HomeMy WebLinkAboutCity of Tamarac Resolution R-2003-126Temp Reso. #10149
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May 30, 2003
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CITY OF TAMARAC, FLORIDA
RESOLUTION NO. R-2003 -�_
A RESOLUTION OF THE CITY COMMISSION OF
TAMARAC, FLORIDA AUTHORIZING THE APPROPRIATE
CITY OFFICIALS TO EXECUTE A GRANT MEMORANDUM
OF AGREEMENT AND MAINTENANCE MEMORANDUM
OF AGREEMENT BETWEEN THE CITY OF TAMARAC
,AND THE STATE OF FLORIDA DEPARTMENT OF
AGRICULTURE AND CONSUMER SERVICES FOR AN
URBAN AND COMMUNITY FORESTRY GRANT IN THE
AMOUNT OF $10,000 FOR MEDIAN LANDSCAPING
ALONG SOUTHGATE BOULEVARD BETWEEN NOB HILL
ROAD AND PINE ISLAND ROAD PROVIDING FOR A CITY
MATCH OF $16,650 AND A TOTAL PROJECT COST OF
$26,650; AUTHORIZING THE APPROPRIATE CITY
OFFICIALS TO AMEND THE GRANTS FUND BUDGET IN
THE AMOUNT OF $10,000 IN ACCORDANCE WITH
PROPER ACCOUNTING PROCEDURES DURING THE
THIRD QUARTER BUDGET REVISIONS; PROVING FOR
CONFLICTS; PROVIDING FOR SEVERABILITY; AND
PROVIDING FOR AND EFFECTIVE DATE.
WHEREAS, the City Commission of the City of Tamarac realizes that trees provide
many benefits to residents including energy conservation, wildlife habitat, decreased storm
water runoff and cleaner air; and
WHEREAS, the City of Tamarac realizes the importance of maintaining, restoring and
expanding the tree canopy within the City; and
WHEREAS, The City of Tamarac is committed to enhancing the medians throughout
the City through the installation of landscaping and trees; and
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Temp. Reso. #10149
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May 30, 2003
WHEREAS, the City of Tamarac submitted a grant application to the State of Florida
Department of Agriculture and Consumer Services through the Urban and Community
Forestry Grant Program in the amount of $10,000 for landscaping of Southgate Boulevard
between Nab Hill Road and Pine Island Road; and
WHEREAS, the City of Tamarac has been awarded a grant in the amount of $10,000
from the State of Florida Department of Agriculture and Consumer Services Division of
Urban and Community Forestry; and
WHEREAS, the State of Florida Department of Agriculture and Consumer Services
Division of Urban and Community Forestry requires execution of a Grant Memorandum of
Agreement and Maintenance Memorandum of Agreement in order to process the grant
award; and
WHEREAS, the City of Tamarac is willing to match a grant award of $10,000 with
$16,650 from the Street Improvement Project Fund for a total project cost of $26,650; and
WHEREAS, the City Manager and the Director of Public Works recommend executing
the Urban and Community Forestry Grant Memorandum of Agreement and Maintenance
Memorandum of Agreement attached hereto as "Exhibit A;" and
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Temp. Reso. #10149
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May 30, 2003
WHEREAS, the City Commission of the City of Tamarac deems it to be in the best
interest of the citizens and residents of the City of Tamarac to execute the State of Florida
Department of Agriculture and Consumer Services Urban and Community Forestry Grant
Memorandum of Agreement and Maintenance Memorandum of Agreement in the amount of
$10,000 for the enhancement of Southgate Boulevard as part of the Street Improvement
Program.
NOW THEREFORE BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY
OF TAMARAC, FLORIDA:
Section 1: The foregoing "WHEREAS" clauses are hereby ratified and confirmed as
being true and correct and are hereby made a specific part of this resolution.
Section 2: The appropriate City officials are hereby authorized to execute the Grant
Memorandum of Agreement and Maintenance Memorandum of Agreement attached hereto
as "Exhibit A", and request $10,000 in grant funds providing for a match of $16,650 and a
total project cost of $26,650.
Section 3: The City Commission authorizes the appropriate City Officials to amend the
grants fund budget in the amount of $10,000 and appropriate said funds including any and all
subsequent budgetary transfers to be in accordance with proper accounting procedures
during third quarter budget amendments.
Section 4: All resolutions in conflict herewith are hereby repealed to the extent of such
conflict.
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Temp. Reso. #10149
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May 30, 2003
Section 5: If any clause, section, other part or application of this Resolution is held by
any court of competent jurisdiction to be unconstitutional or invalid, in part or in application,
it shall not affect the validity of the remaining portion or applications of this Resolution.
Section 6: This Resolution shall become effective immediately upon its adoption.
PASSED, ADOPTED AND APPROVED this 11th day of June, 2003.
ATTEST:
yzfA, CORD OF COMMISSION VOTE:
MARION SWE SON, CMC MAYOR SCHREIBER
CITY CLERK DIST 1: COMM. PORTNER
DIST 2: COMM. FLANSBAUM-TALABISC
DIST 3: COMM. SULTANOF
DIST 4: V/M ROBERTS
I HEREBY CERTIFY that
I have approved this
RESOLUTION as to form.
1
MITCHELL S. A
CITY ATTORNEY
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Florida Department of Agriculture and Consumer Services
CHARLES H. BRONSON, Commissioner
The Capitol • Tallahassee, FL 32399-0800
Please Respond to:
July 14, 2003
Division of Forestry
Forest Management Bureau
3125 Conner Blvd. C-25
Tallahassee, FL 32399-1650
Telephone: (850) 498-6611
FAX: (850) 921-6724
Ms. Kimberly Perron
Special Projects Coordinator
City of Tamarac
7.525 NW 88th Avenue
Tamarac, FL 33321
Dear Ms. Perron:
Enclosed you will find an original fully executed copy of the Urban and Community
Forestry (U&CF) Grant Memorandum of Agreement between the Florida Department of
Agriculture and Consumer Services and the City of Tamarac for U&CF Grant Application
#02-56, "Southgate Boulevard Tree Canopy Enhancement."
CONSIDER THIS AUTHORIZATION TO PROCEED WITH YOUR PROJECT.
Claims for reimbursement may be submitted on a quarterly basis. To avoid delays in
processing your reimbursement claim, please be sure to include the following documentation
when filing a claim:
1) Clear copies of all invoices or receipts
2) Proof -of -payment in the form of copies of canceled checks or financial statements
3) Documentation showing how in -kind contributions were calculated.
Please include a completed copy of the enclosed Reimbursed Summary Sheet with your
claim. You will be reimbursed for fifty (50) percent of all eligible project costs not to exceed the
grant award. Complete the Reimbursement Summary Sheet by itemizing your grant
expenditures. List the expenditures to be reimbursed in the Grant Amount column, and the
matching costs in cash or in -kind contributions in the Match Amount column. The Match
Amount column should always equal or exceed the Grant Amount column.
Also included is the Office of Management and Budget Circular #A-87, "Cost Principles
for State, Local, and Indian Tribal Governments." You should use this as a basis for determining
eligible grant expenditures.
%NIf,
F
FItWa.
Florida Agriculture and Forest Products
$53 Billion for Vlorida's Economy
a
Page 1 of 10 EXH,,,,,1 IT 1 FDACS CONTRACT #
ATTACHMENT G 008066
URBAN AND COMMUNITY FORESTRY (U&CF)
GRANT MEMORANDUM OF AGREEMENT
� fh
-Tbis agreement, made and entered into this the day of
,20_QJ_ by and between the STATE OF FLORIDA DEPARTMENT
OF A CULTURE AND CONSUMER SERVICES, an agency of the State of
Florida, hereinafter called the "Department" and The City of Tamarac,
hereinafter called the Entity (Subrecipient).
WITNESSETH
WHEREAS, the Department desires to increase the application of the
principles of urban and community forestry by granting funds to the
Entity (Subrecipient)for the purpose as outlined in grant application
Number 02-56, included herein as Exhibit A and by reference made a part
hereof:
WHEREAS, the Department and the Entity (Subrecipient) are of the
opinion that the citizens of the state would benefit from the
implementation of urban and community forestry projects that improve
our communities through the proper care of trees and related plant
materials;
WHEREAS, the Department has awarded the Entity (Subrecipient)an
urban forestry grant for the specific project set forth in the U&CF
Grant Application Number 02-56, hereinafter the "project";
WHEREAS, the Entity(Subrecipient) by Resolution No. (N/A), dated
(N/A), has indicated its support of the grant application and
authorized its officers to execute this Agreement on its behalf;
WHEREAS, the parties hereto mutually recognize the benefits of
such a project as described in the U&CF Grant application and the need
for entering into an agreement designating and setting forth the
responsibilities of each party;
NOW THEREFORE, for and in consideration of the mutual benefits
that flow each to the other, the parties covenant and agree as follows:
1. Failure by the Entity (Subrecipient) to sign and return this
agreement by July 18, 2003 shall constitute forfeiture of /tthe award.
2. The effective date of this agreement is �•t ,
20_.
3. The Entity (Subrecipient) shall complete the project by
September 30, 2004 as set forth in the Urban and Community Forestry
Grant Application Number 02-56 approved by the Department on March 28,
2003, during which time the grant shall continue in effect. The
criteria for the project is set forth therein. The final date by which
such criteria must be met for completion of this agreement is September
30, 2004.
The project to be performed by the Entity (Subrecipient) shall be
subject to periodic inspections by the Department. The Entity
(Subrecipient) shall not change or deviate from the project without
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written approval by the Department.
4. The Entity (Subrecipient) has estimated the project cost to be
$26,650.00 as shown on the grant application budget sheet attached as
Exhibit B. The Department agrees to reimburse to the Entity
(Subrecipient) the total sum of $10,000.00 or fifty percent (50%) of
the final approved project costs, whichever is less (the "Grant
Amount"). The Grant Amount is limited to only those items which are
directly related to this project as described in Exhibits "A" and "B".
Project costs incurred prior to the effective date of this agreement
are ineligible for reimbursement. To assist the Entity (Subrecipient)
with the initial three (3) months of implementation, the Department may
make an advance of no more than 25 percent of the grant award. The
Entity (Subrecipient) must request the advance payment in writing using
forms provided by the Department. Funds provided as an advance payment
must be placed in a non -interest bearing account.' Only one advance
payment will be made, thereafter, disbursements will be made on a
reimbursement basis. No more than 75 percent of the Grant Amount will
be paid to the Entity (Subrecipient) prior to Certification of
Acceptance by the Department. The final payment shall not be made
until Certification of Acceptance is received from the Department. For
installed plant materials, a sixty (60) day grow -in -period will be
required after project completion. Certification of Acceptance by the
Department may be requested sixty (60) days after project completion.
Upon receipt of the Certification of Acceptance, the Entity
(Subrecipient) may submit an invoice for final payment.
(a) Purchases of $2,500 to $25,000 shall be carried out
documenting two or more written quotations or written
record of telephone quotations or informal bids to be
opened upon receipt, whenever practical. Competitive
sealed bidding is required for all purchases exceeding
$25,000. Justification must be provided for a sole
source award or for an award to a vendor other than the
vendor submitting the lowest bid or quote.
(b) Bills for fees or other compensation for services or
expenses shall be submitted in detail sufficient for a
proper preaudit and postaudit thereof, and bills for
travel expenses specifically authorized by this
Agreement shall be submitted and paid in accordance
with the rates specified in Section 112.061, Florida
Statutes.
(c) Records of costs incurred under terms of this Agreement
shall be maintained and made available upon request to
the Department at all times during the period of this
Agreement and for three years after final payment is
made. Copies of these documents and records shall be
furnished to the Department upon request. Records of
costs incurred include all records of the costs of the
Entity (Subrecipient) and subcontractors considered
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Page 3 of 10
necessary by the Department for a proper audit of the
project.
(d) A person or affiliate who has been placed on the
convicted vendor list following a conviction for a
public entity crime may not submit a bid on contract to
provide any goods or services to a public entity, may
not submit a bid on a contract with a public entity for
the construction or repair of a public building or
public work, may not submit bids on leases of real
property to a public entity, may not be awarded or
perform work as a contractor, supplier, subcontractor,
or consultant under a contract with any public entity,
and may not transact business with any public entity in
excess of the threshold amount provided in Section
287.017, Florida Statutes, for CATEGORY TWO, for a
period of 36 months from the date of being placed on
the convicted vendor list.
(e) The CONTRACTOR is informed that an entity or affiliate
who has been placed on the discriminatory vendor list
may not submit a bid on a contract to provide goods or
services to a public entity, may not submit a bid on a
contract with a public entity for the construction or
repair of a public building or a public work, may not
submit bids on leases of real property to a public
entity, may not award or perform work as a contractor,
supplier, subcontractor, or consultant under contract
with any public entity, and may not transact business
with any public entity.
5. The Entity (Subrecipient) agrees to maintain plant materials
established as a part of the project for a period of three years and
enter into an agreement which designates and sets forth the duties and
responsibilities of the parties in maintaining the project.
6. The Entity (Subrecipient) agrees to submit to the Department
an interim report on project accomplishments by March 31., 2004 and a
final report summarizing project accomplishments as a prerequisite to
final acceptance by the Department. Failure to submit a required
report or submission of an unsatisfactory report is sufficient grounds
for termination of this agreement according to the provisions of
Section 7(b). The Entity (Subrecipient) upon project completion shall
submit a news release to local newspaper media highlighting the
successes of the project.
7. This Agreement may be terminated under any one of the
following conditions:
(a) The Department of Agriculture and Consumer Services shall
have the right of unilateral cancellation for refusal by the
Subrecipient to allow public access to all documents, papers,
letters or other material made or received by the Contractor
in conjunction with the contract, unless the records are
Page 4 of 10
exempt from s. 24(a) of Article I of the State Constitution
and s. 119.07(l), Florida Statutes.
(b) By the Department, if the Entity (Subrecipient) fails to
perform its duties under this Agreement, following thirty
(30) calendar days written notice by the Department.
(c) By either party following sixty (60) calendar days written
notice.
(d) By both parties following the complete execution by both
parties of an agreement to terminate this Agreement.
(e) Notice to Entity (subrecipient): The Department shall
consider the employment by any entity (subrecipient) of
unauthorized aliens a violation of section 274A (e) of the
Immigration and Nationalization Act. Such violation shall be
cause for unilateral cancellation of this agreement.
8. Notwithstanding any provision of this Agreement to the contrary
but subject to Subparagraph 7(b), in the event this Agreement is
terminated before the Department has paid the Entity (Subrecipient) the
entire Grant Amount, then the Department agrees to pay the Entity
(Subrecipient) the entire Grant amount, if the project has been
completed. If the project has not been completed, the Department shall
pay to the Entity (Subrecipient) a percentage of the Grant amount equal
to the percentage of the project's completion.
9. Extension of a contract for contractual services shall be in
writing for a single period only not to exceed six (6) months and shall
be subject to the same terms and conditions set forth in the initial
contract. There shall be only one extension of a contract unless the
failure to meet the criteria set forth in the contract for completion
of the contract is due to events beyond the control of the Contractor.
If initially competitively procured, contracts for contractual services
may be renewed on a yearly basis for no more than three (3) years, or
for a period no longer than the original contract, whichever period is
longer. Renewal of a contract for contractual services shall be in
writing and shall be subject to the same terms and conditions set forth
in the initial contract. Renewals shall be contingent upon satisfactory
performance evaluations by the Department.
10. As applicable under Florida Statute 768.28, each party will
be liable under this paragraph for damages arising out of injury or
damage to persons or property directly caused or resulting from the
negligence of such party or any of its officers, agents or employees.
11. The Entity (Subrecipient) certifies that neither it or its
principals is presently debarred, suspended, proposed for debarment,
declared ineligible, or voluntarily excluded for participation in this
grant program by any Federal department or agency.
12. This Agreement, together with any Maintenance Agreement, if
executed, embodies the entire agreement and understanding between the
parties hereto and there are no other agreements or understandings,
oral or written, with reference to the subject matter hereof that are
not superseded hereby.
Page 5 of 10
13. This Agreement may not be assigned or transferred by the
Entity (Subrecipient), in whole or in part without the expressed
written consent of the Department.
14. This Agreement, regardless of where executed, shall be
governed by and construed in accordance with the laws of the State of
Florida.
15. All notices, demands, requests or other instruments shall be
given by depositing the same in the U.S. Mail, postage prepaid,
registered or certified with return receipt requested, or by telex
(FAX) or telegram:
(a) If to the Department, address to Grants Coordinator, 3125
Conner Boulevard, Forest Management Bureau, Tallahassee,
Florida 32399-1650 or at such other address the Department
may from time to time designate by written notice to the
Entity (Subrecipient);
(b) If to the Entity (Subrecipient) addressed to:
Ms. Kimberly Perron
Secial Projects pfCoordinator
7525 NW 88 Ave.
With a copy to the City Attorney at the same address.
Tamarac, FL
33321
or at such other address as the Entity (Subrecipient) from
time to time designates by written notice to the Department.
All time limits provided hereunder shall run from the date of
receipt of all mailed notices, demands, requests and other
instruments, or from the date telexed or faxed.
16. Time is of the essence of this agreement.
17. It is mutually understood and agreed that if this contract
disburses grants and aids appropriations, it is:
Subject to the requirements of Section 216.347, Florida Statutes,
a state agency, a water management district, or the judicial branch may
not authorize or make any disbursement of grants and aids
appropriations pursuant to a contract or grant to any person or
organization unless the terms of the grant or contract prohibit the
expenditure of funds for the purpose of lobbying the Legislature, the
judicial branch, or a state agency.
The following provisions of A through G are not applicable to
procurement contracts used to buy goods or services from vendors, but
are only applicable to a contractor subject to the Florida Single Audit
Act.
A. There are uniform state audit requirements for state
financial assistance provided by state agencies to
Nonstate entities to carry out state projects in
accordance with and subject to requirements of Section
Page 6 of 10
215.97, Florida Statutes (F. S.), which may be
applicable to and binding upon Recipient. Nonstate
entity means a local governmental entity, nonprofit
organization, or for -profit organization that receives
state resources. Recipient means a Nonstate entity that
receives state financial assistance directly from a
state awarding agency.
B. In the event that the Recipient expends a total amount
of state financial assistance equal to or in excess of
$300,000 in any fiscal year of such Recipient, the
Recipient must have a state single or project -specific
audit conducted for such fiscal year in accordance with
Section 215.97, F. S., applicable rules of the Executive
Office of the Governor, rules of the Chief Financial
Officer, and Chapter 10.600, rules of the Auditor
General. In determining the state financial assistance
expended in its fiscal year, the Recipient shall
consider all sources of state financial assistance,
including state funds received from this Department
resource, except that state financial assistance
received by a Nonstate entity for federal financial
assistance and state matching requirements shall be
excluded from consideration.
C. Audits conducted pursuant to Section 215.97, F. S.,
shall be: (1) performed annually, and (2) conducted by
an independent auditor in accordance with auditing
standards as stated in rules of the Auditor General.
D. Regardless of the amount of the state financial
assistance, the provisions of Section 215.97, F. S., do
not exempt a Nonstate entity from compliance with
provisions of law relating to maintaining records
concerning state financial assistance to such Nonstate
entity or allowing access and examination of those
records by the state awarding agency, the Chief
Financial Officer, or the Auditor General.
E. If the Nonstate entity does not meet the threshold
requiring the state single audit, such Nonstate entity
must meet terms and conditions specified in this written
agreement with the state awarding agency.
