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Title 32—National Defense–Volume 1
Subtitle A—Department of Defense
CHAPTER I—OFFICE OF THE SECRETARY OF DEFENSE
SUBCHAPTER A—ACQUISITION
PART 1 [RESERVED]
PART 2—PILOT PROGRAM POLICY
§ 2.1 Purpose.
Section 809 of Public Law 101-510, “National Defense Authorization Act for Fiscal Year 1991,” as amended by section 811 of Public Law 102-484, “National Defense Authorization Act for Fiscal Year 1993” and Public Law 103-160, “National Defense Authorization Act for Fiscal Year 1994,” authorizes the Secretary of Defense to conduct the Defense Acquisition Pilot Program. In accordance with section 809 of Public Law 101-510, the Secretary may designate defense acquisition programs for participation in the Defense Acquisition Pilot Program.
(a) The purpose of the pilot programs is to determine the potential for increasing the efficiency and effectiveness of the acquisition process. Pilot programs shall be conducted in accordance with the standard commercial, industrial practices. As used in this policy, the term “standard commercial, industrial practice” refers to any acquisition management practice, process, or procedure that is used by commercial companies to produce and sell goods and services in the commercial marketplace. This definition purposely implies a broad range of potential activities to adopt commercial practices, including regulatory and statutory streamlining, to eliminate unique Government requirements and practices such as government-unique contracting policies and practices, government-unique specifications and standards, and reliance on cost determination rather than price analysis.
(b) Standard commercial, industrial practices include, but are not limited to:
(1) Innovative contracting policies and practices;
(2) Performance and commercial specifications and standards;
(3) Innovative budget policies;
(4) Establishing fair and reasonable prices without cost data;
(5) Maintenance of long-term relationships with quality suppliers;
(6) Acquisition of commercial and non-developmental items (including components); and
(7) Other best commercial practices.
§ 2.2 Statutory relief for participating programs.
(a) Within the limitations prescribed, the applicability of any provision of law or any regulation prescribed to implement a statutory requirement may be waived for all programs participating in the Defense Acquisition Pilot Program, or separately for each participating program, if that waiver or limit is specifically authorized to be waived or limited in a law authorizing appropriations for a program designated by statute as a participant in the Defense Acquisition Pilot Program.
(b) Only those laws that prescribe procedures for the procurement of supplies or services; a preference or requirement for acquisition from any source or class of sources; any requirement related to contractor performance; any cost allowability, cost accounting, or auditing requirements; or any requirement for the management of, testing to be performed under, evaluation of, or reporting on a defense acquisition program may be waived.
(c) The requirements in section 809 of Public Law 101-510, as amended by section 811 of Public Law 102-484, the requirements in any law enacted on or after the enactment of Public Law 101-510 (except to the extent that a waiver or limitation is specifically authorized for such a defense acquisition program by statute), and any provision of law that ensures the financial integrity of the conduct of a Federal Government program or that relates to the authority of the Inspector General of the Department of Defense may not be considered for waiver.
§ 2.3 Regulatory relief for participating programs.
(a) A program participating in the Defense Acquisition Pilot Program will not be subject to any regulation, policy, directive, or administrative rule or guideline relating to the acquisition activities of the Department of Defense other than the Federal Acquisition Regulation (FAR)
(b) Provisions of the FAR and/or DFARS that do not implement statutory requirements may be waived by the Under Secretary of Defense for Acquisition and Technology using appropriate administrative procedures. Provisions of the FAR and DFARS that implement statutory requirements may be waived or limited in accordance with the procedures for statutory relief previously mentioned.
(c) Regulatory relief includes relief from use of government-unique specifications and standards. Since a major objective of the Defense Acquisition Pilot Program is to promote standard, commercial industrial practices, functional performance and commercial specifications and standards will be used to the maximum extent practical. Federal or military specifications and standards may be used only when no practical alternative exists that meet the user’s needs. Defense acquisition officials (other than the Program Manager or Commodity Manager) may only require the use of military specifications and standards with advance approval from the Under Secretary of Defense for Acquisition and Technology, the Head of the DoD Component, or the DoD Component Acquisition Executive.
§ 2.4 Designation of participating programs.
(a) Pilot programs may be nominated by a DoD Component Head or Component Acquisition Executive for participation in the Defense Acquisition Pilot Program. The Under Secretary of Defense for Acquisition and Technology shall determine which specific programs will participate in the pilot program and will transmit to the Congressional defense committees a written notification of each defense acquisition program proposed for participation in the pilot program. Programs proposed for participation must be specifically designated as participants in the Defense Acquisition Pilot Program in a law authorizing appropriations for such programs and provisions of law to be waived must be specifically authorized for waiver.
(b) Once included in the Defense Acquisition Pilot Program, decision and approval authority for the participating program shall be delegated to the lowest level allowed in the acquisition regulations consistent with the total cost of the program (e.g., under DoD Directive 5000.1,
(c) At the time of nomination approval, the Under Secretary of Defense for Acquisition and Technology will establish measures to judge the success of a specific program, and will also establish a means of reporting progress towards the measures.
§ 2.5 Criteria for designation of participating programs.
(a) Candidate programs must have an approved requirement, full program funding assured prior to designation, and low risk. Nomination of a candidate program to participate in the Defense Acquisition Pilot Program should occur as early in the program’s life-cycle as possible. Developmental programs will only be considered on an exception basis.
(b) Programs in which commercial or non-developmental items can satisfy the military requirement are preferred as candidate programs. A nominated program will address which standard commercial, industrial practices will be used in the pilot program and how those practices will be applied.
(c) Nomination of candidate programs must be accompanied by a list of waivers being requested to Statutes, FAR, DFARS, DoD Directives
(1) The provision of law proposed to be waived or limited.
(2) The effects of the provision of law on the acquisition, including specific examples.
(3) The actions taken to ensure that the waiver or limitation will not reduce the efficiency, integrity, and effectiveness of the acquisition process used for the defense acquisition program; and
(4) A discussion of the efficiencies or savings, if any, that will result from the waiver or limitation.
(d) No nominated program shall be accepted until the Under Secretary of Defense has determined that the candidate program is properly planned.
PART 3—TRANSACTIONS OTHER THAN CONTRACTS, GRANTS, OR COOPERATIVE AGREEMENTS FOR PROTOTYPE PROJECTS
§ 3.1 Purpose.
This part consolidates rules that implement section 845 of the National Defense Authorization Act for Fiscal Year 1994, Public Law 103-160, 107 Stat. 1547, as amended, and have a significant impact on the public. Section 845 authorizes the Secretary of a Military Department, the Director of Defense Advanced Research Projects Agency, and any other official designated by the Secretary of Defense, to enter into transactions other than contracts, grants, or cooperative agreements in certain situations for prototype projects that are directly relevant to weapons or weapon systems proposed to be acquired or developed by the Department of Defense.
§ 3.2 Background.
“Other transactions” is the term commonly used to refer to the 10 U.S.C. 2371 authority to enter into transactions other than contracts, grants or cooperative agreements. “Other transactions” are generally not subject to the Federal laws and regulations limited in applicability to contracts, grants or cooperative agreements. As such, they are not required to comply with the Federal Acquisition Regulation (FAR) and its supplements (48 CFR).
§ 3.3 Applicability.
This part applies to the Secretary of a Military Department, the Directors of the Defense Agencies, and any other official designated by the Secretary of Defense to enter into transactions other than contracts, grants or cooperative agreements for prototype projects that are directly relevant to weapons or weapon systems proposed to be acquired or developed by the Department of Defense, under authority of 10 U.S.C. 2371. Such transactions are commonly referred to as “other transaction” agreements and are hereafter referred to as agreements.
§ 3.4 Definitions.
Agency point of contact (POC). The individual identified by the military department or defense agency as its POC for prototype OTs.
Agreements Officer. An individual with the authority to enter into, administer, or terminate OTs for prototype projects and make related determinations and findings.
Approving Official. The official responsible for approving the OTs acquisition strategy and resulting OT agreement. This official must be at least one level above the Agreements Officer and at no lower level than existing agency thresholds associated with procurement contracts.
Awardee. Any business unit that is the direct recipient of an OT agreement.
Business unit. Any segment of an organization, or an entire business organization which is not divided into segments.
Contracting activity. An element of an agency designated by the agency head and delegated broad authority regarding acquisition functions. It includes elements designated by the Director of a Defense Agency which has been delegated contracting authority through its agency charter.
Contracting Officer. A person with the authority to enter into, administer, and/or terminate contracts and make related determinations and findings as defined in Chapter 1 of Title 48, CFR, Federal Acquisition Regulation, Section 2.101(b).
Cost-type OT. Agreements where payments are based on amounts generated from the awardee’s financial or cost records or that require at least one third of the total costs to be provided by non-Federal parties pursuant to statute or require submittal of financial or cost records/reports to determine whether additional effort can be accomplished for the fixed amount.
Fixed-price type OT. Agreements where payments are not based on amounts generated from the awardee’s financial or cost records.
Head of the contracting activity (HCA). The official who has overall responsibility for managing the contracting activity.
Nontraditional Defense contractor. A business unit that has not, for a period of at least one year prior to the date of the OT agreement, entered into or performed on (1) any contract that is subject to full coverage under the cost accounting standards prescribed pursuant to section 26 of the Office of Federal Procurement Policy Act (41 U.S.C. 422) and the regulations implementing such section; or (2) any other contract in excess of $500,000 to carry out prototype projects or to perform basic, applied, or advanced research projects for a Federal agency, that is subject to the Federal Acquisition Regulation.
Procurement contract. A contract awarded pursuant to the Federal Acquisition Regulation.
Project Manager. The government manager for the prototype project.
Qualified Independent Public Accountant. An accountant that is licensed or works for a firm that is licensed in the state or other political jurisdiction where they operate their professional practice and comply with the applicable provisions of the public accountancy law and rules of the jurisdiction where the audit is being conducted.
Segment. One of two or more divisions, product departments, plants, or other subdivisions of an organization reporting directly to a home office, usually identified with responsibility for profit and/or producing a product or service.
Senior Procurement Executive. The following individuals:
(1) Department of the Army—Assistant Secretary of the Army (Acquisition, Logistics and Technology);
(2) Department of the Navy—Assistant Secretary of the Navy (Research, Development and Acquisition);
(3) Department of the Air Force—Assistant Secretary of the Air Force (Acquisition).
(4) The Directors of Defense Agencies who have been delegated authority to act as Senior Procurement Executive for their respective agencies.
Single Audit Act. Establishes uniform audit requirements for audits of state and local government, universities, and non-profit organizations that expend Federal awards.
Subawardee. Any business unit of a party, entity or subordinate element performing effort under the OT agreement, other than the awardee.
Traditional Defense contractor. Any business unit that does not meet the definition of a nontraditional Defense contractor.
§ 3.5 Appropriate use.
In accordance with statute, this authority may be used only when:
(a) At least one nontraditional Defense contractor is participating to a significant extent in the prototype project; or
(b) No nontraditional Defense contractor is participating to a significant extent in the prototype project, but at least one of the following circumstances exists:
(1) At least one third of the total cost of the prototype project is to be paid out of funds provided by non-Federal parties to the transaction.
(2) The Senior Procurement Executive for the agency determines in writing that exceptional circumstances justify the use of a transaction that provides for innovative business arrangements or structures that would not be feasible or appropriate under a procurement contract.
§ 3.6 Limitations on cost-sharing.
(a) When a nontraditional Defense contractor is not participating to a significant extent in the prototype project and cost-sharing is the reason for using OT authority, then the non-Federal amounts counted as provided, or to be provided, by the business units of an awardee or subawardee participating in the performance of the OT agreement may not include costs that were incurred before the date on which the OT agreement becomes effective. Costs that were incurred for a prototype project by the business units of an awardee or subawardee after the beginning of negotiations, but prior to the date the OT agreement becomes effective, may be counted as non-Federal amounts if and to the extent that the Agreements Officer determines in writing that:
(1) The awardee or subawardee incurred the costs in anticipation of entering into the OT agreement; and
(2) It was appropriate for the awardee or subawardee to incur the costs before the OT agreement became effective in order to ensure the successful implementation of the OT agreement.
(b) As a matter of policy, these limitations on cost-sharing apply any time cost-sharing may be recognized when using OT authority for prototype projects.
§ 3.7 Comptroller General access.
(a) A clause must be included in solicitations and agreements for prototype projects awarded under authority of 10 U.S.C. 2371, that provide for total government payments in excess of $5,000,000 to allow Comptroller General access to records that directly pertain to such agreements.
(b) The clause referenced in paragraph (a) of this section will not apply with respect to a party or entity, or subordinate element of a party or entity, that has not entered into any other contract, grant, cooperative agreement or “other transaction” agreement that provides for audit access by a government entity in the year prior to the date of the agreement. The clause must be included in all agreements described in paragraph (a) of this section in order to fully implement the law by covering those participating entities and their subordinate elements which have entered into prior agreements providing for Government audit access, and are therefore not exempt. The presence of the clause in an agreement will not operate to require Comptroller General access to records from any party or participating entity, or subordinate element of a party or participating entity, or subordinate element of a party or participating entity, which is otherwise exempt under the terms of the clause and the law.
(c)(1) The right provided to the Comptroller General in a clause of an agreement under paragraph (a) of this part, is limited as provided by subparagraph (c)(2) of this part in the case of a party to the agreement, an entity that participates in the performance of the agreement, or a subordinate element of that party or entity, if the only cooperative agreements or “other transactions” that the party, entity, or subordinate element entered into with government entities in the year prior to the date of that agreement are cooperative agreements or transactions that were entered into under 10 U.S.C. 2371 or Section 845 of the National Defense Authorization Act for Fiscal Year 1994 (Pub. L. 103-160; 10 U.S.C. 2371 note).
(c)(2) The only records of a party, other entity, or subordinate element referred to in subparagraph (c)(1) of this part that the Comptroller General may examine in the exercise of the right referred to in that subparagraph, are records of the same type as the records that the government has had the right to examine under the audit access clauses of the previous cooperative agreements or transactions referred to in such subparagraph that were entered into by that particular party, entity, or subordinate element.
(d) The head of the contracting activity (HCA) that is carrying out the agreement may waive the applicability of the Comptroller General access requirement if the HCA determines it would not be in the public interest to apply the requirement to the agreement. The waiver will be effective with respect to the agreement only if the HCA transmits a notification of the waiver to the Committees on Armed Services of the Senate and the House of Representatives, the Comptroller General, and the Director, Defense Procurement before entering into the agreement. The notification must include the rationale for the determination.
(e) The HCA must notify the Director, Defense Procurement of situations where there is evidence that the Comptroller General Access requirement caused companies to refuse to participate or otherwise restricted the Department’s access to companies that typically do not do business with the Department.
(f) In no case will the requirement to examine records under the clause referenced in paragraph (a) of this section apply to an agreement where more than three years have passed after final payment is made by the government under such an agreement.
(g) The clause referenced in paragraph (a) of this section, must provide for the following:
(1) The Comptroller General of the United States, in the discretion of the Comptroller General, shall have access to and the right to examine records of any party to the agreement or any entity that participates in the performance of this agreement that directly pertain to, and involve transactions relating to, the agreement.
(2) Excepted from the Comptroller General access requirement is any party to this agreement or any entity that participates in the performance of the agreement, or any subordinate element of such party or entity, that, in the year prior to the date of the agreement, has not entered into any other contract, grant, cooperative agreement, or “other transaction” agreement that provides for audit access to its records by a government entity.
(3)(A) The right provided to the Comptroller General is limited as provided in subparagraph (B) in the case of a party to the agreement, any entity that participates in the performance of the agreement, or a subordinate element of that party or entity if the only cooperative agreements or “other transactions” that the party, entity, or subordinate element entered into with government entities in the year prior to the date of that agreement are cooperative agreements or transactions that were entered into under 10 U.S.C. 2371 or Section 845 of the National Defense Authorization Act for Fiscal Year 1994 (Pub. L. 103-160; 10 U.S.C. 2371 note).
(B) The only records of a party, other entity, or subordinate element referred to in subparagraph (A) that the Comptroller General may examine in the exercise of the right referred to in that subparagraph are records of the same type as the records that the government has had the right to examine under the audit access clauses of the previous agreements or transactions referred to in such subparagraph that were entered into by that particular party, entity, or subordinate element.
(4) This clause shall not be construed to require any party or entity, or any subordinate element of such party or entity, that participates in the performance of the agreement, to create or maintain any record that is not otherwise maintained in the ordinary course of business or pursuant to a provision of law.
(5) The Comptroller General shall have access to the records described in this clause until three years after the date the final payment is made by the United States under this agreement.
(6) The recipient of the agreement shall flow down this provision to any entity that participates in the performance of the agreement.
§ 3.8 DoD access to records policy.
(a) Applicability. This section provides policy concerning DoD access to awardee and subawardee records on OT agreements for prototype projects. This access is separate and distinct from Comptroller General access.
(1) Fixed-price type OT agreements. (i) General—DoD access to records is not generally required for fixed-price type OT agreements. In order for an agreement to be considered a fixed-price type OT agreement, it must adequately specify the effort to be accomplished for a fixed amount and provide for defined payable milestones, with no provision for financial or cost reporting that would be a basis for making adjustment in either the work scope or price of the effort.
(ii) Termination considerations. The need to provide for DoD access to records in the case of termination of a fixed-price type OT can be avoided by limiting potential termination settlements to an amount specified in the original agreement or to payment for the last completed milestone. However, if a fixed-price agreement provides that potential termination settlement amounts may be based on amounts generated from cost or financial records and the agreement exceeds the specified threshold, the OT should provide that DoD will have access to records in the event of termination.
(2) Cost-type OT agreements. (i) Single Audit Act—In accordance with the requirements of Public Law 98-502, as amended by Public Law 104-156, 110 STAT. 1396-1404, when a business unit that will perform the OT agreement, or a subawardee, meets the criteria for an audit pursuant to the Single Audit Act, the DoD must have sufficient access to the entity’s records to assure compliance with the provisions of the Act.
(ii) Traditional Defense contractors. The DoD shall have access to records on cost-type OT agreements with traditional Defense contractors that provide for total Government payments in excess of $5,000,000. The content of the access to records clause shall be in accordance with paragraph (c) of this section. The value establishing the threshold is the total value of the agreement including all options.
(iii) Nontraditional Defense contractors. The DoD should have access to records on cost-type OT agreements with nontraditional Defense contractors that provide for total Government payments in excess of $5,000,000. The content of the access to records clause should be in accordance with paragraph (c) of this section. The value establishing the threshold is the total value of the agreement including all options.
(iv) DoD access below threshold. The Agreements Officer has the discretion to determine whether to include DoD access to records when the OT does not meet any of the requirements in (a)(2)(i) through (a)(2)(iii) of this section. The content of that access to records clause should be tailored to meet the particular circumstances of the agreement.
(v) Examples of cost-type OT agreements. (A) An agreement that requires at least one-third cost share pursuant to statute.
(B) An agreement that includes payable milestones, but provides for adjustment of the milestone amounts based on actual costs or reports generated from the awardee’s financial or cost records.
(C) An agreement that is for a fixed-Government amount, but the agreement provides for submittal of financial or cost records/reports to determine whether additional effort can be accomplished for the fixed amount.
(3) Subawardees. When a DoD access to records provision is included in the OT agreement, the awardee shall use the criteria established in paragraphs (a)(2)(i) through (a)(2)(iii) of this section to determine whether DoD access to records clauses should be included in subawards.
(b) Exceptions—(1) Nontraditional Defense contractors—(i) The Agreements Officers may deviate, in part or in whole, from the application of this access to records policy for a nontraditional Defense contractor when application of the policy would adversely impact the government’s ability to incorporate commercial technology or execute the prototype project.
(ii) The Agreements Officer will document:
(A) What aspect of the audit policy was not applied;
(B) Why it was problematic;
(C) What means will be used to protect the Government’s interest; and
(D) Why the benefits of deviating from the policy outweigh the potential risks.
(iii) This determination will be reviewed by the approving official as part of the pre-award approval of the agreement and submitted to the agency POC within 10 days of award.
(iv) The agency POC will forward all such documentation received in any given fiscal year, to the Director, Defense Procurement by 15 October of each year.
(2) Traditional Defense contractor. (i) Any departure from this policy for other than nontraditional Defense contractors must be approved by the Head of the Contracting Activity prior to award and set forth the exceptional circumstances justifying deviation.
(ii) Additionally, the justification will document:
(A) What aspect of the policy was not applied;
(B) Why it was problematic;
(C) What means will be used to protect the Government’s interest; and
(D) Why the benefits of deviating from the policy outweigh the potential risks.
(iii) The HCA will forward documentation associated with such waivers in any given fiscal year, to the Director, Defense Procurement by 15 October of each year.
(3) DoD access below the threshold. When the Agreements Officer determines that access to records is appropriate for an agreement below the $5,000,000 threshold, the content, length and extent of access may be mutually agreed to by the parties, without documenting reasons for departing from the policy of this section.
(4) Flow down provisions. The awardee shall submit justification for any exception to the DoD access to records policy to the Agreements Officer for subawardees. The Agreements Officer will review and obtain appropriate approval, as set forth in paragraphs (b)(1) and (b)(2) of this section.
(c) Content of DoD access to records clause. When a DoD access to records clause is included as part of the OT agreement, address the following areas during the negotiation of the clause:
(1) Frequency of audits. Audits will be performed when the Agreements Officer determines it is necessary to verify statutory cost share or to verify amounts generated from financial or cost records that will be used as the basis for payment or adjustment of payment.
(2) Means of accomplishing audits. (i) Business units subject to the Single Audit Act—When the awardee or subawardee is a state government, local government, or nonprofit organization whose Federal cost reimbursement contracts and financial assistance agreements are subject to the Single Audit Act (Public Law 98-502, as amended by Public Law 104-156, 110 STAT. 1396-1404), the clause must apply the provisions of that Act for purposes of performing audits of the awardee or subawardee under the agreement.
(ii) Business units not subject to the Single Audit Act currently performing on procurement contracts. The clause must provide that DCAA will perform any necessary audits if, at the time of agreement award, the awardee or subawardee is not subject to the Single Audit Act and is performing a procurement contract that is subject to the Cost Principles Applicable to Commercial Organizations (48 CFR part 31.2) and/or the Cost Accounting Standards (48 CFR part 99).
(iii) Other business units. DCAA or a qualified IPA may perform any necessary audit of a business unit of the awardee or subawardee if, at the time of agreement award, the business unit does not meet the criteria in (c)(2)(i) or (c)(2)(ii) of this section. The clause must provide for the use of a qualified IPA if such a business unit will not accept the agreement if the Government has access to the business unit’s records. The Agreements Officer will include a statement in the file that the business unit is not performing on a procurement contract subject to the Cost Principles or Cost Accounting Standards at the time of agreement award, and will not accept the agreement if the government has access to the business unit’s records. The Agreements Officer will also prepare a report (Part III to the annual report submission) for the Director, Defense Procurement that identifies, for each business unit that is permitted to use an IPA: the business unit’s name, address and the expected value of its award. When the clause provides for use of an IPA to perform any necessary audits, the clause must state that:
(A) The IPA will perform the audit in accordance with Generally Accepted Government Auditing Standards (GAGAS). Electronic copies of the standards may be accessed at www.gao.gov. Printed copies may be purchased from the U.S. Government Printing Office (for ordering information, call (202) 512-1800 or access the Internet Site at www.gpo.gov).
(B) The Agreements Officers’ authorized representative has the right to examine the IPA’s audit report and working papers for 3 years after final payment or three years after issuance of the audit report, whichever is later, unless notified otherwise by the Agreements Officer.
(C) The IPA will send copies of the audit report to the Agreements Officer and the Assistant Inspector General (Audit Policy and Oversight) [AIG(APO)], 400 Army Navy Drive, Suite 737, Arlington, VA 22202.
(D) The IPA will report instances of suspected fraud directly to the DoDIG.
(E) The Government has the right to require corrective action by the awardee or subawardee if the Agreements Officer determines (subject to appeal under the disputes clause of the agreement) that the audit has not been performed or has not been performed in accordance with GAGAS. The Agreements Officer should take action promptly once the Agreements Officer determines that the audit is not being accomplished in a timely manner or the audit is not performed in accordance with GAGAS but generally no later than twelve (12) months of the date requested by the Agreements Officer. The awardee or subawardee may take corrective action by having the IPA correct any deficiencies identified by the Agreements Officer, having another IPA perform the audit, or electing to have the Government perform the audit. If corrective action is not taken, the Agreements Officer has the right to take one or more of the following actions:
(1) Withhold or disallow a specified percentage of costs until the audit is completed satisfactorily. The agreement should include a specified percentage that is sufficient to enhance performance of corrective action while also not being unfairly punitive.
(2) Suspend performance until the audit is completed satisfactorily; and/or
(3) Terminate the agreement if the agreements officer determines that imposition of either (c)(2)(iii)(E)(1) or (c)(2)(iii)(e)(2) of this section is not practical.
(F) If it is found that the awardee or subawardee was performing a procurement contract subject to Cost Principles Applicable to Commercial Organizations (48 CFR part 31.2) and/or Cost Accounting Standards (48 CFR part 99) at the time of agreement award, the Agreements Officer, or an authorized representative, has the right to audit records of the awardee or subawardee to verify the actual costs or reporting information used as the basis for payment or to verify statutorily required cost share under the agreement, and the IPA is to be paid by the awardee or subawardee. The cost of an audit performed in accordance with this policy is reimbursable based on the business unit’s established accounting practices and subject to any limitations in the agreement.
(3) Scope of audit. The Agreements Officer should coordinate with the auditor regarding the nature of any audit envisioned.
(4) Length and extent of access—(i) Clauses that do not provide for use of an IPA. The clause must provide for the Agreements Officer’s authorized representative to have access to directly pertinent records of those business units of the awardee or subawardee’s performing effort under the OT agreement, when needed to verify the actual costs or reporting used as the basis for payment or to verify statutorily required cost share under the agreement.
(ii) Clauses that provide for use of an IPA to perform the audits. The clause must:
(A) Provide the Agreements Officer’s authorized representative access to the IPA’s audit reports and working papers to ensure that the IPA has performed the audit in accordance with GAGAS.
(B) State that the Government will make copies of contractor records contained in the IPA’s work papers if needed to demonstrate that the audit was not performed in accordance with GAGAS.
(C) State that the Government has no direct access to any awardee or subawardee records unless it is found that the awardee or subawardee was performing a procurement contract subject to Cost Principles (48 CFR part 31) and/or Cost Accounting Standards (48 CFR part 99) at the time of agreement award.
(iii) Business Units subject to the Single Audit Act. The clause must provide access to the extent authorized by the Single Audit Act.
(iv) Record Retention/Period of Access. The clause must require that the awardee and subawardee retain, and provide access to, the records referred to in (c)(4)(i) and (c)(4)(ii) of this section for three years after final payment, unless notified of a shorter or longer period by the Agreements Officer.
(5) Awardee flow down responsibilities. Agreements must require awardees to include the necessary provisions in subawards that meet the conditions set forth in this DoD access to records policy.
(d) DoDIG and GAO access. In accordance with statute, if an agreement gives the Agreements Officer or another DoD component official access to a business unit’s records, the DoDIG or GAO are granted the same access to those records.
§ 3.9 Follow-on production contracts.
(a) Authority. A competitively awarded OT agreement for a prototype project that satisfies the condition set forth in law that requires non-Federal parties to the OT agreement to provide at least one-third of the costs of the prototype project may provide for the award of a follow-on production contract to the awardee of the OT prototype agreement for a specific number of units at specific target prices, without further competition.
(b) Conditions. The Agreements Officer must do the following in the award of the prototype project:
(1) Ensure non-Federal parties to the OT prototype agreement offer at least one-third of the costs of the prototype project pursuant to subsection (d)(1)(B)(i), 10 U.S.C. 2371 note.
(2) Use competition to select parties for participation in the OT prototype agreement and evaluate the proposed quantity and target prices for the follow-on production units as part of that competition.
(3) Determine the production quantity that may be procured without further competition, by balancing of the level of the investment made in the project by the non-Federal parties with the interest of the Federal Government in having competition among sources in the acquisition of the product or products prototyped under the project.
(4) Specify the production quantity and target prices in the OT prototype agreement and stipulate in the agreement that the Contracting Officer for the follow-on contract may award a production contract without further competition if the awardee successfully completes the prototype project and agrees to production quantities and prices that do not exceed those specified in the OT prototype agreement (see part 206.001 of the Defense Federal Acquisition Regulation Supplement).
(c) Limitation. As a matter of policy, establishing target prices for production units should only be considered when the risk of the prototype project permits realistic production pricing without placing undue risks on the awardee.
(d) Documentation. (1) The Agreements Officer will need to provide information to the Contracting Officer from the agreement and award file that the conditions set forth in paragraph (b) of this section have been satisfied.
(2) The information shall contain, at a minimum:
(i) The competitive procedures used;
(ii) How the production quantities and target prices were evaluated in the competition;
(iii) The percentage of cost-share; and
(iv) The production quantities and target prices set forth in the OT agreement.
(3) The Project Manager will provide evidence of successful completion of the prototype project to the Contracting Officer.
PARTS 4-8 [RESERVED]
SUBCHAPTER B [RESERVED]
SUBCHAPTER C—DoD GRANT AND AGREEMENT REGULATIONS
PART 21—DoD GRANTS AND AGREEMENTS—GENERAL MATTERS
Subpart A—Introduction
§ 21.100 What are the purposes of this part?
This part of the DoD Grant and Agreement Regulations:
(a) Provides general information about the Defense Grant and Agreement Regulatory System (DGARS).
(b) Sets forth general policies and procedures related to DoD Components’ overall management of functions related to assistance and certain other nonprocurement instruments subject to the DGARS (see § 21.205(b)).
Subpart B—Defense Grant and Agreement Regulatory System
§ 21.200 What is the Defense Grant and Agreement Regulatory System (DGARS)?
The Defense Grant and Agreement Regulatory System (DGARS) is the system of regulatory policies and procedures for the award and administration of DoD Components’ assistance and other nonprocurement awards. DoD Directive 3210.6
§ 21.205 What types of instruments are covered by the DGARS?
The Defense Grant and Agreement Regulatory System (DGARS) applies to the following types of funding instruments awarded by DoD Components:
(a) All grants, cooperative agreements, and technology investment agreements.
(b) Other nonprocurement instruments, as needed to implement statutes, Executive orders, or other Federal Governmentwide rules that apply to those other nonprocurement instruments, as well as to grants and cooperative agreements.
§ 21.210 What are the purposes of the DGARS?
The purposes of the DGARS are to provide uniform policies and procedures for DoD Components’ awards, in order to meet DoD needs for:
(a) Efficient program execution, effective program oversight, and proper stewardship of Federal funds.
(b) Compliance with relevant statutes; Executive orders; and applicable guidance, such as Office of Management and Budget (OMB) circulars.
(c) Collection from DoD Components, retention, and dissemination of management and fiscal data related to awards.
§ 21.215 Who is responsible for the DGARS?
The Assistant Secretary of Defense for Research and Engineering (ASD(R&E)), or his or her designee, develops and implements DGARS policies and procedures. He or she does so by issuing and maintaining the DoD publications that comprise the DGARS.
§ 21.220 What publications are in the DGARS?
The DoD Grant and Agreement Regulations comprise the principal element of the DGARS. The ASD(R&E) also may publish DGARS policies and procedures in DoD instructions and other DoD publications, as appropriate.
Subpart C—The DoD Grant and Agreement Regulations
§ 21.300 What instruments are subject to the DoD Grant and Agreement Regulations (DoDGARs)?
(a) The types of instruments that are subject to the DoDGARs vary from one portion of the DoDGARs to another. The types of instruments include grants, cooperative agreements, and technology investment agreements. Some portions of the DoDGARs apply to other types of assistance or nonprocurement instruments. The term “awards,” as defined in subpart F of this part, is used in this part to refer collectively to all of the types of instruments that are subject to one or more portions of the DoDGARs.
(b) Note that each portion of the DoDGARs identifies the types of instruments to which it applies.
(c) For convenience, the table in Appendix A to this part provides an overview of the applicability of the various portions of the DoDGARs.
§ 21.305 What is the purpose of the DoDGARs?
The DoD Grant and Agreement Regulations provide uniform policies and procedures for the award and administration of DoD Components’ awards. The DoDGARs are the primary DoD regulations for achieving the DGARS purposes described in § 21.210.
§ 21.310 Who ensures DoD Component compliance with the DoDGARs?
The Head of each DoD Component that makes or administers awards, or his or her designee, is responsible for ensuring compliance with the DoDGARs within that DoD Component.
§ 21.315 May DoD Components issue supplemental policies and procedures to implement the DoDGARs?
Yes, Heads of DoD Components or their designees may issue regulations, procedures, or instructions to implement the DGARS or supplement the DoDGARs to satisfy needs that are specific to the DoD Component, as long as the regulations, procedures, or instructions do not impose additional costs or administrative burdens on recipients or potential recipients.
§ 21.320 Are there areas in which DoD Components must establish policies and procedures to implement the DoDGARs?
Yes, Heads of DoD Components or their designees must establish policies and procedures in areas where uniform policies and procedures throughout the DoD Component are required, such as for:
(a) Requesting class deviations from the DoDGARs (see §§ 21.335(b) and 21.340(a)) or exemptions from the provisions of 31 U.S.C. 6301 through 6308, that govern the appropriate use of contracts, grants, and cooperative agreements (see 32 CFR 22.220).
(b) Designating one or more Grant Appeal Authorities to resolve claims, disputes, and appeals (see 32 CFR 22.815).
(c) Reporting data on assistance awards and programs, as required by 31 U.S.C. chapter 61 (see subpart E of this part).
§ 21.325 Do acquisition regulations also apply to DoD grants and agreements?
Unless the DoDGARs specify that they apply, policies and procedures in the following acquisition regulations that apply to procurement contracts do not apply to grants, cooperative agreements, technology investment agreements, or to other assistance or nonprocurement awards:
(a) The Federal Acquisition Regulation (FAR)(48 CFR parts 1-53).
(b) The Defense Federal Acquisition Regulation Supplement (DFARS)(48 CFR parts 201-270).
(c) DoD Component supplements to the FAR and DFARS.
§ 21.330 How are the DoDGARs published and maintained?
(a) The DoD publishes the DoDGARs in the Code of Federal Regulations (CFR).
(b) The location of the DoDGARs in the CFR currently is in transition. The regulations are moving from chapter I, subchapter C, title 32, to a new location in chapter XI, title 2 of the CFR. During the transition, there will be some parts of the DoDGARs in each of the two titles.
(c) The DoD publishes updates to the DoDGARs in the
(d) A standing working group recommends revisions to the DoDGARs to the ASD(R&E). The ASD(R&E), Director of Defense Procurement, and each Military Department must be represented on the working group. Other DoD Components that make or administer awards may also nominate representatives. The working group meets when necessary.
(a) The Head of the DoD Component or his or her designee may authorize individual deviations from the DoDGARs, which are deviations that affect only one award, if the deviations are not prohibited by statute, executive order or regulation.
(b) The ASD(R&E) or his or her designee must approve in advance any deviation for a class of awards. Note that, as described at 2 CFR 1126.3, OMB concurrence also is required for some class deviations from requirements included in awards to institutions of higher education, nonprofit organizations, States, local governments, and Indian tribes.
§ 21.340 What are the procedures for requesting and documenting deviations?
(a) DoD Components must submit copies of justifications and agency approvals for individual deviations and written requests for class deviations to: Principal Deputy Assistant Secretary of Defense for Research and Engineering, ATTN: Basic Research, 3030 Defense Pentagon, Washington, DC 20301-3030.
(b) Grants officers and agreements officers must maintain copies of requests and approvals for individual and class deviations in award files.
Subpart D—Authorities and Responsibilities for Making and Administering Assistance Awards
§ 21.400 To what instruments does this subpart apply?
This subpart applies to grants, cooperative agreements, and technology investment agreements, which are legal instruments used to reflect assistance relationships between the United States Government and recipients.
§ 21.405 What is the purpose of this subpart?
This subpart describes the sources and flow of authority to make or administer assistance awards, and assigns the broad responsibilities associated with DoD Components’ use of those instruments.
Yes, the use of an assistance instrument to carry out a program requires authorizing legislation. That is unlike the use of a procurement contract, for which Federal agencies have inherent, Constitutional authority.
No, the statutory authority described in § 21.410 need not specifically say that the purpose of the program is assistance or mention the use of any type of assistance instrument. However, the intent of the statute must support a judgment that the use of an assistance instrument is appropriate. For example, a DoD Component may judge that the principal purpose of a program for which it has authorizing legislation is assistance, rather than acquisition. The DoD Component would properly use an assistance instrument to carry out that program, in accordance with 31 U.S.C. chapter 63.
DoD Components may use assistance instruments under a number of statutory authorities that fall into three categories:
(a) Authorities that statutes provide to the Secretary of Defense. These authorities generally are delegated by the Secretary of Defense to Heads of DoD Components, usually through DoD directives, instructions, or policy memoranda that are not part of the Defense Grant and Agreement Regulatory System. Examples of statutory authorities in this category are:
(1) Authority under 10 U.S.C. 2391 to award grants or cooperative agreements to help State and local governments alleviate serious economic impacts of defense program changes (e.g., base openings and closings, contract changes, and personnel reductions and increases).
(2) Authority under 10 U.S.C. 2413 to enter into cooperative agreements with entities that furnish procurement technical assistance to businesses.
(b) Authorities that statutes may provide directly to Heads of DoD Components. When a statute authorizes the Head of a DoD Component to use a funding instrument to carry out a program with a principal purpose of assistance, use of that authority requires no delegation by the Secretary of Defense. For example, 10 U.S.C. 2358 authorizes the Secretaries of the Military Departments, in addition to the Secretary of Defense, to perform research and development projects through grants and cooperative agreements. Similarly, 10 U.S.C. 2371 provides authority for the Secretaries of the Military Departments and Secretary of Defense to carry out basic, applied, or advanced research projects using assistance instruments other than grants and cooperative agreements. A Military Department’s use of the authority of 10 U.S.C. 2358 or 10 U.S.C. 2371 therefore requires no delegation by the Secretary of Defense.
(c) Authorities that arise indirectly as the result of statute. For example, authority to use an assistance instrument may result from:
(1) A federal statute authorizing a program that is consistent with an assistance relationship (i.e., the support or stimulation of a public purpose, rather than the acquisition of a good or service for the direct benefit of the Department of Defense). In accordance with 31 U.S.C. chapter 63, such a program would appropriately be carried out through the use of grants or cooperative agreements. Depending upon the nature of the program (e.g., research) and whether the program statute includes authority for any specific types of instruments, there also may be authority to use other assistance instruments.
(2) Exemptions requested by the Department of Defense and granted by the Office of Management and Budget under 31 U.S.C. 6307, as described in 32 CFR 22.220.
The Head of a DoD Component, or his or her designee, may delegate to the heads of contracting activities (HCAs) within the Component, that Component’s authority to make and administer awards, to appoint grants officers and agreements officers (see §§ 21.435 through 21.450), and to broadly manage the DoD Component’s functions related to assistance instruments. The HCA is the same official (or officials) designated as the head of the contracting activity for procurement contracts, as defined at 48 CFR 2.101. The intent is that overall management responsibilities for a DoD Component’s functions related to nonprocurement instruments be assigned only to officials that have similar responsibilities for procurement contracts.
§ 21.430 What are the responsibilities of the head of the awarding or administering activity?
When designated by the Head of the DoD Component or his or her designee (see 32 CFR 21.425), the head of the awarding or administering activity (i.e., the HCA) is responsible for the awards made by or assigned to that activity. He or she must supervise and establish internal policies and procedures for that activity’s awards.
§ 21.435 Must DoD Components formally select and appoint grants officers and agreements officers?
Yes, each DoD Component that awards grants or enters into cooperative agreements must have a formal process (see § 21.425) for selecting and appointing grants officers and for terminating their appointments. Similarly, each DoD Component that awards or administers technology investment agreements must have a process for selecting and appointing agreements officers and for terminating their appointments.
§ 21.440 What are the standards for selecting and appointing grants officers and agreements officers?
In selecting grants officers and agreements officers, DoD Components must use the following minimum standards:
(a) In selecting a grants officer, the appointing official must judge whether the candidate has the necessary experience, training, education, business acumen, judgment, and knowledge of assistance instruments and contracts to function effectively as a grants officer. The appointing official also must take those attributes of the candidate into account when deciding the complexity and dollar value of the grants and cooperative agreements to be assigned.
(b) In selecting an agreements officer, the appointing official must consider all of the same factors as in paragraph (a) of this section. In addition, the appointing official must consider the candidate’s ability to function in the less structured environment of technology investment agreements, where the rules provide more latitude and the individual must have a greater capacity for exercising judgment. Agreements officers therefore should be individuals who have demonstrated expertise in executing complex assistance and acquisition instruments.
§ 21.445 What are the requirements for a grants officer’s or agreements officer’s statement of appointment?
A statement of a grants officer’s or agreements officer’s appointment:
(a) Must be in writing.
(b) Must clearly state the limits of the individual’s authority, other than limits contained in applicable laws or regulations. Information on those limits of a grants officer’s or agreements officer’s authority must be readily available to the public and agency personnel.
(c) May, if the individual is a contracting officer, be incorporated into his or her statement of appointment as a contracting officer (i.e., there does not need to be a separate written statement of appointment for assistance instruments).
§ 21.450 What are the requirements for a termination of a grants officer’s or agreements officer’s appointment?
A termination of a grants officer’s or agreements officer’s authority:
(a) Must be in writing, unless the written statement of appointment provides for automatic termination.
(b) May not be retroactive.
(c) May be integrated into a written termination of the individual’s appointment as a contracting officer, as appropriate.
§ 21.455 Who can sign, administer, or terminate assistance instruments?
Only grants officers are authorized to sign, administer, or terminate grants or cooperative agreements (other than technology investment agreements) on behalf of the Department of Defense. Similarly, only agreements officers may sign, administer, or terminate technology investment agreements.
Grants officers and agreements officers may bind the Government only to the extent of the authority delegated to them in their written statements of appointment (see § 21.445).
§ 21.465 What are grants officers’ and agreements officers’ responsibilities?
Grants officers and agreements officers should be allowed wide latitude to exercise judgment in performing their responsibilities, which are to ensure that:
(a) Individual awards are used effectively in the execution of DoD programs, and are made and administered in accordance with applicable laws, Executive orders, regulations, and DoD policies.
(b) Sufficient funds are available for obligation.
(c) Recipients of awards receive impartial, fair, and equitable treatment.
Subpart E—Information Reporting on Awards Subject to 31 U.S.C. Chapter 61
§ 21.500 What is the purpose of this subpart?
This subpart prescribes policies and procedures for compiling and reporting data related to DoD awards and programs that are subject to information reporting requirements of 31 U.S.C. chapter 61. That chapter of the U.S. Code requires the Office of Management and Budget to maintain a Governmentwide information system to collect data on Federal agencies’ domestic assistance awards and programs.
§ 21.505 What is the Catalog of Federal Domestic Assistance (CFDA)?
The Catalog of Federal Domestic Assistance (CFDA) is a Governmentwide compilation of information about assistance programs. It covers all assistance programs and activities, regardless of the number of awards made under the program, the total dollar value of assistance provided, or the duration. In addition to programs using grants and agreements, covered programs include those providing assistance in other forms, such as payments in lieu of taxes or indirect assistance resulting from Federal operations.
§ 21.510 Why does the DoD report information to the CFDA?
The Federal Program Information Act (31 U.S.C. 6101 through 6106), as implemented through OMB guidance at 2 CFR 200.202 requires the Department of Defense and other Federal agencies to provide certain information about their assistance programs to the OMB and the General Services Administration (GSA). The GSA makes this information available to the public by publishing it in the Catalog of Federal Domestic Assistance (CFDA).
§ 21.515 Who reports the information for the CFDA?
(a) Each DoD Component that provides financial assistance must:
(1) Report to the Defense Assistance Awards Data System (DAADS) Administrator all new programs and changes as they occur or as the DoD Component submits its annual updates to existing CFDA information. DAADS is further described in §§ 21.520 through 21.555.
(2) Identify to the DAADS Administrator a point-of-contact who will be responsible for reporting the program information and for responding to inquiries related to it.
(b) The DAADS Administrator is the Department of Defense’s single liaison with whom DoD Components that collect and compile such program information work to report the information to OMB and GSA.
§ 21.520 What are the purposes of the Defense Assistance Awards Data System (DAADS)?
Data from the Defense Assistance Awards Data System (DAADS) are used to provide:
(a) DoD inputs to meet statutory requirements for Federal Governmentwide reporting of data related to obligations of funds by assistance instrument.
(b) A basis for meeting Governmentwide requirements to report to USASpending.gov (or any successor site designated by OMB) and for preparing other recurring and special reports to the President, the Congress, the Government Accountability Office, and the public.
(c) Information to support policy formulation and implementation and to meet management oversight requirements related to the use of awards.
§ 21.525 Who issues policy guidance for the DAADS?
The Principal Deputy Assistant Secretary of Defense for Research and Engineering (PDASD(R&E)), or his or her designee, issues necessary policy guidance for the Defense Assistance Awards Data System.
§ 21.530 What are the responsibilities of the DAADS Administrator?
The DAADS Administrator, consistent with guidance issued by the PDASD(R&E):
(a) Processes DAADS information twice a month and prepares recurring and special reports using such information.
(b) Prepares, updates, and disseminates instructions for reporting information to the DAADS. The instructions are to specify procedures, formats, and editing processes to be used by DoD Components, including record layout, submission deadlines, media, methods of submission, and error correction schedules.
§ 21.535 Do DoD Components have central points for collecting DAADS data?
Each DoD Component must have a central point for collecting DAADS information from contracting activities within that DoD Component. The central points are as follows:
(a) For the Army: As directed by the U.S. Army Contracting Support Agency.
(b) For the Navy: As directed by the Office of Naval Research.
(c) For the Air Force: As directed by the Office of the Secretary of the Air Force, Acquisition Contracting Policy and Implementation Division (SAF/AQCP).
(d) For the Office of the Secretary of Defense, Defense Agencies, and DoD Field Activities: Each Defense Agency must identify a central point for collecting and reporting DAADS information to the DAADS administrator. The DAADS Administrator serves as the central point for offices and activities within the Office of the Secretary of Defense and for DoD Field Activities.
§ 21.540 What are the duties of the DoD Components’ central points for the DAADS?
The office that serves, in accordance with § 21.535, as the central point for collecting DAADS information from contracting activities within each DoD Component must:
(a) Establish internal procedures to ensure reporting by contracting activities that make awards subject to 31 U.S.C. chapter 61.
(b) Collect information required by the DAADS User Guide from those contracting activities, and report it to the DAADS Administrator, in accordance with §§ 21.545 through 21.555. Note that the DAADS User Guide, which a registered DAADS user may find at the Resources section of the DAADS website (https://www.dmdc.osd.mil/daads/), provides further information about required data elements and instructions for submitting data.
(c) Submit to the DAADS Administrator any recommended changes to the DAADS.
§ 21.545 Must DoD Components report every obligation to the DAADS?
Yes, DoD Components’ central points must collect and report the data required by the DD Form 2566 for each individual action that involves the obligation or deobligation of Federal funds for an award that is subject to 31 U.S.C. chapter 61.
§ 21.550 Must DoD Components relate reported actions to listings in the CFDA?
Yes, DoD Components’ central points must report each action as an obligation or deobligation under a specific programmatic listing in the Catalog of Federal Domestic Assistance (CFDA, see § 21.505). The programmatic listing to be shown is the one that provided the funds being obligated or deobligated. For example, if a grants officer or agreements officer in one DoD Component obligates appropriations of a second DoD Component’s programmatic listing, the grants officer or agreements officer must show the CFDA programmatic listing of the second DoD Component on the DD Form 2566.
§ 21.555 When and how must DoD Components report to the DAADS?
DoD Components must report:
(a) Each obligating or deobligating action no later than 15 days after the date of the obligation or deobligation. Doing so enables DAADS to comply with the deadline in the Federal Funding Accountability and Transparency Act of 2006 (Pub. L. 109-282; 31 U.S.C. 6101 note) to report to the Governmentwide data system (USASpending.gov) established to implement requirements of that Act.
(b) Using a method and in a format permitted either by the DAADS User Guide described in § 21.540(b) or by agreement with the DAADS Administrator.
§ 21.560 Must DoD Components assign numbers uniformly to awards?
Yes, DoD Components must assign identifying numbers to all awards subject to this subpart, including grants, cooperative agreements, and technology investment agreements. The uniform numbering system parallels the procurement instrument identification (PII) numbering system specified in 48 CFR 204.70 (in the “Defense Federal Acquisition Regulation Supplement”), as follows:
(a) The first six alphanumeric characters of the assigned number must be identical to those specified by 48 CFR 204.7003(a)(1) to identify the DoD Component and contracting activity.
(b) The seventh and eighth positions must be the last two digits of the fiscal year in which the number is assigned to the grant, cooperative agreement, or other nonprocurement instrument.
(c) The 9th position must be a number:
(1) “1” for grants.
(2) “2” for cooperative agreements, including technology investment agreements that are cooperative agreements (see Appendix B to 32 CFR part 37).
(3) “3” for other nonprocurement instruments, including technology investment agreements that are not cooperative agreements.
(d) The 10th through 13th positions must be the serial number of the instrument. DoD Components and contracting activities need not follow any specific pattern in assigning these numbers and may create multiple series of letters and numbers to meet internal needs for distinguishing between various sets of awards.
§ 21.565 Must DoD Components’ electronic systems accept Data Universal Numbering System (DUNS) numbers?
The DoD Components must comply with paragraph 5.e of the Office of Management and Budget (OMB) policy directive entitled, “Requirement for a DUNS number in Applications for Federal Grants and Cooperative Agreements.”
Subpart F—Definitions
§ 21.605 Acquisition.
The acquiring (by purchase, lease, or barter) of property or services for the direct benefit or use of the United States Government (see more detailed definition at 48 CFR 2.101). In accordance with 31 U.S.C. 6303, procurement contracts are the appropriate legal instruments for acquiring such property or services.
§ 21.610 Agreements officer.
An official with the authority to enter into, administer, and/or terminate technology investment agreements.
§ 21.615 Assistance.
The transfer of a thing of value to a recipient to carry out a public purpose of support or stimulation authorized by a law of the United States (see 31 U.S.C. 6101(3)). Grants, cooperative agreements, and technology investment agreements are examples of legal instruments used to provide assistance.
§ 21.620 Award.
A grant, cooperative agreement, technology investment agreement, or other nonprocurement instrument subject to one or more parts of the DoD Grant and Agreement Regulations (see appendix A to this part).
§ 21.625 Contract.
See the definition for procurement contract in this subpart.
§ 21.630 Contracting activity.
An activity to which the Head of a DoD Component has delegated broad authority regarding acquisition functions, pursuant to 48 CFR 1.601.
§ 21.635 Contracting officer.
A person with the authority to enter into, administer, and/or terminate contracts and make related determinations and findings. A more detailed definition of the term appears at 48 CFR 2.101.
§ 21.640 Cooperative agreement.
A legal instrument which, consistent with 31 U.S.C. 6305, is used to enter into the same kind of relationship as a grant (see definition “grant”), except that substantial involvement is expected between the Department of Defense and the recipient when carrying out the activity contemplated by the cooperative agreement. The term does not include “cooperative research and development agreements” as defined in 15 U.S.C. 3710a.
§ 21.645 Deviation.
The issuance or use of a policy or procedure that is inconsistent with the DoDGARs.
§ 21.650 DoD Components.
The Office of the Secretary of Defense, the Military Departments, the Defense Agencies, and DoD Field Activities.
§ 21.655 Grant.
A legal instrument which, consistent with 31 U.S.C. 6304, is used to enter into a relationship:
(a) Of which the principal purpose is to transfer a thing of value to the recipient to carry out a public purpose of support or stimulation authorized by a law of the United States, rather than to acquire property or services for the Department of Defense’s direct benefit or use.
(b) In which substantial involvement is not expected between the Department of Defense and the recipient when carrying out the activity contemplated by the grant.
§ 21.660 Grants officer.
An official with the authority to enter into, administer, and/or terminate grants or cooperative agreements.
§ 21.665 Nonprocurement instrument.
A legal instrument other than a procurement contract. Examples include instruments of financial assistance, such as grants or cooperative agreements, and those of technical assistance, which provide services in lieu of money.
§ 21.670 Procurement contract.
A legal instrument which, consistent with 31 U.S.C. 6303, reflects a relationship between the Federal Government and a State, a local government, or other recipient when the principal purpose of the instrument is to acquire property or services for the direct benefit or use of the Federal Government. See the more detailed definition for contract at 48 CFR 2.101.
§ 21.675 Recipient.
An organization or other entity receiving an award from a DoD Component.
§ 21.680 Technology investment agreements.
A special class of assistance instruments used to increase involvement of commercial firms in defense research programs and for other purposes related to integrating the commercial and defense sectors of the nation’s technology and industrial base. Technology investment agreements include one kind of cooperative agreement with provisions tailored for involving commercial firms, as well as one kind of other assistance transaction. Technology investment agreements are described more fully in 32 CFR part 37.
Appendix A to Part 21—Instruments to Which DoDGARs Portions Apply
I. For each DoDGARs part that DoD already has adopted in chapter XI of title 2 of the Code of Federal Regulations (CFR), the following table summarizes the general subject area that the part addresses and its applicability. All of the DoDGARs ultimately will be located in chapter XI of 2 CFR.
| DoDGARs . . . | Which addresses . . . | Applies to . . . |
|---|---|---|
| Part 1104 | DoD’s interim implementation of the OMB guidance in 2 CFR part 200 | grants and cooperative agreements other than TIAs. |
| Part 1108 (2 CFR part 1108) | Definitions of terms | terms used throughout the DoDGARs in chapter XI of 2 CFR other than the portion containing regulations implementing specific national policy requirements that provide their own definitions of terms. |
| Part 1120 (2 CFR part 1120) | Award format | grants and cooperative agreements, other than TIAs. |
| Part 1122 (2 CFR part 1122) | National policy requirements general award terms and conditions | grants and cooperative agreements other than TIAs. Portions of this part apply to TIAs, but only as 32 CFR part 37 refers to them and makes them apply. |
| Part 1125 (2 CFR part 1125) | Governmentwide debarment and suspension requirements | nonprocurement generally, including grants, cooperative agreements, TIAs, and any other instruments that are “covered transactions” under OMB guidance in 2 CFR 180.210 and 180.215, as implemented by 2 CFR part 1125, except acquisition transactions to carry out prototype projects ( |
| Parts 1126, 1128, 1130, 1132, 1134, 1136, and 1138 (subchapter D of 2 CFR chapter XI) | Administrative Requirements Terms and Conditions for Cost-type Awards to Nonprofit and Governmental Entities | cost-type grants and cooperative agreements other than TIAs. Portions of this subchapter apply to TIAs, but only as 32 CFR part 37 refers to them and makes them apply. |
II. For each DoDGARs part that will remain in subchapter C of chapter I of title 32 of the CFR, pending completion of the DoDGARs updating needed to fully implement OMB guidance in 2 CFR part 200 and for other purposes, the following table summarizes the general subject area that the part addresses and its applicability. All of the substantive content of these DoDGARs parts ultimately will be located in new parts in chapter XI of 2 CFR.
| DoDGARs . . . | which addresses . . . | applies to . . . |
|---|---|---|
| Part 21 (32 CFR part 21), all but subparts D and E | The Defense Grant and Agreement Regulatory System and the DoD Grant and Agreement Regulations | “awards,” which are grants, cooperative agreements, technology investment agreements (TIAs), and other nonprocurement instruments subject to one or more parts of the DoDGARs. |
| Part 21 (32 CFR part 21), subpart D | Authorities and responsibilities for assistance award and administration | grants, cooperative agreements, and TIAs. |
| Part 21 (32 CFR part 21), subpart E | DoD Components’ information reporting requirements | grants, cooperative agreements, TIAs, and other nonprocurement instruments subject to reporting requirements in 31 U.S.C. chapter 61. |
| Part 22 (32 CFR part 22) | DoD grants officers’ responsibilities for award and administration of grants and cooperative agreements | grants and cooperative agreements other than TIAs. Portions of this part apply to TIAs, but only as 32 CFR part 37 refers to them and makes them apply. |
| Part 26 (32 CFR part 26) | Governmentwide drug-free workplace requirements | grants, cooperative agreements and other financial assistance instruments, including TIAs, that are included in the definition of “award” at 32 CFR 26.605. |
| Part 28 (32 CFR part 28) | Governmentwide restrictions on lobbying | grants, cooperative agreements and other financial assistance instruments, including TIAs, that are included in the definitions of “Federal grant” and “Federal cooperative agreement” at 32 CFR 28.105. |
| Part 34 (32 CFR part 34) | Administrative requirements for grants and agreements with for-profit organizations | grants and cooperative agreements other than TIAs (“award,” as defined in 32 CFR 34.2). Portions of this part apply to TIAs, but only as 32 CFR part 37 refers to them and makes them apply. |
| Part 37 (32 CFR part 37) | Agreements officers’ responsibilities for award and administration of TIAs | TIAs. Note that this part refers to other portions of DoDGARs that apply to TIAs. |
PART 22—DoD GRANTS AND AGREEMENTS—AWARD AND ADMINISTRATION
Subpart A—General
§ 22.100 Purpose.
This part outlines grants officers’ and DoD Components’ responsibilities related to the award and administration of grants and cooperative agreements.
§ 22.105 Definitions.
Other than the terms defined in this section, terms used in this part are defined in 32 CFR part 21, subpart F.
Administrative offset. An action whereby money payable by the United States Government to, or held by the Government for, a recipient is withheld to satisfy a delinquent debt the recipient owes the Government.
Advanced research. Advanced technology development that creates new technology or demonstrates the viability of applying existing technology to new products and processes in a general way. Advanced research is most closely analogous to precompetitive technology development in the commercial sector (i.e., early phases of research and development on which commercial competitors are willing to collaborate, because the work is not so coupled to specific products and processes that the results of the work must be proprietary). It does not include development of military systems and hardware where specific requirements have been defined. It is typically funded in Advanced Technology Development (Budget Activity 3 and Research Category 6.3A) programs within Research, Development, Test and Evaluation (RDT&E).
Applied research. Efforts that attempt to determine and exploit the potential of scientific discoveries or improvements in technology such as new materials, devices, methods and processes. It typically is funded in Applied Research (Budget Activity 2 and Research Category 6.2) programs within Research, Development, Test and Evaluation (RDT&E). Applied research normally follows basic research but may not be fully distinguishable from the related basic research. The term does not include efforts whose principal aim is the design, development, or testing of specific products, systems or processes to be considered for sale or acquisition; these efforts are within the definition of “development.”
Basic research. Efforts directed toward increasing knowledge and understanding in science and engineering, rather than the practical application of that knowledge and understanding. It typically is funded within Basic Research (Budget Activity 1 and Research Category 6.1) programs within Research, Development, Test and Evaluation (RDT&E). For the purposes of this part, basic research includes:
(1) Research-related, science and engineering education, including graduate fellowships and research traineeships.
(2) Research instrumentation and other activities designed to enhance the infrastructure for science and engineering research.
Claim. A written demand or written assertion by one of the parties to a grant or cooperative agreement seeking as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of award terms, or other relief arising under or relating to a grant or cooperative agreement. A routine request for payment that is not in dispute when submitted is not a claim. The submission may be converted to a claim by written notice to the grants officer if it is disputed either as to liability or amount, or is not acted upon in a reasonable time.
Debt. Any amount of money or any property owed to a Federal Agency by any person, organization, or entity except another United States Federal Agency. Debts include any amounts due from insured or guaranteed loans, fees, leases, rents, royalties, services, sales of real or personal property, or overpayments, penalties, damages, interest, fines and forfeitures, and all other claims and similar sources. Amounts due a nonappropriated fund instrumentality are not debts owed the United States, for the purposes of this subchapter.
Delinquent debt. A debt:
(1) That the debtor fails to pay by the date specified in the initial written notice from the agency owed the debt, normally within 30 calendar days, unless the debtor makes satisfactory payment arrangements with the agency by that date; and
(2) With respect to which the debtor has elected not to exercise any available appeals or has exhausted all agency appeal processes.
Development. The systematic use of scientific and technical knowledge in the design, development, testing, or evaluation of potential new products, processes, or services to meet specific performance requirements or objectives. It includes the functions of design engineering, prototyping, and engineering testing.
Electronic commerce. The conduct of business through the use of automation and electronic media, in lieu of paper transactions, direct personal contact, telephone, or other means. For grants and cooperative agreements, electronic commerce can include the use of electronic data interchange, electronic mail, electronic bulletin board systems, and electronic funds transfer for: program announcements or solicitations; applications or proposals; award documents; recipients’ requests for payment; payment authorizations; and payments.
Electronic data interchange. The exchange of standardized information communicated electronically between business partners, typically between computers. It is DoD policy that DoD Component EDI applications conform to the American National Standards Institute (ANSI), Accredited Standards Committee (ASC) X-12 standard.
Electronic funds transfer. A system that provides the authority to debit or credit accounts in financial institutions by electronic means rather than source documents (e.g., paper checks). Processing typically occurs through the Federal Reserve System and/or the Automated Clearing House (ACH) computer network. It is DoD policy that DoD Component EFT transmissions conform to the American National Standards Institute (ANSI), Accredited Standards Committee (ASC) X-12 standard.
Historically Black colleges and universities. Institutions of higher education determined by the Secretary of Education to meet the requirements of 34 CFR 608.2. Each DoD Component’s contracting activities and grants officers may obtain a list of historically Black colleges and universities from that DoD Component’s Small and Disadvantaged Business Utilization office.
Institution of higher education. An educational institution that meets the criteria in section 1201(a) of the Higher Education Act of 1965 (20 U.S.C. 1141(a)). Note, however, that institution of higher education has a different meaning in § 22.520, as given at § 22.520(b)(2).
Minority institutions. Institutions of higher education that meet the criteria for minority institutions specified in 10 U.S.C. 2323. Each DoD Component’s contracting activities and grants officers may obtain copies of a current list of institutions that qualify as minority institutions under 10 U.S.C. 2323 from that DoD Component’s Small and Disadvantaged Business Utilization office (the list of minority institutions changes periodically, based on Department of Education data on institutions’ enrollments of minority students).
Research. Basic, applied, and advanced research, as defined in this section.
Subaward. An award of financial assistance in the form of money, or property in lieu of money, made under a DoD grant or cooperative agreement by a recipient to an eligible subrecipient. The term includes financial assistance for substantive program performance by the subrecipient of a portion of the program for which the DoD grant or cooperative agreement was made. It does not include the recipient’s procurement of goods and services needed to carry out the program.
