the plans are negotiated, notify the cognizant agency.

2. The results of each negotiation shall be formalized in a written agreement between the co-gizant agency and the governmental unit. This agreement will be subject to re-opening if the agreement is subsequently found to violate a statute or the information upon which the plan was negotiated is later found to be materially incomplete or inaccurate. The results of the negotiation shall be made available to all Federal agencies for their use.

3. Negotiated cost allocation plans based on a proposal later found to have included costs that: (a) are unallowable (i) as specified by law or regulation, (ii) as identified in Attachment B of this Circular, or (iii) by the terms and conditions of Federal awards, or (b) are unallowable because they are clearly not allocable to Federal awards, shall be adjusted, or a refund shall be made at the option of the Federal cognizant agency. These adjustments or refunds are designed to correct the plans and do not constitute a reopening of the negotiation.

G. Other Policies. 1. Billed central service activities. Each billed central service activity must separately account for all revenues (including imputed revenues) generated by the service, expenses incurred to furnish the service, and profit/loss.

2. Working capital reserves. Internal service funds are dependent upon a reasonable level of working capital reserve to operate from one billing cycle to the next. Charges by an internal service activity to provide for the establishment and maintenance of a reasonable level of working capital reserve, in addition to the full recovery of costs, are allowable. A working capital reserve as part of retained earnings of up to 60 days cash expenses for normal operating purposes is considered reasonable. A working capital reserve exceeding 60 days may be approved by the cognizant Federal agency in exceptional cases.

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3. Carry-forward adjustments of allocated central service costs. Allocated central service costs are usually negotiated and approved for a future fiscal year on a "fixed with carry-forward" basis. Under this procedure, the fixed amounts for the future year covered by agreement are not subject to adjustment for that year. However, when the actual costs of the year involved become known, the differences between the fixed amounts previously approved and the actual costs will be carried forward and used as an adjustment to the fixed amounts established for a later year. This "carry-forward" procedure applies to all central services whose costs were fixed in the approved plan. However, a carry-forward adjustment is not permitted, for a central service activity that was not included in the approved plan, or for unallowable costs that must be reimbursed immediately.

4. Adjustments of billed central services. Billing rates used to charge Federal awards shall be based on the estimated costs of providing the services, including an estimate of the allocable central service costs. A comparison of the revenue generated by each billed service (including total revenues whether or not billed or collected) to the actual allowable costs of the service will be made at least annually, and an adjustment will be made for the difference between the revenue and the allowable costs. These adjustments will be made through one of the following adjustment methods: (a) a cash refund to the Federal Government for the Federal share of the adjustment, (b) credits to the amounts charged to the individual programs, (c) adjustments to future billing rates, or (d) adjustments to allocated central service costs. Adjustments to allocated central services will not be permitted where the total amount of the adjustment for a particular service (Federal share and non-Federal) share exceeds $500,000.

5. Records retention. All central service cost allocation plans and related documentation used as a basis for claiming costs under Federal awards must be retained for audit in accordance with the records retention requirements contained in the Common Rule.

6. Appeals. If a dispute arises in the negotiation of a plan between the cognizant agency and the govemmental unit, the dispute shall be resolved in accordance with the appeals procedures of the cognizant agency.

7. O m assistance. To the extent that problems are encountered among the Federal agencies andlor govemmental units in connection with the negotiation and approval process, OMB will lend assistance, as required, to resolve such problems in a timely manner.

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ATTACHMENT D Circular No. A-87

PUBLIC ASSISTANCE COST ALLOCATION PLANS TABLE OF CONTENTS A. General

B. Definitions

1. State public assistance agency 2. State public assistance agency costs

C. Policy

D. Submission, Documentation, and Approval of Public Assistance Cost Allocation Plans

E. Review of Implementation of Approved Plans

F. Unallowable Costs

A. General. Federally-financed programs administered by State public assistance agencies are funded predominately by the Department of Health and Human Services (HHS). In support of its stewardship requirements, HHS has published requirements for the development, documentation, submission, negotiation, and approval of public assistance cost allocation plans in Subpart E of 45 CFR Part 95. All administrative costs (direct and indirect) are normally charged to Federal awards by implementing the public assistance cost allocation plan. This Attachment extends these requirements to all Federal agencies whose programs are administered by a State public assistance agency. Major federally-financed programs typically administered by State public assistance agencies include: Aid to Families with Dependent Children, Medicaid, Food Stamps, Child Support Enforcement, Adoption Assistance and Foster Care, and Social Services Block Grant.

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B. Definitions 1. "State public assistance agency" means a State agency administering or supervising the administration o f one or more public assistance programs operated by the State as identified in Subpart E o f 45 CFR Part 95. For the purpose o f this Attachment, these programs include all programs ahnistered by the State public assistance agency.

2. "State public assistance agency costs" means all costs incurred by, or allocable to, the State public assistance agency, except expenditures for financial assistance, medical vendor payments, food stamps, and payments for services and goods provided directly to program recipients.

C. Policy. State public assistance agencies will develop, document and implement, and the Federal Government will review, negotiate, and approve, public assistance cost allocation plans in accordance with Subpart E o f 45 CFR Part 95. The plan will include all programs administered by the State public assistance agency. Where a letter o f approval or disapproval is transmitted to a State public assistance agency in accordance with Subpart E, the letter will apply to all Federal agencies and programs. The remaining sections o f this Attachment (except for the requirement for certification) summarize the provisions o f Subpart E o f 45 CFR Part 95.

D. Submission, Documentation, and Approval of Public Assistance Cost Allocation Plans. 1. State public assistance agencies are required to promptly submit amendments to the cost allocation plan to HHS for review and approval. 2. Under the coordination process outlined in subsection E, affected Federal agencies will review all new plans and plan amendments and provide comments, as appropriate, to HHS. The effectivedate o f the plan or plan amendment will be the first day o f the quarter following the submission o f the plan or amendment, unless another date is specifically approved by HHS. HHS, as the cognizant agency acting on behalf o f all affected Federal agencies, will, as necessary, conduct negotiations with the State public assistance agency and will inform the State agency o f the action taken on the plan or plan amendment.

E. Review of Implementation of Approved Plans. 1. Since public assistance cost allocation plans are o f a narrative nature, the review during the plan approval process consists o f evaluating the appropriateness o f the proposed groupings o f

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costs (cost centers) and the related allocation bases. As such, the Federal Government needs some assurance that the cost allocation plan has been implemented as approved. This is accomplished by reviews by the funding agencies, single audits, or audits conducted by the cognizant audit agency.

2. Where inappropriate charges affecting more than one funding agency are identified, the cognizant HHS cost negotiation office will be advised and will take the lead in resolving the issue(s) as provided for in Subpart E of 45 CFR Part 95.

3. If a dispute arises in the negotiation of a plan or from a disallowance involving two or more funding agencies, the dispute shall be resolved in accordance with the appeals procedures set out in 45 CFR Part 75. Disputes involving only one funding agency will be resolved in accordance with the funding agency's appeal process.

4. To the extent that problems are encountered among the Federal agencies and/or governmental units in connection with the negotiation and approval process, the Office of Management and Budget will lend assistance, as required, to resolve such problems in a timely manner. F. Unallowable Costs. Claims developed under approved cost allocation plans will be based on allowable costs as identified in this Circular. Where unallowable costs have been claimed and reimbursed, they will be refunded to the program that reimbursed the unallowable cost using one of the following methods: (a) a cash refund, (b) offset to a subsequent claim, or (c) credits to the amounts charged to individual awards.

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ATTACHMENT E Circular No. A-87

STATE AND LOCAL INDIRECT COST RATE PROPOSALS TABLE OF CONTENTS A. General

B. Definitions

1.Indirect cost rate proposal 2. Indirect cost rate 3. Indirect cost pool

4. Base

5. Predetermined rate

6. Fixed rate 7. Provisional rate 8. Final rate

9. Base period C. Allocation of Indirect Costs and Determination of Indirect Cost Rates

1. General

2.Simplified method 3. Multiple allocation base method 4. Special indirect cost rates

D. Submission and Documentation of Proposals O The Falmouth institute C-53

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1. Submission of indirect cost rate proposals 2. Documentation of proposals 3. Required certification

E. Negotiation and Approval of Rates F. Other Policies

1. Fringe benefit rates 2. Billed services provided by the grantee agency 3. Indirect cost allocations not using rates

4. Appeals

5. Collections of unallowable costs and erroneous payments 6. OMB assistance

A. General.

1. Indirect costs are those that have been incurred for common or joint purposes. These costs benefit more than one cost objective and cannot be readily identified with a particular final cost objective without effort disproportionate to the results achieved. After direct costs have been determined and assigned directly to Federal awards and other activities as appropriate, indirect costs are those remaining to be allocated to benefitted cost objectives. A cost may not be allocated to a Federal award as an indirect cost if any other cost incurred for the same purpose, in like circumstances, has been assigned to a Federal award as a direct cost. 2. Indirect costs include (a) the indirect costs originating in each department or agency of the governmental unit carrying out Federal awards and @) the costs of central governmental services distributed through the central service cost allocation plan (as described in Attachment C) and not otherwise treated as direct costs.

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3. Indirect costs are normally charged to Federal awards by the use of an indirect cost rate. A separate indirect cost rate(s) is usually necessary for each department or agency of the governmental unit claiming indirect costs under Federal awards. Guidelines and illustrations of indirect cost proposals are provided in a brochure published by the Department of Health and Human Services entitled "A Guide for State and Local Government Agencies: Cost Principles and Procedures for Establishing Cost Allocation Plans and Indirect Cost Rates for Grants and Contracts with the Federal Government." A copy of this brochure may be obtained from the Superintendent of Documents, U.S. Government Printing Office. 4. Because of the diverse characteristics and accounting practices of governmental units, the types of costs which may be classified as indirect costs cannot be specified in all situations. However, typical examples of indirect costs may include certain State/local-wide central service costs, general administration of the grantee department or agency, accounting and personnel services performed within the grantee department or agency, depreciation or use allowances on buildings and equipment, the costs of operating and maintaining facilities, etc.

5. This Attachment does not apply to State public assistance agencies. These agencies should refer instead to Attachment D. B. Definitions.

1. "Indirect cost rate proposal" means the documentation prepared by a governmental unit or subdivision thereof to substantiate its request for the establishment of an indirect cost rate.

2. "Indirect cost rate" is a device for determining in a reasonable manner the proportion of indirect costs each program should bear. It is the ratio (expressed as a percentage) of the indirect costs to a direct cost base.

3. "Indirect cost pool" is the accumulated costs that jointly benefit two or more programs or other cost objectives.

4. "Base" means the accumulated direct costs (normally either total direct salaries and wages or total direct costs exclusive of any extraordinary or distorting expenditures) used to distribute indirect costs to individual Federal awards. The direct cost base selected should result in each award bearing a fair share of the indirect costs in reasonable relation to the benefits received from the costs.

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5. "Predetermined rate" means an indirect cost rate, applicable to a specified current or future period, usually the govemmental unit's fiscal year. This rate is based on an estimate of the costs to be incurred during the period. Except under very unusual circumstances, a predetermined rate is not subject to adjustment. Pecause of legal constraints, predetermined rates are not permitted for Federal contracts; they may, however, be used for grants or cooperative agreements.) Predetermined rates may not be used by governmental units that have not submitted and negotiated the rate with the cognizant agency. In view of the potential advantages offered by this procedure, negotiation of predetermined rates for indirect costs for a period of two to four years should be the norm in those situations where the cost experience and other pertinent facts available are deemed sufficient to enable the parties involved to reach an informed jud-ment as to the probable level of indirect costs during the ensuing accounting periods.

6. "Fixed rate" means an indirect cost rate which has the same characteristics as a predetermined rate, except that the difference between the estimated costs and the actual, allowable costs of the period covered by the rate is carried forward as an adjustment to the rate computation of a subsequent period. 7. "Provisional rate" means a temporary indirect cost rate applicable to a specified period which is used for funding, interim reimbursement, and reporting indirect costs on Federal awards pending the establishment of a "final" rate for that period. 8. "Final rate" means an indirect cost rate applicable to a specified past period which is based on the actual allowable costs of the period. A final audited rate is not subject to adjustment.

9. "Base period" for the allocation of indirect costs is the period in which such costs are incurred and accumulated for allocation to activities performed in that period. The base period normally should coincide with the governmental unit's fiscal year, but in any event, shall be so selected as to avoid inequities in the allocation of costs.

C. Allocation of Indirect Costs and Determination of Indirect Cost Rates,

1. General. a. Where a govemmental unit's department or agency has only one major function, or where all its major functions benefit from the indirect costs to approximately the same degree, the allocation of indirect costs and the computation of an indirect cost rate may be accomplished through simplified allocation procedures as described in subsection 2.

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b. Where a governmental unit's department or agency has several major functions which benefit from its indirect costs in varying degrees, the allocation of indirect costs may require the accumulation of such costs into separate cost groupings which then are allocated individually to benefitted functions by means of a base which best measures the relative degree of benefit. The indirect costs allocated to each function are then distributed to individual awards and other activities included in that function by means of an indirect cost rate(?,).

c. Specific methods for allocating indirect costs and computing indirect cost rates along with the conditions under which each method should be used are described in subsections 2.3 and 4.

2. Simplified method.

a. Where a grantee agency's major functions benefit from its indirect costs to approximately the same degree, the allocation of indirect costs may be accomplished by (1) classifying the grantee agency's total costs for the base pe~iodas either direct or indirect, and (2) dividing the total allowable indirect costs (net of applicable credits) by an equitable distribution base. The result of this process is an indirect cost rate which is used to distribute indirect costs to individual Federal awards. The rate should be expressed as the percentage which the total amount of allowable indirect costs bears to the base selected. This method should also be used where a governmental unit's department or agency has only one major function encompassing a number of individual projects or activities, and may be used where the level of Federal awards to that department or agency is relatively small.

b. Both the direct costs and the indirect costs shall exclude capital expenditures and unallowable costs. However, unallowable costs must be included in the direct costs if they represent activities to which indirect costs are properly allocable.

c. The distribution base may be (1)total direct costs (excluding capital expenditures and other distorting items, such as pass-through funds, major subcontracts, etc.), (2) direct salaries and wages, or (3) another base which results in an equitable distribution.

3. Multiple allocation base method.

a. Where a grantee agency's indirect costs benefit its major functions in varying degrees, such costs shall be accumulated into separate cost groupings. Each grouping shall then be allocated individually to benefitted functions by means of a base which best measures the relative benefits.

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b. The cost groupings should be established so as to permit the allocation of each grouping on the basis of benefits provided to the major functions. Each grouping should constitute a pool of expenses that are of like character in terms of the functions they benefit and in terms of the allocation base which best measures the relative benefits provided to each function. The number of separate groupings should be held within practical limits, taking into consideration the materiality of the amounts involved and the degree of precision needed.

c. Actual conditions must be taken into account in selecting the base to be used in allocating the expenses in each grouping to benefitted functions. When an allocation can be made by assignment of a cost grouping directly to the function benefitted, the allocation shall be made in that manner. When the expenses in a grouping are more general in nature, the allocation should be made through the use of a selected base which produces results that are equitable to both the Federal Government and the governmental unit. In general, any cost element or related factor associated with the governmental unit's activities is potentially adaptable for use as an allocation base provided that: (1) it can readily be expressed in terms of dollars or other quantitative measures (total direct costs, direct salaries and wages, staff hours applied, square feet used, hours of usage, number of documents processed, population served, and the like), and (2) it is common to the benefitted functions during the base period.

d. Except where a special indirect cost rate(s) is required in accordance with subsection 4, the separate groupings of indirect costs allocated to each major function shall be aggregated and treated as a common pool for that function. The costs in the common pool shall then be distributed to individual Federal awards included in that function by use of a single indirect cost rate.

e. The distribution base used in computing the indirect cost rate for each function may be (1) total direct costs (excluding capital expenditures and other distorting items such as pass-through funds, major subcontracts, etc.), (2) direct salaries and wages, or (3) another base which results in an equitable distribution. An indirect cost rate should be developed for each separate indirect cost pool developed. The rate in each case should be stated as the percentage relationship between the particular indirect cost pool and the distribution base identified with that pool.

4. Special indirect cost rates. a. In some instances, a single indirect cost rate for all activities of a grantee department or agency or for each major function of the agency may not be appropriate. It may not take into account those different factors which may substantially affect the indirect costs applicable to a particular program or group of programs. The factors may include the physical location of the work, the level of administrative support required, the nature of the facilities or other resources employed, the organizational arrangements used, or any combination thereof. When a particular award is canied out in an environment which appears to generate a significantly different level of indirect

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costs, provisions should be made for a separate indirect cost pool applicable to that award. The separate indirect cost pool should be developed during the course of the regular allocation process, and the separate indirect cost rate resulting therefrom should be used, provided that: (1) the rate differs significantly from the rate which would have been developed under subsections 2. and 3., and (2) the award to which the rate would apply is material in amount.

b. Although this Circular adopts the concept of the full allocation of indirect costs, there are some Federal statutes which restrict the reimbursement of certain indirect costs. Where such restrictions exist, it may be necessary to develop a special rate for the affected award. Where a "restricted rate" is required, the procedure for developing a non-restricted rate will be used except for the additional step of the elimination from the indirect cost pool those costs for which the law prohibits reimbursement.

D. Submission and Documentation of Proposals.

1. Submission of indirect cost rate proposals

a. All departments or agencies of the governmental unit desiring to claim indirect costs under Federal awards must prepare an indirect cost rate proposal and related documentation to support those costs. The proposal and related documentation must be retained for audit in accordance with the records retention requirements contained in the Common Rule.

b. A governmental unit for which a c o - ~ z a n tagency assignment has been specifically designated must submit its indirect cost rate proposal to its cognizant agency. The Office of Management and Budget ( O m ) will periodically publish lists of governmental units identifying the appropriate Federal cognizant agencies. The cognizant agency for all governmental units or agencies not identified by OMB will be determined based on the Federal agency providing the largest amount of Federal funds. In these cases, a governmental unit must develop an indirect cost proposal in accordance with the requirements of this Circular and maintain the proposal and related supporting documentation for audit. These governmental units are not required to submit their proposals unless they are specifically requested to do so by the cognizant agency. Where a local government only receives funds as a sub-recipient, the primary recipient will be responsible for negotiating andlor monitoring the sub-recipient's plan.

c. Each Indian tribal government desiring reimbursement of indirect costs must submit its indirect cost proposal to the Department of the Interior (its cognizant Federal agency). d. Indirect cost proposals must be developed (and, when required, submitted) within six months after the close of the governmental unit's fiscal year, unless an exception is approved by the

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cognizant Federal agency. Lf the proposed central service cost allocation plan for the same period has not been approved by that time, the indirect cost proposal may be prepared including an amount for central services that is based on the latest federally-approved central service cost allocation plan. The difference between these central service amounts and the amounts ultimately approved will be compensated for by an adjustment in a subsequent period.

2. Documentation of proposals. The following shall be included with each indirect cost proposal: a. The rates proposed, including subsidiary work sheets and other relevant data, cross referenced and reconciled to the financial data noted in subsection b. Allocated central service costs will be supported by the summary table included in the approved central service cost allocation plan. This summary table is not required to be submitted with the indirect cost proposal if the central service cost allocation plan for the same fiscal year has been approved by the cognizant agency and is available to the funding agency.

b. A copy of the financial data (financial statements, comprehensive annual financial report, executive budgets, accounting reports, etc.) upon which the rate is based. Adjustments resulting from the use of unaudited data will be recognized, where appropriate, by the Federal cognizant agency in a subsequent proposal.

c. The approximate amount of direct base costs incurred under Federal awards. These costs should be broken out between salaries and wages and other direct costs.

d. A chart showing the organizational structure of the agency during the period for which the proposal applies, along with a functional statement(s) noting the duties andlor responsibilities of all units that comprise the agency. (Once this is submitted, only revisions need be submitted with subsequent proposals.)

3. Required certification. Each indirect cost rate proposal shall be accompanied by a certification in the following form:

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CERTIFICATE OF INDIRECT COSTS This is to certify that I have reviewed the indirect cost rate proposal submitted herewith and to the best of my knowledge and belief:

(1) All costs included in this proposal [identify date] to establish billing or final indirect costs rates for [identify period covered by rate] are allowable in accordance with the requirements of the Federal awardis) to which they~applyand OMB Circular A-87, "Cost Principles for State, Local, and Indian Tribal Governments." Unallowable costs have been adjusted for in allocating costs as indicated in the cost allocation plan.

(2) All costs included in this proposal are properly allocable to Federal awards on the basis of a beneficial or causal relationship between the expenses incurred and the agreements to which they are allocated in accordance with applicable requirements. Further, the same costs that have been treated as indirect costs have not been claimed as direct costs. Similar types of costs have been accounted for consistently and the Federal Government will be notified of any accounting changes that would affect the predetermined rate.

I declare that the foregoing is true and correct.

Govenunental Unit:

Signature:

Name of Official:

Title:

Date of Execution:

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E. Negotiation and Approval of Rates. 1. Indirect cost rates will be reviewed, negotiated, and approved by the co,gizant Federal agency on a timely basis. Once a rate has been agreed upon, it will be accepted and used by all Federal agencies unless prohibited or limited by statute. Where a Federal funding agency has reason to believe that special operating factors affecting its awards necessitate special indirect cost rates, the funding agency will, prior to the time the rates are negotiated, notify the cognizant Federal agency.

2. The use of predetermined rates, if allowed, is encouraged where the cognizant agency has reasonable assurance based on past experience and reliable projection of the grantee agency's costs, that the rate is not likely to exceed a rate based on actual costs. Long-term agreements utilizing predetermined rates extending over two or more years are encouraged, where appropriate.

3. The results of each negotiation shall be formalized in a written agreement between the cognizant agency and the governmental unit. This agreement will be subject to re-opening if the agreement is subsequently found to violate a statute, or the information upon which the plan was negotiated is later found to be materially incomplete or inaccurate. The agreed upon rates shall be made available to all Federal agencies for their use.

4. Refunds shall be made if proposals are later found to have included costs that (a) are unallowable (i) as specified by law or regulation, (ii) as identified in Attachment B of this Circular, or (iii) by the terms and conditions of Federal awards, or (b) are unallowable because they are clearly not allocable to Federal awards. These adjustments or refunds will be made regardless of the type of rate negotiated (predetermined, final, fixed, or provisional).

F. Other Policies. 1. Fringe benefit rates. If overall fringe benefit rates are not approved for the governmental unit as part of the central service cost allocation plan, these rates will be reviewed, negotiated and approved for individual grantee agencies during the indirect cost negotiation process. In these cases, a proposed fringe benefit rate computation should accompany the indirect cost proposal. If fringe benefit rates are not used at the grantee agency level (i.e., the agency specifically identifies fringe benefit costs to individual employees), the governmental unit should so advise the cognizant agency. 2. Billed services provided by the grantee agency. In some cases, governmental units provide and bill for services similar to those covered by central service cost allocation plans (e.g., computer centers). Where this occurs, the governmental unit should be guided by the requirements in

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Attachment C relating to the development of billing rates and documentation requirements, and should advise the cognizant agency of any billed services. Reviews of these types of services (including reviews of costinglbilling methodology, profits or losses, etc.) will be made on a caseby-case basis as warranted by the circumstances involved.

3. Indirect cost allocations not using rates. In certain situations, a govemmental unit, because of the nature of its awards, may be required to develop a cost allocation plan that distributes indirect (and, in some cases, direct) costs to the specific funding sources. In these cases, a narrative cost allocation methodology should be developed, documented, maintained for audit, or submitted, as appropriate, to the cognizant agency for review, negotiation, and approval.

4. Appeals. If a dispute arises in a negotiation of an indirect cost rate (or other rate) between the co-gizant agency and the govemmental unit, the dispute shall be resolved in accordance with the appeals procedures of the cognizant agency.

5. Collection of unallowable costs and erroneous payments. Costs specifically identified as unallowable and charged to Federal awards either directly or indirectly will be refunded (including interest chargeable in accordance with applicable Federal agency regulations).

6. OMB assistance. To the extent that problems are encountered among the Federal agencies andlor governmental units in connection with the negotiation and approval process, OMB will lend assistance, as required, to resolve such problems in a timely manner.

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APPENDIX D ARCHITECTURAL AND ENGINEERING (A&E) CONTRACTING

The Brooks Act Federal Government Selection of Architects and Engineers Public Law 92-582 92nd Congress, H.R. 12807 October 27, 1972 An ActTo amend the Federal Property and Administrative Services Act of 1949 in order to establish Federal policy concerning the selection of firms and individuals to perform architectural, engineering, and related services for the Federal Government. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 471 et seq.) is amended by adding at the end thereof the following new title: "TITLE M - SELECTION OF ARCHlTECTS AND ENGINEERS " DEFINITIONS "Sec.901. As used in this title "(1) The term 'firm' means any individual, firm, partnership, corporation, association, or other legal entity permitted by law to practice the professions of architecture or engineering. "(2) The term 'agency head' means the Secretary, Administrator, or head of a department, agency, or bureau of the Federal Government. "(3) The term "architectural and engineering services" means 1. professional services of an architectural or engineering nature, as defined by State law, if applicable, which are required to be performed or approved by a person licensed, registered, or certified to provide such services as described in this paragraph;

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2. professional services of an architectural or engineering nature performed by contract that are associated with research, planning, development, design, construction, alteration, or repair of real property; and 3. such other professional services of an architectural or engineering nature, or incidental services, which members of the architectural and engineering professions (and individuals in their employ) may logically or justifiably perform, including studies, investigations, surveying and mapping, tests, evaluations, consultations, comprehensive planning, program management, conceptual designs, plans and specifications, value engineering, construction phase services, soils engineering, drawing reviews, preparation of operation and maintenance manuals, and other related services. "POLICY "Sec.902. The Congress hereby declares it to be the policy of the Federal Government to publicly announce all requirements for architectural and engineering services, and to negotiate contracts for architectural and engineering services on the basis of demonstrated competence and qualification for the type of professional services required and at fair and reasonable prices. "REQUESTS FOR DATA ON ARCHlTECTURAL AND ENGINEERING SERVICES "Sec.903. In the procurement of architectural and engineering services, the agency head shall encourage firms engaged in the lawful practice of their profession to submit annually a statement of qualifications and performance data. The agency head, for each proposed project, shall evaluate current statements of qualifications and performance data on file with the agency, together with those that may be submitted by other firms regarding the proposed project, and shall conduct discussions with no less than three firms regarding anticipated concepts and the relative utility of alternative methods of approach for furnishing the required services and then shall select there from, in order of preference, based upon criteria established and published by him, no less than three of the firms deemed to be the most highly qualified to provide the services required. "NEGOTIATIONS OF CONTRACTS FOR A R C m C T U R A L AND ENGWEERlNG SERVICES "Sec.904. (a) The agency head shall negotiate a contract with the highest qualified firm for architectural and engineering services at compensation which the agency head determines is fair and reasonable to the Government. In making such determination, the agency head shall take into account the estimated value of the services to be rendered, the scope, complexity, and professional nature thereof.

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"(b) Should the agency head be unable to negotiate a satisfactory contract with the firm

considered to be the most qualified, at a price he determines to be fair and reasonable to the Government, negotiations with that firm should be formally terminated. The agency head should then undertake negotiations with the second most qualified firm. Failing accord with the second most qualified firm, the agency head should terminate negotiations. The agency head should then undertake negotiations with the third most qualified firm. "(c) Should the agency head be unable to negotiate a satisfactory contract with any of the selected firms, he shall select additional firms in order of their competence and qualification and continue negotiations in accordance with this section until an agreement is reached."

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APPENDIX E 25 CFR 1000

© The Falmouth Institute E-1

PART 1000—ANNUAL FUNDING AGREEMENTS UNDER THE TRIBAL SELF-GOVERNMENT ACT AMENDMENTS TO THE INDIAN SELF-DETERMINATION AND EDUCATION ACT Subpart A—General Provisions Sec. 1000.1 1000.2 1000.3 1000.4

Authority. Definitions. Purpose and scope. Policy statement.

Subpart B—Selection of Additional Tribes for Participation in Tribal Self-Governance PURPOSE AND DEFINITIONS 1000.10 1000.11 1000.12 1000.13

What What What What

is the purpose of this subpart? is the ‘‘applicant pool’’? is a ‘‘signatory’’? is a ‘‘nonsignatory Tribe’’? ELIGIBILITY

1000.14 Who is eligible to participate in Tribal self-governance? 1000.15 How many additional Tribes/Consortia may participate in self-governance per year? 1000.16 What criteria must a Tribe/Consortium satisfy to be eligible for admission to the ‘‘applicant pool’’? 1000.17 What documents must a Tribe/Consortium submit to OSG to apply for admission to the applicant pool? 1000.18 May a Consortium member Tribe withdraw from the Consortium and become a member of the applicant pool? 1000.19 What is done during the ‘‘planning phase’’? 1000.20 What is required in a planning report? 1000.21 When does a Tribe/Consortium have a ‘‘material audit exception’’? 1000.22 What are the consequences of having a material audit exception? ADMISSION INTO THE APPLICANT POOL 1000.23 How is a Tribe/Consortium admitted to the applicant pool? 1000.24 When does OSG accept applications to become a member of the applicant pool? 1000.25 What are the deadlines for a Tribe/ Consortium in the applicant pool to negotiate a compact and annual funding agreement (AFA)? 1000.26 Under what circumstances will a Tribe/Consortium be removed from the applicant pool? 1000.27 How does the Director select which Tribes in the applicant pool become selfgovernance Tribes?

1000.28 What happens if an application is not complete? 1000.29 What happens if a Tribe/Consortium is selected from the applicant pool but does not execute a compact and an AFA during the calendar year? 1000.30 May a Tribe/Consortium be selected to negotiate an AFA under section 403(b)(2) without having or negotiating an AFA under section 403(b)(1)? 1000.31 May a Tribe/Consortium be selected to negotiate an AFA under section 403(c) without negotiating an AFA under section 403(b)(1) and/or section 403(b)(2)? WITHDRAWAL FROM A CONSORTIUM ANNUAL FUNDING AGREEMENT 1000.32 What happens when a Tribe wishes to withdraw from a Consortium annual funding agreement? 1000.33 What amount of funding is to be removed from the Consortium’s AFA for the withdrawing Tribe? 1000.34 What happens if there is a dispute between the Consortium and the withdrawing Tribe? 1000.35 When a Tribe withdraws from a Consortium, is the Secretary required to award to the withdrawing Tribe a portion of funds associated with a construction project if the withdrawing Tribe so requests?

Subpart C—Section 402(d) Planning and Negotiation Grants PURPOSE AND TYPES OF GRANTS 1000.40 1000.41

What is the purpose of this subpart? What types of grants are available?

AVAILABILITY, AMOUNT, AND NUMBER OF GRANTS 1000.42 Will grants always be made available to meet the planning phase requirement as described in section 402(d) of the Act? 1000.43 May a Tribe/Consortium use its own resources to meet its self-governance planning and negotiation expenses? 1000.44 What happens if there are insufficient funds to meet the Tribal requests for planning/negotiation grants in any given year? 1000.45 How many grants will the Department make each year and what funding will be available? SELECTION CRITERIA 1000.46 Which Tribes/Consortia may be selected to receive a negotiation grant? 1000.47 What must a Tribe/Consortium do to receive a negotiation grant? 1000.48 What must a Tribe do if it does not wish to receive a negotiation grant?

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ADVANCE PLANNING GRANT FUNDING 1000.49 Who can apply for an advance planning grant? 1000.50 What must a Tribe/Consortium seeking a planning grant submit in order to meet the planning phase requirements? 1000.51 How will Tribes/Consortia know when and how to apply for planning grants? 1000.52 What criteria will the Director use to award advance planning grants? 1000.53 Can Tribes/Consortia that receive advance planning grants also apply for a negotiation grant? 1000.54 How will a Tribe/Consortium know whether or not it has been selected to receive an advance planning grant? 1000.55 Can a Tribe/Consortium appeal within DOI the Director’s decision not to award a grant under this subpart?

Subpart D—Other Financial Assistance for Planning and Negotiations Grants for Non-BIA Programs PURPOSE AND ELIGIBILITY 1000.60 What is the purpose of this subpart? 1000.61 Are other funds available to self-governance Tribes/Consortia for planning and negotiating with non-BIA bureaus? ELIGIBILITY AND APPLICATION PROCESS 1000.62 Who can apply to OSG for grants to plan and negotiate non-BIA programs? 1000.63 Under what circumstances may planning and negotiation grants be awarded to Tribes/Consortia? 1000.64 How does the Tribe/Consortium, know when and how to apply to OSG for a planning and negotiation grant? 1000.65 What kinds of activities do planning and negotiation grants support? 1000.66 What must be included in the application? 1000.67 How will the Director award planning and negotiation grants? 1000.68 May non-BIA bureaus provide technical assistance to a Tribe/Consortium in drafting its planning grant application? 1000.69 How can a Tribe/Consortium obtain comments or selection documents received or utilized after OSG has made a decision on a planning grant application? 1000.70 What criteria will the Director use to rank the applications and how many maximum points can be awarded for each criterion? 1000.71 Can an applicant appeal a decision not to award a grant? 1000.72 Will OSG notify Tribes/Consortia and affected non-BIA bureaus of the results of the selection process? 1000.73 Once a Tribe/Consortium has been awarded a grant, may the Tribe/Consortium obtain information from a non-BIA bureau?

Subpart E—Annual Funding Agreements for Bureau of Indian Affairs Programs 1000.80 What is the purpose of this subpart? 1000.81 What is an annual funding agreement (AFA)? CONTENTS AND SCOPE OF ANNUAL FUNDING AGREEMENTS 1000.82 What types of provisions must be included in a BIA AFA? 1000.83 Can additional provisions be included in an AFA? 1000.84 Does a Tribe/Consortium have the right to include provisions of Title I of Pub. L. 93–638 in an AFA? 1000.85 Can a Tribe/Consortium negotiate an AFA with a term that exceeds one year? DETERMINING WHAT PROGRAMS MAY BE INCLUDED IN AN AFA 1000.86 What types of programs may be included in an AFA? 1000.87 How does the AFA specify the services provided, functions performed, and responsibilities assumed by the Tribe/ Consortium and those retained by the Secretary? 1000.88 Do Tribes/Consortia need Secretarial approval to redesign BIA programs that the Tribe/Consortium administers under an AFA? 1000.89 Can the terms and conditions in an AFA be amended during the year it is in effect? 1000.90 What happens if an AFA expires before the effective date of the successor AFA? DETERMINING AFA AMOUNTS 1000.91 What funds must be transferred to a Tribe/Consortium under an AFA? 1000.92 What funds may not be included in an AFA? 1000.93 May the Secretary place any requirements on programs and funds that are otherwise available to Tribes/Consortia or Indians for which appropriations are made to agencies other than DOI? 1000.94 What are BIA residual funds? 1000.95 How is BIA’s residual determined? 1000.96 May a Tribe/Consortium continue to negotiate an AFA pending an appeal of residual functions and amounts? 1000.97 What is a Tribal share? 1000.98 How does BIA determine a Tribe’s/ Consortium’s share of funds to be included in an AFA? 1000.99 Can a Tribe/Consortium negotiate a Tribal share for programs outside its region/agency? 1000.100 May a Tribe/Consortium obtain funding that is distributed on a discretionary or competitive basis?

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Office of the Assistant Secretary, Interior 1000.101 Are all funds identified as Tribal shares always paid to the Tribe/Consortium under an AFA? 1000.102 How are savings that result from downsizing allocated? 1000.103 Do Tribes/Consortia need Secretarial approval to reallocate funds between programs that the Tribe/Consortium administers under the AFA? 1000.104 Can funding amounts negotiated in an AFA be adjusted during the year it is in effect? ESTABLISHING SELF-GOVERNANCE BASE BUDGETS 1000.105 What are self-governance base budgets? 1000.106 Once a Tribe/Consortium establishes a base budget, are funding amounts renegotiated each year? 1000.107 Must a Tribe/Consortium with a base budget or base budget-eligible program amounts negotiated before January 16, 2001 negotiate new Tribal shares and residual amounts? 1000.108 How are self-governance base budgets established? 1000.109 How are self-governance base budgets adjusted?

Subpart F—Non-BIA Annual Self-Governance Compacts and Funding Agreements PURPOSE 1000.120 What is the purpose of this subpart? 1000.121 What is an annual funding agreement for a non-BIA program? ELIGIBILITY 1000.122 What non-BIA programs are eligible for inclusion in an AFA? 1000.123 Are there non-BIA programs for which the Secretary must negotiate for inclusion in an AFA subject to such terms as the parties may negotiate? 1000.124 What programs are included under section 403(b)(2) of the Act? 1000.125 What programs are included under section 403(c)? 1000.126 What does ‘‘special geographic, historical or cultural’’ mean? 1000.127 Under section 403(b)(2), when must programs be awarded non-competitively? 1000.128 Is there a contracting preference for programs of special geographic, historical, or cultural significance? 1000.129 Are there any programs that may not be included in an AFA? 1000.130 Does a Tribe/Consortium need to be identified in an authorizing statute in order for a program or element of a program to be included in a non-BIA AFA? 1000.131 Will Tribes/Consortia participate in the Secretary’s determination of what is

Pt. 1000 to be included on the annual list of available programs? 1000.132 How will the Secretary consult with Tribes/Consortia in developing the list of available programs? 1000.133 What else is on the list in addition to eligible programs? 1000.134 May a bureau negotiate with a Tribe/Consortium for programs not specifically included on the annual section 405(c) list? 1000.135 How will a bureau negotiate an annual funding agreement for a program of special geographic, historical, or cultural significance to more than one Tribe? 1000.136 When will this determination be made? FUNDING 1000.137 What funds are included in an AFA? 1000.138 How are indirect cost rates determined? 1000.139 Will the established indirect cost rate always apply to new AFAs? 1000.140 How does the Secretary determine the amount of indirect contract support costs? 1000.141 Is there a predetermined cap or limit on indirect cost rates or a fixed formula for calculating indirect cost rates? 1000.142 Instead of the negotiated indirect cost rate, is it possible to establish a fixed amount or another negotiated rate for indirect costs where funds are limited? OTHER TERMS AND CONDITIONS 1000.143 May the bureaus negotiate terms to be included in an AFA for non-Indian programs? REALLOCATION, DURATION AND AMENDMENTS 1000.144 Can a Tribe reallocate funds for a non-BIA non-Indian program? 1000.145 Do Tribes/Consortia need Secretarial approval to reallocate funds between Title-I eligible programs that the Tribe/Consortium administers under a non-BIA AFA? 1000.146 Can a Tribe/Consortium negotiate an AFA with a non-BIA bureau for which the performance period exceeds one year? 1000.147 Can the terms and conditions in a non-BIA AFA be amended during the year it is in effect? 1000.148 What happens if an AFA expires before the effective date of the successor AFA?

Subpart G—Negotiation Process for Annual Funding Agreements PURPOSE 1000.160

What is the purpose of this subpart?

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NEGOTIATING A SELF-GOVERNANCE COMPACT 1000.161 What is a self-governance compact? 1000.162 What is included in a self-governance compact? 1000.163 Can a Tribe negotiate other terms and conditions not contained in the model compact? 1000.164 Can a Tribe/Consortium have an AFA without entering into a compact? 1000.165 Are provisions in compacts negotiated before January 16, 2001, effective after implementation? NEGOTIATION OF INITIAL ANNUAL FUNDING AGREEMENTS 1000.166 What are the phases of the negotiation process? 1000.167 Who may initiate the information phase? 1000.168 Is it mandatory to go through the information phase before initiating the negotiation phase? 1000.169 How does a Tribe/Consortium initiate the information phase? 1000.170 What is the letter of interest? 1000.171 When should a Tribe/Consortium submit a letter of interest? 1000.172 What steps does the bureau take after a letter of interest is submitted by a Tribe/Consortium? 1000.173 How does a newly selected Tribe/ Consortium initiate the negotiation phase? 1000.174 How and when does the bureau respond to a request to negotiate? 1000.175 What is the process for conducting the negotiation phase? 1000.176 What issues must the bureau and the Tribe/Consortium address at negotiation meetings? 1000.177 What happens when the AFA is signed? 1000.178 When does the AFA become effective? 1000.179 What happens if the Tribe/Consortium and bureau negotiators fail to reach an agreement? NEGOTIATION PROCESS FOR SUCCESSOR ANNUAL FUNDING AGREEMENTS 1000.180 What is a successor AFA? 1000.181 How does the Tribe/Consortium initiate the negotiation of a successor AFA? 1000.182 What is the process for negotiating a successor AFA?

Subpart H—Limitation and/or Reduction of Services, Contracts, and Funds 1000.190 What is the purpose of this subpart? 1000.191 To whom does this subpart apply? 1000.192 What services, contracts, or funds are protected under section 406(a)? 1000.193 Who may raise the issue of limitation or reduction of services, contracts, or funding?

1000.194 When must BIA raise the issue of limitation or reduction of services, contracts, or funding? 1000.195 When must an affected Tribe/Consortium or Tribal organization raise the issue of a limitation or reduction of services, contracts, or funding for which it is eligible? 1000.196 What must be included in a finding by BIA or in a claim by or an affected Tribe/Consortium or Tribal organization regarding the issue of a limitation or reduction of services? 1000.197 How will BIA resolve a claim? 1000.198 How must a limitation or reduction in services, contracts, or funds be remedied?

Subpart I—Public Consultation Process 1000.210 When does a non-BIA bureau use a public consultation process related to the negotiation of an AFA? 1000.211 Will the bureau contact the Tribe/ Consortium before initiating public consultation process for a non-BIA AFA under negotiation? 1000.212 What is the role of the Tribe/Consortium when a bureau initiates a public meeting? 1000.213 What should the bureau do if it is invited to attend a meeting with respect to the Tribe’s/Consortium’s proposed AFA? 1000.214 Will the bureau and the Tribe/Consortium share information concerning inquiries about the Tribes/Consortia and the AFA?

Subpart J—Waiver of Regulations 1000.220 What regulations apply to self-governance Tribes? 1000.221 Can the Secretary grant a waiver of regulations to a Tribe/Consortium? 1000.222 How does a Tribe/Consortium obtain a waiver? 1000.223 When can a Tribe/Consortium request a waiver of a regulation? 1000.224 How can a Tribe/Consortium expedite the review of a regulation waiver request? 1000.225 Are meetings or discussions mandatory? 1000.226 On what basis may the Secretary deny a waiver request? 1000.227 What happens if the Secretary denies the waiver request? 1000.228 What are examples of waivers prohibited by law? 1000.229 May a Tribe/Consortium propose a substitute for a regulation it wishes to be waived? 1000.230 How is a waiver approval documented for the record?

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Office of the Assistant Secretary, Interior 1000.231 How does a Tribe/Consortium request a reconsideration of the Secretary’s denial of a waiver? 1000.232 When must DOI respond to a request for reconsideration?

Subpart K—Construction 1000.240 What construction programs included in an AFA are subject to this subpart? 1000.241 Does this subpart create an agency relationship? 1000.242 What provisions relating to a construction program may be included in an AFA? 1000.243 What special provisions must be included in an AFA that contains a construction program? 1000.244 May the Secretary suspend construction activities under an AFA? 1000.245 May a Tribe/Consortium continue work with construction funds remaining in an AFA at the end of the funding year? 1000.246 Must an AFA that contains a construction project or activity incorporate provisions of Federal construction standards? 1000.247 May the Secretary require design provisions and other terms and conditions for construction programs or activities included in an AFA under section 403(c) of the Act? 1000.248 What is the Tribe’s/Consortium’s role in a construction program included in an AFA? 1000.249 What is the Secretary’s role in a construction program in an AFA? 1000.250 How are property and funding returned if there is a reassumption for substantial failure to carry out an AFA? 1000.251 What happens when a Tribe/Consortium is suspended for substantial failure to carry out the terms of an AFA without good cause and does not correct the failure during the suspension? 1000.252 Do all provisions of other subparts apply to construction portions of AFAs? 1000.253 When a Tribe withdraws from a Consortium, is the Secretary required to award to the withdrawing Tribe a portion of funds associated with a construction project if the withdrawing Tribe so requests? 1000.254 May a Tribe/Consortium reallocate funds from a construction program to a non-construction program? 1000.255 May a Tribe/Consortium reallocate funds among construction programs? 1000.256 Must the Secretary retain project funds to ensure proper health and safety standards in construction projects?

Subpart L—Federal Tort Claims 1000.270

What does this subpart cover?

Pt. 1000 1000.271 What other statutes and regulations apply to FTCA coverage? 1000.272 Do Tribes/Consortia need to be aware of areas which FTCA does not cover? 1000.273 Is there a deadline for filing FTCA claims? 1000.274 How long does the Federal government have to process a FTCA claim after the claim is received by the Federal agency, before a lawsuit may be filed? 1000.275 Is it necessary for a self-governance AFA to include any clauses about FTCA coverage? 1000.276 Does FTCA apply to a self-governance AFA if FTCA is not referenced in the AFA? 1000.277 To what extent shall the Tribe/Consortium cooperate with the Federal government in connection with tort claims arising out of the Tribe’s/Consortium’s performance? 1000.278 Does this coverage extend to subcontractors of self-governance AFAs? 1000.279 Is FTCA the exclusive remedy for a tort claim, including a claim concerning personal injury or death, resulting from the performance of a self-governance AFA? 1000.280 What employees are covered by FTCA for medical-related claims? 1000.281 Does FTCA cover employees of the Tribe/Consortium who are paid by the Tribe/Consortium from funds other than those provided through the self-governance AFA? 1000.282 May persons who are not Indians or Alaska Natives assert claims under FTCA? 1000.283 If the Tribe/Consortium or the Tribe’s/Consortium’s employee receives a summons and/or complaint alleging a tort covered by FTCA, what should a Tribe/Consortium do?

Subpart M—Reassumption 1000.300 What is the purpose of this subpart? 1000.301 When may the Secretary reassume a Federal program operated by a Tribe/ Consortium under an AFA? 1000.302 What is ‘‘imminent jeopardy’’ to a trust asset? 1000.303 What is imminent jeopardy to natural resources? 1000.304 What is imminent jeopardy to public health and safety? 1000.305 In an imminent jeopardy situation, what must the Secretary do? 1000.306 Must the Secretary always reassume a program, upon a finding of imminent jeopardy? 1000.307 What happens if the Secretary’s designated representative determines that the Tribe/Consortium cannot mitigate the conditions within 60 days?

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1000.308 What will the notice of reassumption include? 1000.309 How much time will a Tribe/Consortium have to respond to a notice of imminent jeopardy? 1000.310 What information must the Tribe’s/ Consortium’s response contain? 1000.311 How will the Secretary reply to the Tribe’s/Consortium’s response? 1000.312 What happens if the Secretary accepts the Tribe’s/Consortium’s proposed measures? 1000.313 What happens if the Secretary does not accept the Tribe’s/Consortium’s proposed measures? 1000.314 What must a Tribe/Consortium do when a program is reassumed? 1000.315 When must the Tribe/Consortium return funds to the Department? 1000.316 May the Tribe/Consortium be reimbursed for actual and reasonable ‘‘wind up costs’’ incurred after the effective date of retrocession? 1000.317 Is a Tribe’s/Consortium’s general right to negotiate an AFA adversely affected by a reassumption action? 1000.318 When will the Secretary return management of a reassumed program?

Subpart N—Retrocession 1000.330 What is the purpose of this subpart? 1000.331 Is a decision by a Tribe/Consortium not to include a program in a successor agreement considered a retrocession? 1000.332 Who may retrocede a program in an AFA? 1000.333 How does a Tribe/Consortium retrocede a program? 1000.334 When will the retrocession become effective? 1000.335 How will retrocession affect the Tribe’s/Consortium’s existing and future AFAs? 1000.336 Does the Tribe/Consortium have to return funds used in the operation of a retroceded program? 1000.337 Does the Tribe/Consortium have to return property used in the operation of a retroceded program? 1000.338 What happens to a Tribe’s/Consortium’s mature contractor status if it has retroceded a program that is also available for self-determination contracting? 1000.339 How does retrocession affect a bureau’s operation of the retroceded program?

Subpart O—Trust Evaluation Review 1000.350 What is the purpose of this subpart? 1000.351 Does the Tribal Self-Governance Act of 1994 alter the trust responsibility of the United States to Indian Tribes and individuals under self-governance? 1000.352 What are ‘‘trust resources’’ for the purposes of the trust evaluation process?

1000.353 What are ‘‘trust functions’’ for the purposes of the trust evaluation process? ANNUAL TRUST EVALUATIONS 1000.354 What is a trust evaluation? 1000.355 How are trust evaluations conducted? 1000.356 May the trust evaluation process be used for additional reviews? 1000.357 May the parties negotiate standards of review for purposes of the trust evaluation? 1000.358 Can an initial review of the status of the trust asset be conducted? 1000.359 What are the responsibilities of the Secretary’s designated representative(s) after the annual trust evaluation? 1000.360 Is the trust evaluation standard or process different when the trust asset is held in trust for an individual Indian or Indian allottee? 1000.361 Will the annual review include a review of the Secretary’s residual trust functions? 1000.362 What are the consequences of a finding of imminent jeopardy in the annual trust evaluation? 1000.363 What if the trust evaluation reveals problems that do not rise to the level of imminent jeopardy? 1000.364 Who is responsible for corrective action? 1000.365 What are the requirements of the review team report? 1000.366 Can the Department conduct more than one trust evaluation per Tribe per year? 1000.367 Will the Department evaluate a Tribe’s/Consortium’s performance of nontrust related programs?

Subpart P—Reports 1000.380 What is the purpose of this subpart? 1000.381 How is information about self-governance developed and reported? 1000.382 What may the Tribe’s/Consortium’s annual report on self-governance address?

Subpart Q—Miscellaneous Provisions 1000.390 How can a Tribe/Consortium hire a Federal employee to help implement an AFA? 1000.391 Can a Tribe/Consortium employee be detailed to a Federal service position? 1000.392 How does the Freedom of Information Act apply? 1000.393 How does the Privacy Act apply? 1000.394 What audit requirements must a self-governance Tribe/Consortium follow? 1000.395 Do OMB circulars and revisions apply to self-governance funding agreements? 1000.396 Does a Tribe/Consortium have additional ongoing requirements to maintain

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Office of the Assistant Secretary, Interior minimum standards for Tribe/Consortium management systems? 1000.397 Are there any restrictions on how AFA funds may be spent? 1000.398 May a Tribe/Consortium invest funds received under a self-governance agreement? 1000.399 How may interest or investment income that accrues on AFAs be used? 1000.400 Can a Tribe/Consortium retain savings from programs? 1000.401 Can a Tribe/Consortium carry over funds not spent during the term of the AFA? 1000.402 After a non-BIA AFA has been executed and the funds transferred to a Tribe/Consortium, can a bureau request the return of funds? 1000.403 How can a person or group appeal a decision or contest an action related to a program operated by a Tribe/Consortium under an AFA? 1000.404 Must self-governance Tribes/Consortia comply with the Secretarial approval requirements of 25 U.S.C. 81, 82a, and 476 regarding professional and attorney contracts? 1000.405 Are AFA funds non-Federal funds for the purpose of meeting matching requirements? 1000.406 Does Indian preference apply to services, activities, programs and functions performed under a self-governance AFA? 1000.407 Do the wage and labor standards in the Davis-Bacon Act apply to Tribes and Tribal Consortia?

Pt. 1000 compact or amendment to an AFA or compact has been signed? 1000.429 What statutes and regulations govern resolution of disputes concerning signed AFAs or compacts that are appealed to IBCA? 1000.430 To whom are appeals directed regarding reassumption for imminent jeopardy? 1000.431 Does the Equal Access to Justice Act (EAJA) apply to appeals under this subpart? 1000.432 To whom may a Tribe appeal a decision made before the AFA or an amendment to the AFA or compact is signed? 1000.433 When and how must a Tribe/Consortium appeal an adverse pre-award decision? 1000.434 When must the bureau head (or appropriate Assistant Secretary) issue a final decision in the pre-award appeal? 1000.435 When and how will the Assistant Secretary respond to an appeal by a Tribe/Consortium? 1000.436 How may a Tribe/Consortium seek reconsideration of the Secretary’s decision involving a self-governance compact? 1000.437 When will the Secretary respond to a request for reconsideration of a decision involving a self-governance compact? 1000.438 May Tribes/Consortia appeal Department decisions to a Federal court?

SUPPLY SOURCES

Subpart S—Conflicts of Interest

1000.408 Can a Tribe/Consortium use Federal supply sources in the performance of an AFA?

1000.460 What is an organizational conflict of interest? 1000.461 What must a Tribe/Consortium do if an organizational conflict of interest arises under an AFA? 1000.462 When must a Tribe/Consortium regulate its employees or subcontractors to avoid a personal conflict of interest? 1000.463 What types of personal conflicts of interest involving Tribal officers, employees or subcontractors would have to be regulated by a Tribe/Consortium? 1000.464 What personal conflicts of interest must the standards of conduct regulate? 1000.465 May a Tribe/Consortium negotiate AFA provisions on conflicts of interest to take the place of this subpart?

PROMPT PAYMENT ACT 1000.409 Does the Prompt Payment Act (31 U.S.C. 3901) apply to a non-BIA, non-Indian program AFA? SUBPART R—APPEALS 1000.420 What does ‘‘Title-I eligible programs’’ mean in this subpart? 1000.421 What is the purpose of this subpart? 1000.422 How must disputes be handled? 1000.423 Are there any decisions that are not administratively appealable under this subpart? 1000.424 Does a Tribe/Consortium have a right to an informal conference to resolve any disputes? 1000.425 How does a Tribe/Consortium request an informal conference? 1000.426 How is an informal conference held? 1000.427 What happens after the informal conference? 1000.428 How may a Tribe/Consortium appeal a decision made after the AFA or

APPENDIX A TO PART 1000—MODEL COMPACT OF SELF-GOVERNANCE BETWEEN THE TRIBE AND THE DEPARTMENT OF THE INTERIOR AUTHORITY: 25 U.S.C. 458aa–gg. SOURCE: 66 FR 78703, Dec. 15, 2000, unless otherwise noted.

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§ 1000.1

25 CFR Ch. VI (4–1–04 Edition)

Subpart A—General Provisions § 1000.1 Authority. This part is prepared and issued by the Secretary of the Interior under the negotiated rulemaking procedures in 5 U.S.C. 565. § 1000.2 Definitions. 403(c) Program means a non-BIA program eligible under section 403(c) of the Indian Self-Determination and Education Assistance Act of 1975, as amended, 25 U.S.C. 450 et seq. and, specifically, a program, function, service, or activity that is of special geographic, historical or cultural significance to a self-governance Tribe/Consortium. These programs may be referred to, also, as ‘‘nexus’’ programs. Act means the Tribal Self-Governance Act, Title IV of the Indian SelfDetermination and Education Assistance Act of 1975, Pub. L. 93–638, as added by Pub. L. 103–413, amended by Pub. L. 104–109, as amended. Applicant pool means Tribes/Consortia that the Director of the Office of Self-Governance has determined are eligible to participate in self-governance in accordance with § 1000.16 of these regulations. BIA means the Bureau of Indian Affairs of the Department of the Interior. BIA Program means any program, service, function, or activity, or portion thereof, that is performed or administered by the Department through the Bureau of Indian Affairs. Bureau means a bureau or office of the Department of the Interior. Compact means an executed document that affirms the government-togovernment relationship between a self-governance Tribe and the United States. The compact differs from an annual funding agreement (AFA) in that parts of the compact apply to all bureaus within the Department of the Interior rather than a single bureau. Consortium means an organization of Indian Tribes that is authorized by those Tribes to participate in self-governance under this part and is responsible for negotiating, executing, and implementing annual funding agreements and compacts. Construction management services (CMS) means activities limited to ad-

ministrative support services, coordination, oversight of engineers and construction activities. CMS services include services that precede project design: all project design and actual construction activities are subject to Subpart K of these regulations whether performed by a Tribe subcontractor, or consultant. Days means calendar days, except where the last day of any time period specified in this part falls on a Saturday, Sunday, or a Federal holiday, the period must carry over to the next business day unless otherwise prohibited by law. Director means the Director of the Office of Self-Governance (OSG). DOI or Department means the Department of the Interior. Funding year means either fiscal or calendar year. Indian means a person who is a member of an Indian Tribe. Indian Tribe or Tribe means any Indian Tribe, band, nation or other organized group or community, including pueblos, rancherias, colonies and any Alaska Native village, or regional or village corporations as defined in or established pursuant to the Alaska Native Claims Settlement Act, that is recognized as eligible for special programs and services provided by the United States to Indians because of their status as Indians. Indirect cost rates means the rate(s) arrived at through negotiation between an Indian Tribe/Consortium and the appropriate Federal agency. Indirect costs means costs incurred for a common or joint purpose benefitting more than one program and that are not readily assignable to individual programs. Nexus Program means a 403(c) Program as defined in this section. Non-BIA Bureau means any bureau or office within the Department of the Interior other than the Bureau of Indian Affairs. Non-BIA programs means those programs administered by bureaus or offices other than the Bureau of Indian Affairs within the Department of the Interior.

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Office of the Assistant Secretary, Interior Office of Self-Governance (OSG) means the office within the Office of the Assistant Secretary-Indian Affairs responsible for the implementation and development of the Tribal Self-Governance Program. Program means any program, service, function, or activity, or portions of programs administered by a bureau within the Department of the Interior. Pub. L. 93–638 means sections 1–9 and Title I of the Indian Self-Determination and Education Assistance Act of 1975, as amended. Reassumption means that the Secretary reassumes control or operation of a program under § 1000.300 et seq. Retained Tribal shares means those funds that were available as a Tribal share but under the AFA were left with BIA to administer. Retrocession means the voluntary return by a Tribe/Consortium to a bureau of a program operated under an AFA before the agreement expires. Secretary means the Secretary of the Interior (DOI) or his or her designee authorized to act on the behalf of the Secretary as to the matter at hand. Self-governance Tribe/Consortium means a Tribe or Consortium that participates in permanent self-governance through application and selection from the applicant pool or has participated in the Tribal self-governance demonstration project. May also be referred to as ‘‘participating Tribe/Consortium.’’ Successor AFA means a funding agreement negotiated after a Tribe’s/Consortium’s initial agreement with a bureau for continuing to perform a particular program. The parties to the AFA should generally use the terms of the existing AFA to expedite and simplify the exchange of information and the negotiation process. Tribal share means the amount determined for that Tribe/Consortium for a particular program at BIA region, agency, and central office levels under sec. 403(g)(3) and 405(d) of the Act. § 1000.3 Purpose and scope. (a) General. This part codifies uniform and consistent rules for the Department of the Interior (DOI) in implementing Title IV of the Indian SelfDetermination and Education Assist-

§ 1000.4 ance Act (ISDEA) Public Law 93–638, 25 U.S.C. 450 et seq., as amended by Title II of Pub. L. 103–413, the Tribal SelfGovernance Act of 1994 (108 Stat. 4250, October 25, 1994). (b) Information Collection. The information provided by the Tribes will be used by the Department for a variety of purposes. The first purpose will be to ensure that qualified applicants are admitted into the applicant pool consistent with the requirements of the Act. In addition, Tribes seeking grant assistance to meet the planning requirements for admission into the applicant pool, will provide information so that grants can be awarded to Tribes meeting basic eligibility (i.e. Tribal resolution indicating that the Tribe wants to plan for Self-Governance and has no material audit exceptions for the last three years of audits). There is no confidential information being solicited and confidentiality is not extended under the law. Other documentation is required to meet the reporting requirements as called for in section 405 of the Act. The information being provided by the Tribes is required to obtain a benefit, however, no person is required to respond to an information collection request unless the form or regulation requesting the information has a currently valid OMB control (clearance) number. Comments were solicited from the Tribes and the general public with respect to this collection. No adverse comments were received. The information collection has been cleared by OMB. The number is OMB control #1076–0143. The approval expires on April 30, 2003. § 1000.4

Policy statement.

