HomeMy WebLinkAbout58-94 RESOLUTION1
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RESOLUTION NO. „.18_-_9_4_
A RESOLUTION AUTHORIZING THE MAYOR AND CITY
CLERK TO EXECUTE AN AGREEMENT WITH THE
COUNCIL ON AGING, INC. TO GOVERN THE
ADMINISTRATION OF A GRANT AWARD TO THE BUILD
A SENIOR/COMMUNITY CENTER.
BE IT RFSOLVED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section 1 That the Mayor and City Clerk are hereby authorized to execute an
agreement with the Council on Aging, Inc. to govern the administration of a grant award in the
amount of $375,000 to build a semor/commimity center. A copy of the agreement is attached
hereto marked Exhibit "A" and made a part hereof.
PASSED AND APPROVED this 17th day of May 1994.
ATTEST:
By•
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Sherry Thomas, City Clerk
APPROVED:
By:
Ted Hanna, Mayor
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AGREEMENT
THIS AGREEMENT entered into this Met day of
19 Tr , by and between the COUNCIL ON AGING, INC.,'hereinafter
called the Grantee and the CITY OF FAYETTEVILLE, through its
Community Development Division, hereinafter called the City;
WHEREAS, the Grantee is a non-profit corporation that provides
services and programs designed to allow persons over 50 years of
age to live independently and to enhance overall quality of life
and offers these services and programs to all eligible persons who
reside within the city limits of Fayetteville; and
WHEREAS, the Grantee and the City are interested in expanding
programs and services to all citizens of Fayetteville, particularly
persons over 50 years of age, by providing public facilities for
the purposes described herein;
NOW THEREFORE, in consideration of the benefits to be derived by
the citizens of Fayetteville from programs and services described
herein, the City agrees to provide funds to the Grantee for
development and construction of a Community/Senior Center.
I. GRANT CONDITIONS
a. It is expressly agreed and understood that the total
amount to be paid to the Grantee under this Agreement
shall not exceed $375,000.00. Disbursement of grant
funds will follow the guidelines specified in Section II
of this Agreement.
b. Funding under this Agreement is contingent upon award of
Community Development Block Grant funds to the City by
the U.S. Department of Housing and Urban Development
(HUD).
c. Grantee agrees to construct the Community/Senior Center
on real property which the City owns, that is commonly
described as 901 South College and more particularly
described as:
Lots 1, 2, 3, 8, and 9 in Block E and Lots 17 through 21
in Block F of the Archibald Yell Subdivision to the City
of Fayetteville, Arkansas and including a 50 foot drive
that appears as Henry Walker Drive on the recorded plat
thereof.
a. Grant funds will be used for planning, design,
development, and construction of a Community/Senior
Center as follows:
1. Grant funds will be used to secure the
services of a licensed architect who will
complete a Design Study. The Study will
include a conceptual design of the building,
parking requirements, related site
improvements, and a preliminary cost estimate.
The Design Study will include representations
of the conceptual design through drawings and
at least one scale model.
2. The development and construction of the
building will be undertaken only when
sufficient funding is secured to complete the
project, in addition to the grant funds
awarded herein. Grant funds will be expended
for eligible activities in amounts that
represent a proportionate share of the costs
in relation to other project funds.
3 The City will have the right to review the
plans and specifications and will provide
written approval of plans and specifications
prior to commencement of the bidding process.
e. The Community/Senior Center will conform to the
requirements described in a statement of "Initial
Requirements for Walker Park Senior Center" dated
November 30, 1992 attached as Exhibit 1 and made a part
of this Agreement. Any changes to these initial
requirements must be approved by the City through the
Community Development Coordinator.
f. It is agreed by both parties that legal title to the
Community/Senior Center will vest with the City when
construction is complete.
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It is agreed by both parties that services and programs
currently offered at the Sang Avenue Senior Center,
excluding preparation of meals for the Nutrition Program,
will be transferred to the Community/Senior Center. At
that time, a lease will be negotiated for use of the
Community/Senior Center with the agency that is
responsible for the provision of services and programs at
the Sang Avenue Senior Center.
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II. TIME OF PERFORMANCE
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Activities in conjunction with this Agreement will
commence on the day of 19
and will continue until the construction of the Senior
Activity Center is completed in a condition that is
acceptable to the City or until December 31, 1995
whichever is earlier. This Agreement may be extended
later than December 31, 1995 upon mutual consent of both
parties.
II. PAYMENT
Disbursement of grant funds will follow these guidelines:
1. Payment of grant funds will be made directly
to Grantee for eligible costs in conjunction
with the project.
2. The Grantee will submit invoices, progress
payment requests, statements and other
requests for payment to the Community
Development Coordinator. Invoices and other
requests for payment shall include
documentation in sufficient detail to
determine that the request is reasonable and
pertains to the project.
3. Each invoice or other request for payment
shall include a signed statement by the
designated responsible party of the Grantee
that (1) all goods and services have been
received, (2) that payment to the vendor or
supplier is due, and (3) that materials and
services were used for eligible activities as
described in this Agreement.
III. GENERAL CONDITIONS
a. General Compliance
Grantee agrees that funds provided by and through the
CDBG Program are used in accordance with all requirements
set forth in 24 CFR Part 570 which is the regulatory
document for the CDBG Program.
b. Accounting and Contract Administration Requirements
As a non-profit corporation, the Grantee agrees to follow
the Uniform Administrative Standards found in OMB
Circular No. A-122 attached as Exhibit 2 and hereby made
a part of this Agreement.
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Grantee agrees to follow requirements of applicable
Attachments to OMB Circular A-110 in performance of the
following activities:
Cash Depositories - Attachment A (except paragraph 4)
Bonding and Insurance - Attachment B
Recording Keeping Requirements - Attachment C
Financial Management Standards - Attachments F and G
Reporting Requirements - Attachment H
Property Management Standards - Attachment N
The applicable attachments to OMB Circular A-110 are
attached as Exhibit 3 and are hereby made a part of this
Agreement.
c. Procurement
The Grantee agrees to comply with the adopted policies
and procedures of the City and with the requirements
contained in OMB Circular A-110, Attachment 0 (see
Exhibit 3) regarding procurement of services, goods, and
materials insofar as these policies, procedures, and
regulations apply to the performance of this Agreement
and contracts entered into as a result of this grant
award.
d. Audits
Grantee agrees to have audits conducted in accordance
with OMB Circular A-133 attached as Exhibit 4 and hereby
made a part of this Agreement.
e. Access to Records
The Grantee shall furnish all information and reports
required hereunder and will permit access to its books,
records, and accounts by the City. HUD or its agent, or
other authorized Federal officials for purposes of
investigation to ascertain compliance with the rules,
regulations and provisions stated herein.
f. Nondiscrimination
The Grantee agrees to comply with Title VI of the Civil
Rights Act of 1974 and Section 109 of Title I of the
Housing and Community Development Act of 1974, as
amended, which state that no person will, on the basis of
race, color, national origin, sex, age or religion be
subjected to discrimination, be excluded from
participation in, or be denied the benefits of any
programs or activity funded in whole or in part with
Community Development funds.
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Section 504/Americans with Disabilities Act
The Grantee agrees to comply with any Federal regulations
issued pursuant to compliance with Section 504 of the
Rehabilitation Act of 1973 which states that no otherwise
qualified individual with handicaps in the United States
shall, solely by reason of his or her handicap, be
excluded from participation in, be denied the benefits
of, or be subjected to discrimination under any program
or activity receiving Federal financial assistance.
The Grantee agrees to comply with requirements of the
Americans with Disabilities Act of 1990 which prohibits
discrimination on the basis of disability and assures
equality of opportunity and full participation in, among
other things, public accommodations. The City will
provide the Grantee with any guidelines necessary for
compliance with these regulations during the term of this
Agreement.
h. Labor Standards
The Grantee agrees to comply with the requirements of the
Davis -Bacon Act, as amended and the Copeland "Anti -
Kickback" Act and all other applicable Federal, state and
local laws and regulations pertaining to labor standards
insofar as those acts apply to the performance of this
Agreement and contracts entered into as a result of this
grant award.
is Assignability/Subcontracts
The Grantee shall not assign or transfer any interest in
this contract without the prior written consent of the
City. The Grantee shall not enter into any subcontracts
with any agency or individual in the performance of this
contract without the written consent of the City prior to
the execution of such agreement.
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Conflict of Interest
The Grantee agrees to abide by the provisions of 24 CFR
570.611 with respect to conflicts of interest; and
covenants that it presently has no financial interest and
shall not acquire any financial interest, direct or
indirect, which would conflict in any manner of degree
with the performance of services required under this
Agreement. These conflict of interest provisions apply
to any person who is an employee, agent, consultant,
officer, or elected official or appointed official of the
City, the Grantee, or of any designated public agencies
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or subrecipients which are receiving funds under the CDBG
Entitlement program.
k. Amendments
The City or the Grantee may amend this Agreement at any
time provided that such amendments make specific
reference to this Agreement and are executed in writing,
signed by a duly authorized representative of both
organizations, and approved by the City's governing body.
Such amendments shall not invalidate this Agreement nor
relieve or release the City or the Grantee from its
obligations under this Agreement.
The City may, in its discretion, amend this Agreement to
conform with Federal, state or local governmental
guidelines, policies and or for other reasons. If such
amendments result in a change in the funding or scope of
work as described herein to be undertaken as part of this
Agreement, such modifications will be incorporated only
by written amendment signed by both parties to this
Agreement.
1. Suspension or Termination
If the City determines that the funds will not or cannot
be used for the purpose described herein, Grantee agrees
that all funds or portions thereof, in the case of funds
remaining after approved disbursements, shall be
forfeited to the City. Grantee further acknowledges no
further interest, right, or claim in regards to any
proceeds so returned.
The City may suspend or terminate this Agreement, in
whole or in part, if the Grantee materially fails to
comply with any tern of this Agreement, or with any of
the rules, regulations or provisions referred to herein.
Grantee understands that should it not meet the
requirements of the CDBG Program or the terms of this
Agreement while this Agreement is in force, Grantor shall
take any action or remedies furnished under 24 CFR Part
570 to ensure regulatory compliance including but not
limited to requiring Grantee to repay grant funds.
In the event of any termination, all finished or
unfinished documents, data, studies, surveys, maps,
models, photographs, reports or other materials prepared
by the Grantee under this Agreement shall, at the option
of the City, become the property of the City.
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m. Hold Harmless Clause
Grantee shall indemnify and hold harmless the City, its
officers, boards, commissions, agents and employees
against and from any and all claims, demand, causes of
actions, actions, suits, proceedings, damages (including
but not limited to damages to City property), cost of
liabilities including the cost of liabilities of the
Grantee with respect to its employees and cost of
defending any and all such actions and proceedings as set
forth herein, of every kind and nature whatsoever and
regardless of the merit of any of the same arising out or
pertaining to the services as herein agreed by the
Grantee. This clause shall not be construed in any form
or manner to waive that tort immunity set forth under
Arkansas law.
IN WITNESS WHEREOF, the City and the Grantee have executed this
Agreement on or as of the date first above written.
Attest:
CITY OF FAYETTEVILLE, ARKANSAS
7
MAYOR
COUNCIL ON AGING, INC.
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COUNCIL ON AGING, INC.
ELDERLY SERVICES AND NUTRITION PROGRAM
818 NORTH SANG AVENUE
FAYETTEVILLE, ARKANSAS 72701
Phone: 521-6960
November 30, 1992
INITIAL REQUIREMENTS FOR WALKER PARK SENIOR CENTER
I. POSSIBLE USES acOR EXIST:NG HOUSE
A. MAN FLOOR
1. Library & Msic Room
2. Lcurge, TV & Radio Room
3. Table Games Room for 4 or 5 tables (TV/Radio not
compatable)
4. Crcices cr Storage
5. Restrooms
6. Garage for storage of grounds upNeeping ecuipment.
B. ..PPER LEVEL
1. Offices (1Cx12 min.)
a. Director
b. Admir. Assistant
c. Secretary
d. Activities Director
e. Accountirg Clerk
2. Office Supplies and Records S o -age
3. Staff Restrocirs
:I. NEA SENIOR CENTER BUILDING
A. ACTIVITIES SECTION
3. Man Hall/Dirirg Room Area (33'6" x 75'9")
Seating for 180 people at 30 round tables,
54 -inches Dia. (5 -rows staggared) w/ 15 -Ft stage
area across frort. (Piano, etc could sit in tnis
area as well). Pust pe adjacent to kitchen arc
food serving area ard have sheltered entranceway
to outside parkirg areas.
