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§ 66.32

(c) Disposition. When real property is
no longer needed for the originally au-
thorized purpose, the grantee or sub-
grantee will request disposition in-
structions from the awarding agency.
The instructions will provide for one of
the following alternatives:

(1) Retention of title. Retain title after
compensating the awarding agency.
The amount paid to the awarding agen-
cy will be computed by applying the
awarding agency’s percentage of par-
ticipation in the cost of the original
purchase to the fair market value of
the property. However, in those situa-
tions where a grantee or subgrantee is
disposing of real property acquired
with grant funds and acquiring replace-
ment real property under the same pro-
gram, the net proceeds from the dis-
position may be used as an offset to the
cost of the replacement property.

(2) Sale of property. Sell the property
and compensate the awarding agency.
The amount due to the awarding agen-
cy will be calculated by applying the
awarding agency’s percentage of par-
ticipation in the cost of the original
purchase to the proceeds of the sale
after deduction of any actual and rea-
sonable selling and fixing-up expenses.
If the grant is still active, the net pro-
ceeds from sale may be offset against
the original cost of the property. When
a grantee or subgrantee is directed to
sell property, sales procedures shal] be
followed that provide for competition
to the extent practicable and result in
the highest possible return.

(3) Transfer of title. Transfer title to
the awarding agency or to a third-
party designatedapproved by the
awarding agency. The grantee or sub-
grantee shall be paid an amount cal-
culated by applying the grantee or sub-
grantee’s percentage of participation
in the purchase of the real property to
the current fair market value of the
property.

$66.32 Equipment.

(a) The Omnibus Crime Control and
Safe Streets Act of 1968, as amended,
Public Law 90-351, section 808, requires
that the title to all equipment and sup-
plies purchased with section 403 or 1302
(block or formula funds) shall vest in
the criminal justice agency or non-
profit organization that purchased the

28 CFR Ch. | (7-1-10 Edition)

property if it certifies to the State of-
fice described in section 408 or 1308 that
it will use the property for criminal
justice purposes. If such certification is
not made, title to the property shall
vest in the State office, which shall
seek to have the property used for
criminal justice purposes elsewhere in
the State prior to using it or disposing
of it in any other manner.

(bo) States. A State will use, manage,
and dispose of equipment acquired
under a grant by the State in accord-
ance with State laws and procedures.
Other grantees and subgrantees will
follow paragraphs (c) through (e) of
this section.

(c) Use. (1) Equipment shall be used
by the grantee or subgrantee in the
program or project for which it was ac-
quired 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 pro-
gram or project, the equipment may be
used in other activities currently or
previously supported by a Federal
agency.

(2) The grantee or subgrantee shall
also make equipment available for use
on other projects or programs cur-
rently 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 pref-
erence for other use shall be given to
other programs or projects supported
by the awarding agency. User fees
should be considered if appropriate.

(3) Notwithstanding the encourage-
ment in §66.25(a) to earn program in-
come, the grantee or subgrantee must
not use equipment acquired with grant
funds to provide services for a fee to
compete unfairly with private compa-
nies that provide equivalent services,
unless specifically permitted or con-
templated by Federal statute.

(4) When acquiring replacement
equipment, the grantee or subgrantee
may use the equipment to be replaced
as a trade-in or sell the property and
use the proceeds to offset the cost of
the replacement property, subject to
the approval of the awarding agency.

(d) Management requirements. Proce-
dures for managing equipment (includ-
ing replacement equipment), whether

204

Deparment of Justice

acquired in whole or in part with grant
funds, unti] disposition takes place
will, as a minimum, meet the following
requirements:

(1) Property records must be main-
tained that include a description of the
property, a serial number or other
identification number, the source of
property, who holds title, the acquisi-
tion date, and cost of the property, per-
centage 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) A physical inventory of the prop-
erty must be taken and the results rec-
onciled with the property records at
least once every two years.

(3) A control system must be devel-
oped to ensure adequate safeguards to
prevent loss, damage, or theft of the
property. Any loss, damage, or theft
shall be investigated.