Subpart B—Selecting the Appropriate Instrument
§ 22.200 Purpose.
This subpart provides the bases for determining the appropriate type of instrument in a given situation.
§ 22.205 Distinguishing assistance from procurement.
Before using a grant or cooperative agreement, the grants officer shall make a positive judgment that an assistance instrument, rather than a procurement contract, is the appropriate instrument, based on the following:
(a) Purpose. (1) The grants officer must judge that the principal purpose of the activity to be carried out under the instrument is to stimulate or support a public purpose (i.e., to provide assistance), rather than acquisition (i.e., to acquire goods and services for the direct benefit of the United States Government). If the principal purpose is acquisition, then the grants officer shall judge that a procurement contract is the appropriate instrument, in accordance with 31 U.S.C. chapter 63 (“Using Procurement Contracts and Grant and Cooperative Agreements”). Assistance instruments shall not be used in such situations, except:
(i) When a statute specifically provides otherwise; or
(ii) When an exemption is granted, in accordance with § 22.220.
(2) For research and development, the appropriate use of grants and cooperative agreements therefore is almost exclusively limited to the performance of selected basic, applied, and advanced research projects. Development projects nearly always shall be performed by contract or other acquisition transaction because their principal purpose is the acquisition of specific deliverable items (e.g., prototypes or other hardware) for the benefit of the Department of Defense.
(b) Fee or profit. Payment of fee or profit is consistent with an activity whose principal purpose is the acquisition of goods and services for the direct benefit or use of the United States Government, rather than an activity whose principal purpose is assistance. Therefore, the grants officer shall use a procurement contract, rather than an assistance instrument, in all cases where:
(1) Fee or profit is to be paid to the recipient of the instrument; or
(2) The instrument is to be used to carry out a program where fee or profit is necessary to achieving program objectives.
§ 22.210 Authority for providing assistance.
(a) Before a grant or cooperative agreement may be used, the grants officer must:
(1) Identify the program statute, the statute that authorizes the DoD Component to carry out the activity the principal purpose of which is assistance (see 32 CFR 21.410 through 21.420.
(2) Review the program statute to determine if it contains requirements that affect the:
(i) Solicitation, selection, and award processes. For example, program statutes may authorize assistance to be provided only to certain types of recipients; may require that recipients meet certain other criteria to be eligible to receive assistance; or require that a specific process shall be used to review recipients’ proposals.
(ii) Terms and conditions of the award. For example, some program statutes require a specific level of cost sharing or matching.
(b) The grants officer shall ensure that the award of DoD appropriations through a grant or cooperative agreement for a research project meets the standards of 10 U.S.C. 2358, DoD’s broad authority to carry out research, even if the research project is authorized under a statutory authority other than 10 U.S.C. 2358. The standards of 10 U.S.C. 2358 are that, in the opinion of the Head of the DoD Component or his or her designee, the projects must be:
(1) Necessary to the responsibilities of the DoD Component.
(2) Related to weapons systems and other military needs or of potential interest to the DoD Component.
§ 22.215 Distinguishing grants and cooperative agreements.
(a) Once a grants officer judges, in accordance with §§ 22.205 and 22.210, that either a grant or cooperative agreement is the appropriate instrument, the grants officer shall distinguish between the two instruments as follows:
(1) Grants shall be used when the grants officer judges that substantial involvement is not expected between the Department of Defense and the recipient when carrying out the activity contemplated in the agreement.
(2) Cooperative agreements shall be used when the grants officer judges that substantial involvement is expected. The grants officer should document the nature of the substantial involvement that led to selection of a cooperative agreement. Under no circumstances are cooperative agreements to be used solely to obtain the stricter controls typical of a contract.
(b) In judging whether substantial involvement is expected, grants officers should recognize that “substantial involvement” is a relative, rather than an absolute, concept, and that it is primarily based on programmatic factors, rather than requirements for grant or cooperative agreement award or administration. For example, substantial involvement may include collaboration, participation, or intervention in the program or activity to be performed under the award.
§ 22.220 Exemptions.
Under 31 U.S.C. 6307, “the Director of the Office of Management and Budget may exempt an agency transaction or program” from the requirements of 31 U.S.C. chapter 63. Grants officers shall request such exemptions only in exceptional circumstances. Each request shall specify for which individual transaction or program the exemption is sought; the reasons for requesting an exemption; the anticipated consequences if the exemption is not granted; and the implications for other agency transactions and programs if the exemption is granted. The procedures for requesting exemptions shall be:
(a) In cases where 31 U.S.C. chapter 63 would require use of a contract and an exemption from that requirement is desired:
(1) The grants officer shall submit a request for exemption, through appropriate channels established by his or her DoD Component (see 32 CFR 21.320(a)), to the Director of Defense Procurement and Acquisition Policy (DDP&AP).
(2) The DDP&AP, after coordination with the Assistant Secretary of Defense for Research and Engineering (ASD (R&E)), shall transmit the request to OMB or notify the DoD Component that the request has been disapproved.
(b) In other cases, the DoD Component shall submit a request for the exemption through appropriate channels to the ASD (R&E). The ASD (R&E) shall transmit the request to OMB or notify the DoD Component that the request has been disapproved.
(c) Where an exemption is granted, documentation of the approval shall be maintained in the award file.
Subpart C—Competition
§ 22.300 Purpose.
This subpart establishes DoD policy and implements statutes related to the use of competitive procedures in the award of grants and cooperative agreements.
§ 22.305 General policy and requirement for competition.
(a) It is DoD policy to maximize use of competition in the award of grants and cooperative agreements. This also conforms with:
(1) 31 U.S.C. 6301(3), which encourages the use of competition in awarding all grants and cooperative agreements.
(2) 10 U.S.C. 2374(a), which sets out Congressional policy that any new grant for research, development, test, or evaluation be awarded through merit-based selection procedures.
(b) Grants officers shall use merit-based, competitive procedures (as defined by § 22.315) to award grants and cooperative agreements:
(1) In every case where required by statute (e.g., 10 U.S.C. 2361, as implemented in § 22.310, for certain grants to institutions of higher education).
(2) To the maximum extent practicable in all cases where not required by statute.
§ 22.310 Statutes concerning certain research, development, and facilities construction grants.
(a) Definitions specific to this section. For the purposes of implementing the requirements of 10 U.S.C. 2374 in this section, the following terms are defined:
(1) Follow-on grant. A grant that provides for continuation of research and development performed by a recipient under a preceding grant. Note that follow-on grants are distinct from incremental funding actions during the period of execution of a multi-year award.
(2) New grant. A grant that is not a follow-on grant.
(b) Statutory requirement to use competitive procedures. (1) A grants officer shall not award a grant by other than merit-based, competitive procedures (as defined by § 22.315) to an institution of higher education for the performance of research and development or for the construction of research or other facilities, unless:
(i) In the case of a new grant for research and development, there is a statute meeting the criteria in paragraph (c)(1) of this section;
(ii) In the case of a follow-on grant for research and development, or of a grant for the construction of research or other facilities, there is a statute meeting the criteria in paragraph (c)(2) of this section; and
(iii) The Secretary of Defense submits to Congress a written notice of intent to make the grant. The grant may not be awarded until 180 calendar days have elapsed after the date on which Congress received the notice of intent. Contracting activities must submit a draft notice of intent with supporting documentation through channels to the Principal Deputy Assistant Secretary of Defense for Research and Engineering.
(2) Because subsequently enacted statutes may, by their terms, impose different requirements than set out in paragraph (b)(1) of this section, grants officers shall consult legal counsel on a case-by-case basis, when grants for the performance of research and development or for the construction of research or other facilities are to be awarded to institutions of higher education by other than merit-based competitive procedures.
(c) Subsequent statutes. In accordance with 10 U.S.C. 2361 and 10 U.S.C. 2374, a provision of law may not be construed as requiring the award of a grant through other than the merit-based, competitive procedures described in § 22.315, unless:
(1) Institutions of higher education—new grants for research and development. In the case of a new grant for research and development to an institution of higher education, such provision of law specifically:
(i) Identifies the particular institution of higher education involved;
(ii) States that such provision of law modifies or supersedes the provisions of 10 U.S.C. 2361 (a requirement that applies only if the statute authorizing or requiring award by other than competitive procedures was enacted after September 30, 1989); and
(iii) States that the award to the institution of higher education involved is required by such provision of law to be made in contravention of the policy set forth in 10 U.S.C. 2374(a).
(2) Institutions of higher education—follow-on grants for research and development and grants for the construction of any research or other facility. In the case of any such grant to an institution of higher education, such provision of law specifically:
(i) Identifies the particular institution of higher education involved; and
(ii) States that such provision of law modifies or supersedes the provisions of 10 U.S.C. 2361 (a requirement that applies only if the statute authorizing or requiring award by other than competitive procedures was enacted after September 30, 1989).
(3) Other entities—new grants for research and development—(i) General. In the case of a new grant for research and development to an entity other than an institution of higher education, such provision of law specifically:
(A) Identifies the particular entity involved;
(B) States that the award to that entity is required by such provision of law to be made in contravention of the policy set forth in 10 U.S.C. 2374(a).
(ii) Exception. The requirement of paragraph (c)(3)(i) of this section does not apply to any grant that calls upon the National Academy of Sciences to:
(A) Investigate, examine, or experiment upon any subject of science or art of significance to the Department of Defense or any Military Department; and
(B) Report on such matters to the Congress or any agency of the Federal Government.
§ 22.315 Merit-based, competitive procedures.
Competitive procedures are methods that encourage participation in DoD programs by a broad base of the most highly qualified performers. These procedures are characterized by competition among as many eligible proposers as possible, with a published or widely disseminated notice. Competitive procedures include, as a minimum:
(a) Notice to prospective proposers. The notice may be a notice of funding availability or Broad Agency Announcement that is publicly disseminated, with unlimited distribution, or a specific notice that is distributed to eligible proposers (a specific notice must be distributed to at least two eligible proposers to be considered as part of a competitive procedure). Requirements for notices are as follows:
(1) The format and content of each notice must conform with the Governmentwide format for announcements of funding opportunities established by the Office of Management and Budget (OMB) in a policy directive entitled, “Format for Financial Assistance Program Announcements.”
(2) In accordance with that OMB policy directive, DoD Components also must post on the Internet any notice under which domestic entities may submit proposals, if the distribution of the notice is unlimited. DoD Components are encouraged to simultaneously publish the notice in other media (e.g., the
(3) To comply with an OMB policy directive entitled, “Requirement to Post Funding Opportunity Announcement Synopses at Grants.gov and Related Data Elements/Format,”
(4) In accordance with an OMB policy directive entitled, “Requirement for a DUNS Number in Applications for Federal Grants and Cooperative Agreements,”
(b) At least two eligible, prospective proposers.
(c) Impartial review of the merits of applications or proposals received in response to the notice, using the evaluation method and selection criteria described in the notice. For research and development awards, in order to be considered as part of a competitive procedure, the two principal selection criteria, unless statute provides otherwise, must be the:
(1) Technical merits of the proposed research and development; and
(2) Potential relationship of the proposed research and development to Department of Defense missions.
§ 22.320 Special competitions.
Some programs may be competed for programmatic or policy reasons among specific classes of potential recipients. An example would be a program to enhance U.S. capabilities for academic research and research-coupled graduate education in defense-critical, science and engineering disciplines, a program that would be competed specifically among institutions of higher education. All such special competitions shall be consistent with program representations in the President’s budget submission to Congress and with subsequent Congressional authorizations and appropriations for the programs.
Subpart D—Recipient Qualification Matters—General Policies and Procedures
§ 22.400 Purpose.
The purpose of this subpart is to specify policies and procedures for grants officers’ determination of recipient qualifications prior to award.
§ 22.405 Policy.
(a) General. Grants officers normally shall award grants or cooperative agreements only to qualified recipients that meet the standards in § 22.415. This practice conforms with the Governmentwide policy to do business only with responsible persons, which is stated in OMB guidance at 2 CFR 180.125(a) and implemented by the Department of Defense in 2 CFR part 1125.
(b) Exception. In exceptional circumstances, grants officers may make awards to recipients that do not fully meet the standards in § 22.415 and include special award conditions that are appropriate to the particular situation, in accordance with 32 CFR 34.4 for awards to for-profit organizations or as described in OMB guidance at 2 CFR 200.207 for awards to institutions of higher education, nonprofit organizations, States, local governments, and Indian tribes.
§ 22.410 Grants officers’ responsibilities.
The grants officer is responsible for determining a recipient’s qualification prior to award. The grants officer’s signature on the award document shall signify his or her determination that either:
(a) The potential recipient meets the standards in § 22.415 and is qualified to receive the grant or cooperative agreement; or
(b) An award is justified to a recipient that does not fully meet the standards, pursuant to § 22.405(b). In such cases, grants officers shall document in the award file the rationale for making an award to a recipient that does not fully meet the standards.
§ 22.415 Standards.
To be qualified, a potential recipient must:
(a) Have the management capability and adequate financial and technical resources, given those that would be made available through the grant or cooperative agreement, to execute the program of activities envisioned under the grant or cooperative agreement.
(b) Have a satisfactory record of executing such programs or activities (if a prior recipient of an award).
(c) Have a satisfactory record of integrity and business ethics.
(d) Be otherwise qualified and eligible to receive a grant or cooperative agreement under applicable laws and regulations (see § 22.420(c)).
§ 22.420 Pre-award procedures.
(a) The appropriate method to be used and amount of effort to be expended in deciding the qualification of a potential recipient will vary. In deciding on the method and level of effort, the grants officer should consider factors such as:
(1) DoD’s past experience with the recipient;
(2) Whether the recipient has previously received cost-type contracts, grants, or cooperative agreements from the Federal Government; and
(3) The amount of the prospective award and complexity of the project to be carried out under the award.
(b) There is no DoD-wide requirement to obtain a pre-award credit report, audit, or any other specific piece of information. On a case-by-case basis, the grants officer will decide whether there is a need to obtain any such information to assist in deciding whether the recipient meets the standards in § 22.415 (a), (b), and (c).
(1) Should the grants officer in a particular case decide that a pre-award credit report, audit, or survey is needed, he or she should consult first with the appropriate grants administration office (identified in § 22.710), and decide whether pre-existing surveys or audits of the recipient, such as those of the recipient’s internal control systems under OMB guidance in subpart F of 2 CFR part 200, will satisfy the need (see § 22.715(a)(1)).
(2) If, after consulting with the grants administration office, the grants officer decides to obtain a credit report, audit, or other information, and the report or other information discloses that a potential recipient is delinquent on a debt to an agency of the United States Government, then:
(i) The grants officer shall take such information into account when determining whether the potential recipient is qualified with respect to the grant or cooperative agreement; and
(ii) If the grants officer decides to make the award to the recipient, unless there are compelling reasons to do otherwise, the grants officer shall delay the award of the grant or cooperative agreement until payment is made or satisfactory arrangements are made to repay the debt.
(c) In deciding whether a recipient is otherwise qualified and eligible in accordance with the standard in § 22.415(d), the grants officer shall ensure that the potential recipient:
(1) Is not identified in the Exclusions area of the System for Award Management (SAM Exclusions) as being debarred, suspended, or otherwise ineligible to receive the award (SAM is at www.sam.gov). In addition to being a requirement for every new award, note that checking SAM Exclusions also is a requirement for subsequent obligations of additional funds, such as incremental funding actions, in the case of pre-existing awards to institutions of higher education, as described at § 22.520(e)(5). The grants officer’s responsibilities include (see the OMB guidance at 2 CFR 180.425 and 180.430, as implemented by the Department of Defense at 2 CFR 1125.425) checking SAM Exclusions for:
(i) Potential recipients of prime awards; and
(ii) A recipient’s principals (as defined in OMB guidance at 2 CFR 180.995, implemented by the Department of Defense in 2 CFR part 1125), potential recipients of subawards, and principals of those potential subaward recipients, if DoD Component approval of those principals or lower-tier recipients is required under the terms of the award.
(2) Has provided all certifications and assurances required by Federal statute, Executive order, or codified regulation, unless they are to be addressed in award terms and conditions at the time of award (see § 22.510).
(3) Meets any eligibility criteria that may be specified in the statute authorizing the specific program under which the award is being made (see § 22.210(a)(2)).
(d) Grants officers shall obtain each recipient’s Taxpayer Identification Number (TIN, which may be the Social Security Number for an individual and Employer Identification Number for a business or non-profit entity) and notify the recipient that the TIN is being obtained for purposes of collecting and reporting on any delinquent amounts that may arise out of the recipient’s relationship with the Government. Obtaining the TIN and so notifying the recipient is a statutory requirement of 31 U.S.C. 7701, as amended by the Debt Collection Improvement Act of 1996 (section 31001(i)(1), Pub. L. 104-134).
Subpart E—National Policy Matters
§ 22.505 Purpose.
The purpose of this subpart is to supplement other regulations that implement national policy requirements, to the extent that it is necessary to provide additional guidance to DoD grants officers.
§ 22.510 Certifications, representations, and assurances.
(a) Certifications—(1) Policy. Certifications of compliance with national policy requirements are to be obtained from recipients only for those national policies where a statute, Executive order, or codified regulation specifically states that a certification is required. Other national policy requirements may be addressed by obtaining representations or assurances (see paragraph (b) of this section). Grants officers should utilize methods for obtaining certifications, in accordance with Executive Order 12866 (3 CFR, 1993 Comp., p. 638), that minimize administration and paperwork.
(2) Procedures. (i) When necessary, grants officers may obtain individual, written certifications.
(ii) Whenever possible, and to the extent consistent with statute and codified regulation, grants officers should identify the certifications that are required for the particular type of recipient and program, and consolidate them into a single certification provision that cites them by reference.
(A) If a grants officer elects to have proposers incorporate certifications by reference into their proposals, he or she must do so in one of the two following ways. When required by statute or codified regulation, the solicitation must include the full text of the certifications that proposers are to provide by reference. In other cases, the grants officer may include language in the solicitation that informs the proposers where the full text may be found (e.g., in documents or computer network sites that are readily available to the public) and offers to provide it to proposers upon request.
(B) Appendix A to this part provides language that may be used for incorporating by reference the certification on lobbying, which currently is the only certification requirement that commonly applies to DoD grants and agreements. Because that certification is required by law to be submitted at the time of proposal, rather than at the time of award, Appendix A includes language to incorporate the certification by reference into a proposal.
(C) Grants officers may incorporate certifications by reference in award documents when doing so is consistent with statute and codified regulation (that is not the case for the lobbying certification addressed in paragraph (a)(2)(ii)(B) of this section). The provision that a grants officer would use to incorporate certifications in award documents, when consistent with statute and codified regulation, would be similar to the provision in Appendix A to this part, except that it would be modified to state that the recipient is providing the required certifications by signing the award document or by accepting funds under the award.
(b) Representations and assurances. Many national policies, either in statute or in regulation, require recipients of grants and cooperative agreements to make representations or provide assurances (rather than certifications) that they are in compliance with the policies. Part 1122 of the DoDGARs (2 CFR part 1122) provides standard wording of general award terms and conditions to address several of the more commonly applicable national policy requirements. These terms and conditions may be used to obtain required assurances and representations for national policy matters covered in part 1122 at the time of award, which is as effective and more efficient and less administratively burdensome than obtaining them at the time of each proposal. If any other assurances or representations must be obtained at the time of proposal, grants officers should use the most efficient method for doing so—e.g., for a program that has a program announcement and applications using the standard application form (SF-424
§ 22.515 Provisions of annual appropriations acts.
An annual appropriations act can include general provisions stating national policy requirements that apply to the use of funds (e.g., obligation through a grant or cooperative agreement) appropriated by the act. Because these requirements are of limited duration (the period during which a given year’s appropriations are available for obligation), and because they can vary from year to year and from one agency’s appropriations act to another agency’s, the grants officer must know the agency(ies) and fiscal year(s) of the appropriations being obligated by a given grant or cooperative agreement, and may need to consult legal counsel if he or she does not know the requirements applicable to those appropriations.
§ 22.520 Campus access for military recruiting and Reserve Officer Training Corps (ROTC).
(a) Purpose. (1) The purpose of this section is to implement 10 U.S.C. 983 as it applies to grants. Under that statute, DoD Components are prohibited from providing funds to institutions of higher education that have policies or practices, as described in paragraph (c) of this section, restricting campus access of military recruiters or the Reserve Officer Training Corps (ROTC).
(2) By addressing the effect of 10 U.S.C. 983 on grants and cooperative agreements, this section supplements the DoD’s primary implementation of that statute in 32 CFR part 216, “Military Recruiting and Reserve Officer Training Corps Program Access to Institutions of Higher Education.” Part 216 establishes procedures by which the Department of Defense identifies institutions of higher education that have a policy or practice described in paragraph (c) of this section.
(b) Definition specific to this section. “Institution of higher education” in this section has the meaning given at 32 CFR 216.3, which is different than the meaning given at § 22.105 for other sections of this part.
(c) Statutory requirement of 10 U.S.C. 983. No funds made available to the Department of Defense may be provided by grant to an institution of higher education (including any subelement of such institution) if the Secretary of Defense determines that the institution (or any subelement of that institution) has a policy or practice that either prohibits, or in effect prevents:
(1) The Secretary of a Military Department from maintaining, establishing, or operating a unit of the Senior ROTC (in accordance with 10 U.S.C. 654 and other applicable Federal laws) at that institution (or any subelement of that institution);
(2) A student at that institution (or any subelement of that institution) from enrolling in a unit of the Senior ROTC at another institution of higher education;
(3) The Secretary of a Military Department or Secretary of Homeland Security from gaining access to campuses, or access to students (who are 17 years of age or older) on campuses, for purposes of military recruiting in a manner that is at least equal in quality and scope to the access to campuses and to students that is provided to any other employer; or
(4) Access by military recruiters for purposes of military recruiting to the following information pertaining to students (who are 17 years of age or older) enrolled at that institution (or any subelement of that institution):
(i) Names, addresses, and telephone listings.
(ii) Date and place of birth, levels of education, academic majors, degrees received, and the most recent educational institution enrolled in by the student.
(d) Policy—(1) Applicability to cooperative agreements. As a matter of DoD policy, the restrictions of 10 U.S.C. 983, as implemented by 32 CFR part 216, apply to cooperative agreements, as well as grants.
(2) Deviations. Grants officers may not deviate from any provision of this section without obtaining the prior approval of the Assistant Secretary of Defense for Research and Engineering. Requests for deviations shall be submitted, through appropriate channels, to: Director for Basic Research, OASD(R&E), 3040 Defense Pentagon, Washington, D.C. 20301-3040.
(e) Grants officers’ responsibility. (1) A grants officer shall not award any grant or cooperative agreement to an institution of higher education that has been identified pursuant to the procedures of 32 CFR part 216. Such institutions are identified as being ineligible in the Exclusions area of the System for Award Management (SAM Exclusions). The exclusion types in SAM Exclusions broadly indicate the nature of an institution’s ineligibility, as well as the effect of the exclusion, and the Additional Comments field may have further details about the exclusion. Note that OMB guidance in 2 CFR 180.425 and 180.430, as implemented by the Department of Defense at 2 CFR part 1125, require a grants officer to check the SAM Exclusions prior to determining that a recipient is qualified to receive an award.
(2) A grants officer shall not consent to a subaward of DoD funds to such an institution, under a grant or cooperative agreement to any recipient, if the subaward requires the grants officer’s consent.
(3) A grants officer shall include the following award term in each grant or cooperative agreement with an institution of higher education (note that this requirement does not flow down and that recipients are not required to include the award term in subawards):
“As a condition for receipt of funds available to the Department of Defense (DoD) under this award, the recipient agrees that it is not an institution of higher education (as defined in 32 CFR part 216) that has a policy or practice that either prohibits, or in effect prevents:
(A) The Secretary of a Military Department from maintaining, establishing, or operating a unit of the Senior Reserve Officers Training Corps (in accordance with 10 U.S.C. 654 and other applicable Federal laws) at that institution (or any subelement of that institution);
(B) Any student at that institution (or any subelement of that institution) from enrolling in a unit of the Senior ROTC at another institution of higher education;
(C) The Secretary of a Military Department or Secretary of Homeland Security from gaining access to campuses, or access to students (who are 17 years of age or older) on campuses, for purposes of military recruiting in a manner that is at least equal in quality and scope to the access to campuses and to students that is provided to any other employer; or
(D) Access by military recruiters for purposes of military recruiting to the names of students (who are 17 years of age or older and enrolled at that institution or any subelement of that institution); their addresses, telephone listings, dates and places of birth, levels of education, academic majors, and degrees received; and the most recent educational institutions in which they were enrolled.
(4) If an institution of higher education refuses to accept the award term in paragraph (e)(3) of this section, the grants officer shall:
(i) Determine that the institution is not qualified with respect to the award. The grants officer may award to an alternative recipient.
(ii) Transmit the name of the institution, through appropriate channels, to the Director for Accession Policy, Office of the Deputy Under Secretary of Defense for Military Personnel Policy (ODUSD(MPP)), 4000 Defense Pentagon, Washington, DC 20301-4000. This will allow ODUSD(MPP) to decide whether to initiate an evaluation of the institution under 32 CFR part 216, to determine whether it is an institution that has a policy or practice described in paragraph (c) of this section.
(5) With respect to any pre-existing award to an institution of higher education that currently is listed in SAM Exclusions pursuant to a determination under 32 CFR part 216, a grants officer:
(i) Shall not obligate additional funds available to the DoD for the award. A grants officer therefore must check SAM Exclusions before approving an incremental funding action or other additional funding for any pre-existing award to an institution of higher education. The grants officer may not obligate the additional funds if the cause and treatment code indicates that the reason for an institution’s SAM Exclusions listing is a determination under 32 CFR part 216 that institutional policies or practices restrict campus access of military recruiters or ROTC.
(ii) Shall not approve any request for payment submitted by such an institution (including payments for costs already incurred).
(iii) Shall:
(A) Terminate the award unless he or she has a reason to believe, after consulting with the ODUSD(MPP), 4000 Defense Pentagon, Washington, DC 20301-4000), that the institution may be removed from SAM Exclusions in the near term and have its eligibility restored; and
(B) Suspend any award that is not immediately terminated, as well as all payments under it.
(f) Post-award administration responsibilities of the Office of Naval Research (ONR). As the DoD office assigned responsibility for performing field administration services for grants and cooperative agreements with institutions of higher education, the ONR shall disseminate the list it receives from the ODUSD(MPP) of institutions of higher education identified pursuant to the procedures of 32 CFR part 216 to:
(1) ONR field administration offices, with instructions to:
(i) Disapprove any payment requests under awards to such institutions for which post-award payment administration was delegated to the ONR; and
(ii) Alert the DoD offices that made the awards to their responsibilities under paragraphs (e)(5)(i) and (e)(5)(iii) of this section.
(2) Awarding offices in DoD Components that may be identified from data in the Defense Assistance Awards Data System (see 32 CFR 21.520 through 21.555) as having awards with such institutions for which post-award payment administration was not delegated to ONR. The ONR is to alert those offices to their responsibilities under paragraph (e)(5) of this section.
§ 22.525 Paperwork Reduction Act.
Grants officers shall include appropriate award terms or conditions, if a recipient’s activities under an award will be subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 3500, et seq.):
(a) Generally, the Act only applies to Federal agencies—it requires agencies to obtain clearance from the Office of Management and Budget before collecting information using forms, schedules, questionnaires, or other methods calling either for answers to:
(1) Identical questions from ten or more persons other than agencies, instrumentalities, or employees of the United States.
(2) Questions from agencies, instrumentalities, or employees of the United States which are to be used for statistical compilations of general public interest.
(b) The Act applies to similar collections of information by recipients of grants or cooperative agreements only when:
(1) A recipient collects information at the specific request of the awarding Federal agency; or
(2) The terms and conditions of the award require specific approval by the agency of the information collection or the collection procedures.
§ 22.530 Metric system of measurement.
(a) Statutory requirement. The Metric Conversion Act of 1975, as amended by the Omnibus Trade and Competitiveness Act of 1988 (15 U.S.C. 205) and implemented by Executive Order 12770 (3 CFR, 1991 Comp., p. 343), states that:
(1) The metric system is the preferred measurement system for U.S. trade and commerce.
(2) The metric system of measurement will be used, to the extent economically feasible, in federal agencies’ procurements, grants, and other business-related activities.
(3) Metric implementation shall not be required to the extent that such use is likely to cause significant inefficiencies or loss of markets to United States firms.
(b) Responsibilities. DoD Components shall ensure that the metric system is used, to the maximum extent practicable, in measurement-sensitive activities supported by programs that use grants and cooperative agreements, and in measurement-sensitive outputs of such programs.
Subpart F—Award
§ 22.600 Purpose.
This subpart sets forth grants officers’ responsibilities relating to the award document and other actions at the time of award.
§ 22.605 Grants officers’ responsibilities.
At the time of award, the grants officer is responsible for ensuring that:
(a) The award:
(1) Conforms to the award format specified in 2 CFR part 1120.
(2) Includes appropriate general terms and conditions and any program-specific and award-specific terms and conditions needed to specify applicable administrative, national policy, and programmatic requirements. These requirements include:
(i) Federal statutes or Executive orders that apply broadly to Federal or DoD grants and cooperative agreements; and
(ii) Any requirements specific to the program, as prescribed in the program statute (see § 22.210(a)(2)), or specific to the funding, as stated in pertinent Congressional appropriations (see § 22.515).
(b) Information about the award is reported to the Defense Assistance Award Data System (DAADS), in accordance with Subpart E of 32 CFR part 21.
(c)(1) In addition to the copy of the award document provided to the recipient, a copy is forwarded to the office designated to administer the grant or cooperative agreement, and another copy is forwarded to the finance and accounting office designated to make the payments to the recipient.
(2) For any award subject to the electronic funds transfer (EFT) requirement described in § 22.810(b)(2), the grants officer shall include a prominent notification of that fact on the first page of the copies forwarded to the recipient, the administrative grants officer, and the finance and accounting office. On the first page of the copy forwarded to the recipient, the grants officer also shall include a prominent notification that the recipient, to be paid, must submit a Payment Information Form (Standard Form SF-3881
Subpart G—Field Administration
§ 22.700 Purpose.
This subpart prescribes policies and procedures for administering grants and cooperative agreements. It does so in conjunction with 32 CFR part 34 and subchapter D of 2 CFR chapter XI, which prescribe administrative requirements for particular types of recipients.
§ 22.705 Policy.
(a) DoD policy is to have each recipient deal with a single office, to the maximum extent practicable, for post-award administration of its grants and cooperative agreements. This reduces burdens on recipients that can result when multiple DoD offices separately administer grants and cooperative agreements they award to a given recipient. It also minimizes unnecessary duplication of field administration services.
(b) To further reduce burdens on recipients, the office responsible for performing field administration services for grants and cooperative agreements to a particular recipient shall be, to the maximum extent practicable, the same office that is assigned responsibility for performing field administration services for contracts awarded to that recipient.
(c) Contracting activities and grants officers therefore shall use cross-servicing arrangements whenever practicable and, to the maximum extent possible, delegate responsibility for post-award administration to the cognizant grants administration offices identified in § 22.710.
§ 22.710 Assignment of grants administration offices.
In accordance with the policy stated in § 22.705(b), the DoD offices (referred to in this part as “grants administration offices”) that are assigned responsibility for performing field administration services for grants and cooperative agreements are (see the “Federal Directory of Contract Administration Services (CAS) Components”
(a) Regional offices of the Office of Naval Research, for grants and cooperative agreements with:
(1) Institutions of higher education and laboratories affiliated with such institutions, to the extent that such organizations are subject to the cost principles in subpart E of 2 CFR part 200.
(2) Nonprofit organizations that are subject to the cost principles in subpart E of 2 CFR part 200 if their principal business with the Department of Defense is research and development.
(b) Field offices of the Defense Contract Management Agency, for grants and cooperative agreements with all other entities, including:
(1) For-profit organizations.
(2) Nonprofit organizations identified in appendix VIII to 2 CFR part 200 that are subject to for-profit cost principles in 48 CFR part 31.
(3) Nonprofit organizations subject to the cost principles in subpart E of 2 CFR part 200, if their principal business with the Department of Defense is other than research and development.
(4) State and local governments.
§ 22.715 Grants administration office functions.
The primary responsibility of cognizant grants administration offices shall be to advise and assist grants officers and recipients prior to and after award, and to help ensure that recipients fulfill all requirements in law, regulation, and award terms and conditions. Specific functions include:
(a) Conducting reviews and coordinating reviews, audits, and audit requests. This includes:
(1) Advising grants officers on the extent to which audits by independent auditors (i.e., public accountants or Federal auditors) have provided the information needed to carry out their responsibilities. If a recipient has had an independent audit in accordance with subpart F of 2 CFR part 200, and the audit report disclosed no material weaknesses in the recipient’s financial management and other management and control systems, additional preaward or closeout audits usually will not be needed (see §§ 22.420(b) and 22.825(b)).
(2) Performing pre-award surveys, when requested by a grants officer, after providing advice described in paragraph (a)(1) of this section.
(3) Reviewing recipients’ systems and compliance with Federal requirements, in coordination with any reviews and compliance audits performed by independent auditors under subpart F of 2 CFR part 200, or in accordance with the terms and conditions of the award. This includes:
(i) Reviewing recipients’ financial management, property management, and purchasing systems, to determine the adequacy of such systems.
(ii) Determining that recipients have drug-free workplace programs, as required under 32 CFR part 26.
(iii) Determining that governmental, university and nonprofit recipients have complied with requirements in subpart F of 2 CFR part 200, as implemented at subpart E of 2 CFR part 1128, to have single audits and submit audit reports to the Federal Audit Clearinghouse. If a recipient has not had a required audit, appropriate action must be taken (e.g., contacting the recipient and coordinating with the Office of the Assistant Inspector General for Audit Policy and Oversight (OAIG(P&O)), Office of the Deputy Inspector General for Inspections and Policy, Office of the Inspector General of the Department of Defense (OIG, DoD), 4800 Mark Center Drive, Alexandria, VA 22350-1500).
(4) Issuing timely management decisions, in accordance with DoD Instruction 7640.02, “Policy for Follow-up on Contract Audit Reports,”
(b) Performing property administration services for Government-owned property, and for any property acquired by a recipient, with respect to which the recipient has further obligations to the Government.
(c) Ensuring timely submission of required reports.
(d) Executing administrative closeout procedures.
(e) Establishing recipients’ indirect cost rates, where the Department of Defense is the cognizant or oversight Federal agency with the responsibility for doing so.
(f) Performing other administration functions (e.g., receiving recipients’ payment requests and transmitting approved payment authorizations to payment offices) as delegated by applicable cross-servicing agreements or letters of delegation.
Subpart H—Post-Award Administration
§ 22.800 Purpose and relation to other parts.
This subpart sets forth grants officers’ and DoD Components’ responsibilities for post-award administration, by providing DoD-specific requirements on payments; debt collection; claims, disputes and appeals; and closeout audits.
§ 22.805 Post-award requirements in other parts.
Grants officers responsible for post-award administration of grants and cooperative agreements shall administer such awards in accordance with the following parts of the DoDGARs, as supplemented by this subpart:
(a) Awards to domestic recipients. Standard administrative requirements for grants and cooperative agreements with domestic recipients are specified in other parts of the DoDGARs, as follows:
(1) For awards to domestic institutions of higher education, nonprofit organizations, States, local governments, and Indian tribes, requirements are specified in subchapter D of 2 CFR chapter XI.
(2) For awards to domestic for-profit organizations, requirements are specified in 32 CFR part 34.
(b) Awards to foreign recipients. DoD Components shall use the administrative requirements specified in paragraph (a) of this section, to the maximum extent practicable, for grants and cooperative agreements to foreign recipients.
§ 22.810 Payments.
(a) Purpose. This section prescribes policies and grants officers’ post-award responsibilities, with respect to payments to recipients of grants and cooperative agreements.
(b) Policy. (1) It is Governmentwide policy to minimize the time elapsing between any payment of funds to a recipient and the recipient’s disbursement of the funds for program purposes.
(2) It also is a Governmentwide requirement to use electronic funds transfer (EFT) in the payment of any grant unless the recipient has obtained a waiver in accordance with Department of the Treasury regulations at 31 CFR part 208. As a matter of DoD policy, this requirement applies to cooperative agreements, as well as grants. Within the Department of Defense, the Defense Finance and Accounting Service implements this EFT requirement, and grants officers have collateral responsibilities at the time of award, as described in § 22.605(c), and in post-award administration, as described in paragraph (c)(3)(iv) of this section.
(3) Expanding on these Governmentwide policies, DoD policy is for DoD Components to use electronic commerce, to the maximum extent practicable, in the portions of the payment process for grants and cooperative agreements for which grants officers are responsible. In cases where recipients submit each payment request to the grants officer, this includes using electronic methods to receive recipients’ requests for payment and to transmit authorizations for payment to the DoD payment office. Using electronic methods will improve timeliness and accuracy of payments and reduce administrative burdens associated with paper-based payments.
(c) Post-award responsibilities. In cases where the recipient submits each payment request to the grants officer, the administrative grants officer designated to handle payments for a grant or cooperative agreement is responsible for:
(1) [Reserved]
(2) Reviewing each payment request to ensure that:
(i) The request complies with the award terms.
(ii) Available funds are adequate to pay the request.
(iii) The recipient will not have excess cash on hand, based on expenditure patterns.
(3) Maintaining a close working relationship with the personnel in the finance and accounting office responsible for making the payments. A good working relationship is necessary, to ensure timely and accurate handling of financial transactions for grants and cooperative agreements. Administrative grants officers:
(i) Should be generally familiar with policies and procedures for disbursing offices that are contained in Chapter 19 of Volume 10 of the DoD Financial Management Regulation (the FMR, DoD 7000.14-R
(ii) Shall forward authorizations to the designated payment office expeditiously, so that payments may be made in accordance with the timely payment guidelines in Chapter 19 of Volume 10 of the FMR. Unless alternative arrangements are made with the payment office, authorizations should be forwarded to the payment office at least 3 working days before the end of the period specified in the FMR. The period specified in the FMR is:
(A) No more than seven calendar days after receipt of the recipient’s request by the administrative grants officer, whenever electronic commerce is used (i.e., EDI to request and authorize payments and electronic funds transfer (EFT) to make payments).
(B) No more than thirty calendar days after receipt of the recipient’s request by the administrative grants officer, when it is not possible to use electronic commerce and paper transactions are used.
(C) No more than seven calendar days after each date specified, when payments are authorized in advance based on a predetermined payment schedule, provided that the payment schedule was received in the disbursing office at least 30 calendar days in advance of the date of the scheduled payment.
(iii) Shall ensure that, for recipients not required to register in the System for Award Management, the recipients’ Taxpayer Identification Number (TIN) is included with each payment authorization forwarded to the payment office. This is a statutory requirement of 31 U.S.C. 3325, as amended by the Debt Collection Improvement Act of 1996 (section 31001(y), Pub. L. 104-134).
(iv) For each award that is required to be paid by EFT (see § 22.605(c) and (§ 22.810(b)(2)), shall prominently indicate that fact in the payment authorization.
§ 22.815 Claims, disputes, and appeals.
(a) Award terms. Grants officers shall include in grants and cooperative agreements a term or condition that incorporates the procedures of this section for:
(1) Processing recipient claims and disputes.
(2) Deciding appeals of grants officers’ decisions.
(b) Submission of claims—(1) Recipient claims. If a recipient wishes to submit a claim arising out of or relating to a grant or cooperative agreement, the grants officer shall inform the recipient that the claim must:
(i) Be submitted in writing to the grants officer for decision;
(ii) Specify the nature and basis for the relief requested; and
(iii) Include all data that supports the claim.
(2) DoD Component claims. Claims by a DoD Component shall be the subject of a written decision by a grants officer.
(c) Alternative Dispute Resolution (ADR)—(1) Policy. DoD policy is to try to resolve all issues concerning grants and cooperative agreements by mutual agreement at the grants officer’s level. DoD Components therefore are encouraged to use ADR procedures to the maximum extent practicable. ADR procedures are any voluntary means (e.g., mini-trials or mediation) used to resolve issues in controversy without resorting to formal administrative appeals (see paragraph (e) of this section) or to litigation.
(2) Procedures. (i) The ADR procedures or techniques to be used may either be agreed upon by the Government and the recipient in advance (e.g., when agreeing on the terms and conditions of the grant or cooperative agreement), or may be agreed upon at the time the parties determine to use ADR procedures.
(ii) If a grants officer and a recipient are not able to resolve an issue through unassisted negotiations, the grants officer shall encourage the recipient to enter into ADR procedures. ADR procedures may be used prior to submission of a recipient’s claim or at any time prior to the Grant Appeal Authority’s decision on a recipient’s appeal (see paragraph (e)(3)(iii) of this section).
(d) Grants officer decisions. (1) Within 60 calendar days of receipt of a written claim, the grants officer shall either:
(i) Prepare a written decision, which shall include the reasons for the decision; shall identify all relevant data on which the decision is based; shall identify the cognizant Grant Appeal Authority and give his or her mailing address; and shall be included in the award file; or
(ii) Notify the recipient of a specific date when he or she will render a written decision, if more time is required to do so. The notice shall inform the recipient of the reason for delaying the decision (e.g., the complexity of the claim, a need for more time to complete ADR procedures, or a need for the recipient to provide additional information to support the claim).
(2) The decision of the grants officer shall be final, unless the recipient decides to appeal. If a recipient decides to appeal a grants officer’s decision, the grants officer shall encourage the recipient to enter into ADR procedures, as described in paragraph (c) of this section.
(e) Formal administrative appeals—(1) Grant appeal authorities. Each DoD Component that awards grants or cooperative agreements shall establish one or more Grant Appeal Authorities to decide formal, administrative appeals in accordance with paragraph (e)(3) of this section. Each Grant Appeal Authority shall be either:
(i) An individual at a grade level in the Senior Executive Service, if civilian, or at the rank of Flag or General Officer, if military; or
(ii) A board chaired by such an individual.
(2) Right of appeal. A recipient has the right to appeal a grants officer’s decision to the Grant Appeal Authority (but note that ADR procedures, as described in paragraph (c) of this section, are the preferred means for resolving any appeal).
(3) Appeal procedures—(i) Notice of appeal. A recipient may appeal a decision of the grants officer within 90 calendar days of receiving that decision, by filing a written notice of appeal to the Grant Appeal Authority and to the grants officer. If a recipient elects to use an ADR procedure, the recipient is permitted an additional 60 calendar days to file the written notice of appeal to the Grant Appeal Authority and grants officer.
(ii) Appeal file. Within 30 calendar days of receiving the notice of appeal, the grants officer shall forward to the Grant Appeal Authority and the recipient the appeal file, which shall include copies of all documents relevant to the appeal. The recipient may supplement the file with additional documents it deems relevant. Either the grants officer or the recipient may supplement the file with a memorandum in support of its position. The Grant Appeal Authority may request additional information from either the grants officer or the recipient.
(iii) Decision. The appeal shall be decided solely on the basis of the written record, unless the Grant Appeal Authority decides to conduct fact-finding procedures or an oral hearing on the appeal. Any fact-finding or hearing shall be conducted using procedures that the Grant Appeal Authority deems appropriate.
(f) Representation. A recipient may be represented by counsel or any other designated representative in any claim, appeal, or ADR proceeding brought pursuant to this section, as long as the representative is not otherwise prohibited by law or regulation from appearing before the DoD Component concerned.
(g) Non-exclusivity of remedies. Nothing in this section is intended to limit a recipient’s right to any remedy under the law.
§ 22.820 Debt collection.
(a) Purpose. This section prescribes procedures for establishing debts owed by recipients of grants and cooperative agreements, and transferring them to payment offices for collection.
(b) Resolution of indebtedness. The grants officer shall attempt to resolve by mutual agreement any claim of a recipient’s indebtedness to the United States arising out of a grant or cooperative agreement (e.g., by a finding that a recipient was paid funds in excess of the amount to which the recipient was entitled under the terms and conditions of the award).
(c) Grants officer’s decision. In the absence of such mutual agreement, any claim of a recipient’s indebtedness shall be the subject of a grants officer decision, in accordance with § 22.815(b)(2). The grants officer shall prepare and transmit to the recipient a written notice that:
(1) Describes the debt, including the amount, the name and address of the official who determined the debt (e.g., the grants officer under § 22.815(d)), and a copy of that determination.
(2) Informs the recipient that:
(i) Within 30 calendar days of the grants officer’s decision, the recipient shall either pay the amount owed to the grants officer (at the address that was provided pursuant to paragraph (c)(1) of this section) or inform the grants officer of the recipient’s intention to appeal the decision.
(ii) If the recipient elects not to appeal, any amounts not paid within 30 calendar days of the grants officer’s decision will be a delinquent debt.
(iii) If the recipient elects to appeal the grants officer’s decision the recipient has 90 calendar days, or 150 calendar days if ADR procedures are used, after receipt of the grants officer’s decision to file the appeal, in accordance with § 22.815(e)(3)(i).
(iv) The debt will bear interest, and may include penalties and other administrative costs, in accordance with the debt collection provisions in Chapters 29, 31, and 32 of Volume 5 and Chapters 18 and 19 of Volume 10 of the DoD Financial Management Regulation (DoD 7000.14-R). No interest will be charged if the recipient pays the amount owed within 30 calendar days of the grants officer’s decision. Interest will be charged for the entire period from the date the decision was mailed, if the recipient pays the amount owed after 30 calendar days.
(d) Follow-up. Depending upon the response from the recipient, the grants officer shall proceed as follows:
(1) If the recipient pays the amount owed within 30 calendar days to the grants officer, the grants officer shall forward the payment to the responsible payment office.
(2) If within 30 calendar days the recipient elects to appeal the grants officer’s decision, further action to collect the debt is deferred, pending the outcome of the appeal. If the final result of the appeal is a determination that the recipient owes a debt to the Federal Government, the grants officer shall send a demand letter to the recipient and transfer responsibility for further debt collection to a payment office, as described in paragraph (d)(3) of this section.
(3) If within 30 calendar days the recipient has neither paid the amount due nor provided notice of intent to file an appeal of the grants officer’s decision, the grants officer shall send a demand letter to the recipient, with a copy to the payment office that will be responsible for collecting the delinquent debt. The payment office will be responsible for any further debt collection activity, including issuance of additional demand letters (see Chapter 19 of volume 10 of the DoD Financial Management Regulation, DoD 7000.14-R). The grants officer’s demand letter shall:
(i) Describe the debt, including the amount, the name and address of the official that determined the debt (e.g., the grants officer under § 22.815(d)), and a copy of that determination.
(ii) Notify the recipient that the debt is a delinquent debt that bears interest from the date of the grants officer’s decision, and that penalties and other administrative costs may be assessed.
(iii) Identify the payment office that is responsible for the collection of the debt, and notify the recipient that it may submit a proposal to that payment office to defer collection, if immediate payment is not practicable.
(e) Administrative offset. In carrying out the responsibility for collecting delinquent debts, a disbursing officer may need to consult grants officers, to determine whether administrative offset against payments to a recipient owing a delinquent debt would interfere with execution of projects being carried out under grants or cooperative agreements. Disbursing officers may also ask grants officers whether it is feasible to convert payment methods under grants or cooperative agreements from advance payments to reimbursements, to facilitate use of administrative offset. Grants officers therefore should be familiar with guidelines for disbursing officers, in Chapter 19 of Volume 10 of the Financial Management Regulation (DoD 7000.14-R), concerning withholding and administrative offset to recover delinquent debts.
§ 22.825 Closeout audits.
(a) Purpose. This section establishes DoD policy for obtaining audits at closeout of individual grants and cooperative agreements.
(b) Policy. Grants officers shall use their judgment on a case-by-case basis, in deciding whether to obtain an audit prior to closing out a grant or cooperative agreement (i.e., there is no specific DoD requirement to obtain an audit prior to doing so). Factors to be considered include:
(1) The amount of the award.
(2) DoD’s past experience with the recipient, including the presence or lack of findings of material deficiencies in recent:
(i) Audits of individual awards; or
(ii) Systems-wide financial audits and audits of the compliance of the recipient’s systems with Federal requirements, under OMB guidance in subpart F of 2 CFR part 200, where that guidance is applicable. (See § 22.715(a)(1)).
Appendix A to Part 22—Proposal Provision for Required Certification
PART 26—GOVERNMENTWIDE REQUIREMENTS FOR DRUG-FREE WORKPLACE (FINANCIAL ASSISTANCE)
Subpart A—Purpose and Coverage
§ 26.100 What does this part do?
This part carries out the portion of the Drug-Free Workplace Act of 1988 (41 U.S.C. 701 et seq., as amended) that applies to grants. It also applies the provisions of the Act to cooperative agreements and other financial assistance awards, as a matter of Federal Government policy.
§ 26.105 Does this part apply to me?
(a) Portions of this part apply to you if you are either—
(1) A recipient of an assistance award from the DOD Component; or
(2) A(n) DOD Component awarding official. (See definitions of award and recipient in §§ 26.605 and 26.660, respectively.)
(b) The following table shows the subparts that apply to you:
| If you are . . . | see subparts . . . |
|---|---|
| (1) A recipient who is not an individual | A, B and E. |
| (2) A recipient who is an individual | A, C and E. |
| (3) A(n) DOD Component awarding official | A, D and E. |
§ 26.110 Are any of my Federal assistance awards exempt from this part?
This part does not apply to any award that the Head of the DOD Component or his or her designee determines that the application of this part would be inconsistent with the international obligations of the United States or the laws or regulations of a foreign government.
§ 26.115 Does this part affect the Federal contracts that I receive?
It will affect future contract awards indirectly if you are debarred or suspended for a violation of the requirements of this part, as described in § 26.510(c). However, this part does not apply directly to procurement contracts. The portion of the Drug-Free Workplace Act of 1988 that applies to Federal procurement contracts is carried out through the Federal Acquisition Regulation in chapter 1 of Title 48 of the Code of Federal Regulations (the drug-free workplace coverage currently is in 48 CFR part 23, subpart 23.5).
Subpart B—Requirements for Recipients Other Than Individuals
§ 26.200 What must I do to comply with this part?
There are two general requirements if you are a recipient other than an individual.
(a) First, you must make a good faith effort, on a continuing basis, to maintain a drug-free workplace. You must agree to do so as a condition for receiving any award covered by this part. The specific measures that you must take in this regard are described in more detail in subsequent sections of this subpart. Briefly, those measures are to—
(1) Publish a drug-free workplace statement and establish a drug-free awareness program for your employees (see §§ 26.205 through 26.220); and
(2) Take actions concerning employees who are convicted of violating drug statutes in the workplace (see § 26.225).
(b) Second, you must identify all known workplaces under your Federal awards (see § 26.230).
§ 26.205 What must I include in my drug-free workplace statement?
You must publish a statement that—
(a) Tells your employees that the unlawful manufacture, distribution, dispensing, possession, or use of a controlled substance is prohibited in your workplace;
(b) Specifies the actions that you will take against employees for violating that prohibition; and
(c) Lets each employee know that, as a condition of employment under any award, he or she:
(1) Will abide by the terms of the statement; and
(2) Must notify you in writing if he or she is convicted for a violation of a criminal drug statute occurring in the workplace and must do so no more than five calendar days after the conviction.
§ 26.210 To whom must I distribute my drug-free workplace statement?
You must require that a copy of the statement described in § 26.205 be given to each employee who will be engaged in the performance of any Federal award.
§ 26.215 What must I include in my drug-free awareness program?
You must establish an ongoing drug-free awareness program to inform employees about—
(a) The dangers of drug abuse in the workplace;
(b) Your policy of maintaining a drug-free workplace;
(c) Any available drug counseling, rehabilitation, and employee assistance programs; and
(d) The penalties that you may impose upon them for drug abuse violations occurring in the workplace.
§ 26.220 By when must I publish my drug-free workplace statement and establish my drug-free awareness program?
If you are a new recipient that does not already have a policy statement as described in § 26.205 and an ongoing awareness program as described in § 26.215, you must publish the statement and establish the program by the time given in the following table:
| If . . . | then you . . . |
|---|---|
| (a) The performance period of the award is less than 30 days | must have the policy statement and program in place as soon as possible, but before the date on which performance is expected to be completed. |
| (b) The performance period of the award is 30 days or more | must have the policy statement and program in place within 30 days after award. |
| (c) You believe there are extraordinary circumstances that will require more than 30 days for you to publish the policy statement and establish the awareness program | may ask the DOD Component awarding official to give you more time to do so. The amount of additional time, if any, to be given is at the discretion of the awarding official. |
§ 26.225 What actions must I take concerning employees who are convicted of drug violations in the workplace?
There are two actions you must take if an employee is convicted of a drug violation in the workplace:
(a) First, you must notify Federal agencies if an employee who is engaged in the performance of an award informs you about a conviction, as required by § 26.205(c)(2), or you otherwise learn of the conviction. Your notification to the Federal agencies must—
(1) Be in writing;
(2) Include the employee’s position title;
(3) Include the identification number(s) of each affected award;
(4) Be sent within ten calendar days after you learn of the conviction; and
(5) Be sent to every Federal agency on whose award the convicted employee was working. It must be sent to every awarding official or his or her official designee, unless the Federal agency has specified a central point for the receipt of the notices.
(b) Second, within 30 calendar days of learning about an employee’s conviction, you must either—
(1) Take appropriate personnel action against the employee, up to and including termination, consistent with the requirements of the Rehabilitation Act of 1973 (29 U.S.C. 794), as amended; or
(2) Require the employee to participate satisfactorily in a drug abuse assistance or rehabilitation program approved for these purposes by a Federal, State or local health, law enforcement, or other appropriate agency.
§ 26.230 How and when must I identify workplaces?
(a) You must identify all known workplaces under each DOD Component award. A failure to do so is a violation of your drug-free workplace requirements. You may identify the workplaces—
(1) To the DOD Component official that is making the award, either at the time of application or upon award; or
(2) In documents that you keep on file in your offices during the performance of the award, in which case you must make the information available for inspection upon request by DOD Component officials or their designated representatives.
(b) Your workplace identification for an award must include the actual address of buildings (or parts of buildings) or other sites where work under the award takes place. Categorical descriptions may be used (e.g., all vehicles of a mass transit authority or State highway department while in operation, State employees in each local unemployment office, performers in concert halls or radio studios).
(c) If you identified workplaces to the DOD Component awarding official at the time of application or award, as described in paragraph (a)(1) of this section, and any workplace that you identified changes during the performance of the award, you must inform the DOD Component awarding official.
Subpart C—Requirements for Recipients Who Are Individuals
§ 26.300 What must I do to comply with this part if I am an individual recipient?
As a condition of receiving a(n) DOD Component award, if you are an individual recipient, you must agree that—
(a) You will not engage in the unlawful manufacture, distribution, dispensing, possession, or use of a controlled substance in conducting any activity related to the award; and
(b) If you are convicted of a criminal drug offense resulting from a violation occurring during the conduct of any award activity, you will report the conviction:
(1) In writing.
(2) Within 10 calendar days of the conviction.
(3) To the DOD Component awarding official or other designee for each award that you currently have, unless § 26.301 or the award document designates a central point for the receipt of the notices. When notice is made to a central point, it must include the identification number(s) of each affected award.
§ 26.301 [Reserved]
Subpart D—Responsibilities of DOD Component Awarding Officials
§ 26.400 What are my responsibilities as a(n) DOD Component awarding official?
As a(n) DOD Component awarding official, you must obtain each recipient’s agreement, as a condition of the award, to comply with the requirements in—
(a) Subpart B of this part, if the recipient is not an individual; or
(b) Subpart C of this part, if the recipient is an individual.
Subpart E—Violations of this Part and Consequences
§ 26.500 How are violations of this part determined for recipients other than individuals?
A recipient other than an individual is in violation of the requirements of this part if the Head of the DOD Component or his or her designee determines, in writing, that—
(a) The recipient has violated the requirements of subpart B of this part; or
(b) The number of convictions of the recipient’s employees for violating criminal drug statutes in the workplace is large enough to indicate that the recipient has failed to make a good faith effort to provide a drug-free workplace.
§ 26.505 How are violations of this part determined for recipients who are individuals?
An individual recipient is in violation of the requirements of this part if the Head of the DOD Component or his or her designee determines, in writing, that—
(a) The recipient has violated the requirements of subpart C of this part; or
(b) The recipient is convicted of a criminal drug offense resulting from a violation occurring during the conduct of any award activity.
§ 26.510 What actions will the Federal Government take against a recipient determined to have violated this part?
If a recipient is determined to have violated this part, as described in § 26.500 or § 26.505, the DOD Component may take one or more of the following actions—
(a) Suspension of payments under the award;
(b) Suspension or termination of the award; and
(c) Suspension or debarment of the recipient under 32 CFR Part 25, for a period not to exceed five years.
§ 26.515 Are there any exceptions to those actions?
The Secretary of Defense or Secretary of a Military Department may waive with respect to a particular award, in writing, a suspension of payments under an award, suspension or termination of an award, or suspension or debarment of a recipient if the Secretary of Defense or Secretary of a Military Department determines that such a waiver would be in the public interest. This exception authority cannot be delegated to any other official.
Subpart F—Definitions
§ 26.605 Award.
Award means an award of financial assistance by the DOD Component or other Federal agency directly to a recipient.
(a) The term award includes:
(1) A Federal grant or cooperative agreement, in the form of money or property in lieu of money.
(2) A block grant or a grant in an entitlement program, whether or not the grant is exempted from coverage under the Governmentwide rule 32 CFR Part 33 that implements OMB Circular A-102 (for availability, see 5 CFR 1310.3) and specifies uniform administrative requirements.
(b) The term award does not include:
(1) Technical assistance that provides services instead of money.
(2) Loans.
(3) Loan guarantees.
(4) Interest subsidies.
(5) Insurance.
(6) Direct appropriations.
(7) Veterans’ benefits to individuals (i.e., any benefit to veterans, their families, or survivors by virtue of the service of a veteran in the Armed Forces of the United States).
§ 26.610 Controlled substance.
Controlled substance means a controlled substance in schedules I through V of the Controlled Substances Act (21 U.S.C. 812), and as further defined by regulation at 21 CFR 1308.11 through 1308.15.
§ 26.615 Conviction.
Conviction means a finding of guilt (including a plea of nolo contendere) or imposition of sentence, or both, by any judicial body charged with the responsibility to determine violations of the Federal or State criminal drug statutes.
§ 26.620 Cooperative agreement.
Cooperative agreement means an award of financial assistance that, consistent with 31 U.S.C. 6305, is used to enter into the same kind of relationship as a grant (see definition of grant in § 26.650), except that substantial involvement is expected between the Federal agency and the recipient when carrying out the activity contemplated by the award. The term does not include cooperative research and development agreements as defined in 15 U.S.C. 3710a.
§ 26.625 Criminal drug statute.
Criminal drug statute means a Federal or non-Federal criminal statute involving the manufacture, distribution, dispensing, use, or possession of any controlled substance.
§ 26.630 Debarment.
Debarment means an action taken by a Federal agency to prohibit a recipient from participating in Federal Government procurement contracts and covered nonprocurement transactions. A recipient so prohibited is debarred, in accordance with the Federal Acquisition Regulation for procurement contracts (48 CFR part 9, subpart 9.4) and the common rule, Government-wide Debarment and Suspension (Nonprocurement), that implements Executive Order 12549 and Executive Order 12689.
§ 26.632 DOD Component.
DOD Component means the Office of the Secretary of Defense, a Military Department, a Defense Agency, or the Office of Economic Adjustment.
§ 26.635 Drug-free workplace.
Drug-free workplace means a site for the performance of work done in connection with a specific award at which employees of the recipient are prohibited from engaging in the unlawful manufacture, distribution, dispensing, possession, or use of a controlled substance.
§ 26.640 Employee.
(a) Employee means the employee of a recipient directly engaged in the performance of work under the award, including—
(1) All direct charge employees;
(2) All indirect charge employees, unless their impact or involvement in the performance of work under the award is insignificant to the performance of the award; and
(3) Temporary personnel and consultants who are directly engaged in the performance of work under the award and who are on the recipient’s payroll.
(b) This definition does not include workers not on the payroll of the recipient (e.g., volunteers, even if used to meet a matching requirement; consultants or independent contractors not on the payroll; or employees of subrecipients or subcontractors in covered workplaces).
§ 26.645 Federal agency or agency.
Federal agency or agency means any United States executive department, military department, government corporation, government controlled corporation, any other establishment in the executive branch (including the Executive Office of the President), or any independent regulatory agency.
§ 26.650 Grant.
Grant means an award of financial assistance that, consistent with 31 U.S.C. 6304, is used to enter into a relationship—
(a) The principal purpose of which is to transfer a thing of value to the recipient to carry out a public purpose of support or stimulation authorized by a law of the United States, rather than to acquire property or services for the Federal Government’s direct benefit or use; and
(b) In which substantial involvement is not expected between the Federal agency and the recipient when carrying out the activity contemplated by the award.
§ 26.655 Individual.
Individual means a natural person.
§ 26.660 Recipient.
Recipient means any individual, corporation, partnership, association, unit of government (except a Federal agency) or legal entity, however organized, that receives an award directly from a Federal agency.
§ 26.665 State.
State means any of the States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any territory or possession of the United States.
§ 26.670 Suspension.
Suspension means an action taken by a Federal agency that immediately prohibits a recipient from participating in Federal Government procurement contracts and covered nonprocurement transactions for a temporary period, pending completion of an investigation and any judicial or administrative proceedings that may ensue. A recipient so prohibited is suspended, in accordance with the Federal Acquisition Regulation for procurement contracts (48 CFR part 9, subpart 9.4) and the common rule, Government-wide Debarment and Suspension (Nonprocurement), that implements Executive Order 12549 and Executive Order 12689. Suspension of a recipient is a distinct and separate action from suspension of an award or suspension of payments under an award.
PART 28—NEW RESTRICTIONS ON LOBBYING
See also Office of Management and Budget notice published at 54 FR 52306, December 20, 1989.
Subpart A—General
§ 28.100 Conditions on use of funds.
(a) No appropriated funds may be expended by the recipient of a Federal contract, grant, loan, or cooperative agreement to pay any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with any of the following covered Federal actions: the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement.
(b) Each person who requests or receives from an agency a Federal contract, grant, loan, or cooperative agreement shall file with that agency a certification, set forth in Appendix A, that the person has not made, and will not make, any payment prohibited by paragraph (a) of this section.
(c) Each person who requests or receives from an agency a Federal contract, grant, loan, or a cooperative agreement shall file with that agency a disclosure form, set forth in Appendix B, if such person has made or has agreed to make any payment using nonappropriated funds (to include profits from any covered Federal action), which would be prohibited under paragraph (a) of this section if paid for with appropriated funds.