2. Arts and Craft Class/Work Room (205 x 40') with
locKable supply storage caninets under and above
a counter -top across ore erc cc t.P-e room.
3. Arts and Cracts Class/Work Room (2C' x 20') with
lockable storage cabirets as above.
4. Kiln Room (9' x 12') acjacert to larger 4&C Room
kith Utility SinK (contairirg a mud & lint trap),
open shelving and a vert 4ar for removing Kiln
"eat.
5. Pool Table Room for two tables (20' x 28')
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6. Exercise Equipment Room Aith space fo- a Shuffel
Board Table, Dart Board, etc. (20' x 28')
7. Vestibule/Aai ing Room at Entrance ;10 x 10')
8. T1.0,o Onices (10' x 12') oath near main entrance
(to observe traffic ir and o -,t of the center)
9. Ccat Room (near office at entrance) (10' x 10')
10. 2-Restrocrs (10' x :6') eacn
Storage Room fo- all tables and chairs in main
dining nall (12' x 16').
12. Utility arc Janitorial Storage Room (10' x 12')
B. KITCHEN
1. WM-K Area w/ Serving Bar (24' x 30')
2.
Kitchen Equipmert
1 4-Burrer Commercial Cook Stove w/ Over
1 Vent Hood 'ICY Stove w/ Fire Protectior
1 20 -Tray Holding Oven
1 Commercial 2 -Door Refrigerator
1 Conmercial 2 -Door r-eeze-
1 lce Making rachine
1 3-Conpartmert Sink ,AJ/ Drain Boards
1 Handwash Lavatory
1 Commercial Dishwashing Machine vi/ Sink ard
Gardage Disposal Unit
50 -Gal Hot Water Heaters
1 8 -Station Steam Table to,/ Sreeze Cover
1 8 -Case Milk Cooler
1 3C' x 5' Accessories Table/Cabirert
1 Trash Dumpster
Dish/Tray Storage Cabinets ard Racks
Parking/Loading Area 'or Fooc Vars and
Volunteer Meal Drivers at Kitcnen
Entrance (6 -Spaces)
III. PAVED PARKING AREA (5-Handicadoed and SO -Regular) all
easily accessible to elderly drivers
IV. TCTAL SOJARE FEET IN NEto. BUILDING = 6,600
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41109 Office of Management and Budget Circular A-1
OFROE OF MANAGEMENT AND local. or federatty tea:wizen g
BUDGET tnbal government. Circular 74-4 IIIdU
aroular A-122, "Coat Principles foi
Nonprofit Organizations"
AGENCY: Office of Management and
Budget.
ACTION: Final Policy
lune 27.1990
To The Heads of Executive
Departments and Establishments
S.thject: Cost pnnciples for nonprofit
organizations.
1. Purpose. This Circular establishes
principles for determining coats of
grants contracts and other agreements
with nonprofit rganizations. It does not
apply to colleges ard universities which
are covered by Circular A-211 State.
local. and federally recognized Indian
tribal governments which are covered
by Circular 74-4: or hospitals The
principles are des gned to provide that
the Federal Government bear its fair
share of costs except where restricted or
prohibited by law. The principles do not
attempt to prescribellhe extent of cost
shanng cr matching orrgrants, contracts,
or other agreemer.ts. Hcwever. such cost
sharing or matching shall not be
accomplished through artunary
!Imitations or. individual cost elements
by Federal agencies. Provision for profit
or other increment above cost is outside
the scope of this Circular.
2. Supersessior. This Circular
supersedes cos: principles Issued by
individual agencies for nonprofit
organization.
3. Applicabihty. a. 'Pliese principles
shall be used by all Federal agencies In
determining the coati of work performed
by nonprofit organization' under grants,
cooperative agreements. cost
reimbursement contracts. and other
contracts in which costs are used m
pricing. administration. or settlement.
All of these instruments are hereafter
referred to as awards. The principles do
not apply to awards under which an
organization is not required lo account
to the Government for actual costs
Incurred.
b. All cost rei:nbursement subawards
(subgrants, subcontracts. etc.) are
sublet' to those Federal cost principles
applicable to the particular organization
concerned. Thus, if a subaward Is to a
nonprofit organization. this Circular
'shall apply: if a subaward is to a
commercial organization. the cost
principles applicable to commercial
concerns shall apply: if a subaward is to
a college or university. Circular A-21
shall apply if a subaward is to • Stale.
mormscr Publishing Gitlin 1^c
apply.
6. Definitions. a "Nonprofit
organization" means any corporation.
trust, nsociation cooperative. or other
organization width (1) is operated
pnmenly for scientific, educationaL
service, chentable, or similar purposes
in the public interest; 121 is not
organized primarily for profit: and 13)
uses its net proceeds.to maintain,
improve. and/or expand its operations.
For this purpose. the term "nonprofit
organization" excludes (i) colleges and
universities: (ii) hospitals: (iii) State,
local. and federally recognized Indian
tribal governments: and (iv) those
nonprofit organizations which are
excluded from coverage of this Circular
In accordance with paragraph 5 below.
b. "Prior approval" means securing
the awarding agency's permission ut
advance to incur cost for those items
ihat are designated as requiring pnor
approval by the Circular. Generally this
pernumion will be m writing. Where an
item of cosl requinng pnor approval is
specified .n the budget of an award.
approval of the budget constitutes
approval of that cast.
5 Exclasion of some nonprofit
organizations. Some nonprofil
organizations. because crf their size and
natcre of operations can be considered
to he similar to commermakconcerns for
purpose of applicability of toot
principles. Such nonprofit organizatior.s
shell operate under Federal cost
principles applicable to commercial
concerns. A listing of these
organizations is oestained is
Attachment C. Other organizations may
be addedbee Nine to lime.
& Respossibilitiee. Aseeeies
responstisis ior administering programs
that involve swarth to nonprofli
organizations shell trapiainent the
provisions of this Circular. Upon
request, baplementing instruction ehall
be furnished to the Office of
Management and Budget Aseacies abitfl
designee a liaison official fa serve as
the 'peaty representative en Matters
relaling to the Implementation of this
Circular. The name and title of sera
representative shall be furnished to the
Office of Maaariment and Budget
within 30 days of the dale el this
Circtilar.
Atiochatenle. The principles and
related poky guides are sat forth In the
following Attachments
Attachment A--Generel Principles
Attachment B—Selected hems of Cost
Attachment C.--Nceipeollt
Onpunzatiess Not Subjeci In This
Circular
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& Rarest: for excepts° Re. The Office
of Mans gement aad Budget may grant
exceptions to the requiremests of this
Circular when permiasible under
exiling law. However. in the Interest af
achieving maximum umformity.
exceptions will be permitted only 111
Itghly unusual circuallitanCee.
9. Effective Dale. The provisions of
this Circular are effective immediately.
Implementation shall be phased m by
incorporating the provisions into new
awards made after the abut of the
organization's next fiscal year. For
exisling awards the new principles may
be applied if an organization and Gel
cognizant Federal agency agree. Eviler
implementatiot or a delay m
implementation of individual previsioni
is also permitted by mutual agreement
between an organization and the
cognizant Federal agency.
10. Inquiries. Further indonnation
concerning this Circular may be
obtained by contacting the Financial
Management Branch, Budget Review
Division. Office of Management mid
Budget, Washington, D.C. 335034
telephone (2021 3415-4773.
lames T. hilchityre. fi..
Director.
'Circular No. A-1221
Attachment A
General Principles
Table of Contents
A. Basic Considerations
1. Composition of total cede
2. Factors affecting allowebellf af lea
3. lismonable oasis
1. Allocable cosis
5. Applicable credits
&Advance underatandlaga
B. Direct Goers
C Indirect Costa
13 Allocation of indirect Costa mid
Determination of Indirect Cad Bate
1. General
2. Simplified allocation method
3. MeV* aflocatton base siaboa
4. Diihci allocation alethod
5. Special indirbet eon raise
E. Negotiation and Approval of tndirect Cost
Rates
1. Definitions
2. Negotiations and approval.of rates
;Cunslar No A-1.221
Aryan's! A
General Principles
A. Basic CoasnienItioaa
1..Compontion of total on. Th. luta soil
of an award he the aura of the allimeable
direct and allocable :naval coos Ian any
applicable credits.
2. Factors affecting afirnrobillry of oasts
February 1995
'1109
Tab 110C • Page 143
To he eflowante under an award cons MOO
Inerl rhf following general cnteria-
a Be reasonable for the performance of the
award and be allocable thereto under these
principles.
b Conform to any limitations or exclusions
set forth in these principles or ui the sward
as to types or amount of cost dew.
c Be amsistent with policies and
procedures that apply uniformly to both
federally Enanced and ether activities of the
orgarazation.
d Be accorded consistent t-eatment.
e Be determined in accorddrice wtth
generally accepted accounting pnnaples.
f Not be .ncluded as a cost or used lo meet
cost sharing or matclung requimmente of any
other federally financed program in either the
current or a prior period.
g Be adequately documented.
Arosono/Ple costs A LOW limier eke
if n its natre or amount..fdoes not exceed
that which would be Incureed hy e pnident
pi non under :he circumstances prevail ng at
the lima ibe decision was made to incur the
costs The question of the reasonabkness of
specific costs must be scrutinized with
parlicu.ar care in connection with
organize:ions or separate divisions thereof
wh ch reci•ive the prepcuderance of their
support :rom awards made by Federdl
age,: es :n ceterm ning •he reason •hl-ness
cf • gven cn,I. CgrSIderal on ithal be given
a K hether the ccs i. af a type generally
retool zed as ordinary ard necessary for the
opera i:.in of :he orgunaation or the
perlurrnarue of Me a wale,.
o ; he retar..inis or reindremerds imposed
bybIL h tattirs as se In -ally accepted socnd
business pra-iicrs. arms length bargaining.
Federal and State laws and regclations. end
terns ane conditions ot the award
c Whether the Indic/1(1mila concerned acted
h prudence n the croutslantes.
cors.der ng tried responsibilities to the
orea•az.lion. its members. employees. and
cli',s the nubile al large, ar.d the
g Sieniiii ant .Jr. alians from the
esiahl shed a-artices of the eelAm:alion
whidh riqy un ustifiably increase the award
C nis
4 A cons
a A cost is allocable :o a part.tular cost
ob et ,i. sach as a grant protect. service. or
nun r aitodi). .n accordance with the restive
henrids receis ed. A cost li a.locable to a
Line -linen' award if .1.s 'reeled
consistently w•th other costs .ncurred for the
same purpose in ake circumstances and if
,11 k .nr °nod specifically for the award.
.2' Brreles no:h the award and oiher worit
and car. be dtrbued .n reasonable
proocrtion t,j he benefits received
5 Is necessary to :he overall opera lion of
the organization al.hough a d red
reladouship to any particular cost obtectiv•
carroi be shown
• Ar3 zosi a:tenable to a particular award
or juir cost obiective under :hese principles
may not be shifted ic ether Federal awards to
cvercane funding deficiencies. or to avoid
res'r dions 'reposed by law or by the terms
el he award
Page 444 • Tab 1430
5 Applacobie creciaLs
• The term applicable credits refers to
those rreripie al reduction of exprod:ii.MPI
MOM h operate to offset or reduce expanses
tierce that err, allocable to awards as direct
or indirect costs. Typical examples of such
transact.oru arc purchase discounts. rebates
ur alkwances. recevenes or indemnities on
losses, insurance refunds. end sdivatainns of
overpayments or erroneous charges. To the
extent that such crediis accruing or received
by the organtzation relate lo adowable cost
they shall be credited to the Government
enher as a con reduction or cash refund as
appropriate.