(4) Adequate maintenance procedures
must be developed to keep the property
in good condition.

(5) If the grantee or subgrantee is au-
thorized or required to sell the prop-
erty, proper sales procedures must be
established to ensure the highest pos-
sible return.

(e) Disposition. When original or re-
placement equipment acquired under a
grant or subgrant is no longer needed
for the original project or program or
for other activities currently or pre-
viously supported by a Federal agency,
disposition of the equipment will be
made as follows:

(1) Items of equipment with a current
per-unit fair market value of less than
$5,000 may be retained, sold or other-
wise disposed of with no further obliga-
tion 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.

(3) In cases where a grantee or sub-
grantee fails to take appropriate dis-
position actions, the awarding agency
may direct the grantee or subgrantee
to take excess and disposition actions.

§ 66.33

(f) Federal equipment. In the event a
grantee or subgrantee is provided fed-
erally-owned equipment:

(1) Title will remain vested in the
Federal Government.

(2) Grantees or subgrantees will man-
age the equipment in accordance with
Federal agency rules and procedures,
and submit an annual] inventory list-
ing,

(3) When the equipment is no longer
needed, the grantee or subgrantee will
request disposition instructions from
the Federal agency.

(g) Right to transfer title. The Federal
awarding agency may reserve the right
to transfer title to the Federal Govern-
ment or a third part named by the
awarding agency when such a third
party is otherwise eligible under exist-
ing statutes. Such transfers shall be
subject to the following standards:

(1) The property shall be identified in
the grant or otherwise made known to
the grantee in writing.

(2) The Federal awarding agency
shall issue disposition instruction
within 120 calendar days after the end
of the Federal support of the project
for which it was acquired. If the Fed-
eral awarding agency fails to issue dis-
position instructions within the 120
calendar-day period the grantee shall
follow 66.32(e).

(3) When title to equipment is trans-
ferred, the grantee shall be paid an
amount calculated by applying the per-
centage of participation in the pur-
chase to the current fair market value
of the property.

(53 FR 8068 and 8087, Mar. 11, 1988, as amend-
ed by Order No. 1252-88, 53 FR 8068. Mar. 11,
1988; 53 FR 12099, Apr. 12, 1988)

$66.33 Supplies.

(a) The Omnibus Crime Control and
Safe Streets Act of 1968, as amended,
Public Law 90-351, section 808, requires
that the title to all equipment and sup-
plies purchased with section 408 or 1302
(block or formula funds) shall vest in
the criminal justice agency or non-
profit organization that purchased the
property if it certifies to the State of-
fice described in section 408 or 1308 that
it will use the property for criminal
justice purposes. If such certification is
not made, title to the property shall
vest in the State office, which shall

205

§ 66.34

seek to have the property used for
criminal justice purposes elsewhere in
the State prior to using it or disposing
of it in any other manner.

(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 com-
pensate the awarding agency for its
share.

[53 FR 8068 and 8087, Mar. 11, 1988, as amend-
ed by Order No. 1252-88, 53 FR 8069, Mar. 11,
1988]

$66.34 Copyrights.

The Federal awarding agency re-
serves a royalty-free, nonexclusive, and
irrevocable license to reproduce, pub-
lish or otherwise use, and to authorize
others to use, for Federal] Government
purposes:

(a) The copyright in any work devel-
oped under a grant, subgrant, or con-
tract under a grant or subgrant; and

(b) Any rights of copyright to which
a grantee, subgrantee or a contractor
purchases ownership with grant sup-
port.

$66.35 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 sus-
pended or is otherwise excluded from or
ineligible for participation in Federal
assistance programs under Executive
Order 12549, ‘‘Debarment and Suspen-
sion.”

$66.36 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 non-
Federal funds. The State will ensure
that every purchase order or other con-
tract 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.

