PART 1108—DEFINITIONS OF TERMS USED IN SUBCHAPTERS A THROUGH F OF THIS CHAPTER Authority: 5 U.S.C. 301 and 10 U.S.C. 113. Source: 85 FR 51230, Aug. 19, 2020, unless otherwise noted. Subpart A—General § 1108.1 Purpose of this part. (a) This part provides: (1) Definitions of terms used in subchapters A through F of this chapter; and (2) Background information as context for understanding terms related to assistance and acquisition purposes, legal instruments that DoD Components make at the prime tier, and lower-tier transactions into which recipients and subrecipients enter when carrying out programs at lower tiers under DoD awards. (b) This part is, for DoD, the regulatory implementation of OMB guidance in subpart A of 2 CFR part 200. § 1108.2 Precedence of definitions of terms in national policy requirements. (a) General. (b) Examples. (i) A Governmentwide regulation currently codified by DoD at 32 CFR part 26, which implements the Drug-Free Workplace Act of 1988 as it applies to grants (41 U.S.C. chapter 81, as amended); (ii) A Government regulation currently codified by DoD at 32 CFR part 28, which implements restrictions on lobbying in 31 U.S.C. 1352; (iii) A DoD regulation at part 1125 of this chapter, which implements Governmentwide guidance on nonprocurement debarment and suspension (2 CFR part 180) that has bases both in statute (section 2455 of Public Law 103-355, 108 Stat. 3327) and in Executive orders 12549 and 12689; and (iv) Part 1122 of this chapter, which provides standard wording of terms and conditions related to a number of national policy requirements. (2) To illustrate that a term may be defined differently in conjunction with specific national policy requirements than it is in this part, the term “State” is defined differently in the drug-free workplace requirements at 32 CFR part 26, the lobbying restrictions at 32 CFR part 28, and Subpart B of this part. § 1108.3 Definitions of terms used in the Governmentwide cost principles or single audit requirements. (a) Some DoDGARs provisions state that DoD Components or recipients must comply with single audit or cost principles requirements in a Governmentwide issuance that contains defined terms and include the requirements by reference to the issuance without restating them. (b) For any term in one of those issuances, this part includes the definition of the term only if the DoDGARs also use that term directly. (c) If the DoDGARs only use the term indirectly, i.e., (1) The Single Audit Act requirements for audits of recipients and subrecipients that are in subpart F of OMB guidance in 2 CFR part 200; (2) The Governmentwide cost principles for institutions of higher education, nonprofit organizations, States, local governments, and Indian tribes that are contained in subpart E of OMB guidance in 2 CFR part 200; and (3) The cost principles for for-profit entities at Subpart 31.2 of the Federal Acquisition Regulation (FAR) at 48 CFR part 31, as supplemented by provisions of the Defense Federal Acquisition Regulation Supplement at subpart 231.2 of 48 CFR part 231. § 1108.4 Definitions of terms that vary depending on context. DoDGARs definitions of some terms related to types of legal instruments ( e.g., e.g., Subpart B—Definitions § 1108.10 Acquire. Acquire (a) When the term is used in connection with a DoD Component action at the prime tier, obtain property or services by purchase, lease, or barter for the direct benefit or use of the United States Government. (b) When the term is used in connection with a recipient action or a subrecipient action at a tier under a DoD Component's award: (1) Purchase services; (2) Obtain property under the award by: (i) Purchase; (ii) Construction; (iii) Fabrication; (iv) Development; (v) The recipient's or subrecipient's donation of the property to the project or program under the award to meet a cost-sharing or matching requirement ( i.e., (vi) Otherwise. § 1108.15 Acquisition. Acquisition (a) Paragraph (a) of § 1108.10 when used in connection with DoD Component actions at the prime tier. (b) Paragraph (b) of § 1108.10 when used in connection with recipient or subrecipient actions at a lower tier under a DoD Component's award. § 1108.20 Acquisition cost. Acquisition cost (a) For example, when used in conjunction with: (1) The purchase of equipment, the term 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. (2) Equipment that a recipient or subrecipient constructs or fabricates—or software that it develops—under an award, the term includes, when capitalized in accordance with generally accepted accounting principles (GAAP): (i) The construction and fabrication costs of that equipment; and (ii) The development costs of that software. (b) Ancillary charges, such as taxes, duty, protective in-transit insurance, freight, and installation may be included in, or excluded from, the acquisition cost in accordance with the recipient's or subrecipient's regular accounting practices. § 1108.25 Administrative offset. Administrative offset § 1108.30 Advance payment. Advance payment § 1108.35 Advanced research. Advanced research i.e., § 1108.40 Agreements officer. Agreements officer § 1108.45 Applied research. Applied research § 1108.50 Approved