Research Administration Office

University of California

Memo

Operating Guidance

No. 95-4

February 7, 1995

Subject: National Endowment for the Humanities (NEH) Revised General Grant Provisions for Organizations

The National Endowment for the Humanities (NEH) issued revised General Grant Provisions for Organizations, which appeared to require an Organizational Prior Approval System. We wrote to NEH on December 14, 1994 to seek clarification as to what the minimum requirements were and to state our opinion that the University currently complies with the intent of the new provisions by virtue of our observance of the Federal Demonstration Project, A-110, and A-21. NEH responded to our letter, confirming our belief that the University's current procedures meet their requirements.

Therefore, a new system need not be implemented for NEH grants, and the Federal Demonstration Project systems of approval can be used instead.

Refer: Lourdes G. DeMattos (510) 987-9850

Subject Index: 02

Organization Index: F-705

David F. Mears

Director

Research Administration Office

Enclosures:

Revised NEH General Grant Provisions for Organizations

Letter to NEH Director Wallace from David Mears, Dated 12/14/94

Letter from NEH Director Wallace to David Mears, Dated 12/28/94


NOTICE TO INSTITUTIONAL GRANT ADMINISTRATORS

October 21, 1994

Enclosed is a copy of the Endowment's revised General Grant Provisions for Organizations. As you will see from the "Introduction" to the grant provisions, a number of significant changes have been made in this document, particularly in terms of the responsibilities that have now been delegated to grantee institutions.

The "Introduction" stresses the fact that grantees are required to have in place a procedure for reviewing and approving proposed grant actions and expenditures and for ensuring that any changes do not affect the scope or objectives of the project. This procedure is sometimes called an "organizational prior approval system." If your institution does not have such a system, it is required to do so by December 31, 1994. This would entail developing written review procedures, determining the documentation that is needed to verify that the proposed change is reasonable and necessary to carry out the project, and designating the person(s) (other than the project director) who will be responsible for overseeing the process.

If the NEH Grants Office does not hear from you before the December deadline, we will assume that a prior approval system already exists or will be in place by this date. The system will therefore be subject to review in compliance audits of NEH grants that are performed as of January 1, 1995.

With the exception of Challenge Grants, the revised General Grant Provisions for Organizations will apply to all of your institution's active NEH grants as of October 1, 1994. However, the new responsibilities that have been delegated to grantee organizations cannot be exercised until a prior approval system has been established. You should also note that grantee institutions do not have the authority to extend unilaterally Summer Seminar awards or any grant that has already been extended by the Endowment.

Please read the revised general grant provisions carefully. If you have any questions about them or about what constitutes an acceptable prior approval system, do not hesitate to write to me or to any of the Grants Office staff. Additional copies of these provisions may be obtained from the NEH Grants Office or they may be downloaded via modern from NEH's bulletin board system by dialing 202-606-8688.

David J. Wallace Director

Enclosure


Introduction

All grants (except Challenge Grants) that the National Endowment for the Humanities (NEH-I) awards to institutions of higher education, nonprofit organizations, and units of state and local governments are subject to the General Grant Provisions for Organizations (GGPO). These provisions are based on the administrative requirements of the Office of Management and Budget Circular A-110, the Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments, and the various federal regulations that apply to grants and cooperative agreements. It is therefore important that organizations receiving funds from NEH be familiar with and comply with these general grant provisions.

This particular edition of the GGPO differs in several significant ways from the grant provisions NEH has published in the past. For example,

grantees may now authorize a one-time extension of a grant period for up to a 12-month period (Article 5),

grantees no longer need prior written approval from the Endowment to incur pre-award costs within 90 calendar days of the beginning date of an award (Article 7),

interest earned on federal funds is to be returned to the Department of Health and Human Services (Article 12), and

the threshold used in defining equipment has been raised to $5,000 (Article 18).

In addition, grant recipients may now authorize the expenditure of project funds for items that, under the applicable cost principles, require prior agency approval (Article 4) and there is broader authority to grantees to transfer funds among direct cost categories and between direct and indirect costs (Article 10), provided the scope and objectives of the project remain unchanged.

This delegation of authority reinforces the fact that the grantee institution, as distinct from the project director, is required to have in place a system for prior review and approval of grant actions and expenditures. The purpose of such a system is to ensure that all grant actions are consistent with the scope and objectives of the grant and that any deviation from the budget approved by NEH is necessary and reasonable for the accomplishment of project objectives and is allowable under the applicable federal cost principles.

A grantee institution is therefore responsible for (1) maintaining written procedures for the organizational prior approval system and documentation that substantiates that the system is actually being used and works properly, and (2) being familiar with these General Grant Provisions for Organizations, the applicable federal cost principles, and the terms and conditions of the grant itself.

Questions about the institutional grantee's responsibilities should be addressed to the NEH Grants

Glossary of Terms

Cash Contributions: The grantee's cash outlay for budgeted project activities, including the outlay of money contributed to the grantee by third parties.

Cost Sharing: The portion of the costs of a project not charged to NEH funds. This would include cash contributions (as defined above) as well as the value of third-party in-kind contributions.

Debarment: The ineligibility of a grantee to receive any assistance or benefits from the federal government, either indefinitely or for a specified period of time, based on legal proceedings taken pursuant to agency regulations implementing Executive Order 12549.

Equipment: Tangible, nonexpendable personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit.

Federally Recognized Indian Tribal Government: The governing body or a governmental agency of any Indian tribe, band, nation, or other organi7ed group or community certified by the Secretary of the Interior as eligible for the special programs and services provided through the Bureau of Indian Affairs.

Grant: A legal instrument that provides financial assistance in the form of money or property to an eligible recipient. The term includes cooperative agreements but it does not apply to 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. The term does not include fellowships or other lump sum awards, for which the recipient is not required to provide a financial accounting.

Grant Period: The period established in the grant award during which NEH support begins and ends. All project costs must be incurred within the established grant period, and all obligations must be liquidated within 90 days after the ending date of the grant period.

Grantee: The organization to which a grant is awarded and which is accountable for the use of the funds provided.

In-Kind Contributions: The value of noncash contributions provided by third parties. In-kind contributions may be in the form of charges for real property and equipment or the value of goods and services directly benefiting and specifically identifiable to the project.

Institutional Grant Administrator: The member of the grantee organization who has the official responsibility for administering the grant, e.g., negotiating budget revisions, overseeing the submission of required reports, ensuring compliance with the terms and conditions of the grant.

Intangible Property Includes, but is not limited to, trademarks; copyrights; patents and patent applications.