(d) Each person who requests or receives from an agency a commitment providing for the United States to insure or guarantee a loan shall file with that agency a statement, set forth in appendix A, whether that person has made or has agreed to make any payment to influence or attempt to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with that loan insurance or guarantee.
(e) Each person who requests or receives from an agency a commitment providing for the United States to insure or guarantee a loan shall file with that agency a disclosure form, set forth in Appendix B, if that person has made or has agreed to make any payment to influence or attempt to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with that loan insurance or guarantee.
§ 28.105 Definitions.
For purposes of this part:
(a) Agency, as defined in 5 U.S.C. 552(f), includes Federal executive departments and agencies as well as independent regulatory commissions and Government corporations, as defined in 31 U.S.C. 9101(1).
(b) Covered Federal action means any of the following Federal actions:
(1) The awarding of any Federal contract;
(2) The making of any Federal grant;
(3) The making of any Federal loan;
(4) The entering into of any cooperative agreement; and,
(5) The extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement.
(c) Federal contract means an acquisition contract awarded by an agency, including those subject to the Federal Acquisition Regulation (FAR), and any other acquisition contract for real or personal property or services not subject to the FAR.
(d) Federal cooperative agreement means a cooperative agreement entered into by an agency.
(e) Federal grant means an award of financial assistance in the form of money, or property in lieu of money, by the Federal Government or a direct appropriation made by law to any person. The term does not include technical assistance which provides services instead of money, or other assistance in the form of revenue sharing, loans, loan guarantees, loan insurance, interest subsidies, insurance, or direct United States cash assistance to an individual.
(f) Federal loan means a loan made by an agency. The term does not include loan guarantee or loan insurance.
(g) Indian tribe and tribal organization have the meaning provided in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450B). Alaskan Natives are included under the definitions of Indian tribes in that Act.
(h) Influencing or attempting to influence means making, with the intent to influence, any communication to or appearance before an officer or employee or any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with any covered Federal action.
(i) Loan guarantee and loan insurance means an agency’s guarantee or insurance of a loan made by a person.
(j) Local government means a unit of government in a State and, if chartered, established, or otherwise recognized by a State for the performance of a governmental duty, including a local public authority, a special district, an intrastate district, a council of governments, a sponsor group representative organization, and any other instrumentality of a local government.
(k) Officer or employee of an agency includes the following individuals who are employed by an agency:
(1) An individual who is appointed to a position in the Government under title 5, U.S. Code, including a position under a temporary appointment;
(2) A member of the uniformed services as defined in section 101(3), title 37, U.S. Code;
(3) A special Government employee as defined in section 202, title 18, U.S. Code; and,
(4) An individual who is a member of a Federal advisory committee, as defined by the Federal Advisory Committee Act, title 5, U.S. Code appendix 2.
(l) Person means an individual, corporation, company, association, authority, firm, partnership, society, State, and local government, regardless of whether such entity is operated for profit or not for profit. This term excludes an Indian tribe, tribal organization, or any other Indian organization with respect to expenditures specifically permitted by other Federal law.
(m) Reasonable compensation means, with respect to a regularly employed officer or employee of any person, compensation that is consistent with the normal compensation for such officer or employee for work that is not furnished to, not funded by, or not furnished in cooperation with the Federal Government.
(n) Reasonable payment means, with respect to professional and other technical services, a payment in an amount that is consistent with the amount normally paid for such services in the private sector.
(o) Recipient includes all contractors, subcontractors at any tier, and subgrantees at any tier of the recipient of funds received in connection with a Federal contract, grant, loan, or cooperative agreement. The term excludes an Indian tribe, tribal organization, or any other Indian organization with respect to expenditures specifically permitted by other Federal law.
(p) Regularly employed means, with respect to an officer or employee of a person requesting or receiving a Federal contract, grant, loan, or cooperative agreement or a commitment providing for the United States to insure or guarantee a loan, an officer or employee who is employed by such person for at least 130 working days within one year immediately preceding the date of the submission that initiates agency consideration of such person for receipt of such contract, grant, loan, cooperative agreement, loan insurance commitment, or loan guarantee commitment. An officer or employee who is employed by such person for less than 130 working days within one year immediately preceding the date of the submission that initiates agency consideration of such person shall be considered to be regularly employed as soon as he or she is employed by such person for 130 working days.
(q) State means a State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, a territory or possession of the United States, an agency or instrumentality of a State, and a multi-State, regional, or interstate entity having governmental duties and powers.
§ 28.110 Certification and disclosure.
(a) Each person shall file a certification, and a disclosure form, if required, with each submission that initiates agency consideration of such person for:
(1) Award of a Federal contract, grant, or cooperative agreement exceeding $100,000; or
(2) An award of a Federal loan or a commitment providing for the United States to insure or guarantee a loan exceeding $150,000.
(b) Each person shall file a certification, and a disclosure form, if required, upon receipt by such person of:
(1) A Federal contract, grant, or cooperative agreement exceeding $100,000; or
(2) A Federal loan or a commitment providing for the United States to insure or guarantee a loan exceeding $150,000,
(c) Each person shall file a disclosure form at the end of each calendar quarter in which there occurs any event that requires disclosure or that materially affects the accuracy of the information contained in any disclosure form previously filed by such person under paragraphs (a) or (b) of this section. An event that materially affects the accuracy of the information reported includes:
(1) A cumulative increase of $25,000 or more in the amount paid or expected to be paid for influencing or attempting to influence a covered Federal action; or
(2) A change in the person(s) or individual(s) influencing or attempting to influence a covered Federal action; or,
(3) A change in the officer(s), employee(s), or Member(s) contacted to influence or attempt to influence a covered Federal action.
(d) Any person who requests or receives from a person referred to in paragraphs (a) or (b) of this section:
(1) A subcontract exceeding $100,000 at any tier under a Federal contract;
(2) A subgrant, contract, or subcontract exceeding $100,000 at any tier under a Federal grant;
(3) A contract or subcontract exceeding $100,000 at any tier under a Federal loan exceeding $150,000; or,
(4) A contract or subcontract exceeding $100,000 at any tier under a Federal cooperative agreement,
(e) All disclosure forms, but not certifications, shall be forwarded from tier to tier until received by the person referred to in paragraphs (a) or (b) of this section. That person shall forward all disclosure forms to the agency.
(f) Any certification or disclosure form filed under paragraph (e) of this section shall be treated as a material representation of fact upon which all receiving tiers shall rely. All liability arising from an erroneous representation shall be borne solely by the tier filing that representation and shall not be shared by any tier to which the erroneous representation is forwarded. Submitting an erroneous certification or disclosure constitutes a failure to file the required certification or disclosure, respectively. If a person fails to file a required certification or disclosure, the United States may pursue all available remedies, including those authorized by section 1352, title 31, U.S. Code.
(g) For awards and commitments in process prior to December 23, 1989, but not made before that date, certifications shall be required at award or commitment, covering activities occurring between December 23, 1989, and the date of award or commitment. However, for awards and commitments in process prior to the December 23, 1989 effective date of these provisions, but not made before December 23, 1989, disclosure forms shall not be required at time of award or commitment but shall be filed within 30 days.
(h) No reporting is required for an activity paid for with appropriated funds if that activity is allowable under either subpart B or C.
Subpart B—Activities by Own Employees
§ 28.200 Agency and legislative liaison.
(a) The prohibition on the use of appropriated funds, in § 28.100 (a), does not apply in the case of a payment of reasonable compensation made to an officer or employee of a person requesting or receiving a Federal contract, grant, loan, or cooperative agreement if the payment is for agency and legislative liaison activities not directly related to a covered Federal action.
(b) For purposes of paragraph (a) of this section, providing any information specifically requested by an agency or Congress is allowable at any time.
(c) For purposes of paragraph (a) of this section, the following agency and legislative liaison activities are allowable at any time only where they are not related to a specific solicitation for any covered Federal action:
(1) Discussing with an agency (including individual demonstrations) the qualities and characteristics of the person’s products or services, conditions or terms of sale, and service capabilities; and,
(2) Technical discussions and other activities regarding the application or adaptation of the person’s products or services for an agency’s use.
(d) For purposes of paragraph (a) of this section, the following agencies and legislative liaison activities are allowable only where they are prior to formal solicitation of any covered Federal action:
(1) Providing any information not specifically requested but necessary for an agency to make an informed decision about initiation of a covered Federal action;
(2) Technical discussions regarding the preparation of an unsolicited proposal prior to its official submission; and,
(3) Capability presentations by persons seeking awards from an agency pursuant to the provisions of the Small Business Act, as amended by Public Law 95-507 and other subsequent amendments.
(e) Only those activities expressly authorized by this section are allowable under this section.
§ 28.205 Professional and technical services.
(a) The prohibition on the use of appropriated funds, in § 28.100 (a), does not apply in the case of a payment of reasonable compensation made to an officer or employee of a person requesting or receiving a Federal contract, grant, loan, or cooperative agreement or an extension, continuation, renewal, amendment, or modification of a Federal contract, grant, loan, or cooperative agreement if payment is for professional or technical services rendered directly in the preparation, submission, or negotiation of any bid, proposal, or application for that Federal contract, grant, loan, or cooperative agreement or for meeting requirements imposed by or pursuant to law as a condition for receiving that Federal contract, grant, loan, or cooperative agreement.
(b) For purposes of paragraph (a) of this section, “professional and technical services” shall be limited to advice and analysis directly applying any professional or technical discipline. For example, drafting of a legal document accompanying a bid or proposal by a lawyer is allowable. Similarly, technical advice provided by an engineer on the performance or operational capability of a piece of equipment rendered directly in the negotiation of a contract is allowable. However, communications with the intent to influence made by a professional (such as a licensed lawyer) or a technical person (such as a licensed accountant) are not allowable under this section unless they provide advice and analysis directly applying their professional or technical expertise and unless the advice or analysis is rendered directly and solely in the preparation, submission or negotiation of a covered Federal action. Thus, for example, communications with the intent to influence made by a lawyer that do not provide legal advice or analysis directly and solely related to the legal aspects of his or her client’s proposal, but generally advocate one proposal over another are not allowable under this section because the lawyer is not providing professional legal services. Similarly, communications with the intent to influence made by an engineer providing an engineering analysis prior to the preparation or submission of a bid or proposal are not allowable under this section since the engineer is providing technical services but not directly in the preparation, submission or negotiation of a covered Federal action.
(c) Requirements imposed by or pursuant to law as a condition for receiving a covered Federal award include those required by law or regulation, or reasonably expected to be required by law or regulation, and any other requirements in the actual award documents.
(d) Only those services expressly authorized by this section are allowable under this section.
§ 28.210 Reporting.
No reporting is required with respect to payments of reasonable compensation made to regularly employed officers or employees of a person.
Subpart C—Activities by Other Than Own Employees
§ 28.300 Professional and technical services.
(a) The prohibition on the use of appropriated funds, in § 28.100 (a), does not apply in the case of any reasonable payment to a person, other than an officer or employee of a person requesting or receiving a covered Federal action, if the payment is for professional or technical services rendered directly in the preparation, submission, or negotiation of any bid, proposal, or application for that Federal contract, grant, loan, or cooperative agreement or for meeting requirements imposed by or pursuant to law as a condition for receiving that Federal contract, grant, loan, or cooperative agreement.
(b) The reporting requirements in § 28.110 (a) and (b) regarding filing a disclosure form by each person, if required, shall not apply with respect to professional or technical services rendered directly in the preparation, submission, or negotiation of any commitment providing for the United States to insure or guarantee a loan.
(c) For purposes of paragraph (a) of this section, “professional and technical services” shall be limited to advice and analysis directly applying any professional or technical discipline. For example, drafting of a legal document accompanying a bid or proposal by a lawyer is allowable. Similarly, technical advice provided by an engineer on the performance or operational capability of a piece of equipment rendered directly in the negotiation of a contract is allowable. However, communications with the intent to influence made by a professional (such as a licensed lawyer) or a technical person (such as a licensed accountant) are not allowable under this section unless they provide advice and analysis directly applying their professional or technical expertise and unless the advice or analysis is rendered directly and solely in the preparation, submission or negotiation of a covered Federal action. Thus, for example, communications with the intent to influence made by a lawyer that do not provide legal advice or analysis directly and solely related to the legal aspects of his or her client’s proposal, but generally advocate one proposal over another are not allowable under this section because the lawyer is not providing professional legal services. Similarly, communications with the intent to influence made by an engineer providing an engineering analysis prior to the preparation or submission of a bid or proposal are not allowable under this section since the engineer is providing technical services but not directly in the preparation, submission or negotiation of a covered Federal action.
(d) Requirements imposed by or pursuant to law as a condition for receiving a covered Federal award include those required by law or regulation, or reasonably expected to be required by law or regulation, and any other requirements in the actual award documents.
(e) Persons other than officers or employees of a person requesting or receiving a covered Federal action include consultants and trade associations.
(f) Only those services expressly authorized by this section are allowable under this section.
Subpart D—Penalties and Enforcement
§ 28.400 Penalties.
(a) Any person who makes an expenditure prohibited herein shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such expenditure.
(b) Any person who fails to file or amend the disclosure form (see Appendix B) to be filed or amended if required herein, shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure.
(c) A filing or amended filing on or after the date on which an administrative action for the imposition of a civil penalty is commenced does not prevent the imposition of such civil penalty for a failure occurring before that date. An administrative action is commenced with respect to a failure when an investigating official determines in writing to commence an investigation of an allegation of such failure.
(d) In determining whether to impose a civil penalty, and the amount of any such penalty, by reason of a violation by any person, the agency shall consider the nature, circumstances, extent, and gravity of the violation, the effect on the ability of such person to continue in business, any prior violations by such person, the degree of culpability of such person, the ability of the person to pay the penalty, and such other matters as may be appropriate.
(e) First offenders under paragraphs (a) or (b) of this section shall be subject to a civil penalty of $10,000, absent aggravating circumstances. Second and subsequent offenses by persons shall be subject to an appropriate civil penalty between $10,000 and $100,000, as determined by the agency head or his or her designee.
(f) An imposition of a civil penalty under this section does not prevent the United States from seeking any other remedy that may apply to the same conduct that is the basis for the imposition of such civil penalty.
§ 28.405 Penalty procedures.
Agencies shall impose and collect civil penalties pursuant to the provisions of the Program Fraud and Civil Remedies Act, 31 U.S.C. sections 3803 (except subsection (c)), 3804, 3805, 3806, 3807, 3808, and 3812, insofar as these provisions are not inconsistent with the requirements herein.
§ 28.410 Enforcement.
The head of each agency shall take such actions as are necessary to ensure that the provisions herein are vigorously implemented and enforced in that agency.
Subpart E—Exemptions
§ 28.500 Secretary of Defense.
(a) Exemption authority. The Secretary of Defense may exempt, on a case-by-case basis, a covered Federal action from the prohibition whenever the Secretary determines, in writing, that such an exemption is in the national interest. The Secretary shall transmit a copy of each such written exemption to Congress immediately after making such a determination.
(b) Policy. It is the policy of the Department of Defense that exemptions under paragraph (a) of this section shall be requested only rarely and in exceptional circumstances.
(c) Procedures. Each DoD Component that awards or administers Federal grants, Federal cooperative agreements, or Federal loans subject to this part shall establish procedures whereby:
(1) A grants officer wishing to request an exemption for a grant, cooperative agreement, or loan shall transmit such request through appropriate channels to: Director for Research, ODDR&E(R), 3080 Defense Pentagon, Washington, DC. 20301-3080.
(2) Each such request shall explain why an exemption is in the national interest, a justification that must be transmitted to Congress for each exemption that is approved.
Subpart F—Agency Reports
§ 28.600 Semi-annual compilation.
(a) The head of each agency shall collect and compile the disclosure reports (see appendix B) and, on May 31 and November 30 of each year, submit to the Secretary of the Senate and the Clerk of the House of Representatives a report containing a compilation of the information contained in the disclosure reports received during the six-month period ending on March 31 or September 30, respectively, of that year.
(b) The report, including the compilation, shall be available for public inspection 30 days after receipt of the report by the Secretary and the Clerk.
(c) Information that involves intelligence matters shall be reported only to the Select Committee on Intelligence of the Senate, the Permanent Select Committee on Intelligence of the House of Representatives, and the Committees on Appropriations of the Senate and the House of Representatives in accordance with procedures agreed to by such committees. Such information shall not be available for public inspection.
(d) Information that is classified under Executive Order 12356 or any successor order shall be reported only to the Committee on Foreign Relations of the Senate and the Committee on Foreign Affairs of the House of Representatives or the Committees on Armed Services of the Senate and the House of Representatives (whichever such committees have jurisdiction of matters involving such information) and to the Committees on Appropriations of the Senate and the House of Representatives in accordance with procedures agreed to by such committees. Such information shall not be available for public inspection.
(e) The first semi-annual compilation shall be submitted on May 31, 1990, and shall contain a compilation of the disclosure reports received from December 23, 1989 to March 31, 1990.
(f) Major agencies, designated by the Office of Management and Budget (OMB), are required to provide machine-readable compilations to the Secretary of the Senate and the Clerk of the House of Representatives no later than with the compilations due on May 31, 1991. OMB shall provide detailed specifications in a memorandum to these agencies.
(g) Non-major agencies are requested to provide machine-readable compilations to the Secretary of the Senate and the Clerk of the House of Representatives.
(h) Agencies shall keep the originals of all disclosure reports in the official files of the agency.
§ 28.605 Inspector General report.
(a) The Inspector General, or other official as specified in paragraph (b) of this section, of each agency shall prepare and submit to Congress each year, commencing with submission of the President’s Budget in 1991, an evaluation of the compliance of that agency with, and the effectiveness of, the requirements herein. The evaluation may include any recommended changes that may be necessary to strengthen or improve the requirements.
(b) In the case of an agency that does not have an Inspector General, the agency official comparable to an Inspector General shall prepare and submit the annual report, or, if there is no such comparable official, the head of the agency shall prepare and submit the annual report.
(c) The annual report shall be submitted at the same time the agency submits its annual budget justifications to Congress.
(d) The annual report shall include the following: All alleged violations relating to the agency’s covered Federal actions during the year covered by the report, the actions taken by the head of the agency in the year covered by the report with respect to those alleged violations and alleged violations in previous years, and the amounts of civil penalties imposed by the agency in the year covered by the report.
Appendix A to Part 28—Certification Regarding Lobbying
The undersigned certifies, to the best of his or her knowledge and belief, that:
(1) No Federal appropriated funds have been paid or will be paid, by or on behalf of the undersigned, to any person for influencing or attempting to influence an officer or employee of an agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement.
(2) If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, the undersigned shall complete and submit Standard Form-LLL, “Disclosure Form to Report Lobbying,” in accordance with its instructions.
(3) The undersigned shall require that the language of this certification be included in the award documents for all subawards at all tiers (including subcontracts, subgrants, and contracts under grants, loans, and cooperative agreements) and that all subrecipients shall certify and disclose accordingly.
This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by section 1352, title 31, U.S. Code. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure.
The undersigned states, to the best of his or her knowledge and belief, that:
If any funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this commitment providing for the United States to insure or guarantee a loan, the undersigned shall complete and submit Standard Form-LLL, “Disclosure Form to Report Lobbying,” in accordance with its instructions.
Submission of this statement is a prerequisite for making or entering into this transaction imposed by section 1352, title 31, U.S. Code. Any person who fails to file the required statement shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure.
Appendix B to Part 28—Disclosure Form To Report Lobbying
PART 34—ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND AGREEMENTS WITH FOR-PROFIT ORGANIZATIONS
Subpart A—General
§ 34.1 Purpose.
(a) This part prescribes administrative requirements for awards to for-profit organizations.
(b) Applicability to prime awards and subawards is as follows:
(1) Prime awards. DoD Components shall apply the provisions of this part to awards to for-profit organizations. DoD Components shall not impose requirements that are in addition to, or inconsistent with, the requirements provided in this part, except:
(i) In accordance with the deviation procedures or special award conditions in § 34.3 or § 34.4, respectively; or
(ii) As required by Federal statute, Executive order, or Federal regulation implementing a statute or Executive order.
(2) Subawards. (i) Any legal entity (including any State, local government, university or other nonprofit organization, as well as any for-profit entity) that receives an award from a DoD Component shall apply the provisions of this part to subawards with for-profit organizations. It should be noted that subawards (see definition in § 34.2) are financial assistance for substantive programmatic performance and do not include recipients’ procurement of goods and services.
(ii) For-profit organizations that receive prime awards covered by this part shall apply to each subaward the administrative requirements that are applicable to the particular type of subrecipient.
§ 34.2 Definitions.
The following are definitions of terms as used in this part. Grants officers are cautioned that terms may be defined differently in this part than they are in other parts of the DoD Grant and Agreement Regulations (DoDGARs).
Advance. A payment made by Treasury check or other appropriate payment mechanism to a recipient upon its request either before outlays are made by the recipient or through the use of predetermined payment schedules.
Award. A grant or a cooperative agreement other than a technology investment agreement (TIA). TIAs are covered by part 37 of the DoDGARs (32 CFR part 37). Portions of this part may apply to a TIA, but only to the extent that 32 CFR part 37 makes them apply.
Cash contributions. The recipient’s cash outlay, including the outlay of money contributed to the recipient by third parties.
Closeout. The process by which the grants officer administering an award made by a DoD Component determines that all applicable administrative actions and all required work of the award have been completed by the recipient and DoD Component.
Contract. Either:
(1) A procurement contract made by a recipient under a DoD Component’s award or by a subrecipient under a subaward; or
(2) A procurement subcontract under a contract awarded by a recipient or subrecipient.
Cost sharing or matching. That portion of project or program costs not borne by the Federal Government.
Disallowed costs. Those charges to an award that the grants officer administering an award made by a DoD Component determines to be unallowable, in accordance with the applicable Federal cost principles or other terms and conditions contained in the award.
DoD Component. A Military Department, Defense Agency, DoD Field Activity, or organization within the Office of the Secretary of Defense that provides or administers an award to a recipient.
Equipment. Tangible nonexpendable personal property charged directly to the award having a useful life of more than one year and an acquisition cost of $5,000 or more per unit. That definition applies for the purposes of the Federal administrative requirements in this part. However, the recipient’s policy may be to use a lower dollar value for defining “equipment,” and nothing in this part should be construed as requiring the recipient to establish a higher limit for purposes other than the administrative requirements in this part.
Excess property. Property under the control of any DoD Component that, as determined by the head thereof, is no longer required for its needs or the discharge of its responsibilities.
Expenditures. See the definition for outlays in this section.
Federally owned property. Property in the possession of, or directly acquired by, the Government and subsequently made available to the recipient.
Funding period. The period of time when Federal funding is available for obligation by the recipient.
Intellectual property. Intangible personal property such as patents and patent applications, trademarks, copyrights, technical data, and software rights.
Obligations. The amounts of orders placed, contracts and grants awarded, services received and similar transactions during a given period that require payment by the recipient during the same or a future period.
Outlays or expenditures. Charges made to the project or program. They may be reported on a cash or accrual basis. For reports prepared on a cash basis, outlays are the sum of cash disbursements for direct charges for goods and services, the amount of indirect expense charged, the value of third party in-kind contributions applied and the amount of cash advances and payments made to subrecipients. For reports prepared on an accrual basis, outlays are the sum of cash disbursements for direct charges for goods and services, the amount of indirect expense incurred, the value of in-kind contributions applied, and the net increase (or decrease) in the amounts owed by the recipient for goods and other property received, for services performed by employees, contractors, subrecipients and other payees and other amounts becoming owed under programs for which no current services or performance are required.
Personal property. Property of any kind except real property. It may be:
(1) Tangible, having physical existence (i.e., equipment and supplies); or
(2) Intangible, having no physical existence, such as patents, copyrights, data and software.
Prior approval. Written or electronic approval by an authorized official evidencing prior consent.
Program income. Gross income earned by the recipient that is directly generated by a supported activity or earned as a result of the award. Program income includes, but is not limited to, income from fees for services performed, the use or rental of real or personal property acquired under federally-funded projects, the sale of commodities or items fabricated under an award, license fees and royalties on patents and copyrights, and interest on loans made with award funds. Interest earned on advances of Federal funds is not program income. Except as otherwise provided in program regulations or the terms and conditions of the award, program income does not include the receipt of principal on loans, rebates, credits, discounts, etc., or interest earned on any of them.
Project costs. All allowable costs, as set forth in the applicable Federal cost principles, incurred by a recipient and the value of the contributions made by third parties in accomplishing the objectives of the award during the project period.
Project period. The period established in the award document during which Federal sponsorship begins and ends.
Property. Real property and personal property (equipment, supplies, and intellectual property), unless stated otherwise.
Real property. Land, including land improvements, structures and appurtenances thereto, but excludes movable machinery and equipment.
Recipient. A for-profit organization receiving an award directly from a DoD Component to carry out a project or program.
Research. Basic, applied, and advanced research activities. Basic research is defined as efforts directed toward increasing knowledge or understanding in science and engineering. Applied research is defined as efforts that attempt to determine and exploit the potential of scientific discoveries or improvements in technology, such as new materials, devices, methods, and processes. “Advanced research,” advanced technology development that creates new technology or demonstrates the viability of applying existing technology to new products and processes in a general way, is most closely analogous to precommercialization or precompetitive technology development in the commercial sector (it does not include development of military systems and hardware where specific requirements have been defined).
Small award. See the definition for this term in 2 CFR part 1108.
Small business concern. A concern, including its affiliates, that is independently owned and operated, not dominant in the field of operation in which it has applied for an award, and qualified as a small business under the criteria and size standards in 13 CFR part 121. For more details, grants officers should see 48 CFR part 19 in the “Federal Acquisition Regulation.”
Subaward. Financial assistance in the form of money, or property in lieu of money, provided under an award by a recipient to an eligible subrecipient or by a subrecipient to a lower tier subrecipient. The term includes financial assistance when provided by any legal agreement, even if the agreement is called a contract, but the term includes neither procurement of goods and services nor any form of assistance which is excluded from the definition of “award” in this section.
Subrecipient. The legal entity to which a subaward is made and which is accountable to the recipient for the use of the funds provided.
Supplies. Tangible expendable personal property that is charged directly to the award and that has a useful life of less than one year or an acquisition cost of less than $5000 per unit.
Suspension. An action by a DoD Component that temporarily withdraws Federal sponsorship under an award, pending corrective action by the recipient or pending a decision to terminate the award by the DoD Component. Suspension of an award is a separate action from suspension of a participant under 2 CFR part 1125.
Termination. The cancellation of an award, in whole or in part, under an agreement at any time prior to either:
(1) The date on which all work under an award is completed; or
(2) The date on which Federal sponsorship ends, as given on the award document or any supplement or amendment thereto.
Third party in-kind contributions. The value of non-cash contributions provided by non-Federal third parties. Third party in-kind contributions may be in the form of real property, equipment, supplies and other expendable property, and the value of goods and services directly benefiting and specifically identifiable to the project or program.
Unobligated balance. The portion of the funds authorized by a DoD Component that has not been obligated by the recipient and is determined by deducting the cumulative obligations from the cumulative funds authorized.
§ 34.3 Deviations.
(a) Individual deviations. Individual deviations affecting only one award may be approved by DoD Components in accordance with procedures stated in 32 CFR 21.335(a) and 21.340.
(b) Small awards. DoD Components may apply less restrictive requirements than the provisions of this part when awarding small awards, except for those requirements which are statutory.
(c) Other class deviations. For classes of awards other than small awards, the Assistant Secretary of Defense for Research and Engineering, or his or her designee, may grant exceptions from the requirements of this part when exceptions are not prohibited by statute. DoD Components shall request approval for such deviations in accordance with 32 CFR 21.335 (b) and 21.340.
§ 34.4 Special award conditions.
(a) Grants officers may impose additional requirements as needed, over and above those provided in this part, if an applicant or recipient:
(1) Has a history of poor performance;
(2) Is not financially stable;
(3) Has a management system that does not meet the standards prescribed in this part;
(4) Has not conformed to the terms and conditions of a previous award; or
(5) Is not otherwise responsible.
(b) Before imposing additional requirements, DoD Components shall notify the applicant or recipient in writing as to:
(1) The nature of the additional requirements;
(2) The reason why the additional requirements are being imposed;
(3) The nature of the corrective action needed;
(4) The time allowed for completing the corrective actions; and
(5) The method for requesting reconsideration of the additional requirements imposed.
(c) Any special conditions shall be promptly removed once the conditions that prompted them have been corrected.
(d) Grants officers:
(1) Should coordinate the imposition and removal of special award conditions with the cognizant grants administration office identified in 32 CFR 22.710.
(2) Shall include in the award file the written notification to the recipient, described in paragraph (b) of this section, and the documentation required by 32 CFR 22.410(b).
Subpart B—Post-award Requirements
Financial and Program Management
§ 34.10 Purpose of financial and program management.
Sections 34.11 through 34.17 prescribe standards for financial management systems; methods for making payments; and rules for cost sharing and matching, program income, revisions to budgets and program plans, audits, allowable costs, and fee and profit.
§ 34.11 Standards for financial management systems.
(a) Recipients shall be allowed and encouraged to use existing financial management systems established for doing business in the commercial marketplace, to the extent that the systems comply with Generally Accepted Accounting Principles (GAAP) and the minimum standards in this section. As a minimum, a recipient’s financial management system shall provide:
(1) Effective control of all funds. Control systems must be adequate to ensure that costs charged to Federal funds and those counted as the recipient’s cost share or match are consistent with requirements for cost reasonableness, allowability, and allocability in the applicable cost principles (see § 34.17) and in the terms and conditions of the award.
(2) Accurate, current and complete records that document for each project funded wholly or in part with Federal funds the source and application of the Federal funds and the recipient’s required cost share or match. These records shall:
(i) Contain information about receipts, authorizations, assets, expenditures, program income, and interest.
(ii) Be adequate to make comparisons of outlays with budgeted amounts for each award (as required for programmatic and financial reporting under § 34.41. Where appropriate, financial information should be related to performance and unit cost data. Note that unit cost data are generally not appropriate for awards that support research.
(3) To the extent that advance payments are authorized under § 34.12, procedures that minimize the time elapsing between the transfer of funds to the recipient from the Government and the recipient’s disbursement of the funds for program purposes.
(4) The recipient shall have a system to support charges to Federal awards for salaries and wages, whether treated as direct or indirect costs. Where employees work on multiple activities or cost objectives, a distribution of their salaries and wages will be supported by personnel activity reports which must:
(i) Reflect an after the fact distribution of the actual activity of each employee.
(ii) Account for the total activity for which each employee is compensated.
(iii) Be prepared at least monthly, and coincide with one or more pay periods.
(b) Where the Federal Government guarantees or insures the repayment of money borrowed by the recipient, the DoD Component, at its discretion, may require adequate bonding and insurance if the bonding and insurance requirements of the recipient are not deemed adequate to protect the interest of the Federal Government.
(c) The DoD Component may require adequate fidelity bond coverage where the recipient lacks sufficient coverage to protect the Federal Government’s interest.
(d) Where bonds are required in the situations described above, the bonds shall be obtained from companies holding certificates of authority as acceptable sureties, as prescribed in 31 CFR part 223, “Surety Companies Doing Business with the United States.”
§ 34.12 Payment.
(a) Methods available. Payment methods for awards with for-profit organizations are:
(1) Reimbursement. Under this method, the recipient requests reimbursement for costs incurred during a time period. In cases where the recipient submits each request for payment to the grants officer, the DoD payment office reimburses the recipient by electronic funds transfer or check after approval of the request by the grants officer designated to do so.
(2) Advance payments. Under this method, a DoD Component makes a payment to a recipient based upon projections of the recipient’s cash needs. The payment generally is made upon the recipient’s request, although predetermined payment schedules may be used when the timing of the recipient’s needs to disburse funds can be predicted in advance with sufficient accuracy to ensure compliance with paragraph (b)(2)(iii) of this section.
(b) Selecting a method. (1) The preferred payment method is the reimbursement method, as described in paragraph (a)(1) of this section
(2) Advance payments, as described in paragraph (a)(2) of this section, may be used in exceptional circumstances, subject to the following conditions:
(i) The grants officer, in consultation with the program official, must judge that advance payments are necessary or will materially contribute to the probability of success of the project contemplated under the award (e.g., as startup funds for a project performed by a newly formed company). The rationale for the judgment shall be documented in the award file.
(ii) Cash advances shall be limited to the minimum amounts needed to carry out the program.
(iii) Recipients and the DoD Component shall maintain procedures to ensure that the timing of cash advances is as close as is administratively feasible to the recipients’ disbursements of the funds for program purposes, including direct program or project costs and the proportionate share of any allowable indirect costs.
(iv) Recipients shall maintain advance payments of Federal funds in interest-bearing accounts, and remit annually the interest earned to the administrative grants officer responsible for post-award administration (the grants officer shall forward the payment to the responsible payment office, for return to the Department of Treasury’s miscellaneous receipts account), unless one of the following applies:
(A) The recipient receives less than $120,000 in Federal awards per year.
(B) The best reasonably available interest bearing account would not be expected to earn interest in excess of $250 per year on Federal cash balances.
(C) The depository would require an average or minimum balance so high that it would not be feasible within the expected Federal and non-Federal cash resources.
(c) Frequency of payments. For either reimbursements or advance payments, recipients shall be authorized to submit requests for payment at least monthly.
(d) Forms for requesting payment. DoD Components may authorize recipients to use the SF-270,
(e) Timeliness of payments. Payments normally will be made within 30 calendar days of the receipt of a recipient’s request for reimbursement or advance by the office designated to receive the request (for further information about timeframes for payments, see 32 CFR 22.810(c)(3)(ii)).
(f) Precedence of other available funds. Recipients shall disburse funds available from program income, rebates, refunds, contract settlements, audit recoveries, and interest earned on such funds before requesting additional cash payments.
(g) Withholding of payments. Unless otherwise required by statute, grants officers shall not withhold payments for proper charges made by recipients during the project period for reasons other than the following:
(1) A recipient has failed to comply with project objectives, the terms and conditions of the award, or Federal reporting requirements, in which case the grants officer may suspend payments in accordance with § 34.52.
(2) The recipient is delinquent on a debt to the United States (see definitions of “debt” and “delinquent debt” in 32 CFR 22.105). In that case, the grants officer may, upon reasonable notice, withhold payments for obligations incurred after a specified date, until the debt is resolved.
§ 34.13 Cost sharing or matching.
(a) Acceptable contributions. All contributions, including cash contributions and third party in-kind contributions, shall be accepted as part of the recipient’s cost sharing or matching when such contributions meet all of the following criteria:
(1) They are verifiable from the recipient’s records.
(2) They are not included as contributions for any other federally-assisted project or program.
(3) They are necessary and reasonable for proper and efficient accomplishment of project or program objectives.
(4) They are allowable under § 34.17.
(5) They are not paid by the Federal Government under another award, except:
(i) Costs that are authorized by Federal statute to be used for cost sharing or matching; or
(ii) Independent research and development (IR&D) costs. In accordance with the for-profit cost principle in 48 CFR 31.205-18(e), use of IR&D as cost sharing is permitted, whether or not the Government decides at a later date to reimburse any of the IR&D as allowable indirect costs. In such cases, the IR&D must meet all of the criteria in paragraphs (a) (1) through (4) and (a) (6) through (8) of this section.
(6) They are provided for in the approved budget, when approval of the budget is required by the DoD Component.
(7) If they are real property or equipment, whether purchased with recipient’s funds or donated by third parties, they must have the grants officer’s prior approval if the contributions’ value is to exceed depreciation or use charges during the project period (paragraphs (b)(1) and (b)(4)(ii) of this section discuss the limited circumstances under which a grants officer may approve higher values). If a DoD Component requires approval of a recipient’s budget (see paragraph (a)(6) of this section), the grants officer’s approval of the budget satisfies this prior approval requirement, for real property or equipment items listed in the budget.
(8) They conform to other provisions of this part, as applicable.
(b) Valuing and documenting contributions—(1) Valuing recipient’s property or services of recipient’s employees. Values shall be established in accordance with the applicable cost principles in § 34.17, which means that amounts chargeable to the project are determined on the basis of costs incurred. For real property or equipment used on the project, the cost principles authorize depreciation or use charges. The full value of the item may be applied when the item will be consumed in the performance of the award or fully depreciated by the end of the award. In cases where the full value of a donated capital asset is to be applied as cost sharing or matching, that full value shall be the lesser of the following:
(i) The certified value of the remaining life of the property recorded in the recipient’s accounting records at the time of donation; or
(ii) The current fair market value. However, when there is sufficient justification, the grants officer may approve the use of the current fair market value of the donated property, even if it exceeds the certified value at the time of donation to the project. The grants officer may accept the use of any reasonable basis for determining the fair market value of the property.
(2) Valuing services of others’ employees. When an employer other than the recipient furnishes the services of an employee, those services shall be valued at the employee’s regular rate of pay plus an amount of fringe benefits and overhead (at an overhead rate appropriate for the location where the services are performed) provided these services are in the same skill for which the employee is normally paid.
(3) Valuing volunteer services. Volunteer services furnished by professional and technical personnel, consultants, and other skilled and unskilled labor may be counted as cost sharing or matching if the service is an integral and necessary part of an approved project or program. Rates for volunteer services shall be consistent with those paid for similar work in the recipient’s organization. In those instances in which the required skills are not found in the recipient organization, rates shall be consistent with those paid for similar work in the labor market in which the recipient competes for the kind of services involved. In either case, paid fringe benefits that are reasonable, allowable, and allocable may be included in the valuation.
(4) Valuing property donated by third parties. (i) Donated supplies may include such items as office supplies or laboratory supplies. Value assessed to donated supplies included in the cost sharing or matching share shall be reasonable and shall not exceed the fair market value of the property at the time of the donation.
(ii) Normally only depreciation or use charges for equipment and buildings may be applied. However, the fair rental charges for land and the full value of equipment or other capital assets may be allowed, when they will be consumed in the performance of the award or fully depreciated by the end of the award, provided that the grants officer has approved the charges. When use charges are applied, values shall be determined in accordance with the usual accounting policies of the recipient, with the following qualifications:
(A) The value of donated space shall not exceed the fair rental value of comparable space as established by an independent appraisal of comparable space and facilities in a privately-owned building in the same locality.
(B) The value of loaned equipment shall not exceed its fair rental value.
(5) Documentation. The following requirements pertain to the recipient’s supporting records for in-kind contributions from third parties:
(i) Volunteer services shall be documented and, to the extent feasible, supported by the same methods used by the recipient for its own employees.
(ii) The basis for determining the valuation for personal services and property shall be documented.
§ 34.14 Program income.
(a) DoD Components shall apply the standards in this section to the disposition of program income from projects financed in whole or in part with Federal funds.
(b) Recipients shall have no obligation to the Government, unless the terms and conditions of the award provide otherwise, for program income earned:
(1) From license fees and royalties for copyrighted material, patents, patent applications, trademarks, and inventions produced under an award. Note, however, that the Patent and Trademark Amendments (35 U.S.C. Chapter 18), as implemented in § 34.25, apply to inventions made under a research award.
(2) After the end of the project period. If a grants officer anticipates that an award is likely to generate program income after the end of the project period, the grants officer should indicate in the award document whether the recipient will have any obligation to the Federal Government with respect to such income.
(c) If authorized by the terms and conditions of the award, costs incident to the generation of program income may be deducted from gross income to determine program income, provided these costs have not been charged to the award.
(d) Other than any program income excluded pursuant to paragraphs (b) and (c) of this section, program income earned during the project period shall be retained by the recipient and used in one or more of the following ways, as specified in program regulations or the terms and conditions of the award:
(1) Added to funds committed to the project by the DoD Component and recipient and used to further eligible project or program objectives.
(2) Used to finance the non-Federal share of the project or program.
(3) Deducted from the total project or program allowable cost in determining the net allowable costs on which the Federal share of costs is based.
(e) If the terms and conditions of an award authorize the disposition of program income as described in paragraph (d)(1) or (d)(2) of this section, and stipulate a limit on the amounts that may be used in those ways, program income in excess of the stipulated limits shall be used in accordance with paragraph (d)(3) of this section.
(f) In the event that the terms and conditions of the award do not specify how program income is to be used, paragraph (d)(3) of this section shall apply automatically to all projects or programs except research. For awards that support research, paragraph (d)(1) of this section shall apply automatically unless the terms and conditions specify another alternative or the recipient is subject to special award conditions, as indicated in § 34.4.
(g) Proceeds from the sale of property that is acquired, rather than fabricated, under an award are not program income and shall be handled in accordance with the requirements of the Property Standards (see §§ 34.20 through 34.25).
§ 34.15 Revision of budget and program plans.
(a) The budget plan is the financial expression of the project or program as approved during the award process. It may include either the sum of the Federal and non-Federal shares, or only the Federal share, depending upon DoD Component requirements. It shall be related to performance for program evaluation purposes whenever appropriate.
(b) Recipients are required to report deviations from budget and program plans, and request prior approvals for budget and program plan revisions, in accordance with this section.
(c) Recipients shall immediately request, in writing, prior approval from the cognizant grants officer when there is reason to believe that within the next seven calendar days a programmatic or budgetary revision will be necessary for certain reasons, as follows:
(1) The recipient always must obtain the grants officer’s prior approval when a revision is necessary for either of the following two reasons (i.e., these two requirements for prior approval may never be waived):
(i) A change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
(ii) A need for additional Federal funding.
(2) The recipient must obtain the grants officer’s prior approval when a revision is necessary for any of the following six reasons, unless the requirement for prior approval is waived in the terms and conditions of the award (i.e., if the award document is silent, these prior approvals are required):
(i) A change in a key person specified in the application or award document.
(ii) The absence for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator.
(iii) The inclusion of any additional costs that require prior approval in accordance with applicable cost principles for Federal funds and recipients’ cost share or match, in § 34.17 and § 34.13, respectively.
(iv) The inclusion of pre-award costs. All such costs are incurred at the recipient’s risk (i.e., the DoD Component is under no obligation to reimburse such costs if for any reason the recipient does not receive an award, or if the award is less than anticipated and inadequate to cover such costs).
(v) A “no-cost” extension of the project period that does not require additional Federal funds and does not change the approved objectives or scope of the project.
(vi) Any subaward, transfer or contracting out of substantive program performance under an award, unless described in the application and funded in the approved awards. This provision does not apply to the purchase of supplies, material, or general support services, except that procurement of equipment or other capital items of property always is subject to the grants officer’s prior approval under § 34.21(a), if it is to be purchased with Federal funds, or § 34.13(a)(7), if it is to be used as cost sharing or matching.
(3) The recipient also must obtain the grants officer’s prior approval when a revision is necessary for either of the following reasons, if specifically required in the terms and conditions of the award document (i.e., if the award document is silent, these prior approvals are not required):
(i) The transfer of funds among direct cost categories, functions and activities for awards in which the Federal share of the project exceeds the simplified acquisition threshold and the cumulative amount of such transfers exceeds or is expected to exceed 10 percent of the total budget as last approved by the DoD Component. No DoD Component shall permit a transfer that would cause any Federal appropriation or part thereof to be used for purposes other than those consistent with the original intent of the appropriation.
(ii) For awards that provide support for both construction and nonconstruction work, any fund or budget transfers between the two types of work supported.
(d) Within 30 calendar days from the date of receipt of the recipient’s request for budget revisions, the grants officer shall review the request and notify the recipient whether the budget revisions have been approved. If the revision is still under consideration at the end of 30 calendar days, the grants officer shall inform the recipient in writing of the date when the recipient may expect the decision.
§ 34.16 Audits.
(a) Any recipient that expends $750,000 or more in a year under Federal awards shall have an audit made for that year by an independent auditor, in accordance with paragraph (b) of this section. The audit generally should be made a part of the regularly scheduled, annual audit of the recipient’s financial statements. However, it may be more economical in some cases to have the Federal awards separately audited, and a recipient may elect to do so, unless that option is precluded by award terms and conditions, or by Federal laws or regulations applicable to the program(s) under which the awards were made.
(b) The auditor shall determine and report on whether:
(1) The recipient has an internal control structure that provides reasonable assurance that it is managing Federal awards in compliance with Federal laws and regulations, and with the terms and conditions of the awards.
(2) Based on a sampling of Federal award expenditures, the recipient has complied with laws, regulations, and award terms that may have a direct and material effect on Federal awards.
(c) The recipient shall make the auditor’s report available to DoD Components whose awards are affected.
(d) The requirement for an annual independent audit is intended to ascertain the adequacy of the recipient’s internal financial management systems and to curtail the unnecessary duplication and overlap that usually results when Federal agencies request audits of individual awards on a routine basis. Therefore, a grants officer:
(1) Shall consider whether the independent audit satisfies his or her requirements, before requesting any additional audits; and
(2) When requesting an additional audit, shall:
(i) Limit the scope of such additional audit to areas not adequately addressed by the independent audit.
(ii) Coordinate the audit request with the Federal agency with the predominant fiscal interest in the recipient, as the agency responsible for the scheduling and distribution of audits. If DoD has the predominant fiscal interest in the recipient, the Defense Contract Management Agency (DCMA) is responsible for monitoring audits, ensuring resolution of audit findings, and distributing audit reports. When an additional audit is requested and DoD has the predominant fiscal interest in the recipient, DCMA shall, to the extent practicable, ensure that the additional audit builds upon the independent audit or other audits performed in accordance with this section.
(e) There may be instances in which Federal auditors have recently performed audits, are performing audits, or are planning to perform audits, of a recipient. In these cases, the recipient and its Federal cognizant agency should seek to have the non-Federal, independent auditors work with the Federal auditors to develop a coordinated audit approach, to minimize duplication of audit work.
(f) Audit costs (including a reasonable allocation of the costs of the audit of the recipient’s financial statement, based on the relative benefit to the Government and the recipient) are allowable costs of DoD awards.
§ 34.17 Allowable costs.
Allowability of costs shall be determined in accordance with the cost principles applicable to the type of entity incurring the costs, as follows:
(a) For-profit organizations. Allowability of costs incurred by for-profit organizations that are recipients of prime awards from DoD Components, and those that are subrecipients under prime awards to other organizations, is to be determined in accordance with:
(1) The for-profit cost principles in 48 CFR parts 31 and 231 (in the Federal Acquisition Regulation, or FAR, and the Defense Federal Acquisition Regulation Supplement, or DFARS, respectively).
(2) The supplemental information on allowability of audit costs, in § 34.16(f).
(b) Other types of organizations. Allowability of costs incurred by other types of organizations that may be subrecipients under a prime award to a for-profit organization is determined as follows:
(1) Institutions of higher education, nonprofit organizations, States, local governments, and Indian tribes. Allowability is determined in accordance with the cost principles in subpart E of OMB guidance in 2 CFR part 200. Note that 2 CFR 200.401(c) provides that a nonprofit organization listed in appendix VIII to 2 CFR part 200 is subject to the FAR and DFARS cost principles specified in paragraph (a)(1) of this section for for-profit organizations.
(2) Hospitals. Allowability is determined in accordance with the cost principles identified in appendix IX to 2 CFR part 200 (currently 45 CFR part 75).
§ 34.18 Fee and profit.
In accordance with 32 CFR 22.205(b), grants and cooperative agreements shall not:
(a) Provide for the payment of fee or profit to the recipient.
(b) Be used to carry out programs where fee or profit is necessary to achieving program objectives.
Property Standards
§ 34.20 Purpose of property standards.
Sections 34.21 through 34.25 set forth uniform standards for management, use, and disposition of property. DoD Components shall encourage recipients to use existing property-management systems, to the extent that the systems meet these minimum requirements.
§ 34.21 Real property and equipment.
(a) Prior approval for acquisition with Federal funds. Recipients may purchase real property or equipment in whole or in part with Federal funds under an award only with the prior approval of the grants officer.
(b) Title. Title to such real property or equipment shall vest in the recipient upon acquisition. Unless a statute specifically authorizes a DoD Component to vest title in the recipient without further obligation to the Government, and the DoD Component elects to do so, the title shall be a conditional title. Title shall vest in the recipient subject to the conditions that the recipient:
(1) Use the real property or equipment for the authorized purposes of the project until funding for the project ceases, or until the property is no longer needed for the purposes of the project.
(2) Not encumber the property without approval of the grants officer.
(3) Use and dispose of the property in accordance with paragraphs (d) and (e) of this section.
(c) Federal interest in real property or equipment offered as cost-share. A recipient may offer the full value of real property or equipment that is purchased with recipient’s funds or that is donated by a third party to meet a portion of any required cost sharing or matching, subject to the prior approval requirement in § 34.13(a)(7). If a recipient does so, the Government has a financial interest in the property, a share of the property value attributable to the Federal participation in the project. The property therefore shall be considered as if it had been acquired in part with Federal funds, and shall be subject to the provisions of paragraphs (b)(1), (b)(2) and (b)(3) of this section, and to the provisions of § 34.23.
(d) Use. If real property or equipment is acquired in whole or in part with Federal funds under an award, and the award provides that title vests conditionally in the recipient, the real property or equipment is subject to the following:
(1) During the time that the real property or equipment is used on the project or program for which it was acquired, the recipient shall make it available for use on other projects or programs, if such other use will not interfere with the work on the project or program for which the real property or equipment was originally acquired. Use of the real property or equipment on other projects will be in the following order of priority:
(i) Activities sponsored by DoD Components’ grants, cooperative agreements, or other assistance awards;
(ii) Activities sponsored by other Federal agencies’ grants, cooperative agreements, or other assistance awards;
(iii) Activities under Federal procurement contracts, or activities not sponsored by any Federal agency. If so used, use charges shall be assessed to those activities. For real property or equipment, the use charges shall be at rates equivalent to those for which comparable real property or equipment may be leased. The use charges shall be treated as program income.
(2) After Federal funding for the project ceases, or when the real property or equipment is no longer needed for the purposes of the project, the recipient may use the real property or equipment for other projects, insofar as:
(i) There are Federally sponsored projects for which the real property or equipment may be used. If the only use for the real property or equipment is for projects that have no Federal sponsorship, the recipient shall proceed with disposition of the real property or equipment, in accordance with paragraph (e) of this section.
(ii) The recipient obtains written approval from the grants officer to do so. The grants officer shall ensure that there is a formal change of accountability for the real property or equipment to a currently funded, Federal award.
(iii) The recipient’s use of the real property or equipment for other projects is in the same order of priority as described in paragraph (d)(1) of this section.
(e) Disposition. (1) When an item of real property or equipment is no longer needed for Federally sponsored projects, the recipient shall proceed as follows:
(i) If the property that is no longer needed is equipment (rather than real property), the recipient may wish to replace it with an item that is needed currently for the project. In that case, the recipient may use the original equipment as trade-in or sell it and use the proceeds to offset the costs of the replacement equipment, subject to the approval of the responsible agency (i.e., the DoD Component or the Federal agency to which the DoD Component delegated responsibility for administering the equipment).
(ii) The recipient may elect to retain title, without further obligation to the Federal Government, by compensating the Federal Government for that percentage of the current fair market value of the real property or equipment that is attributable to the Federal participation in the project.
(iii) If the recipient does not elect to retain title to real property or equipment (see paragraph (e)(1)(ii) of this section), or request approval to use equipment as trade-in or offset for replacement equipment (see paragraph (e)(1)(i) of this section), the recipient shall request disposition instructions from the responsible agency.
(2) If a recipient requests disposition instructions, in accordance with paragraph (e)(1)(iii) of this section, the responsible grants officer shall:
(i) For equipment (but not real property), consult with the Federal program manager and judge whether the age and nature of the equipment warrant a screening procedure, to determine whether the equipment is useful to a DoD Component or other Federal agency. If a screening procedure is warranted, the responsible agency shall determine whether the equipment can be used to meet a DoD Component’s requirement. If no DoD requirement is found, the responsible agency shall report the availability of the equipment to the General Services Administration, to determine whether a requirement for the equipment exists in other Federal agencies.
(ii) For either real property or equipment, issue instructions to the recipient for disposition of the property no later than 120 calendar days after the recipient’s request. The grants officer’s options for disposition are to direct the recipient to:
(A) Transfer title to the real property or equipment to the Federal Government or to an eligible third party provided that, in such cases, the recipient shall be entitled to compensation for its attributable percentage of the current fair market value of the real property or equipment, plus any reasonable shipping or interim storage costs incurred. If title is transferred to the Federal Government, it shall be subject thereafter to provisions for Federally owned property in § 34.22.
(B) Sell the real property or equipment and pay the Federal Government for that percentage of the current fair market value of the property that is attributable to the Federal participation in the project (after deducting actual and reasonable selling and fix-up expenses, if any, from the sale proceeds). When the recipient is authorized or required to sell the real property or equipment, proper sales procedures shall be established that provide for competition to the extent practicable and result in the highest possible return.
(3) If the responsible agency fails to issue disposition instructions within 120 calendar days of the recipient’s request, as described in paragraph (e)(2)(ii) of this section, the recipient shall dispose of the real property or equipment through the option described in paragraph (e)(2)(ii)(B) of this section.
§ 34.22 Federally owned property.
(a) Annual inventory. Recipients shall submit annually an inventory listing of all Federally owned property in their custody (property furnished by the Federal Government, rather than acquired by the recipient with Federal funds under the award), to the DoD Component or other Federal agency responsible for administering the property under the award.
(b) Use on other activities. (1) Use of federally owned property on other activities is permissible, if authorized by the DoD Component responsible for administering the award to which the property currently is charged.
(2) Use on other activities will be in the following order of priority:
(i) Activities sponsored by DoD Components’ grants, cooperative agreements, or other assistance awards;
(ii) Activities sponsored by other Federal agencies’ grants, cooperative agreements, or other assistance awards;
(iii) Activities under Federal procurement contracts, or activities not sponsored by any Federal agency. If so used, use charges shall be assessed to those activities. For real property or equipment, the use charges shall be at rates equivalent to those for which comparable real property or equipment may be leased. The use charges shall be treated as program income.
(c) Disposition of property. Upon completion of the award, the recipient shall report the property to the responsible agency. The agency may:
(1) Use the property to meet another Federal Government need (e.g., by transferring accountability for the property to another Federal award to the same recipient, or by directing the recipient to transfer the property to a Federal agency that needs the property, or to another recipient with a currently funded award).
(2) Declare the property to be excess property and either:
(i) Report the property to the General Services Administration, in accordance with the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 483(b)(2)), as implemented by General Services Administration regulations at 41 CFR 101-47.202; or
(ii) Dispose of the property by alternative methods, if there is statutory authority to do so (e.g., DoD Components are authorized by 15 U.S.C. 3710(i), the Federal Technology Transfer Act, to donate research equipment to educational and nonprofit organizations for the conduct of technical and scientific education and research activities. Such donations shall be in accordance with the DoD implementation of E.O. 12999 (3 CFR, 1996 Comp., p. 180), “Educational Technology: Ensuring Opportunity for All Children in the Next Century,” as applicable.) Appropriate instructions shall be issued to the recipient by the responsible agency.
§ 34.23 Property management system.
The recipient’s property management system shall include the following, for property that is Federally owned, and for equipment that is acquired in whole or in part with Federal funds, or that is used as matching share:
(a) Property records shall be maintained, to include the following information:
(1) A description of the property.
(2) Manufacturer’s serial number, model number, Federal stock number, national stock number, or any other identification number.
(3) Source of the property, including the award number.
(4) Whether title vests in the recipient or the Federal Government.
(5) Acquisition date (or date received, if the property was furnished by the Federal Government) and cost.
(6) Information from which one can calculate the percentage of Federal participation in the cost of the property (not applicable to property furnished by the Federal Government).
(7) The location and condition of the property and the date the information was reported.
(8) Ultimate disposition data, including date of disposal and sales price or the method used to determine current fair market value where a recipient compensates the Federal Government for its share.
(b) Federally owned equipment shall be marked, to indicate Federal ownership.
(c) A physical inventory shall be taken and the results reconciled with the property records at least once every two years. Any differences between quantities determined by the physical inspection and those shown in the accounting records shall be investigated to determine the causes of the difference. The recipient shall, in connection with the inventory, verify the existence, current utilization, and continued need for the property.
(d) A control system shall be in effect to insure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft of property shall be investigated and fully documented; if the property was owned by the Federal Government, the recipient shall promptly notify the Federal agency responsible for administering the property.
(e) Adequate maintenance procedures shall be implemented to keep the property in good condition.
§ 34.24 Supplies.
(a) Title shall vest in the recipient upon acquisition for supplies acquired with Federal funds under an award.
(b) Upon termination or completion of the project or program, the recipient shall retain any unused supplies. If the inventory of unused supplies exceeds $5,000 in total aggregate value and the items are not needed for any other Federally sponsored project or program, the recipient shall retain the items for use on non-Federal sponsored activities or sell them, but shall, in either case, compensate the Federal Government for its share.
§ 34.25 Intellectual property developed or produced under awards.
(a) Patents. Grants and cooperative agreements with:
(1) Small business concerns shall comply with 35 U.S.C. Chapter 18, as implemented by 37 CFR part 401, which applies to inventions made under grants and cooperative agreements with small business concerns for research and development. 37 CFR 401.14 provides a standard clause that is required in such grants and cooperative agreements in most cases, 37 CFR 401.3 specifies when the clause shall be included, and 37 CFR 401.5 specifies how the clause may be modified and tailored.
(2) For-profit organizations other than small business concerns shall comply with 35 U.S.C. 210(c) and Executive Order 12591 (3 CFR, 1987 Comp., p. 220) (which codifies a Presidential Memorandum on Government Patent Policy, dated February 18, 1983).
(i) The Executive order states that, as a matter of policy, grants and cooperative agreements should grant to all for-profit organizations, regardless of size, title to patents made in whole or in part with Federal funds, in exchange for royalty-free use by or on behalf of the Government (i.e., it extends the applicability of 35 U.S.C. Chapter 18, to the extent permitted by law, to for-profit organizations other than small business concerns).
(ii) 35 U.S.C. 210(c) states that 35 U.S.C. Chapter 18 is not intended to limit agencies’ authority to agree to the disposition of rights in inventions in accordance with the Presidential memorandum codified by the Executive order. It also states that such grants and cooperative agreements shall provide for Government license rights required by 35 U.S.C. 202(c)(4) and march-in rights required by 35 U.S.C. 203.
(b) Copyright, data and software rights. Requirements concerning data and software rights are as follows:
(1) The recipient may copyright any work that is subject to copyright and was developed under an award. DoD Components reserve a royalty-free, nonexclusive and irrevocable right to reproduce, publish, or otherwise use the work for Federal purposes, and to authorize others to do so.
(2) Unless waived by the DoD Component making the award, the Federal Government has the right to:
(i) Obtain, reproduce, publish or otherwise use for Federal Government purposes the data first produced under an award.
(ii) Authorize others to receive, reproduce, publish, or otherwise use such data for Federal purposes.
Procurement Standards
§ 34.30 Purpose of procurement standards.
Section 34.31 sets forth requirements necessary to ensure:
(a) Compliance of recipients’ procurements that use Federal funds with applicable Federal statutes and executive orders.
(b) Proper stewardship of Federal funds used in recipients’ procurements.
§ 34.31 Requirements.
The following requirements pertain to recipients’ procurements funded in whole or in part with Federal funds or with recipients’ cost-share or match:
(a) Reasonable cost. Recipients procurement procedures shall make maximum practicable use of competition, or shall use other means that ensure reasonable cost for procured goods and services.
(b) Pre-award review of certain procurements. Prior to awarding a procurement contract under an award, a recipient may be required to provide the grants officer administering the award with pre-award documents (e.g., requests for proposals, invitations for bids, or independent cost estimates) related to the procurement. Recipients will only be required to provide such documents for the grants officer’s pre-award review in exceptional cases where the grants officer judges that there is a compelling need to do so. In such cases, the grants officer must include a provision in the award that states the requirement.
(c) Contract provisions. (1) Contracts in excess of the simplified acquisition threshold shall contain contractual provisions or conditions that allow for administrative, contractual, or legal remedies in instances in which a contractor violates or breaches the contract terms, and provide for such remedial actions as may be appropriate.
(2) All contracts in excess of the simplified acquisition threshold shall contain suitable provisions for termination for default by the recipient or for termination due to circumstances beyond the control of the contractor.
(3) All negotiated contracts in excess of the simplified acquisition threshold shall include a provision permitting access of the Department of Defense, the Comptroller General of the United States, or any of their duly authorized representatives, to any books, documents, papers, and records of the contractor that are directly pertinent to a specific program, for the purpose of making audits, examinations, excerpts, and transcriptions.
(4) All contracts, including those for amounts less than the simplified acquisition threshold, awarded by recipients and their contractors shall contain the procurement provisions of Appendix A to this part, as applicable.
Reports and Records
§ 34.40 Purpose of reports and records.
Sections 34.41 and 34.42 prescribe requirements for monitoring and reporting financial and program performance and for records retention.
§ 34.41 Monitoring and reporting program and financial performance.
Grants officers may use the provisions of subparts A and B of 2 CFR part 1134 for awards to for-profit organizations, or may include equivalent technical and financial reporting requirements that ensure reasonable oversight of the expenditure of appropriated funds. As a minimum, equivalent requirements must include:
(a) Periodic reports (at least annually, and no more frequently than quarterly) addressing both program status and business status, as follows:
(1) The program portions of the reports must address progress toward achieving program performance goals, including current issues, problems, or developments.
(2) The business portions of the reports shall provide summarized details on the status of resources (federal funds and non-federal cost sharing or matching), including an accounting of expenditures for the period covered by the report. The report should compare the resource status with any payment and expenditure schedules or plans provided in the original award; explain any major deviations from those schedules; and discuss actions that will be taken to address the deviations.
(3) When grants officers previously authorized advance payments, pursuant to § 34.12(a)(2), they should consult with the program official and consider whether program progress reported in the periodic report, in relation to reported expenditures, is sufficient to justify continued authorization of advance payments.
(b) Unless inappropriate, a final performance report that addresses all major accomplishments under the award.
§ 34.42 Retention and access requirements for records.
(a) This section sets forth requirements for records retention and access to records for awards to recipients.
(b) Financial records, supporting documents, statistical records, and all other records pertinent to an award shall be retained for a period of three years from the date of submission of the final expenditure report. The only exceptions are the following:
(1) If any litigation, claim, or audit is started before the expiration of the 3-year period, the records shall be retained until all litigation, claims or audit findings involving the records have been resolved and final action taken.
(2) Records for real property and equipment acquired with Federal funds shall be retained for 3 years after final disposition.
(3) When records are transferred to or maintained by the DoD Component that made the award, the 3-year retention requirement is not applicable to the recipient.
(4) Indirect cost rate proposals, cost allocations plans, and related records, for which retention requirements are specified in § 34.42(g).
(c) Copies of original records may be substituted for the original records if authorized by the grants officer.