(a) Congressional findings. In the Tribal Self-Governance Act of 1994, the Congress found that: (1) The Tribal right of self-governance flows from the inherent sovereignty of Indian Tribes and nations; (2) The United States recognizes a special government-to-government relationship with Indian Tribes, including the right of the Tribes to self-governance, as reflected in the Constitution, treaties, Federal statues, and the course of dealings of the United States with Indian Tribes;

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§ 1000.4

25 CFR Ch. VI (4–1–04 Edition)

(3) Although progress had been made, the Federal bureaucracy, with its centralized rules and regulations, had eroded Tribal self-governance and dominated Tribal affairs; (4) The Tribal Self-Governance Demonstration Project was designed to improve and perpetuate the governmentto-government relationship between Indian Tribes and the United States and to strengthen Tribal control over Federal funding and program management; and (5) Congress has reviewed the results of the Tribal Self-Governance demonstration project and finds that: (i) Transferring control over funding and decision making to Tribal governments, upon Tribal request, for Federal programs is an effective way to implement the Federal policy of government-to-government relations with Indian Tribes; and (ii) Transferring control over funding and decision making to Tribal governments, upon request, for Federal programs strengthens the Federal policy of Indian self-determination. (b) Congressional declaration of policy. It is the policy of the Tribal Self-Governance Act to permanently establish and implement self-governance: (1) To enable the United States to maintain and improve its unique and continuing relationship with, and responsibility to, Indian Tribes; (2) To permit each Tribe to choose the extent of its participation in selfgovernance; (3) To coexist with the provisions of the Indian Self-Determination and Education Assistance Act relating to the provision of Indian services by designated Federal agencies; (4) To ensure the continuation of the trust responsibility of the United States to Indian Tribes and Indian individuals; (5) To permit an orderly transition from Federal domination of programs and services to provide Indian Tribes with meaningful authority to plan, conduct, redesign, and administer programs, services, functions, and activities that meet the needs of the individual Tribal communities; and (6) To provide for an orderly transition through a planned and measurable

parallel reduction in the Federal bureaucracy. (c) Secretarial self-governance policies. (1) It is the policy of the Secretary to fully support and implement the foregoing policies to the full extent of the Secretary’s authority. (2) It is the policy of the Secretary to recognize and respect the unique government-to-government relationship between Tribes, as sovereign governments, and the United States. (3) It is the policy of the Secretary to have all bureaus of the Department work cooperatively and pro-actively with Tribes and Tribal Consortia on a government-to-government basis within the framework of the Act and any other applicable provision of law, so as to make the ideals of self-determination and self-governance a reality. (4) It is the policy of the Secretary to have all bureaus of the Department actively share information with Tribes and Tribal Consortia to encourage Tribes and Tribal Consortia to become knowledgeable about the Department’s programs and the opportunities to include them in an annual funding agreement. (5) It is the policy of the Secretary that all bureaus of the Department will negotiate in good faith, interpret each applicable Federal law and regulation in a manner that will facilitate the inclusion of programs in each annual funding agreement authorized, and enter into such annual funding agreements under Title IV, whenever possible. (6) It is the policy of the Secretary to afford Tribes and Tribal Consortia the maximum flexibility and discretion necessary to meet the needs of their communities consistent with their diverse demographic, geographic, economic, cultural, health, social, religious, and institutional needs. These policies are designed to facilitate and encourage Tribes and Tribal Consortia to participate in the planning, conduct, and administration of those Federal programs, included, or eligible for inclusion in an annual funding agreement. (7) It is the policy of the Secretary, to the extent of the Secretary’s authority, to maintain active communication with Tribal governments regarding

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Office of the Assistant Secretary, Interior budgetary matters applicable to programs subject to the Act, and that are included in an individual self-governance annual funding agreement. (8) It is the policy of the Secretary to implement policies, procedures, and practices at the Department to ensure that the letter, spirit, and goals of the Tribal Self-Governance Act are fully and successfully implemented. (9) Executive Order 13084 on Consultation and Coordination with Indian Tribal Governments and any subsequent Executive Orders regarding consultation will apply to the implementation of these regulations.

Subpart B—Selection of Additional Tribes for Participation in Tribal Self-Governance PURPOSE AND DEFINITIONS § 1000.10 What is the purpose of this subpart? This subpart describes the selection process and eligibility criteria that the Secretary uses to decide that Indian Tribes may participate in Tribal selfgovernance as authorized by section 402 of the Tribal Self-Governance Act of 1994. § 1000.11

What is the ‘‘applicant pool’’?

The applicant pool is the pool of Tribes/Consortia that the Director of the Office of Self-Governance has determined are eligible to participate in self-governance. § 1000.12

What is a ‘‘signatory’’?

A signatory is a Tribe or Consortium that meets the eligibility criteria in § 1000.16 and directly signs the agreements. A signatory may exercise all of the rights and responsibilities outlined in the compact and annual funding agreement and is legally responsible for all financial and administrative decisions made by the signatory. § 1000.13 What Tribe’’?

is

a

‘‘nonsignatory

(a) A nonsignatory Tribe is a Tribe that either: (1) Does not meet the eligibility criteria in § 1000.16 and, by resolution of its governing body, authorizes a Con-

§ 1000.17 sortium to participate in self-governance on its behalf. (2) Meets the eligibility criteria in § 1000.16 but chooses to be a member of a Consortium and have a representative of the Consortium sign the compact and AFA on its behalf. (b) A non-signatory tribe under paragraph (a)(1) of this section: (1) May not sign the compact and AFA. A representative of the Consortium must sign both documents on behalf of the Tribe. (2) May only become a ‘‘signatory Tribe’’ if it independently meets the eligibility criteria in § 1000.16. ELIGIBILITY § 1000.14 Who is eligible to participate in Tribal self-governance? Two types of entities are eligible to participate in Tribal self-governance: (a) Indian Tribes; and (b) Consortia of Indian Tribes. § 1000.15 How many additional Tribes/ Consortia may participate in selfgovernance per year? (a) Sections 402(b) and (c) of the Act authorize the Director to select up to 50 additional Indian Tribes per year from an ‘‘applicant pool’’. A Consortium of Indian Tribes counts as one Tribe for purposes of calculating the 50 additional Tribes per year. (b) Any signatory Tribe that signed a compact and AFA under the Tribal Self-Governance Demonstration project may negotiate its own compact and AFA in accordance with this subpart without being counted against the 50-Tribe limitation in any given year. § 1000.16 What criteria must a Tribe/ Consortium satisfy to be eligible for admission to the ‘‘applicant pool’’? To be admitted into the applicant pool, a Tribe/Consortium must either be an Indian Tribe or a Consortium of Indian Tribes and comply with § 1000.17. § 1000.17 What documents must a Tribe/Consortium submit to OSG to apply for admission to the applicant pool? In addition to the application required by § 1000.23, the Tribe/Consortium must submit to OSG documentation that shows all of the following:

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§ 1000.18

25 CFR Ch. VI (4–1–04 Edition)

(a) Successful completion of a planning phase and a planning report. The requirements for both of these are described in § 1000.19 and § 1000.20. A Consortium’s planning activities satisfy this requirement for all its member Tribes for the purpose of the Consortium meeting this requirement; (b) A request for participation in selfgovernance by a Tribal resolution and/or a final official action by the Tribal governing body. For a Consortium, the governing body of each Tribe must authorize its participation by a Tribal resolution and/or a final official action by the Tribal governing body that specifies the scope of the Consortium’s authority to act on behalf of the Tribe. (c) A demonstration of financial stability and financial management capability for the previous 3 fiscal years. This will be done by providing, as part of the application, an audit report prepared in accordance with procedures promulgated under the Single Audit Act Amendments of 1996, 31 U.S.C. 7501, et seq., for the previous 3 years of the self-determination contracts. These audits must not contain material audit exceptions as defined in § 1000.21. § 1000.18 May a Consortium member Tribe withdraw from the Consortium and become a member of the applicant pool? In accordance with the expressed terms of the compact or written agreement of the Consortium, a Consortium member Tribe (either a signatory or nonsignatory Tribe) may withdraw from the Consortium to directly negotiate a compact and AFA. The withdrawing Tribe must do the following. (a) Independently meet all of the eligibility criteria in §§ 1000.14 through 1000.20. If a Consortium’s planning activities and report specifically consider self-governance activities for a member Tribe, that planning activity and report may be used to satisfy the planning requirements for the member Tribe if it applies for self-governance status on its own. (b) Submit a notice of withdrawal to OSG and the Consortium as evidenced by a resolution of the Tribal governing body.

§ 1000.19 What is done ‘‘planning phase’’?

during

The Act requires that all Tribes/Consortia seeking to participate in Tribal self-governance complete a planning phase. During the planning phase, the Tribe/Consortium must conduct legal and budgetary research and internal Tribal government and organizational planning. The availability of BIA grant funds for planning activities will be in accordance with subpart C. The planning phase may be completed without a planning grant. § 1000.20 What is required in a planning report? As evidence that the Tribe/Consortium has completed the planning phase, the Tribe/Consortium must prepare and submit to the Secretary a final planning report. (a) The planning report must: (1) Identify BIA and non-BIA programs that the Tribe/Consortium may wish to subsequently negotiate for inclusion in a compact and AFA; (2) Describe the Tribe’s/Consortium’s planning activities for both BIA and non-BIA programs that may be negotiated; (3) Identify the major benefits derived from the planning activities; (4) Identify the process that the Tribe/Consortium will use to resolve any complaints by service recipients; (5) Identify any organizational planning that the Tribe/Consortium has completed in anticipation of implementing Tribal self-governance; and (6) Indicate if the Tribe’s/Consortium’s planning efforts have revealed that its current organization is adequate to assume programs under Tribal self-governance. (b) In supplying the information required by paragraph (a)(5) of this section: (1) For BIA programs, a Tribe/Consortium should describe the process that it will use to debate and decide the setting of priorities for the funds it will receive from its AFA. (2) For non-BIA programs that the Tribe/Consortium may wish to negotiate, the report should describe how the Tribe/Consortium proposes to perform the programs.

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Office of the Assistant Secretary, Interior § 1000.21 When does a Tribe/Consortium have a ‘‘material audit exception’’? A Tribe/Consortium has a material audit exception if any of the audits that it submitted under § 1000.17(c) identifies: (a) A material weakness, that is a condition in which the design or operation of one or more of the internal control components does reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions; (b) a single finding of known questioned costs subsequently disallowed by a contracting officer or awarding official that exceeds $10,000. If the audits submitted under § 1000.17(c) identify any of the conditions described in this section, the Tribe/Consortium must also submit copies of the contracting officer’s findings and determinations. § 1000.22 What are the consequences of having a material audit exception? If a Tribe/Consortium has a material audit exception, the Tribe/Consortium is ineligible to participate in self-governance until the Tribe/Consortium meets the eligibility criteria in § 1000.16. ADMISSION INTO THE APPLICANT POOL § 1000.23 How is a Tribe/Consortium admitted to the applicant pool? To be considered for admission in the applicant pool, a Tribe/Consortium must submit an application to the Director, Office of Self-Governance, 1849 C Street NW; MS 2542–MIB; Department of the Interior; Washington, DC 20240. The application must contain the documentation required in § 1000.17. § 1000.24 When does OSG accept applications to become a member of the applicant pool? OSG accepts applications to become a member of the applicant pool at any time.

§ 1000.28 § 1000.25 What are the deadlines for a Tribe/Consortium in the applicant pool to negotiate a compact and annual funding agreement (AFA)? (a) To be considered for negotiations in any year, a Tribe/Consortium must be a member of the applicant pool on March 1 of the year in which the negotiations are to take place. (b) An applicant may be admitted into the applicant pool during one year and selected to negotiate a compact and AFA in a subsequent year. In this case, the applicant must, before March 1 of the negotiation year, submit to OSG updated documentation that permits OSG to evaluate whether the Tribe/Consortium still satisfies the application criteria in 1000.17. § 1000.26 Under what circumstances will a Tribe/Consortium be removed from the applicant pool? Once admitted into the applicant pool, a Tribe/Consortium will only be removed if it: (a) Fails to satisfy the audit criteria in § 1000.17(c); or (b) Submits to OSG a Tribal resolution and/or official action by the Tribal governing body requesting removal. § 1000.27 How does the Director select which Tribes in the applicant pool become self-governance Tribes? The Director selects up to the first 50 Tribes from the applicant pool in any given year ranked according to the earliest postmark date of complete applications. If multiple complete applications have the same postmark date and there are insufficient slots available for that year, the Director will determine priority through random selection. A representative of each Tribe/ Consortium that has submitted an application subject to random selection may, at the option of the Tribe/Consortium, be present when the selection is made. § 1000.28 What happens if an application is not complete? (a) If OSG determines that a Tribe’s/ Consortium’s application is deficient, OSG will immediately notify the Tribe/ Consortium of the deficiency by letter, certified mail, return receipt requested. The letter will explain what

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§ 1000.29

25 CFR Ch. VI (4–1–04 Edition)

the Tribe/Consortium must do to correct the deficiency. (b) The Tribe/Consortium will have 20 working days from the date of receiving the letter to mail or telefax the corrected material and retain the applicant’s original postmark. (c) If the corrected material is deficient, the date of entry into the applicant pool will be the date the complete application is postmarked. (d) If the postmark or date on the applicant’s response letter or telefax is more than 20 working days after the date the applicant received the noticeof-deficiency letter, the date of entry into the applicant pool will be the date of full receipt of a completed application. § 1000.29 What happens if a Tribe/Consortium is selected from the applicant pool but does not execute a compact and an AFA during the calendar year? (a) The Tribe/Consortium remains eligible to negotiate a compact and annual funding agreement at any time unless: (1) It notifies the Director in writing that it no longer wishes to be eligible to participate in the Tribal Self-Governance Program; (2) Fails to satisfy the audit requirements of § 1000.17(c); or (3) Submits documentation evidencing a Tribal resolution requesting removal from the application pool. (b) The failure of the Tribe/Consortium to execute an agreement has no effect on the selection of up to 50 additional Tribes/Consortia in a subsequent year. § 1000.30 May a Tribe/Consortium be selected to negotiate an AFA under section 403(b)(2) without having or negotiating an AFA under section 403(b)(1)? Yes, a Tribe/Consortium may be selected to negotiate an AFA under section 403(b)(2) without having or negotiating an AFA under section 403(b)(1).

§ 1000.31 May a Tribe/Consortium be selected to negotiate an AFA under section 403(c) without negotiating an AFA under section 403(b)(1) and/ or section 403(b)(2)? No, section 403(c) of the Act states that any programs of special geographic, cultural, or historical significance to the Tribe/Consortium must be included in AFAs negotiated under section 403(a) and/or section 403(b). A Tribe may be selected to negotiate an AFA under section 403(c) at the same time that it negotiates an AFA under section 403(b)(1) and/or section 403(b)(2). WITHDRAWAL FROM A CONSORTIUM ANNUAL FUNDING AGREEMENT § 1000.32 What happens when a Tribe wishes to withdraw from a Consortium annual funding agreement? (a) A Tribe wishing to withdraw from a Consortium’s AFA must notify the Consortium, bureau, and OSG of the intent to withdraw. The notice must be: (1) In the form of a Tribal resolution or other official action by the Tribal governing body; and (2) Received no later than 180 days before the effective date of the next AFA. (b) The resolution referred to in paragraph (a)(1) of this section must indicate whether the Tribe wishes the withdrawn programs to be administered under a Title IV AFA, Title I contract, or directly by the bureau. (c) The effective date of the withdrawal will be the date on which the current agreement expires, unless the Consortium, the Tribe, OSG, and the appropriate bureau agree otherwise. § 1000.33 What amount of funding is to be removed from the Consortium’s AFA for the withdrawing Tribe? When a Tribe withdraws from a Consortium, the Consortium’s AFA must be reduced by the portion of funds attributable to the withdrawing Tribe. The Consortium must reduce the AFA on the same basis or methodology upon which the funds were included in the Consortium’s AFA. (a) If there is not a clear identifiable methodology upon which to base the reduction for a particular program, the

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Office of the Assistant Secretary, Interior Consortium, Tribe, OSG, and the bureau must negotiate an appropriate amount on a case-by-case basis. (b) If a Tribe withdraws in the middle of a funding year, the Consortium agreement must be amended to reflect: (1) A reduction based on the amount of funds passed directly to the Tribe, or already spent or obligated by the Consortium on behalf of the Tribe; and (2) That the Consortium is no longer providing those programs associated with the withdrawn funds. (c) Carryover funds from a previous fiscal year may be factored into the amount by which the Consortium agreement is reduced if: (1) The Consortium, Tribe, OSG, and bureau agree it is appropriate; and (2) The funds are clearly identifiable. § 1000.34 What happens if there is a dispute between the Consortium and the withdrawing Tribe? (a) At least 15 days before the 90-day Congressional review period of the next AFA, the Consortium, OSG, bureau, and the withdrawing Tribe must reach an agreement on the amount of funding and other issues associated with the program or programs involved. (b) If agreement is not reached: (1) For BIA and OIEP programs, at least 5 days before the 90-day Congressional review, the Director must make a decision on the funding or other issues involved. (2) For non-BIA programs, the bureau head will make a decision on the funding or other issues involved. (c) A copy of the decision made under paragraph (b) of this section must be distributed in accordance with the following table. If the program is . . .

then a copy of the decision must be sent to . . .

(1) A BIA program ..

BIA regional director, the Deputy Commissioner of Indian Affairs, the withdrawing Tribe, and the Consortium. the OIEP line officer, the Director of OIEP, the withdrawing Tribe, and the Consortium.

(2) An OIEP program.

(d) Any decision made under paragraph (b) of this section is appealable under subpart R of this part.

§ 1000.41 § 1000.35 When a Tribe withdraws from a Consortium, is the Secretary required to award to the withdrawing Tribe a portion of funds associated with a construction project if the withdrawing Tribe so requests? Under § 1000.32 of this part, a Tribe may withdraw from a Consortium and request that the Secretary award the Tribe its portion of a construction project’s funds. The Secretary may decide not to award these funds if the Secretary determines that the award of the withdrawing Tribe’s portion of funds would affect the ability of the remaining members of the Consortium to complete a severable or non-severable phase of the project within available funding. (a) An example of a non-severable phase of a project would be the construction of a single building to serve all members of a Consortium. (b) An example of a severable phase of a project would be the funding of a road in one village where the Consortium would be able to complete the roads in other villages that were part of the project approved initially in the AFA. (c) The Secretary’s decision under this section may be appealed under § 1000.428 of these regulations.

Subpart C—Section 402(d) Planning and Negotiation Grants PURPOSE AND TYPES OF GRANTS § 1000.40 What is the purpose of this subpart? This subpart describes the availability and process of applying for planning and negotiation grants authorized by section 402(d) of the Act to help Tribes meet costs incurred in: (a) Meeting the planning phase requirement of the Act, including planning to negotiate for non-BIA programs; and (b) Conducting negotiations. § 1000.41 What types of grants are available? Three categories of grants may be available: (a) Negotiation grants may be awarded to the Tribes/Consortia that have

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§ 1000.42

25 CFR Ch. VI (4–1–04 Edition)

been selected from the applicant pool as described in subpart B of this part; (b) Planning grants may be available to Tribes/Consortia requiring advance funding to meet the planning phase requirement of the Act; and (c) Financial assistance may be available to Tribes/Consortia to plan for negotiating for non-BIA programs, as described in subpart D and §§ 1000.42– 1000.45 of this subpart. AVAILABILITY, AMOUNT, AND NUMBER OF GRANTS § 1000.42 Will grants always be made available to meet the planning phase requirement as described in section 402(d) of the Act? No, grants to cover some or all of the planning costs that a Tribe/Consortium may incur, depend upon the availability of funds appropriated by Congress. Notice of availability of grants will be published in the FEDERAL REGISTER as described in § 1000.45. § 1000.43 May a Tribe/Consortium use its own resources to meet its selfgovernance planning and negotiation expenses? Yes, a Tribe/Consortium may use its own resources to meet these costs. Receiving a grant is not necessary to meet the planning phase requirement of the Act or to negotiate a compact and an AFA. § 1000.44 What happens if there are insufficient funds to meet the Tribal requests for planning/negotiation grants in any given year? If appropriated funds are available but insufficient to meet the total requests from Tribes/Consortia: (a) First priority will be given to Tribes/Consortia that have been selected from the applicant pool to negotiate an AFA; and (b) Second priority will be given to Tribes/Consortia that require advance funds to meet the planning requirement for entry into the self-governance program. § 1000.45 How many grants will the Department make each year and what funding will be available? The number and size of grants awarded each year will depend on Congres-

sional appropriations and Tribal interest. By no later than January 1 of each year, the Director will publish a notice in the FEDERAL REGISTER that provides relevant details about the application process, including the funds available, timeframes, and requirements for negotiation grants, advance planning grants, and financial assistance as described in subpart D of this part. SELECTION CRITERIA § 1000.46 Which Tribes/Consortia may be selected to receive a negotiation grant? Any Tribe/Consortium that has been accepted into the applicant pool and has been accepted to negotiate a selfgovernance AFA may apply for a negotiation grant. By March 15 of each year, the Director will publish a list of additional Tribes/Consortia that have been selected for negotiation along with information on how to apply for negotiation grants. § 1000.47 What must a Tribe/Consortium do to receive a negotiation grant? If funds are available, a grant will be awarded to help cover the costs of preparing for and negotiating a compact and an AFA. These grants are not competitive. To receive a negotiation grant, a Tribe/Consortium must: (a) Be selected from the applicant pool to negotiate an AFA; (b) Be qualified as eligible to receive a negotiation grant in the FEDERAL REGISTER notice discussed in § 1000.45; (c) Not have received a negotiation grant within the 3 years preceding the date of the latest FEDERAL REGISTER announcement; (d) Submit a letter affirming its readiness to negotiate; and (e) Formally request a negotiation grant to prepare for and negotiate an AFA. § 1000.48 What must a Tribe do if it does not wish to receive a negotiation grant? A selected Tribe/Consortium may elect to negotiate without applying for a negotiation grant. In such a case, the Tribe/Consortium should notify OSG in writing so that funds can be reallocated for other grants.

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Office of the Assistant Secretary, Interior ADVANCE PLANNING GRANT FUNDING § 1000.49 Who can apply for an advance planning grant? Any Tribe/Consortium that is not a self-governance Tribe and needs advance funding to complete the planning phase requirement may apply. Tribes/Consortia that have received a planning grant within 3 years preceding the date of the latest FEDERAL REGISTER announcement are not eligible. § 1000.50 What must a Tribe/Consortium seeking a planning grant submit in order to meet the planning phase requirements? A Tribe/Consortium must submit the following material: (a) A Tribal resolution or other final action of the Tribal governing body indicating a desire to plan for Tribal selfgovernance. (b) Audits from the last 3 years that document that the Tribe/Consortium is free from material audit exceptions. In order to meet this requirement, a Tribe/Consortium may use the audit currently being conducted on its operations if this audit is submitted before the Tribe/Consortium completes the planning activity. (c) A proposal that includes: (1) The Tribe’s/Consortium’s plans for conducting legal and budgetary research; (2) The Tribe’s/Consortium’s plans for conducting internal Tribal government and organizational planning; (3) A timeline indicating when planning will start and end, and; (4) Evidence that the Tribe/Consortium can perform the tasks associated with its proposal (i.e., resumes and position descriptions of key staff or consultants to be used). § 1000.51 How will Tribes/Consortia know when and how to apply for planning grants? The number and size of grants awarded each year will depend on Congressional appropriations. By no later than January 1 of each year, the Director will publish in the FEDERAL REGISTER a notice concerning the availability of planning grants for additional Tribes. This notice must identify the specific details for applying.

§ 1000.55 § 1000.52 What criteria will the Director use to award advance planning grants? Advance planning grants are discretionary and based on need. The Director will use the following criteria to determine whether or not to award a planning grant to a Tribe/Consortium before the Tribe/Consortium is selected into the applicant pool. (a) Completeness of application as described in § 1000.50. (b) Financial need. The Director will rank applications according to the percent of Tribal resources that comprise total resources covered by the latest A–133 audit. Priority will be given to applications that have a lower level of Tribal resources as a percent of total resources. (c) Other factors that the Tribe may identify as documenting its previous efforts to participate in self-governance and demonstrating its readiness to enter into a self-governance agreement. § 1000.53 Can Tribes/Consortia that receive advance planning grants also apply for a negotiation grant? Yes, Tribes/Consortia that successfully complete the planning activity and are selected may apply to be included in the applicant pool. Once approved for inclusion in the applicant pool, the Tribe/Consortium may apply for a negotiation grant according to the process in §§ 1000.46–1000.48. § 1000.54 How will a Tribe/Consortium know whether or not it has been selected to receive an advance planning grant? No later than June 1, the Director will notify the Tribe/Consortium by letter whether it has been selected to receive an advance planning grant. § 1000.55 Can a Tribe/Consortium appeal within DOI the Director’s decision not to award a grant under this subpart? No, the Director’s decision to award or not to award a grant under this subpart is final for the Department.

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§ 1000.60

25 CFR Ch. VI (4–1–04 Edition)

Subpart D—Other Financial Assistance for Planning and Negotiation Grants for Non-BIA Programs PURPOSE AND ELIGIBILITY § 1000.60 What is the purpose of this subpart? This subpart describes the availability and process of applying for other financial assistance that may be available for planning and negotiating for a non-BIA program. § 1000.61 Are other funds available to self-governance Tribes/Consortia for planning and negotiating with non-BIA bureaus? Yes, Tribes/Consortia may contact OSG to determine if OSG has funds available for the purpose of planning and negotiating with non-BIA bureaus under this subpart. A Tribe/Consortium may also ask a non-BIA bureau for information on any funds that may be available from that bureau. ELIGIBILITY AND APPLICATION PROCESS § 1000.62 Who can apply to OSG for grants to plan and negotiate nonBIA programs? Any Tribe/Consortium that is in the applicant pool, or has been selected from the applicant pool or that has an existing AFA. § 1000.63 Under what circumstances may planning and negotiation grants be awarded to Tribes/Consortia? At the discretion of the Director, grants may be awarded when requested by the Tribe. Tribes/Consortia may submit only one application per year for a grant under this section. § 1000.64 How does the Tribe/Consortium know when and how to apply to OSG for a planning and negotiation grant? When funds are available, the Director will publish a notice in the FEDERAL REGISTER announcing their availability and a deadline for submitting an application.

§ 1000.65 What kinds of activities do planning and negotiation grants support? The planning and negotiation grants support activities such as, but not limited to, the following: (a) Information gathering and analysis; (b) Planning activities, that may include notification and consultation with the appropriate non-BIA bureau and identification and/or analysis of activities, resources, and capabilities that may be needed for the Tribe/Consortium to assume non-BIA programs; and (c) Negotiation activities. § 1000.66 What must be included in the application? The application for a planning and negotiation grant must include: (a) Written notification by the governing body or its authorized representative of the Tribe’s/Consortium’s intent to engage in planning/negotiation activities like those described in § 1000.65; (b) Written description of the planning and/or negotiation activities that the Tribe/Consortium intends to undertake, including, if appropriate, documentation of the relationship between the proposed activities and the Tribe/ Consortium; (c) The proposed timeline for completion of the planning and/or negotiation activities to be undertaken; and (d) The amount requested from OSG. § 1000.67 How will the Director award planning and negotiation grants? The Director must review all grant applications received by the date specified in the announcement to determine whether or not the applications include the required elements outlined in the announcement. OSG must rank the complete applications submitted by the deadline using the criteria in § 1000.70. § 1000.68 May non-BIA bureaus provide technical assistance to a Tribe/ Consortium in drafting its planning grant application? Yes, upon request from the Tribe/ Consortium, a non-BIA bureau may provide technical assistance to the

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Office of the Assistant Secretary, Interior Tribe/Consortium in the drafting of its planning grant application. § 1000.69 How can a Tribe/Consortium obtain comments or selection documents received or utilized after OSG has made a decision on a planning grant application? A Tribe/Consortium may request comments or selection documents under the Freedom of Information Act. § 1000.70 What criteria will the Director use to rank the applications and how many maximum points can be awarded for each criterion? The Director will use the following criteria and point system to rank the applications: (a) The application contains a clear statement of objectives and timelines to complete the proposed planning or negotiation activity and demonstrates that the objectives are legally authorized and achievable. (20 points) (b) The proposed budget expenses are reasonable. (10 points) (c) The proposed project demonstrates a new or unique approach to Tribal self-governance or broadens selfgovernance to include new activities within the Department. (5 points) § 1000.71 Can an applicant appeal a decision not to award a grant? No, all decisions made by the Director to award or not to award a grant under this subpart are final for the Department. § 1000.72 Will OSG notify Tribes/Consortia and affected non-BIA bureaus of the results of the selection process? Yes, OSG will notify all applicant Tribes/Consortia and affected non-BIA bureaus in writing as soon as possible after completing the selection process. § 1000.73 Once a Tribe/Consortium has been awarded a grant, may the Tribe/Consortium obtain information from a non-BIA bureau? Yes, see § 1000.169.

§ 1000.85

Subpart E—Annual Funding Agreements for Bureau of Indian Affairs Programs § 1000.80 What is the purpose of this subpart? This subpart describes the components of annual funding agreements for BIA programs. § 1000.81 What is an annual funding agreement (AFA)? Annual funding agreements are legally binding and mutually enforceable written agreements negotiated and entered into annually between a self-governance Tribe/Consortium and BIA. CONTENTS AND SCOPE OF ANNUAL FUNDING AGREEMENTS § 1000.82 What types of provisions must be included in a BIA AFA? Each AFA must specify the programs and it must also specify the applicable funding: (a) Retained by BIA for ‘‘inherently Federal functions’’ identified as ‘‘residuals’’ (See § 1000.94); (b) Transferred or to be transferred to the Tribe/Consortium (See § 1000.91); and (c) Retained by BIA to carry out functions that the Tribe/Consortium could have assumed but elected to leave with BIA. (See § 1000.101). § 1000.83 Can additional provisions be included in an AFA? Yes, any provision that the parties mutually agreed upon may be included in an AFA. § 1000.84 Does a Tribe/Consortium have the right to include provisions of Title I of Pub. L. 93–638 in an AFA? Yes, under Pub. L. 104–109, a Tribe/ Consortium has the right to include any provision of Title I of Pub. L. 93– 638 in an AFA. § 1000.85 Can a Tribe/Consortium negotiate an AFA with a term that exceeds one year? Yes, at the option of the Tribe/Consortium, and subject to the availability of Congressional appropriations, a Tribe/Consortium may negotiate an

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§ 1000.86

25 CFR Ch. VI (4–1–04 Edition)

AFA with a term that exceeds one year in accordance with section 105(c)(1) of Title I of Pub. L. 93–638.

§ 1000.89 Can the terms and conditions in an AFA be amended during the year it is in effect?

DETERMINING WHAT PROGRAMS MAY BE INCLUDED IN AN AFA

Yes, terms and conditions in an AFA may be amended during the year it is in effect as agreed to by both the Tribe/ Consortium and the Secretary.

§ 1000.86 What types of programs may be included in an AFA? A Tribe/Consortium may include in its AFA programs administered by BIA, without regard to the BIA agency or office that administers the program, including any program identified in section 403(b)(1) of the Act. § 1000.87 How does the AFA specify the services provided, functions performed, and responsibilities assumed by the Tribe/Consortium and those retained by the Secretary? (a) The AFA must specify in writing the services, functions, and responsibilities to be assumed by the Tribe/Consortium and the functions, services, and responsibilities to be retained by the Secretary. (b) Any division of responsibilities between the Tribe/Consortium and BIA should be clearly stated in writing as part of the AFA. Similarly, when there is a relationship between the program and BIA’s residual responsibility, the relationship should be in writing. § 1000.88 Do Tribes/Consortia need Secretarial approval to redesign BIA programs that the Tribe/Consortium administers under an AFA? No, the Secretary does not have to approve a redesign of a program under the AFA, except when the redesign involves a waiver of a regulation. (a) The Secretary must approve any waiver, in accordance with subpart J of this part, before redesign takes place. (b) This section does not authorize redesign of programs where other prohibitions exist. (c) Redesign shall not result in the Tribe/Consortium being entitled to receive more or less funding for the program from BIA. (d) Redesign of construction project(s) included in an AFA must be done in accordance with subpart K of this part.

§ 1000.90 What happens if an AFA expires before the effective date of the successor AFA? If the effective date of the successor AFA is not on or before the expiration of the current AFA, subject to terms mutually agreed upon by the Tribe/ Consortium and the Department at the time the current AFA was negotiated or in a subsequent amendment, the Tribe/Consortium may continue to carry out the program authorized under the AFA to the extent adequate resources are available. During this extension period, the current AFA shall remain in effect, including coverage of the Tribe/Consortium under the Federal Tort Claims Act (FTCA) 28 U.S.C. 2671–2680 (1994), and the Tribe/Consortium may use any funds remaining under the AFA, savings from other programs or Tribal funds to carry out the program. Nothing in this section authorizes an AFA to be continued beyond the completion of the program authorized under the AFA or the amended AFA. This section also does not entitle a Tribe/Consortium to receive, nor does it prevent a Tribe from receiving, additional funding under any successor AFA. The successor AFA must provide funding to the Tribe/Consortium at a level necessary for the Tribe/Consortium to perform the programs, functions, services, and activities or portions thereof (PFSAs) for the full period it was or will be performed. DETERMINING AFA AMOUNTS § 1000.91 What funds must be transferred to a Tribe/Consortium under an AFA? (a) At the option of the Tribe/Consortium, the Secretary must provide the following program funds to the Tribe/ Consortium through an AFA: (1) An amount equal to the amount that the Tribe/Consortium would have been eligible to receive under contracts and grants for direct programs and

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Office of the Assistant Secretary, Interior contract support under Title I of Pub. L. 93–638, as amended; (2) Any funds that are specifically or functionally related to providing services and benefits to the Tribe/Consortium or its members by the Secretary without regard to the organizational level within BIA where such functions are carried out; and (3) Any funds otherwise available to Indian Tribes or Indians for which appropriations are made to agencies other than the Department of the Interior; (b) Examples of the funds referred to in paragraphs (a)(1) and (a)(2) of this section are: (1) A Tribe’s/Consortium’s Pub. L. 93– 638 contract amounts; (2) Negotiated amounts of agency, regional and central office funds, including previously undistributed funds or new programs on the same basis as they are made available to other Tribes; (3) Other recurring funding; (4) Non-recurring funding; (5) Special projects, if applicable; (6) Construction; (7) Wildland firefighting accounts; (8) Competitive grants; and (9) Congressional earmarked funding. (c) An example of the funds referred to in paragraph (a)(3) of this section is Federal Highway Administration funds. § 1000.92 What funds may not be included in an AFA? Funds associated with programs prohibited from inclusion under section 403(b)(4) of the Act may not be included in an AFA. § 1000.93 May the Secretary place any requirements on programs and funds that are otherwise available to Tribes/Consortia or Indians for which appropriations are made to agencies other than DOI? No, unless the Secretary is required to develop terms and conditions that are required by law or that are required by the agency to which the appropriation is made.

§ 1000.95 § 1000.94

What are BIA residual funds?

BIA residual funds are the funds necessary to carry out BIA residual functions. BIA residual functions are those functions that only BIA employees could perform if all Tribes were to assume responsibilities for all BIA programs that the Act permits. § 1000.95 How is BIA’s residual determined? (a) Generally, residual information will be determined through a process that is consistent with the overall process used by the BIA. Residual information will consist of residual functions performed by the BIA, brief justification why the function is not compactible, and the estimated funding level for each residual function. Each regional office and the central office will compile a single document for distribution each year that contains all the residual information of that respective office. The development of the residual information will be based on the following principles. The BIA will: (1) Develop uniform residual information to be used to negotiate residuals; (2) Ensure functional consistency throughout BIA in the determination of residuals; (3) Make the determination of residuals based upon the functions actually being performed by BIA at the respective office; (4) Annually consult with Tribes on a region-by-region basis as requested by Tribes/Consortia; and (5) Notify Tribal leaders each year by March 1 of the availability of residual information. (b) BIA shall use the residual information determined under subparagraph (a) as the basis for negotiating with individual Tribes. (c) In accordance with the appeals procedures in subpart R of this part, if BIA and a participating Tribe/Consortium disagree over the content of residual functions or amounts, Tribe/Consortium can appeal as shown in the following table.

If a Tribe/Consortium . . .

the Tribe/Consortium may . . .

and . . .

(1) Disagrees with BIA’s determination .....

appeal to the Deputy Commissioner .......

the Deputy Commissioner must make a written determination within 30 days of receiving the request.

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§ 1000.96

25 CFR Ch. VI (4–1–04 Edition)

If a Tribe/Consortium . . .

the Tribe/Consortium may . . .

and . . .

(2) Disagrees with the Deputy Commissioner’s determination.

appeal to the Assistant Secretary—Indian Affairs.

the Assistant Secretary’s determination is final for the Department.

(d) Information on residual functions may be amended if programs are added or deleted, if statutory or final judicial determinations mandate or if the Deputy Commissioner makes a determination that would alter the residual information or funding amounts. The decision may be appealed to the Assistant Secretary in accordance with subpart R of this part. The Assistant Secretary shall make a written determination within 30 days. § 1000.96 May a Tribe/Consortium continue to negotiate an AFA pending an appeal of residual functions or amounts? Yes, pending appeal of a residual function or amount, any Tribe/Consortium may continue to negotiate an AFA using the residual information that is being appealed. The residual information will be subject to later adjustment based on the final determination of a Tribe’s/Consortium’s appeal. § 1000.97 What is a Tribal share? A Tribal share is the amount determined for a particular Tribe/Consortium for a particular program at BIA regional, agency and central office levels under section 403(g)(3) and 405(d) of the Act. § 1000.98 How does BIA determine a Tribe’s/Consortium’s share of funds to be included in an AFA? There are typically two methods for determining the amount of funds to be included in the AFA: (a) Formula-driven. For formula-driven programs, a Tribe’s/Consortium’s amount is determined by first identifying the residual funds to be retained by BIA and second, by applying the distribution formula to the remaining eligible funding for each program involved. (1) Distribution formulas must be reasonably related to the function or service performed by an office, and must be consistently applied to all Tribes within each regional and agency office.

(2) The process in paragraph (a) of this section for calculating a Tribe’s funding under self-governance must be consistent with the process used for calculating funds available to non-selfgovernance Tribes. (b) Tribal-specific. For programs whose funds are not distributed on a formula basis as described in paragraph (a) of this section, a Tribe’s funding amount will be determined on a Tribeby-Tribe basis and may differ between Tribes. Examples of these funds may include special project funding, awarded competitive grants, earmarked funding, and construction or other onetime or non-recurring funding for which a Tribe is eligible. § 1000.99 Can a Tribe/Consortium negotiate a Tribal share for programs outside its region/agency? Yes, where BIA services for a particular Tribe/Consortium are provided from a location outside its immediate agency or region, the Tribe may negotiate its share from BIA location where the service is actually provided. § 1000.100 May a Tribe/Consortium obtain discretionary or competitive funding that is distributed on a discretionary or competitive basis? Funds provided for Indian services/ programs that have not been mandated by Congress to be distributed on a competitive/discretionary basis may be distributed to a Tribe/Consortium under a formula-driven method. In order to receive such funds, a Tribe/Consortium must be eligible and qualified to receive such funds. A Tribe/Consortium that receives such funds under a formula-driven methodology would no longer be eligible to compete for these funds. § 1000.101 Are all funds identified as Tribal shares always paid to the Tribe/Consortium under an AFA? No, at the discretion of the Tribe/ Consortium, Tribal shares may be left,

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Office of the Assistant Secretary, Interior in whole or in part, with BIA for certain programs. This is referred to as a ‘‘retained Tribal share’’. § 1000.102 How are savings that result from downsizing allocated? Funds that are saved as a result of downsizing in BIA are allocated to Tribes/Consortia in the same manner as Tribal shares as provided for in § 1000.98. § 1000.103 Do Tribes/Consortia need Secretarial approval to reallocate funds between programs that the Tribe/Consortium administers under the AFA? No, unless otherwise required by law, the Secretary does not have to approve the reallocation of funds between programs that a Tribe/Consortium administers under an AFA. § 1000.104 Can funding amounts negotiated in an AFA be adjusted during the year it is in effect? Yes, funding amounts negotiated in an AFA may be adjusted under the following circumstances: (a) Congressional action. (1) Increases/ decreases as a result of Congressional appropriations and/or a directive in the statement of managers accompanying a conference report on an appropriations bill or continuing resolution. (2) General decreases due to Congressional action must be applied consistently to BIA, self-governance Tribes/ Consortia, and Tribes/Consortia not participating in self-governance. (3) General increases due to Congressional appropriations must be applied consistently, except where used to achieve equitable distribution among regions and Tribes. (4) A Tribe/Consortium will be notified of any decrease and be provided an opportunity to reconcile. (b) Mistakes. If the Tribe/Consortium or the Secretary can identify and document substantive errors in calculations, the parties will renegotiate the amounts and make every effort to correct such errors. (c) Mutual Agreement. Both the Tribe/ Consortium and the Secretary may agree to renegotiate amounts at any time.

§ 1000.106 ESTABLISHING SELF-GOVERNANCE BASE BUDGETS § 1000.105 What are base budgets?

self-governance

(a) A Tribe/Consortium self-governance base budget is the amount of recurring funding identified in the President’s annual budget request to Congress. This amount must be adjusted to reflect subsequent Congressional action. It includes amounts that are eligible to be base transferred or have been base transferred from BIA budget accounts to self-governance budget accounts. As allowed by Congress, selfgovernance base budgets are derived from: (1) A Tribe’s/Consortium’s Pub. L. 93– 638 contract amounts; (2) Negotiated agency, regional, and central office amounts; (3) Other recurring funding; (4) Special projects, if applicable; (5) Programmatic shortfall; (6) Tribal priority allocation increases and decreases; (7) Pay costs and retirement cost adjustments; and (8) Any other inflationary cost adjustments. (b) Self-governance base budgets must not include any non-recurring program funds, construction and wildland firefighting accounts, Congressional earmarks, or other funds specifically excluded by Congress. These funds are negotiated annually and may be included in the AFA but must not be included in the self-governance base budget. (c) Self-governance base budgets may not include other recurring type programs that are currently in Tribal priority allocations (TPA) such as general assistance, housing improvement program (HIP), road maintenance and contract support. Should these later four programs ever become base transferred to Tribes, then they may be included in a self-governance Tribe’s base budget. § 1000.106 Once a Tribe/Consortium establishes a base budget, are funding amounts renegotiated each year? No, unless otherwise requested by the Tribe/Consortium, these amounts are not renegotiated each year. If a Tribe/

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§ 1000.107

25 CFR Ch. VI (4–1–04 Edition)

Consortium renegotiates funding levels: (a) It must negotiate all funding levels in the AFA using the process for determining residuals and funding amounts on the same basis as other Tribes; and (b) It is eligible for funding amounts of new programs or available programs not previously included in the AFA on the same basis as other Tribes. § 1000.107 Must a Tribe/Consortium with a base budget or base budgeteligible program amounts negotiated before January 16, 2001 negotiate new Tribal shares and residual amounts? No, if a Tribe/Consortium negotiated amounts before January 16, 2001, it does not need to renegotiate new Tribal shares and residual amounts. (a) At Tribal option, a Tribe/Consortium may retain funding amounts that: (1) Were either base eligible or in the Tribe’s base; and (2) Were negotiated before this part is promulgated. (b) If a Tribe/Consortium desires to renegotiate the amounts referred to in paragraph (a) of this section, the Tribe/ Consortium must: (1) Negotiate all funding included in the AFA; and (2) Use the process for determining residuals and funding amounts on the same basis as other Tribes. (c) Self-governance Tribes/Consortia are eligible for funding amounts for new or available programs not previously included in the AFA on the same basis as other Tribes/Consortia. § 1000.108 How are self-governance base budgets established? At the request of the Tribe/Consortium, a self-governance base budget identifying each Tribe’s funding amount is included in BIA’s budget justification for the following year, subject to Congressional appropriation. § 1000.109 How are self-governance base budgets adjusted? Self-governance base budgets must be adjusted as follows: (a) Congressional action. (1) Increases/ decreases as a result of Congressional appropriations and/or a directive in the statement of managers accompanying

a conference report on an appropriations bill or continuing resolution. (2) General decreases due to Congressional action must be applied consistently to BIA, self-governance Tribes/ Consortia, and Tribes/Consortia not participating in self-governance. (3) General increases due to Congressional appropriations must be applied consistently, except where used to achieve equitable distribution among regions and Tribes. (4) A Tribe/Consortium will be notified of any decrease and be provided an opportunity to reconcile. (b) Mistakes. If the Tribe/Consortium or the Secretary can identify and document substantive errors in calculations, the parties will renegotiate such amounts and make every effort to correct the errors. (c) Mutual agreement. Both the Tribe/ Consortium and the Secretary may agree to renegotiate amounts at any time.

Subpart F—Non-BIA Annual SelfGovernance Compacts and Funding Agreements PURPOSE § 1000.120 What is the purpose of this subpart? This subpart describes program eligibility, funding, terms, and conditions of AFAs for non-BIA programs. § 1000.121 What is an annual funding agreement for a non-BIA program? Annual funding agreements for nonBIA programs are legally binding and mutually enforceable agreements between a bureau and a Tribe/Consortium participating in the self-governance program that contain: (a) A description of that portion or portions of a bureau program that are to be performed by the Tribe/Consortium; and (b) Associated funding, terms and conditions under which the Tribe/Consortium will assume a program, or portion of a program.

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Office of the Assistant Secretary, Interior ELIGIBILITY § 1000.122 What non-BIA programs are eligible for inclusion in an annual funding agreement? Programs authorized by sections 403(b)(2) and 403(c) of the Act are eligible for inclusion in AFAs. The Secretary will publish annually a list of these programs in accordance with section 405(c)(4). § 1000.123 Are there non-BIA programs for which the Secretary must negotiate for inclusion in an AFA subject to such terms as the parties may negotiate? Yes, those programs, or portions thereof, that are eligible for contracting under Pub. L. 93–638. § 1000.124 What programs are included under Section 403(b)(2) of the Act? Those programs, or portions thereof, that are eligible for contracting under Pub. L. 93–638. § 1000.125 What programs are included under Section 403(c)? Department of the Interior programs of special geographic, historical, or cultural significance to participating Tribes, individually or as members of a Consortium, are eligible for inclusion in AFAs under section 403(c). § 1000.126 What does ‘‘special geographic, historical or cultural’’ mean? (a) Geographic generally refers to all lands presently ‘‘on or near’’ an Indian reservation, and all other lands within ‘‘Indian country,’’ as defined by 18 U.S.C. 1151. In addition, ‘‘geographic’’ includes: (1) Lands of former reservations; (2) Lands on or near those conveyed or to be conveyed under the Alaska Native Claims Settlement Act (ANCSA); (3) Judicially established aboriginal lands of a Tribe or a Consortium member or as verified by the Secretary; and (4) Lands and waters pertaining to Indian rights in natural resources, hunting, fishing, gathering, and subsistence activities, provided or protected by treaty or other applicable law. (b) Historical generally refers to programs or lands having a particular his-

§ 1000.130 tory that is relevant to the Tribe. For example, particular trails, forts, significant sites, or educational activities that relate to the history of a particular Tribe. (c) Cultural refers to programs, sites, or activities as defined by individual Tribal traditions and may include, for example: (1) Sacred and medicinal sites; (2) Gathering of medicines or materials such as grasses for basket weaving; or (3) Other traditional activities, including, but not limited to, subsistence hunting, fishing, and gathering. § 1000.127 Under Section 403(b)(2), when must programs be awarded non-competitively? Programs eligible for contracts under Pub. L. 93–638 must be awarded noncompetitively. § 1000.128 Is there a contracting preference for programs of special geographic, historical, or cultural significance? Yes, if there is a special geographic, historical, or cultural significance to the program or activity administered by the bureau, the law affords the bureau the discretion to include the programs or activities in an AFA on a non-competitive basis. § 1000.129 Are there any programs that may not be included in an AFA? Yes, section 403(k) of the Act excludes from the program: (a) Inherently Federal functions; and (b) Programs where the statute establishing the existing program does not authorize the type of participation sought by the Tribe/Consortium, except as provided in § 1000.134. § 1000.130 Does a Tribe/Consortium need to be identified in an authorizing statute in order for a program or element of a program to be included in a non-BIA AFA? No, the Act favors the inclusion of a wide range of programs.

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§ 1000.131

25 CFR Ch. VI (4–1–04 Edition)

§ 1000.131 Will Tribes/Consortia participate in the Secretary’s determination of what is to be included on the annual list of available programs? Yes, the Secretary must consult each year with Tribes/Consortia participating in self-governance programs regarding which bureau programs are eligible for inclusion in AFAs. § 1000.132 How will the Secretary consult with Tribes/Consortia in developing the list of available programs? (a) On, or as near as possible to, October 1 of each year, the Secretary must distribute to each participating self-governance Tribe/Consortium the previous year’s list of available programs in accordance with section 405(c)(4) of the Act. The list must include: (1) All of the Secretary’s proposed additions and revisions for the coming year with an explanation; and (2) Programmatic targets and an initial point of contact for each bureau. (b) The Tribes/Consortia receiving the proposed list will have 30 days from receipt to comment in writing on the Secretary’s proposed revisions and to provide additions and revisions of their own for the Secretary to consider. (c) The Secretary will carefully consider these comments before publishing the list as required by section 405(c)(4) of the Act. (d) If the Secretary does not plan to include a Tribal suggestion or revision in the final published list, he/she must provide an explanation of his/her reasons if requested by a Tribe. § 1000.133 What else is on the list in addition to eligible programs? The list will also include programmatic targets and an initial point of contact for each bureau. Programmatic targets will be established as part of the consultation process described in § 1000.132. § 1000.134 May a bureau negotiate with a Tribe/Consortium for programs not specifically included on the annual section 405(c) list? Yes, the annual list will specify that bureaus will negotiate for other programs eligible under section 403(b)(2)

when requested by a Tribe/Consortium. Bureaus may negotiate for section 403(c) programs whether or not they are on the list. § 1000.135 How will a bureau negotiate an annual funding agreement for a program of special geographic, historical, or cultural significance to more than one Tribe? (a) If a program is of special geographic, historical, or cultural significance to more than one Tribe, the bureau may allocate the program among the several Tribes/Consortia or select one Tribe/Consortium with whom to negotiate an AFA. (b) In making a determination under paragraph (a) of this section, the bureau will, in consultation with the affected Tribes, consider: (1) The special significance of each Tribe’s or Consortium member’s interest; and (2) The statutory objectives being served by the bureau program. (c) The bureau’s decision will be final for the Department. § 1000.136 When will this determination be made? It will occur during the pre-negotiation process, subject to the timeframes in § 1000.171 and § 1000.172. FUNDING § 1000.137 What funds are included in an AFA? Bureaus determine the amount of funding to be included in the AFA using the following principles: (a) 403(b)(2) programs. In general, funds are provided in an AFA to the Tribe/Consortium in an amount equal to the amount that it is eligible to receive under section 106 of Pub. L. 93– 638. (b) 403(c) programs. (1) The AFA will include: (i) Amounts equal to the direct costs the bureau would have incurred were it to operate that program at the level of work mutually agreed to in the AFA; and (ii) Allowable indirect costs. (2) A bureau is not required to include management and support funds from the regional or central office level in an AFA, unless:

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Office of the Assistant Secretary, Interior (i) The Tribe/Consortium will perform work previously performed at the regional or central office level; (ii) The work is not compensated in the indirect cost rate; and (iii) Including management and support costs in the AFA does not result in the Tribe/Consortium being paid twice for the same work when negotiated indirect cost rate is applied. (c) Funding Limitations. The amount of funding must be subject to the availability and level of Congressional appropriations to the bureau for that program or activity. As the various bureaus use somewhat differing budgeting practices, determining the amount of funds available for inclusion in the AFA for a particular program or activity is likely to vary among bureaus or programs. (1) The AFA may not exceed the amount of funding the bureau would have spent for direct operations and indirect support and management of that program in that year. (2) The AFA must not include funding for programs still performed by the bureau. § 1000.138 How are indirect cost rates determined? The Department’s Office of the Inspector General (OIG) or other cognizant Federal agency and the Tribe/ Consortium negotiate indirect cost rates. These rates are based on the provisions of the Office of Management and Budget (OMB) Circular A–87 or other applicable OMB cost circular and the provisions of Title I of Pub. L. 93– 638 (See § 1000.142). These rates are used generally by all Federal agencies for contracts and grants with the Tribe/ Consortium, including self-governance agreements. § 1000.139 Will the established indirect cost rates always apply to new AFAs? No, the established indirect cost rates will not always apply to new AFAs. (a) A Tribe’s/Consortium’s existing indirect cost rate should be reviewed and renegotiated with the inspector general or other cognizant agency if: (1) Using the previously negotiated rate would include the recovery of indi-

§ 1000.142 rect costs that are not reasonable, allocable, or allowable to the relevant program; or (2) The previously negotiated rate would result in an under-recovery by the Tribe/Consortium. (b) If a Tribe/Consortium has a fixed amount indirect cost agreement under OMB Circular A–87, then: (1) Renegotiation is not required and the duration of the fixed amount agreement will be that provided for in the fixed amount agreement; or (2) The Tribe/Consortium and bureau may negotiate an indirect cost amount or rate for use only in that AFA without the involvement of the inspector general or other cognizant agency. § 1000.140 How does the Secretary determine the amount of indirect contract support costs? The Secretary determines the amount of indirect contract support costs by: (a) Applying the negotiated indirect cost rate to the appropriate direct cost base; (b) Using the provisional rate; or (c) Negotiating the amount of indirect contract support. § 1000.141 Is there a predetermined cap or limit on indirect cost rates or a fixed formula for calculating indirect cost rates? No, indirect cost rates vary from Tribe to Tribe. The Secretary should refer to the appropriate negotiated indirect cost rates for individual Tribes, that apply government-wide. Although this cost rate is not capped, the amount of funds available for inclusion is capped at the level available under the relevant appropriation. § 1000.142 Instead of the negotiated indirect cost rate, is it possible to establish a fixed amount or another negotiated rate for indirect costs where funds are limited? Yes, OMB Circular A–87 encourages agencies to test fee-for-service alternatives. If the parties agree to a fixed price, fee-for-service agreement, then they must use OMB Circular A–87 as a guide in determining the appropriate price (OMB circulars are available at http://www.whitehouse.gov/omb/ or see

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§ 1000.143

25 CFR Ch. VI (4–1–04 Edition)

5 CFR 1310.3).Where limited appropriated funds are available, negotiating the fixed cost option or another rate may facilitate reaching an agreement with that Tribe/Consortium. OTHER TERMS AND CONDITIONS § 1000.143 May the bureaus negotiate terms to be included in an AFA for non-Indian programs? Yes, as provided for by section 403(b)(2) and 403(c) and as necessary to meet program mandates. REALLOCATION, DURATION, AND AMENDMENTS § 1000.144 Can a Tribe reallocate funds for a non-BIA non-Indian program? Yes, section 403(b) permits such reallocation upon joint agreement of the Secretary and the Tribe/Consortium. § 1000.145 Do Tribes/Consortia need Secretarial approval to reallocate funds between Title-I eligible programs that the Tribe/Consortium administers under a non-BIA AFA? No, unless otherwise required by law, the Secretary does not have to approve the reallocation of funds with the exception of construction projects. § 1000.146 Can a Tribe/Consortium negotiate an AFA with a non-BIA bureau for which the performance period exceeds one year? Yes, subject to the terms of the AFA, a Tribe/Consortium and a non-BIA bureau may agree to provide for the performance under the AFA to extend beyond the fiscal year. However, the Department may not obligate funds in excess and advance of available appropriations. § 1000.147 Can the terms and conditions in a non-BIA AFA be amended during the year it is in effect? Yes, terms and conditions in a nonBIA AFA may be amended during the year it is in effect as agreed to by both the Tribe/Consortium and the Secretary. § 1000.148 What happens if an AFA expires before the effective date of the successor AFA? If the effective date of a successor AFA is not on or before the expiration

of the current AFA, subject to terms mutually agreed upon by the Tribe/ Consortium and the Department at the time the current AFA was negotiated or in a subsequent amendment, the Tribe/Consortium may continue to carry out the program authorized under the AFA to the extent resources permit. During this extension period, the current AFA shall remain in effect, including coverage of the Tribe/Consortium under the Federal Tort Claims Act (FTCA) 28 U.S.C. 2671–2680 (1994); and the Tribe/Consortium may use any funds remaining under the AFA, savings from other programs or Tribal funds to carry out the program. Nothing in this section authorizes an AFA to be continued beyond the completion of the program authorized under the AFA or the amended AFA. This section also does not entitle a Tribe/Consortium to receive, nor does it prevent a Tribe from receiving, additional funding under any successor AFA. The successor AFA must provide funding to the Tribe/Consortium at a level necessary for the Tribe/Consortium to perform the programs, functions, services, and activities (PFSA) or portions thereof for the full period they were or will be performed.

Subpart G—Negotiation Process for Annual Funding Agreements PURPOSE § 1000.160 What is the purpose of this subpart? This subpart provides the process and timelines for negotiating a self-governance compact with the Department and an AFA with any bureau. (a) For a newly selected or currently participating Tribe/Consortium negotiating an initial AFA with any bureau, see §§ 1000.173 through 1000.179. (b) For a participating Tribe/Consortium negotiating a successor AFA with any bureau, see §§ 1000.180 through 1000.182.

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Office of the Assistant Secretary, Interior NEGOTIATING A SELF-GOVERNANCE COMPACT § 1000.161 What is a self-governance compact? A self-governance compact is an executed document that affirms the government-to-government relationship between a self-governance Tribe and the United States. The compact differs from an AFA in that parts of the compact apply to all bureaus within the Department of the Interior rather than a single bureau. § 1000.162 What is included in a selfgovernance compact? A model format for self-governance compacts appears in appendix A. A selfgovernance compact should generally include the following: (a) The authority and purpose; (b) Terms, provisions, and conditions of the compact; (c) Obligations of the Tribe and the United States; and (d) Other provisions. § 1000.163 Can a Tribe/Consortium negotiate other terms and conditions not contained in the model compact? Yes, the Secretary and a self-governance Tribe/Consortium may negotiate into the model compact contained in appendix A additional terms relating to the government-to-government relationship between the Tribe(s) and the United States. For BIA programs, a Tribe/Consortium and the Secretary may agree to include any term in a contract and funding agreement under Title I in the model compact contained in appendix A to this part. § 1000.164 Can a Tribe/Consortium have an AFA without entering into a compact? Yes, at the Tribe’s/Consortium’s option. § 1000.165 Are provisions in compacts negotiated before January 16, 2001, effective after implementation? (a) Yes, all provisions in compacts that were negotiated with BIA before January 16, 2001, shall remain in effect for BIA programs only after January 16, 2001, provided that each compact contains provisions:

§ 1000.169 (1) That are authorized by the Tribal Self-Governance Act of 1994; (2) Are in compliance with other applicable Federal laws; and, (3) Are consistent with this part. (b) BIA will notify the Tribe/Consortium in writing when BIA asserts that a provision or provisions of that Tribe’s/Consortium’s previously negotiated compact is not in compliance with the terms and conditions of this part. BIA and the Tribe/Consortium will renegotiate the provision within 60 days of the Tribe’s/Consortium’s receipt of the notification. (c) If renegotiation is not successful within 60 days of the notice being provided, BIA’s determination is final for the bureau and enforceability of the provisions shall be subject to the appeals process described in subpart R of this part. Pending a final appeal through the appeals process, BIA’s determination shall be stayed. NEGOTIATION OF INITIAL ANNUAL FUNDING AGREEMENTS § 1000.166 What are the phases of the negotiation process? There are two phases of the negotiation process: (a) The information phase; and (b) The negotiation phase. § 1000.167 Who may initiate the information phase? Any Tribe/Consortium that has been admitted to the program or to the applicant pool may initiate the information phase. § 1000.168 Is it mandatory to go through the information phase before initiating the negotiation phase? No, a Tribe/Consortium may go directly to the negotiation phase. § 1000.169 How does a Tribe/Consortium initiate the information phase? A Tribe/Consortium initiates the information phase by submitting a letter of interest to the bureau administering a program that the Tribe/Consortium may want to include in its AFA. A letter of interest may be mailed, telefaxed, or hand-delivered to:

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§ 1000.170

25 CFR Ch. VI (4–1–04 Edition)

(a) The Director, OSG, if the request is for information about BIA programs; (b) The non-BIA bureau’s self-governance representative identified in the Secretary’s annual section 405(c) listing in the FEDERAL REGISTER, if the request is for information concerning programs of non-BIA bureaus. § 1000.170 What is the letter of interest? A letter of interest is the initial indication of interest submitted by the Tribe/Consortium informing the bureau of the Tribe’s/Consortium’s interest in seeking information for the possible negotiation of one or more bureau programs. For non-BIA bureaus, the program and budget information request should relate to the program and activities identified in the Secretary’s section 405(c) list in the FEDERAL REGISTER or a section 403(c) request. A letter of interest should identify the following: (a) As specifically as possible, the program a Tribe/Consortium is interested in negotiating under an AFA; (b) A preliminary brief explanation of the cultural, historical, or geographic significance to the Tribe/Consortium of the program, if applicable; (c) The scope of activity that a Tribe/ Consortium is interested in including in an AFA; (d) Other information that may assist the bureau in identifying the programs that are included or related to the Tribe’s/Consortium’s request; (e) A request for information that indicates the type and/or description of information that will assist the Tribe/ Consortium in pursuing the negotiation process; (f) A designated Tribal contact; (g) A request for information on any funds that may be available within the bureau or other known possible sources of funding for planning and negotiating an AFA; (h) A request for information on any funds available within the bureau or from other sources of funding that the Tribe/Consortium may include in the AFA for planning or performing programs or activities; and (i) Any requests for technical assistance to be provided by the bureau in preparing documents of materials that

may be required for the Tribe/Consortium in the negotiation process. § 1000.171 When should a Tribe/Consortium submit a letter of interest? A letter of interest may be submitted at any time. To meet the negotiation deadlines below, letters should be submitted to the appropriate non-BIA bureaus by March 1; letters should be submitted to BIA by April 1 for fiscal year Tribes/Consortia or May 1 for calendar year Tribes/Consortia. § 1000.172 What steps does the bureau take after a letter of interest is submitted by a Tribe/Consortium? (a) Within 15 calendar days of receipt of a Tribe’s/Consortium’s letter of interest, the bureau will notify the Tribe/ Consortium about who will be designated as the bureau’s representative to be responsible for responding to the Tribal requests for information. The bureau representative shall act in good faith in fulfilling the following responsibilities: (1) Providing all budget and program information identified in paragraph (b) of this section, from each organizational level of the bureau(s); and (2) Notifying any other bureau requiring notification and participation under this part. (b) Within 30 calendar days of receipt of the Tribe’s/Consortium’s letter of interest: (1) To the extent that such reasonably related information is available, the bureau representative is to provide the information listed in paragraph (c) of this section, if available and consistent with the bureau’s budgetary process; (2) A written explanation of why the information is not available or not being provided to the Tribe’s/Consortium’s contact and the date by which other available information will be provided; or (3) If applicable, a written explanation of why the program is unavailable for negotiation. (c) Information to be made available to the Tribe’s/Consortium’s contact, subject to the conditions of paragraph (b) of this section, includes: (1) Information regarding program, budget, staffing, and locations of the

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Office of the Assistant Secretary, Interior offices administering the program and related administrative support program identified by the Tribe/Consortium, (2) Information contained in the previous year, present year, and next year’s budget proposed by the President at the national program level and the regional/local level. (3) When appropriate, the bureau will be available to meet the Tribal representatives to explain the budget information provided. (4) Information used to support budget allocations for the programs identified (e.g., full time equivalents and other relevant factors). (5) Information used to operate and/ or evaluate a program, such as statutory and regulatory requirements and program standards. (6) If applicable, information regarding how a program is administered by

§ 1000.174 more than one bureau, including a point of contact for information for the other bureau(s); and (7) Other information requested by the Tribe/Consortium in its letter of interest. (d) If a bureau fails to provide reasonably related information requested by a Tribe/Consortium, the Tribe/Consortium may appeal the failure in accordance with subpart R of this part. These requests shall be considered for a fee waiver under the Freedom of Information Act. § 1000.173 How does a newly selected Tribe/Consortium initiate the negotiation phase? (a) To initiate the negotiation phase, an authorized official of the newly selected Tribe/Consortium submits a written request to negotiate an AFA as indicated in the following table:

For a . . .

the Tribe/Consortium should submit the request to . . .

and the request should identify . . .