F. Each state awarding agency shall:
(1) Provide to a Recipient, information needed by the
Recipient to comply with the requirements of
Page 7 of 10
Section 215.97, F. S.
(2) Require the Recipient, as a condition of receiving
state financial assistance, to allow the state
awarding agency, the Chief Financial Officer, and
the Auditor General access to the Recipient's
records and the Recipient's independent auditor's
working papers as necessary for complying with the
requirements of Section 215.97, F. S. The
Recipient is required to retain sufficient records
demonstrating its compliance with the terms of
this agreement for a period of three years from
the date the audit report is issued, and shall
allow the department of Agriculture and Consumer
Services or its designee, access to such records
upon request.
(3) Notify the Recipient that Section 215.97, F. S.,
does not limit the authority of the state awarding
agency to conduct or arrange for the conduct of
additional audits or evaluations of state
financial assistance or limit the authority of any
state agency Inspector General, the Auditor
General, or any other state official.
(4) Be provided by Recipient one copy of each
financial reporting package prepared in accordance
with the requirements of Section 215.97, F. S.
The financial reporting package means the nonstate
entities financial statements, Schedule of State
Financial Assistance, auditor's reports,
management letter, auditees written responses or
corrective action plan, correspondence on the
follow-up of prior years corrective actions taken,
and such other information determined by the
Auditor General to be necessary and consistent
with the purposes of Section 215.97, F. S. Copies
of the financial reporting package required by
this agreement shall be submitted by or on behalf
of the Recipient directly to each of the
following;
(a) The Department of Agriculture and Consumer Services
Division of Administration
509 Mayo Building
407 South Calhoun Street
Tallahassee, FL 32399-0800
Page 8 of 10
(b) The Auditor Generals Office at the following address:
State of Florida Auditor General
Room 574, Claude Pepper Building
111 West Madison Street
Tallahassee, FL 32302-1450
G. The Recipient is hereby notified of and bound by the
requirements of F., above.
18. If this agreement contains federal funding in excess
of $100,000, the Entity (subrecipient) must, prior to agreement
execution, complete the Certification Regarding Lobbying form. If a
Disclosure of Lobbying Activities, Standard Form LLL, is required, it
may be obtained from the Department. All disclosure forms as required
by the Certification are attached.
19. Lobbying form must be completed and returned to the
Department.
20. The undersigned Entity (subrecipient) receiving federal
financial assistance under this agreement hereby acknowledges and
agrees that it will comply with the applicable provisions of the latest
version of Office and Management Budget Circular No. A-133 - Revised
June 24, 1997 (Audits of States, Local Governments, and Non-profit
Organizations). Copies of the latest version of the above which would
relate to the undersigned Entity (subrecipient) are available for
review at the following address:
Department of Agriculture and Consumer Services
Division of Administration, Contract Administrator
Room 509, Mayo Building
Tallahassee, FL 32399-0800
If the undersigned Entity (subrecipient) expends $300,000 or more
in federal financial assistance in a fiscal year, either directly from
federal agencies or indirectly through other units of state or local
governments or a combination thereof, the Entity (subrecipient) shall
have an audit made in accordance with the Office of Management and
Budget Circular No. A-133 (Audits of State, Local Governments, and Non-
profit Organizations). The $300,000 threshold specified above shall be
from all federal sources, not just the amount provided by this
agreement. The undersigned Entity (subrecipient) receiving funds under
this agreement hereby agrees that it will allow the Department of
Agriculture and Consumer Services and any federal agency to audit the
Entity's (Subrecipients) books for compliance with the above applicable
circulars.
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21. The Entity (Subrecipient) acknowledges and agrees that public
use of all reports or other printed material, videos, audio recordings,
films and photographs produced as part of this project shall not be
restricted under the copyright laws of the United States of America.
All products (brochures, signs, videos, etc.) funded by the Urban and
Community Forestry grant must display a statement that the material has
been prepared using Urban and Community Forestry grant funds received
through the Division of Forestry.
22. Entities (Subrecipients) providing goods and services to the
Department should be aware of the following time frames. Section
215.422, Florida Statutes, provides that agencies have five (5) working
days to inspect and approve goods and services, unless bid
specifications or the purchase order specifies otherwise. With the
exception of payments to health care providers for hospital, medical,
or other health care services, if payment is not available within 40
days, measured from the latter of the date the invoice was received or
the goods or services are received, inspected and approved, a separate
interest penalty set by the Chief Financial Officer pursuant to Section
55.03, Florida Statutes, will be due and payable in addition to the
invoice amount. To obtain the applicable interest rate, please contact
the Agency's Fiscal Section at (850)488-2020 or Purchasing Office at
(850) 488-7552. Invoices which have to be returned to a Entity
(Subrecipient) because of Entity (Subrecipient) preparation errors will
result in a delay in the payment. The invoice payment requirements do
not start until a properly completed invoice is provided to the
department.
A Vendor Ombudsman has been established within the Department of
Financial Services. The duties of this individual include acting as an
advocate for Entities (Subrecipients) who may be experiencing problems
in obtaining timely payment(s) from a state agency. The Vendor
Ombudsman may be contacted at (850) 413-7269 or by calling the
Department of Financial Services' Hotline, 1-850-410-9724.
23. The Entity (Subrecipient) is informed that a person or
affiliate who has been placed on the convicted vendor list following a
conviction for a public entity crime may not submit a bid on an
agreement to provide any goods or services to a public entity, may not
submit a bid on an agreement with a public entity for the construction
or repair of a public building or public work, may not submit bids on
leases of real property to a public entity, may not be awarded or
perform work as a contractor, supplier, subcontractor, or consultant
under an agreement with any public entity, and may not transact
business with any public entity in excess of the threshold amount
provided in Section 287.017, Florida Statutes, for CATEGORY TWO for a
period of 36 months from the date of being placed on the convicted
vendor list.
24. The Entity (Subrecipient) is informed that the Department
shall consider the employment by an Entity (Subrecipient) of
unauthorized aliens a violation of Section 274A(e) of the Immigration
Page 1.0 of 10
and Nationalization Act. Such violation shall be caused for unilateral
cancellation of this agreement.
25. The contractor is informed that an entity or affiliate who
has been placed in the discriminatory vendor list may not submit a bid
on a contract to provide goods or services to a public entity, may not
submit a bid on a contract with a public entity for the construction or
repair of a public building or public work, may not submit bids on
leases of real property to a public entity, may not award or perform
work as a contractor, supplier, subcontractor, or consultant under
contract with any public entity, and may not transact business with any
public entity.
IN WITNESS WHEREOF, the parties hereto have caused these
presents to be executed the day and year first above written.
STATE OF FLORIDA
DEPARTMENT OF AGRICULTURE AND
CONSUMER SERVICES
BY:Are
Director
Division of Administration
City of Tamar c
BY:
1"
Title: Mavor
BY: al C , h'r.�!"�
Title: City Manager
App ve s o leg 1 orm )
an suf i ie ATTEST :
B C
Title: City AttorNe
Page 1 of 5
URBAN AND COMMUNITY FORESTRY GRANT
MAINTENANCE MEMORANDUM OF AGREEMENT
FDACS CONTRACT #
This agt, made and entered into this the / � " Y
da of
r em n
20 Q _, by and between the STATE OF FLORIDA,
DEPARTM T dF AGRICULTURE AND CONSUMER SERVICES, an agency of the
State of Florida, hereinafter called the Department and The City of
Tamarac, hereinafter called the Entity (Subrecipient).
WITNESSETH
WHEREAS, the Department desires to increase the general level
of knowledge of the principles of urban and community forestry by
granting funds to the Entity (Subrecipient) for the establishment
of a demonstration tree planting project as outlined in the Urban
and Community Forestry grant application Number 02-56 and Grant
Memorandum of Agreement (the Grant Agreement) attached hereto as
Exhibit "1" and by reference made a part hereof;
WHEREAS, the Department has awarded the Entity (Subrecipient)
an urban and community forestry grant for the improvements to the
project property more particularly set forth in the Grant
Agreement;
WHEREAS, the Entity (Subrecipient) agreed in the Grant
Agreement to maintain the project (as described in the Grant
Application);
WHEREAS, the parties hereto recognize the need for entering
into an agreement designating and setting forth the
responsibilities of each party in maintaining the project; and
WHEREAS, the Entity (Subrecipient) by Resolution desires to
enter into this Agreement and authorizes its officers to do so.
NOW THEREFORE, for and in consideration of the mutual benefits
that flow each to the other herein and in Exhibit "111, the Grant
Memorandum of Agreement, the parties covenant and agree as follows:
1. The Entity (Subrecipient) shall maintain the project in a
responsible manner and with due care in accordance with the below
listed Project Standards for the property at the following
location:
On Southqate Boulevard, between Pine Island Road and Nob Hill Road.
Specifically, the Entity (Subrecipient) accepts the below listed
responsibilities and duties:
(a). All planting stock or replacement must be Florida
Grade #1 or better.
(b) Proper watering and
trees/plants.
(c). Keeping trees/plant
disease and harmful
proper fertilization of all
s as free as practicable from
insects;
Page 2 of 5
(d). Proper mulching of trees and/or planting beds;
(e). Keeping the premises free of weeds;
(f). Mowing and/or cutting grasses to the proper length;
(g). Proper pruning of all trees which includes; (I)
removing dead or disease parts of trees or (ii)
pruning such parts thereof which present a hazard;
(h). Removing and replacing dead or diseased
trees/plants in their entirety, or removing and
replacing those that fall below original Project
Standards.
(i). Following the Planting and Maintenance Guidelines
as included herein as Exhibit C.
The Entity (Subrecipient) agrees to repair, or remove and
replace at its own expense all or part of the project that falls
below Project Standards. In the event any part or parts of the
project, including all plants, must be removed and replaced for
whatever reason, then they shall be replaced with the same grade,
size and specification as provided in the original plans for the
project. Furthermore, the Entity (Subrecipient) shall keep litter
removed from the project area. The above named functions to be
performed by the Entity (Subrecipient) shall be subject to periodic
inspections by the Department. It is the intent of the parties
hereto that except as otherwise provided in paragraphs 2 and 4
hereof, the Entity (Subrecipient) shall be the owner of the
planting and other installations included and stipulated in the
grant application comprising the project.
2. This Agreement may by terminated under any one of the
following conditions:
(a). By the Department, if the Entity (Subrecipient)
fails to perform its duties under this Agreement or
for refusal by the Entity (Subrecipient) to allow
public access to all documents, papers, letters, or
other material subject to the provisions of Chapter
119, Florida Statutes and made or secured by the
Entity (Subrecipient)in conjunction with this
Agreement following reasonable written notice.
(b). By either party following sixty (60) calendar days
written notice.
(c). By both parties following the complete execution by
both parties of an agreement to terminate this
agreement.
3. The terms of this Agreement commence on the date of
Certification of Acceptance and continue for a period of three (3)
years.
4. In the event this Agreement is terminated in accordance
with subparagraph 2(a) then the Entity (Subrecipient) shall refund
to the Department a pro -rated portion of the grant award based upon
the following schedule:
Page 3 of 5
(a). If this agreement is terminated within one year of
the date in Paragraph 3, 75 percent of the grant
award.
(b). If this agreement is terminated during the second
year of this agreement, 50 percent of the grant
award.
(c). If this agreement is terminated during the third
year of this agreement, 25 percent of the grant
award.
5. As applicable under Florida Statute 768.28, the Entity
(Subrecipient) Covenants and agrees that it shall indemnify and
hold harmless the Department and all of the Department=s officers,
agents and employees from any claim, action, neglect or omission by
the Entity (Subrecipient) during the performance of the Agreements,
whether direct or indirect, and whether any person or property to
which the Department or said parties may be subject, except that
neither the Entity (Subrecipient) nor any of its sub --contractors
shall be liable under this paragraph for damages arising out of
injury or damage to persons or property directly caused or
resulting from the sole negligence of the Department or any of its
officers, agents or employees.
6. This Agreement, together with the Urban and Community
Forestry Grant Memorandum of Agreement, embodies the entire
agreement and understanding between the parties hereto and there
are no other agreements or understandings, oral or written, with
reference to the subject matter hereof that are not superseded
hereby.
7. This Agreement may not be assigned or transferred by the
Entity (Subrecipient), in whole or in part without the expressed
written consent of the Department.
8. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
9. All notices, demands, requests or other instruments shall
be given by depositing the same in the U.S. Mail, postage prepaid,
registered or certified with return receipt requested, or by telex
(FAX) or telegram:
(1) If to the Department, addressed to Grants
Coordinator, Forest Management Bureau, 3125 Conner
Boulevard, Tallahassee, Florida 32399-1650 or at
such other address the Department may from time to
time designate by written notice to the Entity
(Subrecipient); and
Page 4 of 5
(2) If to the Entity (Subrecipient) addressed to:
Ms. Kimberly Perron
Special Projects Coordinator
7525 NW $8 Avenue
Tamarac, FL 33321
or at such other address as the Entity
(Subrecipient) from time to time designates by
written notice to the Department.
All time limits provided hereunder shall run from the date of
receipt of all mailed notices, demands, requests and other
instruments, or from the date telexed or faxed.
10. Time is of the essence of this agreement.
11. This contract, which disburses grants and aids
appropriations, is subject to the requirements of Section 216.347
Florida Statutes, and the Entity (Subrecipient) is therefore not
allowed to expend any funds received through this contract for the
purpose of lobbying the Florida Legislature, the Department, the
Judicial Branch, or any other state agency.
This contract, which disburses grants and aids appropriations,
is subject to the requirements of Section 216.349, Florida
Statutes, which are:
(1) The Department and the Comptroller before disbursing any
funds must independently ensure that the proposed
expenditure is in accordance with all legal and
regulatory requirements and that this contract
specifically prohibits the use of funds for the purpose
of lobbying the Legislature, the Department, the Judicial
Branch or any state agency.
(2) If the Entity (Subrecipient) is a local government
agency, non-profit organization, or not -for --profit
organization it shall: (I) for amounts $25,000 or less,
have its head attest that it has complied with grant
provisions, (ii) for amounts greater than $25,000 but not
more than $100,000 have a grant -specific audit performed
in accordance with the rules of the Auditor General or
have a statement prepared by an independent certified
public accountant which attests that the grant provisions
have been complied with, (iii) for amounts greater than
$100,000 have a grant -specific audit performed in
accordance with the rules of the Auditor General, and
(iv) have such audits, statements, or attestations filed
with the Department and the Auditor General.
IN WITNESS WHEREOF, the parties hereto have caused these
presents to be executed the day and year first above written.
Page 5 of 5
STATE OF FLORIDA
DEPARTMENT OF AGRICULTURE AND
CONSUMER SERVICES
BY: Z!"-
Director
Division of Administration
Cit of Tamarac
BY:
Title: Mavor
B Y : p4 / , r7GG��r.�.
Title:
r. ; t
ATTEST:
(�,rj
Title: City Attornev
ATTACHMENT I EXHIBIT C
PLANTING AND MAINTENANCE GUIDELINES
A) Planting
Site factors which influence long-term survivability should be considered: overhead and
underground utilities, sidewalks, sign conflicts, traffic visibility, light poles, right -of way
or site improvements, size of planting space/site, etc.
All planting stock or replacement stock must be Florida Grade #1 or better.
All synthetic or non -biodegradable material such as nylon rope, synthetic wrap, treated
burlap, etc. must be removed from the root ball before planting. All biodegradable
material should be removed from the upper 113 of the root ball. Precautions should be
taken to eliminate any material from extending above the soil surface where it can act as a
wick and dry the surrounding soil.
If trees are planted with wire baskets around the root ball, it is recommended that the top
two tiers of wire be cut and removed after the root ball is set in the planting hole.
The planting hole should be at least 3-5 times the diameter of the root ball (where
possible) and the same depth as the root ball.
Position the tree or palm in the center of the planting hole with the top of the root ball
even with the surrounding soil surface.
Backfill with soil from the planting site, if it is not contaminated. All large rocks should
be removed. When the hole is half full, slowly water to saturate the soil and remove air
Pockets, then continue to fill the hole with soil. It is not recommended that large amounts
of organic matter be incorporated into the backfill. Rake the soil evenlv around the entire
planting area.
Water thoroughly to remove air pockets, secure the soil around the roots, and provide
nourishment.
B) Mulching
Mulch an area at least three times the diameter of the root ball to a dept of 24" with
wood chips, bark mulch, shredded mulch, leaves or pine needles. Keep the mulch several
inches way from the tree or palm trunk.
Replenish mulch as it decomposes maintaining a 24" layer over the life of the project.
C St_ akin
Stake only if necessary. For example, if the tree or palm will not stand on its own due to
potential vandalism or strong winds.
Use flexible materials such as strapping or commercially available ties that give as the
tree diameter increases and as the tree moves. Biodegradable material is recommended.
4 40
Do not use wire even if wire is inside rubber hose.
Stakes and ties should remain on the trees no longer than one year to avoid girdling.
D) Pnuung
At the time of planting only dead, damaged, rubbing or cross branches or fronds should
be removed.
Remove sucker sprouts from the base of the tree after planting.
Corrective/structural pruning can begin approximately one year after planting. Do not
remove more than 1/3 of the live crown during one growing season.
E) Watering
Establish a regular watering schedule and follow it. Slow deep watering is recommended.
Additional water may be needed during hot or dry periods.
As tree or palm growth progresses, be sure to water outward (away from the trunk) to the
surrounding soil area, this will promote the outward growth and spread of roots.
Various species of trees or palms and/or soil types may require vaned degree of watering.
Soil moisture and tree health should be monitored and irrigation adjusted accordingly.
Non -irrigated sites need to be monitored more closely.
F) Fertilizing
Begin a fertilization program within the first year of planting. Broadcast fertilizing or
fertilizer plugs/stakes are recommended.
Fertilize lightly after the first year using a balanced fertilizer (rates should be based on the
size of the tree or palm and any special nutrient requirements).
If micronutrient deficiencies are suspected, have a soil test completed and supplement the
fertilization program accordingly.
PROPOSAL #RFP/DF-02/03-01 OPENING DATE: SEPTEMBER 24, 2002 @ 2:30 P.M.
ATTACHMENT E VNIBIT -_ A
FLORIDA URBAN AND COMMUNITY FORESTRY GRANT PROPOSAL FORM 2002
GENERAL INSTRUCTIONS: Please complete all items pertaining to the Category Grant for which you
are applying. The proposal packet must not exceed thirty (30) one sided pages, including attachments.
All attachments must be 8'/2" X 11", except any attached sketches, plans and maps which must be no
larger than 2' X 3' and folded into 8'/2" X 11". Six ( 6 ) copies (one copy with original signatures and
( 5) five copies) of the proposal packet including the proposal form, the project description and
all attachments must be received no later than 2:30 p.m., September 24, 2002 at:
Department of Agriculture and Consumer Services
Purchasing Office - U&CF - 2002 Proposal
Mayo Building - Room SB-8
Tallahassee, FL 32399-0800
Telephone (850) 488-7552
If you have any questions, please see ATTACHMENT L. "Division of Forestry District/Center Contacts"
PROPOSER INFORMATION (Please Print or Type)
Project Title: Southgate Boulevard Tree Canoes Enhancement
Proposer Name: City of Tamarac
Name and Title of Contact Person: Kimberly Perron, Special Projects Coordinator
Address: 7525 NW 88t" Avenue. Tamarac. FL
Zip: 33321 Phone:( 954 ) 718-3051
Is your organization a Nonprofit corporation pursuant to Chapter 617, Florida Statutes?