budget. Approved budget (a) All Federal funding made available to the recipient under the award to use for project or program purposes. (b) Any cost sharing or matching that the recipient is required to provide under the award. (c) Any options that have been exercised but not any options that have not yet been exercised. § 1108.55 Assistance. Assistance § 1108.60 Award. Award § 1108.65 Award administration office. Award administration office § 1108.70 Basic research. Basic research (a) Research-related, science and engineering education and training, including graduate fellowships and research traineeships; and (b) Research instrumentation and other activities designed to enhance the infrastructure for science and engineering research. § 1108.75 Capital asset. Capital asset (a) Land, buildings (facilities), equipment, and intellectual property (including software) whether acquired by purchase, construction, manufacture, lease-purchase, exchange, or through capital leases; and (b) Additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations or alterations to capital assets that materially increase their value or useful life (not ordinary repairs and maintenance). § 1108.80 Claim. Claim § 1108.85 Cognizant agency for indirect costs. Cognizant agency for indirect costs (a) For an institution of higher education, nonprofit organization, State, local government, or Indian tribe is assigned as described in the appendices to 2 CFR part 200. See 2 CFR 200.19 for specific citations to those appendices. (b) For a for-profit entity, normally will be the agency with the largest dollar amount of pertinent business, as described in the Federal Acquisition Regulation at 48 CFR 42.003. § 1108.90 Contract. Contract § 1108.95 Contracting activity. Contracting activity § 1108.100 Contracting officer. Contracting officer § 1108.105 Contractor. Contractor § 1108.110 Cooperative agreement. Cooperative agreement § 1108.115 Co-principal investigator. Co-principal investigator § 1108.120 Cost allocation plan. Cost allocation plan (a) Central service cost allocation plan, as defined at 2 CFR 200.9 and described in Appendix V to 2 CFR part 200; or (b) Public assistance cost allocation plan as described in Appendix VI to 2 CFR part 200. § 1108.125 Cost sharing or matching. Cost sharing or matching § 1108.128 Cost type award. Cost-type award § 1108.130 Cost-type contract. Cost-type contract § 1108.135 Cost-type subaward. Cost-type subaward (a) A recipient or subrecipient makes to another entity at the next lower tier; and (b) Provides for payments to the entity that receives the cost-type subaward based on the actual, allowable costs it incurs in carrying out the subaward. § 1108.140 Debarment. Debarment (a) Nonprocurement instruments, which are in OMB guidance at 2 CFR part 180, as implemented by the DoD at 2 CFR part 1125; or (b) Procurement contracts, which are in the Federal Acquisition Regulation at 48 CFR 9.4. § 1108.145 Debt. Debt § 1108.150 Delinquent debt. Delinquent debt (a) That the debtor fails to pay by the date specified in the initial written notice from the agency owed the debt, normally within 30 calendar days, unless the debtor makes satisfactory payment arrangements with the agency by that date; and (b) With respect to which the debtor has elected not to exercise any available appeals or has exhausted all agency appeal processes. § 1108.155 Development. Development § 1108.160 Direct costs. Direct costs § 1108.165 DoD Components. DoD Components § 1108.170 Equipment. Equipment (a) $5,000; or (b) The recipient's or subrecipient's capitalization threshold for financial statement purposes. § 1108.175 Exempt property. (a) Exempt property (1) Has statutory authority to vest title in recipients (or allow for vesting in subrecipients) without further obligation to the Federal Government or subject to conditions the DoD Component considers appropriate; and (2) Elects to use that authority to do so. (b) An example of exempt property authority is contained in the Federal Grant and Cooperative Agreement Act (31 U.S.C. 6306) for tangible personal property acquired under an award to conduct basic or applied research by a nonprofit institution of higher education or nonprofit organization whose primary purpose is conducting scientific research. § 1108.180 Expenditures. Expenditures (a) The charges may be reported on a cash or accrual basis, as long as the methodology is disclosed and is consistently applied. (b) For reports prepared on a cash basis, expenditures are the sum of: (1) Cash disbursements for direct charges for property and services; (2) The amount of indirect expense charged; (3) The value of third-party in-kind contributions applied; and (4) The amount of cash advance payments and payments made to subrecipients. (c) For reports prepared on an accrual basis, expenditures are the sum of: (1) Cash disbursements for direct charges for property and services; (2) The amount of indirect expense incurred; (3) The value of third-party in-kind contributions applied; and (4) The net increase or decrease in the amounts owed by the recipient or subrecipient for: (i) Goods and other property received; (ii) Services performed by employees, contractors, subrecipients, and