§ 66.22
advance payments described in para-
graph (c) of this section, and the Fed-
eral agency has determined that reim-
pbursement is not feasible because the
grantee lacks sufficient working cap-
ital, the awarding agency may provide
cash or a working capital advance
basis. Under this procedure the award-
ing agency shall advance cash to the
grantee to cover its estimated dis-
pursement needs for an initial period
generally geared to the grantee’s dis-
bursing cycle. Thereafter, the awarding
agency shall reimburse the grantee for
its actual cash disbursements. The
working capital advance method of
payment shall not be used by grantees
or subgrantees if the reason for using
such method is the unwillingness or in-
ability of the grantee to provide timely
advances to the subgrantee to meet the
subgrantee’s actual cash disburse-
ments.
(f) Effect of program income, refunds,
and audit recoveries on payment. (1)
Grantees and subgrantees shall dis-
burse repayments to and interest
earned on a revolving fund before re-
questing additional cash payments for
the same activity.
(2) Except as provided in paragraph
(f)(1) of this section, grantees and sub-
grantees shall disburse program in-
come, rebates, refunds, contract settle-
ments, audit recoveries and interest
earned on such funds before requesting
additional cash payments.
(g) Withholding payments. (1) Unless
otherwise required by Federal] statute,
awarding agencies shall not withhold
payments for proper charges incurred
by grantees or subgrantees unless—
i) The grantee or subgrantee has
failed to comply with grant award con-
ditions or
(ii) The grantee or subgrantee is in-
debted to the United States.
(2) Cash withheld for failure to com-
ply with grant award condition, but
without suspension of the grant, shall
be released to the grantee upon subse-
quent compliance. When a grant is sus-
pended, payment adjustments will be
made in accordance with § 66.43(c).
(3) A Federal agency shall not make
payment to grantees for amounts that
are withheld by grantees or sub-
grantees from payment to contractors
to assure satisfactory completion of
28 CFR Ch. | (7-1-10 Edition)
work. Payments shall be made by the
Federal agency when the grantees or
subgrantees actually disburse the with-
held funds to the contractors or to es-
crow accounts established to assure
satisfactory completion of work.
(h) Cash depositories. (1) Consistent
with the national goal of expanding the
opportunities for minority business en-
terprises, grantees and subgrantees are
encouraged to use minority banks (a
bank which is owned at least 50 percent
by minority group members). A list of
minority owned banks can be obtained
from the Minority Business Develop-
ment Agency, Department of Com-
merce, Washington, DC 202380.
(2) A grantee or subgrantee shall
maintain a separate bank account only
when required by Federal-State agree-
ment.
(1) Interest earned on advances. Except
for interest earned on advances of
funds exempt under the Intergovern-
mental Cooperation Act (31 U.S.C. 6501
et seq.) and the Indian Self-Determina-
tion Act (23 U.S.C. 450), grantees and
subgrantees shall promptly, but at
least quarterly, remit interest earned
on advances to the Federal agency. The
grantee or subgrantee may keep inter-
est amounts up to $100 per year for ad-
ministrative expenses.
§66.22 Allowable costs.
(a) Limitation on use of funds. Grant
funds may be used only for:
(1) The allowable costs of the grant-
ees, subgrantees and cost-type contrac-
tors, including allowable costs in the
form of payments to fixed-price con-
tractors; and
(2) Reasonable fees or profit to cost-
type contractors but not any fee or
profit (or other increment above allow-
able costs) to the grantee or sub-
grantee.
(b) Applicable cost principles. For each
kind of organization, there is a set of
Federal principles for determining al-
lowable costs. Allowable costs will be
determined in accordance with the cost
principles applicable to the organiza-
tion incurring the costs. The following
chart lists the kinds of organizations
and the applicable cost principles.
198