Yes No X
FEID Number 59-1039552
33
PROPOSAL #RFP/DF-02/03-01 OPENING DATE: SEPTEMBER 24, 2002 @ 2:30 P.M.
As the duly authorized representative of the Proposer named above, I hereby certify that all parts of the
proposal and required grant information have been read and understood and that all information
submitted herein is true and correct.
Authorized Executive Officer: Jeffrey L. Miller „
Title: City Manager _
Signature: Ll Date: Z( (1FL-
34
PROPOSAL #RFP/DF-02/03-01 OPENING DATE: SEPTEMBER 24, 2002 @ 2:30 P.M.
GRANT PROGRAM INFORMATION
Specify Category 1, 2, 3, 4 OR 5 and designate the applicable subcategory ("General Information").
Category: 2 — Demonstration or Site Specific Pro'ects
Sub -Category: A — Demonstration tree/palm plantings on Public Property,
SUMMARY OF COSTS (A 50/50 match on behalf of the proposer is required).
Requested Grant $ Local Match $
Contractual costs
Personnel costs
Travel casts
Equipment costs
Supplies costs $ $ 12,850
Operating costs
Tree costs $ 10,000 $ 3.800
Overhead costs
Total Requested Grant ( I) $ 10,000 $ -0-
Total Matching Costs ( 11 ) $ -0- $ 16,650
Total Program Costs ( III) $ 26,650
100%
Add columns I and II for total III (100%)
38 % Grant request
62
A budget _detailing all costs identified above must be attached.
%Local Match
PROJECT LOCATION INFORMATION (Please Print or Type) (Complete where applicable)
This project is for Population Zone 1, Or statewide (circle one).
35
PROPOSAL #RFP/DF-02/03-01 OPENING DATE: SEPTEMBER 24, 2002 @ 2:30 P.M.
Please see ATTACHMENT K to determine the applicable region.
County Broward
Describe the Specific Location of the Project: The project is located on Southgate Boulevard
between Pine Island Road and Nob Hill Road.
Who has Maintenance Responsibility for the Property (Category 2 Grants)?
The Citv of Tamarac
Is the Land Ownership Public or Private?: Public
Name of the Landowner: Citv of Tamarac
Project Title: Southgate Boulevard Tree Canopy Enhancement
Proposer Name: City of Tamarac
PROPOSAL #RFP/DF-02103-01 OPENING DATE: SEPTEMBER 24, 2002 @ 2:30 P.M.
PROJECT DESCRIPTION
(two page limit)
Urban and Community Forestry Grant Proposal
The City of Tamarac, in Broward County, was incorporated in 1963 and has a
population of 56,047 (University of Florida, 2002). Tamarac is a mix of suburban, urban
and commercial interests that has experienced tremendous growth along with the rest of
South Florida. The City is rapidly approaching build -out and is currently 93% developed.
In 1996, the Broward County commissioned a study to examine the tree canopy within the
County. Countywide, the average tree canopy coverage was 16.5%. However, Tamarac
lagged the rest of the county with only 13% of tree canopy coverage. In response to this
study and with growing demand from our residents to preserve open space and beautify
public spaces, the City is undertaking several major projects to "green" the City. The City
has started a major park acquisition and enhancement program and an ambitious citywide
Street Improvement Project. The Street Improvement Project, started in 1999, aims to
resurface the City's streets as well as improve the landscaping and tree canopy along the
streets. By the end of 2002, the street resurfacing portion of the project will be nearly
complete and the landscaping and tree planting portions of the project will begin in
earnest.
This proposed project will address a one -mile section of roadway along Southgate
Boulevard between Pine Island Road and Nab Hill Road as shown in the aerial
photograph in Enclosure 1. Southgate Boulevard runs adjacent to the South Florida
Water Management District's C-14 canal. The area along the roadway and canal is
designated as a Broward County Greenway and shown in Enclosure 2. This project will
add trees and shrubs to the median. Enclosure 3 includes recent photographs of the
median and Enclosure 4 provides sketches of the proposed project. The project will be
managed by the Public Works Department under the direction of the City's Landscape
Supervisor. Project plans include planting 14 live oaks, 18 Geiger trees, 7 Pink
Tabebuias, 14 Mahoganies and 16 Royal Poncianas. Also, in keeping with the City's
landscaping theme, several hundred shrubs and understory plants, St. Augustine sod will
be planted and decorative pavers will be installed at the ends of each of the medians.
This project supports Tamarac's Comprehensive Plan, which specifically
addresses improvements to the tree canopy and beautification of public spaces. The
City's philosophy on enhancing the tree canopy along roadways includes:
1. Enhancement and preservation of existing landscaping whenever possible.
2. Using a consistent landscaping theme throughout the City.
3. Following best practices such as "the right tree in the right place," and using
drought tolerant and native species.
4. Designing safe median plantings that ensure proper visibility is easily
maintained.
The City has been recognized for its efforts in improving our tree canopy by being
designated a Tree City USA. The City also publishes a free guide for homeowners
entitled "A Homeowners Guide to Proper Tree Care" to educate our residents and
encourage tree planting. Tamarac also formulated its own Master Landscape Plan which
is aligned with Broward County's Urban Forest Initiative. The Master Landscape Plan
emphasizes clearing exotic and invasive species and replacing them with native trees and
plants. This project, in concert with the City's other initiatives, will help improve the tree
canopy and ultimately help to beautify public spaces, decrease polluted storm water
runoff, and improve air and water quality.
37
PROPOSAL #RFP/DF-02/03-01 OPENING DATE: SEPTEMBER 24, 2002 @ 2:30 P.M.
BUDGET
IIT
Please note: All proposals must include a detailed itemized budget summary which lists all anticipated
expenditures and explains all project costs. Proposals for site specific demonstration tree planting
projects ( category 2A and 213) must list the quantity, species, and approximate size (container size, or
caliper and height) of trees to be planted.
**** IMPORTANT: THIS FORM MUST BE USED. PROPOSERS NOT USING THIS FORM WILL BE
RULED INELIGBLE ****
Cost Items
Quantity
M
Rate or Price
M
Grant Cost
M
Match Cost
M
Contractual
(Description)
NONE
91*1
PROPOSAL #RFP/DF-02/03-01 OPENING DATE: SEPTEMBER 24, 2002 @ 2:30 P.M.
Cost Items
Quantity
(#)
Rate or Price
M
Grant Cost
M
Match Cost
M
Supplies*
(list items)
St. Augustine Sod
60 pallets
$ 115.00
$ 0.00
$ 6,900.00
Pavers
1400 sq. feet
$ 4.25
$ 0.00
$ 5,950.00
PROPOSAL #RFP/DF-02/03-01 OPENING DATE: SEPTEMBER 24, 2002 @ 2:30 P.M.
Cost Items
Quantity
M
Rate or Price
M
Grant Cost
($)
Match Cost
M
Trees
(list species and
size)
Live Oak
4" caliper
14
$ 200.00
$ 2,800.00
$ 0.00
Geiger
1 '/2" caliper
18
$ 200.00
$ 3,600.00
$ 0.00
Pink Tabebuias
2" caliper
7
$ 200.00
$ 1,400.00
$ 0.00
Mahogany
4° caliper
14
$ 200.00
$ ,2,200.00
$ 600.00
Royal Poinciana
2" caliper
16
$ 200.00
$ 0.00
$ 3,200.00
43
PROPOSAL #RF'P/DF-02/03-01 OPENING DATE: SEPTEMBER 24, 2002 @ 2:30 P.M.
Cost Items
Quantity
Rate or Price
Grant Cost
Match Cost
Overhead"
None
******************
Total
$10,000.00
$16,650.00
* Grant dollars may not be used to purchase food as supplies.
** Overhead costs up to 5% of total project cost may only be used as a matching cost, grant funds
may not be used for overhead costs.
44
City of Tamarac
Southgate Boulevard Tree Canopy Enhancement
Enclosure 5
PROJECT LOCATION MAP
Southgate Boulevard between Pine Island Road and Nob Hill Road,
Tamarac, Broward County, Florida
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REIMBURSEMENT SUMMARY SHEET
URBAN AND COMMUNITY FORESTRY
GRANT PROGRAM
Name of Grantee: Grant No.:
Item ff
Descriptions of Items or Services Purchased
(Attach copies of canceled checks, receipts and invoices)
Grant
Amount
Match
Amount
Totals
Remit payment to:
Note: Two or more written quotes, or a written record of telephone quotes, must be obtained (and documented) for
all individual purchases/expenditures over $2,500 and less than $25,000, Should verbal quotes be received, name
and address of company and $ amount quoted shall be documented in writing. Sealed bids are required for all
purchases over $25,000.
AUTHORIZED SIGNATURE:
Grantee Date
FINAL REPORT
Wauchula in the Shade
In June of 1999, a grant was awarded to the City of Wauchula for the purchase
and planting of trees for the newly designed Main Street Park. Ultimately, all
needed trees and foliage were donated. The City of Wauchula requested and was
allowed to amend the grant amount and location.
On August 30, 2000, we took delivery of twelve 30-gallon Southern Live Oak
shade trees at the "Seminole Street Park" site. The trees were planted and cared
for according to the maintenance plan. Shortly after they were planted, some
unknown person evidently had a desperate need for a tree, as one was pulled up
and stolen! Another died. Both have been replaced.
All 12 trees are now thriving, and we hope that soon they will begin to provide
much needed shade for the children's playground and parking areas. They can
only enhance and increase the use of the park during the summer months, and for
years to come. The informational plaques will serve to educate the children,
primarily, along with other visitors, as to the type of trees which provide the shady
oasis under which they play or rest.
The City of Wauchula will continue to care for the trees as we "promised" in the
maintenance plan, and in doing so, provide an inviting area for children to play,
and a shady spot for Moms and Dads to park in the future.
We are extremely grateful for the part that the Department of Agriculture and
Consumer Services has played in the acquisition of these much needed trees.
AMERICAN LITTORAL SOCIETY
ON'(/ PRESS RELEASE
Date: July 21, 2000
Contact: Kellie Westervelt, Director
tel: (305) 361-0611
fax: (305) 361-2344
e-mail: kwest0I@earthlink.net
State Forestry Program Supports Local Project
Key Biscayne —The Florida Department of Agriculture and Consumer Services, Division of Forestry
contributed $15,000 to the American Littoral Society's Cape Florida Project. Funding was provided
through the Urban and Community Forestry Program. As a result, some 750 students from Miami -Dade
County public schools participated in tree -planting at Bill Baggs Cape Florida State Recreation Area.
Cape Florida was devastated by Hurricane Andrew in 1992. The storm leveled ninety-eight percent of the
park's tree canopy, mostly exotic Australian -pines. Since then, community volunteers have been restoring
native habitat to the park. Some of the youngest volunteers participate through the Nature's Hope program.
Nature's Hope is a science education program for at -risk teens. The program helps students meet academic
objectives in the sciences while furthering restoration goals at the park. Students are trained in plant
identification, exotic plant control, and planting native species, then, they're put to work during monthly field
trips. Throughout the school year, students clear exotic plants from the coastal strand then plant saw
palmettos, a native species. The program was expanded from three high school to five high schools during
the past year.
"Through participation in the Nature's Hope, high school kids are learning about south Florida's unique
environment while actually helping to restore native habitat at the park" stated Kellie Westervelt, Project
Director. "These students are making a connection to the land. It's that connection that will make the
difference in the long -run ".
For more information about the Cape Florida Project's volunteer and educational programs, contact the
American Littoral Society at (305) 361-0611
American Littoral Society * Cape Florida Project • 1200 S. Crandon Blvd. + Key Biscayne, FL 33149
URBAN AND COMMUNITY FORESTRY
GRANT PROGRAM
CERTIFICATION OF ACCEPTANCE
Grant Recipient:
Project Title;
1. Have the objectives of the grant been achieved?
Please explain:
U&CF #
Yes No (Circle one)
2. How will the project contribute to the development or enhancement of urban and connnunity forestry locally?
3. The overall project is:
SATISFACTORY UNSATISFACTORY
4. Changes/corrections required to bring the project up to a satisfactory level:
5. In accordance with Section 216.349, Florida Statutes, as an authorized representative of the above listed grant
recipient, I hereby attest that the grant provisions of DACS Contract # have been complied with.
Signed:
Signed:
Authorized Representative
Division of Forestry Representative
Date
Date
Grant Recipient:
Project Title:_
Species
URBAN AND COMMUNITY FORESTRY
GRANT PROGRAM
CERTIFICATION OF ACCEPTANCE
U&CF Application #
Date Planted:
Number Size (Diameter)
(Attach additional pages if necessary)
1. What is the overall quality of planting stock?
Excellent Good Fair Poor (circle one)
2.Have the trees received proper watering? Yes No
3.Have the trees been kept as free as practicable from insects and diseases? Yes No
4.Have the trees been mulched properly? Yes No
5.Have the premises been kept free of weeds? Yes No
6.Have grasses in the planting site been kept properly mowed? Yes No
THave the trees been properly pruned, including removing dead or diseased parts of the trees? Yes
No
$.Have dead, diseased, or substandard trees been removed or replaced? Yes No
9.The overall project has been: Satisfactory Unsatisfactory
In accordance with Section 216,349, Florida Statutes, as an authorized representative of the above listed
grant
recipient, I hereby attest that the grant provisions of DACS Contract # have been compiled with.
Signed:_ Date
Signed:
Autborized Representative
Date
Division of Forestry Representative
(8/29197)
OFFICE OF MANAGEMENT AND
BUDGET (OMB)
Cost Principles for State, Local and Indian
Tribal Governments
May 4, 1995.
Circular No. A-87 Revised
To the Heads of Executive Departments and
Establishments
From: Alice M. Rivlin, Director
Subject. Cost Principles for State, Local,
and Indian Tribal Governments
1. Purpose. This Circular establishes
principles and standards for determining
costs for Federal awards carried out through
grants, cost reimbursement contracts, and
other agreements with State and local
governments and federally -recognized
Indian tribal governments (governmental
units).
2. Authority. 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; the Chief Financial Officers Act
of 1990; Reorganization Plan No. 2 of 1970;
and Executive Order No. 11541
("Prescribing the Duties of the Office of
Management and Budget and the Domestic
Policy Council in the Executive Office of
the President").
3. Background. An interagency task force
was established in 1987 to review existing
cost principles for Federal awards to State,
local, and Indian tribal governments. The
task force studied Inspector General reports
and recommendations, solicited suggestions
for changes to the Circular from
governmental units, and compared for
consistency the provisions of other OMB
cost principles circulars covering non-profit
organizations and universities. A proposed
revised Circular reflecting the results of
those efforts was issued on October 12,
1988, and August 19, 1993. Extensive
comments on the proposed revisions,
discussions with interest groups, and related
developments were considered in
developing this revision.
4. Rescissions. This Circular rescinds and
supersedes Circular A-87, issued January 15,
1981-
5. Policy. This Circular establishes
principles and standards to provide a
uniform approach for determining costs and
to promote effective program delivery,
Office of Management and Budget Circular A-87
efficiency, and better relationships between
governmental units and the Federal
Government. The principles are for
determining allowable costs only. They are
not intended to identify the circumstances or
to dictate the extent of Federal and
governmental unit participation in the
financing of a particular Federal award.
Provision for profit or other increment
above cost is outside the scope of this
Circular.
6. Definitions. Definitions of key terms
used in this Circular are contained in
Attachment A, Section B.
7. Required Action. Agencies responsible
for administering programs that involve cost
reimbursement contracts, grants, and other
agreements with governmental units shall
issue codified regulations to implement the
provisions of this Circular and its
Attachments by September 1, 1995.
8. OMB Responsibilities. The Office of
Management and Budget (OMB) will
review agency regulations and
implementation of this Circular, and will
provide policy interpretations and assistance
to insure effective and efficient
implementation. Any exceptions will be
subject to approval by OMB. ExceptioQs
will only be made in particular cases where
adequate justification is presented.
9. Information Contact. Further
information concerning this Circular may be
obtained by contacting the Office of Federal
Financial Management, Financial Standards
and Reporting Branch, Office of
Management and Budget, Washington, DC
20503, telephone 202-395-3993.
10. Policy Review Date. OMB Circular
A-87 will have a policy review three years
from the date of issuance.
11. Effective Date. This Circular is
effective as follows:
- For costs charged indirectly or
otherwise covered by the cost
allocation plans described in
Attachments C, D and E, this revision
shall be applied to cost allocation
plans and indirect cost proposals
submitted or prepared for a
governmental unit's fiscal year that
begins on or after September 1, 1995.
- For other costs, this revision shall be
applied to all awards or amendments,
including continuation or renewal
awards, made on or after September 1,
1995.
OMB Circular No. A-87 - Cost
Principles for State, Local and Indian
Tribal Governments
Table of Contents
Attachment A - General Principles for
Determining Allowable Costs
Attachment B -- Selected Items of Cost
Attachment C - State/Local-Wide Central
Service Cost Allocation Plans
Attachment D - Public Assistance Cost
Allocation Plans
Attachment E - State and Local Indirect
Cost Rate Proposals
Attachment A - General Principles for
Determining Allowable Costs
Table of Contents
A. Purpose and -Scope
I. Objectives ,
2. Policy guides
3. Application
B. Definitions
I. Approval or authorization of the
awarding or cognizant Federal agency
2. Award
3. Awarding agency
4. Central service cost allocation plan
5. Claim
6. Cognizant agency
7. Common rule
8. Contract
9. Cost
10. Cost allocation plan
11. Cost objective
12. Federally -recognized Indian tribal
government
13. Governmental unit
14. Grantee department or agency
15. Indirect cost rate proposal
16. Local government
17. Public assistance cost allocation plan
18. State
C. Basic Guidelines
I. Factors affecting allowability of costs
2. Reasonable costs
3. Allocable costs
4. Applicable credits
D. Composition of Cost
1. Total cost
2. Classification of costs
E. Direct Costs
1. General
2. Application
3. Minor items
Grants Management Advisory Service
MaRIOTMPRIrA
Appendix I - Page 113
Office of Management and Budget Circular A-87
(8/29/97)
F. Indirect Costs
1. General
2. Cost allocation plans and indirect cost
proposals
3. Limitation on indirect or administrative
costs
G. Interagency Services
H. Required Certifications
A. Purpose and Scope
1. Objectives. This Attachment establishes
principles for determining the allowable costs
incurred by State, local, and federally -
recognized Indian tribal governments
(governmental units) under grants, cost
reimbursement contracts, and other
agreements with the Federal Government
(collectively referred to in this Circular as
"Federal awards"). The principles are for the
purpose of cost determination and are not
intended to identify the circumstances or
dictate the extent of Federal or governmental
unit participation in the financing of a
particular program or project. The principles
are designed to provide that Federal awards
bear their fair share of cost recognized under
these principles except where restricted or
prohibited by law. Provision for profit or other
increment above cost is outside the scope of
this Circular.
2. Policy guides.
a. The application of these principles is
based on the fundamental premises that:
(1) Governmental units are responsible
for the efficient and effective administration
of Federal awards through the application of
sound management practices.
(2) Governmental units assume
responsibility for administering Federal funds
in a manner consistent with underlying
agreements, program objectives, and the terms
and conditions of the Federal award.