other payees; and (iii) Programs for which no current services or performance are required, such as annuities, insurance claims, or other benefit payments. § 1108.185 Federal interest. Federal interest (a) Federal share of total project costs; and (b) Current fair market value of the property, improvements, or both, to the extent the costs of acquiring or improving the property were included as project costs. § 1108.190 Federal share. Federal share § 1108.195 Fixed-amount award. Fixed-amount award § 1108.200 Fixed-amount subaward. Fixed-amount subaward (a) That a recipient or subrecipient makes to another entity at the next lower tier; and (b) Under which the total amount to be paid to the other entity is based on performance and results, and not on the actual, allowable costs that entity incurs. § 1108.205 Foreign organization. Foreign organization (a) A public or private organization that is located in a country other than the United States and its territories and is subject to the laws of the country in which it is located, irrespective of the citizenship of project staff or place of performance; (b) A private nongovernmental organization located in a country other than the United States and its territories that solicits and receives cash contributions from the general public; (c) A charitable organization located in a country other than the United States and its territories that is nonprofit and tax exempt under the laws of its country of domicile and operation, and is not a university, college, accredited degree-granting institution of education, private foundation, hospital, organization engaged exclusively in research or scientific activities, church, synagogue, mosque or other similar entity organized primarily for religious purposes; or (d) An organization located in a country other than the United States and its territories that is not recognized as a foreign public entity. § 1108.210 Foreign public entity. Foreign public entity (a) A foreign government or foreign governmental entity; (b) A public international organization, which is an organization entitled to enjoy privileges, exemptions, and immunities as an international organization under the International Organizations Immunities Act (22 U.S.C. 288-288f); (c) An entity owned (in whole or in part) or controlled by a foreign government; or (d) Any other entity consisting wholly or partially of one or more foreign governments or foreign governmental entities. § 1108.215 Grant. Grant (a) Of which the principal purpose is to transfer a thing of value to the recipient to carry out a public purpose of support or stimulation authorized by a law of the United States, rather than to acquire property or services for the DoD's direct benefit or use. (b) In which substantial involvement is not expected between DoD and the recipient when carrying out the activity contemplated by the award. § 1108.220 Grants officer. Grants officer § 1108.225 Indian tribe. Indian tribe § 1108.230 Indirect costs (also known as “Facilities and Administrative,” or F&A, costs). Indirect costs § 1108.235 Institution of higher education. Institution of higher education § 1108.240 Intangible property. Intangible property (a) Property having no physical existence, such as trademarks, copyrights, patents and patent applications; and (b) Property such as loans, notes and other debt instruments, lease agreements, stock and other instruments of property ownership, whether the property is considered tangible or intangible. § 1108.245 Local government. Local government (a) County; (b) Borough; (c) Municipality; (d) City; (e) Town; (f) Township; (g) Parish; (h) Local public authority, including any public housing agency under the United States Housing Act of 1937; (i) Special district; (j) School district; (k) Intrastate district; (l) Council of governments, whether or not incorporated as a nonprofit corporation under State law; and (m) Any other agency or instrumentality of a multi-, regional, or intra-state or local government. § 1108.250 Management decision. Management decision § 1108.255 Nonprocurement instrument. Nonprocurement instrument § 1108.260 Nonprofit organization. Nonprofit organization (a) Is operated primarily for scientific, educational, service, charitable, or similar purposes in the public interest; (b) Is not organized primarily for profit; and (c) Uses net proceeds to maintain, improve, or expand the operations of the organization. § 1108.265 Obligation. Obligation (a) When used in conjunction with a DoD Component's award, a legally binding agreement that will result in outlays, either immediately or in the future. Examples of actions through which a DoD Component incurs an obligation include the grants or agreements officer's signature of a grant, cooperative agreement, or technology investment agreement (or modification of such an award) authorizing the recipient to use funds under the award. (b) When used in conjunction with a recipient's or subrecipient's use of funds under an award or subaward, an order placed for property and services, a contract or subaward made, or a similar transaction, during a given period that requires payment during the same or a future period. § 1108.270 