(1) BIA program .............. (2) Non-BIA program .......

the Director, OSG. ................................................ the bureau representative designated to respond to the Tribe’s/Consortium’s request for information.

the lead negotiator(s) for the Tribe/Consortium. the lead negotiator(s) for the Tribe/Consortium and the specific program(s) that the Tribe/Consortium seeks to negotiate.

(b) The Tribal/Consortium official must submit the information required

by paragraph (a) of this section by the deadline shown in the following table:

Type of program

Type of tribe/consortium

(1) BIA ...................................... (2) BIA ...................................... (3) Non-BIA ..............................

Fiscal year ................................................................................. Calendar year ........................................................................... Fiscal year or calendar year .....................................................

Submission deadline April 1. May 1. May 1*.

* The request may be submitted later than this date where the bureau and the Tribe/Consortium agree that administration for a partial year funding agreement is feasible.

§ 1000.174 How and when does the bureau respond to a request to negotiate? (a) Within 15 days of receiving a Tribe’s/Consortium’s request to negotiate, the bureau will take the steps in this section. If more than one bureau is involved, a lead bureau must be designated to conduct negotiations. (b) If the program is contained on the section 405(c) list, the bureau will identify the lead negotiator(s) and awarding official(s) for executing the AFA. (c) If the program is potentially of a special geographic, cultural, or historic significance to a Tribe/Consortium, the bureau will schedule a pre-negotiation

meeting with the Tribe/Consortium as soon as possible. The purpose of the meeting is to assist the bureau in determining if the program is available for negotiation. (d) Within 10 days after convening a meeting under paragraph (c) of this section: (1) If the program is available for negotiation, the bureau will identify the lead negotiator(s) and awarding official(s); or (2) If the program is unavailable for negotiation, the bureau will give to the Tribe/Consortium a written explanation of why the program is unavailable for negotiation.

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§ 1000.175

25 CFR Ch. VI (4–1–04 Edition)

§ 1000.175 What is the process for conducting the negotiation phase? (a) Within 30 days of receiving a written request to negotiate, the bureau and the Tribe/Consortium will agree to a date to conduct an initial negotiation meeting. Subsequent meetings will be held with reasonable frequency at reasonable times. (b) Tribe/Consortium and bureau lead negotiators must: (1) Be authorized to negotiate on behalf of their government; and (2) Involve all necessary persons in the negotiation process. (c) Once negotiations have been successfully completed, the bureau and Tribe/Consortium will prepare and either execute or disapprove an AFA within 30 days or by a mutually agreed upon date. § 1000.176 What issues must the bureau and the Tribe/Consortium address at negotiation meetings? The negotiation meetings referred to in § 1000.175 must address at a minimum the following: (a) The specific Tribe/Consortium proposal(s) and intentions; (b) Legal or program issues that the bureau or the Tribe/Consortium identify as concerns; (c) Options for negotiating programs and related budget amounts, including mutually agreeable options for developing alternative formats for presenting budget information to the Tribe/Consortium; (d) Dates for conducting and concluding negotiations; (e) Protocols for conducting negotiations; (f) Responsibility for preparation of a written summary of the discussions; and (g) Who will prepare an initial draft of the AFA. § 1000.177 What happens AFA is signed?

when

the

(a) After all parties have signed the AFA, a copy is sent to the Tribe/Consortium. (b) The Secretary forwards copies of the AFA to: (1) The House Subcommittee on Native Americans and Insular Affairs; and

(2) The Senate Committee on Indian Affairs; (c) For BIA programs, the AFA is also forwarded to each Indian Tribe/ Consortium served by the BIA Agency that serves any Tribe/Consortium that is a party to the AFA. § 1000.178 When does the AFA become effective? The effective date is not earlier than 90 days after the AFA is submitted to the Congressional committees under § 1000.177(b). § 1000.179 What happens if the Tribe/ Consortium and bureau negotiators fail to reach an agreement? (a) If the Tribe/Consortium and bureau representatives do not reach agreement during the negotiation phase by the mutually agreed to date for completing negotiations, the Tribe/ Consortium and the bureau may each make a last and best offer to the other party. (b) If a last and best offer is not accepted within 15 days, the bureau will provide a written explanation to the Tribe/Consortium explaining its reasons for not entering into an AFA for the requested program, together with the applicable statement prescribed in subpart R of this part, concerning appeal or review rights. (c) The Tribe/Consortium has 30 days from receipt of the bureau’s written explanation to file an appeal. Appeals are handled in accordance with subpart R of this part. NEGOTIATION PROCESS FOR SUCCESSOR ANNUAL FUNDING AGREEMENTS § 1000.180 What is a successor AFA? A successor AFA is a funding agreement negotiated after a Tribe’s/Consortium’s initial agreement with a bureau for continuing to perform a particular program. The parties to the AFA should generally use the terms of the existing AFA to expedite and simplify the exchange of information and the negotiation process. § 1000.181 How does the Tribe/Consortium initiate the negotiation of a successor AFA? Although a written request is desirable to document the precise request

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Office of the Assistant Secretary, Interior and date of the request, a written request is not mandatory. If either party anticipates a significant change in an existing program in the AFA, it should notify the other party of the change at the earliest possible date so that the other party may plan accordingly. § 1000.182 What is the process for negotiating a successor AFA? The Tribe/Consortium and the bureau use the procedures in §§ 1000.173— 1000.179.

Subpart H—Limitation and/or Reduction of BIA Services, Contracts, and Funds § 1000.190 What is the purpose of this subpart? This subpart prescribes the process that the Secretary uses to determine whether a BIA self-governance funding agreement causes a limitation or reduction in the services, contracts, or funds that any other Tribe/Consortium or Tribal organization is eligible to receive under self-determination contracts, other self-governance compacts, or direct services from BIA. This type of limitation is prohibited by section 406(a) of Pub. L. 93–638. For the purposes of this subpart, Tribal organization means an organization eligible to receive services, contracts, or funds under section 102 of Pub. L. 93–638. § 1000.191 To whom does this subpart apply? Participating and non-participating Tribes/Consortia and Tribal organizations are subject to this subpart. It does not apply to the general public and non-Indians. § 1000.192 What services, contracts, or funds are protected under section 406(a)? Section 406(a) protects against the actual reduction or limitations of services, contracts, or funds. § 1000.193 Who may raise the issue of limitation or reduction of services, contracts, or funding? BIA or any affected Tribe/Consortium or Tribal organization may raise the issue that a BIA self-governance AFA limits or reduces particular services,

§ 1000.195 contracts, or funding for which it is eligible. § 1000.194 When must BIA raise the issue of limitation or reduction of services, contracts, or funding? (a) From the beginning of the negotiation period until the end of the first year of implementation of an AFA, BIA may raise the issue of limitation or reduction of services, contracts, or funding. If BIA and a participating Tribe/ Consortium disagree over the residual information, a participating Tribe/Consortium may ask the Deputy Commissioner—Indian Affairs to reconsider residual levels for particular programs. [See § 1000.95(d)] (b) After the AFA is signed, BIA must raise the issue of any undetermined funding amounts within 30 days after the final funding level is determined. BIA may not raise this issue after this period has elapsed. § 1000.195 When must an affected Tribe/Consortium or Tribal organization raise the issue of a limitation or reduction of services, contracts, or funding for which it is eligible? (a) A Tribe/Consortium or Tribal organization may raise the issue of limitation or reduction of services, contracts, or funding for which it is eligible during: (1) Region-wide Tribal shares meetings occurring before the first year of implementation of an AFA; (2) Within the 90-day review period before the effective date of the AFA; and (3) The first year of implementation of an AFA. (b) Any Tribe/Consortium or Tribal organization claiming a limitation or reduction of contracts, services, or funding for which it is eligible must notify, in writing, both the Department and negotiating Tribe/Consortium. Claims may only be filed within the periods specified in paragraph (a) of this section.

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§ 1000.196

25 CFR Ch. VI (4–1–04 Edition)

§ 1000.196 What must be included in a finding by BIA or in a claim by an affected Tribe/Consortium or Tribal organization regarding the issue of a limitation or reduction of services? An affected Tribe/Consortium must include in its claim a written explanation identifying the alleged limitation or reduction of services, contracts, or funding for which it is eligible. A finding by BIA must likewise identify the limitation or reduction. § 1000.197 How claim?

will

BIA

resolve

a

All findings and claims timely made in accordance with §§ 1000.194 through 1000.195 will be resolved in accordance with 25 CFR part 2. § 1000.198 How must a limitation or reduction in services, contracts, or funds be remedied? (a) If funding a participating Tribe/ Consortium will limit or reduce services, contracts, or funds for which another Tribe/Consortium or Tribal organization is eligible, BIA must remedy the reduction as follows: (1) In the current AFA year BIA must use shortfall funding, supplemental funding, or other available BIA resources; and (2) In a subsequent AFA year, BIA may adjust the AFA funding in an AFA to correct a finding of actual reduction in services, contracts, or funds for that subsequent year. (b) All adjustments under this section must be mutually agreed between BIA and the participating Tribe/Consortium.

Subpart I—Public Consultation Process § 1000.210 When does a non-BIA bureau use a public consultation process related to the negotiation of an AFA? When required by law or when appropriate under bureau discretion, a bureau may use a public consultation process in negotiating an AFA.

§ 1000.211 Will the bureau contact the Tribe/Consortium before initiating public consultation process for a non-BIA AFA under negotiation? Yes, the bureau and the Tribe/Consortium will discuss the consultation process to be used in negotiating a nonBIA AFA. (a) When public consultation is required by law, the bureau will follow the required process and will involve the Tribe/Consortium in that process to the maximum extent possible. (b) When public consultation is a matter of bureau discretion, at Tribal request the Tribe/Consortium and the bureau, unless prohibited by law, will jointly develop guidelines for that process, including the conduct of any future public meetings. The bureau and the Tribe/Consortium will jointly identify a list of potential project beneficiaries, third-party stakeholders, or third-party users (affected parties) for use in the public consultation process. § 1000.212 What is the role of the Tribe/Consortium when a bureau initiates a public meeting? When a bureau initiates a public meeting with affected parties it will take the following actions: (a) The bureau will notify the Tribe/ Consortium of the meeting time, place, and invited parties: (1) Ten days in advance, if possible; or (2) If less than 10 days in advance, at the earliest practical time. (b) When the bureau notifies the Tribe/Consortium, the bureau will invite the Tribe/Consortium to participate in and, unless prohibited by law, to co-sponsor or co-facilitate the meeting. (c) When possible, the bureau and the Tribe/Consortium should meet to plan and discuss the conduct of the meeting, meeting protocols, and general participation in the proposed consultation meeting. (d) The bureau and the Tribe/Consortium will conduct the meeting in a manner that facilitates and does not undermine the government-to-government relationship and self-governance; (e) The Tribe/Consortium may provide technical support to the bureau to

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Office of the Assistant Secretary, Interior enhance the consultation process, as mutually agreed. § 1000.213 What should the bureau do if it is invited to attend a meeting with respect to the Tribe’s/Consortium’s proposed AFA? If the bureau is invited to participate in meetings, hearings, etc., held or conducted by other parties, where the subject matter of the AFA under negotiation is expected to be raised, the bureau: (a) Shall notify the Tribe/Consortium at the earliest practical time; and (b) Should encourage the meeting sponsor to invite the Tribe/Consortium to participate. § 1000.214 Will the bureau and the Tribe/Consortium share information concerning inquiries about the Tribes/Consortia and the AFA? Yes, the bureau and the Tribe/Consortium will exchange information about inquiries from affected or interested parties relating to the AFA under negotiation.

Subpart J—Waiver of Regulations § 1000.220 What regulations apply to self-governance Tribes? All regulations that govern the operation of programs included in an AFA apply unless waived under this subpart. To the maximum extent practical, the parties should identify these regulations in the AFA. § 1000.221 Can the Secretary grant a waiver of regulations to a Tribe/ Consortium? Yes, a Tribe/Consortium may ask the Secretary to grant a waiver of some or all Department of the Interior regulation(s) applicable to a program, in whole or in part, operated by a Tribe/ Consortium under an AFA. § 1000.222 How does a Tribe/Consortium obtain a waiver? To obtain a waiver, the Tribe/Consortium must: (a) Submit a written request from the designated Tribal official to the Director for BIA programs or the appropriate bureau/office director for nonBIA programs;

§ 1000.226 (b) Identify the regulation to be waived and the reasons for the request; (c) Identify the programs to which the waiver would apply; (d) Identify what provisions, if any, would be substituted in the AFA for the regulation to be waived; and (e) When applicable, identify the effect of the waiver on any trust programs or resources. § 1000.223 When can a Tribe/Consortium request a waiver of a regulation? A Tribe/Consortium may request a waiver of a regulation: (a) As part of the negotiation process; or (b) After an AFA has been executed. § 1000.224 How can a Tribe/Consortium expedite the review of a regulation waiver request? A Tribe/Consortium may request a meeting or other informal discussion with the appropriate bureau officials before submitting a waiver request. (a) To set up a meeting, the Tribe/ Consortium should contact: (1) For BIA programs, the Director, OSG; or (2) For non-BIA programs, the designated representative of the bureau. (b) The meeting or discussion is intended to provide: (1) A clear understanding of the nature of the request; (2) Necessary background and information; and (3) An opportunity for the bureau to offer appropriate technical assistance. § 1000.225 Are meetings or discussions mandatory? No, a meeting with the bureau officials is not necessary to submit a waiver request. § 1000.226 On what basis may the Secretary deny a waiver request? The Secretary may deny a waiver request if: (a) For a Title-I-eligible program, the requested waiver is prohibited by Federal law; or (b) For a non-Title-I-eligible program, the requested waiver is: (1) Prohibited by Federal law; or (2) Inconsistent with the express provisions of the AFA.

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§ 1000.227

25 CFR Ch. VI (4–1–04 Edition)

§ 1000.227 What happens if the Secretary denies the waiver request? If the Secretary denies a waiver request, the Secretary issues a written decision stating: (a) The basis for the decision; (b) The decision is final for the Department; and (c) The Tribe/Consortium may request reconsideration of the denial. § 1000.228 What are examples of waivers prohibited by law? Examples of when a waiver is prohibited by Federal law include: (a) When the effect would be to waive or eliminate express statutory requirements; (b) When a statute authorizes civil and criminal penalties; (c) When it would result in a failure to ensure that proper health and safety standards are included in an AFA (section 403(e)(2)); (d) When it would result in a reduction of the level of trust services that would have been provided by the Secretary to individual Indians (section 403(g)(4)); (e) When it would limit or reduce the services, contracts, or funds to any other Indian Tribe or Tribal organization (section 406(a)); (f) When it would diminish the Federal trust responsibility to Tribes, individual Indians or Indians with trust allotments (Section 406(b)); or (g) When it would violate Federal case law. § 1000.229 May a Tribe/Consortium propose a substitute for a regulation it wishes to be waived? Yes, where a Tribe/Consortium wishes to replace the waived regulation with a substitute that otherwise maintains the requirements of the applicable Federal law, the Secretary may be able to approve the waiver request. The Tribe/Consortium and bureau officials must negotiate to develop a suggested substitution. § 1000.230 How is a waiver approval documented for the record? The waiver decision is made part of the AFA by attaching a copy of it to the AFA and by mutually executing any necessary conforming amendments

to the AFA. The decisions announcing the waiver also will be posted on the Office of Self-Governance web site and all such decisions shall be made available on request. § 1000.231 How does a Tribe/Consortium request reconsideration of the Secretary’s denial of a waiver? (a) The Tribe/Consortium may request reconsideration of a waiver denial. To do so, the Tribe/Consortium must submit a request to: (1) The Director, OSG, for BIA programs; or (2) The appropriate bureau head, for non-BIA programs. (b) The request must be filed within 30 days of the day the decision is received by certified mail (return receipt requested) or by hand delivery. A request submitted by mail will be considered filed on the postmark date. (c) The request must identify the issues to be addressed, including a statement of reasons supporting the request. § 1000.232 When must DOI respond to a request for reconsideration? The Secretary must issue a written decision within 30 days of the Department’s receipt of a request for reconsideration. This decision is final for the Department and no administrative appeal may be made.

Subpart K—Construction § 1000.240 What construction programs included in an AFA are subject to this subpart? (a) All BIA and non-BIA construction programs included in an AFA are subject to this subpart. This includes design, construction, repair, improvement, expansion, replacement or demolition of buildings or facilities, and other related work for Federal, or Federally funded Tribal, facilities and projects. (b) The following programs and activities are not construction programs and activities: (1) Activities limited to providing planning services, administrative support services, coordination, responsibility for the construction project, dayto-day on-site management on site-

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Office of the Assistant Secretary, Interior

§ 1000.244

No, a BIA or non-BIA construction program does not automatically create an agency relationship. However, Federal law, provisions of an AFA, or Federal actions may create an agency relationship.

engineering standards, appropriate for the particular project; and (3) Necessary inspections and testing by the Tribe. (b) The AFA must comply with applicable Federal laws, program statutes and regulations. (c) The AFA must specify the services to be provided, the work to be performed, and the responsibilities of the Tribe/Consortium and the Secretary under the AFA. (d) The Secretary may require the Tribe/Consortium to provide brief progress reports and financial status reports. The parties may negotiate in the AFA the frequency, format and content of the reporting requirement. As negotiated, these reports may include: (1) A narrative of the work accomplished; (2) The percentage of the work completed; (3) A report of funds expended during the reporting period; and (4) The total funds expended for the project.

§ 1000.242 What provisions relating to a construction program may be included in an AFA?

§ 1000.244 May the Secretary suspend construction activities under an AFA?

The Secretary and the Tribe/Consortium may negotiate to apply specific provisions of the Office of Federal Procurement and Policy Act and Federal Acquisition Regulations to a construction part of an AFA. Absent a negotiated agreement, such provisions and regulatory requirements do not apply.

(a) The Secretary may require a Tribe/Consortium to suspend certain work under a construction portion of an AFA for up to 30 days only if: (1) Site conditions adversely affect health and safety; or (2) Work in progress or completed fails to substantially carry out the terms of the AFA without good cause. (b) The Secretary may suspend only work directly related to the criteria specified in paragraph (a) of this section unless other reasons for suspension are specifically negotiated in the AFA. (c) Unless the Secretary determines that a health and safety emergency requiring immediate action exists, before suspending work the Secretary must provide: (1) A 5 working days written notice; and (2) An opportunity for the Tribe/Consortium to correct the problem. (d) The Tribe/Consortium must be compensated for reasonable costs due

management and administration of the project, which may include cost management, project budgeting, project scheduling and procurement except that all project design and actual construction activities are subject to all the requirements of subpart K, whether performed by a Tribe/Consortium, subcontractor, or consultant. (2) Housing Improvement Program or road maintenance program activities of BIA; (3) Operation and maintenance programs; and (4) Non-403(c) programs that are less than $100,000, subject to section 403(e)(2) of the Act, other applicable Federal law, and § 1000.256 of this subpart. § 1000.241 Does this subpart create an agency relationship?

§ 1000.243 What special provisions must be included in an AFA that contains a construction program? An AFA that contains a construction program must address the requirements listed in this section. (a) The AFA must specify how the Secretary and the Tribe/Consortium must ensure that proper health and safety standards are provided for in the implementation of the AFA, including but not limited to: (1) The use of architects and engineers licensed to perform the type of construction involved in the AFA; (2) Applicable Federal, state, local or Tribal building codes and applicable

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§ 1000.245

25 CFR Ch. VI (4–1–04 Edition)

to any suspension of work that occurred through no fault of the Tribe/ Consortium. Project funds will not be used for this purpose. However, if suspension occurs due to the action or inaction of the Tribe/Consortium, then project funds will be used to cover suspension related activities. § 1000.245 May a Tribe/Consortium continue work with construction funds remaining in an AFA at the end of the funding year? Yes, any funds remaining in an AFA at the end of the funding year may be spent for construction under the terms of the AFA. § 1000.246 Must an AFA that contains a construction project or activity incorporate provisions of Federal construction standards? No, the Secretary may provide information about Federal standards as early as possible in the construction process. If Tribal construction standards are consistent with or exceed applicable Federal standards, then the Secretary must accept the Indian Tribe/Consortium’s proposed standards. The Secretary may accept commonly accepted industry construction standards. § 1000.247 May the Secretary require design provisions and other terms and conditions for construction programs or activities included in an AFA under section 403(c) of the Act? Yes, the relevant bureau may provide to the Tribe/Consortium project design criteria and other terms and conditions that are required for such a project. The project must be completed in accordance with the terms and conditions set forth in the AFA. § 1000.248 What is the Tribe’s/Consortium’s role in a construction program included in an AFA? The Tribe/Consortium has the following role regarding a construction portion of an AFA: (a) Under the Act, the Indian Tribe/ Consortium must successfully complete the project in accordance with the terms and conditions in the AFA. (b) The Tribe/Consortium must give the Secretary timely notice of any pro-

posed changes to the project that require an increase to the negotiated funding amount or an increase in the negotiated performance period or any other significant departure from the scope or objective of the project. The Tribe/Consortium and Secretary may negotiate to include timely notice requirements in the AFA. § 1000.249 What is the Secretary’s role in a construction program in an AFA? The Secretary has the following role regarding a construction program contained in an AFA: (a) Except as provided in § 1000.256, the Secretary may review and approve planning and design documents in accordance with terms negotiated in the AFA to ensure health and safety standards and compliance with Federal law and other program mandates; (b) Unless otherwise agreed to in an AFA, the Secretary reserves a royaltyfree, nonexclusive, and irrevocable license to reproduce, publish, or otherwise use for Federal Government purposes, designs produced in the construction program that are funded by AFA monies, including: (1) The copyright to any work developed under a contract or subcontract; and (2) Any rights of copyright that an Indian Tribe/Consortium or a Tribal contractor purchases through the AFA; (c) The Secretary may conduct onsite monitoring visits as negotiated in the AFA; (d) The Secretary must approve any proposed changes in the construction program or activity that require an increase in the negotiated AFA funding amount or an increase in the negotiated performance period or are a significant departure from the scope or objective of the construction program as agreed to in the AFA; (e) The Secretary may conduct final project inspection jointly with the Indian Tribe/Consortium and may accept the construction project or activity as negotiated in the AFA; (f) Where the Secretary and the Tribe/Consortium share construction program activities, the AFA may provide for the exchange of information;

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Office of the Assistant Secretary, Interior (g) The Secretary may reassume the construction portion of an AFA if there is a finding of: (1) A significant failure to substantially carry out the terms of the AFA without good cause; or (2) Imminent jeopardy to a physical trust asset, to a natural resource, or that adversely affects public health and safety as provided in subpart M of this part. § 1000.250 How are property and funding returned if there is a reassumption for substantial failure to carry out an AFA? If there is a reassumption stantial failure to carry out property and funding will be as provided in subparts M and part.

for suban AFA, returned N of this

§ 1000.251 What happens when a Tribe/ Consortium is suspended for substantial failure to carry out the terms of an AFA without good cause and does not correct the failure during the suspension? (a) Except when the Secretary makes a finding of imminent jeopardy to a physical trust asset, a natural resource, or public health and safety as provided in subpart M of these regulations a finding of substantial failure to carry out the terms of the AFA without good cause must be processed under the suspension of work provision of § 1000.244. (b) If the substantial failure to carry out the terms of the AFA without good cause is not corrected or resolved during the suspension of work, the Secretary may initiate a reassumption at the end of the 30-day suspension of work if an extension has not been negotiated. Any unresolved dispute will be processed in accordance with the Contract Disputes Act of 1978, 41 U.S.C. 601, et seq. § 1000.252 Do all provisions of other subparts apply to construction portions of AFAs? Yes, all provisions of other subparts apply to construction portions of AFAs unless those provisions are inconsistent with this subpart.

§ 1000.256 § 1000.253 When a Tribe withdraws from a Consortium, is the Secretary required to award to the withdrawing Tribe a portion of funds associated with a construction project if the withdrawing Tribe so requests? Under § 1000.35 of this part, a Tribe may withdraw from a Consortium and request its portion of a construction project’s funds. The Secretary may decide not to award these funds if the award will affect the Consortium’s ability to complete a non-severable phase of the project within available funding. An example of a non-severable phase of a project would be the construction of a single building serving all members of the Consortium. An example of a severable phase of a project would be the funding for a road in one village where the Consortium would be able to complete the roads in the other villages that were part of the project approved initially in the AFA. The Secretary’s decision under this section may be appealed under subpart R of this part. § 1000.254 May a Tribe/Consortium reallocate funds from a construction program to a non-construction program? No, a Tribe/Consortium may not reallocate funds from a construction program to a non-construction program unless otherwise provided under the relevant appropriation acts. § 1000.255 May a Tribe/Consortium reallocate funds among construction programs? Yes, a Tribe/Consortium may reallocate funds among construction programs if permitted by appropriation law or if approved in advance by the Secretary. § 1000.256 Must the Secretary retain project funds to ensure proper health and safety standards in construction projects? Yes, the Secretary must retain project funds to ensure proper health and safety standards in construction projects. Examples of purposes for which bureaus may retain funds include:

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§ 1000.270

25 CFR Ch. VI (4–1–04 Edition)

(a) Determining or approving appropriate construction standards to be used in AFAs; (b) Verifying that there is an adequate Tribal inspection system utilizing licensed professionals; (c) Providing for sufficient monitoring of design and construction by the Secretary; and (d) Requiring corrective action during performance when appropriate.

Subpart L—Federal Tort Claims § 1000.270 What does this subpart cover? This subpart explains the applicability of the Federal Tort Claims Act (FTCA). This section covers: (a) Coverage of claims arising out of the performance of functions under Self-Governance AFA’s; and (b) Procedures for filing claims under FTCA.

(b) What claims may not be pursued under FTCA? (1) Claims against subcontractors arising out of the performance of subcontracts with a Self-Governance Tribe/Consortium; (2) Claims for on-the-job injuries which are covered by workmen’s compensation; (3) Claims for breach of contract rather than tort claims; or (4) Claims resulting from activities performed by an employee which are outside the scope of employment. (c) What remedies are expressly excluded by FTCA and therefore are barred? (1) Punitive damages, unless otherwise authorized by 28 U.S.C. 2674; and (2) Other remedies not permitted under applicable state law. § 1000.273 Is there a deadline for filing FTCA claims?

§ 1000.271 What other statutes and regulations apply to FTCA coverage? A number of other statutes and regulations apply to FTCA coverage, including the Federal Tort Claims Act (28 U.S.C. 1346(b), 2401, 2671–2680) and related Department of Justice regulations in 28 CFR part 14.

Yes, claims shall be filed within 2 years of the date of accrual. (28 U.S.C. 2401).

§ 1000.272 Do Tribes/Consortia need to be aware of areas which FTCA does not cover? Yes, there are claims against SelfGovernance Tribes/Consortia which are not covered by FTCA, claims which may not be pursued under FTCA, and remedies that are excluded by FTCA. The following general guidance is not intended as a definitive description of coverage, which is subject to review by the Department of Justice and the courts on a case-by-case basis. (a) What claims are expressly barred by FTCA and therefore may not be made against the United States, a Tribe or Consortium? Any claim under 28 U.S.C. 2680, including claims arising out of assault, battery, false imprisonment, false arrest, malicious prosecution, abuse of process, libel, slander, misrepresentation, deceit, or interference with contract rights, unless otherwise authorized by 28 U.S.C. 2680(h).

The Federal government has 6 months to process a FTCA claim after the claim is received by the Federal agency, before a lawsuit may be filed.

§ 1000.274 How long does the Federal government have to process a FTCA claim after the claim is received by the Federal agency, before a lawsuit may be filed?

§ 1000.275 Is it necessary for a self-governance AFA to include any clauses about FTCA coverage? No, clauses about FTCA coverage are optional. At the request of Tribes/Consortia, self-governance AFA’s shall include the following clause to clarify the scope of FTCA coverage: For purposes of Federal Tort Claims Act coverage, the Tribe/Consortium and its employees (including individuals performing personal services contracts with the tribe/ consortium) are deemed to be employees of the Federal government while performing work under this AFA. This status is not changed by the source of the funds used by the Tribe/Consortium to pay the employee’s salary and benefits unless the employee receives additional compensation for performing covered services from anyone other than the Tribe/Consortium.

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Office of the Assistant Secretary, Interior § 1000.276 Does FTCA apply to a selfgovernance AFA if FTCA is not referenced in the AFA? Yes, FTCA applies even if the AFA does not mention it. § 1000.277 To what extent shall the Tribe/Consortium cooperate with the Federal government in connection with tort claims arising out of the Tribe’s/Consortium’s performance? (a) The Tribe/Consortium shall designate an individual to serve as tort claims liaison with the Federal government. (b) As part of the notification required by 28 U.S.C. 2679(c), the Tribe/ Consortium shall notify the Secretary immediately in writing of any tort claim (including any proceeding before an administrative agency or court) filed against the Tribe/Consortium or any of its employees that relates to performance of a self-governance AFA or subcontract. (c) The Tribe/Consortium, through its designated tort claims liaison, shall assist the appropriate Federal agency in preparing a comprehensive, accurate, and unbiased report of the incident so that the claim may be properly evaluated. This report should be completed within 60 days of notification of the filing of the tort claim. The report should be complete in every significant detail and include as appropriate: (1) The date, time and exact place of the accident or incident; (2) A concise and complete statement of the circumstances of the accident or incident; (3) The names and addresses of Tribal and/or Federal employees involved as participants or witnesses; (4) The names and addresses of all other eyewitnesses; (5) An accurate description of all government and other privately-owned property involved and the nature and amount of damage, if any; (6) A statement as to whether any person involved was cited for violating a Federal, State or tribal law, ordinance, or regulation; (7) The Tribe’s/Consortium’s determination as to whether any of its employees (including Federal employees assigned to the Tribe/Consortium) involved in the incident giving rise to the

§ 1000.279 tort claim were acting within the scope of their employment in carrying out the contract at the time the incident occurred; (8) Copies of all relevant documentation, including available police reports, statements of witnesses, newspaper accounts, weather reports, plats and photographs of the site or damaged property, such as may be necessary or useful for purposes of claim determination by the Federal agency; and (9) Insurance coverage information, copies of medical bills, and relevant employment records. (d) The Tribe/Consortium shall cooperate with and provide assistance to the U.S. Department of Justice attorneys assigned to defend the tort claim, including, but not limited to, case preparation, discovery, and trial. (e) If requested by the Secretary, the Tribe/Consortium shall make an assignment and subrogation of all the Tribe’s/Consortium’s rights and claims (except those against the Federal government) arising out of a tort claim against the Tribe/Consortium. (f) If requested by the Secretary, the Tribe/Consortium shall authorize representatives of the Secretary to settle or defend any claim and to represent the Tribe/Consortium in or take charge of any action. (g) If the Federal government undertakes the settlement or defense of any claim or action, the Tribe/Consortium shall provide all reasonable additional assistance in reaching a settlement or asserting a defense. § 1000.278 Does this coverage extend to subcontractors of self-governance AFAs? No, subcontractors or subgrantees providing services to a Pub. L. 93–638 Tribe/Consortium are generally not covered. § 1000.279 Is FTCA the exclusive remedy for a tort claim, including a claim concerning personal injury or death, resulting from the performance of a self-governance AFA? Yes, except as explained in § 1000.272(b). No claim may be filed against a self-governance Tribe/Consortium or employee based upon performance of functions under a self-governance AFA. All claims shall be filed

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§ 1000.280

25 CFR Ch. VI (4–1–04 Edition)

against the United States and are subject to the limitations and restrictions of FTCA. § 1000.280 What employees are covered by FTCA for medical-related claims? The following employees are covered by FTCA for medical-related claims: (a) Permanent employees; (b) Temporary employees; (c) Persons providing services without compensation in carrying out a contract; (d) Persons required because of their employment by a self-governance Tribe/Consortium to serve non-IHS beneficiaries (even if the services are provided in facilities not owned by the Tribe/Consortium; and, (e) Federal employees assigned to the AFA. § 1000.281 Does FTCA cover employees of the Tribe/Consortium who are paid by the Tribe/Consortium from funds other than those provided through the self-governance AFA? Yes, FTCA covers employees of the Tribe/Consortium who are not paid from AFA funds as long as the services out of which the claim arose were performed in carrying out the self-governance AFA. § 1000.282 May persons who are not Indians or Alaska Natives assert claims under FTCA? Yes, non-Indian individuals served under the self-governance AFA, may assert claims under this Subpart. § 1000.283 If the Tribe/Consortium or Tribe’s/Consortium’s employee receives a summons and/or a complaint alleging a tort covered by FTCA, what should the Tribe/Consortium do? As part of the notification required by 28 U.S.C. 2679(c), if the Tribe/Consortium or Tribe’s/Consortium’s employee receives a summons and/or complaint alleging a tort covered by FTCA, the Tribe/Consortium should immediately: (a) Inform the Assistant Solicitor, Procurement and Patents, Office of the Solicitor, Department of the Interior, Room 6511, 1849 C Street NW., Washington, DC 20240,

(b) Inform the Tribe’s/Consortium’s tort claims liaison, and (c) Forward all of the materials identified in § 1000.277(c) to the contacts given in § 1000.283 (a) and (b).

Subpart M—Reassumption § 1000.300 What is the purpose of this subpart? This subpart explains when the Secretary can reassume a program without the consent of a Tribe/Consortium. § 1000.301 When may the Secretary reassume a Federal program operated by a Tribe/Consortium under an AFA? The Secretary may reassume any Federal program operated by a Tribe/ Consortium upon a finding of imminent jeopardy to: (a) A physical trust asset; (b) A natural resource; or (c) Public health and safety. § 1000.302 ‘‘What is imminent ardy’’ to a trust asset?

Imminent jeopardy means an immediate threat and likelihood of significant devaluation, degradation, damage, or loss of a trust asset, or the intended benefit from the asset caused by the actions or inactions of a Tribe/Consortium in performing trust functions. This includes disregarding Federal trust standards and/or Federal law while performing trust functions if the disregard creates such an immediate threat. § 1000.303 What is imminent jeopardy to natural resources? The standard for natural resources is the same as for a physical trust asset, except that a review for compliance with the specific mandatory statutory provisions related to the program as reflected in the funding agreement must also be considered. § 1000.304 What is imminent jeopardy to public health and safety? Imminent jeopardy to public health and safety means an immediate and significant threat of serious harm to human well-being, including conditions that may result in serious injury, or

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Office of the Assistant Secretary, Interior death, caused by Tribal action or inaction or as otherwise provided in an AFA. § 1000.305 In an imminent jeopardy situation, what must the Secretary do? In an imminent jeopardy situation, the Secretary must: (a) The Secretary must immediately notify the Tribe/Consortium in writing following discovery of imminent jeopardy; or (b) If there is an immediate threat to human health, safety, or welfare, the Secretary may immediately reassume operation of the program regardless of the timeframes specified in this subpart. § 1000.306 Must the Secretary always reassume a program, upon a finding of imminent jeopardy? Yes, the Secretary must reassume a program within 60 days of a finding of imminent jeopardy, unless the Secretary’s designated representative determines that the Tribe/Consortium is able to mitigate the conditions. § 1000.307 What happens if the Secretary’s designated representative determines that the Tribe/Consortium cannot mitigate the conditions within 60 days? The Secretary will proceed with the reassumption in accordance with this subpart by sending the Tribe/Consortium a written notice of the Secretary’s intent to reassume. § 1000.308 What will the notice of reassumption include? The notice of reassumption under § 1000.307 will include all of the following items. In addition, if resources are available, the Secretary may offer technical assistance to mitigate the imminent jeopardy. (a) A statement of the reasons supporting the Secretary’s finding. (b) To the extent practical, a description of specific measures that must be taken by the Tribe/Consortium to eliminate imminent jeopardy. (c) A notice that funds for the management of the trust asset, natural resource, or public health and safety found to be in imminent jeopardy may not be reallocated or otherwise trans-

§ 1000.311 ferred without the Secretary’s written consent. (d) A notice of intent to invoke the return of property provision of the AFA. (e) The effective date of the reassumption if the Tribe/Consortium does not eliminate the imminent jeopardy. If the deadline is less than 60 days after the date of receipt, the Secretary must include a justification. (f) The amount of funds, if any, that the Secretary believes the Tribe/Consortium should refund to the Department for operation of the reassumed program. This amount cannot exceed the amount provided for that program under the AFA and must be based on such factors as the time or functions remaining in the funding cycle. § 1000.309 How much time will a Tribe/ Consortium have to respond to a notice of imminent jeopardy? The Tribe/Consortium will have 5 days to respond to a notice of imminent jeopardy. The response must be written and may be mailed, telefaxed, or sent by electronic mail. If sent by mail, it must be sent by certified mail, return receipt requested; the postmark date will be considered the date of response. § 1000.310 What information must the Tribe’s/Consortium’s response contain? (a) The Tribe’s/Consortium’s response must indicate the specific measures that the Tribe/Consortium will take to eliminate the finding of imminent jeopardy. (b) If the Tribe/Consortium proposes mitigating actions different from those prescribed in the Secretary’s notice of imminent jeopardy, the response must explain the reasons for deviating from the Secretary’s recommendations and how the proposed actions will eliminate imminent jeopardy. § 1000.311 How will the Secretary reply to the Tribe’s/Consortium’s response? The Secretary will make a written determination within 10 days of the Tribe’s/Consortium’s written response as to whether the proposed measures will eliminate the finding of imminent jeopardy.

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§ 1000.312

25 CFR Ch. VI (4–1–04 Edition)

§ 1000.312 What happens if the Secretary accepts the Tribe’s/Consortium’s proposed measures? The Secretary must notify the Tribe/ Consortium in writing of the acceptance and suspend the reassumption process. § 1000.313 What happens if the Secretary does not accept the Tribe’s/ Consortium’s proposed measures? (a) If the Secretary finds that the Tribes/Consortia proposed measures will not mitigate imminent jeopardy, he/she will notify the Tribe/Consortium in writing of this determination and of the Tribe’s/Consortium’s right to appeal (b) After the reassumption, the Secretary is responsible for the reassumed program, and will take appropriate corrective action to eliminate the imminent jeopardy which may include sending Department employees to the site. § 1000.314 What must a Tribe/Consortium do when a program is reassumed? On the effective date of reassumption, the Tribe/Consortium must, at the request of the Secretary, deliver all property and equipment, and title thereto: (a) That the Tribe/Consortium received for the program under the AFA; and (b) That has a per item value in excess of $5,000, or as otherwise provided in the AFA. § 1000.315 When must the Tribe/Consortium return funds to the Department? The Tribe/Consortium must repay funds to the Department as soon as practical after the effective date of the reassumption. § 1000.316 May the Tribe/Consortium be reimbursed for actual and reasonable ‘‘wind up costs’’ incurred after the effective date of retrocession? Yes, the Tribe/Consortium may be reimbursed for actual and reasonable ‘‘wind up costs’’ to the extent that funds are available.

§ 1000.317 Is a Tribe’s/Consortium’s general right to negotiate an AFA adversely affected by a reassumption action? A reassumption action taken by the Secretary does not affect the Tribe’s/ Consortium’s ability to negotiate an AFA for programs not affected by the reassumption. § 1000.318 When will the Secretary return management of a reassumed program? A reassumed program may be included in future AFAs, but the Secretary may include conditions in the terms of the AFA to ensure that the circumstances that caused jeopardy to attach do not reoccur.

Subpart N—Retrocession § 1000.330 What is the purpose of this subpart? This subpart explains what happens when a Tribe/Consortium voluntarily returns a program to a bureau. § 1000.331 Is a decision by a Tribe/Consortium not to include a program in a successor agreement considered a retrocession? No, a decision by a Tribe/Consortium not to include a program in a successor agreement is not a retrocession because the Tribe/Consortium is under no obligation beyond an existing AFA. § 1000.332 Who may retrocede a program in an AFA? A Tribe/Consortium may retrocede a program. However, the right of a Consortium member to retrocede may be subject to the terms of the agreement among the members of the Consortium. § 1000.333 How does a Tribe/Consortium retrocede a program? The Tribe/Consortium must submit: (a) A written notice to: (1) The Office of Self-Governance for BIA programs; or (2) The appropriate bureau for nonBIA programs; and (b) A Tribal resolution or other official action of its governing body.

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Office of the Assistant Secretary, Interior § 1000.334 When will the retrocession become effective? Unless subsequently rescinded by the Tribe/Consortium, a retrocession is only effective on a date mutually agreed upon by the Tribe/Consortium and the Secretary, or as provided in the AFA. § 1000.335 How will retrocession affect the Tribe’s/Consortium’s existing and future AFAs? Retrocession does not affect other parts of the AFA or funding agreements with other bureaus. A Tribe/Consortium may request to negotiate for and include retroceded programs in future AFAs or through a self-determination contract. § 1000.336 Does the Tribe/Consortium have to return funds used in the operation of a retroceded program? The Tribe/Consortium and the Secretary must negotiate the amount of funding to be returned to the Secretary for the operation of the retroceded program. This amount must be based on such factors as the time remaining or functions remaining in the funding cycle or as provided in the AFA. § 1000.337 Does the Tribe/Consortium have to return property used in the operation of a retroceded program? On the effective date of any retrocession, the Tribe/Consortium must return all property and equipment, and title thereto: (a) That was acquired under the AFA for the program being retroceded; and (b) That has a per item value in excess of $5,000 at the time of the retrocession, or as otherwise provided in the AFA. § 1000.338 What happens to a Tribe’s/ Consortium’s mature contract status if it has retroceded a program that is also available for self-determination contracting? Retrocession has no effect on mature contract status, provided that the 3 most recent audits covering activities administered by the Tribe have no unresolved material audit exceptions.

§ 1000.352 § 1000.339 How does retrocession affect a bureau’s operation of the retroceded program? The level of operation of the program will depend upon the amount of funding that is returned with the retrocession.

Subpart O—Trust Evaluation Review § 1000.350 What is the purpose of this subpart? This subpart describes how the trust responsibility of the United States is legally maintained through a system of trust evaluations when Tribes/Consortia perform trust functions through AFAs under the Tribal Self-Governance Act of 1994. It describes the principles and processes upon which trust evaluations will be based. § 1000.351 Does the Tribal Self-Governance Act of 1994 alter the trust responsibility of the United States to Indian Tribes and individuals under self-governance? No, the Act does, however, permit a Tribe/Consortium to assume management responsibilities for trust assets and resources on its own behalf and on behalf of individual Indians. Under the Act, the Secretary has a trust responsibility to conduct annual trust evaluations of Tribal performance of trust functions to ensure that Tribal and individual trust assets and resources are managed in accordance with the legal principles and standards governing the performance of trust functions if trust assets or resources are found to be in imminent jeopardy. § 1000.352 What are ‘‘trust resources’’ for the purposes of the trust evaluation process? (a) Trust resources include property and interests in property: (1) That are held in trust by the United States for the benefit of a Tribe or individual Indians; or (2) That are subject to restrictions upon alienation. (b) Trust assets include: (1) Other assets, trust revenue, royalties, or rental, including natural resources, land, water, minerals, funds,

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§ 1000.353

25 CFR Ch. VI (4–1–04 Edition)

property, assets, or claims, and any intangible right or interest in any of the foregoing; (2) Any other property, asset, or interest therein, or treaty right for which the United States is charged with a trust responsibility. For example, water rights and off-reservation treaty rights. (c) This definition defines trust resources for purposes of the trust evaluation process only. § 1000.353 What are ‘‘trust functions’’ for the purposes of the trust evaluation process? Trust functions are those programs necessary to the management of assets held in trust by the United States for an Indian Tribe or individual Indian. ANNUAL TRUST EVALUATIONS § 1000.354

What is a trust evaluation?

A trust evaluation is an annual review and evaluation of trust functions performed by a Tribe/Consortium to ensure that the functions are performed in accordance with trust standards as defined by Federal law. Trust evaluations address trust functions performed by the Tribe/Consortium on its own behalf as well as trust functions performed by the Tribe/Consortium for the benefit of individual Indians or Alaska Natives. § 1000.355 How are trust evaluations conducted? (a) Each year the Secretary’s designated representative(s) will conduct trust evaluations for each self-governance AFA. The Secretary’s designated representative(s) will coordinate with the designated Tribe’s/Consortium’s representative(s) throughout the review process, including the written report required by § 1000.365. (b) This section describes the general framework for trust reviews. However, each Tribe/Consortium may develop, with the appropriate bureau, an individualized trust evaluation process to allow for the Tribe’s/Consortium’s unique history and circumstances and the terms and conditions of its AFA. An individualized trust evaluation process must, at a minimum, contain

the measures in paragraph (d) of this section. (c) To facilitate the review process so as to mitigate costs and maximize efficiency, each Tribe/Consortium must provide access to all records, plans, and other pertinent documents relevant to the program(s) under review not otherwise available to the Department. (d) The Secretary’s designated representative(s) will: (1) Review trust transactions; (2) Conduct on-site inspections of trust resources, as appropriate; (3) Review compliance with applicable statutory and regulatory requirements; (4) Review compliance with the trust provisions of the AFA; (5) Ensure that the same level of trust services is provided to individual Indians as would have been provided by the Secretary; (6) Document deficiencies in the performance of trust functions discovered during the review process; and (7) Ensure the fulfillment of the Secretary’s trust responsibility to Tribes and individual Indians by documenting the existence of: (i) Systems of internal controls; (ii) Trust standards; and (iii) Safeguards against conflicts of interest in the performance of trust functions. (e) At the request of a Tribe/Consortium, at the time the AFA is negotiated, the standards will be negotiated, except where standards are otherwise provided for by law. § 1000.356 May the trust evaluation process be used for additional reviews? Yes, if the parties agree. § 1000.357 May the parties negotiate standards of review for purposes of the trust evaluation? Yes, unless standards are otherwise provided by Federal treaties, statutes, case law or regulations not waived, the Secretary’s designated representative will negotiate standards of review at the request of the Tribe/Consortium.

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§ 1000.365

§ 1000.358 Can an initial review of the status of the trust asset be conducted?

§ 1000.362 What are the consequences of a finding of imminent jeopardy in the annual trust evaluation?

If the parties agree and it is practical, the Secretary may determine the status of the trust resource at the time of the transfer of the function or at a later time.

(a) A finding of imminent jeopardy triggers the Federal reassumption process (see subpart M of this part), unless the conditions in paragraph (b) of this section are met. (b) The reassumption process will not be triggered if the Secretary’s designated representative determines that the Tribe/Consortium: (1) Can cure the conditions causing jeopardy within 60 days; and (2) Will not cause significant loss, harm, or devaluation of a trust asset, natural resources, or the public health and safety.

§ 1000.359 What are the responsibilities of the Secretary’s designated representative(s) after the annual trust evaluation? The Secretary’s representative(s) must prepare a written report documenting the results of the trust evaluation. (a) Upon Tribal/Consortium request, the representative(s) will provide the Tribal/Consortium representative(s) with a copy of the report for review and comment before finalization. (b) The representative(s) will attach to the report any Tribal/Consortium comments that the representative does not accept. § 1000.360 Is the trust evaluation standard or process different when the trust asset is held in trust for an individual Indian or Indian allottee? No, Tribes/Consortia are under the same obligation as the Secretary to perform trust functions and related activities in accordance with trust protection standards and principles whether managing Tribally or individually owned trust assets. The process for conducting annual trust evaluations of Tribal performance of trust functions on behalf of individual Indians is the same as that used in evaluating performance of Tribal trust functions. § 1000.361 Will the annual review include a review of the Secretary’s residual trust functions? Yes, if the annual evaluation reveals that deficient performance of a trust function is due to the action or inaction of a bureau, the evaluation report will note the deficiency and the appropriate Department official will be notified of the need for corrective action. The review of the Secretary’s trust functions shall be based on the standards in this subpart, other applicable law, and other Federal law.

§ 1000.363 What if the trust evaluation reveals problems that do not rise to the level of imminent jeopardy? Where problems not rising to the level of imminent jeopardy are caused by Tribal action or inaction, the conditions must be: (a) Documented in the annual trust evaluation report; (b) Reported to the Secretary; and (c) Reported in writing to: (1) The governing body of the Tribe; and (2) In the case of a Consortium, to the governing body of each Tribe on whose behalf the Consortium is performing the trust functions. § 1000.364 Who is responsible for corrective action? The Tribe/Consortium is primarily responsible for identifying and implementing corrective actions for matters contained in the AFA, but the Department may also suggest possible corrective measures for Tribal consideration. § 1000.365 What are the requirements of the review team report? A report summarizing the results of the trust evaluation will be prepared and copies provided to the Tribe/Consortium. The report must: (a) Be written objectively, concisely, and clearly; and (b) Present information accurately and fairly, including only relevant and adequately supported information, findings, and conclusions.

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§ 1000.366

25 CFR Ch. VI (4–1–04 Edition)

§ 1000.366 Can the Department conduct more than one trust evaluation per Tribe per year? Trust evaluations are normally conducted annually. When the Department receives information of a threat of imminent jeopardy to a trust asset, natural resource, or the public health and safety, the Secretary, as trustee, may conduct a preliminary investigation. If the preliminary investigation shows that appropriate, sufficient data are present to indicate there may be imminent jeopardy, the Secretary’s designated representative: (a) Will notify the Tribe/Consortium in writing; and (b) May conduct an on-site inspection upon 2 days’ advance written notice to the Tribe/Consortium. § 1000.367 Will the Department evaluate a Tribe’s/Consortium’s performance of non-trust related programs? This depends on the terms contained in the AFA.

Subpart P—Reports § 1000.380 What is the purpose of this subpart? This subpart describes what reports are developed under self-governance. § 1000.381 How is information about self-governance developed and reported? Annually, the Secretary will compile a report on self-governance for submission to the Congress. The report will be based on: (a) Audit reports routinely submitted by Tribes/Consortia; (b) The number of retrocessions requested by Tribes/Consortia in the reporting year; (c) The number of reassumptions that occurred in the reporting year; (d) Federal reductions-in-force and reorganizations resulting from selfgovernance activity; (e) The type of residual functions and amount of residual funding retained by BIA; and (f) An annual report submitted to the Secretary by each Tribe/Consortium as described in

§ 1000.382 What may the Tribe’s/Consortium’s annual report on self-governance address? (a) The Tribe’s/Consortium’s annual self-governance report may address: (1) A list of unmet Tribal needs in order of priority; (2) The approved, year-end Tribal budget for the programs and services funded under self-governance, summarized and annotated as the Tribe may deem appropriate; (3) Identification of any reallocation of trust programs; (4) Program and service delivery highlights, which may include a narrative of specific program redesign or other accomplishments or benefits attributed to self-governance; and (5) At the Tribe’s/Consortium’s option, a summary of the highlights of the report referred to in paragraph (a)(2) of this section and other pertinent information the Tribes may wish to report. (b) The report submitted under this section is intended to provide the Department with information necessary to meet its Congressional reporting responsibilities and to fulfill its responsibility as an advocate for self-governance. The Tribal reporting requirement is not intended to be burdensome, and Tribes are encouraged to design and present the report in a brief and concise manner.

Subpart Q—Miscellaneous Provisions § 1000.390 How can a Tribe/Consortium hire a Federal employee to help implement an AFA? If a Tribe/Consortium chooses to hire a Federal employee, it can use one of the arrangements listed in this section: (a) The Tribe can use its own Tribal personnel hiring procedures. Federal employees hired by the Tribe/Consortium are separated from Federal service. (b) The Tribe can ‘‘direct hire’’ a Federal employee as a Tribal employee. The employee will be separated from Federal service and work for the Tribe/ Consortium, but maintain a negotiated Federal benefit package that is paid for by the Tribe/Consortium out of AFA program funds; or

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§ 1000.399

(c) The Tribe can negotiate an agreement under the Intergovernmental Personnel Act, 25 U.S.C. 48, or other applicable Federal law. The employee will remain a Federal employee during the term of the agreement.

(a) Listed exceptions for Tribes and Tribal Consortia; (b) Exceptions in 25 U.S.C. 450j–1(k); and (c) Additional exceptions that OMB may grant.

§ 1000.391 Can a Tribe/Consortium employee be detailed to a Federal service position? Yes, under the Intergovernmental Personnel Act, 25 U.S.C. 48, or other applicable law, when permitted by the Secretary.

§ 1000.396 Does a Tribe/Consortium have additional ongoing requirements to maintain minimum standards for Tribe/Consortium management systems? Yes, the Tribe/Consortium must maintain management systems that are determined to be adequate by an independent audit through the annual single agency audit report that is required by the Act and OMB Circular A– 133.

§ 1000.392 How does the Freedom of Information Act apply? (a) Access to records maintained by the Secretary is governed by the Freedom of Information Act (5 U.S.C. 552) and other applicable Federal law. (b) At the option of the Tribe/Consortium under section 108 of the Pub. L. 93–638, except for previously provided copies of Tribe/Consortium records that the Secretary demonstrates are clearly required to be maintained as part of the record keeping system of the Department of the Interior, records of the Tribe/Consortium shall not be considered Federal records for the purpose of the Freedom of Information Act. (c) The Freedom of Information Act does not apply to records maintained solely by Tribes/Consortia. § 1000.393 How does the Privacy Act apply? At the option of the Tribe/Consortium, section 108(b) of Pub. L. 93–638, as amended, provides that records of the Tribe/Consortium must not be considered Federal records for the purposes of the Privacy Act. § 1000.394 What audit requirements must a self-governance Tribe/Consortium follow? The Tribe/Consortium must provide to the designated official an annual single organization-wide audit as prescribed by the Single Audit Act of 1984, 31 U.S.C. 7501, et seq. § 1000.395 Do OMB circulars and revisions apply to self-governance funding agreements? Yes, OMB circulars and revisions apply, except for:

§ 1000.397 Are there any restrictions on how AFA funds may be spent? Yes, funds may be spent only for costs associated with programs, services, functions, and activities contained in self-governance AFAs. § 1000.398 May a Tribe/Consortium invest funds received under a selfgovernance agreement? Yes, self-governance funds may be invested if such investment is in: (a) Obligations of the United States; (b) Obligations or securities that are within the limits guaranteed or insured by the United States or mutual (or other) funds registered with the Securities and Exchange Commission and that only invest in obligations of the United States or securities that are guaranteed or insured by the United States; or (c) Deposits insured by an agency or instrumentality of the United States or are fully collateralized to ensure protection of the funds even in the event of a bank failure. § 1000.399 How may interest or investment income that accrues on AFAs be used? Unless restricted by the AFA, interest or income earned on investments or deposits of self-governance awards may be: (a) Placed in the Tribe’s general fund and used for any purpose approved by the Tribe; or (b) Used to provide expanded services under the self-governance AFA and to

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§ 1000.400

25 CFR Ch. VI (4–1–04 Edition)

support some or all of the costs of investment services. § 1000.400 Can a Tribe/Consortium retain savings from programs? Yes, for BIA programs, the Tribe/ Consortium may retain savings for each fiscal year during which an AFA is in effect. A Tribe/Consortium must use any savings that it realizes under an AFA, including a construction contract: (a) To provide additional services or benefits under the AFA; or (b) As carryover; and (c) For purposes of this subpart only, programs administered by BIA using appropriations made to other Federal agencies, such as the Department of Transportation, will be treated in accordance with paragraph (b) of this section. § 1000.401 Can a Tribe/Consortium carry over funds not spent during the term of the AFA? This section applies to BIA programs, services, functions, or activities, notwithstanding any other provision of law. Any funds appropriated under the Snyder Act of 1921 (42 Stat. 208), for any fiscal year that are not obligated or spent by the end of the fiscal year for which they were appropriated shall remain available for obligation or expenditure during the following fiscal year. In the case of amounts made available to a Tribe/Consortium under an AFA, if the funds are to be expended in the succeeding fiscal year for the purpose for which they were originally appropriated, contracted or granted, or for which they are authorized to be used under the provisions of § 106(a)(3) of the Act, no additional justification or documentation of such purposes need be provided by the Tribe/Consortium to the Secretary as a condition of receiving or expending such funds. § 1000.402 After a non-BIA AFA has been executed and the funds transferred to a Tribe/Consortium, can a bureau request the return of funds? The bureau may request the return of funds already transferred to a Tribe/ Consortium only under the following circumstances: (a) Retrocession; (b) Reassumption;

(c) Construction, when there are special legal requirements; or (d) As otherwise provided for in the AFA. § 1000.403 How can a person or group appeal a decision or contest an action related to a program operated by a Tribe/Consortium under an AFA? (a) BIA programs. A person or group who is aggrieved by an action of a Tribe/Consortium with respect to programs that are provided by the Tribe/ Consortium under an AFA must follow Tribal administrative procedures. (b) Non-BIA programs. Procedures will vary depending on the program. Aggrieved parties should initially contact the local program administrator (the Indian program contact). Thereafter, appeals will follow the relevant bureau’s appeal procedures. § 1000.404 Must self-governance Tribes/Consortia comply with the Secretarial approval requirements of 25 U.S.C. 81; 82a; and 476 regarding professional and attorney contracts? No, for the period that an agreement entered into under this part is in effect, the provisions of 25 U.S.C. 81, 82a, and 476, do not apply to attorney and other professional contracts by participating Tribes/Consortia. § 1000.405 Are AFA funds non-Federal funds for the purpose of meeting matching requirements? Yes, self-governance AFA funds can be treated as non-Federal funding for the purpose of meeting matching requirements under Federal law. § 1000.406 Does Indian preference apply to services, activities, programs, and functions performed under a self-governance AFA? Tribal law must govern Indian preference in employment, where permissible, in contracting and subcontracting in performance of an AFA. § 1000.407 Do the wage and labor standards in the Davis-Bacon Act apply to Tribes and Tribal Consortia? No, wage and labor standards of the Davis-Bacon Act do not apply to employees of Tribes and Tribal Consortia.