(3) Each governmental unit, in
recognition of its own unique combination
of staff, facilities, and experience, will have
the primary responsibility for employing
whatever form of organization and
management techniques may be necessary
to assure proper and efficient administration
of Federal awards.
b. Federal agencies should work with
States or localities which wish to test
alternative mechanisms for paying costs for
administering Federal programs. The Office
of Management and Budget (OMB)
encourages Federal agencies to test fee -for -
service alternatives as a replacement for
current cost -reimbursement payment
methods in response to the National
Performance Review's .(NPR)
recommendation. The NPR recommended
the fee -for -service approach to reduce the
burden associated with maintaining systems
for charging administrative costs to Federal
programs and preparing and approving cost
allocation plans. This approach should also
increase incentives for administrative
efficiencies and improve outcomes.
3. Application.
a. These principles will be applied by all
Federal agencies in determining costs
incurred by governmental units under
Federal awards (including subawards)
except those with (1) publicly -financed
educational institutions subject to OMB
Circular A-21, "Cost Principles for
Educational Institutions," and (2) programs
administered by publicly -owned hospitals
and other providers of medical care that are
subject to requirements promulgated by the
sponsoring Federal agencies. However, this
Circular does apply to all central service
and department/agency costs that are
allocated or billed to those educational
institutions, hospitals, and other providers
of medical care or services by other State
and local government departments and
agencies.
b. All subawards are subject to those
Federal cost principles applicable to the
particular organization concerned. Thus, if a
subaward is to a governmental unit (other
than a college, university or hospital), this
Circular shall apply; if a subaward is to a
commercial organization, the cost principles
applicable to commercial organizations
shall apply; if a subaward is to a college or
university, Circular A-21 shall apply; if a
subaward is to a hospital, the cost principles
used by the Federal awarding agencyfor
awards to hospitals shall apply, subject to
the provisions of subsection A.3.a. of this
Attachment; if a subaward is to some other
non-profit organization, Circular A-122,
"Cost Principles for Non -Profit
Organizations," shall apply.
c. These principles shall be used as a
guide in the pricing of fixed price
arrangements where costs are used in
determining the appropriate price.
d. Where a Federal contract awarded to a
governmental unit incorporates a Cost
Accounting Standards (CAS) clause, the
requirements of that clause shall apply. In
such cases, the governmental unit and the
cognizant Federal agency shall establish an
appropriate advance agreement on how the
governmental unit will comply with
applicable CAS requirements when
estimating,, accumulating and reporting
costs under CAS -covered contracts. The
agreement shall indicate that OMB Circular
A-87 requirements will be applied to other
Federal awards. In all cases, only one set of
records needs to be maintained by the
governmental unit.
*e. Conditional exemptions. (1) OMB
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 Alocability 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.
(3) When 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,
*Editor's note: Paragraph a incorporates a conditional program exemption OMB has authorized. See Aug. 29, 1997, Federal Register, pages
45934-4.5936,
Page 114 • Appendix I October 1997 Federal Grants Management Handbook
(8/29/97)
and funds are not to be used for general
expenses required to carry out other
responsibilities of a State or its
subrecipients.
B. Definitions
1. "Approval or authorization of the
awarding or cognizant Federal agency"
means documentation evidencing consent
prior to incurring a specific cost. If such
costs are specifically identified in a Federal
award document, approval of the document
constitutes approval of the costs. If the costs
are covered by a State/local-wide cost
allocation plan or an indirect cost proposal,
approval of the plan constitutes the
approval.
2. "Award" means grants, cost
reimbursement contracts and other
agreements between a State, local and
Indian tribal government and the Federal
Government.
3. "Awarding agency" means (a) with
respect to a grant, cooperative agreement, or
cost reimbursement contract, the Federal
agency, and (b) with respect to a subaward,
the party that awarded the subaward.
4. "Central service cost allocation plan"
means the documentation identifying,
.accumulating, and allocating or developing
billing rates based on the allowable costs of
services provided by a governmental unit on
a centralized basis to its departments and
agencies. The costs of these services may be
allocated or billed to users.
5. "Claim" means a written demand or
written assertion by the governmental unit,'
or grantor 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
the award. A voucher, invoice or other
routine request for payment that is not a
dispute when submitted is not a claim.
Appeals, such as those filed by a
governmental unit in response to questioned
audit costs, are not considered claims until a
final management decision is made by the
Federal awarding agency.
6. "Cognizant agency" means the Federal
agency responsible for reviewing,
negotiating, and approving cost allocation
plans or indirect cost proposals developed
under this Circular on behalf of all Federal
agencies. OMB publishes a listing of
cognizant agencies.
7. "Common Rule" means the "Uniform
Administrative Requirements for Grants and
Cooperative Agreements to State and Local
Governments; Final Rule" originally issued
Office of Management and Budget Circular A-87
at 53 FR 8034-8103 (March 11, 1988).
Other common rules will be referred to by
their specific titles.
8. "Contract" means a mutually binding
legal relationship obligating the seller to
furnish the supplies or services (including
construction) and the buyer to pay for them.
It includes all types of commitments that
obligate the government to an expenditure
of appropriated funds and that, except as
otherwise authorized, are in writing. In
addition to bilateral instruments, contracts
include (but are not limited to): awards and
notices of awards; job orders or task orders
issued under basic ordering agreements;
letter contracts; orders, such as purchase
orders, under which the contract becomes
effective by written acceptance or
performance; and, bilateral contract
modifications. Contracts do not include
grants and cooperative agreements covered
by 31 U.S.C. 6301 et seq.
9. "Cost" means an amount as determined
on a cash, accrual, or other basis acceptable
to the Federal awarding or cognizant
agency. It does not include transfers to a
general or similar fund.
10. "Cost allocation plan" means central
service cost allocation plan, public
assistance cost allocation plan, and indirect
cost rate proposal. Each of these terms are
further defined in this section.
11. "Cost objective" means a function,
organizational subdivision, contract, grant,
or other activity for which cost data are
needed and for which costs are incurred.
12. "Federally -recognized Indian tribal
government" means the governing body or a
governmental agency of any Indian tribe,
band, nation, or other organized group or
community (including any native village as
defined in Section 3 of the Alaska Native
Claims Settlement Act, 85 Stat. 688)
certified by the Secretary of the Interior as
eligible for the special programs and
services provided through the Bureau of
Indian Affairs.
13. "Governmental unit" means the entire
State, local, or federally -recognized Indian
tribal government, including any component
thereof. Components of governmental units
may function independently of the
governmental unit in accordance with the
term of the award.
14. "Grantee department or agency"
means the component of a State, local, or
federally -recognized Indian tribal
government which is responsible for the
performance or administration of all or
some part of a Federal award.
15. "Indirect cost rate proposal" means
the documentation prepared by a
governmental unit or component thereof to
substantiate its request for the establishment
of an indirect cost rate as described in
Attachment E of this Circular.
16. "Local government" means a county,
municipality, city, town, township, local
public authority, school district, special
district, intrastate district, council of
governments (whether or not incorporated
as a non-profit corporation under State law),
any other regional or interstate government
entity, or any agency or instrumentality of a
local government.
17. "Public assistance cost allocation
plan" means a narrative description of the
procedures that will be used in identifying,
measuring and allocating all administrative
costs to all of the programs administered or
supervised by State public assistance
agencies as described in Attachment D of
this Circular.
18. "State" means any of the several
States of the United States, the District of
Columbia, the Commonwealth of Puerto
Rico, any territory or possession of the
United States, or any agency or
instrumentality of a State exclusive of local
governments.
C. Basic Guidelines
I. Factors affecting allowability of costs.
To be allowable under Federal awards, costs
must meet the following general criteria:
a. Be necessary and reasonable for proper
and efficient performance and
administration of Federal awards.
b. Be allocable to Federal awards under
the provisions of this Circular.
c. Be authorized or not prohibited under
State or local laws or regulations.
d. Conform to any limitations or
exclusions set forth in these principles,
Federal laws, terms and conditions of the
Federal award, or other governing
regulations as to types or amounts of cost
items.
e. Be consistent with policies,
regulations, and procedures that apply
uniformly to both Federal awards and other
activities of the governmental unit.
f. Be accorded consistent treatment. A
cost may not be assigned to a Federal award
as a direct cost if any other cost incurred for
the same purpose in like circumstances has
been allocated to the Federal award as an
indirect cost.
g. Except as otherwise provided for in
this Circular, be determined in accordance
Grants Management Advisory Service October 1997 Appendix I • Page 115
Office of Management and Budget Circular A-87
(8/29/97)
with generally accepted accounting
principles.
h. Not be included as a cost or used to
meet cost sharing or matching requirements
of any other Federal award in either the
current or a prior period, except as
specifically provided by Federal law or
regulation.
i. Be the net of all applicable credits.
j. Be adequately documented.
2. Reasonable costs. A cost is reasonable
if, in its nature and•amotint, it'does not
exceed that which would be incurred by a
prudent person under the circumstances
prevailing at the time the decision was made
to incur the cost. The question of
reasonableness is particularly important
when governmental units or components are
predominately federally -funded. In
determining reasonableness of a given cost,
consideration shall be given to:
a. Whether the cost is of a type generally
recognized as ordinary and necessary for the
operation of the governmental unit or the
performance of the Federal award.
b, The restraints or requirements imposed
by such factors as: sound business practices;
arms length bargaining; Federal, State and
other laws and regulations; and, terms and
conditions of the Federal award.
c. Market prices for comparable goods or
services.
d. Whether the individuals concerned
acted with prudence in.the circumstances
considering their responsibilities to the
governmental unit, its employees, the public
at large, and the Federal Government,
e. Significant deviations from the
established practices of the governmental
unit which may unjustifiably increase the
Federal award's cost.
3. Allocable costs.
a. A cost is allocable to a particular cost
objective if the goods or services involved
are chargeable or assignable to such cost
objective in accordance with relative
benefits received.
b. All activities which benefit from the
governmental unit's indirect cost, including
unallowable activities and services donated
to the governmental unit by third parties, '
will receive an appropriate allocation of
indirect costs.
c. Any cost allocable to a particular
Federal award or cost objective under the
Principles provided for in this Circular may
not be charged to other Federal awards to
overcome fund deficiencies, to avoid
restrictions imposed by law or terms of the
Federal awards, or for other reasons.
However, this prohibition would not
preclude governmental units from shifting
costs that are allowable under two or more
awards in accordance with existing program
agreements.
d. Where an accumulation of indirect
costs will ultimately result in charges to a
Federal award, a cost allocation plan will be
required as described in Attachments C, D,
and E.
4, Applicable credits.
a. Applicable credits refer to those
receipts or reduction of expenditure -type
transactions that offset or reduce expense
items allocable to Federal awards as direct
or indirect costs. Examples of such
transactions are: purchase discounts, rebates
or allowances, recoveries or indemnities on
losses, insurance refunds or rebates, and
adjustments of overpayments or erroneous
charges. To the extent that such credits
accruing to or received by the governmental
unit relate to allowable costs, they shall be
credited to the Federal award either as a cost
reduction or cash refund, as appropriate.
b. In some instances, the amounts
received from the Federal Government to
finance activities or service operations of
the governmental unit should be treated as
applicable credits. Specifically, the concept
of netting such credit items (including any
amounts used to meet cost sharing or
matching requirements) should be
recognized in determining the rates or
amounts to be charged to Federal awards,
(See Attachment B, item 15, "Depreciation
and use allowances," for areas of potential
application in the matter of Federal
financing of activities.)
D. Composition of Cost
1. Total cost. The total cost of Federal
awards is comprised of the allowable direct
cost of the program, plus its allocable
portion of allowable indirect costs, less
applicable credits,
2. Classification of costs. There is no
universal role for classifying certain costs as
either'direct or indirect under every
accounting system. A cost may be direct
with respect to some specific service or
function, but indirect with respect to the
Federal award or other final cost objective.
Therefore, it is essential that each item of
cost be treated consistently in like
circumstances either as a direct or an
indirect cost. Guidelines for determining
direct and indirect costs charged to Federal
awards are. provided in the sections that
follow.
E. Direct Costs
1. General. Direct costs are those that can
be identified specifically with a particular
final cost objective.
2. Application. Typical direct costs
chargeable to Federal awards are:
a. Compensation of employees for the
time devoted and identified specifically to
the performance of those awards.
b. Cost of materials acquired, consumed,
or expended specifically for the purpose of
those awards.
c. Equipment and other approved capital
expenditures.
d. Travel expenses incurred specifically
to carry out the award.
3. Minor items. Any direct cost of a
minor amount may be treated as an indirect
cost for reasons of practicality where such
accounting treatment for that item of cost is
consistently applied to all cost objectives.
F. Indirect Costs
1. General. Indirect costs are those: (a)
incurred for a common or joint purpose
benefiting more than one cost objective, and
(b) not readily assignable to the cost
objectives specifically benefitted, without
effort disproportionate to the results '
achieved. The term "indirect costs," as used
herein, applies to costs of this type
originating in the grantee department, as
well as those incurred by other departments
in supplying goods, services, and facilities.
To facilitate equitable distribution of
indirect expenses to the cost objectives
served, it may be necessary to establish a
number of pools of indirect costs within a
governmental unit department or in other
agencies providing services to a'
governmental unit department. Indirect cost
pools should be distributed to benefitted
cost objectives on bases that will produce an
equitable result in consideration of relative
benefits derived.
2. Cost allocation plans and indirect cost
proposals. Requirements for development
and submission of cost allocation plans and
indirect cost rate proposals are contained in
Attachments C, D, and E.
3. Limitation on indirect or
administrative costs.
a. In addition to restrictions contained in
this Circular, there may be laws that further
limit the amount of administrative or
indirect cost allowed,
b. Amounts not recoverable as indirect
costs or administrative costs under one
Federal award may not be shifted to another
Federal award, unless specifically
Page 116 • Appendix I October 1997 Federal Grants Management Handbook
(8/29197)
authorized by Federal legislation or
regulation.
G. Interagency Services
The cost of services provided by one
agency to another within the governmental
unit may include allowable direct costs of
the service plus a pro rate share of indirect
costs. A standard indirect cost allowance
equal to ten percent of the direct salary and
wage cost of providing the service
(excluding overtime, shift premiums, and
fringe benefits) may be used in lieu of
determining the actual indirect costs of the
service. These services do not include
centralized services included in central
service cost allocation plans as described in
Attachment C.
H. Required Certifications
Each cost allocation plan or indirect cost
rate proposal required by Attachments C
and E must comply with the following:
1. No proposal to establish a cost
allocation plan or an indirect cost rate,
whether submitted to a Federal cognizant
agency or maintained on file by the
governmental unit, shall be acceptable
unless such costs have been certified by the
governmental unit using the Certificate of
Cost Allocation Plan or Certificate of
Indirect Costs as set forth in Attachments C
and E. The certificate must be signed on
behalf of the governmental unit by an
individual at a level no lower than chief
financial officer of the governmental unit
that submits the proposal or component
covered by the proposal.
2. No cost allocation plan or indirect cost
rate shall be approved by the Federal
Government unless the plan or rate proposal
has been certified. Where it is necessary to
establish a cost allocation plan or an indirect
cost rate and the governmental unit has not
submitted a certified proposal for
establishing such a plan or rate in
accordance with the requirements, the
Federal Government may either disallow all
indirect costs or unilaterally'establish such a
plan or rate. Such a plan or rate may be
based upon audited historical data or such
other data that have been furnished to the
cognizant Federal agency and for which it
can be demonstrated that all unallowable
costs have been excluded. When a cost
allocation plan or indirect cost rate is
unilaterally established by the Federal
Government because of failure of the
governmental unit to submit a certified
proposal, the plan or rate established will be
Office of Management and Budget Circular A-87
set to ensure that potentially unallowable
costs will not be reimbursed.
Attachment B --- Selected Items of Cost
Table of Contents
1. Accounting
2. Advertising and public relations costs
3. Advisory councils
4. Alcoholic beverages
5. Audit services
6. Automatic electronic data processing
7. Bad debts
8. Bonding costs
9. Budgeting
10. Communications
11. Compensation for personnel services
a. General
b. Reasonableness
c. Unallowable costs
d. Fringe benefits
e. Pension plan costs
f. Post -retirement health benefits
g. Severance pay
h. Support of salaries and wages
i. Donated services
12. Contingencies
13. Contributions and donations
14. Defense and prosecution of criminal
and civil proceedings, and claims
15. Depreciation and use allowances
16. Disbursing service
17. Employee morale, health, and welfare
costs
18. Entertainment
19. Equipment and other capital
expenditures
20. Fines and penalties
21. Fund raising and investment
management costs
22. Gains and losses on disposition of
depreciable property and other capital
assets and substantial relocation of
Federal programs
23. General government expenses
24. Idle facilities and idle capacity
25. Insurance and indemnification
26. Interest
27. Lobbying
28. Maintenance, operations, and repairs
29. Materials and supplies
30. Memberships, subscriptions, and
professional activities
31. Motor pools
32. Pre -award costs
33. Professional service costs
34. Proposal costs
35. Publication and printing costs
36. Rearrangements and alterations
37. Reconversion costs
38. Rental costs
39. Taxes
40. Training
41. Travel costs
42. Underrecovery of costs under Federal
agreements
Sections 1 through 42 provide principles
to be applied in establishing the allowability
or unallowability of certain items of cost.
These principles apply whether a cost is
treated as direct or indirect. A cost is
allowable for Federal reimbursement only
to the extent of benefits received by Federal
awards and its conformance with the
general policies and principles stated in
Attachment A to this Circular. Failure to
mention a particular item of cost in these
sections is not, intended to imply that it is
either allowable or unallowable; rather,
determination of allowability in each case
should be based on the treatment or
standards provided for similar or related
items of cost.
1. Accounting. The cost of establishing
and maintaining accounting and other
information systems is allowable.
2. Advertising and public relations costs.
a. The term "advertising costs" means the
costs of advertising media and corollary
administrative costs. Advertising media
include magazines, newspapers, radio and
television programs, direct mail, exhibits,
and the like.
b. The term "public relations" includes
community relations and means those
activities dedicated to maintaining the image
of the governmental unit or maintaining or
promoting understanding and favorable
relations with the community or public at
large or any segment of the public.
c. Advertising costs are allowable only
when incurred for the recruitment of
personnel, the procurement of goods and
services, the disposal of surplus materials,
and any other specific purposes necessary to
meet the requirements of the Federal award.
Advertising costs associated with the
disposal of surplus materials are not
allowable where all disposal costs are
reimbursed based on a standard rate as
specified in the grants management
common rule.
d. Public relations costs are allowable when:
(1) Specifically required by the Federal
award and then only as a direct cost;
(2) Incurred to communicate with the
public and press pertaining to specific
activities or accomplishments that result
from performance of the Federal award and
then only as a direct cost; or
Grants Management Advisory Service
October 1997
Appendix I - Page 117
Office of Management and Budget Circular A-87
(8/29/97)
(3) Necessary to conduct general liaison
with news media and government public
relations officers, to the extent that such
activities are limited to communication and
liaison necessary to keep the public
informed on matters of public concern, such
as notices of Federal contract/grant awards,
financial matters, etc.
e. Unallowable advertising and public
relations costs include the following:
(1) All advertising and public relations
costs other than as specified in subsections
c. and d.;
(2) Except as otherwise permitted by
these cost principles, costs of conventions,
meetings, or other events related to other
activities of the governmental unit
including:
(a) Costs of displays, demonstrations, and
exhibits;
(b) Costs of meeting rooms, hospitality
suites, apd other special facilities used in
conjunction with shows and other special
events; and
(c) Salaries and wages of employees
engaged in setting up and displaying
exhibits, making demonstrations, and
providing briefings;
(3) Costs of promotional items and
memorabilia, including models, gifts, and
souvenirs; and
(4) Costs of advertising and public
relations designed solely to promote the
governmental unit.