(d) The grants officer shall request that recipients transfer certain records to DoD Component custody when he or she determines that the records possess long term retention value. However, in order to avoid duplicate recordkeeping, a grants officer may make arrangements for recipients to retain any records that are continuously needed for joint use.
(e) DoD Components, the Inspector General, Comptroller General of the United States, or any of their duly authorized representatives, have the right of timely and unrestricted access to any books, documents, papers, or other records of recipients that are pertinent to the awards, in order to make audits, examinations, excerpts, transcripts and copies of such documents. This right also includes timely and reasonable access to a recipient’s personnel for the purpose of interview and discussion related to such documents. The rights of access in this paragraph are not limited to the required retention period, but shall last as long as records are retained.
(f) Unless required by statute, no DoD Component shall place restrictions on recipients that limit public access to the records of recipients that are pertinent to an award, except when the DoD Component can demonstrate that such records shall be kept confidential and would have been exempted from disclosure pursuant to the Freedom of Information Act (5 U.S.C. 552) if the records had belonged to the DoD Component making the award.
(g) Indirect cost proposals, cost allocation plans, and other cost accounting documents (such as documents related to computer usage chargeback rates), along with their supporting records, shall be retained for a 3-year period, as follows:
(1) If a recipient is required to submit an indirect-cost proposal, cost allocation plan, or other computation to the cognizant Federal agency, for purposes of negotiating an indirect cost rate or other rates, the 3-year retention period starts on the date of the submission. This retention requirement also applies to subrecipients submitting similar documents for negotiation to the recipient.
(2) If the recipient or the subrecipient is not required to submit the documents or supporting records for negotiating an indirect cost rate or other rates, the 3-year retention period for the documents and records starts at the end of the fiscal year (or other accounting period) covered by the proposal, plan, or other computation.
(h) If the information described in this section is maintained on a computer, recipients shall retain the computer data on a reliable medium for the time periods prescribed. Recipients may transfer computer data in machine readable form from one reliable computer medium to another. Recipients’ computer data retention and transfer procedures shall maintain the integrity, reliability, and security of the original computer data. Recipients shall also maintain an audit trail describing the data transfer. For the record retention time periods prescribed in this section, recipients shall not destroy, discard, delete, or write over such computer data.
Termination and Enforcement
§ 34.50 Purpose of termination and enforcement.
Sections 34.51 through 34.53 set forth uniform procedures for suspension, termination, enforcement, and disputes.
§ 34.51 Termination.
(a) Awards may be terminated in whole or in part only in accordance with one of the following:
(1) By the grants officer, if a recipient materially fails to comply with the terms and conditions of an award.
(2) By the grants officer with the consent of the recipient, in which case the two parties shall agree upon the termination conditions, including the effective date and, in the case of partial termination, the portion to be terminated.
(3) By the recipient upon sending to the grants officer written notification setting forth the reasons for such termination, the effective date, and, in the case of partial termination, the portion to be terminated. The recipient must provide such notice at least 30 calendar days prior to the effective date of the termination. However, if the grants officer determines in the case of partial termination that the reduced or modified portion of the award will not accomplish the purposes for which the award was made, he or she may terminate the award in its entirety.
(b) If costs are allowed under an award, the responsibilities of the recipient referred to in § 34.61(b), including those for property management as applicable, shall be considered in the termination of the award, and provision shall be made for continuing responsibilities of the recipient after termination, as appropriate.
§ 34.52 Enforcement.
(a) Remedies for noncompliance. If a recipient materially fails to comply with the terms and conditions of an award, whether stated in a Federal statute, regulation, assurance, application, or notice of award, the grants officer may, in addition to imposing any of the special conditions outlined in § 34.4, take one or more of the following actions, as appropriate in the circumstances:
(1) Temporarily withhold cash payments pending correction of the deficiency by the recipient or more severe enforcement action by the grants officer and DoD Component.
(2) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance.
(3) Wholly or partly suspend or terminate the current award. In the case of termination, the recipient will be reimbursed for allowable costs incurred prior to termination, with the possible exception of those for activities and actions described in paragraph (a)(2) of this section.
(4) Withhold further awards for the project or program.
(5) Take other remedies that may be legally available.
(b) Hearings and appeals. In taking an enforcement action, the grants officer and DoD Component shall provide the recipient an opportunity for hearing, appeal, or other administrative proceeding to which the recipient is entitled under any statute or regulation applicable to the action involved (see § 34.53 and 32 CFR 22.815).
(c) Effects of suspension and termination. Costs of a recipient resulting from obligations incurred by the recipient during a suspension or after termination of an award are not allowable unless the grants officer expressly authorizes them in the notice of suspension or termination or subsequently. Other recipient costs during suspension or after termination which are necessary and not reasonably avoidable are allowable if the costs:
(1) Result from obligations which were properly incurred by the recipient before the effective date of suspension or termination, are not in anticipation of it, and in the case of a termination, are noncancellable; and
(2) Would be allowable if the award were not suspended or expired normally at the end of the funding period in which the termination takes effect.
(d) Relationship to debarment and suspension. The enforcement remedies identified in this section, including suspension and termination, do not preclude a recipient from being subject to debarment and suspension under 2 CFR part 1125.
§ 34.53 Disputes and appeals.
Recipients have the right to appeal certain decisions by grants officers. In resolving such issues, DoD policy is to use Alternative Dispute Resolution (ADR) techniques, to the maximum practicable extent. See 32 CFR 22.815 for standards for DoD Components’ dispute resolution and formal, administrative appeal procedures.
Subpart C—After-the-Award Requirements
§ 34.60 Purpose.
Sections 34.61 through 34.63 contain procedures for closeout and for subsequent disallowances and adjustments.
§ 34.61 Closeout procedures.
(a) The cognizant grants officer shall, at least six months prior to the expiration date of the award, contact the recipient to establish:
(1) All steps needed to close out the award, including submission of financial and performance reports, liquidation of obligations, and decisions on property disposition.
(2) A schedule for completing those steps.
(b) The following provisions shall apply to the closeout:
(1) The responsible grants officer and payment office shall expedite completion of steps needed to close out awards and make prompt, final payments to a recipient for allowable reimbursable costs under the award being closed out.
(2) The recipient shall promptly refund any unobligated balances of cash that the DoD Component has advanced or paid and that is not authorized to be retained by the recipient for use in other projects. For unreturned amounts that become delinquent debts, see 32 CFR 22.820.
(3) When authorized by the terms and conditions of the award, the grants officer shall make a settlement for any upward or downward adjustments to the Federal share of costs after closeout reports are received.
(4) The recipient shall account for any real property and personal property acquired with Federal funds or received from the Federal Government in accordance with §§ 34.21 through 34.25.
(5) If a final audit is required and has not been performed prior to the closeout of an award, the DoD Component shall retain the right to recover an appropriate amount after fully considering the recommendations on disallowed costs resulting from the final audit.
§ 34.62 Subsequent adjustments and continuing responsibilities.
(a) The closeout of an award does not affect any of the following:
(1) The right of the Department of Defense to disallow costs and recover funds on the basis of a later audit or other review.
(2) The obligation of the recipient to return any funds due as a result of later refunds, corrections, or other transactions.
(3) Audit requirements in § 34.16.
(4) Property management requirements in §§ 34.21 through 34.25.
(5) Records retention as required in § 34.42.
(b) After closeout of an award, a relationship created under an award may be modified or ended in whole or in part with the consent of the grants officer and the recipient, provided the responsibilities of the recipient referred to in § 34.61(a), including those for property management as applicable, are considered and provisions made for continuing responsibilities of the recipient, as appropriate.
§ 34.63 Collection of amounts due.
Any funds paid to a recipient in excess of the amount to which the recipient is finally determined to be entitled under the terms and conditions of the award constitute a debt to the Federal Government. Procedures for issuing the demand for payment and pursuing administrative offset and other remedies are described in 32 CFR 22.820.
Appendix A to Part 34—Contract Provisions
All contracts awarded by a recipient, including those for amounts less than the simplified acquisition threshold, shall contain the following provisions as applicable:
1. Equal Employment Opportunity—All contracts shall contain a provision requiring compliance with E.O. 11246 (3 CFR, 1964-1965 Comp., p. 339), “Equal Employment Opportunity,” as amended by E.O. 11375 (3 CFR, 1966-1970 Comp., p. 684), “Amending Executive Order 11246 Relating to Equal Employment Opportunity,” and as supplemented by regulations at 41 CFR chapter 60, “Office of Federal Contract Compliance Programs, Equal Employment Opportunity, Department of Labor.”
2. Copeland “Anti-Kickback” Act (18 U.S.C. 874 and 40 U.S.C. 3145)—All contracts and subawards in excess of $2000 for construction or repair awarded by recipients and subrecipients shall include a provision for compliance with the Copeland “Anti-Kickback” Act (18 U.S.C. 874), as supplemented by Department of Labor regulations (29 CFR part 3, “Contractors and Subcontractors on Public Building or Public Work Financed in Whole or in Part by Loans or Grants from the United States”). The Act provides that each contractor or subrecipient shall be prohibited from inducing, by any means, any person employed in the construction, completion, or repair of public work, to give up any part of the compensation to which he is otherwise entitled. The recipient shall report all suspected or reported violations to the responsible DoD Component.
3. Contract Work Hours and Safety Standards Act (40 U.S.C., chapter 37)—Where applicable, all contracts awarded by recipients in excess of $100,000 for construction and other purposes that involve the employment of mechanics or laborers shall include a provision for compliance with Sections 102 and 107 of the Contract Work Hours and Safety Standards Act (40 U.S.C., chapter 37), as supplemented by Department of Labor regulations (29 CFR part 5). Under Section 102 of the Act, each contractor shall be required to compute the wages of every mechanic and laborer on the basis of a standard work week of 40 hours. Work in excess of the standard work week is permissible provided that the worker is compensated at a rate of not less than 1
4. Rights to Inventions Made Under a Contract, Grant or Cooperative Agreement—Contracts, grants, or cooperative agreements for the performance of experimental, developmental, or research work shall provide for the rights of the Federal Government and the recipient in any resulting invention in accordance with 37 CFR part 401, “Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under Government Grants, Contracts and Cooperative Agreements.”
5. Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.), as amended—Contracts and subawards of amounts in excess of $150,000 shall contain a provision that requires the recipient to agree to comply with all applicable standards, orders or regulations issued pursuant to the Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water Pollution Control Act as amended (33 U.S.C. 1251 et seq.). Violations shall be reported to the responsible DoD Component and the Regional Office of the Environmental Protection Agency (EPA).
6. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)—Contractors who apply or bid for an award of $100,000 or more shall file the required certification. Each tier certifies to the tier above that it will not and has not used Federal appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee of any agency, a member of Congress, officer or employee of Congress, or an employee of a member of Congress in connection with obtaining any Federal contract, grant or any other award covered by 31 U.S.C. 1352. Each tier shall also disclose any lobbying with non-Federal funds that takes place in connection with obtaining any Federal award. Such disclosures are forwarded from tier to tier up to the recipient.
7. Debarment and Suspension (E.O.s 12549 and 12689)—A contract award with an amount expected to equal or exceed $25,000 and certain other contract awards (see 2 CFR 1125.220, which implements OMB guidance at 2 CFR 180.220) shall not be made to parties identified in the Exclusions area of the System for Award Management (SAM Exclusions) as being currently debarred, suspended, or otherwise excluded. This restriction is in accordance with the DoD adoption at 2 CFR part 1125 of the OMB guidance implementing E.O.s 12549 (3 CFR, 1986 Comp., p. 189) and 12689 (3 CFR, 1989 Comp., p. 235), “Debarment and Suspension.”
8. Wage Rate Requirements (Construction), formerly the Davis Bacon Act. When required by Federal program legislation, you must take the following actions with respect to each construction contract for more than $2,000 to be awarded using funding provided under this award:
a. Place in the solicitation under which the contract will be awarded a copy of the current prevailing wage determination issued by the Department of Labor;
b. Condition the decision to award the contract upon the contractor’s acceptance of that prevailing wage determination;
c. Include in the contract the clauses specified at 29 CFR 5.5(a) in Department of Labor regulations (29 CFR part 5, “Labor Standards Provisions Applicable to Contracts Governing Federally Financed and Assisted Construction”) to require the contractor’s compliance with the Wage Rate Requirements (Construction), as amended (40 U.S.C. 3141-44, 3146, and 3147); and
d. Report all suspected or reported violations to the award administration office identified in this award.
9. Fly America requirements. In each contract under which funds provided under this award might be used to participate in costs of international air travel or transportation for people or property, you must include a clause to require the contractor to:
a. Comply with the International Air Transportation Fair Competitive Practices Act of 1974 (49 U.S.C. 40118, also known as the “Fly America” Act), as implemented by the General Services Administration at 41 CFR 301-10.131 through 301-10.143, which provides that U.S Government financed international air travel and transportation of personal effects or property must use a U.S. Flag air carrier or be performed under a cost sharing arrangement with a U.S. carrier, if such service is available; and
b. Include the requirements of the Fly America Act in all subcontracts that might involve international air transportation.
10. Cargo preference for United States flag vessels. In each contract under which equipment, material, or commodities may be shipped by oceangoing vessels, you must include the clause specified in Department of Transportation regulations at 46 CFR 381.7(b) to require that at least 50 percent of equipment, materials or commodities purchased or otherwise obtained with Federal funds under this award, and transported by ocean vessel, be transported on privately owned U.S. flag commercial vessels, if available.
PART 37—TECHNOLOGY INVESTMENT AGREEMENTS
Subpart A—General
§ 37.100 What does this part do?
This part establishes uniform policies and procedures for the DoD Components’ award and administration of technology investment agreements (TIAs).
No, this part covers only TIAs, some of which use the authority of 10 U.S.C. 2371 (see appendix B to this part). This part does not cover assistance instruments other than TIAs that use the authority of 10 U.S.C. 2371. It also does not cover acquisition agreements for prototype projects that use 10 U.S.C. 2371 authority augmented by the authority in section 845 of Public Law 103-160, as amended.
§ 37.110 What type of instruments are technology investment agreements (TIAs)?
TIAs are assistance instruments used to stimulate or support research. As discussed in appendix B to this part, a TIA may be either a kind of cooperative agreement or a type of assistance transaction other than a grant or cooperative agreement.
§ 37.115 For what purposes are TIAs used?
The ultimate goal for using TIAs, like other assistance instruments used in defense research programs, is to foster the best technologies for future defense needs. TIAs differ from and complement other assistance instruments available to agreements officers, in that TIAs address the goal by fostering civil-military integration (see appendix A to this part). TIAs therefore are designed to:
(a) Reduce barriers to commercial firms’ participation in defense research, to give the Department of Defense (DoD) access to the broadest possible technology and industrial base.
(b) Promote new relationships among performers in both the defense and commercial sectors of that technology and industrial base.
(c) Stimulate performers to develop, use, and disseminate improved practices.
§ 37.120 Can my organization award or administer TIAs?
Your office may award or administer TIAs if it has a delegation of the authorities in 10 U.S.C. 2371, as well as 10 U.S.C. 2358. If your office is in a Military Department, it must have a delegation of the authority of the Secretary of that Military Department under those statutes. If your office is in a Defense Agency, it must have a delegation of the authority of the Secretary of Defense under 10 U.S.C. 2358 and 2371. Your office needs those authorities to be able to:
(a) Enter into cooperative agreements to stimulate or support research, using the authority of 10 U.S.C. 2358, as well as assistance transactions other than grants or cooperative agreements, using the authority of 10 U.S.C. 2371. The reason that both authorities are needed is that a TIA, depending upon its patent rights provision (see appendix B to this part), may be either a cooperative agreement or a type of assistance transaction other than a grant or cooperative agreement.
(b) Recover funds from a recipient and reuse the funds for program purposes, as authorized by 10 U.S.C. 2371 and described in § 37.580.
(c) Exempt certain information received from proposers from disclosure under the Freedom of Information Act, as authorized by 10 U.S.C. 2371 and described in § 37.420.
(a) You must have specific authorization to award or administer TIAs. Being authorized to award or administer grants and cooperative agreements is not sufficient; a grants officer is an agreements officer only if the statement of appointment also authorizes the award or administration of TIAs.
(b) You receive that authorization in the same way that you receive authority to award other assistance instruments, as described in 32 CFR 21.425 and 21.435 through 21.445.
§ 37.130 Which other parts of the DoD Grant and Agreement Regulations apply to TIAs?
(a) TIAs are explicitly covered in this part and part 21 of the DoD Grant and Agreement Regulations (DoDGARs). Part 21 (32 CFR part 21) addresses deviation procedures and other general matters that relate to the DoDGARs, to DoD Components’ authorities and responsibilities for assistance instruments, and to requirements for reporting information about assistance awards.
(b) Two additional parts of the DoDGARs apply to TIAs, although they do not mention TIAs explicitly. They are:
(1) Part 1125 (2 CFR part 1125) on nonprocurement debarment and suspension, which applies because it covers nonprocurement instruments in general;
(2) Part 26 (32 CFR part 26), on drug-free workplace requirements, which applies because it covers financial assistance in general; and
(3) Part 28 (32 CFR part 28), on lobbying restrictions, which applies by law (31 U.S.C. 1352) to TIAs that are cooperative agreements and as a matter of DoD policy to all other TIAs.
(c) Portions of other DoDGARs parts apply to TIAs only as cited by reference in this part.
Subpart B—Appropriate Use of Technology Investment Agreements
§ 37.200 What are my responsibilities as an agreements officer for ensuring the appropriate use of TIAs?
You must ensure that you use TIAs only in appropriate situations. To do so, you must conclude that the use of a TIA is justified based on:
(a) The nature of the project, as discussed in § 37.205;
(b) The type of recipient, addressed in § 37.210;
(c) The recipient’s commitment and cost sharing, as described in § 37.215;
(d) The degree of involvement of the Government program official, as discussed in § 37.220; and
(e) Your judgment that the use of a TIA could benefit defense research objectives in ways that likely would not happen if another type of assistance instrument were used. Your answers to the four questions in § 37.225 should be the basis for your judgment.
§ 37.205 What judgments must I make about the nature of the project?
You must:
(a) Conclude that the principal purpose of the project is stimulation or support of research (i.e., assistance), rather than acquiring goods or services for the benefit of the Government (i.e., acquisition);
(b) Decide that the basic, applied, or advanced research project is relevant to the policy objective of civil-military integration (see appendix A of this part); and
(c) Ensure that, to the maximum extent practicable, any TIA that uses the authority of 10 U.S.C. 2371 (see appendix B of this part) does not support research that duplicates other research being conducted under existing programs carried out by the Department of Defense. This is a statutory requirement of 10 U.S.C. 2371.
(d) When your TIA is a type of assistance transaction other than a grant or cooperative agreement, satisfy the condition in 10 U.S.C. 2371 to judge that the use of a standard grant or cooperative agreement for the research project is not feasible or appropriate. As discussed in appendix B to this part:
(1) This situation arises if your TIA includes a patent provision that is less restrictive than is possible under the Bayh-Dole statute (because the patent provision is what distinguishes a TIA that is a cooperative agreement from a TIA that is an assistance transaction other than a grant or cooperative agreement).
(2) You satisfy the requirement to judge that a standard cooperative agreement is not feasible or appropriate when you judge that execution of the research project warrants a less restrictive patent provision than is possible under Bayh-Dole.
§ 37.210 To what types of recipients may I award a TIA?
(a) As a matter of DoD policy, you may award a TIA only when one or more for-profit firms are to be involved either in the:
(1) Performance of the research project; or
(2) The commercial application of the research results. In that case, you must determine that the nonprofit performer has at least a tentative agreement with specific for-profit partners who plan on being involved when there are results to transition. You should review the agreement between the nonprofit and for-profit partners, because the for-profit partners’ involvement is the basis for using a TIA rather than another type of assistance instrument.
(b) Consistent with the goals of civil-military integration, TIAs are most appropriate when one or more commercial firms (as defined at § 37.1250) are to be involved in the project.
(c) You are encouraged to make awards to consortia (a consortium may include one or more for-profit firms, as well as State or local government agencies, institutions of higher education, or other nonprofit organizations). The reasons are that:
(1) When multiple performers are participating as a consortium, they are more equal partners in the research performance than usually is the case with a prime recipient and subawards. All of them therefore are more likely to be directly involved in developing and revising plans for the research effort, reviewing technical progress, and overseeing financial and other business matters. That feature makes consortia well suited to building new relationships among performers in the defense and commercial sectors of the technology and industrial base, a principal objective for the use of TIAs.
(2) In addition, interactions among the participants within a consortium potentially provide a self-governance mechanism. The potential for additional self-governance is particularly good when a consortium includes multiple for-profit participants that normally are competitors within an industry.
(d) TIAs also may be used for carrying out research performed by single firms or multiple performers in prime award-subaward relationships. In awarding TIAs in those cases, however, you should consider providing for greater involvement of the program official or a way to increase self-governance (e.g., a prime award with multiple subawards arranged so as to give the subrecipients more insight into and authority and responsibility for programmatic and business aspects of the overall project than they usually have).
§ 37.215 What must I conclude about the recipient’s commitment and cost sharing?
(a) You should judge that the recipient has a strong commitment to and self-interest in the success of the project. You should find evidence of that commitment and interest in the proposal, in the recipient’s management plan, or through other means. A recipient’s self-interest might be driven, for example, by a research project’s potential for fostering technology to be incorporated into products and processes for the commercial marketplace.
(b) You must seek cost sharing. The purpose of cost share is to ensure that the recipient incurs real risk that gives it a vested interest in the project’s success; the willingness to commit to meaningful cost sharing therefore is one good indicator of a recipient’s self-interest. The requirements are that:
(1) To the maximum extent practicable, the non-Federal parties carrying out a research project under a TIA are to provide at least half of the costs of the project. Obtaining this cost sharing, to the maximum extent practicable, is a statutory condition for any TIA under the authority of 10 U.S.C. 2371, and is a matter of DoD policy for all other TIAs.
(2) The parties must provide the cost sharing from non-Federal resources that are available to them unless there is specific authority to use other Federal resources for that purpose (see § 37.530(f)).
(c) You may consider whether cost sharing is impracticable in a given case, unless there is a non-waivable, statutory requirement for cost sharing that applies to the particular program under which the award is to be made. Before deciding that cost sharing is impracticable, you should carefully consider whether there are other factors that demonstrate the recipient’s self-interest in the success of the current project.
§ 37.220 How involved should the Government program official be in the project?
(a) TIAs are used to carry out cooperative relationships between the Federal Government and the recipient, which requires a greater level of involvement of the Government program official in the execution of the research than the usual oversight of a research grant or procurement contract. For example, program officials will participate in recipients’ periodic reviews of research progress and will be substantially involved with the recipients in the resulting revisions of plans for future effort. That increased programmatic involvement before and during program execution with a TIA can reduce the need for some Federal financial requirements that are problematic for commercial firms.
(b) Some aspects of their involvement require program officials to have greater knowledge about and participation in business matters that traditionally would be your exclusive responsibility as the agreements officer. TIAs therefore also require closer cooperation between program officials and you, as the one who decides business matters.
§ 37.225 What judgment must I make about the benefits of using a TIA?
Before deciding that a TIA is appropriate, you also must judge that using a TIA could benefit defense research objectives in ways that likely would not happen if another type of assistance instrument were used (e.g., a cooperative agreement subject to all of the requirements of 32 CFR part 34). You, in conjunction with Government program officials, must consider the questions in paragraphs (a) through (d) of this section, to help identify the benefits that may justify using a TIA and reducing some of the usual requirements. In accordance with § 37.1020, you must document your answers to these questions in the award file. Note that you must give full concise answers only to questions that relate to the benefits that you perceive for using the TIA, rather than another type of funding instrument, for the particular research project. A simple “no” or “not applicable” is a sufficient response for other questions. The questions are:
(a) Will the use of a TIA permit the involvement in the research of any commercial firms or business units of firms that would not otherwise participate in the project? If so:
(1) What are the expected benefits of those firms’ or divisions’ participation (e.g., is there a specific technology that could be better, more readily available, or less expensive)?
(2) Why would they not participate if an instrument other than a TIA were used? You should identify specific provisions of the TIA or features of the TIA award process that enable their participation.
(b) Will the use of a TIA allow the creation of new relationships among participants at the prime or subtier levels, among business units of the same firm, or between non-Federal participants and the Federal Government that will help the DoD get better technology in the future? If so:
(1) Why do these new relationships have the potential for helping the DoD get technology in the future that is better, more affordable, or more readily available?
(2) Are there provisions of the TIA or features of the TIA award process that enable these relationships to form? If so, you should be able to identify specifically what they are. If not, you should be able to explain specifically why you think that the relationships could not be created if an assistance instrument other than a TIA were used.
(c) Will the use of a TIA allow firms or business units of firms that traditionally accept Government awards to use new business practices in the execution of the research that will help us get better technology, help us get new technology more quickly or less expensively, or facilitate partnering with commercial firms? If so:
(1) What specific benefits will the DoD potentially get from the use of these new practices? You should be able to explain specifically why you foresee a potential for those benefits.
(2) Are there provisions of the TIA or features of the TIA award process that enable the use of the new practices? If so, you should be able to identify those provisions or features and explain why you think that the practices could not be used if the award were made using an assistance instrument other than a TIA.
(d) Are there any other benefits of the use of a TIA that could help the Department of Defense better meet its objectives in carrying out the research project? If so, you should be able to identify specifically what they are, how they can help meet defense objectives, what features of the TIA or award process enable the DoD to realize them, and why the benefits likely would not be realized if an assistance instrument other than a TIA were used.
§ 37.230 May I use a TIA if a participant is to receive fee or profit?
In accordance with 32 CFR 22.205(b), you may not use a TIA if any participant is to receive fee or profit. Note that this policy extends to all performers of the research project carried out under the TIA, including any subawards for substantive program performance, but it does not preclude participants’ or subrecipients’ payment of reasonable fee or profit when making purchases from suppliers of goods (e.g., supplies and equipment) or services needed to carry out the research.
Subpart C—Expenditure-Based and Fixed-Support Technology Investment Agreements
§ 37.300 What is the difference between an expenditure-based and fixed-support TIA?
The fundamental difference between an expenditure-based and fixed-support TIA is that:
(a) For an expenditure-based TIA, the amounts of interim payments or the total amount ultimately paid to the recipient are based on the amounts the recipient expends on project costs. If a recipient completes the project specified at the time of award before it expends all of the agreed-upon Federal funding and recipient cost sharing, the Federal Government may recover its share of the unexpended balance of funds or, by mutual agreement with the recipient, amend the agreement to expand the scope of the research project. An expenditure-based TIA therefore is analogous to a cost-type procurement contract or grant.
(b) For a fixed-support TIA, the amount of assistance established at the time of award is not meant to be adjusted later if the research project is carried out to completion. In that sense, a fixed-support TIA is somewhat analogous to a fixed-price procurement contract (although “price,” a concept appropriate to a procurement contract for buying a good or service, is not appropriate for a TIA or other assistance instrument for stimulation or support of a project).
§ 37.305 When may I use a fixed-support TIA?
You may use a fixed-support TIA if:
(a) The agreement is to support or stimulate research with outcomes that are well defined, observable, and verifiable;
(b) You can reasonably estimate the resources required to achieve those outcomes well enough to ensure the desired level of cost sharing (see example in § 37.560(b)); and
(c) Your TIA does not require a specific amount or percentage of recipient cost sharing. In cases where the agreement does require a specific amount or percentage of cost sharing, a fixed-support TIA is not practicable because the agreement has to specify cost principles or standards for costs that may be charged to the project; require the recipient to track the costs of the project; and provide access for audit to allow verification of the recipient’s compliance with the mandatory cost sharing. You therefore must use an expenditure-based TIA if you:
(1) Have a non-waivable requirement (e.g., in statute) for a specific amount or percentage of recipient cost sharing; or
(2) Have otherwise elected to include in the TIA a requirement for a specific amount or percentage of cost sharing.
§ 37.310 When would I use an expenditure-based TIA?
In general, you must use an expenditure-based TIA under conditions other than those described in § 37.305. Reasons for any exceptions to this general rule must be documented in the award file and must be consistent with the policy in § 37.230 that precludes payment of fee or profit to participants.
§ 37.315 What are the advantages of using a fixed-support TIA?
In situations where the use of fixed-support TIAs is permissible (see §§ 37.305 and 37.310), their use may encourage some commercial firms’ participation in the research. With a fixed-support TIA, you can eliminate or reduce some post-award requirements that sometimes are cited as disincentives for those firms to participate. For example, a fixed-support TIA need not:
(a) Specify minimum standards for the recipient’s financial management system.
(b) Specify cost principles or standards stating the types of costs the recipient may charge to the project.
(c) Provide for financial audits by Federal auditors or independent public accountants of the recipient’s books and records.
(d) Set minimum standards for the recipient’s purchasing system.
(e) Require the recipient to prepare financial reports for submission to the Federal Government.
Subpart D—Competition Phase
§ 37.400 Must I use competitive procedures to award TIAs?
DoD policy is to award TIAs using merit-based, competitive procedures, as described in 32 CFR 22.315:
(a) In every case where required by statute; and
(b) To the maximum extent practicable in all other cases.
§ 37.405 What must my announcement or solicitation include?
Your announcement, to be considered as part of a competitive procedure, must include the basic information described in 32 CFR 22.315(a). Additional elements for you to consider in the case of a program that may use TIAs are described in §§ 37.410 through 37.420.
§ 37.410 Should my announcement or solicitation state that TIAs may be awarded?
Yes, once you consider the factors described in subpart B of this part and decide that TIAs are among the types of instruments that you may award pursuant to a solicitation, it is important for you to state that fact in the solicitation. You also should state that TIAs are more flexible than traditional Government funding instruments and that provisions are negotiable in areas such as audits and intellectual property rights that may cause concern for commercial firms. Doing so should increase the likelihood that commercial firms will be willing to submit proposals.
§ 37.415 Should I address cost sharing in the announcement or solicitation?
To help ensure a competitive process that is fair and equitable to all potential proposers, you should state clearly in the solicitation:
(a) That, to the maximum extent practicable, the non-Federal parties carrying out a research project under a TIA are to provide at least half of the costs of the project (see § 37.215(b)).
(b) The types of cost sharing that are acceptable;
(c) How any in-kind contributions will be valued, in accordance with §§ 37.530 through 37.555; and
(d) Whether you will give any consideration to alternative approaches a proposer may offer to demonstrate its strong commitment to and self-interest in the project’s success, in accordance with § 37.215.
§ 37.420 Should I tell proposers that we will not disclose information that they submit?
Your solicitation should tell potential proposers that:
(a) For all TIAs, information described in paragraph (b) of this section is exempt from disclosure requirements of the Freedom of Information Act (FOIA)(codified at 5 U.S.C. 552) for a period of five years after the date on which the DoD Component receives the information from them.
(b) As provided in 10 U.S.C. 2371, disclosure is not required, and may not be compelled, under FOIA during that period if:
(1) A proposer submits the information in a competitive or noncompetitive process that could result in their receiving a cooperative agreement for basic, applied, or advanced research under the authority of 10 U.S.C. 2358 or any other type of transaction authorized by 10 U.S.C. 2371 (as explained in appendix B to this part, that includes all TIAs); and
(2) The type of information is among the following types that are exempt:
(i) Proposals, proposal abstracts, and supporting documents; and
(ii) Business plans and technical information submitted on a confidential basis.
(c) If proposers desire to protect business plans and technical information for five years from FOIA disclosure requirements, they must mark them with a legend identifying them as documents submitted on a confidential basis. After the five-year period, information may be protected for longer periods if it meets any of the criteria in 5 U.S.C. 552(b) (as implemented by the DoD in subpart C of 32 CFR part 286) for exemption from FOIA disclosure requirements.
Subpart E—Pre-Award Business Evaluation
§ 37.500 What must my pre-award business evaluation address?
(a) You must determine the qualification of the recipient, as described in §§ 37.510 and 37.515.
(b) As the business expert working with the program official, you also must address the financial aspects of the proposed agreement. You must:
(1) Determine that the total amount of funding for the proposed effort is reasonable, as addressed in § 37.520.
(2) Assess the value and determine the reasonableness of the recipient’s proposed cost sharing contribution, as discussed in §§ 37.525 through 37.555.
(3) If you are contemplating the use of a fixed-support rather than expenditure-based TIA, ensure that its use is justified, as explained in §§ 37.560 and 37.565.
(4) Address issues of inconsistent cost accounting by traditional Government contractors, should they arise, as noted in § 37.570.
(5) Determine amounts for milestone payments, if you use them, as discussed in § 37.575.
§ 37.505 What resources are available to assist me during the pre-award business evaluation?
Administrative agreements officers of the Defense Contract Management Agency and the Office of Naval Research can share lessons learned from administering other TIAs. Program officials can be a source of information when you are determining the reasonableness of proposed funding (e.g., on labor rates, as discussed in § 37.520) or establishing observable and verifiable technical milestones for payments (see § 37.575). Auditors at the Defense Contract Audit Agency can act in an advisory capacity to help you determine the reasonableness of proposed amounts, including values of in-kind contributions toward cost sharing.
Recipient Qualification
§ 37.510 What are my responsibilities for determining that a recipient is qualified?
Prior to award of a TIA, your responsibilities for determining that the recipient is qualified are the same as those of a grants officer who is awarding a grant or cooperative agreement. Those responsibilities are described in subpart D of 32 CFR part 22. When the recipient is a consortium that is not formally incorporated, you have the additional responsibility described in § 37.515.
§ 37.515 Must I do anything additional to determine the qualification of a consortium?
(a) When the prospective recipient of a TIA is a consortium that is not formally incorporated, your determination that the recipient meets the standard at 32 CFR 22.415(a) requires that you, in consultation with legal counsel, review the management plan in the consortium’s collaboration agreement. The purpose of your review is to ensure that the management plan is sound and that it adequately addresses the elements necessary for an effective working relationship among the consortium members. An effective working relationship is essential to increase the research project’s chances of success.
(b) The collaboration agreement, commonly referred to as the articles of collaboration, is the document that sets out the rights and responsibilities of each consortium member. It binds the individual consortium members together, whereas the TIA binds the Government and the consortium as a group (or the Government and a consortium member on behalf of the consortium, as explained in § 37.1015). The document should discuss, among other things, the consortium’s:
(1) Management structure.
(2) Method of making payments to consortium members.
(3) Means of ensuring and overseeing members’ efforts on the project.
(4) Provisions for members’ cost sharing contributions.
(5) Provisions for ownership and rights in intellectual property developed previously or under the agreement.
Total Funding
§ 37.520 What is my responsibility for determining that the total project funding is reasonable?
In cooperation with the program official, you must assess the reasonableness of the total estimated budget to perform the research that will be supported by the agreement. Additional guidance follows for:
(a) Labor. Much of the budget likely will involve direct labor and associated indirect costs, which may be represented together as a “loaded” labor rate. The program official is an essential advisor on reasonableness of the overall level of effort and its composition by labor category. You also may rely on your experience with other awards as the basis for determining reasonableness. If you have any unresolved questions, two of the ways that you might find helpful in establishing reasonableness are to:
(1) Consult the administrative agreements officers or auditors identified in § 37.505.
(2) Compare loaded labor rates of for-profit firms that do not have expenditure-based Federal procurement contracts or assistance awards with a standard or average for the particular industry. Note that the program official may have knowledge about customary levels of direct labor charges in the particular industry that is involved. You may be able to compare associated indirect charges with Government-approved indirect cost rates that exist for many nonprofit and for-profit organizations that have Federal procurement contracts or assistance awards (note the requirement in § 37.630 for a for-profit participant to use Federally approved provisional indirect cost rates, if it has them).
(b) Real property and equipment. In almost all cases, the project costs may include only depreciation or use charges for real property and equipment of for-profit participants, in accordance with § 37.685. Remember that the budget for an expenditure-based TIA may not include depreciation of a participant’s property as a direct cost of the project if that participant’s practice is to charge the depreciation of that type of property as an indirect cost, as many organizations do.
Cost Sharing
§ 37.525 What is my responsibility for determining the value and reasonableness of the recipient’s cost sharing contribution?
You must:
(a) Determine that the recipient’s cost sharing contributions meet the criteria for cost sharing and determine values for them, in accordance with §§ 37.530 through 37.555. In doing so, you must:
(1) Ensure that there are affirmative statements from any third parties identified as sources of cash contributions.
(2) Include in the award file an evaluation that documents how you determined the values of the recipient’s contributions to the funding of the project.
(b) Judge that the recipient’s cost sharing contribution, as a percentage of the total budget, is reasonable. To the maximum extent practicable, the recipient must provide at least half of the costs of the project, in accordance with § 37.215.
§ 37.530 What criteria do I use in deciding whether to accept a recipient’s cost sharing?
You may accept any cash or in-kind contributions that meet all of the following criteria:
(a) In your judgment, they represent meaningful cost sharing that demonstrates the recipient’s commitment to the success of the research project. Cash contributions clearly demonstrate commitment and they are strongly preferred over in-kind contributions.
(b) They are necessary and reasonable for accomplishment of the research project’s objectives.
(c) They are costs that may be charged to the project under § 37.625 and § 37.635, as applicable to the participant making the contribution.
(d) They are verifiable from the recipient’s records.
(e) They are not included as cost sharing contributions for any other Federal award.
(f) They are not paid by the Federal Government under another award, except:
(1) Costs that are authorized by Federal statute to be used for cost sharing; or
(2) Independent research and development (IR&D) costs, as described at 32 CFR 34.13(a)(5)(ii), that meet all of the criteria in paragraphs (a) through (e) of this section. IR&D is acceptable as cost sharing, even though it may be reimbursed by the Government through other awards. It is standard business practice for all for-profit firms, including commercial firms, to recover their research and development (R&D) costs (which for Federal procurement contracts is recovered as IR&D) through prices charged to their customers. Thus, the cost principles at 48 CFR part 31 allow a for-profit firm that has expenditure-based, Federal procurement contracts to recover through those procurement contracts the allocable portion of its R&D costs associated with a technology investment agreement.
You rarely should accept values for cost sharing contributions of real property or equipment that are in excess of depreciation or reasonable use charges, as discussed in § 37.685 for for-profit participants. You may accept the full value of a donated capital asset if the real property or equipment is to be dedicated to the project and you expect that it will have a fair market value that is less than $5,000 at the project’s end. In those cases, you should value the donation at the lesser of:
(a) The value of the property as shown in the recipient’s accounting records (i.e., purchase price less accumulated depreciation); or
(b) The current fair market value. You may accept the use of any reasonable basis for determining the fair market value of the property. If there is a justification to do so, you may accept the current fair market value even if it exceeds the value in the recipient’s records.
§ 37.540 May I accept fully depreciated real property or equipment as cost sharing?
You should limit the value of any contribution of a fully depreciated asset to a reasonable use charge. In determining what is reasonable, you must consider:
(a) The original cost of the asset;
(b) Its estimated remaining useful life at the time of your negotiations;
(c) The effect of any increased maintenance charges or decreased performance due to age; and
(d) The amount of depreciation that the participant previously charged to Federal awards.
§ 37.545 May I accept costs of prior research as cost sharing?
No, you may not count any participant’s costs of prior research as a cost sharing contribution. Only the additional resources that the recipient will provide to carry out the current project (which may include pre-award costs for the current project, as described in § 37.830) are to be counted.
§ 37.550 May I accept intellectual property as cost sharing?
(a) In most instances, you should not count costs of patents and other intellectual property (e.g., copyrighted material, including software) as cost sharing, because:
(1) It is difficult to assign values to these intangible contributions;
(2) Their value usually is a manifestation of prior research costs, which are not allowed as cost share under § 37.545; and
(3) Contributions of intellectual property rights generally do not represent the same cost of lost opportunity to a recipient as contributions of cash or tangible assets. The purpose of cost share is to ensure that the recipient incurs real risk that gives it a vested interest in the project’s success.
(b) You may include costs associated with intellectual property if the costs are based on sound estimates of market value of the contribution. For example, a for-profit firm may offer the use of commercially available software for which there is an established license fee for use of the product. The costs of the development of the software would not be a reasonable basis for valuing its use.
§ 37.555 How do I value a recipient’s other contributions?
For types of participant contributions other than those addressed in §§ 37.535 through 37.550, the general rule is that you are to value each contribution consistently with the cost principles or standards in § 37.625 and § 37.635 that apply to the participant making the contribution. When valuing services and property donated by parties other than the participants, you may use as guidance the provisions of 32 CFR 34.13(b)(2) through (5).
Fixed-Support or Expenditure-Based Approach
§ 37.560 Must I be able to estimate project expenditures precisely in order to justify use of a fixed-support TIA?
(a) To use a fixed-support TIA, rather than an expenditure-based TIA, you must have confidence in your estimate of the expenditures required to achieve well-defined outcomes. Therefore, you must work carefully with program officials to select outcomes that, when the recipient achieves them, are reliable indicators of the amount of effort the recipient expended. However, your estimate of the required expenditures need not be a precise dollar amount, as illustrated by the example in paragraph (b) of this section, if:
(1) The recipient is contributing a substantial share of the costs of achieving the outcomes, which must meet the criteria in § 37.305(a); and
(2) You are confident that the costs of achieving the outcomes will be at least a minimum amount that you can specify and the recipient is willing to accept the possibility that its cost sharing percentage ultimately will be higher if the costs exceed that minimum amount.
(b) To illustrate the approach, consider a project for which you are confident that the recipient will have to expend at least $800,000 to achieve the specified outcomes. You must determine, in conjunction with program officials, the minimum level of recipient cost sharing that you want to negotiate, based on the circumstances, to demonstrate the recipient’s commitment to the success of the project. For purposes of this illustration, let that minimum recipient cost sharing be 40% of the total project costs. In that case, the Federal share should be no more than 60% and you could set a fixed level of Federal support at $480,000 (60% of $800,000). With that fixed level of Federal support, the recipient would be responsible for the balance of the costs needed to complete the project.
(c) Note, however, that the level of recipient cost sharing you negotiate is to be based solely on the level needed to demonstrate the recipient’s commitment. You may not use a shortage of Federal Government funding for the program as a reason to try to persuade a recipient to accept a fixed-support TIA, rather than an expenditure-based instrument, or to accept responsibility for a greater share of the total project costs than it otherwise is willing to offer. If you lack sufficient funding to provide an appropriate Federal Government share for the entire project, you instead should rescope the effort covered by the agreement to match the available funding.
§ 37.565 May I use a hybrid instrument that provides fixed support for only a portion of a project?
Yes, for a research project that is to be carried out by a number of participants, you may award a TIA that provides for some participants to perform under fixed-support arrangements and others to perform under expenditure-based arrangements. This approach may be useful, for example, if a commercial firm that is a participant will not accept an agreement with all of the post-award requirements of an expenditure-based award. Before using a fixed-support arrangement for that firm’s portion of the project, you must judge that it meets the criteria in § 37.305.
Accounting, Payments, and Recovery of Funds
(a) If a participant has Federal procurement contracts that are subject to the Cost Accounting Standards (CAS) in part 30 of the Federal Acquisition Regulation (FAR) and the associated FAR Appendix (48 CFR part 30 and 48 CFR 9903.201-1, respectively), you must alert the participant during the pre-award negotiations to the potential for a CAS violation, as well as the cognizant administrative contracting officer (ACO) for the participant’s procurement contracts, if you learn that the participant plans to account differently for its own share and the Federal Government’s share of project costs under the TIA. This may arise, for example, if a for-profit firm or other organization subject to the FAR cost principles in 48 CFR parts 31 and 231 proposes to charge:
(1) Its share of project costs as independent research and development (IR&D) costs to enable recovery of the costs through Federal Government procurement contracts, as allowed under the FAR cost principles; and
(2) The Federal Government’s share to the project, rather than as IR&D costs.
(b) The reason for alerting the participant and the ACO is that the inconsistent charging of the two shares could cause a noncompliance with Cost Accounting Standard (CAS) 402. Noncompliance with CAS 402 is a potential issue only for a participant that has CAS-covered Federal procurement contracts (note that CAS requirements do not apply to a for-profit participant’s TIAs).
(c) For for-profit participants with CAS-covered procurement contracts, the cognizant ACO in most cases will be an individual within the Defense Contract Management Agency (DCMA). You can identify a cognizant ACO at the DCMA by querying the contract administration team locator that matches contractors with their ACOs (currently on the World Wide Web at http://alerts.dcmdw.dcma.mil/support, a site that also can be accessed through the DCMA home page at http://www.dcma.mil).
§ 37.575 What are my responsibilities for determining milestone payment amounts?
(a) If you select the milestone payment method (see § 37.805), you must assess the reasonableness of the estimated amount for reaching each milestone. This assessment enables you to set the amount of each milestone payment to approximate the Federal share of the anticipated resource needs for carrying out that phase of the research effort.
(b) The Federal share at each milestone need not be the same as the Federal share of the total project. For example, you might deliberately set payment amounts with a larger Federal share for early milestones if a project involves a start-up company with limited resources.
(c) For an expenditure-based TIA, if you have minimum percentages that you want the recipient’s cost sharing to be at the milestones, you should indicate those percentages in the agreement or in separate instructions to the post-award administrative agreements officer. That will help the administrative agreements officer decide when a project’s expenditures have fallen too far below the original projections, requiring adjustments of future milestone payment amounts (see § 37.1105(c)).
(d) For fixed-support TIAs, the milestone payments should be associated with the well-defined, observable and verifiable technical outcomes (e.g., demonstrations, tests, or data analysis) that you establish for the project in accordance with §§ 37.305(a) and 37.560(a).
§ 37.580 What is recovery of funds and when should I consider including it in my TIA?
(a) Recovery of funds refers to the use of the authority in 10 U.S.C. 2371 to include a provision in certain types of agreements, including TIAs, that require a recipient to make payments to the Department of Defense or another Federal agency as a condition of the agreement. Recovery of funds is a good tool in the right circumstances, at the discretion of the agreements officer and the awarding organization, but its purpose is not to augment program budgets. It may be used to recover funds provided to a recipient through a TIA or another Federal procurement or assistance instrument, and the recovery should not exceed the amounts provided. Recovery of funds is distinct from program income, as described in § 37.835.
(b) In accordance with 10 U.S.C. 2371, as implemented by policy guidance from the Office of the Under Secretary of Defense (Comptroller), the payment amounts may be credited to an existing account of the Department of Defense and used for the same program purposes as other funds in that account.
(c) Before you use the authority to include a provision for recovery of funds, note that 10 U.S.C. 2371 requires you to judge that it would not be feasible or appropriate to use for the research project a standard grant or cooperative agreement (in this instance, a “standard cooperative agreement” means a cooperative agreement without a provision for recovery of funds). You satisfy that 10 U.S.C. 2371 requirement when you judge that execution of the research project warrants inclusion of a provision for recovery of funds.
Subpart F—Award Terms Affecting Participants’ Financial, Property, and Purchasing Systems
§ 37.600 Which administrative matters are covered in this subpart?
This subpart addresses “systemic” administrative matters that place requirements on the operation of a participant’s financial management, property management, or purchasing system. Each participant’s systems are organization-wide and do not vary with each agreement. Therefore, all TIAs should address systemic requirements in a uniform way for each type of participant organization.
§ 37.605 What is the general policy on participants’ financial, property, and purchasing systems?
The general policy for expenditure-based TIAs is to avoid requirements that would force participants to use different financial management, property management, and purchasing systems than they currently use for:
(a) Expenditure-based Federal procurement contracts and assistance awards in general, if they receive them; or
(b) Commercial business, if they have no expenditure-based Federal procurement contracts and assistance awards.
§ 37.610 Must I tell participants what requirements they are to flow down for subrecipients’ systems?
If it is an expenditure-based award, your TIA must require participants to flow down the same financial management, property management, and purchasing systems requirements to a subrecipient that would apply if the subrecipient were a participant. For example, a for-profit participant would flow down to a university subrecipient the requirements that apply to a university participant. Note that this policy applies to subawards for substantive performance of portions of the research project supported by the TIA, and not to participants’ purchases of goods or services needed to carry out the research.
Financial Matters
§ 37.615 What standards do I include for financial systems of for-profit firms?
(a) To avoid causing needless changes in participants’ financial management systems, your expenditure-based TIAs will make for-profit participants that currently perform under other expenditure-based Federal procurement contracts or assistance awards subject to the same standards for financial management systems that apply to those other awards. Therefore, if a for-profit participant has expenditure-based DoD assistance awards other than TIAs, your TIAs are to apply the standards in 32 CFR 34.11. You may grant an exception and allow a for-profit participant that has other expenditure-based Federal Government awards to use an alternative set of standards that meets the minimum criteria in paragraph (b) of this section, if there is a compelling programmatic or business reason to do so. For each case in which you grant an exception, you must document the reason in the award file.
(b) For an expenditure-based TIA, you are to allow and encourage each for-profit participant that does not currently perform under expenditure-based Federal procurement contracts or assistance awards (other than TIAs) to use its existing financial management system as long as the system, as a minimum:
(1) Complies with Generally Accepted Accounting Principles.
(2) Effectively controls all project funds, including Federal funds and any required cost share. The system must have complete, accurate, and current records that document the sources of funds and the purposes for which they are disbursed. It also must have procedures for ensuring that project funds are used only for purposes permitted by the agreement (see § 37.625).
(3) Includes, if advance payments are authorized under § 37.805, procedures to minimize the time elapsing between the payment of funds by the Government and the firm’s disbursement of the funds for program purposes.
§ 37.620 What financial management standards do I include for participants that are nonprofit?
So as not to force system changes for any State, local government, institution of higher education, or other nonprofit organization, your expenditure-based TIA’s requirements for the financial management system of any nonprofit participant are the same as those that apply to the participant’s other Federal assistance awards.
§ 37.625 What cost principles or standards do I require for for-profit participants?
(a) So as not to require any firm to needlessly change its cost-accounting system, your expenditure-based TIAs are to apply the Government cost principles in 48 CFR parts 31 and 231 to for-profit participants that currently perform under expenditure-based Federal procurement contracts or assistance awards (other than TIAs) and therefore have existing systems for identifying allowable costs under those principles. If there are programmatic or business reasons to do otherwise, you may grant an exception from this requirement and use alternative standards as long as the alternative satisfies the conditions described in paragraph (b) of this section; if you do so, you must document the reasons in your award file.
(b) For other for-profit participants, you may establish alternative standards in the agreement as long as that alternative provides, as a minimum, that Federal funds and funds counted as recipients’ cost sharing will be used only for costs that:
(1) A reasonable and prudent person would incur in carrying out the research project contemplated by the agreement. Generally, elements of cost that appropriately are charged are those identified with research and development activities under the Generally Accepted Accounting Principles (see Statement of Financial Accounting Standards Number 2, “Accounting for Research and Development Costs,” October 1974
(2) Are consistent with the purposes stated in the governing Congressional authorizations and appropriations. You are responsible for ensuring that provisions in the award document address any requirements that result from authorizations and appropriations.
§ 37.630 Must I require a for-profit firm to use Federally approved indirect cost rates?
In accordance with the general policy in § 37.605, you must require a for-profit participant that has Federally approved indirect cost rates for its Federal procurement contracts to use those rates to accumulate and report costs under an expenditure-based TIA. This includes both provisional and final rates that are approved up until the time that the TIA is closed out. You may grant an exception from this requirement if there are programmatic or business reasons to do otherwise (e.g., the participant offers you a lower rate). If you grant an exception, the participant must accumulate and report the costs using an accounting system and practices that it uses for other customers (e.g., its commercial customers). Also, you must document the reason for the exception in your award file.
§ 37.635 What cost principles do I require a nonprofit participant to use?
So as not to force financial system changes for any nonprofit participant, your expenditure-based TIA will provide that costs to be charged to the research project by any nonprofit participant must be determined to be allowable in accordance with:
(a) Subpart E of OMB guidance in 2 CFR part 200, if the participant is a State, local government, Indian tribe, institution of higher education, or nonprofit organization. In conformance with 2 CFR 200.401(c) of that OMB guidance, a nonprofit organization listed in appendix VIII to 2 CFR part 200 is subject to the cost principles in the Federal Acquisition Regulation (48 CFR subpart 31.2) and Defense Federal Acquisition Regulation Supplement (48 CFR subpart 231.2).
(b) The cost principles identified in appendix IX to the OMB guidance in 2 CFR part 200 (see 45 CFR part 75), if the participant is a hospital.
§ 37.640 Must I include a provision for audits of for-profit participants?
If your TIA is an expenditure-based award, you must include in it an audit provision that addresses, for each for-profit participant:
(a) Whether the for-profit participant must have periodic audits, in addition to any award-specific audits, as described in § 37.645. Note that the DCAA or the Office of the Inspector General, DoD (OIG, DoD), can provide advice on the types and scope of audits that may be needed in various circumstances.
(b) Whether the DCAA or an independent public accountant (IPA) will perform required audits, as discussed in § 37.650.
(c) How frequently any periodic audits are to be performed, addressed in § 37.655.
(d) Other matters described in § 37.660, such as audit coverage, allowability of audit costs, auditing standards, and remedies for noncompliance.
§ 37.645 Must I require periodic audits, as well as award-specific audits, of for-profit participants?
You need to consider requirements for both periodic audits and award-specific audits (as defined in § 37.1325 and § 37.1235, respectively). The way that your expenditure-based TIA addresses the two types of audits will vary, depending upon the type of for-profit participant.
(a) For for-profit participants that are audited by the DCAA or other Federal auditors, as described in §§ 37.650(b) and 37.655, you need not add specific requirements for periodic audits because the Federal audits should be sufficient to address whatever may be needed. Your inclusion in the TIA of the standard access-to-records provision for those for-profit participants, as discussed in § 37.915(a), gives the necessary access in the event that you or administrative agreements officers later need to request audits to address award-specific issues that arise.
(b) For each other for-profit participant, you:
(1) Should require that the participant have an independent auditor (i.e., the DCAA or an independent public accountant) conduct periodic audits of its systems if it expends $750,000 or more per year in TIAs and other Federal assistance awards. A prime reason for including this requirement is that the Federal Government, for an expenditure-based award, necessarily relies on amounts reported by the participant’s systems when it sets payment amounts or adjusts performance outcomes. The periodic audit provides some assurance that the reported amounts are reliable.
(2) Must ensure that the award provides an independent auditor the access needed for award-specific audits, to be performed at the request of the cognizant administrative agreements officer if issues arise that require audit support. However, consistent with the government-wide policies on single audits that apply to nonprofit participants (see § 37.665), you should rely on periodic audits to the maximum extent possible to resolve any award-specific issues.
§ 37.650 Who must I identify as the auditor for a for-profit participant?
The auditor that you will identify in the expenditure-based TIA to perform periodic and award-specific audits of a for-profit participant depends on the circumstances, as follows:
(a) You may provide that an IPA will be the auditor for a for-profit participant that does not meet the criteria in paragraph (b) of this section, but only if the participant will not agree to give the DCAA access to the necessary books and records for audit purposes. Note that the allocable portion of the costs of the IPA’s audit may be reimbursable under the TIA, as described in § 37.660(b). The IPA should be the one that the participant uses to perform other audits (e.g., of its financial statement), to minimize added burdens and costs. You must document in the award file the participant’s unwillingness to give the DCAA access. The DCAA is to be the auditor if the participant grants the necessary access.
(b) Except as provided in paragraph (c) of this section, you must identify the DCAA as the auditor for any for-profit participant that is subject to DCAA audits because it is currently performing under a Federal award that is subject to the:
(1) Cost principles in 48 CFR part 31 of the Federal Acquisition Regulation (FAR) and 48 CFR part 231 of the Defense FAR Supplement; or
(2) Cost Accounting Standards in 48 CFR chapter 99.
(c) If there are programmatic or business reasons that justify the use of an auditor other than the DCAA for a for-profit participant that meets the criteria in paragraph (b) of this section, you may provide that an IPA will be the auditor for that participant if you obtain prior approval from the Office of the Inspector General, DoD. You must submit requests for prior approval to the Assistant Inspector General (Auditing), 4800 Mark Center Drive, Alexandria, VA 22350-1500. Your request must include the name and address of the business unit(s) for which IPAs will be used. It also must explain why you judge that the participant will not give the DCAA the necessary access to records for audit purposes (e.g., you may submit a statement to that effect from the participant). The OIG, DoD, will respond within five working days of receiving the request for prior approval, either by notifying you of the decision (approval or disapproval) or giving you a date by which they will notify you of the decision.
§ 37.655 Must I specify the frequency of IPAs’ periodic audits of for-profit participants?
If your expenditure-based TIA provides for periodic audits of a for-profit participant by an IPA, you must specify the frequency for those audits. You should consider having an audit performed during the first year of the award, when the participant has its IPA do its next financial statement audit, unless the participant already had a systems audit due to other Federal awards within the past two years. The frequency thereafter may vary depending upon the dollars the participant is expending annually under the award, but it is not unreasonable to require an updated audit every two to three years to reverify that the participant’s systems are reliable (the audit then would cover the two or three-year period between audits). The DCAA is a source of advice on audit frequencies if your TIA provides for audits by IPAs.
§ 37.660 What else must I specify concerning audits of for-profit participants by IPAs?
If your expenditure-based TIA provides for audits of a for-profit participant by an IPA, you also must specify:
(a) What periodic audits are to cover. It is important that you specify audit coverage that is only as broad as needed to provide reasonable assurance of the participant’s compliance with award terms that have a direct and material effect on the research project. Appendix C to this part provides guidance to for-profit participants and their IPAs that you may use for this purpose. The DCAA and the OIG, DoD, also can provide advice to help you set appropriate limits on audit objectives and scope.
(b) Who will pay for periodic and award-specific audits. The allocable portion of the costs of any audits by IPAs may be reimbursable under the TIA. The costs may be direct charges or allocated indirect costs, consistent with the participant’s accounting system and practices.
(c) The auditing standards that the IPA will use. Unless you receive prior approval from the OIG, DoD, to do otherwise, you must provide that the IPA will perform the audits in accordance with the Generally Accepted Government Auditing Standards.
(d) The available remedies for noncompliance. The agreement must provide that the participant may not charge costs to the award for any audit that the agreements officer, with the advice of the OIG, DoD, determines was not performed in accordance with the Generally Accepted Government Auditing Standards or other terms of the agreement. It also must provide that the Government has the right to require the participant to have the IPA take corrective action and, if corrective action is not taken, that the agreements officer has recourse to any of the remedies for noncompliance identified in 32 CFR 34.52(a).
(e) The remedy if it later is found that the participant, at the time it entered into the TIA, was performing on a procurement contract or other Federal award subject to the Cost Accounting Standards at 48 CFR part 30 and the cost principles at 48 CFR part 31. Unless the OIG, DoD, approves an exception (see § 37.650(c)), the TIA’s terms must provide that the DCAA will perform the audits for the agreement if it later is found that the participant, at the time the TIA was awarded, was performing under awards described in § 37.650(b) that gave the DCAA audit access to the participant’s books and records.
(f) Where the IPA is to send audit reports. The agreement must provide that the IPA is to submit audit reports to the administrative agreements officer and the OIG, DoD. It also must require that the IPA report instances of fraud directly to the OIG, DoD.
(g) The retention period for the IPA’s working papers. You must specify that the IPA is to retain working papers for a period of at least three years after the final payment, unless the working papers relate to an audit whose findings are not fully resolved within that period or to an unresolved claim or dispute (in which case, the IPA must keep the working papers until the matter is resolved and final action taken).
(h) Who will have access to the IPA’s working papers. The agreement must provide for Government access to working papers.
§ 37.665 Must I require nonprofit participants to have periodic audits?
Yes, expenditure-based TIAs are assistance instruments subject to the Single Audit Act (31 U.S.C. 7501-7507), so nonprofit participants are subject to their usual requirements under that Act, as implemented by subpart F of 2 CFR part 200. Specifically, the requirements are the same as those in subpart E of 2 CFR part 1128 for grants and cooperative agreements to institutions of higher education, nonprofit organizations, States, local governments, and Indian tribes. Note that those requirements also apply to Federally Funded Research and Development Centers (FFRDCs) and other Government-owned, Contractor-Operated (GOCO) facilities administered by nonprofit organizations, because nonprofit FFRDCs and GOCOs are subject to the Single Audit Act.
§ 37.670 Must I require participants to flow down audit requirements to subrecipients?
(a) Yes, in accordance with § 37.610, your expenditure-based TIA must require participants to flow down the same audit requirements to a subrecipient that would apply if the subrecipient were a participant.
(b) For example, a for-profit participant that is audited by the DCAA:
(1) Would flow down to a university subrecipient the Single Audit Act requirements that apply to a university participant.
(2) Could enter into a subaward allowing a for-profit participant, under the circumstances described in § 37.650(a), to use an IPA to do its audits.
(c) This policy applies to subawards for substantive performance of portions of the research project supported by the TIA, and not to participants’ purchases of goods or services needed to carry out the research.
Property
§ 37.685 May I allow for-profit firms to purchase real property and equipment with project funds?
(a) With the two exceptions described in paragraph (b) of this section, you must require a for-profit firm to purchase real property or equipment with its own funds that are separate from the research project. You should allow the firm to charge to an expenditure-based TIA only depreciation or use charges for real property or equipment (and your cost estimate for a fixed-support TIA only would include those costs). Note that the firm must charge depreciation consistently with its usual accounting practice. Many firms treat depreciation as an indirect cost. Any firm that usually charges depreciation indirectly for a particular type of property must not charge depreciation for that property as a direct cost to the TIA.
(b) In two situations, you may grant an exception and allow a for-profit firm to use project funds, which includes both the Federal Government and recipient shares, to purchase real property or equipment (i.e., to charge to the project the full acquisition cost of the property). The two circumstances, which should be infrequent for equipment and extremely rare for real property, are those in which you either:
(1) Judge that the real property or equipment will be dedicated to the project and have a current fair market value that is less than $5,000 by the time the project ends; or
(2) Give prior approval for the firm to include the full acquisition cost of the real property or equipment as part of the cost of the project (see § 37.535).
(c) If you grant an exception in either of the circumstances described in paragraphs (b)(1) and (2) of this section, you must make the real property or equipment subject to the property management standards in 32 CFR 34.21(b) through (d). As provided in those standards, the title to the real property or equipment will vest conditionally in the for-profit firm upon acquisition. Your TIA, whether it is a fixed-support or expenditure-based award, must specify that any item of equipment that has a fair market value of $5,000 or more at the conclusion of the project also will be subject to the disposition process in 32 CFR 34.21(e), whereby the Federal Government will recover its interest in the property at that time.
§ 37.690 How are nonprofit participants to manage real property and equipment?
For nonprofit participants, your TIA’s requirements for vesting of title, use, management, and disposition of real property or equipment acquired under the award are the same as those that apply to the participant’s other Federal assistance awards.
§ 37.695 What are the requirements for Federally owned property?