28 CFR Ch. | (7-1-10 Edition)

(b) Procurement standards. (1) Grant-
ees and subgrantees will use their own
procurement procedures which reflect
applicable State and local laws and
regulations, provided that the procure-
ments conform to applicable Federal
law and the standards identified in this
section.

(2) Grantees and subgrantees will
maintain a contract administration
system which ensures that contractors
perform in accordance with the terms,
conditions, and specifications of their
contracts or purchase orders.

(3) Grantees and subgrantees will
maintain a written code of standards of
conduct governing the performance of
their employees engaged in the award
and administration of contracts. No
employee, officer or agent of the grant-
ee or subgrantee shall participate in se-
lection, or in the award or administra-
tion of a contract supported by Federal
funds if a conflict of interest, real or
apparent, would be involved. Such a
conflict would arise when:

(i) The employee, officer or agent,

(ii) Any member of his immediate
family,

(ili) His or her partner, or

(iv) An organization which employs,
or is about to employ, any of the
above, has a financial or other interest
in the firm selected for award. The
grantee’s or subgrantee’s officers, em-
ployees or agents will neither solicit
nor accept gratuities, favors or any-
thing of monetary value from contrac-
tors, potential contractors, or parties
to subagreements. Grantee and sub-
grantees 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 reg-
ulations, such standards or conduct
will provide for penalties, sanctions, or
other disciplinary actions for viola-
tions of such standards by the grant-
ee’s and subgrantee’s officers, employ-
ees, or agents, or by contractors or
their agents. The awarding agency may
in regulation provide additional prohi-
bitions relative to real, apparent, or
potential conflicts of interest.

(4) Grantee and subgrantee proce-
dures will provide for a review of pro-
posed procurements to avoid purchase
of unnecessary or duplicative items.

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Department of Justice

Consideration should be given to con-
solidating or breaking out procure-
ments to obtain a more economical
purchase. Where appropriate, an anal-
ysis will be made of lease versus pur-
chase alternatives, and any other ap-
propriate analysis to determine the
most economical approach.

(5) To foster greater economy and ef-
ficiency, grantees and subgrantees are
encouraged to enter into State and
local intergovernmental agreements
for procurement or use of common
goods and services.

(6) Grantees and suhgrantees are en-
couraged to use Federal excess and sur-
plus property in lieu of purchasing new
equipment and property whenever such
use is feasible and reduces project
costs.

(7) Grantees and subgrantees are en-
couraged to use value engineering
clauses in contracts for construction
projects of sufficient size to offer rea-
sonable opportunities for cost reduc-
tions. Value engineering is a system-
atic and creative anaylsis of each con-
tract item or task to ensure that its es-
sential function is provided at the
overall lower cost.

(8) Grantees and subgrantees will
make awards only to responsible con-
tractors possessing the ability to per-
form successfully under the terms and
conditions of a proposed procurement.
Consideration will be given to such
matters as contractor integrity, com-
pliance with public policy, record of
past performance, and financial and
technical resources.

(9) Grantees and subgrantees will
maintain records sufficient to detail
the significant history of a procure-
ment. These records will include, but
are not necessarily Hmited to the fol-
lowing: rationale for the method of
procurement, selection of contract
type, contractor selection or rejection,
and the basis for the contract price.

(10) Grantees and subgrantees will
use time and material type contracts
only—

Gi) After a determination that no
other contract is suitable. and

(il) If the contract includes a ceiling
price that the contractor exceeds at its
own risk.

(11) Grantees and subgrantees alone
will be responsible, in accordance with

§ 66.36

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 lim-
ited to source evaluation, protests, dis-
putes, and claims. These standards do
not relieve 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 un-
less the matter is primarily a Federal
concern. Violations of law will be re-
ferred to the local, State, or Federal
authority having proper jurisdiction.