3. Advisory councils. Costs incurred by
advisory councils or committees are
allowable as a direct cost where authorized
by the Federal awarding.agency or as an
indirect cost where allocable to Federal
awards.
4. Alcoholic beverages. Costs of alcoholic
beverages are unallowable.
5. Audit services. The costs of audits are
allowable provided that the audits were
performed in accordance with the Single
Audit Act, as implemented by Circular A-
128, "Audits of State and Local
Governments." Generally, the percentage of
costs charged to Federal awards for a single.
audit shall not exceed the percentage
derived by dividing Federal funds expended
by total funds expended by the recipient or
subrecipient (including program matching
funds) during the fiscal year. The
percentage may be exceeded only if
appropriate documentation demonstrates
higher actual costs.
Other audit costs are allowable if
specifically approved by the awarding or
cognizant agency as a direct cost to an
award or included as an indirect cost in a
cost allocation plan or rate.
6. Automatic electronic data processing.
The cost of data processing services is
allowable (but see section 19, Equipment
and other capital expenditures).
7. Bad debts. Any losses arising from
uncollectible accounts and other claims, and
related costs, are unallowable unless
provided for in Federal program award
regulations.
8. Bonding costs. Costs of bonding
employees and officials are allowable to the
extent that such bonding is in accordance
with sound business practice.
9. Budgeting. Costs incurred for the
development, preparation, presentation, and
execution of budgets are allowable.
10. Communications. Costs of telephone,
mail, messenger, and similar
communication services are allowable.
11. Compensation for personnel services.
a. General. Compensation for personnel
services includes all remuneration, paid
currently or accrued, for services rendered
during the period of performance under
Federal awards, including but not
necessarily limited to wages, salaries, and
fringe benefits. The costs of such
compensation are allowable to the extent
that they satisfy the specific requirements of
this Circular, and that the total
compensation for individual employees:
(1) Is reasonable for the services rendered
and conforms to the established policy of
the governmental unit consistently applied
fo both Federal and non -Federal activities;
(2) Follows an appointment made in
accordance with a governmental unit's laws
and rules and meets merit system or other
requirements required by Federal law,
where applicable; and
(3) Is determined and supported as
provided in subsection h.
b. Reasonableness. Compensation for
employees engaged in work on Federal
awards will be considered reasonable to the
extent that it is consistent with that paid for
similar work in other activities of the
governmental unit. In cases where the kinds
of employees required for Federal awards
are not found in the other activities of the
governmental unit, compensation will be
considered reasonable to the extent that it is
comparable to that paid for similar work in
the labor market in which the employing
government competes for the kind of
employees involved. Compensation surveys
providing data representative of the labor
market involved will be an acceptable basis
for evaluating reasonableness.
c. Unallowable costs. Costs which are
unallowable under other sections of these
principles shall not be allowable under this
section solely on the basis that they
constitute personnel compensation.
d. Fringe benefits.
(1) Fringe benefits are allowances and
services provided by employers to.their
employees as compensation in addition to
regular salaries and wages. Fringe benefits
include, but are not limited to, the costs of
leave, employee insurance, pensions, and
unemployment benefit plans. Except as
provided elsewhere in these principles, the
costs of fringe benefits are allowable to the
extent that the benefits are reasonable and
are required by law, governmental unit -
employee agreement, or an established
policy of the governmental unit.
(2) The cost of fringe benefits in the form
of regular compensation paid to employees
during periods of authorized absences from
the job, such as for annual leave, sick leave,
holidays, court leave, military leave, and
other similar benefits, are allowable if: (a)
they are provided under established written
leave policies; (b) the costs are equitably
allocated to all related activities, including
Federal awards; and, (c) the accounting
basis (cash or accrual) selected for costing
each type of leave is consistently followed
by the governmental unit.
(3) When a governmental unit uses the
cash basis of accounting, the cost of leave is
recognized in the period that the leave is
taken and paid for, Payments for unused
leave when an employee retires or
terminates employment are allowable in the
year of payment provided they are allocated
as a general administrative expense to all
activities of the governmental unit or
component.
(4) The accrual basis may be only used for
those types of leave for which a liability as
defined by Generally Accepted Accounting
Principles (GAAP) exists when the leave is
earned. When a governmental unit uses the
accrual basis of accounting, in accordance
with GAAP, allowable leave costs are the
lesser of the amount accrued or funded.
(5) The cost of fringe benefits in the form
of employer contributions or expenses for
social security; employee life, health,
unemployment, and worker's compensation
insurance (except as indicated in section 25,
Insurance and indemnification); pension
plan.costs (see subsection e.); and other
similar benefits are allowable, provided
Page 118 • Appendix I October 1997 Federai Grants Management Handbook
(8/29/97)
such benefits are granted under established
written policies. Such benefits, whether
treated as indirect costs or as direct costs,
shall be allocated to Federal awards and all
other activities in a manner consistent with
the pattern of benefits attributable to the
individuals or group(s) of employees whose
salaries and wages are chargeable to such
Federal awards and other activities.
e. Pension plan costs. Pension plan costs
may be computed using a pay-as-you-go
method or an acceptable actuarial cost
method in accordance with established
written policies of the governmental unit.
(1) For pension plans financed on a pay-
as-you-go method, allowable costs will be
limited to those representing actual
payments to retirees or their beneficiaries.
(2) Pension costs calculated using an
actuarial cost -based method recognized by
GAAP are allowable for a given fiscal year
if they are funded for that year within six
months after the end of that year. Costs
funded after the six month period (or a later
period agreed to by the cognizant agency)
are allowable in the year funded. The
cognizant agency may agree to an extension
of the six month period if an appropriate
adjustment is made to compensate for the
timing of the charges to the Federal
Government and related Federal
reimbursement and the governmental unit's
contribution to the pension fund.
Adjustments may be made by cash refund or
other equitable procedures to compensate
the Federal Government for the time value
of Federal reimbursements in excess of ,
contributions to the pension fund.
(3) Amounts funded by the governmental
unit in excess of the actuarially determined
amount for a fiscal year may be used as the
governmental unit's contribution in future
periods.
(4) When a governmental unit converts to
an acceptable actuarial cost method, as
defined by GAAP, and funds pension costs
in accordance with this method, the
unfunded liability at the time of conversion
shall be allowable if amortized over a
period of years in accordance with GAAP.
(5) The Federal Government shall receive
an equitable share of any previously
allowed pension costs (including earnings
thereon) which revert or inure to the
governmental unit in the form of a refund,
withdrawal, or other credit.
f. Posr-retirement health benefits. Post -
retirement health benefits (PRHB) refers to
costs of health insurance or health services
not included in a pension plan covered by
Office of Management and Budget Circular A-87
subsection e. for retirees and their spouses,
dependents, and survivors. PRHB costs may
be computed using a pay-as-you-go method
or an acceptable actuarial cost method in
accordance with established written polices
of the governmental unit.
(1) For PRHB financed on a pay as -you -
go method, allowable costs will be limited
to those representing actual payments to
retirees or their beneficiaries.
(2) PRHB costs calculated using an
actuarial cost method recognized by GAAP
are allowable if they are funded for that year
within six months after the end of that year,
Costs funded after the six month period (or
a later period agreed to by the cognizant
agency) are allowable in the year funded.
The cognizant agency may agree to an
extension of the six month period if an
appropriate adjustment is made to
compensate for the timing of the charges to
the Federal Government and related Federal
reimbursements and the governmental unit's
contributions to the PRHB fund.
Adjustments may be made by cash refund,
reduction in current year's PRHB costs, or
other equitable procedures to compensate
the Federal Government for the time value
of Federal reimbursements in excess of
contributions to the PRHB fund.
(3) Amounts funded in excess of the
actuarially determined amount for a fiscal
year maybe used as the government's
contribution in a future period.
(4) When a governmental unit converts to
an acceptable actuarial cost method and
funds PRHB costs in accordance with this
method, the initial unfunded liability
attributable to prior years shall be allowable
if amortized over a period of years in
accordance with GAAP, or, if no such
GAAP period exists, over a period
negotiated with the cognizant agency.
(5) To be allowable in the current year,
the PRHB costs must be paid either to:
(a) An insurer or other benefit provider as
current year costs or premiums, or
(b) An insurer or trustee to maintain a
trust fund or reserve for the sole purpose of
providing post -retirement benefits to
retirees and other beneficiaries.
(6) The Federal Government shall receive
an equitable share of any amounts of
previously allowed post -retirement benefit
costs (including earnings thereon) which
revert or inure to the governmental unit in the
form of a refund, withdrawal, or other credit.
g. Severance pay.
(1) Payments in addition to regular
salaries and wages made to workers whose
employment is being terminated are
allowable to the extent that, in each case,
they are required by (a) law, (b) employer -
employee agreement, or (c) established
written policy.
(2) Severance payments (but not accruals)
associated with normal turnover are
allowable. Such payments shall be allocated
to all activities of the governmental unit as
an indirect cost.
(3) Abnormal or mass severance pay will
be considered on a case -by -case basis and is
allowable only if approved by the cognizant
Federalagency,
h. Support of salaries and wages. These
standards regarding time distribution are in
addition to the standards for payroll
documentation.
(1) Charges to Federal awards for salaries
and wages, whether treated as direct or
indirect costs, will be based on payrolls
documented in accordance with generally
accepted practice of the governmental unit
and approved by a responsible official(s) of
the governmental unit.
(2) No further documentation is required
for the salaries and wages of employees.
who work in a single indirect cost activity.
(3) Where employees are expected to
work solely on a single Federal award or cost
objective, charges for their salaries and
wages will be supported by periodic
certifications that the employees worked
solely on that program for the period covered
by the certification. These certifications will
be prepared at least semi-annually and will
be signed by the employee or supervisory
official having first hand knowledge of the
work performed by the employee.
(4) Where employees work on multiple
activities or cost objectives, a distribution of
their salaries or wages will be supported by
personnel activity reports or equivalent
documentation which meets the standards in
subsection (5) unless a statistical sampling
system (see subsection (6)) or other
substitute system has been approved by the
cognizant Federal agency. Such
documentary support will be required where
employees work on:
(a) More than one Federal award,
(b) A Federal award and a non -Federal
award,
(c) An indirect cost activity and a direct
cost activity,
(d) Two or more indirect activities which
are allocated using; different allocation
bases, or
(e) An unallowable activity and a direct
or indirect cost activity.
Grants Management Advisory Service October 1997 Appendix I • Page 119
Office of Management and Budget Circular A-87
(8/29/97)
(5) Personnel activity reports or
staffs, based on the results of the sampled
"Allowable costs under defense contracts."
equivalent documentation must meet the
employees, will be acceptable.
(1) Costs incurred in defense of any civil
following standards:
(c) Less than full compliance with the
or criminal fraud proceeding or similar
(a) They must reflect an after -the -fact
statistical sampling standards noted in
proceeding (including filing of false
distribution of the actual activity of each
subsection (a) may be accepted by the
certification brought by the United States
employee,
cognizant agency if it concludes that the
where the contractor is found liable or has
(b) They must account for the total
amounts to be allocated to Federal awards
pleaded nolo contendere to a charge of
activity for which each employee is
will be minimal, or if it concludes that the
fraud or similar proceeding (including filing
compensated,
system proposed by the governmental unit
of a false certification).
(c) They must be prepared at least
will result in lower costs to Federal awards
(2) Costs incurred by a contractor in
monthly and must coincide with one or
than a system which complies with the
connection with any criminal, civil or
:.more pay periods, and
standards.
administrative proceedings commenced by
(d) They must be signed by the employee.
(7) Salaries and wages of employees used in the United States or a State to the extent
(e) Budget estimates or other distribution
meeting cost sharing or matching requirements
provided in 10 U.S.C. 2324(k).
percentages determined before the services
of Federal awards must be supported in the
b. Legal expenses required in the
are performed do not qualify as support for
same manner as those claimed as allowable
administration of Federal programs are
charges to Federal awards but may be used
costs under Federal awards.
allowable. Legal expenses for prosecution
for interim accounting purposes, provided
i. Donated services.
of claims against the Federal Government
that:
(1) Donated or volunteer services may be
are unallowable.
(i) The governmental unit's system for
furnished to a governmental unit by
15. Depreciation and use allowances.
establishing the estimates produces
professional and technical personnel,
a. Depreciation and use allowances are
reasonable approximations of the activity
consultants, and other skilled and unskilled
means of allocating the cost of fixed assets
actually performed;
labor. The value of these services is not
to periods benefitting from asset use.
(ii) At least quarterly, comparisons of
reimbursable either as a direct or indirect
Compensation for the use of fixed assets on
actual costs to budgeted distributions based
cost. However, the value of donated services
hand may be made through depreciation or
on the monthly activity reports are made.
may be used to meet cost sharing or matching
use allowances. A combination of the two
Costs charged to Federal awards to reflect
requirements in accordance with the
methods may not be used in connection with
adjustments made as a result of the activity
provisions of the Common Rule,
a single class of fixed assets (e.g., buildings,
actually performed may be recorded
(2) The value of donated services utilized in
office equipment, computer equipment, etc.)
annually if the quarterly comparisons show
the performance of a direct cost activity shall',
except as provided in subsection g, Except
the differences between budgeted and actual
when material in amount, be considered in the
for enterprise funds and internal service
costs are less than ten percent; and
determination of the governmental unit's
funds that are included as part of a State/
(iii) The budget estimates or other
indirect costs or rate(s) and, accordingly, shall
local cost allocation plan, classes of assets
distribution percentages are revised at least
be allocated a proportionate share of
shall be determined on the same basis used
quarterly, if necessary, to reflect changed
applicable indirect costs.
for the government -wide financial
circumstances.
(3) To the extent feasible, donated services
statements.
(6) Substitute systems for allocating
will be supported by the same methods used
b. The computation of depreciation or use
salaries and wages to Federal awards may
by the governmental unit to support the
allowances shall be based on the acquisition
be used in place of activity reports. These
allocability.of regular personnel services.
cost of the assets involved. Where actual
systems are subject, to approval if required
12. Contingencies. Contributions to a
cost records have not been maintained, a
by the cognizant agency. Such systems may
contingency reserve or any similar provision
reasonable estimate of the original
include, but are not limited to, random
made for events the occurrence of which
acquisition cost may be used. The value of
moment sampling, case counts, or other
cannot be foretold with certainty as to time,
an asset donated to the governmental unit
quantifiable measures of employee effort.
or intensity, or with an assurance of their
by an unrelated third party shall be its fair
(a) Substitute systems which use
happening, are unallowable. The term
market value at the time of donation.
sampling methods (primarily for Aid to
Families with Dependent Children (AFDC),
"contingency reserve" excludes self-
insurance
Governmental or quasi -governmental
Medicaid, and other public assistance
reserves (see subsection 25.c.),
pension plan reserves (see subsection I Le.),
organizations located within the same State
shall not be considered unrelated third
programs) must meet acceptable statistical
'
and post -retirement health and other benefit
parties for this purpose.
sampling standards including:
reserves (see subsection 1 l.f.) computed
c. The computation of depreciation or use
(i) The sampling universe must include
all of the employees whose salaries
using acceptable actuarial cost methods.
allowances will exclude:
and
13. Contributions and donations.
(1) The cost of land;
wages are to be allocated based on sample
Contributions and donations, including cash,
(2) Any portion of the cost of buildings
results except as provided in subsection (c);
property, and services, by governmental units
and equipment borne by or donated by the
(ii) The entire time period involved must
be covered by the sample; and
to others, regardless of the recipient, are
Federal Government irrespective of where
(iii) The results must be statistically valid
unallowable.
14. Defense and prosecution of criminal
title was originally vested or where it
presently resides; and
and applied to the period being sampled.
and civil proceedings, and claims.
(3) Any portion of the cost of buildings
(b) Allocating charges for the sampled
a. The following costs are unallowable for
and equipment contributed by or for the
employees' supervisors, clerical and support
contracts covered by 10 U.S.C. 2324(k),
governmental unit, or a related donor
'age 120 • Appendix I
October 1997
Federal Grants Management Handbook
(8/29197)
Office of Management and Budget Circular A-87
organization, in satisfaction of a matching
' requirement.
d. Where the use allowance method is
followed, the use allowance for buildings
and improvements (including land
improvements, such as paved parking areas,
fences, and sidewalks) will be computed at
an annual rate not exceeding two percent of
acquisition costs, The use allowance for
equipment will be computed at an annual
rate not exceeding 6 2/3 percent of
acquisition cost. When the use allowance
method is used for buildings, the entire
building must be treated as a single asset;
the building's components (e.g., plumbing
system, heating and air condition, etc.)
cannot be segregated from the building's
shell. The two percent limitation, however,
need not be applied to equipment which is
merely attached or fastened to the building
but not permanently fixed to it and which is
used as furnishings or decorations or for
specialized purposes (e.g., dentist chairs and
dental treatment units, counters, laboratory
benches bolted to the floor, dishwashers,
modular furniture, carpeting, etc.). Such
equipment will be considered as not being
permanently fixed to the building if it can
be removed without the destruction of, or
need for costly or extensive alterations or
7 repairs, to the building or the equipment.
Equipment that meets these criteria will be
subject to the 6 2/.1 percent equipment use
allowance limitation.
e. Where the depreciation method is
followed, the period of useful service
(useful life) established in each case for
usable capital assets must take into
consideration such factors as type of
construction, nature of the equipment used,
historical usage patterns, technological
developments, and the renewal and
replacement policies of the governmental
unit followed for the individual items or
classes of assets involved. In the absence of
clear evidence indicating that the expected
consumption of the asset will be
significantly greater in the early portions
than in the later portions of its useful life,
the straight line method of depreciation
shall be used. Depreciation methods once
used shall not be changed unless approved
by the Federal cognizant or awarding
agency. When the depreciation method is
introduced for application to an asset
previously subject to a use allowance, the
annual depreciation charge thereon may not
exceed the amount that would have resulted
had the depreciation method been in effect
from the date of acquisition of the asset.
The combination of use allowances and
depreciation applicable to the asset shall not
exceed the total acquisition cost of the asset
or fair market value at time of donation.
f. When the depreciation method is used
for buildings, a building's shell may be
segregated from the major component of the
building (e.g„ plumbing system, heating,
and air conditioning system, etc.) and each
major component depreciated over its
estimated useful life, or the entire building
(i.e., the shell and all components) may be
treated as a single asset and depreciated
over a single useful life.
g. A reasonable use allowance may be
negotiated for any assets that are considered
to be fully depreciated, after taking into
consideration the amount of depreciation
previously charged to the government, the
estimated useful life remaining at the time
of negotiation, the effect of any increased
maintenance charges, decreased efficiency
due to age, and any other factors pertinent
to the utilization of the asset for the purpose
contemplated.
h. Charges for use allowances or
depreciation must be supported by adequate
property records. Physical inventories must
be taken at least once every two years (a
statistical sampling approach is acceptable)
to ensure that assets exist, and are in use.
Governmental units will manage equipment
in accordance with State laws and.
procedures. When the depreciation method
is followed, depreciation records indicating
the amount of depreciation taken each
period must also be maintained.
16. Disbursing service. The cost of
disbursing funds by the Treasurer or other
designated officer is allowable.
17. Employee morale, health, and welfare
costs, The costs of health or first -aid clinics
and/or infirmaries, recreational facilities,
employee counseling services, employee
information publications, and any related
expenses incurred in accordance with a
governmental unit's policy are allowable.
