August 29, 1997
FOR THE RECORD
of Federal Financial Management
||Recompilation of OMB Circular A-102
I certify that the
attached document constitutes a recompilation of Office of Management
and Budget Circular A-102, "Grants and Cooperative Agreements with State
and Local Governments." The recompilation consists of the last complete
revision of the Circular published at 59 FR 52224 (dated October 7, 1994,
published October 14, 1994), as further amended at 62 FR 45934 (August
A-102 (REVISED 10/7/94, As Further Amended 8/29/97)
TO THE HEADS OF EXECUTIVE
DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Grants and
Cooperative Agreements with State and Local Governments
This Circular establishes consistency and uniformity among Federal agencies
in the management of grants and cooperative agreements with State, local,
and federally- recognized Indian tribal governments. This revision supersedes
Office of Management and Budget (OMB) Circular No. A-102, dated March 3, 1988.
This Circular is issued under the authority of the Budget and Accounting
Act of 1921, as amended; the Budget and Accounting Procedures Act of 1950,
as amended; Reorganization Plan No. 2 of 1970; Executive Order 11541 and
the Chief Financial Officers Act, 31 U.S.C. 503. Also included in the
Circular are standards to ensure consistent implementation of sections
202, 203, and 204 of the Intergovernmental Cooperation Act of 1968, the
Office of Federal Procurement Policy Act Amendments of 1983, and sections
6301-08, title 31, United States Code.
On March 12, 1987, the President directed all affected agencies to issue
a grants management common rule to adopt government-wide terms and conditions
for grants to State and local governments, and they did so. In 1988, OMB
revised the Circular to provide guidance to Federal agencies on other
matters not covered in the common rule.
4. Required Action.
Consistent with their legal obligations, all Federal agencies administering
programs that involve grants and cooperative agreements with State, local
and Indian tribal governments (grantees) shall follow the policies in
this Circular. If the enabling legislation for a specific grant program
prescribes policies or requirements that differ from those in this Circular,
the provisions of the enabling legislation shall govern.
5. OMB Responsibilities.
OMB may grant deviations from the requirements of this Circular when permissible
under existing law. However, in the interest of uniformity and consistency,
deviations will be permitted only in exceptional circumstances.
Contact. Further information concerning this Circular may be obtained
Office of Federal
Office of Management and Budget
New Executive Office Building
Washington, DC 20503
Review Date. The Circular will have a policy review three years from
the date of issuance.
8. Effective Date.
The Circular is effective on publication.
Circular No. A-l02
AND COOPERATIVE AGREEMENTS
WITH STATE AND LOCAL GOVERNMENTS
1. Pre-Award Policies.
- Use of grants
and cooperative agreements. Sections 6301-08, title 31, United States
Code govern the use of grants, contracts and cooperative agreements.
A grant or cooperative agreement shall be used only when the principal
purpose of a transaction is to accomplish a public purpose of support
or stimulation authorized by Federal statute. Contracts shall be used
when the principal purpose is acquisition of property or services for
the direct benefit or use of the Federal Government. The statutory criterion
for choosing between grants and cooperative agreements is that for the
latter, "substantial involvement is expected between the executive agency
and the State, local government, or other recipient when carrying out
the activity contemplated in the agreement."
- Advance Public
Notice and Priority Setting.
(1) Federal agencies
shall provide the public with an advance notice in the Federal
Register, or by other appropriate means, of intended funding priorities
for discretionary assistance programs, unless funding priorities are
established by Federal statute. These priorities shall be approved
by a policy level official.
time permits, agencies shall provide the public an opportunity to
comment on intended funding priorities.
discretionary grant awards in excess of $25,000 shall be reviewed
for consistency with agency priorities by a policy level official.
- Standard Forms
for Applying for Grants and Cooperative Agreements.
(1) Agencies shall
use the following standard application forms unless they obtain Office
of Management and Budget (OMB) approval under the Paperwork Reduction
Act of 1980 (44 U.S.C. 35) and the 5 CFR Part 1320, "Controlling Paperwork
Burdens on the Public":
SF-424a Budget Information (Non-Construction)
SF-424b Standard Assurances (Non-Construction)
SF-424c Budget Information (Construction)
SF-424d Standard Assurances (Construction)
or additional information is needed to comply with legislative requirements
or to meet specific program needs, agencies shall also obtain prior
(2) A preapplication
shall be used for all construction, land acquisition and land development
projects or programs when the need for Federal funding exceeds $100,000,
unless the Federal agency determines that a preapplication is not needed.