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Office of the Assistant Secretary, Interior They do apply to all other laborers and mechanics employed by contractors and subcontractors in the construction, alteration, and repair (including painting or redecorating of buildings or other facilities) in connection with an AFA. SUPPLY SOURCES § 1000.408 Can a Tribe/Consortium use Federal supply sources in the performance of an AFA? A Tribe/Consortium and its employees may use Federal supply sources (including lodging, airline, interagency motor pool vehicles, and other means of transportation) that must be available to the Tribe/Consortium and to its employees to the same extent as if the Tribe/Consortium were a Federal agency. While implementation of this provision is the responsibility of the General Services Administration, the Department shall assist the Tribe/Consortium to resolve any barriers to full implementation that may arise. While implementation of this provision is the responsibility of the General Services Administration, the Department shall assist the Tribes/Consortia to resolve any barriers to full implementation that may arise to the fullest extent possible. PROMPT PAYMENT ACT § 1000.409 Does the Prompt Payment Act (31 U.S.C. 3901) apply to a nonBIA, non-Indian program AFA? Yes, upon mutual agreement of the parties, an AFA may incorporate the Prompt Payment Act.

Subpart R—Appeals § 1000.420 What does ‘‘Title-I eligible programs’’ mean in this subpart? Throughout this subpart, the phrase ‘‘Title I-eligible programs’’ is used to refer to all programs, functions, services, and activities that the Secretary provides for the benefit of Indians because of their status as Indians without regard to the agency or office of the Department within which the programs, functions, services, and activities have been performed.

§ 1000.422 § 1000.421 What is the purpose of this subpart? This subpart prescribes the process Tribes/Consortia may use to resolve disputes with the Department arising before or after execution of an AFA or compact and certain other disputes related to self-governance. It also describes the administrative process for reviewing disputes related to compact provisions. This subpart describes the process for administrative appeals to: (a) The Interior Board of Indian Appeals (IBIA) for certain pre-AFA disputes; (b) The Interior Board of Contract Appeals (IBCA) for certain post-AFA disputes; (c) The Assistant Secretary for the bureau responsible for certain disputed decisions; (d) The Secretary for reconsideration of decisions involving self-governance compacts; and (e) The agency head for certain preaward AFA disputes. § 1000.422 dled?

How must disputes be han-

(a) The Department encourages its Bureaus to seek all means of dispute resolution before the Tribe/Consortium files a formal appeal(s). (b) Disputes shall be addressed through government-to-government discourse. This discourse must be respectful of government-to-government relationships and relevant FederalTribal agreements, treaties, judicial decisions, and policies pertaining to Indian Tribes. (c) Title I-eligible program disputes may use an informal conference as set forth in 25 CFR 900.153–157. (d) All disputes arising under this rule, including but not limited to Title I-eligible program disputes may use non-binding informal alternative dispute resolution at the option of the Tribe/Consortium, as prescribed in § 402 of this subpart. The Tribe/Consortium may ask for this alternative dispute resolution any time before the issuance of an initial decision of a formal appeal(s). The appeals timetable will be suspended while alternative dispute resolution is pending.

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§ 1000.423

25 CFR Ch. VI (4–1–04 Edition)

§ 1000.423 Are there any decisions that are not administratively appealable under this subpart? Yes, the following types of decisions are not administratively appealable under this subpart but may be appealable under other substantive provisions of the Code of Federal Regulations: (a) Decisions relating to planning and negotiation grants (subparts C and D of this part) and certain discretionary grants not awarded under Title IV (25 CFR part 2); (b) Decisions involving a limitation and/or reduction of services for BIA programs (subpart H of this part)(25 CFR part 2); (c) Decisions regarding requests for waivers of regulations (subpart J of this part); (d) Decisions regarding construction (subpart K of this part) addressed in § 1000.251(b); and (e) Decisions under any other statute, such as the Freedom of Information Act and the Privacy Act (see 43 CFR part 2). § 1000.424 Does a Tribe/Consortium have a right to an informal conference to resolve any disputes? Yes, the Tribe/Consortium may request an informal conference (a nonbinding alternative dispute resolution process). An informal conference is a way to resolve both Title I-eligible program and other disputes as quickly as possible, without the need for a formal appeal. § 1000.425 How does a Tribe/Consortium request an informal conference? The Tribe/Consortium shall file its request for an informal conference with the office of the person whose decision it is appealing, within 30 days of the day it receives the decision. (a) The Tribe/Consortium may either hand-deliver the request for an informal conference to that person’s office, fax the request with confirmation or mail it by certified mail, return receipt requested. (b) If the Tribe/Consortium mails the request, it will be considered filed on the date the Tribe/Consortium mailed it by certified mail.

§ 1000.426 How is an informal conference held? For all purposes relating to these informal conference procedures, the parties are the designated representatives of the Tribe/Consortium and the bureau. (a) The informal conference shall be held within 30 days of the date the request was received, unless the parties agree on another date. (b) Where practicable, at the option of the Tribe/Consortium, the informal conference will be held at the Tribe’s/ Consortium’s office. If the meeting cannot be held at the Tribe’s/Consortium’s office, the parties must agree on an alternative meeting place. (c) The informal conference shall be conducted by a designated representative of the Secretary. (d) Only the parties may make presentations at the informal conference. (e) The informal conference is not a hearing on the record. Nothing said during an informal conference may be used by either party in litigation. § 1000.427 What happens after the informal conference? (a) Within 10 business days of the informal conference, the person who conducted the informal conference shall mail to the Tribe/Consortium a brief summary of the informal conference. The summary must include any agreements reached or changes from the initial position of the bureau or the Tribe/ Consortium. (b) If in its judgment no agreement was reached, the Tribe/Consortium may choose to appeal the initial decision, as modified by any changes made as a result of the informal conference, under § 1000.421 of this subpart to the IBIA, bureau head/Assistant Secretary, or IBCA. § 1000.428 How may a Tribe/Consortium appeal a decision made after the AFA or compact or amendment to an AFA or compact has been signed? With the exception of certain decisions concerning reassumption for imminent jeopardy (see § 1000.408 of this subpart), the Tribe/Consortium may appeal post-award administrative decisions to the IBCA.

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Office of the Assistant Secretary, Interior § 1000.429 What statutes and regulations govern resolution of disputes concerning signed AFAs or compacts that are appealed to IBCA? Section 110 of Pub. L. 93–638 (25 U.S.C. 450 m–1) and the regulations at 25 CFR 900.216–900.230 apply to disputes concerning signed AFAs and compacts that are appealed to the IBCA, except that any references to the Department of Health and Human Services are inapplicable. For the purposes of such appeals: (a) The terms ‘‘contract’’ and ‘‘selfdetermination contract’’ mean compacts and AFAs under the Tribal SelfGovernance Act; and (b) The term ‘‘Tribe’’ means ‘‘Tribe/ Consortium’. § 1000.430 To whom are appeals directed regarding reassumption for imminent jeopardy? Appeals regarding reassumption of Title I-eligible PFSAs are handled by the IBIA under those procedures set out in 25 CFR 900.171 through 900.176. Appeals regarding reassumption of PFSAs that are not Title I-eligible are handled by the IBCA under those procedures set out in 43 CFR part 4. § 1000.431 Does the Equal Access to Justice Act (EAJA) apply to appeals under this subpart? Yes, EAJA claims against the DOI will be heard by IBIA or IBCA, as appropriate, under 43 CFR 4.601 through 4.619, Equal Access to Justice Act (Pub. L. No. 96–481, 92 Stat. 2325, as amended), section 504 of Title 5 U.S.C. and Section 2412 of Title 28 U.S.C. § 1000.432 To whom may a Tribe appeal a decision made before the AFA or an amendment to the AFA or compact is signed? (a) Title I-eligible PFSA pre-award disputes. For Title I—eligible PFSA disputes, appeal may only be filed with IBIA under the provisions set forth in 25 CFR 900.150(a) through (h), 900.152 through 900.169. (b) Other pre-award disputes. For all other pre-award disputes, including those involving PFSAs that are not Title I-eligible, appeals may be filed with the bureau head/Assistant Secretary or IBIA as noted below. However, the Tribe/Consortium may not

§ 1000.433 avail itself of both paths for the same dispute. (1) Bureau head/Assistant Secretary appeal. Unless the initial decision being appealed is one that was made by the bureau head (those appeals are forwarded to the appropriate Assistant Secretary—see § 1000.433(c) of this subpart), the bureau head will decide appeals relating to these pre-award matters, that include but are not limited to disputes regarding: (i) PFSAs that are not Title 1-eligible; (ii) Eligibility for the applicant pool of self-governance Tribes; (iii) BIA residual functions; (iv) Decisions declining to provide requested information as addressed in § 1000.172 of this part; (v) Allocations of program funds when a dispute arises between a Consortium and a withdrawing Tribe; and (vi) Inherently Federal functions. (2) IBIA appeal. The Tribe/Consortium may choose to forego the administrative appeal through the bureau or the Assistant Secretary, as described in the paragraph (b)(1) of this section, and instead appeal directly to IBIA. The standard of review for such IBIA appeals will be an ‘‘abuse of discretion’’ standard. § 1000.433 When and how must a Tribe/ Consortium appeal an adverse preaward decision? (a) If a Tribe/Consortium wishes to exercise its appeal rights under § 1000.432(b)(1), it must make a written request for review to the appropriate bureau head within 30 days of receiving the initial adverse decision. In addition, the Tribe/Consortium may request the opportunity to have a meeting with appropriate bureau personnel in an effort to clarify the matter under dispute before a formal decision by the bureau head. (b) The written request for review should include a statement describing its reasons for a review, with any supporting documentation, or indicate that such a statement or documentation will be submitted within 30 days. A copy of the request must also be sent to the Director of the Office of SelfGovernance.

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§ 1000.434

25 CFR Ch. VI (4–1–04 Edition)

(c) If the initial decision was made by the bureau head, any appeal shall be directed to the appropriate Assistant Secretary. If a Tribe does not request a review within 30 days of receipt of the decision, the initial decision will be final for the Department. § 1000.434 When must the bureau head (or appropriate Assistant Secretary) issue a final decision in the preaward appeal? Within 30 days of receiving the request for review and the statement of reasons described in § 1000.433, the bureau head or, where applicable, the appropriate Assistant Secretary must: (a) Issue a written final decision stating the reasons for the decision; and (b) Send the decision to the Tribe/ Consortium. § 1000.435 When and how will the Assistant Secretary respond to an appeal by a Tribe/Consortium? The appropriate Assistant Secretary will decide an appeal of any initial decision made by a bureau head (see § 1000.433). If the Tribe/Consortium has appealed the bureau’s initial adverse decision of the bureau to the bureau head and the bureau head’s decision on initial appeal is contrary to the Tribe’s/Consortium’s request for relief, or the bureau head fails to make a decision within 30 days of receipt by the bureau of the Tribe’s/Consortium’s initial request for review and any accompanying statement and documentation, the Tribe’s/Consortium’s appeal will be sent automatically to the appropriate Assistant Secretary for decision. The Assistant Secretary must either concur with the bureau head’s decision or issue a separate decision within 60 days of receipt by the bureau of the Tribe’s/ Consortium’s initial request for review and any accompanying statement and documentation. The decision of the Assistant Secretary is final for the Department. § 1000.436 How may a Tribe/Consortium seek reconsideration of the Secretary’s decision involving a self-governance compact? A Tribe/Consortium may request reconsideration of the Secretary’s decision involving a self-governance compact by sending a written request for

reconsideration to the Secretary within 30 days of receipt of the decision. A copy of this request must also be sent to the Director of the Office of SelfGovernance. § 1000.437 When will the Secretary respond to a request for reconsideration of a decision involving a selfgovernance compact? The Secretary must respond in writing to the Tribe/Consortium within 30 days of receipt of the Tribe’s/Consortium’s request for reconsideration. § 1000.438 May Tribes/Consortia appeal Department decisions to a Federal court? Yes, Tribes/Consortia may appeal decisions of Department officials relating to the self-governance program to an appropriate Federal court, as authorized by section 110 of Pub. L. 93–638 (25 U.S.C. 405m-1), or any other applicable law.

Subpart S—Conflicts of Interest § 1000.460 What is an organizational conflict of interest? (a) An organizational conflict of interest arises when there is a direct conflict between the financial interests of the self-governance Tribe/Consortium and: (1) The financial interests of beneficial owners of Indian trust resources; (2) The financial interests of the United States relating to trust resources, trust acquisitions, or lands conveyed or to be conveyed under the Alaska Native Claims Settlement Act 43 U.S. C. 1601 et seq.; or (3) An express statutory obligation of the United States to third parties. This section only applies if the conflict was not addressed when the AFA was first negotiated. (b) This section only applies where the financial interests of the Tribe/ Consortium are significant enough to impair the Tribe’s/Consortium’s objectivity in carrying out the AFA, or a portion of the AFA.

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Office of the Assistant Secretary, Interior § 1000.461 What must a Tribe/Consortium do if an organizational conflict of interest arises under an AFA? This section only applies if the conflict was not addressed when the AFA was first negotiated. When a Tribe/Consortium becomes aware of an organizational conflict of interest, the Tribe/ Consortium must immediately disclose the conflict to the Secretary. § 1000.462 When must a Tribe/Consortium regulate its employees or subcontractors to avoid a personal conflict of interest? A Tribe/Consortium must maintain written standards of conduct to govern officers, employees, and agents (including subcontractors) engaged in functions related to the management of trust assets. § 1000.463 What types of personal conflicts of interest involving tribal officers, employees or subcontractors would have to be regulated by a Tribe/Consortium? The Tribe/Consortium would need a tribally-approved mechanism to ensure that no officer, employee, or agent (including a subcontractor) of the Tribe/ Consortium reviews a trust transaction in which that person has a financial or employment interest that conflicts with that of the trust beneficiary, whether the tribe/consortium or an allottee. Interests arising from membership in, or employment by, a Tribe/ Consortium or rights to share in a tribal claim need not be regulated.

Pt. 1000, App. A (c) Provide for sanctions or remedies for violation of the standards. § 1000.465 May a Tribe/Consortium negotiate AFA provisions on conflicts of interest to take the place of this subpart? (a) A Tribe/Consortium and the Secretary may agree to AFA provisions, concerning either personal or organizational conflicts, that: (1) Address the issues specific to the program and activities contracted; and (2) Provide equivalent protection against conflicts of interest to these regulations. (b) Agreed-upon AFA provisions shall be followed, rather than the related provisions of this subpart. For example, the Tribe/Consortium and the Secretary may agree that using the Tribe’s/Consortium’s own written code of ethics satisfies the objectives of the personal conflicts provisions of subpart, in whole or in part. APPENDIX A TO PART 1000—MODEL COMPACT OF SELF-GOVERNANCE BETWEEN THE TRIBE AND THE DEPARTMENT OF THE INTERIOR ARTICLE I—AUTHORITY AND PURPOSE Section 1—Authority

§ 1000.464 What personal conflicts of interest must the standards of conduct regulate?

This agreement, denoted a compact of SelfGovernance (hereinafter referred to as the ‘‘compact’’), is entered into by the Secretary of the Interior (hereinafter referred to as the ‘‘Secretary’’), for and on behalf of the United States of America under the authority granted by Title IV of the Indian Self Determination and Education Assistance Act, Pub. L. 93–638, as amended, and by the Tribe, under the authority of the Constitution and By-Laws of the Tribe (hereinafter referred to as the ‘‘Tribe’’).

The personal conflicts of interest standards must: (a) Prohibit an officer, employee, or agent (including a subcontractor) from participating in the review, analysis, or inspection of trust transactions involving an entity in which such persons have a direct financial interest or an employment relationship; (b) Prohibit such officers, employees, or agents from accepting any gratuity, favor, or anything of more than nominal value, from a party (other than the Tribe/Consortium) with an in the trust transactions under review; and

This compact shall be liberally construed to achieve its purposes: (a) This compact is to carry out Self-Governance as authorized by Title IV of Pub. L. 93–638, as amended, that built upon the Self Governance Demonstration Project, and transfer control to Tribal governments, upon Tribal request and through negotiation with the United States government, over funding and decision-making of certain Federal programs as an effective way to implement the Federal policy of government-to-government relations with Indian Tribes. (b) This compact is to enable the United States to maintain and improve its unique

Section 2—Purpose

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Pt. 1000, App. A

25 CFR Ch. VI (4–1–04 Edition)

and continuing relationship with and responsibility to the Tribe through Tribal self-governance, so that the Tribe may take its rightful place in the family of governments; remove Federal obstacles to effective selfgovernance; reorganize Tribal government programs and services; achieve efficiencies in service delivery; and provide a documented example for the development of future Federal Indian policy. This policy of Tribal self-governance shall permit an orderly transition from Federal domination of Indian programs and services to allow Indian Tribes meaningful authority to plan, conduct, and administer those programs and services to meet the needs of their people. In implementing Self-Governance, the Bureau of Indian Affairs is expected to provide the same level of service to other Tribal governments and to demonstrate new policies and methods to improve service delivery and address Tribal needs. In fulfilling its responsibilities under the compact, the Secretary hereby pledges that the Department will conduct all relations with the Tribe on a government-to-government basis.

all rights and interests that Indians, or groups of Indians, may have with respect to services, activities, programs, and functions that are provided under the compact. ARTICLE III—OBLIGATIONS OF THE TRIBE Section 1—AFA Programs The Tribe will perform the programs as provided in the specific AFA negotiated under the Act. The Tribe pledges to practice utmost good faith in upholding its responsibility to provide such programs, under the Act. Section 2—Trust Services for Individual Indians To the extent that the AFAs have provisions for trust services to individual Indians that were formerly provided by the Secretary, the Tribe will maintain at least the same level of service as was previously provided by the Secretary. The Tribe pledges to practice utmost good faith in upholding their responsibility to provide such service. ARTICLE IV—OBLIGATIONS OF THE UNITED STATES

ARTICLE II—TERMS, PROVISIONS AND CONDITIONS

Section 1—Trust Responsibility

Section 1—Term This compact shall be effective when signed by the Secretary or an authorized representative and the authorized representative of the Tribe. The term of this compact shall commence [negotiated effective date] and must remain in effect as provided by Federal law or agreement of the parties.

The United States reaffirms the trust responsibility of the United States to the llllll Tribe(s) to protect and conserve the trust resources of the Tribe(s) and the trust resources of individual Indians associated with this compact and any annual funding agreement negotiated under the Tribal Self-Governance Act. Section 2—Trust Evaluations

Section 2—Funding Amount In accordance with Section 403(g) of Title IV of Pub. L. 93–638, as amended, and subject to the availability of appropriations, the Secretary shall provide to the Tribe the total amount specified in each annual funding agreement.

Under Section 403(d) of Pub. L. 93–638, as amended, annual funding agreements negotiated between the Secretary and an Indian Tribe shall include provisions to monitor the performance of trust functions by the Tribe through the annual trust evaluation. ARTICLE V—OTHER PROVISIONS

Section 3—Reports to Congress To implement Section 405 of Pub. L. 93–638, as amended, on each January 1 throughout the period of the compact, the Secretary shall make a written report to the Congress that shall include the views of the Tribe concerning the matters encompassed by Section 405(b) and (d).

Section 1—Facilitation Nothing in this compact may be construed to terminate, waive, modify, or reduce the trust responsibility of the United States to the Tribe(s) or individual Indians. The Secretary shall act in good faith in upholding such trust responsibility.

Section 4—Regulatory Authority

Section 2—Officials Not To Benefit

The Tribe shall abide by all Federal regulations as published in the FEDERAL REGISTER unless waived in accordance with Section 403(i)(2) of Pub. L. 93–638, as amended.

No Member of Congress, or resident commissioner, shall be admitted to any share or part of any annual funding agreement or contract thereunder executed under this compact, or to any benefit that may arise from such compact. This paragraph may not be construed to apply to any contract with a third party entered into under an annual funding agreement under this compact if

Section 5—Tribal Administrative Procedure The Tribe shall provide administrative due process right under the Indian Civil Rights Act of 1968, 25 U.S.C. 1301, et seq., to protect

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Office of the Assistant Secretary, Interior such contract is made with a corporation for the general benefit of the corporation. Section 3—Covenant Against Contingent Fees The parties warrant that no person or selling agency has been employed or retained to solicit or secure any contract executed under this compact upon an agreement or understanding for a commission, percentage, brokerage, or contingent fee, excepting bona fide employees or bona fide established commercial or selling agencies maintained by the contractor for the purpose of securing business. Section 4—Sovereign Immunity Nothing in this compact or any AFA shall be construed as— (1) affecting, modifying, diminishing, or otherwise impairing the sovereign immunity from suit enjoyed by the Tribe; or (2) authorizing or requiring the termination of any existing trust responsibility of the United States with respect to the Indian people. In witness whereof, the parties have executed, delivered and formed this compact, effective the llll day of llllll, 20ll. THE llllllll Tribe The Department of the Interior. By: lllllllllllllllllllll By: lllllllllllllllllllll

PART 1001—SELF-GOVERNANCE PROGRAM Sec. 1001.1 Purpose. 1001.2 Applicant eligibility. 1001.3 Priority ranking for negotiations. 1001.4 Application review and approval. 1001.5 Application review and selection process for negotiations for funding agreements. 1001.6 Submitting applications. 1001.7 Availability, amount, and number of planning and negotiation grants. 1001.8 Selection criteria for tribes/consortia to receive a negotiation grant. 1001.9 Selection criteria for tribes/consortia seeking advance planning grant funding. 1001.10 Selection criteria for other planning and negotiating financial assistance. AUTHORITY: 25 U.S.C. 450 note, 458aa–458gg. SOURCE: 60 FR 8554, Feb. 15, 1995, unless otherwise noted.

§ 1001.1 Purpose. The purpose of this rule is to establish the process for tribes to apply for entry into the Self-Governance program and to establish the selection cri-

§ 1001.3 teria by which the Department will identify eligible tribes and select tribes to begin the negotiations process. § 1001.2 Applicant eligibility. Any tribe or consortium of tribes seeking inclusion in the applicant pool must meet the following eligibility criteria: (a) Be a federally recognized tribe or a consortium of federally recognized tribes as defined in Public Law 93–638. (b) Document, with an official action of the tribal governing body, a formal request to enter negotiations with the Department of Interior (Department) under the Tribal Self-Governance Act authority. In the case of a consortium of tribes, the governing body of each participating tribe must authorize participation by an official action by the tribal governing body. (c) Demonstrate financial stability and financial management capability by furnishing organization-wide single audit reports as prescribed by Public Law 96–502, the Single Audit Act of 1984, for the previous three years. These audits must not contain material audit exceptions. In the case of tribal consortiums, each signatory to the agreement must meet this requirement. Non-signatory tribes participating in the consortium do not have to meet this requirement. (d) Successfully complete the planning phase for self-governance. A final planning report must be submitted which demonstrates that the tribe has conducted— (1) Legal and budgetary research; and (2) Internal tribal government and organizational planning. (e) To be included in the applicant pool, tribes or tribal consortiums may submit their applications at any time. The application should state which year the tribe desires to enter negotiations. § 1001.3 Priority ranking for negotiations. In addition to the eligibility criteria identified above, a tribe or consortium of tribes seeking priority ranking for negotiations must submit a description of the efforts of the tribe or consortium to seek to enter negotiations and/or prepare for operations under the self-

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APPENDIX F 42 CFR 137 SUBPART N IHS CONSTRUCTION PROJECTS25 CFR 1000

© The Falmouth Institute F-1

42 CFR § 137 SUBPART N — CONSTRUCTION

No, except as provided in § 137.275, this subpart does not cover construction programs such as the:

CODE OF FEDERAL REGULATIONS TITLE 42--PUBLIC HEALTH CHAPTER I--PUBLIC HEALTH SERVICE, DEPARTMENT OF HEALTH AND HUMAN SERVICES SUBCHAPTER M--INDIAN HEALTH SERVICE, DEPARTMENT OF HEALTH AND HUMAN SERVICES PART 137--TRIBAL SELF-GOVERNANCE SUBPART N--CONSTRUCTION PURPOSE AND SCOPE

(a) Maintenance and Improvement Program; (b) Construction program functions; and, (c) Planning services and construction management services. § 137.275 May Self-Governance Tribes include IHS construction programs in a construction project agreement or in a funding agreement?

Current through November 3, 2005; 70 FR 66799 § 137.270 What is covered by this subpart?

Yes, Self-Governance Tribes may choose to assume construction programs in a construction project agreement, in a funding agreement, or in a combination of the two. These programs may include the following:

This subpart covers IHS construction projects carried out under section 509 of the Act [25 U.S.C. 458aaa-8].

(a) Maintenance and improvement program; PURPOSE AND SCOPE (b) Construction program functions; and § 137.271 Why is there a separate subpart in these regulations for construction project agreements?

(c) Planning services and construction management services.

Construction projects are separately defined in Title V and are subject to a separate proposal and review process. Provisions of a construction project agreement and this subpart shall be liberally construed in favor of the Self-Governance Tribe.

CONSTRUCTION DEFINITIONS § 137.280 Construction Definitions. ALJ means administrative law judge. APA means Administrative Procedures Act, 5 U.S.C. 701--706.

§ 137.272 What other alternatives are available for Self-Governance Tribes to perform construction projects?

Budget means a statement of the funds required to complete the scope of work in a construction project agreement. For cost reimbursement agreements, budgets may be stated using broad categories such as planning, design, construction, project administration, and contingency. For fixed price agreements, budgets may be stated as lump sums, unit cost pricing, or a combination thereof.

Self-Governance Tribes also have the option of performing IHS construction projects under a variety of other legal authorities, including but not limited to Title I of the Act, the Indian Health Care Improvement Act, Public Law 94- 437, and Public Law 86-121. This subpart does not cover projects constructed pursuant to agreements entered into under these authorities.

Categorical exclusion means a category of actions that do not individually or cumulatively have a significant effect on the human environment and that have been found to have no such effect in procedures adopted by a Federal agency in implementation of these regulations and for which, therefore, neither an environmental assessment nor an environmental impact statement is required. Any procedures under this section shall provide for extraordinary

§ 137.273 What are IHS construction PSFAs? IHS construction PSFAs are a combination of construction projects as defined in § 137.280 and construction programs. §

137.274 Does this subpart cover construction programs?

© The Falmouth Institute F-2

42 CFR § 137 SUBPART N — CONSTRUCTION

circumstances in which a normally excluded action may have a significant environmental effect.

(3) Identifies the responsibilities of the SelfGovernance Tribe and the Secretary;

CEQ means Council on Environmental Quality in the Office of the President.

(4) Addresses environmental considerations;

Construction management services (CMS) means activities limited to administrative support services; coordination; and monitoring oversight of the planning, design, and construction process. CMS activities typically include:

(5) Identifies the owner and operations and maintenance entity of the proposed work; (6) Provides a budget; (7) Provides a payment process; and

(1) Coordination and information exchange between the Self-Governance Tribe and the Federal Government;

(8) Establishes the duration of the agreement based on the time necessary to complete the specified scope of work, which may be 1 or more years.

(2) Preparation of a Self-Governance Tribe's project agreement; and

Design phase is the phase of a construction project agreement during which project plans, specifications, and other documents are prepared that are used to build the project. Site investigation, final site selection activities and environmental review and determination activities are completed in this phase if not conducted as a part of the planning phase.

(3) A Self-Governance Tribe's subcontract scope of work identification and subcontract preparation, and competitive selection of construction contract subcontractors. Construction phase is the phase of a construction project agreement during which the project is constructed, and includes labor, materials, equipment and services necessary to complete the work, in accordance with the construction project agreement.

Maintenance and improvement program: (1) As used in this subpart means the program that provides funds for eligible facilities for the purpose of:

Construction project means: (i) Performing routine maintenance; (1) An organized noncontinuous undertaking to complete a specific set of predetermined objectives for the planning, environmental determination, design, construction, repair, improvement, or expansion of buildings or facilities described in a project agreement, and

(ii) Achieving compliance with accreditation standards; (iii) Improving and renovating facilities; (iv) Ensuring that Indian health care facilities meet existing building codes and standards; and

(2) Does not include construction program administration and activities described in sections 4(m)(1) through (3) of the Act [25 U.S.C. 4b(m)(1) through (3) ], that may otherwise be included in a funding agreement under section 505 of the Act [25 U.S.C. 458aaa-4].

(v) Ensuring compliance with public law building requirements. (2) The maintenance and improvement program is comprised of routine maintenance and repair funding and project funding. Typical maintenance and improvement projects have historically been funded out of regional or national project pools and may include, but are not limited to, total replacement of a heating or cooling system, remodel of a medical laboratory, removal of lead based paint, abatement of asbestos and abatement of underground fuel storage tanks. Maintenance and repair program funding provided under a funding agreement is not covered

Construction project agreement means a negotiated agreement between the Secretary and a SelfGovernance Tribe, that at a minimum: (1) Establishes project phase start and completion dates; (2) Defines a specific scope of work and standards by which it will be accomplished;

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under this subpart.

Tribes do not thereby become Federal agencies. However, because Self-Governance Tribes are assuming the responsibilities of the Secretary for the purposes of performing these Federal environmental responsibilities, Self-Governance Tribes will be considered the equivalent of Federal agencies for certain purposes as set forth in this subpart.

NEPA means the National Environmental Policy Act of 1969 [42 U.S.C. 4321 et seq.]. NHPA means the National Historic Preservation Act [16 U.S.C. 470 et seq.]. Planning phase is the phase of a construction project agreement during which planning services are provided.

§

The NEPA is a procedural law that requires Federal agencies to follow established environmental review procedures, which include reviewing and documenting the environmental impact of their actions. NEPA establishes a comprehensive policy for protection and enhancement of the environment by the Federal Government; creates the Council on Environmental Quality in the Office of the President; and directs Federal agencies to carry out the policies and procedures of the Act. CEQ regulations (40 CFR 1500-1508) establish three levels of environmental review: categorical exclusions, environmental assessments, and environmental impact statements.

Planning services may include performing a needs assessment, completing and/or verifying master plans, developing justification documents, conducting pre-design site investigations, developing budget cost estimates, conducting feasibility studies as needed, conducting environmental review activities and justifying the need for the project. SHPO means State Historic Preservation Officer. Scope of work or specific scope of work means a brief written description of the work to be accomplished under the construction project agreement, sufficient to confirm that the project is consistent with the purpose for which the Secretary has allocated funds.

§ 137.288 What is the National Historic Preservation Act (NHPA)? The NHPA requires Federal agencies to take into account the effects of their undertakings, such as construction projects, on properties covered by the NHPA, such as historic properties, properties eligible for listing on the National Register of Historic Places, or properties that an Indian Tribe regards as having religious and/or cultural importance. Section 106 of the NHPA [16 U.S.C. 470f] requires Federal agencies to afford the Advisory Council on Historic Preservation, acting through the SHPO or the THPO, a reasonable opportunity to comment on such undertakings.

THPO means Tribal Historic Preservation Officer. NEPA PROCESS § 137.285 Are Self-Governance Tribes required to accept Federal environmental responsibilities to enter into a construction project agreement? Yes, under section 509 of the Act [25 U.S.C. 458aaa-8], Self-Governance Tribes must assume all Federal responsibilities under the NEPA of 1969 [42 U.S.C. 4321 et seq.] and the National Historic Preservation Act [16 U.S.C. 470 et seq.] and related provisions of law that would apply if the Secretary were to undertake a construction project, but only those responsibilities directly related to the completion of the construction project being assumed. §

137.287 What is the National Environmental Policy Act (NEPA)?

§

137.289 What is a Federal undertaking under NHPA?

The Advisory Council on Historic Preservation has defined a Federal undertaking in 36 CFR 800.16(y) as a project, activity, or program funded in whole or in part under the direct or indirect jurisdiction of a Federal agency, including those carried out by or on behalf of a Federal agency; those carried out with Federal financial assistance; those requiring a Federal permit, license or approval; and those subject to State or local regulation administered pursuant to a delegation or approval by a Federal agency.

137.286 Do Self-Governance Tribes become Federal agencies when they assume these Federal environmental responsibilities?

No, while Self-Governance Tribes are required to assume Federal environmental responsibilities for projects in place of the Secretary, Self-Governance

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§

(18) Toxic Substance Control Act [15 U.S.C. 2601];

137.290 What additional provisions of law are related to NEPA and NHPA?

(19) Wild and Scenic Rivers Act [16 U.S.C. 1271]; and

(a) Depending upon the nature and the location of the construction project, environmental laws related to NEPA and NHPA may include: (1) Archaeological and Historical Preservation Act [16 U.S.C. 469];

(20) Wilderness Act [16 U.S.C. 1131].

Data

(b) This section provides a list of environmental laws for informational purposes only and does not create any legal rights or remedies, or imply private rights of action.

(2) Archeological Resources Protection Act [16 U.S.C. 470aa];

§ 137.291 May Self-Governance Tribes carry out construction projects without assuming these Federal environmental responsibilities?

(3) Clean Air Act [42 U.S.C. 7401]; (4) Clean Water Act [33 U.S.C. 1251];

Yes, but not under section 509 of the Act [25 U.S.C. 458aaa-8]. Self-Governance Tribes may otherwise elect to perform construction projects, or phases of construction projects, under other legal authorities (see § 137.272).

(5) Coastal Barrier Improvement Act [42 U.S.C. 4028 and 16 U.S.C. Sec. 3501]; (6) Coastal Barrier Resources Act [16 U.S.C. 3501];

§ 137.292 How do Self-Governance Tribes assume environmental responsibilities for construction projects under section 509 of the Act [25 U.S.C. 458aaa-8]?

(7) Coastal Zone Management Act [16 U.S.C. 1451]; (8) Comprehensive Environmental Response, Compensation, and Liability Act [42 U.S.C. 9601];

Self-Governance Tribes assume environmental responsibilities by:

(9) Endangered Species Act [16 U.S.C. 1531 et seq.];

(a) Adopting a resolution or taking an equivalent Tribal action which:

(10) Farmland Protection Policy Act [7 U.S.C. 4201 et seq.];

(1) Designates a certifying officer to represent the Self-Governance Tribe and to assume the status of a responsible Federal official under NEPA, NHPA, and related provisions of law; and

(11) Marine Protection, Research, and Sanctuaries Act [33 U.S.C. 1401-1445; 16 U.S.C. 1431-1447F; 33 U.S.C. 2801-2805];

(13) National Trails System Act [16 U.S.C. 1241];

(2) Accepts the jurisdiction of the Federal court, as provided in § 137.310 and § 137.311 for purposes of enforcement of the Federal environmental responsibilities assumed by the Self-Governance Tribe; and

(14) Native American Graves Protection and Repatriation Act [25 U.S.C. 3001];

(b) Entering into a construction project agreement under section 509 of the Act [25 U.S.C. 458aaa-8].

(12) National Historic Preservation Act [16 U.S.C. 470 et seq.];

§ 137.293 Are Self-Governance Tribes required to adopt a separate resolution or take equivalent Tribal action to assume environmental responsibilities for each construction project agreement?

(15) Noise Control Act [42 U.S.C.4901]; (16) Resource Conservation and Recovery Act [42 U.S.C. 6901]; (17) Safe Drinking Water Act [42 U.S.C. 300F];

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resolution or take equivalent Tribal action to assume environmental responsibilities for a single project, multiple projects, a class of projects, or all projects performed under section 509 of the Act [25 U.S.C. 458aaa-8].

Federal agency. §

137.296 How does a Self-Governance Tribe comply with NEPA and NHPA?

Self-Governance Tribes comply with NEPA and the NHPA by adopting and following:

§ 137.294 What is the typical IHS environmental review process for construction projects?

(a) their own environmental review procedures; (a) Most IHS construction projects normally do not have a significant impact on the environment, and therefore do not require environmental impact statements (EIS). Under current IHS procedures, an environmental review is performed on all construction projects. During the IHS environmental review process, the following activities may occur:

(b) the procedures of the IHS; and/or (c) the procedures of another Federal agency. § 137.297 If the environmental review procedures of a Federal agency are adopted by a SelfGovernance Tribe, is the Self-Governance Tribe responsible for ensuring the agency's policies and procedures meet the requirements of NEPA, NHPA, and related environmental laws?

(1) Consult with appropriate Tribal, Federal, state, and local officials and interested parties on potential environmental effects;

No, the Federal agency is responsible for ensuring its own policies and procedures meet the requirements of NEPA, NHPA, and related environmental laws, not the Self-Governance Tribe.

(2) Document assessment of potential environmental effects; (IHS has developed a form to facilitate this process.) (3) Perform necessary environmental surveys and inventories;

§ 137.298 Are Self-Governance Tribes required to comply with Executive Orders to fulfill their environmental responsibilities under section 509 of the Act [25 U.S.C. 458aaa-8]?

(4) Consult with the Advisory Council on Historic Preservation, acting through the SHPO or THPO, to ensure compliance with the NHPA;

No, but Self-Governance Tribes may at their option, choose to voluntarily comply with Executive Orders. For facilities where ownership will vest with the Federal Government upon completion of the construction, Tribes and the Secretary may agree to include the goals and objectives of Executive Orders in the codes and standards of the construction project agreement.

(5) Determine if extraordinary or exceptional circumstances exist that would prevent the project from meeting the criteria for categorical exclusion from further environmental review under NEPA, or if an environmental assessment is required; (6) Obtain environmental permits and approvals; and

§ 137.299 Are Federal funds available to cover the cost of Self-Governance Tribes carrying out environmental responsibilities?

(7) Identify methods to avoid or mitigate potential adverse effects;

Yes, funds are available:

(b) This section is for informational purposes only and does not create any legal rights or remedies, or imply private rights of action. §

(a) for project-specific environmental costs through the construction project agreement; and

137.295 May Self-Governance Tribes elect to develop their own environmental review process?

(b) for environmental review program costs through a funding agreement and/or a construction project agreement.

Yes, Self-Governance Tribes may develop their own environmental review process or adopt the procedures of the IHS or the procedures of another

§

137.300 Since Federal environmental responsibilities are new responsibilities, which

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may be assumed by Tribes under section 509 of the Act [25 U.S.C. 458aaa-8], are there additional funds available to Self-Governance Tribes to carry out these formerly inherently Federal responsibilities?

(2) To ensure compliance with the terms of the agreement and prudent management. (b) Costs incurred before the initial year that the agreement is in effect may not be included in the amount required to be paid under section 106(a)(2) of the Act [25 U.S.C. 450j-1(a)(2) ] if the Secretary does not receive a written notification of the nature and extent of the costs prior to the date on which such costs are incurred.

Yes, the Secretary must transfer not less than the amount of funds that the Secretary would have otherwise used to carry out the Federal environmental responsibilities assumed by the Self-Governance Tribe. §

137.301 How are project and program environmental review costs identified?

§ 137.303 Are Federal or other funds available for training associated with Tribal assumption of environmental responsibilities?

(a) The Self-Governance Tribe and the Secretary should work together during the initial stages of project development to identify program and project related costs associated with carrying out environmental responsibilities for proposed projects. The goal in this process is to identify the costs associated with all foreseeable environmental review activities.

Yes, Self-Governance Tribes may use construction program and project funds for training and program development. Training and program development funds may also be available from other Federal agencies, such as the Environmental Protection Agency and the National Park Service, state and local governments, and private organizations.

(b) If unforeseen environmental review and compliance costs are identified during the performance of the construction project, the SelfGovernance Tribe or, at the request of the SelfGovernance Tribe, the Self-Governance Tribe and the Secretary (with or without amendment as required by § 137.363) may do one or more of the following:

§ 137.304 May Self-Governance Tribes buy back environmental services from the IHS? Yes, Self-Governance Tribes may "buy back" project related services in their construction project agreement, including design and construction engineering, and environmental compliance services from the IHS in accordance with Section 508(f) of the Act [25 U.S.C. 458aaa-7(f) ] and § 137.95, subject to the availability of the IHS's capacity to conduct the work.

(1) Mitigate adverse environmental effects; (2) Alter the project scope of work; and/or

§ 137.305 May Self-Governance Tribes act as lead, cooperating, or joint lead agencies for environmental review purposes?

(3) Add additional program and/or project funding, including seeking supplemental appropriations. § 137.302 Are Federal funds available to cover startup costs associated with initial Tribal assumption of environmental responsibilities?

Yes, Self-Governance Tribes assuming Federal environmental responsibilities for construction projects under section 509 of the Act [25 U.S.C. 458aaa-8] are entitled to receive equal consideration, on the same basis as any Federal agency, for lead, cooperating, and joint lead agency status. For informational purposes, the terms "lead," "cooperating," and "joint lead agency" are defined in the CEQ regulations at 40 CFR 1508.16, 1508.5, and 1501.5 respectively.

(a) Yes, start-up costs are available as provided in section 508(c) of the Act [25 U.S.C. 458aaa-7(c) ]. During the initial year that these responsibilities are assumed, the amount required to be paid under section 106(a)(2) of the Act [25 U.S.C. 450j-1(a)(2) ] must include startup costs consisting of the reasonable costs that have been incurred or will be incurred on a one-time basis pursuant to the agreement necessary:

§

(1) To plan, prepare for, and assume operation of the environmental responsibilities; and

137.306 How are Self-Governance Tribes recognized as having lead, cooperating, or joint lead agency status?

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Self-Governance Tribes may be recognized as having lead, cooperating, or joint lead agency status through funding or other agreements with other agencies. To the extent that resources are available, the Secretary will encourage and facilitate Federal, state, and local agencies to enter into agreements designating Tribes as lead, cooperating, or joint lead agencies for environmental review purposes. §

have not complied with their legal obligations under NEPA and NHPA. These lawsuits may only be filed in Federal court under the provisions of the APA, 5 U.S.C. 701-706. Under the APA, a Federal judge reviews the Federal agency's actions based upon an administrative record prepared by the Federal agency. The judge gives appropriate deference to the agency's decisions and does not substitute the court's views for those of the agency. Jury trials and civil discovery are not permitted in APA proceedings. If a Federal agency has failed to comply with NEPA or NHPA, the judge may grant declaratory or injunctive relief to the interested party. No money damages or fines are permitted in APA proceedings.

137.307 What Federal environmental responsibilities remain with the Secretary when a Self-Governance Tribe assumes Federal environmental responsibilities for construction projects under section 509 of the Act [25 U.S.C. 458aaa-8]?

§ 137.310 Are Self-Governance Tribes required to grant a limited waiver of their sovereign immunity to assume Federal environmental responsibilities under section 509 of the Act [25 U.S.C. 458aaa-8]?

(a) All environmental responsibilities for Federal actions not directly related to construction projects assumed by Tribes under section 509 of the Act [25 U.S.C. 458aaa-8] remain with the Secretary. Federal agencies, including the IHS, retain responsibility for ensuring their environmental review procedures meet the requirements of NEPA, NHPA and related provisions of law, as called for in § 137.297.

Yes, but only as provided in this section. Unless Self-Governance Tribes consent to the jurisdiction of a court, Self-Governance Tribes are immune from civil lawsuits. Self-Governance Tribes electing to assume Federal environmental responsibilities under section 509 of the Act [25 U.S.C. 458aaa-8] must provide a limited waiver of sovereign immunity solely for the purpose of enforcing a Tribal certifying officer's environmental responsibilities, as set forth in this subpart. Self-Governance Tribes are not required to waive any other immunity.

(b) The Secretary will provide information updating and changing IHS agency environmental review policy and procedures to all Self-Governance Tribes implementing a construction project agreement, and to other Indian Tribes upon request. If a Self-Governance Tribe participating under section 509 of the Act [25 U.S.C. 458aaa-8] does not wish to receive this information, it must notify the Secretary in writing. As resources permit, at the request of the Self-Governance Tribe, the Secretary will provide technical assistance to the Selfgovernance tribe to assist the Self-governance Tribe in carrying out Federal environmental responsibilities.

§ 137.311 Are Self-Governance Tribes entitled to determine the nature and scope of the limited immunity waiver required under section 509(a)(2) of the Act [25 U.S.C. 458aaa-8(a)(2) ]? (a) Yes, Section 509(a)(2) of the Act [25 U.S.C. 458aaa-8(a)(2) ] only requires that the waiver permit a civil enforcement action to be brought against the Tribal certifying officer in his or her official capacity in Federal district court for declaratory and injunctive relief in a procedure that is substantially equivalent to an APA enforcement action against a Federal agency. Self-Governance Tribes are not required to subject themselves to suit in their own name, to submit to trial by jury or civil discovery, or to waive immunity for money damages, attorneys fees, or fines.

§ 137.308 Does the Secretary have any enforcement authority for Federal environmental responsibilities assumed by Tribes under section 509 of the Act [25 U.S.C. 458aaa-8]? No, the Secretary does not have any enforcement authority for Federal environmental responsibilities assumed by Tribes under section 509 of the Act [25 U.S.C. 458aaa-8]. § 137.309 How are NEPA and NHPA obligations typically enforced?

(b) Self-Governance Tribes may base the grant of a limited waiver under this subpart on the understanding that:

NEPA and NHPA obligations are typically enforced by interested parties who may file lawsuits against Federal agencies alleging that the agencies

(1) Judicial review of the Tribal certifying official's

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actions are based upon the administrative record prepared by the Tribal official in the course of performing the Federal environmental responsibilities; and

Indian Tribe that funds are available for a construction project or a phase of a project? (a) Yes, within 30 days after the Secretary's allocation of funds for planning phase, design phase, or construction phase activities for a specific project, the Secretary shall notify, by registered mail with return receipt in order to document mailing, the Indian Tribe(s) to be benefitted by the availability of the funds for each phase of a project. The Secretarial notice of fund allocation shall offer technical assistance in the preparation of a construction project proposal.

(2) Actions and decisions of the Tribal certifying officer will be granted deference on a similar basis as Federal officials performing similar functions. § 137.312 Who is the proper defendant in a civil enforcement action under section 509(a)(2) of the Act [25 U.S.C. 458aaa-8(a)(2) ]? Only the designated Tribal certifying officer acting in his or her official capacity may be sued. SelfGovernance Tribes and other Tribal officials are not proper defendants in lawsuits brought under section 509(a)(2) of the Act [25 U.S.C. 458aaa-8(a)(2) ]. NOTIFICATION (PRIORITIZATION PROCESS, PLANNING, DEVELOPMENT AND CONSTRUCTION)

(b) The Secretary shall, within 30 days after receiving a request from an Indian Tribe, furnish the Indian Tribe with all information available to the Secretary about the project including, but not limited to: construction drawings, maps, engineering reports, design reports, plans of requirements, cost estimates, environmental assessments, or environmental impact reports and archeological reports.

§ 137.320 Is the Secretary required to consult with affected Indian Tribes concerning construction projects and programs?

(c) An Indian Tribe is not required to request this information prior to either submitting a notification of intent or a construction project proposal.

Yes, before developing a new project resource allocation methodology and application process the Secretary must consult with all Indian Tribes. In addition, before spending any funds for planning, design, construction, or renovation projects, whether subject to a competitive application and ranking process or not, the Secretary must consult with any Indian Tribe that would be significantly affected by the expenditure to determine and honor Tribal preferences whenever practicable concerning the size, location, type, and other characteristics of the project.

(d) The Secretary shall have a continuing responsibility to furnish information to the Indian Tribes. PROJECT ASSUMPTION PROCESS § 137.325 What does a Self-Governance Tribe do if it wants to perform a construction project under section 509 of the Act [25 U.S.C. 458aaa-8]? (a) A Self-Governance Tribe may start the process of developing a construction project agreement by:

§ 137.321 How do Indian Tribes and the Secretary identify and request funds for needed construction projects?

(1) Notifying the Secretary in writing that the SelfGovernance Tribe wishes to enter into a preagreement negotiation phase as set forth in section 105(m)(3) of the Act [25 U.S.C. 450j(m)(3) ]; or

In addition to the requirements contained in section 513 of the Act [25 U.S.C. 458aaa-12], Indian Tribes and the Secretary are encouraged to jointly identify health facility and sanitation needs at the earliest possible date for IHS budget formulation. In developing budget justifications for specific projects to be proposed to Congress, the Secretary shall follow the preferences of the affected Indian Tribe(s) to the greatest extent feasible concerning the size, location, type, and other characteristics of the project. §

(2) Submitting a proposed construction project agreement. This proposed agreement may be the final proposal, or it may be a draft for consideration and negotiation, or (3) A combination of the actions described in paragraphs (a)(1) and (2) of this section. (b) Upon receiving a Self-Governance Tribe's request to enter into a pre-negotiation phase the

137.322 Is the Secretary required to notify an

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Secretary shall take the steps outlined in section 105(m)(3) of the Act [25 U.S.C. 450j(m)(3) ]. §

and accepting the jurisdiction of the Federal court for enforcement purposes as provided in § § 137.310 and 137.311.

137.326 What must a Tribal proposal for a construction project agreement contain?

(c) Identification of the environmental review procedures adopted by the Self-Governance Tribe, and

A construction project proposal must contain all of the required elements of a construction project agreement as defined in § 137.280. In addition to these minimum requirements, Self-Governance Tribes may propose additional items.

(d) An assurance that no action will be taken on the construction phase of the project that would have an adverse environmental impact or limit the choice of reasonable alternatives prior to making an environmental determination in accordance with the Self-Governance Tribe's adopted procedures.

§ 137.327 May multiple projects be included in a single construction project agreement? Yes, a Self-Governance Tribe may include multiple projects in a single construction project agreement proposal or may add additional approved projects by amendment(s) to an existing construction project agreement. §

§

137.330 What happens if the Self-Governance Tribe and the Secretary cannot develop a mutually agreeable construction project agreement?

The Self-Governance Tribe may submit a final construction project proposal to the Secretary. No later than 30 days after the Secretary receives the final construction project proposal, or within a longer time agreed to by the Self-Governance Tribe in writing, the Secretary shall review and make a determination to approve or reject the construction project proposal in whole or in part.

137.328 Must a construction project proposal incorporate provisions of Federal construction guidelines and manuals?

(a) No, the Self-Governance Tribe and the Secretary must agree upon and specify appropriate building codes and architectural and engineering standards (including health and safety) which must be in conformity with nationally recognized standards for comparable projects.

§

(b) The Secretary may provide, or the SelfGovernance Tribe may request, Federal construction guidelines and manuals for consideration by the SelfGovernance Tribe in the preparation of its construction project proposal. If Tribal construction codes and standards (including national, regional, State, or Tribal building codes or construction industry standards) are consistent with or exceed otherwise applicable nationally recognized standards, the Secretary must accept the Tribally proposed standards.

137.331 May the Secretary reject a final construction project proposal based on a determination of Tribal capacity or capability?

No, the Secretary may not reject a final construction project proposal based on a determination of Tribal capacity or capability. § 137.332 On what basis may the Secretary reject a final construction project proposal? (a) The only basis for rejection of project activities in a final construction project proposal are: (1) The amount of funds proposed in the final construction project proposal exceeds the applicable funding level for the construction project as determined under sections 508(c) [25 U.S.C. 458aaa7(c) ] and 106 of the Act [25 U.S.C. 450j-1].

§ 137.329 What environmental considerations must be included in the construction project agreement? The construction project agreement must include:

(2) The final construction project proposal does not meet the minimum content requirements for construction project agreements set forth in section 501(a)(2) of the Act [25 U.S.C. 458aaa(a)(2) ]; and

(a) Identification of the Tribal certifying officer for environmental review purposes, (b) Reference to the Tribal resolution or equivalent Tribal action appointing the Tribal certifying officer

(3) The final construction project proposal on its

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face clearly demonstrates that the construction project cannot be completed as proposed.

agreement to the severed provisions. Exercising this option does not affect the Self-Governance Tribe's right to appeal the portion of the final construction project proposal that was rejected by the Secretary.

(b) For construction programs proposed to be included in a construction project agreement, the Secretary may also reject that portion of the proposal that proposes to assume an inherently Federal function that cannot legally be delegated to the SelfGovernance Tribe. §

§ 137.334 What happens if the Secretary fails to notify the Self-Governance Tribe of a decision to approve or reject a final construction project proposal within the time period allowed? If the Secretary fails to notify the Self-Governance Tribe of the decision to approve or reject within 30 days (or a longer period if agreed to by the SelfGovernance Tribe in writing), then the proposal will be deemed approved by the Secretary.

137.333 What procedures must the Secretary follow if the Secretary rejects a final construction project proposal, in whole or in part?

Whenever the Secretary rejects a final construction project proposal in whole or in part, the Secretary must:

§ 137.335 What costs may be included in the budget for a construction agreement?

(a) Send the Self-Governance Tribe a timely written notice of rejection that shall set forth specific finding(s) that clearly demonstrates, or that is supported by controlling legal authority supporting the rejection;

(a) A Self-Governance Tribe may include costs allowed by applicable OMB Circulars, and costs allowed under sections 508(c) [25 U.S.C. 458aaa-7(c) ], 106 [25 U.S.C. 450j-1] and 105 (m) of the Act [25 U.S.C. 450j(m)]. The costs incurred will vary depending on which phase of the construction process the Self-Governance Tribe is conducting and type of construction project agreement that will be used.

(b) Within 20 days, provide all documents relied on in making the rejection decision to the SelfGovernance Tribe; (c) Provide assistance to the Self-Governance Tribe to overcome any objections stated in the written notice of rejection;

(b) Regardless of whether a construction project agreement is fixed price or cost-reimbursement, budgets may include costs or fees associated with the following:

(d) Provide the Self-Governance Tribe with a hearing on the record with the right to engage in full discovery relevant to any issue raised in the matter and the opportunity for appeal of the decision to reject the final construction contract proposal, under the regulations set forth in subpart P of this part, except that the Self-Governance Tribe may, in lieu of filing an appeal, initiate an action in Federal district court and proceed directly under sections 511 [25 U.S.C. 458aaa-10] and 110(a) of the Act [25 U.S.C. 450m-1(a) ]. With respect to any hearing or appeal or civil action conducted pursuant to this section, the Secretary shall have the burden of demonstrating by clear and convincing evidence the validity of the grounds for rejecting the final construction project proposal (or portion thereof); and

(1) Construction project proposal preparation; (2) Conducting community meetings to develop project documents; (3) Architects, engineers, and other consultants to prepare project planning documents, to develop project plans and specifications, and to assist in oversight of the design during construction; (4) Real property lease or acquisition; (5) Development of project surveys including topographical surveys, site boundary descriptions, geotechnical surveys, archeological surveys, and NEPA compliance;

(e) Provide the Self-Governance Tribe with the option of entering into the severable portions of a final proposed construction project agreement (including a lesser funding amount) that the Secretary did not reject, subject to any additional alterations necessary to conform the construction project

(6) Project management, superintendence, safety and inspection; (7) Travel, including local travel incurred as a

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direct result of conducting the construction project agreement and remote travel in conjunction with the project;

allowed to include profit; (4) Budgets are stated using broad categories, such as planning, design, construction project administration, and contingency;

(8) Consultants, such as demographic consultants, planning consultants, attorneys, accountants, and personnel who provide services, to include construction management services;

(5) The agreement funding amount is stated as a "not to exceed" amount;

(9) Project site development;

(6) Self-Governance Tribes provide notice to the IHS if they expect to exceed the amount of the agreement and require more funds;

(10) Project construction cost; (11) General, administrative overhead, and indirect costs;

(7) Excess funds remaining at the end of the project are considered savings; and

(12) Securing and installing moveable equipment, telecommunications and data processing equipment, furnishings, including works of art, and special purpose equipment when part of a construction contract;

(8) Actual costs are subject to applicable OMB circulars and cost principles.

(13) Other costs directly related to performing the construction project agreement;

(1) Self-Governance Tribes assume the risk for performance;

(b) Fixed Price agreements generally have one or more of the following characteristics:

(14) Project Contingency:

(2) Self-Governance Tribes are entitled to make a reasonable profit;

(i) A cost-reimbursement project agreement budgets contingency as a broad category. Project contingency remaining at the end of the project is considered savings.

(3) Budgets may be stated as lump sums, unit cost pricing, or a combination thereof; (4) For unit cost pricing, savings may occur if actual quantity is less than estimated; and,

(ii) Fixed-price agreements budget project contingency in the lump sum price or unit price. (c) In the case of a fixed-price project agreement, a reasonable profit determined by taking into consideration the relevant risks and local market conditions.

(5) Excess funds remaining at the end of a lump sum fixed price project are considered profit, unless, at the option of the Self-Governance Tribe, such amounts are reclassified in whole or in part as savings.

§ 137.336 What is the difference between fixed-price and cost-reimbursement agreements?

§ 137.337 What funding must the Secretary provide in a construction project agreement?

(a) Cost-reimbursement agreements generally have one or more of the following characteristics:

The Secretary must provide funding for a construction project agreement in accordance with sections 106 [25 U.S.C. 450j-1] and 508(c) of the Act [25 U.S.C. 458aaa-7(c) ].

(1) Risk is shared between IHS and the SelfGovernance Tribe;

§ (2) Self-Governance Tribes are not required to perform beyond the amount of funds provided under the agreement;

137.338 Must funds from other sources be incorporated into a construction project agreement?

Yes, at the request of the Self-Governance Tribe, the Secretary must include funds from other agencies as permitted by law, whether on an ongoing or a one-

(3) Self-Governance Tribes establish budgets based upon the actual costs of the project and are not

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time basis.

construction.) If project phase is chosen as the payment period, the full amount of funds necessary to perform the work for that phase of the construction project agreement is payable in the initial advance payment. For multi-phase projects, the planning and design phases must be completed prior to the transfer of funds for the associated construction phase. The completion of the planning and design phases will include at least one opportunity for Secretarial approval in accordance with § 137.360.

§ 137.339 May a Self-Governance Tribe use project funds for matching or cost participation requirements under other Federal and nonFederal programs? Yes, notwithstanding any other provision of law, all funds provided under a construction project agreement may be treated as non-Federal funds for purposes of meeting matching or cost participation requirements under any other Federal or non-Federal program.

(d) For the purposes of payment, Sanitation Facilities Construction Projects authorized pursuant to Pub.L. 86-121, are considered to be a single construction phase and are payable in a single lump sum advance payment in accordance with paragraph (c)(2) of this section.

§ 137.340 May a Self-Governance Tribe contribute funding to a project? Yes, the Self-Governance Tribe and the Secretary may jointly fund projects. The construction project agreement should identify the Secretarial amount and any Tribal contribution amount that is being incorporated into the construction project agreement. The Self-Governance Tribe does not have to deposit its contribution with the Secretary.

(e) For all other construction project agreements, the amount of advance payments shall include the funds necessary to perform the work identified in the advance payment period of one year. (f) Any agreement to advance funds under paragraphs (b), (c) or (d) of this section is subject to the availability of appropriations.

§ 137.341 How will a Self-Governance Tribe receive payment under a construction project agreement?

(g)(1) Initial advance payments are due within 10 days of the effective date of the construction project agreement; and

(a) For all construction project agreements, advance payments shall be made annually or semiannually, at the Self-Governance Tribe's option. The initial payment shall include all contingency funding for the project or phase of the project to the extent that there are funds appropriated for that purpose.

(2) Subsequent payments are due: (i) Within 10 days of apportionment for annual payments or

(b) The amount of subsequent payments is based on the mutually agreeable project schedule reflecting:

(ii) Within 10 days of the start date of the project phase for phase payments.

(1) Work to be accomplished within the advance payment period,

§ 137.342 What happens to funds remaining at the conclusion of a cost reimbursement construction project?

(2) Work already accomplished, and All funds, including contingency funds, remaining at the conclusion of the project are considered savings and may be used by the Self-Governance Tribe to provide additional services for the purpose for which the funds were originally appropriated. No further approval or justifying documentation is required before the expenditure of the remaining funds.

(3) Total prior payments for each annual or semiannual advance payment period. (c) For lump sum, fixed price agreements, at the request of the Self-Governance Tribe, payments shall be based on an advance payment period measured as follows:

§ 137.343 What happens to funds remaining at the conclusion of a fixed price construction project?

(1) One year; or (2) Project Phase (e.g., planning, , design,

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(a) For lump sum fixed price construction project agreements, all funds remaining at the conclusion of the project are considered profits and belong to the Self-Governance Tribe.

in a significant change; (c) Utilizing savings from other projects; (d) Requesting additional funds or appropriations;

(b) For fixed price construction project agreements with unit price components, all funds remaining that are associated with overestimated unit price quantities are savings and may be used by the SelfGovernance Tribe in accordance with section 137.342. All other funds remaining at the conclusion of the project are considered profit and belong to the Self-Governance Tribe.