Local Government: A county, municipality, city, town, township, local public authority, school district, special district, intrastate district, council of government, any other regional or interstate government entity, or any agency or instrumentality of a local government.

Obligation: The amounts of orders placed, contracts and grantS awarded, goods and services received, and similar transactions during the grant period that will require payment.

Program Officer: The NEH division staff member designated in the section of the grant award entitled "Endowment Administration of the Award."

Program Income: Money that is earned or received by a grantee or a subrecipient from the activities supported by grant funds or from products resulting from grant activities. It includes, but is not limited to, income from fees for services performed and from the sale of items fabricated under a grant; usage or rental fees for equipment or property acquired under a grant; admission fees; broadcast or distribution rights; and royalties on patents and copyrights.

Project Funds: Both the federal and non-federal funds that are used to cover the cost of budgeted project activities.

Small Purchase Threshold: Currently $25,000, as fixed at 41 U.S.C. 403 (11)

State: Any of the several states of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, or any agency or instrumentality of a state exclusive of local governments, institutions of higher education, and hospitals.

Subgrant: An award of financial assistance in the form of money or property, made under a grant by a grantee to an eligible subrecipient or by a subrecipient to a lower-tier subrecipient. The term includes financial assistance which is provided by any legal agreement, even if the agreement is called a contract, but it does not include the procurement of goods and services nor does it include any form of assistance which is excluded from the definition of a "grant."

Subrecipient: The legal entity to which a subgrant is awarded and which is accountable to the grantee for the use of the funds provided.

Supplies: All personal property excluding equipment and intangible property, as defined in this glossary.

Suspension:

(1) The suspension of a grant is the temporary withdrawal of federal sponsorship. This includes the withdrawal of authority to incur expenditures against grant funds, pending corrective action, or a decision to terminate the grant.

(2) The suspension of an individual or organization causes that party to be temporarily ineligible to receive any assistance and benefits from the federal government pending completion of investigation and legal proceedings as prescribed under agency regulations implementing Executive Order 12549. Such actions may lead to debarment of the

Termination: Cancellation of federal sponsorship of a project, including the withdrawal of authority to incur expenditures against previously awarded grant funds before that authority would otherwise expire.


1. Applicability of General Grant Provisions

The General Grant Provisions for Organizations apply to grants that the National Endowment for the Humanities (NEH) issues to private nonprofit organizations; institutions of higher education; state, local, and federally recognized Indian tribal governments; groups of individuals who form ad hoc associations to carry out projects; and commercial presses.

2. Grantee Responsibilities

The grantee has full responsibility for the conduct of project activities under an NEH award, for adherence to the award conditions, and for informing NEH during the course of the grant of any significant programmatic, administrative, or financial problems that have arisen.

The requirements of this grant are contained in these General Grant Provisions for Organizations, the special terms and conditions of the award document, and the applicable federal uniform administrative requirements (see Article 3). Should there be any inconsistency between the special terms and conditions of an award and the General Grant Provisions for Organizations or the federal uniform administrative requirements, the special terms and conditions will govern.

In accepting a grant, the grantee assumes the legal responsibility of administering the grant in accordance with these requirements and of maintaining documentation, which is subject to audit, of all actions/expenditures affecting the grant. This documentation must reflect appropriate institutional reviews and approvals which shall be made In advance of the action/expenditure. The purpose of institutional reviews is to ensure that expenditures are allowable, necessary, and reasonable for the conduct of the project, and that the proposed action

a. is consistent with the grant terms and conditions, as well as the policies of NEH and the grantee;

b. represents effective utilization of resources; and

c. does not constitute a change in project scope or objectives (see Article 8).

Failure to comply with the requirements of this award could result in suspension or termination of the grant and NEH's recovery of grant funds.

3. Uniform Administrative Requirements

Grants issued to state, local, and federally recognized Indian tribal governments are subject to the Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments. Grants to institutions of higher education, hospitals, and other nonprofit organization are subject to the uniform administrative requirements of OMB Circular A410. The standards set forth herein and in NEH Enclosure 1 (Financial Reporting Requirements) and Enclosure 2 (Performance Reporting Requirements) are consistent with these administrative requirements.

4. Allowable Costs

The allowability of costs and cost allocation methods for work performed under an NEH grant shall be determined in accordance with the applicable federal cost principles and the terms and conditions of the grant award. However, NEH delegates to the grantee the authority to approve any costs that the applicable cost principles state are allowable only with the prior approval of the funding agency. These costs include foreign travel; equipment purchases; stipends and travel allowances for participants at conferences, symposia, or training projects; and publication and printing costs. This delegation does not relieve the grantee of the responsibility to document that such charges are reasonable, necessary, and allocable to the project.

The following circulars set forth the federal cost principles that apply to the various types of NEH grantees:

a. OMB Circular A-2 1-public and private institutions of higher education;

b. OMB Circular A-122-nonprofit organizations that are not institutions of higher education;

c. OMB Circular A-87-state, local, and federally recognized Indian tribal governments.

The NEH grant award will specify the cost principles that apply to the grant. Copies of the cost principles may be obtained by writing to the NEH Grants Office.

5. Grant Period and Extensions

The grant period is the span of time designated in the grant award, or an amendment thereto, during which the grantee has the authority to obligate grant funds and undertake project activities. However, when the grantee determines that it is necessary, project costs may be incurred in the 90-day period prior to the beginning date of the grant period (see Article 7).

Grantees may also authorize a one-time extension of the expiration date established in the initial grant award if additional time is required to complete the original scope of the project with the funds already made available. A single extension that shall not exceed 12 months may be made for this purpose, provided it is made prior to the original expiration date. The institutional grant administrator must inform the NEH Grants Office in writing of the new expiration date at least 10 days before the grant is scheduled to expire and must provide justification for the new extension period. The grantee's authority to extend a grant may not be exercised merely for using the unliquidated balance of project funds, and grant periods cannot be extended beyond the time the grant funds are available (see Article 6--'Availability of Grant Funds').

If a grantee wishes to extend a grant for more than a 12-month period or determines that a second extension is necessary, a written extension request must be submitted to the NEH Grants Office prior to the end of the grant period. The request shall be signed by the institutional grant administrator and shall include a detailed justification for the extension, an estimate of the unexpended grant funds, and a plan of work for the activities that will be undertaken during the requested extension period.

Grantees that have been offered federal matching funds by NEH should note that authority to extend offers of NEH funding is not delegated to the grantee institution. Requests for offer extensions must be submitted in writing to the NEH Grants Office. However, when notified by a grantee institution of a single grant period extension of one year or less, NEH will extend an open offer of matching funds for that grant by an equivalent length of time, provided NEH has sufficient funds for this purpose.