Income generated from any of these
activities will be offset against expenses.
18. Entertainment. Costs of
entertainment, including amusement,
diversion, and social activities and any costs
directly associated with such costs (such as
tickets to shows or sports events, meals,
lodging, rentals, transportation, and
gratuities) are unallowable.
19. Equipment and other capital
expenditures,
a. As used in this section the following
terms have the meanings as set forth below;
(1) "Capital expenditure" means the cost
of the asset including the cost to put it in
place. Capital expenditure for equipment
means the net invoice price of the
equipment, including the cost of any
modifications, attachments, accessories, or
auxiliary apparatus necessary to make it
usable for the purpose for which it is
acquired. Ancillary charges, such as taxes,
duty, protective in transit insurance, freight,
and installation may be included in, or
excluded from, capital expenditure cost in
accordance with the governmental unit's
regular accounting practices.
(2) "Equipment" means an article of
nonexpendable, tangible personal property
having a useful life of more than one year
and an acquisition cost which equals the
lesser of (a) the capitalization level
established by the governmental unit for
financial statement purposes, or (b) $5000.
(3) "Other capital assets" mean buildings,
land, and improvements to buildings or land that
materially increase their value or useful life.
b. Capital expenditures which are not
charged directly to a Federal award may be
recovered through use allowances or
depreciation on buildings, capital
improvements, and equipment (see section
15). See also section 38 for allowability of
rental costs for buildings and equipment.
c. Capital expenditures for equipment,
including replacement equipment, other
capital assets, and improvements which
materially increase the value or useful life
of equipment or other capital assets are
allowable as a direct cost when approved by
the awarding agency. Federal awarding
agencies are authorized at their option to
waive or delegate this approval requirement.
d. Items of equipment with an acquisition
cost of less than $5000 are considered to be
supplies and are allowable as direct costs of
Federal awards without specific awarding
agency approval.
e. The unamortized portion of any
equipment written off as a result of a change
in capitalization levels may be recovered by
(1) continuing to claim the otherwise
allowable use allowances or depreciation
charges on the equipment or by (2)
amortizing the amount to be written off over
a period of years negotiated with the
cognizant agency.
f. When replacing equipment purchased
in whole or in part with Federal funds, the
governmental unit may use the equipment to
be replaced as a trade-in or sell the property
and use the proceeds to offset the cost of the
replacement property.
Grants Management Advisory Service October 1997 Appendix I - Page 121
Office of Management and Budget Circular A-87
(8/29/97)
20. Fines and penalties. Fines, penalties,
damages, and other settlements resulting
from violations (or alleged violations) of, o
failure of the governmental unit to comply
with, Federal, State, local, or Indian tribal
laws and regulations are unallowable except
when incurred as a result of compliance
with specific provisions of the Federal
award or written instructions by the
awarding agency authorizing in advance
such payments.
21.. Furid raising and iiivestmerit
management costs.
a. Costs of organized fund raising,
including financial campaigns, solicitation of
gifts and bequests, and similar expenses
incurred to raise capital or obtain contributions
are unallowable, regardless of the purpose for
which the funds will be used.
b. Costs of investment counsel and staff
and similar expenses incurred to enhance
income from investments are unallowable.
However, such costs associated with
investments covering pension, self-
insurance, or other funds which include
Federal participation allowed by this
Circular are allowable.
c. Fund raising and investment activities
shall be allocated an appropriate share of
indirect costs under the conditions described
in subsection C.3.b_ of Attachment A.
22. Gains and losses on disposition of
depreciable property and other capital
assets and substantial relocation of Federal
programs.
a. (1) Gains and losses on the sale,
retirement, or other disposition. of
depreciable property shall be included in the
year in which they occur as credits or
charges to the asset cost grouping(s) in
which the property was included. The
amount of the gain or loss to be included as
a credit or charge to the appropriate asset
cost grouping(s) shall be the difference
between the amount realized on the property
and the undepreciated basis of the property.
(2) Gains and losses on the disposition of
depreciable property shall not be recognized
as a separate credit or charge under the
following conditions:
(a) The gain or loss is processed through
a depreciation account and is reflected in
the depreciation allowable under sections 15
and 19.
(b) The property is given in exchange as
part of the purchase price of a similar item
and the gain or loss is taken into account in
determining the depreciation cost basis of
the new item.
(c) A loss results from the failure to
maintain permissible insurance, except as
r otherwise provided in subsection 25.d.
(d) Compensation for the use of the
property was provided through use
allowances in lieu of depreciation.
b. Substantial relocation of Federal
awards from a facility where the Federal
Government participated in the financing to
another facility prior to the expiration of the
useful life of the financed. facility requires,
Federal agency approval. The extent of the
relocation, the amount of the Federal
participation in the financing, and the
depreciation charged to date may require
negotiation of space charges for Federal
awards.
c. Gains or losses of any nature arising
from the sale or exchange of property other
than the property covered in subsection a.,
e.g., land or included in the fair market
value used in any adjustment resulting from
a relocation of Federal awards covered in
subsection b. shall be excluded in
computing Federal award costs.
23. General government expenses.
a. The general costs of government are
unallowable (except as provided in section
41). These include:
(1) Salaries and expenses of the Office of
the Governor of a State or the chief
executive of a political subdivision or the
chief executives of federally -recognized
Indian tribal governments;
(2) Salaries and other expenses of State
legislatures, tribal councils, or similar local
governmental bodies, such as county
supervisors, city councils, school boards,
etc., whether incurred for purposes of
legislation or executive direction;
(3) Cost of the judiciary branch of a
government;
(4) Cost of prosecutorial activities unless
treated as a direct cost to a specific program
when authorized by program regulations
(however, this does not preclude the
allowability of other legal activities of the
Attorney General); and
(5) Other general types of government
services normally provided to the general
public, such as fire and police, unless
provided for as a direct cost in program
regulations.
b. For federally -recognized Indian tribal
governments and Councils of Governments
(COGs), the portion of salaries and
expenses directly attributable to managing
and operating Federal programs by the chief
executive and his staff is allowable..
24. Idle facilities and idle capacity.
a. As used in this section the following
terms have the meanings set forth below:
(1) "Facilities" means land and buildings
or any portion thereof, equipment
individually or collectively, or any other
tangible capital asset, wherever located, and
whether owned or leased by the
governmental unit.
(2) "Idle facilities" means completely
unused facilities that are excess to the
governmentalunit's current needs.
(3) "Idle capacity" means the unused
capacity of partially used facilities. It is the
difference between (a) that which a facility
could achieve under 100 percent operating
time on a one -shift basis less operating
interruptions resulting from time lost for
repairs, setups, unsatisfactory materials, and
other normal delays and (b) the extent to
which the facility was actually used to meet
demands during the accounting period. A
multi -shift basis should be used if it can be
shown that this amount of usage would
normally be expected for the type of facility
involved.
(4) "Cost of idle facilities or idle
capacity" means costs such as maintenance,
repair, housing, rent, and other related costs,
e.g., insurance, interest, and depreciation or
use allowances.
b. The costs of idle facilities are
unallowable except to the extent that:
(1) They are necessary to meet
fluctuations in workload; or
(2) Although not necessary to meet
fluctuations in workload, they were
necessary when acquired and are now idle
because of changes in program
requirements, efforts to achieve more
economical operations, reorganization,
termination, or other causes which could
not have been reasonably foreseen. Under
the exception stated in this subsection, costs
of idle facilities are allowable for a
reasonable period of time, ordinarily not to
exceed one year, depending on the initiative
taken to use, lease, or dispose of such
facilities.
c. The costs of idle capacity are normal
costs of doing business and are a factor in
the normal fluctuations of usage or indirect
cost rates from period to period. Such costs
are allowable, provided that the capacity is
reasonably anticipated to be necessary or
was originally reasonable and is not subject
to reduction or elimination by use on other
Federal awards, subletting, renting, or sale,
in accordance with sound business,
Page 122 . Appendix 1 October 1997 Federal Grants Management Handbook
(8/29197)
Office of Management and Budget Circular A-87
economic, or security practices, Widespread
idle capacity throughout an entire facility or
among a group of assets having
substantially the same function may be
considered idle facilities.
25. Insurance and indemnification.
a. Costs of insurance required or
approved and maintained, pursuant to the
Federal award, are allowable.
b. Costs of other insurance in connection
with the general conduct of activities are
allowable subject to the following
limitations:
(I) Types and extent and cost of coverage
are in accordance with the governmental
unit's policy and sound business practice.
(2) Costs of insurance or of contributions
to any reserve covering the risk of loss of,
or damage to, Federal Government property
are unallowable except to the extent that the
awarding agency has specifically required
or approved such costs.
c. Actual losses which could have been
covered by permissible insurance (through a
self-insurance program or otherwise) are
unallowable, unless expressly provided for
in the Federal award or as described below.
However, the Federal Government will
participate in actual losses of a self
insurance fund that are in excess of
reserves. Costs incurred because of losses
not covered under nominal deductible
insurance coverage provided in keeping
with sound management practice, and minor
losses not covered by insurance, such as
spoilage, breakage, and disappearance of
small hand tools, which occur in the
ordinary course of operations, are
allowable.
d. Contributions to a reserve for certain
self-insurance programs including workers
compensation, unemployment
compensation, and severance pay are
allowable subject to the following
provisions:
(1) The type of coverage and the extent of
coverage and the rates and premiums would
have been allowed had insurance (including
reinsurance) been purchased to cover the
risks. However, provision for known or
reasonably estimated self -insured liabilities,
which do not become payable for more than
one year after the provision is made, shall
not exceed the discounted present value of
the liability. The rate used for discounting
the liability must be determined by giving
consideration to such factors as the
governmental unit's settlement rate for
those liabilities and its investment rate of
return.
(2) Earnings or investment income on
reserves must be credited to those reserves.
(3) Contributions to reserves must be
based on sound actuarial principles using
historical experience and reasonable
assumptions. Reserve levels must be
analyzed and updated at least biennially for
each major risk being insured and take into
account any reinsurance, coinsurance, etc.
Reserve levels related to employee -related
coverages will normally be limited to the
value of claims (a) submitted and
adjudicated but not paid, (b) submitted but
not adjudicated, and (c) incurred but not
submitted. Reserve levels in excess of the
amounts based on the above must be
identified and justified in the cost allocation
plan or indirect cost rate proposal.
(4) Accounting records, actuarial studies,
and cost allocations (or billings) must
recognize any significant differences due to
types of insured risk and losses generated by
the various insured activities or agencies of the
governmental unit. If individual departments
or agencies of the governmental unit
experience significantly different levels of
claims for a particular risk, those differences
are to be recognized by the use of separate
allocations or other techniques resulting in an
equitable allocation.
(5) Whenever funds are transferred from
a self-insurance reserve to other accounts
(e.g., general fund), refunds shall be made
to the Federal Government for its share of
funds transferred, including earned or
imputed interest from the date of transfer.
e. Actual claims paid to or on behalf of
employees or former employees for workers'
compensation, unemployment compensation,
severance pay, and similar employee benefits
(e.g., subsection 1 l.f. for post retirement
health benefits), are allowable in the year of
payment provided (1) the governmental unit
follows a consistent costing policy and (2)
they are allocated as a general administrative
expense to all activities of the governmental
unit.
f. insurance refunds shall be credited
-against insurance costs in the year the
refund is received.
g. Indemnification includes securing the
governmental unit against liabilities to third
persons and other losses not compensated
by insurance or otherwise. The Federal
Government is obligated to indemnify the
governmental unit only to the extent
expressly provided for in the Federal award,
except as provided in subsection d.
h. Costs of commercial insurance that
protects against the costs of the contractor
for correction of the contractor's own
defects in materials or workmanship are
unallowable.
26. Interest.
a. Costs incurred for interest on borrowed
capital or the use of a governmental unit's
own funds, however represented, are
unallowable except as specifically provided
in subsection b. or authorized by Federal
legislation.
b. Financing costs (including interest)
paid or incurred on or after the effective
date of this Circular associated with the
otherwise allowable costs of building
acquisition, construction, or fabrication,
reconstruction or remodeling completed an
or after October 1, 1980, is allowable,
subject to the conditions in (1)-(4).
Financing costs (including interest) paid or
incurred on or after the effective date of this
Circular associated with otherwise
allowable costs of equipment is allowable,
subject to the conditions in (1)-(4).
(1) The financing is provided (from other
than tax or user fee sources) by a bona fide
third party external to the governmental unit;
(2) The assets are used in support of
Federal awards;
(3) Earnings on debt service reserve
funds or interest earned on borrowed funds
pending payment of the construction or
acquisition costs are used to offset the
current period's cost or the capitalized
interest, as appropriate. Earnings subject to
being reported to the Federal Internal
Revenue Service under arbitrage
requirements are excludable.
(4) Governmental units will negotiate the
amount of allowable interest whenever cash
payments (interest, depreciation, use
allowances, and contributions) exceed the
governmental unit's cash payments and other
contributions attributable to that portion of
real property used for Federal awards.
27. Lobbying. The cost of certain
influencing activities associated with
obtaining grants, contracts, cooperative
agreements, or loans is an unallowable cost.
Lobbying with respect to certain grants,
contracts, cooperative agreements, and
loans shall be governed by the common
rule, "New Restrictions on Lobbying"
published at 55 FR 6736 (February 26,
1990), including definitions, and the Office
of Management and Budget "Government -
wide Guidance for New Restrictions on
Lobbying" and notices published at 54 FR
52306 (December 20, 1989), 55 FR 24540
(June 15, 1990), and 57 FR 1772 (January
15, 1992), respectively.
Grants Management Advisory Service
October 1997
Appendix I • Page 123
Office of Management and Budget Circular A-87
(8/29/97)
28. Maintenance, operations, and
repairs. Unless prohibited by law, the cost
of utilities, insurance, security, janitorial
services, elevator service, upkeep of
grounds, necessary maintenance, normal
repairs and alterations, and the like are
allowable to the extent that they: (1).keep
property (including Federal property, unless
otherwise provided for) in an efficient
operating condition, (2) do not add to the
permanent value of property or appreciably
prolong its intended life,'and (3) are not
otherwise included in rental or other charges
for space. Costs which add to the permanent
value of property or appreciably prolong its
intended life shall be treated as capital
expenditures (see sections 15 and 19).
29. Materials and supplies. The cost of
materials and supplies is allowable. .
Purchases should be charged at their actual
prices after deducting all cash discounts,
trade discounts, rebates, and allowances
received. Withdrawals from general stores
or stockrooms should be charged at cost
under any recognized method of pricing,
consistently applied. Incoming
transportation charges are a proper part of
materials and supply costs.
30. Memberships, subscriptions, and
professional activities.
a. Costs of the governmental unit's
memberships in business, technical, and
professional organizations are allowable.
b. Costs of the governmental unit's
subscriptions to business, professional, and
technical periodicals are allowable.
c. Costs of meetings and conferences
where the primary purpose is the
dissemination of technical information,
including meals, transportation, rental of
meeting facilities, and other incidental costs
are allowable.
d. Costs of membership in civic and.
community, social organizations are
allowable as a direct cost with the approval
of the Federal awarding agency.
e. Costs of membership in organizations
substantially engaged in lobbying are
unallowable.
31. Motor pools. The costs of a service
organization which provides automobiles to
user governmental units at a mileage or
fixed rate and/or provides vehicle
maintenance, inspection, and repair services
are allowable.
32. Pre -award costs. Pre -award costs are
those incurred prior to the effective date of
the award directly pursuant to the
negotiation and in anticipation of the award
where such costs are necessary to comply
with the proposed delivery schedule or
period of performance. Such costs are
allowable only to the extent that they would
have been allowable if incurred after the
date of the award and only with the written
approval of the awarding agency.
33. Professional service costs.
a. Cost of professional and consultant
services rendered by persons or
organizations that are members of a
particular profession or possess a special
skill, whether or not officers or employees
of the governmental unit, are allowable,
subject to section 14 when reasonable in
relation to the services rendered and when
not contingent upon recovery of the costs
from the Federal Government.
b. Retainer fees supported by evidence of
bona fide services available or rendered are
allowable.
34. Proposal costs. Costs of preparing
proposals for potential Federal awards are
allowable. Proposal costs should normally
be treated as indirect costs and should be
allocated to all activities of the
governmental unit utilizing the cost
allocation plan and indirect cost rate
proposal. However, proposal costs may be
charged directly to Federal awards with the
prior approval of the Federal awarding
agency.
35. Publication and printing costs.
Publication costs, including the costs of
printing (including the processes of
composition, plate -making, press work, and
binding, and the end products produced by
such processes), distribution, promotion,
mailing, and general handling are allowable.
36. Rearrangements and alterations.
Costs incurred for ordinary and normal
rearrangement and alteration of facilities
are allowable. Special arrangements and
alterations costs incurred specifically for
a Federal award are allowable with the
prior approval of the Federal awarding
agency.
37: Reconversion costs. Costs incurred in
the restoration or rehabilitation of the
governmental unit's facilities to
approximately the same condition existing
immediately prior to commencement of
Federal awards, less costs related to normal
wear and tear, are allowable.
38. Rental costs.
a. Subject to the limitations described in
subsections b. through d, of this section,
rental costs are allowable to the extent that
the rates are reasonable in light of such
factors as: rental costs of comparable
property, if any; market conditions in the
area; alternatives available; and, the type,
life expectancy, condition, and value of the
property leased.
b. Rental costs under sale and leaseback
arrangements are allowable only up to the
amount that would be allowed had the
governmental unit continued to own the
property.
c. Rental costs under less -than -arms -length
leases are allowable only up to the amount that
would be allowed had title to the property
vested in the governmental unit. For this
purpose, less -than -arms -length leases include,
but are not limited to, those where:
(1) One party to the lease is able to
control or substantially influence the actions
of the other;
(2) Both.parties are parts of the same
governmental unit; or
(3) The governmental unit creates an
authority or similar entity to acquire and
lease the facilities to the governmental unit
and other parties.
d. Rental costs under leases which are
required to be treated as capital leases under
GAAP are allowable only up to the amount
that would be allowed had the governmental
unit purchased the property on the date the
lease agreement was executed. This amount
would include expenses such as
depreciation or use allowance, maintenance,
and insurance. The provisions of Financial
Accounting Standards Board Statement 13
shall be used to determine whether a lease is
a capital lease. Interest costs related to
capital leases are allowable to the extent
they meet the criteria in section 26.
39. Taxes.
a. Taxes that a governmental unit is
legally required to pay are allowable, except
for self -assessed taxes that
disproportionately affect Federal programs
or changes in tax policies that
disproportionately affect Federal programs.
This provision becomes effective for taxes
paid during the governmental unit's first
fiscal year that begins on or after January 1,
1998, and applies thereafter.
b. Gasoline taxes, motor vehicle fees, and
other taxes that are in effect user fees for
-benefits provided to the Federal
Government are allowable.
c. This provision does not restrict the
authority of Federal agencies to identify
taxes where Federal participation is
inappropriate. Where the identification of
the amount of unallowable taxes would
require an inordinate amount of effort, the
cognizant agency may accept a reasonable .
approximation thereof.
PP-ge 124 - Appendix I October 1997 Federal Grants Management Handbook
(8/29/97)
Office of Management and Budget Circular A-87
40. Training. The cost of training
provided for employee development is
allowable.
41. Travel costs.
a. General. Travel costs are allowable for
expenses for transportation, lodging,
subsistence, and related items incurred by
employees traveling on official business.