(e) Utilizing interest earnings; (f) Seeking funds from other sources; and/or (g) Redesigning or re-scoping that does result in a significant change by amendment as provided in § § 137.363 and 137.364.

(c) At the option of the Self-Governance Tribe, funds otherwise identified in paragraphs (a) and (b) as "profit" may be reclassified, in whole or in part, as savings and to that extent may be used by the SelfGovernance Tribe in accordance with section 137.142.

§ 137.351 Is a Self-Governance Tribe required to submit construction project progress and financial reports for construction project agreements? Yes, a Self-Governance Tribe must provide the Secretary with construction project progress and financial reports semiannually or, at the option of the Self-Governance Tribe, on a more frequent basis. Self-Governance Tribes are only required to submit the reports, as negotiated in the Construction Project Agreement, after funds have been transferred to the Self-Governance Tribe for a construction project. Construction project progress reports and financial reports are only required for active construction projects.

§ 137.344 May a Self-Governance Tribe reallocate funds among construction project agreements? Yes, a Self-Governance Tribe may reallocate funds among construction project agreements to the extent not prohibited by applicable appropriation law(s). ROLES OF SELF-GOVERNANCE TRIBE IN ESTABLISHING AND IMPLEMENTING CONSTRUCTION PROJECT AGREEMENTS

§

§ 137.350 Is a Self-Governance Tribe responsible for completing a construction project in accordance with the negotiated construction project agreement?

137.352 What is contained in a construction project progress report?

Construction project progress reports contain information about accomplishments during the reporting period and issues and concerns of the SelfGovernance Tribe, if any.

Yes, a Self-Governance Tribe assumes responsibility for completing a construction project, including day-to-day on-site management and administration of the project, in accordance with the negotiated construction project agreement. However, Self-Governance Tribes are not required to perform beyond the amount of funds provided. For example, a Self-Governance Tribe may encounter unforeseen circumstances during the term of a construction project agreement. If this occurs, options available to the Self-Governance Tribe include, but are not limited to:

§

137.353 What is contained in a construction project financial report?

Construction project financial reports contain information regarding the amount of funds expended during the reporting period, and financial concerns of the Self-Governance Tribe, if any. ROLES OF THE SECRETARY IN ESTABLISHING AND IMPLEMENTING CONSTRUCTION PROJECT AGREEMENTS

(a) Reallocating existing funding; § (b) Reducing/revising the scope of work that does not require an amendment because it does not result

137.360 Does the Secretary approve project planning and design documents prepared by the Self-Governance Tribe?

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be reduced based on urgency and need, by agreement of the parties. If the Self-Governance Tribe requests reduced timeframes for action due to unusual or special conditions (such as limited construction periods), the Secretary shall make a good faith effort to accommodate the requested timeframes.

The Secretary shall have at least one opportunity to approve project planning and design documents prepared by the Self-Governance Tribe in advance of construction if the Self-Governance Tribe is required to submit planning or design documents as a part of the scope of work under a construction project agreement. §

§ 137.364 What constitutes a significant change in the original scope of work?

137.361 Does the Secretary have any other opportunities to approve planning or design documents prepared by the Self-Governance Tribe?

A significant change in the original scope of work is: (a) A change that would result in a cost that exceeds the total of the project funds available and the Self-Governance Tribe's contingency funds; or

Yes, but only if there is an amendment to the construction project agreement that results in a significant change in the original scope of work.

(b) A material departure from the original scope of work, including substantial departure from timelines negotiated in the construction project agreement.

§ 137.362 May construction project agreements be amended? Yes, the Self-Governance Tribe, at its discretion, may request the Secretary to amend a construction project agreement to include additional projects. In addition, amendments are required if there is a significant change from the original scope of work or if funds are added by the Secretary. The SelfGovernance Tribe may make immaterial changes to the performance period and make budget adjustments within available funding without an amendment to the construction project agreement.

§ 137.365 What is the procedure for the Secretary's review and approval of project planning and design documents submitted by the SelfGovernance Tribe? (a) The Secretary shall review and approve planning documents to ensure compliance with planning standards identified in the construction project agreement. The Secretary shall review and approve design documents for general compliance with requirements of the construction project agreement.

§ 137.363 What is the procedure for the Secretary's review and approval of amendments?

(b) The Secretary shall promptly notify the SelfGovernance Tribe in writing of any concerns or issues that may lead to disapproval. The Secretary shall share relevant information and documents, and make a good faith effort to resolve all issues and concerns of the Self-Governance Tribe. If, after consultation with the Self-Governance Tribe, the Secretary intends to disapprove the documents, then the Secretary shall follow the procedures set forth in § 137.333.

(a) The Secretary shall promptly notify the SelfGovernance Tribe in writing of any concerns or issues that may lead to disapproval. The Secretary shall share relevant information and documents, and make a good faith effort to resolve all issues and concerns of the Self-Governance Tribe. If, after consultation with the Self-Governance Tribe, the Secretary intends to disapprove the proposed amendment, then the Secretary shall follow the procedures set forth in § § 137.330 through 137.334.

(c) The time allowed for Secretarial review, comment, and approval of planning and design documents is 21 days, unless otherwise agreed to by the Self-Governance Tribe in writing. Absence of a written response by the Secretary within 21 days shall be deemed approved.

(b) The time allowed for Secretarial review, comment, and approval of amendments is 30 days, or within a longer time if agreed to by the SelfGovernance Tribe in writing. Absence of a written response by the Secretary within 30 days shall be deemed approved.

§ 137.366 May the Secretary conduct onsite project oversight visits?

(c) The timeframe set forth in paragraph (b) of this section is intended to be the maximum time and may

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Yes, the Secretary may conduct onsite project oversight visits semiannually or on an alternate schedule negotiated in the construction project agreement. The Secretary must provide the SelfGovernance Tribe with reasonable advance written notice to assist the Self-Governance Tribe in coordinating the visit. The purpose of the visit is review the progress under the construction project agreement. At the request of the Self-Governance Tribe, the Secretary must provide the SelfGovernance Tribe a written site visit report.

No, the Secretary does not have a role in the fee-totrust process except to provide technical assistance if requested by the Self-Governance Tribe. § 137.373 Do Federal real property laws, regulations and procedures that apply to the Secretary also apply to Self-Governance Tribes that purchase real property with funds provided under a construction project agreement? No, unless the Self-Governance Tribe has requested the Secretary to take fee title to the property.

§ 137.367 May the Secretary issue a stop work order under a construction project agreement? No, the Secretary has no role in the day-to-day management of a construction project.

§

§ 137.368 Is the Secretary responsible for oversight and compliance of health and safety codes during construction projects being performed by a SelfGovernance Tribe under section 509 of the Act [25 U.S.C. 488aaa-8]?

137.374 Does the Secretary have a role in reviewing or monitoring a Self-Governance Tribe's actions in acquiring or leasing real property with funds provided under a construction project agreement?

No, unless the Self-Governance Tribe has requested the Secretary take fee title to the property. The Self-Governance Tribe is responsible for acquiring all real property needed to perform a construction project under a construction project agreement, not the Secretary. The Secretary shall not withhold funds or refuse to enter into a construction project agreement because of a disagreement between the Self-Governance Tribe and the Secretary over the Self-Governance Tribe's decisions to purchase or lease real property.

No, the Secretary is not responsible for oversight and compliance of health and safety codes during construction projects being performed by a SelfGovernance Tribe under section 509 of the Act [25 U.S.C. 488aaa-8]. OTHER § 137.370 Do all provisions of this part apply to construction project agreements under this subpart?

§ 137.375 Are Tribally-owned facilities constructed under section 509 of the Act [25 U.S.C. 458aaa8] eligible for replacement, maintenance, and improvement funds on the same basis as if title to such property were vested in the United States?

Yes, to the extent the provisions are not inconsistent with the provisions in this subpart. Provisions that do not apply include: programmatic reports and data requirements; reassumption; compact and funding agreement review, approval, and final offer process; and compact and funding agreement contents.

Yes, Tribally-owned facilities constructed under section 509 of the Act [25 U.S.C. 458aaa-8] are eligible for replacement, maintenance, and improvement funds on the same basis as if title to such property were vested in the United States.

§ 137.371 Who takes title to real property purchased with funds provided under a construction project agreement?

§

The Self-Governance Tribe takes title to the real property unless the Self-Governance Tribe requests that the Secretary take title to the property.

137.376 Are design and construction projects performed by Self-Governance Tribes under section 509 of the Act [25 U.S.C. 458aaa-8] subject to Federal metric requirements?

No, however, the Self-Governance Tribe and the Secretary may negotiate the use of Federal metric requirements in the construction project agreement when the Self-Governance Tribe will design and/or

§ 137.372 Does the Secretary have a role in the feeto-trust process when real property is purchased with construction project agreement funds?

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construct an IHS facility that the Secretary will own and operate. §

137.377 Do Federal procurement laws and regulations apply to construction project agreements performed under section 509 of the Act [25 U.S.C. 458aaa-8]?

No, unless otherwise agreed to by the Tribe, no provision of the Office of Federal Procurement Policy Act, the Federal Acquisition Regulations issued pursuant thereto, or any other law or regulation pertaining to Federal procurement (including Executive Orders) shall apply to any construction project conducted under section 509 of the Act [25 U.S.C. 458aaa-8]. The Secretary and the Self-Governance Tribe may negotiate to apply specific provisions of the Office of Federal Procurement and Policy Act and Federal Acquisition Regulations to a construction project agreement or funding agreement. Absent a negotiated agreement, such provisions and regulatory requirements do not apply. §

137.378 Do the Federal Davis-Bacon Act and wage rates apply to construction projects performed by Self-Governance Tribes using their own funds or other non-Federal funds?

No, the Federal Davis-Bacon Act and wage rates do not apply to construction projects performed by Self-Governance Tribes using their own funds or other non-Federal funds. §

137.379 Do Davis-Bacon wage rates apply to construction projects performed by SelfGovernance Tribes using Federal funds?

Davis-Bacon Act wage rates only apply to laborers and mechanics employed by the contractors and subcontractors (excluding Indian Tribes, inter-Tribal consortia, and Tribal organizations) retained by SelfGovernance Tribes to perform construction. The Davis-Bacon Act and wage rates do not apply when Self-Governance Tribes perform work with their own employees. END OF DOCUMENT

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APPENDIX G 42 CFR 136 IHS FACILITIES CONSTRUCTION

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42 CFR Ch. I (10–1–04 Edition)

(4) The relative effectiveness of the applicant’s plan, as set forth in the application, to carry out each of the requirements § 136.105. (5) The compatibility of the proposed project with the published goals and responsibilities of the IHS in carrying out its statutory mission. (b) The Notice of Grant Awards specifies how long the Secretary intends to support the project period without requiring the project to re-compete for funds. This period, called the project period, will usually be for one to two years. The total project period comprises the original project period and any extension. Generally the grant will be for a one-year budget period, any subsequent award will also be a oneyear budget period. A grantee must submit a separate application for each subsequent year. Decisions regarding continuation awards and the funding level of such awards will be made after consideration of such factors as the grantee’s progress and management practices, and the availability of funds. In all cases, awards require a determination by the Secretary that funding is in the best interest of the Federal Government. (c) Neither the approval of any application nor the award of any grant commits or obligates the Federal Government in any way to make any additional, supplemental, continuation or other award with respect to any approved application or portion of an approved application. [40 FR 53143, Nov. 14, 1975, as amended at 50 FR 1854, Jan. 14, 1985. Redesignated and amended at 67 FR 35342, May 17, 2002]

§ 136.107

Use of project funds.

(a) A grantee shall only spend funds it receives under this subpart according to the approved application and budget, the regulations of this subpart, the terms and conditions of the award and the applicable cost principles prescribed in subpart Q of 45 CFR part 74. (b) The provisions of any other Act notwithstanding, any funds made available to a tribal organization under grants pursuant to section 104(b) of the Act may be used as matching shares for any other Federal grant programs which contribute to the purposes for

which grants under this section are made. NOTE: This provision is excepted from application of 45 CFR 74.53 by section 104(c) of Pub. L. 93–638. [40 FR 53143, Nov. 14, 1975, as amended at 50 FR 1854, Jan. 14, 1985]

§ 136.108

[Reserved]

§ 136.109 Availability tions.

of

appropria-

The Secretary will from time to time publish a notice in the FEDERAL REGISTER indicating by areas the allotment of funds and categories of activities for which awards may be made under this subpart. The Secretary may revise such allotments and categories from time to time and will promptly publish a notice of such revisions in the FEDERAL REGISTER. § 136.110

Facilities construction.

In addition to other requirements of this subpart: (a) An applicant for a construction grant to build, renovate, modernize, or remodel a hospital, clinic, health station or quarters for housing personnel associated with such facilities, must in its application: (1) Provide its assessment of the environmental impact of the project as called for by section 102(2)(c) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(c)). (2) Furnish its evaluation of the project site in accordance with the terms and conditions of E.O. 11296, 31 FR 10663 (August 10, 1966) relating to the evaluation of flood hazards in locating federally owned or financed facilities. (b) The following requirements are applicable to each construction grant to build, renovate, modernize, or remodel a hospital, clinic, health station or quarters for housing personnel associated with such facilities. (1) Competitive bids. The approval of the Secretary shall be obtained before the project is advertised or placed on the market for bidding. The approval shall include a determination by the Secretary that the final plan and specifications conform to the minimum standards of construction and equipment specified in the grant award or in

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§ 136.115

HHS documents specified in the grant award. (2) There will be no preference given to local contractors or suppliers over non-local contractors or suppliers, except as otherwise provided in these regulations. (3) Construction contracts and subcontracts under this program are subject to the Davis-Bacon Act (40 U.S.C. 276a et seq.). For requirements that grantees must observe for enforcing compliance by contractors and subcontractors, see the section on contract provisions in the procurement standards for HHS grantees made applicable by subpart P of 45 CFR part 74. (4) Minimum standards of construction and equipment. The plans and specifications for the project will conform to the minimum standards of construction and equipment specified in the grant award or in HHS documents specified in the grant award. (5) The following provision must be included in all construction contracts let by the grantee: ‘‘The Secretary of the Department of Health and Human Services shall have access at all reasonable times to work wherever it is in preparation or progress, and the contractor shall provide proper facilities for such access and inspection.’’ [40 FR 53143, Nov. 14, 1975, as amended at 50 FR 1854, Jan. 14, 1985]

§ 136.111

Interest.

Tribes and Tribal organizations shall not be held accountable for interest earned on grant funds, pending disbursement by such organization. NOTE: This provision is excepted from application of 45 CFR 74.47(a) by section 106(b) of Pub. L. 93–638. [40 FR 53143, Nov. 14, 1975, as amended at 50 FR 1854, Jan. 14, 1985]

§ 136.112

§ 136.113 Fair and uniform provision of services. Services provided pursuant to a grant under this subpart shall be provided by the Grantee in a fair and uniform manner to all participants in the project consistent with their medical need, the policies and regulations of the Indian Health Service, and the Act. § 136.114 Applicability of other Department regulations. Several other regulations apply to grants under this subpart. These include to the extent applicable but are not limited to: 42 CFR part 50, subpart D, Public Health Service grant appeals procedure 45 CFR part 16, Procedures of the Departmental Grant Appeals Board 45 CFR part 74, Administration of grants 45 CFR part 75, Informal grant appeals procedures 45 CFR part 84, Nondiscrimination on the basis of handicap in programs and activities receiving or benefiting from Federal financial assistance 45 CFR part 86, Nondiscrimination on the basis of sex in education programs and activities receiving or benefiting from Federal financial assistance 45 CFR part 91, Nondiscrimination on the basis of age in HHS programs or activities receiving Federal financial assistance NOTE: To the extent they provide special benefits to Indians, grants under this subpart are exempted from the requirements of section 601 of the Civil Rights Act of 1964 [42 U.S.C. 200d], prohibiting discrimination on the basis of race, color or national origin, by regulation at 45 CFR 80.3(d) which provides, with respect to Indian health services, that, ‘‘An individual shall not be deemed subjected to discrimination by reasons of his exclusion from the benefits of a program limited by Federal law to individuals of a particular race, color, or national origin different from his. [50 FR 1854, Jan. 14, 1985]

§ 136.115

Additional conditions.

The Secretary may with respect to any grant award impose additional conditions prior to or at the time of any award when in his judgment such conditions are necessary to assure or protect advancement of the approved project, the interests of public health, or the conservation of grant funds.

Rescission of grants.

(a) When the Secretary determines that the performance of a grantee under these regulations involves (1) the violation of the rights or endangerment of the health, safety, or welfare of any persons, or (2) gross negligence or the mismanagement in the handling or use of funds under the grant, the Secretary will, in writing,

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APPENDIX H 42 CFR 137 SUBPARTS O & P INDIAN HEALTH SERVICE

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report? CODE OF FEDERAL REGULATIONS TITLE 42--PUBLIC HEALTH CHAPTER I--PUBLIC HEALTH SERVICE, DEPARTMENT OF HEALTH AND HUMAN SERVICES SUBCHAPTER M--INDIAN HEALTH SERVICE, DEPARTMENT OF HEALTH AND HUMAN SERVICES PART 137--TRIBAL SELF-GOVERNANCE SUBPART O--SECRETARIAL RESPONSIBILITIES BUDGET REQUEST

The report shall be compiled from information contained in funding agreements, annual audit reports, and data of the Secretary regarding the disposition of Federal funds. The report must identify: (a) The relative costs and benefits of selfgovernance, including savings; (b) With particularity, all funds that are specifically or functionally related to the provision by the Secretary of services and benefits to Self-Governance Tribes and their members;

Current through November 3, 2005; 70 FR 66799 § 137.401 What role does Tribal consultation play in the IHS annual budget request process?

(c) The funds transferred to each Self-Governance Tribe and the corresponding reduction in the Federal bureaucracy;

The IHS will consult with Tribes on budget issues consistent with Administration policy on Tribal consultation.

(d) The funding formula for individual Tribal shares of all headquarters' funds, together with the comments of affected Self-Governance Tribes, developed under § 137.405 of this subpart; and

REPORTS §

137.405 Is the Secretary required to report to Congress on administration of Title V and the funding requirements presently funded or unfunded?

(e) Amounts expended in the preceding fiscal year to carry out inherent Federal functions, including an identification of those functions by type and location.

Yes, no later than January 1 of each year after the date of enactment of the Tribal Self-Governance Amendments of 2000, the Secretary shall submit to the Committee on Indian Affairs of the Senate and the Committee on Resources of the House of Representatives a written report regarding the administration of Title V. The report shall include a detailed analysis of the funding requirements presently funded or unfunded for each Indian Tribe or Tribal organization, either directly by the Secretary, under self-determination contracts under Title I, or under compacts and funding agreements authorized under Title V. §

137.406 In compiling reports pursuant to this section, may the Secretary impose any reporting requirements on Self-Governance Tribes, not otherwise provided in Title V?

No, in compiling reports pursuant to this section, the Secretary may not impose any reporting requirements on Self-Governance Tribes, not otherwise provided in Title V. §

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section 507(a)(2)(C) of the Act [25 U.S.C. 458aaa6(a)(2)(C) ];

CODE OF FEDERAL REGULATIONS TITLE 42--PUBLIC HEALTH CHAPTER I--PUBLIC HEALTH SERVICE, DEPARTMENT OF HEALTH AND HUMAN SERVICES SUBCHAPTER M--INDIAN HEALTH SERVICE, DEPARTMENT OF HEALTH AND HUMAN SERVICES PART 137--TRIBAL SELF-GOVERNANCE SUBPART P--APPEALS

(d) A decision to reject a final construction project proposal, or a portion thereof, under section 509(b) of the Act [25 U.S.C. 458aaa-8(b) ] and subpart N of this part; and (e) For construction project agreements carried out under section 509 of the Act [25 U.S.C. 458aaa-8], a decision to reject project planning documents, design documents, or proposed amendments submitted by a Self-Governance Tribe under section 509(f) of the Act [25 U.S.C. 458aaa-8(f) ] and subpart N of this part.

Current through November 3, 2005; 70 FR 66799 § 137.410 For the purposes of section 110 of the Act [25 U.S.C. 450m-1] does the term contract include compacts, funding agreements, and construction project agreements entered into under Title V?

§ 137.416 Do § § 137.415 through 137.436 apply to any other disputes? No, § § 137.415 through 137.436 only apply to decisions listed in § 137.415. Specifically, § § 137.415 through 137.436 do not apply to any other dispute, including, but not limited to:

Yes, for the purposes of section 110 of the Act [25 U.S.C. 450m-1] the term "contract" includes compacts, funding agreements, and construction project agreements entered into under Title V.

(a) Disputes arising under the terms of a compact, funding agreement, or construction project agreement that has been awarded;

POST-AWARD DISPUTES § 137.412 Do the regulations at 25 CFR Part 900, Subpart N apply to compacts, funding agreements, and construction project agreements entered into under Title V?

(b) Disputes arising from immediate reassumptions under section 507(a)(2)(C) of the Act [25 U.S.C. 458aaa-6(a)(2)(C) ] and § 137.261 and 137.262, which are covered under § 137.440 through 137.445.

Yes, the regulations at 25 CFR Part 900, Subpart N apply to compacts, funding agreements, and construction project agreements entered into under Title V.

(c) Other post-award contract disputes, which are covered under § 137.412.

§

(d) Denials under the Freedom of Information Act, 5 U.S.C. 552, which may be appealed under 45 CFR part 5.

137.415 What decisions may an Indian Tribe appeal under § § 137.415 through 137.436? An Indian Tribe may appeal:

(e) Decisions relating to the award of grants under section 503(e) of the Act [25 U.S.C. 458aaa-2(e) ], which may be appealed under 45 CFR part 5.

(a) A decision to reject a final offer, or a portion thereof, under section 507(b) of the Act [25 U.S.C. 458aaa-6(b) ];

§ 137.417 What procedures apply to Interior Board of Indian Appeals (IBIA) proceedings?

(b) A decision to reject a proposed amendment to a compact or funding agreement, or a portion thereof, under section 507(b) of the Act [25 U.S.C. 458aaa6(b) ];

The IBIA may use the procedures set forth in 43 CFR 4.22-4.27 as a guide. § 137.418 How does an Indian Tribe know where and when to file its appeal from decisions made by IHS?

(c) A decision to rescind and reassume a compact or funding agreement, in whole or in part, under section 507(a)(2) of the Act [25 U.S.C. 458aaa6(a)(2) ], except for immediate reassumptions under

Every decision in any of the areas listed in §

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137.415 must contain information which shall tell the Indian Tribe where and when to file the Indian Tribe's appeal. Each decision shall include the following statement:

conference to that person's office, or mail it by certified mail, return receipt requested. If the Indian Tribe mails the request, it will be considered filed on the date the Indian Tribe mailed it by certified mail.

Within 30 days of the receipt of this decision, you may request an informal conference under 42 CFR 137.421, or appeal this decision under 42 CFR 137.425 to the Interior Board of Indian Appeals (IBIA). Should you decide to appeal this decision, you may request a hearing on the record. An appeal to the IBIA under 42 CFR 137.425 shall be filed with the IBIA by certified mail or by hand delivery at the following address: Board of Indian Appeals, U.S. Department of the Interior, 4015 Wilson Boulevard, Arlington, VA 22203. You shall serve copies of your Notice of Appeal on the Secretary and on the official whose decision is being appealed. You shall certify to the IBIA that you have served these copies.

§ 137.422 How is an informal conference held?

§ 137.419 What authority does the IBIA have under § § 137.415 through 137.436?

(c) The informal conference must be conducted by a designated representative of the Secretary.

(a) The informal conference must be held within 30 days of the date the request was received, unless the Indian Tribe and the authorized representative of the Secretary agree on another date. (b) If possible, the informal conference will be held at the Indian Tribe's office. If the meeting cannot be held at the Indian Tribe's office and is held more than fifty miles from its office, the Secretary must arrange to pay transportation costs and per diem for incidental expenses to allow for adequate representation of the Indian Tribe.

The IBIA has the authority:

(d) Only people who are the designated representatives of the Indian Tribe, or authorized by the Secretary are allowed to make presentations at the informal conference. Such designated representatives may include Office of Tribal SelfGovernance.

(a) to conduct a hearing on the record; (b) to permit the parties to engage in full discovery relevant to any issue raised in the matter; (c) to issue a recommended decision; and

§

(d) to take such action as necessary to insure rights specified in § 137.430.

(a) Within 10 days of the informal conference, the person who conducted the informal conference must prepare and mail to the Indian Tribe a written report which summarizes what happened at the informal conference and a recommended decision.

§ 137.420 Does an Indian Tribe have any options besides an appeal? Yes, the Indian Tribe may request an informal conference. An informal conference is a way to resolve issues as quickly as possible, without the need for a formal hearing. Or, the Indian Tribe may, in lieu of filing an administrative appeal under this subpart or upon completion of an informal conference, file an action in Federal court pursuant to section 110 of the Act [25 U.S.C. 450m-1]. §

137.423 What happens after the informal conference?

(b) Every report of an informal conference must contain the following language: Within 30 days of the receipt of the recommended decision from the informal conference, you may file an appeal of the initial decision of the DHHS agency with the Interior Board of Indian Appeals (IBIA) under 42 CFR 137.425. You may request a hearing on the record. An appeal to the IBIA under 42 CFR 137.425 shall be filed with the IBIA by certified mail or hand delivery at the following address: Board of Indian Appeals, U.S. Department of the Interior, 4015 Wilson Boulevard, Arlington, VA 22203. You shall serve copies of your Notice of Appeal on the Secretary and on the official whose decision is being appealed. You shall certify to the IBIA that you have

137.421 How does an Indian Tribe request an informal conference?

The Indian Tribe must file its request for an informal conference with the office of the person whose decision it is appealing, within 30 days of the day it receives the decision. The Indian Tribe may either hand-deliver the request for an informal

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served these copies. Alternatively you may file an action in Federal court pursuant to section 110 of the Act. [25 U.S.C. 450m-1].

that it has done so. (e) The authorized representative of the Secretary will be considered a party to all appeals filed with the IBIA under the Act.

§ 137.424 Is the recommended decision from the informal conference final for the Secretary?

(f) In lieu of filing an administrative appeal an Indian Tribe may proceed directly to Federal court pursuant to section 110 of the Act [25 U.S.C. 450m1].

No. If the Indian Tribe is dissatisfied with the recommended decision from the informal conference, it may still appeal the initial decision within 30 days of receiving the recommended decision and the report of the informal conference. If the Indian Tribe does not file a notice of appeal within 30 days, or before the expiration of the extension it has received under § 137.426, the recommended decision of the informal conference becomes final for the Secretary and may be appealed to Federal court pursuant to section 110 of the Act [25 U.S.C. 450m-1]. §

§ 137.426 May an Indian Tribe get an extension of time to file a notice of appeal? Yes, if the Indian Tribe needs additional time, the Indian Tribe may request an extension of time to file its Notice of Appeal with the IBIA within 60 days of receiving either the initial decision or the recommended decision resulting from the informal conference. The request of the Indian Tribe must be in writing, and must give a reason for not filing its notice of appeal within the 30-day time period. If the Indian Tribe has a valid reason for not filing its notice of appeal on time, it may receive an extension.

137.425 How does an Indian Tribe appeal the initial decision if it does not request an informal conference or if it does not agree with the recommended decision resulting from the informal conference?

(a) If the Indian Tribe decides to appeal, it must file a notice of appeal with the IBIA within 30 days of receiving either the initial decision or the recommended decision from the informal conference.

§ 137.427 What happens after an Indian Tribe files an appeal? (a) Within 5 days of receiving the Indian Tribe's notice of appeal, the IBIA will decide whether the appeal falls under § 137.415. If so, the Indian Tribe is entitled to a hearing.

(b) The Indian Tribe may either hand-deliver the notice of appeal to the IBIA, or mail it by certified mail, return receipt requested. If the Indian Tribe mails the Notice of Appeal, it will be considered filed on the date the Indian Tribe mailed it by certified mail. The Indian Tribe should mail the notice of appeal to: Board of Indian Appeals, U.S. Department of the Interior, 4015 Wilson Boulevard, Arlington, VA 22203.

(b) If the IBIA cannot make that decision based on the information included in the notice of appeal, the IBIA may ask for additional statements from the Indian Tribe, or from the appropriate Federal agency. If the IBIA asks for more statements, it will make its decision within 5 days of receiving those statements. (c) If the IBIA decides that the Indian Tribe is not entitled to a hearing or if the Indian Tribe has waived its right to a hearing on the record, the IBIA will dismiss the appeal and inform the Indian Tribe that it is not entitled to a hearing or has waived its right to a hearing.

(c) The Notice of Appeal must: (1) Briefly state why the Indian Tribe thinks the initial decision is wrong; (2) Briefly identify the issues involved in the appeal; and

§ 137.428 How is a hearing arranged? (3) State whether the Indian Tribe wants a hearing on the record, or whether the Indian Tribe wants to waive its right to a hearing.

(a) If a hearing is to be held, the IBIA will refer the Indian Tribe's case to the Hearings Division of the Office of Hearings and Appeals of the U.S. Department of the Interior. The case will then be assigned to an Administrative Law Judge (ALJ), appointed under 5 U.S.C. 3105.

(d) The Indian Tribe must serve a copy of the notice of appeal upon the official whose decision it is appealing. The Indian Tribe must certify to the IBIA

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458aaa-17], the Secretary must demonstrate by clear and convincing evidence the validity of the grounds for the decision made and that the decision is fully consistent with provisions and policies of the Act.

(b) Within 15 days of the date of the referral, the ALJ will hold a pre-hearing conference, by telephone or in person, to decide whether an evidentiary hearing is necessary, or whether it is possible to decide the appeal based on the written record. At the prehearing conference the ALJ will provide for:

§

137.431 What rights do Indian Tribes and the Secretary have during the appeal process?

Both the Indian Tribe and the Secretary have the same rights during the appeal process. These rights include the right to:

(1) A briefing and discovery schedule; (2) A schedule for the exchange of information, including, but not limited to witness and exhibit lists, if an evidentiary hearing is to be held;

(a) Be represented by legal counsel; (b) Have the parties provide witnesses who have knowledge of the relevant issues, including specific witnesses with that knowledge, who are requested by either party;

(3) The simplification or clarification of issues; (4) The limitation of the number of expert witnesses, or avoidance of similar cumulative evidence, if an evidentiary hearing is to be held;

(c) Cross-examine witnesses; (5) The possibility of agreement disposing of all or any of the issues in dispute; and

(d) Introduce oral or documentary evidence, or both;

(6) Such other matters as may aid in the disposition of the appeal.

(e) Require that oral testimony be under oath;

(c) The ALJ shall order a written record to be made of any conference results that are not reflected in a transcript.

(f) Receive a copy of the transcript of the hearing, and copies of all documentary evidence which is introduced at the hearing;

§

(g) Compel the presence of witnesses, or the production of documents, or both, by subpoena at hearings or at depositions;

137.429 What happens when a hearing is necessary?

(a) The ALJ must hold a hearing within 90 days of the date of the order referring the appeal to the ALJ, unless the parties agree to have the hearing on a later date.

(h) Take depositions, to request the production of documents, to serve interrogatories on other parties, and to request admissions; and

(b) At least 30 days before the hearing, the Secretary must file and serve the Indian Tribe with a response to the notice of appeal.

(i) Any other procedural rights under the Administrative Procedure Act, 5 U.S.C. 556. § 137.432 What happens after the hearing?

(c) If the hearing is held more than 50 miles from the Indian Tribe's office, the Secretary must arrange to pay transportation costs and per diem for incidental expenses to allow for adequate representation of the Indian Tribe.

(a) Within 30 days of the end of the formal hearing or any post-hearing briefing schedule established by the ALJ, the ALJ shall send all the parties a recommended decision, by certified mail, return receipt requested. The recommended decision must contain the ALJ's findings of fact and conclusions of law on all the issues. The recommended decision shall also state that the Indian Tribe has the right to object to the recommended decision.

(d) The hearing shall be conducted in accordance with the Administrative Procedure Act, 5 U.S.C. 556. § 137.430 What is the Secretary's burden of proof for appeals covered by § 137.415?

(b) The recommended decision shall contain the following statement:

As required by section 518 of the Act [25 U.S.C.

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(2) Specify the findings of fact or conclusions of law that are modified or reversed;

Within 30 days of the receipt of this recommended decision, you may file an objection to the recommended decision with the Secretary under 42 CFR 137.43. An appeal to the Secretary under 42 CFR 137.43 shall be filed at the following address: Department of Health and Human Services, 200 Independence Ave. S.W., Washington, DC, 20201. You shall serve copies of your notice of appeal on the official whose decision is being appealed. You shall certify to the Secretary that you have served this copy. If neither party files an objection to the recommended decision within 30 days, the recommended decision will become final. §

(3) Give reasons for the decision, based on the record; and (4) State that the decision is final for the Department. § 137.435 Will an appeal adversely affect the Indian Tribe's rights in other compact, funding negotiations, or construction project agreement? No, a pending appeal will not adversely affect or prevent the negotiation or award of another compact, funding agreement, or construction project agreement.

137.433 Is the recommended decision always final?

No, any party to the appeal may file precise and specific written objections to the recommended decision, or any other comments, within 30 days of receiving the recommended decision. Objections must be served on all other parties. The recommended decision shall become final for the Secretary 30 days after the Indian Tribe receives the ALJs recommended decision, unless a written statement of objections is filed with the Secretary during the 30-day period. If no party files a written statement of objections within 30 days, the recommended decision shall become final for the Secretary. §

§ 137.436 Will the decisions on appeal be available for the public to review? Yes, all final decisions must be published for the Department under this subpart. Decisions can be found on the Department's website. APPEALS OF AN IMMEDIATE REASSUMPTION OF A SELF-GOVERNANCE PROGRAM § 137.440 What happens in the case of an immediate reassumption under section 507(a)(2)(C) of the Act [25 U.S.C. 458aaa-6(a)(2)(C) ]?

137.434 If an Indian Tribe objects to the recommended decision, what will the Secretary do?

(a) The Secretary may, upon written notification to the Self-Governance Tribe, immediately reassume operation of a program, service, function, or activity (or portion thereof) if:

(a) The Secretary has 45 days from the date it receives the final authorized submission in the appeal to modify, adopt, or reverse the recommended decision. The Secretary also may remand the case to the IBIA for further proceedings. If the Secretary does not modify or reverse the recommended decision or remand the case to the IBIA during that time, the recommended decision automatically becomes final.

(1) The Secretary makes a finding of imminent substantial and irreparable endangerment of the public health caused by an act or omission of the Self-Governance Tribe; and (2) The endangerment arises out of a failure to carry out the compact or funding agreement. (b) When the Secretary advises a Self-Governance Tribe that the Secretary intends to take an action referred to in paragraph (a) of this section, the Secretary must also notify the Deputy Director of the Office of Hearings and Appeals, Department of the Interior, 4015 Wilson Boulevard, Arlington, VA 22203.

(b) When reviewing the recommended decision, the Secretary may consider and decide all issues properly raised by any party to the appeal, based on the record. (c) The decision of the Secretary must: (1) Be in writing;

§ 137.441 Will there be a hearing? © The Falmouth Institute H-8

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party. The recommended decision will become final 15 days after the Self-Governance Tribe receives the ALJs recommended decision, unless a written statement of objections is filed with the Secretary during the 15-day period. If no party files a written statement of objections within 15 days, the recommended decision will become final.

Yes, unless the Self-Governance Tribe waives its right to a hearing in writing. The Deputy Director of the Office of Hearings and Appeals must appoint an Administrative Law Judge to hold a hearing, (a) The hearing must be held within 10 days of the date of the notice referred to in § 137.440 unless the Self-Governance Tribe agrees to a later date.

§ 137.444 If a Self-Governance Tribe objects to the recommended decision, what action will the Secretary take?

(b) If possible, the hearing will be held at the office of the Self-Governance Tribe. If the hearing is held more than 50 miles from the office of the SelfGovernance Tribe, the Secretary must arrange to pay transportation costs and per diem for incidental expenses. This will allow for adequate representation of the Self-Governance Tribe.

(a) The Secretary has 15 days from the date the Secretary receives timely written objections to modify, adopt, or reverse the recommended decision. If the Secretary does not modify or reverse the recommended decision during that time, the recommended decision automatically becomes final.

§ 137.442 What happens after the hearing? (b) When reviewing the recommended decision, the Secretary may consider and decide all issues properly raised by any party to the appeal, based on the record.

(a) Within 30 days after the end of the hearing or any post-hearing briefing schedule established by the ALJ, the ALJ must send all parties a recommended decision by certified mail, return receipt requested. The recommended decision shall contain the ALJs findings of fact and conclusions of law on all the issues. The recommended decision must also state that the Self-Governance Tribe has the right to object to the recommended decision.

(c) The decision of the Secretary must: (1) Be in writing; (2) Specify the findings of fact or conclusions of law that are modified or reversed;

(b) The recommended decision must contain the following statement:

(3) Give reasons for the decision, based on the record; and

Within 15 days of the receipt of this recommended decision, you may file an objection to the recommended decision with the Secretary under § 137.443. An appeal to the Secretary under 25 CFR 900.165(b) shall be filed at the following address: Department of Health and Human Services, 200 Independence Ave. SW., Washington, DC 20201. You shall serve copies of your notice of appeal on the official whose decision is being appealed. You shall certify to the Secretary that you have served this copy. If neither party files an objection to the recommended decision within 15 days, the recommended decision will become final. §

(4) State that the decision is final for the Secretary. § 137.445 Will an immediate reassumption appeal adversely affect the Self-Governance Tribe's rights in other self-governance negotiations? No, a pending appeal will not adversely affect or prevent the negotiation or award of another compact, funding agreement, or construction project agreement. § 137.450 Does the Equal Access to Justice Act (EAJA) apply to appeals under this subpart?

137.443 Is the recommended decision always final?

Yes, EAJA claims against the Department will be heard pursuant to 25 CFR 900.177.

No, any party to the appeal may file precise and specific written objections to the recommended decision, or any other comments, within 15 days of receiving the recommended decision. The objecting party must serve a copy of its objections on the other © The Falmouth Institute H-9

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NOTES

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APPENDIX I 24 CFR PART 85 HUD UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE AGREEMENTS

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grantee and goods and other tangible property delivered to purchasers, and (2) amounts becoming owed to the grantee for which no current services or performance is required by the grantee.

CODE OF FEDERAL REGULATIONS TITLE 24--HOUSING AND URBAN DEVELOPMENT SUBTITLE A--OFFICE OF THE SECRETARY, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT PART 85--UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE AGREEMENTS TO STATE, LOCAL AND FEDERALLY RECOGNIZED INDIAN TRIBAL GOVERNMENTS Current through November 3, 2005; 70 FR 66799

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

Authority: 42 U.S.C. 3535(d).

"Administrative" requirements mean those matters common to grants in general, such as financial management, kinds and frequency of reports, and retention of records. These are distinguished from "programmatic" requirements, which concern matters that can be treated only on a program-by-program or grant-by-grant basis, such as kinds of activities that can be supported by grants under a particular program.

Source: 53 FR 8068, 8087, March 11, 1988; 57 FR 33255, July 27, 1992, unless otherwise noted. C. F. R. T. 24, Subt. A, Pt. 85, Refs & Annos CFR T. 24, Subt. A, Pt. 85, Refs & Annos SUBPART A--GENERAL

"Awarding agency" means (1) with respect to a grant, the Federal agency, and (2) with respect to a subgrant, the party that awarded the subgrant.

§ 85.1 Purpose and scope of this part. This part establishes uniform administrative rules for Federal grants and cooperative agreements and subawards to State, local and Indian tribal governments.

"Cash contributions" means the grantee's cash outlay, including the outlay of money contributed to the grantee or subgrantee by other public agencies and institutions, and private organizations and individuals. When authorized by Federal legislation, Federal funds received from other assistance agreements may be considered as grantee or subgrantee cash contributions.

§ 85.2 Scope of subpart. This subpart contains general rules pertaining to this part and procedures for control of exceptions from this part.

"Contract" means (except as used in the definitions for "grant" and "subgrant" in this section and except where qualified by "Federal") a procurement contract under a grant or subgrant, and means a procurement subcontract under a contract.

§ 85.3 Definitions. As used in this part: "Accrued expenditures" mean the charges incurred by the grantee during a given period requiring the provision of funds for: (1) Goods and other tangible property received; (2) services performed by employees, contractors, subgrantees, subcontractors, and other payees; and (3) other amounts becoming owed under programs for which no current services or performance is required, such as annuities, insurance claims, and other benefit payments.

"Cost sharing or matching" means the value of the third party in-kind contributions and the portion of the costs of a federally assisted project or program not borne by the Federal Government. "Cost-type contract" means a contract or subcontract under a grant in which the contractor or subcontractor is paid on the basis of the costs it incurs, with or without a fee.

"Accrued income" means the sum of: (1) Earnings during a given period from services performed by the

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"Equipment" means tangible, nonexpendable, personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit. A grantee may use its own definition of equipment provided that such definition would at least include all equipment defined above.

"Obligations" means the amounts of orders placed, contracts and subgrants awarded, goods and services received, and similar transactions during a given period that will require payment by the grantee during the same or a future period. "OMB" means the United States Office of Management and Budget.

"Expenditure report" means: (1) For nonconstruction grants, the SF-269 "Financial Status Report" (or other equivalent report); (2) for construction grants, the SF-271 "Outlay Report and Request for Reimbursement" (or other equivalent report).

"Outlays" (expenditures) mean charges made to the project or program. They may be reported on a cash or accrual basis. For reports prepared on a cash basis, outlays are the sum of actual cash disbursement for direct charges for goods and services, the amount of indirect expense incurred, the value of in-kind contributions applied, and the amount of cash advances and payments made to contractors and subgrantees. For reports prepared on an accrued expenditure basis, outlays are the sum of actual cash disbursements, the amount of indirect expense incurred, the value of inkind contributions applied, and the new increase (or decrease) in the amounts owed by the grantee for goods and other property received, for services performed by employees, contractors, subgrantees, subcontractors, and other payees, and other amounts becoming owed under programs for which no current services or performance are required, such as annuities, insurance claims, and other benefit payments.

"Federally recognized Indian tribal government" means the governing body or a governmental agency of any Indian tribe, band, nation, or other organized group or community (including any Native village as defined in section 3 of the Alaska Native Claims Settlement Act, 85 Stat. 688) certified by the Secretary of the Interior as eligible for the special programs and services provided by him through the Bureau of Indian Affairs. "Government" means a State or local government or a federally recognized Indian tribal government. "Grant" means an award of financial assistance, including cooperative agreements, in the form of money, or property in lieu of money, by the Federal Government to an eligible grantee. The term does not include technical assistance which provides services instead of money, or other assistance in the form of revenue sharing, loans, loan guarantees, interest subsidies, insurance, or direct appropriations. Also, the term does not include assistance, such as a fellowship or other lump sum award, which the grantee is not required to account for.

"Percentage of completion method" refers to a system under which payments are made for construction work according to the percentage of completion of the work, rather than to the grantee's cost incurred. "Prior approval" means documentation evidencing consent prior to incurring specific cost.

"Grantee" means the government to which a grant is awarded and which is accountable for the use of the funds provided. The grantee is the entire legal entity even if only a particular component of the entity is designated in the grant award document.

"Real property" means land, including land improvements, structures and appurtenances thereto, excluding movable machinery and equipment. "Share", when referring to the awarding agency's portion of real property, equipment or supplies, means the same percentage as the awarding agency's portion of the acquiring party's total costs under the grant to which the acquisition costs under the grant to which the acquisition cost of the property was charged. Only costs are to be counted--not the value of third-party in-kind contributions.

"Local government" means a county, municipality, city, town, township, local public authority (including any public and Indian housing agency under the United States Housing Act of 1937) school district, special district, intrastate district, council of governments (whether or not incorporated as a nonprofit corporation under state law), any other regional or interstate government entity, or any agency or instrumentality of a local government.

"State" means any of the several States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or

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possession of the United States, or any agency or instrumentality of a State exclusive of local governments. The term does not include any public and Indian housing agency under United States Housing Act of 1937.

"Third party in-kind contributions" mean property or services which benefit a federally assisted project or program and which are contributed by non-Federal third parties without charge to the grantee, or a costtype contractor under the grant agreement.

"Subgrant" means an award of financial assistance in the form of money, or property in lieu of money, made under a grant by a grantee to an eligible subgrantee. The term includes financial assistance when provided by contractual legal agreement, but does not include procurement purchases, nor does it include any form of assistance which is excluded from the definition of "grant" in this part.

"Unliquidated obligations" for reports prepared on a cash basis mean the amount of obligations incurred by the grantee that has not been paid. For reports prepared on an accrued expenditure basis, they represent the amount of obligations incurred by the grantee for which an outlay has not been recorded. "Unobligated balance" means the portion of the funds authorized by the Federal agency that has not been obligated by the grantee and is determined by deducting the cumulative obligations from the cumulative funds authorized.

"Subgrantee" means the government or other legal entity to which a subgrant is awarded and which is accountable to the grantee for the use of the funds provided.

§ 85.4 Applicability. "Supplies" means all tangible personal property other than "equipment" as defined in this part.

(a) General. Subparts A-D of this part apply to all grants and subgrants to governments, except where inconsistent with Federal statutes or with regulations authorized in accordance with the exception provision of § 85.6, or:

"Suspension" means depending on the context, either (1) temporary withdrawal of the authority to obligate grant funds pending corrective action by the grantee or subgrantee or a decision to terminate the grant, or (2) an action taken by a suspending official in accordance with agency regulations implementing E.O. 12549 to immediately exclude a person from participating in grant transactions for a period, pending completion of an investigation and such legal or debarment proceedings as may ensue.

(1) Grants and subgrants to State and local institutions of higher education or State and local hospitals. (2) The block grants authorized by the Omnibus Budget Reconciliation Act of 1981 (Community Services; 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 Grants 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 grant program) and Titles I-III of the Job Training Partnership Act of 1982 and under the Public Health Services Act (Section 1921), Alcohol and Drug Abuse Treatment and Rehabilitation Block Grant and Part C of Title V, Mental Health Service for the Homeless Block Grant).

"Termination" means permanent withdrawal of the authority to obligate previously-awarded grant funds before that authority would otherwise expire. It also means the voluntary relinquishment of that authority by the grantee or subgrantee. "Termination" does not include: (1) Withdrawal of funds awarded on the basis of the grantee's underestimate of the unobligated balance in a prior period; (2) Withdrawal of the unobligated balance as of the expiration of a grant; (3) Refusal to extend a grant or award additional funds, to make a competing or noncompeting continuation, renewal, extension, or supplemental award; or (4) voiding of a grant upon determination that the award was obtained fraudulently, or was otherwise illegal or invalid from inception.

(3) Entitlement grants to carry out the following programs of the Social Security Act:

"Terms of a grant or subgrant" mean all requirements of the grant or subgrant, whether in statute, regulations, or the award document.

(i) Aid to Needy Families with Dependent Children (Title IV-A of the Act, not including the Work Incentive Program (WIN) authorized by section

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402(a)19(G); HHS grants for WIN are subject to this part);

providing the assistance and benefits; (9) Grants to local education agencies under 20 U.S.C. 236 through 241- 1(a), and 242 through 244 (portions of the Impact Aid program), except for 20 U.S.C. 238(d)(2)(c) and 240(f) (Entitlement Increase for Handicapped Children); and

(ii) Child Support Enforcement and Establishment of Paternity (Title IV-D of the Act); (iii) Foster Care and Adoption Assistance (Title IV-E of the Act);

(10) Payments under the Veterans Administration's State Home Per Diem Program (38 U.S.C. 641(a)).

(iv) Aid to the Aged, Blind, and Disabled (Titles I, X, XIV, and XVI-AABD of the Act); and

(b) Entitlement programs. Entitlement programs enumerated above in § 85.4(a) (3)-(8) are subject to Subpart E.

(v) Medical Assistance (Medicaid) (Title XIX of the Act) not including the State Medicaid Fraud Control program authorized by section 1903(a)(6)(B).

§ 85.5 Effect on other issuances. All other grants administration provisions of codified program regulations, program manuals, handbooks and other nonregulatory materials which are inconsistent with this part are superseded, except to the extent they are required by statute, or authorized in accordance with the exception provision in § 85.6.

(4) Entitlement grants under the following programs of The National School Lunch Act: (i) School Lunch (section 4 of the Act), (ii) Commodity Assistance (section 6 of the Act), (iii) Special Meal Assistance (section 11 of the Act),

§ 85.6 Additions and exceptions (a) For classes of grants and grantees subject to this part, Federal agencies may not impose additional administrative requirements except in codified regulations published in the Federal Register.

(iv) Summer Food Service for Children (section 13 of the Act), and (v) Child Care Food Program (section 17 of the Act).

(b) Exceptions for classes of grants or grantees may be authorized only by OMB.

(5) Entitlement grants under the following programs of The Child Nutrition Act of 1966:

(c) Exceptions on a case-by-case basis and for subgrantees may be authorized by the affected Federal agencies.

(i) Special Milk (section 3 of the Act), and (ii) School Breakfast (section 4 of the Act).

SUBPART B--PRE-AWARD REQUIREMENTS (6) Entitlement grants for State Administrative expenses under The Food Stamp Act of 1977 (section 16 of the Act).

§ 85.10 Forms for applying for grants. (a) Scope.

(7) A grant for an experimental, pilot, or demonstration project that is also supported by a grant listed in paragraph (a)(3) of this section;

(1) This section prescribes forms and instructions to be used by governmental organizations (except hospitals and institutions of higher education operated by a government) in applying for grants. This section is not applicable, however, to formula grant programs which do not require applicants to apply for funds on a project basis.

(8) Grant funds awarded under subsection 412(e) of the Immigration and Nationality Act (8 U.S.C. 1522(e)) 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

(2) This section applies only to applications to Federal agencies for grants, and is not required to be

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applied by grantees in dealing with applicants for subgrants. However, grantees are encouraged to avoid more detailed or burdensome application requirements for subgrants. (b) Authorized forms and governmental organizations.

instructions

funding. For this assurance and other assurances required in the plan, the State may: (1) Cite by number the statutory or regulatory provisions requiring the assurances and affirm that it gives the assurances required by those provisions,

for

(2) Repeat the assurance language in the statutes or regulations, or

(1) In applying for grants, applicants shall only use standard application forms or those prescribed by the granting agency with the approval of OMB under the Paperwork Reduction Act of 1980.

(3) Develop its own language to the extent permitted by law.

(2) Applicants are not required to submit more than the original and two copies of preapplications or applications.

(d) Amendments. A State will amend a plan whenever necessary to reflect: (1) New or revised Federal statutes or regulations or;

(3) Applicants must follow all applicable instructions that bear OMB clearance numbers. Federal agencies may specify and describe the programs, functions, or activities that will be used to plan, budget, and evaluate the work under a grant. Other supplementary instructions may be issued only with the approval of OMB to the extent required under the Paperwork Reduction Act of 1980. For any standard form, except the SF-424 facesheet, Federal agencies may shade out or instruct the applicant to disregard any line item that is not needed.

(2) A material change in any State law, organization, policy, or State agency operation. The State will obtain approval for the amendment and its effective date but need submit for approval only the amended portions of the plan. §

85.12 Special grant or subgrant conditions for "high-risk" grantees.

(a) A grantee or subgrantee may be considered "high risk" if an awarding agency determines that a grantee or subgrantee:

(4) When a grantee applies for additional funding (such as a continuation or supplemental award) or amends a previously submitted application, only the affected pages need be submitted. Previously submitted pages with information that is still current need not be resubmitted.

(1) Has a history of unsatisfactory performance, or (2) Is not financially stable, or (3) Has a management system which does not meet the management standards set forth in this part, or

§ 85.11 State plans. (a) Scope. The statutes for some programs require States to submit plans before receiving grants. Under regulations implementing Executive Order 12372, "Intergovernmental Review of Federal Programs," States are allowed to simplify, consolidate and substitute plans. This section contains additional provisions for plans that are subject to regulations implementing the Executive Order.

(4) Has not conformed to terms and conditions of previous awards, or (5) Is otherwise not responsible; and if the awarding agency determines that an award will be made, special conditions and/or restrictions shall correspond to the high risk condition and shall be included in the award.

(b) Requirements. A State need meet only Federal administrative or programmatic requirements for a plan that are in statutes or codified regulations.

(b) Special conditions or restrictions may include: (1) Payment on a reimbursement basis;

(c) Assurances. In each plan the State will include an assurance that the State shall comply with all applicable Federal statutes and regulations in effect with respect to the periods for which it receives grant

(2) Withholding authority to proceed to the next phase until receipt of evidence of acceptable performance within a given funding period;

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(1) Financial reporting. Accurate, current, and complete disclosure of the financial results of financially assisted activities must be made in accordance with the financial reporting requirements of the grant or subgrant.

(3) Requiring additional, more detailed financial reports; (4) Additional project monitoring; (5) Requiring the grantee or subgrantee to obtain technical or management assistance; or

(2) Accounting records. Grantees and subgrantees must maintain records which adequately identify the source and application of funds provided for financially-assisted activities. These records must contain information pertaining to grant or subgrant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income.

(6) Establishing additional prior approvals. (c) If an awarding agency decides to impose such conditions, the awarding official will notify the grantee or subgrantee as early as possible, in writing, of: (1) The nature conditions/restrictions;

of

the

(3) Internal control. Effective control and accountability must be maintained for all grant and subgrant cash, real and personal property, and other assets. Grantees and subgrantees must adequately safeguard all such property and must assure that it is used solely for authorized purposes.

special

(2) The reason(s) for imposing them; (3) The corrective actions which must be taken before they will be removed and the time allowed for completing the corrective actions and

(4) Budget control. Actual expenditures or outlays must be compared with budgeted amounts for each grant or subgrant. Financial information must be related to performance or productivity data, including the development of unit cost information whenever appropriate or specifically required in the grant or subgrant agreement. If unit cost data are required, estimates based on available documentation will be accepted whenever possible.

(4) The method of requesting reconsideration of the conditions/restrictions imposed. SUBPART C--POST-AWARD REQUIREMENTS FINANCIAL ADMINISTRATION §

(5) Allowable cost. Applicable OMB cost principles, agency program regulations, and the terms of grant and subgrant agreements will be followed in determining the reasonableness, allowability, and allocability of costs.

85.20 Standards for financial management systems.

(a) A State must expand and account for grant funds in accordance with State laws and procedures for expending and accounting for its own funds. Fiscal control and accounting procedures of the State, as well as its subgrantees and cost-type contractors, must be sufficient to--

(6) Source documentation. Accounting records must be supported by such source documentation as cancelled checks, paid bills, payrolls, time and attendance records, contract and subgrant award documents, etc.

(1) Permit preparation of reports required by this part and the statutes authorizing the grant, and

(7) Cash management. Procedures for minimizing the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by grantees and subgrantees must be followed whenever advance payment procedures are used. Grantees must establish reasonable procedures to ensure the receipt of reports on subgrantees' cash balances and cash disbursements in sufficient time to enable them to prepare complete and accurate cash transactions reports to the awarding agency. When advances are made by letter-of-credit or electronic transfer of

(2) Permit the tracing of funds to a level of expenditures adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes. (b) The financial management systems of other grantees and subgrantees must meet the following standards:

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funds methods, the grantee must make drawdowns as close as possible to the time of making disbursements. Grantees must monitor cash drawdowns by their subgrantees to assure that they conform substantially to the same standards of timing and amount as apply to advances to the grantees.

cycle. Thereafter, the awarding agency shall reimburse the grantee for its actual cash disbursements. The working capital advance method of payment shall not be used by grantees or subgrantees if the reason for using such method is the unwillingness or inability of the grantee to provide timely advances to the subgrantee to meet the subgrantee's actual cash disbursements.

(c) An awarding agency may review the adequacy of the financial management system of any applicant for financial assistance as part of a preaward review or at any time subsequent to award.

(f) Effect of program income, refunds, and audit recoveries on payment.

§ 85.21 Payment.

(1) Grantees and subgrantees shall disburse repayments to and interest earned on a revolving fund before requesting additional cash payments for the same activity.

(a) Scope. This section prescribes the basic standard and the methods under which a Federal agency will make payments to grantees, and grantees will make payments to subgrantees and contractors.

(2) Except as provided in paragraph (f)(1) of this section, grantees and subgrantees shall disburse program income, rebates, refunds, contract settlements, audit recoveries and interest earned on such funds before requesting additional cash payments.

(b) Basic standard. Methods and procedures for payment shall minimize the time elapsing between the transfer of funds and disbursement by the grantee or subgrantee, in accordance with Treasury regulations at 31 CFR Part 205.

(g) Withholding payments. (c) Advances. Grantees and subgrantees shall be paid in advance, provided they maintain or demonstrate the willingness and ability to maintain procedures to minimize the time elapsing between the transfer of the funds and their disbursement by the grantee or subgrantee.

(1) Unless otherwise required by Federal statute, awarding agencies shall not withhold payments for proper charges incurred by grantees or subgrantees unless-(i) The grantee or subgrantee has failed to comply with grant award conditions or

(d) Reimbursement. Reimbursement shall be the preferred method when the requirements in paragraph (c) of this section are not met. Grantees and subgrantees may also be paid by reimbursement for any construction grant. Except as otherwise specified in regulation, Federal agencies shall not use the percentage of completion method to pay construction grants. The grantee or subgrantee may use that method to pay its construction contractor, and if it does, the awarding agency's payments to the grantee or subgrantee will be based on the grantee's or subgrantee's actual rate of disbursement.

(ii) The grantee or subgrantee is indebted to the United States. (2) Cash withheld for failure to comply with grant award condition, but without suspension of the grant, shall be released to the grantee upon subsequent compliance. When a grant is suspended, payment adjustments will be made in accordance with § 85.43(c). (3) A Federal agency shall not make payment to grantees for amounts that are withheld by grantees or subgrantees from payment to contractors to assure satisfactory completion of work. Payments shall be made by the Federal agency when the grantees or subgrantees actually disburse the withheld funds to the contractors or to escrow accounts established to assure satisfactory completion of work.

(e) Working capital advances. If a grantee cannot meet the criteria for advance payments described in paragraph (c) of this section, and the Federal agency has determined that reimbursement is not feasible because the grantee lacks sufficient working capital, the awarding agency may provide cash or a working capital advance basis. Under this procedure the awarding agency shall advance cash to the grantee to cover its estimated disbursement needs for an initial period generally geared to the grantee's disbursing

(h) Cash depositories.

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(1) Consistent with the national goal of expanding the opportunities for minority business enterprises, grantees and subgrantees are encouraged to use minority banks (a bank which is owned at least 50 percent by minority group members). A list of minority owned banks can be obtained from the Minority Business Development Agency, Department of Commerce, Washington, DC 20230. (2) A grantee or subgrantee shall maintain a separate bank account only when required by Federal-State agreement. (i) Interest earned on advances. Except for interest earned on advances of funds exempt under the Intergovernmental Cooperation Act (31 U.S.C. 6501 et seq.) and the Indian Self-Determination Act (23 U.S.C. 450), grantees and subgrantees shall promptly, but at least quarterly, remit interest earned on advances to the Federal agency. The grantee or subgrantee may keep interest amounts up to $100 per year for administrative expenses.

For the costs of a--

Use the principles in--

State, local or Indian tribal government.

OMB Circular A-87.

Private nonprofit organization other than an (1) institution of higher education, (2) hospital, or (3) organization named in OMB Circular A-122 as not subject to that circular.

OMB Circular A-122.

Educational institutions

OMB Circular A-21

For-profit organization other than a hospital and an organization named in OMB Circular A-122 as not subject to that circular.

48 CFR Part 31. Contract Cost Principles and Procedures, or uniform cost accounting standards that comply with cost principles acceptable to the Federal agency.

§ 85.22 Allowable costs.

§ 85.23 Period of availability of funds.

(a) Limitation on use of funds. Grant funds may be used only for:

(a) General. Where a funding period is specified, a grantee may charge to the award only costs resulting from obligations of the funding period unless carryover of unobligated balances is permitted, in which case the carryover balances may be charged for costs resulting from obligations of the subsequent funding period.

(1) The allowable costs of the grantees, subgrantees and cost-type contractors, including allowable costs in the form of payments to fixedprice contractors; and

(b) Liquidation of obligations. A grantee must liquidate all obligations incurred under the award not later than 90 days after the end of the funding period (or as specified in a program regulation) to coincide with the submission of the annual Financial Status Report (SF-269). The Federal agency may extend this deadline at the request of the grantee.

(2) Reasonable fees or profit to cost-type contractors but not any fee or profit (or other increment above allowable costs) to the grantee or subgrantee. (b) Applicable cost principles. For each kind of organization, there is a set of Federal principles for determining allowable costs. Allowable costs will be determined in accordance with the cost principles applicable to the organization incurring the costs. The following chart lists the kinds of organizations and the applicable cost principles.