A preapplication is used to:
Establish communication between the agency and the applicant,
(b) Determine the
(c) Determine how
well the project can compete with similar projects from others, and
(d) Discourage any proposals that have little or no chance for Federal
funding before applicants incur significant costs in preparing detailed
Agencies shall use the Budget Information (Construction) and Standard
Assurances (Construction) when the major purpose of the project or program
is construction, land acquisition or land development.
may specify how and whether budgets shall be shown by functions or activities
within the program or project.
should generally include a request for a program narrative statement
which is based on the following instructions:
(a) Objectives and need for assistance. Pinpoint any relevant
physical, economic, social, financial, institutional, or other problems
requiring a solution. Demonstrate the need for the assistance and state
the principal and subordinate objectives of the project. Supporting
documentation or other testimonies from concerned interests other than
the applicant may be used. Any relevant data based on planning studies
should be included or footnoted.
(b) Results or
Benefits Expected. Identify costs and benefits to be derived. For example,
show how the facility will be used. For land acquisition or development
projects, explain how the project will benefit the public.
Outline a plan of action pertaining to the scope and detail how the
proposed work will be accomplished for each assistance program. Cite
factors which might accelerate or decelerate the work and reasons for
taking this approach as opposed to others. Describe any unusual features
of the project, such as design or technological innovations, reductions
in cost or time, or extraordinary social and community involvements.
Provide for each assistance program quantitative projections of the
accomplishments to be achieved, if possible. When accomplishments cannot
be quantified, list the activities in chronological order to show the
schedule of accomplishments and target expected completion dates. Identify
the kinds of data to be collected and maintained, and discuss the criteria
to be used to evaluate the results and success of the project. Explain
the methodology that will be used to determine if the needs identified
and discussed are being met and if the results and benefits identified
are being achieved. List each organization, cooperator, consultant,
or other key individuals who will work on the project along with a short
description of the nature of their effort or contribution.
location. Give a precise location of the project and area to be served
by the proposed project. Maps or other graphic aids may be attached.
applicable, provide the following information: for research and demonstration
assistance requests, present a biographical sketch of the program director
with the following information: name, address, telephone number, background,
and other qualifying experience for the project. Also, list the name,
training and background for other key personnel engaged in the project.
Describe the relationship between this project and other work planned,
anticipated, or underway under Federal assistance. Explain the reason
for all requests for supplemental assistance and justify the need for
additional funding. Discuss accomplishments to date and list in chronological
order a schedule of accomplishments, progress or milestones anticipated
with the new funding request. If there have been significant changes
in the project objectives, location, approach or time delays, explain
and justify. For other requests for changes, or amendments, explain
the reason for the change(s). If the scope or objectives have changed
or an extension of time is necessary, explain the circumstances and
justify. If the total budget has been exceeded or if the individual
budget items have changes more than the prescribed limits, explain and
justify the change and its effect on the project.
(6) Additional assurances
shall not be added to those contained on the standard forms, unless
specifically required by statute.
and Suspension. Federal agencies shall not award assistance to applicants
that are debarred or suspended, or otherwise excluded from or ineligible
for participation in Federal assistance programs under Executive Order
12549. Agencies shall establish procedures for the effective use of
the List of Parties Excluded from Federal Procurement or Nonprocurement
programs to assure that they do not award assistance to listed parties
in violation of the Executive Order. Agencies shall also establish procedures
to provide for effective use and/or dissemination of the list to assure
that their grantees and subgrantees (including contractors) at any tier
do not make awards in violation of the nonprocurement debarment and
suspension common rule.
- Awards and
awards shall be made at least ten days prior to the beginning of the
shall notify grantees immediately of any anticipated adjustments in
the amount of an award. This notice shall be provided as early as possible
in the funding period. Reductions in funding shall apply only to periods
after notice is provided. Whenever an agency adjusts the amount of an
award, it shall also make an appropriate adjustment to the amount of
any required matching or cost sharing.
- Carryover Balances.
Agencies shall be prepared to identify to OMB the amounts of carryover
balances (e.g., the amounts of estimated grantee unobligated balances
available for carryover into subsequent grant periods). This presentation
shall detail the fiscal and programmatic (level of effort) impact in
the following period.
- Special Conditions
or Restrictions. Agencies may impose special conditions or restrictions
on awards to "high risk" applicants/grantees in accordance with section
__.12 of the grants management common rule. Agencies shall document
use of the "Exception" provisions of section __.6 and "High-risk" provisions
of section __.12 of the grants management common rule.