Such costs may be charged on an actual cost
basis, on a per diem or mileage basis in lieu
of actual costs incurred, or on a combination
of the two, provided the method used is
applied to an entire trip, and results in
charges consistent with those normally
allowed in like circumstances in non -
federally -sponsored activities.
Notwithstanding the provisions of section
23, travel costs of officials covered by that
section, when specifically related to Federal
awards, are allowable with the prior
approval of a grantor agency.
b. Lodging and subsistence. Costs
incurred by employees and officers for
travel, including costs of lodging, other
subsistence, and incidental expenses, shall
be considered reasonable and allowable
only to the extent such costs do not exceed
charges normally allowed by the
governmental unit in its regular operations
as a result of the governmental unit's
policy. In the absence of a written
governmental unit policy regarding travel
costs, the rates and amounts established
under subchapter I of Chapter 57 of Title 5,
United States Code "Travel and Subsistence
Expenses; Mileage Allowances," or by the
Administrator of General Services, or the ,r
President (or his designee) pursuant to any
provisions of such subchapter shall be used
as guidance for travel under Federal awards
(41 U.S.C. 420, "Travel Expenses of
Government Contractors").
c. Commercial air travel. Airfare costs in
excess of the customary standard (coach or
equivalent) airfare, are unallowable except
when such accommodations would: require
circuitous routing, require travel during
unreasonable hours, excessively prolong
travel, greatly increase the duration of the
flight, result in increased cost that would
offset transportation savings, or offer -
accommodations not reasonably adequate
for the medical needs of the traveler. Where
a governmental unit can reasonably
demonstrate to the awarding agency either
the nonavailability of customary standard
airfare or Federal Government contract
airfare for individual trips or, on an overall
basis, that it is the governmental units.
practice to make routine .use of such airfare,
specific determinations of nonavailability
will generally not be questioned by the
Federal Government, unless a pattern of
avoidance is detected. However, in order for
airfare costs in excess of the customary
standard commercial airfare to be allowable,
e.g., use of first-class airfare, the
governmental unit must justify and
document on a case -by -case basis the
applicable condition(s) set forth above.
d. Air travel by other than commercial
carrier. Cost of travel by governmental
unit -owned, -leased, or -chartered aircraft,
as used in this section, includes the cost of
lease, charter, operation (including
personnel costs), maintenance, depreciation,
interest, insurance, and other related costs.
Costs of travel via governmental unit -
owned, -leased, or -chartered aircraft are
unallowable to the extent they exceed the
cost of allowable commercial air travel, as
provided for in subsection c.
42. Underrecovery of costs under Federal
agreements. Any excess costs over the
Federal contribution under one award
agreement are unallowable under other
award agreements.
Attachment C — State/Local-Wide
Central Service Cost Allocation Plans
'fable of Contents
A. General
B. Definitions
L Billed central services
2. Allocated central services
3. Agency or operating agency
C. Scope of the Central Service Cost
Allocation Plans
D. Submission Requirements
E. Documentation Requirements for
Submitted Plans
1. General
2. Allocated central services
3. Billed services
a. General
b. Internal service funds
c. Self-insurance funds
d. Fringe benefits
4. Required certification
F. Negotiation and Approval of Central
Service Plans
G. Other Policies
1. Billed central service activities
2. Working capital reserves
3. Carry -forward adjustments of
allocated central service costs
4. Adjustments of billed central services
5. Records retention
6. Appeals
7. OMB assistance
A. General
1. Most governmental units provide
certain services, such as motor pools,
computer centers, purchasing, accounting,
etc., to operating agencies on a centralized
basis. Since federally -supported awards are
performed within the individual operating
agencies, there needs to be a process
whereby these central service costs can be
identified and assigned to benefitted
activities on a reasonable and consistent
basis. The central service cost allocation
plan provides that process. All costs and
other data used to distribute the costs
included in the plan should be supported by
formal accounting and other records that
will support the propriety of the costs
assigned to Federal awards.
2. Guidelines and illustrations of central
service cost allocation plans are provided in
a brochure published by the Department of
Health and Human Services entitled "A
Guide for State and Local Government
Agencies: Cost Principles and Procedures
for Establishing Cost Allocation Plans and
Indirect Cost Rates for Grants and Contracts
with the Federal Government." A copy of
this brochure may be obtained from the
Superintendent of Documents, U.S.
Government Printing Office,
B. Definitions
1. "Billed central services" means central
services that are billed to benefitted
agencies and/or programs on an individual
fee -for -service or similar basis. Typical
examples of billed central services include
computer services, transportation services,
insurance, and fringe benefits.
2. "Allocated central services" means
central services that benefit operating
agencies but are not billed to the agencies
on a fee -for -service or similar basis. These
costs are allocated to benefitted agencies on
some reasonable basis. Examples of such
services might include general accounting,
personnel administration, purchasing, etc.
3. "Agency or operating agency" means
an organizational unit or sub -division within
a governmental unit that is responsible for
the performance or administration of awards
or activities of the governmental unit.
C. Scope of the Central Service Cost
Allocation Plans
The central service cost allocation plan
will include all central service costs that
will be claimed (either as a billed or an
Grants Management Advisory Service
October 1997
Appendix I • Page 125
Office of Management and Budget Circular A-87
(8/29/97)
allocated cost) under Federal awards and
will be documented as described in section
E. Costs of central services omitted from th
plan will not be reimbursed.
D. Submission Requirements
1. Each State will submit a plan to the
Department of Health and Human Services
for each year in which it claims central
service costs under Federal awards, The
plan should include (a) a projection of the
next year's allocated central service cost
(based either on actual costs for the most
recently completed year or the budget
projection for the arming year), and (b) a
reconciliation of actual allocated central
service costs to the estimated costs used for
either the most recently completed year or
the year immediately preceding the most,,
recently completed year.
2. Each local government that has been
designated as a "major local government"
by the Office of Management and Budget
(OMB) is also required to submit a plan to
its cognizant agency annually. OMB
periodically lists major local governments
in the Federal Register.
3. All other local governments claiming
central service costs must develop a plan in
accordance with the requirements described in
this Circular and maintain the plan and related
supporting documentation for audit. These
local governments are not required to submit
their plans for Federal approval unless they
are specifically requested to do so by the
cognizant agency. Where a local government
only receives funds as a sub -recipient, the
primary recipient will be responsible for
negotiating indirect cost rates and/or
monitoring the sub -recipient's plan.
4_ All central service cost allocation plans
will be prepared and, when required,
submitted within six months prior to the
beginning of each of the governmental
unit's fiscal years in which it proposes to
claim central service costs. Extensions may
be granted by the cognizant agency on a
case -by -case basis.
F. Documentation Requirements for
Submitted Plans
The documentation requirements
described in this section may be modified,
expanded, or reduced by the cognizant
agency on a case -by -case basis. For
example, the requirements may be reduced
for those central services which have little
or no impact on Federal awards.
Conversely, if a review of a plan indicates
that certain additional_infonnation is
needed, and will likely be needed in future
years, it may be routinely requested in
e future plan submissions. Items marked with
an asterisk (*) should be submitted only
once; subsequent plans should merely
indicate any changes since the last plan.
1. General. All proposed plans must be
accompanied by the following: an
organization chart sufficiently detailed to
show operations including the central
service activities of the State/local
government whether or not they are shown
as benefiting from central service functions;
a copy of the Comprehensive Annual
Financial Report (or a copy of the Executive
Budget if budgeted costs are being
proposed) to support the allowable costs of
each central service activity included in the
plan; and, a certification (see subsection 4.)
that the plan was prepared in accordance
with this Circular, contains only allowable
costs, and was prepared in a manner that
treated similar costs consistently among the
various Federal awards and between Federal
and non -Federal awards/activities.
2. Allocated central services. For each
allocated central service, the plan must also
include the following; a brief description of
the service*, an identification of the unit
rendering the service and the operating "
agencies receiving the service, the items of
expense included in the cost of the service,
the method used to distribute the cost of the
service to benefitted agencies, and a
summary schedule showing the allocation of
each service to the specific benefitted
agencies. If any self-insurance funds or
fringe benefits costs are treated as allocated
(rather than billed) central services,
documentation discussed in subsections 3.b.
and c. shall also be included.
3. Billed services.
a. General. The information described
below shall be provided for all billed central
services, including internal service funds, self-
insurance funds, and fringe benefit funds.
b. Internal service funds.
(1) For each internal service fund or
similar activity with an operating budget of
$5 million or more, the plan shall include; a
brief description of each service; a balance
sheet for each fund based on individual
accounts contained in the governmental
unit's accounting system; a revenue/
expenses statement, with revenues broken
out by source, e.g., regular billings, interest
earned, etc.; a listing of all non -operating
transfers (as defined by Generally Accepted
Accounting Principles (GAAP)) into and
out of the fund; a description of the
Procedures (methodology) used to charge
the costs of each service to users, including
how billing rates are determined; a schedule
of current rates; and, a schedule comparing
total revenues (including imputed revenues)
generated by the service to the allowable
costs of the service, as determined under
this Circular, with an explanation of how
variances will be handled.
(2) Revenues shall.consist of all revenues
generated by the service, including unbilled
and uncollected revenues. If some users
were not billed for the services (or were not
billed at the full rate for that class of users),
a schedule showing the full imputed
revenues associated with these users shall
be provided. Expenses shall be broken out
by object cost categories (e.g., salaries,
supplies, etc.).
C. Self-insurance funds. For each self-
insurance fund, the plan shall include: the
fund balance sheet; a statement of revenue
and expenses including a summary of
billings and claims paid by agency; a
listing of all non -operating transfers into
and out of the fund; the type(s) of risk(s)
covered by the fund (e.g., automobile
liability, workers' compensation, etc.); an
explanation of how the level of fund
contributions are determined, including a
copy of the current actuarial report (with
the actuarial assumptions used) if the
contributions are determined on an
actuarial basis; and, a description of the
procedures used to charge or allocate fund
contributions to benefitted activities.
Reserve levels in excess of claims (1)
submitted and adjudicated but not paid,
(2) submitted but not adjudicated, and (3)
incurred but not submitted must be
identified and explained.
d. Fringe benefits. For fringe benefit
costs, the plan shall include: a listing of
fringe benefits provided to covered
employees, and the overall annual cost of
each type of benefit; current fringe benefit
policies*; and procedures used to charge or
allocate the costs of the benefits to
benefitted activities. In addition, for pension
and post -retirement health insurance plans,
.the following information shall be provided:
the governmental unit's funding policies,
e.g., legislative bills, trust agreements, or
State -mandated contribution rules, if
different from actuarially determined rates;
the pension plan's costs accrued for the
year; the amount funded, and date(s) of
funding; a copy of the current actuarial
report (including the actuarial assumptions);
[he plan trustee's report; and, a schedule
Page 126 - Appendix I October 1997 Federal Grants Management Handbook
(8/29/97)
Office of Management and Budget Circular A-87
�± from the activity showing the value of the
interest cost associated with late funding.
4. Required certification, Each central
service cost allocation plan will be
accompanied by a certification in the
following form:
Certificate of Cost Allocation Plan
This is to certify that I have reviewed the
cost allocation plan submitted herewith and
to the best of my knowledge and belief:
(1) All costs included in this proposal
[identify date] to establish cost allocations
or billings for [identify period covered by
plan] are allowable in accordance with the
requirements of OMB Circular A-87, "Cost
Principles for State and Local
Governments," and the Federal award(s) to
which they apply. Unallowable costs have
been adjusted for in allocating costs as
indicated in the cost allocation plan.
(2).All costs included in this proposal are
properly allocable to Federal awards on the
basis of a beneficial or causal relationship
between the expenses incurred and the
awards to which they are allocated in
accordance with applicable requirements.
Further, the same costs that have been
treated as indirect costs have not been
claimed as direct costs. Similar types of
costs have been accounted for consistently.
I declare that the foregoing is true and
correct.
Governmental Un
Signature
Name of Official
Title
Date of Execution
F. Negotiation and Approval of Central
Service Plans
1. All proposed central service cost
allocation plans that are required to be
submitted will be reviewed, negotiated, and
approved by the Federal cognizant agency
on a timely basis. The cognizant agency will
review the proposal within six months of
receipt of the proposal and either negotiate/
approve the proposal or advise the
governmental unit of the additional
documentation needed to supportlevaluate
the proposed plan or the changes required to
make the proposal acceptable. Once an
agreement with the governmental unit has
been reached, the agreement will be
accepted and used by all Federal agencies,
unless prohibited or limited by statute,
Where a Federal funding agency has reason
to believe that special operating factors
affecting its awards necessitate special
consideration, the funding agency will, prior
to the time the plans are negotiated, notify
the cognizant agency.
2. The results of each negotiation shall be
formalized in a written agreement between
the cognizant agency and the governmental
unit. This agreement will be subject to re-
opening if the agreement is subsequently
found to violate a statute or the information
upon which the plan was negotiated is later
found to be materially incomplete or
inaccurate. The results of the negotiation
shall be made available to all Federal
agencies for their use.
3. Negotiated cost allocation plans based
on a proposal later found to have included
costs that: (a) are unallowable (i) as
specified by law or regulation, (ii) as
identified in Attachment B of this Circular,
or (iii) by the terms and conditions of
Federal awards, or (b) are unallowable
because they are clearly not allocable to
Federal awards, shall be adjusted, or a
refund shall be made at the option of the
Federal cognizant agency. These
adjustments or refunds are designed to
correct the plans and do not constitute a
reopening of the negotiation, 1.
G. Other Policies
1. Billed central service activities. Each
billed central service activity must
separately account for all revenues
(including imputed revenues) generated by
the service, expenses incurred to furnish the
service, and profit/loss.
2. Working capital reserves, Internal
service funds are dependent upon a
reasonable level of working capital reserve
to operate from one billing cycle to the next.
Charges by an internal service activity to
provide for the establishment and
maintenance of a reasonable level of
working capital reserve, in addition to the
full recovery of costs, are allowable. A
working capital reserve as part of retained
earnings of up to 60 days cash expenses for
normal operating purposes is considered
reasonable, A working capital reserve .
exceeding 60 days may be approved by the
cognizant Federal agency in exceptional
cases.
3. Carryforward adjustments of
allocated central service costs. Allocated
central service costs are usually negotiated
and approved for a future fiscal year on a
"Fixed with carry -forward" basis, Under this
procedure, the fixed amounts for the future
year covered by agreement are not subject
to adjustment for that year. However, when
the actual costs of the year involved become
known, the differences between the fixed
amounts previously approved and the actual
costs will be carried forward and used as an
adjustment to the fixed amounts established
for a later year. This "carry -forward"
procedure applies to all central services
whose costs were fixed in the approved
plan. However, a carry -forward adjustment
is not permitted, for a central service
activity that was not included in the
approved plan, or for unallowable costs that
must be reimbursed immediately.
4. Adjustments of billed central services.
Billing rates used to charge Federal awards
shall be based on the estimated costs of
providing the services, including an
estimate of the allocable central service
costs. A comparison of the revenue
generated by each billed service (including
total revenues whether or not billed or
collected) to the actual allowable costs of
the service will be made at least annually,
and an adjustment will be made for the
difference between the revenue and the
allowable costs. These adjustments will
be made through one of the following
adjustment methods: (a) a cash refund to
the Federal Government for the Federal
share of the adjustment, (b) credits to the
amounts charged to the individual
programs,
(c) adjustments to future billing rates, or
(d) adjustments to allocated central
service costs. Adjustments to allocated
central services will not be permitted
where the total amount of the adjustment
for a particular service (Federal share and
non -Federal) share exceeds $500,000.
5. Records retention. All central service
cost allocation plans and related
documentation used as a basis for claiming
costs under Federal awards must be retained
for audit in accordance with the records
retention requirements contained in the
Common Rule,
6. Appeals. If a dispute arises in the
negotiation of a plan between the cognizant
agency and the governmental unit, the
dispute shall be resolved in accordance with
the appeals procedures of the cognizant
agency.
7. OMB assistance. To the extent that
problems are encountered among the
Federal agencies and/or governmental units
in connection with the negotiation and
approval process, OMB will lend
assistance, as required, to resolve such
problems in a timely manner.
Grants Management Advisory Service October 1997 Appendix I • Page 127
Office of Management and Budget Circular A-87
(8/29/97)
Attachment D — Public Assistance Cost
Allocation Plans
Table of Contents
A. General
B. Definitions
1. State public assistance agency
2. State public assistance agency costs
C. Policy
D. Submission, Documentation, and
Approval of Public Assistance Cost
Allocation Plans
E, Review of Implementation of Approved
Plans
F. Unallowable Costs
A. General
Federally -financed programs
administered by State public assistance
agencies are funded predominately by the
Department of Health and Human Services
(HHS). In support of its stewardship
requirements, HHS has published
requirements for the development,
documentation, submission, negotiation,
and approval of public assistance cost
allocation plans in Subpart E of 45 CFR
Part 95, All administrative costs (direct
and indirect) are normally charged to
Federal awards by implementing the public
assistance cost allocation plan. This
Attachment extends these requirements to
all Federal agencies whose programs are
administered by a State public assistance
agency. Major federally -financed
programs typically administered by State
public assistance agencies include: Aid to
Families with Dependent Children,
Medicaid, Food Stamps, Child Support
Enforcement, Adoption, Assistance and
Foster Care, and Social Services Block
Grant.
B. Definitions
1. "State public assistance agency" means
a State agency administering or supervising
the administration of one or more public
assistance programs operated by the State as
identified in Subpart E of 45 CFR Part 95.
For the purpose of this Attachment, these
programs include all programs administered
by the State public assistance agency.
2. "State public assistance agency costs"
means all costs incurred by, or allocable to,
the State public assistance agency, except
expenditures for financial assistance,
medical vendor payments, food stamps, and
payments for services and goods provided
directly to program recipients.
C. Policy
State public assistance agencies will
develop, document and implement, and the
Federal Government will review, negotiate,
and approve, public assistance cost
allocation plans in accordance with Subpart
E of 45 CFR Part 95. The plan will include
all programs administered by the State
public assistance agency. Where a letter of
approval or disapproval is transmitted to a
State public assistance agency in
accordance with Subpart E, the letter will
apply to all Federal agencies and programs.
The remaining sections of this Attachment
(except for the requirement for certification)
summarize the provisions of Subpart E of
45 CFR Part 95.
D. Submission, Documentation, and
Approval of Public Assistance Cost
Allocation Plans
I. State public assistance agencies are
required to promptly submit amendments to
the cost allocation plan to HHS for review
and approval.
2. Under the coordination process
outlined in subsection E, affected Federal
agencies will review all new plans and plan
amendments and provide comments, as
appropriate, to HHS. The effective date of '
the plan or plan amendment will be the first
day of the quarter following the submission
of the plan or amendment, unless another
date is specifically approved by HHS. HHS,
as the cognizant agency acting on behalf of
all affected Federal agencies, will, as
necessary, conduct negotiations with the
State public assistance agency and will
inform the State agency of the action taken
on the plan or plan amendment.
E. Review of Implementation of
Approved Plans
1. Since public assistance cost allocation
plans are of a narrative nature, the review
during the plan approval process consists of
evaluating the appropriateness of the
proposed groupings of costs (cost centers)
and the related allocation bases. As such,
the Federal Government needs some
assurance that the cost allocation plan has
been implemented as approved. This is
accomplished by reviews by the funding
agencies, single audits, or audits conducted
by the cognizant audit agency.
2. Where inappropriate charges affecting
more than one funding agency are
identified, the cognizant HHS cost negotiation
office will be advised and will take the lead in
resolving the issue(s) as provided for in
Subpart E of 45 CFR Part 95.