(12) Grantees and subgrantees will
have protest procedures to handle and
resolve disputes relating to their pro-
curements and shall in all instances
disclose information regarding the pro-
test to the awarding agency. A
protestor must exhaust all administra-
tive remedies with the grantee and sub-
grantee before pursuing a protest with
the Federal agency. Reviews of pro-
tests by the Federal agency will be lim-
ited to:

(i) Violations of Federal law or regu-
lations and the standards of this sec-
tion (violations of State or local law
will be under the jurisdiction of State
or local authorities) and

(il) Violations of the grantee’s or sub-
grantee’s protest procedures for failure
to review a complaint or protest. Pro-
tests received by the Federal agency
other than those specified above will be
referred to the grantee or subgrantee.

(c) Competition. (1) All procurement
transactions will be conducted in a
manner providing full and open com-
petition consistent with the standards
of §66.36. Some of the situations con-
sidered to be restrictive of competition
include but are not limited to:

(i) Placing unreasonable require-
ments on firms in order for them to
qualify to do business,

(i1) Requiring unnecessary experience
and excessive bonding,

(ili) Noncompetitive pricing practices
between firms or between affiliated
companies,

(iv) Noncompetitive awards to con-
sultants that are on retainer contracts,

(v) Organizational conflicts of inter-
est,

207

§ 66.36

(vi) Specifying only a ‘‘brand name”’
product instead of allowing ‘‘an equal”’
product to be offered and describing
the performance of other relevant re-
quirements of the procurement, and

(vii) Any arbitrary action in the pro-
curement process.

(2) Grantees and subgrantees will
conduct procurements in a manner
that prohibits the use of statutorily or
administratively imposed in-State or
local geographical preferences in the
evaluation of bids or proposals, except
in those cases where applicable Federal
statutes expressly mandate or encour-
age geographic preference. Nothing in
this section preempts State licensing
laws. When contracting for architec-
tural 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.

(3) Grantees will have written selec-
tion procedures for procurement trans-
actions. These procedures will ensure
that all solicitations:

(i) Incorporate a clear and accurate
description of the technical require-
ments for the material, product, or
service to be procured. Such descrip-
tion shall not, in competitive procure-
ments, contain features which unduly
restrict competition. The description
may include a statement of the quali-
tative nature of the material, product
or service to be procured, and when
necessary, shall set forth those min-
imum essential characteristics and
standards to which it must conform if
it is to satisfy its intended use. De-
tailed product specifications should be
avoided if at all possible. When it is
impractical or uneconomical to make a
clear and accurate description of the
technical requirements, a ‘‘brand name
or equal” description may be used as a
means to define the performance or
other salient requirements of a pro-
curement. The specific features of the
named brand which must be met by
offerors shall be clearly stated; and

(ii) Identify all requirements which
the offerors must fulfill and all other
factors to be used in evaluating bids or
proposals.

(4) Grantees and subgrantees will en-
sure that all prequalified lists of per-

28 CFR Ch. | (7-1-10 Edition)

sons, firms, or products which are used
in acquiring goods and services are cur-
rent 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 so-
licitation period.

(d) Methods of procurement to be fol-
lowed—(1) Procurement by small purchase
procedures. Small purchase procedures
are those relatively simple and infor-
mal procurement methods for securing
services, supplies, or other property
that do not cost more than the sim-
plified 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 ob-
tained from an adequate number of
qualified sources.

(2) Procurement by sealed bids (formal
advertising). Bids are publicly solicited
and a firm-fixed-price contract (lump
sum or unit price) is awarded to the re-
sponsible bidder whose bid, conforming
with all the material terms and condi-
tions 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
§ 66.36(d)(2)(i) apply.

(i) In order for sealed bidding to be
feasible, the following conditions
should be present:

(A) A complete, adequate, and real-
istic specification or purchase descrip-
tion is available;

(B) Two or more responsible bidders
are willing and able to compete effec-
tively and for the business; and

(C) The procurement lends itself to a
firm fixed price contract and the selec-
tion of the successful bidder can be
made principally on the basis of price.