- Waiver of Single
State Agency Requirements.
to agencies from the Governors, or other duly constituted State authorities,
for waiver of "single" State agency requirements in accordance with
section 31 U.S.C. 6504, "Use of existing State or multi-member agency
to administer grant programs," shall be given expeditious handling and,
whenever possible, an affirmative response.
it is necessary to refuse a request for waiver of "single" State agency
requirements under section 204 of the Intergovernmental Corporation
Act, the Federal grantor agency shall advise OMB prior to informing
the State that the request cannot be granted. The agency shall indicate
to OMB the reasons for the denial of the request.
proposals embracing grant-in-aid programs shall avoid inclusion of proposals
for "single" State agencies in the absence of compelling reasons to
do otherwise. In addition, existing requirements in present grant-in-aid
programs shall be reviewed and legislative proposals developed for the
removal of these restrictive provisions.
Rights. Agencies shall use the standard patent rights clause specified
in "Rights to Inventions made by Non-profit Organizations and Small
Business Firms" (37 CFR Part 401), when providing support for research
- Metric System
of Measurement. The Metric Conversion Act of 1975, as amended, declares
that the metric system is the preferred measurement system for U.S.
trade and commerce. The Act requires each Federal agency to establish
a date(s), in consultation with the Secretary of Commerce, when the
metric system of measurement will be used in the agency's procurement,
grants, and other business-related activities. Metric implementation
may take longer where the use of the system is initially impractical
or likely to cause significant inefficiencies in the accomplishment
of federally-funded activities. Heads of departments and agencies shall
establish a process for a policy level and program level review of proposed
exceptions to metric usage in grants programs. Executive Order 12770
("Metric Usage in Federal Government Programs") elaborates on implementation
of the Act.
- Cash Management.
Agency methods and procedures for transferring funds shall minimize
the time elapsing between the transfer to recipients of grants and cooperative
agreements and the recipient's need for the funds.
transfers shall be made consistent with program purposes, applicable
law and Treasury regulations contained in 31 CFR Part 205, Federal Funds
letters-of-credit are used to provide funds, they shall be in the same
amount as the award.
- Grantee Financial
Management Systems. In assessing the adequacy of an applicant's
financial management system, the awarding agency shall rely on readily
available sources of information, such as audit reports, to the maximum
extent possible. If additional information is necessary to assure prudent
management of agency funds, it shall be obtained from the applicant
or from an on-site review.
- Financial Status
agencies shall require grantees to use the SF-269, Financial Status
Report-Long Form, or SF-269a, Financial Status Report-Short Form, to
report the status of funds for all non-construction projects or programs.
Federal agencies need not require the Financial Status Report when the
SF-270, Request for Advance or Reimbursement, or SF-272, Report of Federal
Cash Transactions, is determined to provide adequate information.
agencies shall not require grantees to report on the status of funds
by object class category of expenditure (e.g., personnel, travel, equipment).
(3) If reporting
on the status of funds by programs, functions or activities within the
project or program is required by statute or regulation, Federal agencies
shall instruct grantees to use block 12, Remarks, on the SF-269, or
a supplementary form approved by the OMB under the Paperwork Reduction
Act of 1980.
agencies shall prescribe whether the reporting shall be on a cash or
an accrual basis. If the Federal agency requires accrual information
and the grantees's accounting records are not normally kept on an accrual
basis, the grantee shall not be required to convert its accounting system
but shall develop such accrual information through an analysis of the
documentation on hand.
With Small and Minority Firms, Women's Business Enterprises and Labor
Surplus Area Firms. It is national policy to award a fair share
of contracts to small and minority business firms. Grantees shall take
similar appropriate affirmative action to support of women's enterprises
and are encouraged to procure goods and services from labor surplus
- Program Income.
shall encourage grantees to generate program income to help defray program
costs. However, Federal agencies shall not permit grantees to use grant-acquired
assets to compete unfairly with the private sector.
agencies shall instruct grantees to deduct program income from total
program costs as specified in the grants management common rule at paragraph
__.25 (g)(1), unless agency regulations or the terms of the grant award
state otherwise. Authorization for recipients to follow the other alternatives
in paragraph __.25 (g) (2) and (3) shall be granted sparingly.
- Site Visits
and Technical Assistance. Agencies shall conduct site visits only
as warranted by program or project needs. Technical assistance site
visits shall be provided only (1) in response to requests from grantees,
(2) based on demonstrated program need, or (3) when recipients are designated
"high risk" under section __.12 of the grants management common rule.