• itt some instances. the amounts received
rm the Federal Government to finance
organizational actinties or strobe operations
sliatild be treated as applicable credits.
Specifically. the concept of netting such
ci edit items against reJated expenditures
senuld be in:plied by We orgaruzaton in
Ccterra ng the rates or amounts to be
crganization in determining the rates or
armour:Is tc be charged to Federal awards
fur services rendered whenever the 'endives
Air other resources used in provid.ng such
services have been financed 1 rectly. tn
%lite or in part. by Federal funds.
evil For ruies covering program income
ft e. gross income earned Irons federally
suppt.ned al -bogies: see Attachment D of
OMS Circular A-110
6 4dvo1,ce and unclersiondifigs. Under any
g ven award :he reasonableness and
al oraluhly of certain 'tents of costs may be
odlicuit to determine 'This particalarly true in
connection velth orgizalioni that receive a
preponderance of their support from Federal
agencies In order to !IVO d subsequent
•fisallowance or Minute based or.
urreasonablenna o: nonallocabiltiy. 11is
clien desirable to seek a wrIlen agreement
with the cognizant or awarding agency in
ads dna, of the incurrence of special or
ur csal costs The absence of an advance
agreement on arty element of cost will nol. in
:self. affect the reascnableness or
alkcabil•ly of that element.
Mired Casts
1 Duect costs are those :ha' can be
ident.fied specified:lc w th • partict.lar fial
cosi rbiective 1 e.. • panicu:ar award.
priceci. service. or other cured act.vity of ar
wiselion. However. • cost may no: be
asseared to an award as. direct cust if ary
oi"r• cost inc.ored kr the same purpose. in
ice ti-tumstance. has ben allocated to an
nerd as an indirect cosi Cost identified
s; diecully with awards re direct cost of the
a ',arils and are to be an gned directly
EN, Cost identified spear:rally with other
• al Lest ob!ectives of the organization are
11 ant rosts of those cost obie.:11.es and ere
• ic be assigned :o cther awards directly or
ti)
2 3r1 direct cost ora minor a -,on' may
te treated as an indirect ccsi caw reasons If
p -az' eality w here the arrtaird treatment fur
su,:h cost is consistently erpliet to 311 rmi
cost objectives
3 The cost of certain ant/dies are not
allowable as charges to FeUel al awards lite
f ir el amp e. furd rais.ng costs n paragraph
February 1985
21 of Attachment Bl. Itnwever even though
these cons are unallliweble for purposes of
computing charges to Federal awards. they
nonetheless must he treated e• direct unit for
purpling; of determining indirect cost rules
aril be allocated their share ol the
organization's indirect ensis if they represent
activities which (II include the salines of
personnel, (21 occupy acne. and 13] benefit
frcm the organization's indirect C0313.
4. The Wail of activities performed
pnmanly as a service to enembes. clients or
the general public when significant and
necessary to the organization's minion must
be treated as direct costa when or not
allowable and be .alor.ated an equi:ahle
share of indirect coals Some examples of
these types of actinhes include
e. Mdin lens nce of membership rolls
subscriptions. publications. and related
funCions
b Providing services and information tn
members. legislative or administrative
bud.es. or the public
c Promotion. lobbying and. other :ens of
put or re.ations.
d Meetings and conferences except thove
Lw d to conduct the genera: adrnin strdliun of
the orgsnization.
3 Maintenanne. prolccnon. and investment
if sandal funds not used in operation of the
crionizelion.
f Administration of group benefits on
behe:f of members of clients .ncludirg life
end hospital insurance. annuity ar -enrement
clans. Finar.cjs aid. etc
C trittrect Cost
1 Wren costs are dune that have been
inc. :ter' for cem nun or mai; ohm- des and
canadt be readily idertified with a particular
fa. 1 CA • ol.lect•Ile Deem cosi of mini ir
▪ •11.•.:• sildy be tree led as indirect cos is
Linde: the cned.tions descnhed in paragraph
B ? otiose Afie: direct costs ndve oeen
d'•-1 -iiied and ass•gned directly to awards
tr 0.cer work as apprupnate. indirect costs
• .hnse remain.ng to be 1,:kcateil to
lteriefii•ng cost objectives. A cosi may not he
dUk ited to am award as an indirect and if
Olin coat incurred kw the same purpose
r e circumstances hes been aaR.rd to
ar award as • direct con.
z Because of the diverse charei terix:ice
• accounting practices of nonprofit
• .Thir mations. is not possible to specify the
t)o. s d cost which may be classified as
indi-ect cosi en all situation. Howei. et., typical
examples or indirect cost for many nonpruk
• Raman:ions may include depreciation or
t.se aeowances or buildings and equipment.
cd.s's of operunng and maintaining
far:bites. and general administration and
g .e•cl. expenses such ao the salaries and
es..enses of executive officers personnel
adir....inration. and accounting
Alli.cotiot of Indireci Cori ond
tir't ni,nolann of inchwv-r Cosi Rufrs
1 Griner&
a Inhere a nonprofit organization has cnly
ode n noir ftrirtion, or is 'IP:! ail gs ma:nr
I..nroons benefit from its milrer 1 Lolls to
app--waniately the same degree the
llocni on of indi: ed cows •nd the
Single Auait lnlormanc.r. Service
1
computation ohm wanted wit rale may be
accomplished through simplified allocation
procedures as described in paragraph 2
below.
b. Where an orsamsallon has several major
functions which benefit from its indirect r.osts
in varyum demote ellocalloa el indirect
costs may require Inc accumulation of such
cos s into separaie cost groupoms which then
are .Coated ndivduaIJy la benefiting
functions by means of a base which best
measures the relative degree of benefit. The
indirect coals adocated to each function are
then distributed to trenviclual award' and
other activities included in that dunclion by
means of an indirect cost rate's)
c. The drier:matron of what conshtules an
°restoration's minor functions wdi depend an
113 purpose m being. the types of serv.ces Lt
renders to the pubac. lie clients. ar.d its
membera. end the amount of ellort it devotes
to 'loch activities as fund raising public
information and membership activities.
d Specific methods for allocating indirect
coats and compuium indirect cost riles along
with the conditions under which each method
shou:d be used are described m paragraphs 2
through 5 be:ow
e The bdse period for the allocation of
indirect costs the penad in wnich such
costs are incurred end sccmumwared for
allocation wo work performed us that period.
The base period normally should comrade
wdh the orgenizabon's fiscal year. but in any
mint. shall be so selected as. to svoid
ir eccities in the allocation a the costs.
2. Simpafred of locanon method
a. Where an organizationa maior functions
benefit from as cos:s
approxima.ely 'he same dere. Ihr &Jonah°,
of indirect costs may be accomposhed by [1]
aeparating the organization $ Iola. coals for
the base perod as either direct or indirect.
and lul dividing the total allowable indirect
costs (nel of applicable credits) by ar.
equitable distribution base. The result of :las
process la an indirect coat rate which is used
to cbsinoute indeed costs to individual
awards The rate should be expressed as the
pereentege which the total amoun: of
allowabie indirect costs bears to the base
selected Thia method shbu.d slog be used
where an organization has only one ma,or
'unction encompassing a number of
•nd.vicuial protects or activities. anc may be
used where the lave: of Federal awards to an
organize ikan .s relatively smalL
b. both the d rent casts and the indirect
cosi• shall each:de capital expenditures and
unallowable costa liowever. unallowable
costa which represent activities must be
in:aided in the dire..1 costa under the
condit.ons described in paragraph 83 above.
c The distrbutior base may be total direct
cos's lexcladiag capital; expenditures •nd
other disiorLum items. such as maior
subccnuacts or sulagranta). dues:salaries
and wages. cr other base which results .n an
equitable distribu'ion. The distribut.on base
shall generally exclude participant import
coats as defkned m paragraph 29 at
Attachment a
d Eaapi where a special :steal is
requemed in accordanc.e with paragraph 05
-horroson Putlish ng Grout.. Inc
below the Indirect cam rate devalopecl ander
the above principles vs appluaLle to all
aweede al the organization. If a special
raIejs 5 requaed. appropriate modalicitions
shall be made n cedes lo develop the spacial
rains).
3 Mu ft,pia allocution Law sn..:hact
• Where an °Plana:anon s inthruct costs
benefit its minor functions kn varying degrees.
such costs shaa be accumulated .nto separate
cost groupings Each grouping shall then be
a.lccated mduividually to benef Ung functional
bv means of a base which best measures the
relative benefits.
b The groupings shall be established so •s
to permit the ailocat.on of each groaping cn
the bays of benefits provided to the major
(uncaring. Ear.h grouping should constitute •
pool or expenses that ere of like charac:er in
terms of the functions they benefit and in
terms of the &location base which best
me '<Lis :he relative beneftla providd to each
function The number of separate groupings
should be held within praciic.al limits. taking
mac consideration the materiaidy of the
b mounts involved and the degree of prems.on
desired.
c Actual conditions must be taken into
account in selecting the base to be used .n
ailocating the expenses in each group.ng to
benefiting functions When an allocation can
he made by assignment of a lost grouping
directly to the function benefited, the
alincation alien be made in that manner.
la her the expenses in a grouping are more
general in natore the aliocation should be
trade :hrough the use of a selected base
which prodaces results that are equitable to
both the Government and the organization In
gercral. any cost element or cosi related
'actor associeted with me organization
work is potent.ally adaptable for use as an
a:II-cation base provided II) it can readily be
expressed .n terms of dollars ar oiher
quaradahae measkues :total direct costs.
dew' sa.anes and ft ages slaff hours applied.
sqaare feet used hours of abage number of
documents processed papuld hon served and
the !nits] and lid LI .1 ccrirron to the
bi nefit.ng fanchuns daring iae base per od.
d. Except where a special inairec: cast
rah:18)13 required in aucordance with
praeraph 0 5 below. the separate groupings
of indirect coils ellocaied lo each major
funoton shad be agregmed ard t-ealed as a
commen poal for that fanchon. The costs .n
the common pool shall tarn be distribaled to
indiv.sual swats included in she' fancaor. by
Lae cf a s.ngle indirect cosi -sie.
e. The d st-ibui on base used in computing
I! P Ind.rect ccst ra IP for each furor on may
be tole. di-ect costs (earr ud:ra capital
.pend tures and other distcrting items such
as maior subcontracts ard smthgrants]. direct
calcines and wages. or other ase wh.ch
results •n ar eqadahme d stribdi•on. The
d stribation base ,hal: genera'ly exclude
art °pant support costs as defined in
paragraph 29. Attachment B An indirect cost
rale shoald be developed fir each separate
nil rect cast pool de % eloped DIP rale in each
c.• se should be slated es the percentage
whica the amount cf the particalar indirect
cost poo. is or the d sir but:or base identified
February 1985
41109
with that pool.
4. Threcf allocation meiotic()
a Some nonprofit orginizani. nu. treat all
cnium aa timed rusts expect general
adnunialrelion and general expenses These
nrgnn.sahnns gcnenilly separate their coils
ii1113 thre basic cal ractir rs .1 Geer 3111
.11.1111.11111:rblicri and general expense,
hind raising, and 111 other direct funct sins
(including protects performed ander Federal
awards). laini costs. such as depreciation.
rental coals. cperalion and main:enence cf
faci:ities. telephone expenses. and the like
are prorated inclivaueLy as d.rect cost to
each category and to each award. cr other
activity using a base most apPrcpriate to the
pa -1 rule: real being prorated.
b. This method a acceptable proviced each
joint cost is prcraled usng a base which
accurately measures the benefits provided to
each award or other act wily. The base' nit
he established ir accordance with retainable
criena. and be skippered by current dame.
This method is ccripatible wPh the
Standards of Account ng ard Finana al
Reporting for Voiun•ary Health and Welfare
Organ:eat:tins issued ;airily by ihe Naacral
Health Council. Inc. the Nal anal Asserr.b.y
cf Voluntary Hea ih ard Social Welfare
0-gani2ations. and the Lmied Way of
Amenca.
c Undar this method. indirect costs consist
eclusive y nf gametal administration and
ger.eral expenses In all other respects. the
organ.zation s indirect cost Wens shal be
computed in the same manner es that
descnbed •n paragraph D 2 above
5 Special Indirect cost rotes. In some
.nslances. it single indirect cost rale fcr all
activities or an o-ganizatIon or for each major
function of the arganizafion ay no• be
appropr.ale. s rice .1 wimi:d not take .nto
accoant those different factors which may
sanstanlially affect the ind•rect costs
applicable to a particu'ar seven' cf wcrk.