3. If a dispute arises in the negotiation of
a plan or from a disallowance involving two
or more funding agencies, the dispute shall
be resolved in accordance with the appeals
procedures set out in 45 CFR Part 75.
Disputes involving only one funding agency
will be resolved in accordance with the
funding agency's,appeal process.
4..To the extent that problems are
encountered among the Federal agencies
and/or governmental units in connection
with the negotiation and approval process,
the Office of Management and Budget will
lend assistance, as required, to resolve such
problems in a timely manner.
F. Unallowable Costs
Claims developed under approved cost
allocation plans will be based on allowable
costs as identified in this Circular. Where
unallowable costs have been claimed and
reimbursed, they will be refunded to the
program that reimbursed the unallowable
cost using one of the following methods: (a)
a cash refund, (b) offset to a subsequent
claim, or (c) credits to the amounts charged
to individual awards.
Attachment E — State and Local Indirect
Cost Rate Proposals
Table of Contents
A: General
B. Definitions
I. Indirect cost rate proposal
2. Indirect cost rate
3. Indirect cost pool
4. Base
5. Predetermined rate
b. Fixed rate
7. Provisional rate
8. Final rate
9. Base period
C. Allocation of Indirect Costs and
Determination of Indirect Cost Rates
1. General
2. Simplified method
3. Multiple allocation base method
4. Special indirect cost rates
D. Submission and Documentation of
Proposals
1. Submission of indirect cost rate
proposals
2. Documentation of proposals
3. Required certification
E. Negotiation and Approval of Rates
Page 128 • Appendix I October 1997 Federal Grants Management Handbook
(8/29/97)
F. Other Policies
1. Fringe benefit rates
2. Billed services provided by the grantee
agency
3. Indirect cost allocations not using rates
4. Appeals
5. Collections of unallowable costs and
erroneous payments
6.OMB assistance
A. General
1. Indirect costs are those that have been
incurred for common or joint purposes.
These costs benefit more than one cost
objective and cannot be readily identified
with a particular final cost objective without
effort disproportionate to the results
achieved. After direct costs have been
determined and assigned directly to Federal
awards and other activities as appropriate,
indirect costs are those remaining to be
allocated to benefitted cost objectives. A
cost may not be allocated to a Federal award
as an indirect cost if any other cost incurred
for the same purpose, in like circumstances,
has been assigned to a Federal award as a
direct cost.
2. Indirect costs include (a) the indirect
costs originating in each department or
agency of the governmental unit carrying
out Federal awards and (b) the costs of
central governmental services distributed
through the central service cost allocation
plan (as described in Attachment C) and not
otherwise treated as direct costs.
3. Indirect costs are normally charged to
Federal awards by the use of an indirect,cost
rate. A separate indirect cost rate(s) is
usually necessary for each department or
agency of the governmental unit claiming
indirect costs under Federal awards.
Guidelines and illustrations of indirect cost
proposals are provided in a brochure
published by the Department of Health and
Human Services entitled "A Guide for State
and Local Government Agencies: Cost
Principles and Procedures for Establishing
Cost Allocation Plans and Indirect Cost
Rates for Grants and Contracts with the
Federal Government." A copy of this
brochure may be obtained from the
Superintendent of Documents, U.S.
Government Printing Office.
4. Because of the diverse characteristics
and accounting practices of governmental
units, the types of costs which may be
classified as indirect costs cannot be
specified in all situations. However, typical
examples of indirect costs may include
certain State/local-wide central service
Office of Management and Budget Circular A-87
costs, general administration of the grantee
department or agency, accounting and
personnel services performed within the
grantee department or agency, depreciation
or use allowances on buildings and
equipment, the costs of operating and
maintaining facilities, etc.
5. This Attachment does not apply to State
public assistance agencies. These agencies
should refer instead to Attachment D.
B. Definitions
1. "Indirect cost rate proposal" means the
documentation prepared by a governmental
unit or subdivision thereof to substantiate its
request for the establishment of an indirect
cost rate.
2. "Indirect cost rate" is a device for
determining in a reasonable manner the
proportion of indirect costs each program
should bear. It is the ratio (expressed as a
percentage) of the indirect costs to a direct
cost base.
3. "Indirect cost pool" is the accumulated
costs that jointly benefit two or more
programs or other cost objectives.
4. "Base" means the accumulated direct
costs (normally either total direct salaries
and wages or total direct costs exclusive of
any extraordinary or distorting
expenditures) used to distribute indirect
costs to individual Federal awards. The
direct cost base selected should result in
each award bearing a fair share of the
indirect costs in reasonable relation to the
benefits received from the costs.
5. "Predetermined rate" means an indirect
cost rate, applicable to a specified current or
future period, usually the governmental
unit's fiscal year. This rate is based on an
estimate of the costs to be incurred during
the period. Except under very unusual
circumstances, a predetermined rate is not
subject to adjustment. (Because of legal
constraints, predetermined rates are not
permitted for Federal contracts; they may,
however, be used for grants or cooperative
agreements.) Predetermined rates may not
be used by governmental units that have not
submitted and negotiated the rate with the
cognizant agency. In view of the potential
advantages offered by this procedure,
negotiation of predetermined rates for
indirect costs for a period of two to four
years should be the norm in those situations
where the cost experience and other
pertinent facts available are deemed
sufficient to enable the parties involved to
reach an informed judgment as to the
probable level of indirect costs during the
ensuing accounting periods.
6. "Fixed rate" means an indirect cost rate
which has the same characteristics as a
predetermined rate, except that the
difference between the estimated costs and
the actual, allowable costs of the period
covered by the rate is carried forward as an
adjustment to the rate computation of a
subsequent period.
7. "Provisional rate" means a temporary
indirect cost rate applicable to a specified
period which is used for funding, interim
reimbursement, and reporting indirect costs
on Federal awards pending the
establishment of a "final" rate for that
period.
8. "Final rate" means an indirect cost rate
applicable to a specified past period which
is based on the actual allowable costs of the
period. A final audited rate is not subject to
adjustment.
9. "Base period" for the allocation of
indirect costs is the period in which such
costs are incurred and accumulated for
allocation to activities performed in that
period. The base period normally should
coincide with the governmental unit's fiscal
year, but in any event, shall be so selected
as to avoid inequities in the allocation of
costs.
C. Allocation of Indirect Costs and
Determination of Indirect Cost Rates
1. General.
a. Where a governmental unit's
department or agency has only one major
function, or where all its major functions
benefit from the indirect costs to
approximately the same degree, the
allocation of indirect costs and the
computation of an indirect cost rate may be
accomplished through simplified allocation
procedures as described in subsection 2.
b. Where a governmental unit's
department or agency has several major
functions which benefit from its indirect
costs in varying degrees, the allocation of
indirect costs may require the accumulation
of such costs into separate cost groupings
which then are allocated individually to
benefitted functions by means of a base
which best measures the relative degree of
benefit. The indirect costs allocated to each
function are then distributed to individual
awards and other activities included in that
function by means of an indirect cost
rate(s).
c. Specific methods for allocating indirect
costs and computing indirect cost rates
along with the conditions under which each
Grants Management Advisory Service
October 1997
Appendix I - Page 129
Office of Management and Budget Circular A-87
method should be used are described in
subsections 2, 3 and 4.
2. Simplified method.
a. Where a grantee agency's major
functions benefit from its indirect costs to
approximately the same degree, the
allocation of indirect costs may be
accomplished by (1) classifying the grantee
agency's total costs for the base period as
either direct or indirect, and (2) dividing the
total allowable indirect costs (net of
applicable credits) by an equitable'
distribution base. The result of this process
is an indirect cost rate which is used to
distribute indirect costs to individual Federal
awards. The rate should be expressed as the
percentage which the total amount of
allowable indirect costs bears to the base
selected. This method should also be used
where a governmental unit's department or
agency has only one major function
encompassing a number of individual
projects or activities, and may be used where
the level of Federal awards to that
department or agency is relatively small.
b. Both the direct costs and the indirect
costs shall exclude capital expenditures and
unallowable costs. However, unallowable
costs must be included in the direct costs if
they represent activities to which indirect
costs are properly allocable.
c. The distribution base may be (1) total
direct costs (excluding capital expenditures
and other distorting items, such as pass -
through funds, major subcontracts, etc.), (2)
direct salaries and wages, or (3) another
base which results in an equitable
distribution.
3. Multiple allocation base method.
a. Where a grantee agency's indirect costs
benefit its major functions in varying
degrees, such costs shall be accumulated
into separate cost groupings. Each grouping
shall then be allocated individually to
benefitted functions by means of a base
which best measures the relative benefits.
b. The cost groupings should be
established so as to permit the allocation of
each grouping on the basis of benefits
provided to the major functions. Each
grouping should constitute a pool of
expenses that are of like character in terms
of the functions they benefit and in terms of
the: allocation base which best measures the
relative benefits provided to each function.
The number of separate groupings should be
held within practical limits, taking into
consideration the materiality of the amounts
involved and the degree of precision
needed.
c. Actual conditions must be taken into
account in selecting the base to be used in
allocating the expenses in each grouping to
benefitted functions. When an allocation
can be made by assignment of a cost
grouping directly to the function benefitted,
the allocation shall be made in that manner.
When the expenses in a grouping are more
general in nature, the allocation should be
made through the use of a selected base
which produces results that are equitable to
both the Federal Government and the
governmental unit. In general, any cost
element or related factor associated with the
governmental unit's activities is potentially
adaptable for use as an allocation base
provided that: (1) it can readily be expressed
in terms of dollars or other quantitative
measures (total direct costs, direct salaries and
wages, staff hours applied, square feet used,
hours of usage, number of documents
Processed, population served, and the like),
and (2) it is common to the benefitted
functions during the base period.
d. Except where a special indirect cost
rate(s) is required in accordance with
subsection 4, the separate groupings of
indirect costs allocated to each major function
shall be aggregated and treated as a common
pool for that function. The costs in the
common pool shall then be distributed to
individual Federal awards included in that
function by use of a single indirect cost rate.
e. The distribution base used in
computing the indirect cost rate for each
function may be (1) total direct costs
(excluding capital expenditures and other
distorting items such as pass -through funds,
major subcontracts, etc.), (2) direct salaries
and wages, or (3) another base which results
in an equitable distribution. An indirect cost
rate should be developed for each separate
indirect cost pool developed. The rate in
each case should be stated as the percentage
relationship between the particular indirect
cost pool and the distribution base identified
with that pool.
4. Special indirect cost rates.
a. Iri some instances, a single indirect cost
rate for all activities of a grantee department
or agency or for each major function of the
agency may not be appropriate. It may not
take into account those different factors
which may substantially affect the indirect
costs applicable to a particular program or
group of programs. The factors may include
the physical location of the work, the level
of administrative support required, the
nature of the facilities or other resources
employed, the organizational arrangements
(8/29/97)
used, or any combination thereof. When a
particular award is carried out in an
environment which appears to generate a
significantly different level of indirect costs,
provisions should be made for a separate
indirect cost pool applicable to that award.
The separate indirect cost pool should be
developed during the course of the regular
allocation process, and the separate indirect
cost rate resulting therefrom should be used,
provided that: (1) the rate differs
significantly from the rate which would
have been developed under subsections 2.
and 3„ and (2) the award to which the rate
would apply is material in amount.
b. Although this Circular adopts the
concept of the full allocation of indirect
costs, there are some Federal statutes which
restrict the reimbursement of certain
indirect costs. Where such restrictions exist,
it may be necessary to develop a special rate
for the affected award. Where a "restricted
rate" is required, the procedure for
developing a non -restricted rate will be used
except for the additional step of the
elimination from the indirect cost pool those
costs for which the law prohibits
reimbursement.
D. Submission and Documentation of
Proposals
1. Submission of indirect cost rate
proposals.
a. All departments or agencies of the
governmental unit desiring to claim indirect
costs under Federal awards must prepare an
indirect cost rate proposal and related
documentation to support those costs. The
proposal and related documentation must be
retained for audit in accordance with the
records retention requirements contained in
the Common Rule.
b. A governmental unit for which a
cognizant agency assignment has been
specifically designated must submit its
indirect cost rate proposal to its cognizant
agency. The Office of Management and
Budget (OMB) will periodically publish
lists of governmental units identifying the
appropriate Federal cognizant agencies. The
cognizant agency for all governmental units
or agencies not identified by OMB will be
determined based on the Federal agency
providing the largest amount of Federal
funds. In these cases, a governmental unit
must develop an indirect cost proposal in
accordance with the requirements of this
Circular and maintain the proposal and
related supporting documentation for audit.
These governmental units are not required
Page 130 • Appendix I October 1997 Federal Grants Management Handbook
(8/29/97)
to submit their proposals unless they are
specifically requested to do so by the
cognizant agency. Where a local
government only receives funds as a sub -
recipient, the primary recipient will be
responsible for negotiating and/or
monitoring the sub -recipient's plan,
c. Each Indian tribal government desiring
reimbursement of indirect costs must submit
its indirect cost proposal to the Department
of the Interior (its cognizant Federal
agency),
d. Indirect cost proposals must be
developed (and, when required, submitted)
within six months after the close of the
governmental unit's fiscal year, unless an
exception is approved by the cognizant
Federal agency. If the proposed central
service cost allocation plan for the same
period has not been approved by that time,
the indirect cost proposal may be prepared
including an amount for central services that
is based on the latest federally -approved
central service cost allocation plan. The
difference between these central service
amounts and the amounts ultimately
approved will be compensated for by an
adjustment in a subsequent period.
2. Documentation of proposals. The
following shall be included with each
indirect cost proposal:
a. The rates proposed, including
subsidiary work sheets and other relevant
data, cross referenced and reconciled to the
financial data noted in subsection b.
Allocated central service costs will be
supported by the summary table included in'
the approved central service cost allocation
plan. This summary table is not required to
be submitted with the indirect cost proposal
if the central service cost allocation plan for
the same fiscal year has been approved by
the cognizant agency and is available to the
funding agency.
b. A copy of the financial data (financial
statements, comprehensive annual financial
report, executive budgets, accounting
reports, etc,) upon which the rate is based.
Adjustments resulting from the use of
unaudited data will be recognized, where
appropriate, by the Federal cognizant
agency in a subsequent proposal.
c. The approximate amount of direct base
costs incurred under Federal awards. These
costs should be broken out between salaries
and wages and other direct costs.
d. A chart showing the organizational
structure of the agency during the period for
which the proposal applies, along with a
functional statement(s) noting the duties
Office of Management and Budget Circular A-87
and/or responsibilities of all units that
comprise the agency. (Once this is
submitted, only revisions need be submitted
with subsequent proposals.)
3. Required certification. Each indirect
cost rate proposal shall be accompanied by
a certification in the following form:
Certificate of Indirect Costs
This is to certify that I have reviewed the
indirect cost rate proposal submitted
herewith and to the best of my knowledge
and belief:
(1) All costs included in this proposal
[identify date] to establish billing or final
indirect costs rates for [identify period
covered by rate] are allowable in
accordance with the requirements of the
Federal award(s) to which they apply and
OMB Circular A-87, "Cost Principles for
State and Local Governments."
Unallowable costs have been adjusted for in
allocating costs as indicated in the cost
allocation plan.
(2) All costs included in this proposal are
properly allocable to Federal awards on the
basis of a beneficial or causal relationship
between the expenses incurred and the
agreements to which they are allocated in
accordance with applicable requirements.
Further, the same costs that have been
treated as indirect costs have not been
claimed as direct costs. Similar types of
costs have been accounted for consistently
and the Federal Government will be notified
of any accounting changes that would affect
the predetermined rate.
I declare that the foregoing is true and
correct.
Governmental Unit
Signature
Name of Official
Title
Date of Execution:
E. Negotiation and Approval of Rates
- 1. Indirect cost rates will be reviewed,
negotiated, and approved by the cognizant
Federal agency on a timely basis. Once a
rate has been agreed upon, it will be
accepted and used by all Federal agencies
unless prohibited or limited by statute.
Where a Federal funding agency has reason
to believe that special operating factors
affecting its awards necessitate special
indirect cost rates, the funding agency will,
prior to the time the rates are negotiated,
notify the cognizant Federal agency,
2. The use of predetermined rates, if
allowed, is encouraged where the cognizant
agency has reasonable assurance based on
past experience and reliable projection of
the grantee agency's costs, that the rate is
not likely to exceed a rate based on actual
costs. Long-term agreements utilizing
predetermined rates extending over two or
more years are encouraged, where
appropriate.
3. The results of each negotiation shall be
formalized in a written agreement between the
cognizant agency and the governmental unit.
This agreement will be subject to re -opening if
the agreement is subsequently found to violate
a statute, or the information upon which the
plan was negotiated is later found to be
materially incomplete or inaccurate. The
agreed upon rates shall be made available to
all Federal agencies for their use.
4. Refunds shall be made if proposals are
later found to have included costs that (a)
are unallowable (i) as specified by law or
regulation, (ii) as identified in Attachment B
of this Circular, or (iii) by the terms and
conditions of Federal awards, or (b) are
unallowable because they are clearly not
allocable to Federal awards. These
adjustments or refunds will be made
regardless of the type of rate negotiated
(predetermined, final, fixed, or provisional).
F. Other Policies
1, Fringe benefit rates. If overall fringe
benefit rates are not approved for the
governmental unit as part of the central
service cost allocation plan, these rates will
be reviewed, negotiated and approved for
individual grantee agencies during the
indirect cost negotiation process. In these
cases, a proposed fringe benefit rate
computation should accompany the indirect
cost proposal, If fringe benefit rates are not
used at the grantee agency level (i.e., the
agency specifically identifies fringe benefit
costs to individual employees), the
governmental unit should so advise the
cognizant agency.
2. Billed services provided by the grantee
agency. In some cases, governmental units
provide and bill for services similar to those
covered by central service cost allocation
plans (e.g., computer centers). Where this
occurs, the governmental unit should be
guided by the requirements in Attachment C
relating to the development of billing rates
and documentation requirements, and
should advise the cognizant agency of any
billed services, Reviews of these types of
Grants Management Advisory Service October 1997 Appendix I - Page 131
Office of Management and Budget Circular A-87
0
- (8/29/97)
services (including reviews of costing/
billing methodology, profits or losses, etc.)
will be made on a case -by -case basis as
warranted by the circumstances involved.
3. Indirect cost allocations not using
rates. In certain situations, a governmental
unit, because of the nature of its awards,
may be required to develop a cost allocation
plan that distributes indirect (and, in some
cases, direct) costs to the specific funding
sources. In these cases, a narrative cost
allocation methodology should be
developed, documented, maintained for
audit, or submitted, as appropriate, to the
cognizant agency for review, negotiation,
and approval.
4. Appeals. If a dispute arises in a
negotiation of an indirect cost rate (or other
rate) between the cognizant agency and the
governmental unit, the dispute shall be
resolved in accordance with,the appeals
procedures of the cognizant agency.
S. Collection of unallowable costs and
erroneous payments. Costs specifically
(Thee nett page is Appendix 1, page 141.)
identified as unallowable and charged to
Federal awards either directly or indirectly
will be refunded (including interest
chargeable in accordance with applicable
Federal agency regulations).
6. OMB assistance. To the extent that
problems are encountered among the
Federal agencies and/or governmental units
in connection with the negotiation and
approval process, OMB will lend assistance,
as required, to resolve such problems in a
timely manner.
Page 132 • Appendix I October 1997 Federal Grants Management Handbook