Investment. Agencies shall encourage grantees to consider the provisions
of the common rule at Section __. 31 and Executive Order 12803 ("Infrastructure
Privatization"). This includes reviewing and modifying procedures affecting
the management and disposition of federally-financed infrastructure
owned by State and local governments, with their requests to sell or
lease infrastructure assets, consistent with the criteria in Section
4 of the Order. Related guidance contained in Executive Order 12893
("Principles for Federal Infrastructure Investments") requiring economic
analysis and the development of investment options, including public-private
partnership, shall also be applied. On March 7, 1994, OMB issued guidance
on Executive Order 12893 in OMB Bulletin No. 94-16.
- Resource Conservation
and Recovery Act. Agencies shall implement the Resource Conservation
and Recovery Act of 1976 (RCRA) (42 U.S.C. 6962). Any State agency or
agency of a political subdivision of a State which is using appropriated
Federal funds must comply with Section 6002 of RCRA. Section 6002 requires
that preference be given in procurement programs to the purchase of
specific products containing recycled materials identified in guidelines
developed by the Environmental Protection Agency (EPA). Current guidelines
are contained in 40 CFR Parts 247-253. State and local recipients of
grants, loans, cooperative agreements or other instruments funded by
appropriated Federal funds shall give preference in procurement programs
to the purchase of recycled products pursuant to the EPA guidelines.
of Goods and Services. Agencies should be aware of and comply with
the requirement enacted in Section 623 of the Treasury, Postal Service
and General Government Appropriations Act, 1993, and reenacted in Section
621 of the fiscal year 1994 Appropriations Act. This Section requires
grantees to specify in any announcement of the awarding of contracts
with an aggregate value of $500,000 or more, the amount of Federal funds
that will be used to finance the acquisitions.
authorizes conditional exemption from OMB administrative requirements
and cost principles circulars for certain Federal programs with statutorily-authorized
consolidated planning and consolidated administrative funding, that
are identified by a Federal agency and approved by the head of the Executive
department or establishment. A Federal agency shall consult with OMB
during its consideration of whether to grant such an exemption.
(2) To promote
efficiency in State and local program administration, when Federal non-entitlement
programs with common purposes have specific statutorily-authorized consolidated
planning and consolidated administrative funding and where most of the
State agency's resources come from non-Federal sources, Federal agencies
may exempt these covered State-administered, non-entitlement grant programs
from certain OMB grants management requirements. The exemptions would
be from all but the allocability of costs provisions of OMB Circulars
A-87 (Attachment A, subsection C.3), "Cost Principles for State, Local,
and Indian Tribal Governments," A-21 (Section C, subpart 4), "Cost Principles
for Educational Institutions," and A-122 (Attachment A, subsection A.4),
"Cost Principles for Non-Profit Organizations," and from all of the
administrative requirements provisions of OMB Circular A-110, "Uniform
Administrative Requirements for Grants and Agreements with Institutions
of Higher Education, Hospitals, and Other Non-Profit Organizations,"
and the agencies' grants management common rule.
a Federal agency provides this flexibility, as a prerequisite to a State's
exercising this option, a State must adopt its own written fiscal and
administrative requirements for expending and accounting for all funds,
which are consistent with the provisions of OMB Circular A-87, and extend
such policies to all subrecipients. These fiscal and administrative
requirements must be sufficiently specific to ensure that: funds are
used in compliance with all applicable Federal statutory and regulatory
provisions, costs are reasonable and necessary for operating these programs,
and funds are not be used for general expenses required to carry out
other responsibilities of a State or its subrecipients.
Federal agencies shall notify grantees in writing before the end of
the grant period of final reports that shall be due, the dates by which
they must be received, and where they must be submitted. Copies of any
required forms and instructions for their completion shall be included
with this notification. The Federal actions that must precede closeout
of all required reports,
or recovery of federally-owned assets (as distinct from property acquired
under the grant), and
of the award amount and the amount of Federal cash paid the recipient.
- Annual Reconciliation
of Continuing Assistance Awards. Federal agencies shall reconcile
continuing awards at least annually and evaluate program performance
and financial reports.
be reviewed include:
(1) A comparison
of the recipient's work plan to its progress reports and project outputs,
(2) the Financial
Status Report (SF-269),
(3) Request(s) for
with any matching, level of effort or maintenance of effort requirement,
(5) A review
of federally-owned property (as distinct from property acquired under
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