Fer this purpose a part eclat segment of
work For this purpose a particular sem-sent
of work may be that performed umier a singe
sward cr .1 may consist of work ander a
group of awards perthrmed n a currrnan
env.ronment. the factors may inc id e the
cthysical locaticn cf the wok. the level of
adm nisira:ive sappo-t requ red. the namure of
the fealties or alter resources emp:oyed. the
toenail° disciplaes or technical sic ills
involved :he organizational arrangements
used. or any comb.nat•on thereof. When a
cartled:Ae segment of work is perfo-med in an
environment which appears to genera'e a
significantly d.fferent avel of 17117111 ed CO3'3.
provision' should be made for a separate
indirect cosi pool applicable In such work.
The separate indirect rest pool should be
developed danag the mine of the regu.ar
allocation process and the separate .ndireca
ccst rale resulting therefrom should be used
proilded i: is determined that the rate
tillers significantly from thal which would
have been obtained under paragraph 13.2. 3.
and 4 above and ; the volume of work to
which the rate would apply is materia..
E Negobotion and .4poroval frd:recl Cost
Rotes,
Tab 1100 • Page 145
411609
1. Def.ritcons As used in dile section. the
following terms have the meanings se: forth
below
a. "Cognizant agency" means the Federal
agency responsible for negotiating and
approving indirect cost rates for a nonprofit
organization on behalf of all Federal
agencies.
b. "Predetermined rate mean' an indirect
coat rate, applicable to a specified current or
future period. usually the organization s fiscal
yeer. The rate is based on an estimate of the
costs to be incurred during the period. A
predetermined rale is not subject to
adjustment.
c. "Fixed rale means an indirect cost rate
which has the same charactenstics as a
predelermuied rale. except that the difference
between the estimated costs and the actual
costs of the period covered by the rate Is
earned forward as an adjustment to the rate
computation of a subsequent penod
d. "Final rate means an indirect cost rale
applicable to a specified past period which is
based on the actual costs of the period A
final rate is not subject to adjustment
e 'Provisional rate" or billing rate means a
temporary Indirect cosi rate applicable to a
spec.fied penod which ia used for funding.
interim reimbursement and reporting indirect
costs on awards pending the establishment of
a rale for the period.
f. "indirect cost proposal" means the
documentation prepared by an organization
to substantiate its claim for the
reimbursement of indirect coals. This
proposal provides the basis for the review
and negotiation leading to the estabiishmer.1
of an organization's indirect cost rate.
g. "Cosi objective" means a fluiction,
organizational subdivision. contract. grant. or
other work unit for which cosi data are
desired and for which provisior. i. rnade to
accumulate and measure the oast of
protease.. projects. jobs and cap.talized
projects.
2. Negotiation and opprovol of rates.
a. Unless different arrangements are
agreed to by the agencies concerned. the
Federal agency with the largest dollar value
of awards with an organization wi:1 be
designated es the cognizant agency for the
negotiation and approval of indirect cost
rates and. where necessary. other rates such
so fringe bere fit and computer charge -out
rates Once an agency is aseigned cognizance
for a particular nonprofit organization. the
assignment will not be changed unless there
le a major bang -term shift in the dollar volume
of the Federal awards to the organisation. All
concerned Federal agencies 'hall be given the
opportunity to participate In the negotiation
process but after a rale has been agreed
upon it will be accepted by all Federal
agencies. When a Federal agency has reason
to believe that special operating factors
affecting its awards necessitate special
indirect cost rates in accordance with
paragraph 0.5 above, it will. pnor to the time
lhe rates are negotiated, notify the cognizant
agency.
b. A nonprofit organization which has not
previously estabbshed an indirect cost rate
with a Federal agency shall after the
organization is advised that an award will be
Page 146 • Tab 1100
•
made and. in no event, leter than three
months after the effective date of the award.
c Organizations that have previously
established indirect cost rates must submit •
new indirect cost proposal to the cognizant
•gency within six months after the dose of
each fiscal year.
d A predetermined rate may be negotiated
for use on awards where there'. reasonable
assurance. based on peal experience and
ratable projection of the organization a costs.
that the rate is not likely to exceed a rate
based on the organization's actual outs.
e. Fixed rates may be negotiated where
predetermined rates are not considered
appropnate. A fixed rate. however. shall not
be negotiated 11 (1) all or a Juba tantial portion
of :he arganiution's awards are expected to
expire before the carry -forward adjustment
can be made. (ti) the nux of Government and
non government work al the organization is
too erratic o permit an equitable carry-
forward ad ustmenb or (iii) the organization's
operations fluctuate lignificant:y from year to
year
f. Provisiona: and final rates shall be
negotiated where neither predetermined nor
fixed rates are rippropna le.
g The results of each negotiation shall be
formalized in a wntlen agreement between
the cogn.zant agency and the nonprefil
organization. The cognizant agency shall
distribute copies of the agreement to all
concerned Federal agencies.
h. 0i dispute arises in a negotiation of an
indirect cost rate between the cognizant
agency and the nonprofit organization. the
d.spute shall be resolved in accordance with
the appeals procedures of the cognizant
ager cy.
i. To the extent that problems are
encoLntered among the Federal agencies in
connection with the negotiation and approval
process. the Office of Management and
Budge will lead assistance as required lo
resolve such problems in a timely manner.
ICircui a r No. A-12.21
Attachment 13
Selected Items of Cal
Table of Contents
1 Advertising costs
2 Bad debts
3 Bid and proposal costa 'reserved)
4 lior.dink costs
5. Communication costs
Compensation for personal services
7. Contingency provisions
8. Contributions
9. Depreciation and use allowances
10 Dona Items
11 Employee morale. health and welfare
costs and credits
12 F.niertehunent cuts
13 Equipment and other capital expenditure+
14. Fines and penalties
15 Fringe benefits
18. Idle !actinism and idle capacity
17. Independent research and development
(reserved)
111 Insurance and indemnification
19. Interest. fundwinsing. and investment
management costs
20. Labor relations costs
Fern-ary 1985
21. Losses an oi he; awards
22. Ma:nli nance and rt.pait coots
23 Malerolls tknd kupplier
24 Meeting% confinen/ as
26. Memberolopi. buliscopliont and
professional activity custa
28 Organization coma
27. Overtime. extra -pay shill. and mut:1511M
premiums
28 Page charges in professional hairnets
29. Partoipant support costs
30 Patent costs
31. Pension p:ans
32. Plan! security costs
33. Preaward coals
$4. Professional lervice costs
36. Profits and losses on disposition of
deprecsable propery or other capital
a51:1:5
38 Kinfomtatioo service costs
37 Publication and printing costs
38. Rearrangement and alteration r.nsts
39 Reconversion costs
40 Recruiting costs
41 Relocation coes
42- Rental costs
43 Royalties and other costa for use of
patenta and copyright.
44 Severance pay
45 Specialized service facilites
46 Taxes
47 Termination costs
48 Training and education costs
49 Transportation costs
50 Travel costs
!Circular No. A -122j
Attachment 9
Selected Items of Cost
Paragraphs 1 through 50 provtde principles
to be applied in establishing the allowstillty
of certain items of nastily'. prinmpies
apply whether a cost is treated as direct or
Indirect, Failure to mention • particular item
of coin is not intended to imply that Ili.
unallowable: rather determine bon as to
allowability in each came should be based on
the treatment or principles provided for
similar or related items of coat
1. Advergairry; cora
a. Advertising costs mean the costs of
media 'services and associated coma. Medie
advertising includes magazines. newipapers
radio and television programs. direct mad.
exhibits. and the like
b. The only advertising costa •Ilowabla are
those which are solely for lil the recruitment
of personnel when considered in conjunction
with all other recruitment costa, as set forth
In paragraph 40:the procurement of goods
and services: (lit) the disposal of surplus
ma tenets acquired in the performance of the
award except when orgeruzations are
reimbursed for enematas at a predetermined
amount an accordance with Attachment N of
OMB Circular A-110: or (Iv) specific
requirements of the award.
2- Bad debts. Bad debtt including losses
(whether actual or estilinaledl arising (ram
un collectible accounts and other claims.
related collection costa and related legal
costs. are unallowable.
3. Bid end proposal oosts. (reserved)
4 Bonding anti
Single ALM; information Service
• Bonding cots n-ise when the
..-sovremment requires assuranm against
financial lose to aural' or others by minion of
the act or default of the organization. They
arise also in Instances where the organizsion
requires similar assuranne Included are such
bonds as bid. perfonre noe. payment.
an ante payment, infnngement and fthei ly
bonds
b Costs of bonding required pursuant lo
the tern, of the swam are a.lowanle
c Costs of banning requtrad by the
organizelion in the general conduct of its
operations are allowable th the extent that
such bonding Is in accordance with sound
bus ness pracbce and the rates ano premiums
are reasonable wider the circumatances.
5 Communication oasts. Costs incurred for
telephone 'emcee. Local and long distance
telechnne calla telegrams. radmgrams.
Postage rir.d the like. are allowable.
8 Compensation for personal service&
a fief:moon Compensa bon for personal
services includes all compensation paid
urrer.ily or accrued br IF., argvnizatiOn for
se -vices of employees renderec during.the
penod of the "ward 'except as othenmse
proviced in paragraph a. below]. 11 •ncludes.
bui a not limited to aslant's. ;varies.
director's and executive corr.rnittee member s
fees. incentive award., fringe benefits.
person plan costs. allowances for off-erte
pay, uncentive pay position allowances.
herdrhip pay. and cost of livirg differennals.
b Allowability Except as otherwise
soecific.ally provided in this paragraph the
costs of such compensat on are allowable lo
the extent that:
HI Total compensation to individual
employees 1 reasonabie far the services
rendered and conforms to the established
pol.cy of the organizat on consistently
applied to both Government and non.
Goverr.ment activities: and
(21 Charges to sward' whether treated as
dtrect or indirect costs are deternuned and
supported a required in this paragraph.
c Reasonableness
ill When the organaation 15 predommant'y
engaged in 'cumber. other than those
sponsored by the Govenunent ccrapensaiion
for emp.oyees on Government-sponsored
work will be considered reasonable to the
extent that It is consistent with that paid for
similar work .n the organize bon a other
az:nines.
(21 When the organization is ',redo:Innen:lir
engaged n Covernmeriaponsored activities
and Ir. cases when the kind of employees
required for the Coverrument activities ore
not found in the organization's other
activities. compensation for employees on
Govenurientapor.sored work writ be
considered reasonable to the extent that it 1..
comparable to that paid for similar work m
ihe :abet markets In which the organtzetwn
competes for the kind of employees uwoved.
d. Special considerations m determining
allowability Certain condition' require
special consideration and poesible limitations
in drier/m=1z costs under Federal awards
where amount' or typea of compensation
appear unreasonable. Among such conditions
are .he foilowing-
11) Compensation to members of nonprofit
Thompson Poclisn ng Grout-. Inc
ort iniz..nnes it...sleet directors. associates.
ofl ers. or the immediate families thereof
Delormination should lie made that such
compensation is reasonable for the actual
preona. Servirpt rendered rather than •
di‘trit ution of earnings in excess of costa.
(2: Any change in an o-gan.zation
compersaton policy resulting in a
sulistarlia: increase in the organization's
;eve! of compersaton. particularly when it
was concurreni with an increase in the ratio
Governmer I award' to other activities of
'he organizaticr or any change in !he
free -sett of ailewati'ity of specific types of
compensation due to changes in Government
po'icy
e Unallowable costs. Coals which are
unallowable ur der ether paragraphs of this
Attachment shall not be allowable under this
pa-ag-aph sole'y on the basis thal they
constithie personal compensation.
f Fringe benefits
11 Fringe berefits In the form of regular
ccmoenaation paid lo employees daring
periods of authorized absences from the job.
szch as vacation leave. sick leave. military
leave. aid :he like, are allowable prov.ded
sat.li costs are absorbed by all organization
act.vt ties .n proportion lo the relative amount
cf •irie cr effort actually devoted to each.