Office of Management and Budget. Office of Management and Budget § 1108.275 Outlays. Outlays § 1108.280 Participant support costs. Participant support costs § 1108.285 Period of performance. Period of performance § 1108.290 Personal property. Personal property § 1108.295 Principal investigator. Principal investigator (a) The single individual whom an organization that is carrying out a research project with DoD support designates as having an appropriate level of authority and responsibility for leading and directing the research intellectually and logistically, which includes the proper conduct of the research, the appropriate use of funds, and compliance with administrative requirements such as the submission of performance reports to DoD; or (b) If the organization designates more than one individual as sharing that authority and responsibility, the individual within that group identified by the organization as the one with whom the DoD Component's program manager generally should communicate as the primary contact for scientific, technical, and related budgetary matters concerning the project (others within the group are “co-principal investigators,” as defined in this subpart). § 1108.298 Prior approval. Prior approval § 1108.300 Procurement contract. Procurement contract § 1108.305 Procurement transaction. Procurement transaction § 1108.310 Program income. Program income (a) Program income includes, but is not limited to, income from: (1) Fees for services performed; (2) The use or rental of real or personal property for which the recipient or subrecipient is accountable under the award or subaward (whether acquired under the award or subaward, or other Federal awards from which accountability for the property was transferred); (3) The sale of commodities or items fabricated under the award or subaward; (4) License fees and royalties on patents and copyrights; and (5) Payments of principal and interest on loans made with award or subaward funds. (b) Program income does not include: (1) Interest earned on advances of Federal funds; (2) Proceeds from the sale of real property or equipment under the award; or (3) Unless otherwise specified in Federal statute or regulation, or the terms and conditions of the award or subaward: (i) Rebates, credits, discounts, and interest earned on any of them; or (ii) Governmental revenues, taxes, special assessments, levies, fines, and similar revenues raised by the recipient or subrecipient. § 1108.315 Project costs. Project costs (a) Allowable costs incurred under an award by the recipient, including costs of any subawards and contracts under the award; and (b) Cost-sharing or matching contributions that are required under the award, which includes voluntary committed (but not voluntary uncommitted) contributions and the value of any third-party in-kind contributions. § 1108.320 Property. Property § 1108.325 Real property. Real property § 1108.330 Recipient. Recipient § 1108.335 Research. Research § 1108.340 Simplified acquisition threshold. Simplified acquisition threshold § 1108.345 Small award. Small award § 1108.350 State. State, § 1108.355 Subaward. Subaward § 1108.360 Subrecipient. Subrecipient § 1108.365 Supplies. Supplies § 1108.370 Suspension. Suspension (a) When used in the context of a specific award or subaward, the temporary withdrawal of authority for that recipient or subrecipient to obligate funds under the award or subaward, pending its taking corrective action or a decision to terminate the award or subaward. (b) When used in the context of an entity, an action by a DoD Component's suspending official under 2 CFR part 1125, DoD's regulation implementing OMB guidance on nonprocurement debarment and suspension in 2 CFR part 180, to immediately exclude the entity from participating in covered Federal Government transactions, pending completion of an investigation and any legal or debarment proceedings that ensue. § 1108.375 Technology investment agreement. Technology investment agreement § 1108.380 Termination. Termination § 1108.385 Third-party in-kind contribution. Third-party in-kind contribution i.e., (a) A non-Federal third party contributes, without charge, either to a recipient or subrecipient at any tier under a DoD Component's award; and (b) Is identified and included in the approved budget of the DoD Component's award, as a contribution being used toward meeting the award's cost-sharing or matching requirement (which includes voluntary committed, but not voluntary uncommitted, contributions). § 1108.390 Total value. Total value (a) The Federal share and any non-Federal cost sharing or matching required under the award; and (b) Any options, even if not yet exercised, for which the costs have been established in the award. § 1108.395 Unique entity identifier. Unique entity identifier § 1108.400 Unobligated balance. Unobligated balance § 1108.405 Voluntary (committed or uncommitted) cost sharing. (a) Voluntary cost sharing i.e., (b) Voluntary committed cost sharing (c) Voluntary uncommitted cost sharing § 1108.410 Working capital advance. Working capital advance Appendix A to Part 1108—Background on Assistance, Acquisition, and Terms for Types of Legal Instruments I. Purpose