If you provide Federally owned property to any participant for the performance of research under a TIA, you must require that participant to account for, use, and dispose of the property in accordance with:
(a) 32 CFR 34.22, if the participant is a for-profit firm.
(b) The requirements that apply to the participant’s other Federal awards, if it is an entity other than a for-profit firm. If the other Federal awards of a participant that is a GOCO or FFRDC administered by a nonprofit organization are procurement contracts, it is appropriate for you to specify the same property standards that apply to those Federal procurement contracts.
§ 37.700 What are the requirements for supplies?
Your expenditure-based TIA’s provisions should permit participants to use their existing procedures to account for and manage supplies. A fixed-support TIA should not include requirements to account for or manage supplies.
Purchasing
§ 37.705 What standards do I include for purchasing systems of for-profit firms?
(a) If your TIA is an expenditure-based award, it should require for-profit participants that currently perform under DoD assistance instruments subject to the purchasing standards in 32 CFR 34.31 to use the same requirements for TIAs, unless there are programmatic or business reasons to do otherwise (in which case you must document the reasons in the award file).
(b) You should allow other for-profit participants under expenditure-based TIAs to use their existing purchasing systems, as long as they flow down the applicable requirements in Federal statutes, Executive orders or Governmentwide regulations (see appendix E to this part for a list of those requirements).
(c) If your TIA is a fixed-support award, you need only require for-profit participants to flow down the requirements listed in appendix F to this part.
§ 37.710 What standards do I include for purchasing systems of nonprofit organizations?
(a) So as not to force system changes for any nonprofit participant, your expenditure-based TIA will provide that each nonprofit participant’s purchasing system comply with standards that conform as much as practicable with requirements that apply to the participant’s other Federal awards.
(b) If your TIA is a fixed-support award, you need only require nonprofit participants to flow down the requirements listed in appendix E to this part.
Subpart G—Award Terms Related to Other Administrative Matters
§ 37.800 Which administrative matters are covered in this subpart?
This subpart addresses “non-systemic” administrative matters that do not impose organization-wide requirements on a participant’s financial management, property management, or purchasing system. Because an organization does not have to redesign its systems to accommodate award-to-award variations in these requirements, a TIA that you award may differ from other TIAs in the non-systemic requirements that it specifies for a given participant, based on the circumstances of the particular research project. To eliminate needless administrative complexity, you should handle some non-systemic requirements, such as the payment method, in a uniform way for the agreement as a whole.
Payments
§ 37.805 If I am awarding a TIA, what payment methods may I specify?
Your TIA may provide for:
(a) Reimbursement, as described in 32 CFR 34.12(a)(1), if it is an expenditure-based award.
(b) Advance payments, as described in 32 CFR 34.12(a)(2), subject to the conditions in 32 CFR 34.12(b)(2)(i) through (iii).
(c) Payments based on payable milestones. These are payments made according to a schedule that is based on predetermined measures of technical progress or other payable milestones. This approach relies upon the fact that, as research progresses throughout the term of the agreement, observable activity will be taking place. The recipient is paid upon the accomplishment of the predetermined measure of progress. Fixed-support TIAs must use this payment method and each measure of progress appropriately would be one of the well-defined outcomes that you identify in the agreement (this does not preclude use of an initial advance payment, if there is no alternative to meeting immediate cash needs). There are cash management considerations when this payment method is used as a means of financing for an expenditure-based TIA (see § 37.575 and § 37.1105).
§ 37.810 What should my TIA’s provisions specify for the method and frequency of recipients’ payment requests?
The procedure and frequency for payment requests depend upon the payment method, as follows:
(a) For either reimbursements or advance payments, your TIA must allow recipients to submit requests for payment at least monthly. You may authorize the recipients to use the forms or formats described in 32 CFR 34.12(d).
(b) If the payments are based on payable milestones, the recipient will submit a report or other evidence of accomplishment to the program official at the completion of each predetermined activity. The agreement administrator may approve payment to the recipient after receiving validation from the program manager that the milestone was successfully reached.
§ 37.815 May the Government withhold payments?
Your TIA must provide that the administrative agreements officer may withhold payments in the circumstances described in 32 CFR 34.12(g), but not otherwise.
§ 37.820 Must I require a recipient to return interest on advance payments?
If your expenditure-based TIA provides for either advance payments or payable milestones, the agreement must require the recipient to:
(a) Maintain in an interest-bearing account any advance payments or milestone payment amounts received in advance of needs to disburse the funds for program purposes unless:
(1) The recipient receives less than $120,000 in Federal grants, cooperative agreements, and TIAs per year;
(2) The best reasonably available interest-bearing account would not be expected to earn interest in excess of $1,000 per year on the advance or milestone payments; or
(3) The depository would require an average or minimum balance so high that it would not be feasible within the expected Federal and non-Federal cash resources for the project.
(b) Remit annually the interest earned to the administrative agreements officer.
Revision of Budget and Program Plans
§ 37.825 Must I require the recipient to obtain prior approval from the Government for changes in plans?
If it is an expenditure-based award, your agreement must require the recipient to obtain the agreement administrator’s prior approval if there is to be a change in plans that results in a need for additional Federal funding (this is unnecessary for a fixed-support TIA because the recipient is responsible for additional costs of achieving the outcomes). Other than that, the program official’s substantial involvement in the project should ensure that the Government has advance notice of changes in plans.
§ 37.830 May I let a recipient charge pre-award costs to the agreement?
Pre-award costs, as long as they are otherwise allowable costs of the project, may be charged to an expenditure-based TIA only with the specific approval of the agreements officer. All pre-award costs are incurred at the recipient’s risk (i.e., no DoD Component is obligated to reimburse the costs if for any reason the recipient does not receive an award or if the award is less than anticipated and inadequate to cover the costs).
Program Income
§ 37.835 What requirements do I include for program income?
Your TIA should apply the standards of 32 CFR 34.14 for program income that may be generated. Note the need to specify whether the recipient is to have any obligation to the Federal Government with respect to program income generated after the end of the project period (the period, as established in the award document, during which Federal support is provided). Doing so is especially important if the TIA includes a provision for the recipient to return any amounts to the Federal Government (see § 37.580).
Intellectual Property
§ 37.840 What general approach should I take in negotiating data and patent rights?
(a) You should confer with program officials and legal counsel to develop an overall strategy for intellectual property that takes into account inventions and data that may result from the project and future needs the Government may have for rights in them. The strategy should take into account any intellectual property the Government is furnishing and any pre-existing proprietary information that the recipient is furnishing, as well as data and inventions that may be generated under the award (recognizing that new data and inventions may be less valuable without pre-existing information). All pre-existing intellectual property, both the Government’s and the recipient’s, should be marked to give notice of its status.
(b) Because TIAs entail substantial cost sharing by recipients, you must use discretion in negotiating Government rights to data and patentable inventions resulting from research under the agreements. The considerations in §§ 37.845 through 37.875 are intended to serve as guidelines, within which you necessarily have considerable latitude to negotiate provisions appropriate to a wide variety of circumstances that may arise. Your goal should be a good balance between DoD interests in:
(1) Gaining access to the best technologies for defense needs, including technologies available in the commercial marketplace, and promoting commercialization of technologies resulting from the research. Either of these interests may be impeded if you negotiate excessive rights for the Government. One objective of TIAs is to help incorporate defense requirements into the development of what ultimately will be commercially available technologies, an objective that is best served by reducing barriers to commercial firms’ participation in the research. In that way, the commercial technology and industrial base can be a source of readily available, reliable, and affordable components, subsystems, computer software, and other technological products and manufacturing processes for military systems.
(2) Providing adequate protection of the Government’s investment, which may be weakened if the Government’s rights are inadequate. You should consider whether the Government may require access to data or inventions for Governmental purposes, such as a need to develop defense-unique products or processes that the commercial marketplace likely will not address.
§ 37.845 What data rights should I obtain?
(a) You should seek to obtain what you, with the advice of legal counsel, judge is needed to ensure future Government use of technology that emerges from the research, as long as doing so is consistent with the balance between DoD interests described in § 37.840(b). You should consider data in which you wish to obtain license rights and data that you may wish to be delivered; since TIAs are assistance instruments rather than acquisition instruments, however, it is not expected that data would be delivered in most cases. What generally is needed is an irrevocable, world-wide license for the Government to use, modify, reproduce, release, or disclose for Governmental purposes the data that are generated under TIAs (including any data, such as computer software, in which a recipient may obtain a copyright). A Governmental purpose is any activity in which the United States Government participates, but a license for Governmental purposes does not include the right to use, or have or permit others to use, modify, reproduce, release, or disclose data for commercial purposes.
(b) You may negotiate licenses of different scope than described in paragraph (a) of this section when necessary to accomplish program objectives or to protect the Government’s interests. Consult with legal counsel before negotiating a license of different scope.
(c) In negotiating data rights, you should consider the rights in background data that are necessary to fully utilize technology that is expected to result from the TIA, in the event the recipient does not commercialize the technology or chooses to protect any invention as a trade secret rather than by a patent. If a recipient intends to protect any invention as a trade secret, you should consult with your intellectual property counsel before deciding what information related to the invention the award should require the recipient to report.
§ 37.850 Should I require recipients to mark data?
To protect the recipient’s interests in data, your TIA should require the recipient to mark any particular data that it wishes to protect from disclosure with a legend identifying the data as licensed data subject to use, release, or disclosure restrictions.
§ 37.855 How should I handle protected data?
Prior to releasing or disclosing data marked with a restrictive legend (as described in § 37.850) to third parties, you should require those parties to agree in writing that they will:
(a) Use the data only for governmental purposes; and
(b) Not release or disclose the data without the permission of the licensor (i.e., the recipient).
§ 37.860 What rights should I obtain for inventions?
(a) You should negotiate rights in inventions that represent a good balance between the Government’s interests (see § 37.840(b)) and the recipient’s interests. As explained in appendix B to this part:
(1) You have the flexibility to negotiate patent rights provisions that vary from what the Bayh-Dole statute (Chapter 18 of Title 35, U.S.C.) requires in many situations. You have that flexibility because TIAs include not only cooperative agreements, but also assistance transactions other than grants or cooperative agreements.
(2) Your TIA becomes an assistance instrument other than a grant or cooperative agreement if its patent rights provision varies from what Bayh-Dole requires in your situation. However, you need not consider that difference in the type of transaction until the agreement is finalized, and it should not affect the provision you negotiate.
(b) As long as it is consistent with the balance between DoD interests described in § 37.840(b) and the recipient’s interests, you should seek to obtain for the Government, when an invention is conceived or first actually reduced to practice under a TIA, a nonexclusive, nontransferrable, irrevocable, paid-up license to practice the invention, or to have it practiced, for or on behalf of the United States throughout the world. The license is for Governmental purposes, and does not include the right to practice the invention for commercial purposes.
(c) To provide for the license described in paragraph (b) of this section, your TIA generally would include the patent-rights clause that 37 CFR 401.14 specifies to implement the Bayh-Dole statute’s requirements. Note that:
(1) The clause is designed specifically for grants, contracts, and cooperative agreements awarded to small businesses and nonprofit organizations, the types of funding instruments and recipients to which the entire Bayh-Dole statute applies. As explained in appendix B to this part, only two Bayh-Dole requirements (in 35 U.S.C. sections 202(c)(4) and 203) apply to cooperative agreements with other performers, by virtue of an amendment to Bayh-Dole at 35 U.S.C. 210(c).
(2) You may use the same clause, suitably modified, in cooperative agreements with performers other than small businesses and nonprofit organizations. Doing so is consistent with a 1983 Presidential memorandum that calls for giving other performers rights in inventions from Federally supported research that are at least as great as the rights that Bayh-Dole gives to small businesses and nonprofit organizations (see appendix B to this part for details). That Presidential memorandum is incorporated by reference in Executive Order 12591 (52 FR 13414, 3 CFR, 1987 Comp., p. 220), as amended by Executive Order 12618 (52 FR 48661, 3 CFR, 1987 Comp., p. 262).
(3) The clause provides for flow-down of Bayh-Dole patent-rights provisions to subawards with small businesses and nonprofit organizations.
(4) There are provisions in 37 CFR part 401 stating when you must include the clause (37 CFR 401.3) and, in cases when it is required, how you may modify and tailor it (37 CFR 401.5).
(d) You may negotiate Government rights of a different scope than the standard patent-rights provision described in paragraph (c) of this section when necessary to accomplish program objectives and foster the Government’s interests. If you do so:
(1) With the help of the program manager and legal counsel, you must decide what best represents a reasonable arrangement considering the circumstances, including past investments, contributions under the current TIA, and potential commercial markets. Taking past investments as an example, you should consider whether the Government or the recipient has contributed more substantially to the prior research and development that provides the foundation for the planned effort. If the predominant past contributor to the particular technology has been:
(i) The Government, then the TIA’s patent-rights provision should be at or close to the standard Bayh-Dole provision.
(ii) The recipient, then a less restrictive patent provision may be appropriate, to allow the recipient to benefit more directly from its investments.
(2) You should keep in mind that obtaining a nonexclusive license at the time of award, as described in paragraph (b) of this section, is valuable if the Government later requires access to inventions to enable development of defense-unique products or processes that the commercial marketplace is not addressing. If you do not obtain a license at the time of award, you should consider alternative approaches to ensure access, such as negotiating a priced option for obtaining nonexclusive licenses in the future to inventions that are conceived or reduced to practice under the TIA.
(3) You also may consider whether you want to provide additional flexibility by giving the recipient more time than the standard patent-rights provision does to:
(i) Notify the Government of an invention, from the time the inventor discloses it within the for-profit firm.
(ii) Inform the Government whether it intends to take title to the invention.
(iii) Commercialize the invention, before the Government license rights in the invention become effective.
§ 37.865 Should my patent provision include march-in rights?
Your TIA’s patent rights provision should include the Bayh-Dole march-in rights clause at paragraph (j)(1) of 37 CFR 401.14, or an equivalent clause, concerning actions that the Government may take to obtain the right to use subject inventions, if the recipient fails to take effective steps to achieve practical application of the subject inventions within a reasonable time. The march-in provision may be modified to best meet the needs of the program. However, only infrequently should the march-in provision be entirely removed (e.g., you may wish to do so if a recipient is providing most of the funding for a research project, with the Government providing a much smaller share).
To protect the recipient’s interest in inventions, your TIA should require the recipient to mark documents disclosing inventions it desires to protect by obtaining a patent. The recipient should mark the documents with a legend identifying them as intellectual property subject to public release or public disclosure restrictions, as provided in 35 U.S.C. 205.
§ 37.875 Should my TIA include a provision concerning foreign access to technology?
(a) Consistent with the objective of enhancing the national security by increasing DoD reliance on the U.S. commercial technology and industrial bases, you must include a provision in the TIA that addresses foreign access to technology developed under the TIA.
(b) The provision must provide, as a minimum, that any transfer of the:
(1) Technology must be consistent with the U.S. export laws, regulations and policies (e.g., the International Traffic in Arms Regulation at chapter I, subchapter M, title 22 of the CFR (22 CFR parts 120 through 130), the DoD Industrial Security Regulation in DoD 5220.22-R,
(2) Exclusive right to use or sell the technology in the United States must, unless the Government grants a waiver, require that products embodying the technology or produced through the use of the technology will be manufactured substantially in the United States. The provision may further provide that:
(i) In individual cases, the Government may waive the requirement of substantial manufacture in the United States upon a showing by the recipient that reasonable but unsuccessful efforts have been made to transfer the technology under similar terms to those likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible.
(ii) In those cases, the DoD Component may require a refund to the Government of some or all the funds paid under the TIA for the development of the transferred technology.
(c) You may, but are not required to, seek to negotiate a domestic manufacture condition for transfers of nonexclusive rights to use or sell the technology in the United States, to parallel the one described for exclusive licenses in paragraph (b)(2) of this section, if you judge that nonexclusive licenses for foreign manufacture could effectively preclude the establishment of domestic sources of the technology for defense purposes.
Financial and Programmatic Reporting
§ 37.880 What requirements must I include for periodic reports on program and business status?
Your TIA must include requirements that, as a minimum, include periodic reports addressing program and, if it is an expenditure-based award, business status. You must require submission of the reports at least annually, and you may require submission as frequently as quarterly (this does not preclude a recipient from electing to submit more frequently than quarterly the financial information that is required to process payment requests if the award is an expenditure-based TIA that uses reimbursement or advance payments under § 37.810(a)). The requirements for the content of the reports are as follows:
(a) The program portions of the reports must address progress toward achieving program performance goals, including current issues, problems, or developments.
(b) The business portions of the reports, applicable only to expenditure-based awards, must provide summarized details on the status of resources (federal funds and non-federal cost sharing), including an accounting of expenditures for the period covered by the report. The report should compare the resource status with any payment and expenditure schedules or plans provided in the original award; explain any major deviations from those schedules; and discuss actions that will be taken to address the deviations. You may require a recipient to separately identify in these reports the expenditures for each participant in a consortium and for each programmatic milestone or task, if you, after consulting with the program official, judge that those additional details are needed for good stewardship.
§ 37.885 May I require updated program plans?
In addition to reports on progress to date, your TIA may include a provision requiring the recipient to annually prepare updated technical plans for the future conduct of the research effort. If your TIA does include a requirement for annual program plans, you also must require the recipient to submit the annual program plans to the agreements officer responsible for administering the TIA.
§ 37.890 Must I require a final performance report?
You need not require a final performance report that addresses all major accomplishments under the TIA. If you do not do so, however, there must be an alternative that satisfies the requirement in DoD Instruction 3200.14
§ 37.895 How is the final performance report to be sent to the Defense Technical Information Center?
(a) Whether your TIA requires a final performance report or uses an alternative means under § 37.890,
(1) Directly to the DTIC; or
(2) To the office that is administering the award (for subsequent transmission to the DTIC).
(b) If you specify that the recipient is to submit the report directly to the DTIC, you also:
(1) Must instruct the recipient to include a fully completed Standard Form 298, “Report Documentation Page,” with each document, so that the DTIC can recognize the document as being related to the particular award and properly record its receipt; and
(2) Should advise the recipient to provide a copy of the completed Standard Form 298 to the agreements officer responsible for administering the TIA.
§ 37.900 May I tell a participant that information in financial and programmatic reports will not be publicly disclosed?
You may tell a participant that:
(a) We may exempt from disclosure under the Freedom of Information Act (FOIA) a trade secret or commercial and financial information that a participant provides after the award, if the information is privileged or confidential information. The DoD Component that receives the FOIA request will review the information in accordance with DoD procedures at 32 CFR 286.23(h) (and any DoD Component supplementary procedures) to determine whether it is privileged or confidential information under the FOIA exemption at 5 U.S.C. 552(b)(4), as implemented by the DoD at 32 CFR 286.12(d).
(b) If the participant also provides information in the course of a competition prior to award, there is a statutory exemption for five years from FOIA disclosure requirements for certain types of information submitted at that time (see § 37.420).
§ 37.905 Must I make receipt of the final performance report a condition for final payment?
If a final report is required, your TIA should make receipt of the report a condition for final payment. If the payments are based on payable milestones, the submission and acceptance of the final report by the Government representative will be incorporated as an event that is a prerequisite for one of the payable milestones.
Records Retention and Access Requirements
Your TIA must require participants to keep records related to the TIA (for which the agreement provides Government access under § 37.915) for a period of three years after submission of the final financial status report for an expenditure-based TIA or final programmatic status report for a fixed-support TIA, with the following exceptions:
(a) The participant must keep records longer than three years after submission of the final financial status report if the records relate to an audit, claim, or dispute that begins but does not reach its conclusion within the 3-year period. In that case, the participant must keep the records until the matter is resolved and final action taken.
(b) Records for any real property or equipment acquired with project funds under the TIA must be kept for three years after final disposition.
§ 37.915 What requirement for access to a for-profit participant’s records do I include in a TIA?
(a) If a for-profit participant currently grants access to its records to the DCAA or other Federal Government auditors, your TIA must include for that participant the standard access-to-records requirements at 32 CFR 34.42(e). If the agreement is a fixed-support TIA, the language in 32 CFR 34.42(e) may be modified to provide access to records concerning the recipient’s technical performance, without requiring access to the recipient’s financial or other records. Note that any need to address access to technical records in this way is in addition to, not in lieu of, the need to address rights in data (see § 37.845).
(b) For other for-profit participants that do not currently give the Federal Government direct access to their records and are not willing to grant full access to records pertinent to the award, there is no set requirement to include a provision in your TIA for Government access to records. If the audit provision of an expenditure-based TIA gives an IPA access to the recipient’s financial records for audit purposes, the Federal Government must have access to the IPA’s reports and working papers and you need not include a provision requiring direct Government access to the recipient’s financial records. For both fixed-support and expenditure-based TIAs, you may wish to negotiate Government access to recipient records concerning technical performance. Should you negotiate a provision giving access only to specific Government officials (e.g., the agreements officer), rather than a provision giving Government access generally, it is important to let participants know that the OIG, DoD, has a statutory right of access to records and other materials to which other DoD Component officials have access.
§ 37.920 What requirement for access to a nonprofit participant’s records do I include in a TIA?
Your TIA must include for any nonprofit participant, including any FFRDC or GOCO administered by a nonprofit organization, the standard access-to-records requirement that subpart B of 2 CFR part 1136 specifies in Section F of OAR Article II (the standard wording for Section F of OAR Article II is provided in appendix B to 2 CFR part 1136).
Termination and Enforcement
§ 37.925 What requirements do I include for termination and enforcement?
Your TIA must apply the standards of 32 CFR 34.51 for termination, 32 CFR 34.52 for enforcement, and your organization’s procedures implementing 32 CFR 22.815 for disputes and appeals.
Subpart H—Executing the Award
§ 37.1000 What are my responsibilities at the time of award?
At the time of the award, you must:
(a) Ensure that the award document contains the appropriate terms and conditions and is signed by the appropriate parties, in accordance with §§ 37.1005 through 37.1015.
(b) Document your analysis of the agreement in the award file, as discussed in § 37.1020.
(c) Provide information about the award to offices responsible for reporting, as described in § 37.1025.
(d) Distribute copies of the award document, as required by § 37.1045.
The Award Document
§ 37.1005 What are my general responsibilities concerning the award document?
You are responsible for ensuring that the award document is complete and accurate. Your objective is to create a document that:
(a) Addresses all issues;
(b) States requirements directly. It is not helpful to readers to incorporate statutes or rules by reference, without sufficient explanation of the requirements. You generally should not incorporate clauses from the Federal Acquisition Regulation (48 CFR parts 1-53) or Defense Federal Acquisition Regulation Supplement (48 CFR parts 201-253), because those provisions are designed for procurement contracts that are used to acquire goods and services, rather than for TIAs or other assistance instruments.
(c) Is written in clear and concise language, to minimize potential ambiguity.
§ 37.1010 What substantive issues should my award document address?
You necessarily will design and negotiate a TIA individually to meet the specific requirements of the particular project, so the complete list of substantive issues that you will address in the award document may vary. Every award document must address:
(a) Project scope. The scope is an overall vision statement for the project, including a discussion of the project’s purpose, objectives, and detailed military and commercial goals. It is a critical provision because it provides a context for resolving issues that may arise during post-award administration. In a fixed-support TIA, you also must clearly specify the well-defined outcomes that reliably indicate the amount of effort expended and serve as the basis for the level of the fixed support (see §§ 37.305 and 37.560(a)).
(b) Project management. You should describe the nature of the relationship between the Federal Government and the recipient; the relationship among the participants, if the recipient is an unincorporated consortium; and the overall technical and administrative management of the project. TIAs are used to carry out collaborative relationships between the Federal Government and the recipient. Consequently, there must be substantial involvement of the DoD program official (see § 37.220) and usually the administrative agreements officer. The program official provides technical insight, which differs from the usual technical oversight of a project. The management provision also should discuss how you and the recipient will make any modifications to the TIA.
(c) Termination, enforcement, and disputes. Your TIA must provide for termination, enforcement remedies, and disputes and appeals procedures, in accordance with § 37.925.
(d) Funding. You must:
(1) Show the total amount of the agreement and the total period of performance.
(2) If the TIA is an expenditure-based award, state the Government’s and recipient’s agreed-upon cost shares. The award document should identify values for any in-kind contributions, determined in accordance with §§ 37.530 through 37.555, to preclude later disagreements about them.
(3) Specify the amount of Federal funds obligated and the performance period for those obligated funds.
(4) State, if the agreement is to be incrementally funded, that the Government’s obligation for additional funding is contingent upon the availability of funds and that no legal obligation on the part of the Government exists until additional funds are made available and the agreement is amended. You also must include a prior approval requirement for changes in plans requiring additional Government funding, in accordance with § 37.825.
(e) Payment. You must choose the payment method and tell the recipient how, when, and where to submit payment requests, as discussed in §§ 37.805 through 37.815. Your payment method must take into account sound cash management practices by avoiding unwarranted cash advances. For an expenditure-based TIA, your payment provision must require the return of interest should excess cash balances occur, in accordance with § 37.820. For any TIA using the milestone payment method described in § 37.805(c), you must include language notifying the recipient that post-award administrators may adjust amounts of future milestone payments if a project’s expenditures fall too far below the projections that were the basis for setting the amounts (see § 37.575(c) and § 37.1105(c)).
(f) Records retention and access to records. You must include the records retention requirement at § 37.910. You also must provide for access to for-profit and nonprofit participants’ records, in accordance with § 37.915 and § 37.920.
(g) Patents and data rights. In designing the patents and data rights provision, you must set forth the minimum required Federal Government rights in intellectual property generated under the award and address related matters, as provided in §§ 37.840 through 37.875. It is important to define all essential terms in the patent rights provision.
(h) Foreign access to technology. You must include a provision, in accordance with § 37.875, concerning foreign access and domestic manufacture of products using technology generated under the award.
(i) Title to, management of, and disposition of tangible property. Your property provisions for for-profit and nonprofit participants must be in accordance with §§ 37.685 through 37.700.
(j) Financial management systems. For an expenditure-based award, you must specify the minimum standards for financial management systems of both for-profit and nonprofit participants, in accordance with §§ 37.615 and 37.620.
(k) Allowable costs. If the TIA is an expenditure-based award, you must specify the standards that both for-profit and nonprofit participants are to use to determine which costs may be charged to the project, in accordance with §§ 37.625 through 37.635, as well as § 37.830.
(l) Audits. If your TIA is an expenditure-based award, you must include an audit provision for both for-profit and nonprofit participants and subrecipients, in accordance with §§ 37.640 through 37.670.
(m) Purchasing system standards. You should include a provision specifying the standards in §§ 37.705 and 37.710 for purchasing systems of for-profit and nonprofit participants, respectively.
(n) Program income. You should specify requirements for program income, in accordance with § 37.835.
(o) Financial and programmatic reporting. You must specify the reports that the recipient is required to submit and tell the recipient when and where to submit them, in accordance with §§ 37.880 through 37.905.
(p) Assurances for applicable national policy requirements. You must incorporate assurances of compliance with applicable requirements in Federal statutes, Executive orders, or regulations (except for national policies that require certifications). Appendix D to this part contains a list of commonly applicable requirements that you need to augment with any specific requirements that apply in your particular circumstances (e.g., general provisions in the appropriations act for the specific funds that you are obligating).
(q) Other routine matters. The agreement should address any other issues that need clarification, including who in the Government will be responsible for post-award administration and the statutory authority or authorities for entering into the TIA (see appendix B to this part for a discussion of statutory authorities). In addition, the agreement must specify that it takes precedence over any inconsistent terms and conditions in collateral documents such as attachments to the TIA or the recipient’s articles of collaboration.
§ 37.1015 How do I decide who must sign the TIA if the recipient is an unincorporated consortium?
(a) If the recipient is a consortium that is not formally incorporated and the consortium members prefer to have the agreement signed by all of them individually, you may execute the agreement in that manner.
(b) If they wish to designate one consortium member to sign the agreement on behalf of the consortium as a whole, you should not decide whether to execute the agreement in that way until you review the consortium’s articles of collaboration with legal counsel.
(1) The purposes of the review are to:
(i) Determine whether the articles properly authorize one participant to sign on behalf of the other participants and are binding on all consortium members with respect to the research project; and
(ii) Assess the risk that otherwise could exist when entering into an agreement signed by a single member on behalf of a consortium that is not a legal entity. For example, you should assess whether the articles of collaboration adequately address consortium members’ future liabilities related to the research project (i.e., whether they will have joint and severable liability).
(2) After the review, in consultation with legal counsel, you should determine whether it is better to have all of the consortium members sign the agreement individually or to allow them to designate one member to sign on all members’ behalf.
Reporting Information About the Award
§ 37.1020 What must I document in my award file?
You should include in your award file an agreements analysis in which you:
(a) Briefly describe the program and detail the specific military and commercial benefits that should result from the project supported by the TIA. If the recipient is a consortium that is not formally incorporated, you should attach a copy of the signed articles of collaboration.
(b) Describe the process that led to the award of the TIA, including how you and program officials solicited and evaluated proposals and selected the one supported through the TIA.
(c) Explain how you decided that a TIA was the most appropriate instrument, in accordance with the factors in Subpart B of this part. Your explanation must include your answers to the relevant questions in § 37.225(a) through (d).
(d) Explain how you valued the recipient’s cost sharing contributions, in accordance with §§ 37.530 through 37.555. For a fixed-support TIA, you must document the analysis you did (see § 37.560) to set the fixed level of Federal support; the documentation must explain how you determined the recipient’s minimum cost share and show how you estimated the expenditures required to achieve the project outcomes.
(e) Document the results of your negotiation, addressing all significant issues in the TIA’s provisions. For example, this includes specific explanations if you:
(1) Specify requirements for a participant’s systems that vary from the standard requirements in §§ 37.615(a), 37.625(a), 37.630, or 37.705(a) in cases where those sections provide flexibility for you to do so.
(2) Provide that any audits are to be performed by an IPA, rather than the DCAA, where permitted under § 37.650. Your documentation must include:
(i) The names and addresses of business units for which IPAs will be the auditors;
(ii) Estimated amounts of Federal funds expected under the award for those business units; and
(iii) The basis (e.g., a written statement from the recipient) for your judging that the business units do not currently perform under types of awards described in § 37.650(b)(1) and (2) and are not willing to grant the DCAA audit access.
(3) Include an intellectual property provision that varies from Bayh-Dole requirements.
(4) Determine that cost sharing is impracticable.
§ 37.1025 Must I report information to the Defense Assistance Awards Data System?
Yes, you must give the necessary information about the award to the office in your organization that is responsible for preparing DD Form 2566, “DoD Assistance Award Action Report,” reports for the Defense Assistance Award Data System, to ensure timely and accurate reporting of data required by 31 U.S.C. 6101-6106 (see 32 CFR part 21, subpart E).
Distributing Copies of the Award Document
§ 37.1045 To whom must I send copies of the award document?
You must send a copy of the award document to the:
(a) Recipient. You must include on the first page of the recipient’s copy a prominent notice about the current DoD requirements for payment by electronic funds transfer (EFT).
(b) Office you designate to administer the TIA. You are strongly encouraged to delegate post-award administration to the regional office of the Defense Contract Management Agency or Office of Naval Research that administers awards to the recipient. When delegating, you should clearly indicate on the cover sheet or first page of the award document that the award is a TIA, to help the post-award administrator distinguish it from other types of assistance instruments.
(c) Finance and accounting office designated to make the payments to the recipient.
Subpart I—Post-Award Administration
§ 37.1100 What are my responsibilities generally as an administrative agreements officer for a TIA?
As the administrative agreements officer for a TIA, you have the responsibilities that your office agreed to accept in the delegation from the office that made the award. Generally, you will have the same responsibilities as a post-award administrator of a grant or cooperative agreement, as described in 32 CFR 22.715. Responsibilities for TIAs include:
(a) Advising agreements officers before they award TIAs on how to establish award terms and conditions that better meet research programmatic needs, facilitate effective post-award administration, and ensure good stewardship of Federal funds.
(b) Participating as the business partner to the DoD program official to ensure the Government’s substantial involvement in the research project. This may involve attendance with program officials at kickoff meetings or post-award conferences with recipients. It also may involve attendance at the consortium management’s periodic meetings to review technical progress, financial status, and future program plans.
(c) Tracking and processing of reports required by the award terms and conditions, including periodic business status reports, programmatic progress reports, and patent reports.
(d) Handling payment requests and related matters. For a TIA using advance payments, that includes reviews of progress to verify that there is continued justification for advancing funds, as discussed in § 37.1105(b). For a TIA using milestone payments, it includes making any needed adjustments in future milestone payment amounts, as discussed in § 37.1105(c).
(e) Coordinating audit requests and reviewing audit reports for both single audits of participants’ systems and any award-specific audits that may be needed, as discussed in §§ 37.1115 and 37.1120.
(f) Responding, after coordination with program officials, to recipient requests for permission to sell or exclusively license intellectual property to entities that do not agree to manufacture substantially in the United States, as described in § 37.875(b). Before you grant approval for any technology, you must secure assurance that the Government will be able to use the technology (e.g., a reasonable license for Government use, if the recipient is selling the technology) or seek reimbursement of the Government’s investments.
§ 37.1105 What additional duties do I have as the administrator of a TIA with advance payments or payable milestones?
Your additional post-award responsibilities as an administrative agreements officer for an expenditure-based TIA with advance payments or payable milestones are to ensure good cash management. To do so, you must:
(a) For any expenditure-based TIA with advance payments or payable milestones, forward to the responsible payment office any interest that the recipient remits in accordance with § 37.820(b). The payment office will return the amounts to the Department of the Treasury’s miscellaneous receipts account.
(b) For any expenditure-based TIA with advance payments, consult with the program official and consider whether program progress reported in periodic reports, in relation to reported expenditures, is sufficient to justify your continued authorization of advance payments under § 37.805(b).
(c) For any expenditure-based TIA using milestone payments, work with the program official at the completion of each payable milestone or upon receipt of the next business status report to:
(1) Compare the total amount of project expenditures, as recorded in the payable milestone report or business status report, with the projected budget for completing the milestone; and
(2) Adjust future payable milestones, as needed, if expenditures lag substantially behind what was originally projected and you judge that the recipient is receiving Federal funds sooner than necessary for program purposes. Before making adjustments, you should consider how large a deviation is acceptable at the time of the milestone. For example, suppose that the first milestone payment for a TIA you are administering is $50,000, and that the awarding official set the amount based on a projection that the recipient would have to expend $100,000 to reach the milestone (i.e., the original plan was for the recipient’s share at that milestone to be 50% of project expenditures). If the milestone payment report shows $90,000 in expenditures, the recipient’s share at this point is 44% ($40,000 out of the total $90,000 expended, with the balance provided by the $50,000 milestone payment of Federal funds). For this example, you should adjust future milestones if you judge that a 6% difference in the recipient’s share at the first milestone is too large, but not otherwise. Remember that milestone payment amounts are not meant to track expenditures precisely at each milestone and that a recipient’s share will increase as it continues to perform research and expend funds, until it completes another milestone to trigger the next Federal payment.
If you are the administrative agreements officer, you have the responsibilities described in 32 CFR 22.810(c), regardless of the payment method. You also must ensure that you do not withhold payments, except in one of the circumstances described in 32 CFR 34.12(g).
For audits of for-profit participant’s systems, under §§ 37.640 through 37.660, you are the focal point within the Department of Defense for ensuring that participants submit audit reports and for resolving any findings in those reports. Nonprofit participants send their single audit reports to a Governmentwide clearinghouse. For those participants, the Office of the Assistant Inspector General (Auditing) should receive any DoD-specific findings from the clearinghouse and refer them to you for resolution, if you are the appropriate official to do so.
§ 37.1120 When and how may I request an award-specific audit?
Guidance on when and how you should request additional audits for expenditure-based TIAs is identical to the guidance for grants officers in 32 CFR 34.16(d). If you require an award-specific examination or audit of a for-profit participant’s records related to a TIA, you must use the auditor specified in the award terms and conditions, which should be the same auditor who performs periodic audits of the participant. The DCAA and the OIG, DoD, are possible sources of advice on audit-related issues, such as appropriate audit objectives and scope.
Subpart J—Definitions of Terms Used in This Part
§ 37.1205 Advance.
A payment made to a recipient before the recipient disburses the funds for program purposes. Advance payments may be based upon recipients’ requests or predetermined payment schedules.
§ 37.1210 Advanced research.
Research that creates new technology or demonstrates the viability of applying existing technology to new products and processes in a general way. Advanced research is most closely analogous to precompetitive technology development in the commercial sector (i.e., early phases of research and development on which commercial competitors are willing to collaborate, because the work is not so coupled to specific products and processes that the results of the work must be proprietary). It does not include development of military systems and hardware where specific requirements have been defined. It is typically funded in Research, Development, Test and Evaluation programs within Budget Activity 3, Advanced Technology Development.
§ 37.1215 Agreements officer.
An official with the authority to enter into, administer, and/or terminate TIAs (see § 37.125).
§ 37.1220 Applied research.
Efforts that attempt to determine and exploit the potential of scientific discoveries or improvements in technology such as new materials, devices, methods and processes. It typically is funded in Research, Development, Test and Evaluation programs within Budget Activity 2, Applied Research (also known informally as research category 6.2) programs. Applied research normally follows basic research but may not be fully distinguishable from the related basic research. The term does not include efforts whose principal aim is the design, development, or testing of specific products, systems or processes to be considered for sale or acquisition; these efforts are within the definition of “development.”
§ 37.1225 Articles of collaboration.
An agreement among the participants in a consortium that is not formally incorporated as a legal entity, by which they establish their relative rights and responsibilities (see § 37.515).
§ 37.1230 Assistance.
The transfer of a thing of value to a recipient to carry out a public purpose of support or stimulation authorized by a law of the United States (see 31 U.S.C. 6101(3)). Grants, cooperative agreements, and technology investment agreements are examples of legal instruments used to provide assistance.
§ 37.1235 Award-specific audit.
An audit of a single TIA, usually done at the cognizant agreements officer’s request, to help resolve issues that arise during or after the performance of the research project. An award-specific audit of an individual award differs from a periodic audit of a participant (as defined in § 37.1325).
§ 37.1240 Basic research.
Efforts directed toward increasing knowledge and understanding in science and engineering, rather than the practical application of that knowledge and understanding. It typically is funded within Research, Development, Test and Evaluation programs in Budget Activity 1, Basic Research (also known informally as research category 6.1).
§ 37.1245 Cash contributions.
A recipient’s cash expenditures made as contributions toward cost sharing, including expenditures of money that third parties contributed to the recipient.
§ 37.1250 Commercial firm.
A for-profit firm or segment of a for-profit firm (e.g., a division or other business unit) that does a substantial portion of its business in the commercial marketplace.
§ 37.1255 Consortium.
A group of research-performing organizations that either is formally incorporated or that otherwise agrees to jointly carry out a research project (see definition of “articles of collaboration,” in § 37.1225).
§ 37.1260 Cooperative agreement.
A legal instrument which, consistent with 31 U.S.C. 6305, is used to enter into the same kind of relationship as a grant (see definition of “grant,” in § 37.1295), except that substantial involvement is expected between the Department of Defense and the recipient when carrying out the activity contemplated by the cooperative agreement. The term does not include “cooperative research and development agreements” as defined in 15 U.S.C. 3710a.
§ 37.1265 Cost sharing.
A portion of project costs that are borne by the recipient or non-Federal third parties on behalf of the recipient, rather than by the Federal Government.
§ 37.1270 Data.
Recorded information, regardless of form or method of recording. The term includes technical data, which are data of a scientific or technical nature, and computer software. It does not include financial, cost, or other administrative information related to the administration of a TIA.
§ 37.1275 DoD Component.
The Office of the Secretary of Defense, a Military Department, a Defense Agency, or a DoD Field Activity.
§ 37.1280 Equipment.
Tangible property, other than real property, that has a useful life of more than one year and an acquisition cost of $5,000 or more per unit.
§ 37.1285 Expenditure-based award.
A Federal Government contract or assistance award for which the amounts of interim payments or the total amount ultimately paid (i.e., the sum of interim payments and final payment) are subject to redetermination or adjustment, based on the amounts expended by the recipient in carrying out the purposes for which the award was made. Most Federal Government grants and cooperative agreements are expenditure-based awards.
§ 37.1290 Expenditures or outlays.
Charges made to the project or program. They may be reported either on a cash or accrual basis, as shown in the following table:
§ 37.1295 Grant.
A legal instrument which, consistent with 31 U.S.C. 6304, is used to enter into a relationship:
(a) The principal purpose of which is to transfer a thing of value to the recipient to carry out a public purpose of support or stimulation authorized by a law of the United States, rather than to acquire property or services for the Department of Defense’s direct benefit or use.
(b) In which substantial involvement is not expected between the Department of Defense and the recipient when carrying out the activity contemplated by the grant.
§ 37.1300 In-kind contributions.
The value of non-cash contributions made by a recipient or non-Federal third parties toward cost sharing.
§ 37.1305 Institution of higher education.
An educational institution that:
(a) Meets the criteria in section 101 of the Higher Education Act of 1965 (20 U.S.C. 1001); and
(b) Is subject to the provisions of OMB Circular A-110, “Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations,” as implemented by the Department of Defense at 32 CFR part 32.
§ 37.1310 Intellectual property.
Inventions, data, works of authorship, and other intangible products of intellectual effort that can be owned by a person, whether or not they are patentable or may be copyrighted. The term also includes mask works, such as those used in microfabrication, whether or not they are tangible.
§ 37.1315 Nonprofit organization.
(a) Any corporation, trust, association, cooperative or other organization that:
(1) Is operated primarily for scientific, educational, service, or similar purposes in the public interest.
(2) Is not organized primarily for profit; and
(3) Uses its net proceeds to maintain, improve, or expand the operations of the organization.
(b) The term includes any nonprofit institution of higher education or nonprofit hospital.
§ 37.1320 Participant.
A consortium member or, in the case of an agreement with a single for-profit entity, the recipient. Note that a for-profit participant may be a firm or a segment of a firm (e.g., a division or other business unit).
§ 37.1325 Periodic audit.
An audit of a participant, performed at an agreed-upon time (usually a regular time interval), to determine whether the participant as a whole is managing its Federal awards in compliance with the terms of those awards. Appendix C to this part describes what such an audit may cover. A periodic audit of a participant differs from an award-specific audit of an individual award (as defined in § 37.1235).
§ 37.1330 Procurement contract.
A Federal Government procurement contract. It is a legal instrument which, consistent with 31 U.S.C. 6303, reflects a relationship between the Federal Government and a State, a local government, or other recipient when the principal purpose of the instrument is to acquire property or services for the direct benefit or use of the Federal Government. See the more detailed definition of the term “contract” at 48 CFR 2.101.
§ 37.1335 Program income.
Gross income earned by the recipient or a participant that is generated by a supported activity or earned as a direct result of a TIA. Program income includes but is not limited to: income from fees for performing services; the use or rental of real property, equipment, or supplies acquired under a TIA; the sale of commodities or items fabricated under a TIA; and license fees and royalties on patents and copyrights. Interest earned on advances of Federal funds is not program income.
§ 37.1340 Program official.
A Federal Government program manager, scientific officer, or other individual who is responsible for managing the technical program being carried out through the use of a TIA.
§ 37.1345 Property.
Real property, equipment, supplies, and intellectual property, unless stated otherwise.
§ 37.1350 Real property.
Land, including land improvements, structures and appurtenances thereto, but excluding movable machinery and equipment.
§ 37.1355 Recipient.
An organization or other entity that receives a TIA from a DoD Component. Note that a for-profit recipient may be a firm or a segment of a firm (e.g., a division or other business unit).
§ 37.1360 Research.
Basic, applied, and advanced research, as defined in this subpart.
§ 37.1365 Supplies.
Tangible property other than real property and equipment. Supplies have a useful life of less than one year or an acquisition cost of less than $5,000 per unit.
§ 37.1370 Termination.
The cancellation of a TIA, in whole or in part, at any time prior to either:
(a) The date on which all work under the TIA is completed; or
(b) The date on which Federal sponsorship ends, as given in the award document or any supplement or amendment thereto.
§ 37.1375 Technology investment agreements.
A special class of assistance instruments used to increase involvement of commercial firms in defense research programs and for other purposes (described in appendix A to this part) related to integrating the commercial and defense sectors of the nation’s technology and industrial base. A technology investment agreement may be a cooperative agreement with provisions tailored for involving commercial firms (as distinct from a cooperative agreement subject to all of the requirements in 32 CFR part 34), or another kind of assistance transaction (see appendix B to this part).
Appendix A to Part 37—What Is the Civil-Military Integration Policy That Is the Basis for Technology Investment Agreements?
Appendix B to Part 37—What Type of Instrument Is a TIA and What Statutory Authorities Does It Use?
Appendix C to Part 37—What Is the Desired Coverage for Periodic Audits of For-Profit Participants To Be Audited by IPAs?
Appendix D to Part 37—What Common National Policy Requirements May Apply and Need To Be Included in TIAs?
Whether your TIA is a cooperative agreement or another type of assistance transaction, as discussed in Appendix B to this part, the terms and conditions of the agreement must provide for recipients’ compliance with applicable Federal statutes and regulations. This appendix lists some of the more common requirements to aid you in identifying ones that apply to your TIA. The list is not intended to be all-inclusive, however, and you may need to consult legal counsel to verify whether there are others that apply in your situation (e.g., due to a provision in the appropriations act for the specific funds that you are using or due to a statute or rule that applies to a particular program or type of activity).
One requirement that applies to all TIAs currently requires you to obtain a certification at the time of proposal. That requirement is in a Governmentwide common rule about lobbying prohibitions, which is implemented by the DoD at 32 CFR part 28. The prohibitions apply to all financial assistance. Appendix A to 32 CFR part 22 includes a sample provision that you may use, to have proposers incorporate the certification by reference into their proposals.
DoD policy is to use a certification, as described in the preceding paragraph, only for a national policy requirement that specifically requires one. The usual approach to communicating other national policy requirements to recipients is to incorporate them as award terms or conditions, or assurances. Part 1122 of 2 CFR lists national policy requirements that commonly apply to DoD grants and cooperative agreements. It also has standard wording of general terms and conditions to incorporate the requirements in award documents. Of those requirements, the following six apply to all TIAs. (Note that TIAs must generally use the standard wording in 2 CFR part 1122 for the terms and conditions of these six requirements, but not the standard format.)
1. Requirements concerning debarment and suspension in the OMB guidance in 2 CFR part 180, as implemented by the DoD at 2 CFR part 1125. The requirements apply to all nonprocurement transactions.
2. Requirements concerning drug-free workplace in the Governmentwide common rule that the DoD has codified at 32 CFR part 26. The requirements apply to all financial assistance.
3. Prohibitions on discrimination on the basis of race, color, or national origin in Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d, et seq.), as implemented by DoD regulations at 32 CFR part 195. These apply to all financial assistance. They require recipients to flow down the prohibitions to any subrecipients performing a part of the substantive research program (as opposed to suppliers from whom recipients purchase goods or services).
4. Prohibitions on discrimination on the basis of age, in the Age Discrimination Act of 1975 (42 U.S.C. 6101, et seq.). They apply to all financial assistance and require flow down to subrecipients, as implemented by Department of Health and Human Services regulations at 45 CFR part 90.
5. Prohibitions on discrimination on the basis of handicap, in section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), as implemented by Department of Justice regulations at 28 CFR part 41 and DoD regulations at 32 CFR part 56. They apply to all financial assistance recipients and require flow down to subrecipients.
6. Preferences for use of U.S.-flag air carriers in the International Air Transportation Fair Competitive Practices Act of 1974 (49 U.S.C. 40118), commonly referred to as the “Fly America Act,” and implementing regulations at 41 CFR 301-10.131 through 301-10.143, which apply to uses of U.S. Government funds.
Additional national policy requirements may apply in certain circumstances, as follows:
1. If construction work is to be done under a TIA or its subawards, it is subject to the prohibitions in Executive Order 11246, as amended, on discrimination on the basis of race, color, religion, sex, sexual orientation, gender identity, or national origin. You must include the clause provided in 41 CFR 60-1.4(b) in any “federally assisted construction contract” (as defined in 41 CFR 60-1.3) under this award unless provisions of 41 CFR part 60-1 exempt the contract from the requirement. The clause will require the contractor to comply with equal opportunity requirements in 41 CFR chapter 60.
2. If the research involves human subjects or animals, it is subject to the applicable requirements identified in appendix C of 2 CFR part 1122.
3. If the research involves actions that may affect the human environment, it is subject to the requirements of the National Environmental Policy Act in paragraph A.4.a of NP Article II, which is found in appendix B of 2 CFR part 1122. It also may be subject to one or more of the other requirements in paragraphs A.4.b through A.4.f, A.5, and A.6 of NP Article II, which concern flood-prone areas, coastal zones, coastal barriers, wild and scenic rivers, underground sources of drinking water, endangered species, and marine mammal protection.
4. If the project may impact any property listed or eligible for listing on the National Register of Historic Places, it is subject to the National Historic Preservation Act of 1966 (54 U.S.C. 306108) as specified in paragraph 11.a of NP Article IV, which is found in appendix D of 2 CFR part 1122.
5. If the project has potential under this award for irreparable loss or destruction of significant scientific, prehistorical, historical, or archeological data, it is subject to the Archaeological and Historic Preservation Act of 1974 (54 U.S.C. Chapter 3125) as specified in paragraph 11.b of NP Article IV, which is found in appendix D of 2 CFR part 1122.
Appendix E to Part 37—What Provisions May A Participant Need to Include When Purchasing Goods or Services Under a TIA?
A. As discussed in § 37.705, you must inform recipients of any national policy requirements that flow down to their purchases of goods or services (e.g., supplies or equipment) under their TIAs. Note that purchases of goods or services differ from subawards, which are for substantive research program performance.
B. Appendix A to 32 CFR part 34 lists ten national policy requirements that commonly apply to firms’ purchases under grants or cooperative agreements. Of those ten, two that apply to all recipients’ purchases under TIAs are:
1. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352). A contractor submitting a bid to the recipient for a contract award of $100,000 or more must file a certification with the recipient that it has not and will not use Federal appropriations for certain lobbying purposes. The contractor also must disclose any lobbying with non-Federal funds that takes place in connection with obtaining any Federal award. For further details, see 32 CFR part 28, the DoD’s codification of the Governmentwide common rule implementing this amendment.
2. Debarment and suspension. A contract award with an amount expected to equal or exceed $25,000 and certain other contract awards (see 2 CFR 1125.220, which implements OMB guidance at 2 CFR 180.220) shall not be made to parties identified in the Exclusions area of the System for Award Management (SAM Exclusions) as being currently debarred, suspended, or otherwise excluded. This restriction is in accordance with the DoD adoption at 2 CFR part 1125 of the OMB guidance implementing E.O.s 12549 (3 CFR, 1986 Comp., p. 189) and 12689 (3 CFR, 1989 Comp., p. 235), “Debarment and Suspension.”
C. The following requirements apply to recipient’s purchases under TIAs in the situations specified below:
1. Equal Employment Opportunity. Although construction work should happen rarely under a TIA, the agreements officer in that case should inform the recipient that Department of Labor regulations at 41 CFR 60-1.4(b) prescribe a clause that must be incorporated into recipients’ and subrecipients’ construction contracts under their awards and subawards, respectively. Further details are provided in appendix B to part 22 of the DoDGARs (32 CFR part 22), in section b. under the heading “Nondiscrimination.” any “federally assisted construction contract” (as defined in 41 CFR 60-1.3) under the award unless provisions of 41 CFR part 60-1 exempt the contract from the requirement. The clause will require the contractor to comply with equal opportunity requirements in 41 CFR chapter 60.
2. Wage Rate Requirements (Construction), formerly the Davis Bacon Act. When required by Federal program legislation, you must take the following actions with respect to each construction contract for more than $2,000 to be awarded using funding provided under this award:
a. Place in the solicitation under which the contract will be awarded a copy of the current prevailing wage determination issued by the Department of Labor;
b. Condition the decision to award the contract upon the contractor’s acceptance of that prevailing wage determination;
c. Include in the contract the clauses specified at 29 CFR 5.5(a) in Department of Labor regulations (29 CFR part 5, “Labor Standards Provisions Applicable to Contracts Governing Federally Financed and Assisted Construction”) to require the contractor’s compliance with the Wage Rate Requirements (Construction), as amended (40 U.S.C. 3141-44, 3146, and 3147); and
d. Report all suspected or reported violations to the award administration office identified in this award.
3. Fly America requirements. In each contract under which funds provided under this award might be used to participate in costs of international air travel or transportation for people or property, you must include a clause to require the contractor to:
a. Comply with the International Air Transportation Fair Competitive Practices Act of 1974 (49 U.S.C. 40118, also known as the “Fly America” Act), as implemented by the General Services Administration at 41 CFR 301-10.131 through 301-10.143, which provides that U.S Government financed international air travel and transportation of personal effects or property must use a U.S. Flag air carrier or be performed under a cost sharing arrangement with a U.S. carrier, if such service is available; and
b. Include the requirements of the Fly America Act in all subcontracts that might involve international air transportation.
4. Cargo preference for United States flag vessels. In each contract under which equipment, material, or commodities may be shipped by oceangoing vessels, you must include the clause specified in Department of Transportation regulations at 46 CFR 381.7(b) to require that at least 50 percent of equipment, materials or commodities purchased or otherwise obtained with Federal funds under this award, and transported by ocean vessel, be transported on privately owned U.S. flag commercial vessels, if available.
SUBCHAPTER D—PERSONNEL, MILITARY AND CIVILIAN
For a revision of Standards for a Merit System of Personnel Administration, see 5 CFR part 900.
PART 44—SCREENING THE READY RESERVE
§ 44.1 Purpose.
This rule updates Department of Defense (DoD) policy and responsibilities for the screening of Ready Reservists under 10 U.S.C. 10149.
§ 44.2 Applicability.
This rule applies to non-Federal employers of Ready Reservists filling key positions.
§ 44.3 Definitions.
For purposes of this part, the following definitions apply:
Extreme community hardship. A situation that, because of a Reserve member’s mobilization, may have a substantially adverse effect on the health, safety, or welfare of the community. Any request for a determination of such hardship will be made by the Reserve member and must be supported by documentation, as required by the Secretary of the Military Department concerned.
Inactive National Guard (ING). Members of the National Guard in an inactive status in the Ready Reserve and attached to a specific National Guard unit. These members do not participate in training activities but mobilize with their unit of assignment or with other units within their State on partial or full mobilization. They are not subject to a call-up pursuant to 10 U.S.C. 12304.
Individual Ready Reserve (IRR). A manpower pool within the Ready Reserve of each of the RCs consisting of individuals who have had some training or who have served previously in the AC or in the Selected Reserve, and may have some period of their MSO remaining pursuant to 10 U.S.C. 651. The IRR consists of members of the Ready Reserve who are not in the Selected Reserve or the ING. Additionally, the IRR also includes some personnel who are participating in officer training programs or in the Armed Forces Health Professions Scholarship and Financial Assistance Programs.
Key employee. Any non-federal employee occupying a key position within an agency, company, local government, or organization.
Key position. A public or private civilian position, not a job series, designated by the employer and approved by the Secretary of the Military Department concerned) that cannot be vacated during war or national emergency.
Mobilization. The process by which the Armed Forces of the United States, or part of them, are brought to a state of readiness for war or other national emergency.
Ready Reserve. The Selected Reserve and Individual Ready Reserve liable for active duty as prescribed by law.
Selected Reserve. Those units and individuals within the Ready Reserve designated by their respective Military Service and approved by the Joint Chiefs of Staff as so essential to initial wartime missions that they have priority over all other reserves.
§ 44.4 Policy.
It is DoD policy that:
(a) Members of the Ready Reserve shall be screened (see the appendix to this part for specific screening guidance) at least annually to meet the provisions of 10 U.S.C. 10149 and to provide a Ready Reserve force composed of members who:
(1) Meet Military Service readiness standards of mental, moral, professional, and physical fitness and possess the military qualifications required in the various ranks, ratings, and specialties.
(2) Are available immediately for active duty (AD) during a mobilization or as otherwise required by law.
(b) Ready Reserve members whose immediate recall to AD during an emergency would create an extreme personal or community hardship shall be transferred to the Standby Reserve or the Retired Reserve, or shall be discharged, as applicable.
(c) Ready Reserve members who occupy key positions shall be transferred to the Standby Reserve or the Retired Reserve, or shall be discharged, as appropriate.
(d) After a mobilization is ordered, no deferment, delay, or exemption from mobilization will be granted to Ready Reserve members because of their civilian employment.
§ 44.5 Responsibilities.
(a) The Under Secretary of Defense for Personnel and Readiness (USD(P&R)) adjudicates, before mobilization, conflicts the Ready Reserve screening process has identified, but has not resolved, between the mobilization manpower needs of the civilian sector and the Military Services.
(b) The Assistant Secretary of Defense for Manpower and Reserve Affairs (ASD(M&RA)), under the USD(P&R), coordinates resolution of conflicts between the mobilization manpower needs of the civilian sector and the Military Services identified but not resolved through the Ready Reserve screening process.
(c) The Secretaries of the Military Departments and Commandant, United States Coast Guard, ensure coordination with the ASD(M&RA) to resolve conflicts (identified, but not resolved through the Ready Reserve screening process) between the mobilization manpower needs of the civilian sector and the military. They will review petitions submitted by employers, take applicable action, and promptly transmit the results of that determination to the reservist concerned and their employer after making a determination in response to the petition. Materials provided or produced with regard to the petition will be retained by the Secretary Concerned.
Appendix A to Part 44—Guidance for Employers of Ready Reservists
(a) Employers of Ready Reserve members. Prior to any mobilization action, employers of Ready Reserve members are encouraged to adopt personnel management procedures designed to prevent conflicts between the emergency manpower needs of civilian and military activities that may occur during a military mobilization requiring Ready Reserve participation. Employers are encouraged to assess the internal capabilities of their own positions and the organic capacity to sustain emergency manpower needs prior to a military mobilization which can produce an accurate listing of what they consider key positions to their organization. Employers, via the head of or suitable designee within an agency, company, local government, or organization, are encouraged to use the below key position guidelines as a reference for considering designations and, when applicable, petitioning the respective Military Service if a Ready Reserve member fills a key position. Nothing in this part shall reduce, limit, or eliminate in any manner any right or benefit provided by USERRA. Employers must ensure that key position determinations are not undertaken in a manner that would violate USERRA.
(b) Key position guidelines:
(1) Designate individual positions that are essential in nature to, and within, the organization as “key positions,” and require they will not be filled by Ready Reserve members to prevent such positions from being vacated during a mobilization.
(2) Consider the following questions to determine whether an individual position should be designated as a key position:
(i) Can the position be filled in a reasonable time after mobilization? (Note that this factor must not be the sole factor relied on in making a key position determination.)
(ii) Does the position require technical or managerial skills that are possessed uniquely by the incumbent employee?
(iii) Is the position associated directly with defense mobilization?
(iv) Does the position include a mobilization or relocation assignment in a federal agency that has emergency functions, as designated by E.O. 12656?
(v) Is the position directly associated with industrial or manpower mobilization, as designated in E.O.s 12656 and 12919?
(vi) Are there other factors related to the national defense, health, or safety that will make the incumbent of the position unavailable for mobilization? These factors should not be applied more broadly than intended as to encompass an entire class of workers, nor misapplied to conflict with USERRA, its implementing regulations at 20 CFR part 1002, or other federal statutes and regulations.
(3) Conduct an annual review of key positions and employees as noted herein.
(4) Petition to the respective Military Service any findings for adjudication of specific Ready Reserve members filling critical positions, as needed.
(5) When employers consider a Ready Reserve member as filling a key position within their organization, they should petition the applicable Reserve personnel center for discussion and adjudication. An employer may not take any employment action with regard to the position for which approval is sought based upon an employee or potential employee’s military service until such time as the petition for approval has been approved by the relevant Service Secretary. Below is the list of Reserve personnel centers to which petitions shall be forwarded:
PART 45—MEDICAL MALPRACTICE CLAIMS BY MEMBERS OF THE UNIFORMED SERVICES
§ 45.1 Purpose of this part.
(a) In general. The purpose of this part is to establish the rules and procedures for members of the uniformed services or their representatives to file claims for compensation for personal injury or death caused by the medical malpractice of a Department of Defense (DoD) health care provider. Claims under this part may be settled and paid by DoD under the Military Claims Act, Title 10, United States Code, Chapter 163, specifically section 2733a of Title 10 (hereinafter 10 U.S.C. 2733a, section 2733a, or the statute), as added to the Military Claims Act by section 731 of the National Defense Authorization Act for Fiscal Year 2020 (Pub. L. 116-92; 133 Stat. 1457). Claims are adjudicated under an administrative process. This administrative process follows a set of rules and procedures set forth in this part. These rules and procedures are based primarily on a number of detailed provisions in the statute.
(b) Relationship to military and veterans’ compensation programs. Federal law provides a comprehensive system of compensation for military members and their families in cases of death or disability incurred in military service. This system applies to all causes of death or disability incurred in service, whether due to combat injuries, training mishaps, motor vehicle accidents, naturally occurring illnesses, or household events, with limited exceptions (e.g., when the member is absent without leave or the injury is due to the member’s intentional misconduct or willful negligence). This comprehensive compensation system applies to cases of personal injury or death caused by medical malpractice incurred in service as it does to all other causes. This part provides for the possibility of separate compensation in certain cases of medical malpractice but in no other type of case. A medical malpractice claim under this part will have no effect on any other compensation the member or the member’s family is entitled to under the comprehensive compensation system applicable to all members. However, if the U.S. Government makes a payment for harm caused by malpractice, this payment reduces the potential damages under this part as provided in § 45.11.
(c) Relationship to Healthcare Resolutions Program. The medical malpractice claims process under this part is separate from the Military Health System Healthcare Resolutions Program. The Healthcare Resolutions Program, under Defense Health Agency Procedural Instruction 6025.17, is an independent, neutral, and confidential system that promotes full disclosure of factual information—including information involving adverse events and outcomes—and mediation of clinical conflicts. The program is part of the Military Health System’s commitment to transparency, which also includes a patient’s right to be heard as part of any quality assurance review of care provided. The Healthcare Resolutions Program is not involved in legal proceedings, compensation matters, or the adjudication of claims under this part. However, any member of the uniformed services may engage the Healthcare Resolutions Program to address non-monetary aspects of his or her belief that he or she has been harmed by medical malpractice by a DoD health care provider. Because it is not involved in claims or legal proceedings, the Healthcare Resolutions Program disengages when a claim is filed by a service member or his or her representative.
§ 45.2 Claims payable and not payable in general.
(a) In general. This section sets forth a number of terms and conditions included in the statute (10 U.S.C. 2733a) that describe claims that are payable and not payable. Some of these terms and conditions are discussed in more detail in later sections of this part.