1:.] Fringe benef.ts in the form of employer
contricutions or expenses for iocial security.
env oyee insurance. workmen's
co:npenaation insurance. pension pan costs
isee paragraph g. ttelowl. and the like. are
al'owable provtded such benefits are granted
in accordance with established written
organization policies Such benefits whether
treated as indirect ants or a• direct costa
shad be cistnbuted to particuler awards and
other act' dies use manner consistent wth
the pattern of benefits accruing lo the
.ndiv.duals or group of employees whose
salanes and wages are chargeable to such
awards ard other activities.
(3).:al Provisions for a reserve under a self-
nsurance progsm far unemployment
compenuaton or workmen, compensation
are allowable to the extent that the
prOvisier s represent reasonable esumates of
the 1 ablices for such compensation. and the
Fyne, of coverage. extent of coverage. and
rates and premium' would have been
allowable had insurance been pueclused to
cover the nits. Howeverproviiions for se'f.
insurec liabillues which do not become
payable for more than one year after the
p-ov ism a made shall not exceed the
present value of the liability.
(b) Where an organisation follow' a
consistent polcy of expensing acid.]
paymenta to, er cm behall of. employees or
forrner employees for unemployment
compensation or woriunens companaalion.
such payments are ellowable in the year of
payment with the prior approval of the
awarding agency provided they are allocated
to all activities of the organnatton.
(4) Costs of Insurance on the lives of
trustees, officers. or other employees holding
positions of irntilarrempansibtlity are
allowable only to the extent that the
insurance represents additional
compensation. The costs of such tnsurance
when the organtzation is r.amed as
Feo-ary 1955
11109
beneficiary are unalowable
g Pension plan costs.
:1 Celts of he organization s pension plan
which are incurred in accordarce wiih the
established policies of the organ.zation are
allowable provided:
;al Such policies meet the test of
reasonableness
:b) The methods of coat allocaton ere nal
discriminatory:
(c; The cost assigned to each faced year is
determined in accore.ance wth generaly
accepted accounting pnncip:m as prescribed
in Accounting Pnnciples Board Opinion No 8
'bead by the American Institute of Certified
Public Accountants: and
Id] The costs assigned to a given fiscal year
ere funded for a.1 p.an participants witiun six
months after the end of that year. However.
increases to normal and past service pensron
cot la caused by a delay in funding the
actuanal liability beyond 30 days 'Per each
qaarter of the year to which such costs are
assignable are unallowable.
(21 Pension plan termir.aticr. insurance
premiums paid pursuant to the Employee
Retirement income Security Acl of 1974 (Pub.
93-408) are a.lcwable Late payment
charges on ouch premiums are unallowable.
(31Excise taxes on accumulated funding
deficiencies and other penalties Imposed
under the Employee Retirement income
Secunly Act are unallowable.
h. Incentive compensation. Lr.centive
compensation. to employees based on cost
reduction. or efficient performar.ce.
suggestion awards. safety awards, etc.. are
allowable to the extent that the overall
compensation is determined to be reasonable
and such cosi are paid or accrued pursuant
to an agreement entered into in good faith
bei omen the organization and the employee'
before the services were rendered or
purauant to an eatahlished plan followed by
the organization so consistently as to imply,
in effect. an agreement to make such
payment
. Overtime, 821ra pay shift ond mull:shift
premiums. See paragraph 27.
,. Severance pay See paragrsph 44.
k. Training and education costs. Sea
paragraph 48.
1. Support of solanes and wages
(1) Charges lc awards for salaries and
wages. whether treated.. direct coati or
indirect costs, will be based on documented
payrolls approved by • responsible officialful
of the mean:cation The distribution vi
salaries and wages to awards must be
supported by personnel activity report' as
prescribed in subparagraph (2] below. except
when a substitute system ham been approved
In writing by the the cognizant agency. (Sett
paragraph E.2 of Attachment A)
(21Reporti reflecting the datribution of
activity of each employee must be
maintained for all staff member.
'professionals and nonprofessionals] whose
compensation A charged. In whole or in part.
directly to sward". In addition, in order to
support the allocation of indirect costs, ouch
reports must also be maintained for other
employees whine work involves two or more
funcitone or 'olivine' if a distribution of their
compensation behveen such functions or
activ:lies le needed in the determination of
Tab 110C • Page 147
tie rgariia nd Teti cost ra.e(slie g..
89 I engaged pan time al indirect
ciait activities; and partatmeM a d.rect
fu ictier... Reports maintained by nurprofit
naniainions to satisfy these requirements
:r oat meet the following standards:
(i rhe reports must reflect en after- the
1.1 t c(iermira tun of the actual activity of
eaca ento.oyee Budget estimates lie..
es'intates determined before the services are
performed) do rol qualify as supperi for
charges ta awards
ihl Each report must account for the Iota)
activity for which employees are
compensated and which A required in
f ; fulment at their obligations to the
arganizelion
(r) The reports must he eigned by the
indivic.ual employee. or by a responsible
supervisory official having first hand
Know euge of the activities performed by the
employee. that he distribution of activity
represents a reasonable estimate of :he
actual work performed by the employee
daring the periods covered by the reports.
IJ) The reports must be prepared al least
monthly and must coincide with or.e or more
Pay pelted:1.
(1) Charges for the salaries end wages of
norprofessional employees. in addition to the
supno-tng documentation described in
subparagraphs (1) and (2) above. must alsa
be Supported by records indicating the total
number of hours worked each day
ma.ntained in conformance with Department
of Labor regulations implementing the Fair
Ldbir Standarcs Act (29 CFR Part 5181. For
this purpose. the term "nonprofessional
eriplov ee" shall have the same mewling as
' nonexempt employee," under the Fair Labor
Standards Act.
141 Salaries and wages cf emplcyees used
ir,nweting cosi shar ng or Matching
reqa.rements an awards must be supported in
:he same manner as Balance and wages
claimed far reimbursement from awarding
agencies.
7 C.critingency provisions Contributions to
a coiffingency reserve or any sim lar
provisicr. made for events the occurrence of
h ch cannot be foreto.d with certainty as to
[.me intensity, or vnth an assurance of their
happening are unallowable. The term
coatrigency reserve ' excludes se:f-
insurance reserves (see paragraph ti(3] and
18 a.12):c1)): pension funds (see paragraph
e (g)). and reserves for norrnat severance pay
(see paragraph 44.(b)(1).
8 Cortriburions. Contnbations and
donations by the organization to other' are
unallcwahle.
9 Depreciation and use allowances.
a Compenaation for the use of buildings.
other capital mprovements. and equipment
in hand may be made through use
a It:wan:es or depreciation However. except
as provided in paragraph f. below a
LO.Tbination of the two methods may nct be
tried in connection with a single class of
f xed assets (e.g . buildingsoffice equipment.
computer equipment etc.).
h. The ccmpatation of use allowances or
depreciation shall be based on the
acquieition cost of the assets involved. The
acquisition cosi or an asset donated to the
Page 48 • Tab 00
ant 1 n liy a thrd pan sh 1 i its fair
nia• 1" .001U1: at the ame uf :he J,.r.uisn.
i Pie , reiputalina o use elate. ar res or
ti.t n11418)11 wi'l exclude.
11' The lib' of lar it
2. Any pallidly of ite :mei of Lt itilings and
P14' tIi' I lio-ne by or donated by the
F latent. Cavern:nen: inspect, e 1 where
lit e was 0 lg,r ally vcslird or eine.e it
preaently resides. and
(J1 Any portion cf :he cosi of lualffings and
equipment co itrhuied hy cr for 'he
organ zatian n satsfaL ion of a s a,u'ory
matcaing reitrement
d. Where the use allowance method A
:o.lownl tie Lee cllowence for ba kings and
.mprovement I including land impraLements
auch as paved perk:ng areas. fences. and
sidewalksi: wil. he computed al ar annual
rate not exceeding two percent of acgaisition
cost The use allawance for equipment will
be computed at an annual rate no: exceeding
91)C ann two-thirds percent rif acquisition cost.
INnen the use allowance method is used for
bcild.ngs, the entire herding trust be treated
as a single asset the building's components
(e g plumb.ng system. heating and air
conditioning, etc.) Cdnncl be segregated from
the building s shell. The Iwo percent
limitation. however. need not be applied to
equipment which is merely attached or
fas:ened In the bailding but not permanently
fixed ,o ti and which is used as furnishings or
decorations or tor special.zed parpcses (e.g..
dentist chairs end dental treatment units.
counters. laboratory benches bolted to the
flant, disawashers, carpeting. etc Such
equipment will Pe considered as not being
pet manently fixed to the building if it can be
removed wahnul the need for costly or
extensive alterations or repairs to the
building or :he equipment Equipment that
meets these critere wili be twiner.: to the six
a ad two-thirds percent equipment ase
adowance limitation.
e. Where depreciation method IS foilowed,
the period of useful service (useful l le)
established in each case for usable capital
assets must take into consideration such
factors as type of construction. nature of the
equipment used. techno.ogical developments
in the particular program area, and the
renewaand replacement poltmes !allowed
for he the individual items or classes of
assets involved. The method of depreciation
used lo assign the cosi of an asset lor group
el assets] to accouzling pericds shall reflect
the panem of consumption of the asset
daring is useful life. In the absence of clear
e‘idence indicating that :he expected
consampt on of the asset will be significantly
greater or lesaer in the early portions of its
Lsefui life than in the later portions. he
straight line method shad be presumed to be
the appropriate method. Depreciation
methods once used shall nol be changed
unless epproved ffi advance by the cognizant
Federal ager.cy. When the depreciation
rr.ethod is introduced for application to assets
previously aubiect lo a use allowance. the
combination of use allowances end
depreciation applicable to such assets Mull
not exceed ffie total acquisition cost of the
assets- When the depreciation method is used
for buildings. a huildffia'a shell may be
‘ehroary 1965
•
•
rl 1z 1tot.1 from eaca hu.loing component
g plantains system heating. and air
'woo -unit system etc.) end each item
4. 1irilt1Jled Over ite estimated aseful life: or
the I'll; re huildicg itt'. Hie shell and aa
MO 184 ryd.,,t1 di 8 single asset
• 1„i ijoa-eL kited over a SOW& usefu: lite
f When 'he depreciatioa method is used
fi a a particular chose of assets nc
;:e.aa lion may be allowed cr any such
aa..els that, under paragraph e. above. would
Ii a viewed es fully depreciated However. a
ri•asonahle use allowance may be negotiated
)iir sach aasets if warranted after taking into
conaidera lion the amount cf depreciation
preously charged to the Government. the
estimated useful ll'e remaining a: time of
negotiationthe effect of any increased
mdinienance charges or deceased efficiency
de la ago. and any other factors pertinent to
:he ultlizaton of the asset for the purpose
contemplated
g. Charges for use ellowancea or
depreciation must be supported by adequate
property records and physics. inventories
mast be taken at least once every two years
(a staiislival sampling bas.s is acceptable) lo
ersare that assets ex.st and are usable and
n, Hied When the oepreetation method la
fctuw ed. adequate dewed:a licn records
indicating the amount of depreciation taken
each period must luso be maintained.
10 Donations
a Services received.
:fiDonated or volunteer services may be
furnished to an organization by professional
and technical persorinel. consultants, and
other skilled and unskilled labcr The value
or these services is not reimbursable either aa
a direct or indirect cosi.
(2) The va.ue of oonated services ittitzed
:n the performance of e direct cosi activity
shi'l be ccnsidered in the determination of
ffie organ 2dtion $ indirect cost ratels: and.
accordingly, shall be allocated a
proportionate share of appl.cable itdirect
cos's vy hen the following circa:I:stances exist.
tit The aggregate value ol the services is
matenat
:a) The Services are supportec by a
signfficant amount of the indirect costs
incurred by the organization.
lc) The d.rect cost activity .s not ponied
primanly or the benefit of the Federal
Government.