(ii) If sealed bids are used, the fol-
lowing 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 suffi-
cient time prior to the date set for
opening the bids;

(B) The invitation for bids. which
will include any specifications and per-
tinent attachments, shall define the
items or services in order for the bidder
to properly respond;

208

Department of Justice

(C) All bids will be publicly opened at
the time and place prescribed in the in-
vitation 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, transpor-
tation cost, and life cycle costs shall be
considered in determining which 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

(E) Any or all bids may be rejected if
there is a sound documented reason.

(3) Procurement by competitive pro-
posals. The technique of competitive
proposals is normally conducted with
more than one source submitting an
offer, and either a fixed-price or cost-
reimbursement type contract is award-
ed. It is generally used when conditions
are not appropriate for the use of
sealed bids. If this method is used, the
following requirements apply:

(i) Requests for proposals will be pub-
licized and identify all evaluation fac-
tors and their relative importance. Any
response to publicized requests for pro-
posals shall be honored to the max-
imum extent practical;

(ii) Proposals will be solicited from
an adequate number of qualified
sources;

(iii) Grantees and subgrantees will
have a method for conducting tech-
nical evaluations of the proposals re-
ceived and for selecting awardees;

(iv) Awards will be made to the re-
sponsible firm whose proposal is most
advantageous to the program, with
price and other factors considered; and

(v) Grantees and subgrantees may
use competitive proposal procedures
for qualifications-based procurement of
architectural/engineering (A/E) profes-
sional services whereby competitors’
qualifications are evaluated and the
most qualified competitor is selected,
subject to negotiation of fair and rea-
sonable compensation. The method,
where price is not used as a selection
factor, can only be used in procure-
ment of A/E professional services. It
cannot be used to purchase other types
of services though A/E firms are a po-

§ 66.36

tential source to perform the proposed
effort.

(4) Procurement by noncompetitive
proposals is procurement through solic-
itation of a proposal from only one
source, or after solicitation of a num-
ber of sources, competition is deter-
mined inadequate.

(i) Procurement by noncompetitive
proposals may be used only when the
award of a contract is infeasible under
small purchase procedures, sealed bids
or competitive proposals and one of the
following circumstances applies:

(A) The item is available only from a
single source;

(B) The public exigency or emergency
for the requirement wil] not permit a
delay resulting from competitive solic-
itation;

(C) The awarding agency authorizes
noncompetitive proposals; or

(D) After solicitation of a number of
sources, competition is determined in-
adequate.

(ii) Cost analysis, i.e., verifying the
proposed cost data, the projections of
the data, and the evaluation of the spe-
cific elements of costs and profits, is
required.

(iii) Grantees and subgrantees may
be required to submit the proposed pro-
curement to the awarding agency for
pre-award review in accordance with
paragraph (g) of this section.

(e) Contracting with small and minority
firms, women’s business enterprise and
labor surplus area firms. (1) The grantee
and subgrantee will take all necessary
affirmative steps to assure that minor-
ity firms, women’s business enter-
prises, and labor surplus area firms are
used when possible.

(2) Affirmative steps shall include:

(i) Placing qualified small and minor-
ity businesses and women's business
enterprises on solicitation lists;

(ii) Assuring that small and minority
businesses, and women’s business en-
terprises are solicited whenever they
are potential sources;

Gii) Dividing total requirements,
when economically feasible, into small-
er tasks or quantities to permit max-
imum participation by small and mi-
nority business, and women’s business
enterprises;

(iv) Establishing delivery schedules,
where the requirement permits, which

209

§ 66.36

encourage participation by small and
minority business, and women’s busi-
ness enterprises;

(v) Using the services and assistance
of the Small Business Administration,
and the Minority Business Develop-
ment Agency of the Department of
Commerce; and

(vi) Requiring the prime contractor,
if subcontracts are to be let, to take
the affirmative steps listed in para-
graphs (e)(2) Gd) through (v) of this sec-
tion.

