Research Administration Office

University of California

Memo Operating Guidance

No. 89-2

January 19, 1989

Subject: Certification/Statement of Non-Delinquency on Federal Debt

Background

A Federal policy theme over the past few years has been collection of debts owed the Federal Government. In 1982 the U.S. Congress passed the Debt Collection Act. On November 25, 1988, the Office of Management and Budget issued OMB Circular A-129 (Rev.) on Managing Federal Credit Programs. A-129 in part addresses delinquent debt collection, and grants, contracts, and other administrative debt. A-129 Appendix 3 is OMB guidance to Federal agencies regarding Certification of Non-Delinquency by applicants for Federal Assistance (see Enclosure 1).

Federal Agencies will soon begin to require statements or certifications of non-delinquency. NSF and PHS have already issued their requirements (see Enclosures 2 and 3).

Purpose

This Memo provides general guidance on how to respond to agency requirements regarding debt delinquency, and specific guidance for NSF and PHS grants. When additional agency implementations are issued, additional guidance will be provided if needed. This Memo also provides guidance for contracts, and student financial aid assistance awards.

Definition of Delinquency

Delinquency is defined generically in A-129 as the "failure to pay an obligation or debt by the date specified in the agency's initial written notification or applicable contractual agreement."

Delinquency is specifically defined with respect to contracts, direct and guaranteed loans, and grants. For grants, delinquency pertains to:

recipients of a "Notice of Grants Cost Disallowance" who have not repaid the disallowed amount or who have not resolved the disallowance.

The federal consensus appears to be that this definition excludes disallowances that are under appeal.

For direct and guaranteed loans, delinquency pertains to debts more than 31 days past due on a scheduled payment.

For contracts, delinquency pertains to non-payment of debt (e.g. overpayment, fine, penalty) within 30 days after the day notification of the debt is mailed to the debtor.

Contracts

With respect to federally-funded contracts, the funding agency will continue to determine contractor eligibility in accordance with FAR Part 9, Contractor Qualifications. At present there are no certification requirements for contracts. We have been told that changes are under consideration but nothing is imminent for at least several-months.

Before this revision to A-129, the University had on several occasions been threatened with hold-ups on grant payments pending settlement of small bills more than 30 days past due on contracts where the University had purchased services from the Department of Commerce.

The current revision now spells out agency procedures for collecting debts, and grant cut-offs or holdups are not part of the procedure. Please let Bill Sellers know immediately if any agency is not following the Circular and holds grant funds hostage because of overdue bills owed by the University.

Financial Assistance - Grants, Loans

What Do Federal Regulations Require?

Appendix 3 of the revised A-129 (see Enclosure 1) states:

All application forms for Federal financial assistance should be amended to include one of the following:

A question to be answered "yes" or "no" asking either: "Are you delinquent on any Federal debt?" or "Is the applicant delinquent on repayment of any Federal debt?" Where the answer is "yes" the applicant is to provide explanatory information.

A certification statement to be signed by the applicant stating either: "I certify that I am not delinquent on repayment of any Federal debt" or "This institution certifies that it is not delinquent on repayment of any Federal debt."

Agencies are requested to use the question-format alternative unless they have determined that they will not make awards to persons in delinquent status (in which case they may use the certification alternative).

When Will the Question About Delinquency be Asked And Who Will Answer It?

In general, applicants for federal financial assistance will be asked whether they are delinquent at the time of application. As a practical matter for the University, financial assistance categories mean the following:

(a) grants and cooperative agreements, including training grants

made to the institution; (b) traineeships awarded to individual trainees; (c) individual fellowships; and (d) student loans

where the source of the funds (or the guarantee in the case of certain kinds of loans) is the federal government. There are no flowdown requirements associated with this non-delinquency issue.

For category (a), the authorized official signing the application on behalf of The Regents will be the one to make the non-delinquency statement. This statement will apply to the institution, not to the individual signing the application or the PI. For NSF grants, the question appears on the application face page (see Enclosure 2). For PHS grants, until a revised application form can be produced, signing the application constitutes an affirmative answer to the question (see Enclosure 3). In most cases, the authorized official will be the campus Contracts and Grants Officer.

For the other three categories (b) through (d), above, the statement of non-delinquency will be provided on an individual basis by the applicant. For PHS traineeships, the prospective trainee must complete a new form PHS-T-600 (7/88), which is provided in Enclosure 3. The form then follows the same route as the Statement of Appointment Form PHS 2271, with a copy eventually going to the agency.

[Note: This is a different procedure from that which you use for obtaining debarment certifications from prospective trainees. For the latter, there is no special form and no agency reporting requirement. For further information on debarment certifications, see C& G Memo No. 88-19 (11/8/88) and Suppl. No. 1 (12/21/88) to C& G Memo 88-19.]