§ 85.24 Matching or cost sharing. (a) Basic rule: Costs and contributions acceptable. With the qualifications and exceptions listed in paragraph (b) of this section, a matching or cost sharing requirement may be satisfied by either or both of the following: (1) Allowable costs incurred by the grantee, subgrantee or a cost-type contractor under the assistance agreement. This includes allowable costs borne by non-Federal grants or by others cash donations from non-Federal third parties.

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(2) The value of third party in-kind contributions applicable to the period to which the cost sharing or matching requirements applies.

will be supported by the same methods that the organization uses to support the allocability of regular personnel costs.

(b) Qualifications and exceptions--

(7) Special standards for third party in-kind contributions. (i) Third party in-kind contributions count towards satisfying a cost sharing or matching requirement only where, if the party receiving the contributions were to pay for them, the payments would be allowable costs.

(1) Costs borne by other Federal grant agreements. Except as provided by Federal statute, a cost sharing or matching requirement may not be met by costs borne by another Federal grant. This prohibition does not apply to income earned by a grantee or subgrantee from a contract awarded under another Federal grant.

(ii) Some third party in-kind contributions are goods and services that, if the grantee, subgrantee, or contractor receiving the contribution had to pay for them, the payments would have been an indirect costs. Costs sharing or matching credit for such contributions shall be given only if the grantee, subgrantee, or contractor has established, along with its regular indirect cost rate, a special rate for allocating to individual projects or programs the value of the contributions.

(2) General revenue sharing. For the purpose of this section, general revenue sharing funds distributed under 31 U.S.C. 6702 are not considered Federal grant funds. (3) Cost or contributions counted towards other Federal costs-sharing requirements. Neither costs nor the values of third party in-kind contributions may count towards satisfying a cost sharing or matching requirement of a grant agreement if they have been or will be counted towards satisfying a cost sharing or matching requirement of another Federal grant agreement, a Federal procurement contract, or any other award of Federal funds.

(iii) A third party in-kind contribution to a fixedprice contract may count towards satisfying a cost sharing or matching requirement only if it results in: (A) An increase in the services or property provided under the contract (without additional cost to the grantee or subgrantee) or

(4) Costs financed by program income. Costs financed by program income, as defined in § 85.25, shall not count towards satisfying a cost sharing or matching requirement unless they are expressly permitted in the terms of the assistance agreement. (This use of general program income is described in § 85.25(g).)

(B) A cost savings to the grantee or subgrantee. (iv) The values placed on third party in-kind contributions for cost sharing or matching purposes will conform to the rules in the succeeding sections of this part. If a third party in-kind contribution is a type not treated in those sections, the value placed upon it shall be fair and reasonable.

(5) Services or property financed by income earned by contractors. Contractors under a grant may earn income from the activities carried out under the contract in addition to the amounts earned from the party awarding the contract. No costs of services or property supported by this income may count toward satisfying a cost sharing or matching requirement unless other provisions of the grant agreement expressly permit this kind of income to be used to meet the requirement.

(c) Valuation of donated services-(1) Volunteer services. Unpaid services provided to a grantee or subgrantee by individuals will be valued at rates consistent with those ordinarily paid for similar work in the grantee's or subgrantee's organization. If the grantee or subgrantee does not have employees performing similar work, the rates will be consistent with those ordinarily paid by other employers for similar work in the same labor market. In either case, a reasonable amount for fringe benefits may be included in the valuation.

(6) Records. Costs and third party in-kind contributions counting towards satisfying a cost sharing or matching requirement must be verifiable from the records of grantees and subgrantee or costtype contractors. These records must show how the value placed on third party in-kind contributions was derived. To the extent feasible, volunteer services

(2) Employees of other organizations. When an employer other than a grantee, subgrantee, or costtype contractor furnishes free of charge the services

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of an employee in the employee's normal line of work, the services will be valued at the employee's regular rate of pay exclusive of the employee's fringe benefits and overhead costs. If the services are in a different line of work, paragraph (c)(1) of this section applies.

and buildings. The depreciation or use allowances for this property are not treated as third party in-kind contributions. Instead, they are treated as costs incurred by the grantee or subgrantee. They are computed and allocated (usually as indirect costs) in accordance with the cost principles specified in § 85.22, in the same way as depreciation or use allowances for purchased equipment and buildings. The amount of depreciation or use allowances for donated equipment and buildings is based on the property's market value at the time it was donated.

(d) Valuation of third party donated supplies and loaned equipment or space. (1) If a third party donates supplies, the contribution will be valued at the market value of the supplies at the time of donation.

(f) Valuation of grantee or subgrantee donated real property for construction/acquisition. If a grantee or subgrantee donates real property for a construction or facilities acquisition project, the current market value of that property may be counted as cost sharing or matching. If any part of the donated property was acquired with Federal funds, only the non-federal share of the property may be counted as cost sharing or matching.

(2) If a third party donates the use of equipment or space in a building but retains title, the contribution will be valued at the fair rental rate of the equipment or space. (e) Valuation of third party donated equipment, buildings, and land. If a third party donates equipment, buildings, or land, and title passes to a grantee or subgrantee, the treatment of the donated property will depend upon the purpose of the grant or subgrant, as follows:

(g) Appraisal of real property. In some cases under paragraphs (d), (e) and (f) of this section, it will be necessary to establish the market value of land or a building or the fair rental rate of land or of space in a building. In these cases, the Federal agency may require the market value or fair rental value be set by an independent appraiser, and that the value or rate be certified by the grantee. This requirement will also be imposed by the grantee on subgrantees.

(1) Awards for capital expenditures. If the purpose of the grant or subgrant is to assist the grantee or subgrantee in the acquisition of property, the market value of that property at the time of donation may be counted as cost sharing or matching, (2) Other awards. If assisting in the acquisition of property is not the purpose of the grant or subgrant, paragraphs (e)(2) (i) and (ii) of this section apply:

§ 85.25 Program income. (a) General. Grantees are encouraged to earn income to defray program costs. Program income includes income from fees for services performed, from the use or rental of real or personal property acquired with grant funds, from the sale of commodities or items fabricated under a grant agreement, and from payments of principal and interest on loans made with grant funds. Except as otherwise provided in regulations of the Federal agency, program income does not include interest on grant funds, rebates, credits, discounts, refunds, etc. and interest earned on any of them.

(i) If approval is obtained from the awarding agency, the market value at the time of donation of the donated equipment or buildings and the fair rental rate of the donated land may be counted as cost sharing or matching. In the case of a subgrant, the terms of the grant agreement may require that the approval be obtained from the Federal agency as well as the grantee. In all cases, the approval may be given only if a purchase of the equipment or rental of the land would be approved as an allowable direct cost. If any part of the donated property was acquired with Federal funds, only the non-federal share of the property may be counted as cost-sharing or matching.

(b) Definition of program income. Program income means gross income received by the grantee or subgrantee directly generated by a grant supported activity, or earned only as a result of the grant agreement during the grant period. "During the grant period" is the time between the effective date of the award and the ending date of the award reflected in the final financial report.

(ii) If approval is not obtained under paragraph (e)(2)(i) of this section, no amount may be counted for donated land, and only depreciation or use allowances may be counted for donated equipment

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(3) Cost sharing or matching. When authorized, program income may be used to meet the cost sharing or matching requirement of the grant agreement. The amount of the Federal grant award remains the same.

(c) Cost of generating program income. If authorized by Federal regulations or the grant agreement, costs incident to the generation of program income may be deducted from gross income to determine program income.

(h) Income after the award period. There are no Federal requirements governing the disposition of program income earned after the end of the award period (i.e., until the ending date of the final financial report, see paragraph (a) of this section), unless the terms of the agreement or the Federal agency regulations provide otherwise.

(d) Governmental revenues. Taxes, special assessments, levies, fines, and other such revenues raised by a grantee or subgrantee are not program income unless the revenues are specifically identified in the grant agreement or Federal agency regulations as program income.

§ 85.26 Non-Federal audit. (e) Royalties. Income from royalties and license fees for copyrighted material, patents, and inventions developed by a grantee or subgrantee is program income only if the revenues are specifically identified in the grant agreement or Federal agency regulations as program income. (See § 85.34.)

(a) Basic rule. Grantees and subgrantees are responsible for obtaining audits in accordance with the Single Audit Act Amendments of 1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-133, "Audits of States, Local Governments, and NonProfit Organizations." The audits shall be made by an independent auditor in accordance with generally accepted government auditing standards covering financial audits.

(f) Property. Proceeds from the sale of real property or equipment will be handled in accordance with the requirements of § § 85.31 and 85.32.

(b) Subgrantees. State or local governments, as those terms are defined for purposes of the Single Audit Act Amendments of 1996, that provide Federal awards to a subgrantee which expends $300,000 or more (or other amount as specified by OMB) in Federal awards in a fiscal year, shall:

(g) Use of program income. Program income shall be deducted from outlays which may be both Federal and non-Federal as described below, unless the Federal agency regulations or the grant agreement specify another alternative (or a combination of the alternatives). In specifying alternatives, the Federal agency may distinguish between income earned by the grantee and income earned by subgrantees and between the sources, kinds, or amounts of income. When Federal agencies authorize the alternatives in paragraphs (g) (2) and (3) of this section, program income in excess of any limits stipulated shall also be deducted from outlays.

(1) Determine whether State or local subgrantees have met the audit requirements of the Act and whether subgrantees covered by OMB Circular A110, "Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations," have met the audit requirements of the Act. Commercial contractors (private for-profit and private and governmental organizations) providing goods and services to State and local governments are not required to have a single audit performed. State and local governments should use their own procedures to ensure that the contractor has complied with laws and regulations affecting the expenditure of Federal funds;

(1) Deduction. Ordinarily program income shall be deducted from total allowable costs to determine the net allowable costs. Program income shall be used for current costs unless the Federal agency authorizes otherwise. Program income which the grantee did not anticipate at the time of the award shall be used to reduce the Federal agency and grantee contributions rather than to increase the funds committed to the project.

(2) Determine whether the subgrantee spent Federal assistance funds provided in accordance with applicable laws and regulations. This may be accomplished by reviewing an audit of the subgrantee made in accordance with the Act, Circular A-133 (as set forth in 24 CFR part 45), or through other means (e.g., program reviews) if the subgrantee has not had

(2) Addition. When authorized, program income may be added to the funds committed to the grant agreement by the Federal agency and the grantee. The program income shall be used for the purposes and under the conditions of the grant agreement.

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such an audit;

projects, functions, or activities which exceed or are expected to exceed ten percent of the current total approved budget, whenever the awarding agency's share exceeds $100,000.

(3) Ensure that appropriate corrective action is taken within six months after receipt of the audit report in instance of noncompliance with Federal laws and regulations;

(iii) Transfer of funds allotted for training allowances (i.e., from direct payments to trainees to other expense categories).

(4) Consider whether subgrantee audits necessitate adjustment of the grantee's own records; and

(2) Construction projects. Grantees and subgrantees shall obtain prior written approval for any budget revision which would result in the need for additional funds.

(5) Require each subgrantee to permit independent auditors to have access to the records and financial statements. (c) Auditor selection. In arranging for audit services, § 85.36 shall be followed.

(3) Combined construction and nonconstruction projects. When a grant or subgrant provides funding for both construction and nonconstruction activities, the grantee or subgrantee must obtain prior written approval from the awarding agency before making any fund or budget transfer from nonconstruction to construction or vice versa.

[57 FR 33255, July 27, 1992; 59 FR 2738, Jan. 19, 1994; 62 FR 61617, Nov. 18, 1997] CHANGES, PROPERTY, AND SUBAWARDS § 85.30 Changes.

(d) Programmatic changes. Grantees or subgrantees must obtain the prior approval of the awarding agency whenever any of the following actions is anticipated:

(a) General. Grantees and subgrantees are permitted to rebudget within the approved direct cost budget to meet unanticipated requirements and may make limited program changes to the approved project. However, unless waived by the awarding agency, certain types of post-award changes in budgets and projects shall require the prior written approval of the awarding agency.

(1) Any revision of the scope or objectives of the project (regardless of whether there is an associated budget revision requiring prior approval). (2) Need to extend the period of availability of funds.

(b) Relation to cost principles. The applicable cost principles (see § 85.22) contain requirements for prior approval of certain types of costs. Except where waived, those requirements apply to all grants and subgrants even if paragraphs (c) through (f) of this section do not.

(3) Changes in key persons in cases where specified in an application or a grant award. In research projects, a change in the project director or principal investigator shall always require approval unless waived by the awarding agency.

(c) Budget changes.

(4) Under nonconstruction projects, contracting out, subgranting (if authorized by law) or otherwise obtaining the services of a third party to perform activities which are central to the purposes of the award. This approval requirement is in addition to the approval requirements of § 85.36 but does not apply to the procurement of equipment, supplies, and general support services.

(1) Nonconstruction projects. Except as stated in other regulations or an award document, grantees or subgrantees shall obtain the prior approval of the awarding agency whenever any of the following changes is anticipated under a nonconstruction award: (i) Any revision which would result in the need for additional funding.

(e) Additional prior approval requirements. The awarding agency may not require prior approval for any budget revision which is not described in paragraph (c) of this section.

(ii) Unless waived by the awarding agency, cumulative transfers among direct cost categories, or, if applicable, among separately budgeted programs,

(f) Requesting prior approval.

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(1) A request for prior approval of any budget revision will be in the same budget formal the grantee used in its application and shall be accompanied by a narrative justification for the proposed revision.

(2) Sale of property. Sell the property and compensate the awarding agency. The amount due to the awarding agency will be calculated by applying the awarding agency's percentage of participation in the cost of the original purchase to the proceeds of the sale after deduction of any actual and reasonable selling and fixing-up expenses. If the grant is still active, the net proceeds from sale may be offset against the original cost of the property. When a grantee or subgrantee is directed to sell property, sales procedures shall be followed that provide for competition to the extent practicable and result in the highest possible return.

(2) A request for a prior approval under the applicable Federal cost principles (see § 85.22) may be made by letter. (3) A request by a subgrantee for prior approval will be addressed in writing to the grantee. The grantee will promptly review such request and shall approve or disapprove the request in writing. A grantee will not approve any budget or project revision which is inconsistent with the purpose or terms and conditions of the Federal grant to the grantee. If the revision, requested by the subgrantee would result in a change to the grantee's approved project which requires Federal prior approval, the grantee will obtain the Federal agency's approval before approving the subgrantee's request.

(3) Transfer of title. Transfer title to the awarding agency or to a third-party designated/approved by the awarding agency. The grantee or subgrantee shall be paid an amount calculated by applying the grantee or subgrantee's percentage of participation in the purchase of the real property to the current fair market value of the property.

§ 85.31 Real property.

§ 85.32 Equipment.

(a) Title. Subject to the obligations and conditions set forth in this section, title to real property acquired under a grant or subgrant will vest upon acquisition in the grantee or subgrantee respectively.

(a) Title. Subject to the obligations and conditions set forth in this section, title to equipment acquired under a grant or subgrant will vest upon acquisition in the grantee or subgrantee respectively.

(b) Use. Except as otherwise provided by Federal statutes, real property will be used for the originally authorized purposes as long as needed for that purposes, and the grantee or subgrantee shall not dispose of or encumber its title or other interests.

(b) States. A State will use, manage, and dispose of equipment acquired under a grant by the State in accordance with State laws and procedures. Other grantees and subgrantees will follow paragraphs (c) through (e) of this section.

(c) Disposition. When real property is no longer needed for the originally authorized purpose, the grantee or subgrantee will request disposition instructions from the awarding agency. The instructions will provide for one of the following alternatives:

(c) Use. (1) Equipment shall be used by the grantee or subgrantee in the program or project for which it was acquired as long as needed, whether or not the project or program continues to be supported by Federal funds. When no longer needed for the original program or project, the equipment may be used in other activities currently or previously supported by a Federal agency.

(1) Retention of title. Retain title after compensating the awarding agency. The amount paid to the awarding agency will be computed by applying the awarding agency's percentage of participation in the cost of the original purchase to the fair market value of the property. However, in those situations where a grantee or subgrantee is disposing of real property acquired with grant funds and acquiring replacement real property under the same program, the net proceeds from the disposition may be used as an offset to the cost of the replacement property.

(2) The grantee or subgrantee shall also make equipment available for use on other projects or programs currently or previously supported by the Federal Government, providing such use will not interfere with the work on the projects or program for which it was originally acquired. First preference for other use shall be given to other programs or projects supported by the awarding agency. User fees should

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be considered if appropriate.

will be made as follows:

(3) Notwithstanding the encouragement in § 85.25(a) to earn program income, the grantee or subgrantee must not use equipment acquired with grant funds to provide services for a fee to compete unfairly with private companies that provide equivalent services, unless specifically permitted or contemplated by Federal statute.

(1) Items of equipment with a current per-unit fair market value of less than $5,000 may be retained, sold or otherwise disposed of with no further obligation to the awarding agency. (2) Items of equipment with a current per unit fair market value in excess of $5,000 may be retained or sold and the awarding agency shall have a right to an amount calculated by multiplying the current market value or proceeds from sale by the awarding agency's share of the equipment.

(4) When acquiring replacement equipment, the grantee or subgrantee may use the equipment to be replaced as a trade-in or sell the property and use the proceeds to offset the cost of the replacement property, subject to the approval of the awarding agency.

(3) In cases where a grantee or subgrantee fails to take appropriate disposition actions, the awarding agency may direct the grantee or subgrantee to take excess and disposition actions.

(d) Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part with grant funds, until disposition takes place will, as a minimum, meet the following requirements:

(f) Federal equipment. In the event a grantee or subgrantee is provided federally-owned equipment: (1) Title will remain vested in the Federal Government.

(1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the cost of the property, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property.

(2) Grantees or subgrantees will manage the equipment in accordance with Federal agency rules and procedures, and submit an annual inventory listing. (3) When the equipment is no longer needed, the grantee or subgrantee will request disposition instructions from the Federal agency.

(2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years.

(g) Right to transfer title. The Federal awarding agency may reserve the right to transfer title to the Federal Government or a third part named by the awarding agency when such a third party is otherwise eligible under existing statutes. Such transfers shall be subject to the following standards:

(3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft shall be investigated.

(1) The property shall be identified in the grant or otherwise made known to the grantee in writing.

(4) Adequate maintenance procedures must be developed to keep the property in good condition.

(2) The Federal awarding agency shall issue disposition instruction within 120 calendar days after the end of the Federal support of the project for which it was acquired. If the Federal awarding agency fails to issue disposition instructions within the 120 calendar-day period the grantee shall follow § 85.32(e).

(5) If the grantee or subgrantee is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. (e) Disposition. When original or replacement equipment acquired under a grant or subgrant is no longer needed for the original project or program or for other activities currently or previously supported by a Federal agency, disposition of the equipment

(3) When title to equipment is transferred, the grantee shall be paid an amount calculated by applying the percentage of participation in the

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purchase to the current fair market value of the property.

(b) Procurement standards. (1) Grantees and subgrantees will use their own procurement procedures which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this section.

§ 85.33 Supplies. (a) Title. Title to supplies acquired under a grant or subgrant will vest, upon acquisition, in the grantee or subgrantee respectively.

(2) Grantees and subgrantees will maintain a contract administration system which ensures that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.

(b) Disposition. If there is a residual inventory of unused supplies exceeding $5,000 in total aggregate fair market value upon termination or completion of the award, and if the supplies are not needed for any other federally sponsored programs or projects, the grantee or subgrantee shall compensate the awarding agency for its share.

(3) Grantees and subgrantees will maintain a written code of standards of conduct governing the performance of their employees engaged in the award and administration of contracts. No employee, officer or agent of the grantee or subgrantee shall participate in selection, or in the award or administration of a contract supported by Federal funds if a conflict of interest, real or apparent, would be involved. Such a conflict would arise when:

§ 85.34 Copyrights. The Federal awarding agency reserves a royaltyfree, nonexclusive, and irrevocable license to reproduce, publish or otherwise use, and to authorize others to use, for Federal Government purposes: (a) The copyright in any work developed under a grant, subgrant, or contract under a grant or subgrant; and

(i) The employee, officer or agent,

(b) Any rights of copyright to which a grantee, subgrantee or a contractor purchases ownership with grant support.

(iii) His or her partner, or

§

(ii) Any member of his immediate family,

(iv) An organization which employs, or is about to employ, any of the above, has a financial or other interest in the firm selected for award. The grantee's or subgrantee's officers, employees or agents will neither solicit nor accept gratuities, favors or anything of monetary value from contractors, potential contractors, or parties to subagreements. Grantee and subgrantees may set minimum rules where the financial interest is not substantial or the gift is an unsolicited item of nominal intrinsic value. To the extent permitted by State or local law or regulations, such standards or conduct will provide for penalties, sanctions, or other disciplinary actions for violations of such standards by the grantee's and subgrantee's officers, employees, or agents, or by contractors or their agents. The awarding agency may in regulation provide additional prohibitions relative to real, apparent, or potential conflicts of interest.

85.35 Subawards to debarred and suspended parties.

Grantees and subgrantees must not make any award or permit any award (subgrant or contract) at any tier to any party which is debarred or suspended or is otherwise excluded from or ineligible for participation in Federal assistance programs under Executive Order 12549, "Debarment and Suspension." § 85.36 Procurement (a) States. When procuring property and services under a grant, a State will follow the same policies and procedures it uses for procurements from its nonFederal funds. The State will ensure that every purchase order or other contract includes any clauses required by Federal statutes and executive orders and their implementing regulations. Other grantees and subgrantees will follow paragraphs (b) through (i) in this section.

(4) Grantee and subgrantee procedures will provide for a review of proposed procurements to avoid purchase of unnecessary or duplicative items. Consideration should be given to consolidating or breaking out procurements to obtain a more

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economical purchase. Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach.

the grantee or subgrantee of any contractual responsibilities under its contracts. Federal agencies will not substitute their judgment for that of the grantee or subgrantee unless the matter is primarily a Federal concern. Violations of law will be referred to the local, State, or Federal authority having proper jurisdiction.

(5) To foster greater economy and efficiency, grantees and subgrantees are encouraged to enter into State and local intergovernmental agreements for procurement or use of common goods and services.

(12) Grantees and subgrantees will have protest procedures to handle and resolve disputes relating to their procurements and shall in all instances disclose information regarding the protest to the awarding agency. A protestor must exhaust all administrative remedies with the grantee and subgrantee before pursuing a protest with the Federal agency. Reviews of protests by the Federal agency will be limited to:

(6) Grantees and subgrantees are encouraged to use Federal excess and surplus property in lieu of purchasing new equipment and property whenever such use is feasible and reduces project costs. (7) Grantees and subgrantees are encouraged to use value engineering clauses in contracts for construction projects of sufficient size to offer reasonable opportunities for cost reductions. Value engineering is a systematic and creative analysis of each contract item or task to ensure that its essential function is provided at the overall lower cost.

(i) Violations of Federal law or regulations and the standards of this section (violations of State or local law will be under the jurisdiction of State or local authorities) and (ii) Violations of the grantee's or subgrantee's protest procedures for failure to review a complaint or protest. Protests received by the Federal agency other than those specified above will be referred to the grantee or subgrantee.

(8) Grantees and subgrantees will make awards only to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement. Consideration will be given to such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources.

(c) Competition. (1) All procurement transactions will be conducted in a manner providing full and open competition consistent with the standards of § 85.36. Some of the situations considered to be restrictive of competition include but are not limited to:

(9) Grantees and subgrantees will maintain records sufficient to detail the significant history of a procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.

(i) Placing unreasonable requirements on firms in order for them to qualify to do business,

(10) Grantees and subgrantees will use time and material type contracts only--

(ii) Requiring unnecessary excessive bonding,

(i) After a determination that no other contract is suitable, and

(iii) Noncompetitive pricing practices between firms or between affiliated companies,

(ii) If the contract includes a ceiling price that the contractor exceeds at its own risk.

(iv) Noncompetitive awards to consultants that are on retainer contracts,

(11) Grantees and subgrantees alone will be responsible, in accordance with good administrative practice and sound business judgment, for the settlement of all contractual and administrative issues arising out of procurements. These issues include, but are not limited to source evaluation, protests, disputes, and claims. These standards do not relieve

experience

and

(v) Organizational conflicts of interest, (vi) Specifying only a "brand name" product instead of allowing "an equal" product to be offered and describing the performance of other relevant requirements of the procurement, and

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(vii) Any arbitrary action in the procurement process.

Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the simplified acquisition threshold fixed at 41 U.S.C. 403(11) (currently set at $100,000). If small purchase procedures are used, price or rate quotations shall be obtained from an adequate number of qualified sources.

(2) Grantees and subgrantees will conduct procurements in a manner that prohibits the use of statutorily or administratively imposed in-State or local geographical preferences in the evaluation of bids or proposals, except in those cases where applicable Federal statutes expressly mandate or encourage geographic preference. Nothing in this section preempts State licensing laws. When contracting for architectural and engineering (A/E) services, geographic location may be a selection criteria provided its application leaves an appropriate number of qualified firms, given the nature and size of the project, to compete for the contract.

(2) Procurement by sealed bids (formal advertising). Bids are publicly solicited and a firmfixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bid method is the preferred method for procuring construction, if the conditions in § 85.36(d)(2)(i) apply.

(3) Grantees will have written selection procedures for procurement transactions. These procedures will ensure that all solicitations:

(i) In order for sealed bidding to be feasible, the following conditions should be present:

(i) Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description shall not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured, and when necessary, shall set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Detailed product specifications should be avoided if at all possible. When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a "brand name or equal" description may be used as a means to define the performance or other salient requirements of a procurement. The specific features of the named brand which must be met by offerors shall be clearly stated; and

(A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively and for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) The invitation for bids will be publicly advertised and bids shall be solicited from an adequate number of known suppliers, providing them sufficient time prior to the date set for opening the bids;

(ii) Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals.

(B) The invitation for bids, which will include any specifications and pertinent attachments, shall define the items or services in order for the bidder to properly respond;

(4) Grantees and subgrantees will ensure that all prequalified lists of persons, firms, or products which are used in acquiring goods and services are current and include enough qualified sources to ensure maximum open and free competition. Also, grantees and subgrantees will not preclude potential bidders from qualifying during the solicitation period.

(C) All bids will be publicly opened at the time and place prescribed in the invitation for bids; (D) A firm fixed-price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs shall be considered in determining which

(d) Methods of procurement to be followed (1) Procurement by small purchase procedures.

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bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and

bids or competitive proposals and one of the following circumstances applies:

(E) Any or all bids may be rejected if there is a sound documented reason.

(B) The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation;

(A) The item is available only from a single source;

(3) Procurement by competitive proposals. The technique of competitive proposals is normally conducted with more than one source submitting an offer, and either a fixed-price or cost-reimbursement type contract is awarded. It is generally used when conditions are not appropriate for the use of sealed bids. If this method is used, the following requirements apply:

(C) The awarding agency noncompetitive proposals; or

authorizes

(D) After solicitation of a number of sources, competition is determined inadequate. (ii) Cost analysis, i.e., verifying the proposed cost data, the projections of the data, and the evaluation of the specific elements of costs and profits, is required.

(i) Requests for proposals will be publicized and identify all evaluation factors and their relative importance. Any response to publicized requests for proposals shall be honored to the maximum extent practical;

(iii) Grantees and subgrantees may be required to submit the proposed procurement to the awarding agency for pre-award review in accordance with paragraph (g) of this section.

(ii) Proposals will be solicited from an adequate number of qualified sources;

(e) Contracting with small and minority firms, women's business enterprise and labor surplus area firms.

(iii) Grantees and subgrantees will have a method for conducting technical evaluations of the proposals received and for selecting awardees;

(1) The grantee and subgrantee will take all necessary affirmative steps to assure that minority firms, women's business enterprises, and labor surplus area firms are used when possible.

(iv) Awards will be made to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered; and

(2) Affirmative steps shall include: (v) Grantees and subgrantees may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby competitors' qualifications are evaluated and the most qualified competitor is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms are a potential source to perform the proposed effort.

(i) Placing qualified small and minority businesses and women's business enterprises on solicitation lists; (ii) Assuring that small and minority businesses, and women's business enterprises are solicited whenever they are potential sources; (iii) Dividing total requirements, when economically feasible, into smaller tasks or quantities to permit maximum participation by small and minority business, and women's business enterprises;

(4) Procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source, or after solicitation of a number of sources, competition is determined inadequate.

(iv) Establishing delivery schedules, where the requirement permits, which encourage participation by small and minority business, and women's business enterprises;

(i) Procurement by noncompetitive proposals may be used only when the award of a contract is infeasible under small purchase procedures, sealed

(v) Using the services and assistance of the Small Business Administration, and the Minority Business Development Agency of the Department of

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Commerce; and

(1) Grantees and subgrantees must make available, upon request of the awarding agency, technical specifications on proposed procurements where the awarding agency believes such review is needed to ensure that the item and/or service specified is the one being proposed for purchase. This review generally will take place prior to the time the specification is incorporated into a solicitation document. However, if the grantee or subgrantee desires to have the review accomplished after a solicitation has been developed, the awarding agency may still review the specifications, with such review usually limited to the technical aspects of the proposed purchase.

(vi) Requiring the prime contractor, if subcontracts are to be let, to take the affirmative steps listed in paragraphs (e)(2) (i) through (v) of this section. (f) Contract cost and price. (1) Grantees and subgrantees must perform a cost or price analysis in connection with every procurement action including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, grantees must make independent estimates before receiving bids or proposals. A cost analysis must be performed when the offeror is required to submit the elements of his estimated cost, e.g., under professional, consulting, and architectural engineering services contracts. A cost analysis will be necessary when adequate price competition is lacking, and for sole source procurements, including contract modifications or change orders, unless price reasonableness can be established on the basis of a catalog or market price of a commercial product sold in substantial quantities to the general public or based on prices set by law or regulation. A price analysis will be used in all other instances to determine the reasonableness of the proposed contract price.

(2) Grantees and subgrantees must on request make available for awarding agency pre-award review procurement documents, such as requests for proposals or invitations for bids, independent cost estimates, etc. when: (i) A grantee's or subgrantee's procurement procedures or operation fails to comply with the procurement standards in this section; or (ii) The procurement is expected to exceed the simplified acquisition threshold and is to be awarded without competition or only one bid or offer is received in response to a solicitation; or

(2) Grantees and subgrantees will negotiate profit as a separate element of the price for each contract in which there is no price competition and in all cases where cost analysis is performed. To establish a fair and reasonable profit, consideration will be given to the complexity of the work to be performed, the risk borne by the contractor, the contractor's investment, the amount of subcontracting, the quality of its record of past performance, and industry profit rates in the surrounding geographical area for similar work.

(iii) The procurement, which is expected to exceed the simplified acquisition threshold, specifies a "brand name" product; or (iv) The proposed award is more than the simplified acquisition threshold and is to be awarded to other than the apparent low bidder under a sealed bid procurement; or (v) A proposed contract modification changes the scope of a contract or increases the contract amount by more than the simplified acquisition threshold.

(3) Costs or prices based on estimated costs for contracts under grants will be allowable only to the extent that costs incurred or cost estimates included in negotiated prices are consistent with Federal cost principles (see § 85.22). Grantees may reference their own cost principles that comply with the applicable Federal cost principles.

(3) A grantee or subgrantee will be exempt from the pre-award review in paragraph (g)(2) of this section if the awarding agency determines that its procurement systems comply with the standards of this section.

(4) The cost plus a percentage of cost and percentage of construction cost methods of contracting shall not be used.

(i) A grantee or subgrantee may request that its procurement system be reviewed by the awarding agency to determine whether its system meets these standards in order for its system to be certified. Generally, these reviews shall occur where there is a continuous high-dollar funding, and third-party

(g) Awarding agency review.

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contracts are awarded on a regular basis.

in instances where contractors violate or breach contract terms, and provide for such sanctions and penalties as may be appropriate. (Contracts more than the simplified acquisition threshold)

(ii) A grantee or subgrantee may self-certify its procurement system. Such self-certification shall not limit the awarding agency's right to survey the system. Under a self-certification procedure, awarding agencies may wish to rely on written assurances from the grantee or subgrantee that it is complying with these standards. A grantee or subgrantee will cite specific procedures, regulations, standards, etc., as being in compliance with these requirements and have its system available for review.

(2) Termination for cause and for convenience by the grantee or subgrantee including the manner by which it will be effected and the basis for settlement. (All contracts in excess of $10,000) (3) Compliance with Executive Order 11246 of September 24, 1965, entitled "Equal Employment Opportunity," as amended by Executive Order 11375 of October 13, 1967, and as supplemented in Department of Labor regulations (41 CFR chapter 60). (All construction contracts awarded in excess of $10,000 by grantees and their contractors or subgrantees)

(h) Bonding requirements. For construction or facility improvement contracts or subcontracts exceeding the simplified acquisition threshold, the awarding agency may accept the bonding policy and requirements of the grantee or subgrantee provided the awarding agency has made a determination that the awarding agency's interest is adequately protected. If such a determination has not been made, the minimum requirements shall be as follows:

(4) Compliance with the Copeland "AntiKickback" Act (18 U.S.C. 874) as supplemented in Department of Labor regulations (29 CFR Part 3). (All contracts and subgrants for construction or repair)

(1) A bid guarantee from each bidder equivalent to five percent of the bid price. The "bid guarantee" shall consist of a firm commitment such as a bid bond, certified check, or other negotiable instrument accompanying a bid as assurance that the bidder will, upon acceptance of his bid, execute such contractual documents as may be required within the time specified.

(5) Compliance with the Davis-Bacon Act (40 U.S.C. 276a to 276a-7) as supplemented by Department of Labor regulations (29 CFR Part 5). (Construction contracts in excess of $2000 awarded by grantees and subgrantees when required by Federal grant program legislation) (6) Compliance with Sections 103 and 107 of the Contract Work Hours and Safety Standards Act (40 U.S.C. 327-330) as supplemented by Department of Labor regulations (29 CFR Part 5). (Construction contracts awarded by grantees and subgrantees in excess of $2000, and in excess of $2500 for other contracts which involve the employment of mechanics or laborers)

(2) A performance bond on the part of the contractor for 100 percent of the contract price. A "performance bond" is one executed in connection with a contract to secure fulfillment of all the contractor's obligations under such contract. (3) A payment bond on the part of the contractor for 100 percent of the contract price. A "payment bond" is one executed in connection with a contract to assure payment as required by law of all persons supplying labor and material in the execution of the work provided for in the contract.

(7) Notice of awarding agency requirements and regulations pertaining to reporting. (8) Notice of awarding agency requirements and regulations pertaining to patent rights with respect to any discovery or invention which arises or is developed in the course of or under such contract.

(i) Contract provisions. A grantee's and subgrantee's contracts must contain provisions in paragraph (i) of this section. Federal agencies are permitted to require changes, remedies, changed conditions, access and records retention, suspension of work, and other clauses approved by the Office of Federal Procurement Policy.

(9) Awarding agency requirements and regulations pertaining to copyrights and rights in data. (10) Access by the grantee, the subgrantee, the Federal grantor agency, the Comptroller General of the United States, or any of their duly authorized

(1) Administrative, contractual, or legal remedies

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representatives to any books, documents, papers, and records of the contractor which are directly pertinent to that specific contract for the purpose of making audit, examination, excerpts, and transcriptions.

reimbursement or fixed amount basis) of financial assistance to local and Indian tribal governments. Grantees shall: (1) Ensure that every subgrant includes a provision for compliance with this part;

(11) Retention of all required records for three years after grantees or subgrantees make final payments and all other pending matters are closed.

(2) Ensure that every subgrant includes any clauses required by Federal statute and executive orders and their implementing regulations; and

(12) Compliance with all applicable standards, orders, or requirements issued under section 306 of the Clean Air Act (42 U.S.C. 1857(h)), section 508 of the Clean Water Act (33 U.S.C. 1368), Executive Order 11738, and Environmental Protection Agency regulations (40 CFR part 15). (Contracts, subcontracts, and subgrants of amounts in excess of $100,000).

(3) Ensure that subgrantees are aware of requirements imposed upon them by Federal statutes and regulations. (c) Exceptions. By their own terms, certain provisions of this part do not apply to the award and administration of subgrants:

(13) Mandatory standards and policies relating to energy efficiency which are contained in the state energy conservation plan issued in compliance with the Energy Policy and Conservation Act (Pub.L. 94163, 89 Stat. 871).

(1) Section 85.10; (2) Section 85.11; (3) The letter-of-credit procedures specified in Treasury Regulations at 31 CFR Part 205, cited in § 85.21; and

[60 FR 19642, April 19, 1995] § 85.37 Subgrants.

REPORTS, RECORDS RETENTION, AND ENFORCEMENT

(a) States. States shall follow state law and procedures when awarding and administering subgrants (whether on a cost reimbursement or fixed amount basis) of financial assistance to local and Indian tribal governments. States shall:

§

85.40 Monitoring and reporting program performance.

(a) Monitoring by grantees. Grantees are responsible for managing the day-to-day operations of grant and subgrant supported activities. Grantees must monitor grant and subgrant supported activities to assure compliance with applicable Federal requirements and that performance goals are being achieved. Grantee monitoring must cover each program, function or activity.

(1) Ensure that every subgrant includes any clauses required by Federal statute and executive orders and their implementing regulations; (2) Ensure that subgrantees are aware of requirements imposed upon them by Federal statute and regulation;

(b) Nonconstruction performance reports. The Federal agency may, if it decides that performance information available from subsequent applications contains sufficient information to meet its programmatic needs, require the grantee to submit a performance report only upon expiration or termination of grant support. Unless waived by the Federal agency this report will be due on the same date as the final Financial Status Report.

(3) Ensure that a provision for compliance with Section 85.42 is placed in every cost reimbursement subgrant; and (4) Conform any advances of grant funds to subgrantees substantially to the same standards of timing and amount that apply to cash advances by Federal agencies. (b) All other grantees. All other grantees shall follow the provisions of this part which are applicable to awarding agencies when awarding and administering subgrants (whether on a cost

(1) Grantees shall submit annual performance reports unless the awarding agency requires quarterly or semi-annual reports. However, performance

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reports will not be required more frequently than quarterly. Annual reports shall be due 90 days after the grant year, quarterly or semi-annual reports shall be due 30 days after the reporting period. The final performance report will be due 90 days after the expiration or termination of grant support. If a justified request is submitted by a grantee, the Federal agency may extend the due date for any performance report. Additionally, requirements for unnecessary performance reports may be waived by the Federal agency.

a statement of the action taken, or contemplated, and any assistance needed to resolve the situation. (2) Favorable developments which enable meeting time schedules and objectives sooner or at less cost than anticipated or producing more beneficial results than originally planned. (e) Federal agencies may make site visits as warranted by program needs. (f) Waivers, extensions.

(2) Performance reports will contain, for each grant, brief information on the following:

(1) Federal agencies may waive any performance report required by this part if not needed.

(i) A comparison of actual accomplishments to the objectives established for the period. Where the output of the project can be quantified, a computation of the cost per unit of output may be required if that information will be useful.

(2) The grantee may waive any performance report from a subgrantee when not needed. The grantee may extend the due date for any performance report from a subgrantee if the grantee will still be able to meet its performance reporting obligations to the Federal agency.

(ii) The reasons for slippage if established objectives were not met.

§ 85.41 Financial Reporting. (iii) Additional pertinent information including, when appropriate, analysis and explanation of cost overruns or high unit costs.

(a) General. (1) Except as provided in paragraphs (a) (2) and (5) of this section, grantees will use only the forms specified in paragraphs (a) through (e) of this section, and such supplementary or other forms as may from time to time be authorized by OMB, for:

(3) Grantees will not be required to submit more than the original and two copies of performance reports. (4) Grantees will adhere to the standards in this section in prescribing performance reporting requirements for subgrantees.

(i) Submitting financial reports to Federal agencies, or (ii) Requesting advances or reimbursements when letters of credit are not used.

(c) Construction performance reports. For the most part, on-site technical inspections and certified percentage-of-completion data are relied on heavily by Federal agencies to monitor progress under construction grants and subgrants. The Federal agency will require additional formal performance reports only when considered necessary, and never more frequently than quarterly.

(2) Grantees need not apply the forms prescribed in this section in dealing with their subgrantees. However, grantees shall not impose more burdensome requirements on subgrantees. (3) Grantees shall follow all applicable standard and supplemental Federal agency instructions approved by OMB to the extend required under the Paperwork Reduction Act of 1980 for use in connection with forms specified in paragraphs (b) through (e) of this section. Federal agencies may issue substantive supplementary instructions only with the approval of OMB. Federal agencies may shade out or instruct the grantee to disregard any line item that the Federal agency finds unnecessary for its decisionmaking purposes.

(d) Significant developments. Events may occur between the scheduled performance reporting dates which have significant impact upon the grant or subgrant supported activity. In such cases, the grantee must inform the Federal agency as soon as the following types of conditions become known: (1) Problems, delays, or adverse conditions which will materially impair the ability to meet the objective of the award. This disclosure must include

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(4) Grantees will not be required to submit more than the original and two copies of forms required under this part.

(i) For grants paid by letter or credit, Treasury check advances or electronic transfer of funds, the grantee will submit the Standard Form 272, Federal Cash Transactions Report, and when necessary, its continuation sheet, Standard Form 272a, unless the terms of the award exempt the grantee from this requirement.

(5) Federal agencies may provide computer outputs to grantees to expedite or contribute to the accuracy of reporting. Federal agencies may accept the required information from grantees in machine usable format or computer printouts instead of prescribed forms.

(ii) These reports will be used by the Federal agency to monitor cash advanced to grantees and to obtain disbursement or outlay information for each grant from grantees. The format of the report may be adapted as appropriate when reporting is to be accomplished with the assistance of automatic data processing equipment provided that the information to be submitted is not changed in substance.

(6) Federal agencies may waive any report required by this section if not needed. (7) Federal agencies may extend the due date of any financial report upon receiving a justified request from a grantee.

(2) Forecasts of Federal cash requirements. Forecasts of Federal cash requirements may be required in the "Remarks" section of the report.

(b) Financial Status Report.-(1) Form. Grantees will use Standard Form 269 or 269A, Financial Status Report, to report the status of funds for all nonconstruction grants and for construction grants when required in accordance with paragraph § 85.41(e)(2)(iii) of this section.

(3) Cash in hands of subgrantees. When considered necessary and feasible by the Federal agency, grantees may be required to report the amount of cash advances in excess of three days' needs in the hands of their subgrantees or contractors and to provide short narrative explanations of actions taken by the grantee to reduce the excess balances.

(2) Accounting basis. Each grantee will report program outlays and program income on a cash or accrual basis as prescribed by the awarding agency. If the Federal agency requires accrual information and the grantee's accounting records are not normally kept on the accrual basis, the grantee shall not be required to convert its accounting system but shall develop such accrual information through and analysis of the documentation on hand.

(4) Frequency and due date. Grantees must submit the report no later than 15 working days following the end of each quarter. However, where an advance either by letter of credit or electronic transfer of funds is authorized at an annualized rate of one million dollars or more, the Federal agency may require the report to be submitted within 15 working days following the end of each month.

(3) Frequency. The Federal agency may prescribe the frequency of the report for each project or program. However, the report will not be required more frequently than quarterly. If the Federal agency does not specify the frequency of the report, it will be submitted annually. A final report will be required upon expiration or termination of grant support.

(d) Request for advance or reimbursement-(1) Advance payments. Requests for Treasury check advance payments will be submitted on Standard Form 270, Request for Advance or Reimbursement. (This form will not be used for drawdowns under a letter of credit, electronic funds transfer or when Treasury check advance payments are made to the grantee automatically on a predetermined basis.)

(4) Due date. When reports are required on a quarterly or semiannual basis, they will be due 30 days after the reporting period. When required on an annual basis, they will be due 90 days after the grant year. Final reports will be due 90 days after the expiration or termination of grant support.

(2) Reimbursements. Requests for reimbursement under nonconstruction grants will also be submitted on Standard Form 270. (For reimbursement requests under construction grants, see paragraph (e)(1) of this section.)

(c) Federal Cash Transactions Report-(1) Form.

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statistical records, and other records of grantees or subgrantees which are:

(3) The frequency for submitting payment requests is treated in § 85.41(b)(3).

(i) Required to be maintained by the terms of this Part, program regulations or the grant agreement, or

(e) Outlay report and request for reimbursement for construction programs.

(ii) Otherwise reasonably considered as pertinent to program regulations or the grant agreement.

(1) Grants that support construction activities paid by reimbursement method.

(2) This section does not apply to records maintained by contractors or subcontractors. For a requirement to place a provision concerning records in certain kinds of contracts, see § 85.36(i)(10).

(i) Requests for reimbursement under construction grants will be submitted on Standard Form 271, Outlay Report and Request for Reimbursement for Construction Programs. Federal agencies may, however, prescribe the Request for Advance or Reimbursement form, specified in § 85.41(d), instead of this form.

(b) Length of retention period. (1) Except as otherwise provided, records must be retained for three years from the starting date specified in paragraph (c) of this section.

(ii) The frequency for submitting reimbursement requests is treated in § 85.41(b)(3).

(2) If any litigation, claim, negotiation, audit or other action involving the records has been started before the expiration of the 3-year period, the records must be retained until completion of the action and resolution of all issues which arise from it, or until the end of the regular 3-year period, whichever is later.

(2) Grants that support construction activities paid by letter of credit, electronic funds transfer or Treasury check advance. (i) When a construction grant is paid by letter of credit, electronic funds transfer or Treasury check advances, the grantee will report its outlays to the Federal agency using Standard Form 271, Outlay Report and Request for Reimbursement for Construction Programs. The Federal agency will provide any necessary special instruction. However, frequency and due date shall be governed by § 85.41(b) (3) and (4).

(3) To avoid duplicate recordkeeping, awarding agencies may make special arrangements with grantees and subgrantees to retain any records which are continuously needed for joint use. The awarding agency will request transfer of records to its custody when it determines that the records possess long-term retention value. When the records are transferred to or maintained by the Federal agency, the 3-year retention requirement is not applicable to the grantee or subgrantee.

(ii) When a construction grant is paid by Treasury check advances based on periodic requests from the grantee, the advances will be requested on the form specified in § 85.41(d). (iii) The Federal agency may substitute the Financial Status Report specified in § 85.41(b) for the Outlay Report and Request for Reimbursement for Construction Programs.

(c) Starting date of retention period-(1) General. When grant support is continued or renewed at annual or other intervals, the retention period for the records of each funding period starts on the day the grantee or subgrantee submits to the awarding agency its single or last expenditure report for that period. However, if grant support is continued or renewed quarterly, the retention period for each year's records starts on the day the grantee submits its expenditure report for the last quarter of the Federal fiscal year. In all other cases, the retention period starts on the day the grantee submits its final expenditure report. If an expenditure report has been waived, the retention period starts on the day the report would have been due.

(3) Accounting basis. The accounting basis for the Outlay Report and Request for Reimbursement for Construction Programs shall be governed by § 85.41(b)(2). §

85.42 Retention and access requirements for records. (a) Applicability.

(1) This section applies to all financial and programmatic records, supporting documents,

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(2) Expiration of right of access. The rights of access in this section must not be limited to the required retention period but shall last as long as the records are retained.

(2) Real property and equipment records. The retention period for real property and equipment records starts from the date of the disposition or replacement or transfer at the direction of the awarding agency.

(f) Restrictions on public access. The Federal Freedom of Information Act (5 U.S.C. 552) does not apply to records Unless required by Federal, State, or local law, grantees and subgrantees are not required to permit public access to their records.

(3) Records for income transactions after grant or subgrant support. In some cases grantees must report income after the period of grant support. Where there is such a requirement, the retention period for the records pertaining to the earning of the income starts from the end of the grantee's fiscal year in which the income is earned.

§ 85.43 Enforcement. (a) Remedies for noncompliance. If a grantee or subgrantee materially fails to comply with any term of an award, whether stated in a Federal statute or regulation, an assurance, in a State plan or application, a notice of award, or elsewhere, the awarding agency may take one or more of the following actions, as appropriate in the circumstances:

(4) Indirect cost rate proposals, cost allocations plans, etc. This paragraph applies to the following types of documents, and their supporting records: indirect cost rate computations or proposals, cost allocation plans, and any similar accounting computations of the rate at which a particular group of costs is chargeable (such as computer usage chargeback rates or composite fringe benefit rates).

(1) Temporarily withhold cash payments pending correction of the deficiency by the grantee or subgrantee or more severe enforcement action by the awarding agency,

(i) If submitted for negotiation. If the proposal, plan, or other computation is required to be submitted to the Federal Government (or to the grantee) to form the basis for negotiation of the rate, then the 3-year retention period for its supporting records starts from the date of such submission.

(2) Disallow (that is, deny both use of funds and matching credit for) all or part of the cost of the activity or action not in compliance,

(ii) If not submitted for negotiation. If the proposal, plan, or other computation is not required to be submitted to the Federal Government (or to the grantee) for negotiation purposes, then the 3-year retention period for the proposal plan, or computation and its supporting records starts from end of the fiscal year (or other accounting period) covered by the proposal, plan, or other computation.

(3) Wholly or partly suspend or terminate the current award for the grantee's or subgrantee's program,

(d) Substitution of microfilm. Copies made by microfilming, photocopying, or similar methods may be substituted for the original records.

(b) Hearings, appeals. In taking an enforcement action, the awarding agency will provide the grantee or subgrantee an opportunity for such hearing, appeal, or other administrative proceeding to which the grantee or subgrantee is entitled under any statute or regulation applicable to the action involved.

(4) Withhold further awards for the program, or (5) Take other remedies that may be legally available.

(e) Access to records-(1) Records of grantees and subgrantees. The awarding agency and the Comptroller General of the United States, or any of their authorized representatives, shall have the right of access to any pertinent books, documents, papers, or other records of grantees and subgrantees which are pertinent to the grant, in order to make audits, examinations, excerpts, and transcripts.

(c) Effects of suspension and termination. Costs of grantee or subgrantee resulting from obligations incurred by the grantee or subgrantee during a suspension or after termination of an award are not allowable unless the awarding agency expressly authorizes them in the notice of suspension or termination or subsequently. Other grantee or subgrantee costs during suspension or after

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termination which are necessary and not reasonably avoidable are allowable if:

financial, performance, and other reports required as a condition of the grant. Upon request by the grantee, Federal agencies may extend this timeframe. These may include but are not limited to:

(1) The costs result from obligations which were properly incurred by the grantee or subgrantee before the effective date of suspension or termination, are not in anticipation of it, and, in the case of a termination, are noncancellable, and,

(1) Final performance or progress report. (2) Financial Status Report (SF 269) or Outlay Report and Request for Reimbursement for Construction Programs (SF-271) (as applicable.)

(2) The costs would be allowable if the award were not suspended or expired normally at the end of the funding period in which the termination takes effect.

(3) Final request for payment (SF-270) (if applicable).

(d) Relationship to Debarment and Suspension. The enforcement remedies identified in this section, including suspension and termination, do not preclude grantee or subgrantee from being subject to "Debarment and Suspension" under E.O. 12549 (see § 85.35).

(4) Invention disclosure (if applicable). (5) Federally-owned property report: In accordance with § 85.32(f), a grantee must submit an inventory of all federally owned property (as distinct from property acquired with grant funds) for which it is accountable and request disposition instructions from the Federal agency of property no longer needed.

§ 85.44 Termination for convenience. Except as provided in § 85.43 awards may be terminated in whole or in part only as follows:

(c) Cost adjustment. The Federal agency will, within 90 days after receipt of reports in paragraph (b) of this section, make upward or downward adjustments to the allowable costs.

(a) By the awarding agency with the consent of the grantee or subgrantee in which case the two parties shall agree upon the termination conditions, including the effective date and in the case of partial termination, the portion to be terminated, or

(d) Cash adjustments.

(b) By the grantee or subgrantee upon written notification to the awarding agency, setting forth the reasons for such termination, the effective date, and in the case of partial termination, the portion to be terminated. However, if, in the case of a partial termination, the awarding agency determines that the remaining portion of the award will not accomplish the purposes for which the award was made, the awarding agency may terminate the award in its entirety under either § 85.43 or paragraph (a) of this section.

(1) The Federal agency will make prompt payment to the grantee for allowable reimbursable costs. (2) The grantee must immediately refund to the Federal agency any balance of unobligated (unencumbered) cash advanced that is not authorized § 85.51 Later disallowances and adjustments. The closeout of a grant does not affect: (a) The Federal agency's right to disallow costs and recover funds on the basis of a later audit or other review;

SUBPART D--AFTER-THE-GRANT REQUIREMENTS § 85.50 Closeout.

(b) The grantee's obligation to return any funds due as a result of later refunds, corrections, or other transactions;

(a) General. The Federal agency will close out the award when it determines that all applicable administrative actions and all required work of the grant has been completed.

(c) Records retention as required in § 85.42; (d) Property management requirements in § § 85.31 and 85.32; and

(b) Reports. Within 90 days after the expiration or termination of the grant, the grantee must submit all

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(e) Audit requirements in § 85.26. § 85.52 Collection of amounts due. (a) Any funds paid to a grantee in excess of the amount to which the grantee is finally determined to be entitled under the terms of the award constitute a debt to the Federal Government. If not paid within a reasonable period after demand, the Federal agency may reduce the debt by: (1) Making an administrative offset against other requests for reimbursements, (2) Withholding advance payments otherwise due to the grantee, or (3) Other action permitted by law. (b) Except where otherwise provided by statutes or regulations, the Federal agency will charge interest on an overdue debt in accordance with the Federal Claims Collection Standards (4 CFR Ch. II). The date from which interest is computed is not extended by litigation or the filing of any form of appeal. SUBPART E--ENTITLEMENT [RESERVED]

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NOTES

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APPENDIX J 25 CFR PART 900 J

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MANAGING FEDERALLY FUNDED CONSTRUCTION PROJECTS

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§ 900.106

25 CFR Ch. V (4–1–05 Edition)

wants the land to be held in trust for the benefit of an Indian tribe. (1) If the Indian tribe or tribal organization requests fee title, the Secretary shall take the necessary action under Federal law and regulations to transfer fee title to the Indian tribe or tribal organization. (2) If the Indian tribe or tribal organization requests beneficial ownership with fee title to be held by the United States in trust for an Indian tribe: (i) The Indian tribe or tribal organization shall submit with its request a resolution of support from the governing body of the Indian tribe in which the beneficial ownership is to be registered. (ii) If the donation request of the Indian tribe or tribal organization is submitted to the Secretary of Health and Human Services, that Secretary shall take all necessary steps to acquire the land and transfer it to the Secretary of the Interior and shall also forward the Indian tribe or tribal organization’s request and the Indian tribe’s resolution. (iii) The Secretary of the Interior shall expeditiously process all requests in accord with applicable Federal law and regulations. (iv) The Secretary shall not require submission of any information other than that required by Federal law and regulation. § 900.106 If a contract or grant agreement or portion thereof is retroceded, reassumed, terminated, or expires, may the Secretary reacquire title to excess or surplus Federal property of other agencies that was donated to an Indian tribe or tribal organization? No. Section 105(f)(3) of the Act does not give the Secretary the authority to reacquire title to excess or surplus government property acquired from other agencies for donation to an Indian tribe or tribal organization. PROPERTY ELIGIBLE FOR REPLACEMENT FUNDING § 900.107 What property to which an Indian tribe or tribal organization obtains title under this subpart is eligible for replacement funding? Government-furnished property, contractor-purchased property and excess

BIA and IHS property donated to an Indian tribe or tribal organization to which an Indian tribe or tribal organization holds title shall remain eligible for replacement funding to the same extent as if title to that property were held by the United States.

Subpart J—Construction § 900.110 What does this subpart cover? (a) This subpart establishes requirements for issuing fixed-price or cost-reimbursable contracts to provide: design, construction, repair, improvement, expansion, replacement, erection of new space, or demolition and other related work for one or more Federal facilities. It applies to tribal facilities where the Secretary is authorized by law to design, construct and/or renovate, or make improvements to such tribal facilities. (b) Activities covered by construction contracts under this subpart are: design and architectural/engineering services, construction project management, and the actual construction of the building or facility in accordance with the construction documents, including all labor, materials, equipment, and services necessary to complete the work defined in the construction documents. (1) Such contracts may include the provision of movable equipment, telecommunications and data processing equipment, furnishings (including works of art), and special purpose equipment, when part of a construction contract let under this subpart. (2) While planning services and construction management services as defined in § 900.113 may be included in a construction contract under this subpart, they may also be contracted separately using the model agreement in section 108 of the Act. § 900.111 What activities of construction programs are contractible? The Secretary shall, upon the request of any Indian tribe or tribal organization authorized by tribal resolution, enter into a self-determination contract to plan, conduct, and administer construction programs or portions thereof.

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Bureau of Indian Affairs, Interior, IHS, HHS § 900.112 What are construction phases? (a) Construction programs generally include the following activities in phases which can vary by funding source (an Indian tribe or tribal organization should contact its funding source for more information regarding the conduct of its program): (1) The preplanning phase. The phase during which an initial assessment and determination of project need is made and supporting information collected for presentation in a project application. This project application process is explained in more detail in § 900.122; (2) The planning phase. The phase during which planning services are provided. This phase can include conducting and preparing a detailed needs assessment, developing justification documents, completing and/or verifying master plans, conducting predesign site investigations and selection, developing budget cost estimates, conducting feasibility studies, and developing a project Program of Requirements (POR); (3) The design phase. The phase during which licensed design professional(s) using the POR as the basis for design of the project, prepare project plans, specifications, and other documents that are a part of the construction documents used to build the project. Site investigation and selection activities are completed in this phase if not conducted as part of the planning phase. (4) The construction phase. The phase during which the project is constructed. The construction phase includes providing the labor, materials, equipment, and services necessary to complete the work in accordance with the construction documents prepared as part of the design phase. (b) The following activities may be part of phases described in paragraphs (a)(2), (a)(3), and (a)(4) of this section: (1) Management; and (2) Environmental, archeological, cultural resource, historic preservation, and similar assessments and associated activities. § 900.113 Definitions. (a) Construction contract means a fixed-price or cost-reimbursement selfdetermination contract for a construc-

§ 900.113 tion project, except that such term does not include any contract: (1) That is limited to providing planning services and construction management services (or a combination of such services); (2) For the Housing Improvement Program or roads maintenance program of the Bureau of Indian Affairs administered by the Secretary of the Interior; or (3) For the health facility maintenance and improvement program administered by the Secretary of Health and Human Services. (b) Construction management services (CMS) means activities limited to administrative support services; coordination; and monitoring oversight of the planning, design, and construction process. An Indian tribe or tribal organization’s employee or construction management services consultant (typically an engineer or architect) performs such activities as: (1) Coordination and information exchange between the Indian tribe or tribal organization and the Federal government; (2) Preparation of Indian tribe or tribal organization’s construction contract proposals; (3) Indian tribe or tribal organization subcontract scope of work identification and subcontract preparation, and competitive selection of Indian tribe or tribal organization construction contract subcontractors (see § 900.110); (4) Review of work to ensure compliance with the POR and/or the construction contract. This does not involve construction project management as defined in paragraph (d) of this section. (c) Construction programs include programs for the planning, design, construction, repair, improvement, and expansion of buildings or facilities, including but not limited to, housing, law enforcement and detention facilities, sanitation and water systems, roads, schools, administration and health facilities, irrigation and agricultural work, water conservation, flood control, and port facilities, and environmental, archeological, cultural resource, historic preservation, and conduct of similar assessments.

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§ 900.114

25 CFR Ch. V (4–1–05 Edition)

(d) Construction project management means direct responsibility for the construction project through day-to-day on-site management and administration of the project. Activities may include cost management, project budgeting, project scheduling, procurement services. (e) Design means services performed by licensed design professionals related to preparing drawings, specifications, and other design submissions specified in the contract, as well as services provided by or for licensed design professionals during the bidding/negotiating, construction, and operational phases of the project. (f) Planning services means activities undertaken to support agency and/or Congressional funding of a construction project. Planning services may include performing a needs assessment, completing and/or verifying master plans, developing justification documents, conducting pre-design site investigations, developing budget cost estimates, conducting feasibility studies as needed and completion of approved justification documents and a program of requirements (POR) for the project. (g) Program of Requirements (POR) is a planning document developed during the planning phase for an individual project. It provides background about the project; site information; programmatic needs; and, for facilities projects, a detailed room-by-room listing of spaces, including net and gross sizes, finish materials to be used, furnishings and equipment, and other information and design criteria on which to base the construction project documents. (h) Scope of work means the description of the work to be provided through a contract issued under this subpart and the methods and processes to be used to accomplish that work. A scope of work is typically developed based on criteria provided in a POR during the design phase, and project construction documents (plans and specifications) during the construction phase.