of This Appendix This appendix provides background intended to clarify some terms: A. That are used in this chapter to describe either types of legal instruments that DoD Components, recipients, and subrecipients issue, or the purposes for which those types of instruments are used; and B. For which this part provides definitions that vary depending on the context within which the terms are used. II. Why Definitions of Some Terms Are Context-Dependent A. The DoDGARs contain both: 1. Direction to DoD Components concerning their award of grants and cooperative agreements at the prime tier; and 2. Terms and conditions that DoD Components include in their grants and cooperative agreements to specify the Government's and recipients' rights and responsibilities, including post-award requirements with which recipients' actions must comply. B. In some cases, the same defined term or two closely related terms are used in relation to both DoD Component actions at the prime tier and recipient or subrecipient actions at lower tiers under DoD Components' awards. But a given defined term may have meanings that differ at the two tiers. For example, in part because the Federal Grant and Cooperative Agreement Act applies to DoD Component actions at the prime tier but not to recipient or subrecipient actions at lower tiers (see sections III and IV of this appendix): 1. The terms “acquire” and “acquisition” do not have precisely the same meaning in conjunction with actions at the prime and lower tiers. 2. The meaning of the term “procurement contract” used to describe DoD Component prime-tier actions is not precisely the same as the meaning of “procurement transaction” or “contract” used to describe recipient or subrecipient actions at lower tiers. III. Background: Distinguishing Prime-Tier Relationships and Legal Instruments A. The Federal Grant and Cooperative Agreement Act (31 U.S.C. chapter 63) specifies that the type of legal instrument a DoD Component is to use is based on the nature of the relationship between the DoD Component and the recipient. B. Specifically, except where another statute authorizes DoD to do otherwise, 31 U.S.C. chapter 63 specifies use of: 1. A procurement contract as the legal instrument reflecting a relationship between a DoD Component and a recipient when the principal purpose of the relationship is to acquire property or services for the direct benefit or use of the Federal Government. 2. A grant or cooperative agreement as the legal instrument reflecting a relationship between those two parties when the principal purpose of the relationship is to transfer a thing of value to the recipient to carry out a public purpose of support or stimulation authorized by Federal statute. C. The terms “acquisition” and “assistance” are defined in this part to correspond to the principal purposes described in paragraphs III.B.1 and 2 of this section, respectively. Using those terms, paragraphs III.B.1 and B.2 may be restated to say that grants and cooperative agreements are assistance instruments that DoD Components use, as distinct from procurement contracts they use for acquisition. IV. Background: Distinguishing Types of Recipients' and Subrecipients' Instruments A. While the Federal Grant and Cooperative Agreement Act applies to Federal agencies, it does not govern types of instruments that recipients and subrecipients of any tier use. That statute does not require a recipient or subrecipient to: 1. Consider any instrument it makes at a lower tier under a Federal assistance award to be a grant or cooperative agreement. Therefore, at its option, a recipient or subrecipient may consider all of its lower-tier instruments to be “contracts.” 2. Associate an “assistance” relationship, as that term is defined in this part and used in this chapter, with any lower-tier transaction that it makes. B. However, the DoDGARs in this chapter do distinguish between two classes of lower-tier transactions that recipients and subrecipients make: Subawards and procurement transactions. The distinction promotes uniformity in requirements for lower-tier transactions under DoD grants and cooperative agreements. It is based on a long-standing distinction in OMB guidance to Federal agencies, currently at 2 CFR part 200, which DoD implements in this chapter. C. The distinction between a subaward and procurement transaction is based on the primary purpose of that transaction. 1. The transaction is a subaward if a recipient or subrecipient enters into it with another entity at the next lower tier in order to transfer—for performance by that lower-tier entity—a portion of the substantive program for which the DoD grant or cooperative agreement provided financial assistance to the recipient. Because the Federal Grant and Cooperative Agreement Act does not apply to the recipient or subrecipient, it may make a subaward as defined in this part using an instrument that it considers a contract. 2. The transaction is a procurement transaction if the recipient or subrecipient enters into it in order to purchase goods or services from the lower-tier entity that the recipient or subrecipient needs to perform its portion of the substantive program supported by the DoD award.