6. Availability of Grant Funds

As a result of Public Law 101-510, limitations have been placed on the availability of gram funds. In the majority of NEH grant programs, funds cease to be available to grantees five years after the federal fiscal year in which they were awarded. Thus, if funds were awarded in fiscal year 1994 (October 1993 through September 1994), they would no longer be available and could not be paid to the grantee after September 30, 1999.

7. PreAward Costs

Grantees may approve project costs incurred within the 90 calendar day period immediately preceding the beginning date of the grant. Requests for pre-award costs for periods exceeding 90 calendar days must be signed by the institutional grant administrator and submitted to the NEH Grants Office. Pre-award expenditures are made at the grantee's risk and the grantee's authority to approve such costs does not impose an obligation on NEH in the event an award is not made or is made for an amount that is less than the grantee anticipated.

8. Changes in Project Scope or Objectives

Any project that is carried out under a grant must be consistent with the scope and objectives of the proposal that is approved for funding by NEH. Therefore, changes may not be made in the subject matter, the treatment of the subject matter, the span of time that is to be covered, the volume of material that is treated/studied, or the proposed products resulting from grant activities without prior written approval from NEH.

All-requests for a change in the scope or objectives of a grant shall be signed by the institutional grant administrator and submitted to the appropriate NEH program officer.

9. Changes in Key Project Personnel

The replacement of the project director or the co-director or a substantial reduction in the level of their effort, e.g., their unanticipated absence for more than three months, or a 25 percent reduction in the time devoted to the project, requires prior written approval from NEH. When it is specifically required as a condition of a grant, written approval will also be needed for the replacement or the substantial reduction in the level of effort of other personnel whose work is deemed by NEH to be critical to the project's successful completion.

All requests for approval of changes in key project personnel shall be signed by the institutional grant administrator and submitted to the appropriate NEH program officer. Evidence of the qualifications for replacement personnel (such as a resume) shall be included.

10. Budget Revisions

The project budget is the schedule of anticipated project expenditures that is approved by NEH for carrying out the purposes of the grant. When grantees or third parties support a portion of the project costs, the project budget 'includes the nonfederal as well as the federal share of project expenses.

The grantee shall obtain prior written approval from NEH whenever a budget revision is necessary because of

a. the transfer to a third party (by subgranting, contracting, or other means) of any work under a grant [NOTE: NEH approval is not required for third-party transfers that were described in the approved project plan, or for the purchase of supplies, materials, or general support services.];

b. the addition of costs that are specifically disallowed by the terms and conditions of the grant award;

c. the transfer of funds from stipends or training allowances to other budget categories; or

d. changes in the scope or objectives of the project (see Article 8).

All requests for budget revisions shall be signed by the institutional grant administrator and submitted to the NEH Grants Office.

Within 30 calendar days from the date of receipt of the request for budget revision, NEH will review the request and notify the grantee whether or not the budget revision has been approved. If the budget revision is still under consideration at the end of 30 calendar days, NEH will inform the grantee in writing of the date by which the grantee may expect a decision.

11. Cost Sharing and Cost-Sharing Records

Grantees are expected to share in project expenses at the level indicated in the approved project budget. They must also maintain auditable records of all project costs whether they are charged to grant funds or supported by cost-sharing contributions.

All cash and in-kind contributions to a project that are provided by the grantee or by a third party are acceptable as the grantee's cost sharing when such contributions meet the following criteria:

--Are verifiable from the grantee's records;

--Are not included as contributions for any other federally-assisted program;

--Are necessary and reasonable for the proper and efficient accomplishment of project objectives;

--Are types of charges that would be allowable under the applicable cost principles;

--Are used to support activities that are included in the approved project workplan; and

--Are incurred during the grant period.

Contributions, such as property, space, or services, that are donated to a project by the grantee are to be valued in accordance with the applicable federal cost principles and not on the basis of what would normally be charged for the use of these items or services.

When the grantee's cost sharing includes third-party in-kind contributions, the basis for determining the valuation of volunteer services and donated property or space must be documented and must conform to the principles set out below.

a. Volunteer services that are provided to the grantee by professional and technical personnel, consultants, and other skilled and unskilled labor may be counted as cost sharing if the service is an integral and necessary pan of an approved project or program. Volunteer services shall be valued at rates consistent with those ordinarily paid for similar work within the grantee organization. If the grantee 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 of fringe benefits may be included in the valuation.

b. When an employer furnishes the services of an employee, these services shall be valued at the employee's regular rate of pay (plus an amount of fringe benefits that is reasonable), provided these services involve the same skills for which the employee is normally paid.

c. The value of donated equipment shall not exceed the fair market value of equipment of the same age and condition at the time of donation, and the value of loaned equipment shall not exceed its fair rental value.

d. The value of donated space shall not exceed the fair rental value of comparable space, as established by an independent appraisal of comparable space and facilities in a privately-owned building in the same locality.

e. The value assigned to donated supplies or other expendable property should be reasonable and should not exceed the fair market value of the property at the time of donation.

12. Payments and Interest

A detailed explanation of payment procedures will be found in Enclosure 1 of the grant award.

Unless otherwise specified in the grant award, grantees will be paid on an advance basis. Whenever possible, advances should be consolidated to cover the anticipated cash needs for all NEH awards to the grantee and should be deposited and maintained in insured accounts. Grantees are also encouraged to use women-owned and minority-owned banks (banks that are owned at least 50 percent by women or minority group members).

Requests for advance payment shall be limited to the grantee's immediate cash needs and are not to exceed anticipated expenditures for a 30-day period.

All grantees, except states (see definition), are required to maintain advances of federal funds in interest- bearing accounts unless the grantee receives less than $120,000 per year in advances of grant funds or the most reasonably available interest-bearing account would not earn more than $250 per year on the federal cash balance, or would entail bank services charges in excess of the interest earned.

Interest in excess of $250 a year that is earned on advanced payments shall be remitted annually to the Department of Health and Human Services. If possible, interest should be remitted through an electronic medium such as the FEDWIRE Deposit system. Grantees that do not have this capability should make payment by check and mail it to the HHS Payment Management System, P.O. Box 6021, Rockville, MD 20852.

13. Reporting Requirements

A final performance report and a final Financial Status Report shall be submitted to the NEH Grants Office within 90 days after the completion date of the grant period. A schedule of due dates for interim and final reports will be found on the last page of the grant award. Grantees that are authorized to be paid on an advance basis are also required to submit a Federal Cash Transactions Report within 30 days of the end of each calendar quarter.