(f) Contract cost and price. (1) Grant-
ees and subgrantees must perform a
cost or price analysis in connection
with every procurement action includ-
ing contract modifications. The meth-
od and degree of analysis is dependent
on the facts surrounding the particular
procurement situation, but as a start-
ing point, grantees must make inde-
pendent estimates before receiving bids
or proposals. A cost analysis must be
performed when the offeror is required
to submit the elements of his esti-
mated cost, e.g., under professional,
consulting, and architectural engineer-
ing services contracts. A cost analysis
will be necessary when adequate price
competition is lacking, and for sole
source procurements, including con-
tract modifications or change orders,
unless price resonableness can be es-
tablished 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 deter-
mine the reasonableness of the pro-
posed contract price.

(2) Grantees and subgrantees will ne-
gotiate 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 prof-
it, consideration will be given to the
complexity of the work to be per-
formed, the risk borne by the con-
tractor, the contractor’s investment,
the amount of subcontracting, the
quality of its record of past perform-
ance, and industry profit rates in the
surrounding geographical area for
similar work.

(3) Costs or prices based on estimated
costs for contracts under grants will be

28 CFR Ch. } (7-1-10 Edition)

allowable only to the extent that costs
incurred or cost estimates included in
negotiated prices are consistent with
Federal cost principles {see §66.22).
Grantees may reference their own cost
principles that comply with the appli-
cable Federal cost principles.

(4) The cost plus a percentage of cost
and percentage of construction cost
methods of contracting shall not be
used.

(g) Awarding agency review. (1) Grant-
ees and subgrantees must make avail-
able, upon request of the awarding
agency, technical specifications on pro-
posed procurements where the award-
ing agency believes such review is
needed to ensure that the item and/or
service specified is the one being pro-
posed for purchase. This review gen-
erally 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 solici-
tation has been developed, the award-
ing agency may still review the speci-
fications, with such review usually lim-
ited to the technical aspects of the pro-
posed purchase.

(2) Grantees and subgrantees must on
request make available for awarding
agency pre-award review procurement
documents, such as requests for pro-
posals or invitations for bids, inde-
pendent cost estimates, etc. when:

(1) A grantee’s or subgrantee’s pro-
curement procedures or operation fails
to comply with the procurement stand-
ards 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

(iii) The procurement, which is ex-
pected to exceed the simplified acquisi-
tion 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 in-
creases the contract amount by more

210

Department of Justice

than the simplified acquisition thresh-
old.

(3) A grantee or subgrantee will be
exempt from the pre-award review in
paragraph (g)(2) of this section if the
awarding agency determines that its
procurement systems comply with the
standards of this section.

(i) A grantee or subgrantee may re-
quest that its procurement system be
reviewed by the awarding agency to de-
termine whether its system meets
these standards in order for its system
to be certified. Generally, these re-
views shall occur where there is a con-
tinuous high-dollar funding, and third-
party contracts are awarded on a reg-
ular basis.

(ii) A grantee or subgrantee may self-
certify its procurement system. Such
self-certification shall not limit the
awarding agency's right to survey the
system. Under a self-certification pro-
cedure, awarding agencies may wish to
rely on written assurances from the
grantee or subgrantee that it is com-
plying with these standards. A grantee
or subgrantee will cite specific proce-
dures, regulations, standards, etc., as
being in compliance with these require-
ments and have its system available
for review.

(h) Bonding requirements. For con-
struction or facility improvement con-
tracts or subcontracts exceeding the
simplified acquisition threshold, the
awarding agency may accept the bond-
ing policy and requirements of the
grantee or subgrantee provided the
awarding agency has made a deter-
mination that the awarding agency’s
interest is adequately protected. If
such a determination has not been
made, the minimum requirements shall
be as follows:

(1) A bid guarantee from each bidder
equivalent to five percent of the bid price.
The ‘bid guarantee’ shall consist of a
firm commitment such as a bid bond,
certified check, or other negotiable in-
strument accompanying a bid as assur-
ance that the bidder will, upon accept-
ance of his bid, execute such contrac-
tual documents as may be required
within the time specified.