(b) Claim not otherwise payable. As required by the statute (section 2733a(b)(5)), a claim under this Part may only be paid if it is not allowed to be settled and paid under any other provision of law. This limitation provides that it cannot be a claim allowed under the Federal Tort Claims Act (FTCA), 28 U.S.C. 1346 and Chapter 171. Claims against the United States filed by members of the uniformed services or their representatives for personal injury or death incident to service are not allowed under the FTCA. These claims may be allowed under this Part if they meet the other applicable terms and conditions.
(c) Time period for filing claims. (1) The statute (section 2733a(b)(4)) requires that a claim must be received by DoD in writing within two years after the claim accrues. For mailed claims, timeliness of receipt will be determined by the postmark.
(2) There is a special rule for claims filed during calendar year 2020. Such claims must be presented to DoD in writing within three years after the claim accrues. The tolling provisions under the Servicemembers Civil Relief Act, 50 U.S.C. 3901-4043, are not applicable under this section.
(3) For purposes of applying the time limit for filing a claim, a claim accrues as of the latter of:
(i) The date of the act or omission by a DoD health care provider that is the basis of the malpractice claim; or
(ii) The date on which the claimant knew, or with the exercise of reasonable diligence should have known, of the injury and that malpractice was its possible cause.
(4) State statutes of limitation or repose are inapplicable.
(d) No claim for attorney’s fees or expenses in addition to statutorily allowed amount.
In calculating the amount that may be paid under this part, consistent with section 2733a(c)(2), there is no additional amount permitted for attorneys’ fees or expenses associated with filing a claim or participating in any process relating to the adjudication of the claim. The adjudication of claims under this part is not an adversarial proceeding and there is no prevailing party to be awarded costs.
(e) Claims adjudication based on national standards. As required by the statute (section 2733a(f)(2)(B)), claims are adjudicated based on national standards consistent with generally accepted standards used in a majority of States in adjudicating claims under the FTCA. The determination of the applicable law is without regard to the place of occurrence of the alleged medical malpractice giving rise to the claim or the military or executive department or service of the member of the uniformed services. Foreign law has no role in the case of claims arising in foreign countries. The legal standards set forth in other sections of this part apply to determinations with respect to:
(1) Whether an act or omission by a DoD health care provider in the context of performing medical, dental, or related health care functions was negligent or wrongful, considering the specific facts and circumstances;
(2) Whether the personal injury or death of the member was proximately caused by a negligent or wrongful act or omission of a DoD health care provider in the context of performing medical, dental, or related health care functions, considering the specific facts and circumstances;
(3) Requirements relating to proof of duty, breach of duty, and causation resulting in compensable injury or loss, subject to such exclusions as may be established by this Part; and
(4) Calculation of damages that may be paid.
(f) Certain other claims not payable. The generally accepted legal standards under FTCA that are required to be reflected in the adjudication of claims under this Part include certain exclusions that are part of FTCA law.
(1) The due care and discretionary function exceptions apply to claims under this part.
(i) The due care and discretionary function exceptions, 28 U.S.C. 2680(a), bar any claim based upon an act or omission of a DoD health care provider, exercising due care, in the execution of a statute or regulation or based upon the exercise or performance of any discretionary function or duty on the part of DoD or a DoD health care provider.
(ii) The due care exception applies to any DoD health care provider’s act, if carried out with due care, or omission, if omitted with due care, in the execution of a statute or regulation. The due care exception applies whether or not the statute or regulation is valid.
(iii) The discretionary function exception applies to the exercise or performance or the failure to exercise or perform any discretionary function. The discretionary function exception applies whether or not the discretion involved was abused. It applies to any DoD health care provider’s act or omission that is a permissible exercise of discretion under the applicable statutes, regulations, or directive and, by its nature, is susceptible to policy analysis. The discretionary function exception applies to DoD policy decisions regarding clinical practice, patient triage, force health protection, medical readiness, health promotion, disease prevention, medical screening, health assessment, resource management, hiring and retaining employees, selection of contractors, military standards, fitness for duty, duty limitations, and health information management, among other matters affecting or involving the provision of health care services.
(2) The quarantine exception applies to claims under this part. This exception, consistent with 28 U.S.C. 2680(f), bars any claim for damages caused by the imposition or establishment of a quarantine by any agency of the U.S. Government.
(3) The combatant activities exception applies to claims under this part. This exception, consistent with 28 U.S.C. 2680(j), bars any claim arising out of the combatant activities of the military or naval forces, or the Coast Guard, in time of war.
(4) The FTCA’s exclusions under 28 U.S.C. 2674 of interest prior to judgment and punitive damages apply to any claim under this part.
(5) Claims based on intentional or negligent infliction of emotional distress, other intentional torts, wrongful death/life, strict liability, products liability, informed consent, negligent credentialing, or joint and severable liability theories are not payable under this part.
(6) Breach of medical confidentiality is not actionable under this part.
§ 45.3 Authorized claimants.
(a) In general. This section describes who may file a claim under this part. A claim may be filed only by a member of a uniformed service or an authorized representative on behalf of a member who is deceased or otherwise unable to file the claim due to incapacitation. A member of the uniformed services includes a cadet or midshipman from the military academies. It does not include an applicant to join a uniformed service or a delayed entry program recruit who has not been accessed into active duty.
(1) As provided in section 2733a(b)(1), the claim must be filed by the member of the uniformed services who is the subject of the medical malpractice claim or by an authorized representative on behalf of such member who is deceased or otherwise unable to file the claim due to incapacitation.
(2) In some circumstances, a claim otherwise payable under this part may be filed by or on behalf of a reserve component member. As provided in section 2733a(i)(3), those circumstances are that the claim is in connection with personal injury or death that occurred while the member was in a Federal duty status. This circumstance includes personal injury, death, or negligent diagnosis resulting from a negligent or wrongful act or omission that occurred while the member was in a Federal duty status. In the case of a member of the National Guard of the United States, a period of Federal duty status may be under Title 10, U.S. Code, or, based on 10 U.S.C. 12602, duty under title 32, U.S. Code. Other duty under State control is not covered.
(b) Third party claims not allowed. The statute only authorizes claims by members of the uniformed services. Thus, the regulation does not permit derivative claims or other claims from third parties alleging a separate injury as a result of harm to a member of the uniformed services. This prohibition includes claims by family members or survivors arising out of the circumstances of personal injury or death of a member.
(c) Incident to service requirement. Under section 2733a(a), the member’s personal injury or death must be incident to service. An injury or death is incident to service if the medical care provided is based on the member’s status under this section.
§ 45.4 Filing a claim.
(a) In general. A member of a uniformed service or, when applicable, an authorized representative may file a claim in writing. Any written claim will suffice as long as it is meets the requirements below and is signed by the claimant or authorized representative.
(b) Contents of the claim. The filed claim must include the following:
(1) The factual basis for the claim, including identification of the conduct allegedly constituting malpractice (e.g., the theory of liability and/or breach of the applicable standard of care);
(2) A demand for a specified dollar amount;
(3) If the claim is filed by an attorney, an affidavit from the claimant affirming the attorney’s authority to file the claim on behalf of the claimant;
(4) If the claim is filed by an authorized representative, an affidavit from the representative affirming his/her authority to file on behalf of the claimant;
(5) If the claimant is not represented by an attorney, unless the alleged medical malpractice is within the general knowledge and experience of ordinary laypersons, an affidavit from the claimant affirming that the claimant consulted with a health care professional who opined that a DoD health care provider breached the standard of care that caused the alleged harm. Alternatively, if the claimant is represented by an attorney, unless the alleged medical malpractice is within the general knowledge and experience of ordinary laypersons, the claim must include an affidavit from the attorney affirming that the attorney consulted with a health care professional who opined that a DoD health care provider breached the standard of care that caused the alleged harm.
(c) Additional information to file in support of claim. In the investigation and adjudication of a claim, DoD will access pertinent DoD records and information systems regarding the member in order to consider fully all facts that have a bearing on the claim. This collection may include information in personnel and medical records, the Defense Eligibility and Enrollment System (DEERS), reports of investigation, medical quality assurance records, and other information. Upon DoD’s request, a claimant must identify any pertinent health care providers outside of DoD, and provide a copy of his or her medical records from each of the identified health care providers, including a statement that the records are complete. A claimant must provide medical release(s) upon DoD’s request, enabling DoD to obtain medical records from these health care providers. Claimants may submit any other relevant information they believe supports their claim, such as information regarding the medical care involved, the acts or omissions the claimant believes constitute malpractice, medical opinions from non-DoD providers, and evidence of pain and suffering or other harm.
(d) Substantiating the claim. Under section 2733a(b)(6), DoD is allowed to pay a claim only if it is substantiated. The claimant has the burden to substantiate the claim by a preponderance of the evidence. Upon receipt of a claim, DoD may require that the claimant provide additional information DoD believes is necessary for adjudication of the claim, including the submission of an expert opinion at the claimant’s expense. DoD may determine an expert opinion is not necessary when negligence is within the general knowledge and experience of ordinary laypersons, such as when a foreign object is unintentionally left in the body or an operation occurred on the wrong body part. DoD may take other steps necessary to adjudicate the claim accurately, including conducting interviews of health care providers.
(e) No discovery. There is no discovery process for adjudication of claims under this part. However, claimants may obtain copies of records in DoD’s possession that are part of their personnel and medical records in accordance with the Privacy Act of 1974, 5 U.S.C. 552a; DoD’s Privacy Act regulation at 32 CFR part 310; and DoD Manual 6025.18, “Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule in DoD Health Care Programs.” Claimants are not entitled to attorney work product, attorney-client privileged communications, material that is part of a DoD Quality Assurance Program protected under 10 U.S.C. 1102, pre-decisional material, or other privileged information.
§ 45.5 Elements of payable claim: facilities and providers.
(a) In general. This section describes some of the necessary elements of a payable claim. The health care involved must occur in a covered military medical treatment facility (MTF) and be provided by a DoD health care provider acting within the scope of employment.
(b) Covered MTF. (1) As provided in section 2733a(b)(3) and (i)(1), the alleged act or omission constituting medical malpractice must have occurred in a covered MTF. For the purposes of this regulation, an MTF is a medical center, inpatient hospital, or ambulatory care center, as those facilities are described in 10 U.S.C. 1073d. Fixed dental clinics are also included.
(2) A claim may not be based on health care services provided by DoD health care providers in any other location, such as in the field, battalion aid stations, ships, planes, deployed settings, or in any other place that is not a covered MTF.
(c) DoD health care provider. As provided in section 2733a(i)(2), a DoD health care provider is a member of the uniformed services, DoD civilian employee, or personal services contractor of the Department (under 10 U.S.C. 1091) authorized by DoD to provide health care services. A non-personal services contractor or a volunteer working in an MTF is not a DoD health care provider for purposes of a payable claim under this part.
(d) Scope of employment. As provided in section 2733a(b)(2), for a claim to be payable under this part, the DoD health care provider whose negligent or wrongful act or omission is the basis of a claim must be acting within the scope of employment, meaning that the provider was acting in furtherance of his or her duties in the MTF. For personal services contractors, “scope of employment” means the contractor was acting within the scope of his or her duties.
§ 45.6 Element of payable claim: negligent or wrongful act or omission.
(a) In general. To establish the element of a negligent or wrongful act or omission, a member of a uniformed service (“claimant”) allegedly harmed incident to service by medical malpractice must prove by a preponderance of the evidence that one or more DoD health care providers in a covered MTF acting within the scope of employment had a professional duty to the patient involved and by act or omission breached that duty which proximately caused the injury or death.
(b) Standard of care. The professional duty referred to in paragraph (a) of this section is a duty to exercise the same degree of skill, care, and knowledge ordinarily expected of providers in the same field or specialty in a comparable clinical setting. The standard of care is determined based on generally recognized national standards, not on the standards of a particular region, State or locality. However, standard of care in the military context may be impacted by the particular setting and the availability of resources in that setting.
(c) Breach of the standard of care. A breach referred to in paragraph (a) occurs if the health care provider or providers by act or omission did not meet the standard of care.
(d) Presenting evidence of the standard of care. A claimant may present evidence to support what the claimant believes is the standard of care relevant to the care involved in the claim.
(e) Presenting evidence of a failure to meet the standard of care. (1) A claimant may present evidence to support what the claimant believes demonstrates the failure of one or more DoD health care providers to meet the standard of care. That evidence may be based on the medical records of the patient involved and other documentary evidence of the acts or omissions of health care providers involved, including expert reports.
(2) Evidence of an apology by a health care provider or any other DoD or Military Department personnel, such as hospital directors or commanders, to or regarding a patient will not be considered evidence of medical malpractice. Providers often apologize for unexpected or adverse outcomes independent of whether the provider’s acts or omissions met the standard of care.
(f) Information DoD will consider in assessing whether there was a negligent or wrongful act or omission. (1) In addition to the information submitted by the claimant, DoD may consider all relevant information in DoD records and information systems or otherwise available to DoD, including information prepared by or on behalf of DoD in connection with adjudication of the claim.
(2) DoD will consider medical quality assurance records relevant to the health care provided to the patient. DoD’s Clinical Quality Management Program features reviews of many circumstances of clinical care. Results of any such reviews of the care involved in the claim that occurred before or after the claim was filed may be considered by DoD in the adjudication of the claim. As required by 10 U.S.C. 1102, DoD medical quality assurance records are confidential. While such records may be used by DoD, any information contained in or derived from such records may not be disclosed to the claimant.
§ 45.7 Element of payable claim: proximate cause.
(a) In general. (1) In a case otherwise payable under this part, a claimant must prove by a preponderance of evidence that a negligent or wrongful act or omission by one or more DoD health care providers was the proximate cause of the harm suffered by the member.
(2) Under section 2733a(c)(1), DoD is liable for only the portion of compensable injury, loss, or damages attributable to the medical malpractice of a DoD health care provider. To the extent other causes contributed to the personal injury or death of the member, whether pre-existing, concurrent, or subsequent, the potential amount of compensation under this regulation will be reduced by that proportion of the alternative cause(s).
(b) Comparative negligence. A rule of modified comparative negligence will apply to claims under this part. If a claimant was contributorily negligent in relation to the health care provided, damages will be reduced by the proportion of fault assigned to the Service member. If the claimant’s own negligence constituted more than 50% of the fault, the claim is not payable.
(c) Loss of chance or failure to diagnose. A claimant may recover for loss of chance for a more favorable clinical outcome in the diagnosis and treatment of his or her illness or injury. The claimant must prove by a preponderance of the evidence that one or more DoD health care providers in a covered MTF acting within the scope of employment had a professional duty to the claimant and by act or omission breached that duty and proximately caused harm. In proving that the claimant suffered harm, the claimant must prove that the lost chance for a better outcome or the failure to diagnose a condition is attributable to the provider or providers. The claimant must prove a substantial loss as opposed to a theoretical or de minimis loss. The portion of harm attributable to the breach of duty will be the percentage of chance lost in proportion to the overall clinical outcome. Damages will be calculated based on this portion of harm.
(d) Information DoD will consider in assessing proximate cause. (1) In addition to the information submitted by the claimant, DoD may consider all relevant information in DoD records or information systems or otherwise available to DoD, including information prepared by or on behalf of DoD in connection with adjudication of the claim.
(2) DoD may consider medical quality assurance records relevant to the health care provided to the patient. DoD’s Clinical Quality Management Program features reviews of many circumstances of clinical care. Results of any such reviews of the care involved in the claim that occurred before or after the claim was filed may be considered by DoD in the adjudication of the claim. As required by 10 U.S.C. 1102, DoD medical quality assurance records are confidential. While such records may be used by DoD, any information contained in or derived from such records may not be disclosed to the claimant.
§ 45.8 Calculation of damages: disability rating.
(a) In general. For certain purposes relating to calculating damages for a member in a claim under this part, DoD will use the disability rating established in the DoD Disability Evaluation System under DoD Instruction 1332.18
(b) Disability rating procedures. (1) If a claimant disagrees with the disability rating received in the DoD or VA disability evaluation or claims processes, the member must pursue the appeal opportunities available within the DoD and/or VA to change the member’s disability rating.
(2) In any case in which a member has filed a claim under this part and also has a disability determination pending under DoD or VA disability evaluation or claims processes applicable to determinations or appeals, DoD may, in its discretion, hold in abeyance the claim under this part pending the outcome of the disability evaluation or claims process. DoD will notify the claimant that his or her claim is being held in abeyance.
(3) In any case in which a member has not yet received a DoD or VA disability evaluation because the member is retained on active duty, DoD will use the VASRD as the standard for assessing the degree of disability of the member relevant to the member’s claim under this part.
§ 45.9 Calculation of damages: economic damages.
(a) In general. Economic damages are one component of a potential damages award. The claimant has the burden to prove the amount of economic damages by a preponderance of evidence. Estimates of future losses must be discounted to present value.
(b) Elements of economic damages in personal injury cases. Elements of economic damage are limited to the following:
(1) Past expenses, including medical, hospital, and related expenses actually incurred. These expenses do not include health care services provided or paid for by DoD or VA.
(2) Future medical, hospital, and related expenses. These expenses do not include health care goods and services for which the member is entitled to receive from, or be reimbursed for by, DoD (including TRICARE) or VA. Goods and services provided or paid for by DoD or VA are deemed sufficient to meet the claimant’s needs for that particular type of good or service.
(3) Past lost earnings unrelated to compensation as a member of the uniformed services. Appropriate documentation is required.
(4) For future lost earnings:
(i) Until DoD determines that the claimant is, or is expected to be, medically rehabilitated and able to resume employment;
(ii) In cases of permanent incapacitation, until expiration of the claimant’s work-life expectancy; or
(iii) In cases of death, until the expiration of the claimant’s work-life expectancy, after deducting for the claimant’s personal consumption.
(iv) Future lost earnings must be substantiated by appropriate documentation and claimants have an obligation to mitigate damages.
(v) In addition, loss of retirement benefits is compensable and similarly discounted after appropriate deductions. Estimates for future lost earnings and retirement benefits must be discounted to present value.
(5) Compensation when the claimant can no longer perform essential household services on his or her own behalf, including activities of daily living. This compensation does not include goods and services the member is entitled to receive from, or be reimbursed for by, DoD or VA. Goods and services provided or paid for by DoD or VA are deemed sufficient to meet the claimant’s needs for that particular type of good or service.
(c) Information DoD will consider in calculating economic damages. In addition to the information submitted by the claimant, DoD may consider all relevant information in DoD records or information systems or otherwise available to DoD, including assessments from appropriate documentary sources and experts available to DoD.
(d) Disability discrimination. An injury or condition does not result in lost earnings for purposes of, and is not compensable under, this part if the lost earnings stem from disability discrimination, which may be settled and paid under other provisions of law.
§ 45.10 Calculation of damages: non-economic damages.
(a) In general. Non-economic damages are one component of a potential damages award. The claimant has the burden of proof on the amount of non-economic damages by a preponderance of evidence. DoD may request an interview of or statement from the claimant or other person with primary knowledge of the claimant. DoD may also require medical statements documenting the claimant’s condition and, in cases of disfigurement, photographs documenting the claimant’s condition.
(b) Elements of non-economic damages. Non-economic damages include pain and suffering; physical discomfort; mental and emotional trauma or distress; loss of enjoyment of life; physical disfigurement; and the inability to perform daily activities that one performed prior to injury, such as recreational activities. Such damages are compensable as part of non-economic damages.
(c) Cap on non-economic damages. In any claim under this part, total non-economic damages may not exceed a cap amount published by DoD via a
(d) Information DoD will consider in calculating non-economic damages. In addition to the information submitted by the claimant, DoD may consider all relevant information in DoD records or otherwise available to DoD, including assessments from appropriate documentary sources and experts available to DoD.
§ 45.11 Calculation of damages: offsets for DoD and VA Government compensation.
(a) In general. Total potential economic damages calculated under this part are reduced by offsetting most of the compensation otherwise provided or expected to be provided by DoD or VA for the same harm that is the subject of the medical malpractice claim. DoD has the burden to establish the applicability and amount of any offsets.
(b) Eligibility for payments and benefits. In determining the offsets that are applied to a medical malpractice damages award under this part, DoD presumes that a claimant will receive all the payments and benefits for which the claimant is expected to be eligible, whether or not the claimant has taken steps to obtain the payment or benefit or ultimately receives such payment or benefit. A claimant may present evidence that he or she is not eligible for a payment or benefit to rebut the presumption.
(c) Present value of future payments and benefits. In determining offsets under this section from economic damages, DoD will use the present value of future payments and benefits. Many such payments and benefits in cases of disability or death are lifetime benefits for members or survivors. With respect to any lifetime payments or benefits that may terminate upon the remarriage of a surviving spouse, DoD will not assume a remarriage. Estimates will be based on actuarial information provided by the Chief Actuary, DoD Office of the Actuary, taking into consideration methods and assumptions approved by the DoD Board of Actuaries and DoD Medicare-Eligible Retiree Health Care Board of Actuaries, respectively, as of the recent actuarial valuation date.
(d) Information considered. In determining offsets under this section, DoD will consider all data available in DoD records or information systems, other U.S. Government records systems, and other information available to DoD. This data may include information on military pay and allowances, Disability Evaluation System outcomes, VA disability claims, marital status, number and ages of dependents, survivor benefits, and other information. Access to all such information will be in accordance with the Privacy Act, 5 U.S.C. 552a, and applicable implementing regulations. Claimants must provide information not available to DoD, but requested by DoD, for the purpose of determining offsets.
(e) Benefits and payments that may be considered as potential offsets. The general rule is that potential damages calculated under this part may be offset only by DoD or VA payments and benefits that are primarily funded by Government appropriations. Potential damages calculated under this part are not offset by U.S. Government payments and benefits that are substantially funded by the military member. The following examples are provided for illustrative purposes only, are not all-inclusive, and are subject to adjustment as appropriate.
(1) The following DoD and VA payments and benefits are primarily funded from Government appropriations and will be offset:
(i) Disability retired pay in the case of retirement due to the disability caused by the alleged medical malpractice;
(ii) Disability severance pay in the case of non-retirement disability separation caused by the alleged medical malpractice.
(iii) Incapacitation pay.
(iv) Involuntary and voluntary separation pays and incentives.
(v) Death gratuity.
(vi) Housing allowance continuation.
(vii) Survivor Benefit Plan.
(viii) VA disability compensation, to include Special Monthly Compensation, attributable to the disability resulting from the malpractice.
(ix) VA Dependency and Indemnity Compensation, attributable to the disability resulting from the malpractice.
(x) Special Survivor Indemnity Allowance.
(xi) Special Compensation for Assistance with Activities of Daily Living.
(xii) Program of Comprehensive Assistance for Family Caregivers.
(xiii) Fry Scholarship.
(xiv) TRICARE coverage, including TRICARE-for-Life, for a disability retiree, family, or survivors. Future TRICARE coverage is part of the Government’s compensation package for a disability retiree or survivor.
(2) The following U.S. Government payments and benefits are substantially funded by the military members or are otherwise generally not eligible for consideration as potential offsets:
(i) Servicemembers Group Life Insurance.
(ii) Traumatic Servicemembers Group Life Insurance.
(iii) Social Security disability benefits.
(iv) Social Security survivor benefits.
(v) Prior Government contributions to a Thrift Savings Plan.
(vi) Commissary, exchange, and morale, welfare, and recreation facility access.
(vii) Value of legal assistance and other services provided by DoD.
(viii) Medical care provided while in active service or in an active status prior to death, retirement, or separation.
§ 45.12 Initial and Final Determinations.
(a) Denial of claim—deficient filing. If a claim does not contain the information required by § 45.4(b), DoD will issue an Initial Determination stating that DoD will issue a Final Determination denying the claim unless the deficiency is cured.
(1) DoD will provide the claimant 90 calendar days following receipt of the Initial Determination to cure the deficiency, unless an extension of time is granted for good cause by the DoD Component which issued the Initial Determination. The date of receipt of the Initial Determination will be presumed to be seven calendar days after the date the Initial Determination was mailed or emailed, unless there is evidence to the contrary.
(2) If the claimant does not timely cure the deficiency, DoD will issue a Final Determination denying the claim for failure to cure the deficiency. A Final Determination issued under paragraph (a) of this section may not be appealed.
(b) Denial of claim—failure to state a claim. If a claim does not, based upon the information provided, state a claim cognizable under 10 U.S.C. 2733a or this interim final rule, DoD will issue an Initial Determination denying the claim. Such an Initial Determination may be appealed under the procedures in § 45.13.
(c) Denial of claim—absence of an expert report. Where applicable, if the claimant initially does not submit an expert report in support of his or her claim and DoD intends to deny the claim, DoD will issue an Initial Determination stating that DoD will issue a Final Determination denying the claim in the absence of an expert report or manifest negligence. DoD will provide a meaningful explanation for the intent to deny the claim that includes the specific basis for the denial.
(1) DoD will provide the claimant 90 calendar days following receipt of the Initial Determination by the claimant or, if the claimant is represented, by the claimant’s representative, to submit an expert report, unless an extension of time is granted for good cause. The date of receipt of the Initial Determination will be presumed to be seven calendar days after the date the Initial Determination was mailed or emailed, unless there is evidence to the contrary.
(2) If the claimant does not timely submit an expert report, DoD will issue a Final Determination denying the claim. A Final Determination issued under this paragraph (c) may not be appealed.
(d) Initial Determination. (1) Upon consideration of the information provided by the claimant and relevant information available to DoD, DoD will issue the claimant a written Initial Determination.
(2) The Initial Determination may be in the form of a certified letter and/or an email. The Initial Determination may take the form of a grant of a claim and an offer of settlement or a denial of the claim. Subject to applicable confidentiality requirements, such as 10 U.S.C. 1102, privileged information, and paragraph (a) of this section, DoD will provide a meaningful basis for an offer of settlement or will provide a meaningful explanation for the denial of a claim that includes the specific basis for the denial.
(3) The Initial Determination will include information on the claimant’s right to appeal if the claimant does not agree with the Initial Determination.
(4) The claimant may request reconsideration of the damages calculation contained in an Initial Determination if, within the time otherwise allowed to file an administrative appeal, the claimant identifies an alleged clear error—a definite and firm conviction that a mistake has been committed—in the damages calculation. The DoD Component that issued the Initial Determination will review the alleged clear error and will issue an Initial Determination on Reconsideration either granting or denying reconsideration of the Initial Determination and adjusting the damages calculation, if appropriate. The Initial Determination on Reconsideration will include information on the claimant’s right to appeal under the procedures in § 45.13.
§ 45.13 Appeals.
(a) In general. This section describes the appeals process applicable to Initial Determinations under this part, which include Initial Determinations on Reconsideration. With the exception of Initial Determinations issued under § 45.12(a), in any case in which the claimant disagrees with an Initial Determination, the claimant has a right to file an administrative appeal. The claimant should explain why he or she disagrees with the Initial Determination, but may not submit additional information in support of the claim unless requested to do so by DoD. An appeal must be received within 90 calendar days of the date of receipt of the Initial Determination by the claimant or, if the claimant is represented, the claimant’s representative, unless an extension of time is granted for good cause by the DoD Component that issued the Initial Determination. The date of receipt of the Initial Determination will be presumed to be seven calendar days after the date the Initial Determination was mailed or emailed, unless there is evidence to the contrary. If no timely appeal is received, DoD will issue a Final Determination.
(b) Appeals Board. Appeals will be decided by an Appeals Board administratively supported by the Office of the General Counsel, Defense Health Agency. Although there may be, in DoD’s discretion, multiple offices that initially adjudicate claims under this part (such as offices in the Military Departments), there is a single DoD Appeals Board. The Appeals Board will consist of DoD attorneys designated by the Defense Health Agency from that agency and/or the Military Departments who are experienced in medical malpractice claims adjudication. Appeals Board members must not have had any previous role in the claims adjudication under appeal. The Appeals Board will consider cases in panels designated by the General Counsel of the Defense Health Agency of not fewer than three and no more than five Appeals Board members. Appeals are decided on a written record and decisions will be approved by a majority of the members. There is no adversarial proceeding and no hearing. There is no opposing party. The Appeals Board may obtain information or assessments from appropriate sources, including from the claimant, to assist in deciding the appeal. The Appeals Board is bound by the provisions of this part and will not consider challenges to them.
(c) Burden of proof. The claimant on appeal has the burden of proof by a preponderance of evidence that the claim is substantiated in the written record considered as a whole.
(d) Appeals Board decisions. (1) Every claimant will be provided a written Final Determination on the claimant’s appeal. The Final Determination may adopt by reference the Initial Determination or revise the Initial Determination, as appropriate. If the Final Determination revises the Initial Determination, DoD will provide a meaningful explanation of the basis for the revisions.
(2) An Appeals Board decision is final and conclusive. 10 U.S.C. 2735.
(3) The Appeals Board may reverse the Initial Determination to grant or deny a claim and may adjust the settlement amount contained in the Initial Determination either upwards or downwards as appropriate.
§ 45.14 Final and conclusive resolution.
(a) Administrative adjudication final. As provided in 10 U.S.C. 2735, the adjudication and settlement of a claim under this part is final and conclusive and not subject to review in any court. Unlike the FTCA, the Military Claims Act, 10 U.S.C. chapter 163, which provides the authority for this part, does not give Federal courts jurisdiction over claims. Further, no claim under this Part may be paid unless the amount tendered is accepted by the claimant in full satisfaction.
(b) Additional terms of settlement agreement. (1) Settlement agreements under this part will incorporate the requirement of section 2733a(g)(1) that no attorney may charge, demand, receive, or collect for services rendered, fees in excess of 20 percent of any claim payment amount under this part.
(2) Because settlement and payment of a claim under this part is under section 2733a(b)(5) conditional on the claim not being allowed to be settled and paid under any other provision of law, a settlement agreement under this part will include a provision that it bars any other claim against the United States or DoD health care providers arising from the same set of facts.
§ 45.15 Other claims procedures and administrative matters.
(a) Payment of damages. In the event damages are awarded, the claimant or the claimant’s estate is entitled to payment of those damages.
(b) Communication through counsel. If the claimant is represented by counsel, all communications will be through the claimant’s counsel.
(c) Remedies for filing false claims or making false statements. Remedies available to the United States for filing false claims with Federal agencies or making false statements to Federal agencies and officials are applicable to claims and statements made in connection with claims under this part. Applicable authorities include 31 U.S.C. 3729 and 18 U.S.C. 1001. False claims and claims supported by false statements will be denied.
(d) Reports to the Defense Health Agency. As provided in section 2733a(e), not later than 30 calendar days after a Final Determination of medical malpractice or the payment of all or a portion of a claim under this part, a report documenting that determination is sent to the Director, Defense Health Agency to be used for all necessary and appropriate purposes, including those actions undertaken as part of DoD’s Clinical Quality Management Program.
(e) Monitoring claims adjudications under this part. The General Counsel of the Defense Health Agency will monitor the performance of the claims adjudications structures and procedures under this part, including accounting for the number of claims processed under this part and the resolution of each claim and identifying means to enhance the effectiveness of the claims adjudication process.
(f) Authority for actions under this part. To ensure consistency and compliance with statutory requirements, supplementation of the procedures in this part is not permitted without approval in writing by the General Counsel of the Department of Defense. The General Counsel of the Department of Defense, under DoD Directive 5145.01, “General Counsel of the Department of Defense,” may delegate in writing authority for making Initial and Final Determinations, and other actions by DoD officials under this part. As used in this part, and at DoD’s discretion, “DoD” or “DoD Components” may include, but is not limited to, Military Departments.
PART 47—ACTIVE DUTY SERVICE FOR CIVILIAN OR CONTRACTUAL GROUPS
§ 47.1 Purpose.
This document:
(a) Revises 32 CFR part 47 and implements Public Law 95-202.
(b) Directs the Secretary of the Air Force to determine if an established group of civilian employees or contract workers provided service to the U.S. Armed Forces in a manner considered active military service for Department of Veterans Affairs (VA) benefits.
(c) Establishes the DoD Civilian/Military Service Review Board and the Advisory Panel.
(d) Establishes policy, assigns responsibilities, prescribes application procedures for groups and individuals, and clarifies the factors used to determine active duty (AD) service.
§ 47.2 Applicability and scope.
This part:
(a) Applies to the Office of the Secretary of Defense (OSD), the Military Departments, and by agreement with the Department of Transportation (DoT), the U.S. Coast Guard.
(b) Applies to any group application considered under Public Law 95-202 after September 11, 1989 and to any individual who applies for discharge documents as a member of a group recognized by the Secretary of the Air Force.
§ 47.3 Definitions.
Armed conflict. A prolonged period of sustained combat involving members of the U.S. Armed Forces against a foreign belligerent. The term connotes more than a military engagement of limited duration or for limited objectives, and involves a significant use of military and civilian forces.
(a) Examples of armed conflict are World Wars I and II, and the Korean and Vietnam Conflicts.
(b) Examples of military actions that are not armed conflicts are as follows:
(1) The incursion into Lebanon in 1958, and the peacekeeping force there in 1983 and 1984.
(2) The incursions into the Dominican Republic in 1965 and into Libya in 1986.
(3) The intervention into Grenada in 1983.
Civilian or contractual group. An organization similarly situated to the Women’s Air Forces Service Pilots (a group of Federal civilian employees attached to the U.S. Army Air Force in World War II). Those organization members rendered service to the U.S. Armed Forces during a period of armed conflict in a capacity that was then considered civilian employment with the Armed Forces, or the result of a contract with the U.S. Government, to provide direct support to the Armed Forces.
Recognized group. A group whose service the Secretary of the Air Force administratively has determined to have been “active duty for the purposes of all laws administered by the Department of Veterans Affairs”; i.e., VA benefits under 38 U.S.C. 101.
Similarly situated. A civilian or contractual group is similarly situated to the Women’s Air Forces Service Pilots when it existed as an identifiable group at the time the service was being rendered to the U.S. Armed Forces during a period of armed conflict. Persons who individually provided support through civilian employment or contract, but who were not members of an identifiable group at the time the services were rendered, are not “similarly situated” to the Women’s Air Forces Service Pilots of World War II.
§ 47.4 Policy.
(a) Eligibility for consideration. To be eligible to apply for consideration under Public Law 95-202 and this part, a group must:
(1) Have been similarly situated to the Women’s Air Forces Service Pilots of World War II.
(2) Have rendered service to the United States in what was considered civilian employment with the U.S. Armed Forces either through formal Civil Service hiring or less formal hiring if the engagement was created under the exigencies of war, or as the result of a contract with the U.S. Government to provide direct support to the U.S. Armed Forces.
(3) Have rendered that service during a period of armed conflict.
(4) Consist of living persons to whom VA benefits can accrue.
(5) Not have already received benefits from the Federal Government for the service in question.
(b) A determination of AD service that is considered to be equivalent to active military service is made on the extent to which the group was under the control of the U.S. Armed Forces in support of a military operation or mission during an armed conflict. The extent of control exerted over the group must be similar to that exerted over military personnel and shall be determined by, but not necessarily limited to, the following:
(1) Incidents favoring equivalency—(i) Uniqueness of service. Civilian service (civilian employment or contractual service) is a vital element of the war-fighting capability of the Armed Forces. Civilian service during a period of armed conflict is not necessarily equivalent to active military service, even when performed in a combat zone. Service must be beyond that generally performed by civilian employees and must be occasioned by unique circumstances. For civilian service to be recognized under this part, the following factors must be present:
(A) The group was created or organized by U.S. Government authorities to fill a wartime need or, if a group was not created specifically for a wartime need, but existed before that time, then its wartime mission was of a nature to substantially alter the organization’s prewar character.
(B) If the application is based on service in a combat zone, the mission of the group in a combat zone must have been substantially different from the mission of similar groups not in a combat zone.
(ii) Organizational authority over the group. The concept of military control is reinforced if the military command authority determines such things as the structure of the civilian organization, the location of the group, the mission and activities of the group, and the staffing requirements to include the length of employment and pay grades of the members of the group.
(iii) Integration into the military organization. Integrated civilian groups are subject to the regulations, standards, and control of the military command authority.
(A) Examples include the following:
(1) Exchanging military courtesies.
(2) Wearing military clothing, insignia, and devices.
(3) Assimilating the group into the military organizational structure.
(4) Emoluments associated with military personnel; i.e., the use of commissaries and exchanges, and membership in military clubs.
(B) A group fully integrated into the military would give the impression that the members of the group were military, except that they were paid and accounted for as civilians.
(C) Integration into the military may lead to an expectation by members of the group that the service of the group imminently would be recognized as active military service. Such integration acts in favor of recognition.
(iv) Subjection to military discipline. During past armed conflicts, U.S. military commanders sometimes restricted the rights or liberties of civilian members as if they were military members.
(A) Examples include the following:
(1) Placing members under a curfew.
(2) Requiring members to work extended hours or unusual shifts.
(3) Changing duty assignments and responsibilities.
(4) Restricting proximity travel to and from the military installation.
(5) Imposing dress and grooming standards.
(B) Consequences for noncompliance might include a loss of some privilege, dismissal from the group, or trial under military law. Such military discipline acts in favor of recognition.
(v) Subjection to military justice. Military members are subject to the military criminal justice system. During times of war, “persons serving with or accompanying an Armed Force in the field” are subject to the military criminal justice code. Those who were serving with the U.S. Armed Forces may have been treated as if they were military and subjected to court-martial jurisdiction to maintain discipline. Such treatment is a factor in favor of recognition.
(vi) Prohibition against members of the group joining the armed forces. Some organizations may have been formed to serve in a military capacity to overcome the operation of existing laws or treaty or because of a governmentally established policy to retain individuals in the group as part of a civilian force. These factors act in favor of recognition.
(vii) Receipt of military training and/or achievement of military capability. If a group employed skills or resources that were enhanced as the result of military training or equipment designed or issued for that purpose, this acts toward recognition.
(2) Incidents not favoring equivalency—(i) Submission to the U.S. Armed Forces for protection. A group that seeks protection and assistance from the U.S. Armed Forces and submits to military control for its own well-being is not deemed to have provided service to the Armed Forces equivalent to AD military service, even though the group may have been as follows:
(A) Armed by the U.S. military for defensive purposes.
(B) Routed by the U.S. military to avoid the enemy.
(C) Instructed by the U.S. military for the defense of the group when attacked by, or in danger of attack by, the enemy.
(D) Otherwise submitted themselves to the U.S. military for sustenance and protection.
(ii) Permitted to resign. The ability of members to resign at will and without penalty acts against military control. Penalty may be direct and severe, such as confinement, or indirect and moderate, such as difficult and costly transportation from an overseas location.
(iii) Prior recognition of group service. Recognition of a group’s service by agencies of State or local government does not provide support in favor of recognition under this part.
(3) Status of group in international law. In addition to other factors, consideration will be given to whether members of the group were regarded and treated as civilians, or assimilated to the Armed Forces as reflected in treaties, customary international law, judicial decisions, and U.S. diplomatic practice.
(c) Reconsideration. Applications by groups previously denied a favorable determination by the Secretary of the Air Force shall be reconsidered under this part if the group submits evidence that is new, relevant, and substantive. Any request that the DoD Civilian/Military Service Review Board established hereunder (see § 47.5(b)) determines does not provide new, relevant, and substantive evidence shall be returned to the applicant with the reasons for nonacceptance.
(d) Counsel Representation. Neither the Department of Defense nor Department of Transportation shall provide representation by counsel or defray the cost of such representation with respect to any matter covered by this part.
§ 47.5 Responsibilities.
(a) The Assistant Secretary of Defense (Force Management and Personnel) (ASD(FM&P)) shall:
(1) Appoint a primary and an alternate member in the grade of O-6 or GM-15 or higher to the DoD Civilian/Military Service Review Board.
(2) Exercise oversight over the Military Departments and the U.S. Coast Guard for compliance with this Directive and in the issuance of discharge documents and casualty reports to members of recognized groups.
(b) The Secretary of the Air Force, as the designated Executive Agent of the Secretary of Defense for the administration of Public Law 95-202 shall:
(1) Establish the DoD Civilian/Military Service Review Board and the Advisory Panel.
(2) Appoint as board president a member or employee of the Air Force in grade O-6 or GM-15 or higher.
(3) Request the Secretary of Transportation to appoint an additional voting member from the U.S. Coast Guard when the board is considering the application of a group claiming active Coast Guard service.
(4) Provide a recorder and an assistant to maintain the records of the board and administer the functions of this part.
(5) Provide nonvoting legal advisors and historians.
(6) Publish notices of group applications and other Public Law 95-202 announcements in the
(7) Consider the rationale and recommendations of the DoD Civilian/Military Service Review Board.
(8) Determine whether the service rendered by a civilian or contractual group shall be considered AD service to the U.S. Armed Forces for all laws administered by the VA. The decision of the Secretary of the Air Force is final. There is no appeal.
(9) Notify the following persons in writing when a group determination is made (if the Secretary of the Air Force disagrees with the rationale or recommendations of the board, the Secretary of the Air Force shall provide the decision and reasons for it in writing to these persons):
(i) The applicant(s) for the group.
(ii) The Secretary of the Department of Veterans Affairs.
(iii) The Secretary of the Army.
(iv) The Secretary of the Navy.
(v) The ASD (FM&P).
(vi) The Secretary of Transportation (when a group claims active Coast Guard service).
(c) The Secretary of the Army, Secretary of the Navy, Secretary of the Air Force, and Commandant of the Coast Guard shall:
(1) Appoint to the board a primary and an alternate member in the grades of O-6 or GM-15 or higher from their respective Military Services.
(2) Process applications for discharge documents from individuals claiming membership in a recognized group in accordance with applicable laws, Directives, the Secretary of the Air Force rationale and instrument effecting a group determination, and any other instructions of the board.
(3) Determine whether the applicant was a member of a recognized group after considering the individual’s evidence of membership and verifying the service against available Government records.
(4) Issue a DD Form 214, “Certificate of Release or Discharge from Active Duty,” and a DD Form 256, “Honorable Discharge Certificate,” or a DD Form 257, “General Discharge Certificate,” as appropriate, consistent with DoD Instruction 1336.1
(5) Issue a DD Form 1300, “Report of Casualty,” in accordance with DoD Instruction 1300.9
(6) Ensure that each DD Form 214, “Certificate of Release or Discharge from Active Duty,” and each DD Form 1300, “Report of Casualty,” have the following statement entered in the “Remarks” section:
This document, issued under Public Law 95-202 (38 U.S.C. 106 Note), administratively establishes active duty service for the purposes of Department of Veterans Affairs benefits.
(7) Determine the equivalent military pay grade, when required by the Department of Veterans Affairs. For VA benefits, a pay grade is needed only in cases when an individual was killed or received service-connected injuries or disease during the recognized period of AD service. A DD Form 1300 shall be issued with the equivalent pay grade annotated for a member who died during the recognized period of service. A DD Form 214 shall not include pay grade, unless the Department of Veterans Affairs requests that a grade determination be given. Determinations of equivalent grade shall be based on the following criteria in order of importance:
(i) Officially recognized organizational grade or equivalent rank.
(ii) The corresponding rank for civilian pay grade.
(iii) If neither of the criteria in paragraphs (c)(7) (i) and (ii) of this section, and applies, only one of three grades may be issued; i.e., O-1, E-4, or E-1. Selection depends on the nature of the job performed, the level of supervision exercised, and the military privileges to which the individual was entitled.
(8) Adjudicate applicant challenges to the period of AD service, characterization of service, or other administrative aspects of the discharge documents issued.
§ 47.6 Procedures.
(a) Submitting group applications. Applications on behalf of a civilian or contractual group shall be submitted to the Secretary of the Air Force using the instructions in appendix A to this part.
(b) Processing group applications. (1) When received, the recorder shall review the application for sufficiency and either return it for more information or accept it for consideration and announce acceptance in the
(2) The recorder shall send the application to the appropriate advisory panel for historical review and analysis.
(3) When received, the recorder shall send the advisory panel’s report to the applicant for comment. The applicant’s comments shall be referred to the advisory panel if significant disagreement requires resolution. Additional comments from the historians also shall be referred to the applicant for comment.
(4) The DoD Civilian/Military Service Board shall consider the group application, as established, in paragraph (a) and paragraphs (b) (1) through (3) of this section.
(5) After the Secretary of the Air Force makes a decision, the recorder shall notify the applicant of the decision and announce it in the “
(c) Submitting individual applications. When a group is recognized, individual members may apply to the appropriate Military Department or to the Coast Guard for discharge documents. Submit applications on DD Form 2168, “Application for Discharge of Member or Survivor of Member of Group Certified to Have Performed Active Duty with the Armed Forces of the United States.” An application on behalf of a deceased or incompetent member submitted by the next of kin must be accompanied by proof of death or incompetence.
Appendix A to Part 47—Instructions for Submitting Group Applications Under Public Law 95-202
A. In Submitting a Group Application: 1. Define the group to include the time period that your group provided service to the U.S. Armed Forces.
2. Show the relationship that the group had with the U.S. Armed Forces, the manner in which members of the group were employed, and the services the members of the group provided to the Armed Forces.
3. Address each of the factors in § 47.4.
4. Substantiate and document the application. (The burden of proof rests with the applicant.)
B. Send Completed Group Applications To: Secretary of the Air Force (SAF/MRC), DoD Civilian/Military Service Review Board, Washington, DC 20330-1000.
Appendix B to Part 47—The DoD Civilian/Military Service Review Board and the Advisory Panel
1. The board shall consist of a president selected from the Department of the Air Force and one representative each from the OSD, the Department of the Army, the Department of the Navy, the Department of the Air Force, and the U.S. Coast Guard (when the group claims active Coast Guard service). Each member shall have one vote except that the president shall vote only to break a tie. The board’s decision is determined by majority vote. The president and two voting members shall constitute a quorum.
2. The advisory panel shall act as a nonvoting adjunct to the board. It shall consist of historians selected by the Secretaries of the Military Departments and, if required, by the Secretary of Transportation. The respective Military Departments and the DOT shall ensure that the advisory panel is provided with administrative and legal support.
1. The board shall meet in executive session at the call of the president, and shall limit its reviews to the following:
a. Written submissions by an applicant on behalf of a civilian or contractual group. Presentations to the board are not allowed.
b. Written report(s) prepared by the advisory panel.
c. Any other relevant written information available.
d. Factors established in this part for determining AD service.
2. The board shall return to the applicant any application that does not meet the eligibility criteria established in § 47.4(a). The board only needs to state the reasons why the group is ineligible for consideration under this part.
3. If the board determines that an application is eligible for consideration under § 47.4(a), the board shall provide, to the Secretary of the Air Force, a recommendation on the AD service determination for the group and the rationale for that recommendation that shall include, but not be limited to, a discussion of the factors listed in § 47.4.
a. No factors shall be established that require automatic recognition. Neither the board nor the Secretary of the Air Force shall be bound by any method in reaching a decision.
b. Prior group determinations made under Public Law 95-202 do not bind the board or the Secretary of the Air Force. The board and the Secretary of the Air Force fully and impartially shall consider each group on its own merit in relation to the factors listed in section D. of this Directive.
PART 49—IMPLEMENTATION OF THE HAVANA ACT OF 2021
(a) Under 22 U.S.C. 2680b(i), the Secretary of Defense may provide a payment for a qualifying injury to the brain to a covered employee or covered dependent, as defined in this part, who incurred a qualifying injury to the brain on or after January 1, 2016. The authority to provide such payments is at the discretion of the Secretary of Defense or the Secretary’s designees.
(b) These regulations are issued in accordance with 22 U.S.C. 2680b(i)(4) and apply to covered employees of the Department of Defense (current and former employees) and covered dependents.
§ 49.2 Definitions.
For purposes of this part, the following definitions apply:
Covered dependent. A family member, as defined in this section, of a current or former employee of the Department of Defense who, on or after January 1, 2016, accompanies the employee, while an employee of the Department, to an assigned duty location and becomes injured by reason of a qualifying injury to the brain.
Covered employee. A current or former employee of the Department of Defense who, on or after January 1, 2016, becomes injured by reason of a qualifying injury incurred while an employee of the Department of Defense.
Employee. For purposes of this part, “employee” means an individual who has been appointed to a position in the civil service in accordance with 5 U.S.C. 2104(a)(1) or 5 U.S.C. 2105(a)(1), with the exception of employees paid from non-appropriated funds of an instrumentality of the United States under the jurisdiction of the armed forces who are not a citizen or national of the United States.
Family member. for the purposes of determining “covered dependent”, a family member is defined as follows:
(1) Children who at the time of the injury are unmarried and under 21 years of age or, regardless of age, are unmarried and due to mental and/or physical limitations are incapable of self-support. The term “children” includes natural offspring, step-children, adopted children, and those under permanent legal guardianship, or comparable permanent custody arrangement, of the employee, spouse or domestic partner as defined in 5 CFR 875.101 when dependent upon and normally residing with the guardian or custodial party, and U.S. citizen children placed for adoption if a U.S. court grants temporary guardianship of the child to the employee and specifically authorizes the child to reside with the employee in the country of assignment before the adoption is finalized;
(2) Siblings (including stepsiblings, or adoptive siblings) of the employee, or the spouse when at the time of the injury such siblings were at least 51 percent dependent on the employee for support, unmarried and under 21 years of age, or regardless of age, were physically and/or mentally incapable of self-support;
(3) Parents (including stepparents and legally adoptive parents) of the employee or of the spouse or of the domestic partner as defined in 5 CFR 875.101, when normally residing with the employee at the time of the injury; and
(4) Spouse or domestic partner (as defined in 5 CFR 875.01) at the time of the injury.
Other incident. A new onset of physical manifestations that cannot otherwise be readily explained and that is designated under 22 U.S.C. 2680b.
Qualifying injury to the brain. An injury to the brain that occurred in connection with war, insurgency, hostile act, terrorist activity, or other incidents designated under 22 U.S.C. 2680b, and that was not the result of the willful misconduct of the covered employee or covered dependent.
(1) The individual must have an acute injury to the brain such as, but not limited to, a concussion, penetrating injury, or as a consequence of an event that leads to permanent alterations in brain function as demonstrated by confirming correlative findings on imaging studies (to include computed tomography scan (CT) or magnetic resonance imaging scan (MRI)) or electroencephalogram (EEG); or
(2) A medical diagnosis of a traumatic brain injury (TBI) that required active medical treatment for 12 months or more; or
(3) Acute onset of new persistent, disabling neurologic symptoms as demonstrated by confirming correlative findings on imaging studies (to include CT or MRI), or EEG, or physical exam, or other appropriate testing, and that required active medical treatment for 12 months or more.
§ 49.3 Eligibility for payments by the Department of Defense.
(a) The Department may provide a payment to covered employees as defined in this part, if the qualifying injury to the brain was assessed and diagnosed in person by a currently board-certified physician from the American Board of Psychiatry and Neurology (ABPN), the American Osteopathic Board of Neurology and Psychiatry (AOBNP), the American Board of Physical Medicine and Rehabilitation (ABPMR), or the American Osteopathic Board of Physical Medicine and Rehabilitation (AOBPMR); occurred on or after January 1, 2016; and occurred while the employee or former employee was a covered employee of the Department.
(b) The Department may provide a payment to a covered dependent, if the qualifying injury to the brain was assessed and diagnosed in person by a currently board-certified physician from the ABPN, AOBNP, ABPMR, or AOBPMR; occurred on or after January 1, 2016; and occurred while the covered dependent accompanied an employee of the Department at an assigned duty location.
(c) Payment for a qualifying injury to the brain will be a non-taxable, one-time lump sum payment unless a second payment is authorized under paragraph (d)(4) of this section.
(d) The amount of payment is at the Department’s discretion. The Department will determine the amount paid to each eligible person based on the following factors:
(1) The responses on; DD Form 3220, “Eligibility Questionnaire for HAVANA Act Payments”; and
(2) Whether the Department of Labor (Workers’ Compensation) has determined that the requester has no reemployment potential for an indefinite future; or the Social Security Administration has approved the requester for Social Security Disability Insurance or Supplemental Security Income (SSI) for a disability; or a neurologist or physician certified by the ABPN, AOBNP, ABPMR, or AOBPMR has certified that the individual requires a full-time caregiver for activities of daily living, as defined by the Katz Index of Independence of Daily Living.
(3) The award thresholds are based on Level III of the Senior Executive Schedule of the year in which the request for payment is approved: Base will be 75 percent of Level III pay, and Base Plus will be 100 percent of Level III pay.
(4) If the requester meets any of the criteria listed in paragraph (d)(2) of this section, the requester will be eligible to receive a Base Plus payment. Requesters whose board-certified physicians confirm that the definition of “qualifying injury to the brain” has been met but has not met any of the criteria listed in paragraph (d)(2), will be eligible to receive a Base payment. If a requester who received a Base payment later meets any of the criteria listed in paragraph (d)(2), the requester may apply for an additional payment that will be the difference between the Base and Base Plus payment.
§ 49.4 Consultation with the Department of State.
When a covered employee or covered dependent seeks payment for an incident that occurred overseas under Secretary of State security responsibility, the Department will coordinate with the Department of State as appropriate in evaluating whether the incident is an “other incident” for purposes of establishing a qualifying injury or should be so designated.
§ 49.5 Procedures.
(a) Application. (1) A covered employee or covered dependent may apply for a HAVANA Act payment if the covered individual has sustained a qualifying injury to the brain on or after January 1, 2016. To apply for the benefit, the applicant must submit the DD Form 3220, “Eligibility Questionnaire for HAVANA Act Payments,” claim form to the appropriate email address set forth in paragraph (a)(2) of this section. The claim form must be completed by a person eligible to file a claim, or by that person’s legal guardian, a family member, or another individual authorized to act on behalf of the requestor and must be signed by a currently certified physician as listed in § 49.3(a).
(2) The claim form and any additional documentation must be emailed to the following address: [email protected].
(3) The applicant must furnish additional documentation upon request provided that the applicant has access to such additional documentation.
(4) Copies of the claim form, as well as the regulations and other information, may be obtained on the Defense Civilian Personnel Advisory Service website, https://www.dcpas.osd.mil/havana-act-benefits-program.
(b) Other incident. The Department will determine whether a covered employee or covered dependent has a qualifying injury to the brain as set forth in § 49.2(f)(2), and whether the incident causing the injury was in connection with war, insurgency, hostile act, or terrorist activity. The Department will, as appropriate or necessary, designate “other incidents” under 22 U.S.C. 2680b(j) for employees and dependents who were not, at the time of the incident, under the security responsibility of the Secretary of State or when operational control of overseas security responsibility for such employees or dependents was delegated to the Secretary of Defense. The Department will, as appropriate or necessary, make a recommendation to the Secretary of State that the incident should be deemed an “other incident designated by the Secretary of State” for purposes of 22 U.S.C. 2680b(i)(1)(D) (cross-referencing subparagraph 2680b(e)(4)) for incidents affecting employees or dependents who were, at the time of the incident, under the security responsibility of the Secretary of State.
(c) Decisions. For covered employees and covered dependents, the Director, Defense Civilian Personnel Advisory Service, in their discretion may approve payments pursuant to 22 U.S.C. 2680b(i).
(d) Appeals. In the event of a decision to deny an application for payment under the HAVANA Act, the Department will notify the applicant in writing. Applicants may direct an appeal via the DoD HAVANA Act mailbox, [email protected], to the Deputy Assistant Secretary of Defense for Civilian Personnel Policy, within 60 days of the date of the notification of the denial. However, decisions concerning the amount paid are not subject to appeal. The Department will notify the applicant in writing of the decision on appeal.
PART 50—PERSONAL COMMERCIAL SOLICITATION ON DOD INSTALLATIONS
General Provisions
§ 50.1 Purpose.
This part:
(a) Implements section 577 of Public Law No. 109-163 (2006) and establishes policy and procedures for personal commercial solicitation on DoD installations.
(b) Continues the established annual DoD registration requirement for the sale of insurance and securities on DoD installations overseas.
(c) Identifies prohibited practices that may cause withdrawal of commercial solicitation privileges on DoD installations and establishes notification requirements when privileges are withdrawn.
(d) Establishes procedures for persons solicited on DoD installations to evaluate solicitors.
(e) Prescribes procedures for providing financial education programs to military personnel.
§ 50.2 Applicability.
This part:
(a) Applies to the Office of the Secretary of Defense, the Military Departments, the Chairman of the Joint Chiefs of Staff, the Combatant Commands, the Office of the Inspector General of the Department of Defense, the Defense Agencies, the DoD Field Activities, and all other organizational entities in the Department of Defense (hereafter referred to collectively as the “DoD Components”).
(b) Does not apply to services furnished by residential service companies, such as deliveries of milk, laundry, newspapers, and related services to personal residences on the installation requested by the resident and authorized by the installation commander.
(c) Applies to all other personal commercial solicitation on DoD installations. It includes meetings on DoD installations of private, non-profit, tax-exempt organizations that involve commercial solicitation. Attendance at these meetings shall be voluntary and the time and place of such meetings are subject to the discretion of the installation commander or his or her designee.
§ 50.3 Definitions.
Agent. An individual who receives remuneration as a salesperson or whose remuneration is dependent on volume of sales of a product or products. (Also referred to as “commercial agent” or “producer”). In this part, the term “agent” includes “general agent” unless the content clearly conveys a contrary intent.
“Authorized” Bank and/or Credit Union. Bank and/or credit union selected by the installation commander through open competitive solicitation to provide exclusive on-base delivery of financial services to the installation under a written operating agreement.
Banking institution. An entity chartered by a State or the Federal Government to provide financial services.
Commercial sponsorship. The act of providing assistance, funding, goods, equipment (including fixed assets), or services to an MWR program or event by an individual, agency, association, company or corporation, or other entity (sponsor) for a specified (limited) period of time in return for public recognition or advertising promotions. Enclosure 9 of DoD Instruction 1015.10
Credit union. A cooperative nonprofit association, incorporated under the Credit Union Act (12 U.S.C. 1751), or similar state statute, for the purpose of encouraging thrift among its members and creating a source of credit at a fair and reasonable rate of interest.
DoD installation. For the purposes of this part, any Federally owned, leased, or operated base, reservation, post, camp, building, or other facility to which DoD personnel are assigned for duty, including barracks, transient housing, and family quarters.
DoD personnel. For the purposes of this part, all active duty officers (commissioned and warrant) and enlisted members of the Military Departments and all civilian employees, including nonappropriated fund employees and special Government employees, of the Department of Defense.
Financial services. Those services commonly associated with financial institutions in the United States, such as electronic banking (e.g., ATMs), in-store banking, checking, share and savings accounts, fund transfers, sale of official checks, money orders and travelers checks, loan services, safe deposit boxes, trust services, sale and redemption of U.S. Savings Bonds, and acceptance of utility payments and any other consumer-related banking services.
General agent. A person who has a legal contract to represent a company. See the definition of “Agent” in this section.
Insurance carrier. An insurance company issuing insurance through an association reinsuring or coinsuring such insurance.
Insurance product. A policy, annuity, or certificate of insurance issued by an insurer or evidence of insurance coverage issued by a self-insured association, including those with savings and investment features.
Insurer. An entity licensed by the appropriate department to engage in the business of insurance.
Military services. See Joint Publication 1-02, “DoD Dictionary of Military and Associated Terms.”
Normal home enterprises. Sales or services that are customarily conducted in a domestic setting and do not compete with an installation’s officially sanctioned commerce.
Personal commercial solicitation. Personal contact, to include meetings, meals, or telecommunications contact, for the purpose of seeking private business or trade.
Securities. Mutual funds, stocks, bonds, or any product registered with the Securities and Exchange Commission except for any insurance or annuity product issued by a corporation subject to supervision by State insurance authorities.
Suspension. Temporary termination of privileges pending completion of a commander’s inquiry or investigation.
Withdrawal. Termination of privileges for a set period of time following completion of a commander’s inquiry or investigation.
§ 50.4 Policy.
(a) It is DoD policy to safeguard and promote the welfare of DoD personnel as consumers by setting forth a uniform approach to the conduct of all personal commercial solicitation and sales to them by dealers and their agents. For those individuals and their companies that fail to follow this policy, the opportunity to solicit on military installations may be limited or denied as appropriate.
(b) Command authority includes authority to approve or prohibit all commercial solicitation covered by this part. Nothing in this part limits an installation commander’s inherent authority to deny access to vendors or to establish time and place restrictions on commercial activities at the installation.
§ 50.5 Responsibilities.
(a) The Principal Deputy Under Secretary of Defense for Personnel and Readiness (PDUSD(P&R)), under the Under Secretary of Defense for Personnel and Readiness, shall:
(1) Identify and publish policies and procedures governing personal commercial solicitation on DoD installations consistent with the policy set forth in this part.
(2) Maintain and make available to installation commanders and appropriate Federal personnel the current master file of all individual agents, dealers, and companies who have their privileges withdrawn at any DoD installation.
(3) Develop and maintain a list of all State Insurance Commissioners’ points of contact for DoD matters and forward this list to the Military Services.
(b) The Heads of the DoD Components shall:
(1) Ensure implementation of this part and compliance with its provisions.
(2) Require installations under their authority to report each instance of withdrawal of commercial solicitation privileges.
(3) Submit lists of all individuals and companies who have had their commercial solicitation privileges withdrawn at installations under their authority to the PDUSD(P&R) in accordance with this part.
§ 50.6 Procedures.
(a) General. (1) No person has authority to enter a DoD installation to transact personal commercial solicitation as a matter of right. Personal commercial solicitation may be permitted only if the following requirements are met:
(i) The solicitor is duly licensed under applicable Federal, State, or municipal laws and has complied with installation regulations.
(ii) A specific appointment has been made for each meeting with the individual concerned. Each meeting is conducted only in family quarters or in other areas designated by the installation commander.
(iii) The solicitor agrees to provide each person solicited the personal commercial solicitation evaluation included in DD Form 2885
(iv) The solicitor agrees to provide DoD personnel with a written reminder, prior to their making a financial commitment, that free legal advice is available from the Office of the Staff Judge Advocate.
(2) Solicitors on overseas installations shall be required to observe, in addition to the above, the applicable laws of the host country. Upon request, the solicitor must present documentary evidence to the installation commander that the company they represent, and its agents, meet the applicable licensing requirements of the host country.
(b) Life insurance products and securities. (1) Life insurance products and securities offered and sold to DoD personnel shall meet the prerequisites described in § 50.3.
(2) Installation commanders may permit insurers and their agents to solicit on DoD installations if the requirements of paragraph (a) of this section are met and if they are licensed under the insurance laws of the State where the installation is located. Commanders will ensure the agent’s license status and complaint history are checked with the appropriate State or Federal regulators before granting permission to solicit on the installation.
(3) In addition, before approving insurance and financial product agents’ requests for permission to solicit, commanders shall review the list of agents and companies currently barred, banned, or limited from soliciting on any or all DoD installations. This list may be viewed via the Personal Commercial Solicitation Report “quick link” at http://www.commanderspage.com. In overseas areas, the DoD Components shall limit insurance solicitation to those insurers registered under the provisions of appendix B to this part.
