DEPARTMENT OF DEFENSE
CFDA 12.401 NATIONAL GUARD MILITARY OPERATIONS AND MAINTENANCE (O&M)
PROJECTS
I. PROGRAM OBJECTIVE
The Department of Defense (DoD) enters into cooperative agreements (CA)
with States to provide Federal support for services provided by the State
Military Departments for authorized facilities, real property services, real
property maintenance and repair, operations and maintenance (O&M), and
minor construction costs.
II. PROGRAM PROCEDURES
The DoD National Guard Bureau (NGB) enters into a CA with a State when
NGB transfers value, through funding or otherwise, to the State to support the
State Army National Guard (ARNG) and Air National Guard (ANG) instead of
acquiring (by purchase, lease, or barter) property or services for the direct
benefit or use of the ARNG or ANG and substantial involvement is expected
between the NGB and the State when carrying out the activity contemplated in
the agreement (CA chapter 1-1).
Generally, a CA consists of two parts, the agreement and appendices
(Master Cooperative Agreement (MCA) and as many Appendices as apply to that
State). The CA for this program is titled as "Grants and Cooperative Agreements
NGR 5-1/ANGI 63-101" and the appendices are listed as separate chapters in this
standard CA. Additionally, single purpose CAs may be created. The MCA includes
standard terms and conditions applicable to all Appendices under the MCA and
the required signatures of the parties. There will be a separate Appendix for
each CA functional area applicable to the State. Each Appendix shall contain
terms and conditions, allowable costs, reports, approved budget, management
controls, and administrative information applicable only to that functional
area (CA chapter 2-1).
The Adjutant General (TAG) and the United States Property & Fiscal
Officer (USPFO) are responsible for the execution of the MCA and Appendices. A
CA is the means of providing all financial assistance and other support to
States for the operation of the National Guard except for financial assistance
and support provided under separate authority (e.g., military and technician
pay and the military supply system). Single purpose CAs will specify the
responsible parties (CA chapter 2-1).
The sum of Federal reimbursements and program income may not exceed the
requirements listed for each program in the approved budget. The State Military
Department must have prior written USPFO approval of an amended budget before
it may request a reimbursement or receive program income that would bring its
receipts above the maximum program funding level. Funding may be transferred
from the O&M program without the prior written approval of the appropriate
NGB program manager. However, transfers of funds within the Real Property
Operations and Maintenance Activities (RPOMA) program which remain part of the
RPOMA program do not require approval (CA chapter 13-1).
III. COMPLIANCE REQUIREMENTS
In developing the audit procedures to test compliance with the
requirements for a Federal program, the auditor should first look to Part 2,
Matrix of Compliance Requirements, to identify which of the 14 types of
compliance requirements described in Part 3 are applicable and then look to
Parts 3 and 4 for the details of the requirements.
A. Activities Allowed Or Unallowable
1. Federal funding under the CA shall be on a requirements basis within
Federal budget limitations and funding availability. Funding shall be provided
to support those items designated in the CA or facilities authorized support in
the Facilities Inventory Stationing Plan (FISP). Facilities used in excess of
those authorized shall be supported with other than Federal funds (CA chapter
13-5).
2. RPOMA and Facilities Operations and Maintenance Activities (FOMA) (CA
chapter 33) Appendix support shall be provided within available funding
limitations for authorized facilities and supporting elements such as
sidewalks, fire hydrants, gasoline and diesel fuel dispensing systems,
flammable materials buildings, roads, utilities systems, fencing and hard
stand. Maintenance and repair, real property services, and minor construction
support is provided for space or facilities as detailed in the CA chapter
13-5.
3. Unallowable activities are those activities that are described as
unauthorized charges and detailed in the CA chapter 13-6.
B. Allowable Costs/Cost Principles
1. Budget - Costs must be in accordance with any restrictions,
limitations, or instructions contained in the CA budget (CA chapter 13-4 and
33-4).
2. Indirect costs are unallowable - Indirect costs, except fringe
benefits, are unallowable (CA chapter 5-3).