131:n those instances where ihere no
basis for rietermin.ng ihe fair market vaiue of
the seniors rendered the recipient and the
cognizant agency sha.I negotiate an
appropriate allocation of indirect cost to the
services
41 Where donated services directly benefit
a crated supperied by an award, the indirect
costs al:ocaied to the services wt..] be
considered as a part at the total costa of the
protect. Such indirect costs may be
reimbursed under the award or used to meet
cost sharing or matching requirements.
(5) The value of the donated services may
be timed to meal cost sharing or matching
recaurements under conditions described In
Attachment FL OMB Circular No A—t10.
Where donated services are treated as
inclateci casts. indirect cosi rate, will
separate the value of the donations so that
Single Audit litorrnatior.
—cevice
1
•
reimbursement will net be made.
NI Fair market value of donated servicei
sha;I be compuied as follows
(a; Rotes for volunteer services Rates for
vela -neer' shall be consistent woh those
retuar rates paid for sunder work n other
act.vities of the onaarizanon In cases where
the kinds of skals involved are not found in
the other activities of the organization. the
rates used shall be consistent with those paid
for similar work in the labo- market in which
the o-gan zation competes for such exills
lb)Servtces donated Ly other
orgoP.zotions When an employer donate,
the seri ices of an employee these services
shah be valued at the employee 1 regular rate
of pay 'exclusive of fringe benefits and
indirect costs) provided the 'emcee are in
the same skill for which the employee
norrnally paid. If the services are not in the
same skill for which the err.pleyee is nermaEy
paid. fair market va:ue sha.1 be computed in
acccrdance with sub pa ra gra ph la) ace.
E. Goods ond spoce.
111 Donated goads; e.. expendable
personal propertyisupp:ies. and donated use
of space :nay be furn.shed to an organization.
The va.ue of the goods and space a no!
renbursatile either as a direct or nd.rect
cost.
(21 The valae of the donations Tay be used
to meet cost sharing or match.ng share
tequ.rements under the cond lions descr.bed
in Attachment E. OMB Circular No. A-110.
The value of the donations shall be
delerrined Lo accordance with Allathment
E. Where donat.ons are treaied as indirect
costs. rdirect cost rates w.II separate the
value of the aerations so that reimbursement
wit. net be Old de
n Employee morale. health. and wertere,
costs and cn dits The costs of house
publicatiers health o: first-aid clinics. and/
cr .nfirmaries recreational activines
eniVoyees' counseling services, and ether
expenses .rmicrred in accordance w th the
orgariraticn'e established practice or CIAO=
for the improvement of working condinonsi
employer ernpinvee relations. emp'oyee
morale. and envidi)ep cerformarce are
allowab:e. Such costs w .11 be eqarabiy
apporconed to all thin -hies cf ,he
organizat on :ncome generated from any of
these ectvities will be credited io tne coat
thereof units. such income has been
irrevocably set over to employee welfare
orga nizations
Egferfornmen costs. Costs of
aTusement, diversion. 'coal activities.
ceremonies". an costs relatine the-eto. such
as meals. lodging. rentaa transportation. and
gratuities are unallowable but see
paragraphs 11 and 25)
13 Equtornent once other copttal
sotpendttares.
a As used in this paragraph. the foilow.ng
loans have the meanings set forth below:
(11 "Equipment" means an article of
nonexpendable tangible personal property
having a useful ;de of -nore thar. two yea -13
and en acquisition cost of WO er :core per
unit. Ar. organization may use its own
definitien provided that it at least includes rt)1
nonexpendable tangible personal properly as
defined herein.
F. Thompson Punishing Omni), Inc
121Acqu.iition cost" means the net
invoice ani t pnce cf an item of equip-nent.
inriuding the cost of any modifications,
attachments accessories. or auxil ary
apparatus necessary to make it usable fo• the
purpose for which it iu acquired. Ant:Baty
charges. sucn as taxes. duty. protective in -
hens': insurance. freight, and irsiallation
shall be included n ar excluded from
acquisition cost in accordance with the
organizal ons regular written accounting
practices
12) "Special purpose equipment" means
equipment which is usable ()ilia( for research
med.cal scent fit. or technical
Examples of special purpose equipment
include microscopes. x-ray machines. surgical
Instruments. and spectrometers
14; "Genera; purpose eqcipment" means
equipment which .s u.sable fcr other than
research. medical. scientific. or technical
activities, whether or not special
modifications are needed to make them
suitable for a particular parpcse. Examples of
gene -al purpose equipment mclude office
equipment and furnishings. air conditioning
equipment. reproduction anc printing
equipment. motor vehicles. and aatomatic
data processing equipment.
b ;I: Capital expenditures for general
purpose equipment are unallowable as a
direct cost except w.lh the pnor approval of
the awarding agency.
;2) Capra] expenditure' for special purpose
equipment are ailcwable as direct costs
prov dad lhal .lems with a unit cost of MOO
or more have the prier appreval of the
awarding agency.
c. Capital expend:lures for :and or
bu lings are unallawabie as a direct cast
except with the prior approval of the
awardirg agency.
d. Capita: expenditure" for improvements
lo land timid:cgs. or equipment which
rnater.ally increase the.r value cr awful lite
ere unallowable an a cirect cost except with
p-ior approval ef the award.ng agency.
e Equipment and other capita.
expend.lu-es are unanowable as indirect
costs However see paragraph 9 for
allowab of lige allowances or
depreciation on buildings capital
improvements and equ.pment Also. see
paragraph 42 for al.owability of rental cons
for land. build.ngs and equipment
14. Ftres cod peca;lies Costs of fines and
penalties -esulting from vio.ations of. or
failure of the organization to comply with
Fedenn. State. and local laws anis rep:ahone
are unallowable except wher Incurred as a
result cf compliance with specific provisions
of an award or instructions in writing from
the awarding agency.
15. Frtage benefits. See paragraph 6. f.
16. Idle fortilt.es end capcclly.
a As used in this paragraph :he following
terms have the meanings se: forth below:
(1) "Facilities" means lar.d and buildings or
any portion thereof, equipment individuaby
or collective:3h or any other fangjble capital
asset wherever located. and whether owned
or .easad by the organization.
(2) lee facilities Tear.s ccrtp.etely
unused facilines !hal are excess to !he
°Nam/snore" current needs.
Di "Idle capacity" means the unused
Fetroary 1985
41109
capacity of partially used facilities. It Is tbe
difference betweei that which i facility
could achieve wider TOO per cent operating
time nn a ene-shift basis less ope-ating
interruptions resulting from time lost for
repturs, setups asisattafactory materials. and
inner normal delays. and Lhe extent to w'tch
'he facility was scantily used to meet
de-nands durina the accounting penod A
reultishift bus may be used if it can be
shown that this amount of usage could
norma ly be expected for the type of facCity
.nvo.vee
(4) "Costs of idle faullfties or fee capacity'
means costs such as maintenance, repair.
hoasing rent. and other telated costs e4.
property taxes, insurance. and depreciation
or use allowances.
b. The costa of idle facalicies are
unallowable except to the extant that.
(1) They are unnecessary to meet
Suctuat oris in woridoack or
(21 Although not neceuary to meet
fluctuatona Lfl woraJoa4 they went
necessary when somatic and are DOW idle
because of changes in program requarerseaAa
efforts lo achieve MOCIII economical
ope-ations, reorganization. termination. or
o!her causes which conk' not have heee
reasonably foreseen. Under the exception
6 ta ied in this imbparegraph, costs of idle
facilities are alioweble for a reasonable
uenod of time. ord.nanly not to eueed one
;ear. depending upon the autiahve taken to
ase. lease, or dispose of such facilites flxit
see paragraphs 47 b. end d.).
c. The costs of idle capacity are normal
toxls of doing bus.ness and area factor in the
ncrmal fluchationis of War IlidilICt COSI
Eales 1mm period to period. Suck oasts aro
atowable provided the capacity is
reasonably antic:paled to be recision or
was ongmaily reasonable and is raped la
recuclion or summatiese by subiertmg.
re c1114 Or sale. in scar Sete with sound
business. LICOOOCTICIL Or security practices.
Widespread idle r.apaal y throughout an
err:, facility or among a group of egrets
having substantially the num Lacli on may
he Ida- iicilines
1.. ',cm research crd development
IReser.f c'
18. Insurance ond feetemnilicotoa
a Insurance mollifies torn. which Sus
orgaruzahon is required to carry, or arch is
approved. under the tern of the awed awl
any other insursike which the esmanisatton
ma in tains .11 CENTnericn with the general
ionduct of its operations. This paragraph
does not apply to insurance which represents
Fringe benefits for employees (set peregreph
6' and 6 12))
0) Costs of nsi:rance •eq kneed or
approved. and Taw iamed pursuant to the
award are allowab.e.
(21 Costs of other ins•urarce maintained by
the organization in connection vinth the
general conduct of its operations are
ahewable srublect lo the following limitation..
(a) Types and extent of coverage sheH be
Ir. accordance with sound business practice
and the rates and premiums shell be
teaser,under the otrointistancei.
lb) Costs sficyfed for buriness interruption
or other similar in/unmet shell be Innited to
Tat 1100 • Page 149
exclude (-average of -nanagement fret
Fri Coos of insurunce or of •ny provendre
For a reserve covenng the risk of loss or
demage to Government property are
aicwable on:y to the extent that the
organization is liable for such loss or damage
(d) Provisions for a reserve ur.der a +elf-
aiscrance program are allowabie to the
extent that types of coverage. extent of
coverage. rates. arid premiums wculd Nave
beer. allowed had insurance been purchased
to cover the nuke However, provision for
known cr reasonably esemated self-insured
liabilities. which do not become payable for
mcre than one year after the ironic,: al
made shall :at exceed the present value of
:he Lability.
(e) Costs of insurance on the lives of
it:islets. officers, or other employees holding
positions of similar responeibibties re
allooable only lo the extent that the
MALI d ice represents additional
compensation :see paragraph 6). The cost of
such ineurance when the oraanization is
.denttfied as the beneficiary is unallowable.
(3) Adual losses which codicil have been
cos ered by permissible insurance (through
the purchase of insurance or a self nsurance
program) are unallawable unless exprassly
provided fcr in the award. except:
(al Cos:s inctsred beracse of losses not
covered under nominal deductible insurance
euveraae provided in Ka •Iping with sound
business practice are allowable.
lb) Minor losses not covered by
sauh as spo•lage. breakage, and
..sappearance of supplies. whit): occur ir the
ordinary course of operations, are a Icwahle
b. Indemeification ncludes secunng the
organization against 'minlines to third
persons and any other loss or darner. not
compensated by ineurence or otherwise. The
Government is obligated to indemnify the
oNanizaticn or.ly to the e Nlent expressly
provided in the award.
13 Intere.a. fund rcis.rg. rid :P. estme.it
Iret....ige-,ent costs
a Costs incurred for irlerest cn burrow ed
capita: er lempora-y use of endowment
lard!. however repreaented. are uralloviable.
b Coats of organized ft.nd
inz.uding finannal carrp-iens ail law aisint
droves aolicairnon of gifts and !it. es la a -id
s.mhar expenses incurred vilely Iij (ase
capital or obtain zonInba: L :a 9:e
unailowable
c. Cos:s of investment ours-1 dr.d s'aff
and similar expenses incurred gaiety lo
enhance income Burl .evaie.nents ,Gke
unalowab:P.
&rand riosirg and ie., eint-nr a.
ehell be cloaleit al ai prepr aie 5' i ./ LF
nitirec. costs under oil- .-11-.11 ors lesi nheil
in 1arig-aph ft of Ara. hr. -nt A
.:0 Labc• rd•t, n
ma its., 0 PS S.. IS.JLi.a '1. a. nrie bei.• Cot
a-gaortali..n ankl 1
c.eas of tabor M3 7.( CI elm ...toes,
employ eP pcbacal.ans a -.I :r ed
dC'el ties are allowable
• 21 losses an other awards Any excess -if
cess over income on sny award Is
cna towable as a cost of any other award
Thi• incicdes. but is not 11mited lo. the
organ zation's contnbuted portion by reason
maarenee.