§ 900.114 Why is there a separate subpart in these regulations for construction contracts and grants? There is a separate subpart because the Act differentiates between construction contracts and the model agreement in section 108 of the Act which is required for contracting other activities. Construction contracts are separately defined in the Act and are subject to a separate proposal and review process. § 900.115 How do self-determination construction contracts relate to ordinary Federal procurement contracts? (a) A self-determination construction contract is a government-to-government agreement that transfers control of the construction project, including administrative functions, to the contracting Indian tribe or tribal organization to facilitate effective and meaningful participation by the Indian tribe or tribal organization in planning, conducting, and administering the construction project, and so that the construction project is responsive to the true needs of the Indian community. The Secretary’s role in the conduct of a contracted construction project is limited to the Secretary’s responsibilities set out in § 900.131. (b) Self-determination construction contracts are not traditional ‘‘procurement’’ contracts. (1) With respect to a construction contract (or a subcontract of such a construction contract), the provisions of the Office of Federal Procurement Policy Act (41 U.S.C. 401 et seq.) and the regulations promulgated under that Act, shall apply to a construction contract or subcontract only to the extent that application of the provision is: (i) Necessary to ensure that the contract may be carried out in a satisfactory manner; (ii) Directly related to the construction activity; and (iii) Not inconsistent with the Act. (2) A list of the Federal requirements that meet the requirements of this paragraph shall be included in an attachment to the contract under negotiations between the Secretary and the Indian tribe or tribal organization.

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Bureau of Indian Affairs, Interior, IHS, HHS (3) Except as provided in paragraph (b)(2) of this section, no Federal law listed in section 105(3)(C)(ii) of the Act or any other provision of Federal law (including an Executive order) relating to acquisition by the Federal government shall apply to a construction contract that an Indian tribe or tribal organization enters into under this Act, unless expressly provided in the law. (c) Provisions of a construction contract under this subpart shall be liberally construed in favor of the contracting Indian tribe or tribal organization. § 900.116 Are negotiated fixed-price contracts treated the same as costreimbursable contracts? Yes, except that in negotiated fixedprice construction contracts, appropriate clauses shall be negotiated to allocate properly the contract risks between the government and the contractor. § 900.117 Do these ‘‘construction contract’’ regulations apply to planning services? (a) These regulations apply to planning services contracts only as provided in this section. (1) The Indian tribe or tribal organization shall submit to the Secretary for review and approval the POR documents produced as a part of a model contract under section 108 of the Act or under a construction contract under this subpart. (i) Within 60 days after receipt of the POR from the Indian tribe or tribal organization for a project that has achieved priority ranking or that is funded, the Secretary shall: (A) Approve the POR; (B) Notify the Indian tribe or tribal organization of and make available any objections to the POR that the Secretary may have; or (C) Notify the Indian tribe or tribal organization of the reasons why the Secretary will be unable either to approve the POR or to notify the Indian tribe or tribal organization of any objections within 60 days, and state the time within which the notification will be made, provided that the extended time shall not exceed 60 additional days.

§ 900.118 (ii) Within a maximum of 180 days after receipt of a POR from an Indian tribe or tribal organization for a project that is not funded and is not described in paragraph (a)(1)(i) of this section, the Secretary shall: (A) Approve the POR; or (B) Notify the Indian tribe or tribal organization of and make available any objections to the POR; or (C) Notify the Indian tribe or tribal organization of the reasons why the Secretary will be unable either to approve the POR or to notify the Indian tribe or tribal organization of any objections within 180 days, and state the time within which the notification will be made, provided that the extended time shall not exceed 60 additional days. (2) Any failure of the Secretary to act on a POR within the applicable period required in paragraph (a)(1) of this section will be deemed a rejection of the POR and will authorize the commencement of any appeal as provided in section 110 of the Act, or, if a model agreement under section 108 of the Act is used, the disputes provision of that agreement. (3) If an Indian tribe or tribal organization elects to provide planning services as part of a construction contract rather than under a model agreement as set out in section 108 of the Act, the regulations in this subpart shall apply. (b) The parties to the contract are encouraged to consult during the development of the POR and following submission of the POR to the Secretary. § 900.118 Do these ‘‘construction contract’’ regulations apply to construction management services? No. Construction management services may be contracted separately under section 108 of the Act. Construction management services consultants and/or Indian tribe or tribal organization employees assist and advise the Indian tribe or tribal organization to implement construction contracts, but have no contractual relationship with or authority to direct construction contract subcontractors. (a) If the Indian tribe or tribal organization chooses to contract solely for construction management services, these services shall be limited to:

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§ 900.119

25 CFR Ch. V (4–1–05 Edition)

(1) Coordination and exchange of information between the Indian tribe or tribal organization and the Secretary; (2) Review of work produced by the Secretary to determine compliance with: (i) The POR and design contract during the design stage; or (ii) The project construction documents during the construction stage; (3) Disputes shall be resolved in accordance with the disputes clause of the CMS contract. (b) If the Indian tribe or tribal organization conducts CMS under section 108 of the Act and the Indian tribe or tribal organization contracts separately under this subpart for all or some of the activities in § 900.110, the contracted activities shall be limited to: (1) Coordination and exchange of information between the Indian tribe or tribal organization and Secretary; (2) Preparation of tribal or tribal organization construction subcontract scope of work identification and subcontract preparation, and competitive selection of tribal or tribal organization construction contract subcontractors; (3) Review of work produced by tribal or tribal organization construction subcontractors to determine compliance with: (i) The POR and the design contract during the design stage; or (ii) The project construction documents during the construction stage. § 900.119 To what extent shall the Secretary consult with affected Indian tribes before spending funds for any construction project? Before spending any funds for a planning, design, construction, or renovation project, whether subject to a competitive application and ranking process or not, the Secretary shall consult with any Indian tribe or tribal organization(s) that would be significantly affected by the expenditure to determine and to follow tribal preferences to the greatest extent feasible concerning: size, location, type, and other characteristics of the project.

§ 900.120 How does an Indian tribe or tribal organization find out about a construction project? Within 30 days after the Secretary’s allocation of funds for planning phase, design phase, or construction phase activities for a specific project, the Secretary shall notify, by registered mail with return receipt in order to document mailing, the Indian tribe or tribal organization(s) to be benefitted by the availability of the funds for each phase of a project. The Secretarial notice of fund allocation shall offer technical assistance in the preparation of a contract proposal. (a) The Secretary shall, within 30 days after receiving a request from an Indian tribe or tribal organization, furnish the Indian tribe or tribal organization with all information available to the Secretary about the project including, but not limited to: construction drawings, maps, engineering reports, design reports, plans of requirements, cost estimates, environmental assessments, or environmental impact reports and archeological reports. (b) An Indian tribe or tribal organization is not required to request this information prior to submitting a notification of intent to contract or a contract proposal. (c) The Secretary shall have a continuing responsibility to furnish information. § 900.121 What happens during the preplanning phase and can an Indian tribe or tribal organization perform any of the activities involved in this process? (a) The application and ranking process for developing a priority listing of projects varies between agencies. There are, however, steps in the selection process that are common to most selection processes. An Indian tribe or tribal organization that wishes to secure a construction project should contact the appropriate agency to determine the specific steps involved in the application and selection process used to fund specific types of projects. When a priority process is used in the selection of construction projects, the steps involved in the application and ranking process are as follows:

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Bureau of Indian Affairs, Interior, IHS, HHS (1) Application. The agency solicits applications from Indian tribes or tribal organizations. In the request for applications, the Secretary provides specific information regarding the type of project to be funded, the objective criteria that will be used to evaluate applications, the points or weight that each criterion will be assigned, and the time when applications are due. An Indian tribe or tribal organization may prepare the application (technical assistance from the agency, within resources available, shall be provided upon request from an Indian tribe or tribal organization) or may rely upon the agency to prepare the application. (2) Ranking/Prioritization. The Secretary evaluates the applications based on the criteria provided as part of the application preparation process. The Secretary applies only criteria and weights assigned to each criteria that were disclosed to the Indian tribe or tribal organization during the application stage. The applications are then ranked in order from the application that best meets application criteria to the application that least meet the application criteria. (3) Validation. Before final acceptance of a ranked application, the information, such as demographic information, deficiency levels reported in application, the condition of existing facilities, and program housing needs, is validated. During this process, additional information may be developed by the Indian tribe or tribal organization in support of the original information or the Secretary may designate a representative of the Department to conduct an on-site review of the information contained in the application. (b) [Reserved] § 900.122 What does an Indian tribe or tribal organization do if it wants to secure a construction contract? (a) The Act establishes a special process for review and negotiation of proposals for construction contracts which is different than that for other self-determination contract proposals. The Indian tribe or tribal organization should notify the Secretary of its intent to contract. After notification, the Indian tribe or tribal organization should prepare its contract proposal in

§ 900.122 accordance with the sections of this subpart. While developing its construction contract proposal, the Indian tribe or tribal organization can request technical assistance from the Secretary. Not later than 30 days after receiving a request from an Indian tribe or tribal organization, the Secretary shall provide to the Indian tribe or tribal organization all information available about the construction project, including construction drawings, maps, engineering reports, design reports, plans of requirements, cost estimates, environmental assessments, or environmental impact reports, and archaeological reports. The responsibility of the Secretary to furnish this information shall be a continuing one. (b) At the request of the Indian tribe or tribal organization and before finalizing its construction contract proposal, the Secretary shall provide for a precontract negotiation phase during the development of a contract proposal. Within 30 days the Secretary shall acknowledge receipt of the proposal and, if requested by the Indian tribe or tribal organization, shall confer with the Indian tribe or tribal organization to develop a negotiation schedule. The negotiation phase shall include, at a minimum: (1) The provision of technical assistance under section 103 of the Act and paragraph (a) of this section; (2) A joint scoping session between the Secretary and the Indian tribe or tribal organization to review all plans, specifications, engineering reports, cost estimates, and other information available to the parties, for the purpose of identifying all areas of agreement and disagreement; (3) An opportunity for the Secretary to revise plans, designs, or cost estimates of the Secretary in response to concerns raised, or information provided by, the Indian tribe or tribal organization; (4) A negotiation session during which the Secretary and the Indian tribe or tribal organization shall seek to develop a mutually agreeable contract proposal; and (5) Upon the request of the Indian tribe or tribal organization, the use of alternative dispute resolution to resolve remaining areas of disagreement

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§ 900.123

25 CFR Ch. V (4–1–05 Edition)

under the dispute resolution provisions under subchapter IV of chapter 5 of the United States Code. § 900.123 What happens if the Indian tribe or tribal organization and the Secretary cannot develop a mutually agreeable contract proposal? (a) If the Secretary and the Indian tribe or tribal organization are unable to develop a mutually agreeable construction contract proposal under the procedures in § 900.122, the Indian tribe or tribal organization may submit a final contract proposal to the Secretary. Not later than 30 days after receiving the final contract proposal, the Secretary shall approve the contract proposal and award the contract, unless, during the period the Secretary declines the proposal under sections 102(a)(2) and 102(b) of the Act (including providing opportunity for an appeal under section 102(b)). (b) Whenever the Secretary declines to enter into a self-determination contract or contracts under section 102(a)(2) of the Act, the Secretary shall: (1) State any objections to the contract proposal (as submitted by the Indian tribe or tribal organization) in writing and provide all documents relied on in making the declination decision within 20 days of such decision to the Indian tribe or tribal organization; (2) Provide assistance to the Indian tribe or tribal organization to overcome the stated objections; (3) Provide the Indian tribe or tribal organization with a hearing on the record with the right to engage in full discovery relevant to any issue raised in the matter and the opportunity for appeal on the objections raised, under the regulations set forth in subpart L, except that the Indian tribe or tribal organization may, in lieu of filing the appeal, initiate an action in a Federal district court and proceed directly under section 110(a) of the Act. § 900.124 May the Indian tribe or tribal organization elect to use a grant in lieu of a contract? Yes. A grant agreement or a cooperative agreement may be used in lieu of a contract under sections 102 and 103 of the Act when agreed to by the Secretary and the Indian tribe or tribal organization. Under the grant concept,

the grantee will assume full responsibility and accountability for design and construction performance within the funding limitations. The grantee will manage and administer the work with minimal involvement by the government. The grantee will be expected to have acceptable management systems for finance, procurement, and property. The Secretary may issue Federal construction guidelines and manuals applicable to its construction programs, and the government shall accept tribal proposals for alternatives which are consistent with or exceed Federal guidelines or manuals applicable to construction programs. § 900.125 What shall a construction contract proposal contain? (a) In addition to the full name, address, and telephone number of the Indian tribe or tribal organization submitting the construction proposal, a construction contract proposal shall contain descriptions of the following standards under which they propose to operate the contract: (1) The use of licensed and qualified architects; (2) Applicable health and safety standards; (3) Adherence to applicable Federal, State, local, or tribal building codes and engineering standards; (4) Structural integrity; (5) Accountability of funds; (6) Adequate competition for subcontracting under tribal or other applicable law; (7) The commencement, performance, and completion of the contract; (8) Adherence to project plans and specifications (including any applicable Federal construction guidelines and manuals and the Secretary shall accept tribal proposals for alternatives which are consistent with or exceed Federal guidelines or manuals applicable to construction programs); (9) The use of proper materials and workmanship; (10) Necessary inspection and testing; (11) With respect to the self-determination contract between the Indian tribe or tribal organization and Federal government, a process for changes, modifications, stop work, and termination of the work when warranted;

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Bureau of Indian Affairs, Interior, IHS, HHS (b) In addition to provisions regarding the program standards listed in paragraph (a) of this section or the assurances listed in paragraph (c) of this section, the Indian tribe or tribal organization shall also include in its construction contract proposal the following: (1) In the case of a contract for design activities, this statement, ‘‘Construction documents produced as part of this contract will be produced in accordance with the Program of Requirements and/or Scope of Work,’’ and the POR and/or Scope of Work shall be attached to the contract proposal. If tribal construction procedures, standards and methods (including national, regional, state, or tribal building codes or construction industry standards) are consistent with or exceed applicable Federal standards then the Secretary shall accept the tribally proposed standards; and (2) In the case of a contract for construction activities, this statement, ‘‘The facility will be built in accordance with the construction documents produced as a part of design activities. The project documents, including plans and specifications, are hereby incorporated into this contract through this reference.’’ If tribal construction procedures, standards and methods (including national, regional, state, or tribal building codes or construction industry standards) are consistent with or exceed applicable Federal standards then the Secretary shall accept the tribally proposed standards; and (3) Proposed methods to accommodate the responsibilities of the Secretary provided in § 900.131; and (4) Proposed methods to accommodate the responsibilities of the Indian tribe or tribal organization provided in § 900.130 unless otherwise addressed in paragraph (a) of this section and minimum staff qualifications proposed by the Indian tribe or tribal organization, if any; (5) A contract budget as described in § 900.127; and (6) A period of performance for the conduct of all activities to be contracted; (7) A payment schedule as described in § 900.132;

§ 900.125 (8) A statement indicating whether or not the Indian tribe or tribal organization has a CMS contract related to this project; (9) Current (unrevoked) authorizing resolutions in accordance with § 900.5(d) from all Indian tribes benefitting from the contract proposal; and (10) Any responsibilities, in addition to the Federal responsibilities listed in § 900.131, which the Indian tribe or tribal organization proposes the Federal government perform to assist with the completion of the scope of work; (c) The Indian tribe or tribal organization will provide the following assurances in its contract proposal: (1) If the Indian tribe or tribal organization elects not to take title (pursuant to subpart I) to Federal property used in carrying out the contract, ‘‘The Indian tribe or tribal organization will not dispose of, modify the use of, or change the terms of the real property title, or other interest in the site and facilities without permission and instructions from the awarding agency. The Indian tribe or tribal organization will record the Federal interest in the title of real property in accordance with awarding agency directives and will include a covenant in the title of real property acquired in whole or in part with Federal assistance funds to assure nondiscrimination during the useful life of the project’’; and (2) ‘‘The Indian tribe or tribal organization will comply with the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4801 et seq.)’’ which prohibits the use of lead based paint in construction or rehabilitation of residential structures; (3) ‘‘The Indian tribe or tribal organization will comply, or has already complied, with the requirements of titles II and III of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (Pub. L. 91–646),’’ which provides for fair and equitable treatment of persons displaced or whose property is acquired as a result of Federal participation in purchases; and (4) ‘‘Except for work performed by tribal or tribal organization employees, the Indian tribe or tribal organization will comply, as applicable, with the provisions of the Davis-Bacon Act (40

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§ 900.126

25 CFR Ch. V (4–1–05 Edition)

U.S.C. 276c and 18 U.S.C. 874),’’ for Federally assisted construction subagreements; (5) ‘‘The Indian tribe or tribal organization will comply with the flood insurance purchase requirements of section 102(a) of the Flood Disaster Protection Act of 1973 (Pub. L. 93–234),’’ which requires recipients in a special flood hazard area to participate in the program and to purchase flood insurance if the total cost of insurable construction and acquisition is $10,000 or more; (6) ‘‘The Indian tribe or tribal organization will comply with all applicable Federal environmental laws, regulations, and Executive Orders;’’ (7) ‘‘The Indian tribe or tribal organization will comply with the Wild and Scenic Rivers Act of 1968 (16 U.S.C. 1271 et seq.) related to protecting the components or potential components of the national wild and scenic rivers system;’’ (8) ‘‘The Indian tribe or tribal organization will assist the awarding agency in assuring compliance with section 106 of the National Historic Preservation Act of 1966, as amended (16 U.S.C. 470), EO 11593 (identification and preservation of historic properties), and the Archaeological and Historic Preservation Act of 1974 (16 U.S.C. 469a–1 et seq.).’’ (d) The Indian tribe or tribal organization and the Secretary will both make a good faith effort to identify any other applicable Federal laws, Executive Orders, or regulations applicable to the contract, share them with the other party, and refer to them in the construction contract. The parties will make a good faith effort to identify tribal laws, ordinances, and resolutions which may affect either party in the performance of the contract. § 900.126 Shall a construction contract proposal incorporate provisions of Federal construction guidelines and manuals? Each agency may provide or the Indian tribe or tribal organization may request Federal construction guidelines and manuals for consideration by the Indian tribe or tribal organization in the preparation of its contract proposal. If tribal construction procedures, standards and methods (includ-

ing national, regional, State, or tribal building codes or construction industry standards) are consistent with or exceed applicable Federal standards, the Secretary shall accept the tribally proposed standards. § 900.127 What can be included in the Indian tribe or tribal organization’s contract budget? (a) The costs incurred will vary depending on which phase (see § 900.112) of the construction process the Indian tribe or tribal organization is conducting and the type of contract that will be used. The total amount awarded under a construction contract shall reflect an overall fair and reasonable price to the parties (see § 900.129). (b) Costs for activities under this subpart that have not been billed, allocated, or recovered under a contract issued under section 108 of the Act should be included. (c) The Indian tribe or tribal organization’s budget should include the cost elements that reflect an overall fair and reasonable price. These costs include: (1) The reasonable costs to the Indian tribe or tribal organization of performing the contract, taking into consideration the terms of the contract and the requirements of the Act and any other applicable law; (2) The costs of preparing the contract proposal and supporting cost data; (3) The costs associated with auditing the general and administrative costs of the Indian tribe or tribal organization associated with the management of the construction contract; and (4) In cases where the Indian tribe or tribal organization is submitting a fixed-price construction contract: (i) The reasonable costs to the Indian tribe or tribal organization for general administration incurred in connection with the project that is the subject of the contract; (ii) The ability of the contractor that carries out the construction contract to make a reasonable profit, taking into consideration the risks associated with carrying out the contract, local market conditions, and other relevant considerations.

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Bureau of Indian Affairs, Interior, IHS, HHS (d) In establishing a contract budget for a construction project, the Secretary shall not be required to identify separately the components described in paragraphs (c)(4)(i) and (c)(4)(ii) of this section. (e) The Indian tribe or tribal organization’s budget proposal includes a detailed budget breakdown for performing the scope of work including a total ‘‘not to exceed’’ dollar amount with which to perform the scope of work. Specific budget line items, if requested by the Indian tribe or tribal organization, can include the following: (1) The administrative costs the Indian tribe or tribal organization may incur including: (i) Personnel needed to provide administrative oversight of the contract; (ii) Travel costs incurred, both local travel incurred as a direct result of conducting the contract and remote travel necessary to review project status with the Secretary; (iii) Meeting costs incurred while meeting with community residents to develop project documents; (iv) Fees to be paid to consultants, such as demographic consultants, planning consultants, attorneys, accountants, and personnel who will provide construction management services; (2) The fees to be paid to architects and engineers to assist in preparing project documents and to assist in oversight of the construction process; (3) The fees to be paid to develop project surveys including topographical surveys, site boundary descriptions, geotechnical surveys, archeological surveys, and NEPA compliance, and; (4) In the case of a contract to conduct project construction activities, the fees to provide a part-time or fulltime on-site inspector, depending on the terms of the contract, to monitor construction activities; (5) In the case of a contract to conduct project construction activities, project site development costs; (6) In the case of a contract to conduct project construction activities, project construction costs including those costs described in paragraph (c)(4), of this section; (7) The cost of securing and installing moveable equipment, telecommuni-

§ 900.128 cations and data processing equipment, furnishings, including works of art, and special purpose equipment when part of a construction contract; (8) A contingency amount for unanticipated conditions of the construction phase of cost-reimbursable contracts. The amount of the contingency provided shall be 3 percent of activities being contracted or 50 percent of the available contingency funds, whichever is greater. In the event provision of required contingency funds will cause the project to exceed available project funds, the discrepancy shall be reconciled in accordance with § 900.129(e). Any additional contingency funds for the construction phase will be negotiated on an as-needed basis subject to the availability of funds and the nature, scope, and complexity of the project. Any contingency for other phases will be negotiated on a contract-by-contract basis. Unused contingency funds obligated to the contract and remaining at the end of the contract will be considered savings. (9) Other costs incurred that are directly related to the conduct of contract activities. § 900.128 What funding shall the Secretary provide in a construction contract? The Secretary shall provide an amount under a construction contract that reflects an overall fair and reasonable price to the parties. These costs include: (a) The reasonable costs to the Indian tribe or tribal organization of performing the contract, taking into consideration the terms of the contract and the requirements of the Act and any other applicable law; (b) The costs of preparing the contract proposal and supporting cost data; and (c) The costs associated with auditing the general and administrative costs of the tribal organization associated with the management of the construction contract; and (d) If the Indian tribe or tribal organization is submitting a fixed-price construction contract: (1) The reasonable costs to the Indian tribe or tribal organization for general administration incurred in connection

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§ 900.129

25 CFR Ch. V (4–1–05 Edition)

with the project that is the subject of the contract; (2) The ability of the contractor that carries out the construction contract to make a reasonable profit, taking into consideration the risks associated with carrying out the contract, local market conditions, and other relevant considerations including but not limited to contingency. (3) In establishing a contract budget for a construction project, the Secretary is not required to identify separately the components described in paragraph (d) (1) and (d) (2) of this sections. § 900.129 How do the Secretary and Indian tribe or tribal organization arrive at an overall fair and reasonable price for the performance of a construction contract? (a) Throughout the contract award process, the Secretary and Indian tribe or tribal organization shall share all construction project cost information available to them in order to facilitate reaching agreement on an overall fair and reasonable price for the project or part thereof. In order to enhance this communication, the government’s estimate of an overall fair and reasonable price shall: (1) Contain a level of detail appropriate to the nature and phase of the work and sufficient to allow comparisons to the Indian tribe or tribal organization’s estimate; (2) Be prepared in a format coordinated with the Indian tribe or tribal organization; and (3) Include the cost elements contained in section 105(m)(4) of the Act. (b) The government’s cost estimate shall be an independent cost estimate based on such information as the following: (1) Prior costs to the government for similar projects adjusted for comparison to the target location, typically in unit costs, such as dollars per pound, square meter cost of building, or other unit cost that can be used to make a comparison; (2) Actual costs previously incurred by the Indian tribe or tribal organization for similar projects; (3) Published price lists, to include regional adjustment factors, for materials, equipment, and labor; and

(4) Projections of inflation and cost trends, including projected changes such as labor, material, and transportation costs. (c) The Secretary shall provide the initial government cost estimate to the Indian tribe or tribal organization and make appropriate revisions based on concerns raised or information provided by the Indian tribe or tribal organization. The Secretary and the Indian tribe or tribal organization shall continue to revise, as appropriate, their respective cost estimates based on changed or additional information such as the following: (1) Actual subcontract bids; (2) Changes in inflation rates and market conditions, including local market conditions; (3) Cost and price analyses conducted by the Secretary and the Indian tribe or tribal organization during negotiations; (4) Agreed-upon changes in the size, scope and schedule of the construction project; and (5) Agreed-upon changes in project plans and specifications. (d) Considering all of the information available, the Secretary and the Indian tribe or tribal organization shall negotiate the amount of the construction contract. The objective of the negotiations is to arrive at an amount that is fair under current market conditions and reasonable to both the government and the Indian tribe or tribal organization. As a result, the agreement does not necessarily have to be in strict conformance with either party’s cost estimate nor does agreement have to be reached on every element of cost, but only on the overall fair and reasonable price of each phase of the work included in the contract. (e) If the fair and reasonable price arrived at under paragraph (d) of this section would exceed the amount available to the Secretary, then: (1) If the Indian tribe or tribal organization elects to submit a final proposal, the Secretary may decline the proposal under section 105(m)(4)(C)(v) of the Act or if the contract has been awarded, dispute the matter under the Contract Disputes Act; or (2) If requested by the Indian tribe or tribal organization:

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Bureau of Indian Affairs, Interior, IHS, HHS (i) The Indian tribe or tribal organization and the Secretary may jointly explore methods of expanding the available funds through the use of contingency funds, advance payments in accordance with § 900.132, rebudgeting, or seeking additional appropriations; or (ii) The Indian tribe or tribal organization may elect to propose a reduction in project scope to bring the project price within available funds; or (iii) The Secretary and Indian tribe or tribal organization may agree that the project be executed in phases. § 900.130 What role does the Indian tribe or tribal organization play during the performance of a self-determination construction contract? (a) The Indian tribe or tribal organization is responsible for the successful completion of the project in accordance with the approved contract documents. (b) If the Indian tribe or tribal organization is contracting to perform design phase activities, the Indian tribe or tribal organization shall have the following responsibilities: (1) The Indian tribe or tribal organization shall subcontract with or provide the services of licensed and qualified architects and other consultants needed to accomplish the self-determination construction contract. (2) The Indian tribe or tribal organization shall administer and disburse funds provided through the contract in accordance with subpart F, § 900.42 through § 900.45 and implement a property management system in accordance with subpart F, § 900.51 through § 900.60. (3) The Indian tribe or tribal organization shall direct the activities of project architects, engineers, and other project consultants, facilitate the flow of information between the Indian tribe or tribal organization and its subcontractors, resolve disputes between the Indian tribe or tribal organization and its subcontractors or between its subcontractors, and monitor the work produced by its subcontractors to ensure compliance with the POR. (4) The Indian tribe or tribal organization shall direct the work of its subcontractors so that work produced is

§ 900.130 provided in accordance with the contract budget and contract performance period as negotiated between and agreed to by the parties. (5) The Indian tribe or tribal organization shall provide the Secretary with an opportunity to review and provide written comments on the project plans and specifications only at the concept phase, the schematic phase (or the preliminary design), the design development phase, and the final construction documents phase and approve the project plans and specifications for general compliance with contract requirements only at the schematic phase (or the preliminary design) and the final construction documents phase or as otherwise negotiated. (6) The Indian tribe or tribal organization shall provide the Secretary with the plans and specifications after their final review so, if needed, the Secretary may obtain an independent government cost estimate in accordance with § 900.131(b)(4) for the construction of the project. (7) The Indian tribe or tribal organization shall retain project records and design documents for a minimum of 3 years following completion of the contract. (8) The Indian tribe or tribal organization shall provide progress reports and financial status reports quarterly, or as negotiated, that contain a narrative of the work accomplished, including but not limited to descriptions of contracts, major subcontracts, and modifications implemented during the report period and A/E service deliverables, the percentage of the work completed, a report of funds expended during the reporting period, and total funds expended for the project. The Indian tribe or tribal organization shall also provide copies, for the information of the Secretary, of an initial work and payment schedule and updates as they may occur. (c) If the Indian tribe or tribal organization is contracting to perform project construction phase activities, the Indian tribe or tribal organization shall have the following responsibilities:

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§ 900.130

25 CFR Ch. V (4–1–05 Edition)

(1) The Indian tribe or tribal organization shall subcontract with or provide the services of licensed and qualified architects and other consultants as needed to accomplish the self-determination construction contract. (2) The Indian tribe or tribal organization shall administer and dispense funds provided through the contract in accordance with subpart F, § 900.42 through § 900.45 and implement a property management system in accordance with subpart F, § 900.51 through § 900.60. (3) The Indian tribe or tribal organization shall subcontract with or provide the services of construction contractors or provide its own forces to conduct construction activities in accordance with the project construction documents or as otherwise negotiated between and agreed to by the parties. (4) The Indian tribe or tribal organization shall direct the activities of project architects, engineers, construction contractors, and other project consultants, facilitate the flow of information between the Indian tribe or tribal organization and its subcontractors, resolve disputes between itself and its subcontractors or between its subcontractors, and monitor the work produced by its subcontractors to assure compliance with the project plans and specifications. (5) The Indian tribe or tribal organization shall manage or provide for the management of day-to-day activities of the contract including the issuance of construction change orders to subcontractors except that, unless the Secretary agrees: (i) The Indian tribe or tribal organization may not issue a change order to a construction subcontractor that will cause the Indian tribe or tribal organization to exceed its self-determination contract budget; (ii) The Indian tribe or tribal organization may not issue a change order to a construction subcontractor that will cause the Indian tribe or tribal organization to exceed the performance period in its self-determination contract budget; or (iii) The Indian tribe or tribal organization may not issue to a construction subcontractor a change order that is a

significant departure from the scope or objective of the project. (6) The Indian tribe or tribal organization shall direct the work of its subcontractors so that work produced is provided in accordance with the contract budget and performance period as negotiated between and agreed to by the parties. (7) The Indian tribe or tribal organization shall provide to the Secretary progress and financial status reports. (i) The reports shall be provided quarterly, or as negotiated, and shall contain a narrative of the work accomplished, the percentage of the work completed, a report of funds expended during the reporting period, and total funds expended for the project. (ii) The Indian tribe or tribal organization shall also provide copies, for the information of the Secretary, of an initial schedule of values and updates as they may occur, and an initial construction schedule and updates as they occur. (8) The Indian tribe or tribal organization shall maintain on the job-site or project office, and make available to the Secretary during monitoring visits: contracts, major subcontracts, modifications, construction documents, change orders, shop drawings, equipment cut sheets, inspection reports, testing reports, and current redline drawings. (d) Upon completion of the project, the Indian tribe or tribal organization shall provide to the Secretary a reproducible copy of the record plans and a contract closeout report. (e) For cost-reimbursable projects, the Indian tribe or tribal organization shall not be obligated to continue performance that requires an expenditure of more funds than were awarded under the contract. If the Indian tribe or tribal organization has a reason to believe that the total amount required for performance of the contract will be greater than the amount of funds awarded, it shall provide reasonable notice to the Secretary. If the Secretary does not increase the amount of funds awarded under the contract, the Indian tribe or tribal organization may suspend performance of the contract until sufficient additional funds are awarded.

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Bureau of Indian Affairs, Interior, IHS, HHS § 900.131 What role does the Secretary play during the performance of a self-determination construction contract? (a) If the Indian tribe or tribal organization is contracting solely to perform construction management services either under this subpart or section 108 of the Act, the Secretary has the following responsibilities: (1) The Secretary is responsible for the successful completion of the project in accordance with the approved contract documents. In fulfilling those responsibilities, the Secretary shall consult with the Indian tribe or tribal organization on a regular basis as agreed to by the parties to facilitate the exchange of information between the Indian tribe or tribal organization and Secretary; (2) The Secretary shall provide the Indian tribe or tribal organization with regular opportunities to review work produced to determine compliance with the following documents: (i) The POR, during the conduct of design phase activities. The Secretary shall provide the Indian tribe or tribal organization with an opportunity to review the project construction documents at the concept phase, the schematic phase, the design development phase, and the final construction documents phase, or as otherwise negotiated. Upon receipt of project construction documents for review, the Indian tribe or tribal organization shall not take more than 21 days to make available to the Secretary any comments or objections to the construction documents as submitted by the Secretary. Resolution of any comments or objections shall be in accordance with dispute resolution procedures as agreed to by the parties and contained in the contract; or (ii) The project construction documents, during conduct of the construction phase activities. The Indian tribe or tribal organization shall have the right to conduct monthly or critical milestone on-site monitoring visits or as negotiated with the Secretary; (b) If the Indian tribe or tribal organization is contracting to perform design and/or construction phase activities, the Secretary shall have the following responsibilities:

§ 900.131 (1) In carrying out the responsibilities of this section, and specifically in carrying out review, comment, and approval functions under this section, the Secretary shall provide for full tribal participation in the decision making process and shall honor tribal preferences and recommendations to the greatest extent feasible. This includes promptly notifying the Indian tribe or tribal organization of any concerns or issues in writing that may lead to disapproval, meeting with the Indian tribe or tribal organization to discuss these concerns and issues and to share relevant information and documents, and making a good faith effort to resolve all issues and concerns of the Indian tribe or tribal organization. The time allowed for Secretarial review, comment, and approval shall be no more than 21 days per review unless a different time period is negotiated and specified in individual contracts. The 21-day time period may be extended if the Indian tribe or tribal organization agrees to the extension in writing. Disagreements over the Secretary’s decisions in carrying out these responsibilities shall be handled under subpart N governing contract disputes under the Contract Disputes Act. (2) To the extent the construction project is subject to NEPA or other environmental laws, the appropriate Secretary shall make the final determination under such laws. All other environmentally related functions are contractible. (3) If the Indian tribe or tribal organization conducts planning activities under this subpart, the Secretary shall review and approve final planning documents for the project to ensure compliance with applicable planning standards. (4) When a contract or portion of a contract is for project construction activities, the Secretary may rely on the Indian tribe or tribal organization’s cost estimate or the Secretary may obtain an independent government cost estimate that is derived from the final project plans and specifications. The Secretary shall obtain the cost estimate, if any, within 90 days or less of

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§ 900.131

25 CFR Ch. V (4–1–05 Edition)

receiving the final plans and specifications from the Indian tribe or tribal organization and shall provide all supporting documentation of the independent cost estimate to the Indian tribe or tribal organization within the 90 day time limit. (5) If the contracted project involves design activities, the Secretary shall have the authority to review for general compliance with the contract requirements and provide written comments on the project plans and specifications only at the concept phase, the schematic phase, the design development phase and the final construction documents phase, and approve for general compliance with contract requirements the project plans and specifications only at the schematic phase and the final construction documents phase or as otherwise negotiated. (6) If the contracted project involves design activities, the Secretary reserves a royalty-free, nonexclusive, and irrevocable license to reproduce, publish or otherwise use, for Federal government purposes: (i) The copyright in any work developed under a contract or subcontract of this subpart; and (ii) Any rights of copyright to which an Indian tribe or tribal organization or a tribal subcontractor purchases ownership through this contract. (7) Changes that require an increase to the negotiated contract budget or an increase in the negotiated performance period or are a significant departure from the scope or objective of the project shall require approval of the Secretary. (8) Review and comment on specific shop drawings as negotiated and specified in individual contracts. (9) The Secretary may conduct monthly on-site monitoring visits, or alternatively if negotiated with the Indian tribe or tribal organization, critical milestone on-site monitoring visits. (10) The Secretary retains the right to conduct final project inspections jointly with the Indian tribe or tribal organization and to accept the building or facility. If the Secretary identifies problems during final project inspections the information shall be provide to the Indian tribe or tribal organiza-

tion and shall be limited to items that are materially noncompliant. (11) The Secretary can require an Indian tribe or tribal organization to suspend work under a contract in accordance with this paragraph. The Secretary may suspend a contract for no more than 30 days unless the Indian tribe or tribal organization has failed to correct the reason(s) for the suspension or unless the cause of the suspension cannot be resolved through either the efforts of the Secretary or the Indian tribe or tribal organization. (i) The following are reasons the Secretary may suspend work under a selfdetermination contract for construction: (A) Differing site conditions encountered upon commencement of construction activities that impact health or safety concerns or shall require an increase in the negotiated project budget; (B) The Secretary discovers materially non-compliant work; (C) Funds allocated for the project that is the subject of this contract are rescinded by Congressional action; or (D) Other Congressional actions occur that materially affect the subject matter of the contract. (ii) If the Secretary wishes to suspend the work, the Secretary shall first provide written notice and an opportunity for the Indian tribe or tribal organization to correct the problem. The Secretary may direct the Indian tribe or tribal organization to suspend temporarily work under a contract only after providing a minimum of 5 working days’ advance written notice to the Indian tribe or tribal organization describing the nature of the performance deficiencies or imminent safety, health or environmental issues which are the cause for suspending the work. (iii) The Indian tribe or tribal organization shall be compensated for reasonable costs, including but not limited to overhead costs, incurred due to any suspension of work that occurred through no fault of the Indian tribe or tribal organization. (iv) Disputes arising as a result of a suspension of the work by the Secretary shall be subject to the Contract Disputes Act or any other alternative

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Bureau of Indian Affairs, Interior, IHS, HHS dispute resolution mechanism as negotiated between and agreed to by the parties and contained in the contract. (12) The Secretary can terminate the project for cause in the event non-compliant work is not corrected through the suspension process specified in paragraph (11) of this section. (13) The Secretary retains authority to terminate the project for convenience for the following reasons: (i) Termination for convenience is requested by the Indian tribe or tribal organization; (ii) Termination for convenience is requested by the Secretary and agreed to by the Indian tribe or tribal organization; (iii) Funds allocated for the project that is the subject of the contract are rescinded by Congressional action; (iv) Other Congressional actions take place that affect the subject matter of the contract; (v) If the Secretary terminates a selfdetermination construction contract for convenience, the Secretary shall provide the Indian tribe or tribal organization 21 days advance written notice of intent to terminate a contract for convenience; or (vi) The Indian tribe or tribal organization shall be compensated for reasonable costs incurred due to termination of the contract. § 900.132 Once a contract and/or grant is awarded, how will the Indian tribe or tribal organization receive payments? (a) A schedule for advance payments shall be developed based on progress, need, and other considerations in accordance with applicable law. The payment schedule shall be negotiated by the parties and included in the contract. The payment schedule may be adjusted as negotiated by the parties during the course of the project based on progress and need. (b) Payments shall be made to the Indian tribe or tribal organization according to the payment schedule contained in the contract. If the contract does not provide for the length of each allocation period, the Secretary shall make payments to the Indian tribe or tribal organization at least quarterly. Each allocation shall be adequate to

§ 900.133 provide funds for the contract activities anticipated to be conducted during the allocation period, except that: (1) The first allocation may be greater than subsequent allocations and include mobilization costs, and contingency funds described in § 900.128(e)(8); and (2) Any allocation may include funds for payment for materials that will be used during subsequent allocation periods. (c) The Indian tribe or tribal organization may propose a schedule of payment amounts measured by time or measured by phase of the project (e.g., planning, design, construction). (d) The amount of each payment allocation shall be stated in the Indian tribe or tribal organization’s contract proposal. Upon award of the contract, the Secretary shall transfer the amount of the first allocation to the Indian tribe or tribal organization within 21 days after the date of contract award. The second allocation shall be made not later than 7 days before the end of the first allocation period. (e) Not later than 7 days before the end of each subsequent allocation period after the second allocation, the Secretary shall transfer to the Indian tribe or tribal organization the amount for the next allocation period, unless the Indian tribe or tribal organization is delinquent in submission of allocation period progress reports and financial reports or the Secretary takes action to suspend or terminate the contract in accordance with § 900.131(b)(11), § 900.131(b)(12), or § 900.131(b)(13). § 900.133 Does the declination process or the Contract Dispute Act apply to construction contract amendments proposed either by an Indian tribe or tribal organization or the Secretary? The Contract Disputes Act generally applies to such amendments. However, the declination process and the procedures in § 900.122 and § 900.123 apply to the proposal by an Indian tribe or tribal organization when the proposal is for a new project, a new phase or discreet stage of a phase of a project, or an expansion of a project resulting from an additional allocation of funds by the Secretary under § 900.120.

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§ 900.134

25 CFR Ch. V (4–1–05 Edition)

§ 900.134 At the end of a self-determination construction contract, what happens to savings on a costreimbursement contract? The savings shall be used by the Indian tribe or tribal organization to provide additional services or benefits under the contract. Unexpended contingency funds obligated to the contract, and remaining at the end of the contract, are savings. No further approval or justifying documentation by the Indian tribe or tribal organization shall be required before expenditure of funds. § 900.135 May the time frames for action set out in this subpart be reduced? Yes. The time frames in this subpart are intended to be maximum times and may be reduced based on urgency and need, by agreement of the parties. If the Indian tribe or tribal organization requests reduced time frames for action due to unusual or special conditions (such as limited construction periods), the Secretary shall make a good faith effort to accommodate the requested time frames. § 900.136 Do tribal employment rights ordinances apply to construction contracts and subcontracts? Yes. Tribal employment rights ordinances do apply to construction contracts and subcontracts pursuant to section 7(b) and section 7(c) of the Act. § 900.137 Do all provisions of the other subparts apply to contracts awarded under this subpart? Yes, except as otherwise provided in this subpart and unless excluded as follows: programmatic reports and data requirements, reassumption, contract review and approval process, contract proposal contents, and § 900.150 (d) and (e) of these regulations.

Subpart K—Waiver Procedures § 900.140 Can any provision of the regulations under this part be waived? Yes. Upon the request of an Indian tribe or tribal organization, the Secretary shall waive any provision of these regulations, including any cost principles adopted by the regulations

under this part, if the Secretary finds that granting the waiver is either in the best interest of the Indians served by the contract, or is consistent with the policies of the Act and is not contrary to statutory law. § 900.141 How does an Indian tribe or tribal organization get a waiver? To obtain a waiver, an Indian tribe or tribal organization shall submit a written request to the Secretary identifying the regulation to be waived and the basis for the request. The Indian tribe or tribal organization shall explain the intended effect of the waiver, the impact upon the Indian tribe or tribal organization if the waiver is not granted, and the specific contract(s) to which the waiver will apply. § 900.142 Does an Indian tribe or tribal organization’s waiver request have to be included in an initial contract proposal? No. Although a waiver request may be included in a contract proposal, it can also be submitted separately. § 900.143 How processed?

is

a

waiver

The Secretary shall approve or deny a waiver within 90 days after the Secretary receives a written waiver request. The Secretary’s decision shall be in writing. If the requested waiver is denied, the Secretary shall include in the decision a full explanation of the basis for the decision. § 900.144 What happens if the Secretary makes no decision within the 90-day period? The waiver request is deemed approved. § 900.145 On what basis may the Secretary deny a waiver request? Consistent with section 107(e) of the Act, the Secretary may only deny a waiver request based on a specific written finding. The finding must clearly demonstrate (or be supported by controlling legal authority) that if the waiver is granted: (a) The service to be rendered to the Indian beneficiaries of the particular program or function to be contracted will not be satisfactory;

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Bureau of Indian Affairs, Interior, IHS, HHS (b) Adequate protection of trust resources is not assured; (c) The proposed project or function to be contracted for cannot be properly completed or maintained by the proposed contract; (d) The amount of funds proposed under the contract is in excess of the applicable funding level for the contract, as determined under section 106(a) of the Act; or (e) The program, function, service, or activity (or portion of it) that is the subject of the proposal is beyond the scope of programs, functions, services, or activities that are contractible under the Act because the proposal includes activities that cannot lawfully be carried out by the contractor. § 900.146 Is technical assistance available for waiver requests? Yes. Technical assistance is available as provided in § 900.7 to prepare a waiver request or to overcome any stated objection which the Secretary might have to the request. § 900.147 What appeal rights are available? If the Secretary denies a waiver request, the Indian tribe or tribal organization has the right to appeal the decision and request a hearing on the record under the procedures for hearings and appeals contained in subpart L of these regulations. Alternatively, the Indian tribe or tribal organization may sue in Federal district court to challenge the Secretary’s action. § 900.148 How can an Indian tribe or tribal organization secure a determination that a law or regulation has been superseded by the Indian Self-Determination Act, as specified in section 107(b) of the Act? Any Indian tribe or tribal organization may at any time submit a request to the Secretary for a determination that any law or regulation has been superseded by the Act and that the law has no applicability to any contract or proposed contract under the Act. The Secretary is required to provide an initial decision on such a request within 90 days after receipt. If such a request is denied, the Indian tribe or tribal organization may appeal under subpart L of these regulations. The Secretary

§ 900.151 shall provide notice of each determination made under this subpart to all Indian tribes and tribal organizations.

Subpart L—Appeals APPEALS OTHER THAN EMERGENCY REASSUMPTION AND SUSPENSION, WITHHOLDING OR DELAY IN PAYMENT § 900.150 What decisions can an Indian tribe or tribal organization appeal under this subpart? (a) A decision to decline to award a self-determination contract, or a portion thereof, under section 102 of the Act; (b) A decision to decline to award a construction contract, or a portion thereof, under sections 105(m) and 102 of the Act; (c) A decision to decline a proposed amendment to a self-determination contract, or a portion thereof, under section 102 of the Act; (d) A decision not to approve a proposal, in whole or in part, to redesign a program; (e) A decision to rescind and reassume a self-determination contract, in whole or in part, under section 109 of the Act except for emergency reassumptions; (f) A decision to refuse to waive a regulation under section 107(e) of the Act; (g) A disagreement between an Indian tribe or tribal organization and the Federal government over proposed reporting requirements; (h) A decision to refuse to allow an Indian tribe or tribal organization to convert a contract to mature status, under section 4(h) of the Act; (i) All other appealable pre-award decisions by a Federal official as specified in these regulations, whether an official of the Department of the Interior or the Department of Health and Human Services; or (j) A decision relating to a request for a determination that a law or regulation has been superseded by the Act. § 900.151 Are there any appeals this subpart does not cover? This subpart does not cover: (a) Disputes which arise after a selfdetermination contract has been

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APPENDIX K COMPARISON OF PROPOSED AMENDMENTS OF TRIBAL WORKGROUP (3-3-05), § 408 TO TITLE IV AND TITLE V

© The Falmouth Institute K-1

MANAGING FEDERALLY FUNDED CONSTRUCTION PROJECTS

© The Falmouth Institute K-2

Comparison of proposed amendments of tribal workgroup (3-3-05), § 408 to Title IV and Title V Section

Proposed amendments (March 3, 2005)

Title IV

Title V

408(a)

An Indian tribe participating in tribal selfgovernance may carry out construction programs and projects under this title in the same manner the Indian tribe carries out other included programs under this title, consistent with the provisions of all applicable Federal laws.

See, for example:

Indian tribes participating in tribal selfgovernance may carry out construction projects under this part if they elect to assume all Federal responsibilities under the National Environmental Policy Act of 1969..., the National Historic Preservation Act..., and related provisions of law that would apply if the Secretary were to undertake a construction project....(25 U.S.C. § 458aaa-8(a)).

(1) Regarding construction programs or projects, the Secretary and Indian tribes may negotiate for the inclusion of specific provisions of the Office of Federal Procurement and Policy Act and Federal acquisition regulations in any funding agreement entered into under this subchapter. Absent a negotiated agreement, such provisions and regulatory requirements shall not apply. (2) In all construction projects performed pursuant to this part, the Secretary shall ensure that proper health and safety standards are provided for in the funding agreements. (25 U.S.C. § 458cc(e)). Also see the regulations: The AFA must comply with applicable Federal laws, program statutes and regulations (25 C.F.R. § 1000.243(c)). If Tribal construction standards are consistent with or exceed applicable Federal standards, then the Secretary must accept the Indian Tribe/Consortium’s proposed standards (25 C.F.R. § 1000.246). [T]he relevant bureau may provide to the Tribe/Consortium project design criteria and other terms and conditions that are required for such a project. The project must be completed in acordance wit the terms and conditions set forth in the AFA (25 C.F.R. § 1000.247).

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Section

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408(b)

An Indian tribe participating in tribal selfgovernance may, in carrying out construction projects under this title, elect to assume all Federal responsibilities under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.), the National Historic Preservation Act (16 U.S.C. 470 et seq.), and related provisions of law that would apply if the Secretary were to undertake a construction project, by adopting a resolution--(1) Designating a certifying officer to represent the Indian tribe and to assume the status of a responsible Federal official under such laws; and (2) Accepting the jurisdiction of the Federal court for the purpose of enforcement of the responsibilities of the responsible Federal official under applicable environmental law.

None, but see the regulations:

Indian tribes participating in tribal selfgovernance may carry out construction projects under this part if they elect to assume all Federal responsibilities under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.), the National Historic Preservation Act (16 U.S.C. 470 et seq.), and related provisions of law that would apply if the Secretary were to undertake a construction project, by adopting a resolution– (1) designating a certifying officer to represent the Indian tribe and to assume the status of a responsible Federal official under such laws; and (2) accepting the jurisdiction of the Federal court for the purpose of enforcement of the responsibilities of the responsible Federal official under such environmental laws (25 U.S.C. § 458aaa-8(a)).

In accordance with all applicable Federal laws, a construction program or construction project shall be treated in the same manner and be subject to all provisions in this Act as are all other tribal assumptions of included programs under this Act.

None, but see the regulations:

None, but see the regulations:

Yes, all provisions of other subparts apply to construction portions of AFAs unless those provisions are inconsistent with this subpart (25 C.F.R. § 1000.252).

Yes, all provisions of other subparts apply to construction portions of AFAs unless those provisions are inconsistent with this subpart (25 C.F.R. § 1000.252).

408(c)(1)

What special provisions must be included in an AFA that contains a construction program? An AFA that contains a construction program must address the requirements listed in this section. * * ** (c) The AFA must comply with applicable Federal laws, program statutes and regulations (25 C.F.R. § 1000.243(c)). May the Secretary require design provisions and other terms and conditions for construction programs or activities included in an AFA under section 403(c) of the Act? Yes, the relevant bureau may provide to the Tribe/Consortium project design criteria and other terms and conditions that are required for such a project. The project must be completed in acordance wit the terms and conditions set forth in the AFA (25 C.F.R. § 1000.247).

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Section

Proposed amendments (March 3, 2005)

Title IV

Title V

408(c)(2)

A provision shall be included in the funding agreement that, for each construction project -(A) States the approximate start and completion dates, which may extend for 1 or more years; (B) Provides a general description of the construction project; (C) States the responsibilities of the Indian tribe and the Secretary with respect to the construction project; (D) Describes– (i) The ways in which the Indian tribe will address projectrelated environmental considerations; and (ii) The standards by which the Indian tribe will accomplish the project; and (E) The amount of funds provided for the project.

None, but see the regulations:

None, but see the regulations:

An AFA that contains a construction program must address the requirements listed in this section. (a) The AFA must specify how the Secretary and the Tribe/Consortium must ensure that proper health and safety standards are provided for in the implementation of the AFA, including but not limited to: (1) The use of architects and engineers licensed to perform the type of construction involved in the AFA; (2) Applicable Federal, state, local or Tribal building codes and applicable engineering standards, appropriate for the particular project; and (3) Necessary inspections and testing by the Tribe. (b) The AFA must comply with applicable Federal laws, program statutes and regulations. (c) The AFA must specify the services to be provided, the work to be performed, and the responsibilities of the Tribe/Consortium and the Secretary under the AFA. (d) The Secretary may require the Tribe/Consortium to provide brief progress reports and financial status reports. The parties may negotiate in the AFA t he frequency, the format and content of the reporting requirement. As negotiated, these reports may include: (1) A narrative of the work accomplished; (2) The percentage of work completed; (3) A report of funds expended during the reporting period; and (4) The tatal funds expended for the project (25 C.F.R. § 1000.243).

An AFA that contains a construction program must address the requirements listed in this section. (a) The AFA must specify how the Secretary and the Tribe/Consortium must ensure that proper health and safety standards are provided for in the implementation of the AFA, including but not limited to: (1) The use of architects and engineers licensed to perform the type of construction involved in the AFA; (2) Applicable Federal, state, local or Tribal building codes and applicable engineering standards, appropriate for the particular project; and (3) Necessary inspections and testing by the Tribe. (b) The AFA must comply with applicable Federal laws, program statutes and regulations. (c) The AFA must specify the services to be provided, the work to be performed, and the responsibilities of the Tribe/Consortium and the Secretary under the AFA. (d) The Secretary may require the Tribe/Consortium to provide brief progress reports and financial status reports. The parties may negotiate in the AFA t he frequency, the format and content of the reporting requirement. As negotiated, these reports may include: (1) A narrative of the work accomplished; (2) The percentage of work completed; (3) A report of funds expended during the reporting period; and (4) The tatal funds expended for the project (25 C.F.R. § 1000.243).

Proposed amendments (March 3, 2005)

Title IV

Title V

Section

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408(d)

408(e)

Section

A funding agreement shall contain a certification by the Indian tribe that the Indian tribe will establish and enforce procedures designed to assure that all construction-related included programs undertaken through this funding agreement adhere to building and other codes and architectural and engineering standards (including public health and safety standards) identified by the Indian tribe in the funding agreement, which codes and standards shall be in conformity with nationally recognized standards for comparable projects in comparable locations.

In all construction projects performed pursuant to this part, the Secretary shall ensure that proper health and safety standards are provided for in the funding agreements (25 U.S.C. § 458cc(e)(2)).

The Indian tribe shall assume responsibility for the successful completion of the construction project in accordance with the funding agreement.

None, but see the regulations:

Proposed amendments (March 3, 2005)

Title IV

(a) The AFA must specify how the Secretary and the Tribe/Consortium must ensure that proper health and safety standards are provided for in the implementation of the AFA, including but not limited to: (1) The use of architects and engineers licensed to perform the type of construction involved in the AFA; (2) Applicable Federal, state, local or Tribal building codes and applicable engineering standards, appropriate for the particular project; and (3) Necessary inspections and testing by the Tribe. (b) The AFA must comply with applicable Federal laws, program statutes and regulations (25 C.F.R. § 1000.243(a) & (b)).

Under the Act, the Indian Tribe/Consortium must successfully complete the project in accordance with the terms and conditions in the AFA (25 C.F.R. § 1000.248(a)).

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The Indian tribe and the Secretary shall agree upon and specify appropriate building codes and architectural and engineering standards (including health and safety) which shall be in conformity with nationally recognized standards for comparable projects (25 U.S.C. § 458aaa-8(c)).

The Indian tribe shall assume responsibility for the successful completion of the construction project in accordance with the negotiated construction project agreement (25 U.S.C. § 458aaa-8(d)).

Title V

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408(f)(1)

At the option of an Indian tribe, full funding for a construction program or construction project carried out under this title shall be included in funding agreements as an annual advance payment.

None in Title IV or in 25 C.F.R. Part 1000 pertaining specifically to construction programs and construction projects, but see: The funding agreements authorized by this part...shall provide for advance payments to the tribes in the form of annual or semiannual installments at the discretion of the tribes (25 U.S.C.§ 458cc(g)(2)).

408(f)(2)

Section

Notwithstanding the annual advance payment provisions or any other provision of law, an Indian tribe is entitled to receive in its initial funding agreement all funds made available to the Secretary for multi-year construction programs and projects carried out under this title.

None in Title IV or in 25 C.F.R. Part 1000 pertaining specifically to construction programs and construction projects, but see:

Proposed amendments (March 3, 2005)

Title IV

Funding for construction projects carried out under this part shall be included in funding agreements as annual advance payments, with semiannual payments at the option of the Indian tribe. Annual advance and semiannual payment amounts shall be determined based on mutually agreeable project schedules reflecting work to be accomplished within the advance payment period, work accomplished and funds expended in previous payment periods, and the total prior payments (25 U.S.C. § 458aaa-8(e)). None

The funding agreements authorized by this part...shall provide for advance payments to the tribes in the form of annual or semiannual installments at the discretion of the tribes (25 U.S.C.§458cc(g)(2)).

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Title V

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408(f)(3)

408(f)(4)

The Secretary shall include associated project contingency funds in an advance payment described in paragraph (1), and the Indian tribe shall be responsible for the management of the contingency funds included in the funding agreement.

None, but see the regulations:

(A) Notwithstanding any other provision of an annual Act of appropriation or other Federal law, an Indian tribe may reallocate any financial savings realized by the Indian tribe arising from efficiencies in the design, construction, or any other aspect of a construction program or construction project.

None, but see the regulations:

(B) A reallocation under subparagraph (A) shall be for construction-related activity purposes generally similar to those for which the funds were appropriated and distributed to the Indian tribe under the funding agreement.

No, a Tribe/Consortium may not reallocate funds from a construction program to a non-construction program unless otherwise provided under the relevant appropriations acts (25 C.F.R. § 1000.254).

[T]he Secretary must retain project funds to ensure proper health and safety standards in construction projects. Examples of purposes for which bureaus may retain funds include: **** (d) Requiring corrective action during performance when appropriate (25 C.F.R. § 1000.256).

The Secretary shall include associated project contingency funds with each advance payment installment. The Indian tribe shall be responsible for the management of contingency funds included in funding agreements (25 U.S.C. § 458aaa8(e)).

None

Yes, any funds remaining in an AFA at the end of the funding year may be spent for construction under the terms of the AFA (25 C.F.R. § 1000.245).

Yes, a Tribe/Consortium may reallocate funds among construction programs if permitted by appropriation law or if approved in advance by the Secretary (25 C.F.R. § 1000.255). Yes, for BIA programs, the Tribe/Consortium may retain savings for each fiscal year during which an AFA is in effect. A Tribe/Consortium must use any savings that it realizes under an AFA, including a construction contract: (a) To provide additional services or benefits under the AFA; or (b) As carryover; and (c) For purposes of this subpart only, programs administered by BIA using appropriations made to other Federal agencies, such as the Department of Transportation, will be treated in accordance with paragraph (b) of this section (25 C.F.R. § 1000.400). Section

Proposed amendments (March 3, 2005)

Title IV

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408(g)(1)

If the planning and design documents for a construction project have been prepared by an Indian tribe in a manner consistent with the certification given by the tribe as required under subsection (d), approval by the Secretary of a funding agreement providing for the assumption of the construction project shall be deemed to be an approval by the Secretary of these construction project planning and design documents.

None, but see the regulations: Except as provided in § 1000.256, the Secretary may review and approve planning and design documents in accordance with terms negotiated in the AFA to ensure health and safety standards and compliance with Federal law and other program mandates (25 C.F.R. § 1000.249(a)).

The Secretary shall have at least one opportunity to approve project planning and design documents prepared by the Indian tribe in advance of construction of the facilities specified in the scope of work for each negotiated construction project agreement or amendment thereof which results in a significant change in the original scope of work (25 U.S.C. § 458aaa-8(f)).

[T]he Secretary must retain project funds to ensure proper health and safety standards in construction projects. Examples of purposes for which bureaus may retain funds include: **** (c) Providing for sufficient monitoring of design...by the Secretary; and (d) Requiring corrective action during performance when appropriate (25 C.F.R. § 1000.256).

Section

Proposed amendments (March 3, 2005)

Title IV

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408(g)(2)

The Indian tribe shall provide the Secretary with project progress and financial reports not less than semiannually.

None, but see the regulations: The Secretary may require the Tribe/Consortium to provide brief progress reports and financial status reports. The parties may negotiate in the AFA the frequency, the format and content of the reporting requirement. As negotiated, these reports may include: (1) A narrative of the work accomplished; (2) The percentage of work completed; (3) A report of funds expended during the reporting period; and (4) The total funds expended for the project (25 C.F.R. § 1000.243(d)).

The Indian tribe shall provide the Secretary with project progress and financial reports not less than semiannually (25 U.S.C. § 458aaa-8(f)).

408(g)(3)

The Secretary may conduct onsite project inspections at a construction project semiannually or on an alternate schedule agreed to by the Secretary and the Indian tribe.

None, but see the regulations: The Secretary may conduct onsite monitoring visits as negotiated in the AFA (25 C.F.R. § 1000.249(c)).

The Secretary may conduct onsite project oversight visits semianually or on an alternate schedule agreed to by the Secretary and the Indian tribe (25 U.S.C. § 458aaa-8(f)).