3. Fringe benefits - Fringe benefits for which the State does not
bill the State Military Department directly, such as workmen=s compensation, unemployment compensation,
State sponsored life and health insurance, and retirement benefits are
allowable if they are part of the State=s Central Service Cost Allocation Plan
approved by the Department of Health and Human Services (HHS). However, for
these costs to be reimbursable, all of the following conditions have to be met
(CA chapter 5):
a. The individual cost items have to be reimbursable under the terms of
individual appendices.
b. Fringe benefit costs for which the State does not bill the State
Military Department directly shall be reimbursable by applying a fringe benefit
rate to the costs of actual salaries paid to employees.
c. Fringe benefits which are neither direct costs nor included in the
billed central services section of the State=s Central Service Cost Allocation Plan
approved by HHS are not reimbursable.
G. Matching, Level of Effort, Earmarking
The rate of reimbursement to the State for all authorized charges,
unless expressly stated otherwise, shall be based on the FISP support code for
the facility generating the expenditure. For example, employee, repair,
supplies, equipment, utility, etc. costs directly and exclusively associated
with a facility authorized 75 percent support shall be reimbursed to the State
Military Department 75 percent. Costs that are generated for facilities that
are authorized at several different support levels shall be reimbursed at a
rate that reflects the actual level of effort. However, nothing shall preclude
the State Military Department from requesting reimbursement at a rate less than
what is authorized (CA chapter 13-5).
H. Period Of Availability Of Federal Funds
1. National Guard Operations and Maintenance agreements are funded with
one year appropriations and, as such, obligations may not be incurred against
Federal funds for a specified year before or after the Federal fiscal year in
which the funds were appropriated (CA chapters 12-1, 12-6, 32-1, and 32-6).
2. A CA shall be executed by the USPFO and the TAG prior to any request
for reimbursement or advance payment. The State shall also have an approved
Appendix covering each functional area for which the reimbursement or an
advance is requested. The State shall not request reimbursement for any
expenditures it made before the date that all required parties execute the MCA
and the covering Appendices unless the MCA or appropriate Appendix expressly
authorize expenditures made during the funding period, but prior to the date of
final signature (CA chapter 2-1).
3. Work or task performance must serve a bona fide need that exists in
the fiscal year in which the work or tasking is issued; otherwise, a valid
obligation is not accomplished. It is not intended that the rule of bona fide
need of the fiscal year rule be construed to preclude lead time. Thus, where
materials, for example, cannot be obtained in the same fiscal year in which
they are needed, a provision for delivery in the subsequent fiscal year does
not violate the bona fide need rule so long as the time intervening between
placing of the order and delivery is not excessive and the work order is not
for standard commercial items readily available from other sources. Bona fide
need generally is a determination of the NGB activity and not that of the State
performing the activity. The USPFO shall prepare a bona fide determination and
finding to reflect this need. A State performing the activity should, however,
refuse to accept a work order if it is obvious that the work order does not
serve a need existing in the fiscal year in which issued (CA chapter 2-2).
J. Program Income
Program income in NGB CA shall mean the gross income, received by a
recipient from fees for services performed and from the use, rental, or sale of
real or personal property, the operation and maintenance of which is supported
under the CA. The following exceptions are applicable (CA chapter 7):
1. Income received from the use or rental of State-owned,
Federally-supported armories is not program income. However, the State must
fulfill its obligations under Title 10 USC 18236(c) on the use of these funds.
Title 10 USC 18236(c) permits States to rent out armories if the State uses the
rental income to maintain the armory. In addition, as a condition for continued
Federal support, the State must increase its contribution to the agreement by
at least the amount of all Identifiable Incremental Costs (IIC), as defined in
CA chapter 7-3c(4), for which it receives Federal support (e.g.,
utilities).
2. Reimbursements made to NGB by another Federal agency for the use of
an NGB supported National Guard facility are not program income but are
considered to be direct reimbursement of costs incurred. However, they may
increase the maximum funding limitations of the appropriate appendices to the
CA.
3. Amounts paid directly to a State Military Department by a Federal
agency, a State agency, or any other user for the use of a State Military
Department owned, leased, or licensed real property (exclusive of armories) or
equipment acquired or supported under an NGB CA pursuant to a direct
relationship between the Federal or State agency, or other user and the State
Military Department are program income.
L. Reporting
1. Financial Reporting
a. SF-269, Financial Status Report - Not Applicable
b. SF-270, Request for Advance or Reimbursement - Applicable
c. SF-271, Outlay Report and Request for Reimbursement for
Construction Program - Not Applicable
d. SF-272, Federal Cash Transactions Report - Applicable
2. Performance Reporting - Not Applicable
3. Special Reporting - Not Applicable
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