Failure to submit reports on a timely basis may result in delayed payments and the suspension of action on pending applications from the grantee organization.

Detailed information on the financial and performance reporting requirements will be found in Enclosures I and 2 of the grant award.

14. Financial Management Standards

The financial management systems of grantee organizations and their subrecipients must meet the following standards:

a. Accounting System. Grantee organizations and their subrecipients must have an accounting system that provides accurate, current, and complete disclosure of all financial transactions related to each federally- sponsored project. Accounting records must contain information pertaining to federal awards, authorizations, obligations, unobligated balances, assets, outlays, and income. These records must be maintained on a current basis and balanced at least quarterly.

Cash contributions to the project from third parties must be accounted for in the general ledger with other grant funds. Third party in-kind (non-cash) contributions are not required to be recorded in the general ledger, but must be under accounting control, possibly through the use of a memorandum ledger.

b. Source Documentation. Accounting records must be supported by such source documentation as canceled checks, bank statements, invoices, paid bills, donor letters, time and attendance records, activity reports, travel reports, contractual and consultant agreements, and subaward documentation. All supporting documentation should be clearly identified with the grant and general ledger accounts which are to be charged or credited.

The documentation required for salary charges to grants is prescribed by the cost principles applicable to the grantee organization. (See Article 4)

For grantees subject to OMB Circular A-21, documentation for salary charges shall be based on either a system of monitored workload or a system of personnel activity reports for professional or professorial staff. Nonprofessional employees must keep personnel activity reports.

For grantees subject to OMB Circular A-122 and OMB Circular A-87, documentation for all salary charges shall be based on a system of personnel activity reports.

Personnel activity reports shall account on an after-the-fact basis for one hundred percent of the employee's actual time, separately indicating the time spent on the NEH grant, other grants or projects, vacation or sick leave, and administrative time, if applicable. The reports must be signed by the employee, approved by the appropriate official, and coincide with a pay period. These time records should be used to record the distribution of salary costs to the appropriate accounts no less frequently than quarterly.

Formal agreements with independent contractors, such as consultants, must include a description of the services to be performed, the period of performance, the fee and method of payment, an itemization of travel and other costs which are chargeable to the agreement, and the signatures of both the contractor and an appropriate official of the grantee organization.

For grants that contain a gifts and matching component, grantees are required to maintain:

(1) documentation that supports the eligibility of the gifts to release federal matching dollars, and

(2) a record that contains the name of the donor, the donor category as defined in the NEH Federal Matching Fund Guidelines, the amount of the gift, the designation of the gift as restricted to the project or unrestricted, the date the gift is certified to NEH, and the amount of matching funds awarded by NEH as a result of the certification.

If third party in-kind (non-cash) contributions are used on a project, the valuation of these contributions must be supported with adequate documentation. (See Article 11 )

c. Internal Control. Effective control and accountability must be maintained for all cash, real and personal property, and other assets. Grantees must adequately safeguard all such property and must provide assurance that it is used solely for authorized purposes. Grantees must also have systems in place that ensure compliance with the terms and conditions of each grant award.

d. Budget Control. Records of expenditures must be maintained for each grant project by the cost categories of the approved budget (including indirect costs that are charged to the project), and actual expenditures are to be compared with budgeted amounts no less frequently than quarterly. NEH. approval is required for certain budget revisions. (See Article 10)

e. Allowable Costs. The applicable OMB cost principles, the General Grant Provisions for Organizations, and the terms and conditions of the grant award shall be followed in determining the reasonableness, allowability, and allocability of costs.

f. Cash Management. Grantees must also have written procedures to minimi7e the time elapsing between the receipt and the disbursement of grant funds to avoid having excessive federal funds on hand. Requests for advance payment shall be limited to the grantee's immediate cash needs and are not to exceed anticipated expenditures for a 30-day period.

Grantees must insure that all grant funds are obligated during the grant period and paid no later than 90 days after the end of the grant period.

15. Audit Requirements

Grantees that are state, local, or federally-recognized Indian tribal governments shall have audits performed that meet the requirements of OMB Circular A-128. Institutions of higher education and other types of nonprofit organizations shall have audits performed that meet the requirements of OMB Circular A-133. (Copies of these circulars may be obtained from the NEH Grants Office.)

16. Record Retention

Financial records, supporting documentation, statistical records, and all other records pertinent to the grant shall be retained by the grantee for three years from the date of submission of the final Financial Status Report. When the conditions of a grant award require the grantee to report program income, records relating to program income shall be retained for three years from the date of submission of the last required income report.

If the three-year retention period is extended because of audits, appeals, litigation, or the settlement of claims arising out of the performance of the project, the records shall be retained until such audits, appeals, litigation, or claims are resolved. Unless court action or audit proceedings have been initiated, the grantee may substitute microfilm copies of original records.

The NEH, the Comptroller General of the United States, and any of their duly authorized representatives, shall have access to any pertinent books, documents, papers, and records of the grantee and its subrecipients to make audits, examinations, excerpts, transcripts, and copies. Further, any contract in excess of the small purchase threshold (currently $25,000) that is negotiated by the grantee for the purposes of carrying out the grant project shall include a provision to the effect that the grantee, NEH, the Comptroller General, or any of their duly authorized representatives shall have access for similar purposes to any records of the contractor that are directly pertinent to the project..

17. Procurement Standards

NOTE: The standards contained in this section do not relieve the grantee of the contractual responsibilities arising under its contracts. The grantee is the responsible authority, without recourse to the Endowment, regarding the settlement and satisfaction of all contractual and administrative issues arising out of procurements entered into in support of a grant or other agreement. Matters concerning the violation of a statute are to be referred to such federal, state, or local authority as may have proper jurisdiction.

When procuring property or services under a grant, the grantee's procurement policies must adhere to the standards set forth below. Subrecipients of grant funds are subject to the same policies and procedures as the grantee.

a. The grantee will maintain a system for contract administration that ensures that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. Grantees shall evaluate contractor performance and document, as appropriate, whether or not contractors have met the terms, conditions, and specifications of the contract.

b. A written standard of conduct for awarding and administrating contracts shall be maintained by the grantee. No employee, officer, or agent of the grantee shall participate in the selection, or in the awarding or administration of a contract supported by federal funds if a real or apparent conflict of interest would be involved. Such a conflict would arise when any of the following has a financial or other interest in the firm selected for a contract: the employee, officer, or agent; any member of his or her immediate family; his or her partner; or an organization which employs or is about to employ any of the preceding.