Proposed amendments (March 3, 2005)

Title IV

Title V

Section

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408(h)

(1) In General.--All laborers and mechanics employed by a contractor or subcontractor in the construction, alteration, or repair (including painting or decorating) of a building or other facility in connection with construction projects funded by the United States under this subchapter shall be paid wages at not less than those prevailing wages on similar construction in the locality as determined by the Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40, United States Code. (2) Authority.—With respect to construction alteration, or repair work to which that subchapter is applicable under this section, the Secretary of Labor shall have the authority and functions specified in the Reorganization Plan numbered 14, of 1950. (3) Applicability of Subsection.—Notwithstanding any other provision of law, this subsection does not apply to any portion of a construction project carried out under this Act— (A) that is funded from a non-Federal source, regardless of whether the non-Federal funds are included with Federal funds for administrative convenience; or (B) that is performed by a laborer or mechanic employed directly by an Indian tribe or tribal organization. (4) Applicability of Tribal Law.-- This subsection does not apply to a compact or funding agreement if the compact, self-determination contract or funding agreement is otherwise covered by a law (including a regulation) adopted by an Indian tribe that requires the payment of not less than prevailing wages, as determined by the Indian tribe.

Section

Proposed amendments (March 3, 2005)

Section

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408(i)

Unless otherwise agreed to by the Indian tribe, no provision of the Office of Federal Procurement Policy Act (41 U.S.C. 401 et seq.), the Federal Acquisition Regulation, or any other law or regulation pertaining to Federal procurement (including Executive orders) shall apply to any construction program or project conducted under this title.

Regarding construction programs or projects, the Secretary and Indian tribes may negotiate for the inclusion of specific provisions of the Office of Federal Procurement and Policy Act and Federal acquisition regulations in any funding agreement entered into under this subchapter. Absent a negotiated agreement, such provisions and regulatory requirements shall not apply (25 U.S.C. § 458cc-8(e)(1)). See also 25 C.F.R. § 1000.242 (same).

Unless otherwise agreed to by the Indian tribe, no provision of the Office of Federal Procurement Policy Act, the Federal Acquisition Regulations issued pursuant thereto, or any other law or regulation pertaining to Federal procurement (including Executive orders) shall apply to any construction project conducted under this part (25 U.S.C. § 458aaa-8(h)).

But see 25 C.F.R. § 1000.143, which is made applicable by 25 C.F.R. § 1000.252 : May the bureaus negotiate terms to be included in an AFA for non-Indian programs? Yes, as provided for by section 403(b)(2) and 403(c) and as necessary to meet program mandates.

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APPENDIX L THE STIMULUS PACKAGE AND ITS IMPACT ON YOU

© The Falmouth Institute L-1

MANAGING FEDERALLY FUNDED CONSTRUCTION PROJECTS

© The Falmouth Institute L-2

PATTON BOGGS OVERVIEW On Thursday, February 12, the House and Senate released the conference agreement on the American Economic Recovery and Reinvestment Act of 2009 (H.R. 1). The House passed the bill Friday, February 13 and the Senate is expected to soon follow suit. The President is expected to sign the bill on Monday, February 16. In its final form, this landmark legislation is the largest combined spending and tax bill in American history, with a total of $789.5 billion in spending and tax cuts. The bill will impact a wide range of businesses and industries from healthcare to energy to education and transportation. Overall, the conference agreement includes $311 billion in spending. Funding is included for transportation infrastructure upgrades and construction, energy efficiency, State and local stabilization, health care programs, education programs, and housing assistance, as well as numerous other provisions. The bill requires that much of the funding be infused into the American economy quickly, so it is important to understand how the funding will impact your business priorities. To provide a sense of the overall funding levels, we have prepared a general overview of the bill by subject area. Please note that this is a general overview of funding levels only, and does not report on every aspect of the bill. For a detailed analysis on any subject matter and the process for securing these federal dollars, please contact the Patton Boggs professionals listed for each respective subject area.

BUSINESS • • • • • •

$15 million for additional capital for the Surety Bond Guarantees Revolving Fund. $6 million for an additional amount for the cost of direct loans. $630 million for an additional amount for the cost of guaranteed loans. $375 million for reimbursements, loan subsidies and loan modifications for loans to small business concerns. $255 million for loan subsidies and loan modifications for loans to small businesses. $100 million for an additional amount for the Community Development Financial Institutions Fund Program Account. $8 million for financial and technical assistance, training and outreach programs designed to benefit Native American, Native Hawaiian and Alaskan Native communities.

For additional details on this information, please contact Charlie Miller at 214-758-1565 or by email at [email protected], Doug Boggs at 703-744-8010 or by email at [email protected], Joe Brand at 202-457-6035 or by email at [email protected], and Courtney Nowell at 202-457-6563 or by email at [email protected].

ENERGY AND NATURAL RESOURCES • • • • • • • •

• • • • • • •

$3.4 billion for Fossil Energy research and development. $6 billion for new loan guarantees aimed at standard renewable projects such as wind or solar projects and for electricity transmission projects. $11 billion for electrical grid projects, of which $4.5 billion is for implementing "smart grid" technologies. $5 billion for Weatherization Assistance Program to make low-income housing more energy efficient. $2 billion in grant funding for the manufacturing of advanced batteries systems and components and vehicle batteries that are produced in the United States. $3.2 billion for the Energy Efficient and Conservation Block Grants (EECBG) program: o $2.8 billion available by statutory formula o $400 million awarded competitively. $3.1 billion for the State Energy Program. $2.5 billion for Energy Efficiency and Renewable Energy (EERE) related research: o At least $800 million is dedicated for biomass and $400 million for geothermal. o $50 million for efficiency of information and communications technology and improve to standards. $300 million for the Alternative Fueled Vehicles Pilot Grant Program. $400 million for transportation electrification. $300 million for Energy Efficient Appliance Rebates Program and Energy Star Program. $250 million for energy retrofitting and green investments in HUD-assisted housing projects. $4.5 billion for repair of federal buildings to increase energy efficiency using green technology. $300 million for Rapid Technology transition and demonstration of energy efficiency technologies at the Department of Defense. $120 million for the Department of Defense for the Defense-wide Energy Conservation Investment Program.

For additional details on this information, please contact Martin Gibson at 214-758-1537 or by email at [email protected], Amy Koch at 202-457-5618 or by email at [email protected], Jeff Turner at 202-457-6434 or by email at [email protected], Debbie Swanstrom at 202-457-6565 or by email at [email protected], and Mike Driver at 202-457-6092 or by email at [email protected].

ENVIRONMENTAL • • • •

$340 million for Watershed and Flood Prevention construction. $6 billion is directed towards environmental cleanup of former weapon production and energy research sites. $1.2 billion for Environmental Protection Agency’s nationwide environmental cleanup programs, including $600 million for Superfund. $1.38 billion to support $3.8 billion in loans and grants for needed water and waste disposal facilities in rural areas. 2

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$1 billion for the Bureau of Reclamation to provide clean, reliable drinking water to rural areas. $4.6 billion in funding for the Corps of Engineers, including $2 billion for construction projects.

For additional details on this information, please contact John Martin at 202-457-6032 or by email at [email protected], Susan Mathiascheck at 202-457-6524 or by email at [email protected], Kyle Parker at 907-263-6330 or by email at [email protected], David Farber at 202-457-6516 or by email at [email protected], and John McGahren at 973-848-5610 or by email at [email protected].

FOOD AND DRUG • •

$50 million for competitive grants for the Agriculture and Food Research Initiative. $19.9 billion for additional Supplemental Nutrition Assistance Program (SNAP), formerly Food Stamps, to increase the benefit by 13.6 percent.

For additional details on this information, please contact Stuart Pape at 202-457-5240 or by email at [email protected], Paul Rubin at 202-457-5646 or by email at [email protected], Chris Hagenbush at 202-457-5334 or by email at [email protected], and Daryl Nirenberg at 202-457.6022 or by email at [email protected].

HEALTH CARE • • •

• • • •

$19 billion, including $2 billion in discretionary funds and $17 billion for investments and incentives through Medicare and Medicaid to ensure widespread adoption and use of interoperable health information technology (IT). $24.7 billion to subsidize COBRA health insurance premiums — at a level of 65 percent, for nine months — for workers who have lost their jobs. $10 billion to the National Institute of Health (NIH), including $8.2 billion for NIH research to conduct biomedical research in areas such as cancer, Alzheimer’s, heart disease and stem cells, $500 million for NIH buildings, $1.3 billion for NIH to renovate university research facilities and to help them compete for biomedical research grants. $1.1 billion for comparative effectiveness research to evaluate the relative effectiveness of different health care services and treatment options. $2 billion for Health Information Technology (HIT) grants, training, infrastructure, dissemination of best practices, telemedicine, HIT clinical education. $50 million for pandemic flu/BARDA. $1 billion for prevention and wellness programs to fight preventable diseases and conditions with evidence-based strategies, including $300 million for CDC’s immunization program, $650 million for evidence-based clinical and community-based prevention and wellness strategies, and $50 million for States to implement healthcare-associated infections reduction strategies.

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For additional details on this information, please contact John Jonas at 202-457-5624 or by email at [email protected], Martie Kendrick at 202-457-6520 or by email at [email protected], Todd Tuten at 202-457-5215 or by email at [email protected], and Kathy Lester at 202-457-6562 or by email at [email protected].

HOMELAND SECURITY • • • • • • • • •

$1.0 billion for aviation security consisting of checked baggage explosives detection system and check point explosives detection equipment. $160 million to U.S. Customs and Border Protection for non-intrusive inspection systems and tactical communications equipment and radios. $100 million for border security on the Southwest border. $420 million for construction of agency owned land border ports of entry. $20 million for tactical communications equipment and radios for U.S. Immigration and Customs Enforcement’s Automation Modernization. $142 million for the Coast Guard for alteration or removal of obstructive bridges $150 million for Public Transportation Security Assistance and Railroad Security Assistance. $150 million for Port Security Grants. $210 million for Firefighter Assistance Grants for modifying, upgrading or constructing non-Federal fire stations.

For additional details on this information, please contact Norma Krayem at 202-457-5206 or by email at [email protected], Steve McHale at 202-457-6344 or by email at [email protected], Giovanna Cinelli at 703-744-8075 or by email at [email protected], and Mike Nardotti at 202-457-6125 or by email at [email protected].

NATIVE AMERICAN AFFAIRS • • • • • •

$3.1 billion for repair, restoration and improvement of public facilities at on public and tribal lands. $510 million for the Department of Housing and Urban Development for Native American Block Grants, of which half to be distributed by existing formula, half through a competitive process with use restrictions. $500 million to Bureau of Indian Affairs for construction. $550 million for the Federal Highway Administration set-aside for Indian reservations and Federal lands, including $310 million for the Indian Reservation Roads program. $415 million for Indian Health Facilities for construction projects. $85 million for Indian Health Services for Health IT activities.

For additional details on this information, please contact Walter Featherly at 907-263-6395 or by email at [email protected] and Heather Sibbison at 202-457-6148 or by email at [email protected].

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TAX H.R. 1 includes approximately $287 billion of tax relief for individuals, businesses, and State and local governments. Bond Provisions • $10 billion allocation for recovery zone economic development bonds. • $15 billion allocation for recovery zone facility bonds. • Modification of a Tax-Exempt Interest Expense Rule for Financial Institutions. • Creation of new category of tax credit bonds for the construction, rehabilitation or repair of public schools. • Additional $ 1.4 billion of issuing authority for Qualified Zone Academy Bonds. • $2 billion of tax-exempt Tribal Development Bonds. Energy Incentives • $2.3 billion of Investment Tax Credit for certified Qualifying Advanced Energy Projects. • Facilities that produce electricity from wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation, hydropower, landfill gas, waste-to-energy and marine renewable facilities: o Investment Credit in Lieu of Production Credit o Grants from Treasury in lieu of production credits • Extension of Energy Credit for Electricity Produced from Renewable Sources. • $1.6 billion of clean renewable energy bonds. • $2.4 billion of qualified energy conservation bonds to finance State and municipal and tribal government programs and initiatives. • Increase in alternative refueling property credit for businesses. Enhancement of New Markets Tax Credit • Additional $1.5 billion for 2008 allocations. • Additional $1.5 billion for 2009 allocations. Low-Income Housing Grants in Lieu of Tax Credits • Taxpayers would be allowed to receive a grant from the Treasury Department in lieu of tax credits. Build America Bonds • State and local governments are provided the option of issuing a tax credit bond instead of a tax-exempt governmental obligation bond. • State or local governments may elect to receive a direct payment from the Federal government equal to the subsidy that would have otherwise been delivered through the Federal tax credit for bonds. General Business Tax Provisions • Extension of carryback period for losses for small businesses • Extension of Bonus Depreciation. 5

• • • •

Extension of monetization of accumulated alternative minimum tax and R& D credits in lieu of bonus depreciation. Delay of the 3% withholding tax on payments to businesses that sell goods or services to governments. Deferral of Income from Discharge of Indebtedness. Modification of rules for original issue discount on high yield obligations.

For additional details on this information, please contact Don Moorehead at 202-457-5212 or by email at [email protected], Aubrey Rothrock at 202-457-5620 or by email at [email protected], Micah Green at 202-457-5258 or by email at [email protected], George Schutzer at 202-457-5273 or by email at [email protected], Richard Andersen at 646-557-5171 or by email at [email protected],and Sue Temkin at 202-457-5260 or by email at [email protected].

TECHNOLOGY AND COMMUNICATIONS • •

• • •

$2.5 billion for the Department of Agriculture for distance learning, telemedicine and programs that increase broadband access and usage. $4.7 billion for the National Telecommunications and Information Administration Broadband Technology Opportunities Program (TOP) for competitive grants to accelerate broadband deployment in unserved and underserved areas, with at least $200 million for competitive grants for expanding public computer center capacity, including community colleges and public libraries, and at least $250 million for competitive grants for innovative programs for sustainable broadband adoption. $650 million for Digital-to-Analog Converter Box Program for additional implementation and administration of program, including coupons, consumer outreach and support. $650 million to the Department of Education for educational technology State grants. $200 million to the Department of Veterans Affairs for information technology systems, Veterans Benefit Administration for paperless claims processing.

For additional details on this information, please contact Nick Allard at 202-457-6465 or by email at [email protected], Jeff Turner at 202-457-6434 or by email at [email protected], Jonathan Yarowsky at 202-457-6160 or by email at [email protected], and Jennifer Richter at 202-457-5666 or by email at [email protected].

TRANSPORTATION AND INFRASTRUCTURE Transportation • $27.5 billion for supplemental grants for highway investments, including $105 million for Puerto Rico highways, $45 million for territorial highways, $60 million set-aside for construction of ferry boats and ferry terminal facilities, and $550 million set-aside for Indian reservations and Federal lands (including $310 million for the Indian Reservation Roads program). • $6.9 billion for Transit Capital Assistance grants.

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• • • • • • • •

$1.5 billion for competitive grants to State and local governments for projects that will have a significant impact on the Nation, a metropolitan area, or a region. $9.3 billion for investments in rail transportation, including Amtrak, High Speed and Intercity Rail, of which $450 million is to be used for capital security grants. $300 million for transit and rail security. $1.1 billion to the Federal Aviation Administration (FAA) for discretionary grants for airport investment, and $200 million for FAA facilities and equipment. $100 million in discretionary grants at the Federal Transit Administration for energy efficiency/greenhouse gas reduction. $750 million for Fixed Guideway Infrastructure Investment that will be apportioned through the existing fixed guideway formulas. $750 Million for Capital Investment Grants (New Starts). $300 million for capital expenditures and necessary expenses of acquiring motor vehicles with higher fuel economy, including hybrid vehicles, electric vehicles, and commerciallyavailable plug-in hybrid vehicles.

For additional details on this information, please contact Rodney Slater at 202-457-5265 or by email at [email protected], Carolina Mederos at 202-457-5653 or by email at [email protected], Norma Krayem at 202-457-5205 or by email at [email protected], Phil Bangert at 202-457-5247 or by email at [email protected], Greg Walden at 202-457-6135 or by email at [email protected], and Kevin O’Neill at 202-457-6136 or by email at [email protected]. Construction/Infrastructure Improvements • $4.6 billion in funding for the Corps of Engineers, including $2 billion for construction projects. • $4.2 billion for Facilities Sustainment, Restoration and Modernization to be used to invest in energy efficiency projects and to improve the repair and modernization of Department of Defense facilities to include Defense Health facilities. • $1 billion for the Community Development Block Grant program for community and economic development projects including housing and services for those hit hard by tough economic times. • $250 million is included for energy retrofitting and green investments in HUD-assisted housing projects. • $100 million to the Department of Education to support school construction in LEAs that educate federally-connected students or have federally-owned land. The grants, which are awarded by formula and competition, enable eligible districts to undertake emergency renovations and modernization projects. • $2.0 billion for the Health Resources and Services Administration for Community Health Centers/infrastructure • $53.6 billion for the State Fiscal Stabilization Fund, including $39.5 billion to local school districts using existing funding formulas, which can be used for preventing cutbacks, preventing layoffs, school modernization, or other purposes; $5 billion to states as bonus grants for meeting key performance measures in education; and $8.8 billion to states for high priority needs such as public safety and other critical services, which may include education 7

• •

and for modernization, renovation and repairs of public school facilities and institutions of higher education facilities. $200 million for planning, design, construction costs, site security, information technology infrastructure, fixtures and related costs to consolidate the Department of Homeland Security headquarters. $4.5 billion to convert GSA facilities to High Performance Green Buildings.

For additional details on this information, please contact Bob Brams at 202-457-5650 or by email at [email protected], Rodney Slater at 202-457-5265 or by email at [email protected], and John Miller at 202-457-6500 or by email at [email protected].

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APPENDIX M 2009 ECONOMIC STIMULUS PACKAGE NATIVE AMERICAN HOUSING

© The Falmouth Institute M-1

MANAGING FEDERALLY FUNDED CONSTRUCTION PROJECTS

© The Falmouth Institute M-2

2009 Economic Stimulus Package Native American Housing INTRODUCTION As the national economy worsens, Native Americans still face some of the worst housing and living conditions in the United States. Housing, related infrastructure, and reliable utilities are needed immediately in Indian country. Barriers to housing development in Indian communities include the lack of significant private investment opportunities, low functioning housing markets, and poverty. Efforts are underway to develop and include in the stimulus package provisions to 1) finance and build housing and physical infrastructure in Indian communities; and 2) remove the barriers that prevent access to capital by Indian tribes and Indian communities. HOUSING RELIEF REHABILITATION AND CONSTRUCTION PROGRAM In response to a direct request from the Obama Transition Team, NAIHC developed a proposal for housing rehabilitation. The following proposal was developed: Request:

$966 Million - Native American Housing Rehabilitation and Ready Construction, HUD

Jobs:

4,180 jobs created.

According to the 2004 “Housing and Economic Development in Indian Country: Challenges and Opportunity” report conducted by the Center for Urban Policy Research at Rutgers University, 23.3 percent of Indian households pay 30 percent or more of household income for housing. Indian homes also frequently lack utilities and infrastructure. According to the 2000 Census, approximately 14.2 percent of Indian homes have no electricity; 11.7 percent lack complete plumbing; 11 percent lack kitchen facilities; and 32.1 percent lack telephone service. Retrofitting homes is an activity that can take place immediately and be completed within 12 months. This activity would significantly extend the life of homes throughout Indian country. We estimate that 60,000 homes are being maintained by Native American housing programs and are of an age where retrofitting might be needed. We estimate that 70 percent of these homes are in need of retrofitting (weatherization, windows, insulation, efficient furnaces/air, elder/handicap conversion, etc.). Therefore, 42,000 homes are in need of retrofitting. With an estimated retrofitting cost of $23,000 per unit, the total amount of funds that could be expended in 12 months is $966 million. There are 380 NAHASDA recipients-tribal governments and tribally-designated housing entities. We estimate that an average number of 11 jobs will be created per housing program, which results to 4,180 new jobs for Native American housing programs. An untold number of jobs will be created at other companies through the purchase of new windows, insulation, furnaces, lumber and other building products.

INFRASTRUCTURE FOR NATIVE HOUSING Similar to the Native Housing Rehabilitation proposal above, the NAIHC membership requested a similar program to address the major infrastructure needs Native Housing. Request:

$857 Million – Infrastructure for Native Housing, HUD

Jobs:

15,200 jobs created.

Infrastructure is needed to support housing on reservations and Indian areas would included construction or renovation of community buildings and recreational centers, roads and transportation (including bridges, walkways, street lights and access roads), utilities (including water, sewer and power lines), parks and playgrounds, and fire stations. The total amount of funds that could be expended in 12 months is $857,415,660. A total of 15,200 jobs would be created and additional benefits would be generated through contracts for building and construction materials. Historically, the Indian Community Development Block Grant Program (ICDBG) has been effective in distributing Federal funds in an efficient and effective manner and stimulus funding for housing-related infrastructure should be routed through this mechanism. PROJECTS READY TO GO The NAIHC inquired with its membership in December 2008 about projects that could be completed within one year. A broad range of projects were identified that are poised to be constructed and the required funding levels to bring these projects to fruition. Request:

$717 Million - Projects Ready to Go *

*Requirements of the National Environmental Policy Act ("NEPA") are completed; funding can be obligated and construction begun within 120 days; and funding can be fully spent and the construction completed within one year.

REMOVING BARRIERS TO ACCESS TO CAPITAL Along with the infrastructure initiative, efforts are being made to include the following in the stimulus package: (1) Authority for Indian tribes to issue tax-exempt bonds on the same basis as State governments; (2) Authority for Indian tribes to use project funds to offset debt already incurred; (3) Authority for Indian tribes to transfer their allocable share of the Production Tax Credit for renewable energy projects to their private sector partners; and (4) Provisions aimed at encouraging banking institutions to open branches on Indian reservations. CONCLUSION As Congressional leadership and the incoming Obama Administration develop a massive Federal stimulus plan that will be considered in January 2009 when the 111th Congress and Presidentelect Barack Obama are sworn into office, NAIHC stands ready assist in stimulating tribal economies in the areas of housing, housing-related infrastructure and community development. NAIHC is the only national organization that promotes, supports, and encourages Indian tribes and tribally-designated housing entities (TDHEs) in their efforts to provide culturally-relevant, decent, safe, sanitary, and affordable housing for American Indians, Alaska Natives and Native Hawaiians. NAIHC has a membership of 267 tribes and TDHEs, representing nearly 460 Indian tribes, and provides its members with training, technical assistance, research, communications and advocacy.

APPENDIX N STIMULUS MONIES SPARK TRIBAL CONSTRUCTION

© The Falmouth Institute N-1

MANAGING FEDERALLY FUNDED CONSTRUCTION PROJECTS

© The Falmouth Institute N-2

STIMULUS MONIES SPARK TRIBAL CONSTRUCTION PROJECTS by Veronica Hix Terms of the funding require that contractors register with the Data Universal Numbering System (DUNS). TAHLEQUAH, Okla. – The Cherokee Nation will receive money for various types of construction from the Economic Stimulus Package. In order for contractors to qualify to work on these upcoming projects it is necessary to complete the following two steps. Stimulus monies will bring about various opportunities for contractors. The Cherokee Nation Small Business Assistance Center wants to ensure that Tier 1 Contractors are prepared for prospective business ventures. Terms of the funding require that contractors register with the Data Universal Numbering System (DUNS). This is a unique nine-digit number that identifies an organization. DUNS numbers have been adopted by the federal government as a way to help track how federal grant money is distributed. If your organization does not already have a DUNS number, you should call (866) 705-5711 to register. Applicants may also obtain a DUNS number at http://fedgov.dnb.com/webform. There is no charge for this number. It takes approximately 10-15 minutes to get a DUNS number if you apply by phone. If you register online, it takes one business day to create the number. Before registering for the DUNS number have the following information ready: legal name, headquarters name and address of your organization, doing business as or other name by which your organization is commonly recognized, physical address, mailing address, telephone number, contact name and title and number of employees at your physical location.

Next, vendors must register with the Central Contractor’s Registry (CCR). The CCR is the central government repository for tribes and organizations working with the federal government. To register for the first time or to annually update or renew registration, you should go to the CCR website at http://www.ccr.gov. You may also register by calling 1-888-227-2423. Online the process could take up to one hour. Information is not provides as to how long the process may take over the phone. The DUNS number of your organization will be needed to proceed. If your organization is not already registered with the CCR, you should identify the primary contact within the organization that should then proceed with the registration process. When you register with CCR, you will be required to designate an E-Business Point of Contact (E-Biz POC). The E-Biz POC plays an important role in maintaining who has access to the CCR, and also serves as the central point of contact by the CCR for the organization. He or she creates a nine-digit special password called a Marketing Partner ID Number (MPIN). The E-Biz POC will need the MPIN to approve an Authorized Organization Representative (AOR) to submit grant applications for the organization via Grants.gov. The following is a list of information needed to complete the CCR registration process: DUNS number, Legal business name and doing business name, federal tax identification number (call the IRS at 1-866-255-0654 and choose option 4 if you don’t know the number; if you operate as an individual sole proprietorship you may use your social security number), division name and number (if you do business or are identified as a division of a larger company, use this space to indicate the proper name for your division), registration URL if applicable, physical address information, physical street address, city, state, zip code, business start date, fiscal year end date, average number of employees for location (optional), annual receipts for location (optional), average number of employees including all affiliates, average annual receipts including all affiliates, company security level (if applicable) and the highest employee security level (if applicable). CCR registration also requires that vendors provide checking account information for payment related issues.

The Small Business Assistance Center understands that this procedure may be confusing and is here to assist you in the registration process. We can work oneon-one with vendors to assist and prepare you for upcoming jobs that may become available to TERO vendors. If you would like to set up an appointment for assistance, contact (918) 207-3955.

NOTES

APPENDIX O OSHA INSPECTIONS

© The Falmouth Institute O-1

MANAGING FEDERALLY FUNDED CONSTRUCTION PROJECTS

© The Falmouth Institute O-2

OSHA Inspections OSHA 2098 2002 (Revised)

OSHA Inspections U.S. Department of Labor Elaine L. Chao, Secretary Occupational Safety and Health Administration John L. Henshaw, Assistant Secretary OSHA 2098 2002 (Revised)

Contents Background .................................................................... 1 What are OSHA’s inspection priorities? ............................ 3 How does a compliance officer prepare for the inspection? .............................................. 6 What does the inspection process involve? ........................ 7 What are the results of an inspection? ............................ 12 How does the appeals process work? ............................. 15 OSHA Assistance, Services, and Products ...................... 18 OSHA Regional and Area Offices ................................... 24 OSHA-Approved Safety and Health Plans ...................... 28 OSHA Onsite Consultation Offices ................................. 29

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Background Under the Occupational Safety and Health Act of 1970 (the Act), the Occupational Safety and Health Administration (OSHA) is authorized to conduct workplace inspections and investigations to determine whether employers are complying with standards issued by the agency for safe and healthful workplaces. OSHA also enforces Section 5(a)(1) of the Act, known as the “General Duty Clause,” which requires that every working man and woman must be provided with a safe and healthful workplace. Workplace inspections and investigations are conducted by OSHA compliance safety and health officers who are safety and health professionals trained in the disciplines of safety and industrial hygiene. States administering their own occupational safety and health program through plans approved under section 18(b) of the Act must adopt standards and enforce requirements which are at least as effective as federal requirements. There are currently 26 states and territories with OSHA-approved safety and health plans: 23 covering the private and public (state and local government) sectors and 3 covering the public sector only. Plan states must adopt standards comparable to the federal standards within 6 months of a federal standard’s issue. Although most states adopt standards identical to the federal standards and have similar inspection procedures— including citations and penalties and employer and employee rights and responsibilities— you should contact the state plan agency directly to determine if there are any different or additional state occupational safety and health requirements.

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Inspections are always conducted without advance notice. There are, however, special circumstances under which OSHA may give notice to the employer, but such a notice will normally be less than 24 hours. These circumstances include the following: • Imminent danger situations that require correction as soon as possible; • Accident investigations where the employer has notified the agency of a fatality or catastrophe; • Inspections that must take place after regular business hours or that require special preparation; • Cases where notice is required to ensure that the employer and employee representative or other personnel will be present; • Cases where an inspection must be delayed for more than 5 working days when there is good cause; and • Situations in which the OSHA Area Director determines that advance notice would produce a more thorough or effective inspection. Employers who receive advance notice of an inspection must inform their employees’ representative or arrange for OSHA to do so. If an employer refuses to admit an OSHA compliance officer or if an employer attempts to interfere with the inspection, the Act permits appropriate legal action, such as obtaining a warrant to inspect.

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What are OSHA’S inspection priorities? Not all 111 million workplaces covered by the Act can be inspected immediately. The worst situations need attention first. OSHA, therefore, has established a system of inspection priorities.

Imminent danger Imminent danger situations receive top priority. An imminent danger is any condition where there is reasonable certainty that a danger exists that can be expected to cause death or serious physical harm immediately or before the danger can be eliminated through normal enforcement procedures. If a compliance officer finds an imminent danger situation, he or she will ask the employer to voluntarily abate the hazard and remove endangered employees from exposure. Should the employer fail to do this, OSHA, through the regional solicitor, may apply to the Federal District Court for an injunction prohibiting further work as long as unsafe conditions exist.

Catastrophes and fatal accidents Second priority goes to the investigation of fatalities and accidents resulting in a death or hospitalization of three or more employees. The employer must report such catastrophes to OSHA within 8 hours. OSHA investigates to determine the cause of these accidents and whether existing OSHA standards were violated.

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Complaints and referrals Third priority goes to formal employee complaints of unsafe or unhealthful working conditions and to referrals from any source about a workplace hazard. The Act gives each employee the right to request an OSHA inspection when the employee believes he or she is in imminent danger from a hazard or when he or she thinks that there is a violation of an OSHA standard that threatens physical harm. OSHA will maintain confidentiality if requested, inform the employee of any action it takes regarding complaints, and, if requested, hold an informal review of any decision not to inspect.

Programmed inspections Next in priority are programmed inspections aimed at specific high-hazard industries, workplaces, occupations, or health substances, or other industries identified in OSHA’s current inspection procedures. OSHA selects industries for inspection on the basis of factors such as the injury incidence rates, previous citation history, employee exposure to toxic substances, or random selection. OSHA also may develop special emphasis programs that are local, regional, or national in scope, depending on the distribution of the workplaces involved. OSHA normally will conduct comprehensive safety inspections in manufacturing in those establishments with lost-workday injury rates at or above the Bureau of Labor Statistics’ (BLS) national rate for manufacturing currently in use by OSHA. States with their own occupational safety and health programs may use somewhat different systems to identify industries for inspection.

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Followup inspections A followup inspection determines if the employer has corrected previously cited violations. If an employer has failed to abate a violation, the compliance officer informs the employer that he or she is subject to “Failure to Abate” alleged violations. This involves proposed additional daily penalties until the employer corrects the violation.

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How does a compliance officer prepare for the inspection? A compliance officer represents the agency and is expected to demonstrate his or her knowledge and expertise in the safety and health field in a courteous and professional manner. Before the inspection, the compliance officer will become familiar with as many relevant facts as possible about the workplace, such as its inspection history, the nature of the business, and the particular standards that might apply. This preparation provides the compliance officer with a knowledge of the potential hazards and industrial processes that he or she may encounter and aids in selecting appropriate personal protective equipment for use against these hazards during the inspection.

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What does the inspection process involve? Inspector’s credentials When the OSHA compliance officer arrives at the establishment, he or she displays official credentials and asks to meet an appropriate employer representative. Employers should always ask to see the compliance officer’s credentials. Employers may verify the OSHA federal or state compliance officer credentials by calling the nearest federal or state OSHA office. Compliance officers may not collect a penalty at the time of the inspection or promote the sale of a product or service at any time; anyone who attempts to do so is impersonating a government inspector and the employer should contact the FBI or local law enforcement officials immediately.

Opening conference In the opening conference, the compliance officer explains how the establishment was selected and what the likely scope of the inspection will be. The compliance officer also will ascertain whether an OSHA-funded consultation visit is in progress or whether the facility is pursuing or has received an inspection exemption through the consultation program; if so, the inspection may be limited or terminated. The compliance officer explains the purpose of the visit, the scope of the inspection, and the standards that apply. The compliance officer gives the employer information on how to get a copy of applicable safety and health standards as well as a copy of any employee complaint that may be involved (with the employee’s name deleted, if the employee requests anonymity). The compliance officer asks the employer to select an employer representative to accompany the compliance officer during the inspection. 7

The compliance officer also gives an authorized employee representative the opportunity to attend the opening conference and accompany the compliance officer during the inspection. If a recognized bargaining agent represents the employees, the agent ordinarily will designate the employee representative to accompany the compliance officer. Similarly, if there is a plant safety committee, the employee members of that committee will designate the employee representative (in the absence of a recognized bargaining agent). Where neither employee group exists, the employees themselves may select an employee representative, or the compliance officer may determine if any employee suitably represents the interest of other employees. The Act does not require an employee representative for each inspection. Where there is no authorized employee representative, however, the compliance officer must consult with a reasonable number of employees concerning safety and health matters in the workplace.

Walkthrough After the opening conference, the compliance officer and accompanying representatives proceed through the establishment to inspect work areas for safety and health hazards. The compliance officer determines the route and duration of the inspection. While talking with employees, the compliance officer makes every effort to minimize any work interruptions. The compliance officer observes safety and health conditions and practices; consults with employees privately, if necessary; takes photos, videotapes, and instrument readings; examines records; collects air samples; measures noise levels; surveys existing engineering controls; and monitors employee exposure to toxic fumes, gases, and dusts. 8

An inspection tour may cover part or all of an establishment, even if the inspection resulted from a specific complaint, fatality, or catastrophe. If the compliance officer finds a violation in open view, he or she may ask permission to expand the inspection. The compliance officer keeps all trade secrets observed confidential. The compliance officer consults employees during the inspection tour. He or she may stop and question workers, in private, about safety and health conditions and practices in their workplaces. Each employee is protected under the Act from discrimination by the employer for exercising his or her safety and health rights. OSHA places special importance on posting and recordkeeping requirements. The compliance officer will inspect records of deaths, injuries, and illnesses that the employer is required to keep. He or she will check to see that a copy of the totals from the last page of OSHA Form Number 300 are posted as required and that the OSHA workplace poster (OSHA 3165), which explains employees’ safety and health rights, is prominently displayed. Where records of employee exposure to toxic substances and harmful physical agents are required, the compliance officer will examine them for compliance with the recordkeeping requirements. The compliance officer also requests a copy of the employer’s Hazard Communication Program. Under OSHA’s Hazard Communication Standard, employers must establish a written, comprehensive communication program that includes provisions for container labeling, material safety data sheets, and an employee training program. The program must contain a list of the hazardous chemicals in each work area and the means the employer will use to inform employees of the hazards associated with these chemicals. 9

During the course of the inspection, the compliance officer will point out to the employer any unsafe or unhealthful working conditions observed. At the same time, the compliance officer will discuss possible corrective action if the employer so desires. Some apparent violations detected by the compliance officer can be corrected immediately. When the employer corrects them on the spot, the compliance officer records such corrections to help in judging the employer’s good faith in compliance. Although corrected, the apparent violations will serve as the basis for a citation and, if appropriate, a notice of proposed penalty. OSHA may reduce the penalties for some types of violations if they are corrected immediately.

Closing conference At the conclusion of the inspection, the compliance officer conducts a closing conference with the employer, employees, and/or the employees’ representative. The compliance officer gives the employer and all other parties involved a copy of Employer Rights and Responsibilities Following an OSHA Inspection (OSHA 3000) for their review and discussion. The compliance officer discusses with the employer all unsafe or unhealthful conditions observed during the inspection and indicates all apparent violations for which he or she may issue or recommend a citation and a proposed penalty. The compliance officer will not indicate any specific proposed penalties but will inform the employer of appeal rights.

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During the closing conference, the employer may wish to produce records to show compliance efforts and provide information that can help OSHA determine how much time may be needed to abate an alleged violation. When appropriate, the compliance officer may hold more than one closing conference. This is usually necessary when the inspection includes an evaluation of health hazards, after a review of additional laboratory reports, or after the compliance officer obtains additional factual evidence while concluding an accident investigation. The compliance officer explains that OSHA area offices are full-service resource centers that inform the public of OSHA activities and programs. This includes information on new or revised standards, the status of proposed standards, comment periods, or public hearings. Additionally, area offices provide technical experts and materials and refer callers to other agencies and professional organizations as appropriate. The area offices promote effective safety and health programs through Voluntary Protection Programs (VPP) and provide information about study courses offered at the OSHA Training Institute or its satellite locations nationwide. If an employee representative does not participate in either the opening or the closing conference held with the employer, the compliance officer holds a separate discussion with the employee representative, if requested, to discuss matters of direct interest to employees.

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What are the results of an inspection? After the compliance officer reports findings, the Area Director determines whether he or she will issue citations and/or propose penalties.

Citations Citations inform the employer and employees of the regulations and standards alleged to have been violated and of the proposed length of time set to correct alleged hazards. The employer will receive citations and notices of proposed penalties by certified mail. The employer must post a copy of each citation at or near the place a violation occurred for 3 days or until the violation is abated, whichever is longer.

Penalties These are the types of violations that may be cited and the penalties that may be proposed:1 • Other-Than-Serious Violation — A violation that has a direct relationship to job safety and health, but probably would not cause death or serious physical harm. OSHA may assess a penalty from $0 to $1,000 for each violation. The agency may adjust a penalty for an other-than-serious violation downward by as much as 95 percent, depending on the employer’s good faith (demonstrated efforts to comply with the Act ), history of previous violations, and size of business.2 1 For more detailed information, see U.S. Department of Labor Program Highlights, Fact Sheet No. OSHA 91-36, “New OSHA Civil Penalties Policy.” It is available online at www.osha.gov. 2 For a more detailed description of adjustment factors, see U.S. Department of Labor Program Highlights, Fact Sheet No. OSHA 91-36 and OSHA’s voluntary Safety and Health Program Management Guidelines. (Federal Register, Vol. 54, No. 16, January 26, 1989, pp. 3904-3916.) Both are available at www.osha.gov. 12

• Serious Violation — A violation where there is a substantial probability that death or serious physical harm could result. OSHA assesses the penalty for a serious violation from $1,500 to $7,000 depending on the gravity of the violation. OSHA may adjust a penalty for a serious violation downward based on the employer’s good faith, history of previous violations, and size of business. • Willful Violation — A violation that the employer intentionally and knowingly commits. The employer is aware that a hazardous condition exists, knows that the condition violates a standard or other obligation of the Act, and makes no reasonable effort to eliminate it. OSHA may propose penalties of up to $70,000 for each willful violation. The minimum willful penalty is $5,000. An employer who is convicted in a criminal proceeding of a willful violation of a standard that has resulted in the death of an employee may be fined up to $250,000 (or $500,000 if the employer is a corporation) or imprisoned up to 6 months, or both. A second conviction doubles the possible term of imprisonment.3 • Repeated Violation — A violation of any standard, regulation, rule, or order where, upon reinspection, a substantially similar violation is found and the original citation has become a final order. Violations can bring a fine or up to $70,000 for each such violation within the previous 3 years. To calculate repeated violations, OSHA adjusts the initial penalty for the size and then multiplies by a factor of 2, 5, or 10 depending on the size of the business. • Failure-to-Abate — Failure to correct a prior violation may bring a civil penalty of up to $7,000 for each day

3 For more information, see United States Code Annotated, Title 18, Crimes and Criminal Procedures 3331 to 4120, West Publishing Company, St. Paul, MN, 1991, pp. 53–54. 13

that the violation continues beyond the prescribed abatement date. Additional violations for which OSHA may issue citations and proposed penalties are as follows: • Falsifying records, reports, or applications can, upon conviction, bring a criminal fine of $10,000 or up to 6 months in jail, or both. • Violating posting requirements may bring a civil penalty of $7,000. • Assaulting a compliance officer or otherwise resisting, opposing, intimidating, or interfering with a compliance officer in the performance of his or her duties is a criminal offense and is subject to a fine of not more than $5,000 and imprisonment for not more than 3 years. Citations and penalty procedures may differ somewhat in states with their own occupational safety and health programs.

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How does the appeals process work? Appeals by employees If an employee complaint initiates an inspection, the employee or authorized employee representative may request an informal review of any decision not to issue a citation. Employees may not contest citations, amendments to citations, proposed penalties, or lack of penalties. They may, however, contest the time allowed for abatement of a hazardous condition. They also may contest an employer’s “Petition for Modification of Abatement,” which requests an extension of the proposed abatement period. Employees must contest the petition within 10 working days of its posting or within 10 working days after an authorized employee representative receives a copy. Employees may request an informal conference with OSHA to discuss any issues raised by an inspection, citation, notice of proposed penalty, or employer’s notice of intention to contest.

Appeals by employers Within 15 working days of receiving a citation, an employer who wishes to contest must submit a written objection to OSHA. The OSHA Area Director forwards the objection to the Occupational Safety and Health Review Commission (OSHRC), which operates independently of OSHA. When issued a citation and notice of proposed penalty, an employer may request an informal meeting with OSHA’s Area Director to discuss the case. OSHA encourages employers to have informal conferences with the Area Director if the employer has issues arising from the inspection that he or she wishes to discuss or provide additional information. The Area Director is authorized to enter into settlement agreements that revise citations and 15

penalties to avoid prolonged legal disputes and result in speedier hazard abatement. (Alleged violations contested before OSHRC do not need to be corrected until the contest is ruled upon by OSHRC.)

Petition for modification of abatement After receiving a citation, the employer must correct the cited hazard by the abatement date unless he or she contests the citation or abatement date. Factors beyond the employer’s control, however, may prevent the completion of corrections by that date. In such a situation, the employer who has made a good-faith effort to comply may file a petition to modify the abatement date. The written petition must specify the steps taken to achieve compliance, the additional time needed to comply, the reasons additional time is needed, and interim steps taken to safeguard employees against the cited hazard during the intervening period. The employer must certify that he or she posted a copy of the petition in a conspicuous place at or near each place where a violation occurred and that the employee representative received a copy of the petition.

Notice of Contest If the employer decides to contest either the citation, the abatement period, or the proposed penalty, he or she has 15 working days from the time the citation and proposed penalty are received to notify the OSHA Area Director in writing. Failure to do so results in the citation and proposed penalty becoming a final order of the OSHRC without further appeal. An orally expressed disagreement will not suffice. This written notification is called a “Notice of Contest.” Although there is no specific format for the Notice of Contest, it must clearly identify the employer’s basis for 16

filing — the citation, notice of proposed penalty, abatement period, or notification of failure to correct violations. The employer must give a copy of the Notice of Contest to the employees’ authorized representative. If any affected employees are not represented by a recognized bargaining agent, the employer must post a copy of the notice in a prominent location in the workplace or give it personally to each unrepresented employee.

Review procedure If the employer files a written Notice of Contest within the required 15 working days, the OSHA Area Director forwards the case to OSHRC. The commission is an independent agency not associated with OSHA or the Department of Labor. The commission assigns the case to an administrative law judge. OSHRC may schedule a hearing at a public place near the employer’s workplace. The employer and the employee have the right to participate in the hearing; the OSHRC does not require them to be represented by attorneys. Once the administrative law judge has ruled, any party to the case may request a further review by OSHRC. Any of the three OSHRC commissioners also may, at his or her own motion, bring a case before the commission for review. Employers and other parties may appeal commission rulings to the appropriate U.S. Court of Appeals.

Appeals in states and territories with OSHA-approved plans States with their own occupational safety and health programs have a state system for review and appeal of citations, penalties, and abatement periods. The procedures are generally similar to Federal OSHA’s, but a state review board or equivalent authority hears cases. 17

OSHA Assistance, Services, and Products How can OSHA help me? OSHA can provide extensive help through a variety of programs, including assistance about safety and health programs, state plans, workplace consultations, voluntary protection programs, strategic partnerships, training and education, and more.

Safety and Health Program Management Guidelines Working in a safe and healthful environment can stimulate innovation and creativity and result in increased performance and higher productivity. To assist employers and employees in developing effective safety and health management systems, OSHA published recommended Safety and Health Program Management Guidelines (Federal Register 54(16): 3904-3916, January 26, 1989). These voluntary guidelines can be applied to all places of employment covered by OSHA. The guidelines identify four general elements that are critical to the development of a successful safety and health management system. These are the following: • Management leadership and employee involvement, • Worksite analysis, • Hazard prevention and control, and • Safety and health training. The guidelines recommend specific actions, under each of these general elements, to achieve an effective safety and health management system. The Federal Register notice is available online at www.osha.gov.

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State programs The Occupational Safety and Health Act of 1970 (OSH Act) encourages states to develop and operate their own job safety and health plans. OSHA approves and monitors these plans. There are currently 26 state plans: 23 cover both private and public (state and local government) employment; 3 states, Connecticut, New Jersey, and New York, cover the public sector only. States and territories with their own OSHA-approved occupational safety and health plans must adopt and enforce standards identical to, or at least as effective as, the federal standards and provide extensive programs of voluntary compliance and technical assistance, including consultation services.

Consultation services Consultation assistance is available on request to employers who want help in establishing and maintaining a safe and healthful workplace. Funded largely by OSHA, the service is provided at no cost to the employer. Primarily developed for smaller employers with more hazardous operations, the consultation service is delivered by state governments employing professional safety and health consultants. Comprehensive assistance includes a hazard survey of the worksite and appraisal of all aspects of the employer’s existing safety and health management system. In addition, the service offers assistance to employers in developing and implementing an effective safety and health management system. No penalties are proposed or citations issued for hazards identified by the consultant. The employer’s only obligation is to correct all identified serious hazards within the agreed upon correction timeframe. OSHA provides consultation assistance to the employer with the assurance that his or her name and firm and any information about the workplace will not be routinely reported to OSHA enforcement staff.

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Under the consultation program, certain exemplary employers may request participation in OSHA’s Safety and Health Achievement Recognition Program (SHARP). Eligibility for participation in SHARP includes, but is not limited to, receiving a full-service, comprehensive consultation visit, correcting all identified hazards, and developing an effective safety and health program management system. Employers accepted into SHARP may receive an exemption from programmed inspections (not complaint or accident investigation inspections) for a period of 1 year initially, or 2 years upon renewal. For more information concerning consultation assistance, see the list of consultation projects listed at the end of this publication.

Voluntary Protection Programs (VPP) Voluntary Protection Programs and onsite consultation services, when coupled with an effective enforcement program, expand worker protection to help meet the goals of the OSH Act. The three levels of VPP—Star, Merit, and Demonstration—are designed to recognize outstanding achievements by companies that have developed and implemented effective safety and health management systems. The VPPs motivate others to achieve excellent safety and health results in the same outstanding way as they establish a cooperative relationship between employers, employees, and OSHA. For additional information on VPPs and how to apply, contact the OSHA regional offices listed at the end of this publication.

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Strategic Partnership Program OSHA’s Strategic Partnership Program, the newest member of OSHA’s cooperative programs, helps encourage, assist, and recognize the efforts of partners to eliminate serious workplace hazards and achieve a high level of worker safety and health. Whereas OSHA’s Consultation Program and VPP entail one-on-one relationships between OSHA and individual worksites, most strategic partnerships seek to have a broader impact by building cooperative relationships with groups of employers and employees. These partnerships are voluntary, cooperative relationships between OSHA, employers, employee representatives, and others such as trade unions, trade and professional associations, universities, and other government agencies. For more information on this program, contact your nearest OSHA office, or visit OSHA’s website at www.osha.gov.

Training and education OSHA’s area offices offer a variety of information services, such as compliance assistance, technical advice, publications, audiovisual aids, and speakers for special engagements. OSHA’s Training Institute in Des Plaines, IL, provides basic and advanced courses in safety and health for federal and state compliance officers, state consultants, federal agency personnel, and private sector employers, employees, and their representatives. The OSHA Training Institute also has established OSHA Training Institute Education Centers to address the increased demand for its courses from the private sector and from other federal agencies. These centers are nonprofit colleges, universities, and other organizations that have been selected after a competition for participation in the program. OSHA awards grants through its Susan Harwood Training Grant Program to nonprofit organizations to provide safety 21

and health training and education to employers and workers in the workplace. The grants focus on programs that will educate workers and employers in small business (fewer than 250 employees), training workers and employers about new OSHA standards or about high-risk activities or hazards. Grants are awarded for one year and may be renewed for an additional 12-month period depending on whether the grantee has performed satisfactorily. OSHA expects each organization awarded a grant to develop a training and/or education program that addresses a safety and health topic named by OSHA, recruit workers and employers for the training, and conduct the training. Grantees are also expected to follow up with people who have been trained to find out what changes were made to reduce the hazards in their workplaces as a result of the training. Each year OSHA has a national competition that is announced in the Federal Register and on the Internet at www.osha-slc.gov/Training/sharwood/sharwood.html. For more information on grants, training, and education, contact the OSHA Training Institute, Office of Training and Education, 1555 Times Drive, Des Plaines, IL 60018; call (847) 297-4810, or see Outreach on OSHA’s website at www.osha.gov.

Electronic information OSHA has a variety of materials and tools available on its website at www.osha.gov. These include e-Tools such as Expert Advisors and Electronic Compliance Assistance Tools (e-CATs), Technical Links, regulations, directives, publications, videos, and other information for employers and employees. OSHA’s software programs and compliance assistance tools “walk” you through challenging safety and health issues and common problems to find the best solutions for your workplace. 22

OSHA’s CD-ROM includes standards, interpretations, directives, and more and can be purchased on CD-ROM from the U.S. Government Printing Office. To order, write to the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402, or phone (202) 512–1800. Specify OSHA Regulations, Documents and Technical Information on CD-ROM (ORDT), GPO Order No. S/N 729-013-00000-5. The price is $45 per year ($56.25 international); $21 per single copy ($26.25 international).

OSHA publications OSHA has an extensive publications program. For a listing of free or sales items, visit OSHA’s website at www.osha.gov or contact the OSHA Publications Office, U.S. Department of Labor, OSHA/OSHA Publications, 200 Constitution Avenue, NW, N-3101, Washington, DC 20013-7535. Telephone (202) 693–1888 or fax to (202) 693–2498.

Emergencies, complaints, and further assistance To report an emergency, file a complaint, or seek OSHA advice, assistance, or products, call (800) 321– OSHA or contact your nearest OSHA regional, area, state plan, or consultation office listed at the end of this publication. The teletypewriter (TTY) number is (877) 889–5627. You can also file a complaint online and obtain more information on OSHA federal and state programs by visiting OSHA’s website at www.osha.gov.

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OSHA Regional and Area Offices OSHA Regional Offices Region I (CT,* ME, MA, NH, RI, VT*) JFK Federal Building, Room E340 Boston, MA 02203 (617) 565–9860

Region VI (AR, LA, NM,* OK, TX) 525 Griffin Street, Room 602 Dallas, TX 75202 (214) 767–4731 or 4736 x224

Region II (NJ,* NY,* PR,* VI*) 201 Varick Street, Room 670 New York, NY 10014 (212) 337–2378

Region VII (IA,* KS, MO, NE) City Center Square 1100 Main Street, Suite 800 Kansas City, MO 64105 (816) 426–5861

Region III (DE, DC, MD,* PA,* VA,* WV) The Curtis Center 170 S. Independence Mall West Suite 740 West Philadelphia, PA 19106-3309 (215) 861–4900 Region IV (AL, FL, GA, KY,* MS, NC,* SC,* TN*) SNAF 61 Forsyth Street SW Room 6T50 Atlanta, GA 30303 (404) 562–2300 Region V (IL, IN,* MI,* MN,* OH, WI) 230 South Dearborn Street, Room 3244 Chicago, IL 60604 (312) 353–2220

Region VIII (CO, MT, ND, SD, UT,* WY*) 1999 Broadway, Suite 1690 PO Box 46550 Denver, CO 80202-5716 (303) 844–1600 Region IX (American Samoa, AZ,* CA,* HI, NV,* Northern Mariana Islands) 71 Stevenson Street, Room 420 San Francisco, CA 94105 (415) 975–4310 Region X (AK,* ID, OR,* WA*) 1111 Third Avenue, Suite 715 Seattle, WA 98101-3212 (206) 553–5930

*These states and territories operate their own OSHA-approved job safety and health programs (Connecticut, New Jersey and New York plans cover public employees only). States with approved programs must have a standard that is identical to, or at least as effective as, the federal standard. 24

OSHA Area Offices Anchorage, AK (907) 271–5152

Smyrna, GA (770) 984–8700

Birmingham, AL (205) 731–1534

Tucker, GA (770) 493–6644/6742/8419

Mobile, AL (251) 441–6131

Des Moines, IA (515) 284–4794

Little Rock, AR (501) 324–6291(5818)

Boise, ID (208) 321–2960

Phoenix, AZ (602) 640–2348

Calumet City, IL (708) 891–3800

Sacramento, CA (916) 566–7471

Des Plaines, IL (847) 803–4800

San Diego, CA (619) 557–5909

Fairview Heights, IL (618) 632–8612

Denver, CO (303) 844–5285

North Aurora, IL (630) 896–8700

Greenwood Village, CO (303) 843–4500

Peoria, IL (309) 671–7033

Bridgeport, CT (203) 579–5581

Indianapolis, IN (317) 226–7290

Hartford, CT (860) 240–3152

Wichita, KS (316) 269–6644

Wilmington, DE (302) 573–6518

Frankfort, KY (502) 227–7024

Fort Lauderdale, FL (954) 424–0242

Baton Rouge, LA (225) 389–0474 (0431)

Jacksonville, FL (904) 232–2895

Braintree, MA (617) 565–6924

Tampa, FL (813) 626–1177

Methuen, MA (617) 565–8110

Savannah, GA (912) 652–4393

Springfield, MA (413) 785–0123 25

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Linthicum, MD (410) 865–2055/2056

Marlton, NJ (856) 757–5181

August, ME (207) 622–8417

Parsippany, NJ (973) 263–1003

Bangor, ME (207) 941–8177

Carson City, NV (775) 885–6963

Portland, ME (207) 780–3178

Albany, NY (518) 464–4338

Lansing, MI (517) 327–0904

Bayside, NY (718) 279–9060

Minneapolis, MN (612) 664–5460

Bowmansville, NY (716) 684–3891

Kansas City, MO (816) 483–9531

New York, NY (212) 337–2636

St. Louis, MO (314) 425–4249

North Syracuse, NY (315) 451–0808

Jackson, MS (601) 965–4606

Tarrytown, NY (914) 524–7510

Billings, MT (406) 247–7494

Westbury, NY (516) 334–3344

Raleigh, NC (919) 856–4770

Cincinnati, OH (513) 841–4132

Bismark, ND (701) 250–4521

Cleveland, OH (216) 522–3818

Omaha, NE (402) 221–3182

Columbus, OH (614) 469–5582

Concord, NH (603) 225–1629

Toledo, OH (419) 259–7542

Avenel, NJ (732) 750–3270

Oklahoma City, OK (405) 278–9560

Hasbrouck Heights, NJ (201) 288–1700

Portland, OR (503) 326–2251

Allentown, PA (610) 776–0592

El Paso, TX (915) 534–6251

Erie, PA (814) 833–5758

Fort Worth, TX (817) 428–2470 (485–7647)

Harrisburg, PA (717) 782–3902

Houston, TX (281) 591–2438 (2787)

Philadelphia, PA (215) 597–4955

Houston, TX (281) 286–0583/0584 (5922)

Pittsburgh, PA (412) 395–4903

Lubbock, TX (806) 472–7681 (7685)

Wilkes–Barre, PA (570) 826–6538

Salt Lake City, UT (801) 530–6901

Guaynabo, PR (787) 277–1560

Norfolk, VA (757) 441–3820

Providence, RI (401) 528–4669

Bellevue, WA (206) 553–7520

Columbia, SC (803) 765–5904

Appleton, WI (920) 734–4521

Nashville, TN (615) 781–5423

Eau Claire, WI (715) 832–9019

Austin, TX (512) 916–5783 (5788)

Madison, WI (608) 264–5388

Corpus Christi, TX (361) 888–3420

Milwaukee, WI (414) 297–3315

Dallas, TX (214) 320–2400 (2558)

Charleston, WV (304) 347–5937

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OSHA-Approved Safety and Health Plans Juneau, AK (907) 465–2700

Trenton, NJ (609) 292–2975

Phoenix, AZ (602) 542–5795

Santa Fe, NM (505) 827–2850

San Francisco, CA (415) 703–5050

Carson City, NV (775) 684–7260

Wethersfield, CT (860) 263–6505

Salem, OR (503) 378–3272

Honolulu, HI (808) 586–8844

Hato Rey, PR (787) 754–2119

Des Moines, IA (515) 281–3447

Columbia, SC (803) 896–4300

Indianapolis, ID (317) 232–2378

Nashville, TN (615) 741–2582

Indianapolis, IN (317) 232–3325

Salt Lake City, UT (801) 530–6901

Frankfort, KY (502) 564–3070

Richmond, VA (804) 786–2377

Baltimore, MD (410) 767–2215

Christiansted, St. Croix, VI (340) 773–1990

Lansing, MI (517) 322–1814

Montpelier VT (802) 828–2288

St. Paul, MN (651) 284–5010

Olympia, WA (360) 902–4200 (360) 902–5430

Raleigh, NC (919) 807–2900

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Cheyenne, WY (307) 777–7786

OSHA Onsite Consultation Offices Alabama (205) 348–3033 (205) 348–3049 FAX Alaska (907) 269–4957 (907) 269–4950 FAX

Florida (813) 974–9962 Georgia (404) 894–2643 (404) 894–8275 FAX

Arizona (602) 542–1695 (602) 542–1614 FAX

Guam 011 (671) 475–0136 011 (671) 477–2988 FAX

Arkansas (501) 682–4522 (501) 682–4532 FAX

Hawaii (808) 586–9100 (808) 586–9099 FAX

California (415) 703–5270 (415) 703–4596 FAX Colorado (970) 491–6151 (970) 491–7778 FAX Connecticut (860) 566–4550 (860) 566–6916 FAX Delaware (302) 761–8219 (302) 761–6601 FAX District of Columbia (202) 576–6339 (202) 576–7579 FAX

Idaho (208) 426–3283 (208) 426–4411 FAX Illinois (312) 814–2337 (312) 814–7238 FAX Indiana (317) 232–2688 (317) 232–3790 FAX Iowa (515) 281–7629 (515) 281–5522 FAX Kansas (785) 296–7476 (785) 296–1775 FAX

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Kentucky (502) 564–6895 (502) 564–6103 FAX

Nebraska (402) 471–4717 (402) 471–5039 FAX

Louisiana (225) 342–9601 (225) 342–5158 FAX

Nevada (702) 486–9140 (702) 990–0362 FAX

Maine (207) 624–6460 (207) 624–6449 FAX

New Hampshire (603) 271–2024 (603) 271–2667 FAX

Maryland (410) 880–4970 (301) 483–8332 FAX

New Jersey (609) 292–3923 (609) 292–4409 FAX

Massachusetts (617) 727–3982 (617) 727–4581 FAX

New Mexico (505) 827–4230 (505) 827–4422 FAX

Michigan (517) 322–1809 (517) 322–1374 FAX

New York (518) 457–2238 (518) 457–3454 FAX

Minnesota (612) 297–2393 (612) 297–1953 FAX

North Carolina (919) 807–2905 (919) 807–2902 FAX

Mississippi (601) 987–3981 (601) 987–3890 FAX

North Dakota (701) 328–5188 (701) 328–5200 FAX

Missouri (573) 751–3403 (573) 751–3721 FAX

Ohio (800) 282–1425 or (614) 644–2631 (614) 644–3133 FAX

Montana (406) 444–6418 (406) 444–4140 FAX 30

Oklahoma (405) 528–1500 (405) 528–5751 FAX

Oregon (503) 378–3272 (503) 378–5729 FAX

Vermont (802) 828–2765 (802) 828–2195 FAX

Pennsylvania (724) 357–2396 (724) 357–2385 FAX

Virginia (804) 786–6359 (804) 786–8418 FAX

Puerto Rico (787) 754–2171 (787) 767–6051 FAX

Virgin Islands (340) 772–1315 (340) 772–4323 FAX

Rhode Island (401) 222–2438 (401) 222–2456 FAX

Washington (360) 902–5638 (360) 902–5459 FAX

South Carolina (803) 734–9614 (803) 734–9741 FAX

West Virginia (304) 558–7890 (304) 558–9711 FAX

South Dakota (605) 688–4101 (605) 688–6290 FAX

Wisconsin (Health) (608) 266–8579 (608) 266–9383 FAX

Tennessee (615) 741–7036 (615) 532–2997 FAX

Wisconsin (Safety) (262) 523–3040 (800) 947–0553 (262) 523–3046 FAX

Texas (512) 804–4640 (512) 804–4641 FAX OSHCON Request Line: (800) 687–7080

Wyoming (307) 777–7786 (307) 777–3646 FAX

Utah (801) 530–6901 (801) 530–6992 FAX

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