III • I .k1 1" 1.41.1..1
11 10„ .11.t 1(1.11 • I • 1.
Page 150 • Tab 1100
011 nil sharing agreements or any
unJerrecovenes through negotiation al Limp
son, for. or ceilings on. indirect costs
• 22 Mumte.nance and repast i asr.. Casts
incurred for necessary maintenance. i• pair.
31' upkeep cf buildings and equrpreeri
; neluding Government property unless
otherwise prorded fort which neither atlit to
the pennanent value of the pmperty nor
appreciably prolong its .ntended life but
keep it in an efficient operating conditien. are
alaneable Costs marred for improvements
wa.ch add to the permanent value el the
bwIdings and equipment or appreciably
prolong their intended :ife shall be treated as
capita. expenditures (see paragraph 131.
• 22. Mater:cis and nappies. The costs of
natenals and supplies necessary to carry oul
en award are allowable. Such cows should be
harged at their actual pnces after dedccting
it II cash discounts. trade discounts. rebates
and allowances received by the crgarrzaron.
Withdrawals front general stcres or
stockrooms should be charged at cnat eerier
any recognized method of pricing
C011Stslerlly applied. Incormng transreriation
charges may be a proper part cf material
coat. Matena'S and supp:Ees charger) ail a
di-Pc1 cost should include nnly the materels
and suppaes actually used for the
performance cf the contract or grant. and due
credit should be given for any tare,'
matenats or supp.ies retailed. or returned to
vendors.
• 24. Meetings ronfererr es.
a Costs associated with the conduct of
meetings. and conferences and in, Iude the
cast of rentirg facilities. meals. speakees'
fees. and the .ike But See paragraph 12,
Frtertarnment =Sit and paragraph 29
Port ittpant ',wart casts.
To the extent that thesP Cf3AIS are
idertif able with a particular cost ob:er Pive.
ihey shou d be charged to that obterlive :See
paraaraph 13 of Attachirent A }neer cc•is
a:e al owable provided that they meet F,P
ger ert I tests of allo-reable. shown n
Attachment A te this Circular
c Costs of meetings and conferencal held
to concuct S. general gam inislraticn of the
o-ganizalion are allowable,
• 25 Membersbips. subset:pions nrd
prrlessionni Pit pity costs.
a reins of the organizaticies membership
11 civ c. business. nich.nical and p-ofeiesional
arganizaticns are allowab.e.
b Costa of 'he organization s subs:77,114:ns
civ.c. business professioral. and iethiical
pp-Id:dials are al:owable.
c Can of attendanae a mee.lines and
mak-once, •ponsored by albe-s wien
taTl nary pemose :a the tsemmailoa el
cal irk:mania 1. are Antleea'ie r:
" tin enlist af meals. Ire isetrita la n d
ether IP:ns nr dtnial to sarn a Prid a. e
• :r• age; 2r.,,Or 1,..v:,,e-1-1,1 . qua]
• Arccrs len fees, bt01. °S. './ S. fp. i n
pliant:ten o-eali2er3 or manakter.
cur.s . Ian's. att.:mays
Ift 'Tient ..01.115,Hrd. V.; 1: r
..D. s or the organizetide.. in innia. don
said. es: OT recoganizaticn of WI
ore, r at•on. are unit:lore dile except with
pr lir - 2: re. d, of ilie aweeliag agency.
• 27 ("it .-t.,r c. erfra pcy st .ft. and
1,1.1)1 ' 1 .• •• ‘•-•
Feb-aary 1985
ne•/"../i•it of—Peens Pri•mitans ler
extia iiity sli,fe KI wok •i•i•
1.1. 1"••I J11 "1•;) the peen aupro, al uf tee
agenuy excepe.
• When necessary lc cope willt
unic•eeni ies. such as :apse tesulling burr
•. s. calla al disaslers. breakcowns o'
istiipment. or occasional operalizral
I API( ^Pt I•3 f u spored c notice
b ¼' 'C 1 1 mpioy:1•3 are per fur.... nitre.;
furctioas s a as admin.straLion.
maintenance. or accuant.ng.
c. In the perfortraiire of iests. leLitratury
pro i edures. ur other simi:ar operations as hhei
ere calit.iaous ia nalcre and cannot
nitsur ale .„ be irlern.pled or otherwise
COI
d owe: overall cos: la the
Uo.erninant w 11 result.
• 211. Pug( ',urges An profess.ona! Tait -no 's
Page c barges for professional (Liana:
publications are allowable as a necessa-y
part nf research costs. where
• a 1 he rcsi erch papers reporl wark
suaporied ..,y the Cos ernment and
b. Tbe ct eiges are levied Impart's ly on I
restart' k Jeers published by the journet
whi the' ot not by Gcvernment gponscrerl
'20 nor:avoid sapport crsts Pa.t lard Al
support costs are dine oasts for items such
as stipend, o subs.slence allowar.ces, travel
ailowarwes and registratioa fees psid to or
un behalf a partinpants or treaters (bat not
eTplOyeesl n conneitiOn with MeelingS,
:inferences. symposia. or training prong ts
These costa ce allowable with the prior
approval cf the awarding agency
* 30. t
a Lusts t p-eparing illsclasures,
reperts. dad other documents required by the
a» .rd and af searrhing the art to the extend
n e, essa re lc make such d.scloscrcs. (a)
draments and any other peter.'
costs in runnection with the filing and
prosecchon of a 'Jelled slates pe lent
aerie -citing where lit e or royally free license
,s leciu ;ed by the Government to be
cp.:4E33-A the Government, ar.d (id) generp I
strvices relatir.g to pater.' arid
ClIl :1811: that:p.a. such AS ad% lee re. ridicnt
a-, • 1; , iyht laws regnielions. clauses to.d
en 11 ji d erect -Lents are eloveable gee
r oil- 34)
f, of pinee:ins d.9, oseres rcein-ts.
other ,:ocumenas sad of %I arching 'he Jr1
°I. tle^I reeericry In Make 4.P -10M.^1-3
•1 nu ''r.1• :red 53 hip &ode ri ore
;,,waHr Cos's in rormecton lit
,ia prcsuttaing any fore.gr patent
1,41101 Of id any United Stairs poiret
/ tate. 1 %%herd the eweed do -s POI
• •P CU'it.e)",g ti It Of 3 rayalty free
• si • the Gelern:nett are urellawa',1:
s • • ler
• 31 or lb 'on s Sec paragreph S g
• 12 nor/ se. i..-•ty tosts Necessary
f' •nst.s attuned ccniply with
Geier r.1 security requirements or for
misled:on. including w ages.
i.• "a, ins. and etiLiomerlef pent:Avail ale
U:
• PI-CnWrid COSOI Preaward costs are
thrle IrC ;Uri prinr IC he effei five date af
the evt.ird 11 rectly pursuant lo the
Sopa Audet Informataon Sendice
•
negotiation and in &mac:patine. of the Award
where such costs is necessary to comply with
lhe proposed deavery schedule or period of
performance. Such costs are aawatle only
to he ex:ern that they would have been
allowable if incaned after the date of the
2wa-.1 end only with the wntler. approval of
the avard lig agency.
• 34 Pra,lesronal serrate costs.
a Costs or professional and corsair ant
seraices rendered by persons who are
nieinLers ol a partictbar prof easier. or possess
a spec.al skill. ar.d who are nol officers or
tor Voyees of the orgarazt.iion, are allowable.
seticia to b. c. and d. of this paragraph when
reantable in re.atice to the services
renderd and when not contingent upon
recovery cl the costs from the Government.
b Ir. deter:rang the ability of 'osis in
• particular case. no single factor or any
specie] combination of factors 111 necessanly
dete-miraiive However. the follcw.ng
factors are relevant:
(1) 1 he nature and scope of the serves
rendered in relation to the service required
121 The necessity of connecting for the
service. cnnsidenng the orgar izatiores
capelility in the particular area.
;al The past palterr. of Bach COOS,
pencularly in the years pnor to Government
a *Ards.
(4) The impact af Government awards on
tee organization's business e.. what new
prcblems have amen).
(91 Whether the proportion of Gcsemment
writ to the organizaton s total Lowness is
au.h as to Influence the organizaticr. in favor
of alcurrng the cosi. particularly where the
services rendered are rol of a continuing
na:ure and have little relationship to work
under Goverment grants and contracts
(6) Wheiber :he serv:ce can be performed
:nnre econamical'y by direct employment
lather than coniracting.
r; The qualificaticns of the irdividuel or
cancer zendenng the nervier and the
rus:orrary fees d:hdrged, especiely nn;ton-
Government ass a -ds.
Adeg-ary ef 'he coatrartaal agreement
ler the len g • desrre,r. z.f the service.
est -mete o tare rega.rnd rale of
onmeensetem. aed eerminanan provisions,
c addinor. t thc fez:ors in paragrapn b
▪ I. recliner fres tc hedilowdble must be
ap-r1ed esiern( e n; bona fide services
• rilue' • i -r •endered
1 Cos f hg. d ceontine. arid consatng
s• .ki 05 tird flabi.Pd CO.'S esurred in
nr ••• eon c1.21 -rose ol p.a.
•1.. C:la gic-0:-.1 len of cld aFa;rist the
,er.iii••.1131... . )wo:)le Corals el leg
a. Udi I g ' rune ng sets- el. and
•elo:rd ,..,s's incor ed 11 connc t ice. A•11`
cdtv.'t • r•• Sn'Ill CO 1 tc*.'irc 0^131V7dt1011
.c'12 c• •11* nn d:d• firullnwab.e ran
d • IA %a" p- shied fru In it'e award •to•P
r • )V11 Co!
1.n •, and :rsses eq.] d epos th ri ei
0-1y CV leb:er cault„a 1 "a
V.) (In Ii elld 1.13•441-1 51,e. rehrerheni
ei nbi1 est,' it el C properly
•.1 :led in 3 ,ar n rh they
e- sent. 13 or 4.1111114" 10 CkiSi arnuping(s1
in en hr..% the derreciatiun wettable to such
properly was incliened The amount of :he
gain or loss to be included as a crede or
charge to the appropnaie cost groupings',
sha I be the difference between the amount
real.zed on the property and the
undepreciated basis of :he property.
(21; Gans ar.d losses on ihe disposition of
derecrable property that. not be recognized
as a separate credit or charge under the
following conditicts.
la) TFe gain or loss is processed through a
deprec.ation reserve ascount and is :elected
ril the deprec:ation allowaole urder
i.clragrapli 9.
(b) The property is g. en in exchange as
per if the purchase price of a s.milar item
and the gen- or loss is taken into account in
de'creenaig the aepreciation cost bas.s of the
new dem
(ci A loss reeules :rot the huitthe to
maintain penrassible insurance. except as
ante -wise plavided in paragraph 18 a.(3).
(di Compensation for the use of the
properly was provided through use
allowances in lieu of depreciation in
accordant.' with paragraph 9.
:el :Aetna and losses arising from mass or
extraordinary sales. retirements or other
ti sposhans shall be considered on a case -
by cuthe basis
h Gd ar losses of any nature arising
froen the sale ,jr exchange of property other
than the properly covered in paragraph a
above sha'l be exr..uded in computing award --
Jets
• 38. Putaa: ,".,rrctkjq sen n essfs
a Public .nfeirrnation sercke costs include
the cost associated with pamphlets, news
releases, and other forms of inforrnalioe
services SLIM costs are normally incurred to
(1) Infirm or instruct groups. or
the geaeral
(1) Interest indiv.duals or group! in
prrticipating in a ser. ice p-ograrn of the
.3114 inzaticn.