The officers, employees, and agents of the grantee will neither solicit nor accept gratuities, favors, or anything of monetary value from contractors, or parties to subagreements. However, the grantee may set standards governing when the financial interest is not substantial or the gift is an unsolicited item of nominal value. The standards of conduct shall provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the grantee.

c. All procurement transactions will be conducted in a manner to provide, to the maximum extent practical, open and free competition. The grantee should be alert to organizational conflicts of interest or noncompetitive practices among contractors that may restrict or eliminate competition or otherwise restrain trade. In order to insure objective contractor performance and eliminate unfair competitive advantage, contractors that develop or draft specifications, requirements, statements of work, invitations for bids and/or requests for proposals should be excluded from competing for such procurements. Awards shall be made to the bidder/offeror whose bid/offer is responsive to the solicitation and is most advantageous to the grantee, price, quality, and other factors considered. Solicitations shall clearly set forth all requirements that the bidder/offeror must fulfill in order for the bid/offer to be evaluated by the grantee. When it is in the grantee's interest to do so, any bid/offer may be rejected.

d. All grantees shall establish written procurement procedures that meet the requirements set forth in the Appendix to these general grant provisions.

The Appendix also contains the provisions that must be included in procurement contracts when applicable.

18. Equipment

Equipment is defined as tangible, nonexpendable personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit. The purchase of equipment not included in the approved project budget is allowable only if it is specifically approved beforehand by the grantee institution and there is documentation to support that the purchase is necessary and reasonable to carry out project activities.

Equipment records must be maintained that include the description of the equipment, the serial number or other identification number, the source of equipment, the title holder, the acquisition date, the cost of the equipment, the location, use, and condition of the equipment, and any ultimate disposition data including the date of disposal and the sale price of the equipment. A physical inventory of the equipment must be taken and the results reconciled with the equipment records at least once every two years.

19. Title to Equipment

Title to equipment purchased or fabricated with NEH funds shall be vested in the grantee organization with the understanding that the equipment will be used for the project for which it was obtained but without further obligation to the federal government. NEH may reserve the right to request the transfer of title to the federal government or to a third party when the current per unit fair market value of the equipment is $5,000 or more and the equipment is no longer needed to carry out the purposes of the project or other projects funded by government agencies.

20. Supplies

Title to supplies and other expendable property shall vest in the grantee upon acquisition. If there is a residual inventory of unused supplies exceeding $5,000 in total aggregate value upon termination or completion of the project and the supplies are not needed for any other federally-sponsored project or program, the grantee shall retain the supplies for use on non-federal sponsored activities or sell them, but shall in either case compensate the federal government for its share.

21. Travel Costs

Travel costs are the expenses for transportation, lodging, subsistence, and related items incurred by those who are on official business attributable to work under a grant.

Such costs may be charged on an actual basis, on a per diem or mileage basis in lieu of actual costs, or on a combination of the two, provided the method used results in charges consistent with those normally allowed by the grantee in its regular operation, as set forth in its written travel policy.

Airfare costs in excess of the lowest available commercial discount or customary standard (coach) airfare are unallowable unless such accommodations are not reasonably available to accomplish the purpose of travel. All air travel that is paid in whole or in part with NEH funds must be undertaken on U.S. air carriers.

22. Foreign Travel

All travel outside the United States, its territories and possessions, and Canada that is not included in the approved project budget must be specifically approved by the grantee institution before travel is undertaken. Any air transportation of persons or property from, between, or within a country other than the United States that is paid in whole or in part with NEH funds must be performed on a U.S. air carrier when such service is available. U.S. air-carrier service is considered available even though a comparable or different kind of service can be provided at less cost by a foreign carrier or foreign air-carrier service is preferred by, or is more convenient for, the traveler.

U.S. air-carrier service is considered to be unavailable only under the following conditions:

a. when the traveler's origin or destination airport is a gateway airport abroad (i.e., the airport from which the traveler last embarks en route to the United States or at which the individual first arrives when traveling from the United States), and the use of a U.S. air carrier would extend the time in travel status by at least twenty-four hours more than travel by a foreign air carrier;

b. when a traveler while en route must transfer to another flight and the use of a U.S. air carrier would extend his or her time in travel status by at least six hours more than travel by a foreign air carrier;

c. when travel time on a scheduled flight by a foreign air carrier is three hours or less and service by a U.S. air carrier would involve twice as much travel time; or

d. when travel is between two points outside the United States and the use of a foreign air carrier would eliminate two or more aircraft changes en route.

23. Activities Outside the United States

Grantees shall obtain the appropriate licenses, permits, or approvals prior to undertaking grant activities outside the United States. NEH does not assume responsibility for grantee compliance with the laws and regulations of the country in which work is to be conducted.

24. Dissemination of Project Results

Grantees are expected to publish or otherwise make publicly available the results of work conducted under a grant. Unless otherwise specified. in the award documents, two copies of any published material resulting from grant activities should be forwarded to the appropriate NEH program officer as soon as it becomes available. This material should be labeled with the identifying NEH grant number.

All publication and distribution agreements shall include provisions giving the government a royalty-free, nonexclusive and irrevocable right to reproduce, publish or otherwise use the material for government purposes and requiting the acknowledgment of NEH support. When it is specifically requested by NEH, the publication shall also include the disclaimer contained in Article 25 of these General Grant Provisions for Organizations.

25. Acknowledgment of Support and Disclaimer

Unless advised to the contrary, all materials publicizing or resulting from grant activities shall contain an acknowledgment of NEH support. When it is specifically requested by NEH, the material shall also include the following statement: "The opinions, findings, and conclusions or recommendations expressed in this (publication) (program) (exhibition) are those of the author(s) and do not necessarily reflect the views of the National Endowment for the Humanities."

26. Intangible Property

a. The grantee may copyright any work that is subject to copyright and was developed or for which ownership was purchased under the grant. NEH reserves a royalty-free, nonexclusive and irrevocable fight to reproduce, publish or otherwise use the work and to authorize others to do so for government purposes.

b. Grants that are primarily intended to support experimental, developmental, or research work that may result in the development of a process or invention that is patentable or otherwise protectable under Title 35 of the U.S. Code will be subject to the standard patent rights clause contained at 37 C.F.R. 401.14.

27. Data Collection

Data collection activities performed under a grant are the responsibility of the grantee, and NEH support of the project does not constitute approval of the survey design, questionnaire content, or data collection procedures. The grantee shall not represent to respondents that such data are being collected for, or in association with, NEH or any other government agency without the specific written approval of the data collection plan or device by NEH. However, this requirement is not intended to preclude mention of NEH support of the project in response to an inquiry or acknowledgment of such support in any publication of this data.