For individual fellowship applications, it is the prospective fellow who makes the required non-delinquency statement.

For federally-supported student loans, the loan recipient will be asked about delinquent debts at the time of making the loan application.

Since the three latter categories (b) through (d), above, involve attestations by individuals, the scope of the attestation is limited and unproblematic. The first category, (a) above, involves the institution and its scope is not so clear. This topic is taken up in the next section.

Under What Circumstances Can a C& G Officer or Other Authorized Official Be Assured that the Institution Is Not Delinquent?

Because federal awards are made on a campus-by-campus basis, the statement of non-delinquency applies only to the campus submitting the proposal, not to the entire University system. Given the specific examples of delinquency in Appendix 3 of Circular A-129, this means that the C& G Officer (or other authorized official) should interpret the delinquency question as follows:

Are there any disallowances of costs on federal grants to the campus that have been settled in favor of the Government but not paid (or not in the process of being paid)?

Are there any delinquent student loans for which the campus (as opposed to the individual loan recipient) has direct liability to the federal government?

According to the Office of the President Financial Analysis Office, and the Office of the President Financial Aid and Loan Collection unit, the answer to both questions is "no" and it is highly unlikely that the answer to either would ever be "yes". These two offices will inform the Office of the President Contracts and Grants Office if the status quo changes with respect to cost disallowances or student loans, and we will in turn inform campuses. Therefore, you should proceed with providing routine certifications or statements of nondelinquency unless you receive such notification.

If there are questions, difficulties or cases where you need help with agencies, please call Bill Sellers.

Refer: Bill Sellers

ATSS 8-582-3045

(415) 642-3045

Subject Index: 04

Organization Index: U-115

David F. Mears

University Contracts and

Grants Coordinator

Enclosures

cc:

Kip Meader

Nancy Coolidge

Don Alter

Wayne Ove


ENCLOSURE 1

Circular A-129 Appendix 3

GUIDANCE ON IMPLEMENTATION OF OMB MEMORANDUM M-87-32,. CERTIFICATION OF NON-DELINQUENCY BY APPLICANTS FOR FEDERAL

REQUIRED CHANGES TO APPLICATIONS FOR FEDERAL ASSISTANCE

All application forms for Federal financial should be amended to include one of the following:

assistance

A question to be answered "yes" or "no" asking either: "Are you delinquent on repayment of any Federal debt?" or "Is the applicant delinquent on any Federal debt?" Where the answer is "yes" the applicant is to provide explanatory information.

A certification statement to be signed by the applicant stating either: "I certify that I am not delinquent on repayment of any Federal debt" or "This institution certifies that it is not delinquent on repayment of any Federal debt."

Paragraph b. will be used only where the agency has determined that no awards of Federal funds will be awarded to delinquent applicants regardless of circumstances. In the vast majority of cases, however, we expect that agencies will use the yes/no questions in paragraph A instead of the certification statements in paragraph B to enable applicants to provide, for consideration by the agency, information regarding the circumstances surrounding the delinquency.

EXAMPLES OF DELINQUENT DEBT

Agencies must add instructions that include examples of debts relevant to the institution or individual applying for assistance. Examples of debts include delinquent taxes, audit disallowances, guaranteed and direct student loans, (housing, farm, business, student loans), benefit overpayments and other miscellaneous administrative debts.

Also, the following definitions of delinquency should be reflected in the implementing instructions:

For direct and guaranteed loans, a debt more than 31 days past due on a scheduled payment.

For grants, recipients of a "Notice of Grants Cost Disallowance" who have not repaid the disallowed amount or who have not resolved the disallowance.

LIMITATION ON CERTIFICATION SIGNATORY

The certification applies only to the person or institution requesting financial assistance. Neither the certification or the question applies to the Federal credit status of a person who signs an application form as the authorized representative of an institution or on behalf of another person who actually receives the funds. The application for Federal assistance (SF-424 face sheet), of the government-wide grants management common rule, Uniform Administrative Requirements for Grants to State and Local Governments, has been amended to reflect this policy.

GUARANTEED LOANS

Agencies should develop and issue regulations or instructions requiring primary lending institutions to include a. delinquent debt status question on applications for federally-guaranteed loans.

PAPERWORK REDUCTION ACT

Agencies can implement these changes by adding the certification to forms with accompanying instructions, prior to the existing expiration date assigned by OMB under the Paperwork Reduction Act, they need not receive explicit approval from OMB that agencies shall provide the Office of Information and Regulatory Affairs with a copy of the amended form for inclusion in the docket file associated with the form. Agencies choosing to implement these changes in the manner described, without explicit OMB approval, may make no further changes to the forms without approval in accordance with the Paperwork Reduction Act.

Attachment