17..I bseminate the reschs or sponsored
: rid nunspunsored acevoies.
h Pulate infomeation service casts are
illowab:e as direct costs with the prior
aeamv al of the a W erding aecr cy Si ch Costs
.1,13 k renewable as indroci costs
• 37 PhlArat,or snd p•Ir rests
a Pultication costs irelorle the costs af
printaig ;a -eluding the mix nsses
cov posit on pthie mak ng press work.
biro:seg. and the erC produrls prorth..cd by
sorb prooessesi. d sinbaton. pro:notion.
retthee rine p nerd Fancling
et.pria curaia are nf:1•den111 ab.e w•th
„ •iI c.••• Air; Ire they ra1 odd be
elbzdved as ircireci ris•s :n at. henehting
ji 111'1,•CS iF.e ereganua ecr.
t. lemblirairon anel r,nI ne costs are
s...'ess able aS ti 1PC I 1 oats excen1 w ib LIP
-1)Jdn‘ al of the ow arcirg aeerty.
el 1 Fe tnst of p3g0 ct 'ages la iturnals tS
adaresec.1 pPragraph 2e
• ys pearl anAle-r;eef 0...d a ire retinn OS'S.
s s re cited 'In arcarary cr ntrmal
-earra-,gement a'reration of :entries ?tic
Special arrangement and
aeon costs Incurred speci:thaily for the
• a -e abowabie with the prior aporrval
the warding agency
• to Recce. YaSscri eases Costs incurred n
▪ it rristorat on or rehabilitation of the
crganization's facilities to approximately the
s. Tnernesoe Punt sting Gepop. Inc Feroary 1985
111109
Name =anon existing irnmedistely pror to
commencement of Government awards. fair
wear and tsar exceptedare allowable.
• 40 Recreants amts. The foLlowmg
recruiting costs are allowable: cost of 'help
wanted" &dyer:lung. operate4 coats of 171
employment office. costa of operating an
educational testing program, heave: expenses
including food and lodging of employees
while engaged in recnuting personnel travel
costs of applicants for interviews for
prcspective employment end relocaton costs
incurred ir.cident to recrwirrient of new
employees (see paragraph 41c) Where the
organization uses employment agencies,
costs not in excess of standard commercial
rales for such services are allowale.e.
•41. Bean:ion cons.
a Relocation costs are cos" ir cident to the
permanent change of duty assignment (For an
indefinite period or fcr • stated enod of nct
less than 12 months) of an ex.steng employee
or upon recruitment of a new empioyee.
Relocation costa are alioweble, subject to the
limitation described in paragraphs b. c. and d.
below. provided that
11) The Men Is for the bdnent Or the
employer.
121 Reimbursement In the employee is in
accordance with an esiablashed written
policy consistently followed by the employer.
(3) The reimbursement does no: exceed the
employee's actual or reasonably esnmated )
expenses.
b. &towable relocation costs for current
employees are limited to the fotiowing
(1) The costs of U ansportelion of the
employee. members of his .mmechaie family
and his household. and personal effects' to the
new location.
12) The costs of finding a new home. such
as advance trips by employees and spouses
tc locale living quarters end temporary
lodging during the trans:lion period. up to a
maximum penod o130 days, including
edvance trip time.
131 Closing caste. such as breilterage. legal.
and appraisal fees, tncident to the d spcsoion
of the employees former home. These costs.
together with those described in [4] below.
are amiien 1t/ 8 per cent of the sales price or
the employ Le's former home.
(4) The centinumg costs of ownership of
the vacant former home after the settlement
or lease date of the employees new
permanent home. such as maintenance of
bui,dings and grounds lexclasive of fixing up
expenses), utilities. taxes and property
.nscrance.
(5) Other necessary and reasonable
expenses normally incident to relocaimn.
such as the costs of cancelling an unexp:red
lease. discornecting end reinstall.ng
household appliances. and purchasing
insarance against loss of ar damages to
personal property The cost of cancelling an
unexpired lease is lima ted to three limes the
mon:hly rental.
c Allowable relocation costs for new
employees are limited io those described in
Oland (21 of paragraph b above. When
relocation coals incurred inciden: to the
recruitment of r.ew employeei have been
allowed either as a direct or indirect cost and
the employee resigns for reascne with.n hie
Tab 1400 • Page 151
•
(1109
control within 12 months after him, the
crganizabon Rhea refund or credit the
Government for its share of :he cost.
1 lueyever. the coals of travel to an oversees
lasstion ahall be considered !Cabel coats in
accarcunce with paragiaph SG and not
relocation costs for the purpose of this
paragraph :f dependents are not permitted at
the location For any reason and the costs do
nat ruclude costs of transporting household
goods.
d. The Following costs retated to relocation
are unallcwable:
ill ker.' and other costs associeted with
iirquirang a new home.
,2) A Ices on the sale of a former home.
,3; Coannuing mortgage principal and
.r se-cs1 payments on e home being gold
41 Income taxes pa d by an employee
related to reimbursed relocation costs
• 42. Recto] costs.
a SL.leect ic the limitations described in
agraphs b. through d. of th:s paragraph.
renta costs are allowable lo the extent that
the rates ace reasonable in light of such
favors Is: rental emits crf comparable
properly, if ary: market conditions in the
area. alternatives availalde: and the type :de
expectancy, condition and value of the
property leased
b Rental casts under sale and leaseback
arrangements are allowable only up lc the
armant that wouid be a.lowed had the
rigger tzaton continaed lo own the property.
Rental costs under less -than -length
Ie iscs are allowable only tip to the amount
that would be allowed had line to the
prone-ty vested in :he organization. For this
purpose. a less-thaniarrnei.ength lease is one
:ender which one parly to the .ease agreement
s ah.e to c trot or sulastantially influence
the acnone of the other. Such leases inclade
but are not limited to those between ii)
diL.sions cr an organization: tit) organizat.ons
ancer enTiv011 control through corrimcct
officers. directors, or members: and (in) an
organization and a director. trustee. officer,
e r Ice% employee of the nrganization cr his
immediate famtiv either tiredly or through
ccrpiara' tons. musts, or similar arrangements
ir which they held a controlling interest.
d Rental casts under leases which create a
-raieria. equity in the leased n•coerly are
• h.:Wahle only up IG the DITIOUC: hd: vni4
ne allowed had the organization put chased -
the property on the date the lease agreement
v.e s executed: e g.. depreciation or use
al:owances, maintenance, taxes, insurance
1•Li exclucing interest expense and other
urailowable coats For this purpose, a
material equity in the poverty exists if the
lease :n noncancelable or is cancelable oily
upon the occurrence of some remote
ccr trigency and has one or more of the
following charactensticei
111 The organization has the right to
pa -chase the properly for a pr.ce whicih el the
beginning of the lease appears to be
stbstanually less than the probable fair
market value al the time a is permitted to
purchase the property icommomy called a
lease with a bargain purchase option).
12) Title to the property passes to the
organization at some time during or after the
lease permit
;3) The term of the lease (Initial term plus
1 1 1 111 111111 %. I, •I .11 0 . ,1.1.111.1 1.• II% O.
Page 152 • -an :100
periods covered by bargain renewal apucrs
if any) is equal to 75 per cent or more of the
economic life of :he leased property:le . the
re•toti the property is experted to be
mariem Lally Liable by one or more users
▪ 43. Royalties and other costs for use al
peter ts and copy -This
Rityailie4 cr a paten: cr copyright or
anwrinancn el the cost of acquiring by
purchase a copyrghl, paterl. cr naive
therelo. necessary for the preen performance
of the award are allowable un r ss:
(11The Government has a I.Lerse or the
right to free use e the paten: or ccpyright
(2) The patent or copright has been
adjudicated to be invalid or has been
admmistraevely deternieee to be invalid.
(3) The oven: cr copynght Is constricted to
be unenforceable.
(4) The paten: cr copyright is expired.
b. Special care shoald be exerc.sed
determinirg reasonableness where the
reveilles may have been armed al as 8 result
cf less then arm's length bargaitung: es
II) Royalties paid to persons, including
cnrporations. airlifted with the organ.zation.
12) Roya.lies paid m unr.ffillated parties
iniuding comet aliens under an agreement
petered into in contemplation that a
Government award would be made.
:3' Royalties paid ancer an agreement
entered into efier an award is made lc an
nrgenization
en In any case involvais a patent or
copyright formerly owned by the
organization. the amount of royalty allowed
should nol exceed the cost which woual have
been allowed had the organization retained
title thereto.
• 44 Severarce pay
a Severance pay. also corn.nonty referred
to as dismissal wages..e a payment in
eddition to regular saleries and wases. by
organizations to workers whose empaoyment
is being terminated. Costs of severance pay
are adowable only to the extent !hal in each
cese. it is required by ::; ise., 11) employe: -
employee agreement, (ia) establ.shed policy
that consIdates. in effect, an implied
agreement cr. the organization a part, nr (iv)
urn:inter:ices of the particular emp nyment.
ri Costs of severe -me payments are divided
into two categones as follows:
:11 Actual normal tranover severance
payrnente shall be allocated to a'l Wei lies:
or. where the organization provides fo• a
reserve for normal severanc es such method
wi.1 be acceptable if the charge to curent
nperatinns is reasonaale in aght of payments
aril -ally made for normal severances over a
releesentative past period. and if emeurts
cha-;ed are al.oceled to a:.1 activeies cf 'he
organize:ten
(2) Abnormal or mass severance pay is of
euch a ron.ectural nature that measurement
af costs by means of an accrual wi.I not
achieve equity to bcth parties. Thus accruals
for :h:s purpose are not allewable Hcwever.
the Government recognizes .'s obligat on to
participate to the extent of its fair share in
any specific payment. Thus. allowability will
be considered on a case-by-case basis .n the
event of occarrence.
45. Spec,clized sertace tacilibes.
a The coley of services provided by highly
-lei!: ea . . I
f:ebruary 1985
complex or specialtzed facilites opemoiti by
the crganizat or.. sach as electronic
computers and wind tunnels. am allowable
provided the charges for the services meet
the conditions of either b or c. of this
Pitragraph and, in addaion. take into acaoant
any :terns of income or Federal finanring that
rel fy as applicable credits anther paregraph
S uf Attachment A
h. The costs of each services. when
material must be charged directly to
applic..b.e awards based on aVuti. usage of
ibie serv tees nn the basis of a schedule of
rates cr established methodology that 01 COP
rot discriminate against fedenaly step's:red
act vines of the organization, including usage
Ly the organize:ler. for internal parposes. and
;al .s designed to recover only the aggregate
costs of the services. The costs of each
servile shall consist normally of both its
direct costs imd as allocable snare of all
tridirect c is's Advance agreements pursuant
tc paragraph A 8 e Attachment A are
particularly important in this situation.
c. Where the cost, incurred for a service
arc nol malenal. they may be allocated as
Indirect costs.
' 46 Tosrs.
a En general. taxes whoch the organization
t. :veered to pay and which are paid or
ac seed in accordance with generally
accepted accounting or:maples. and
payments made to local goverrments in lieu
c I :axes wluch are commensurate wtth the
local government stemma received are
allowable. except for li) taxes From wh.ch
exi!inetions are available to the organization
directly or which are available to the
organ:zation based on an eaempt on effcrded
'he Government and in :he laner case when
the awarding agency makes available the
necessary exemption certificates. (ii) special
assessments on land which represent cipIal
:roprovements. ard :di) Federal income taxes.
b. Any refund of faxes and any payment to
the organization of interest thereon. wh:ch
were allowed as award costs wt be
credited either as a ccsi reduction or cash
refund. as appropriate, to the Government.
• 47. Term:notion costs. Te -m nation cf
awards general.y give rise to the itcLrrenec
uf costs. or the need for spec... treat:reel or
ream, which would not ha. e arisen had the
award not been termirated Cost rota roles
reverirg :hese items are set forth below.
They are to be used in conantaion with the
other provisions of this Circular ir
termination situations.
0 Cerh/TOr rteinS 11.e Cus: a items
reasonaUly usable on the creanizaticn's ether
work shall not be clowab.e artless the
o-ganizetion submits evidence that it would
lot ream such items at eclat without
sustaining a lost In deciding whether suds
'ems are reasonably usable on other wcrk of
the organ:zaton. the award-rg agency should
consider the organization's plans and orders
for current and scheduled activity.
Contemporaneous purchases of common
items by the organization shal: be regarded
as evider ce that such items are reasonably
usable on the erganization's other work Any
acceptance cf common items as ancient le to
the terminated portion of the award shal be
limited to the extent that the qoannties of
Seigle Audit Informaeon Service