The federal government has the right to obtain, reproduce, publish or otherwise use the data fast produced under a grant and authorize others to do so for government purposes.

28. Program Income

Program income is money that is earned or received by a grantee or a subrecipient from the activities supported by grant funds or from products resulting from grant activities. It includes, but is not limited to, income from fees for services performed and from the sale of items fabricated under a grant; usage or rental fees for equipment or property acquired under a grant; admission fees; broadcast or distribution rights; and royalties on patents and copyrights. The federal share of program income is determined by the percentage of total project costs that are supported by NEH.

a. Income Earned During the Grant Period

The federal share of program income earned during the grant period shall be retained by the grantee and, unless the grant award specifies how such income will be used, the grantee must use it in one or more of the following ways:

(1) It may be added to the existing project funding to cover increased costs of the project or it may be used to support other projects in the humanities;

(2) It may be used to finance the non-federal share of the project; or

(3) It may be used to finance the federal share of the project costs, which would result in an equivalent reduction in the amount of the NEH grant.

A report of program income earned during the grant period must be submitted with the final Financial Status Report whenever the terms and conditions of the grant award specifically require such a report. The report shall indicate the total amount of program income that was earned and how it was used.

b. Income Earned After the Grant Period

When NEH funding of a project amounts to $50,000 or more and the total program income earned after the grant period exceeds $50,000, NEH reserves the right to make a claim to or restrict the use of the federal share of income earned during the five years following the grant period. Due dates for the submission of program income reports may be listed in the grant award. However, even if due dates are not provided, it is the grantee's responsibility to submit a report as soon as the cumulative amount of program income earned after the grant period exceeds $50,000.

In reporting program income earned after the grant period, the grantee shall indicate the amount and sources of gross income, the auditable expenses that the grantee proposed to deduct to arrive at net income, the percentage of funding provided to the project by NEH, and the federal share of net income. Any expenses subtracted from gross income to arrive at net income must be itemized in detail and are subject to NEH approval.

If income is to be returned to NEH, a check made payable to the National Endowment for the Humanities and identified as program income must be submitted with the report.

29. Employment of Professional Performers

Grantees that employ professional performers and related or supporting professional personnel under a grant (including but not limited to scriptwriters, actors, extras, musicians, stage hands, scenery designers, technicians, electricians, cinematographers) are required to provide written assurance that

a. these employees will be paid, without subsequent deduction or rebate on any account, not less than the minimum compensation as determined in accordance with 29 CFR 505.3 to be the prevailing minimum compensation for persons employed on similar activities (e.g., union or guild rates), and

b. no part of any project or production which is financed in whole or in pan under a grant will be performed or engaged in under working conditions which are unsanitary or hazardous or dangerous to the health and safety of the employee engaged in such project or production.

A copy of the "Assurances as to Labor Standards..." form and the applicable Department of Labor regulations may be obtained from the NEH Grants Office.

30. Nondiscrimination

Grants are subject to the provisions of Title VI of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972 (as amended), Section 504 of the Rehabilitation Act of 1973 (as amended), the Age Discrimination Act of 1973 (as amended), and the regulations issued pursuant thereto by NEH (Code of Federal Regulations, Title 45, Chapter XI).

Therefore, no person on grounds of race, color, national origin, disability, or age shall be excluded from participation in, be denied the benefits of, or be otherwise subject to discrimination under a program funded by NEH. In addition, if a project involves an educational activity or program, as defined in Title IX of the Education Amendments of 1972, no person on the basis of sex shall be excluded from participation in the project.

Grantees shall at the time of application to NEH certify that their programs operate in compliance with the requirements of the nondiscrimination statutes and their implementing regulations. Grantees are also required to obtain an executed certification of compliance with the nondiscrimination statutes from all organizations that are subrecipients under an NEH grant.

31. Lobbying Activities

The Byrd Anti-Lobbying Amendment, 31 U.S.C. 1352, prohibits recipients of federal contracts, grants, and loans from using appropriated funds to influence the Executive or Legislative Branches of the Federal Government in connection with a specific contract, grant, cooperative agreement, loan, or any other award covered by §1352. 18 U.S.C. 1913 makes it a crime to use funds appropriated by Congress to influence members of Congress regarding congressional legislation or appropriations. Finally, Attachment B21 of Office of Management and Budget Circular A-122 designates the following as unallowable charges to grant funds or cost sharing: certain electioneering activities, financial support for political parties, attempts to influence federal or state legislation either directly or through grass-roots lobbying, and some legislative liaison activities.

NEH is required by the provisions of its appropriations act to include the text of 18 U.S.C. 1913 in all of its grant and contract documents.

Text of 18 U.S.C. 1913:

No part of the money appropriated by any enactment of Congress shall, in the absence of express authorization by Congress, be used directly or indirectly to pay for any personal service, advertisement, telegram, telephone, letter, printed or written matter, or other device, intended or designated to influence in any manner a Member of Congress, to favor or oppose, by vote or otherwise, any legislation or appropriation by Congress, whether before or after the introduction of any bill or resolution proposing such legislation or appropriation; but this shall not prevent officers or employees of the United States or its departments or agencies from communicating to Members of Congress on the request of any Member or to Congress, through the proper official channels, requests for legislation or appropriations which they deem necessary for the efficient conduct of the public business.

32. Drug-Free Workplace Requirements

At the time of application to NEH, grantees shall certify that they will provide a drug-free workplace. The Drug-Free Workplace Act of 1988, 41 U.S.C. 701, requires grantees to have an on-going drug-free awareness program; to publish a statement notifying employees that the unlawful manufacture, distribution, dispensing, possession, or use of a controlled substance is prohibited in the grantee's workplace; to maintain evidence that this statement was given to each employee engaged in the performance of the grant; and to identify in the funding proposal or to keep on file in its office the place(s) where grant activities will be carried out.

33. Debarment and Suspension

At the time of application to NEH, the grantee shall certify that it and its principals are not presently debarred or suspended or otherwise excluded from or ineligible to participate in federal assistance programs. The grantee shall provide immediate written notice to the director of the NEH Grants Office if at any time the grantee learns that its certification was erroneous when submitted or has become erroneous by reason of changed circumstances.

Grantees shall not make or permit any subgrant or contract to any party which is debarred or suspended or is otherwise excluded from or ineligible for participation in federal assistance programs in violation of the regulations implementing Executive Order 12549, "Debarment and Suspension."