(2) A performance bond on the part of
the contractor for 100 percent of the con-
tract price. A ‘‘performance bond”’ is
one executed in connection with a con-

§ 66.36

tract 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 exe-
cuted in connection with a contract to
assure payment as required by law of
all persons supplying labor and mate-
rial in the execution of the work pro-
vided for in the contract.

(i) Contract provisions. A grantee’s
and subgrantee’s contracts must con-
tain provisions in paragraph (i) of this
section. Federal agencies are permitted
to require changes, remedies, changed
conditions, access and records reten-
tion, suspension of work, and other
clauses approved by the Office of Fed-
eral Procurement Policy.

(1) Administrative, contractual, or
legal remedies in instances where con-
tractors violate or breach contract
terms, and provide for such sanctions
and penalties as may be appropriate.
(Contracts more than the simplified ac-
quisition threshold)

(2) Termination for cause and for
convenience by the grantee or sub-
grantee including the manner by which
it will be effected and the basis for set-
tlement. (All contracts in excess of
$10,000)

(3) Compliance with Executive Order
11246 of September 24, 1965, entitled
“Hgual 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 con-
tracts awarded in excess of $10,000 by
grantees and their contractors or sub-
grantees)

(4) Compliance with the Copeland
“Anti-Kickback’’ Act (18 U.S.C. 874) as
supplemented in Department of Labor
regulations (29 CFR part 3). (All con-
tracts and subgrants for construction
or repair)

(5) Compliance with the Davis-Bacon
Act (40 U.S.C. 276a to 276a-7) as supple-
mented by Department of Labor regu-
lations (29 CFR part 5). (Construction
coutracts in excess of $2000 awarded by
grantees and subgrantees when re-
quired by Federal grant program legis-
lation)

(6) Compliance with sections 103 and
107 of the Contract Work Hours and

211

§ 66.37

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 employ-
ment of mechanics or laborers)

(7) Notice of awarding agency re-
quirements and regulations pertaining
to reporting.

(8) Notice of awarding agency re-
quirements and regulations pertaining
to patent rights with respect to any
discovery or invention which arises or
is developed in the course of or under
such contract.

(9) Awarding agency requirements
and regulations pertaining to copy-
rights and rights in data.

(10) Access by the grantee, the sub-
grantee, the Federal grantor agency,
the Comptroller General of the United
States, or any of their duly authorized
representatives to any books, docu-
ments, papers, and records of the con-
tractor which are directly pertinent to
that specific contract for the purpose
of making audit, examination, ex-
cerpts, and transcriptions.

(11) Retention of all required records
for three years after grantees or sub-
grantees make final payments and all
other pending matters are closed.

(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 117388, and Environ-
mental Protection Agency regulations
(40 CFR part 15). (Contracts, sub-
contracts, and subgrants of amounts in
excess of $100,000)

(13) Mandatory standards and policies
relating to energy efficiency which are
contained in the state energy conserva-
tion plan issued in compliance with the
Energy Policy and Conservation Act
(Pub, L. 94-168, 89 Stat. 871).

[Order No. 1252-88, 53 FR 8068 and 8067, Mar.
11, 1988, as amended by Order No. 1961-95, 60
FR 19639, 19642, Apr. 19, 1995]

§66.37 Subgrants.

(a) States. States shall follow state
law and procedures when awarding and
administering subgrants (whether on a
cost reimbursement or fixed amount

28 CFR Ch. | (7-1-10 Edition)

basis) of financial assistance to local
and Indian tribal governments. States
shall:

(1) Ensure that every subgrant in-
cludes any clauses required by Federal
statute and executive orders and their
implementing regulations;

(2) Ensure that subgrantees are
aware of requirements imposed upon
them by Federal statute and regula-
tion;

(3) Ensure that a provision for com-
pliance with §66.42 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 grant-
ees shall follow the provisions of this
part which are applicable to awarding
agencies when awarding and admin-
istering subgrants (whether on a cost
reimbursement or fixed amount basis)
of financial assistance to local and In-
dian tribal governments. Grantees
shall:

(1) Ensure that every subgrant in-
cludes a provision for compliance with
this part;

(2) Ensure that every subgrant in-
cludes any clauses required by Federal
statute and executive orders and their
implementing regulations; and

(3) Ensure that subgrantees are
aware of requirements imposed upon
them by Federal statutes and regula-
tions.