(4) The conduct of all insurance business on DoD installations shall be by specific appointment. When establishing the appointment, insurance agents shall identify themselves to the prospective purchaser as an agent for a specific insurer.
(5) Installation commanders shall designate areas where interviews by appointment may be conducted. The opportunity to conduct scheduled interviews shall be extended to all solicitors on an equitable basis. Where space and other considerations limit the number of agents using the interviewing area, the installation commander may develop and publish local policy consistent with this concept.
(6) Installation commanders shall make disinterested third-party insurance counseling available to DoD personnel desiring counseling. Financial counselors shall encourage DoD personnel to seek legal assistance or other advice from a disinterested third-party before entering into a contract for insurance or securities.
(7) In addition to the solicitation prohibitions contained in paragraph (d) of this section, DoD Components shall prohibit the following:
(i) The use of DoD personnel representing any insurer, dealing directly or indirectly on behalf of any insurer or any recognized representative of any insurer on the installation, or as an agent or in any official or business capacity with or without compensation.
(ii) The use of an agent as a participant in any Military Service-sponsored education or orientation program.
(iii) The designation of any agent or the use by any agent of titles (for example, “Battalion Insurance Counselor,” “Unit Insurance Advisor,” “Servicemen’s Group Life Insurance Conversion Consultant,”) that in any manner, states, or implies any type of endorsement from the U.S. Government, the Armed Forces, or any State or Federal agency or government entity.
(iv) The use of desk space for interviews for other than a specific prearranged appointment. During such appointment, the agent shall not be permitted to display desk signs or other materials announcing his or her name or company affiliation.
(v) The use of an installation “daily bulletin,” marquee, newsletter, Web page, or other official notice to announce the presence of an agent and/or his or her availability.
(c) Supervision of on-base commercial activities. (1) All pertinent installation regulations shall be posted in a place easily accessible to those conducting and receiving personal commercial solicitation on the installation.
(2) The installation commander shall make available a copy of installation regulations to anyone conducting on-base commercial solicitation activities warning that failure to follow the regulations may result in the loss of solicitation privileges.
(3) The installation commander, or designated representative, shall inquire into any alleged violations of this part or of any questionable solicitation practices. The DD Form 2885 is provided as a means to supervise solicitation activities on the installation.
(d) Prohibited practices. The following commercial solicitation practices shall be prohibited on all DoD installations:
(1) Solicitation of recruits, trainees, and transient personnel in a group setting or “mass” audience and solicitation of any DoD personnel in a “captive” audience where attendance is not voluntary.
(2) Making appointments with or soliciting military or DoD civilian personnel during their normally scheduled duty hours.
(3) Soliciting in barracks, day rooms, unit areas, transient personnel housing, or other areas where the installation commander has prohibited solicitation.
(4) Use of official military identification cards or DoD vehicle decals by active duty, retired or reserve members of the Military Services to gain access to DoD installations for the purpose of soliciting. When entering the installation for the purpose of solicitation, solicitors with military identification cards and/or DoD vehicle decals must present documentation issued by the installation authorizing solicitation.
(5) Procuring, attempting to procure, supplying, or attempting to supply non-public listings of DoD personnel for purposes of commercial solicitation, except for releases made in accordance with DoD Directive 5400.7.
(6) Offering unfair, improper, or deceptive inducements to purchase or trade.
(7) Using promotional incentives to facilitate transactions or to eliminate competition.
(8) Using manipulative, deceptive, or fraudulent devices, schemes, or artifices, including misleading advertising and sales literature. All financial products, which contain insurance features, must clearly explain the insurance features of those products.
(9) Using oral or written representations to suggest or give the appearance that the Department of Defense sponsors or endorses any particular company, its agents, or the goods, services, and commodities it sells.
(10) DoD personnel making personal commercial solicitations or sales to DoD personnel who are junior in rank or grade, or to the family members of such personnel, except as authorized in Section 2-205 and 5-409 of the Joint Ethics Regulation, DoD 5500.7-R.
(11) Entering into any unauthorized or restricted area.
(12) Using any portion of installation facilities, including quarters, as a showroom or store for the sale of goods or services, except as specifically authorized by DoD Directive 1330.17
(13) Soliciting door to door or without an appointment.
(14) Unauthorized advertising of addresses or telephone numbers used in personal commercial solicitation activities conducted on the installation, or the use of official positions, titles, or organization names, for the purpose of personal commercial solicitation, except as authorized in DoD 5500.7-R. Military grade and Military Service as part of an individual’s name (e.g., Captain Smith, U.S. Marine Corps) may be used in the same manner as conventional titles, such as “Mr.”, “Mrs.”, or “Honorable”.
(15) Contacting DoD personnel by calling a government telephone, faxing to a government fax machine, or by sending e-mail to a government computer, unless a pre-existing relationship (i.e., the DoD member is a current client or requested to be contacted) exists between the parties and the DoD member has not asked for contact to be terminated.
(e) Denial, suspension, and withdrawal of installation solicitation privileges. (1) The installation commander shall deny, suspend, or withdraw permission for a company and its agents to conduct commercial activities on the base if such action is in the best interests of the command. The grounds for taking these actions may include, but are not limited to, the following:
(i) Failure to meet the licensing and other regulatory requirements prescribed in this part or violations of the State law where the installation is located. Commanders will request that appropriate state officials determine whether a company or agent violated State law.
(ii) Commission of any of the practices prohibited in paragraphs (b)(6) and (d) of this section.
(iii) Substantiated complaints and/or adverse reports regarding the quality of goods, services, and/or commodities, and the manner in which they are offered for sale.
(iv) Knowing and willful violations of Public Law 90-321.
(v) Personal misconduct by a company’s agent or representative while on the installation.
(vi) The possession of, and any attempt to obtain supplies of direct deposit forms, or any other form or device used by Military Departments to direct a Service member’s pay to a third party, or possession or use of facsimiles thereof. This includes using or assisting in using a Service member’s “MyPay” account or other similar Internet medium for the purpose of establishing a direct deposit for the purchase of insurance or other investment product.
(vii) Failure to incorporate and abide by the Standards of Fairness policies contained in DoD Instruction 1344.9.
(2) The installation commander may determine that circumstances dictate the immediate suspension of solicitation privileges while an investigation is conducted. Upon suspending solicitation privileges, the commander shall promptly inform the agent and the company the agent represents, in writing.
(3) In suspending or withdrawing solicitation privileges, the installation commander shall determine whether to limit such action to the agent alone or extend it to the company the agent represents. This decision shall be based on the circumstances of the particular case, including, but not limited to, the nature of the violations, frequency of violations, the extent to which other agents of the company have engaged in such practices and any other matters tending to show the culpability of an individual and the company.
(4) If the investigation determines an agent or company does not possess a valid license or the agent, company, or product has failed to meet other State or Federal regulatory requirements, the installation commander shall immediately notify the appropriate regulatory authorities.
(5) In a withdrawal action, the commander shall allow the individual or company an opportunity to show cause as to why the action should not be taken. To “show cause” means an opportunity must be given for the aggrieved party to present facts on an informal basis for the consideration of the installation commander or the commander’s designee. The installation commander shall make a final decision regarding withdrawal based upon the entire record in each case. Installation commanders shall report concerns or complaints involving the quality or suitability of financial products or concerns or complaints involving marketing methods used to sell these products to the appropriate State and Federal regulatory authorities. Also, installation commanders shall report any suspension or withdrawal of insurance or securities products solicitation privileges to the appropriate State or Federal regulatory authorities.
(6) The installation commander shall inform the Military Department concerned of any denial, suspension, withdrawal, or reinstatement of an agent or company’s solicitation privileges and the Military Department shall inform the Office of the PDUSD(P&R), which will maintain a list of insurance and financial product companies and agents currently barred, banned, or otherwise limited from soliciting on any or all DoD installations. This list may be viewed at http://www.commanderspage.com. If warranted, the installation commander may recommend to the Military Department concerned that the action taken be extended to other DoD installations. The Military Department may extend the action to other military installations in the Military Department. The PDUSD(P&R), following consultation with the Military Department concerned, may order the action extended to other Military Departments.
(7) All suspensions or withdrawals of privileges may be permanent or for a set period of time. If for a set period, when that period expires, the individual or company may reapply for permission to solicit through the installation commander or Military Department originally imposing the restriction. The installation commander or Military Department reinstating permission to solicit shall notify the Office of the PDUSD(P&R) and appropriate State and Federal regulatory agencies when such suspensions or withdrawals are lifted.
(8) The Secretaries of the Military Departments may direct the Armed Forces Disciplinary Control Boards in all geographical areas in which the grounds for withdrawal action have occurred to consider all applicable information and take action that the Boards deem appropriate.
(9) Nothing in this part limits the authority of the installation commander or other appropriate authority from requesting or instituting other administrative and/or criminal action against any person, including those who violate the conditions and restrictions upon which installation entry is authorized.
(f) Advertising and commercial sponsorship. (1) The Department of Defense expects voluntary observance of the highest business ethics by commercial enterprises soliciting DoD personnel through advertisements in unofficial military publications when describing goods, services, commodities, and the terms of the sale (including guarantees, warranties, and the like).
(2) The advertising of credit terms shall conform to the provisions of 15 U.S.C. 1601 as implemented by Federal Reserve Board Regulation Z according to 12 CFR part 226.
(3) Solicitors may provide commercial sponsorship to DoD Morale, Welfare and Recreation programs or events according to DoD Instruction 1015.10. However, sponsorship may not be used as a means to obtain personal contact information for any participant at these events without written permission from the individual participant. In addition, commercial sponsors may not use sponsorship to advertise products and/or services not specifically agreed to in the sponsorship agreement.
(4) The installation commander may permit organizations to display sales literature in designated locations subject to command policies. In accordance with DoD 7000.14-R,
(g) Educational programs. (1) The Military Departments shall develop and disseminate information and provide educational programs for members of the Military Services on their personal financial affairs, including such subjects as insurance, Government benefits, savings, budgeting, and other financial education and assistance requirements outlined in DoD Instruction 1342.27.
(2) The Military Departments shall also make qualified personnel and facilities available for individual counseling on loans and consumer credit transactions in order to encourage thrift and financial responsibility and promote a better understanding of the wise use of credit, as prescribed in DoD 7000.14-R.
(3) The Military Departments shall encourage military members to seek advice from a legal assistance officer, the installation financial counselor, their own lawyer, or a financial counselor, before making a substantial loan or credit commitment.
(4) Each Military Department shall provide advice and guidance to DoD personnel who have a complaint under DoD 1344.9 or who allege a criminal violation of its provisions, including referral to the appropriate regulatory agency for processing of the complaint.
(5) Banks and credit unions operating on DoD installations are required to provide financial counseling services as an integral part of their financial services offerings. Representatives of and materials provided by authorized banks and/or credit unions located on military installations may be used to provide the educational programs and information required by this part subject to the following conditions:
(i) If the bank or credit union operating on a DoD installation sells insurance or securities or has any affiliation with a company that sells or markets insurance or other financial products, the installation commander shall consider that company’s history of complying with this part before authorizing the on-base financial institution to provide financial education.
(ii) All prospective educators must agree to use appropriate disclaimers in their presentations and on their other educational materials. The disclaimers must clearly indicate that they do not endorse or favor any commercial supplier, product, or service, or promote the services of a specific financial institution.
(6) Use of other non-government organizations to provide financial education programs is limited as follows:
(i) Under no circumstances shall commercial agents, including employees or representatives of commercial loan, finance, insurance, or investment companies, be used.
(ii) The limitation in paragraph (g)(6)(i) of this section does not apply to educational programs and information regarding the Survivor Benefits Program and other government benefits provided by tax-exempt organizations under section (c)(23) of 26 U.S.C. 501 or by any organization providing such a benefit under a contract with the Government.
(iii) Educators from non-government, non-commercial organizations expert in personal financial affairs and their materials may, with appropriate disclaimers, provide the educational programs and information required by this part if approved by a Presidentially-appointed, Senate-confirmed civilian official of the Military Department concerned. Presentations by approved organizations shall be conducted only at the express request of the installation commander. The following criteria shall be used when considering whether to permit a non-government, non-commercial organization to present an educational program or provide materials on personal financial affairs:
(A) The organization must qualify as a tax-exempt organization under 5 U.S.C. 501(c)(3) or 5 U.S.C. 501(c)(23).
(B) If the organization has any affiliation with a company that sells or markets insurance or other financial products, the approval authority shall consider that company’s history of complying with this part.
(C) All prospective educators must use appropriate disclaimers, in their presentations and on their other educational materials, which clearly indicate that they and the Department of Defense do not endorse or favor any commercial supplier, product, or service or promote the services of a specific financial institution.
§ 50.7 Information requirements.
The reporting requirements concerning the suspension or withdrawal of solicitation privileges have been assigned Report Control Symbol (RCS) DD-P&R(Q)2182 in accordance with DoD 8910.1-M.
Appendix A to Part 50—Life Insurance Products and Securities
Companies must provide DoD personnel a written description for each product or service they intend to market to DoD personnel on DoD installations. These descriptions must be written in a manner that DoD personnel can easily understand, and fully disclose the fundamental nature of the policy. Companies must be able to demonstrate that each form to be used has been filed with and approved, where applicable, by the insurance department of the State where the installation is located. Insurance products marketed to DoD personnel on overseas installations must conform to the standards prescribed by the laws of the State where the company is incorporated.
1. Insurance products, other than certificates or other evidence of insurance issued by a self-insured association, offered and sold worldwide to personnel on DoD installations, must:
a. Comply with the insurance laws of the State or country in which the installation is located and the requirements of this part.
b. Contain no restrictions by reason of Military Service or military occupational specialty of the insured, unless such restrictions are clearly indicated on the face of the contract.
c. Plainly indicate any extra premium charges imposed by reason of Military Service or military occupational specialty.
d. Contain no variation in the amount of death benefit or premium based upon the length of time the contract has been in force, unless all such variations are clearly described in the contract.
e. In plain and readily understandable language, and in type font at least as large as the font used for the majority of the policy, inform Service members of:
1. The availability and cost of government subsidized Servicemen’s Group Life Insurance.
2. The address and phone number where consumer complaints are received by the State insurance commissioner for the State in which the insurance product is being sold.
3. That the U.S. Government has in no way sanctioned, recommended, or encouraged the sale of the product being offered. With respect to the sale or solicitation of insurance on Federal land or facilitates located outside the United States, insurance products must contain the address and phone number where consumer complaints are received by the State insurance commissioner for the State which has issued the agent a resident license or the company is domiciled, as applicable.
2. To comply with paragraphs A.1.b., A.1.c. and A.1.d., an appropriate reference stamped on the first page of the contract shall draw the attention of the policyholder to any restrictions by reason of Military Service or military occupational specialty. The reference shall describe any extra premium charges and any variations in the amount of death benefit or premium based upon the length of time the contract has been in force.
3. Variable life insurance products may be offered provided they meet the criteria of the appropriate insurance regulatory agency and the Securities and Exchange Commission.
4. Insurance products shall not be marketed or sold disguised as investments. If there is a savings component to an insurance product, the agent shall provide the customer written documentation, which clearly explains how much of the premium goes to the savings component per year broken down over the life of the policy. This document must also show the total amount per year allocated to insurance premiums. The customer must be provided a copy of this document that is signed by the insurance agent.
1. All securities must be registered with the Securities and Exchange Commission.
2. All sales of securities must comply with the appropriate Securities and Exchange Commission regulations.
3. All securities representatives must apply to the commander of the installation on which they desire to solicit the sale of securities for permission to solicit.
4. Where the accredited insurer’s policy permits, an overseas accredited life insurance agent—if duly qualified to engage in security activities either as a registered representative of the National Association of Securities Dealers or as an associate of a broker or dealer registered with the Securities and Exchange Commission—may offer life insurance and securities for sale simultaneously. In cases of commingled sales, the allotment of pay for the purchase of securities cannot be made to the insurer.
1. Allotments of military pay for life insurance products shall be made in accordance with DoD 7000.14-R.
2. For personnel in pay grades E-4 and below, in order to obtain financial counseling, at least seven calendar days shall elapse between the signing of a life insurance application and the certification of a military pay allotment for any supplemental commercial life insurance. Installation Finance Officers are responsible for ensuring this seven-day cooling-off period is monitored and enforced. The purchaser’s commanding officer may grant a waiver of the seven-day cooling-off period requirement for good cause, such as the purchaser’s imminent deployment or permanent change of station.
The recent growth and general acceptability of quasi-military associations offering various insurance plans to military personnel are acknowledged. Some associations are not organized within the supervision of insurance laws of either a State or the Federal Government. While some are organized for profit, others function as nonprofit associations under Internal Revenue Service regulations. Regardless of the manner in which insurance is offered to members, the management of the association is responsible for complying fully with the policies contained in this part.
Appendix B to Part 50—Overseas Life Insurance Registration Program
a. Insurers must demonstrate continuous successful operation in the life insurance business for a period of not less than 5 years on December 31 of the year preceding the date of filing the application.
b. Insurers must be listed in Best’s Life-Health Insurance Reports and be assigned a rating of B + (Very Good) or better for the business year preceding the Government’s fiscal year for which registration is sought.
a. Insurers must demonstrate continuous successful operation in the life insurance business, as described in paragraph A.1.a. of this appendix.
b. Insurers must retain a Best’s rating of B + or better, as described in paragraph A.1.b. of this appendix.
c. Insurers must demonstrate a record of compliance with the policies found in this part.
Waivers of the initial registration or re-registration provisions shall be considered for those insurers demonstrating substantial compliance with the aforementioned criteria.
1. Applications Filed Annually. Insurers must apply by June 30 of each year for solicitation privileges on overseas U.S. military installations for the next fiscal year beginning October 1. Applications e-mailed, faxed, or postmarked after June 30 shall not be considered.
2. Application prerequisites. A letter of application, signed by the President, Vice President, or designated official of the insurance company shall be forwarded to the Principal Deputy Under Secretary of Defense (Personnel and Readiness), Attention: Morale, Welfare and Recreation (MWR) Policy Directorate, 4000 Defense, Pentagon, Washington, DC 20301-4000. The registration criteria in paragraph A1.a. or A1.b. of this appendix must be met to satisfy application prerequisites. The letter shall contain the information set forth below, submitted in the order listed. Where criteria are not applicable, the letter shall so state.
a. The overseas Combatant Commands (e.g., U.S. European Command, U.S. Pacific Command, U.S. Central Command, U.S. Southern Command) where the company presently solicits, or plans to solicit, on U.S. military installations.
b. A statement that the company has complied with, or shall comply with, the applicable laws of the country or countries wherein it proposes to solicit. “Laws of the country” means all national, provincial, city, or county laws or ordinances of any country, as applicable.
c. A statement that the products to be offered for sale conform to the standards prescribed in appendix A to this part and contain only the standard provisions such as those prescribed by the laws of the State where the company’s headquarters are located.
d. A statement that the company shall assume full responsibility for the acts of its agents with respect to solicitation. If warranted, the number of agents may be limited by the overseas command concerned.
e. A statement that the company shall only use agents who have been licensed by the appropriate State and registered by the overseas command concerned to sell to DoD personnel on DoD installations.
f. Any explanatory or supplemental comments that shall assist in evaluating the application.
g. If the Department of Defense requires facts or statistics beyond those normally involved in registration, the company shall make separate arrangements to provide them.
h. A statement that the company’s general agent and other registered agents are appointed in accordance with the prerequisites established in section C of this appendix.
3. If a company is a life insurance company subsidiary, it must be registered separately on its own merits.
The overseas Combatant Commanders shall apply the following principles in registering agents:
1. An agent must possess a current State license. This requirement may be waived for a registered agent continuously residing and successfully selling life insurance in foreign areas, who, through no fault of his or her own, due to State law (or regulation) governing domicile requirements, or requiring that the agent’s company be licensed to do business in that State, forfeits eligibility for a State license. The request for a waiver shall contain the name of the State or jurisdiction that would not renew the agent’s license.
2. General agents and agents may represent only one registered commercial insurance company. This principle may be waived by the overseas Combatant Commander if multiple representations are in the best interest of DoD personnel.
3. An agent must have at least 1 year of successful life insurance underwriting experience in the United States or its territories, generally within the 5 years preceding the date of application, in order to be approved for overseas solicitation.
4. The overseas Combatant Commanders may exercise further agent control procedures as necessary.
5. An agent, once registered in an overseas area, may not change affiliation from the staff of one general agent to another and retain registration, unless the previous employer certifies in writing that the release is without justifiable prejudice. Overseas Combatant Commanders will have final authority to determine justifiable prejudice. Indebtedness of an agent to a previous employer is an example of justifiable prejudice.
1. Registration by the Department of Defense upon annual applications of insurers shall be announced as soon as practicable by notice to each applicant and by a list released annually in September to the appropriate overseas Combatant Commanders. Approval does not constitute DoD endorsement of the insurer or its products. Any advertising by insurers or verbal representation by its agents, which suggests such endorsement, is prohibited.
2. In the event registration is denied, specific reasons for the denial shall be provided to the applicant.
a. The insurer shall have 30 days from the receipt of notification of denial of registration (sent certified mail, return receipt requested) in which to request reconsideration of the original decision. This request must be in writing and accompanied by substantiating data or information in rebuttal of the specific reasons upon which the denial was based.
b. Action by the Office of the PDUSD(P&R) on a request for reconsideration is final.
c. An applicant that is presently registered as an insurer shall have 90 calendar days from final action denying registration in which to close operations.
3. Upon receiving an annual letter approving registration, each company shall send to the applicable overseas Combatant Commander a verified list of agents currently registered for overseas solicitation. Where applicable, the company shall also include the names and prior military affiliation of new agents for whom original registration and permission to solicit on base is requested. Insurers initially registered shall be furnished instructions by the Department of Defense for agent registration procedures in overseas areas.
4. Material changes affecting the corporate status and financial condition of the company that occur during the fiscal year of registration must be reported to the MWR Policy Directorate at the address in paragraph B.2. of this appendix as they occur.
a. The Office of the PDUSD(P&R) reserves the right to terminate registration if such material changes appear to substantially affect the financial and operational standards described in section A of this appendix on which registration was based.
b. Failure to report such material changes may result in termination of registration regardless of how it affects the standards.
5. If an analysis of information furnished by the company indicates that unfavorable trends are developing that could adversely affect its future operations, the Office of the PDUSD(P&R) may, at its option, bring such matters to the attention of the company and request a statement as to what action, if any, is considered to deal with such unfavorable trends.
PART 53—WEARING OF THE UNIFORM
§ 53.1 Purpose.
This part prescribes limitations on wearing of the uniform by members of the Armed Forces, and establishes policy with respect to wearing of the uniform by former members of the Armed Forces.
§ 53.2 Policy.
(a) Members of the Armed Forces (including retired members and members of reserve components). The wearing of the uniform is prohibited under any of the following circumstances:
(1) At any meeting or demonstration which is a function of, or sponsored by an organization, association, movement, group, or combination of persons which the Attorney General of the United States has designated, pursuant to E.O. 10450 as amended, as totalitarian, fascist, communist, or subversive, or as having adopted a policy of advocating or approving the commission of acts of force or violence to deny others their rights under The Constitution of the United States, or as seeking to alter the form of Government of the United States by unconstitutional means.
(2) During or in connection with the furtherance of political activities, private employment or commercial interests, when an inference of official sponsorship for the activity or interest could be drawn.
(3) Except when authorized by competent Service authority, when participating in activities such as public speeches, interviews, picket lines, marches, rallies or any public demonstrations (including those pertaining to civil rights), which may imply Service Sanction of the cause for which the demonstration or activity is conducted.
(4) When wearing of the uniform would tend to bring discredit upon the Armed Forces.
(5) When specifically prohibited by regulations of the department concerned.
(b) Former members of the Armed Forces. (1) Unless qualified under another provision of this part or under the provisions of 10 U.S.C. 772, former members who served honorably during a declared or undeclared war and whose most recent service was terminated under honorable conditions may wear the uniform in the highest grade held during such war service only upon the following occasions and in the course of travel incidents thereto:
(i) Military funerals, memorial services, weddings, and inaugurals.
(ii) Parades on national or State holidays; or other parades or ceremonies of a patriotic character in which any active or reserve U.S. military unit is taking part.
(2) Wearing of the uniform or any part thereof at any other time or for any other purpose is prohibited.
(c) Medal of Honor holders. Persons who have been awarded the Medal of Honor may wear the uniform at their pleasure except under the circumstances set forth in paragraph (a) of this section.
PART 56—NONDISCRIMINATION ON THE BASIS OF HANDICAP IN PROGRAMS AND ACTIVITIES ASSISTED OR CONDUCTED BY THE DEPARTMENT OF DEFENSE
§ 56.1 Purpose.
This part implements section 504 of Public Law 93-112, “Rehabilitation Act of 1973,” September 26, 1973 (29 U.S.C. 794) (1976); section 111 of Pub. L. 93-516, “Rehabilitation Act Amendments of 1974,” December 7, 1974 (29 U.S.C. 706, 780, 790) (1976); section 119 of Pub. L. 95-602, “Rehabilitation, Comprehensive Services, and Developmental Disabilities Amendments of 1978,” November 6, 1978 (29 U.S.C. 794) (supp. III 1979); and Department of Justice Regulation, “Implementation of Executive Order 12250, Nondiscrimination on the Basis of Handicap in Federally Assisted Programs,” August 11, 1981 (28 CFR part 41) to prohibit discrimination based on handicap in programs and activities receiving Federal financial assistance disbursed by the Department of Defense and in programs and activities conducted by the Department of Defense.
§ 56.2 Applicability and scope.
(a) This part applies to the Office of the Secretary of Defense, the Military Departments, the Organization of the Joint Chiefs of Staff, the National Guard Bureau, and the Defense Agencies (hereafter referred to as “DoD Components”) insofar as they:
(1) Extend Federal financial assistance to programs and activities that affect handicapped persons in the United States and that are covered by this part (see § 56.7(b)).
(2) Conduct programs and activities that affect handicapped persons in the United States and that are covered by this part (see § 56.7(c)).
(b) This part also applies to each recipient of Federal financial assistance disbursed by the Department of Defense and to each program and activity that receives or benefits from such assistance, insofar as such recipient, program, or activity affects a handicapped person in the United States.
§ 56.3 Definitions.
(a) Facility. All or any portion of buildings, structures, equipment, roads, walks, parking lots, or other real or personal property or any interest in such property.
(b) Federal financial assistance. Any grant, loan, contract (other than a procurement contract or a contract of insurance or guaranty), or any other arrangement by which the Federal Government provides or otherwise makes available assistance in the form of:
(1) Funds.
(2) Services performed by Federal personnel, including technical assistance, counseling, training, and provision of statistical or expert information.
(3) Real and personal property or any interest in or use of such property, including:
(i) Transfers or leases of such property for less than fair market value or for reduced consideration.
(ii) Proceeds from a subsequent transfer or lease of such property if the Federal share of its fair market value is not returned to the Federal government.
(c) Handicapped person. Any person who has a physical or mental impairment that substantially limits one or more major life activities, has a record of such an impairment, or is regarded as having such an impairment. For purposes of this Directive as it relates to employment programs of recipients, such term does not include any individual who is an alcoholic or drug abuser and whose current use of alcohol or drugs prevents such individual from performing the duties of the job in question, or whose employment, by reason of such current alcohol or drug abuse, would constitute a direct threat to property or to the safety of others. As used in this paragraph:
(1) Physical or mental impairment. Any physiological disorder or condition, cosmetic disfigurement, or anatomical loss affecting one or more of the following body systems: Neurological; musculoskeletal and special sense organs; respiratory, including speech organs; cardiovascular; reproductive; digestive; genito-urinary; hemic and lymphatic; skin; and endocrine; or any mental or psychological disorder, such as mental retardation, organic brain syndrome, emotional or mental illness, and specific learning disabilities. The term includes such diseases and conditions as orthopedic, visual, speech, and hearing impairments; cerebral palsy, epilepsy, and muscular dystrophy; multiple sclerosis; cancer; heart disease; diabetes; drug abuse; and alcoholism.
(2) Major life activities. Functions such as caring for one’s self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, and working.
(3) Has a record of such an impairment. Has a history of, or has been misclassified as having, a mental or physical impairment that substantially limits one or more major life activities.
(4) Is regarded as having an impairment. Has: (i) A physical or mental impairment that does not substantially limit major life activities but is treated by a recipient or DoD Component as constituting such a limitation;
(ii) A physical or a mental impairment that substantially limits major life activities only as a result of the attitudes of others toward such impairment; or
(iii) None of the impairments defined above, but is treated by a recipient or DoD Component as having such an impairment.
(d) Historic properties. Those properties listed or eligible for listing in the National Register of Historic Places.
(e) Include; such as. Not all the possible items are covered, whether like or unlike the ones named.
(f) Qualified handicapped person. A handicapped person who:
(1) With respect to employment, can perform the essential functions of the job in question with reasonable accommodation.
(2) With respect to services, meets the essential eligibility requirements for receiving the services in question.
(g) Recipient. Any State or political subdivision or instrumentality thereof, any public or private agency, institution, organization, or other entity, or any person that receives Federal financial assistance directly or through another recipient, including any successor, assignee, or transferee of a recipient, but not the ultimate beneficiary of the assistance. The term includes persons and entities applying to be recipients.
(h) Substantial impairment. A significant loss of the integrity of finished materials, design quality, or special character resulting from a permanent alteration.
§ 56.4 Policy.
It is DoD policy that no qualified handicapped person shall be subjected to discrimination on the basis of handicap under any program or activity that receives or benefits from Federal financial assistance disbursed by a DoD Component or under any Federal program or activity that is conducted by a DoD Component. Guidelines for determining actions that discriminate against handicapped persons are prescribed in § 56.8.
§ 56.5 Responsibilities.
(a) The Assistant Secretary of Defense (Manpower, Reserve Affairs, and Logistics) (ASD(MRA&L)), or designee, shall monitor compliance with this part. In discharging this responsibility, the ASD(MRA&L), or designee, shall:
(1) Coordinate efforts of DoD Components to enforce this part.
(2) Assist in the development of standards and procedures promulgated pursuant to § 56.9.
(3) Perform the responsibilities assigned to the ASD(MRA&L) in § 56.8, 9, and 10.
(4) Otherwise assist DoD Components in implementing this part.
(b) The Heads of DoD Components shall comply with this part. In discharging this responsibility, they shall:
(1) Designate a policy-level official to ensure compliance with this part receive and investigate complaints filed under this part and otherwise manage DoD Component responsibilities under this part.
(2) Notify the ASD(MRA&L), or designee, of the name, position, location, and telephone number of persons selected by them to be policy-level officials within 15 calendar days of such a selection.
(3) Issue guidelines pursuant to § 56.9.
(4) Cooperate fully with the ASD(MRA&L), or designee, in that official’s performance of the responsibilities assigned herein, including furnishing to the ASD(MRA&L), or designee, in a timely fashion any requested reports and information.
(5) Assign sufficient personnel to implement and to ensure effective enforcement of this part.
§ 56.6 Information requirements.
(a) Each DoD Component shall maintain a log of all complaints that are filed with it or its recipients under this part. The log shall contain the complainant’s name (last name, first, and middle initial) and address (street address, city, State, and zip code), the recipient’s name (if this refers to a person, last name, first, and middle initial) and address (street address, city, State, and zip code), the nature of the complaint, and the current status of the complaint investigation or resolution. Each DoD Component shall submit a narrative summary report on complaints by memorandum to the ASD(MRA&L), or designee, before July 15 and January 15 of each year. This reporting requirement has been assigned Report Control Symbol DD-M(SA)1596.
(b) Each DoD Component shall submit a narrative report by memorandum to the ASD(MRA&L), or designee, whenever, pursuant to enclosure 4 of this directive, the DoD Component notifies an applicant or recipient that noncompliance with this part is indicated. The report shall include the recipient’s name (if this refers to a person, last name, first, and middle initial) and address (street address, city, State, and zip code), the date (YYMMDD) and nature of the finding, and the name of the applicable federally assisted program or activity. This reporting requirement has been assigned Report Control Symbol DD-M(AR)1597.
(c) The recordkeeping requirements contained in § 56.9(c)(2), have been approved by the Office of Management and Budget (OMB) under 44 U.S.C. chapter 35 and have been assigned OMB No. 0704-0102.
§ 56.7 Programs and activities subject to this part.
(a) This part applies to all DoD Components and recipients of Federal financial assistance disbursed by a DoD Component insofar as the programs and activities of the DoD Components and recipients affect handicapped persons in the United States. Existing programs and activities that are assisted or conducted by a DoD Component and that are subject to this part but do not appear in paragraph (b) or (c) of this section, are covered even though not listed. DoD Components must report new programs and activities that are subject to this part to the ASD (MRA&L), or designee, within 15 calendar days of their creation or funding.
(b) Federal financial assistance programs subject to this part include: (1) title 32, United States Code, sections 101-716 (1976 and supp. III 1979): the Army and Air National Guard.
(2) Title 40, U.S. Code, sections 483, 484, and 512 (1976); title 49, U.S. Code, sections 1101 and 1107 (1976); and title 10, U.S. Code, sections 2541, 2544, 2571, 2576, 2662, 7308, 7541, 7542, 7545, 7546, and 7547 (1976 and supp. IV 1980): Various programs involving the loan or other disposition of surplus, obsolete, or unclaimed property.
(3) Title 10 U.S. Code, sections 4307-4311 (1976), and the annual Department of Defense Appropriations Act: National Program for the Promotion of Rifle Practice.
(4) Secretary of the Navy Instruction 5720.19E, “Navy Science Cruiser Program,” February 24, 1977.
(5) Title 10 U.S. Code, section 9441 (1976 and supp. IV 1980): Civil Air Patrol.
(6) Title 41 U.S. Code, sections 501-509 (supp. III 1979): Federal grants and cooperative agreements.
(7) Title 33 U.S. Code, section 426 (1976 and supp. III 1979): Army Corps of Engineers participation in cooperative investigations and studies concerning the erosion of shores of coastal and lake waters.
(8) Title 33 U.S. Code, sections 426e-426h (1976): Army Corps of Engineers assistance in the construction of works for the restoration and protection of shores.
(9) Title 16 U.S. Code, section 460d (1976): Construction and operation of public park and recreational facilities in water resource development projects under the administrative jurisdiction of the Department of the Army.
(10) Title 33 U.S. Code, section 701c-3 (1976): Payment to States of lease receipts from lands acquired by the United States for flood control, navigation, and allied purposes.
(11) Title 33 U.S. Code, sections 558c and 702d-1 (1976); title 10, U.S. Code, sections 2668 and 2669 (1976); title 43, U.S. Code, section 961 (1976); and title 40, U.S. Code, section 319 (1976): Grants of easements without consideration, or at a nominal or reduced consideration, on land under the control of the Department of the Army at water resource development projects.
(12) Title 33 U.S. Code, sections 540 and 577 (1976): Army Corps of Engineers assistance in the construction of small boat harbor projects.
(13) Title 33 U.S. Code, section 701s (1976): Emergency bank protection works constructed by the Army Corps of Engineers for protection of highways, bridge approaches, and public works.
(14) Title 33 U.S. Code, section 633 (1976): Army Corps of Engineers contracts for the protection, alteration, reconstruction, relocation, or replacement of structures and facilities.
(15) Title 50 U.S. Code, section 453 (1976): Defense Logistics Agency loans of industrial equipment to educational institutions (Tools for Schools).
(16) Title 33 U.S. Code, section 610 (1976): Provision of specialized services or technical information by the Army Corps of Engineers to State and local governments for the control of aquatic plant growths in rivers, harbors, and allied waters.
(17) Title 42 U.S. Code, section 1962d-16 (1976): Provision of specialized services by the Army Corps of Engineers to any State for the preparation of comprehensive plans for drainage basins located within the boundaries of said State.
(18) Title 33 U.S. Code, section 603a (1976): Provision of specialized services by the Army Corps of Engineers to improve channels for navigation.
(19) Title 33 U.S. Code, section 701g (1976): Provision of specialized services by the Army Corps of Engineers to reduce flood damage.
(20) Title 24 U.S. Code, sections 44c and 47 (1976): United States Soldiers’ and Airmen’s Home.
(21) Title 10 U.S. Code, chapter 55, as implemented by DoD 6010.8-R, “Civilian Health and Medical Program of the Uniformed Services (CHAMPUS),” January 10, 1977.
(c) All programs and activities conducted by the Department of Defense that affect handicapped persons in the United States are subject to this part. They include:
(1) Promulgation of rules and regulations for public comment in a manner that grants handicapped persons a reasonable opportunity for such comment (such as by making cassette recordings of proposed rules).
(2) Public meetings, conferences, or seminars sponsored or conducted by a DoD Component but held in nongovernmental buildings.
(3) Public meetings, conferences, or seminars sponsored or conducted by a DoD Component or by a non-DoD organization but held in a DoD building.
(4) Open houses, memorial services, tours, or other ceremonies held on or in DoD property.
(5) Military museums.
(6) Historic vessels.
(7) Historic buildings and properties maintained by a DoD Component and properties designated as historic under a statute of the appropriate State or local governmental body.
(8) Schools operated by the Department of Defense within the United States pursuant to section 6 of Public Law 81-874, title 20, U.S. Code, section 241 (1976).
§ 56.8 Guidelines for determining discriminatory practices.
(a) General prohibitions against discrimination. (1) No qualified handicapped person shall, on the basis of handicap, be excluded from participation in, be denied the benefit of, or otherwise be subjected to discrimination under any program or activity that is conducted by the Department of Defense or that receives or benefits from Federal financial assistance disbursed by the Department of Defense.
(2) A recipient or DoD Component may not, directly or through contractual, licensing, or other arrangements, on the basis of handicap:
(i) Provide different or separate aid, benefits, or services to handicapped persons than is provided to others unless such action is necessary to provide qualified handicapped persons with aid, benefits, or services that are equal to those provided to others;
(ii) Deny a qualified handicapped person the opportunity to participate in or benefit from the aid, benefit, or service;
(iii) Afford a qualified handicapped person an opportunity to participate in or benefit from the aid, benefit, or service that is not equal to that afforded others;
(iv) Provide a qualified handicapped person with an aid, benefit, or service that is not as effective as that afforded to others; or
(v) Otherwise limit a qualified handicapped person in the enjoyment of any right, privilege, advantage, or opportunity granted to others receiving the aid, benefit, or service.
(3) A recipient or DoD Component may not deny a qualified handicapped person the opportunity to participate in programs or activities that are not separate or different from regular programs or activities, even if such separate or different programs and activities are permissible under paragraph (a)(2)(i) of this section.
(4) A recipient or DoD Component may not provide assistance to an agency, organization, or person that discriminates on the basis of handicap in providing any aid, benefit, or service to beneficiaries of the recipient’s program or activity.
(5) A recipient of DoD Component may not deny, on the basis of handicap, a qualified handicapped person the opportunity to participate as a member of planning or advisory boards.
(6) A recipient or DoD Component may not use, directly or through contractual or other arrangements, criteria or methods of administration that:
(i) Subject qualified handicapped persons to discrimination on the basis of handicap;
(ii) Defeat or substantially impair accomplishment of the objectives of the recipient’s or DoD Component’s program or activity with respect to handicapped persons; or
(iii) Perpetuate discrimination by another recipient if both recipients are subject to common administrative control or are agencies of the same State.
(7) In determining the site or location of a facility, a recipient or DoD Component may not make selections that:
(i) Exclude handicapped persons from, deny them the benefits of, or otherwise subject them to discrimination under any program or activity that receives or benefits from Federal financial assistance; or
(ii) Defeat or substantially impair, with respect to handicapped persons, the accomplishment of the objectives of the program or activity.
(8) Recipients and DoD Components shall administer programs and activities in the most integrated setting appropriate to the needs of qualified handicapped persons.
(9) Recipients and DoD Components shall take appropriate steps to make communications with their applicants, employees, and beneficiaries available to persons with impaired vision and hearing.
(10) This section may not be interpreted to prohibit the exclusion of:
(i) Persons who are not handicapped from benefits, programs, and activities limited by Federal statute or Executive order to handicapped persons; or
(ii) One class of handicapped persons from a program or activity limited by Federal statute or Executive order to a different class of handicapped persons.
(11) Recipients and DoD Components shall take appropriate steps to ensure that no handicapped individual is denied the benefits of, excluded from participation in, or otherwise subjected to discrimination under any program or activity receiving or benefiting from Federal financial assistance disbursed by the Department of Defense or under any program or activity conducted by the Department of Defense because of the absence of auxiliary aids, such as certified sign-language interpreters, telecommunication devises (TDDs), or other telephonic devices for individuals with impaired sensory, manual, or speaking skills.
(b) Prohibitions against employment discrimination by recipients. (1) No qualified handicapped person shall, on the basis of handicap, be subjected to discrimination in employment under any program or activity that receives or benefits from Federal financial assistance disbursed by the Department of Defense.
(2) The prohibition against discrimination in employment applies to the following:
(i) Recruitment, advertising, and processing of applications for employment.
(ii) Hiring, upgrading, promotion, award of tenure, demotion, transfer, layoff, termination, right of return from layoff, and rehiring.
(iii) Rates of pay or any other form of compensation and changes in compensation.
(iv) Job assignments, job classifications, organizational structures, position descriptions, lines of progression, and seniority lists.
(v) Leaves of absence, sick leave, or any other leave.
(vi) Fringe benefits available by virtue of employment, whether or not administered by the recipient.
(vii) Selection and financial support for training, including apprenticeship, professional meetings, conferences and other related activities, and selection for leaves of absence for training.
(viii) Programs and activities sponsored by the employer, including social and recreational programs.
(ix) Any other term, condition, or privilege of employment.
(3) A recipient may not participate in a contractual or other relationship that subjects qualified handicapped applicants or employees to discrimination prohibited by this section, including relationships with employment and referral agencies, labor unions, organizations providing or administering fringe benefits to employees of the recipient, and organizations providing training and apprenticeship programs.
(4) A recipient shall make reasonable accommodation to the known physical or mental limitations of an otherwise qualified handicapped applicant or employee unless the recipient can demonstrate that the accommodation would impose an undue hardship on the operation of its program. Reasonable accommodation includes providing ramps, accessible restrooms, drinking fountains, interpreters for deaf employees, readers for blind employees, amplified telephones, TDDs such as Teletypewriters or Telephone Writers (TTYs), and tactile signs on elevators.
(5) A recipient may not use employment tests or criteria that discriminate against handicapped persons, and shall ensure that employment tests are adapted for use by persons who have handicaps that impair sensory, manual, or speaking skills.
(6) A recipient may not conduct a preemployment medical examination or make a preemployment inquiry about whether an applicant is a handicapped person or about the nature or severity of a handicap. A recipient may make, however, a preemployment inquiry into an applicant’s ability to perform job-related functions.
(7) When a recipient is taking remedial action to correct the effects of past discrimination or is taking voluntary action to overcome the effects of conditions that have resulted in limited participation by handicapped persons in its federally assisted program or activity, the recipient may invite applicants for employment to indicate whether and to what extent they are handicapped if:
(i) The recipient makes clear to the applicants that the information is intended for use solely in connection with its remedial action obligations or its voluntary affirmative action efforts.
(ii) The recipient makes clear to the applicants that the information is being requested on a voluntary basis, that it will be kept confidential as provided in paragraph (b)(9) in this section, that refusal to provide it will not subject the applicants to any adverse treatment, and that it will be used only in accordance with this part.
(8) Nothing in this section shall prohibit a recipient from conditioning an offer of employment on the results of a medical examination conducted prior to the employee’s entrance on duty if:
(i) All entering employees are subjected to such an examination, regardless of handicap.
(ii) The results of such an examination are used only in accordance with this part which prohibits discrimination against a qualified handicapped person on the basis of handicap.
(9) Information obtained under this section concerning the medical condition or history of applicants shall be collected and maintained on separate forms that shall be accorded confidentiality as medical records, except that:
(i) Supervisors and managers may be informed about restrictions on the work or duties of handicapped persons and about necessary accommodations.
(ii) First aid and safety personnel may be informed, when appropriate, if a handicapping condition might require emergency treatment.
(iii) Government officials investigating compliance with section 504, Pub. L. 93-112, and this part shall be provided relevant information upon request.
(c) Program accessibility—(1) General requirements. No qualified handicapped person shall, because a recipient’s or DoD Component’s facilities are inaccessible to or not usable by handicapped persons, be denied the benefits of, be excluded from participation in, or otherwise be subjected to discrimination under any program or activity that receives or benefits from Federal financial assistance disbursed by the Department of Defense or under any program or activity conducted by the Department of Defense.
(2) Existing facilities. (i) A recipient or DoD Component shall operate each program or activity so that the program or activity, when viewed in its entirety, is readily accessible to and usable by handicapped persons. This does not necessarily require a recipient or DoD Component to make each of its existing facilities or every part of an existing facility accessible to and usable by handicapped persons. For guidance in determining the accessibility of facilities, see chapter 18 of DoD 4270.1-M, “Department of Defense Construction Criteria Manual,” June 1, 1978, and Department of the Army, Office of the Chief of Engineers, Manual EM 1110-1-103, “Design for the Physically Handicapped,” October 15, 1976. Inquiries on specific accessibility design problems may be addressed to the ASD (MRA&L), or designee.
(ii) When structural changes are necessary to make programs or activities in existing facilities accessible to the extent required by paragraph (c)(1) of this section.
(A) Such changes shall be made as soon as practicable, but not later than 3 years after the effective date of this part however, if the program or activity is a particular mode of transportation (such as a subway station) that can be made accessible only through extraordinarily expensive structural changes to, or replacement of, existing facilities and if other accessible modes of transportation are available, the DoD Component concerned may extend this period of time. This extension shall be for a reasonable and definite period, which shall be determined after consultation with the ASD(MRA&L), or designee.
(B) The recipient or DoD Component shall develop, with the assistance of interested persons or organizations and within a period to be established in each DoD Component’s guidelines, a transition plan setting forth the steps necessary to complete such changes.
(C) The recipient or DoD Component shall make a copy of the transition plan available for public inspection. At a minimum, the plan shall:
(1) Identify physical obstacles in the recipient’s or DoD Component’s facilities that limit the accessibility of its program or activity to handicapped persons.
(2) Describe in detail the methods that will be used to make the facilities accessible.
(3) Specify the schedule for taking the steps necessary to achieve full program accessibility and, if the time period of the transition plan is longer than 1 year, identify steps that will be taken during each year of the transition period.
(4) Indicate the person (last name, first, and middle initial) responsible for implementation of the transition plan.
(iii) A recipient or DoD Component may comply with paragraphs (c)(2)(i) and (c)(2)(ii) of this section, through such means as the acquisition or redesign of equipment, such as telecommunication or other telephonic devices; relocation of classes or other services to accessible buildings; assignment of aides to beneficiaries, such as readers or certified sign-language interpreters; home visits; delivery of health, welfare, or other services at accessible alternate sites; alteration of existing facilities and construction of new facilities in conformance with paragraph (c)(3) in this section; or any other method that results in making the program or activity of the recipient or DoD Component accessible to handicapped persons.
(iv) A recipient or DoD Component is not required to make structural changes in existing facilities when other methods are effective in achieving compliance with this section.
(v) In choosing among available methods for meeting the requirements of this section, a recipient or DoD Component shall give priority to those methods that offer programs and activities to handicapped persons in the most integrated setting appropriate with nonhandicapped persons.
(3) New Construction. New facilities shall be designed and constructed to be readily accessible to and usable by handicapped persons. Alterations to existing facilities shall be designed and constructed, to the maximum extent feasible, to be readily accessible to and usable by handicapped persons. For guidance in determining the accessibility of facilities, see chapter 18 of DoD 4270.1-M and Department of the Army, Office of the Chief of Engineers, Manual EM 1110-1-103. Inquiries about specific accessibility design problems may be addressed to the ASD(MRA&L), or designee.
(4) Historic properties. (i) In the case of historic properties, program accessibility shall mean that, when viewed in their entirety, programs are readily accessible to and usable by handicapped persons. Because the primary benefit of historic properties is the experience of the property itself, DoD Components and recipients shall give priority to those methods of achieving program accessibility that make the historic property, or portions thereof, physically accessible to handicapped persons.
(ii) Methods of achieving program accessibility include:
(A) Making physical alterations that give handicapped persons access to otherwise inaccessible areas or features of historic properties.
(B) Using audiovisual materials and devices to depict otherwise inaccessible areas or features of historic properties.
(C) Assigning individuals to guide handicapped persons into or through otherwise inaccessible portions of historic properties.
(D) Adopting other innovative methods.
(iii) When program accessibility cannot be achieved without causing a substantial impairment of significant historic features, the DoD Component or recipient may seek a modification or waiver of access standards from the ASD (MRA&L), or designee.
(A) A decision to grant a modification or waiver shall be based on consideration of the following:
(1) Scale of the property, reflecting its ability to absorb alterations.
(2) Use of the property, whether primarily for public or private purposes.
(3) Importance of the historic features of the property to the conduct of the program.
(4) Costs of alterations in comparison to the increase in accessibility.
(B) The ASD(MRA&L), or designee, shall review periodically any waiver granted under this paragraph and may withdraw it if technological advances or other changes warrant.
(iv) The decision by the ASD(MRA&L), or designee, to grant a modification or waiver of access standards is subject to section 106 of the National Historic Preservation Act, as amended, and shall be made in accordance with the Advisory Council on Historic Preservation regulation on “Protection of Historic and Cultural Properties” (36 CFR part 800). When the property is federally owned or when Federal funds may be used for alterations, the ASD(MRA&L), or designee, shall obtain the comments of the Advisory Council on Historic Preservation when required by section 106 of the National Historic Preservation Act and the Advisory Council on Historic Preservation regulation on “Protection of Historic and Cultural Properties” (36 CFR part 800) prior to effectuation of structural alterations.
(v) DoD Component guidelines prepared in accordance with § 56.10 shall include a listing of all historic properties, including historic ships, subject to this part and a plan for compliance with paragraph (c)(4) of this section.
(5) Military museums. (i) In the case of military museums, program accessibility shall mean that exhibits, displays, tours, lectures, circulating or traveling exhibits, and other programs of military museums are accessible to and usable by handicapped persons. Methods of meeting this requirement include the following:
(A) Museum programs may be made accessible to deaf and hearing-impaired persons by means such as training museum staff, such as docents, in sign language; providing qualified sign-language interpreters to accompany deaf or hearing-impaired visitors; ensuring that clear, concise language is used on all museum signs and display labels; providing amplification devices; or providing printed scripts for films, videotapes, lectures, or tours. DoD Components are encouraged to use “Museums and Handicapped Students: Guidelines for Educators,” published by the National Air and Space Museum, Smithsonian Institution, Washington, DC 20560.
(B) Museum programs may be made accessible to blind and visually-impaired persons by means such as providing museum catalogues in a large-print edition printed over braille; providing cassette tapes, records, or discs for museum tours or exhibits; providing readers to accompany blind or visually impaired visitors; using large-print and braille display cards at exhibits; providing raised-line maps of the museum building; using raised-line drawings, reproductions, or models of large exhibits to facilitate tactile experiences when touching exhibits is prohibited; placing large-print and braille signs to identify galleries, elevators, restrooms, and other service areas; and permitting guide dogs in all museum facilities.
(C) Museum programs may be made accessible to other physically impaired persons by means such as lowering display cases; spacing exhibits to facilitate movement; using ramps in galleries; increasing lighting in exhibit areas to facilitate viewing from a distance; providing places to sit in exhibit areas; making restrooms accessible; using large-print exhibit display cards to facilitate reading from a distance; and sensitizing museum staff to consider the needs of handicapped visitors when organizing exhibits.
(ii) DoD Component guidelines developed in accordance with paragraph (c)(5) of this section shall identify military museums subject to paragraph (c) of this section and shall contain a plan for making museum programs accessible to handicapped persons. Technical assistance in the preparation and content of these plans may be obtained from the National Access Center, 1419 27th Street, NW., Washington, DC 20007 ((202) 333-1712 or TTY (202) 333-1339). In addition, community organizations that serve handicapped persons and handicapped persons themselves shall be consulted in the preparation of these plans.
(d) Reasonable accommodation. (1) A recipient or DoD Component shall make reasonable accommodation to the known physical or mental limitations of an otherwise qualified handicapped applicant or employee unless the recipient or DoD Component demonstrates to the ASD(MRA&L), or designee, that the accommodation would impose an undue hardship on the operation of its program.
(2) Reasonable accommodation includes the following:
(i) Making facilities used by employees readily accessible to and usable by handicapped persons.
(ii) Job restructuring; part-time or modified work schedules; acquisition or modification of equipment or devices, such as telecommunication or other telephonic instruments; the provision of readers or certified sign-language interpreters; and similar actions.
(3) In determining whether an accommodation would impose an undue hardship on the operation of a recipient’s or DoD Component’s program, the ASD(MRA&L), or designee, shall consider the following factors, at a minimum:
(i) The overall size of the recipient’s or DoD Component’s program or activity, such as the number of employees, number and type of facilities, and size of budget.
(ii) The size of the recipient’s or DoD Component’s operations, including the composition and structure of the recipient’s or DoD Component’s workforce.
(iii) The nature and cost of the accommodation needed.
(4) A recipient or DoD Component may not deny any employment opportunity to a qualified handicapped employee or applicant for employment if the basis for the denial is the need to make reasonable accommodation to the physical or mental limitations of the employee or applicant.
§ 56.9 Ensuring compliance with this part in Federal financial assistance programs and activities.
(a) Supplementary guidelines issued by DoD Components. (1) Whenever necessary, DoD Components shall publish supplementary guidelines for each type of program or activity to which they disburse Federal financial assistance within 120 days of the effective date of this part or of the effective date of any subsequent statute authorizing Federal financial assistance to a new type of program or activity. DoD Components shall obtain approval of these supplementary guidelines from the ASD(MRA&L), or designee, before issuing them. Prior to their issuance, the ASD(MRA&L), or designee, shall submit supplementary guidelines prepared pursuant to paragraph (a)(1) of this section to the Coordination and Review Section, Civil Rights Division, Department of Justice, for review and approval. To the extent that supplementary guidelines issued by DoD Components deal with the employment of civilians in programs and activities subject to this part the ASD(MRA&L), or designee, shall also obtain the approval of the Equal Employment Opportunity Commission (EEOC) in accordance with Executive Order 12067.
(2) The ASD(MRA&L), or designee, and DoD Components shall ensure that their supplementary guidelines conform to the requirements of this part and that they provide:
(i) A description of the types of programs and activities covered.
(ii) Examples of prohibited practices likely to arise with respect to those types of programs and activities.
(iii) A list of the data collection and reporting requirements of the recipients.
(iv) Procedures for processing and investigating complaints.
(v) Procedures for hearings to determine compliance by recipients with this part.
(vi) Requirements or suggestions for affirmative action on behalf of qualified handicapped persons.
(vii) Requirements for the dissemination of program and complaint information to the public.
(viii) A description of the form of the assurances that must be executed pursuant to paragraph (b) of this section, and sample assurances.
(ix) Requirements concerning the frequency and nature of postapproval reviews conducted pursuant to paragraph (h) of this section.
(x) A period of time, provided for by § 56.8(c)(2)(ii)(B), for the development of a transition plan that sets out the steps necessary to complete structural changes that might be required by § 56.8(c).
(xi) The maximum period of time that may be allowed for extensions that might be granted pursuant to § 56.8(c)(2)(ii).
(xii) An appendix that contains a list of identified programs and activities of the type covered by the supplementary guidelines, including the names of the programs and activities and the authorizing statute, regulation, or directive for each program and activity.
(xiii) Requirements for the recipient to designate a responsible official to coordinate the implementation of supplementary guidelines.
(xiv) Requirements for any other actions or procedures necessary to implement this part.
(3) When the head of a DoD Component determines that it would not be appropriate to include on or more of the provisions described in paragraph (a)(2) of this section, in the supplementary guidelines of that DoD Component or that it is not necessary to issue such guidelines at all, the reasons for such determination shall be stated in writing and submitted to the ASD(MRA&L), or designee, for review and approval. Once that determination is approved, the DoD Component shall make it available to the public upon request.
(4) The heads of DoD Components, or designees, shall be responsible for keeping the supplementary guidelines current and accurate. When a DoD Component determines that a program or activity should be added to or deleted from the guidelines, the DoD Component shall notify the ASD(MRA&L), or designee, in writing.
(b) Required assurances. (1) DoD Components shall require all recipients to file written assurances that their programs or activities will be conducted in accordance with this part and supplementary guidelines promulgated by DoD Components. If a recipient fails to provide an assurance that conforms to the requirements of this section, the DoD Component shall attempt to effect compliance pursuant to paragraphs (f) through (h) of this section, provided that if assistance is due and payable to the recipient based on an application approved prior to the effective date of this part the DoD Component shall continue the assistance while any proceedings required by paragraphs (n) through (v) of this section, are pending.
(2) DoD Components shall advise each recipient of the required elements of the assurance and, with respect to each program or activity, of the extent to which those receiving assistance from recipients shall be required to execute similar assurances.
(3) DoD Component shall ensure that each assurance:
(i) Obligates the recipient to advise the DoD Component of any complaints received that allege discrimination against handicapped persons.
(ii) Obligates the recipient to collect and provide the items of information that the DoD Component lists in its supplementary guidelines pursuant to paragraph (a)(2)(iii) of this section.
(iii) Is made applicable to any Federal financial assistance that might be disbursed by a DoD Component without the submission of a new application.
(iv) Obligates the recipient, when the financial assistance is in the form of property, for the period during which the property is used under a financial assistance agreement or is possessed by the recipient.
(v) Includes a provision recognizing that the U.S. Government has the right to seek judicial enforcement of section 504 and this part.
(c) Self-evaluation and consultation with interested persons and organizations. (1) DoD Components shall require recipients to conduct, within 6 months of the effective date of this part or of first receiving Federal financial assistance disbursed by the Department of Defense, a self-evaluation with the assistance of interested persons, including handicapped persons or organizations that represent them. When appropriate, DoD Components also shall require recipients to consult at least annually with such persons. The “Department of Health, Education, and Welfare Section 504 Technical Assistance Reserve Directory,” April 1980, shall be consulted to identify likely sources for consultation. In conducting its self-evaluation, each recipient shall:
(i) Evaluate the effects of its policies and practices with respect to its compliance with this part and the applicable DoD Component’s supplementary guidelines.
(ii) Modify any policies that do not meet such requirements.
(iii) Take appropriate remedial steps to eliminate the discriminatory effects of any such policies or practices.
(2) For at least 3 years following the completion of a self-evaluation required under paragraph (c)(1) of this section, a recipient shall maintain on file, make available for public inspection, and provide to the ASD(MRA&L), or designee, upon request:
(i) A list of the interested persons (last names, first names, and middle initials) consulted.
(ii) A description of areas examined and problems identified, if any, with respect to those areas.
(iii) A description of any modification made and remedial steps taken.
(d) Dissemination of information. (1) Within 90 days of the effective date of this part or of first receiving assistance from the Department of Defense and on a continuing basis thereafter, each recipient shall notify beneficiaries and employees of their rights under this part and shall take appropriate steps to notify participants, beneficiaries, applicants for employment and employees, including those with impaired vision or hearing, and unions or professional organizations involved in collective bargaining or professional agreements with the recipient that the recipient does not discriminate on the basis of handicap in violation of this part. The notification shall state, when appropriate, that the recipient does not discriminate in admitting or providing access to or treating or employing persons in its programs and activities. Such notification may be accomplished by posting notices, publishing announcements in newspapers and magazines, placing notices in its publications, or distributing memoranda or other written communications.
(2) If a recipient publishes or uses and makes available to participants, beneficiaries, applicants for employment, or employees recruitment materials or publications containing general information about the recipient’s programs and activities, it shall include in those materials or publications a statement of the policy described in paragraph (d)(1) of this section. This may be accomplished by including appropriate inserts in existing materials and publications or by revising and reprinting the materials and publications.
(3) Understandable materials developed in accordance with this section shall be provided to ensure that all beneficiaries and employees of the recipient understand the information. In addition, recipients shall disseminate appropriate and comprehensive information about formal and informal complaint and appeal procedures, including directions on how and where to file complaints and to appeal DoD Component decisions.
(e) Intimidation and interference. Recipients and DoD Components shall take reasonable steps to ensure that no person intimidates, threatens, coerces, or discriminates against any individual for the purpose of retaliating against, interfering with, or discouraging the filing of a complaint, furnishing of information, or assisting or participating in an investigation, compliance review, hearing, or other activity related to the administration of this part.
(f) Staff responsibilities. All DoD Component determinations of recipient compliance with this part shall be subject to reviews by the ASD(MRA&L), or designee. When responsibility for approving applications for Federal financial assistance disbursed by a DoD Component is assigned to regional or area offices of the DoD Component, personnel in such offices shall be designated to perform the functions described in paragraphs (h) and (o) through (w) of this section.
(g) Access to records and facilities. Each recipient shall permit access to its premises by DoD officials during normal business hours when such access is necessary for conducting onsite compliance reviews or complaint investigations, and shall allow such officials to photograph facilities and to inspect and copy any books, records, accounts, and other material relevant to determining the recipient’s compliance with this part. Information so obtained shall be used only in connection with the administration of this part. If the recipient does not have the information requested, it shall submit to the DoD Component a written report that contains a certification that the information is not available and describes the good-faith efforts made to obtain the information.
(h) Compliance review. DoD Components shall determine the compliance of each recipient with this part as follows: (1) General. Whenever possible, DoD Components shall perform compliance reviews in conjunction with their review and audit efforts implementing title VI of the Civil Rights Act of 1964.
(2) Desk audit application review. Before approving an application for Federal financial assistance, the DoD Component concerned shall make a written determination as to whether the recipient is in compliance with this part, based on a review of the assurance of compliance executed by a recipient pursuant to paragraph (b) of this section, and other data submitted by the recipient. When a determination cannot be made from the assurance and other data submitted by the recipient, the DoD Component concerned shall require the recipient to submit additional information and shall take other steps as necessary to determine the recipient’s compliance with this part. If this additional information demonstrates that the recipient is in compliance with this part, the DoD Component shall notify the recipient promptly that it is in compliance.
(3) Preapproval onsite review. (i) When a desk audit application review conducted pursuant to paragraph (h)(2) of this section indicates that the recipient might not be in compliance with this part, the DoD Component concerned may conduct a preapproval onsite review at the recipient’s facilities before approving the disbursement of Federal financial assistance to the recipient. The DoD Component shall conduct such a review:
(A) When appropriate, if a desk audit application review reveals that the recipient’s compliance posture is questionable because of a history of discrimination complaints, current discrimination complaints, a noncompliance determination by another government agency or DoD Component, or other indications of possible noncompliance; or
(B) If Federal financial assistance is requested for construction, except under extraordinary circumstances, to determine whether the location and design of the project would provide service on a nondiscriminatory basis, in conformity with § 56.8(c).