(NEH regulations are contained at 45 CFR Part 1169-"Nonprocurement Debarment and Suspension. ")

34. Suspension and Termination

Grants may be terminated in whole or in part

a. by the Endowment, if a grantee materially fails to comply with the terms and conditions of an award;

b. by the Endowment with the consent of the grantee, 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 of the project to be terminated; or

c. by the grantee upon sending to NEH written notification setting forth the reasons for such termination, the effective date, and, in the case of partial termination, the portion of the project to be terminated. However, if NEH determines that the reduced or modified portion of the grant will not accomplish the purposes for which the grant was made, it may terminate the grant in its entirety either unilaterally or with the consent of the grantee.

When NEH determines that a grantee has failed to comply with the terms of the grant award, NEH may suspend or terminate the grant for cause. Normally, this action will be taken only after the grantee has been notified of the deficiency and given sufficient time to correct it, but this does not preclude immediate suspension or termination when such action is required to protect the interests of the government.

In the event that a grant is suspended and corrective action is not taken within 90 days of the effective date, NEH may issue a notice of termination. No costs that are incurred during the suspension period or after the effective date of termination will be allowable except those that are specifically authorized by the suspension or termination notice or those that, in the opinion of NEH, could not have been reasonably avoided.

Within 30 days of the termination date, the grantee shall furnish to NEH a summary of progress achieved under the grant, an itemized accounting of charges incurred against grant funds and cost sharing prior to the effective date of the suspension or termination, and a separate accounting and justification for any costs that may have been incurred after this date.

35. Termination Review Procedures

A grantee who has received a notice of termination may request NEH review of the termination action. The request must be postmarked no later than 30 days after the date of the termination notice and should be addressed to the Deputy Chairman, National Endowment for the Humanities, 1100 Pennsylvania Avenue, N.W., Washington, D.C. 20506.

The request for review must contain a full statement of the grantee's position and the pertinent facts and reasons that support such a position. The Deputy Chairman will promptly acknowledge the request for review and appoint a review committee of at least three staff members. Pending the resolution of the review, the notice of termination will remain in effect.

None of the review committee members may be from the NEH program or the section of the Grams Office that recommended termination or was responsible for monitoring the programmatic or administrative aspects of the grant. The committee will have full access to all relevant NEH background materials. The committee may also request the submission of additional information from the grantee or NEH staff and, at its discretion, may meet with representatives of both groups to discuss the pertinent issues. All review activities will be fully documented by the committee. Based on its review, the committee will present its written recommendation to the Deputy Chairman, who will advise the parties concerned of the final decision.

36. Resolution of Conflicting Conditions

Should there be any inconsistency between these general grant provisions and the terms and conditions of a grant, the latter will govern.

Appendix

1. Procurement Procedures

All grantees shall establish written procurement procedures that provide for, at a minimum, the following procedural requirements:

a. Proposed procurements are to be reviewed to avoid the purchase of unnecessary or duplicative items. Where appropriate, an analysis shall be made of lease and purchase alternatives to determine which would be the most economical, practical procurement.

b. Solicitations for goods and services shall provide the following:

(1) A clear and accurate description of the technical requirements for the material, product, or service to be procured. In competitive procurements, such a description shall not contain features which unduly restrict competition.

(2) Requirements which the bidder/offeror must fulfill and all other factors to be used in evaluating bids or proposals.

(3) Whenever practicable, a description of technical requirements in terms of the functions to be performed or the performance required, including the range of acceptable characteristics or minimum acceptable standards.

(4) The specific features of "brand name or equal" descriptions that bidden are required to meet when such items are included in the solicitation.

(5) Preference, to the extent practical and economically feasible, for products and services that conserve natural resources, protect the environment, and are energy efficient.

c. The grantee shall make positive efforts to assure that small businesses, minority-owned firms, and women's business enterprises, are used whenever possible. Organizations receiving federal awards shall take all the steps outlined below to further this goal. This shall include

(1) placing qualified small, minority and women's business enterprises on solicitation lists;

(2) assuring that these businesses are solicited whenever they are potential sources;

(3) contracting with consortiums of small, minority-owned, or women's business enterprises, when a contract is too large for one of these firms to handle individually;

(4) using the services and assistance, as appropriate, of such organizations as the Small Business Administration and the Department of Commerce's Minority Business Development Agency; and

(5) considering in the contract process whether firms competing for larger contracts intend to subcontract with small businesses, minority-owned firms, and women's business enterprises.

d. The type of procurement instrument used, e.g., fixed price contracts, cost reimbursable contracts, incentive contracts, purchase orders, will be determined by the grantee, but must be appropriate for the particular procurement and for promoting the best interest of the program involved. The "cost-plus-a- percentage-of-cost" or "percentage of construction cost" methods shall not be used.

e. Contracts will be made only with responsible contractor who possess the potential ability to perform successfully under the terms and conditions of a proposed procurement. Consideration should be given to such matters as contractor integrity, the record of past performance, financial and technical resources or accessibility to other necessary resources.

f. Some form of price or cost analysis should be made in connection with every procurement action. Price analysis may be accomplished in various ways, including the comparison of price quotations submitted, market prices and similar indicia, together with discounts. Cost analysis is the review and evaluation of each element of cost to determine reasonableness, allocability, and allowability.

g. Procurement records and files for purchases in excess of the small purchase threshold (currently $25,000) shall include the basis for contractor selection, justification for lack of competition when competitive bids or often are not obtained, and the basis for award cost or price.

2. Contract Provisions

a. Grantee contracts in excess of the small purchase threshold (currently $25,000) must provide for:

(1) Administrative, contractual, or legal remedies in instances where contractors violate or breach contract terms, and such remedial actions as may be appropriate.

(2) Termination for cause and for convenience by the grantee, including the manner by which it will be effected and the basis for settlement. In addition, these contracts shall also contain a description of the conditions under which the contract may be terminated for default as well as conditions where the contract may be terminated because of circumstances beyond the control of the contractor.

(3) Access by the grantee, NEH, the Comptroller General of the United States, or any other duly authorized 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.

b. All contracts, including small purchases, shall contain the following provisions as applicable:

(1) Equal Employment Opportunity

All contracts awarded by grantees and their contractors and subrecipients having a value of more than $10,000 must contain a provision requiring compliance with Executive Order 11246, entitled "Equal Employment Opportunity" as amended by Executive Order 11375, and as supplemented in Department of Labor regulations (41 CFR, Part 60).