(c) Exceptions. By their own terms,
certain provisions of this part do not
apply to the award and administration
of subgrants:

(1) Section 66.10;

(2) Section 66.11;

(3) The letter-of-credit procedures
specified in Treasury Regulations at 31
CFR part 205, cited in §66.21; and

(4) Section 66.50.

REPORTS, RECORDS, RETENTION, AND
ENFORCEMENT

866.40 Monitoring and reporting pro-
gram performance.

(a) Monitoring by grantees. Grantees
are responsible for managing the day-
to-day operations of grant and
subgrant supported activities. Grantees

212

Department of Justice

must monitor grant and subgrant sup-
ported activities to assure compliance
with applicable Federal requirernents
and that performance goals are being
achieved. Grantee monitoring must
cover each program, function or activ-
ity.

(b) Nonconstruction performance re-
ports. The Federal agency may, if it de-
cides that performance information
available from subsequent applications
contains sufficient information to
meet its programmatic needs, require
the grantee to submit a performance
report only upon expiration or termi-
nation of grant support. Unless waived
py the Federal agency this report will
be due on the same date as the final Fi-
nancial Status Report.

(1) Grantees shall submit annual per-
formance reports unless the awarding
agency requires quarterly or semi-an-
nual reports. However, performance re-
ports will not be required more fre-
quently 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 ex-
tend the due date for any performance
report. Additionally, requirements for
unnecessary performance reports may
be waived by the Federal agency.

(2) Performance reports will contain,
for each grant, brief information on the
following:

dj) A comparison of actual accom-
plishments to the objectives estab-
lished for the period. Where the output
of the project can be quantified, a com-
putation of the cost per unit of output
may be required if that information
will be useful.

(ii) The reasons for slippage if estab-
lished objectives were not met.

(iii) Additional pertinent information
including. when appropriate, analysis
and explanation of cost overruns or
high unit costs.

(3) Grantees will not be required to
submit more than the original and two
copies of performance reports.

(4) Grantees will adhere to the stand-
ards in this section in prescribing per-

§ 66.41

formance reporting requirements for
subgrantees.

(c) Construction performance reports.
For the most part, on-site technica] in-
spections 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 re-
quire additional formal performance
reports only when considered nec-
essary, and never more frequently than
quarterly.

(ad) Significant developments. Events
may occur between the scheduled per-
formance reporting dates which have
significant impact upon the grant or
subgrant supported activity. In such
cases, the grantee must inform the
Federal agency as soon as the following
types of conditions become known:

(1) Problems, delays, or adverse con-
ditions which will materially impair
the ability to meet the objective of the
award. This disclosure must include a
statement of the action taken, or con-
templated, and any assistance needed
to resolve the situation.

(2) Favorable developments which en-
able meeting time schedules and objec-
tives sooner or at less cost than antici-
pated or producing more beneficial re-
sults than originally planned.

(e) Federal agencies may make site
visits as warranted by program needs.

(f) Waivers, extensions. (1) Federal
agencies may waive any performance
report required by this part if not need-
ed.

(2) The grantee may waive any per-
formance report from a subgrantee
when not needed. The grantee may ex-
tend the due date for any performance
report from a subgrantee if the grantee
will still be able to meet its perform-
ance reporting obligations to the Fed-
eral agency.

$66.41 Financial reporting.

(a) General. (1) Except as provided in
paragraphs (a) (2) and (5) of this sec-
tion, grantees will use only the forms
specified in paragraphs (a) through (e)
of this section, and such supple-
mentary or other forms as may from
time to time be authorized by OMB,
for:

(i) Submitting financial reports to
Federal agencies, or

213