(ii) Preapproval onsite reviews shall be conducted under DoD Component supplementary guidelines and in accordance with the provisions of paragraph (h)(4) of this section, concerning postapproval reviews.
(4) Postapproval reviews. DoD Components shall: (i) Establish and maintain effective programs of postapproval reviews.
(ii) Conduct such reviews of each recipient, the frequency and the nature of which shall be prescribed in the DoD Component supplementary guidelines implementing this part.
(iii) Require recipients periodically to submit compliance reports to them.
(iv) Record the results of the reviews, including findings of fact and recommendations.
(5) A DoD Component shall complete a review within 180 calendar days of initiating it unless an extension of time is granted by the ASD(MRA&L), or designee, for good cause shown, and shall either:
(i) Find the recipient to be in compliance and notify the recipient of that finding; or
(ii) Notify the recipient and the ASD(MRA&L), or designee, of a finding of probable noncompliance, pursuant to paragraph (o) of this section.
(i) Filing of complaints against recipients. (1) DoD Components shall establish and publish in their supplementary guidelines procedures for the prompt processing and disposition of complaints against recipients, consistent with this section.
(2) A DoD Component shall consider all complaints that: (i) Are filed with it within 180 days of the alleged discrimination or within a longer period of time if an extension is granted for good cause by the DoD Component with the approval of the ASD(MRA&L), or designee.
(ii) Include the name, address, and telephone number, if any, of the complainant; the name and address of the recipient committing the alleged discrimination; a description of the acts or omissions considered to be discriminatory; and other pertinent information.
(iii) Are signed by the complainant or the complainant’s authorized representative (legal counsel or a person with power of attorney granted by the complainant).
(3) DoD Components shall transmit a copy of each complaint filed with them to the ASD(MRA&L), or designee, within 10 calendar days after its receipt.
(4) If the information in a complaint is incomplete, the DoD Component shall request the complainant to provide the additional information required. If the DoD Component does not receive this requested information within 30 calendar days of the date of the request, the case may be closed and the complainant so notified in writing.
(5) If a complaint concerning a program or activity is filed with a DoD Component that does not have jurisdiction over it, the DoD Component shall refer the complaint to the ASD(MRA&L), or designee, and advise the complainant in writing of such referral. The ASD(MRA&L), or designee, then shall refer the complaint to the appropriate DoD Component and so notify the complainant in writing.
(j) Investigation by DoD components. (1) DoD Components shall investigate complaints that involve recipients and that meet the standards described in paragraph (i) of this section, unless good cause for not investigating is stated in a written notification of the disposition of the complaint provided to the complainant.
(2) If an investigation of a complaint is conducted, the DoD Component concerned shall maintain a case record that contains:
(i) The name (last name, first, and middle initial), address (street address, city, State, and zip code), and telephone number of each person interviewed.
(ii) Copies, transcripts, or summaries of pertinent documents.
(iii) A reference to at least one program or activity conducted by the recipient and receiving Federal financial assistance disbursed by a DoD Component, and a description of the amount and nature of the assistance.
(iv) A narrative report of the results of the investigation that contains references to relevant exhibits and other evidence that relates to the alleged violations.
(k) Investigations by recipients. (1) A DoD Component may require or permit recipients to investigate complaints alleging violation of this part. In such cases, the DoD Component shall:
(i) Ensure that the recipient investigates the complaints in accordance with the standards, procedures, and requirements prescribed in paragraph (j) of this section.
(ii) Require the recipient to submit a written report of each complaint and investigation to the DoD Component.
(iii) Retain a review responsibility over the investigation and disposition of each complaint.
(iv) Ensure that each complaint investigation is completed within 180 calendar days of the receipt of the complaint by the proper DoD Component, unless an extension of time is granted for good cause by the ASD(MRA&L), or designee.
(v) Require the recipient to maintain a log of all complaints filed against it, as described in § 56.6(a)(1).
(2) DoD Components that require or permit complaint investigations to be conducted by recipients shall review recipient complaint investigations pursuant to paragraphs (k) and (l) of this section.
(l) Results of investigations. (1) Within 180 days of the receipt of a complaint, the DoD Component, recipient, or the ASD(MRA&L), or designee, shall give written notification:
(i) Of the disposition of the complaint to the complainant and, as the case may be, to the recipient or DoD Component.
(ii) To the complainant that within 30 calendar days of receipt of the written notification, the complainant may request that the ASD(MRA&L), or designee, review the findings in the notification pursuant to paragraph (m) of this section.
(2) If the complaint investigation results in a determination by the DoD Component that a recipient is not complying with this part the DoD Component shall proceed as prescribed in paragraph (n) through (v) of this section. If the DoD Component determines that the recipient is in compliance, the DoD Component shall submit the complete case file to the ASD(MRA&L), or designee, within 15 calendar days after the notification of the disposition of the investigation to the complainant.
(m) Reviewing completed investigations. (1) The ASD(MRA&L), or designee, may review all completed investigations.
(2) The ASD(MRA&L), or designee, shall review the results of any investigation of a complaint if the complainant requests such a review pursuant to paragraph (l)(1)(ii) of this section.
(3) After reviewing the results of an investigation, the ASD(MRA&L), or designee, may:
(i) Find that no further investigation is necessary and approve the results of the investigation;
(ii) Request further investigation by the DoD Component; or
(iii) Require the DoD Component to take appropriate corrective action.
(n) Effecting compliance. (1) When a compliance review or complaint investigation indicates that a recipient has violated this part, the applicable DoD Component’s supplementary guidelines, or the assurances executed pursuant to paragraph (b) of this section, the responsible DoD Component or the ASD(MRA&L), or designee, shall attempt to effect compliance in accordance with paragraphs (o) and (p) of this section. The inability of a DoD Component to comply with any time frame prescribed by this part does not relieve a recipient of the responsibility for compliance with this part.
(2) The DoD Component may require, when necessary to overcome the effects of discrimination in violation of this part, a recipient to take remedial action:
(i) With respect to handicapped persons who are no longer participants in the recipient’s program or activity but who were participants in the program or activity when such discrimination occurred.
(ii) With respect to handicapped persons who would have been participants in the recipient’s program or activity had the discrimination not occurred.
(iii) With respect to handicapped persons presently in the recipient’s program or activity, but not receiving full benefits or equal and integrated treatment within the program or activity.
(o) Written notice. After evaluating the investigative report, the DoD Component shall issue to the recipient and, pursuant to paragraph (n)(2) of this section to the ASD(MRA&L), or designee, a written notice that:
(1) Describes the apparent violation and the corrective actions necessary to achieve compliance.
(2) Extends an offer to meet informally with the recipient.
(3) Informs the recipient that failure to respond to the notice within 15 calendar days of its receipt shall result in the initiation of enforcement procedures described in paragraphs (r) through (v), of this section.
(p) Attempting to achieve voluntary compliance by recipients. (1) If a DoD Component issues a notice pursuant to paragraph (o) of this section, the DoD Component shall attempt to meet with the recipient and shall attempt to persuade it to take the steps necessary to achieve compliance with this part.
(2) If a recipient agrees to take remedial steps to achieve compliance, the DoD Component shall require that the agreement be in writing and:
(i) Be signed by the head of the DoD Component concerned, or designee, and by the principal official of the recipient.
(ii) Specify the action necessary to achieve compliance.
(iii) Be made available to the public upon request.
(iv) Be subject to the approval of the ASD(MRA&L), or designee.
(3) If satisfactory adjustment or a written agreement has not been achieved within 60 calendar days of the recipient’s receipt of the notice issued pursuant to paragraph (o) of this section, the DoD Component shall notify the ASD(MRA&L), or designee, and state the reasons therefor.
(4) The DoD Component shall initiate the enforcement actions prescribed in paragraphs (r) through (v) of this section if:
(i) The recipient does not respond to a notice pursuant to paragraph (o) of this section, within 15 calendar days of its receipt and satisfactory adjustments are not made within 45 calendar days of the date of the recipient’s response; or
(ii) The DoD Component or the ASD (MRA&L) determines at any time within 90 days after the recipient receives a notice pursuant to paragraph (o) of this section, that, despite reasonable efforts, it is not likely that the recipient will comply promptly and voluntarily.
(5) If, pursuant to paragraph (p)(4) of this section, the DoD Component initiates enforcement action, it also shall continue its attempts to persuade the recipient to comply voluntarily.
(q) Imposing sanctions—(1) Sanctions available. If a DoD Component has taken action pursuant to paragraphs (o) and (p) of this section, the DoD Component may, by order, subject to paragraph (q)(2) and (q)(3) of this section:
(i) Terminate, suspend, or refuse to grant or continue assistance to such recipient.
(ii) Refer the case to the Department of Justice for the initiation of enforcement proceedings at a Federal, State, or local level.
(iii) Pursue any remedies under State or local law.
(iv) Impose other sanctions upon consultation with the ASD (MRASL), or designee.
(2) Terminating, suspending, or refusing to grant or continue assistance. A DoD Component may not terminate or refuse to grant or continue Federal financial assistance unless:
(i) Such action has been approved by the Secretary of Defense.
(ii) The DoD Component has given the recipient an opportunity for a hearing pursuant to the procedures set out in paragraph (r) of this section, and a finding of noncompliance has resulted.
(iii) Thirty calendar days have elapsed since the Secretary of Defense has filed a written report describing the violation and action to be taken with the committees of the House of Representatives and Senate that have jurisdiction over the program or activity in which the violation of this part exists.
(iv) Such action is limited to affect only the particular activity or program, or portion thereof, of the recipient where the violation exists.
(3) Other sanctions. A DoD Component may not impose the sanctions set out in paragraphs (q)(1) (iii) and (iv) of this section, unless:
(i) The DoD Component has given the recipient an opportunity for a hearing pursuant to paragraph (r) of this section, and a finding of noncompliance has resulted.
(ii) The action has been approved by the Secretary of Defense.
(iii) Ten calendar days have elapsed since the mailing of a notice informing the recipient of its continuing failure to comply with this part the action necessary to achieve compliance, and the sanction to be imposed.
(iv) During those 10 calendar days the DoD Component has made additional efforts to persuade the recipient to comply.
(r) Hearings for recipients—(1) General. When, pursuant to paragraph (q)(2)(ii) of this section, an opportunity for a hearing is given to a recipient, the DoD Component involved shall follow the procedures prescribed in paragraphs (r)(2) through (r)(6) of this section.
(2) Notice. The DoD Component concerned shall notify the recipient of the opportunity for a hearing by registered or certified mail, return receipt requested, when the recipient denies a tentative finding of noncompliance with this part.
(i) The DoD Component shall ensure that the notice:
(A) Describes the proposed sanctions to be imposed.
(B) Cites the section of this part under which the proposed action is to be taken.
(C) States the name and office of the DoD Component official who is responsible for conducting the hearing (hereafter referred to as the “responsible DoD official”).
(D) Outlines the issues to be decided at the hearing.
(E) Advises the recipient either of a date, not less than 20 calendar days after the date that the notice is received, by which the recipient may request that the matter be scheduled for a hearing, or of a reasonable time and place of a hearing that is subject to change for good cause shown.
(ii) When a time and place for a hearing are set, the DoD Component shall give the recipient and the complainant, if any, reasonable notice of such time and place.
(3) Waiver of a hearing. A recipient may waive a hearing and submit to the responsible DoD official, in writing, information or arguments on or before the date stated pursuant to paragraph (r)(2)(i)(E) of this section.
(i) A recipient waives its right to a hearing if it fails to request a hearing on or before a date stated pursuant to paragraph (r)(2)(i)(E) of this section, or fails to appear at a hearing that has been scheduled pursuant to that paragraph.
(ii) If a recipient waives its right to a hearing under this section, the responsible DoD official shall decide the issues and render a final decision that is based on the information available and that conforms to the requirements of paragraph (s)(4) of this section.
(4) Hearing examiner. Hearings shall be conducted by the responsible DoD official or by a hearing examiner designated by the official, provided that the hearing examiner shall be a field grade officer or civilian employee above the grade of GS-12 (or the equivalent) who is admitted to practice law before a Federal court or the highest court of a State, territory, commonwealth, or the District of Columbia.
(5) Right to counsel. In all proceedings under this section, the recipient and the DoD Component may be represented by counsel. The representation of the recipient will not be at U.S. Government expense.
(6) Procedures. Hearings authorized under this section shall be subject to the following: (i) Hearings shall be open to the public.
(ii) Formal rules of evidence will not apply. The DoD Component concerned and the recipient shall be entitled to introduce all relevant evidence on the issues stated in the notice of hearing issued pursuant to paragraph (r)(2) of this section, and those designated by the responsible DoD official or the hearing examiner at the outset of or during the hearing. The responsible DoD official or hearing examiner, however, may exclude irrelevant, immaterial, or repetitious evidence.
(iii) All witnesses may be examined or cross-examined, as the case may be, by each party.
(iv) All parties shall have the opportunity to examine all evidence offered or admitted for the record.
(v) A transcript of the proceedings shall be maintained in either electronic or typewritten form and made available to all parties.
(s) Decisions—(1) Initial or proposed decisions by a hearing examiner. If a hearing is conducted by a hearing examiner who is designated by the responsible DoD official pursuant to paragraph (r)(4) of this section, the hearing examiner shall either:
(i) Make an initial decision, if so authorized, that conforms to the requirements of paragraph (s)(4) of this section; or
(ii) Certify the entire record and submit to the responsible DoD official recommended findings and a proposed decision.
(2) Review of initial decisions. Initial decisions made by a hearing examiner pursuant to paragraph (s)(1)(i) of this section, shall be reviewed as follows:
(i) A recipient may file exceptions to an initial decision within 30 calendar days of receiving notice of such initial decision. Reasons shall be stated for each exception.
(ii) If the recipient does not file exceptions pursuant to paragraph (s)(2)(i) of this section, the responsible DoD official may notify the recipient within 45 calendar days of the initial decision that the responsible DoD official will review the decisions.
(iii) If exceptions are filed pursuant to paragraph (s)(2)(i) of this section, or a notice of review is issued pursuant to paragraph (s)(2)(ii) of this section, the responsible DoD official shall review the initial decision and, after giving the recipient reasonable opportunity to file a brief or other written statement of its contentions, issue a final decision that addresses each finding and conclusion in the initial decision and each exception, if any.
(iv) If the exceptions described in paragraph (s)(2)(i) of this section are not filed and the responsible DoD official does not issue the notice of review described in paragraph (s)(2)(ii) of this section, the initial decision of the hearing examiner shall constitute the final decision of the responsible DoD official.
(3) Decisions by the responsible DoD official who conducts a hearing or receives a certified record. If a hearing examiner who is designated by the responsible DoD official certifies the entire record and submits recommended findings and a proposed decision to the responsible DoD official pursuant to paragraph (s)(1)(ii) of this section, or if the responsible DoD official conducts the hearing, after giving the recipient a reasonable opportunity to file a brief or other written statement of its contentions, the responsible DoD official shall render a final decision that conforms to paragraph (s)(4) of this section.
(4) Contents of decisions. Each decision of a hearing examiner or responsible DoD official shall state all findings and conclusions and identify each violation of this part. The final decision may contain an order pursuant to paragraph (q) of this section, providing for the suspension or termination of or refusal to grant or continue all or some of the Federal financial assistance under the program or activity involved and contain terms, conditions, and other provisions that are consistent with and intended to achieve compliance with this Directive.
(5) Notice of decisions and certifications. The responsible DoD official shall provide a copy of any certified record of a hearing and any initial or final decision to the recipient and the complainant, if any.
(6) Review by the Secretary of Defense. The responsible DoD official shall transmit promptly any final decision that orders a suspension, termination, or denial of Federal financial assistance through the ASD(MRA&L) to the Secretary of Defense. The Secretary may;
(i) Approve the decision;
(ii) Vacate the decision; or
(iii) Remit or mitigate any sanction imposed.
(t) Restoring eligibility for financial assistance. (1) A recipient that is affected adversely by a final decision issued under paragraph (s) of this section, may at any time request the responsible DoD official to restore fully its eligibility to receive Federal financial assistance.
(2) If the responsible DoD official determines that the information supplied by the recipient demonstrates that it has satisfied the terms and conditions of the order entered pursuant to paragraph (s) of this section, and that is complying with and has provided reasonable assurance that it will continue to comply with this part the responsible DoD official shall restore such eligibility immediately.
(3) If the responsible DoD official denies a request for restoration of eligibility, the recipient may submit a written request for a hearing that states why it believes the responsible DoD official erred in denying the request. Following such a written request, the recipient shall be given an expeditious hearing under rules of procedure issued by the responsible DoD official to determine whether the requirements described in paragraph (t)(2) of this section, have been met. While any such proceedings are pending, the sanctions imposed by the order issued under paragraph (s) of this section, shall remain in effect.
(u) Interagency cooperation and delegation. (1) When several recipients are receiving assistance for the same or similar purposes from a DoD Component and another Federal agency, the DoD Component shall notify the ASD (MRA&L), or designee. Such notification shall be in writing and shall contain:
(i) A description of the programs and activities involved.
(ii) A statement of the amount of money expended on the programs and activities in the previous and current fiscal year by the DoD Component and the agency.
(iii) A list of the known primary recipients.
(2) The ASD(MRA&L), or designee, shall attempt to negotiate with the Federal agency a written delegation agreement that designates the agency or the DoD Component as the primary agency for purposes of ensuring compliance with section 504 of Public Law 93-112, as amended, and this part depending upon which of them administers a larger financial assistance program with the common recipients and other relevant factors. If necessary, the agreement shall establish procedures to ensure the enforcement of section 504 of Public Law 93-112, as amended, and this part. The ASD(MRA&L), or designee, shall provide written notification to recipients of an agreement reached under this subsection.
(3) When several recipients are receiving assistance for the same or similar purposes from two or more DoD Components, the DoD Components may negotiate a proposed written delegation agreement that:
(i) Assigns responsibility for ensuring that the recipient complies with this part to one of the DoD Components.
(ii) Provides for the notification to recipients and the responsible program officials of the DoD Components involved of the assignment of enforcement responsibility.
(4) No delegation agreement reached in accordance with paragraph (u)(3) to this section shall be effective until it is approved by the ASD(MRA&L), or designee.
(5) When possible, existing delegation agreements relating to title VI of the Civil Rights Act of 1964 shall be amended to provide for the enforcement of this part.
(6) Any DoD Component conducting a compliance review or investigating a complaint of an alleged violation by a recipient shall notify any other affected agency or DoD Component through the ASD(MRA&L), or designee, upon discovery that the agency or DoD Component has jurisdiction over the program or activity in question and shall subsequently inform it of the finding made. Such reviews or investigations may be conducted on a joint basis.
(7) When a compliance review or complaint investigation under this part reveals a possible violation of Executive Order 11246, titles VI or VII of the Civil Rights Act of 1964, or any other Federal law, the DoD Component shall notify the appropriate agency, through the ASD(MRA&L), or designee.
(v) Coordination with sections 502 and 503. (1) DoD Components shall use DoD 4270.1-M and Department of the Army, Office of the Chief of Engineers, Manual EM 1110-1-103, in developing requirements for the accessibility of facilities. If DoD Components encounter issues with respect to section 502 of the Rehabilitation Act of 1973, as amended, that are not covered by these publications, the ASD(MRA&L), or designee, may be consulted. If necessary, the ASD(MRA&L), or designee, shall consult with the Architectural and Transportation Barriers Compliance Board in resolving such problems.
(2) DoD Components may advise recipients to consult directly with the Architectural and Transportation Barriers Compliance Board in developing accessibility criteria.
(3) DoD Components shall coordinate enforcement actions relating to the accessibility of facilities with the Architectural and Transportation Barriers Compliance Board and shall notify the ASD(MRA&L), or designee, of such coordination.
(4) If a recipient is also a Federal contractor subject to section 503 of the Rehabilitation Act of 1973, as amended, and the regulations thereunder (41 CFR part 60-741) and if a DoD Component has reason to believe that the recipient is in violation thereof, the DoD Component shall coordinate enforcement actions with the Department of Labor, Office of Federal Contract Compliance Programs. The DoD Component shall notify the ASD(MRA&L), or designee, of such coordination.
§ 56.10 Ensuring compliance with this part in programs and activities conducted by the Department of Defense.
(a) Supplementary guidelines. (1) Whenever necessary, the ASD(MRA&L), or designee, shall publish supplementary guidelines for programs and activities that are conducted by DoD Components and that are subject to this Directive. Prior to their issuance, the ASD(MRA&L), or designee, shall submit supplementary guidelines prepared pursuant to this subsection to the Coordination and Review Section, Civil Rights Division, Department of Justice, for review.
(2) The heads of DoD Components, or designees, shall be responsible for keeping the supplementary guidelines described in this section current and accurate. When a DoD Component head determines that a program or activity should be added to or deleted from the guidelines, that official shall notify the ASD(MRA&L), or designee, in writing.
(b) Staff responsibilities. The ASD(MRA&L), or designee, shall determine DoD Component compliance with this part as it pertains to programs and activities that are conducted by DoD Components and are subject to this part.
(c) Filing of complaints. (1) Complaints of discrimination in a program or activity conducted by a DoD Component may be filed directly with the ASD(MRA&L), or designee.
(2) DoD Components shall develop procedures, such as posters or other devices, to notify participants in the programs and activities listed in § 56.7(c) of their right to be free of discrimination because of handicap in those programs and activities and of their right to file complaints of discrimination with the ASD(MRA&L), or designee.
(d) Investigations of complaints. (1) The ASD(MRA&L), or designee, shall investigate complaints of discrimination in programs and activities that are conducted by DoD Components and are subject to this part.
(2) A case record of each investigation shall be compiled in accordance with § 56.9(j)(2).
(e) Results of investigations. If the complaint investigation results in a determination by the ASD(MRA&L), or designee, that a DoD Component’s program or activity is not complying with § 56.9, the ASD(MRA&L), or designee, shall proceed as prescribed in § 56.9 (n) through (v). Hearings prescribed under § 56.9(r) however, need not be conducted. If the ASD(MRA&L), or designee, determines that the DoD Component is in compliance, the ASD(MRA&L), or designee, shall notify the complainant within 15 calendar days of such determination.
(f) Written notice. If an investigative report concludes that there has been a violation of this part in a program or activity conducted by a DoD Component and the ASD(MRA&L), or designee, accepts that conclusion, that official shall issue to the head of the DoD Component a written notice describing the apparent violation, the corrective actions necessary to achieve compliance, and a suspense date for completion of the corrective actions.
(g) Effecting compliance. When necessary to overcome the effects of discrimination in violation of this part the ASD(MRA&L), or designee, may require a DoD Component to take remedial action similar to that in § 56.9(n)(2).
(h) Employment. DoD Components that conduct Federal programs or activities covered by this part that involve employment of civilian persons to conduct such a program or activity must comply with section 501 of the Rehabilitation Act of 1973, as amended, and the implementing rules and regulations of the EEOC.
PART 57—PROVISION OF EARLY INTERVENTION AND SPECIAL EDUCATION SERVICES TO ELIGIBLE DOD DEPENDENTS
§ 57.1 Purpose.
This part:
(a) Establishes policy and assigns responsibilities to implement, other than the funding and reporting provisions, chapter 33 of 20 U.S.C. (also known and hereinafter referred to in this part as “Individuals with Disabilities Education Act (IDEA)”) pursuant to 20 U.S.C. 927(c) and 10 U.S.C. 2164(f) for:
(1) Provision of early intervention services (EIS) to infants and toddlers with disabilities and their families, as well as special education and related services to children with disabilities entitled under this part to receive education services from the DoD in accordance with 20 U.S.C. 921-932, 10 U.S.C. 2164, and DoD Directive 1342.20, “Department of Defense Education Activity (DoDEA)” (available at http://www.dtic.mil/whs/directives/corres/pdf/134220p.pdf), and the IDEA.
(2) Implementation of a comprehensive, multidisciplinary program of EIS for infants and toddlers with disabilities and their DoD civilian-employed and military families.
(3) Provision of a free appropriate public education (FAPE), including special education and related services for children with disabilities who are eligible to enroll in DoDEA schools, as specified in their respective individualized education programs (IEP).
(4) Monitoring of DoD programs providing EIS, or special education and related services for compliance with this part.
(b) Establishes a DoD Coordinating Committee to recommend policies and provide compliance oversight for early intervention and special education.
(c) Authorizes the issuance of other guidance as necessary.
§ 57.2 Applicability.
This part applies to:
(a) Office of the Secretary of Defense (OSD), the Military Departments, the Office of the Chairman of the Joint Chiefs of Staff and the Joint Staff, the Combatant Commands, the Office of the Inspector General of the Department of Defense, the Defense Agencies, the DoD Field Activities, and all other organizational entities in the DoD (hereinafter referred to collectively as the “DoD Components”).
(b) Eligible infants, toddlers, and children receiving or entitled to receive early intervention services (EIS) or special education and related services from the DoD, whose parents have not elected voluntary enrollment in a non-Department of Defense Education Activity (DoDEA) school.
(c) All schools operated under the oversight of the DoDEA, including:
(1) Domestic Dependent Elementary and Secondary Schools (DDESS) operated by the DoD pursuant to 10 U.S.C. 2164.
(2) Department of Defense Dependents Schools (DoDDS) operated by the DoD pursuant to 20 U.S.C. 921-932 (hereinafter referred to as “overseas” schools).
(d) Does not create any substantive rights or remedies not otherwise authorized by the IDEA or other relevant law; and may not be relied upon by any person, organization, or other entity to allege a denial of substantive rights or remedies not otherwise authorized by the IDEA or other relevant law.
§ 57.3 Definitions.
Unless otherwise noted, these terms and their definitions are for the purpose of this part.
Age of majority. The age when a person acquires the rights and responsibilities of being an adult. For purposes of this part, a child attains majority at age 18, unless the child has been determined by a court of competent jurisdiction to be incompetent, or, if the child has not been determined to be incompetent, he or she is incapable of providing informed consent with respect to his or her educational program.
Alternate assessment. An objective and consistent process that validly measures the performance of students with disabilities unable to participate, even with appropriate accommodations provided as necessary and as determined by their respective CSC, in a system-wide assessment.
Alternative educational setting (AES). A temporary setting in or out of the school, other than the setting normally attended by the student (e.g., alternative classroom, home setting, installation library) as determined by school authorities or the CSC, in accordance with § 57.6(b)(12) as the appropriate learning environment for a student because of a violation of school rules and regulations or disruption of regular classroom activities.
Assistive technology device. Any item, piece of equipment, or product system, whether acquired commercially or off the shelf, modified, or customized, that is used to increase, maintain, or improve functional capabilities of children with disabilities. This term does not include a medical device that is surgically implanted or the replacement of that device.
Assistive technology service. Any service that directly assists an individual with a disability in the selection, acquisition, or use of an assistive technology device. The term includes: Evaluating the needs of an individual with a disability, including a functional evaluation in the individual’s customary environment; purchasing, leasing, or otherwise providing for the acquisition of assistive technology devices by individuals with disabilities; selecting, designing, fitting, customizing, adapting, applying, maintaining, repairing, or replacing assistive technology devices; coordinating and using other therapies, interventions, or services with assistive technology devices, such as those associated with existing educational and rehabilitative plans and programs; training or technical assistance for an individual with disabilities or the family of an individual with disabilities; and training or technical assistance for professionals (including individuals providing educational rehabilitative services), employers, or other individuals who provide services to, employ, or are otherwise substantially involved in the major life functions of an individual with a disability.
Case study committee (CSC). A school-level multidisciplinary team, including the child’s parents, responsible for making educational decisions concerning a child with a disability.
Child-find. An outreach program used by DoDEA, the Military Departments, and the other DoD Components to locate, identify, and evaluate children from birth to age 21, inclusive, who may require EIS or special education and related services. All children who are eligible to attend a DoD school under 20 U.S.C. 921-932 or 10 U.S.C. 2164 fall within the scope of the DoD child-find responsibilities. Child-find activities include the dissemination of information to Service members, DoD employees, and parents of students eligible to enroll in DoDEA schools; the identification and screening of children; and the use of referral procedures.
Children with disabilities. Children, ages 3 through 21, inclusive, who are entitled to enroll, or are enrolled, in a DoD school in accordance with 20 U.S.C. 921-932 and 10 U.S.C. 2164, have not graduated from high school or completed the General Education Degree, have one or more disabilities in accordance with section 1401(3) of the IDEA, and need and qualify for special education and related services.
Complainant. Person making an administrative complaint.
Comprehensive system of personnel development (CSPD). A system of personnel development that is developed in coordination with the Military Departments and the Director, DoDEA. CSPD is the training of professionals, paraprofessionals, and primary referral source personnel with respect to the basic components of early intervention, special education, and related services. CSPD may also include implementing innovative strategies and activities for the recruitment and retention of personnel providing special education and related services, ensuring that personnel requirements are established and maintaining qualifications to ensure that personnel necessary to carry out the purposes of this part are appropriately and adequately prepared to provide special education and related services. Training of personnel may include working within the military and with military families, the emotional and social development of children, and transition services from early intervention to preschool and transitions within educational settings and to post-secondary environments.
Consent. The permission obtained from the parent ensuring they are fully informed of all information about the activity for which consent is sought, in his or her native language or in another mode of communication if necessary, and that the parent understands and agrees in writing to the implementation of the activity for which permission is sought.
Continuum of placement options. Instruction in general education classes, special classes, special schools, home instruction, and instruction in hospitals and institutions; includes provision for supplementary services (such as resource room or itinerant instruction) to be provided in conjunction with regular class placement.
Controlled substance. As defined in Sections 801-971 of title 21, United States Code (also known as the “Controlled Substances Act, as amended”).
Day. A calendar day, unless otherwise indicated as a business day or a school day.
(1) Business day. Monday through Friday except for Federal and State holidays.
(2) School day. Any day, including a partial day, that children are in attendance at school for instructional purposes. School day has the same meaning for all children in school, including children with and without disabilities.
Department of Defense Education Activity (DoDEA). The Department of Defense Education Activity is a DoD Field Activity under the direction, operation, and control of the Under Secretary of Defense for Personnel & Readiness (USD(P&R)) and the Assistant Secretary of Defense for Readiness & Force Management (ASD(R&FM)). The mission of DoDEA is to provide an exemplary education by effectively and efficiently planning, directing, and overseeing the management, operation, and administration of the DoD Domestic Dependent Elementary and Secondary Schools (DDESS) and the DoD Dependents Schools (DoDDS), which provide instruction from kindergarten through grade 12 to eligible dependents.
Department of Defense Dependents Schools (DoDDS). The overseas schools (kindergarten through grade 12) established in accordance with 20 U.S.C. 921-932.
Department of Defense Education Activity School. A DDESS or DoDDS school operated under the oversight of DoDEA.
Developmental Delay in children ages 3 through 7. A child three through seven (or any subset of that age range, including ages 3 through 5) who is experiencing developmental delays, as defined for infants and toddlers at § 57.6(a)(4)(ii)(A) as measured by appropriate diagnostic instruments and procedures, in one or more of the following areas: Physical development, cognitive development, communication development, social or emotional development, or adaptive development, and who, by reason thereof, needs special education and related services. A child determined to have a developmental delay before the age of 7 may maintain that eligibility through age 9.
Domestic Dependent Elementary and Secondary Schools (DDESS). The schools (pre-kindergarten through grade 12) established in accordance with 10 U.S.C. 2164.
Early intervention service provider. An individual that provides early intervention services in accordance with this part.
Educational and Developmental Intervention Services (EDIS). Programs operated by the Military Departments to provide EIS to eligible infants and toddlers with disabilities, and related services to eligible children with disabilities in accordance with this part.
EIS. Developmental services for infants and toddlers with disabilities, as defined in this part, that are provided under the supervision of a Military Department, including evaluation, individualized family service plan (IFSP) development and revision, and service coordination, provided at no cost to the child’s parents (except for incidental fees also charged to children without disabilities).
Extended school year (ESY) services. Special education and related services that are provided to a child with a disability beyond the normal DoDEA school year, in accordance with the child’s IEP, are at no cost to the parents, and meet the standards of the DoDEA school system.
Evaluation. The method used by a multidisciplinary team to conduct and review the assessments of the child and other relevant input to determine whether a child has a disability and a child’s initial and continuing need to receive EIS or special education and related services.
Extracurricular and non-academic activities. Services and activities including counseling services; athletics; transportation; health services; recreational activities; special interest groups or clubs sponsored by the DoDEA school system; and referrals to agencies that provide assistance to individuals with disabilities and employment of students, including employment by a public agency and assistance in making outside employment available.
FAPE. Special education and related services that are provided under the general supervision and direction of DoDEA at no cost to parents of a child with a disability, in conformity with an IEP, in accordance with the requirements of the IDEA and DoD guidance.
Functional behavioral assessment. A process for identifying the events that predict and maintain patterns of problem behavior.
General education curriculum. The curriculum adopted by the DoDEA school systems for all children from preschool through secondary school. To the extent applicable to an individual child with a disability, the general education curriculum can be used in any educational environment along a continuum of alternative placements.
IEP. A written document that is developed, reviewed, and revised at a meeting of the CSC, identifying the required components of the individualized education program for a child with a disability.
Individualized Family Service Plan (IFSP). A written document identifying the specially designed services for an infant or toddler with a disability and the family of such infant or toddler.
Independent educational evaluation (IEE). An evaluation conducted by a qualified examiner who is not an EDIS examiner or an examiner funded by the DoDEA school who conducted the evaluation with which the parent is in disagreement.
Infants and toddlers with disabilities. Children from birth up to 3 years of age, inclusive, who need EIS because:
(1) They are experiencing developmental delays as measured by appropriate diagnostic instruments and procedures, in one or more of the following areas: Cognitive development, physical development including vision and hearing, communication development, social or emotional development, adaptive development; or
(2) They have a diagnosed physical or mental condition that has a high probability of resulting in developmental delay.
Inter-component. Cooperation among DoD organizations and programs, ensuring coordination and integration of services to infants, toddlers, children with disabilities, and their families.
Manifestation determination. The process in which the CSC reviews all relevant information and the relationship between the child’s disability and the child’s behavior to determine whether the behavior is a manifestation of the child’s disability.
Mediation. A confidential, voluntary, informal dispute resolution process that is provided at no charge to the parents, whether or not a due process petition has been filed, in which the disagreeing parties engage in a discussion of issues related to the provision of the child’s EIS or special education and related services in accordance with the requirements of IDEA and this part, in the presence of, or through, a qualified and impartial mediator who is trained in effective mediation techniques.
Medical services. Those evaluative, diagnostic, and therapeutic, services provided by a licensed and credentialed medical provider to assist providers of EIS, regular and special education teachers, and providers of related services to develop and implement IFSPs and IEPs.
Multidisciplinary. The involvement of two or more disciplines or professions in the integration and coordination of services, including evaluation and assessment activities and development of an IFSP or an IEP.
Native language. When used with reference to an individual of limited English proficiency, the home language normally used by such individuals, or in the case of a child, the language normally used by the parents of the child.
Natural environment. A setting, including home and community, in which children without disabilities participate.
Non-DoD school or facility. A public or private school or other educational program not operated by DoD.
Parent. The natural, adoptive, or foster parent of a child, a guardian, an individual acting in the place of a natural or adoptive parent with whom the child lives, or an individual who is legally responsible for the child’s welfare if that person contributes at least one-half of the child’s support.
Personally identifiable information. Information that would make it possible to identify the infant, toddler, or child with reasonable certainty. Information includes: The name of the child, the child’s parent or other family member; the address of the child; a personal identifier, such as the child’s social security number or student number; or a list of personal characteristics or other information that would make it possible to identify the child with reasonable certainty.
Primary referral source. Parents and the DoD Components, including child development centers, pediatric clinics, and newborn nurseries, that suspect an infant or toddler has a disability and bring the child to the attention of the EDIS.
Psychological services. Psychological services include: Administering psychological and educational tests and other assessment procedures; interpreting assessment results; obtaining, integrating and interpreting information about child behavior and conditions relating to learning; consulting with other staff members in planning school programs to meet the special educational needs of children as indicated by psychological tests, interviews, direct observations, and behavioral evaluations; planning and managing a program of psychological services, including psychological counseling for children and parents; and assisting in developing positive behavioral intervention strategies.
Public awareness program. Activities or print materials focusing on early identification of infants and toddlers with disabilities. Materials may include information prepared and disseminated by a military medical department to all primary referral sources and information for parents on the availability of EIS. Procedures to determine the availability of information on EIS to parents are also included in that program.
Qualified. A person who meets the DoD-approved or recognized certification, licensing, or registration requirements or other comparable requirements in the area in which the person provides evaluation or assessment, EIS, special education or related services to an infant, toddler, or child with a disability.
Rehabilitation counseling. Services provided by qualified personnel in individual or group sessions that focus specifically on career development, employment preparation, achieving independence, and integration in the workplace and community of the student with a disability. The term also includes vocational rehabilitation services provided to a student with disabilities by vocational rehabilitation programs funded in accordance with the Rehabilitation Act of 1973, 29 U.S.C. chapter 16.
Related services. Transportation and such developmental, corrective, and other supportive services, as required, to assist a child with a disability to benefit from special education under the child’s IEP. The term includes services or consults in the areas of speech-language pathology; audiology services; interpreting services; psychological services; physical and occupational therapy; recreation including therapeutic recreation; social work services; and school nurse services designed to enable a child with a disability to receive a FAPE as described in the child’s IEP; early identification and assessment of disabilities in children; counseling services including rehabilitation counseling; orientation and mobility services; and medical services for diagnostic or evaluative purposes. The term does not include a medical device that is surgically implanted or the replacement of such.
Related services assigned to the Military Departments. Medical and psychological services, audiology, and optometry for diagnostic or evaluative purposes, including consults, to determine whether a particular child has a disability, the type and extent of the disability, and the child’s eligibility to receive special services. In the overseas and domestic areas, transportation is provided as a related service by the Military Department when transportation is prescribed in an IFSP for an infant or toddler, birth to 3 years of age, with disabilities.
Resolution meeting. The meeting between parents and relevant school personnel, which must be convened within a specified number of days after receiving notice of a due process complaint and prior to the initiation of a due process hearing, in accordance with the IDEA and this part. The purpose of the meeting is for the parent to discuss the due process complaint and the facts giving rise to the complaint so that the school has the opportunity to resolve the complaint.
Resolution period. That period of time following a resolution meeting, the length of which is defined in this part, during which the school is afforded an opportunity to resolve the parent’s concerns before the dispute can proceed to a due process hearing.
Separate facility. A school or a portion of a school, regardless of whether it is operated by DoD, attended exclusively by children with disabilities.
Serious bodily injury. A bodily injury, which involves a substantial risk of death; extreme physical pain; protracted and obvious disfigurement; or protracted loss or impairment of the function of a bodily member, organ, or mental faculty.
Service coordination. Activities of a service coordinator to assist and enable an infant or toddler and the family to receive the rights, procedural safeguards, and services that are authorized to be provided.
Special education. Specially designed instruction, which is provided at no cost to the parents, to meet the unique needs of a child with a disability, including instruction conducted in the classroom, in the home, in hospitals and institutions, and in other settings; and instruction in physical education.
Supplementary aids and services. Aids, services, and other supports that are provided in regular education classes or other educational-related settings, and in extracurricular and non-academic settings to enable children with disabilities to be educated with non-disabled children to the maximum extent appropriate.
Transition services. A coordinated set of activities for a child with a disability that is designed to be within a results-oriented process, that is focused on improving the academic and functional achievement of the child with a disability to facilitate the child’s movement from school to post-school activities, including post-secondary education, vocational education, integrated employment (including supported employment), continuing and adult education, adult services, independent living, or community participation, and is based on the individual child’s needs, taking into account the child’s strengths, preferences, and interests and includes instruction, related services, community experiences, the development of employment and other post-school adult living objectives, and when appropriate, acquisition of daily living skills and functional vocational evaluation.
Transportation. A service that includes transportation and related costs, including the cost of mileage or travel by taxi, common carrier, tolls, and parking expenses, that are necessary to: enable an eligible child with a disability and the family to receive EIS, when prescribed in a child’s IFSP; enable an eligible child with a disability to receive special education and related services, when prescribed as a related service by the child’s IEP; and enable a child to obtain an evaluation to determine eligibility for special education and related services, if necessary. It also includes specialized equipment, including special or adapted buses, lifts, and ramps needed to transport children with disabilities.
Weapon. Defined in Department of Defense Education Activity Regulation 2051.1, “Disciplinary Rules and Procedures” (available at http://www.dodea.edu/foia/iod/pdf/2051_1a.pdf).
§ 57.4 Policy.
It is DoD policy that:
(a) Infants and toddlers with disabilities and their families who (but for the children’s age) would be entitled to enroll in a DoDEA school in accordance with 20 U.S.C. 921-932 or 10 U.S.C. 2164 shall be provided EIS.
(b) The DoD shall engage in child-find activities for all children age birth to 21, inclusive, who are entitled by 20 U.S.C. 921-932 or 10 U.S.C. 2164 to enroll or are enrolled in a DoDEA school.
(c) Children with disabilities who meet the enrollment eligibility criteria of 20 U.S.C. 921-932 or 10 U.S.C. 2164 shall be provided a FAPE in the least restrictive environment, including if appropriate to the needs of the individual child, placement in a residential program for children with disabilities in accordance with the child’s IEP and at no cost to the parents.
(d) The Military Departments and DoDEA shall cooperate in the delivery of related services prescribed by section 1401(26) of the IDEA and this part as may be required to assist eligible children with disabilities to benefit from special education.
(e) Children with disabilities who are eligible to enroll in a DoDEA school in accordance with 20 U.S.C. 921-932 or 10 U.S.C. 2164 shall not be entitled to provision of a FAPE by DoDEA, or to the procedural safeguards prescribed by this part in accordance with the IDEA, if:
(1) The sponsor is assigned to an overseas area where a DoDEA school is available within the commuting area of the sponsor’s overseas assignment, but the sponsor does not elect to enroll the child in a DoDEA school for reasons other than DoDEA’s alleged failure to provide a FAPE; or
(2) The sponsor is assigned in the United States or in a U.S. territory, commonwealth, or possession and the sponsor’s child meets the eligibility requirements for enrollment in a DoDEA school, but the sponsor does not elect to enroll the child in a DoDEA school for reasons other than DoDEA’s alleged failure to provide a FAPE.
§ 57.5 Responsibilities.
(a) The ASD(R&FM) under the authority, direction, and control of the USD(P&R) shall:
(1) Establish, in accordance with DoD Instruction 5105.18, “DoD Intergovernmental and Intragovernmental Committee Management Program” (available at http://www.dtic.mil/whs/directives/corres/pdf/510518p.pdf), a DoD Coordinating Committee to recommend policies regarding the provision of early intervention and special education services.
(2) Ensure the development, implementation and administration of a system of services for infants and toddlers with disabilities and their families and children with disabilities; and provide compliance oversight for early intervention and special education in accordance with DoD Directive 5124.02, “Under Secretary of Defense for Personnel and Readiness (USD(P&R))” (available at http://www.dtic.mil/whs/directives/corres/pdf/512402p.pdf); 20 U.S.C. 921-932; the applicable statutory provision of the IDEA; 10 U.S.C. 2164; DoD Directive 1342.20 and implementing guidance authorized by this part.
(3) Oversee DoD Component collaboration on the provision of services and transition support to infants, toddlers, and school-aged children.
(4) Develop a DoD-wide comprehensive child-find system to identify eligible infants, toddlers, and children ages birth through 21 years, inclusive, who may require early intervention or special education services, in accordance with the IDEA.
(5) Develop and provide guidance as necessary for the delivery of services for children with disabilities and for the protection of procedural rights consistent with the IDEA and implementing guidance authorized by this part.
(6) Coordinate with the Secretaries of the Military Departments to ensure that their responsibilities, as detailed in paragraph (f) of this section, are completed.
(7) Direct the development and implementation of a comprehensive system of personnel development (CSPD) for personnel serving infants and toddlers with disabilities and children with disabilities, and their families.
(8) Develop requirements and procedures for compiling and reporting data on the number of eligible infants and toddlers with disabilities and their families in need of EIS and children in need of special education and related services.
(9) Require DoDEA schools provide educational information for assignment coordination and enrollment in the Services’ Exceptional Family Member Program or Special Needs Program consistent with DoD Instruction 1315.19, “Authorizing Special Needs Family Members Travel Overseas at Government Expense” (available at http://www.dtic.mil/whs/directives/corres/pdf/131519p.pdf).
(10) Identify representatives to serve on the Department of Defense Coordinating Committee on Early Intervention, Special Education, and Related Services (DoD-CC).
(11) Ensure delivery of appropriate early intervention and educational services to eligible infants, toddlers, and children, and their families as appropriate pursuant to the IDEA and this part through onsite monitoring of special needs programs and submission of an annual compliance report.
(b) The Assistant Secretary of Defense for Health Affairs (ASD(HA)), under the authority, direction, and control of the USD(P&R), shall:
(1) Advise the USD(P&R) and consult with the General Counsel of the Department of Defense (GC, DoD) regarding the provision of EIS and related services.
(2) Oversee development of provider workload standards and performance levels to determine staffing requirements for EIS and related services. The standards shall take into account the provider training needs, the requirements of this part, and the additional time required to provide EIS and related services in schools and the natural environments, and for the coordination with other DoD Components and other service providers, indirect services including analysis of data, development of the IFSP, transition planning, and designing interventions and accommodations.
(3) Establish and maintain an automated data system to support the operation and oversight of the Military Departments’ delivery of EIS and related services.
(4) Assign geographical areas of responsibility for providing EIS and related services under the purview of healthcare providers to the Military Departments. Periodically review the alignment of geographic areas to ensure that resource issues (e.g., base closures) are considered in the cost-effective delivery of services.
(5) Establish a system for measuring EIS program outcomes for children and their families.
(6) Resolve disputes among the DoD Components providing EIS.
(c) The Director, Defense Health Agency (DHA), under the authority, direction, and control of the ASD(HA), shall identify representatives to serve on the DoD-CC.
(d) The Director, DoD Education Activity (DoDEA), under the authority, direction, and control of the USD(P&R), and through the ASD(R&FM), in accordance with DoD Directive 5124.02, shall ensure that:
(1) Children who meet the enrollment eligibility criteria of 20 U.S.C. 921-932 or 10 U.S.C. 2164 are identified and referred for evaluation if they are suspected of having disabilities, and are afforded appropriate procedural safeguards in accordance with the IDEA and implementing guidance authorized by this part.
(2) Children who meet the enrollment eligibility criteria of 20 U.S.C. 921-932 or 10 U.S.C. 2164 shall be evaluated in accordance with the IDEA and implementing guidance authorized by this part, as needed. If found eligible for special education and related services, they shall be provided a FAPE in accordance with an IEP, with services delivered in the least restrictive environment and procedural safeguards in accordance with the requirements of the IDEA and implementing guidance authorized by this part.
(3) Records are maintained on the special education and related services provided to children in accordance with this part, pursuant to 32 CFR part 310.
(4) Related services as prescribed in an IEP for a child with disabilities enrolled in a DoDEA school in the United States, its territories, commonwealths, or possessions are provided by DoDEA.
(5) Transportation is provided by DoDEA in overseas and domestic areas as a related service to children with disabilities when transportation is prescribed in a child’s IEP. The related service of transportation includes necessary accommodations to access and leave the bus and to ride safely on the bus and transportation between the child’s home, the DoDEA school, or another location, as specified in the child’s IEP.
(6) Appropriate personnel participate in the development and implementation of a CSPD.
(7) Appropriate written guidance is issued to implement the requirements pertaining to special education and related services under 20 U.S.C. 921-932, 10 U.S.C. 2164, and the IDEA.
(8) Activities to identify and train personnel to monitor the provision of services to eligible children with disabilities are funded.
(9) DoDEA schools that operate pursuant to 20 U.S.C. 921-932 and 10 U.S.C. 2164 conduct child-find activities for all eligible children;
(10) A free appropriate public education (FAPE) and procedural safeguards in accordance with IDEA and this part available to children with disabilities who are entitled to enroll in DoDEA schools under the enrollment eligibility criteria of 20 U.S.C. 921-932 or 10 U.S.C. 2164. However, a FAPE, or the procedural safeguards prescribed by the IDEA and this part, shall NOT be available to such children, if:
(i) The sponsor is assigned to an overseas area where a DoDEA school is available within the commuting area of the sponsor’s assignment, but the sponsor does not elect to enroll his or her child in a DoDEA school for reasons other than DoDEA’s alleged failure to provide a FAPE; or
(ii) The sponsor is assigned in the United States or in a U.S. territory, commonwealth, or possession and the sponsor’s child meets the eligibility requirements for enrollment in a DoDEA school, but the sponsor does not elect to enroll the child in a DoDEA school for reasons other than DoDEA’s alleged failure to provide a FAPE.
(11) The educational needs of children with and without disabilities are met comparably, in accordance with § 57.6(b) of this part.
(12) Educational facilities and services (including the start of the school day and the length of the school year) operated by DoDEA for children with and without disabilities are comparable.
(13) All programs providing special education and related services are monitored for compliance with this part and with the substantive rights, protections, and procedural safeguards of the IDEA and this part at least once every 3 years.
(14) A report is submitted to the USD(P&R) not later than September 30 of each year certifying whether all schools are in compliance with the IDEA and this part, and are affording children with disabilities the substantive rights, protections, and procedural safeguards of the IDEA.
(15) Transition assistance is provided in accordance with IDEA and this part to promote movement from early intervention or preschool into the school setting.
(16) Transition services are provided in accordance with IDEA and this part to facilitate the child’s movement into different educational settings and post-secondary environments.
(e) The GC, DoD shall identify representatives to serve on the DoD-CC.
(f) The Secretaries of the Military Departments shall:
(1) Establish educational and developmental intervention services (EDIS) to ensure infants and toddlers with disabilities are identified and provided EIS where appropriate, and are afforded appropriate procedural safeguards in accordance with the requirements of the IDEA and implementing guidance authorized by this part.
(2) Staff EDIS with appropriate professional staff, based on the services required to serve children with disabilities.
(3) Provide related services required to be provided by a Military Department in accordance with the mandates of this part for children with disabilities. In the overseas areas served by DoDEA schools, the related services required to be provided by a Military Department under an IEP necessary for the student to benefit from special education include medical services for diagnostic or evaluative purposes; social work; community health nursing; dietary, audiological, optometric, and psychological testing and therapy; occupational therapy; and physical therapy. Transportation is provided as a related service by the Military Department when it is prescribed in a child’s IFSP for an infant or toddler birth up to 3 years of age, inclusive, with disabilities. Related services shall be administered in accordance with guidance issued pursuant to this part, including guidance from the ASD(HA) on staffing and personnel standards.
(4) Issue implementing guidance and forms necessary for the operation of EDIS in accordance with this part.
(5) Provide EIS to infants and toddlers with disabilities and their families, and related services to children with disabilities as required by this part at the same priority that medical care is provided to active duty military members.
(6) Provide counsel from the Military Department concerned or request counsel from the Defense Office of Hearings and Appeals (DOHA) to represent the Military Department in impartial due process hearings and administrative appeals conducted in accordance with this part for infants and toddlers birth up to 3 years of age, inclusive, with disabilities who are eligible for EIS.
(7) Execute Departmental responsibilities under the Exceptional Family Member program (EFMP) prescribed by DoD Instruction 1315.19.
(8) Train command personnel to fully understand their legal obligations to ensure compliance with and provide the services required by this part.
(9) Fund activities to identify and train personnel to monitor the provision of services to eligible children with disabilities.
(10) Require the development of policies and procedures for providing, documenting, and evaluating EDIS, including EIS and related services provided to children receiving special education in a DoDEA school.
(11) Maintain EDIS to provide necessary EIS to eligible infants and toddlers with disabilities and related services to eligible children with disabilities in accordance with this part and the substantive rights, protections, and procedural safeguards of the IDEA, § 57.6(a) and § 57.6(c) of this part.
(12) Implement a comprehensive, coordinated, inter-component, community-based system of EIS for eligible infants and toddlers with disabilities and their families using the procedures established in § 57.6(a) of this part and guidelines from the ASD(HA) on staffing and personnel standards.
(13) Provide transportation for EIS pursuant to the IDEA and this part.
(14) Provide transportation for children with disabilities pursuant to the IDEA and this part. The Military Departments are to provide transportation for a child to receive medical or psychological evaluations at a medical facility in the event that the local servicing military treatment facility (MTF) is unable to provide such services and must transport the child to another facility.
(15) Require that EDIS programs maintain the components of an EIS as required by the IDEA and this part, to include:
(i) A comprehensive child-find system, including a system for making referrals for services that includes timelines and provides for participation by primary referral sources, and that establishes rigorous standards for appropriately identifying infants and toddlers with disabilities for services.
(ii) A public awareness program focusing on early identification of infants and toddlers with disabilities to include:
(A) Preparation of information materials for parents regarding the availability of EIS, especially to inform parents with premature infants or infants with other physical risk factors associated with learning or developmental complications.
(B) Dissemination of those materials to all primary referral sources, especially hospitals and physicians, for distribution to parents.
(C) A definition of developmental delay, consistent with § 57.6(g) of this part, to be used in the identification of infants and toddlers with disabilities who are in need of services.
(D) Availability of appropriate EIS.
(iii) A timely, comprehensive, multidisciplinary evaluation of the functioning of each infant or toddler and identification of the needs of the child’s family to assist appropriately in the development of the infant or toddler.
(iv) Procedures for development of an Individualized Family Service Plan (IFSP) and coordination of EIS for families of eligible infants and toddlers with disabilities.
(v) A system of EIS designed to support infants and toddlers and their families in the acquisition of skills needed to become functionally independent and to reduce the need for additional support services as toddlers enter school.
(vi) A central directory of information on EIS resources and experts available to military families.
(16) Implement a comprehensive system of personnel development consistent with the requirements of the IDEA.
(17) Require that EDIS participate in the existing MTF quality assurance program, which monitors and evaluates the medical services for children receiving such services as described by this part. Generally accepted standards of practice for the relevant medical services shall be followed, to the extent consistent with the requirements of the IDEA including provision of EIS in a natural environment, to ensure accessibility, acceptability, and adequacy of the medical portion of the program provided by EDIS.
(18) Require transition services to promote movement from early intervention, preschool, and other educational programs into different educational settings and post-secondary environments.
(19) Direct that each program providing EIS is monitored for compliance with this part, and the substantive rights, protections, and procedural safeguards of the IDEA, at least once every 3 years.
(20) Submit a report to the USD(P&R) not later than September 30 of each year stating whether all EDIS programs are in compliance with this part and are affording infants and toddlers the substantive rights, protections, and procedural safeguards of the IDEA, as stated in § 57.6(f) of this part.
(21) Compile and report EDIS workload and compliance data using the system established by the ASD(HA) as stated in § 57.6(f).
(g) The Director, DOHA, under the authority, direction, and control of the GC, DoD/Director, Defense Legal Services Agency, shall:
(1) Ensure impartial due process hearings are provided in accordance with the IDEA and implementing guidance authorized by this part with respect to complaints related to special education and related services arising under the IDEA.
(2) Ensure DOHA Department Counsel represents DoDEA in all due process proceedings arising under the IDEA for children age 3 through 21 who are eligible for special education and related services.
(3) Ensure DOHA Department Counsel, upon request by a Military Department, represents the Military Department in due process proceedings arising under the IDEA for infants and toddlers birth up to 3 years of age with disabilities who are eligible for EIS.
(4) Ensure the DOHA Center for Alternative Dispute Resolution (CADR) maintains a roster of mediators qualified in special education disputes and, when requested, provides a mediator for complaints related to special education and related services arising under the IDEA.
§ 57.6 Procedures.
(a) Procedures for the Provision of EIS for Infants and Toddlers with Disabilities—(1) General.
(i) There is an urgent and substantial need to:
(A) Enhance the development of infants and toddlers with disabilities to minimize their potential for developmental delay and to recognize the significant brain development that occurs during a child’s first 3 years of life.
(B) Reduce educational costs by minimizing the need for special education and related services after infants and toddlers with disabilities reach school age.
(C) Maximize the potential for individuals with disabilities to live independently.
(D) Enhance the capacity of families to meet the special needs of their infants and toddlers with disabilities.
(ii) All procedures and services within EIS must be in accordance with the IDEA and the provisions of this part.
(2) Identification and screening. (i) Each Military Department shall develop and implement in its assigned geographic area a comprehensive child-find and public awareness program, pursuant to the IDEA and this part, that focuses on the early identification of infants and toddlers who are eligible to receive EIS pursuant to this part.
(ii) The military treatment facility (MTF) and Family Advocacy Program must be informed that EDIS will accept direct referrals for infants and toddlers from birth up to 3 years of age who are:
(A) Involved in a substantiated case of child abuse or neglect; or
(B) Identified as affected by illegal substance abuse or withdrawal symptoms resulting from prenatal drug exposure.
(iii) All other DoD Components will refer infants and toddlers with suspected disabilities to EDIS in collaboration with the parents.
(iv) Upon receipt of a referral, EDIS shall appoint a service coordinator.
(v) All infants and toddlers referred to the EDIS for EIS shall be screened to determine the appropriateness of the referral and to guide the assessment process.
(A) Screening does not constitute a full evaluation. At a minimum, screening shall include a review of the medical and developmental history of the referred infant or toddler through a parent interview and a review of medical records.
(B) If screening is conducted prior to the referral, or if there is a substantial or obvious biological risk, a screening following the referral may not be necessary.
(C) If EDIS determines that an evaluation is not necessary based on screening results, EDIS will provide written notice to the parents in accordance with paragraph (a)(9) of this section.
(3) Assessment and evaluation—(i) Assessments and evaluations. The assessment and evaluation of each infant and toddler must:
(A) Be conducted by a multidisciplinary team.
(B) Include:
(1) A review of records related to the infant’s or toddler’s current health status and medical history.
(2) An assessment of the infant’s or toddler’s needs for EIS based on personal observation of the child by qualified personnel.
(3) An evaluation of the infant’s or toddler’s level of functioning in each of the following developmental areas, including a multidisciplinary assessment of the unique strengths and needs of the child and the identification of services appropriate to meet those needs.
(i) Cognitive development.
(ii) Physical development, including functional vision and hearing.
(iii) Communication development.
(iv) Social or emotional development.
(v) Adaptive development.
(4) Informed clinical opinion of qualified personnel if the infant or toddler does not qualify based on standardized testing and there is probable need for services.
(ii) Family assessments. (A) Family assessments must include consultation with the family members.
(B) If EDIS conducts an assessment of the family, the assessment must:
(1) Be voluntary on the part of the family.
(2) Be conducted by personnel trained to utilize appropriate methods and procedures.
(3) Be based on information provided by the family through a personal interview.
(4) Incorporate the family’s description of its resources, priorities, and concerns related to enhancing the infant’s or toddler’s development and the identification of the supports and services necessary to enhance the family’s capacity to meet the developmental needs of the infant or toddler.
(iii) Standards for Assessment Selection and Procedures. EDIS shall ensure, at a minimum, that:
(A) Evaluators administer tests and other evaluations in the native language of the infant or toddler, or the family’s native language, or other mode of communication, unless it is clearly not feasible to do so.
(B) Assessment, evaluation procedures, and materials are selected and administered so as not to be racially or culturally discriminatory.
(C) No single procedure is used as the sole criterion for determining an infant’s or toddler’s eligibility under this part.
(D) Qualified personnel conduct evaluations and assessments.
(iv) Delivery of Intervention Services. With parental consent, the delivery of intervention services may begin before the completion of the assessment and evaluation when it has been determined by a multidisciplinary team that the infant or toddler or the infant’s or toddler’s family needs the service immediately. Although EDIS has not completed all assessments, EDIS must develop an IFSP before the start of services and complete the remaining assessments in a timely manner.
(4) Eligibility. (i) The EDIS team shall meet with the parents and determine eligibility. The EIS team shall document the basis for eligibility in an eligibility report and provide a copy to the parents.
(ii) Infants and toddlers from birth up to 3 years of age with disabilities are eligible for EIS if they meet one of the following criteria:
(A) The infant or toddler is experiencing a developmental delay in one or more of the following areas: Physical development; cognitive development; communication development; social or emotional development; or adaptive development, as verified by a developmental delay of two standard deviations below the mean as measured by diagnostic instruments and procedures in at least one area; a 25 percent delay in at least one developmental area on assessment instruments that yield scores in months; a developmental delay of 1.5 standard deviations below the mean as measured by diagnostic instruments and procedures in two or more areas; or a 20 percent delay in two or more developmental areas on assessment instruments that yield scores in months.
(B) The infant or toddler has a diagnosed physical or mental condition that has a high probability of resulting in developmental delay. Includes conditions such as, chromosomal abnormalities; genetic or congenital disorders; severe sensory impairments; inborn errors of metabolism; disorders reflecting disturbance of the development of the nervous system; congenital infections; and disorders secondary to exposure to toxic substances, including fetal alcohol syndrome.
(5) Timelines. (i) EIS shall complete the initial evaluation and assessment of each infant and toddler (including the family assessment) in a timely manner ensuring that the timeline in paragraph (a)(6)(ii) of this section is met.
(ii) The Military Department responsible for providing EIS shall develop procedures requiring that, if circumstances make it impossible to complete the evaluation and assessment within a timely manner (e.g., if an infant or toddler is ill), EDIS shall:
(A) Document those circumstances.
(B) Develop and implement an appropriate interim IFSP in accordance with this part.
(6) IFSP. (i) The EDIS shall develop and implement an IFSP for each infant and toddler with a disability, from birth up to 3 years of age, who meets the eligibility criteria for EIS.
(ii) EDIS shall convene a meeting to develop the IFSP of an infant or toddler with a disability. The meeting shall be scheduled as soon as possible following its determination that the infant or toddler is eligible for EIS, but not later than 45 days from the date of the referral for services.
(iii) The IFSP team meeting to develop and review the IFSP must include:
(A) The parent or parents of the infant or toddler.
(B) Other family members, as requested by the parent, if feasible.
(C) An advocate or person outside of the family if the parent requests that person’s participation.
(D) The service coordinator who has worked with the family since the initial referral of the infant or toddler or who is responsible for the implementation of the IFSP.
(E) The persons directly involved in conducting the evaluations and assessments.
(F) As appropriate, persons who shall provide services to the infant or toddler or the family.
(iv) If a participant listed in paragraph (a)(6)(iii) of this section is unable to attend a meeting, arrangements must be made for the person’s involvement through other means, which may include:
(A) A telephone conference call or other electronic means of communication.
(B) Providing knowledgeable,