(2) Copeland "Anti-Kick Back" Act (18 U.S.C. 874)

All contracts and subgrants in excess of $2,000 for construction or repair awarded by grantees and subrecipients shall include a provision for compliance with the Copeland "Anti-Kick Back" Act (18 U.S.C. 874) as supplemented in Department of Labor regulations (29 CFR, Part 3). The Act provides that each contractor or subrecipient shall be prohibited from inducing, by any means, any person employed in the construction, completion, or repair of public work, to give up any part of the compensation to which he is otherwise entitled. The grantee shall report all suspected or reported violations to the Federal awarding agency.

(3) Davis-Bacon Act (40 U.S.C. 276a to a-7)

All construction contracts awarded by the grantee and subrecipients of more than $2,000 shall include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 276a to a-7) and as supplemented by Department of Labor regulations (29 CFR, Part 5). Under this Act contractors shall be required to pay wages to laborers and mechanics at a rate not less than the minimum wages specified in a wage determination made by the Secretary of Labor. In addition, contractors shall be required to pay wages not less than once a week. The grantee shall place a copy of the current prevailing wage determination issued by the Department of Labor in each solicitation and the award of a contract shall be conditioned upon the acceptance of the wage determination. The grantee shall report all suspected or reported violations to the Federal sponsoring agency.

(4) Contract Work Hours and Safety Standards Act (40 U.S.C. 327-330)

Where applicable, all contracts awarded by grantees in excess of $2,000 for construction contracts and in excess of $2,500 for other contracts that involve the employment of mechanics or laborers, shall include a provision for compliance with sections 102 and 107 of the Contract Work Hours and Safety Standards Act (40 U.S.C. 327-330) as supplemented by Department of Labor regulations (29 CFR, Part 5). Under section 102 of the Act, each contractor shall be required to compute the wages of every mechanic and laborer on the basis of a standard work day of 8 hours and a standard work week of 40 hours. Work in excess of the standard workday or workweek is permissible provided that the worker is compensated at a rate of not less than 1 1/2 times the basic rate of pay for all hours worked in excess of 8 hours in any calendar day or 40 hours in the workweek.

Section 107 of the Act is applicable to construction work and provides that no laborer or mechanic shall be required to work in surroundings or under working conditions which are unsanitary, hazardous, or dangerous to his/her health and safety and health standards promulgated by the Secretary of Labor. These requirements do not apply to the purchases of supplies or materials or articles ordinarily available on the open market, or contracts for transportation or transmission of intelligence.

(5) Rights to Inventions and Materials Generated Under a Contract or Agreement

Contracts or agreements for the performance of experimental, developmental, or research work shall provide for the rights of the Government and the recipient in any resulting invention in accordance with 37 CFR Part 401 and any implementing regulations issued by the awarding agency.

(6) Clean Air Act of 1970 (42 U.S.C. 7401 et seq.) and the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.) as Amended

Contracts and subgrants of amounts in excess of $100,000 shall contain a provision that requires the recipient to agree to comply with all applicable standards,. orders or regulations issued pursuant to the Clean Air Act of 1970 (42 U.S.C. 7401 et seq.) and the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.) as amended. Violations shall be reported to the Federal sponsoring agency and the Regional Office of the Environmental Protection Agency.

(7) Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)

Contractors who receive an award of $100,000 or more must file a certification with the grantee stating that they will not and have not used Federal appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee of any agency, a member of Congress, officer or employee of Congress, or an employee of a member of Congress in connection with obtaining any Federal contract, grant, cooperative agreement, loan, or any other award covered by 31 U.S.C. 1352. Such contractors must also disclose to the grantee any lobbying that takes place in connection with obtaining any Federal award.

(8) Debarment and Suspension (E.O. 12549 and 12689)

No contracts shall be made to parties listed on the General Services Administration's Lists of Parties Excluded From Federal Procurement or Nonprocurement Programs in accordance with Executive Orders 12549 and 12689. These lists contain the names of contractors debarred, suspended, or proposed for debarment by agencies, and contractors declared ineligible under other statutory or regulatory authority other than Executive Order 12549.

Grantees are required to obtain a certification regarding debarment and suspension from all subrecipients and from all parties with whom they contract for goods or services when (1) the amount of the contract is $25,000 or more, or (2) when, regardless of the amount of the contract, the contractor will have a critical influence or substantive control over the covered transaction. Such persons would be project directors and providers of federally-required audit services.


UNIVERSITY OF CALIFORNIA

December 14, 1994

Director David J. Wallace

National Endowment for the Humanities

Grants Office, Room 310

1100 Pennsylvania Ave., N.W.

Washington, DC 20506

Dear Mr. Wallace:

We thank you for your efforts to streamline the administration of National Endowment for the Humanities (NEH) grants by transferring approval of specific actions to the grantee institution. At the University of California, most of our campuses no longer utilize the old Organizational Prior Approval System (OPAS) because we are currently under the Federal Demonstration Project.

The Federal Demonstration Project (FDP) essentially grants the receiving institution the same authorities described in the new NEH General Grant Provisions. For actions such as preaward spending and no cost time extensions, as permitted under A-110 and the FDP, our campuses have forms that must be signed by the Contracts & Grants Office. For other actions, such as equipment purchases or foreign travel not listed in the approved budget, our University Accounting Manual designates those authorized to sign these business transactions. When the Principal Investigator initiates such requests, they are reviewed by the departmental fiscal officer. Charges are made in accordance with University requirements and federal policy, which permit only allocable, reasonable and allowable charges.

We believe that by complying with the requirements of A-110 and A-21, in addition to the internal controls and systems in place at the University which are audited pursuant to A-133, we meet your requirement of a prior approval system. If you disagree with this assessment, please notify me.

David F. Mears

Director

Research Administration Office


NATIONAL ENDOWMENT FOR THE HUMANITIES

GRANTS OFFICE, ROOM 310

1100 PENNSYLVANIA AVENUE, N.W., WASHINGTON, DC 20506

December 28, 1994

Mr. David F. Mears

Director

Research Administration Office

University of California

300 Lakeside Drive

Oakland, CA 94612-3550

Dear Mr. Mears:

Thank you for your letter of December 14, 1994.

Several institutions of higher education have raised the same question that you did about what we meant when we used the term "organizational prior approval system." Frankly, we had no particular system in mind. When we are asked about this matter, we tell grantees that there are several basic elements to an acceptable system. At a minimum, there should be a level of review of proposed changes in project actions/expenditures that is above the project director; the procedures for this review should be in writing; and, whenever changes are approved, the grantee should retain documentation of the approval for three years following the submission of the final financial report for the grant project.

From the information provided in your letter, it would seem that the University of California has a system in place that meets these requirements.

Sincerely,

David J. Wallace

Director

TELEPHONE 202/606-8494